- Reports Revenue of $2.4 Billion, Growing 11%, and Net Income
of $682 Million, or $1.50 per Diluted Share, Increasing 14% and
16%, Respectively, on a Reported Basis for Third Quarter
2024
- Delivers 14% Operational Growth in Revenue and 15%
Operational Growth in Adjusted Net Income for Third Quarter
2024
- Reports Adjusted Net Income of $716 Million, or Adjusted
Diluted EPS of $1.58, for Third Quarter 2024
- Raises Full Year 2024 Revenue Guidance to $9.200 - $9.300
Billion, Representing Operational Revenue Growth of 10% to 11%,
with Diluted EPS on an Adjusted Basis of $5.86 to $5.92
- Updates Full Year Operational Growth in Adjusted Net Income
to 13.5% to 14.5%
Zoetis Inc. (NYSE:ZTS) today reported its financial results for
the third quarter of 2024 and raised its full year 2024 guidance
for revenue and adjusted EPS.
The company reported revenue of $2.4 billion for the third
quarter of 2024, an increase of 11% compared with the third quarter
of 2023. On an operational1 basis, revenue for the third quarter of
2024 increased 14% compared with the third quarter of 2023. Net
income for the third quarter of 2024 was $682 million, or $1.50 per
diluted share, an increase of 14% and 16%, respectively, on a
reported basis.
Adjusted net income2 for the third quarter of 2024 was $716
million, or $1.58 per diluted share, an increase of 14% and 16%,
respectively, on a reported basis, and an increase of 15% and 17%,
respectively, on an operational basis. Adjusted net income for the
third quarter of 2024 excludes the net impact of $34 million for
purchase accounting adjustments, acquisition and
divestiture-related costs and certain significant items.
EXECUTIVE COMMENTARY
“Building on the strong momentum from the first half of the
year, we are proud to have delivered another excellent quarter,
fueled by our diverse, durable, and science-driven portfolio and
our customer obsession that underscore our market leadership," said
Kristin Peck, Chief Executive Officer of Zoetis. “We achieved 15%
revenue growth in the U.S. and 13% operational revenue growth
internationally, with both our companion animal and livestock
portfolios seeing impressive global operational growth, 15% and
11%, respectively. Our track record of above-market growth speaks
to our relentless focus on innovation and execution and the
dedication and commitment of our colleagues."
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 third quarter of 2024:
- Revenue in the U.S. segment was $1.3 billion, an
increase of 15% compared with the third quarter of 2023. Sales of
companion animal products increased 18%, 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 5% in the quarter. Growth in cattle
products was driven primarily by volume, due to improved supply of
ceftiofur.
- Revenue in the International segment was $1.0 billion,
reflecting a 7% increase on a reported basis and an increase of 13%
operationally compared with the third quarter of 2023. Sales of
companion animal products grew 7% on a reported basis and 11%
operationally, driven by Simparica® and Simparica Trio, key
dermatology products, Apoquel and Cytopoint, and OA pain products,
Librela for dogs and Solensia for cats. Sales of livestock products
grew 7% on a reported basis and 15% operationally. Growth of the
company's cattle and poultry products was driven largely by price
increases across the broader international segment, as well as the
timing of certain customer purchases. 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 received approval in China for Apoquel® Chewable
(oclacitinib chewable tablet) for the control of pruritus
associated with allergic dermatitis and control of atopic
dermatitis in dogs. Previously approved in the U.S., EU, Mexico,
Australia, Canada, Japan and other international markets, Apoquel
Chewable is the first and only chewable treatment for the control
of allergic itch and inflammation in dogs. Revolution® Plus
(selamectin/sarolaner), a topical combination product that treats
ticks, fleas, ear mites, lice and gastrointestinal worms and
prevents heartworm disease in cats, received approval in the EU for
an additional claim related to efficacy against notoedres mange. In
Australia, Revolution Plus received approval for an additional
claim related to flea tapeworm prevention by controlling fleas.
In livestock, the company gained approval in Australia, its
third largest market by revenue in 2023, for an additional claim
for the use of Valcor™ (Dectomax V®, doramectin and
levamisole injection) in sheep, an endectocide to treat and control
internal and external parasites in sheep and cattle. Fostera®
Gold PCV, a vaccine for pigs that offers the longest-lasting
combined protection against porcine circovirus type 2 (PCV2),
gained approval in Mexico for a claim related to breeding herd
safety. Poulvac Maternavac® 4, a vaccine for poultry that
provides protection from standard and variant infectious bursal
disease virus (IBDV), Newcastle disease, infectious bronchitis Mass
type, and malabsorption due to Reovirus, also received approval in
Mexico. In Canada, Synovex® Primer™, a new growth-promoting
implant, received approval for growing beef steers and heifers fed
in confinement and in the backgrounder phase.
In September, Zoetis expanded its India Capability Center
in Hyderabad, India. The Center will play a crucial role in driving
the company’s digital transformation and improving efficiencies to
support sustainable growth by insourcing critical technology roles,
allowing Zoetis to advance its vision to shape the future of animal
care.
Zoetis Completes Sale of Medicated Feed Additive Portfolio to
Phibro Animal Health On Thursday, October 31, Zoetis completed the
divestiture of its medicated feed additive (MFA) product portfolio,
certain water-soluble products and related assets to Phibro Animal
Health. This transaction demonstrates Zoetis’ disciplined capital
allocation strategy to focus its investments on areas with the
highest growth potential that are aligned to its core capabilities,
including vaccine, biologic and genetic programs in livestock.
FINANCIAL GUIDANCE
Zoetis is raising its full year 2024 guidance for revenue and
adjusted EPS due to the company's strong first three quarters and
the underlying strength in companion animal.
- Revenue between $9.200 billion to $9.300 billion (operational
growth of 10% to 11%)
- Reported net income between $2.435 billion to $2.450
billion
- Adjusted net income between $2.670 billion to $2.695 billion
(operational growth of 13.5% to 14.5%)
- Reported diluted EPS of $5.33 to $5.39
- Adjusted diluted EPS between $5.86 to $5.92
This guidance reflects foreign exchange rates as of mid-October.
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 8:30 a.m. (ET)
today, during which company executives will review third 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
November 4, 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; expectations regarding competing products;
expectations regarding timing and financial impact of divestitures;
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; 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
Nine Months Ended
September 30,
September 30,
2024
2023
% Change
2024
2023
% Change
Revenue
$
2,388
$
2,151
11
$
6,939
$
6,331
10
Costs and expenses:
Cost of sales
701
638
10
2,012
1,833
10
Selling, general and administrative
expenses
565
525
8
1,693
1,586
7
Research and development expenses
167
152
10
500
440
14
Amortization of intangible assets
35
38
(8)
107
112
(4)
Restructuring charges and certain
acquisition and divestiture-related costs
5
16
(69)
51
45
13
Interest expense, net of capitalized
interest
57
59
(3)
174
180
(3)
Other (income)/deductions–net
(16
)
6
*
1
(151
)
*
Income before provision for taxes on
income
874
717
22
2,401
2,286
5
Provision for taxes on income
182
121
50
486
469
4
Net income before allocation to
noncontrolling interests
692
596
16
1,915
1,817
5
Less: Net income/(loss) attributable to
noncontrolling interests
10
—
*
10
(2
)
*
Net income attributable to Zoetis Inc.
$
682
$
596
14
$
1,905
$
1,819
5
Earnings per share—basic
$
1.51
$
1.29
17
$
4.18
$
3.94
6
Earnings per share—diluted
$
1.50
$
1.29
16
$
4.18
$
3.93
6
Weighted-average shares used to calculate
earnings per share
Basic
452.9
460.3
455.4
461.9
Diluted
453.5
461.4
456.1
463.0
(a) The condensed consolidated statements
of income present the three and nine months ended September 30,
2024 and 2023. Subsidiaries operating outside the United States are
included for the three and nine months ended August 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 September 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
$
701
$
(1
)
$
—
$
(1
)
$
699
Gross profit
1,687
1
—
1
1,689
Selling, general and administrative
expenses
565
(3
)
—
(2
)
560
Research and development expenses
167
(1
)
—
—
166
Amortization of intangible assets
35
(30
)
—
—
5
Restructuring charges and certain
acquisition and divestiture-related costs
5
—
(7
)
2
—
Income before provision for taxes on
income
874
35
7
1
917
Provision for taxes on income
182
8
2
(1
)
191
Net income attributable to Zoetis
682
27
5
2
716
Earnings per common share attributable to
Zoetis–diluted
1.50
0.06
0.01
0.01
1.58
Three Months Ended September 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
$
638
$
(1
)
$
—
$
(2
)
$
635
Gross profit
1,513
1
—
2
1,516
Selling, general and administrative
expenses
525
(4
)
—
—
521
Research and development expenses
152
(1
)
—
—
151
Amortization of intangible assets
38
(33
)
—
—
5
Restructuring charges and certain
acquisition and divestiture-related costs
16
—
(3
)
(13
)
—
Other (income)/deductions–net
6
—
—
(8
)
(2
)
Income before provision for taxes on
income
717
39
3
23
782
Provision for taxes on income
121
9
—
23
153
Net income attributable to Zoetis
596
30
3
—
629
Earnings per common share attributable to
Zoetis–diluted
1.29
0.06
0.01
—
1.36
(a) The condensed consolidated statements
of income present the three months ended September 30, 2024 and
2023. Subsidiaries operating outside the United States are included
for the three months ended August 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)
Nine Months Ended September 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
$
2,012
$
(3
)
$
—
$
(1
)
$
2,008
Gross profit
4,927
3
—
1
4,931
Selling, general and administrative
expenses
1,693
(9
)
—
(2
)
1,682
Research and development expenses
500
(2
)
—
—
498
Amortization of intangible assets
107
(93
)
—
—
14
Restructuring charges and certain
acquisition and divestiture-related costs
51
—
(12
)
(39
)
—
Other (income)/deductions–net
1
—
—
(35
)
(34
)
Income before provision for taxes on
income
2,401
107
12
77
2,597
Provision for taxes on income
486
24
3
13
526
Net income attributable to Zoetis
1,905
83
9
64
2,061
Earnings per common share attributable to
Zoetis–diluted
4.18
0.18
0.02
0.14
4.52
Nine Months Ended September 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
$
1,833
$
(10
)
$
—
$
(2
)
$
1,821
Gross profit
4,498
10
—
2
4,510
Selling, general and administrative
expenses
1,586
(18
)
—
—
1,568
Research and development expenses
440
(1
)
—
—
439
Amortization of intangible assets
112
(95
)
—
—
17
Restructuring charges and certain
acquisition and divestiture-related costs
45
—
(8
)
(37
)
—
Other (income)/deductions–net
(151
)
—
—
84
(67
)
Income before provision for taxes on
income
2,286
124
8
(45
)
2,373
Provision for taxes on income
469
26
1
(9
)
487
Net income attributable to Zoetis
1,819
98
7
(36
)
1,888
Earnings per common share attributable to
Zoetis–diluted
3.93
0.21
0.02
(0.08
)
4.08
(a) The condensed consolidated statements
of income present the nine months ended September 30, 2024 and
2023. Subsidiaries operating outside the United States are included
for the nine months ended August 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
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Acquisition-related costs(a)
$
—
$
3
$
1
$
7
Divestiture-related costs(b)
7
—
11
—
Restructuring charges(c)
—
—
—
1
Total acquisition and divestiture-related
costs—pre-tax
7
3
12
8
Income taxes(d)
2
—
3
1
Total acquisition and divestiture-related
costs—net of tax
$
5
$
3
$
9
$
7
(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
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Other restructuring charges and
cost-reduction/productivity initiatives(a)
$
(2
)
$
12
$
39
$
36
Certain asset impairment charges(b)
—
11
11
21
Loss on assets held for sale(c)
—
—
22
—
Net gain on sale of business(d)
—
—
—
(101
)
Other
3
—
5
(1
)
Total certain significant
items—pre-tax
1
23
77
(45
)
Income taxes(e)
(1
)
23
13
(9
)
Total certain significant items—net of
tax
$
2
$
—
$
64
$
(36
)
(a) For the nine months ended September
30, 2024, primarily consisted of employee termination costs related
to organizational structure refinements, partially offset by a
reversal of certain employee termination costs as a result of a
change in strategy from our 2015 operational efficiency initiative,
included in Restructuring charges and certain acquisition and
divestiture-related costs.
For the three and nine months ended
September 30, 2023, primarily consisted of employee termination and
exit costs related to organizational structure refinements and
other cost-reduction and productivity initiatives, included in
Restructuring charges and certain acquisition and
divestiture-related costs.
(b) For the nine months ended September
30, 2024, represents certain asset impairment charges related to
our aquaculture business, included in Other
(income)/deductions–net.
For the three and nine months ended
September 30, 2023, represents certain asset impairment charges
related to our precision animal health and diagnostics businesses,
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) Primarily 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 nine months ended September
30, 2023, also includes a benefit from the tax loss on the
divestiture of Performance Livestock Analytics, partially offset by
a 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
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
699
$
635
10
%
(4
)%
14
%
as a percent of revenue
29.3
%
29.5
%
NA
NA
NA
Adjusted SG&A expenses
560
521
7
%
(2
)%
9
%
Adjusted R&D expenses
166
151
10
%
—
%
10
%
Adjusted net income attributable to
Zoetis
716
629
14
%
(1
)%
15
%
Nine Months Ended
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
2,008
$
1,821
10
%
1
%
9
%
as a percent of revenue
28.9
%
28.8
%
NA
NA
NA
Adjusted SG&A expenses
1,682
1,568
7
%
(2
)%
9
%
Adjusted R&D expenses
498
439
13
%
(1
)%
14
%
Adjusted net income attributable to
Zoetis
2,061
1,888
9
%
(7
)%
16
%
(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 as of
November 4, 2024
Full Year 2024 as of August 6,
2024 (Prior Guidance)
Revenue
$9,200 to $9,300
$9,100 to $9,250
Operational growth(a)
10% to 11%
9% to 11%
Adjusted cost of sales as a percentage of
revenue(b)
Approximately 29.3%
Approximately 29.3%
Adjusted SG&A expenses(b)
$2,275 to $2,325
$2,225 to $2,290
Adjusted R&D expenses(b)
$665 to $675
$660 to $670
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $190
Approximately $200
Effective tax rate on adjusted
income(b)
20.0% to 20.5%
20.0% to 20.5%
Adjusted diluted EPS(b)
$5.86 to $5.92
$5.78 to $5.88
Adjusted net income(b)
$2,670 to $2,695
$2,640 to $2,690
Operational growth(a)(c)
13.5% to 14.5%
13.5% to 15.5%
Certain significant items and acquisition
and divestiture-related costs(d)
$126 - $136
$80 - $90
The guidance as of November 4, 2024
reflects foreign exchange rates as of mid-October 2024. The prior
guidance as of August 6, 2024 reflects foreign exchange rates as of
late July 2024.
Reconciliations of 2024 reported guidance
to 2024 adjusted guidance as of November 4, 2024 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
$2,290 to $2,340
~ $(3)
~ $(12)
$2,275 to $2,325
R&D expenses
$667 to $677
~ $(2)
$665 to $675
Interest expense and other
(income)/deductions-net
~ $235
~ $(45)
~ $190
Effective tax rate
20.0% to 20.5%
20.0% to 20.5%
Diluted EPS
$5.33 to $5.39
~ $0.29
~ $0.24
$5.86 to $5.92
Net income attributable to Zoetis
$2,435 to $2,450
$126 - $136
~ $109
$2,670 to $2,695
(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
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
1,609
$
1,414
14
%
(1
)%
15
%
Livestock
758
716
6
%
(5
)%
11
%
Contract Manufacturing & Human
Health
21
21
—
%
(2
)%
2
%
Total Revenue
$
2,388
$
2,151
11
%
(3
)%
14
%
U.S.:
Companion Animal
$
1,068
$
908
18
%
—
%
18
%
Livestock
278
266
5
%
—
%
5
%
Total U.S. Revenue
$
1,346
$
1,174
15
%
—
%
15
%
International:
Companion Animal
$
541
$
506
7
%
(4
)%
11
%
Livestock
480
450
7
%
(8
)%
15
%
Total International Revenue
$
1,021
$
956
7
%
(6
)%
13
%
Companion Animal:
Dogs and Cats
$
1,551
$
1,354
15
%
(1
)%
16
%
Horses
58
60
(3
)%
(2
)%
(1
)%
Total Companion Animal Revenue
$
1,609
$
1,414
14
%
(1
)%
15
%
Livestock:
Cattle
$
391
$
374
5
%
(4
)%
9
%
Poultry
139
127
9
%
(7
)%
16
%
Swine
131
129
2
%
(7
)%
9
%
Fish
70
57
23
%
(3
)%
26
%
Sheep and other
27
29
(7
)%
(1
)%
(6
)%
Total Livestock Revenue
$
758
$
716
6
%
(5
)%
11
%
(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)
Nine Months Ended
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
4,708
$
4,128
14
%
(2
)%
16
%
Livestock
2,172
2,145
1
%
(5
)%
6
%
Contract Manufacturing & Human
Health
59
58
2
%
—
%
2
%
Total Revenue
$
6,939
$
6,331
10
%
(2
)%
12
%
U.S.:
Companion Animal
$
3,046
$
2,588
18
%
—
%
18
%
Livestock
771
756
2
%
—
%
2
%
Total U.S. Revenue
$
3,817
$
3,344
14
%
—
%
14
%
International:
Companion Animal
$
1,662
$
1,540
8
%
(4
)%
12
%
Livestock
1,401
1,389
1
%
(7
)%
8
%
Total International Revenue
$
3,063
$
2,929
5
%
(5
)%
10
%
Companion Animal:
Dogs and Cats
$
4,516
$
3,931
15
%
(1
)%
16
%
Horses
192
197
(3
)%
(3
)%
—
%
Total Companion Animal Revenue
$
4,708
$
4,128
14
%
(2
)%
16
%
Livestock:
Cattle
$
1,132
$
1,102
3
%
(4
)%
7
%
Poultry
410
397
3
%
(7
)%
10
%
Swine
388
404
(4
)%
(6
)%
2
%
Fish
177
158
12
%
(2
)%
14
%
Sheep and other
65
84
(23
)%
(3
)%
(20
)%
Total Livestock Revenue
$
2,172
$
2,145
1
%
(5
)%
6
%
(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
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(a)
Total International
$
1,021
$
956
7
%
(6
)%
13
%
Australia
83
84
(1
)%
—
%
(1
)%
Brazil
101
101
—
%
(14
)%
14
%
Canada
66
63
5
%
(3
)%
8
%
Chile
31
31
—
%
(6
)%
6
%
China
61
69
(12
)%
—
%
(12
)%
France
36
34
6
%
2
%
4
%
Germany
57
50
14
%
1
%
13
%
Italy
31
26
19
%
(3
)%
22
%
Japan
33
34
(3
)%
(6
)%
3
%
Mexico
39
42
(7
)%
(8
)%
1
%
Spain
35
30
17
%
3
%
14
%
United Kingdom
80
78
3
%
1
%
2
%
Other developed markets
148
127
17
%
(1
)%
18
%
Other emerging markets
220
187
18
%
(19
)%
37
%
Nine Months Ended
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(a)
Total International
$
3,063
$
2,929
5
%
(5
)%
10
%
Australia
239
248
(4
)%
(2
)%
(2
)%
Brazil
301
276
9
%
(3
)%
12
%
Canada
202
183
10
%
(1
)%
11
%
Chile
93
109
(15
)%
(5
)%
(10
)%
China
205
255
(20
)%
(3
)%
(17
)%
France
111
102
9
%
—
%
9
%
Germany
166
148
12
%
—
%
12
%
Italy
95
87
9
%
—
%
9
%
Japan
109
120
(9
)%
(10
)%
1
%
Mexico
129
119
8
%
3
%
5
%
Spain
100
94
6
%
—
%
6
%
United Kingdom
230
209
10
%
2
%
8
%
Other developed markets
413
374
10
%
(2
)%
12
%
Other emerging markets
670
605
11
%
(23
)%
34
%
(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
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
1,346
$
1,174
15
%
—
%
15
%
Cost of Sales
258
228
13
%
—
%
13
%
Gross Profit
1,088
946
15
%
—
%
15
%
Gross Margin
80.8
%
80.6
%
Operating Expenses
199
202
(1
)%
—
%
(1
)%
Other (income)/deductions-net
—
—
*
*
*
U.S. Earnings
$
889
$
744
19
%
—
%
19
%
International:
Revenue
$
1,021
$
956
7
%
(6
)%
13
%
Cost of Sales
321
306
5
%
(8
)%
13
%
Gross Profit
700
650
8
%
(5
)%
13
%
Gross Margin
68.6
%
68.0
%
Operating Expenses
157
156
1
%
(6
)%
7
%
Other (income)/deductions-net
1
1
—
%
13
%
(13
)%
International Earnings
$
542
$
493
10
%
(5
)%
15
%
Total Reportable Segments
$
1,431
$
1,237
16
%
(2
)%
18
%
Other business activities(c)
(137
)
(124
)
10
%
Reconciling Items:
Corporate(d)
(306
)
(258
)
19
%
Purchase accounting adjustments(e)
(35
)
(39
)
(10
)%
Acquisition and divestiture-related
costs(f)
(7
)
(3
)
*
Certain significant items(g)
(1
)
(23
)
(96
)%
Other unallocated(h)
(71
)
(73
)
(3
)%
Total Earnings(i)
$
874
$
717
22
%
(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)
Nine Months Ended
September 30,
% Change
2024
2023
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
3,817
$
3,344
14
%
—
%
14
%
Cost of Sales
707
645
10
%
—
%
10
%
Gross Profit
3,110
2,699
15
%
—
%
15
%
Gross Margin
81.5
%
80.7
%
Operating Expenses
593
602
(1
)%
—
%
(1
)%
Other (income)/deductions-net
—
—
*
*
*
U.S. Earnings
$
2,517
$
2,097
20
%
—
%
20
%
International:
Revenue
$
3,063
$
2,929
5
%
(5
)%
10
%
Cost of Sales
976
912
7
%
(3
)%
10
%
Gross Profit
2,087
2,017
3
%
(8
)%
11
%
Gross Margin
68.1
%
68.9
%
Operating Expenses
491
473
4
%
(4
)%
8
%
Other (income)/deductions-net
1
1
—
%
(39
)%
39
%
International Earnings
$
1,595
$
1,543
3
%
(9
)%
12
%
Total Reportable Segments
$
4,112
$
3,640
13
%
(3
)%
16
%
Other business activities(c)
(411
)
(354
)
16
%
Reconciling Items:
Corporate(d)
(893
)
(722
)
24
%
Purchase accounting adjustments(e)
(107
)
(124
)
(14
)%
Acquisition and divestiture-related
costs(f)
(12
)
(8
)
50
%
Certain significant items(g)
(77
)
45
*
Other unallocated(h)
(211
)
(191
)
10
%
Total Earnings(i)
$
2,401
$
2,286
5
%
(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/20241101893520/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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