Zoetis Announces First Quarter 2021 Results

Free stock photo of analysis, biochemistry, biology

Image Source: Unsplash 

  • Reports Revenue of $1.9 Billion, Growing 22%, and Net Income of $559 Million, or $1.17 per Diluted Share, Increasing 32% and 33%, respectively, on a Reported Basis for First Quarter 2021
  • Reports Adjusted Net Income of $603 Million, or Adjusted Diluted EPS of $1.26, for First Quarter 2021
  • Delivers 21% Operational Growth in Revenue and 34% Operational Growth in Adjusted Net Income for First Quarter 2021
  • Increases Full Year 2021 Revenue Guidance to $7.500 - $7.625 Billion and Diluted EPS of $4.08 - $4.19 on a Reported Basis, or $4.42 - $4.51 on an Adjusted Basis

May 06, 2021 07:00 AM Eastern Daylight Time

PARSIPPANY, N.J.--(BUSINESS WIRE)--Zoetis Inc. (NYSE: ZTS) today reported its financial results for the first quarter of 2021 and increased its guidance for full-year 2021.

The company reported revenue of $1.9 billion for the first quarter of 2021, an increase of 22% compared with the first quarter of 2020. Net income for the first quarter of 2021 was $559 million, or $1.17 per diluted share, an increase of 32% and 33%, respectively, on a reported basis.

Adjusted net income1 for the first quarter of 2021 was $603 million, or $1.26 per diluted share, an increase of 33%, on a reported basis. Adjusted net income for the first quarter of 2021 excludes the net impact of $44 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational2 basis, revenue for the first quarter of 2021 increased 21%, excluding the impact of foreign currency. Adjusted net income for the first quarter of 2021 increased 34% operationally, excluding the impact of foreign currency.

EXECUTIVE COMMENTARY

“We are off to a very strong start in 2021 -- our best quarter ever -- with 21% operational revenue growth and 34% growth in adjusted net income, as we continue to build on our innovative pet care portfolio, expand in key markets outside the U.S., and accelerate sales of diagnostics products,” said Kristin Peck, Chief Executive Officer of Zoetis.

“Looking ahead, we are raising guidance for operational growth in full-year revenue to the range of 10.5% to 12%. The fundamental growth drivers for our industry continue to show strong and sustainable momentum, and we remain confident that our diverse portfolio across species and geographies, our pipeline of innovative new products and lifecycle innovations, and the agility and commitment of our colleagues will continue driving our success in 2021 and beyond."

QUARTERLY HIGHLIGHTS

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 companion animals and livestock, tailored to local trends and customer needs. In the first quarter of 2021:

  • Revenue in the U.S. segment was $933 million, an increase of 19% compared with the first quarter of 2020. Sales of companion animal products increased 32% driven by growth in its parasiticides portfolio including the recently launched Simparica Trio® brand, the new triple combination parasiticide for dogs. Also contributing to growth was the company’s diagnostic franchise, resulting from increased sales of point-of-care consumables, and the key dermatology portfolio across both the Apoquel® and Cytopoint® brands. The company benefited from the continued recovery of veterinary clinic businesses, following the impact of social distancing restrictions that began in the same quarter of the prior year. Sales of livestock products decreased 4% in the quarter. The poultry portfolio declined as a result of the expanded use of lower-cost alternatives to the company’s premium products. Sales of swine products declined due to a non-recurring government purchase in the same quarter last year. These declines were partially offset by increased sales in the company’s cattle portfolio resulting from successful promotional activities.
  • Revenue in the International segment was $922 million, an increase of 27% on a reported basis and an increase of 25% operationally compared with the first quarter of 2020. Sales of companion animal products grew 40% on a reported basis and 37% on an operational basis. Growth resulted from increased sales of the company’s parasiticides portfolio including the Simparica® and Revolution®/Stronghold® franchises, as well as the key dermatology portfolio across both the Apoquel and Cytopoint brands. Growth also resulted from the company’s broader in-line portfolio, which benefited from increased pet ownership and medicalization rates, as well as pent up demand resulting from COVID-19 restrictions. Sales of livestock products grew 17% on both a reported and operational basis. Sales of swine products grew as a result of the continuing expansion of herd production and increased biosecurity measures in key accounts in the wake of African Swine Fever in China. Sales of cattle products grew due to promotional activities, key account penetration and favorable export market conditions in Brazil and other emerging markets around the world. Growth in the company’s fish portfolio was primarily the result of increased vaccine sales in key salmon markets, including favorable timing of vaccination programs. The recent acquisition of Fish Vet Group also contributed to growth in the quarter. Sales of poultry products grew modestly versus the same period in the prior year.

INVESTMENTS IN GROWTH

Zoetis continues to gain market approvals for its innovative monoclonal antibody (mAb) therapies that alleviate osteoarthritis (OA) pain in cats. Since its last quarterly earnings announcement, Zoetis received approval in the European Union (EU) for Solensia® (frunevetmab), the first injectable mAb for the alleviation of pain associated with OA in cats, a condition that is vastly underdiagnosed and undertreated in felines today; it is also approved in Switzerland.

In China, Zoetis’ second-largest market in terms of revenue, the company received approvals for several of its leading products. On the livestock side, Fostera® PCV MH, a one-shot vaccine for pigs that offers long-lasting combined protection against porcine circovirus type 2 (PCV2) and Mycoplasma hyopneumoniae infections, was approved, along with Excenel® RTU EZ (ceftiofur hydrochloride), a key anti-infective for cattle and swine. For companion animals, Zoetis expanded the reach of its parasiticide offering for cats with the approval of Revolution® Plus (selamectin and sarolaner topical solution).

Additionally, Zoetis continues to bring leading products into new markets. In poultry, the company expanded its line of recombinant vector vaccines with the approval of Poulvac® Procerta™ HVT-ND in Canada, Brazil, and other smaller markets. This vaccine provides early protection against the contemporary Marek and Newcastle viruses in chickens. In parasiticides, the company received approval of Simparica Trio (sarolaner, moxidectin, pyrantel chewable tablets) in Japan, Mexico, and other smaller markets.

FINANCIAL GUIDANCE

Zoetis is increasing its full year 2021 guidance, which includes:

  • Revenue between $7.500 billion and $7.625 billion
  • Reported diluted EPS between $4.08 and $4.19
  • Adjusted diluted EPS between $4.42 and $4.51

This guidance reflects foreign exchange rates as of late April. 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 first quarter 2021 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 May 6, 2021.

About Zoetis

As the world’s leading animal health company, Zoetis is driven by a singular purpose: to nurture our world and humankind by advancing care for animals. After nearly 70 years of innovating ways to predict, prevent, detect, and treat animal illness, Zoetis continues to stand by those raising and caring for animals worldwide -- from livestock farmers to veterinarians and pet owners. The company’s leading portfolio and pipeline of medicines, vaccines, diagnostics and technologies make a difference in over 100 countries. In 2020, Zoetis generated revenue of $6.7 billion with approximately 11,300 employees. For more information, visit www.zoetis.com.

Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as reported net income and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items.
Operational revenue growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.

DISCLOSURE NOTICES

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; the impact of the coronavirus (COVID-19) pandemic and any recovery therefrom on our business, suppliers, customers and employees; 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 and any changes thereto; 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, 2020, 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. Such risks and uncertainties may be amplified by the COVID-19 pandemic and its potential impact on the global economy and our business. These filings and subsequent filings are available online at www.sec.govwww.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.

ZTS-COR
ZTS-FIN
ZTS-IR

 

ZOETIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)

(UNAUDITED)

(millions of dollars, except per share data)

         

 

 

First Quarter

 

 

 

2021

 

2020

 

% Change

Revenue

 

$

1,871

 

 

$

1,534

 

 

22

Costs and expenses:

 

 

 

 

 

 

Cost of sales

 

549

 

 

459

 

 

20

Selling, general and administrative expenses

 

409

 

 

389

 

 

5

Research and development expenses

 

118

 

 

107

 

 

10

Amortization of intangible assets

 

40

 

 

40

 

 

Restructuring charges and certain acquisition-related costs

 

9

 

 

9

 

 

Interest expense

 

57

 

 

53

 

 

8

Other (income)/deductions–net

 

2

 

 

(20

)

 

*

Income before provision for taxes on income

 

687

 

 

497

 

 

38

Provision for taxes on income

 

129

 

 

74

 

 

74

Net income before allocation to noncontrolling interests

 

558

 

 

423

 

 

32

Less: Net loss attributable to noncontrolling interests

 

(1

)

 

 

 

*

Net income attributable to Zoetis

 

$

559

 

 

$

423

 

 

32

 

 

 

 

 

 

 

Earnings per share—basic

 

$

1.18

 

 

$

0.89

 

 

33

 

 

 

 

 

 

 

Earnings per share—diluted

 

$

1.17

 

 

$

0.88

 

 

33

 

 

 

 

 

 

 

Weighted-average shares used to calculate earnings per share

 

 

 

 

 

 

Basic

 

475.5

 

 

475.6

 

 

 

Diluted

 

477.9

 

 

479.0

 

 

 

 

 

 

 

 

 

 

1 2 3 4
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.