Zoetis Inc. (NYSE:ZTS) Jefferies London Healthcare Conference November 20, 2024 10:00 AM ET Company Participants Wetteny Joseph - CFO Conference Call Participants Glen Santangelo - Jefferies Glen Santangelo Thank you for taking the time to join us this afternoon. We're very excited to have Zoetis for our next presentation. For those of you who don't know me, I'm Glen Santangelo. I'm the analyst at Jefferies that covers the stock. I cover a number of things in addition to animal health, spec pharma and HCIT. ...

Summary of Zoetis Inc. Conference Call Company Overview - **Company**: Zoetis Inc. (NYSE: ZTS) - **Event**: Jefferies London Healthcare Conference - **Date**: November 20, 2024 - **Participants**: Wetteny Joseph (CFO), Glen Santangelo (Jefferies Analyst) Key Points Financial Performance - **Q3 Revenue Growth**: 14% operational growth in revenue, marking the third consecutive quarter of double-digit growth [2][3] - **Adjusted Net Income Growth**: 15% increase in adjusted net income [3] - **Companion Animal Segment**: Grew approximately 15%, with 8% from volume and 6% from price [5] - **Livestock Segment**: Achieved 11% growth in Q3, indicating strong performance despite broader market growth of 2% to 4% [36] Companion Animal Business - **Dermatology Franchise**: - Grew 16% in Q3, with Apoquel and Cytopoint driving growth [7][8] - Approximately 20 million dogs globally are under-treated for atopic dermatitis, presenting a significant market opportunity [8][10] - Increased awareness and direct-to-consumer campaigns have contributed to growth [8][10] - **Parasiticides**: - Trio product grew 30% year-over-year, with over half of the growth attributed to volume [14][15] - Significant market share gains from both new and existing customers [18] Market Dynamics - **Pricing Strategy**: - Price realization has improved, contributing to higher growth rates [20] - Excluding hyperinflationary impacts, the company expects to maintain pricing at or slightly above historical trends of 2% to 3% [6][41] - **Competition**: - Anticipated competition in dermatology and parasiticides is expected to drive market education and growth [10][13] Future Outlook - **Guidance for 2024**: - Revenue growth guidance raised to 10% to 11% from previous estimates [38] - Anticipated strong year-over-year growth in 2025, despite the impact of the MFA divestiture [41] - **Livestock Business**: - Expected to continue double-digit growth, with adjustments post-divestiture of the medicated feed additives business [36][37] Additional Insights - **Safety Profile**: Ongoing routine discussions with the FDA regarding product safety, with no unusual concerns reported [32][33] - **Market Trends**: Increasing pet ownership and the human-animal bond are driving demand for veterinary care and products [10][11] Conclusion Zoetis Inc. demonstrated robust financial performance in Q3 2024, with significant growth across its companion animal and livestock segments. The company is well-positioned for future growth, supported by strong market dynamics, effective pricing strategies, and ongoing product innovation.

Company Overview - Zoetis Inc. (NYSE: ZTS) is recognized as a global market leader in animal health products, demonstrating a trajectory of slow and steady growth for the foreseeable future [1]. Investment Philosophy - The investment approach emphasizes the importance of compounding, dividend reinvesting, and patient investing through various market conditions to achieve significant rewards [1]. - The strategy includes a mix of steady investments in high-quality assets along with high-risk/high-reward opportunities, underappreciated turnaround plays, and transformative technologies [1]. Personal Background of the Analyst - The analyst identifies as an amateur investor with over 25 years of experience, self-taught without formal education in investing or business, and values learning from others [1]. - The analyst holds a PhD from Brunel University and is also involved in teaching at the college/university level [1].

I upgraded Zoetis (NYSE: ZTS ) to a 'Buy' rating in August 2024, highlighting the company's direct-to-customer strategy and investment in new products. Zoetis delivered a strong growth in Q3 FY24, with 14% year-over-year growth in both revenue and adjusted net income. Notably, their companion animalMore than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specia ...

Financial Performance - Total revenue for the three months ended September 30, 2024, increased by $237 million, or 11%, compared to the same period in 2023, with operational growth of 14%[78] - Net income attributable to Zoetis for the three months ended September 30, 2024, was $682 million, a 14% increase from $596 million in the same period of 2023[69] - For the nine months ended September 30, 2024, total revenue increased by $608 million, or 10%, with operational growth of 12% compared to the same period in 2023[70] - Adjusted net income for the nine months ended September 30, 2024, was $2,061 million, reflecting a 9% increase from $1,888 million in the same period of 2023[70] - Total revenue for the company reached $2,388 million in Q3 2024, an 11% increase from $2,151 million in Q3 2023[99] - Total earnings for the company increased by 22% to $874 million in Q3 2024, up from $717 million in Q3 2023[102] - GAAP reported net income attributable to Zoetis for the nine months ended September 30, 2024, was $1.905 billion, a 5% increase from $1.819 billion in the prior year[115] - Diluted earnings per share (EPS) for the nine months ended September 30, 2024, was $4.18, a 6% increase from $3.93 in the prior year[116] Revenue Growth Drivers - Price growth contributed approximately 7% to operational revenue growth for the nine months ended September 30, 2024[78] - U.S. segment revenue increased by $172 million, or 15%, to $1,346 million in Q3 2024, driven by an $160 million increase in companion animal products and a $12 million increase in livestock products[100] - International segment revenue rose by $65 million, or 7%, to $1,021 million in Q3 2024, with operational revenue growth of $125 million, or 13%[100] - Companion animal revenue in the U.S. grew primarily due to sales of mAb products for osteoarthritis pain, including Librela and Solensia, as well as key dermatology products[103] - Livestock revenue growth in the U.S. was attributed to increased sales of cattle and swine products, benefiting from supply availability compared to the prior year[103] - U.S. segment revenue increased by $473 million, or 14%, to $3.8 billion for the nine months ended September 30, 2024, driven by companion animal products growth[105] - International segment revenue rose by $134 million, or 5%, to $2.8 billion for the nine months ended September 30, 2024, with operational revenue growth of $305 million, or 10%[106] Expenses and Costs - Selling, general and administrative (SG&A) expenses increased by $40 million, or 8%, to $565 million for the three months ended September 30, 2024, compared to $525 million in 2023[83] - Research and development expenses for the three months ended September 30, 2024, were $167 million, a 10% increase from $152 million in the same period of 2023[79] - R&D expenses for the nine months ended September 30, 2024, increased by $60 million, or 14%, totaling $500 million compared to $440 million in 2023[86] - SG&A expenses for the nine months ended September 30, 2024, rose by $107 million, or 7%, to $1,693 million from $1,586 million in 2023[83] - The provision for taxes on income increased to $182 million for the three months ended September 30, 2024, compared to $121 million in 2023, with an effective tax rate of 20.8%[96] - The effective tax rate for the three months ended September 30, 2024, was 20.8%, compared to 16.9% in the same period of 2023[79] Cash Flow and Financial Position - The net cash provided by operating activities for the nine months ended September 30, 2024, was $2,048 million, an increase of $592 million compared to $1,456 million in 2023[125] - The net decrease in cash and cash equivalents for the nine months ended September 30, 2024, was $327 million, a significant improvement from a decrease of $1,827 million in 2023[125] - Cash and cash equivalents as of September 30, 2024, were $1,714 million, a decrease from $2,041 million as of December 31, 2023[130] - Accounts receivable increased to $1,411 million as of September 30, 2024, from $1,304 million at the end of 2023[130] - The ratio of current assets to current liabilities improved to 3.69:1 as of September 30, 2024, compared to 3.36:1 at the end of 2023[130] Risk Factors - The company is subject to various risks including legal proceedings, economic conditions, and competition from generic products[138] - Future performance is uncertain and may be affected by factors such as product launch delays and regulatory changes[138] - The company emphasizes the importance of protecting intellectual property rights amid potential legal disputes[138] - Risks related to climate change and natural disasters could impact the company's operations and supply chain[138] - The company acknowledges the potential for cyberattacks and data breaches as a significant risk[138] Strategic Outlook - The company anticipates continued growth driven by new product launches and expansion into emerging markets such as Brazil, China, and Mexico[68] - There is a focus on the integration of acquired businesses and the successful commercialization of new products[138]

Zoetis, Inc. (ZTS) delivered third-quarter 2024 adjusted earnings (excluding one-time items) of $1.58 per share, which surpassed the Zacks Consensus Estimate of $1.46 per share. In the year-ago quarter, the company delivered adjusted earnings of $1.36 per share. Total revenues grew 11% year over year to $2.39 billion in the reported quarter, which beat the Zacks Consensus Estimate of $2.29 billion. In the year-ago quarter, the company reported total revenues of $2.15 billion. Shares of Zoetis are gaining in ...

Zoetis Inc. (NYSE:ZTS) Q3 2024 Earnings Conference Call November 4, 2024 8:30 AM ET Company Participants Steve Frank - VP of IR Kristin Peck - CEO Wetteny Joseph - CFO Conference Call Participants Erin Wright - Morgan Stanley Michael Ryskin - Bank of America Brandon Vazquez - William Blair Jon Block - Stifel David Westenberg - Piper Sandler Balaji Prasad - Barclays Glen Santangelo - Jefferies Chris Schott - JPMorgan Chris LoBianco - TD Cowen Navann Ty - BNP Paribas Operator Welcome to the Third Quarter 2024 ...

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| --- | --- | --- | --- | --- | --- | --- | --- | |----------|-----------------|-------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Third | | | | | | | | | | Quarter | | | | | | | | 2024 | Financial | | | | | | | | November | 4, 2024 Results | | | | | | | | | | | | | | | | Forward-Looking Statements This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospect ...

Zoetis (ZTS) came out with quarterly earnings of $1.58 per share, beating the Zacks Consensus Estimate of $1.46 per share. This compares to earnings of $1.36 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 8.22%. A quarter ago, it was expected that this animal health company would post earnings of $1.49 per share when it actually produced earnings of $1.56, delivering a surprise of 4.70%. Over the last four quarters, the compa ...