- Reports Revenue of $2.4 Billion, Growing 8%, and Net Income
of $624 Million, or $1.37 per Diluted Share, Decreasing 7% and 6%,
Respectively, on a Reported Basis for Second Quarter 2024
- Delivers 11% Operational Growth in Revenue and 18%
Operational Growth in Adjusted Net Income for Second Quarter
2024
- Reports Adjusted Net Income of $711 Million, or Adjusted
Diluted EPS of $1.56, for Second Quarter 2024
- Raises Full Year 2024 Revenue Guidance to $9.100 - $9.250
Billion, with Diluted EPS of $5.35 to $5.45 on a Reported Basis, or
$5.78 to $5.88 on an Adjusted Basis
- Increases Full Year 2024 Operational Revenue Growth to 9% to
11% and Full-Year Operational Growth in Adjusted Net Income to
13.5% to 15.5%
Zoetis Inc. (NYSE:ZTS) today reported its financial results for
the second quarter of 2024 and raised its guidance for full year
2024.
The company reported revenue of $2.4 billion for the second
quarter of 2024, an increase of 8% compared with the second quarter
of 2023. On an operational1 basis, revenue for the second quarter
of 2024 increased 11% compared with the second quarter of 2023. Net
income for the second quarter of 2024 was $624 million, or $1.37
per diluted share, a decrease of 7% and 6%, respectively, on a
reported basis.
Adjusted net income2 for the second quarter of 2024 was $711
million, or $1.56 per diluted share, an increase of 9% and 11%,
respectively, on a reported basis, and an increase of 18% and 20%,
respectively, on an operational basis. Adjusted net income for the
second quarter of 2024 excludes the net impact of $87 million for
purchase accounting adjustments, acquisition and
divestiture-related costs and certain significant items.
EXECUTIVE COMMENTARY
“We had another outstanding quarter, demonstrating the strong
demand for our trusted, innovative products, our ability to capture
and expand markets, and the dedication of our purpose-driven
colleagues," said Kristin Peck, Chief Executive Officer of Zoetis.
“We achieved 12% revenue growth in the U.S. and 10% operational
revenue growth internationally, with both our companion animal and
livestock portfolios seeing impressive global operational growth,
12% and 9% respectively."
"Our excellent first half across key franchises, including
osteoarthritis (OA) pain, Simparica and key dermatology, is a
testament to our commitment to deliver breakthrough innovations
that address our customers' unmet needs and our differentiated
execution. I look forward to continuing our momentum into the
second half of the year where we will remain focused on executing
our strategy, building trust and preference for our best-in-class
products and delivering value to shareholders.”
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its commercial operations across
two segments: United States (U.S.) and International. Within these
segments, the company delivers a diverse portfolio of products for
companion animals and livestock, tailored to local trends and
customer needs. In the second quarter of 2024:
- Revenue in the U.S. segment was $1.3 billion, an
increase of 12% compared with the second quarter of 2023. Sales of
companion animal products increased 13%, driven by the company's
monoclonal antibody (mAb) products for osteoarthritis (OA) pain,
Librela® for dogs and Solensia® for cats. Also contributing to
growth in the quarter was Simparica Trio®, the company's flea, tick
and heartworm combination product as well as the company's key
dermatology portfolio, including Apoquel® and Cytopoint®. Sales of
livestock products increased 11% in the quarter. Growth in both
cattle and swine products was driven primarily by a soft prior year
comparison due to the timing of supply of ceftiofur.
- Revenue in the International segment was $1.0 billion,
reflecting a 4% increase on a reported basis and an increase of 10%
operationally compared with the second quarter of 2023. Sales of
companion animal products grew 7% on a reported basis and 12%
operationally. Growth in the quarter was driven by the company’s
companion animal products, including Simparica® and Simparica Trio,
key dermatology products, Apoquel and Cytopoint, as well as OA pain
products, Librela for dogs and Solensia for cats. Sales of
livestock products were flat on a reported basis and grew 8%
operationally. Growth of the company's cattle and poultry products
was driven largely by price increases in hyperinflationary markets.
Sales of fish products grew due to increased demand for vaccines in
Norway.
INVESTMENTS IN GROWTH
Zoetis continues to advance innovation and care for animals
across the globe. Since its last quarterly earnings announcement,
the company gained approval in Canada for Alpha Ject Micro® 7
ISA, the latest version of its combination vaccine for Atlantic
Salmon, now enhanced with protection against Infectious Salmon
Anaemia Virus (ISA). Simparica and Simparica Trio
received approval in Canada for a claim related to the treatment
and control of Asian longhorned tick infestations (Haemaphysalis
longicornis) in dogs.
The company also received approval in Japan for Draxxin®
KP (tulathromycin ketoprofen), an injectable for the treatment
of bacterial pneumoniae in cattle. Fostera® Gold PCV MH, a
one-shot vaccine for pigs that offers the longest lasting combined
protection against porcine circovirus type 2 (PCV2) and Mycoplasma
hyopneumoniae infections, gained approval in Mexico for a claim
related to breeding herd safety.
The company is further strengthening its Diagnostic offerings
with the anticipated launch of a new premium point-of-care
hematology analyzer, Vetscan® Opticell™, in the second half
of 2024. As the newest addition to the Diagnostics suite, it offers
veterinary healthcare teams significant time, cost and space
savings – leading to better patient outcomes and a more efficient
clinic. The innovative AI-powered classification technology will
offer a more advanced option for Complete Blood Count (CBC)
analysis, providing lab-quality accuracy at the point-of-care.
In June, Zoetis published its 2023 Sustainability Report,
highlighting specific actions the company has made by embedding
sustainability across the business to support Communities, Animals
and the Planet as it advances sustainability in animal health for a
better future.
FINANCIAL GUIDANCE
Zoetis is raising its full year reported 2024 guidance due to
the company's strong first half and the underlying strength in
companion animal.
- Revenue between $9.100 billion to $9.250 billion (operational
growth of 9% to 11%)
- Reported net income between $2.450 billion to $2.490
billion
- Adjusted net income between $2.640 billion to $2.690 billion
(operational growth of 13.5% to 15.5%)
- Reported diluted EPS of $5.35 to $5.45
- Adjusted diluted EPS between $5.78 to $5.88
This guidance reflects foreign exchange rates as of late July.
Additional details on guidance are included in the financial tables
and will be discussed on the company's conference call this
morning.
WEBCAST & CONFERENCE CALL
DETAILS
Zoetis will host a webcast and conference call at 8:00 a.m. (ET)
today, during which company executives will review second quarter
2024 results, discuss financial guidance and respond to questions
from financial analysts. Investors and the public may access the
live webcast and corresponding slides by visiting the Zoetis
website at http://investor.zoetis.com/events-presentations. A
replay of the webcast will be archived and made available on August
6, 2024.
About Zoetis
As the world’s leading animal health company, Zoetis is driven
by a singular purpose: to nurture our world and humankind by
advancing care for animals. After innovating ways to predict,
prevent, detect, and treat animal illness for more than 70 years,
Zoetis continues to stand by those raising and caring for animals
worldwide – from veterinarians and pet owners to livestock farmers
and ranchers. The company’s leading portfolio and pipeline of
medicines, vaccines, diagnostics and technologies make a difference
in over 100 countries. A Fortune 500 company, Zoetis generated
revenue of $8.5 billion in 2023 with approximately 14,100
employees. For more information, visit www.zoetis.com.
1 Operational results (a non-GAAP financial measure) is defined
as results excluding the impact of foreign exchange. 2 Adjusted net
income and its components and adjusted diluted earnings per share
(non-GAAP financial measures) are defined as reported net income
and reported diluted earnings per share, excluding purchase
accounting adjustments, acquisition and divestiture-related costs
and certain significant items.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect
the current views of Zoetis with respect to: business plans or
prospects, future operating or financial performance, future
guidance, future operating models; R&D costs; timing and
likelihood of success; expectations regarding products, product
approvals or products under development and expected timing of
product launches; disruptions in our global supply chain;
expectations regarding the performance of acquired companies and
our ability to integrate new businesses; expectations regarding the
financial impact of acquisitions; future use of cash, dividend
payments and share repurchases; expectations regarding timing and
financial impact of divestitures; foreign exchange rates, tax rates
and tax regimes and any changes thereto; and other future events.
These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those
contemplated by a forward-looking statement. Forward-looking
statements speak only as of the date on which they are made. Zoetis
expressly disclaims any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. A further list and description of
risks, uncertainties and other matters can be found in our most
recent Annual Report on Form 10-K, including in the sections
thereof captioned “Forward-Looking Statements and Factors That May
Affect Future Results” and “Item 1A. Risk Factors,” in our
Quarterly Reports on Form 10-Q and in our Current Reports on Form
8-K. These filings and subsequent filings are available online at
www.sec.gov, www.zoetis.com, or on request from Zoetis.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as adjusted net income,
adjusted diluted earnings per share and operational results (which
exclude the impact of foreign exchange), to assess and analyze our
results and trends and to make financial and operational decisions.
We believe these non-GAAP financial measures are also useful to
investors because they provide greater transparency regarding our
operating performance. The non-GAAP financial measures included in
this press release should not be considered alternatives to
measurements required by GAAP, such as net income, operating
income, and earnings per share, and should not be considered
measures of liquidity. These non-GAAP financial measures are
unlikely to be comparable with non-GAAP information provided by
other companies. Reconciliations of non-GAAP financial measures and
the most directly comparable GAAP financial measures are included
in the tables accompanying this press release and are posted on our
website at www.zoetis.com.
Internet Posting of Information: We routinely post information
that may be important to investors on the 'Investor Relations'
section of our website at www.zoetis.com, as well as on LinkedIn,
Facebook, X (formerly Twitter) and YouTube. We encourage investors
and potential investors to consult our website regularly and to
follow us on social media for company news and information.
ZTS-COR ZTS-IR ZTS-FIN
ZOETIS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME(a)
(UNAUDITED)
(millions of dollars, except per
share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
% Change
2024
2023
% Change
Revenue
$
2,361
$
2,180
8
$
4,551
$
4,180
9
Costs and expenses:
Cost of sales
668
607
10
1,311
1,195
10
Selling, general and administrative
expenses
581
556
4
1,128
1,061
6
Research and development expenses
171
146
17
333
288
16
Amortization of intangible assets
35
37
(5)
72
74
(3)
Restructuring charges and certain
acquisition and divestiture-related costs
42
8
*
46
29
59
Interest expense, net of capitalized
interest
59
58
2
117
121
(3)
Other (income)/deductions–net
25
(104
)
*
17
(157
)
*
Income before provision for taxes on
income
780
872
(11)
1,527
1,569
(3)
Provision for taxes on income
156
202
(23)
304
348
(13)
Net income before allocation to
noncontrolling interests
624
670
(7)
1,223
1,221
—
Less: Net loss attributable to
noncontrolling interests
—
(1
)
*
—
(2
)
*
Net income attributable to Zoetis Inc.
$
624
$
671
(7)
$
1,223
$
1,223
—
Earnings per share—basic
$
1.37
$
1.45
(6)
$
2.68
$
2.64
2
Earnings per share—diluted
$
1.37
$
1.45
(6)
$
2.67
$
2.64
1
Weighted-average shares used to calculate
earnings per share
Basic
455.5
461.9
456.7
462.7
Diluted
456.0
462.9
457.4
463.8
(a) The condensed consolidated
statements of income present the three and six months ended June
30, 2024 and 2023. Subsidiaries operating outside the United States
are included for the three and six months ended May 31, 2024 and
2023.
* Calculation not meaningful.
ZOETIS INC.
RECONCILIATION OF GAAP REPORTED
TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per
share data)
Three Months Ended June 30,
2024
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition and Divestiture-
Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
668
$
(1
)
$
—
$
—
$
667
Gross profit
1,693
1
—
—
1,694
Selling, general and administrative
expenses
581
(3
)
—
—
578
Amortization of intangible assets
35
(31
)
—
—
4
Restructuring charges and certain
acquisition and divestiture-related costs
42
—
(5
)
(37
)
—
Other (income)/deductions–net
25
—
—
(33
)
(8
)
Income before provision for taxes on
income
780
35
5
70
890
Provision for taxes on income
156
8
1
14
179
Net income attributable to Zoetis
624
27
4
56
711
Earnings per common share attributable to
Zoetis–diluted
1.37
0.06
0.01
0.12
1.56
Three Months Ended June 30,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition and Divestiture-
Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
607
$
(5
)
$
—
$
—
$
602
Gross profit
1,573
5
—
—
1,578
Selling, general and administrative
expenses
556
(7
)
—
—
549
Amortization of intangible assets
37
(31
)
—
—
6
Restructuring charges and certain
acquisition and divestiture-related costs
8
—
(4
)
(4
)
—
Other (income)/deductions–net
(104
)
—
—
94
(10
)
Income before provision for taxes on
income
872
43
4
(90
)
829
Provision for taxes on income
202
9
1
(34
)
178
Net income attributable to Zoetis
671
34
3
(56
)
652
Earnings per common share attributable to
Zoetis–diluted
1.45
0.07
0.01
(0.12
)
1.41
(a) The condensed consolidated statements
of income present the three months ended June 30, 2024 and 2023.
Subsidiaries operating outside the United States are included for
the three months ended May 31, 2024 and 2023.
(b) Non-GAAP adjusted net income and its
components and non-GAAP adjusted diluted EPS are not, and should
not be viewed as, substitutes for U.S. GAAP net income and its
components and diluted EPS. Despite the importance of these
measures to management in goal setting and performance measurement,
non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are non-GAAP financial measures that have no
standardized meaning prescribed by U.S. GAAP and, therefore, have
limits in their usefulness to investors. Because of the
non-standardized definitions, non-GAAP adjusted net income and its
components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net
income and its components and diluted EPS) may not be comparable to
the calculation of similar measures of other companies. Non-GAAP
adjusted net income and its components, and non-GAAP adjusted
diluted EPS are presented solely to permit investors to more fully
understand how management assesses performance.
See Notes to Reconciliation of GAAP
Reported to Non-GAAP Adjusted Information for notes (1) and
(2).
ZOETIS INC.
RECONCILIATION OF GAAP REPORTED
TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per
share data)
Six Months Ended June 30,
2024
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition and Divestiture-
Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
1,311
$
(2
)
$
—
$
—
$
1,309
Gross profit
3,240
2
—
—
3,242
Selling, general and administrative
expenses
1,128
(6
)
—
—
1,122
Research and development expenses
333
(1
)
—
—
332
Amortization of intangible assets
72
(63
)
—
—
9
Restructuring charges and certain
acquisition and divestiture-related costs
46
—
(5
)
(41
)
—
Other (income)/deductions–net
17
—
—
(35
)
(18
)
Income before provision for taxes on
income
1,527
72
5
76
1,680
Provision for taxes on income
304
16
1
14
335
Net income attributable to Zoetis
1,223
56
4
62
1,345
Earnings per common share attributable to
Zoetis–diluted
2.67
0.12
0.01
0.14
2.94
Six Months Ended June 30,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition and Divestiture-
Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
1,195
$
(9
)
$
—
$
—
$
1,186
Gross profit
2,985
9
—
—
2,994
Selling, general and administrative
expenses
1,061
(14
)
—
—
1,047
Amortization of intangible assets
74
(62
)
—
—
12
Restructuring charges and certain
acquisition and divestiture-related costs
29
—
(5
)
(24
)
—
Other (income)/deductions–net
(157
)
—
—
92
(65
)
Income before provision for taxes on
income
1,569
85
5
(68
)
1,591
Provision for taxes on income
348
17
1
(32
)
334
Net income attributable to Zoetis
1,223
68
4
(36
)
1,259
Earnings per common share attributable to
Zoetis–diluted
2.64
0.14
0.01
(0.08
)
2.71
(a) The condensed consolidated statements of income present the six
months ended June 30, 2024 and 2023. Subsidiaries operating outside
the United States are included for the six months ended May 31,
2024 and 2023. (b) Non-GAAP adjusted net income and its components
and non-GAAP adjusted diluted EPS are not, and should not be viewed
as, substitutes for U.S. GAAP net income and its components and
diluted EPS. Despite the importance of these measures to management
in goal setting and performance measurement, non-GAAP adjusted net
income and its components and non-GAAP adjusted diluted EPS are
non-GAAP financial measures that have no standardized meaning
prescribed by U.S. GAAP and, therefore, have limits in their
usefulness to investors. Because of the non-standardized
definitions, non-GAAP adjusted net income and its components and
non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its
components and diluted EPS) may not be comparable to the
calculation of similar measures of other companies. Non-GAAP
adjusted net income and its components, and non-GAAP adjusted
diluted EPS are presented solely to permit investors to more fully
understand how management assesses performance. See Notes to
Reconciliation of GAAP Reported to Non-GAAP Adjusted Information
for notes (1) and (2).
ZOETIS INC.
NOTES TO RECONCILIATION OF GAAP
REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars)
(1)
Acquisition and divestiture-related costs
include the following:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Acquisition-related costs(a)
$
1
$
3
$
1
$
4
Divestiture-related costs(b)
4
—
4
—
Restructuring charges(c)
—
1
—
1
Total acquisition and divestiture-related
costs—pre-tax
5
4
5
5
Income taxes(d)
1
1
1
1
Total acquisition and divestiture-related
costs—net of tax
$
4
$
3
$
4
$
4
(a)
Acquisition-related costs represent
external, incremental costs that directly relate to transacting and
integrating businesses, included in Restructuring charges and
certain acquisition and divestiture-related costs.
(b)
Divestiture-related costs represent
external, incremental costs that directly relate to divesting and
disintegrating businesses, included in Restructuring charges and
certain acquisition and divestiture-related costs.
(c)
Restructuring charges represent employee
termination costs directly related to acquisitions and
divestitures, included in Restructuring charges and certain
acquisition and divestiture-related costs.
(d)
Included in Provision for taxes on income.
Income taxes include the tax effect of the associated pre-tax
amounts, calculated by determining the jurisdictional location of
the pre-tax amounts and applying that jurisdiction's applicable tax
rate.
(2)
Certain significant items include the
following:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Other restructuring charges and
cost-reduction/productivity initiatives(a)
$
37
$
4
$
41
$
24
Certain asset impairment charges(b)
11
10
11
10
Loss on assets held for sale(c)
22
—
22
—
Net gain on sale of business(d)
—
(101
)
—
(101
)
Other
—
(3
)
2
(1
)
Total certain significant
items—pre-tax
70
(90
)
76
(68
)
Income taxes(e)
14
(34
)
14
(32
)
Total certain significant items—net of
tax
$
56
$
(56
)
$
62
$
(36
)
(a)
For the three and six months ended June
30, 2024, primarily consisted of employee termination costs related
to organizational structure refinements, included in Restructuring
charges and certain acquisition and divestiture-related costs. For
the six months ended June 30, 2024, charges were partially offset
by a reversal of certain employee termination costs as a result of
a change in strategy from our 2015 operational efficiency
initiative.
For the three and six months ended June
30, 2023, primarily consisted of employee termination costs related
to organizational structure refinements, included in Restructuring
charges and certain acquisition and divestiture-related costs.
(b)
For the three and six months ended June
30, 2024, represents certain asset impairment charges related to
our aquaculture business included in Other
(income)/deductions–net.
For the three and six months ended June
30, 2023, represents certain asset impairment charges related to
our precision animal health business, included in Other
(income)/deductions–net.
(c)
Represents a loss on assets held for sale
related to the planned sale of our medicated feed additive product
portfolio, certain water soluble products and related assets,
included in Other (income)/deductions–net.
(d)
Represents a net gain on the sale of a
majority interest in our pet insurance business, included in Other
(income)/deductions–net.
(e)
Included in Provision for taxes on income.
Income taxes include the tax effect of the associated pre-tax
amounts, calculated by determining the jurisdictional location of
the pre-tax amounts and applying that jurisdiction's applicable tax
rate. For the three and six months ended June 30, 2023, also
includes tax expense related to changes to prior years' tax
positions with regard to the one-time mandatory deemed repatriation
tax under the Tax Cuts and Jobs Act.
ZOETIS INC.
ADJUSTED SELECTED COSTS, EXPENSES
AND INCOME(a)
(UNAUDITED)
(millions of dollars)
Three Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
667
$
602
11
%
3
%
8
%
as a percent of revenue
28.3
%
27.6
%
NA
NA
NA
Adjusted SG&A expenses
578
549
5
%
(2
)%
7
%
Adjusted R&D expenses
171
146
17
%
—
%
17
%
Adjusted net income attributable to
Zoetis
711
652
9
%
(9
)%
18
%
Six Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
1,309
$
1,186
10
%
3
%
7
%
as a percent of revenue
28.8
%
28.4
%
NA
NA
NA
Adjusted SG&A expenses
1,122
1,047
7
%
(1
)%
8
%
Adjusted R&D expenses
332
288
15
%
—
%
15
%
Adjusted net income attributable to
Zoetis
1,345
1,259
7
%
(10
)%
17
%
(a) Adjusted cost of sales, adjusted
selling, general, and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, and adjusted net
income (non-GAAP financial measures) are defined as the
corresponding reported U.S. GAAP income statement line items
excluding purchase accounting adjustments, acquisition and
divestiture-related costs and certain significant items. These
adjusted income statement line item measures are not, and should
not be viewed as, substitutes for the corresponding U.S. GAAP line
items. The corresponding GAAP line items and reconciliations of
reported to adjusted information are provided in Condensed
Consolidated Statements of Income and Reconciliation of GAAP
Reported to Non-GAAP Adjusted Information.
(b) Operational results (a non-GAAP
financial measure) is defined as results excluding the impact of
foreign exchange.
ZOETIS INC.
2024 GUIDANCE
Selected Line Items
(millions of dollars, except per share
amounts)
Full Year 2024
Revenue
$9,100 to $9,250
Operational growth(a)
9% to 11%
Adjusted cost of sales as a percentage of
revenue(b)
Approximately 29.3%
Adjusted SG&A expenses(b)
$2,225 to $2,290
Adjusted R&D expenses(b)
$660 to $670
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $200
Effective tax rate on adjusted
income(b)
20.0% to 20.5%
Adjusted diluted EPS(b)
$5.78 to $5.88
Adjusted net income(b)
$2,640 to $2,690
Operational growth(a)(c)
13.5% to 15.5%
Certain significant items and acquisition
and divestiture-related costs(d)
$80 - $90
The guidance reflects foreign exchange
rates as of late July 2024.
Reconciliations of 2024 reported guidance
to 2024 adjusted guidance follows:
(millions of dollars, except per share amounts)
Reported
Certain significant items and
acquisition and divestiture-related costs(d)
Purchase accounting
Adjusted(c)
Cost of sales as a percentage of
revenue
~ 29.4%
~ (0.1%)
~ 29.3%
SG&A expenses
$2,236 to $2,301
~ $(11)
$2,225 to $2,290
R&D expenses
$662 to $672
~ $(2)
$660 to $670
Interest expense and other
(income)/deductions-net
~ $220
~ $(20)
~ $200
Effective tax rate
20.0% to 20.5%
20.0% to 20.5%
Diluted EPS
$5.35 to $5.45
~ $0.19
~ $0.24
$5.78 to $5.88
Net income attributable to Zoetis
$2,450 to $2,490
$80 - $90
~ $110
$2,640 to $2,690
(a) Operational results (a non-GAAP
financial measure) excludes the impact of foreign exchange.
(b) Adjusted net income and its components
and adjusted diluted EPS are defined as reported U.S. GAAP net
income and its components and reported diluted EPS excluding
purchase accounting adjustments, acquisition and
divestiture-related costs and certain significant items. Adjusted
cost of sales, adjusted SG&A expenses, adjusted R&D
expenses, and adjusted interest expense and other
(income)/deductions-net are income statement line items prepared on
the same basis, and, therefore, components of the overall adjusted
income measure. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted
net income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted
net income and its components and adjusted diluted EPS (unlike U.S.
GAAP net income and its components and diluted EPS) may not be
comparable to the calculation of similar measures of other
companies. Adjusted net income and its components and adjusted
diluted EPS are presented solely to permit investors to more fully
understand how management assesses performance. Adjusted net income
and its components and adjusted diluted EPS are not, and should not
be viewed as, substitutes for U.S. GAAP net income and its
components and diluted EPS.
(c) We do not provide a reconciliation of
forward-looking non-GAAP adjusted net income operational results to
the most directly comparable U.S. GAAP reported financial measure
because we are unable to calculate with reasonable certainty the
foreign exchange impact of unusual gains and losses, acquisition
and divestiture-related expenses, potential future asset
impairments and other certain significant items, without
unreasonable effort. The foreign exchange impacts of these items
are uncertain, depend on various factors, and could have a material
impact on U.S. GAAP reported results for the guidance period.
(d) Primarily includes certain
nonrecurring costs related to acquisitions, divestitures and other
charges.
ZOETIS INC.
CONSOLIDATED REVENUE BY
SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
Three Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
1,649
$
1,489
11
%
(1
)%
12
%
Livestock
694
671
3
%
(6
)%
9
%
Contract Manufacturing & Human
Health
18
20
(10
)%
(1
)%
(9
)%
Total Revenue
$
2,361
$
2,180
8
%
(3
)%
11
%
U.S.:
Companion Animal
$
1,080
$
959
13
%
—
%
13
%
Livestock
228
206
11
%
—
%
11
%
Total U.S. Revenue
$
1,308
$
1,165
12
%
—
%
12
%
International:
Companion Animal
$
569
$
530
7
%
(5
)%
12
%
Livestock
466
465
—
%
(8
)%
8
%
Total International Revenue
$
1,035
$
995
4
%
(6
)%
10
%
Companion Animal:
Dogs and Cats
$
1,581
$
1,424
11
%
(2
)%
13
%
Horses
68
65
5
%
(1
)%
6
%
Total Companion Animal Revenue
$
1,649
$
1,489
11
%
(1
)%
12
%
Livestock:
Cattle
$
350
$
329
6
%
(6
)%
12
%
Poultry
132
131
1
%
(6
)%
7
%
Swine
130
133
(2
)%
(7
)%
5
%
Fish
62
52
19
%
(1
)%
20
%
Sheep and other
20
26
(23
)%
(2
)%
(21
)%
Total Livestock Revenue
$
694
$
671
3
%
(6
)%
9
%
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational revenue results (a
non-GAAP financial measure) is defined as revenue results excluding
the impact of foreign exchange.
ZOETIS INC.
CONSOLIDATED REVENUE BY
SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
Six Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
3,099
$
2,714
14
%
(2
)%
16
%
Livestock
1,414
1,429
(1
)%
(5
)%
4
%
Contract Manufacturing & Human
Health
38
37
3
%
—
%
3
%
Total Revenue
$
4,551
$
4,180
9
%
(3
)%
12
%
U.S.:
Companion Animal
$
1,978
$
1,680
18
%
—
%
18
%
Livestock
493
490
1
%
—
%
1
%
Total U.S. Revenue
$
2,471
$
2,170
14
%
—
%
14
%
International:
Companion Animal
$
1,121
$
1,034
8
%
(5
)%
13
%
Livestock
921
939
(2
)%
(7
)%
5
%
Total International Revenue
$
2,042
$
1,973
3
%
(6
)%
9
%
Companion Animal:
Dogs and Cats
$
2,965
$
2,577
15
%
(2
)%
17
%
Horses
134
137
(2
)%
(2
)%
—
%
Total Companion Animal Revenue
$
3,099
$
2,714
14
%
(2
)%
16
%
Livestock:
Cattle
$
741
$
728
2
%
(4
)%
6
%
Poultry
271
270
—
%
(7
)%
7
%
Swine
257
275
(7
)%
(6
)%
(1
)%
Fish
107
101
6
%
(1
)%
7
%
Sheep and other
38
55
(31
)%
(4
)%
(27
)%
Total Livestock Revenue
$
1,414
$
1,429
(1
)%
(5
)%
4
%
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational revenue results (a
non-GAAP financial measure) is defined as revenue results excluding
the impact of foreign exchange.
ZOETIS INC.
CONSOLIDATED REVENUE BY KEY
INTERNATIONAL MARKETS
(UNAUDITED)
(millions of dollars)
Three Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(a)
Total International
$
1,035
$
995
4
%
(6
)%
10
%
Australia
83
82
1
%
(1
)%
2
%
Brazil
99
91
9
%
(1
)%
10
%
Canada
75
70
7
%
(1
)%
8
%
Chile
31
39
(21
)%
(4
)%
(17
)%
China
68
84
(19
)%
(3
)%
(16
)%
France
34
34
—
%
(2
)%
2
%
Germany
58
53
9
%
(1
)%
10
%
Italy
36
35
3
%
1
%
2
%
Japan
39
47
(17
)%
(13
)%
(4
)%
Mexico
46
38
21
%
11
%
10
%
Spain
33
31
6
%
(2
)%
8
%
United Kingdom
73
63
16
%
3
%
13
%
Other developed markets
138
125
10
%
(2
)%
12
%
Other emerging markets
222
203
9
%
(25
)%
34
%
Six Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(a)
Total International
$
2,042
$
1,973
3
%
(6
)%
9
%
Australia
156
164
(5
)%
(3
)%
(2
)%
Brazil
200
175
14
%
3
%
11
%
Canada
136
120
13
%
(1
)%
14
%
Chile
62
78
(21
)%
(4
)%
(17
)%
China
144
186
(23
)%
(3
)%
(20
)%
France
75
68
10
%
(1
)%
11
%
Germany
109
98
11
%
—
%
11
%
Italy
64
61
5
%
1
%
4
%
Japan
76
86
(12
)%
(12
)%
—
%
Mexico
90
77
17
%
11
%
6
%
Spain
65
64
2
%
—
%
2
%
United Kingdom
150
131
15
%
4
%
11
%
Other developed markets
265
247
7
%
(1
)%
8
%
Other emerging markets
450
418
8
%
(25
)%
33
%
(a) Operational revenue results (a
non-GAAP financial measure) is defined as revenue results excluding
the impact of foreign exchange.
ZOETIS INC.
SEGMENT(a) EARNINGS
(UNAUDITED)
(millions of dollars)
Three Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
1,308
$
1,165
12
%
—
%
12
%
Cost of Sales
232
214
8
%
—
%
8
%
Gross Profit
1,076
951
13
%
—
%
13
%
Gross Margin
82.3
%
81.6
%
Operating Expenses
204
212
(4
)%
—
%
(4
)%
Other (income)/deductions-net
—
—
*
*
*
U.S. Earnings
$
872
$
739
18
%
—
%
18
%
International:
Revenue
$
1,035
$
995
4
%
(6
)%
10
%
Cost of Sales
342
315
9
%
—
%
9
%
Gross Profit
693
680
2
%
(9
)%
11
%
Gross Margin
67.0
%
68.3
%
Operating Expenses
175
166
5
%
(4
)%
9
%
Other (income)/deductions-net
—
(1
)
*
*
*
International Earnings
$
518
$
515
1
%
(10
)%
11
%
Total Reportable Segments
$
1,390
$
1,254
11
%
(4
)%
15
%
Other business activities(c)
(142
)
(116
)
22
%
Reconciling Items:
Corporate(d)
(299
)
(256
)
17
%
Purchase accounting adjustments(e)
(35
)
(43
)
(19
)%
Acquisition and divestiture-related
costs(f)
(5
)
(4
)
25
%
Certain significant items(g)
(70
)
90
*
Other unallocated(h)
(59
)
(53
)
11
%
Total Earnings(i)
$
780
$
872
(11
)%
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational results (a non-GAAP
financial measure) is defined as results excluding the impact of
foreign exchange.
(c) Other business activities includes the
research and development costs managed by our research and
development organization, as well as our contract manufacturing
business and human health business.
(d) Corporate includes, among other
things, certain costs associated with information technology,
administration expenses, interest income and expense, certain
compensation costs and other costs not charged to our operating
segments.
(e) Purchase accounting adjustments
include certain charges related to the amortization of fair value
adjustments to inventory, intangible assets and property, plant and
equipment not charged to our operating segments.
(f) Acquisition and divestiture-related
costs include costs associated with acquiring and integrating newly
acquired businesses, such as transaction costs and integration
costs, as well as costs associated with divesting and
disintegrating a portion of our business.
(g) Certain significant items includes
substantive, unusual items that, either as a result of their nature
or size, would not be expected to occur as part of our normal
business on a regular basis. Such items primarily include certain
asset impairment charges, restructuring charges and implementation
costs associated with cost-reduction/productivity initiatives that
are not associated with an acquisition, as well as a loss on assets
held for sale and the impact of divestiture gains and losses.
(h) Includes overhead expenses associated
with our global manufacturing and supply operations not directly
attributable to an operating segment, as well as certain
procurement costs.
(i) Defined as income before provision for
taxes on income.
* Calculation not meaningful.
ZOETIS INC.
SEGMENT(a) EARNINGS
(UNAUDITED)
(millions of dollars)
Six Months Ended
June 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
2,471
$
2,170
14
%
—
%
14
%
Cost of Sales
449
417
8
%
—
%
8
%
Gross Profit
2,022
1,753
15
%
—
%
15
%
Gross Margin
81.8
%
80.8
%
Operating Expenses
394
400
(2
)%
—
%
(2
)%
Other (income)/deductions-net
—
—
*
*
*
U.S. Earnings
$
1,628
$
1,353
20
%
—
%
20
%
International:
Revenue
$
2,042
$
1,973
3
%
(6
)%
9
%
Cost of Sales
655
606
8
%
—
%
8
%
Gross Profit
1,387
1,367
1
%
(9
)%
10
%
Gross Margin
67.9
%
69.3
%
Operating Expenses
334
317
5
%
(4
)%
9
%
Other (income)/deductions-net
—
—
*
*
*
International Earnings
$
1,053
$
1,050
—
%
(10
)%
10
%
Total Reportable Segments
$
2,681
$
2,403
12
%
(4
)%
16
%
Other business activities(c)
(274
)
(230
)
19
%
Reconciling Items:
Corporate(d)
(587
)
(464
)
27
%
Purchase accounting adjustments(e)
(72
)
(85
)
(15
)%
Acquisition and divestiture-related
costs(f)
(5
)
(5
)
—
%
Certain significant items(g)
(76
)
68
*
Other unallocated(h)
(140
)
(118
)
19
%
Total Earnings(i)
$
1,527
$
1,569
(3
)%
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational results (a non-GAAP
financial measure) is defined as results excluding the impact of
foreign exchange.
(c) Other business activities includes the
research and development costs managed by our research and
development organization, as well as our contract manufacturing
business and human health business.
(d) Corporate includes, among other
things, certain costs associated with information technology,
administration expenses, interest income and expense, certain
compensation costs and other costs not charged to our operating
segments.
(e) Purchase accounting adjustments
include certain charges related to the amortization of fair value
adjustments to inventory, intangible assets and property, plant and
equipment not charged to our operating segments.
(f) Acquisition and divestiture-related
costs include costs associated with acquiring and integrating newly
acquired businesses, such as transaction costs and integration
costs, as well as costs associated with divesting and
disintegrating a portion of our business.
(g) Certain significant items includes
substantive, unusual items that, either as a result of their nature
or size, would not be expected to occur as part of our normal
business on a regular basis. Such items primarily include certain
asset impairment charges, restructuring charges and implementation
costs associated with cost-reduction/productivity initiatives that
are not associated with an acquisition, as well as a loss on assets
held for sale and the impact of divestiture gains and losses.
(h) Includes overhead expenses associated
with our global manufacturing and supply operations not directly
attributable to an operating segment, as well as certain
procurement costs.
(i) Defined as income before provision for
taxes on income.
* Calculation not meaningful.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240805847620/en/
Media Contacts: Jennifer Albano
1-862-399-0810 (o) jennifer.albano@zoetis.com
Laura Panza 1-973-975-5176 (o) laura.panza@zoetis.com
Investor Contacts: Steve Frank
1-973-822-7141 (o) steve.frank@zoetis.com
Nick Soonthornchai 1-973-443-2792 (o)
nick.soonthornchai@zoetis.com
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