10-QPeriod: Q2 FY2022

Zoetis Inc. Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 4, 2022For Securities:ZTS

Summary

Zoetis Inc. (ZTS) reported strong performance for the second quarter and first half of 2022, demonstrating resilience and growth in the animal health sector. For the three months ended June 30, 2022, revenue increased by 5% to $2,052 million, and net income attributable to Zoetis Inc. rose by 3% to $529 million, or $1.12 per diluted share. For the six months ended June 30, 2022, revenue grew by 6% to $4,038 million, with net income attributable to Zoetis Inc. increasing by 5% to $1,124 million, or $2.38 per diluted share. The company highlighted operational growth, which excludes the impact of foreign exchange, indicating underlying business strength. Key drivers included volume growth from new products and strong performance in companion animal segments, particularly in the U.S. The company also continued its share repurchase program, demonstrating a commitment to returning value to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$2.05B

69.5% Gross Margin

Net Income

$529.00M

25.8% Net Margin

EPS (Diluted)

$1.12

Total Assets

$13.77B

Cash & Equivalents

$2.65B

Free Cash Flow

$190.00M

Financial Statements
Beta
Revenue$2.05B
Cost of Revenue$625.00M
Gross Profit$1.43B
SG&A Expenses$529.00M
Interest Expense$53.00M
Net Income$529.00M
EPS (Basic)$1.13
EPS (Diluted)$1.12
Shares Outstanding (Basic)470.00M
Shares Outstanding (Diluted)471.50M

Key Highlights

  • 1Revenue for the three months ended June 30, 2022, increased 5% year-over-year to $2,052 million, with operational growth of 8%.
  • 2Net income attributable to Zoetis Inc. for the three months ended June 30, 2022, was $529 million, or $1.12 per diluted share, a 3% increase.
  • 3For the six months ended June 30, 2022, revenue grew 6% to $4,038 million, with operational growth of 9%.
  • 4Net income attributable to Zoetis Inc. for the six months ended June 30, 2022, was $1,124 million, or $2.38 per diluted share, a 5% increase.
  • 5Companion animal products showed strong growth, increasing revenue by 11% in the quarter and 14% year-to-date, driven by parasiticides and dermatology products.
  • 6The U.S. segment revenue increased by 9% year-over-year for both the quarter and the first six months, driven by robust companion animal sales.
  • 7Zoetis repurchased approximately $812 million of its shares during the first six months of 2022, reflecting ongoing capital allocation to shareholders.

Frequently Asked Questions

Revenue growth was driven by a combination of factors, including volume growth from new products (approximately 6%), price growth (approximately 3%), and volume growth from key dermatology products (approximately 2%). These were partially offset by a volume decrease from other in-line products. Foreign exchange had an unfavorable impact, decreasing reported revenue growth by approximately 3%.

The companion animal segment demonstrated strong performance, with revenue increasing by 11% for the quarter and 14% year-to-date. The U.S. companion animal segment, in particular, saw a 13% increase in revenue for the quarter. The livestock segment experienced a slight decline, with revenue decreasing by 4% for the quarter, influenced by factors such as generic competition and market conditions in specific sub-segments like cattle and poultry.

Zoetis acknowledged ongoing isolated supply chain challenges that are expected to continue through the remainder of 2022. They are managing these through optimizations and customer coordination. The company also noted the impact of global economic and political uncertainty, including Russia's invasion of Ukraine and inflation, but does not expect these to have a material adverse effect on overall results, as Russia and Ukraine are not top markets. They are closely monitoring these evolving situations.

Zoetis has a commitment to returning value to shareholders. The company completed its $2.0 billion share repurchase program authorized in December 2018. In December 2021, an additional $3.5 billion share repurchase program was authorized, with approximately $3.4 billion remaining as of June 30, 2022. During the first six months of 2022, Zoetis repurchased approximately $812 million of its shares.