- Reports Revenue of $2.2 Billion, Growing 7%, and Net Income
of $596 Million, or $1.29 per Diluted Share, Increasing 13% and
14%, Respectively, on a Reported Basis for Third Quarter
2023
- Delivers 8% Operational Growth in Revenue and a 13%
Operational Growth in Adjusted Net Income for Third Quarter
2023
- Reports Adjusted Net Income of $629 Million, or Adjusted
Diluted EPS of $1.36, for Third Quarter 2023
- Updates Full Year 2023 Revenue Guidance Range of $8.475 -
$8.550 Billion Due to the Impact of Foreign Exchange Rates
- Narrows Full Year 2023 Guidance for Operational Revenue
Growth to a Range of 6.5% to 7.5% and Adjusted Net Income of 7.5%
to 8.5%
Zoetis Inc. (NYSE: ZTS) today reported its financial results for
the third quarter of 2023 and updated its guidance for full year
2023.
The company reported revenue of $2.2 billion for the third
quarter of 2023, an increase of 7% compared with the third quarter
of 2022. On an operational1 basis, revenue for the third quarter of
2023 increased 8% compared with the third quarter of 2022,
excluding the impact of foreign currency. Net income for the third
quarter of 2023 was $596 million, or $1.29 per diluted share, an
increase of 13% and 14%, respectively, on a reported basis.
Adjusted net income2 for the third quarter of 2023 was $629
million, or $1.36 per diluted share, an increase of 11% and 12%,
respectively, on a reported basis, and an increase of 13% and 15%,
respectively, on an operational basis. Adjusted net income for the
third quarter of 2023 excludes the net impact of $33 million for
purchase accounting adjustments, acquisition-related costs and
certain significant items.
EXECUTIVE COMMENTARY
“Today we reported strong third quarter results of 8%
operational growth in revenue and 13% operational growth in
adjusted net income, based on our diverse portfolio across markets
and species," said Kristin Peck, Chief Executive Officer of Zoetis.
“We showed balanced segment growth again this quarter, with 8%
revenue growth in the U.S. and 8% operational revenue growth
internationally. Our companion animal portfolio grew 11%
operationally, driven by our major franchises in dermatology, pet
parasiticides, osteoarthritis pain and diagnostics. Our livestock
portfolio grew 3% operationally, driven by sales of poultry and
cattle products.”
“We are on track to achieve our full-year operational guidance
and have narrowed it around the mid-point of the range. We remain
confident in the sustainable, underlying demand for animal health,
as customers continue to place a premium on the animal health
benefits our products deliver. We are executing well on drivers
where we have more control, like the successful launch of Librela®
in the U.S., while also mitigating the downside of macroeconomic
declines in China. Once again, our diverse portfolio across product
categories and geographies provides us with durable, reliable,
long-term growth.”
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 2023:
- Revenue in the U.S. segment was $1.174 billion, an
increase of 8% compared with the third quarter of 2022. Sales of
companion animal products increased 11%, driven by the company’s
key dermatology portfolio, including Apoquel® and Cytopoint®, as
well as the company's parasiticide product Simparica Trio®. Also
contributing to growth in the quarter was Solensia®, a monoclonal
antibody for osteoarthritis pain in cats, and the company's
diagnostics portfolio of Vetscan® products. Sales of livestock
products declined 2% in the quarter. Sales of cattle products
decreased primarily due to a difficult comparable period versus the
same quarter last year. Sales of swine products declined in the
quarter, as a result of lower disease prevalence and unfavorable
market conditions. Declines in cattle and swine were partially
offset by growth in the poultry portfolio due to vaccines and the
expanded use of Zoamix®, an alternative to antibiotic medicated
feed additives (MFAs).
- Revenue in the International segment was $956 million,
reflecting an increase of 8% on both a reported and operational
basis, compared with the third quarter of 2022. Sales of companion
animal products grew 12% on both a reported and operational basis,
despite declines in China. Growth in the quarter was driven by the
company’s monoclonal antibody products for osteoarthritis pain,
Librela for dogs and Solensia for cats, as well as its key
dermatology products, Apoquel and Cytopoint. Also contributing to
growth in the quarter were Simparica® and Simparica Trio. Sales of
livestock products grew 3% on a reported basis and 5%
operationally. Growth in cattle was driven largely by price,
improved supply and channel dynamics as well as strong market
conditions in Brazil. Sales of poultry products experienced price
increases across the international segment and MFAs grew in key
regions. Sales in swine grew primarily from demand generation
efforts in key and emerging markets.
INVESTMENTS IN GROWTH
Zoetis continues to grow key product franchises through
additional claim extensions in major markets. In the third quarter,
Simparica Trio (sarolaner/moxidectin/pyrantel), the
company’s triple combination oral parasiticide for dogs, received
approval in Australia and Canada for claims related to efficacy
against sarcoptic and demodectic manges. Simparica Trio also
received approval for two additional claims in Australia –
Otodectes cynotis and flea tapeworms. Additionally,
Simparica (sarolaner) received approval in Canada for claims
related to Otodectes cynotis mange.
Zoetis also continues to advance pain management and dermatology
innovation for companion animals across the globe. With the October
launch of Librela (bedinvetmab injection) and Apoquel
Chewable (oclacitinib chewable tablet) in the U.S., three of
the company’s major franchises – including Solensia
(frunevetmab injection) – are now available in most major markets
around the world, with ongoing geographic expansion continuing in
additional markets.
FINANCIAL GUIDANCE
Zoetis is updating its full year reported 2023 guidance due to
foreign exchange rates.
- Updates revenue to between $8.475 billion to $8.550 billion
(narrows operational growth to a range of 6.5% to 7.5%)
- Updates reported net income to between $2.380 billion to $2.415
billion
- Updates adjusted net income to between $2.490 billion to $2.515
billion (narrows operational growth to a range of 7.5% to
8.5%)
- Updates reported diluted EPS of $5.14 to $5.21 due to the
impact of foreign exchange rates
- Updates adjusted diluted EPS between $5.38 to $5.43 due to the
impact of foreign exchange rates
This guidance reflects foreign exchange rates as of late
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
2023 results, discuss financial guidance and respond to questions
from financial analysts. Investors and the public may access the
live webcast 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 2,
2023.
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 $8.1 billion in 2022 with approximately 13,800
employees. For more information, visit www.zoetis.com.
1 Operational growth (a non-GAAP financial measure) is defined
as growth 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-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; the
impact of the coronavirus (COVID-19) global pandemic and any
recovery therefrom on our business, supply chain, customers and
employees; 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; 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,
2023
2022
% Change
2023
2022
% Change
Revenue
$
2,151
$
2,002
7
$
6,331
$
6,040
5
Costs and expenses:
Cost of sales
638
607
5
1,833
1,801
2
Selling, general and administrative
expenses
525
501
5
1,586
1,495
6
Research and development expenses
152
134
13
440
391
13
Amortization of intangible assets
38
37
3
112
115
(3)
Restructuring charges and certain
acquisition-related costs
16
6
*
45
9
*
Interest expense, net of capitalized
interest
59
53
11
180
159
13
Other (income)/deductions–net
6
(3)
*
(151)
6
*
Income before provision for taxes on
income
717
667
7
2,286
2,064
11
Provision for taxes on income
121
139
(13)
469
413
14
Net income before allocation to
noncontrolling interests
596
528
13
1,817
1,651
10
Less: Net loss attributable to
noncontrolling interests
—
(1)
*
(2)
(2)
—
Net income attributable to Zoetis Inc.
$
596
$
529
13
$
1,819
$
1,653
10
Earnings per share—basic
$
1.29
$
1.13
14
$
3.94
$
3.52
12
Earnings per share—diluted
$
1.29
$
1.13
14
$
3.93
$
3.51
12
Weighted-average shares used to calculate
earnings per share
Basic
460.3
467.8
461.9
470.0
Diluted
461.4
469.1
463.0
471.6
(a) The condensed consolidated statements
of income present the three and nine months ended September 30,
2023 and 2022. Subsidiaries operating outside the United States are
included for the three and nine months ended August 31, 2023 and
2022.
* 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,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- 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-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
Three months ended September 30,
2022
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
607
$
(1)
$
—
$
(1)
$
605
Gross profit
1,395
1
—
1
1,397
Selling, general and administrative
expenses
501
(8)
—
—
493
Amortization of intangible assets
37
(31)
—
—
6
Restructuring charges and certain
acquisition-related costs
6
—
(1)
(5)
—
Income before provision for taxes on
income
667
40
1
6
714
Provision for taxes on income
139
9
—
1
149
Net income attributable to Zoetis
529
31
1
5
566
Earnings per common share attributable to
Zoetis–diluted
1.13
0.07
—
0.01
1.21
(a) The condensed consolidated statements
of income present the three months ended September 30, 2023 and
2022. Subsidiaries operating outside the United States are included
for the three months ended August 31, 2023 and 2022.
(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,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- 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-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
Nine Months Ended September 30,
2022
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
1,801
$
(3)
$
—
$
(8)
$
1,790
Gross profit
4,239
3
—
8
4,250
Selling, general and administrative
expenses
1,495
(22)
—
—
1,473
Amortization of intangible assets
115
(95)
—
—
20
Restructuring charges and certain
acquisition-related costs
9
—
(4)
(5)
—
Other (income)/deductions–net
6
—
—
3
9
Income before provision for taxes on
income
2,064
120
4
10
2,198
Provision for taxes on income
413
28
1
—
442
Net income attributable to Zoetis
1,653
92
3
10
1,758
Earnings per common share attributable to
Zoetis–diluted
3.51
0.20
—
0.02
3.73
(a) The condensed consolidated statements
of income present the nine months ended September 30, 2023 and
2022. Subsidiaries operating outside the United States are included
for the nine months ended August 31, 2023 and 2022.
(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-related costs include the
following:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Integration costs(a)
$
1
$
1
$
3
$
4
Transaction costs(b)
2
—
4
—
Restructuring charges(c)
—
—
1
—
Total acquisition-related
costs—pre-tax
3
1
8
4
Income taxes(d)
—
—
1
1
Total acquisition-related costs—net of
tax
$
3
$
1
$
7
$
3
(a) Integration costs represent external,
incremental costs directly related to integrating acquired
businesses and primarily include expenditures for consulting and
the integration of systems and processes. Included in Restructuring
charges and certain acquisition-related costs.
(b) Transaction costs represent external
costs directly related to acquiring businesses and primarily
includes expenditures for banking, legal, accounting and other
similar services. Included in Restructuring charges and certain
acquisition-related costs.
(c) Represents employee termination costs,
included in Restructuring charges and certain acquisition-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,
2023
2022
2023
2022
Other restructuring charges and
cost-reduction/productivity initiatives(a)
$
12
$
4
$
36
$
7
Certain asset impairment charges(b)
11
2
21
6
Net gain on sale of business(c)
—
—
(101)
—
Other
—
—
(1)
(3)
Total certain significant
items—pre-tax
23
6
(45)
10
Income taxes(d)
23
1
(9)
—
Total certain significant items—net of
tax
$
—
$
5
$
(36)
$
10
(a) 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-related costs.
For the three and nine months ended September 30, 2022,
primarily represents employee termination and exit costs associated
with cost-reduction and productivity initiatives in certain
international markets, included in Restructuring charges and
certain acquisition-related costs, as well as product transfer
costs, included in Cost of sales.
(b) For the three and nine months ended September 30, 2023,
represents certain asset impairment charges related to our
precision animal health and diagnostics businesses, primarily
included in Other (income)/deductions–net.
For the three and nine months ended September 30, 2022,
represents inventory and certain asset impairment charges primarily
related to the consolidation of manufacturing sites in China,
included in Cost of sales and Restructuring charges and certain
acquisition-related costs, respectively.
(c) Primarily represents a net gain on the sale of a majority
interest in our pet insurance business, included in Other
(income)/deductions–net.
(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. Income taxes in Certain significant items also includes:
- For the three and nine months ended September 30, 2023, 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.
- For the nine months ended September 30, 2022, changes in
valuation allowances.
ZOETIS INC. ADJUSTED SELECTED
COSTS, EXPENSES AND INCOME(a) (UNAUDITED) (millions of dollars)
Three Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
635
$
605
5 %
— %
5 %
as a percent of revenue
29.5 %
30.2 %
NA
NA
NA
Adjusted SG&A expenses
521
493
6 %
1 %
5 %
Adjusted R&D expenses
151
134
13 %
— %
13 %
Adjusted net income attributable to
Zoetis
629
566
11 %
(2) %
13 %
Nine Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
1,821
$
1,790
2 %
(6) %
8 %
as a percent of revenue
28.8 %
29.6 %
NA
NA
NA
Adjusted SG&A expenses
1,568
1,473
6 %
(2) %
8 %
Adjusted R&D expenses
439
391
12 %
(1) %
13 %
Adjusted net income attributable to
Zoetis
1,888
1,758
7 %
— %
7 %
(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-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 growth (a non-GAAP
financial measure) is defined as growth excluding the impact of
foreign exchange.
ZOETIS INC.
2023 GUIDANCE
Selected Line Items
(millions of dollars, except per share
amounts)
Full Year 2023
Revenue
$8,475 to $8,550
Operational growth(a)
6.5% to 7.5%
Adjusted cost of sales as a percentage of
revenue(b)
Approximately 29%
Adjusted SG&A expenses(b)
$2,095 to $2,115
Adjusted R&D expenses(b)
$600 to $610
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $160
Effective tax rate on adjusted
income(b)
20.0% to 20.5%
Adjusted diluted EPS(b)
$5.38 to $5.43
Adjusted net income(b)
$2,490 to $2,515
Operational growth(a)(c)
7.5% to 8.5%
Certain significant items and
acquisition-related costs(d)
$(15) - $(25)
The guidance reflects foreign
exchange rates as of late October 2023.
Reconciliations of 2023 reported
guidance to 2023 adjusted guidance follows:
(millions of dollars, except per
share amounts)
Reported
Certain significant items and
acquisition-related costs(d)
Purchase accounting
Adjusted(c)
Cost of sales as a percentage of
revenue
~ 29.2%
~ (0.2%)
~ 29.0%
SG&A expenses
$2,125 to $2,145
~ $(30)
$2,095 to $2,115
R&D expenses
$601 to $611
~ $(1)
$600 to $610
Interest expense and other
(income)/deductions-net
~ $70
~ $90
~ $160
Effective tax rate
20.0% to 20.5%
20.0% to 20.5%
Diluted EPS
$5.14 to $5.21
$(0.03) - $(0.05)
~ $0.27
$5.38 to $5.43
Net income attributable to Zoetis
$2,380 to $2,415
$(15) - $(25)
~ $125
$2,490 to $2,515
(a) Operational growth (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-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 growth 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-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 and other charges.
ZOETIS INC.
CONSOLIDATED REVENUE BY
SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
Three Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
1,414
$
1,271
11 %
— %
11 %
Livestock
716
708
1 %
(2) %
3 %
Contract Manufacturing & Human
Health
21
23
(9) %
3 %
(12) %
Total Revenue
$
2,151
$
2,002
7 %
(1) %
8 %
U.S.
Companion Animal
$
908
$
819
11 %
— %
11 %
Livestock
266
271
(2) %
— %
(2) %
Total U.S. Revenue
$
1,174
$
1,090
8 %
— %
8 %
International
Companion Animal
$
506
$
452
12 %
— %
12 %
Livestock
450
437
3 %
(2) %
5 %
Total International Revenue
$
956
$
889
8 %
— %
8 %
Companion Animal:
Dogs and Cats
$
1,354
$
1,213
12 %
1 %
11 %
Horses
60
58
3 %
1 %
2 %
Total Companion Animal Revenue
$
1,414
$
1,271
11 %
— %
11 %
Livestock:
Cattle
$
374
$
371
1 %
(1) %
2 %
Swine
129
129
— %
(1) %
1 %
Poultry
127
116
9 %
(2) %
11 %
Fish
57
60
(5) %
(3) %
(2) %
Sheep and other
29
32
(9) %
(3) %
(6) %
Total Livestock Revenue
$
716
$
708
1 %
(2) %
3 %
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K. (b) Operational
revenue growth (a non-GAAP financial measure) is defined as revenue
growth 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
2023
2022
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
4,128
$
3,900
6 %
(1) %
7 %
Livestock
2,145
2,081
3 %
(3) %
6 %
Contract Manufacturing & Human
Health
58
59
(2) %
— %
(2) %
Total Revenue
$
6,331
$
6,040
5 %
(2) %
7 %
U.S.
Companion Animal
$
2,588
$
2,488
4 %
— %
4 %
Livestock
756
713
6 %
— %
6 %
Total U.S. Revenue
$
3,344
$
3,201
4 %
— %
4 %
International
Companion Animal
$
1,540
$
1,412
9 %
(4) %
13 %
Livestock
1,389
1,368
2 %
(4) %
6 %
Total International Revenue
$
2,929
$
2,780
5 %
(5) %
10 %
Companion Animal:
Dogs and Cats
$
3,931
$
3,715
6 %
(1) %
7 %
Horses
197
185
6 %
(2) %
8 %
Total Companion Animal Revenue
$
4,128
$
3,900
6 %
(1) %
7 %
Livestock:
Cattle
$
1,102
$
1,063
4 %
(2) %
6 %
Swine
404
427
(5) %
(3) %
(2) %
Poultry
397
361
10 %
(3) %
13 %
Fish
158
151
5 %
(4) %
9 %
Sheep and other
84
79
6 %
(7) %
13 %
Total Livestock Revenue
$
2,145
$
2,081
3 %
(3) %
6 %
(a) For a description of each
segment, see Zoetis' most recent Annual Report on Form 10-K.
(b) Operational revenue growth (a
non-GAAP financial measure) is defined as revenue growth excluding
the impact of foreign exchange.
ZOETIS INC.
CONSOLIDATED REVENUE BY KEY
INTERNATIONAL MARKETS
(UNAUDITED)
(millions of dollars)
Three Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(a)
Total International
$ 956.2
$ 888.8
8 %
— %
8 %
Australia
84.2
79.5
6 %
(5) %
11 %
Brazil
100.0
70.6
42 %
8 %
34 %
Canada
63.9
56.5
13 %
(3) %
16 %
Chile
30.5
30.9
(1) %
2 %
(3) %
China
69.0
92.1
(25) %
(5) %
(20) %
France
34.3
27.8
23 %
5 %
18 %
Germany
50.5
43.3
17 %
7 %
10 %
Italy
25.8
23.6
9 %
7 %
2 %
Japan
34.1
37.0
(8) %
(5) %
(3) %
Mexico
42.2
32.6
29 %
20 %
9 %
Spain
30.5
28.6
7 %
7 %
— %
United Kingdom
77.6
59.7
30 %
6 %
24 %
Other developed markets
127.1
120.5
5 %
1 %
4 %
Other emerging markets
186.5
186.1
— %
(12) %
12 %
Nine Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(a)
Total International
$ 2,929.1
$ 2,779.5
5 %
(5) %
10 %
Australia
247.7
224.5
10 %
(7) %
17 %
Brazil
275.5
233.3
18 %
3 %
15 %
Canada
183.5
172.3
7 %
(5) %
12 %
Chile
108.8
106.3
2 %
1 %
1 %
China
255.3
291.0
(12) %
(6) %
(6) %
France
101.9
91.0
12 %
— %
12 %
Germany
148.3
132.3
12 %
— %
12 %
Italy
86.9
85.6
2 %
1 %
1 %
Japan
119.9
137.0
(12) %
(8) %
(4) %
Mexico
119.1
100.6
18 %
13 %
5 %
Spain
94.3
96.5
(2) %
— %
(2) %
United Kingdom
209.1
174.2
20 %
(4) %
24 %
Other developed markets
373.9
353.8
6 %
(3) %
9 %
Other emerging markets
604.9
581.1
4 %
(12) %
16 %
(a) Operational revenue growth (a non-GAAP
financial measure) is defined as revenue growth excluding the
impact of foreign exchange.
ZOETIS INC.
SEGMENT(a) EARNINGS
(UNAUDITED)
(millions of dollars)
Three Months Ended
September 30,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
1,174
$
1,090
8 %
— %
8 %
Cost of Sales
228
204
12 %
— %
12 %
Gross Profit
946
886
7 %
— %
7 %
Gross Margin
80.6 %
81.3 %
Operating Expenses
202
206
(2) %
— %
(2) %
Other (income)/deductions-net
—
1
*
*
*
U.S. Earnings
$
744
$
679
10 %
— %
10 %
International:
Revenue
$
956
$
889
8 %
— %
8 %
Cost of Sales
306
256
20 %
1 %
19 %
Gross Profit
650
633
3 %
(1) %
4 %
Gross Margin
68.0 %
71.2 %
Operating Expenses
156
150
4 %
— %
4 %
Other (income)/deductions-net
1
(3)
*
*
*
International Earnings
$
493
$
486
1 %
(3) %
4 %
Total Reportable Segments
$
1,237
$
1,165
6 %
(1) %
7 %
Other business activities(c)
(124)
(106)
17 %
Reconciling Items:
Corporate(d)
(258)
(245)
5 %
Purchase accounting adjustments(e)
(39)
(40)
(3) %
Acquisition-related costs(f)
(3)
(1)
*
Certain significant items(g)
(23)
(6)
*
Other unallocated(h)
(73)
(100)
(27) %
Total Earnings(i)
$
717
$
667
7 %
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational growth (a non-GAAP
financial measure) is defined as growth 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-related costs include
costs associated with acquiring and integrating newly acquired
businesses, such as transaction costs and integration costs.
(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 and the impact of
divestiture-related 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
2023
2022
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
3,344
$
3,201
4 %
— %
4 %
Cost of Sales
645
587
10 %
— %
10 %
Gross Profit
2,699
2,614
3 %
— %
3 %
Gross Margin
80.7 %
81.7 %
Operating Expenses
602
578
4 %
— %
4 %
Other (income)/deductions-net
—
(6)
*
*
*
U.S. Earnings
$
2,097
$
2,042
3 %
— %
3 %
International:
Revenue
$
2,929
$
2,780
5 %
(5) %
10 %
Cost of Sales
912
809
13 %
(7) %
20 %
Gross Profit
2,017
1,971
2 %
(4) %
6 %
Gross Margin
68.9 %
70.9 %
Operating Expenses
473
456
4 %
(5) %
9 %
Other (income)/deductions-net
1
(5)
*
*
*
International Earnings
$
1,543
$
1,520
2 %
(2) %
4 %
Total Reportable Segments
$
3,640
$
3,562
2 %
(1) %
3 %
Other business activities(c)
(354)
(315)
12 %
Reconciling Items:
Corporate(d)
(722)
(771)
(6) %
Purchase accounting adjustments(e)
(124)
(120)
3 %
Acquisition-related costs(f)
(8)
(4)
*
Certain significant items(g)
45
(10)
*
Other unallocated(h)
(191)
(278)
(31) %
Total Earnings(i)
$
2,286
$
2,064
11 %
(a) For a description of each segment, see
Zoetis' most recent Annual Report on Form 10-K.
(b) Operational growth (a non-GAAP
financial measure) is defined as growth 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-related costs include
costs associated with acquiring and integrating newly acquired
businesses, such as transaction costs and integration costs.
(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 and the impact of
divestiture-related 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/20231101216612/en/
Media: Bill Price 1-973-443-2742
(o) william.price@zoetis.com Laura Panza 1-973-975-5176 (c)
laura.panza@zoetis.com Investor: Steve
Frank 1-973-822-7141 (o) steve.frank@zoetis.com Nick Soonthornchai
1-973-443-2792 (o) nick.soonthornchai@zoetis.com
Grafico Azioni Zoetis (NYSE:ZTS)
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