10-QPeriod: Q1 FY2025

Zoetis Inc. Quarterly Report for Q1 Ended Mar 31, 2025

Filed May 6, 2025For Securities:ZTS

Summary

Zoetis Inc. reported revenue of $2,220 million for the first quarter of 2025, a slight increase of 1% compared to $2,190 million in the prior year period. On an operational basis, excluding foreign exchange impacts, revenue grew by 5%. This growth was driven by a 4% increase in pricing and a 4% volume increase from key franchises, partially offset by a 4% decrease related to the divestiture of its medicated feed additive (MFA) portfolio. Net income attributable to Zoetis Inc. rose by 5% to $631 million, or $1.41 per diluted share, up from $599 million, or $1.31 per diluted share, in the first quarter of 2024. The company's effective tax rate increased to 22.1% from 19.8%, impacting profitability. The company experienced a notable shift in its revenue mix, with companion animal products showing robust growth (up 7% overall, 9% operationally) while livestock products saw a decline (down 10% overall, 5% operationally). This is largely attributable to the MFA divestiture impacting livestock sales. Geographically, the U.S. segment saw a 2% revenue increase driven by companion animal products, while the International segment's revenue was flat overall but grew 7% operationally, with both companion animal and livestock segments contributing positively on an operational basis. The company continued its share repurchase program, buying back $443 million worth of stock in the quarter.

Financial Highlights

50 data points
Beta

Revenue

$2.20B

71.9% Gross Margin

Net Income

$602.00M

27.4% Net Margin

EPS (Diluted)

$1.34

Total Assets

$14.10B

Cash & Equivalents

$1.78B

Free Cash Flow

$337.00M

Financial Statements
Beta
Revenue$2.20B
Cost of Revenue$618.00M
Gross Profit$1.58B
SG&A Expenses$574.00M
Interest Expense$54.00M
Net Income$602.00M
EPS (Basic)$1.34
EPS (Diluted)$1.34
Shares Outstanding (Basic)447.60M
Shares Outstanding (Diluted)448.00M

Key Highlights

  • 1Total revenue increased 1% to $2.22 billion, with a 5% increase on an operational basis, driven by price and volume growth in key franchises.
  • 2Net income attributable to Zoetis Inc. rose 5% to $631 million, resulting in diluted EPS of $1.41, an increase from $1.31 in the prior year.
  • 3Companion animal product revenue grew 7% to $1.55 billion, outpacing the decline in livestock product revenue, which fell 10% to $645 million, partly due to the MFA divestiture.
  • 4The U.S. segment revenue increased 2% to $1.18 billion, primarily driven by companion animal products.
  • 5The International segment revenue remained flat at $1.01 billion, but showed a 7% operational growth.
  • 6Cost of sales as a percentage of revenue improved to 28.0% from 29.4%, benefiting from price increases, the MFA divestiture, and favorable foreign exchange.
  • 7Zoetis continued its share repurchase program, buying back approximately $443 million in stock during the first quarter of 2025.

Frequently Asked Questions

Revenue growth was primarily driven by price increases (approximately 4%) and volume growth from key franchises (approximately 4%), partially offset by a decrease related to the divestiture of the medicated feed additive (MFA) product portfolio. On an operational basis, excluding foreign exchange impacts, total revenue grew by 5%.

The divestiture of the MFA portfolio, completed in October 2024, negatively impacted livestock product revenue, contributing to a 4% decrease in overall revenue growth. However, it also positively affected the cost of sales as a percentage of revenue due to favorable impacts from the divestiture.

While the filing does not provide explicit forward-looking guidance for the full year, the reported growth in revenue and net income, along with improved cost management (lower cost of sales as a percentage of revenue), suggests a stable performance. However, investors should note the higher effective tax rate and the ongoing impact of foreign exchange fluctuations and trade policies as potential factors influencing future results.

Zoetis is actively returning capital to shareholders. The company repurchased approximately $443 million of its common stock during the first quarter of 2025 as part of its authorized $6 billion share repurchase program. Additionally, the company declared a dividend of $0.500 per common share for the quarter.