Overall, Disney's (NYSE: DIS) third-quarter results last week lacked any big surprises. But Disney's third-quarter earnings call included plenty of interesting fodder for investors to mull over. Notable topics included Disney's plans to invest aggressively in parks and resorts, why international opportunities persist, and how Thor: Ragnarok is a huge success.
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Here's a look at some key quotes from Disney's earnings call (via an S&P Global Market Intelligence transcript).
Investing aggressively in its parks and resorts
Arguably Disney's most successful segment in its fourth quarter, "parks and resorts" showed its strength with a 6% and 7% year-over-year increase in revenue and operating income, respectively. The segment was Disney's only growing business during the quarter, and it remains the company's second-largest contributor to both revenue and operating income ("media networks" is Disney's largest segment).
With such impressive growth during the quarter from Disney parks and resorts, investors are likely looking to ensure the segment can continue growing nicely in the coming years. Based on management's aggressive plans for capital spending in the segment, it looks like there's more growth ahead.
Disney said it expects capital expenditures in 2018 to be about $1 billion higher than in 2017 -- an increase Disney CFO Christine McCarthy said will be primarily driven by increased investments in parks and resorts:
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[A] lot of that spend is going into the completion of the 2 Star Wars Lands, and we're also completing Toy Story Land in Orlando and there's other initiatives that are in process around the globe. ... So I think it's fair to assume that we will continue to make investments in areas in which we see driving long-term value and long-term returns. So I would say, this is a business that we feel very confident in and the businesses is working right now at a very high level, and will continue to do so.
Disney management also noted it has commissioned "three spectacular new cruise ships, which will all be completed between 2021 and 2023."
Significant upside internationally
While Disney's domestic parks and resorts business continues to do well, especially when adjusted to exclude the negative impact of hurricanes, parks and resorts' international operations represent a significant opportunity for Disney. Indeed, in Q3, management said parks and resorts' international operations was the primary driver for the segment's 7% year-over-year increase in operating income.
Looking ahead, management says there's more upside internationally for parks and resorts.
Disney CEO Bob Iger explained:
The other thing to add to that is, when you look at the results of our international parks, Shanghai, as Christine cited, and the improvements that we're seeing in Paris and the restructuring in Paris, as well as Hong Kong and in Tokyo, we have ample opportunity to continue to invest and continue to expand those businesses. And with the franchises that we have, and their popularity in these markets, the opportunity actually has increased significantly over the last few years.
Thor is crushing it
A few days before Disney's fourth-quarter earnings release, the company confirmed what everyone already knew: Thor: Ragnarok is a blockbuster hit. The movie brought in $122.7 million domestically during its debut weekend, and $431 million globally within just 13 days of its release. Critics raved about the film, giving it a 92% Certified Fresh rating on RottenTomatoes.
But Iger really wanted to drive home the film's success in Disney's fourth-quarter earnings call:
We have four new Marvel movies in fiscal 2018, starting with Thor: Ragnarok, which has already has topped $500 million in worldwide box office since it premiered two weeks ago.
To put this early performance into perspective, the box office total for the entire run of our first Thor movie in 2011 was $449 million. Thor: Ragnarok is also one of the best reviewed Marvel movies to date.
Disney's Marvel franchise has now passed the $5 billion mark domestically and $13 billion globally.
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