Zoetis Announces Second Quarter 2017 Results

PARSIPPANY, N.J.--(BUSINESS WIRE)--Zoetis Inc. (NYSE:ZTS) today reported its financial results for the second quarter of 2017 and increased its full year guidance for revenue and net income.

The company reported revenue of $1.3 billion for the second quarter of 2017, an increase of 5% compared with the second quarter of 2016. Net income for the second quarter of 2017 was $247 million, or $0.50 per diluted share, an increase of 10% and 11%, respectively, on a reported basis.

Adjusted net income¹ for the second quarter of 2017 was $261 million, or $0.53 per diluted share, an increase of 6% and 8%, respectively, on a reported basis. Adjusted net income for the second quarter of 2017 excludes the net impact of $14 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational² basis, revenue for the second quarter of 2017 increased 6%, excluding the impact of foreign currency. Adjusted net income for the second quarter of 2017 increased 11% operationally, excluding the impact of foreign currency.

EXECUTIVE COMMENTARY

“As in previous quarters, the consistency of our financial results is supported by the innovations we bring to the market and the diversity of our portfolio across geographies, species and therapeutic areas,” said Juan Ramón Alaix, Chief Executive Officer at Zoetis. “Zoetis was able to generate an 11% operational increase in adjusted net income on 6% operational growth in revenue in the second quarter. Our companion animal business remains the largest driver of our growth, supported by the continued adoption of products like Apoquel, Cytopoint and Simparica, while our livestock portfolio continues to grow based on the breadth of our solutions and global presence.”

“Based on recent foreign exchange rates and continued confidence in our performance for the year, we are improving our full year guidance for revenue and net income,” said Glenn David, Executive Vice President and Chief Financial Officer at Zoetis. “We will continue to build on our foundation for sustainable long term growth, allocating cash and other resources to support new products, lifecycle innovation, market expansion and business development opportunities.”

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 livestock and companion animals tailored to local trends and customer needs. In the second quarter of 2017:

• Revenue in the U.S. segment was $623 million, an increase of 5% compared with the second quarter of 2016. Sales of companion animal products grew 7%, driven by increased sales in our dermatology portfolio, in addition to several other new product launches. Growth was partially offset by lower sales of our pain products due to competition and timing of promotional campaigns. Sales of livestock products grew 3% driven primarily by increased sales of cattle and poultry products. Growth was partially offset by lower sales of swine products. In addition, certain medicated feed additive products for cattle and swine were negatively impacted by livestock producers’ implementation of the Veterinary Feed Directive.
• Revenue in the International segment was $634 million, an increase of 5% on a reported basis and 7% operationally compared with the second quarter of 2016. Sales of companion animal products grew 12% on a reported basis and 15% operationally, resulting primarily from increased sales of Apoquel^®, in addition to new product launches, primarily Simparica^®. Sales of livestock products grew 2% on a reported basis and 3% on an operational basis, driven primarily by increased sales of cattle and swine products. In cattle, growth was due to higher sales in Brazil and other Latin American markets, with increased demand in Brazil as a result of field force expansion, while swine was driven by growth in China. Growth was partially offset by product rationalizations as a result of our operational efficiency initiative.

Zoetis continues to drive demand and strengthen its diverse portfolio through the introduction of new products, lifecycle innovations, business development initiatives, strong customer relationships and entry into new markets and technologies. In the second quarter of 2017:

• In a prime example of lifecycle innovation to keep brand product franchises delivering value to customers, Zoetis received approval in May from the U.S. Food and Drug Administration (FDA) for the company’s Clavamox^® Chewable (amoxicillin/clavulanate potassium tablets) for use in dogs. This leading anti-infective, first approved in the U.S. in 1984, provides a broad spectrum of treatment for skin infections in dogs and cats, periodontal infections in dogs and urinary tract infections in cats. Clavamox Chewables join the original tablet and liquid drop formulations, which Zoetis will continue to market.
• Zoetis continued to extend its dermatology portfolio to new markets with approvals of Apoquel (oclacitinib tablet) in Vietnam and Cytopoint^® (lokivetmab) in New Zealand. Apoquel, first approved in 2013, is indicated for the control of pruritus (itching) associated with allergic dermatitis and control of atopic dermatitis in dogs at least 12 months of age. Monoclonal antibody therapy Cytopoint, fully licensed in the United States in 2016 and in Europe and Canada earlier this year, aids in the reduction of clinical signs associated with atopic dermatitis in dogs. The company also continued expanding the availability of its oral flea and tick medication Simparica (sarolaner) Chewables with an approval in Peru. Simparica received its first approval in 2015. It delivers fast and persistent protection from fleas and ticks in dogs, with effectiveness that lasts for a full 35 days, without losing efficacy at the end of the month.
• On July 31, Zoetis completed the acquisition of Nexvet Biopharma plc, an innovator in monoclonal antibody therapies for companion animals in management of chronic pain and other therapeutic areas. The acquisition strengthens Zoetis’ R&D pipeline in monoclonal antibodies and helps sustain the company’s leadership in chronic pain management for companion animals, an area poised for innovation with new monoclonal antibody therapies.

FINANCIAL GUIDANCE