01—Abstract
Summary
Summary of the 10-K filed February 14, 2019. Cited figures are marked; the original filing is the authoritative source.
Zoetis Inc. reported strong financial performance for the fiscal year ended December 31, 2018, with total revenue reaching $5.825 billiona, a 10% increase year-over-year.
This growth was driven by a balanced performance across both its U.S. and International segments, with revenues of $2.877 billionb and $2.890 billion, respectively. The company saw robust growth in its companion animal segment, up 17% to $2.613 billion, largely attributed to its key dermatology products and the strategic acquisition of Abaxis. The livestock segment also contributed positively, growing 4% to $3.154 billion, benefiting from demand for alternatives to antibiotic medicated feed additives and new product introductions.
Net income attributable to Zoetis was $1.428 billionc, a significant 65% increase from the previous year, bolstered by strong revenue growth and improved operational efficiencies. The company also benefited from a lower effective tax rate in 2018, following the enactment of the Tax Cuts and Jobs Act, which reduced the U.S. federal corporate tax rate. Zoetis continued its commitment to shareholder returns through share repurchases, authorizing an additional $2.0 billion, indicating confidence in its ongoing business strategy and future prospects.
02—Key points
Key Highlights
- Total revenue grew 10% to $5.825 billion in 2018, driven by broad-based growth across segments.
- Companion animal segment revenue increased by 17% to $2.613 billion, supported by strong performance in dermatology products and the Abaxis acquisition.
- Livestock segment revenue increased by 4% to $3.154 billion, benefiting from products addressing antibiotic alternatives and new vaccine launches.
- Net income attributable to Zoetis surged by 65% to $1.428 billion.
- The effective tax rate decreased significantly due to the Tax Cuts and Jobs Act.
- The company completed the acquisition of Abaxis in July 2018, strengthening its position in the veterinary diagnostics market.
- Zoetis announced a new $2.0 billion share repurchase program, demonstrating its commitment to returning capital to shareholders.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 14, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $5.83B$5.31B | +9.8% |
| Cost of Revenue | $1.91B$1.77B | +7.7% |
| Gross Profit | $3.91B$3.53B | +10.8% |
| SG&A Expenses | $1.48B$1.33B | +11.2% |
| Interest Expense | $206.00M$175.00M | +17.7% |
| Net Income | $1.42B$862.00M | +65.2% |
| EPS (Basic) | $2.96$1.76 | +68.2% |
| EPS (Diluted) | $2.93$1.75 | +67.4% |
| Shares Outstanding (Basic) | 483.06M489.92M | −1.4% |
| Shares Outstanding (Diluted) | 486.90M493.16M | −1.3% |
05—Questions
Frequently Asked Questions
What were Zoetis's key financial results for the fiscal year ended December 31, 2018?
Zoetis reported total revenue of $5.825 billion, a 10% increase compared to the prior year. Net income attributable to Zoetis was $1.428 billion, marking a 65% increase. The company's U.S. operations generated $2.877 billion in revenue, while International operations brought in $2.890 billion.
Which product categories or segments drove Zoetis's revenue growth in 2018?
Revenue growth was driven by strong performance in both companion animal products (up 17% to $2.613 billion), fueled by dermatology products and the Abaxis acquisition, and the livestock segment (up 4% to $3.154 billion), which benefited from demand for alternatives to antibiotic medicated feed additives and new product introductions.
What was the impact of the Abaxis acquisition on Zoetis's financial performance?
The acquisition of Abaxis, completed in July 2018, contributed approximately 2% to the company's overall revenue growth. It enhanced Zoetis's presence in the veterinary diagnostics market and added approximately $1.962 billion to the consideration transferred for assets and liabilities, including significant goodwill and intangible assets.
How did the Tax Cuts and Jobs Act affect Zoetis's financial results?
The Tax Cuts and Jobs Act, enacted in December 2017, reduced the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018. This reduction, along with other adjustments related to the Act, led to a significantly lower effective tax rate for Zoetis in 2018 compared to 2017, contributing to the substantial increase in net income.
What is Zoetis's approach to returning capital to shareholders?
Zoetis actively engages in share repurchases. In December 2018, the company announced a new share repurchase program of up to an additional $2.0 billion, following the substantial completion of a previous $1.5 billion program. While the company currently pays a quarterly cash dividend, it reserves the right to change its dividend policy.
06—Continue