10-QPeriod: Q1 FY2022

Zoetis Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 5, 2022For Securities:ZTS

Summary

Zoetis Inc. (ZTS) reported its first-quarter results for the period ending March 30, 2022, demonstrating robust growth driven by strong performance in both its U.S. and International segments. Total revenue increased by 6% year-over-year to $1.99 billion, with a notable 9% operational increase, excluding the impact of foreign exchange. This growth was primarily fueled by volume increases from new and in-line products, alongside price adjustments. Net income attributable to Zoetis Inc. rose by 6% to $595 million, translating to a diluted EPS of $1.26, up from $1.17 in the prior year. The company also managed its cost of sales effectively, improving its gross margin as a percentage of revenue, despite increased SG&A and R&D expenses which were driven by strategic investments in headcount, innovation, and revenue growth support. The company's financial health remains strong, with solid cash flows and a well-managed debt profile.

Financial Highlights

51 data points
Beta

Revenue

$1.99B

71.3% Gross Margin

Net Income

$594.00M

29.9% Net Margin

EPS (Diluted)

$1.26

Total Assets

$13.86B

Cash & Equivalents

$3.13B

Free Cash Flow

$194.00M

Financial Statements
Beta
Revenue$1.99B
Cost of Revenue$569.00M
Gross Profit$1.42B
SG&A Expenses$465.00M
Interest Expense$53.00M
Net Income$594.00M
EPS (Basic)$1.26
EPS (Diluted)$1.26
Shares Outstanding (Basic)472.20M
Shares Outstanding (Diluted)474.10M

Key Highlights

  • 1Total revenue increased by 6% to $1.99 billion, with a 9% operational increase, driven by volume and price growth.
  • 2Net income attributable to Zoetis Inc. grew by 6% to $595 million, with diluted EPS rising to $1.26 from $1.17.
  • 3The U.S. segment revenue saw a 9% increase, largely driven by companion animal products like Simparica Trio® and key dermatology products.
  • 4International segment revenue grew by 3% (8% operationally), with companion animal products leading the growth, including new launches like Librela and Solensia.
  • 5Cost of sales as a percentage of revenue improved to 28.7% from 29.3%, driven by favorable product mix, price increases, and foreign exchange.
  • 6SG&A expenses increased by 14% due to investments in headcount, travel, and growth support, while R&D expenses increased by 3% to support innovation.
  • 7The company continued its share repurchase program, buying back approximately $361 million worth of shares during the quarter.

Frequently Asked Questions

Zoetis reported a 6% increase in total revenue to $1.99 billion for the first quarter of 2022, compared to the same period in 2021. Net income attributable to Zoetis Inc. also increased by 6% to $595 million, resulting in a diluted EPS of $1.26, up from $1.17 in Q1 2021. Operational revenue growth, excluding foreign exchange, was particularly strong at 9%.

Revenue growth was driven by a combination of factors: a 5% increase in volume from new products, a 3% price increase, and a 1% volume growth from in-line products, including key dermatology products. This was partially offset by a 3% negative impact from foreign exchange rates.

The U.S. segment revenue grew by 9%, primarily due to strong performance in companion animal products like Simparica Trio® and dermatology products. The International segment saw a 3% revenue increase (8% operationally), with companion animal products, including new launches Librela and Solensia, driving growth, despite a negative impact from foreign exchange.

Zoetis maintained a healthy financial position with $3.14 billion in cash and cash equivalents as of March 31, 2022. Net cash provided by operating activities was $309 million for the quarter, though this was lower than the previous year due to timing of receipts and payments and inventory build-up. The company also continued its share repurchase program, acquiring approximately $361 million in treasury stock during the quarter.