Zoetis(ZTS) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements This section presents Zoetis Inc.'s unaudited condensed consolidated financial statements, including statements of income, comprehensive income, balance sheets, equity, and cash flows for the periods ended June 30, 2025 and 2024, along with detailed notes explaining accounting policies, revenue disaggregation, divestitures, restructuring, financial instruments, and other key financial information Condensed Consolidated Statements of Income (Unaudited) This table presents the unaudited condensed consolidated statements of income for specified quarterly and semi-annual periods Condensed Consolidated Statements of Income (Unaudited) | (MILLIONS OF DOLLARS) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $2,460 | $2,361 | $4,680 | $4,551 | | Cost of sales | 649 | 668 | 1,271 | 1,311 | | Selling, general and administrative expenses | 617 | 581 | 1,180 | 1,128 | | Research and development expenses | 172 | 171 | 329 | 333 | | Amortization of intangible assets | 33 | 35 | 65 | 72 | | Restructuring charges and certain acquisition and divestiture-related costs | 30 | 42 | 30 | 46 | | Interest expense, net of capitalized interest | 53 | 59 | 107 | 117 | | Other (income)/deductions—net | 4 | 25 | (14) | 17 | | Income before provision for taxes on income | 902 | 780 | 1,712 | 1,527 | | Provision for taxes on income | 184 | 156 | 363 | 304 | | Net income attributable to Zoetis Inc. | $718 | $624 | $1,349 | $1,223 | | Basic EPS | $1.61 | $1.37 | $3.02 | $2.68 | | Diluted EPS | $1.61 | $1.37 | $3.02 | $2.67 | | Dividends declared per common share | $0.500 | $0.432 | $1.000 | $0.864 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) This table details unaudited condensed comprehensive income, including net income and other comprehensive income components Condensed Consolidated Statements of Comprehensive Income (Unaudited) | (MILLIONS OF DOLLARS) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income before allocation to noncontrolling interests | $718 | $624 | $1,349 | $1,223 | | Unrealized losses on derivatives for cash flow hedges, net of tax | (4) | (1) | (17) | (1) | | Unrealized (losses)/gains on derivatives for net investment hedges, net of tax | (74) | 2 | (107) | 18 | | Foreign currency translation adjustments | 218 | (5) | 187 | (23) | | Total other comprehensive income/(loss), net of tax | 140 | (4) | 63 | (6) | | Comprehensive income attributable to Zoetis Inc. | $858 | $620 | $1,412 | $1,217 | Condensed Consolidated Balance Sheets (Unaudited) This table provides unaudited condensed balance sheets, outlining assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (Unaudited) | (MILLIONS OF DOLLARS) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Assets | | | | Cash and cash equivalents | $1,435 | $1,987 | | Accounts receivable, less allowance for doubtful accounts | 1,540 | 1,316 | | Inventories | 2,439 | 2,306 | | Other current assets | 509 | 377 | | Total current assets | 5,923 | 5,986 | | Property, plant and equipment, less accumulated depreciation | 3,537 | 3,391 | | Operating lease right-of-use assets | 302 | 219 | | Goodwill | 2,758 | 2,724 | | Identifiable intangible assets, less accumulated amortization | 1,075 | 1,127 | | Noncurrent deferred tax assets | 617 | 540 | | Other noncurrent assets | 267 | 250 | | Total assets | $14,479 | $14,237 | | Liabilities and Equity | | | | Current portion of long-term debt | $1,350 | $1,350 |\n| Accounts payable | 508 | 433 | | Dividends payable | 222 | 224 | | Accrued expenses | 770 | 746 | | Accrued compensation and related items | 293 | 441 | | Income taxes payable | 93 | 93 | | Other current liabilities | 130 | 125 | | Total current liabilities | 3,366 | 3,412 | | Long-term debt, net of discount and issuance costs | 5,231 | 5,220 | | Noncurrent deferred tax liabilities | 156 | 167 | | Operating lease liabilities | 210 | 174 | | Other taxes payable | 265 | 272 | | Other noncurrent liabilities | 274 | 222 | | Total liabilities | 9,502 | 9,467 | | Total equity | 4,977 | 4,770 | | Total liabilities and equity | $14,479 | $14,237 | Condensed Consolidated Statements of Equity (Unaudited) This table presents unaudited condensed equity statements, detailing changes in common stock, treasury stock, retained earnings, and comprehensive loss Condensed Consolidated Statements of Equity (Unaudited) - Six Months Ended June 30, 2025 | (MILLIONS OF DOLLARS AND SHARES) | Common Stock Shares | Common Stock Amount | Treasury Stock Shares | Treasury Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | | :------------------------------- | :------------------ | :------------------ | :-------------------- | :-------------------- | :------------------------- | :---------------- | :----------------------------------- | :----------- | | Balance, December 31, 2024 | 501.9 | $5 | 53.4 | $(7,445) | $1,182 | $11,968 | $(940) | $4,770 | | Net income | — | — | — | — | — | 1,349 | — | 1,349 | | Other comprehensive income | — | — | — | — | — | — | 63 | 63 | | Share-based compensation awards | — | — | (0.3) | 7 | 21 | — | — | 28 | | Treasury stock acquired | — | — | 4.8 | (788) | — | — | — | (788) | | Dividends declared | — | — | — | — | — | (445) | — | (445) | | Balance, June 30, 2025 | 501.9 | $5 | 57.9 | $(8,226) | $1,203 | $12,872 | $(877) | $4,977 | Condensed Consolidated Statements of Equity (Unaudited) - Six Months Ended June 30, 2024 | (MILLIONS OF DOLLARS AND SHARES) | Common Stock Shares | Common Stock Amount | Treasury Stock Shares | Treasury Stock Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | | :------------------------------- | :------------------ | :------------------ | :------------------ | :-------------------- | :------------------------- | :---------------- | :----------------------------------- | :----------- | | Balance, December 31, 2023 | 501.