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02/16/2021

Zoetis Reports Fourth Quarter and Full Year 2020 Results

  • For Fourth Quarter 2020, Zoetis Reports Revenue of $1.8 Billion, Growing 8%, and Net Income of $359 Million, or $0.75 per Diluted Share, on a Reported Basis
    • Reports Adjusted Net Income of $438 Million, or Adjusted Diluted EPS of $0.91, for Fourth Quarter 2020
    • Delivers 9% Operational Growth in Revenue and 3% Operational Growth in Adjusted Net Income for Fourth Quarter 2020
  • For Full Year 2020, Zoetis Reports Revenue of $6.7 Billion, Growing 7%, and Net Income of $1.6 Billion, or $3.42 per Diluted Share, on a Reported Basis
    • Reports Adjusted Net Income of $1.8 Billion, or Adjusted Diluted EPS of $3.85 for Full Year 2020
    • Delivers 9% Operational Growth in Revenue and 10% Operational Growth in Adjusted Net Income for Full Year 2020
  • Provides Full Year 2021 Revenue Guidance of $7.400 - $7.550 Billion, with Diluted EPS of $4.02 - $4.14 on a Reported Basis, or $4.36 - $4.46 on an Adjusted Basis

Zoetis Inc. (NYSE: ZTS) today reported its financial results for the fourth quarter and full year 2020 and provided full year guidance for 2021.

The company reported revenue of $1.8 billion for the fourth quarter of 2020, which was an increase of 8% compared with the fourth quarter of 2019. Net income for the fourth quarter of 2020 was $359 million, or $0.75 per diluted share, compared with $384 million, or $0.80 per diluted share, in the fourth quarter of 2019.

Adjusted net income1 for the fourth quarter of 2020 was $438 million, relatively flat compared with the fourth quarter of 2019, or $0.91 per diluted share, a decrease of 1%. Adjusted net income for the fourth quarter of 2020 excludes the net impact of $79 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational2 basis, revenue for the fourth quarter of 2020, excluding the impact of foreign exchange, increased 9% compared with the fourth quarter of 2019. Adjusted net income for the fourth quarter of 2020 increased 3% operationally, excluding the impact of foreign exchange.

For full year 2020, the company reported revenue of $6.7 billion, an increase of 7% compared with full year 2019. Net income for full year 2020 was $1.6 billion, or $3.42 per diluted share, an increase of 9% and 10%, respectively.

Adjusted net incomefor full year 2020 was $1.8 billion, or $3.85 per diluted share, an increase of 5% and 6%, respectively. Adjusted net income for full year 2020 excludes the net impact of $206 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational basis, revenue for full year 2020 increased 9%, excluding the impact of foreign exchange. Adjusted net income for full year 2020 increased 10% operationally, excluding the impact of foreign exchange.

EXECUTIVE COMMENTARY

“In 2020, Zoetis delivered another year of strong growth and market leadership thanks to our diverse and durable portfolio, our commitment to continuous innovation and the essential nature of our business,” said Kristin Peck, Chief Executive Officer of Zoetis. “We grew revenue 9% operationally, which is once again above market growth in a competitive, global sector. We also grew our adjusted net income faster than revenue, at 10% operationally."

"Looking forward, we believe this momentum sets us up for a strong 2021, even amidst ongoing COVID-19 uncertainty. We expect to continue growing revenue faster than the market in 2021 driven by continued strength in petcare; ongoing expansion in markets outside the U.S., most notably China; and acceleration of our diagnostics portfolio penetration. As a result, we are guiding to full-year operational growth of 9% to 11% in revenue," said Peck.

QUARTERLY HIGHLIGHTS

Zoetis organizes and manages its commercial operations across two regional segments: the 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 fourth quarter of 2020:

  • Revenue in the U.S. segment was $952 million, an increase of 11% compared with the fourth quarter of 2019. Sales of companion animal products increased 30% driven primarily by growth in Simparica Trio®, the recently launched triple combination parasiticide for dogs, as well as the company’s key dermatology portfolio across both the Apoquel® and Cytopoint® brands. The diagnostic portfolio also contributed to growth based on the continued recovery of veterinary clinic business following the impact of social distancing restrictions earlier in the year and the acquisition of a number of regional diagnostic reference labs in late 2019. Sales of livestock products decreased 15% in the quarter. Sales of cattle products declined as a result of an earlier fall cattle run than the same period in the prior year, supply constraints on vaccines and generic competition. Sales of both swine and poultry products also declined in the quarter due to unfavorable market conditions related to the COVID-19 pandemic.
  • Revenue in the International segment was $832 million, an increase of 5% on a reported basis and an increase of 7% operationally compared with the fourth quarter of 2019. Sales of companion animal products grew 17% on a reported and operational basis. Growth resulted from increased sales across the broader in-line portfolio and with key accounts. Also contributing to growth in the quarter was the Simparica® franchise, including Simparica Trio, which was recently launched in Australia, the European Union (EU) and Canada, as well as the company’s key dermatology portfolio across both the Apoquel and Cytopoint brands. Sales of livestock products decreased 2% on a reported basis and increased 2% operationally. Sales of swine products grew in China as a result of expanding herd production in key accounts and increased biosecurity measures in the wake of African Swine Fever. In other key global swine markets, vaccine sales increased as a result of favorable market conditions including increased production and export opportunities. Growth in the company’s fish portfolio was driven primarily by increased market share for salmon vaccines and the acquisition of Fish Vet Group. The company’s cattle portfolio remained flat, while poultry product sales decreased versus the same period due to rotation programs and COVID-19 restrictions.

INVESTMENTS IN GROWTH

Zoetis continues to pave the way in the development of monoclonal antibody (mAb) therapies to treat osteoarthritis (OA) pain in dogs and cats. Since its last quarterly earnings announcement, the company received approval in the EU, Brazil, Canada and Switzerland for Librela® (bedinvetmab), the first injectable mAb licensed for alleviation of pain associated with OA in dogs. Similarly, Zoetis received approval in Switzerland for Solensia®(frunevetmab),the first injectable mAb for the treatment of pain associated with OA in cats, a condition that is vastly underdiagnosed and treated in felines today.

In other companion animal product advancements, the company gained approval in the EU for an extended claim for Cytopoint (lokivetmab), an injectable monoclonal antibody therapy for dogs. The new claim, which is already approved in the U.S., includes the treatment of pruritus associated with allergic dermatitis, in addition to the original claim of clinical manifestations of atopic dermatitis. Zoetis also expanded the geographic reach of key parasiticide products, with approvals of Simparica Trio (sarolaner, moxidectin, pyrantel chewable tablets) for dogs in Latin America and Revolution Plus® (selamectin and sarolaner topical solution) for cats in Asia.

In livestock, Zoetis received approval in the EU for CircoMax® Myco (also known as Fostera® Gold PCV MH outside of the EU), a one-shot vaccine for pigs that offers the longest lasting combined protection on the EU market against porcine circovirus type 2 (PCV2) and Mycoplasma hyopneumoniae infections. In poultry, the company expanded its line of recombinant vector vaccines with the approval of Poulvac® Procerta HVT-IBD in the U.S., which provides early protection against the contemporary infectious bursal disease (IBD) viruses in chickens.

FINANCIAL GUIDANCE

Zoetis is providing full year 2021 guidance, which includes:

  • Revenue between $7.400 billion to $7.550 billion
  • Reported diluted EPS between $4.02 to $4.14
  • Adjusted diluted EPS between $4.36 to $4.46

This guidance reflects foreign exchange rates as of late January. 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 fourth quarter and full year 2020 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 Feb. 16, 2021.

About Zoetis

Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses in advancing care for animals. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines, diagnostics, technologies and services, including biodevices, genetic tests and precision livestock farming. 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 2020, the company generated annual revenue of $6.7 billion with approximately 11,300 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 basis and operational revenue growth (non-GAAP financial measures) are 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; 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, 2019, 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.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.

ZTS-IR
ZTS-FIN

 

ZOETIS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)

(UNAUDITED)

(millions of dollars, except per share data)

 

 

 

Fourth Quarter

 

 

 

Full Year

 

 

 

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

Revenue

 

$

1,807

 

 

$

1,674

 

 

8

 

$

6,675

 

 

$

6,260

 

 

7

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

601

 

 

530

 

 

13

 

2,057

 

 

1,992

 

 

3

Selling, general and administrative expenses

 

520

 

 

472

 

 

10

 

1,726

 

 

1,638

 

 

5

Research and development expenses

 

133

 

 

132

 

 

1

 

463

 

 

457

 

 

1

Amortization of intangible assets

 

40

 

 

40

 

 

 

160

 

 

155

 

 

3

Restructuring charges and certain acquisition-related costs

 

3

 

 

18

 

 

(83)

 

25

 

 

51

 

 

(51)

Interest expense

 

58

 

 

56

 

 

4

 

231

 

 

223

 

 

4

Other (income)/deductions–net

 

32

 

 

(11

)

 

*

 

17

 

 

(57

)

 

*

Income before provision for taxes on income

 

420

 

 

437

 

 

(4)

 

1,996

 

 

1,801

 

 

11

Provision for taxes on income

 

62

 

 

53

 

 

17

 

360

 

 

301

 

 

20

Net income before allocation to noncontrolling interests

 

358

 

 

384

 

 

(7)

 

1,636

 

 

1,500

 

 

9

Less: Net loss attributable to noncontrolling interests

 

(1

)

 

 

 

*

 

(2

)

 

 

 

*

Net income attributable to Zoetis

 

$

359

 

 

$

384

 

 

(7)

 

$

1,638

 

 

$

1,500

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share—basic

 

$

0.75

 

 

$

0.81

 

 

(7)

 

$

3.44

 

 

$

3.14

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share—diluted

 

$

0.75

 

 

$

0.80

 

 

(6)

 

$

3.42

 

 

$

3.11

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used to calculate earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

475.6

 

 

476.4

 

 

 

 

475.5

 

 

478.1

 

 

 

Diluted

 

478.7

 

 

480.2

 

 

 

 

478.6

 

 

481.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

The Condensed Consolidated Statements of Income present the three and twelve months ended December 31, 2020 and 2019. Subsidiaries operating outside the U.S. are included for the three and twelve months ended November 30, 2020 and 2019.

 

* Calculation not meaningful.

 

ZOETIS INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(millions of dollars, except per share data)

 

 

 

Quarter Ended December 31, 2020

 

 

GAAP
Reported(a)

 

Purchase
Accounting
Adjustments

 

Acquisition-
Related
Costs(1)

 

Certain
Significant
Items(2)

 

Non-GAAP
Adjusted(b)

Cost of sales

 

$

601

 

 

$

(2

)

 

$

 

 

$

(15

)

 

$

584

 

Gross profit

 

1,206

 

 

2

 

 

 

 

15

 

 

1,223

 

Selling, general and administrative expenses

 

520

 

 

(7

)

 

 

 

(2

)

 

511

 

Research and development expenses

 

133

 

 

 

 

 

 

 

 

133

 

Amortization of intangible assets

 

40

 

 

(34

)

 

 

 

 

 

6

 

Restructuring charges and certain acquisition-related costs

 

3

 

 

 

 

(3

)

 

 

 

 

Other (income)/deductions–net

 

32

 

 

 

 

 

 

(22

)

 

10

 

Income before provision for taxes on income

 

420

 

 

43

 

 

3

 

 

39

 

 

505

 

Provision for taxes on income

 

62

 

 

9

 

 

(1

)

 

(2

)

 

68

 

Net income attributable to Zoetis

 

359

 

 

34

 

 

4

 

 

41

 

 

438

 

Earnings per common share attributable to Zoetis–diluted

 

0.75

 

 

0.07

 

 

0.01

 

 

0.08

 

 

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31, 2019

 

 

GAAP
Reported(a)

 

Purchase
Accounting
Adjustments

 

Acquisition-
Related
Costs(1)

 

Certain
Significant
Items(2)

 

Non-GAAP
Adjusted(b)

Cost of sales

 

$

530

 

 

$

(2

)

 

$

 

 

$

(1

)

 

$

527

 

Gross profit

 

1,144

 

 

2

 

 

 

 

1

 

 

1,147

 

Selling, general and administrative expenses

 

472

 

 

(18

)

 

 

 

(2

)

 

452

 

Research and development expenses

 

132

 

 

(1

)

 

 

 

 

 

131

 

Amortization of intangible assets

 

40

 

 

(34

)

 

 

 

 

 

6

 

Restructuring charges and certain acquisition-related costs

 

18

 

 

 

 

(10

)

 

(8

)

 

 

Other (income)/deductions–net

 

(11

)

 

 

 

 

 

 

 

(11

)

Income before provision for taxes on income

 

437

 

 

55

 

 

10

 

 

11

 

 

513

 

Provision for taxes on income

 

53

 

 

19

 

 

1

 

 

 

 

73

 

Net income attributable to Zoetis

 

384

 

 

36

 

 

9

 

 

11

 

 

440

 

Earnings per common share attributable to Zoetis–diluted

 

0.80

 

 

0.08

 

 

0.02

 

 

0.02

 

 

0.92

 

(a)

 

The Condensed Consolidated Statements of Income present the quarter ended December 31, 2020 and 2019. Subsidiaries operating outside the U.S. are included for the quarter ended November 30, 2020 and 2019.

(b)

 

Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.

See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2).

 

ZOETIS INC.

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(millions of dollars, except per share data)

 

 

 

Twelve Months Ended December 31, 2020

 

 

GAAP
Reported(a)

 

Purchase
Accounting
Adjustments

 

Acquisition-
Related
Costs(1)

 

Certain
Significant
Items(2)

 

Non-GAAP
Adjusted(b)

Cost of sales

 

$

2,057

 

 

$

(8

)

 

$

 

 

$

(19

)

 

$

2,030

 

Gross profit

 

4,618

 

 

8

 

 

 

 

19

 

 

4,645

 

Selling, general and administrative expenses

 

1,726

 

 

(54

)

 

 

 

(13

)

 

1,659

 

Research and development expenses

 

463

 

 

(1

)

 

 

 

 

 

462

 

Amortization of intangible assets

 

160

 

 

(135

)

 

 

 

 

 

25

 

Restructuring charges and certain acquisition-related costs

 

25

 

 

 

 

(18

)

 

(7

)

 

 

Other (income)/deductions–net

 

17

 

 

 

 

 

 

(4

)

 

13

 

Income before provision for taxes on income

 

1,996

 

 

198

 

 

18

 

 

43

 

 

2,255

 

Provision for taxes on income

 

360

 

 

56

 

 

(1

)

 

(2

)

 

413

 

Net income attributable to Zoetis

 

1,638

 

 

142

 

 

19

 

 

45

 

 

1,844

 

Earnings per common share attributable to Zoetis–diluted

 

3.42

 

 

0.30

 

 

0.04

 

 

0.09

 

 

3.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2019

 

 

GAAP
Reported(a)

 

Purchase
Accounting
Adjustments

 

Acquisition-
Related
Costs(1)

 

Certain
Significant
Items(2)

 

Non-GAAP
Adjusted(b)

Cost of sales

 

$

1,992

 

 

$

(24

)

 

$

 

 

$

(77

)

 

$

1,891

 

Gross profit

 

4,268

 

 

24

 

 

 

 

77

 

 

4,369

 

Selling, general and administrative expenses

 

1,638

 

 

(72

)

 

 

 

(2

)

 

1,564

 

Research and development expenses

 

457

 

 

(2

)

 

 

 

 

 

455

 

Amortization of intangible assets

 

155

 

 

(136

)

 

 

 

 

 

19

 

Restructuring charges and certain acquisition-related costs

 

51

 

 

 

 

(43

)

 

(8

)

 

 

Other (income)/deductions–net

 

(57

)

 

 

 

 

 

20

 

 

(37

)

Income before provision for taxes on income

 

1,801

 

 

234

 

 

43

 

 

67

 

 

2,145

 

Provision for taxes on income

 

301

 

 

78

 

 

7

 

 

4

 

 

390

 

Net income attributable to Zoetis

 

1,500

 

 

156

 

 

36

 

 

63

 

 

1,755

 

Earnings per common share attributable to Zoetis–diluted

 

3.11

 

 

0.32

 

 

0.08

 

 

0.13

 

 

3.64

 

(a)

 

The Condensed Consolidated Statements of Income present the twelve months ended December 31, 2020 and 2019. Subsidiaries operating outside the U.S. are included for the twelve months ended November 30, 2020 and 2019.

(b)

 

Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. generally accepted accounting principles (GAAP) net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.

See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2).

 

ZOETIS INC.

NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(millions of dollars)

 

(1) Acquisition-related costs include the following:

 

 

 

Fourth Quarter

 

Full Year

 

 

2020

 

2019

 

2020

 

2019

Integration costs(a)

 

$

2

 

 

$

5

 

 

$

17

 

 

$

18

 

Restructuring charges(b)

 

1

 

 

5

 

 

1

 

 

25

 

Total acquisition-related costs—pre-tax

 

3

 

 

10

 

 

18

 

 

43

 

Income taxes(c)

 

(1

)

 

1

 

 

(1

)

 

7

 

Total acquisition-related costs—net of tax

 

$

4

 

 

$

9

 

 

$

19

 

 

$

36

 

(a) 

 

Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes. Included in Restructuring charges and certain acquisition-related costs.

(b) 

 

Represents employee termination costs, included in Restructuring charges and certain acquisition-related costs.

(c) 

 

Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. For the twelve months ended December 31, 2020, also includes a tax charge related to a remeasurement of deferred taxes resulting from the integration of acquired businesses.

(2) Certain significant items include the following:

 

 

 

Fourth Quarter

 

Full Year

 

 

2020

 

2019

 

2020

 

2019

Operational efficiency initiative(a)

 

$

 

 

$

 

 

$

(18

)

 

$

(20

)

Supply network strategy(b)

 

 

 

 

 

4

 

 

7

 

Other restructuring charges and cost-reduction/productivity initiatives(c)

 

 

 

8

 

 

7

 

 

8

 

Certain asset impairment charges(d)

 

37

 

 

 

 

37

 

 

 

Other(e)

 

2

 

 

3

 

 

13

 

 

72

 

Total certain significant items—pre-tax

 

39

 

 

11

 

 

43

 

 

67

 

Income taxes(f)

 

(2

)

 

 

 

(2

)

 

4

 

Total certain significant items—net of tax

 

$

41

 

 

$

11

 

 

$

45

 

 

$

63

 

(a) 

 

Represents a net gain resulting from net cash proceeds received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites, included in Other (income)/deductions-net.

(b) 

 

Represents consulting fees, included in Cost of sales, related to cost-reduction and productivity initiatives.

(c) 

 

Represents employee termination costs incurred as a result of the CEO transition and other cost-reduction and productivity initiatives, included in Restructuring charges and certain acquisition-related costs.

(d)

 

For the quarter and twelve months ended December 31, 2020, primarily represents asset impairment charges related to:

  • Developed technology rights in our precision livestock farming and aquatic health businesses, included in Other (income)/deductions-net;
  • Inventory in our precision livestock farming business, included in Cost of sales; and
  • Property, plant and equipment in our precision livestock farming business, included in Other (income)/deductions-net.

(e)

For the quarter and twelve months ended December 31, 2020, primarily represents the modification of share-based compensation related to CEO transition costs, included in Selling, general and administrative expenses. For the twelve months ended December 31, 2019, represents a change in estimate related to inventory costing, included in Cost of sales.

(f)

Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. For the quarter and twelve months ended December 31, 2020, also includes a tax charge related to changes in valuation allowance related to impairments of acquired businesses.

 

ZOETIS INC.

ADJUSTED SELECTED COSTS AND EXPENSES(a)

(UNAUDITED)

(millions of dollars)

 

 

 

Fourth Quarter

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign
Exchange

 

Operational(b)

Adjusted cost of sales

 

$

584

 

 

$

527

 

 

11%

 

 

 

—%

 

 

11%

 

As a percent of revenue

 

32.3

%

 

31.5

%

 

NA

 

 

 

NA

 

 

NA

 

Adjusted SG&A expenses

 

511

 

 

452

 

 

13%

 

 

 

—%

 

 

13%

 

Adjusted R&D expenses

 

133

 

 

131

 

 

2%

 

 

 

2%

 

 

—%

 

Adjusted net income attributable to Zoetis

 

438

 

 

440

 

 

—%

 

 

 

(3)%

 

 

3%

 

 

 

 

 

 

 

 

 

Full Year

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign
Exchange

 

Operational(b)

Adjusted cost of sales

 

$

2,030

 

 

$

1,891

 

 

7%

 

 

 

(1)%

 

 

8%

 

As a percent of revenue

 

30.4

%

 

30.2

%

 

NA

 

 

 

NA

 

 

NA

 

Adjusted SG&A expenses

 

1,659

 

 

1,564

 

 

6%

 

 

 

(1)%

 

 

7%

 

Adjusted R&D expenses

 

462

 

 

455

 

 

2%

 

 

 

—%

 

 

2%

 

Adjusted net income attributable to Zoetis

 

1,844

 

 

1,755

 

 

5%

 

 

 

(5)%

 

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) 

 

Adjusted cost of sales, adjusted selling, general, and administrative (SG&A) expenses, adjusted research and development (R&D) expenses, and adjusted net income attributable to Zoetis (non-GAAP financial measures) are defined as the corresponding reported U.S. GAAP income statement line items excluding purchase accounting adjustments, acquisition-related costs, and certain significant items. These adjusted income statement line item measures are not, and should not be viewed as, substitutes for the corresponding U.S. GAAP line items. The corresponding U.S. GAAP line items and reconciliations of reported to adjusted information are provided in Condensed Consolidated Statements of Income and Reconciliation of GAAP Reported to Non-GAAP Adjusted Information.

(b) 

 

Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.

ZOETIS INC.

2021 GUIDANCE

 

Selected Line Items
(millions of dollars, except per share amounts)

Full Year 2021

Revenue

$7,400 to $7,550

Operational growth(a)

9% to 11%

Adjusted cost of sales as a percentage of revenue(b)

Approximately 30%

Adjusted SG&A expenses(b)

$1,775 to $1,850

Adjusted R&D expenses(b)

$500 to $520

Adjusted interest expense and other (income)/deductions-net(b)

Approximately $260

Effective tax rate on adjusted income(b)

Approximately 20%

Adjusted diluted EPS(b)

$4.36 to $4.46

Adjusted net income(b)

$2,080 to $2,130

Operational growth(a)(c)

9% to 12%

Certain significant items and acquisition-related costs(d)

$15 - $25

 

 

The guidance reflects foreign exchange rates as of late January 2021.

 

Reconciliations of 2021 reported guidance to 2021 adjusted guidance follows:

(millions of dollars, except per share amounts)

Reported

Certain significant

items and

acquisition-related

costs(d)

Purchase

accounting

Adjusted(b)

Cost of sales as a percentage of revenue

~ 30.3%

~ (0.2%)

~ (0.1%)

~ 30%

SG&A expenses

$1,820 to $1,895

 

~ $(45)

$1,775 to $1,850

R&D expenses

$501 to $521

 

~ $(1)

$500 to $520

Interest expense and other (income)/deductions

~ $260

 

 

~ $260

Effective tax rate

~ 20%

 

 

~ 20%

Diluted EPS

$4.02 to $4.14

$0.03 to $0.05

~ $0.29

$4.36 to $4.46

Net income attributable to Zoetis

$1,915 to $1,975

$15 to $25

~ $140

$2,080 to $2,130

(a)  

Operational growth (a non-GAAP financial measure) excludes the impact of foreign exchange.

(b) 

 

Adjusted net income and its components and adjusted diluted EPS are defined as reported U.S. GAAP net income and its components and reported diluted EPS excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted cost of sales, adjusted SG&A expenses, adjusted R&D expenses, and adjusted interest expense and other (income)/deductions are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. Despite the importance of these measures to management in goal setting and performance measurement, adjusted net income and its components and adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, adjusted net income and its components and adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Adjusted net income and its components and adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. Adjusted net income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.

(c) 

 

We do not provide a reconciliation of forward-looking non-GAAP adjusted net income operational growth to the most directly comparable U.S. GAAP reported financial measure because we are unable to calculate with reasonable certainty the foreign exchange impact of unusual gains and losses, acquisition-related expenses, potential future asset impairments and other certain significant items, without unreasonable effort. The foreign exchange impacts of these items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period.

(d) 

 

Primarily includes certain nonrecurring costs related to acquisitions and other charges.

 

ZOETIS INC.

CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES

(UNAUDITED)

(millions of dollars)

 

 

 

Fourth Quarter

 

% Change

 

 

2020

 

2019

 

Total

 

Foreign

Exchange

 

Operational(b)

Revenue:

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

978

 

 

$

784

 

 

25

%

 

%

 

25

%

Livestock

 

806

 

 

868

 

 

(7)

%

 

(2)

%

 

(5)

%

Contract Manufacturing & Human Health

 

23

 

 

22

 

 

5

%

 

6

%

 

(1)

%

Total Revenue

 

$

1,807

 

 

$

1,674

 

 

8

%

 

(1)

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

634

 

 

$

489

 

 

30

%

 

%

 

30

%

Livestock

 

318

 

 

372

 

 

(15)

%

 

%

 

(15)

%

Total U.S. Revenue

 

$

952

 

 

$

861

 

 

11

%

 

%

 

11

%

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

344

 

 

$

295

 

 

17

%

 

%

 

17

%

Livestock

 

488

 

 

496

 

 

(2)

%

 

(4)

%

 

2

%

Total International Revenue

 

$

832

 

 

$

791

 

 

5

%

 

(2)

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

Companion Animal:

 

 

 

 

 

 

 

 

 

 

Dogs and Cats

 

$

913

 

 

$

719

 

 

27

%

 

%

 

27

%

Horses

 

65

 

 

65

 

 

%

 

%

 

%

Total Companion Animal Revenue

 

$

978

 

 

$

784

 

 

25

%

 

%

 

25

%

 

 

 

 

 

 

 

 

 

 

 

Livestock:

 

 

 

 

 

 

 

 

 

 

Cattle

 

$

451

 

 

$

506

 

 

(11)

%

 

(3)

%

 

(8)

%

Swine

 

167

 

 

162

 

 

3

%

 

%

 

3

%

Poultry

 

125

 

 

142

 

 

(12)

%

 

(2)

%

 

(10)

%

Fish

 

47

 

 

44

 

 

7

%

 

%

 

7

%

Sheep and other

 

16

 

 

14

 

 

14

%

 

1

%

 

13

%

Total Livestock Revenue

 

$

806

 

 

$

868

 

 

(7)

%

 

(2)

%

 

(5)

%

(a) 

 

For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K.

(b) 

 

Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange.

 

ZOETIS INC.

CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES

(UNAUDITED)

(millions of dollars)

 

 

 

Full Year

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign

Exchange

 

Operational(b)

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

3,652

 

 

$

3,145

 

 

16

%

 

 

(1)

%

 

17

%

Livestock

 

2,940

 

 

3,030

 

 

(3)

%

 

 

(3)

%

 

%

Contract Manufacturing & Human Health

 

83

 

 

85

 

 

(2)

%

 

 

1

%

 

(3)

%

Total Revenue

 

$

6,675

 

 

$

6,260

 

 

7

%

 

 

(2)

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

2,391

 

 

$

1,984

 

 

21

%

 

 

%

 

21

%

Livestock

 

1,166

 

 

1,219

 

 

(4)

%

 

 

%

 

(4)

%

Total U.S. Revenue

 

$

3,557

 

 

$

3,203

 

 

11

%

 

 

%

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

 

 

 

 

 

 

Companion Animal

 

$

1,261

 

 

$

1,161

 

 

9

%

 

 

(3)

%

 

12

%

Livestock

 

1,774

 

 

1,811

 

 

(2)

%

 

 

(5)

%

 

3

%

Total International Revenue

 

$

3,035

 

 

$

2,972

 

 

2

%

 

 

(5)

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

Companion Animal:

 

 

 

 

 

 

 

 

 

 

 

Dogs and Cats

 

3,437

 

 

2,950

 

 

17

%

 

 

(1)

%

 

18

%

Horses

 

215

 

 

195

 

 

10

%

 

 

(1)

%

 

11

%

Total Companion Animal Revenue

 

$

3,652

 

 

$

3,145

 

 

16

%

 

 

(1)

%

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

Livestock:

 

 

 

 

 

 

 

 

 

 

 

Cattle

 

$

1,558

 

 

$

1,654

 

 

(6)

%

 

 

(4)

%

 

(2)

%

Swine

 

621

 

 

611

 

 

2

%

 

 

(2)

%

 

4

%

Poultry

 

537

 

 

559

 

 

(4)

%

 

 

(3)

%

 

(1)

%

Fish

 

148

 

 

134

 

 

10

%

 

 

(3)

%

 

13

%

Sheep and other

 

76

 

 

72

 

 

6

%

 

 

(2)

%

 

8

%

Total Livestock Revenue

 

$

2,940

 

 

$

3,030

 

 

(3)

%

 

 

(3)

%

 

%

(a) 

 

For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K.

(b) 

 

Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange.

ZOETIS INC.

CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS

(UNAUDITED)

(millions of dollars)

 

 

 

Fourth Quarter

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign

Exchange

 

Operational(a)

Total International

 

$

832.8

 

 

$

791.6

 

 

5

%

 

 

(2)

%

 

7

%

Australia

 

53.4

 

 

46.4

 

 

15

%

 

 

6

%

 

9

%

Brazil

 

77.0

 

 

86.9

 

 

(11)

%

 

 

(29)

%

 

18

%

Canada

 

66.1

 

 

64.9

 

 

2

%

 

 

%

 

2

%

Chile

 

28.3

 

 

26.5

 

 

7

%

 

 

(3)

%

 

10

%

China

 

68.0

 

 

44.4

 

 

53

%

 

 

8

%

 

45

%

France

 

35.3

 

 

33.7

 

 

5

%

 

 

7

%

 

(2)

%

Germany

 

46.5

 

 

42.6

 

 

9

%

 

 

7

%

 

2

%

Italy

 

27.8

 

 

30.1

 

 

(8)

%

 

 

6

%

 

(14)

%

Japan

 

43.9

 

 

40.5

 

 

8

%

 

 

3

%

 

5

%

Mexico

 

32.2

 

 

29.4

 

 

10

%

 

 

(9)

%

 

19

%

Spain

 

29.5

 

 

28.2

 

 

5

%

 

 

8

%

 

(3)

%

United Kingdom

 

52.5

 

 

52.7

 

 

%

 

 

4

%

 

(4)

%

Other Developed

 

105.9

 

 

100.7

 

 

5

%

 

 

4

%

 

1

%

Other Emerging

 

166.4

 

 

164.6

 

 

1

%

 

 

(6)

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Full Year

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign

Exchange

 

Operational(a)

Total International

 

$

3,035.4

 

 

$

2,972.2

 

 

2

%

 

 

(5)

%

 

7

%

Australia

 

207.2

 

 

195.9

 

 

6

%

 

 

(2)

%

 

8

%

Brazil

 

258.3

 

 

293.0

 

 

(12)

%

 

 

(26)

%

 

14

%

Canada

 

209.8

 

 

206.4

 

 

2

%

 

 

(1)

%

 

3

%

Chile

 

100.1

 

 

90.9

 

 

10

%

 

 

(5)

%

 

15

%

China

 

265.7

 

 

200.1

 

 

33

%

 

 

(1)

%

 

34

%

France

 

117.7

 

 

116.7

 

 

1

%

 

 

1

%

 

%

Germany

 

158.6

 

 

153.3

 

 

3

%

 

 

1

%

 

2

%

Italy

 

90.5

 

 

112.0

 

 

(19)

%

 

 

1

%

 

(20)

%

Japan

 

177.2

 

 

158.1

 

 

12

%

 

 

2

%

 

10

%

Mexico

 

115.8

 

 

116.6

 

 

(1)

%

 

 

(10)

%

 

9

%

Spain

 

112.2

 

 

114.4

 

 

(2)

%

 

 

1

%

 

(3)

%

United Kingdom

 

177.9

 

 

198.1

 

 

(10)

%

 

 

1

%

 

(11)

%

Other Developed

 

388.2

 

 

370.1

 

 

5

%

 

 

%

 

5

%

Other Emerging

 

656.2

 

 

646.6

 

 

1

%

 

 

(7)

%

 

8

%

(a)

 

Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange.

ZOETIS INC.

SEGMENT(a) EARNINGS

(UNAUDITED)

(millions of dollars)

 

 

Fourth Quarter

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign

Exchange

 

Operational(b)

U.S.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

952

 

 

$

861

 

 

11

%

 

 

%

 

11

%

Cost of sales

 

194

 

 

187

 

 

4

%

 

 

%

 

4

%

Gross profit

 

758

 

 

674

 

 

12

%

 

 

%

 

12

%

Gross margin

 

79.6

%

 

78.3

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

184

 

 

176

 

 

5

%

 

 

%

 

5

%

Other (income)/deductions-net

 

3

 

 

 

 

 

 

 

U.S. Earnings

 

$

571

 

 

$

498

 

 

15

%

 

 

%

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

832

 

 

$

791

 

 

5

%

 

 

(2)

%

 

7

%

Cost of sales

 

274

 

 

263

 

 

4

%

 

 

(6)

%

 

10

%

Gross profit

 

558

 

 

528

 

 

6

%

 

 

%

 

6

%

Gross margin

 

67.1

%

 

66.8

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

146

 

 

148

 

 

(1)

%

 

 

%

 

(1)

%

Other (income)/deductions-net

 

6

 

 

 

 

 

 

 

International Earnings

 

$

406

 

 

$

380

 

 

7

%

 

 

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Reportable Segments

 

$

977

 

 

$

878

 

 

11

%

 

 

%

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other business activities(c)

 

(108)

 

 

(102)

 

 

6

%

 

 

 

 

 

 

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate(d)

 

(261)

 

 

(195)

 

 

34

%

 

 

 

 

 

 

 

Purchase accounting adjustments(e)

 

(43)

 

 

(55)

 

 

(22)

%

 

 

 

 

 

 

 

Acquisition-related costs(f)

 

(3)

 

 

(10)

 

 

(70)

%

 

 

 

 

 

 

 

Certain significant items(g)

 

(39)

 

 

(11)

 

 

 

 

 

 

 

 

 

Other unallocated(h)

 

(103)

 

 

(68)

 

 

51

%

 

 

 

 

 

 

 

Total Earnings(i)

 

$

420

 

 

$

437

 

 

(4)

%

 

 

 

 

 

 

 

(a) 

 

For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K.

(b) 

 

Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.

(c) 

 

Other business activities reflect the research and development costs managed by our Research and Development organization as well as our contract manufacturing and human health businesses.

(d) 

 

Corporate includes, among other things, administration expenses, interest expense, certain compensation costs, certain procurement costs, and other costs not charged to our operating segments.

(e) 

 

Purchase accounting adjustments include certain charges related to the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment not charged to our operating segments.

(f) 

 

Acquisition-related costs include costs associated with acquiring and integrating newly-acquired businesses, such as transaction costs and integration costs.

(g) 

 

Certain significant items includes substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include certain asset impairment charges and restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition.

(h) 

 

Includes overhead expenses associated with our manufacturing and supply operations not directly attributable to an operating segment, as well as certain procurement costs.

(i) 

 

Defined as income before provision for taxes on income.

* Calculation not meaningful.

ZOETIS INC.

SEGMENT(a) EARNINGS

(UNAUDITED)

(millions of dollars)

 

 

Full Year

 

% Change

 

 

2020

 

2019

 

Total

 

 

Foreign

Exchange

 

Operational(b)

U.S.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

3,557

 

 

$

3,203

 

 

11

%

 

 

%

 

11

%

Cost of sales

 

709

 

 

655

 

 

8

%

 

 

%

 

8

%

Gross profit

 

2,848

 

 

2,548

 

 

12

%

 

 

%

 

12

%

Gross margin

 

80.1

%

 

79.6

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

602

 

 

543

 

 

11

%

 

 

%

 

11

%

Other (income)/deductions-net

 

7

 

 

 

 

 

 

*

 

U.S. Earnings

 

$

2,239

 

 

$

2,005

 

 

12

%

 

 

%

 

12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

3,035

 

 

$

2,972

 

 

2

%

 

 

(5)

%

 

7

%

Cost of sales

 

971

 

 

925

 

 

5

%

 

 

(4)

%

 

9

%

Gross profit

 

2,064

 

 

2,047

 

 

1

%

 

 

(4)

%

 

5

%

Gross margin

 

68.0

%

 

68.9

%

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

510

 

 

560

 

 

(9)

%

 

 

(4)

%

 

(5)

%

Other (income)/deductions-net

 

7

 

 

 

 

 

 

 

International Earnings

 

$

1,547

 

 

$

1,487

 

 

4

%

 

 

(5)

%

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Reportable Segments

 

$

3,786

 

 

$

3,492

 

 

8

%

 

 

(3)

%

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other business activities(c)

 

(372)

 

 

(348)

 

 

7

%

 

 

 

 

 

 

 

Reconciling Items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate(d)

 

(820)

 

 

(707)

 

 

16

%

 

 

 

 

 

 

 

Purchase accounting adjustments(e)

 

(198)

 

 

(234)

 

 

(15)

%

 

 

 

 

 

 

 

Acquisition-related costs(f)

 

(18)

 

 

(43)

 

 

(58)

%

 

 

 

 

 

 

 

Certain significant items(g)

 

(43)

 

 

(67)

 

 

(36)

%

 

 

 

 

 

 

 

Other unallocated(h)

 

(339)

 

 

(292)

 

 

16

%

 

 

 

 

 

 

 

Total Earnings(i)

 

$

1,996

 

 

$

1,801

 

 

11

%

 

 

 

 

 

 

 

(a) 

 

For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K.

(b) 

 

Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.

(c) 

 

Other business activities reflect the research and development costs managed by our Research and Development organization as well as our contract manufacturing and human health businesses.

(d) 

 

Corporate includes, among other things, administration expenses, interest expense, certain compensation costs, certain procurement costs, and other costs not charged to our operating segments.

(e) 

 

Purchase accounting adjustments include certain charges related to the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment not charged to our operating segments.

(f) 

 

Acquisition-related costs include costs associated with acquiring and integrating newly-acquired businesses, such as transaction costs and integration costs.

(g) 

 

Certain significant items includes substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include certain asset impairment charges, restructuring charges and implementation costs associated with our cost-reduction/productivity initiatives that are not associated with an acquisition, costs associated with the operational efficiency initiative and supply network strategy, and the impact of divestiture-related gains and losses.

(h) 

 

Includes overhead expenses associated with our manufacturing and supply operations not directly attributable to an operating segment, as well as certain procurement costs.

(i) 

 

Defined as income before provision for taxes on income.

* Calculation not meaningful.

 

Media Contacts:
Bill Price
1-973-443-2742 (o)
william.price@zoetis.com

Kristen Seely
1-973-443-2777 (o)
kristen.seely@zoetis.com

Investor Contacts:
Steve Frank
1-973-822-7141 (o)
steve.frank@zoetis.com

Keith Gaub
1-973-822-7154 (o)
keith.gaub@zoetis.com

Source: Zoetis Inc.

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