- For Fourth Quarter 2021, Zoetis Reports Revenue of $2.0
Billion, Growing 9%, and Net Income of $414 Million, or $0.87 per
Diluted Share, on a Reported Basis
- Reports Adjusted Net Income of $474 Million, or Adjusted
Diluted EPS of $1.00, for Fourth Quarter 2021
- Delivers 9% Operational Growth in Revenue and 5% Operational
Growth in Adjusted Net Income for Fourth Quarter 2021
- For Full Year 2021, Zoetis Reports Revenue of $7.8 Billion,
Growing 16%, and Net Income of $2.0 Billion, or $4.27 per Diluted
Share, on a Reported Basis
- Reports Adjusted Net Income of $2.2 Billion, or Adjusted
Diluted EPS of $4.70 for Full Year 2021
- Delivers 15% Operational Growth in Revenue and 19%
Operational Growth in Adjusted Net Income for Full Year
2021
- Provides Full Year 2022 Revenue Guidance of $8.325 - $8.475
Billion, with Diluted EPS of $4.75 to $4.87 on a Reported Basis, or
$5.09 to $5.19 on an Adjusted Basis
Zoetis Inc. (NYSE: ZTS) today reported its financial results for
the fourth quarter and full year 2021 and provided full year
guidance for 2022.
The company reported revenue of $2.0 billion for the fourth
quarter of 2021, which was an increase of 9% compared with the
fourth quarter of 2020. Net income for the fourth quarter of 2021
was $414 million, or $0.87 per diluted share, an increase of 15%
and 16%, respectively, on a reported basis.
Adjusted net income1 for the fourth quarter of 2021 was $474
million, or $1.00 per diluted share, an increase of 8% and 10%,
respectively, on a reported basis. Adjusted net income for the
fourth quarter of 2021 excludes the net impact of $60 million for
purchase accounting adjustments, acquisition-related costs and
certain significant items.
On an operational2 basis, revenue for the fourth quarter of 2021
increased 9% compared with the fourth quarter of 2020, with no
impact from foreign exchange. Adjusted net income for the fourth
quarter of 2021 increased 5% operationally, excluding the impact
from foreign exchange.
For full year 2021, the company reported revenue of $7.8
billion, an increase of 16% compared with full year 2020. Net
income for full year 2021 was $2.0 billion, or $4.27 per diluted
share, an increase of 24% and 25%, respectively.
Adjusted net income for full year 2021 was $2.2 billion, or
$4.70 per diluted share, an increase of 21% and 22%, respectively,
on a reported basis. Adjusted net income for full year 2021
excludes the net impact of $203 million for purchase accounting
adjustments, acquisition-related costs and certain significant
items.
On an operational basis, revenue for full year 2021 increased
15%, excluding the impact of foreign exchange. Adjusted net income
for full year 2021 increased 19% operationally, excluding the
impact of foreign exchange.
EXECUTIVE COMMENTARY “In 2021,
Zoetis delivered its strongest performance ever, thanks to our
innovative, diverse and durable portfolio, and the talent and
commitment of our colleagues,” said Kristin Peck, Chief Executive
Officer of Zoetis. “We grew revenue 15% operationally, which is
once again above the expected market growth rate in the $45 billion
animal health market. We also grew our adjusted net income faster
than revenue, at 19% operationally, while continuing to support
investments in our latest product launches and future pipeline of
innovations.”
“Looking forward, we believe this momentum sets us up for a
strong 2022. We expect to continue growing revenue faster than the
market in the coming year, driven by continued strength in petcare;
expansion of our diagnostics portfolio internationally; and
significant growth in both livestock and companion animal product
sales in emerging markets, including China and Brazil. As a result,
we are guiding to full-year operational growth of 9% to 11% in
revenue,” said Peck.
QUARTERLY HIGHLIGHTS Zoetis
organizes and manages its commercial operations across two regional
segments: the 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 2021:
- Revenue in the U.S. segment was $1.040 billion, an
increase of 9% compared with the fourth quarter of 2020. Sales of
companion animal products increased 20%, driven by growth across
the company’s parasiticides portfolio, including Simparica Trio®
for dogs. The key dermatology portfolio also significantly
contributed to growth across both the Apoquel® and Cytopoint®
brands. Sales of livestock products declined 13% in the quarter.
Sales of cattle products declined as a result of generic
competition for Draxxin® and continued weakness in beef and dairy
consumer markets. The company’s poultry portfolio declined due to
the expanded use of lower cost alternatives and generic competition
for Zoamix®, the company’s alternative to antibiotics in medicated
feed additives. Sales of swine products declined due to pricing
pressure on anti-infectives and vaccines.
- Revenue in the International segment was $902 million,
an increase of 8% on a reported and operational basis compared with
the fourth quarter of 2020. Sales of companion animal products
increased 22% on a reported basis and 23% operationally. Growth
resulted from increased sales in the key dermatology portfolio
across both the Apoquel and Cytopoint brands, as well as from the
company’s recently launched monoclonal antibody (mAb) products for
control of osteoarthritis pain, Librela® for dogs and Solensia® for
cats. The parasiticides portfolio, including the
Simparica®/Simparica Trio and Revolution®/Stronghold® franchises,
also contributed to growth, as well as the broader in-line
portfolio which benefited from increased pet ownership and
standards of care. Sales of livestock products declined 1% on a
reported basis and 2% operationally. Sales of cattle products
declined due to generic competition for Draxxin. Sales of swine
products decreased in the quarter as a result of declining pork
prices due to increased supply in China. Growth in the company’s
fish portfolio was primarily the result of increased sales of the
Alpha Flux® sea lice treatment product and Alpha Ject LiVac® SRS
vaccine. Growth in poultry was driven by market expansion and
demand generation efforts in key geographies including the Middle
East and China.
INVESTMENTS IN GROWTH Zoetis
continues to gain market approvals for its innovative mAb
therapies. Since its last quarterly earnings announcement, the
company received approval in the U.S. for Solensia
(frunevetmab), the first injectable mAb for the control of pain
associated with osteoarthritis (OA) in cats; it is also approved in
the European Union (EU), the U.K., Canada and Switzerland.
Additionally, the company introduced lifecycle innovations for
key companion animal products from its dermatology and parasiticide
portfolios. In December, Zoetis received marketing authorization in
the EU and the U.K. for a new chewable version of Apoquel
(oclacitinib), providing veterinarians and pet owners with a
convenient solution to quickly and safely stop the cycle of
pruritus in allergic dogs and clinical signs of atopic dermatitis
in dogs. In parasiticides, the company received approval in the
U.S. for a new label indication for Simparica Trio
(sarolaner, moxidectin, and pyrantel chewable tablets), making it
the first and only combination product demonstrated to prevent
infections that may cause Lyme disease in dogs by killing deer
ticks and black-legged ticks. The label expansion also included
approval for the treatment and control of certain hookworms,
providing a more comprehensive intestinal parasite control
program.
On the livestock side of the business, Zoetis introduced new
digital and data analytic solutions to help its U.S. cattle
producer customers improve the productivity of their farms and
ranches. Earlier this month, the company announced expansions to
its precision animal health portfolio. Performance Ranch, a
new cloud-based, cow-calf management software, simplifies tracking
of individual animal performance and health product usage. The
easy-to-use software will help cow-calf producers track and manage
herd inventory, expenses, genetics and marketing opportunities.
Additionally, the company’s innovative new BLOCKYARD™
platform, developed in cooperation with IBM Consulting and deployed
on IBM’s Blockchain and Cloud platforms, provides a way to securely
share information across production segments; this empowers cattle
sellers, buyers, and industry participants by putting the valuable
production, health and genetic information they need at their
fingertips.
FINANCIAL GUIDANCE Zoetis is
providing full year 2022 guidance, which includes:
- Revenue between $8.325 billion to $8.475 billion
- Reported diluted EPS between $4.75 to $4.87
- Adjusted diluted EPS between $5.09 to $5.19
This guidance reflects foreign exchange rates as of late
January. 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 2021 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 Feb. 15, 2022.
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 70 years
innovating ways to predict, prevent, detect, and treat animal
illness, Zoetis continues to stand by those raising and caring for
animals worldwide – from livestock farmers to veterinarians and pet
owners. 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
$7.8 billion in 2021 with approximately 12,100 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 growth (a
non-GAAP financial measure) is defined as growth excluding the
impact of foreign exchange.
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; supply chain; R&D costs,
timing and likelihood of success; expectations regarding products,
product approvals or products under development, expected timing of
product launches; 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 rate 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 Annual Report on Form 10-K for the
fiscal year ended December 31, 2020, 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 COVID-19
global pandemic and its potential 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
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 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.
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,
Twelve Months Ended December
31,
2021
2020
% Change
2021
2022
% Change
Revenue
$
1,967
$
1,807
9
$
7,776
$
6,675
16
Costs and expenses:
Cost of sales
600
601
—
2,303
2,057
12
Selling, general and administrative
expenses
593
520
14
2,001
1,726
16
Research and development expenses
138
133
4
508
463
10
Amortization of intangible assets
40
40
—
161
160
1
Restructuring charges and certain
acquisition-related costs
4
3
33
43
25
72
Interest expense
54
58
(7)
224
231
(3)
Other (income)/deductions–net
32
32
—
48
17
*
Income before provision for taxes on
income
506
420
20
2,488
1,996
25
Provision for taxes on income
93
62
50
454
360
26
Net income before allocation to
noncontrolling interests
413
358
15
2,034
1,636
24
Less: Net loss attributable to
noncontrolling interests
(1
)
(1
)
—
(3
)
(2
)
50
Net income attributable to Zoetis
$
414
$
359
15
$
2,037
$
1,638
24
Earnings per share—basic
$
0.88
$
0.75
17
$
4.29
$
3.44
25
Earnings per share—diluted
$
0.87
$
0.75
16
$
4.27
$
3.42
25
Weighted-average shares used to calculate
earnings per share
Basic
473.1
475.6
474.3
475.5
Diluted
475.6
478.7
476.7
478.6
(a)
The Condensed Consolidated Statements of
Income present the three and twelve months ended December 31, 2021
and 2020. Subsidiaries operating outside the U.S. are included for
the three and twelve months ended November 30, 2021 and 2020.
* 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,
2021
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant
Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
600
$
(1
)
$
—
$
(1
)
$
598
Gross profit
1,367
1
—
1
1,369
Selling, general and administrative
expenses
593
(7
)
—
—
586
Research and development expenses
138
—
—
—
138
Amortization of intangible assets
40
(34
)
—
—
6
Restructuring charges and certain
acquisition-related costs
4
—
(4
)
—
—
Other (income)/deductions–net
32
—
—
(28
)
4
Income before provision for taxes on
income
506
42
4
29
581
Provision for taxes on income
93
9
1
5
108
Net income attributable to Zoetis
414
33
3
24
474
Earnings per common share attributable to
Zoetis–diluted
0.87
0.07
0.01
0.05
1.00
Three Months Ended December 31,
2020
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
601
$
(2
)
$
—
$
(15
)
$
584
Gross profit
1,206
2
—
15
1,223
Selling, general and administrative
expenses
520
(7
)
—
(2
)
511
Research and development expenses
133
—
—
—
133
Amortization of intangible assets
40
(34
)
—
—
6
Restructuring charges and certain
acquisition-related costs
3
—
(3
)
—
—
Other (income)/deductions–net
32
—
—
(22
)
10
Income before provision for taxes on
income
420
43
3
39
505
Provision for taxes on income
62
9
(1
)
(2
)
68
Net income attributable to Zoetis
359
34
4
41
438
Earnings per common share attributable to
Zoetis–diluted
0.75
0.07
0.01
0.08
0.91
(a)
The Condensed Consolidated Statements of
Income present the three months ended December 31, 2021 and 2020.
Subsidiaries operating outside the U.S. are included for the three
months ended November 30, 2021 and 2020.
(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,
2021
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain Significant Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
2,303
$
(6
)
$
—
$
(8
)
$
2,289
Gross profit
5,473
6
—
8
5,487
Selling, general and administrative
expenses
2,001
(30
)
—
—
1,971
Research and development expenses
508
(1
)
—
—
507
Amortization of intangible assets
161
(138
)
—
—
23
Restructuring charges and certain
acquisition-related costs
43
—
(12
)
(31
)
—
Other (income)/deductions–net
48
—
—
(34
)
14
Income before provision for taxes on
income
2,488
175
12
73
2,748
Provision for taxes on income
454
39
2
16
511
Net income attributable to Zoetis
2,037
136
10
57
2,240
Earnings per common share attributable to
Zoetis–diluted
4.27
0.29
0.02
0.12
4.70
Twelve Months Ended December 31,
2020
GAAP Reported(a)
Purchase Accounting
Adjustments
Acquisition- Related Costs(1)
Certain
Significant
Items(2)
Non-GAAP Adjusted(b)
Cost of sales
$
2,057
$
(8
)
$
—
$
(19
)
$
2,030
Gross profit
4,618
8
—
19
4,645
Selling, general and administrative
expenses
1,726
(54
)
—
(13
)
1,659
Research and development expenses
463
(1
)
—
—
462
Amortization of intangible assets
160
(135
)
—
—
25
Restructuring charges and certain
acquisition-related costs
25
—
(18
)
(7
)
—
Other (income)/deductions–net
17
—
—
(4
)
13
Income before provision for taxes on
income
1,996
198
18
43
2,255
Provision for taxes on income
360
56
(1
)
(2
)
413
Net income attributable to Zoetis
1,638
142
19
45
1,844
Earnings per common share attributable to
Zoetis–diluted
3.42
0.30
0.04
0.09
3.85
(a)
The Condensed Consolidated Statements of
Income present the twelve months ended December 31, 2021 and 2020.
Subsidiaries operating outside the U.S. are included for the twelve
months ended November 30, 2021 and 2020.
(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,
2021
2020
2021
2020
Integration costs(a)
$
4
$
2
$
10
$
17
Restructuring charges(b)
—
1
2
1
Total acquisition-related
costs—pre-tax
4
3
12
18
Income taxes(c)
1
(1
)
2
(1
)
Total acquisition-related costs—net of
tax
$
3
$
4
$
10
$
19
(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 twelve months ended December 31, 2020, also includes
a tax charge related to a remeasurement of deferred tax assets and
liabilities resulting from the integration of acquired
businesses.
(2) Certain significant items include the
following:
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
2021
2020
Operational efficiency initiative(a)
$
—
$
—
$
—
$
(18
)
Supply network strategy(b)
1
—
3
4
Other restructuring charges and
cost-reduction/productivity initiatives(c)
1
—
21
7
Certain asset impairment charges(d)
27
37
46
37
Net loss on sale of assets(e)
—
—
3
—
Other(f)
—
2
—
13
Total certain significant
items—pre-tax
29
39
73
43
Income taxes(g)
5
(2
)
16
(2
)
Total certain significant items—net of
tax
$
24
$
41
$
57
$
45
(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 product transfer costs,
included in Cost of sales, related to cost-reduction and
productivity initiatives.
(c)
For the twelve months ended December 31,
2021, primarily represents employee termination costs associated
with the realignment of our international operations and other
costs associated with cost-reduction and productivity initiatives,
included in Restructuring charges and certain acquisition-related
costs.
For the twelve months ended December 31,
2020, represents employee termination costs incurred as a result of
the CEO transition and other cost-reduction and productivity
initiatives, included in Restructuring charges and certain
acquisition-related costs.
(d)
For the three months ended December 31,
2021, represents asset impairment charges related to developed
technology rights and trademarks in our dairy cattle, diagnostics
and aquatic health businesses, included in Other
(income)/deductions-net.
For the twelve months ended December 31,
2021, primarily represents asset impairment charges related to:
- Developed technology rights and
trademarks in our dairy cattle, diagnostics and aquatic health
businesses, included in Other (income)/deductions-net;
- The consolidation of manufacturing sites
in China, included in Restructuring charges and certain acquisition
related costs; and
- Property, plant and equipment and
inventory related to a dairy product termination included in Other
(income)/deductions-net and Cost of sales.
For the three and twelve months ended
December 31, 2020, primarily represents asset impairment charges
related to:
- Developed technology rights in our
precision livestock farming and aquatic health businesses, included
in Other (income)/deductions-net;
- Inventory in our precision livestock
farming business, included in Cost of sales; and
- Property, plant and equipment in our
precision livestock farming business, included in Other
(income)/deductions-net.
(e)
Represents a net loss related to the sale
of certain assets of our poultry automation business located in the
U.S. and Canada, included in Other (income)/deductions-net.
(f)
For the three and twelve months ended
December 31, 2020, primarily represents the modification of
share-based compensation related to CEO transition costs, included
in Selling, general and administrative expenses.
(g)
Included in Provision for taxes on income.
Income taxes include the tax effect of the associated pre-tax
amounts, calculated by determining the jurisdictional location of
the pre-tax amounts and applying that jurisdiction's applicable tax
rate. For the three and twelve months ended December 31, 2020, also
includes a tax charge related to changes in valuation allowance
related to impairments of acquired businesses.
ZOETIS INC.
ADJUSTED SELECTED COSTS AND
EXPENSES(a)
(UNAUDITED)
(millions of dollars)
Three Months Ended December
31,
% Change
2021
2020
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
598
$
584
2
%
(3)%
5%
As a percent of revenue
30.4
%
32.3
%
NA
NA
NA
Adjusted SG&A expenses
586
511
15
%
—%
15%
Adjusted R&D expenses
138
133
4
%
1%
3%
Adjusted net income attributable to
Zoetis
474
438
8
%
3%
5%
Twelve Months Ended December
31,
% Change
2021
2020
Total
Foreign Exchange
Operational(b)
Adjusted cost of sales
$
2,289
$
2,030
13
%
1%
12%
As a percent of revenue
29.4
%
30.4
%
NA
NA
NA
Adjusted SG&A expenses
1,971
1,659
19
%
1%
18%
Adjusted R&D expenses
507
462
10
%
2%
8%
Adjusted net income attributable to
Zoetis
2,240
1,844
21
%
2%
19%
(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.
2022 GUIDANCE
Selected Line Items
(millions of dollars, except per share
amounts)
Foreign Exchange
Impact
Full Year 2022
Revenue
~ $(160)
$8,325 to $8,475
Operational growth(a)
9% to 11%
Adjusted cost of sales as a percentage of
revenue(b)
Approximately 29%
Adjusted SG&A expenses(b)
~ $(30)
$2,070 to $2,120
Adjusted R&D expenses(b)
~ $(5)
$540 to $560
Adjusted interest expense and other
(income)/deductions-net(b)
Approximately $240
Effective tax rate on adjusted
income(b)
Approximately 20%
Adjusted diluted EPS(b)
~ $(0.12)
$5.09 to $5.19
Adjusted net income(b)
~ $(60)
$2,415 to $2,470
Operational growth(a)(c)
10% to 13%
Certain significant items and
acquisition-related costs(d)
$20 - $30
The guidance reflects foreign exchange rates as of late January
2022 and includes the assumed impacts as a result of fluctuations
in foreign exchange rates relative to the U.S. dollar compared to
weighted average foreign exchange rates from 2021, as noted
above.
Reconciliations of 2022 reported guidance to 2022 adjusted
guidance follows:
(millions of dollars, except per share amounts) Reported Certain
significantitems andacquisition-relatedcosts(d) Purchaseaccounting
Adjusted(b) Cost of sales as a percentage of revenue ~ 29.2% ~
(0.1%) ~ (0.1%) ~ 29% SG&A expenses $2,100 to $2,150 ~
$(30) $2,070 to $2,120 R&D expenses $542 to $562 ~ $(2)
$540 to $560 Interest expense and other (income)/deductions ~ $240
~ $240 Effective tax rate ~ 20% ~ 20%
Diluted EPS $4.75 to $4.87 $0.03 to $0.05 ~ $0.29 $5.09 to $5.19
Net income attributable to Zoetis $2,250 to $2,315 $20 to $30 ~
$135 $2,415 to $2,470 (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
2021
2020
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
1,182
$
978
21
%
—
%
21
%
Livestock
760
806
(6
)%
—
%
(6
)%
Contract Manufacturing & Human
Health
25
23
9
%
(3
)%
12
%
Total Revenue
$
1,967
$
1,807
9
%
—
%
9
%
U.S.
Companion Animal
$
763
$
634
20
%
—
%
20
%
Livestock
277
318
(13
)%
—
%
(13
)%
Total U.S. Revenue
$
1,040
$
952
9
%
—
%
9
%
International
Companion Animal
$
419
$
344
22
%
(1
)%
23
%
Livestock
483
488
(1
)%
1
%
(2
)%
Total International Revenue
$
902
$
832
8
%
—
%
8
%
Companion Animal:
Dogs and Cats
$
1,107
$
913
21
%
—
%
21
%
Horses
75
65
15
%
—
%
15
%
Total Companion Animal Revenue
$
1,182
$
978
21
%
—
%
21
%
Livestock:
Cattle
$
413
$
451
(8
)%
—
%
(8
)%
Swine
155
167
(7
)%
1
%
(8
)%
Poultry
118
125
(6
)%
(1
)%
(5
)%
Fish
55
47
17
%
3
%
14
%
Sheep and other
19
16
19
%
10
%
9
%
Total Livestock Revenue
$
760
$
806
(6
)%
—
%
(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
2021
2020
Total
Foreign Exchange
Operational(b)
Revenue:
Companion Animal
$
4,689
$
3,652
28
%
1
%
27
%
Livestock
3,005
2,940
2
%
1
%
1
%
Contract Manufacturing & Human
Health
82
83
(1
)%
—
%
(1
)%
Total Revenue
$
7,776
$
6,675
16
%
1
%
15
%
U.S.
Companion Animal
$
2,990
$
2,391
25
%
—
%
25
%
Livestock
1,052
1,166
(10
)%
—
%
(10
)%
Total U.S. Revenue
$
4,042
$
3,557
14
%
—
%
14
%
International
Companion Animal
$
1,699
$
1,261
35
%
5
%
30
%
Livestock
1,953
1,774
10
%
2
%
8
%
Total International Revenue
$
3,652
$
3,035
20
%
3
%
17
%
Companion Animal:
Dogs and Cats
4,426
3,437
29
%
2
%
27
%
Horses
263
215
22
%
2
%
20
%
Total Companion Animal Revenue
$
4,689
$
3,652
28
%
1
%
27
%
Livestock:
Cattle
$
1,557
$
1,558
—
%
1
%
(1
)%
Swine
659
621
6
%
2
%
4
%
Poultry
507
537
(6
)%
—
%
(6
)%
Fish
187
148
26
%
3
%
23
%
Sheep and other
95
76
25
%
10
%
15
%
Total Livestock Revenue
$
3,005
$
2,940
2
%
1
%
1
%
(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
2021
2020
Total
Foreign Exchange
Operational(a)
Total International
$
902.3
$
832.8
8
%
—
%
8
%
Australia
62.8
53.4
18
%
2
%
16
%
Brazil
84.1
77.0
9
%
—
%
9
%
Canada
63.0
66.1
(5
)%
4
%
(9
)%
Chile
36.1
28.3
28
%
(1
)%
29
%
China
68.4
68.0
1
%
5
%
(4
)%
France
34.7
35.3
(2
)%
(2
)%
—
%
Germany
48.0
46.5
3
%
(2
)%
5
%
Italy
27.9
27.8
—
%
(2
)%
2
%
Japan
46.3
43.9
5
%
(7
)%
12
%
Mexico
34.8
32.2
8
%
4
%
4
%
Spain
31.1
29.5
5
%
(2
)%
7
%
United Kingdom
61.2
52.5
17
%
5
%
12
%
Other Developed
117.1
105.9
11
%
1
%
10
%
Other Emerging
186.8
166.4
12
%
(4
)%
16
%
Twelve Months Ended December
31,
% Change
2021
2020
Total
Foreign Exchange
Operational(a)
Total International
$
3,651.9
$
3,035.4
20
%
3
%
17
%
Australia
258.8
207.2
25
%
11
%
14
%
Brazil
311.5
258.3
21
%
(7
)%
28
%
Canada
231.5
209.8
10
%
7
%
3
%
Chile
136.3
100.1
36
%
2
%
34
%
China
357.3
265.7
34
%
9
%
25
%
France
132.4
117.7
12
%
5
%
7
%
Germany
183.0
158.6
15
%
5
%
10
%
Italy
115.2
90.5
27
%
6
%
21
%
Japan
186.2
177.2
5
%
(2
)%
7
%
Mexico
132.6
115.8
15
%
6
%
9
%
Spain
127.7
112.2
14
%
6
%
8
%
United Kingdom
234.4
177.9
32
%
9
%
23
%
Other Developed
467.0
388.2
20
%
6
%
14
%
Other Emerging
778.0
656.2
19
%
(3
)%
22
%
(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
2021
2020
Total
Foreign Exchange
Operational(b)
U.S.:
Revenue
$
1,040
$
952
9
%
—
%
9
%
Cost of sales
213
194
10
%
—
%
10
%
Gross profit
827
758
9
%
—
%
9
%
Gross margin
79.5
%
79.6
%
Operating expenses
197
184
7
%
—
%
7
%
Other (income)/deductions-net
2
3
(33
)%
—
%
(33
)%
U.S. Earnings
$
628
$
571
10
%
—
%
10
%
International:
Revenue
$
902
$
832
8
%
—
%
8
%
Cost of sales
273
274
—
%
(2
)%
2
%
Gross profit
629
558
13
%
2
%
11
%
Gross margin
69.7
%
67.1
%
Operating expenses
173
146
18
%
(1
)%
19
%
Other (income)/deductions-net
—
6
*
*
*
International Earnings
$
456
$
406
12
%
2
%
10
%
Total Reportable Segments
$
1,084
$
977
11
%
1
%
10
%
Other business activities(c)
(105
)
(108
)
(3
)%
Reconciling Items:
Corporate(d)
(308
)
(276
)
12
%
Purchase accounting adjustments(e)
(42
)
(43
)
(2
)%
Acquisition-related costs(f)
(4
)
(3
)
33
%
Certain significant items(g)
(29
)
(39
)
(26
)%
Other unallocated(h)
(90
)
(88
)
2
%
Total Earnings(i)
$
506
$
420
20
%
(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 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 a
shift in our organizational structure and
cost-reduction/productivity initiatives that are not associated
with an acquisition, certain asset impairment charges, 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.
ZOETIS INC.
SEGMENT(a) EARNINGS
(UNAUDITED)
(millions of dollars)
Twelve Months Ended December
31,
% Change
2021
2020
Total
Foreign
Exchange
Operational(b)
U.S.:
Revenue
$
4,042
$
3,557
14
%
—
%
14
%
Cost of sales
788
709
11
%
—
%
11
%
Gross profit
3,254
2,848
14
%
—
%
14
%
Gross margin
80.5
%
80.1
%
Operating expenses
681
602
13
%
—
%
13
%
Other (income)/deductions-net
4
7
(43
)%
—
%
(43
)%
U.S. Earnings
$
2,569
$
2,239
15
%
—
%
15
%
International:
Revenue
$
3,652
$
3,035
20
%
3
%
17
%
Cost of sales
1,106
971
14
%
1
%
13
%
Gross profit
2,546
2,064
23
%
4
%
19
%
Gross margin
69.7
%
68.0
%
Operating expenses
602
510
18
%
3
%
15
%
Other (income)/deductions-net
(4
)
7
*
*
*
International Earnings
$
1,948
$
1,547
26
%
5
%
21
%
Total Reportable Segments
$
4,517
$
3,786
19
%
2
%
17
%
Other business activities(c)
(406
)
(372
)
9
%
Reconciling Items:
Corporate(d)
(1,052
)
(879
)
20
%
Purchase accounting adjustments(e)
(175
)
(198
)
(12
)%
Acquisition-related costs(f)
(12
)
(18
)
(33
)%
Certain significant items(g)
(73
)
(43
)
70
%
Other unallocated(h)
(311
)
(280
)
11
%
Total Earnings(i)
$
2,488
$
1,996
25
%
(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 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 certain
asset impairment charges, restructuring charges and implementation
costs associated with a shift in our organizational structure and
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/20220214005852/en/
Media: Bill Price 1-973-443-2742 (o)
william.price@zoetis.com
Kristen Seely 1-973-443-2777 (o) kristen.seely@zoetis.com
Investors: Steve Frank 1-973-822-7141 (o)
steve.frank@zoetis.com
Keith Gaub 1-973-822-7154 (o) keith.gaub@zoetis.com
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