Zoetis(US:ZTS)2025-02-13 17:27Financial Data and Key Metrics Changes - The company reported full-year revenue of $9.3 billion, growing 8% on a reported basis and 11% operationally, with 6% driven by price and 5% from volume [30] - Adjusted net income grew 10% on a reported basis and 15% operationally to $2.7 billion [31] - Full-year adjusted gross margins were 70.7%, growing 50 basis points on a reported basis [57] Business Line Data and Key Metrics Changes - The companion animal portfolio grew 14% operationally, while the livestock portfolio saw a 5% operational revenue growth [11][21] - The Simparica franchise generated $1.4 billion in revenue, growing 28% operationally, with Simparica Trio exceeding $1 billion in global revenue [31] - The osteoarthritis pain franchises, including Librela and Solensia, reported combined revenue of $581 million, growing 80% operationally [31] Market Data and Key Metrics Changes - In the US, revenue grew 11%, while international revenue grew 10% operationally [10][35] - The international livestock portfolio grew 8% operationally to $1.9 billion in sales for the year [44] - The US livestock business declined 1% due to the MFA divestiture, but organic operational growth was 6% [40] Company Strategy and Development Direction - The company aims for continued above-market growth in the mid to high single-digit range for 2025 and beyond, driven by scientific innovation and commercial excellence [11][25] - A strategic divestiture of the medicated feed additive product portfolio was made to enhance operational focus and prioritize high-growth areas [22] - The company is committed to balancing strategic investments in innovation while delivering long-term value for shareholders [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth due to the diversity of the business model and strong underlying demand in the animal health industry [12][24] - The company anticipates organic operational revenue growth of 6% to 8% in 2025, with continued strong performance from the companion animal business [23][63] - Management highlighted the importance of the human-animal bond and the aging pet population as key drivers for future growth [109] Other Important Information - The company repurchased $1.9 billion of shares in 2024, the most in its history, and increased its dividend rate by 15% [60][61] - The guidance for 2025 reflects foreign exchange headwinds of approximately $250 million to revenue and $50 million to adjusted net income [62] Q&A Session Summary Question: Insights on competition and guidance adjustments - Management acknowledged competition in the dermatology segment and emphasized the vast opportunity remaining in the market, with significant untreated populations [80][81] - Investments in key brands and education for veterinarians were highlighted as strategies to maintain growth despite competition [82] Question: Updates on Librela and its market response - The launch of Librela was described as highly successful, with veterinarians responding positively to updated prescribing information [88][89] - Management confirmed that no new products are included in the 2025 guidance, but strong growth is expected in the OA pain category [87] Question: Revenue cadence and R&D investments - Management indicated a stronger first half of 2025 compared to the second half, factoring in potential competition [98] - R&D investments are expected to align with pipeline progress rather than being a fixed leverageable line item [101] Question: Trends in pet population growth post-COVID - Management noted that the pet population is expected to remain stable, with strong growth drivers from the human-animal bond and an aging pet population [109][110] Question: Upside risks to guidance and total addressable market for new products - Management confirmed that new product approvals are not factored into guidance, but expressed excitement about the diverse portfolio and strong demand [115][118]