Zoetis Announces Second Quarter 2019 Results
Reports Revenue of $1.5 Billion, Growing 9%, and Net Income of $371 Million, or $0.77 per Diluted Share, Decreasing 3%, on a Reported Basis for Second Quarter 2019
Reports Adjusted Net Income of $436 Million, or Adjusted Diluted EPS of $0.90, for Second Quarter 2019
Delivers 14% Operational Growth in Revenue and 17% Operational Growth in Adjusted Net Income for Second Quarter 2019
Raises Full Year 2019 Revenue Guidance to $6.175 - $6.275 Billion and Diluted EPS of $2.93 - $3.04 on a Reported Basis, or $3.53 - $3.60 on an Adjusted Basis
Source: Zoetis Inc.
via Business Wire - August 06, 2019
PARSIPPANY, N.J.--(BUSINESS WIRE)--Zoetis Inc. (NYSE: ZTS) today reported its financial results for the second quarter of 2019 and raised its guidance for full year 2019.
The company reported revenue of $1.5 billion for the second quarter of 2019, an increase of 9% compared with the second quarter of 2018. Net income for the second quarter of 2019 was $371 million, or $0.77 per diluted share, a decrease of 3%, on a reported basis.
Adjusted net income1 for the second quarter of 2019 was $436 million, or $0.90 per diluted share, an increase of 16% and 17%, respectively, on a reported basis. Adjusted net income for the second quarter of 2019 excludes the net impact of $65 million for purchase accounting adjustments, acquisition-related costs and certain significant items.
On an operational2 basis, revenue for the second quarter of 2019 increased 14%, excluding the impact of foreign currency. Adjusted net income for the second quarter of 2019 increased 17% operationally, excluding the impact of foreign currency.
“We continued our strong performance through the first half of the year, with 14% operational revenue growth in the second quarter,” said Juan Ramón Alaix, Chief Executive Officer at Zoetis. “Our companion animal portfolio is continuing its positive momentum, with 22% operational revenue growth, based on diagnostic sales from the Abaxis acquisition, strong sales of our key dermatology products, and parasiticides. Livestock product sales returned to growth in the second quarter at 3% operationally, with increases across all species.”
“We remain confident that our latest innovations combined with our core business will spur future growth and profitability, and I am pleased to report that we have increased our full-year guidance for 2019,” said Alaix.
Zoetis organizes and manages its commercial operations across two segments: United States (U.S.) and International. Within these segments, the company delivers a diverse portfolio of products for livestock and companion animals, tailored to local trends and customer needs. In the second quarter of 2019:
Revenue in the U.S. segment was $780 million, an increase of 15% compared with the second quarter of 2018. Sales of companion animal products grew 23% driven primarily by the acquisition of Abaxis, key dermatology products, and a number of our in-line products including Simparica®, Clavamox®, Cerenia® and ProHeart® 6. Sales of livestock products grew 3% in the quarter, driven primarily by poultry products from increased sales of alternatives to antibiotics in medicated feed additives. Promotional activity resulted in modest growth in our swine portfolio, which was offset by a modest decline in cattle products due to continued weakness in both the dairy and beef sectors.
Revenue in the International segment was $742 million, an increase of 2% on a reported basis and an increase of 10% operationally, compared with the second quarter of 2018. Sales of companion animal products grew 12% on a reported basis and 21% on an operational basis. Growth resulted primarily from increased sales across our key dermatology portfolio, parasiticides, including Simparica and Stronghold® Plus, and the acquisition of Abaxis. Sales of livestock products declined 4% on a reported basis, but increased 4% operationally. Growth in our poultry portfolio was driven by increased sales of vaccines and medicated feed additives. Growth in cattle product sales was the result of a favorable comparison to the prior year which was negatively impacted by a national trucking strike in Brazil. Sales of swine products were flat compared to the prior year, with growth in vaccines, including new products, offset by the ongoing impact of African Swine Fever in China.
INVESTMENTS IN GROWTH
Zoetis diversifies and grows its business through the introduction of new products, lifecycle innovations, business development initiatives, and entries into new markets and technologies. The company is increasingly focused on developing integrated solutions for veterinarians and farmers that span the continuum of animal healthcare – helping to predict, prevent, detect and treat diseases.
Zoetis is strengthening its parasiticide portfolio for companion animals with new internal innovations. In July, the company received a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Veterinary Use (CVMP) for our three-way combination parasiticide for dogs, and looks forward to the final decision from the European Commission later this year. Regulatory reviews are also underway in the U.S., Canada, Australia, Brazil and Japan, with further submissions expected in China and Mexico this year. If approved, Zoetis anticipates this product coming to market in Europe and the U.S. in 2020. The company also recently gained U.S. Food and Drug Administration (FDA) approval of ProHeart 12 (moxidectin), the industry’s only once-yearly injection to prevent heartworm disease in dogs 12 months of age and older.
In the second quarter, Zoetis expanded its Fostera® swine vaccine franchise with approvals of different formulations in new geographies. Fostera Gold PCV MH was approved in Brazil. This vaccine, currently commercially available in the U.S., Canada and several other markets, provides livestock farmers with greater options and flexibility in protecting pigs from porcine circovirus (PCV2) and Mycoplasma hyopneumoniae (M. hyo). Fostera PCV, a single-dose vaccine that aids in the prevention of PCV2, was also approved in China.
In addition to new product approvals and lifecycle innovations, Zoetis continues to support future growth through business development activities. The company recently announced plans to acquire Platinum Performance, a privately held, nutrition-focused animal heath company. Platinum’s premium nutritional product formulas and unique approach to the field of scientific wellness for horses, dogs and cats will further strengthen and diversify Zoetis’ portfolio in the equine and petcare markets. The acquisition is expected to be completed in the third quarter of 2019 after customary closing conditions are met. The company also signed an agreement with Colorado State University (CSU) to establish a research lab at CSU that will explore the livestock immune system and target new immunotherapies that could serve as alternatives to antibiotics in food production animals.
Zoetis is raising its full year 2019 guidance, which includes:
Revenue between $6.175 billion and $6.275 billion
Reported diluted EPS between $2.93 and $3.04
Adjusted diluted EPS between $3.53 and $3.60
This increased guidance reflects the ongoing strength and performance of our business, as well as foreign exchange rates as of late July. Additional details on guidance are included in the financial tables and will be discussed on the company's conference call this morning.
WEBCAST & CONFERENCE CALL DETAILS
Zoetis will host a webcast and conference call at 8:30 a.m. (ET) today, during which company executives will review second quarter 2019 results, discuss financial guidance and respond to questions from financial analysts. Investors and the public may access the live webcast by visiting the Zoetis website at http://investor.zoetis.com/events-presentations. A replay of the webcast will be archived and made available on Aug. 6, 2019.
Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and a range of services. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2018, the company generated annual revenue of $5.8 billion with approximately 10,000 employees. For more information, visit www.zoetis.com.
1 Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as reported net income attributable to Zoetis and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items.
2 Operational revenue growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.
Forward-Looking Statements: This press release contains forward-looking statements, which reflect the current views of Zoetis with respect to business plans or prospects, future operating or financial performance, future guidance, future operating models, expectations regarding products, product approvals or products under development, expected timing of product launches, expectations regarding the performance of acquired companies and our ability to integrate new businesses, expectations regarding the financial impact of acquisitions, future use of cash and dividend payments, tax rate and tax regimes, changes in the tax regimes and laws in other jurisdictions, and other future events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management's underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, including in the sections thereof captioned “Forward-Looking Statements and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. These filings and subsequent filings are available online at www.sec.gov, www.zoetis.com, or on request from Zoetis.
Use of Non-GAAP Financial Measures: We use non-GAAP financial measures, such as adjusted net income, adjusted diluted earnings per share and operational results (which exclude the impact of foreign exchange), to assess and analyze our results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this press release should not be considered alternatives to measurements required by GAAP, such as net income, operating income, and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this press release and are posted on our website at www.zoetis.com.
Internet Posting of Information: We routinely post information that may be important to investors in the 'Investors' section of our website at www.zoetis.com, on our Facebook page at http://www.facebook.com/zoetis and on Twitter @zoetis. We encourage investors and potential investors to consult our website regularly and to follow us on Facebook and Twitter for important information about us.
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