Zoetis Announces Second Quarter 2022 Results

2022-08-04

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Reports Revenue of $2.1 Billion, Growing 5%, and Net Income of $529 Million, or $1.12 per Diluted Share, Increasing 3% and 5%, Respectively, on a Reported Basis for Second Quarter 2022 Delivers 8% Operational Growth in Revenue and 9% Operational Growth in Adjusted Net Income for Second Quarter 2022 Reports Adjusted Net Income of $567 Million, or Adjusted Diluted EPS of $1.20, for Second Quarter 2022 Updates Full Year 2022 Revenue Guidance to $8.225 - $8.325 Billion, with Diluted EPS of $4.65 to $4.75 on a Reported Basis, or $4.97 to $5.05 on an Adjusted Basis PARSIPPANY, N.J.--(BUSINESS WIRE)-- Zoetis Inc. (NYSE: ZTS) today reported its financial results for the second quarter of 2022 and updated its guidance for full year 2022 to reflect its positive outlook for the remainder of the year, as well as the negative impact of recent changes to foreign exchange rates. The company reported revenue of $2.1 billion for the second quarter of 2022, an increase of 5% compared with the second quarter of 2021. Net income for the second quarter of 2022 was $529 million, or $1.12 per diluted share, an increase of 3% and 5%, respectively, on a reported basis. On an operational1 basis, revenue for the second quarter of 2022 increased 8%, excluding the impact of foreign currency. Adjusted net income for the second quarter of 2022 increased 9% operationally, excluding the impact of foreign currency. Adjusted net income2 for the second quarter of 2022 was $567 million, or $1.20 per diluted share, which was flat and an increase of 1%, respectively, on a reported basis. Adjusted net income for the second quarter of 2022 excludes the net impact of $38 million for purchase accounting adjustments, acquisition-related costs and certain significant items. EXECUTIVE COMMENTARY “Zoetis delivered another strong quarter, with 8% operational revenue growth and 9% operational growth in adjusted net income, driven once again by the strength of our companion animal portfolio,” said Zoetis Chief Executive Officer Kristin Peck. “Our diversity and strength across parasiticides, dermatology products, vaccines and monoclonal antibodies for pain continue to demonstrate people’s desire for innovative and effective care for their pets." “Our business remains strong thanks to the durability of our global portfolio and a steady pipeline of new products. Even as we face uncertain macroeconomic conditions, continued supply constraints, generic competition and the war in Ukraine, we remain confident in the resilience of our business and colleagues. As we look at the rest of the year, we are updating and narrowing our guidance to reflect our positive outlook for the remainder of the year, as well as recent changes to foreign exchange rates." 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 second quarter of 2022: Revenue in the U.S. segment was $1.091 billion, an increase of 9% compared with the second quarter of 2021. Sales of companion animal products increased 13%, driven by growth across the company’s parasiticide portfolio, primarily Simparica Trio® for dogs. The company's dermatology portfolio also contributed to growth across both the Apoquel® and Cytopoint® brands. Sales of livestock products declined 7% in the quarter. Sales of cattle products declined as a result of generic competition for Draxxin® and continued weakness in beef and dairy 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 grew primarily from higher disease prevalence and favorable market conditions for producers. Revenue in the International segment was $943 million, an increase of 2% on a reported basis and an increase of 8% operationally compared with the second quarter of 2021. Growth across species was impacted by lower sales due to the war in Ukraine. Sales of companion animal products grew 8% on a reported basis and 16% operationally. Growth resulted from increased sales of the company’s recently launched monoclonal antibody (mAb) products for osteoarthritis pain, Librela® and Solensia®, as well as the key dermatology portfolio across both the Apoquel and Cytopoint brands. The Simparica® portfolio, including Simparica Trio, also contributed to growth in the quarter. Sales of livestock products declined 3% on a reported basis and grew 2% operationally. Growth in the company’s fish portfolio was primarily the result of increased sales of vaccines across key salmon markets, including Chile and Norway. Sales of cattle products grew due to favorable market conditions and price in key and emerging markets, including Australia, Turkey, China and the U.K. Sales of sheep products grew as a result of favorable market conditions and new product launches in Australia. Sales of swine products decreased in the quarter due to lower pork prices and COVID-related lockdowns in China, which temporarily impacted the company’s supply chain in the market, as well as an exceptionally strong comparative period versus the second quarter of last year. The poultry products portfolio declined due to the unfavorable impact of producer rotational programs with certain medicated feed additives in Europe and reduced flock sizes in Latin American markets. INVESTMENTS IN GROWTH AND SUSTAINABILITY Zoetis continues to gain market approvals and introduce lifecycle innovations for key brands. On the companion animal side of the business, the company received approval in Mexico and New Zealand for Apoquel Chewable Tablets. Previously approved in the EU and the U.K., the new chewable version of Apoquel (oclacitinib) provides 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, a new label indication for Simparica Trio (sarolaner/moxidectin/pyrantel chewable tablets) was approved in Canada. The label expansion now includes the reduction of infections that may cause Lyme disease in dogs by killing deer ticks, also called black-legged ticks, as well as approval for the treatment and control of certain hookworms. On the livestock side of the business, Zoetis expanded its poultry vaccine portfolio in the U.S. with the approval of Poulvac® Procerta® HVT-IBD-ND, an advanced trivalent vector vaccine that delivers powerful early protection against Marek’s disease, infectious bursal disease and Newcastle disease in one dose. This is the third recombinant vector vaccine from Zoetis, following the introduction of Poulvac® Procerta® HVT-ND in 2020 and Poulvac® Procerta® HVT-IBD in 2021. In Business Development news, Zoetis acquired Basepaws, a privately held petcare genetics company, in June. Basepaws provides pet owners with genetic tests, analytics and early health risk assessments, which help pet owners and veterinarians understand an individual pet’s risk for disease and can lead to more meaningful engagements and increased likelihood of early detection and treatment of disease. The acquisition of Basepaws enhances the company’s portfolio in the precision animal health space and will help inform its future pipeline of petcare innovations. In terms of Sustainability, Zoetis continues to advance its Driven To Care goals that were established last year. In June, the company published its 2021 Progress Update and Environmental, Social and Governance (ESG) metrics, highlighting achievements toward the company’s Diversity, Equity & Inclusion (DE&I) aspirations, expanded climate goals and support for the veterinary profession – underscoring its commitment to be the most sustainable animal health company in the world. FINANCIAL GUIDANCE Zoetis is updating its full year 2022 guidance due to the positive outlook for the remainder of the year, as well as the negative impact of recent changes to foreign exchange rates. This includes: Revenue between $8.225 billion to $8.325 billion Reported diluted EPS between $4.65 to $4.75 Adjusted diluted EPS between $4.97 to $5.05 This guidance reflects foreign exchange rates as of late July. 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 second quarter 2022 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 . A replay of the webcast will be archived and made available on August 4, 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 . 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; disruptions in our global 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, 2021, 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 , , 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 . Internet Posting of Information: We routinely post information that may be important to investors in the 'Investors' section of our website at , on our Facebook page at 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-COR ZTS-IR ZTS-FIN View source version on businesswire.com: Contacts 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 Contact: Steve Frank 1-973-822-7141 (o) steve.frank@zoetis.com Source: Zoetis Inc. View this news release online at: