Elanco(US:ELAN)2023-11-06 16:00Revenue Performance - Revenue for Q3 2023 was $1,068 million, a 4% increase from $1,026 million in Q3 2022[114] - Pet Health revenue increased by 6% to $495 million in Q3 2023, while Farm Animal revenue rose by 3% to $561 million[117] - Total revenue for the nine months ended September 30, 2023, was $3,382 million, a decrease of $44 million or 1% compared to the same period in 2022[118] - Pet Health revenue for the three months ended September 30, 2023, increased by $26 million or 6%, driven by increased pricing and improved market conditions in Europe[120] - Farm Animal revenue for the three months ended September 30, 2023, increased by $16 million or 3%, supported by higher volumes and pricing, despite foreign exchange impacts[121] Financial Losses and Impairments - The company incurred a $1,042 million pre-tax goodwill impairment charge due to rising long-term treasury rates in Q3 2023[111] - The company experienced a net loss of $1,096 million in Q3 2023, compared to a net loss of $65 million in Q3 2022[114] - Goodwill impairment for the nine months ended September 30, 2023, resulted in a pre-tax charge of $1,042 million due to increased discount rate assumptions[130] - A goodwill impairment charge of $1,042 million was recognized as of September 30, 2023, due to increased long-term treasury rates impacting the fair value of the reporting unit[148] Costs and Expenses - Integration costs related to the acquisition of Bayer Animal Health totaled $86 million during the nine months ended September 30, 2023[104] - Research and development expenses increased by 10% to $86 million in Q3 2023, representing 8% of revenue[114] - Research and development expenses for the nine months ended September 30, 2023, increased by $7 million or 3%, primarily due to higher employee-related expenses[124] - Marketing, selling, and administrative expenses for the nine months ended September 30, 2023, increased by $30 million or 3%, driven by higher marketing and promotional spend[125] - Amortization of intangible assets for the nine months ended September 30, 2023, increased by $12 million or 3%, due to acquisitions and foreign exchange impacts[126] - Asset impairment, restructuring, and other special charges for the nine months ended September 30, 2023, decreased by $61 million or 40%, primarily due to a prior year charge that did not recur[128] - Interest expense for the nine months ended September 30, 2023, increased by $31 million or 17%, primarily due to higher interest rates on outstanding debt[131] Taxation - The company recognized an income tax benefit of $1 million for Q3 2023, compared to an expense of $21 million in Q3 2022, resulting in an effective tax rate of 0.2% versus (47.7)% in the prior year[133] - For the nine months ended September 30, 2023, income tax expense decreased by $19 million, with an effective tax rate of (2.0)%, down from 234% in the same period last year[134] Cash Flow and Liquidity - Cash provided by operating activities decreased by $325 million to $114 million for the nine months ended September 30, 2023, compared to $439 million in the prior year[139] - Cash used for investing activities increased to $134 million for the nine months ended September 30, 2023, primarily due to $19 million paid for acquisitions of NutriQuest assets[140] - Cash provided by financing activities was $56 million for the nine months ended September 30, 2023, a turnaround from cash used of $465 million in the same period last year[141] - The company had cash and cash equivalents of $369 million and unused borrowing capacity of approximately $453 million as of September 30, 2023[136] Foreign Currency and Global Operations - Approximately 51% of revenue for the nine months ended September 30, 2023, was denominated in foreign currencies, impacting revenue by a decrease of 1% for Q3 2023[115] - Revenue from Russian and Ukrainian customers represented approximately 1% of consolidated revenue during the nine months ended September 30, 2023[106] - The application of hyperinflationary accounting for subsidiaries in Argentina and Turkey resulted in approximately $13 million of foreign currency-related expense during the nine months ended September 30, 2023[151] - The company intends to indefinitely reinvest foreign earnings for continued use in foreign operations, with potential changes based on tax-efficient reinvestment alternatives[135] Product Innovation - The company launched a canine parvovirus monoclonal antibody in July 2023, marking a significant product innovation[108]