Zoetis Inc (ZTS) Q3 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic Divestitures

GuruFocus.com11-05

Revenue: $2.4 billion, growing 11% on a reported basis and 14% operationally. Adjusted Net Income: $716 million, grew 14% on a reported basis and 15% operationally. Companion Animal Portfolio Revenue:...

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Simparica franchise posted $333 million; Dermatology franchise contributed $449 million.US Revenue Growth: 15% in the quarter, with companion animal growing 18% and livestock growing 5%.International Revenue Growth: 7% on a reported basis and 13% operationally.Adjusted Gross Margin: 70.7%, grew 20 basis points.Adjusted Diluted EPS: Grew 17% operationally for the quarter.Full Year 2024 Revenue Guidance: Between $9.2 billion and $9.3 billion, representing 10% to 11% operational growth.Full Year 2024 Adjusted Net Income Guidance: $2.67 billion to $2.695 billion, representing operational growth of 13.5% to 14.5%.Full Year 2024 Adjusted Diluted EPS Guidance: $5.86 to $5.92.Zoetis Inc  reported a 14% operational revenue growth and a 15% increase in adjusted n","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"ZTS":"Zoetis Inc."},"translate_title":"硕腾公司(ZTS)2024年第三季度收益看涨期权亮点：强劲的收入增长和战略资产剥离","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ZTS":1},"content_text":"Revenue: $2.4 billion, growing 11% on a reported basis and 14% operationally.\nAdjusted Net Income: $716 million, grew 14% on a reported basis and 15% operationally.\nCompanion Animal Portfolio Revenue: OA Pay mAbs contributed $151 million; Simparica franchise posted $333 million; Dermatology franchise contributed $449 million.\nLivestock Portfolio Revenue: $758 million.\nUS Revenue Growth: 15% in the quarter, with companion animal growing 18% and livestock growing 5%.\nInternational Revenue Growth: 7% on a reported basis and 13% operationally.\nAdjusted Gross Margin: 70.7%, grew 20 basis points.\nAdjusted Operating Expenses: Increased 9% operationally.\nAdjusted Diluted EPS: Grew 17% operationally for the quarter.\nFull Year 2024 Revenue Guidance: Between $9.2 billion and $9.3 billion, representing 10% to 11% operational growth.\nFull Year 2024 Adjusted Net Income Guidance: $2.67 billion to $2.695 billion, representing operational growth of 13.5% to 14.5%.\nFull Year 2024 Adjusted Diluted EPS Guidance: $5.86 to $5.92.\n\n\nWarning! GuruFocus has detected 8 Warning Signs with KLNG.\n\nRelease Date: November 04, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nZoetis Inc (NYSE:ZTS) reported a 14% operational revenue growth and a 15% increase in adjusted net income, showcasing strong financial performance.\nThe company's innovative companion animal portfolio grew 15% operationally, driven by products like Librela and Simparica Trio.\nLibrela, a key product in the osteoarthritis pain franchise, achieved 97% operational revenue growth globally, indicating strong market demand.\nSimparica Trio became the number one vet-prescribed parasiticide, with over 13 million dogs treated, highlighting its market leadership.\nZoetis Inc (NYSE:ZTS) successfully divested its medicated feed additives portfolio, allowing the company to focus on high-growth potential areas like preventative antibiotic alternatives and genetics.\n\n Negative Points \n\nThe company anticipates a deceleration in revenue growth rate for Q4 due to the divestiture of the medicated feed additives portfolio.\nZoetis Inc (NYSE:ZTS) faces increased competition in the parasiticide market, which could impact market share despite current leadership.\nThe company is experiencing headwinds in China, which have had an approximately 1% unfavorable impact on growth this year.\nThere is a potential risk of market saturation for products like Librela, as the company has already achieved high penetration rates.\nZoetis Inc (NYSE:ZTS) must navigate a complex environment with evolving competitive dynamics, which could impact future growth and profitability.\n\n Q & A Highlights \nQ: How should we think about the quarterly progression of Librela in the US, and what are the expectations for 2025 considering the investments in innovation and product mix? A: Kristin Peck, CEO, highlighted the strong performance of Librela, with 123% growth and a significant market opportunity. Wetteny Joseph, CFO, noted that while specific quarterly guidance isn't provided, strong growth is expected as Librela continues to penetrate the market. The focus will be on leveraging past investments and maintaining a balance between innovation and profitability in 2025.\nQ: Were there any inventory management issues or promotions affecting the third quarter results for Librela, Trio, or Derm? A: Kristin Peck, CEO, confirmed it was a clean quarter with no stocking dynamics. Wetteny Joseph, CFO, added that inventory levels were stable, and Librela's direct-to-clinic distribution minimizes inventory fluctuations. The MFA divestiture's impact was also clarified, with a linear seasonality and 30% margins.\nQ: Can you discuss the factors driving the strong performance of Simparica Trio despite increased competition? A: Kristin Peck, CEO, attributed the success to the product's comprehensive coverage, convenience, and first-mover advantage. The oral flea, tick, and heartworm market is growing, with Trio capturing a significant share, especially among puppies. Wetteny Joseph, CFO, noted balanced growth from volume and price, with targeted promotions enhancing price realization.\nQ: What are the expectations for 2025 revenue growth, considering factors like China headwinds and the MFA divestiture? A: Wetteny Joseph, CFO, indicated that while specific guidance will be provided in February, strong growth is expected across key franchises like derm and Trio. China headwinds are expected to normalize, and the MFA divestiture's impact has been accounted for. The company remains confident in its ability to grow above the market.\nQ: How is Zoetis planning to defend Apoquel against new competition, and what are the innovation plans for long-acting injectables and other areas? A: Kristin Peck, CEO, expressed confidence in Apoquel's continued growth due to its established safety and efficacy. The company plans to maintain its current promotional strategies and leverage its strong customer relationships. Innovation efforts are focused on long-acting injectables across key franchises, with more details to be provided in future updates.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2481541203"}