How did Zoetis perform in the fourth quarter of 2023?

Revenue was $2.2 billion, up 8% on both reported and operational bases. GAAP net income was $525 million, or $1.14 per diluted share, up 14% and 15% on a reported basis. Adjusted net income was $569 million, or $1.24 per diluted share, excluding $44 million of purchase accounting, acquisition-related costs and certain significant items.

What is Zoetis guiding for full year 2024?

Revenue is guided to $9.075 to $9.225 billion, representing 7% to 9% operational growth. Reported diluted EPS is expected at $5.34 to $5.44, and adjusted diluted EPS at $5.74 to $5.84. Adjusted net income is projected at $2.650 to $2.700 billion, or 9% to 11% operational growth. Guidance reflects foreign exchange rates as of late January 2024.

What drove growth in 2023?

Growth was driven by companion animal franchises across pain, dermatology and parasiticides. Librela and Solensia, the osteoarthritis pain monoclonal antibodies, were key contributors, alongside Apoquel and Cytopoint in dermatology and Simparica Trio. Companion animal revenue grew 10% operationally in Q4 and 8% for the full year.

Are there any notable risks or weak spots?

China was a significant weakness, with Q4 revenue down 29% reported and full year revenue down 16%. Adjusted cost of sales rose to 32.9% of revenue in Q4 from 31.9% a year earlier, and Sheep and Swine products were soft in certain markets. Management also noted that the company cannot reasonably predict the foreign exchange impact of certain significant items in its guidance.

Does this 8-K make the earnings information legally 'filed'?

No. Item 2.02 information and Exhibit 99.1 are furnished to the SEC and are not deemed filed for purposes of Section 18 of the Exchange Act. They are also not incorporated by reference into Securities Act or Exchange Act filings unless specifically referenced.

ZTS 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 13, 2024. Cited figures are marked; the original filing is the authoritative source.

Zoetis Inc. (NYSE: ZTS) reported fourth quarter and full year 2023 results on February 13, 2024, and issued full year 2024 guidance.

Fourth quarter revenue was $2.2 billion^a, up 8% on both reported and operational bases, while reported net income rose 14% to $525 million ($1.14 per diluted share). Adjusted net income of $569 million ($1.24 per diluted share) grew 6% reported and 8% per share on a reported basis, with operational growth of 6% in adjusted net income. For full year 2023, revenue reached $8.5 billion (up 6% reported, 7% operational), and reported net income was $2.3 billion ($5.07 per diluted share).

Adjusted net income was $2.5 billion^b ($5.32 per diluted share), growing 7% operationally. Growth was led by companion animal franchises, particularly the osteoarthritis pain monoclonal antibodies Librela (dogs) and Solensia (cats), along with dermatology and parasiticide products. Management guided to full year 2024 revenue of $9.075 to $9.225 billion, representing 7% to 9% operational growth, with reported diluted EPS of $5.34 to $5.44 and adjusted diluted EPS of $5.74 to $5.84.

Adjusted net income is expected to grow 9%^c to 11% operationally. The guidance reflects foreign exchange rates as of late January 2024. Management emphasized Librela as a path to its next billion-dollar franchise.

Segment detail shows U.S. revenue up 9%^d in the quarter, while International revenue rose 9% reported and 8% operationally, with China notably weak, down 29% in the quarter and 16% for the year. For investors, the results show consistent operational growth and margin pressure from higher adjusted cost of sales as a percentage of revenue in the quarter, which rose to 32.9% from 31.9%.

Guidance implies continued top-line expansion alongside a modest margin recovery in 2024. The 8-K furnishes the press release under Item 2.02 and is not deemed filed for Exchange Act liability purposes.

02—Key points

Key Highlights

Q4 2023 revenue of $2.2 billion, up 8% on both reported and operational bases; U.S. segment up 9%, International up 8% operationally.
Q4 2023 GAAP net income of $525 million ($1.14 diluted EPS), up 14% and 15% respectively; adjusted net income of $569 million ($1.24 diluted EPS).
Full year 2023 revenue of $8.5 billion, up 6% reported and 7% operationally; GAAP diluted EPS of $5.07 and adjusted diluted EPS of $5.32.
Full year 2024 guidance: revenue of $9.075 to $9.225 billion (7% to 9% operational growth) and adjusted diluted EPS of $5.74 to $5.84.
Full year 2024 reported diluted EPS guidance of $5.34 to $5.44, with adjusted net income of $2.650 to $2.700 billion (9% to 11% operational growth).
Librela (dogs) and Solensia (cats) osteoarthritis pain franchise cited as the next billion-dollar franchise driver; companion animal revenue grew 11% in Q4.
China remains a drag, with Q4 revenue down 29% reported (28% operationally) and full year revenue down 16% reported.

03—Questions

Frequently Asked Questions

How did Zoetis perform in the fourth quarter of 2023?
Revenue was $2.2 billion, up 8% on both reported and operational bases. GAAP net income was $525 million, or $1.14 per diluted share, up 14% and 15% on a reported basis. Adjusted net income was $569 million, or $1.24 per diluted share, excluding $44 million of purchase accounting, acquisition-related costs and certain significant items.
What is Zoetis guiding for full year 2024?
Revenue is guided to $9.075 to $9.225 billion, representing 7% to 9% operational growth. Reported diluted EPS is expected at $5.34 to $5.44, and adjusted diluted EPS at $5.74 to $5.84. Adjusted net income is projected at $2.650 to $2.700 billion, or 9% to 11% operational growth. Guidance reflects foreign exchange rates as of late January 2024.
What drove growth in 2023?
Growth was driven by companion animal franchises across pain, dermatology and parasiticides. Librela and Solensia, the osteoarthritis pain monoclonal antibodies, were key contributors, alongside Apoquel and Cytopoint in dermatology and Simparica Trio. Companion animal revenue grew 10% operationally in Q4 and 8% for the full year.
Are there any notable risks or weak spots?
China was a significant weakness, with Q4 revenue down 29% reported and full year revenue down 16%. Adjusted cost of sales rose to 32.9% of revenue in Q4 from 31.9% a year earlier, and Sheep and Swine products were soft in certain markets. Management also noted that the company cannot reasonably predict the foreign exchange impact of certain significant items in its guidance.
Does this 8-K make the earnings information legally 'filed'?
No. Item 2.02 information and Exhibit 99.1 are furnished to the SEC and are not deemed filed for purposes of Section 18 of the Exchange Act. They are also not incorporated by reference into Securities Act or Exchange Act filings unless specifically referenced.

04—Continue

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