Financial Data and Key Metrics Changes - For the full year 2025, the company reported global revenue of $9.5 billion, growing 2% on a reported basis and 6% on an organic operational basis, with 4% from price and 2% from volume [20][21] - Adjusted net income grew 6% on a reported basis and 7% on an organic operational basis to $2.8 billion [20][21] - Full year adjusted gross margin of 71.9% grew 120 basis points on a reported basis, with foreign exchange having a favorable impact of 80 basis points [40] Business Line Data and Key Metrics Changes - The companion animal portfolio grew 5% operationally in 2025, with the Simparica franchise reporting $1.5 billion in revenue, growing 12% operationally [21][22] - The livestock portfolio delivered 8% organic operational revenue growth for the year, with $2.8 billion in revenue [24][30] - Companion animal diagnostics delivered broad-based 13% operational revenue growth for the year [14][23] Market Data and Key Metrics Changes - International markets contributed significantly, with 8% organic operational revenue growth, while the U.S. delivered 4% organic operational growth [5][20] - International companion animal grew 7% operationally, driven by the Simparica and key dermatology franchises [27] - International livestock grew 10% on an organic operational basis, with strong performance in the Brazilian cattle market [30] Company Strategy and Development Direction - The company is focused on advancing long-acting approvals and maintaining a robust pipeline to extend growth [6][18] - Strategic actions are being taken to sustain growth through competition, including optimizing channel mix and increasing reach with veterinarians [8][19] - The company aims to leverage its diverse portfolio and robust pipeline, with 12 potential blockbusters in development [18][19] Management Comments on Operating Environment and Future Outlook - Management noted that the operating environment is dynamic, with macroeconomic pressures affecting consumer behavior, particularly among Gen Z and millennial pet owners [6][9] - Despite near-term headwinds, management remains confident in the long-term fundamentals of the animal health market, expecting gradual improvement in 2026 [9][17] - Guidance for 2026 includes organic operational revenue growth of 3%-5% and adjusted net income growth of 3%-6% [42][43] Other Important Information - The company is transitioning its ERP system to enhance operational efficiency and align fiscal years globally [39][40] - A convertible bond offering supported a $1.75 billion common stock buyback, returning over $3.2 billion to shareholders through buybacks and dividends [42] Q&A Session Summary Question: Competition and Pricing Strategy for 2026 - Management acknowledged the competitive landscape and the impact of new product launches on growth, particularly in the dermatology space [48][50] - Price increases are expected to return to a normal range of 2%-3%, with volume contributing to growth as well [52] Question: U.S. Companion Animal Operational Growth - Management indicated that the guidance incorporates current market conditions and the strength of their portfolio, despite competitive pressures [56][57] Question: Dynamics of Simparica Trio Growth - Management highlighted that Simparica Trio remains a leading product with significant room for expansion, despite recent lower growth [61][63]