Walt Disney Company (The)

Good day, everybody, and welcome to the Walt Disney Company fourth quarter and full year 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Carlos Gomez, Executive Vice President, Treasurer, and Head of Investor Relations. Please go ahead.

Good morning. It's my pleasure to welcome everyone to the Walt Disney Company's fourth quarter 2024 earnings call. Our press release, Form 10-K, and management's posted prepared remarks were issued earlier this morning and are available on our website at www. Today's call is being webcast, and a replay and transcript, as well as the fourth quarter earnings presentation, will all be made available on our website after the call. Before we begin, please take a note of our cautionary statements regarding forward-looking statements on our investor relations website. Certain statements on this call, including financial estimates or statements about our plans, guidance or expectations and drivers, such as future revenues, profitability, earnings, subscribers, demand, investments, content offerings and acceptance, cash position, cost structure and capital allocation, and other statements that are not historical in nature may constitute forward-looking statements under securities law. We make these statements on the basis of our views and assumptions regarding future events and business performance at the time we make them. and we do not undertake any obligation to update these statements. Forward-looking statements are subject to a variety of risks and uncertainties, and actual results may differ materially from the results expressed or implied in light of a variety of factors. These factors include, among others, economic or industry conditions, competition, execution risks, including in connection with our business plan, potential strategic transactions, and our content. cost savings, the market for advertising, our future financial performance, and legal and regulatory development. For more information about key risk factors, please refer to our investor relations website, the press release issued today, and the risks and uncertainties described in our Form 10-K, Form 10-Q, and other filings with the Securities and Exchange Commission. Also note that when discussing our results and outlook, we will refer to non-GAAP measures, A reconciliation of non-GAAP measures that are referred to on this call to the most comparable GAAP measures can be found on our investor relations website. Joining me this morning are Bob Iger, Disney's Chief Executive Officer, and Hugh Johnston, Senior Executive Vice President and Chief Financial Officer. Following introductory remarks from Bob, we will be happy to take your questions. So with that, I will now turn the call over to Bob.

Good morning. As I reflect on the two years since I returned to the company, I'm incredibly proud of how much progress we've made. We've emerged from a period of considerable challenges and disruption, and we're well positioned for growth. We put in place specific strategies to generate growth across our businesses, and our solid results this quarter are a clear indication they've been successful. Given the momentum we see, we believe we can continue to drive healthy growth beyond this year, including our expectation of high single-digit adjusted EPS growth in fiscal 2025, accelerating to double-digit adjusted EPS growth in fiscal 2026 and 2027. I'm especially grateful to my leadership team and everyone at Disney who has played a role in setting us on this path for a new era of growth. On the creative front, our renewed strength is a result of the extensive work we began two years ago to restore creativity to the center of the company. In television, our branded series and general entertainment programming are performing exceptionally well, drawing new audiences and winning an unprecedented number of accolades, including a record-breaking 60 Emmy Awards. In film, we're extremely proud of our performance at the summer box office, fueled by the top two movies of the year to date, Inside Out 2 and Deadpool and Wolverine. We're excited to close out the year with two other highly anticipated titles, Moana 2 and Mufasa the Lion King. Looking to 2025, we have an extremely promising content slate, including Captain America Brave New World, Lilo and Stitch, The Fantastic Four First Steps, Zootopia 2, and Avatar Fire and Ash. Worth noting that a successful Disney movie today drives more value than it ever has in the past, with our increased number of consumer touchpoints extending the reach and impact of our world-class storytelling, from streaming to parks and resorts, cruise ships, consumer products, and games. This multiplier effect means that the system economics of our movie business has never been stronger. Disney's experiences segment continues to be the gold standard for the industry, and we have an investment strategy that is highly targeted in terms of projects, locations, and IP, and is designed to drive operating income growth and attractive returns. This all comes at a time when the footprint of our parks and experiences is growing. With six locations that attract guests from across the world, we have multiple exciting expansions currently in the works. After we unveil the Disney Treasure next week, Disney Cruise Lines fleet will grow to a total of six ships, with seven additional ships currently in development. Plus, our collaboration with Epic Games will allow us to integrate our popular brands and franchises in a transformational new games and entertainment universe. Meanwhile, we ended the quarter with 174 million Disney Plus Core and Hulu subscriptions, And in five short years, we've built Disney Plus into a streaming destination unlike any other with more than 120 million core subscribers. And with the addition of Hulu on Disney Plus, it is the ultimate collection of high-quality content for every member of the household, from our extensive library of branded and general entertainment titles to news and live events. We've invested to make our already profitable streaming business a significant growth driver for the company. and we're strengthening that streaming offering even more on December 4th with the introduction of an ESPN tile on Disney+. This is the beginning of an exciting new era for ESPN. We have secured rights to many of the most popular sports for years to come at a time when the value of live sports is undeniable, contributing to an industry-leading portfolio of sports programming for Disney. And this integrated streaming experience moves us one step closer to bringing a full sports offering to Disney Plus in the U.S. as we prepare for the launch of ESPN's flagship DTC offering in early fall of 2025. Taken as a whole, we have a lot to be proud of, both from a creative and a financial standpoint. And as we look to fiscal 25 and beyond, we are confident in our continued ability to drive sustained growth and create shareholder value through our world-class portfolio of assets. And now we'll be happy to take your questions.