- Reports Revenue of $1.5 Billion, Growing 5%, and Net Income
of $423 Million, or $0.88 per Diluted Share, Increasing 36% and
35%, Respectively, on a Reported Basis for First Quarter
2020
- Reports Adjusted Net Income of $455 Million, or Adjusted
Diluted EPS of $0.95, for First Quarter 2020
- Delivers 7% Operational Growth in Revenue and 10%
Operational Growth in Adjusted Net Income for First Quarter
2020
- COVID-19 Pandemic Has Minimal Impact on First Quarter
Results; Estimated Full-Year Impact Reflected in Lower 2020
Guidance
- Updates Full Year 2020 Revenue Guidance to $5.950 - $6.250
Billion and Diluted EPS of $2.80 - $3.07 on a Reported Basis, or
$3.17 - $3.42 on an Adjusted Basis
Zoetis Inc. (NYSE: ZTS) today
reported its financial results for the first quarter of 2020 and
lowered its guidance for full year 2020 to reflect the company’s
current view of the estimated full-year impact of the COVID-19
outbreak, recessionary conditions in the global economy, and
foreign currency headwinds.
The company reported revenue of $1.5 billion for the first
quarter of 2020, an increase of 5% compared with the first quarter
of 2019. Net income for the first quarter of 2020 was $423 million,
or $0.88 per diluted share, an increase of 36% and 35%,
respectively, on a reported basis.
Adjusted net income1 for the first quarter of 2020 was $455
million, or $0.95 per diluted share, an increase of 7%, on a
reported basis. Adjusted net income for the first quarter of 2020
excludes the net impact of $32 million for purchase accounting
adjustments, acquisition-related costs and certain significant
items.
On an operational2 basis, revenue for the first quarter of 2020
increased 7%, excluding the impact of foreign currency. Adjusted
net income for the first quarter of 2020 increased 10%
operationally, excluding the impact of foreign currency.
EXECUTIVE COMMENTARY
“At Zoetis, we are privileged to play an essential role in
sustaining and protecting animal and human life during the COVID-19
outbreak, as our products are necessary to keep pets healthy and
help support a safe and productive food supply,” said Kristin Peck,
Chief Executive Officer of Zoetis. “In the first quarter, the
pandemic had a limited impact on our results given our February
quarter end for the International segment and the timing of shelter
in place orders across the U.S. We generated 7% operational growth
in revenue and 10% operational growth in adjusted net income thanks
to the strength of our diverse portfolio and global scope of our
business.”
“As we look ahead, our business continuity plans are working
well, and we continue to show great agility and responsiveness to
this crisis. I am extremely proud of our colleagues, who have been
maintaining our supply of critical product inventories, keeping our
research on track, and serving our customers and communities in
these extraordinary times,” said Peck. “While we saw a limited
financial impact on our first quarter results, we are realistic
about the challenges and uncertainties that the COVID-19 pandemic
presents to our society, global economy and Zoetis’ business in the
coming months. We expect a more significant impact from COVID-19
for the full year as the lockdowns and recession have a continued
impact on our business. Because of this, we are lowering our
guidance to reflect our current outlook for the full year.”
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 first quarter of 2020:
- Revenue in the U.S. segment was $786 million, an
increase of 9% compared with the first quarter of 2019. Sales of
companion animal products increased 12% driven primarily by growth
in the company’s key dermatology portfolio across both the Apoquel®
and Cytopoint® brands, as well as the Simparica® franchise,
including some initial stocking of Simparica Trio, the new triple
combination parasiticide. Additionally, companion animal sales
benefited from the recent acquisitions of Platinum Performance, as
well as a number of regional diagnostic reference labs. Partially
offsetting this growth was a decline in the company’s point-of-care
diagnostic business. Sales of livestock products increased 5% in
the quarter. Both poultry and swine portfolios experienced double
digit growth in the quarter. Growth in poultry was driven primarily
by increased sales of Zoamix®, an alternative to antibiotics in
medicated feed additives, while growth in swine was the result of
increased sales of anti-infectives and vaccines. A decline in
cattle products was the result of continued unfavorable market
conditions in beef and dairy.
- Revenue in the International segment was $728 million,
an increase of 1% on a reported basis and an increase of 4%
operationally compared with the first quarter of 2019. Sales of
companion animal products grew 5% on a reported basis and 8% on an
operational basis. Growth resulted primarily from increased sales
across the Simparica franchise, including the launch of Simparica
Trio in certain markets in the European Union (EU). Also
contributing to growth in the quarter was the company’s key
dermatology portfolio and new diagnostic accounts in the U.K. and
other key markets. Sales of companion animal products in China also
continued to grow rapidly driven by strong underlying dynamics in
the market and despite the impact of COVID-19. Sales of livestock
products declined 1% on a reported basis and grew 2% operationally.
Sales of swine products grew as a result of expanding herd
production and increased biosecurity measures in the wake of
African Swine Fever in China. Alpha Flux®, a recently launched
parasiticide that controls sea lice in salmon, was the primary
driver of growth in fish. Growth in the poultry portfolio was the
result of price increases taken in Argentina, Mexico and Brazil.
Sales of cattle products were flat this quarter.
INVESTMENTS IN GROWTH
Zoetis diversifies and grows its business through the
introduction of new products, lifecycle innovations, business
development initiatives, and entries into new markets and
technologies. The company is increasingly focused on developing
integrated solutions for pet owners, veterinarians and farmers that
span the continuum of animal care - helping to predict, prevent,
detect and treat diseases.
Since our last quarterly earnings announcement, Zoetis received
approval in the U.S. and Australia for Simparica Trio™
(sarolaner/moxidectin/pyrantel), a once monthly, chewable tablet
for dogs that delivers all-in-one protection from heartworm
disease, ticks and fleas, roundworms and hookworms. This
combination parasiticide, which became available to veterinarians
in the U.S. in April, had also been previously approved and
launched in the EU and Canada. Regulatory reviews are underway in
Brazil, China, Japan, Mexico and other markets, with further
submissions expected globally.
In livestock, the company enhanced its Improvest® product
for swine in the U.S. with the addition of a new claim for estrus
suppression in female pigs. Improvest, a product with proven
environmental sustainability benefits, is best known for providing
a safe and effective alternative to physical castration in male
pigs to manage unpleasant odor or taste in cooked pork.
In addition to new product approvals and lifecycle innovations,
Zoetis continues to support future growth through business
development activities. In April, Zoetis acquired Performance
Livestock Analytics, a technology company that simplifies data
and analytics for the livestock industry. This acquisition will
help Zoetis to accelerate progress in precision livestock farming
and improve sustainability of producers’ operations.
Also in April, Pumpkin Insurance Services (Pumpkin), a
recently announced pet insurance agency and pet care company that
is a subsidiary of Zoetis, launched its new insurance and optional
monthly preventive care plans for pet owners in the U.S.3 With its
holistically designed plans, Pumpkin addresses a gap in the pet
care industry by offering competitive pet health insurance and
preventive care so pet owners can help their pets stay healthy
year-round.
FINANCIAL GUIDANCE
Zoetis is lowering its full year 2020 guidance to reflect the
company’s current view of the estimated full year impact of the
COVID-19 outbreak, recessionary conditions in the global economy,
and foreign currency headwinds. The updated guidance includes:
- Revenue between $5.950 billion and $6.250 billion
- Reported diluted EPS between $2.80 and $3.07
- Adjusted diluted EPS between $3.17 and $3.42
This guidance reflects foreign exchange rates as of late April.
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 first quarter
2020 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 May 6, 2020.
About Zoetis
Zoetis is the leading animal health
company, dedicated to supporting its customers and their
businesses. Building on more than 65 years of experience in animal
health, Zoetis discovers, develops, manufactures and commercializes
medicines, vaccines and diagnostic products, which are complemented
by biodevices, genetic tests and precision livestock farming.
Zoetis serves veterinarians, livestock producers and people who
raise and care for farm and companion animals with sales of its
products in more than 100 countries. In 2019, the company generated
annual revenue of $6.3 billion with approximately 10,600 employees.
For more information, visit www.zoetis.com.
1 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.
2 Operational revenue growth (a non-GAAP financial measure) is
defined as growth excluding the impact of foreign exchange.
3 Pumpkin is not yet available in all states. To find out if
Pumpkin is available in your location, visit www.pumpkin.care.
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; expectations regarding products,
product approvals or products under development; expected timing of
product launches; the impact of the coronavirus (COVID-19) pandemic
on our business, suppliers, 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 and dividend payments;
tax rate and tax regimes; changes in the tax regimes and laws in
other jurisdictions; 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, 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. Such risks and
uncertainties may be amplified by the coronavirus (COVID-19)
pandemic and its impact on the global economy and our business.
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.
Reconciliation of non-GAAP financial measures and 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 in
the 'Investors' section of our website at www.zoetis.com, on our
Facebook page at http://www.facebook.com/zoetis and on
Twitter@zoetis. We encourage investors and potential investors to
consult our website regularly and to follow us on Facebook and
Twitter for important information about us.
ZOETIS INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME(a)
(UNAUDITED)
(millions of dollars, except per
share data)
First Quarter
2020
2019
% Change
Revenue
$
1,534
$
1,455
5
Costs and expenses:
Cost of sales
459
518
(11
)
Selling, general and administrative
expenses
389
369
5
Research and development expenses
107
102
5
Amortization of intangible assets
40
38
5
Restructuring charges and certain
acquisition-related costs
9
5
80
Interest expense
53
56
(5
)
Other (income)/deductions–net
(20
)
(14
)
43
Income before provision for taxes on
income
497
381
30
Provision for taxes on income
74
69
7
Net income
$
423
$
312
36
Earnings per share—basic
$
0.89
$
0.65
37
Earnings per share—diluted
$
0.88
$
0.65
35
Weighted-average shares used to calculate
earnings per share
Basic
475.6
479.6
Diluted
479.0
483.1
(a)
The condensed consolidated statements of
income present the first quarter ended March 31, 2020 and March 31,
2019. Subsidiaries operating outside the United States are included
for the first quarter ended February 29, 2020 and February 28,
2019.
ZOETIS INC.
RECONCILIATION OF GAAP REPORTED
TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per
share data)
Quarter Ended March 31, 2020
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
459
$
(2)
$
—
$
(2)
$
455
Gross profit
1,075
2
—
2
1,079
Selling, general and administrative
expenses
389
(18)
—
(2)
369
Amortization of intangible assets
40
(34)
—
—
6
Restructuring charges and certain
acquisition-related costs
9
—
(7)
(2)
—
Other (income)/deductions–net
(20)
—
—
17
(3)
Income before provision for taxes on
income
497
54
7
(11)
547
Provision for taxes on income
74
22
(1)
(3)
92
Net income
423
32
8
(8)
455
Earnings per common share–diluted
0.88
0.07
0.02
(0.02)
0.95
Quarter Ended March 31, 2019
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
518
$
(14)
$
—
$
(70)
$
434
Gross profit
937
14
—
70
1,021
Selling, general and administrative
expenses
369
(18)
—
—
351
Amortization of intangible assets
38
(34)
—
—
4
Restructuring charges and certain
acquisition-related costs
5
—
(5)
—
—
Income before provision for taxes on
income
381
66
5
70
522
Provision for taxes on income
69
20
1
8
98
Net income
312
46
4
62
424
Earnings per common share –diluted
0.65
0.09
0.01
0.13
0.88
(a)
The condensed consolidated statements of
income present the first quarter ended March 31, 2020 and March 31,
2019. Subsidiaries operating outside the United States are included
for the first quarter ended February 29, 2020 and February 28,
2019.
(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:
First Quarter
2020
2019
Integration costs(a)
$
6
$
1
Restructuring charges(b)
1
4
Total acquisition-related
costs—pre-tax
7
5
Income taxes(c)
(1)
1
Total acquisition-related costs—net of
tax
$
8
$
4
(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)
Represents employee termination costs,
included in Restructuring charges and certain acquisition-related
costs.
(c)
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 first quarter ended March 31, 2020, also includes a
tax charge related to a remeasurement of deferred taxes resulting
from the integration of acquired businesses.
(2) Certain significant items include the
following:
First Quarter
2020
2019
Operational efficiency initiative(a)
$
(17)
$
—
Supply network strategy(b)
2
2
Other restructuring charges and
cost-reduction/productivity initiatives(c)
2
—
Other(d)
2
68
Total certain significant
items—pre-tax
(11)
70
Income taxes(e)
(3)
8
Total certain significant items—net of
tax
$
(8)
$
62
(a)
Represents a net gain resulting from net
cash proceeds received pursuant to an agreement related to the 2016
sale of certain U.S. manufacturing sites, included in Other
(income)/deductions-net.
(b)
Represents consulting fees, included in
Cost of sales, related to cost-reduction and productivity
initiatives.
(c)
Represents employee termination costs
incurred as a result of the CEO transition, included in
Restructuring charges and certain acquisition-related costs.
(d)
For the first quarter ended March 31,
2020, represents the modification of share-based compensation
related to CEO transition costs, included in Selling, general and
administrative expenses. For the first quarter ended March 31,
2019, primarily represents a change in estimate related to
inventory costing, included in Cost of sales.
(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.
ZOETIS INC.
ADJUSTED SELECTED COSTS, EXPENSES
AND INCOME(a)
(UNAUDITED)
(millions of dollars)
First Quarter
% Change
2020
2019
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
455
$
434
5
%
(1)
%
6
%
as a percent of revenue
29.7
%
29.8
%
NA
NA
NA
Adjusted SG&A expenses
369
351
5
%
(1)
%
6
%
Adjusted R&D expenses
107
102
5
%
—
%
5
%
Adjusted net income
455
424
7
%
(3)
%
10
%
(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.
2020 GUIDANCE
Selected Line Items (millions of dollars,
except per share amounts)
Full Year 2020
Foreign exchange impact
compared to February 2020 guidance
Revenue
$5,950 to $6,250
~ ($150)
Operational growth(a)
(2%) to 3%
Adjusted cost of sales as a percentage of
revenue(b)
30.5% to 31.5%
Adjusted SG&A expenses(b)
$1,455 to $1,545
~ ($25)
Adjusted R&D expenses(b)
$440 to $465
~ ($5)
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $250
Effective tax rate on adjusted
income(b)
20% to 21%
Adjusted diluted EPS(b)
$3.17 to $3.42
($0.11)
Adjusted net income(b)
$1,520 to $1,640
~ ($50)
Operational growth(a)(c)
(9%) to (2%)
Certain significant items and
acquisition-related costs(d)
$20 to $30
The guidance reflects the current view of the estimated full
year impact of the COVID-19 outbreak, recessionary conditions in
the global economy and foreign exchange rates as of late April
2020.
Reconciliations of 2020 reported guidance to 2020 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
30.8% to 31.8%
~ (0.2%)
~ (0.1%)
30.5% to 31.5%
SG&A expenses
$1,526 to $1,616
~ ($6)
~ ($65)
$1,455 to $1,545
R&D expenses
$442 to $467
($2)
$440 to $465
Interest expense and other
(income)/deductions-net
~ $233
$17
~ $250
Effective tax rate
19.5% to 20.5%
~ 0.5%
20% to 21%
Diluted EPS
$2.80 to $3.07
$0.04 to $0.06
$0.31
$3.17 to $3.42
Net income
$1,340 to $1,470
$20 to $30
~ $150
$1,520 to $1,640
(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)
First Quarter
% Change
2020
2019
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
797
$
729
9
%
(1)
%
10
%
Livestock
717
707
1
%
(2)
%
3
%
Contract Manufacturing & Human
Health
20
19
5
%
—
5
%
Total Revenue
$
1,534
$
1,455
5
%
(2)
%
7
%
U.S.
Companion Animal
$
499
$
445
12
%
—
%
12
%
Livestock
287
273
5
%
—
%
5
%
Total U.S. Revenue
$
786
$
718
9
%
—
%
9
%
International
Companion Animal
$
298
$
284
5
%
(3)
%
8
%
Livestock
430
434
(1)
%
(3)
%
2
%
Total International Revenue
$
728
$
718
1
%
(3)
%
4
%
Companion Animal:
Dogs and Cats
$
746
$
688
8
%
(2)
%
10
%
Horses
51
41
24
%
—
%
24
%
Total Companion Animal Revenue
$
797
$
729
9
%
(1)
%
10
%
Livestock:
Cattle
$
370
$
380
(3)
%
(2)
%
(1)
%
Swine
157
149
5
%
(2)
%
7
%
Poultry
148
139
6
%
(2)
%
8
%
Fish
26
23
13
%
(1)
%
14
%
Sheep and other
16
16
—
%
—
%
—
%
Total Livestock Revenue
$
717
$
707
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 KEY
INTERNATIONAL MARKETS
(UNAUDITED)
(millions of dollars)
First Quarter
% Change
2020
2019
Total
Foreign Exchange
Operational(a)
Total International
$
728.4
$
718.0
1
%
(3)
%
4
%
Australia
43.3
48.0
(10)
%
(4)
%
(6)
%
Brazil
62.8
60.1
4
%
(11)
%
15
%
Canada
40.1
41.1
(2)
%
—
%
(2)
%
China
65.7
59.5
10
%
(3)
%
13
%
France
29.0
32.3
(10)
%
(4)
%
(6)
%
Germany
33.5
36.5
(8)
%
(3)
%
(5)
%
Italy
21.5
28.1
(23)
%
(2)
%
(21)
%
Japan
41.5
37.3
11
%
—
%
11
%
Mexico
32.2
28.1
15
%
4
%
11
%
Spain
28.1
27.1
4
%
(3)
%
7
%
United Kingdom
55.1
56.7
(3)
%
1
%
(4)
%
Other developed markets
86.7
83.8
3
%
(4)
%
7
%
Other emerging markets
188.9
179.4
5
%
(4)
%
9
%
(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)
First Quarter
% Change
2020
2019
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
786
$
718
9
%
—
%
9
%
Cost of Sales
167
147
14
%
—
%
14
%
Gross Profit
619
571
8
%
—
%
8
%
Gross Margin
78.8
%
79.5
%
Operating Expenses
125
110
14
%
—
%
14
%
Other (income)/deductions-net
1
—
*
*
*
U.S. Earnings
$
493
$
461
7
%
—
%
7
%
International:
Revenue
$
728
$
718
1
%
(3)
%
4
%
Cost of Sales
224
210
7
%
—
%
7
%
Gross Profit
504
508
(1)
%
(4)
%
3
%
Gross Margin
69.2
%
70.8
%
Operating Expenses
125
132
(5)
%
(3)
%
(2)
%
Other (income)/deductions-net
—
—
*
*
*
International Earnings
$
379
$
376
1
%
(4)
%
5
%
Total Reportable Segments
$
872
$
837
4
%
(2)
%
6
%
Other business activities(c)
(87)
(80)
9
%
Reconciling Items:
Corporate(d)
(173)
(162)
7
%
Purchase accounting adjustments(e)
(54)
(66)
(18)
%
Acquisition-related costs(f)
(7)
(5)
40
%
Certain significant items(g)
11
(70)
*
Other unallocated(h)
(65)
(73)
(11)
%
Total Earnings(i)
$
497
$
381
30
%
(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,
administration expenses, interest expense, certain compensation
costs, certain procurement 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
restructuring charges and implementation costs associated with our
cost-reduction/productivity initiatives that are not associated
with an acquisition, costs associated with the operational
efficiency initiative and supply network strategy, and the impact
of divestiture-related gains and losses.
(h)
Includes overhead expenses associated with
our 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/20200506005448/en/
Media Contacts: Bill Price
1-973-443-2742 (o) william.price@zoetis.com
Kristen Seely 1-973-443-2777 (o) kristen.seely@zoetis.com
Investor Contacts: Steve Frank
1-973-822-7141 (o) steve.frank@zoetis.com
Marissa Patel 1-973-443-2996 (o) marissa.patel@zoetis.com
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