10-QPeriod: Q1 FY2021

Zoetis Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 6, 2021For Securities:ZTS

Summary

Zoetis Inc. reported strong financial performance for the first quarter of 2021, with total revenue increasing by 22% to $1.87 billion, driven by robust operational growth of 21%. This growth was largely fueled by volume increases in both established and new products, particularly in the companion animal segment. Net income attributable to Zoetis Inc. saw a significant jump of 32% to $559 million, or $1.17 per diluted share, reflecting improved operational efficiencies and favorable product mix. The company's performance was strong across both its U.S. and International segments. The U.S. segment grew revenue by 19%, primarily driven by companion animal products like parasiticides, while the International segment saw a 27% revenue increase, also boosted by companion animal products and recovering livestock markets, especially in China. Zoetis continues to invest in research and development, with R&D expenses increasing by 10% to support future growth. The company also maintained a healthy liquidity position with $3.6 billion in cash and cash equivalents.

Financial Highlights

51 data points
Beta

Revenue

$1.87B

70.7% Gross Margin

Net Income

$558.00M

29.8% Net Margin

EPS (Diluted)

$1.17

Total Assets

$13.80B

Cash & Equivalents

$3.60B

Free Cash Flow

$323.00M

Financial Statements
Beta
Revenue$1.87B
Cost of Revenue$549.00M
Gross Profit$1.32B
SG&A Expenses$409.00M
Interest Expense$57.00M
Net Income$558.00M
EPS (Basic)$1.18
EPS (Diluted)$1.17
Shares Outstanding (Basic)475.50M
Shares Outstanding (Diluted)477.90M

Key Highlights

  • 1Revenue increased by 22% to $1.87 billion in Q1 2021, with 21% driven by operational growth.
  • 2Net income attributable to Zoetis Inc. grew by 32% to $559 million.
  • 3Diluted EPS increased by 32% to $1.17 compared to the prior year period.
  • 4Companion animal products were a key growth driver, with significant contributions from parasiticides like Simparica Trio.
  • 5The International segment showed strong revenue growth of 27%, benefiting from expanding herd production in China and improved export conditions.
  • 6Cost of sales as a percentage of revenue improved to 29.3% from 29.9% due to favorable product mix.
  • 7Zoetis resumed its share repurchase program in January 2021, with $1.2 billion remaining authorization as of March 31, 2021.

Frequently Asked Questions

Zoetis' revenue growth in Q1 2021 was primarily driven by strong operational growth of 21%, fueled by volume increases from both in-line products (approximately 16%) and new products (approximately 5%). Favorable foreign exchange movements contributed an additional 1% to reported revenue growth.

Both segments showed strong performance. Companion animal products were a significant growth driver, with revenue increasing by 35% globally, thanks to products like Simparica Trio and the Revolution/Stronghold franchise. Livestock revenue grew by 9% globally, benefiting from recovering markets in China and improved export conditions.

Zoetis demonstrated strong financial health. The company reported $3.6 billion in cash and cash equivalents as of March 31, 2021, and maintained a healthy current ratio of 3.29:1. They also had $1 billion available under their revolving credit facility, with no amounts drawn, indicating strong liquidity and financial flexibility.

While the report acknowledges the ongoing impact of COVID-19, Zoetis' Q1 2021 results indicate a strong recovery and growth, suggesting they have navigated the pandemic effectively. The company was designated an essential business, allowing for continued operations. Some pandemic-related impacts, like lower travel expenses, were noted as offsetting certain cost increases.