Zoetis(ZTS) - 2025 Q4 - Annual Results

Financial Performance - The company reported Q4 2025 revenue of $2.4 billion, a 3% increase from Q4 2024, with 4% organic operational growth[3]. - Net income for Q4 2025 was $603 million, or $1.37 per diluted share, reflecting increases of 4% and 6% respectively on a reported basis[4]. - For the full year 2025, revenue was $9.5 billion, up 2% from 2024, with 6% organic operational growth[5]. - Full year 2025 net income was $2.7 billion, or $6.02 per diluted share, representing increases of 8% and 10% respectively on a reported basis[6]. - Adjusted net income for full year 2025 was $2.8 billion, or $6.41 per diluted share, with 7% organic operational growth[6]. - Total revenue for the full year 2025 reached $9,467 million, reflecting a 2% growth from $9,256 million in 2024[28]. - For the twelve months ended December 31, 2025, net income attributable to Zoetis was $2,847 million, an increase of 6% from $2,693 million in 2024[35]. - Diluted earnings per share for 2025 was $6.41, up from $5.92 in 2024, reflecting a 8.3% increase[35]. - Adjusted net income for the twelve months ended December 31, 2025, was $2,847 million, a 6% increase compared to $2,693 million in 2024[45]. Revenue Breakdown - U.S. segment revenue for Q4 2025 was $1.2 billion, a 2% decrease on a reported basis, while International segment revenue was $1.1 billion, an 8% increase[8][9]. - Companion Animal revenue for the twelve months ended December 31, 2025, was $6,587 million, a 5% increase from $6,278 million in 2024[56]. - Livestock revenue for the twelve months ended December 31, 2025, decreased by 5% to $2,764 million compared to $2,898 million in 2024[56]. - Contract Manufacturing & Human Health revenue increased by 45% to $116 million for the twelve months ended December 31, 2025[56]. - Total international revenue for 2025 reached $4,254 million, a 4% increase from $4,102 million in 2024, with operational revenue growth of 5%[59]. Guidance and Future Outlook - The company provided full year 2026 revenue guidance of $9.825 - $10.025 billion, expecting 3% to 5% organic operational growth[4]. - Zoetis plans to continue its focus on innovation and market expansion in 2026, with guidance indicating potential growth in key product areas[47]. - Revenue guidance for full year 2026 is projected to be between $9,825 million and $10,025 million, reflecting organic operational growth of 3% to 5%[48]. - Adjusted diluted EPS is expected to be between $7.00 and $7.10, with adjusted net income projected at $2,975 million to $3,025 million[48]. Expenses and Profitability - Research and development expenses for Q4 2025 were $199 million, a 7% increase from $186 million in Q4 2024[28]. - Selling, general and administrative expenses decreased by 1% to $619 million in Q4 2025 from $625 million in Q4 2024[28]. - The gross profit for Q4 2025 was $1,675 million, with a gross margin of approximately 70.1%[31]. - Non-GAAP adjusted net income for Q4 2025 was $648 million, compared to $632 million in Q4 2024, representing a 3% increase[31]. - The company reported a provision for taxes on income of $158 million for Q4 2025, a 5% increase from $151 million in Q4 2024[28]. - Interest expense for Q4 2025 was $57 million, a 12% increase from $51 million in Q4 2024[28]. - Adjusted cost of sales for 2025 was $2,657 million, a decrease of 2% from $2,714 million in 2024[45]. - Selling, general and administrative expenses for 2025 were $2,344 million, a 2% increase from $2,301 million in 2024[45]. - Research and development expenses for 2025 were $696 million, a 2% increase from $684 million in 2024[45]. - The adjusted SG&A expenses as a percentage of revenue decreased from 30.5% in 2024 to 29.7% in 2025[45]. - The company reported a gross profit margin of 71.9% for 2025, compared to 71.1% in 2024[35]. Acquisitions and Milestones - The company achieved key milestones in 2025, including regulatory approvals for long-acting OA pain products Lenivia and Portela[7]. - Zoetis acquired Veterinary Pathology Group (VPG) to enhance its diagnostic capabilities and expand its diagnostics portfolio[14]. - The company expects to receive significant approvals in major markets annually for the next several years, with 12 pipeline candidates having blockbuster potential[13].