Zoetis Inc. · NYSE:ZTS
Zoetis — FY2018 Earnings Presentation
26 slides from Zoetis's earnings presentation, Feb 14, 2019
Slide 1: Fourth Quarter and Full Year 2018 Financial Results
FOURTH QUARTER AND FULL YEAR 2018 FINANCIAL RESULTS February 14, 2019 1 1
Slide 2: Forward-Looking Statements; Non-GAAP Financial Information
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements, which reflect the current views of Zoetis with respect to business plans or prospects, future operating or financial performance, future guidance, future operating models, expectations regarding products, expectations
Slide 3: Juan Ramón Alaix, Chief Executive Officer
JUAN RAMÓN ALAIX CHIEF EXECUTIVE OFFICER 3 3
Slide 4: Key Takeaways
KEY TAKEAWAYS ZOETIS DELIVERS STRONG FULL YEAR RESULTS FOR 2018 • Generated 10% operational1 growth in revenue for the full year including the acquisition of Abaxis, with 31% operational 1 increase in adjusted net income2 • Operational revenue growth across all core species, major markets and therap
Slide 5: Glenn David, Chief Financial Officer
GLENN DAVID CHIEF FINANCIAL OFFICER 5 5
Slide 6: Income Statement Highlights - Fourth Quarter
INCOME STATEMENT HIGHLIGHTS Fourth Quarter 2018* 2017* Change Revenue $1,564 $1,460 7% Reported Net Income 345 81 ** Reported Diluted Earnings Per Share $0.71 $0.16 ** Adjusted Net Income1 382 341 12% Adjusted Diluted Earnings Per Share1,2 $0.79 $0.69 14% * Millions of dollars, except per share data
Slide 7: Income Statement Highlights - Full Year
INCOME STATEMENT HIGHLIGHTS Full Year 2018* 2017* Change Revenue $5,825 $5,307 10% Reported Net Income 1,428 864 65% Reported Diluted Earnings Per Share $2.93 $1.75 67% Adjusted Net Income1 1,525 1,185 29% Adjusted Diluted Earnings Per Share1,2 $3.13 $2.40 30% * Millions of dollars, except per share
Slide 8: Adjusted Income Statement Highlights - Fourth Quarter
ADJUSTED INCOME STATEMENT HIGHLIGHTS Fourth Quarter Foreign 2018* 2017* Change Operational1 Exchange Revenue $1,564 $1,460 7% (4)% 11% Adjusted Cost of Sales2 526 454 16% 1% 15% as a percent of revenue3 33.6% 31.1% NA NA NA Adjusted SG&A Expenses2 401 359 12% (3)% 15% Adjusted R&D Expenses2 124 110
Slide 9: Adjusted Income Statement Highlights - Full Year
ADJUSTED INCOME STATEMENT HIGHLIGHTS Full Year Foreign 2018* 2017* Change Operational1 Exchange Revenue $5,825 $5,307 10% - 10% Adjusted Cost of Sales2 1,876 1,761 7% 2% 5% as a percent of revenue3 32.2% 33.2% NA NA NA Adjusted SG&A Expenses2 1,450 1,325 9% - 9% Adjusted R&D Expenses2 430 380 13% -
Slide 10: US Segment Performance - Fourth Quarter
US SEGMENT PERFORMANCE Fourth Quarter Foreign 2018* 2017* Change Operational1 Exchange Revenue $809 $712 14% - 14% Livestock 384 374 3% - 3% Companion Animal 425 338 26% - 26% Cost of Sales 175 153 14% - 14% Gross Profit 634 559 13% - 13% Gross Margin 78.4% 78.5% NA - NA Operating Expenses 128 109 1
Slide 11: US Segment Performance - Full Year
US SEGMENT PERFORMANCE Full Year Foreign 2018* 2017* Change Operational1 Exchange Revenue $2,877 $2,620 10% - 10% Livestock 1,269 1,244 2% - 2% Companion Animal 1,608 1,376 17% - 17% Cost of Sales 606 565 7% - 7% Gross Profit 2,271 2,055 11% - 11% Gross Margin 78.9% 78.4% NA - NA Operating Expenses
Slide 12: International Segment Performance - Fourth Quarter
INTERNATIONAL SEGMENT PERFORMANCE Fourth Quarter Foreign 2018* 2017* Change Operational1 Exchange Revenue $727 $740 (2)% (7)% 5% Livestock 488 517 (6)% (8)% 2% Companion Animal 239 223 7% (7)% 14% Cost of Sales 240 244 (2)% (5)% 3% Gross Profit 487 496 (2)% (9)% 7% Gross Margin 67.0% 67.0% NA NA NA
Slide 13: International Segment Performance - Full Year
INTERNATIONAL SEGMENT PERFORMANCE Full Year Foreign 2018* 2017* Change Operational1 Exchange Revenue $2,890 $2,643 9% - 9% Livestock 1,885 1,793 5% (1)% 6% Companion Animal 1,005 850 18% 1% 17% Cost of Sales 929 889 4% - 4% Gross Profit 1,961 1,754 12% - 12% Gross Margin 67.9% 66.4% NA NA NA Operati
Slide 14: International Market Revenue - Fourth Quarter
INTERNATIONAL MARKET REVENUE Fourth Quarter Foreign 2018* 2017* Change Operational1 Exchange Total International $727.2 $739.5 (2)% (7)% 5% Australia 36.8 41.5 (11)% (7)% (4)% Brazil 84.6 95.2 (11)% (19)% 8% Canada 64.4 61.3 5% (5)% 10% China 41.3 37.2 11% (5)% 16% France 38.3 36.3 6% (2)% 8% German
Slide 15: International Market Revenue - Full Year
INTERNATIONAL MARKET REVENUE Full Year Foreign 2018* 2017* Change Operational1 Exchange Total International $2,889.8 $2,642.9 9% - 9% Australia 188.6 175.6 7% (2)% 9% Brazil 294.7 299.8 (2)% (13)% 11% Canada 202.8 184.4 10% 1% 9% China 211.4 174.4 21% 4% 17% France 129.8 121.0 7% 5% 2% Germany 146.8
Slide 16: Financial Guidance
FINANCIAL GUIDANCE Selected Line Items Full Year 2019 (millions of dollars, except per share amounts) Revenue $6,175 to $6,300 Operational growth1 7.5% to 9.5% Organic Operational growth2 4.5% to 6.5% Adjusted cost of sales as a percentage of revenue3 31% to 32% Adjusted SG&A expenses3 $1,470 to $1,
Slide 17: Q&A
Q&A 17 17
Slide 18: Reconciliation of Adjusted Net Income to Adjusted EBIT
RECONCILIATION OF ADJUSTED NET INCOME TO ADJUSTED EBIT 2013 – 2018 in USD millions 2013 2014 2015 2016 2017 2018 Adjusted Net Income Before Allocation to Noncontrolling $708 $794 $889 $973 $1,183 $1,521 Interests1 Interest Expense2 113 117 124 166 175 206 Interest Income2 (3) (6) (6) (8) (13) (31) I
Slide 19: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2018
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2018 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,911 (27) - (8) 1,876 Gross Profit 3,914 27 - 8 3,949 Selling, Genera
Slide 20: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2017
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2017 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,775 (7) - (7) 1,761 Gross Profit 3,532 7 - 7 3,546 Selling, General
Slide 21: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2016
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2016 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,666 (23) - (19) 1,624 Gross Profit 3,222 23 - 19 3,264 Selling, Gene
Slide 22: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2015
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2015 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,738 (9) - (62) 1,667 Gross Profit 3,027 9 - 62 3,098 Selling, Genera
Slide 23: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2014
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2014 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,717 (4) - (33) 1,680 Gross Profit 3,068 4 - 33 3,105 Selling, Genera
Slide 24: Reconciliation of GAAP Reported to Non-GAAP Adjusted Information 2013
RECONCILIATION OF GAAP REPORTED TO NON- GAAP ADJUSTED INFORMATION 2013 Purchase Acquisition Certain Significant Non-GAAP in USD millions, except per share data GAAP1 Reported Accounting Related Costs Items Adjusted2 Cost of Sales 1,669 (2) - (42) 1,625 Gross Profit 2,892 2 - 42 2,936 Selling, Genera
Slide 25: Adjusted Income Statement Highlights
ADJUSTED INCOME STATEMENT HIGHLIGHTS Operational in USD millions 2013 2014 Change Foreign Exchange Growth1 Revenue 4,561 4,785 5% (2)% 7% Adjusted Net Income2 709 790 11% (2)% 13% Operational in USD millions 2014 2015 Change Foreign Exchange Growth1 Revenue 4,785 4,765 - (8)% 8% Adjusted Net Income2
Slide 26: Zoetis
zoetis