- For Fourth Quarter 2023, Zoetis Reports Revenue of $2.2
Billion, Growing 8%, and Net Income of $525 Million, or $1.14 per
Diluted Share, Increasing 14% and 15%, Respectively, on a Reported
Basis
- Delivers 8% Operational Growth in Revenue and 6% Operational
Growth in Adjusted Net Income for Fourth Quarter 2023
- Reports Adjusted Net Income of $569 Million, or Adjusted
Diluted EPS of $1.24, for Fourth Quarter 2023
- For Full Year 2023, Zoetis Reports Revenue of $8.5 Billion,
Growing 6%, and Net Income of $2.3 Billion, or $5.07 per Diluted
Share, Increasing 11% and 13%, Respectively, on a Reported
Basis
- Delivers 7% Operational Growth in Revenue and Adjusted Net
Income for Full Year 2023
- Reports Adjusted Net Income of $2.5 Billion, or Adjusted
Diluted EPS of $5.32 for Full Year 2023
- Provides Full Year 2024 Revenue Guidance of $9.075 - $9.225
Billion, with Diluted EPS of $5.34 to $5.44 on a Reported Basis, or
$5.74 to $5.84 on an Adjusted Basis
- Expects to Deliver 7% to 9% Operational Growth in
Revenue
Zoetis Inc. (NYSE: ZTS) today reported its financial results for
the fourth quarter and full year 2023 as well as provided full year
guidance for 2024.
The company reported revenue of $2.2 billion for the fourth
quarter of 2023, which was an increase of 8% compared with the
fourth quarter of 2022, on both a reported and operational1 basis.
Net income for the fourth quarter of 2023 was $525 million, or
$1.14 per diluted share, an increase of 14% and 15%, respectively,
on a reported basis.
Adjusted net income2 for the fourth quarter of 2023 was $569
million, or $1.24 per diluted share, an increase of 6% and 8%,
respectively, on a reported and operational basis. Adjusted net
income for the fourth quarter of 2023 excludes the net impact of
$44 million for purchase accounting adjustments,
acquisition-related costs and certain significant items.
For full year 2023, the company reported revenue of $8.5
billion, an increase of 6% compared with full year 2022. On an
operational basis, revenue for full year 2023 increased 7%,
excluding the impact of foreign currency. Net income for full year
2023 was $2.3 billion, or $5.07 per diluted share, an increase of
11% and 13%, respectively, on a reported basis.
Adjusted net income for full year 2023 was $2.5 billion, or
$5.32 per diluted share, an increase of 7% and 9%, respectively, on
a reported and operational basis. Adjusted net income for full year
2023 excludes the net impact of $113 million for purchase
accounting adjustments, acquisition-related costs and certain
significant items.
EXECUTIVE COMMENTARY
“Zoetis delivered another strong performance in 2023 thanks to
our diverse portfolio across markets and species and our dedicated
colleagues,” said Kristin Peck, Chief Executive Officer of Zoetis.
“We grew revenue 7% operationally, driven by our innovative
companion animal franchises across pain, dermatology and
parasiticides. We also grew our adjusted net income 7%
operationally, while continuing to support investments in R&D,
supply chain, and commercial excellence capabilities that will
drive our next phase of growth.”
“We are excited by the momentum of Librela in the U.S. and
around the world as we work to build our next billion-dollar
franchise. In addition to OA pain, we are well-positioned for
growth in our other key franchises, including dermatology,
parasiticides and diagnostics, and will continue to invest in
solutions that will shape and expand the future of animal health.
We are committed to continuing our track record of innovation and
growing faster than the market, even during times of global
uncertainty, and are guiding to full-year operational growth of 7%
to 9% in revenue in 2024,” said Peck.
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its commercial operations across
two regional 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 fourth quarter of 2023:
- Revenue in the U.S. segment was $1.2 billion, an
increase of 9% compared with the fourth quarter of 2022. Sales of
companion animal products increased 10%, driven by the company’s
monoclonal antibody (mAb) products for osteoarthritis (OA) pain,
Librela™ for dogs and Solensia® for cats, as well as the company's
flea, tick and heartworm combination product for dogs, Simparica
Trio®. Also contributing to growth in the quarter was the company's
dermatology portfolio, including Apoquel® and Cytopoint®. Sales of
livestock products increased 4% in the quarter. Growth in the
poultry product portfolio was the result of favorable rotations
back to certain medicated feed additives (MFAs) and the expanded
use of Zoamix®. Sales of both swine and cattle products increased
in the quarter, primarily as a result of increased supply of
vaccines that were limited in the same quarter the year prior.
- Revenue in the International segment was $982 million,
reflecting a 9% increase on a reported basis and an increase of 8%
operationally compared with the fourth quarter of 2022. Sales of
companion animal products grew 13% on a reported basis and 10%
operationally. Growth in the quarter was driven by the company’s
monoclonal antibody products for OA pain, Librela for dogs and
Solensia for cats, as well as key dermatology products, Apoquel and
Cytopoint. Also contributing to growth in the quarter were
Simparica® and Simparica Trio. Sales of livestock products
increased 5% on a reported basis and 7% operationally. Growth in
both the company’s cattle and poultry product portfolios were
driven largely by price increases across the broader international
segment. The fish product portfolio grew as a result of a new
vaccine launch in Norway. Sales in the sheep product portfolio
declined due to unfavorable market conditions in Australia and New
Zealand, while sales in the swine product portfolio decreased in
China primarily due to unfavorable market conditions and a
difficult comparative period versus the same quarter of the prior
year.
INVESTMENTS IN GROWTH
Zoetis continues to advance innovation and care for animals
across the globe. Since its last quarterly earnings announcement,
Solensia (frunevetmab injection), the first injectable
monoclonal antibody for the alleviation of pain associated with
osteoarthritis in cats, received approval in Brazil. Additionally,
Simparica Trio (sarolaner/moxidectin/pyrantel), the
company’s triple combination oral parasiticide for dogs, was
approved in China. The company expanded its Vetscan Imagyst™
diagnostics platform in the U.S. to include new applications for
artificial intelligence (AI) urine sediment analysis for dogs and
cats.
On the livestock side of the business, Zoetis received approval
in Mexico for Poulvac® Procerta® HVT-IBD-ND, a part of the
company’s recombinant vector vaccine portfolio for poultry, which
provides early, robust protection against Marek’s, infectious
bursal and Newcastle disease viruses with one dose. Poulvac
Procerta HVT-IBD, which provides protection against Marek’s and
infectious bursal viruses, was approved in the EU.
Zoetis also continues to grow key product franchises through
additional claim extensions in major markets. In the fourth
quarter, Simparica Trio received approval in Japan for
claims related to efficacy against sarcoptic and demodectic manges.
Revolution® Plus (selamectin/sarolaner), the company’s
topical combination product that treats ticks, fleas, ear mites,
lice and gastrointestinal worms and prevents heartworm disease in
cats, received approval in the U.S. for claims related to the
treatment and control of lone star tick infestations, making it the
only parasiticide for cats on the market to defend against four
types of ticks.
FINANCIAL GUIDANCE
Zoetis is providing full year 2024 guidance, which includes:
- Revenue between $9.075 billion to $9.225 billion (operational
growth of 7% to 9%)
- Reported net income between $2.468 billion to $2.513
billion
- Adjusted net income between $2.650 billion to $2.700 billion
(operational growth of 9% to 11%)
- Reported diluted EPS between $5.34 to $5.44
- Adjusted diluted EPS between $5.74 to $5.84
This guidance reflects foreign exchange rates as of late January
2024. 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 fourth quarter
and full year 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 February 13,
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 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;
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 December
31,
% Change
Twelve Months Ended December
31,
% Change
2023
2022
2023
2022
Revenue
$
2,213
$
2,040
8
$
8,544
$
8,080
6
Costs and expenses:
Cost of sales
728
653
11
2,561
2,454
4
Selling, general and administrative
expenses
565
514
10
2,151
2,009
7
Research and development expenses
174
148
18
614
539
14
Amortization of intangible assets
37
35
6
149
150
(1
)
Restructuring charges and certain
acquisition-related costs
8
2
*
53
11
*
Interest expense
59
62
(5
)
239
221
8
Other (income)/deductions–net
(8
)
34
*
(159
)
40
*
Income before provision for taxes on
income
650
592
10
2,936
2,656
11
Provision for taxes on income
127
132
(4
)
596
545
9
Net income before allocation to
noncontrolling interests
523
460
14
2,340
2,111
11
Less: Net loss attributable to
noncontrolling interests
(2
)
(1
)
*
(4
)
(3
)
33
Net income attributable to Zoetis
$
525
$
461
14
$
2,344
$
2,114
11
Earnings per share—basic
$
1.14
$
0.99
15
$
5.08
$
4.51
13
Earnings per share—diluted
$
1.14
$
0.99
15
$
5.07
$
4.49
13
Weighted-average shares used to calculate
earnings per share
Basic
459.0
465.6
461.2
468.9
Diluted
460.1
466.8
462.3
470.4
(a) The Condensed Consolidated Statements
of Income present the three and twelve months ended December 31,
2023 and 2022. Subsidiaries operating outside the U.S. are included
for the three and twelve months ended November 30, 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 December 31,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
728
$
—
$
—
$
(1
)
$
727
Gross profit
1,485
—
—
1
1,486
Selling, general and administrative
expenses
565
(3
)
—
—
562
Research and development expenses
174
—
—
—
174
Amortization of intangible assets
37
(32
)
—
—
5
Restructuring charges and certain
acquisition-related costs
8
—
(1
)
(7
)
—
Other (income)/deductions–net
(8
)
—
—
(4
)
(12
)
Income before provision for taxes on
income
650
35
1
12
698
Provision for taxes on income
127
6
1
(3
)
131
Net income attributable to Zoetis
525
29
—
15
569
Earnings per common share attributable to
Zoetis–diluted
1.14
0.07
—
0.03
1.24
Three Months Ended December 31,
2022
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
653
$
(3
)
$
—
$
—
$
650
Gross profit
1,387
3
—
—
1,390
Selling, general and administrative
expenses
514
(7
)
—
—
507
Research and development expenses
148
(1
)
—
—
147
Amortization of intangible assets
35
(29
)
—
—
6
Restructuring charges and certain
acquisition-related costs
2
—
(1
)
(1
)
—
Other (income)/deductions–net
34
—
—
(45
)
(11
)
Income before provision for taxes on
income
592
40
1
46
679
Provision for taxes on income
132
12
—
(3
)
141
Net income attributable to Zoetis
461
28
1
49
539
Earnings per common share attributable to
Zoetis–diluted
0.99
0.06
—
0.10
1.15
(a) The Condensed Consolidated Statements
of Income present the three months ended December 31, 2023 and
2022. Subsidiaries operating outside the U.S. are included for the
three months ended November 30, 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)
Twelve Months Ended December 31,
2023
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
2,561
$
(10
)
$
—
$
(3
)
$
2,548
Gross profit
5,983
10
—
3
5,996
Selling, general and administrative
expenses
2,151
(21
)
—
—
2,130
Research and development expenses
614
(1
)
—
—
613
Amortization of intangible assets
149
(127
)
—
—
22
Restructuring charges and certain
acquisition-related costs
53
—
(9
)
(44
)
—
Other (income)/deductions–net
(159
)
—
—
80
(79
)
Income before provision for taxes on
income
2,936
159
9
(33
)
3,071
Provision for taxes on income
596
32
2
(12
)
618
Net income attributable to Zoetis
2,344
127
7
(21
)
2,457
Earnings per common share attributable to
Zoetis–diluted
5.07
0.28
0.02
(0.05
)
5.32
Twelve Months Ended December 31,
2022
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
2,454
$
(6
)
$
—
$
(8
)
$
2,440
Gross profit
5,626
6
—
8
5,640
Selling, general and administrative
expenses
2,009
(29
)
—
—
1,980
Research and development expenses
539
(1
)
—
—
538
Amortization of intangible assets
150
(124
)
—
—
26
Restructuring charges and certain
acquisition-related costs
11
—
(5
)
(6
)
—
Other (income)/deductions–net
40
—
—
(42
)
(2
)
Income before provision for taxes on
income
2,656
160
5
56
2,877
Provision for taxes on income
545
40
1
(3
)
583
Net income attributable to Zoetis
2,114
120
4
59
2,297
Earnings per common share attributable to
Zoetis–diluted
4.49
0.26
0.01
0.12
4.88
(a) The Condensed Consolidated Statements
of Income present the twelve months ended December 31, 2023 and
2022. Subsidiaries operating outside the U.S. are included for the
twelve months ended November 30, 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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Transaction costs(a)
$
—
$
1
$
4
$
1
Integration costs(b)
—
—
3
4
Restructuring charges(c)
1
—
2
—
Total acquisition-related
costs—pre-tax
1
1
9
5
Income taxes(d)
1
—
2
1
Total acquisition-related costs—net of
tax
$
—
$
1
$
7
$
4
(a) 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.
(b) 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.
(c) Restructuring charges represent
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 December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Other restructuring charges and
cost-reduction/productivity initiatives(a)
$
8
$
1
$
44
$
8
Certain asset impairment charges(b)
3
41
24
47
Net gain on sale of businesses(c)
—
—
(101
)
—
Other
1
4
—
1
Total certain significant
items—pre-tax
12
46
(33
)
56
Income taxes(d)
(3
)
(3
)
(12
)
(3
)
Total certain significant items—net of
tax
$
15
$
49
$
(21
)
$
59
(a) For the three and twelve months ended
December 31, 2023, primarily represents employee termination and
exit costs related to organizational structure refinements and
other cost-reduction and productivity initiatives, primarily
included in Restructuring charges and certain acquisition-related
costs.
For the twelve months ended December 31,
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 twelve months ended December
31, 2023, primarily 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 twelve months ended
December 31, 2022, primarily represents asset impairment charges
related to customer relationships, developed technology rights and
property, plant and equipment in our diagnostics, poultry, cattle
and swine businesses, included in Other
(income)/deductions-net.
(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 twelve months ended December 31, 2023,
includes 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 twelve months ended
December 31, 2023, also includes a benefit from the tax loss on the
divestiture of Performance Livestock Analytics.
- For the three and twelve months ended December 31, 2022,
includes a tax charge related to changes in uncertain tax
positions. For the twelve months ended December 31, 2022, also
includes a tax charge related to changes in valuation allowances
related to impairment of certain assets.
ZOETIS INC.
ADJUSTED SELECTED COSTS AND
EXPENSES(a)
(UNAUDITED)
(millions of dollars)
Three Months Ended December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
727
$
650
12
%
3
%
9
%
As a percent of revenue
32.9
%
31.9
%
NA
NA
NA
Adjusted SG&A expenses
562
507
11
%
1
%
10
%
Adjusted R&D expenses
174
147
18
%
1
%
17
%
Adjusted net income attributable to
Zoetis
569
539
6
%
—
%
6
%
Twelve Months Ended December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
2,548
$
2,440
4
%
(4
)%
8
%
As a percent of revenue
29.8
%
30.2
%
NA
NA
NA
Adjusted SG&A expenses
2,130
1,980
8
%
(1
)%
9
%
Adjusted R&D expenses
613
538
14
%
—
%
14
%
Adjusted net income attributable to
Zoetis
2,457
2,297
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.
2024 GUIDANCE
Selected Line Items
(millions of dollars, except per share
amounts)
Full Year 2024
Revenue
$9,075 to $9,225
Operational growth(a)
7% to 9%
Adjusted cost of sales as a percentage of
revenue(b)
Approximately 29.5%
Adjusted SG&A expenses(b)
$2,170 to $2,220
Adjusted R&D expenses(b)
$665 to $675
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $210
Effective tax rate on adjusted
income(b)
20.0% to 21.0%
Adjusted diluted EPS(b)
$5.74 to $5.84
Adjusted net income(b)
$2,650 to $2,700
Operational growth(a)(c)
9% to 11%
Certain significant items and
acquisition-related costs(d)
$70 - $75
The guidance reflects foreign exchange
rates as of late January 2024.
Reconciliations of 2024 reported guidance
to 2024 adjusted guidance follows:
(millions of dollars, except per share
amounts)
Reported
Certain significant items and
acquisition-related costs(d)
Purchase accounting
Adjusted(b)
Cost of sales as a percentage of
revenue
~ 29.6%
~ (0.1%)
~ 29.5%
SG&A expenses
$2,191 to $2,241
~ $(21)
$2,170 to $2,220
R&D expenses
$666 to $676
~ $(1)
$665 to $675
Interest expense and other
(income)/deductions
~ $240
~ $30
~ $270
Effective tax rate
20.0% to 21.0%
20.0% to 21.0%
Diluted EPS
$5.34 to $5.44
~ $0.16
~ $0.24
$5.74 to $5.84
Net income attributable to Zoetis
$2,468 to $2,513
$70 - $75
~ $112
$2,650 to $2,700
(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 December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
1,448
$
1,303
1
%
1
%
10
%
Livestock
745
710
5
%
(1
)%
6
%
Contract Manufacturing & Human
Health
20
27
(26
)%
1
%
(27
)%
Total Revenue
$
2,213
$
2,040
8
%
—
%
8
%
U.S.
Companion Animal
$
941
$
853
10
%
—
%
10
%
Livestock
270
259
4
%
—
%
4
%
Total U.S. Revenue
$
1,211
$
1,112
9
%
—
%
9
%
International
Companion Animal
$
507
$
450
13
%
3
%
10
%
Livestock
475
451
5
%
(2
)%
7
%
Total International Revenue
$
982
$
901
9
%
1
%
8
%
Companion Animal:
Dogs and Cats
$
1,360
$
1,224
11
%
1
%
10
%
Horses
88
79
11
%
—
%
11
%
Total Companion Animal Revenue
$
1,448
$
1,303
11
%
1
%
10
%
Livestock:
Cattle
$
401
$
377
6
%
(1
)%
7
%
Swine
139
138
1
%
1
%
—
%
Poultry
127
115
10
%
(3
)%
13
%
Fish
62
61
2
%
(3
)%
5
%
Sheep and other
16
19
(16
)%
1
%
(17
)%
Total Livestock Revenue
$
745
$
710
5
%
(1
)%
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
SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
Twelve Months Ended December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
5,576
$
5,203
7
%
(1
)%
8
%
Livestock
2,890
2,791
4
%
(2
)%
6
%
Contract Manufacturing & Human
Health
78
86
(9
)%
1
%
(10
)%
Total Revenue
$
8,544
$
8,080
6
%
(1
)%
7
%
U.S.
Companion Animal
$
3,529
$
3,341
6
%
—
%
6
%
Livestock
1,026
972
6
%
—
%
6
%
Total U.S. Revenue
$
4,555
$
4,313
6
%
—
%
6
%
International
Companion Animal
$
2,047
$
1,862
10
%
(2
)%
12
%
Livestock
1,864
1,819
2
%
(5
)%
7
%
Total International Revenue
$
3,911
$
3,681
6
%
(3
)%
9
%
Companion Animal:
Dogs and Cats
$
5,291
$
4,939
7
%
(1
)%
8
%
Horses
285
264
8
%
(1
)%
9
%
Total Companion Animal Revenue
$
5,576
$
5,203
7
%
(1
)%
8
%
Livestock:
Cattle
$
1,503
$
1,440
4
%
(3
)%
7
%
Swine
543
565
(4
)%
(2
)%
(2
)%
Poultry
524
476
10
%
(3
)%
13
%
Fish
220
212
4
%
(4
)%
8
%
Sheep and other
100
98
2
%
(6
)%
8
%
Total Livestock Revenue
$
2,890
$
2,791
4
%
(2
)%
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 December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(a)
Total International
$
982.1
$
901.3
9
%
1
%
8
%
Australia
75.0
64.2
17
%
(2
)%
19
%
Brazil
117.2
96.2
22
%
7
%
15
%
Canada
71.1
65.2
9
%
(2
)%
11
%
Chile
31.4
34.8
(10
)%
1
%
(11
)%
China
64.7
91.4
(29
)%
(1
)%
(28
)%
France
40.5
35.1
15
%
8
%
7
%
Germany
54.1
44.0
23
%
8
%
15
%
Italy
33.9
25.6
32
%
9
%
23
%
Japan
38.0
36.1
5
%
(4
)%
9
%
Mexico
43.3
35.6
22
%
14
%
8
%
Spain
27.3
21.3
28
%
9
%
19
%
United Kingdom
67.9
60.3
13
%
9
%
4
%
Other Developed
138.3
114.6
21
%
4
%
17
%
Other Emerging
179.4
176.9
1
%
(13
)%
14
%
Twelve Months Ended December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(a)
Total International
$
3,911.2
$
3,680.8
6
%
(3
)%
9
%
Australia
322.7
288.7
12
%
(5
)%
17
%
Brazil
392.7
329.5
19
%
4
%
15
%
Canada
254.6
237.5
7
%
(5
)%
12
%
Chile
140.2
141.1
(1
)%
1
%
(2
)%
China
320.0
382.4
(16
)%
(5
)%
(11
)%
France
142.4
126.1
13
%
2
%
11
%
Germany
202.4
176.3
15
%
3
%
12
%
Italy
120.8
111.2
9
%
3
%
6
%
Japan
157.9
173.1
(9
)%
(8
)%
(1
)%
Mexico
162.4
136.2
19
%
13
%
6
%
Spain
121.6
117.8
3
%
1
%
2
%
United Kingdom
277.0
234.5
18
%
(1
)%
19
%
Other Developed
512.2
468.4
9
%
(2
)%
11
%
Other Emerging
784.3
758.0
3
%
(13
)%
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 December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
1,211
$
1,112
9
%
—
%
9
%
Cost of sales
255
216
18
%
—
%
18
%
Gross profit
956
896
7
%
—
%
7
%
Gross margin
78.9
%
80.6
%
Operating expenses
184
187
(2
)%
—
%
(2
)%
Other (income)/deductions-net
6
(12
)
*
*
*
U.S. Earnings
$
766
$
721
6
%
—
%
6
%
International:
Revenue
$
982
$
901
9
%
1
%
8
%
Cost of sales
322
274
18
%
1
%
17
%
Gross profit
660
627
5
%
—
%
5
%
Gross margin
67.2
%
69.6
%
Operating expenses
165
155
6
%
1
%
5
%
Other (income)/deductions-net
1
2
*
*
*
International Earnings
$
494
$
470
5
%
—
%
5
%
Total Reportable Segments
$
1,260
$
1,191
6
%
—
%
6
%
Other business activities(c)
(142
)
(109
)
30
%
Reconciling Items:
Corporate(d)
(320
)
(302
)
6
%
Purchase accounting adjustments(e)
(35
)
(40
)
(13
)%
Acquisition-related costs(f)
(1
)
(1
)
—
%
Certain significant items(g)
(12
)
(46
)
(74
)%
Other unallocated(h)
(100
)
(101
)
(1
)%
Total Earnings(i)
$
650
$
592
10
%
(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 reflect 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)
Twelve Months Ended December
31,
% Change
2023
2022
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
4,555
$
4,313
6
%
—
%
6
%
Cost of sales
900
803
12
%
—
%
12
%
Gross profit
3,655
3,510
4
%
—
%
4
%
Gross margin
80.2
%
81.4
%
Operating expenses
786
765
3
%
—
%
3
%
Other (income)/deductions-net
6
(18
)
*
*
*
U.S. Earnings
$
2,863
$
2,763
4
%
—
%
4
%
International:
Revenue
$
3,911
$
3,681
6
%
(3
)%
9
%
Cost of sales
1,234
1,083
14
%
(5
)%
19
%
Gross profit
2,677
2,598
3
%
(2
)%
5
%
Gross margin
68.4
%
70.6
%
Operating expenses
638
611
4
%
(4
)%
8
%
Other (income)/deductions-net
2
(3
)
*
*
*
International Earnings
$
2,037
$
1,990
2
%
(2
)%
4
%
Total Reportable Segments
$
4,900
$
4,753
3
%
(1
)%
4
%
Other business activities(c)
(496
)
(424
)
17
%
Reconciling Items:
Corporate(d)
(1,042
)
(1,073
)
(3
)%
Purchase accounting adjustments(e)
(159
)
(160
)
(1
)%
Acquisition-related costs(f)
(9
)
(5
)
80
%
Certain significant items(g)
33
(56
)
*
Other unallocated(h)
(291
)
(379
)
(23
)%
Total Earnings(i)
$
2,936
$
2,656
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 reflect 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/20240212731050/en/
Media: Jenielle Alonso
1-973-945-4333 (o) jenielle.alonso@zoetis.com
Laura Panza 1-973-975-5176 (o) 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
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