Zoetis (ZTS) 4 May 232023 Q1 Earnings call transcript

Welcome to the First Quarter 2023 Financial Results Conference Call and a Webcast for Zoetis. Hosting the call today is Steve Frank, Vice President of Investor Relations for Zoetis.

The presentation materials and additional financial tables are currently posted on the Investor Relations section of zoetis.com. The presentation slides can be managed by you, the viewer, and will not be forwarded automatically.

In addition, a replay of this call will be available approximately two hours after the conclusion of this call via dial-in or on the Investor Relations section of zoetis.com. Instructions]. [Operator

my you the may now Steve over to Steve, Frank. begin. pleasure is floor turn to It

Thank you, am operator. and the Kristin Zoetis Good our Wetteny morning, everyone, quarter Peck, Financial earnings and Joseph, XXXX our call. Officer. Executive I Chief joined Chief by first today Officer; welcome to

and and you include Before on section Relations the remind slides actual that remarks on will that that website today our we statements differ begin, those I this could presented forward-looking Investor of the projections. will materially call available results our are from

factors For refer a XX-K and list Annual that statements and and could on the but reports to our filings, results description in I our XX-Q. of not differ, SEC on press to, release certain our Report to Form forward-looking Form today’s cause you including, limited

Our measures, will XXXX. GAAP to Generally GAAP. included financial the financial these tables references today, which accordance financial company’s measures in to Accounting dated non-GAAP earnings were A X, Principles remarks certain with Thursday, also our X-K comparable U.S. in and U.S. most directly the accompany release or of filing Accepted prepared May today press is include reconciliation the that not measures

the We exchange. cite impact results, also which operational exclude foreign of

over With call I that, will turn to Kristin. the

based solid expected, Thank quarter as results to welcome call operational in our our reported in international everyone Today, and you, strength revenue we first and for of Steve, first diverse quarter XXXX. markets. earnings growth portfolio X% on

are X% net the of revenue February, petcare to of growth guidance growth a and the in of year the strength in X% and a income, and we X% for stronger our full As underlying first the we softer adjusted to expected reiterating market. operational we in given remainder quarter X% year, for indicated

was operationally decline In the revenue way U.S. in the international by and quarter, segment our X% the offset partially XX% led growing first a

revenue, for of operational the the U.S. The by while supply growth drove in and livestock double-digit were In sheep with cattle, companion animal poultry, XX% in results revenues products. in performance growth flat operationally. cattle, operational improvement the of product an this on key was supported performance livestock Our case fish. portfolio based was

Meanwhile, our to due in their distributors U.S. first portfolio and in the quarter. animal companion declined inventories destocking the reducing

As And fourth of inventories increases well which price data promotional as retailers on in of and animal distributor programs. a based on higher animal as clinics, We based companion purchases we on in view end strong companion quarter the from XXXX, see demand veterinary pet short-term owners. anticipation impact in channels and sales. market occurred our

dynamics patterns the momentum increased to the XXXX. increase in during vet more more in time quarter, also allowing become the Other the second the Clinic first a X% by direction. and showing in aligned underlying purchase distributors throughout the to our and grow up our channels market for while product in quarter, the distributors owners demand were retail example, distributors product to up is out approximately sales expected the affirming veterinary Pet healthy our about out expected, declined product U.S. we continue pulling quarter, since inventory for through of For visits as an with trending XX% positive up to in show clinics and from sales owner into year. X% were demand a to sales pet U.S. clinics petcare first

in delivered QX we was distributor Despite the overall Meanwhile, combination the both driven evolving portfolios. strength quarter. dollars inflationary of the which international companion grow average even clinic companion human visit and animal The the owner an growing demographics, XX% livestock pressures. and X% and lead. face operational continue where respectively positive in and growth and to in innovative in of a average visit Revenue by growth increased revenue per unbreakable U.S. markets, pet support revenue to continue in all medicines animal per issues bond, spend market our and animal XX%

steady results geographic once growth. quarter's deliver and are predictable This a testament and again diverse our how help presence to portfolio

we was adjusted of a the in income, X% now our Turning decline first with quarter, in-line saw operationally to net expectations. which

The quarter investments fully ago not field our costs in U.S. in shifts first petcare quarter. significant the the diagnostics, which market model were year force go to reflected incurred and for in

gaining discussed traction We we to expand The also of outside U.S., which we and maturing are R&D, diagnostics increased investments previously. in continue grow in U.S. have saw and in investments the the and

Vetscan We and expect bring platform, our to year our we innovative the a return further lab as build growth for reference offerings and refine the diagnostics grow AI U.S. Imagyst space. in to business

operational see animal Looking double digit companion in relatively we our our portfolio portfolio growth this flat strong demand operational year. innovative driving livestock for growth and ahead,

continue will that and vaccines and dermatology, large including growth, areas in growing parasiticides, We our future to the diagnostics. monoclonal antibodies, franchises invest capabilities support like and product

key out in through lifecycle extensions Cytopoint build to innovations like Trio, and claim continue Simparica Draxxin. products and we franchises example, product For

antibody, We expected our with vaccines we be to global in dairy add as recently, purchased manufacturing site which a Protivity, beef new and Lawsotek markets operation Atlanta, for for And product like are growth. used calves, livestock Georgia, approvals capacity for outside most also and new and vaccine, will expanding reach a additional for petcare monoclonal swine.

are it biologics and As XXXX. expand you markets substantially when begins new rapidly monoclonal in ensure vaccine all global platforms and would across know, portfolio supply this and long-term site for growing antibody operations capacity manufacturing our our

a overall the XXXX, be globally to we uncertainty any While challenge. economic headwind have to proven in remains XXXX, up

first guidance, new the portfolio the future agility, and and our our and create continue customers I resilience very growth, to positive long-term mix our sustainable for diverse our can and value full business animal for in year feel about built and more our valuable vision of health over flexibility and unusual people. drive shareholders. learned Despite our of results quarter, the developing in especially muscles, have last years, We and three lessons how

to and franchises XXXX economic challenges for our while strong leadership, potential future. the our could be market shifts diverse to continue the invest continuing occur portfolio, will and delivering adaptable on that committed remain We the We innovative based year. disciplined opportunities, yet to throughout growth in approach to in

you. Thank

Now let Wetteny. off me Wetteny? to hand this

Thank our year, comment, Kristin, growth morning, good had business QX solid results and strong the in-line our livestock Kristin’s our by everyone. driven We market with Echoing to a and with start you, international are expectations. performance.

to first our X% As expected earnings annual of for we indicated quarter we end of on below low call, the our growth QX operational rate forecasted XXXX. the be

first by income a In operational generated a we a an million and X% on Of X% billion X% basis growing on companion both $XXX destocking quarter, reported the X%age declined X% and basis. operational on in from of volume is quarter. revenue revenue X% reported volume. an Adjusted net growth, of $X the in operational driven distributor the primarily price decline decline animal U.S. with basis. The

growth cattle, growth by key quarter. The with the terms of species Livestock in companion XX% poultry broad sheep revenues in growth fish. products vaccines. saw way by led of portfolio poultry, was and driven of U.S. an driven across portfolio We with livestock double-digit in operational animal growth based higher sales Our growth on growing the flat cattle basis our additional in in operationally the was operational supply

fourth favorable as in conditions benefited quarter our XXXX. in products of market sheep from of as Australia well Our the acquisition Jurox

parasiticides double-digit Sales Apoquel, performance to and our operational growth Finally, flat growth continues offsetting perform Norway. declines were and in strong in our products the companion Solensia, with driven well portfolio in operationally products, by quarter, vaccine our Librela monoclonal of in antibody with fish animal Cytopoint, anti-infectives.

million in monoclonal Our for quarter, cats, osteoarthritis antibodies Solensia with globally posted revenue in the in strong for dogs products. demand and pain Librela both $XX and

Solensia U.S. Additionally, benefited in the launch our quarter last from third year.

representing half this This in period. fourth U.S. in the from Trio year with result X% the growth versus well the activity the of offset anticipate the pre-price increased buy-in primarily operational markets. an of comparable and destocking in $XXX decline half. posted first million new the decline in of global Librela clinic was was our second of promotional as later launches during This by the still for and the XXXX increased quarter. markets As U.S. international as quarter, in revenue Simparica penetration approval we during launch distributor the in partially quarter,

market growth direct demand lack percent on portfolio $XXX decline operation offset revenue. due the dermatology with the pre-price underlying our only of QX, is impact increased in key continued this XXXX. Cytopoint portfolio based impacts. X% period keep and in in with Japan This revenues million veterinary the clinic. attributed which to on buy-ins decline retail reflects comparable and declined better the in of U.S. in global in to channel partially our injectables, model Our dermatology the sales in Cytopoint double-digit for preference

accelerating, be may portfolio While believe for we to key unchanged. outlook Cytopoint conversion our remains dermatology Apoquel from overall do our

declines declined portfolio diagnostics the offset growth in U.S. with animal partially companion by Our operationally, X% internationally.

promotional by revenue set X% quarter livestock of the of the quarter billion in companion and products for moving expectations is impacts. animal the sales X% declining Now distributor with declining quarter. in XX%. in revenue growth reflective the on result growing segment animal and and inventory U.S. was to performance Companion the quarter we $X is prior a

market mentioned, the clinics as and distributor growing. is Kristin sales healthy for veterinary demonstrated demand As by to

remains our across to full outgrowth and continue outlook unchanged. parasiticides animal in and our our portfolio, key products We growth the see strong sales companion year including robust dermatology for

in X% remain to visit on annually Average quarter trends than average These period. grown U.S. clinic impact Spent continues are improving, reflect XX%. vet the better up the that slightly and elevated per increase. revenue the clinic above as remains expected of clinic up trends COVID and visits. is levels Total normalization have and visits quarter largely revenue per in visits standard-of-care the over vet are of pre-pandemic visit the clinic revenues growth up X%. XX% on practice with we

by posted was Turning as companion patient sales flea, million of by offset parasiticides the of a outpace share heartworm in in dermatology XX% products. Trio U.S. growth overall by continue to destocking, to portfolio well $XXX driven as the driven distributor we sales market. and in the where partially our product quarter, largely in animal performance, key tick, declining Simparica the decrease decline

Our as to strong collars. we customer see outlook continued topicals for and Trio remains continue unchanged and conversion from demand

and QX growth decline were Apoquel administration, companion The partially Solensia, impacted offset our which retail by to X%. partially the XXXX which QX is price sales were the largely by XXXX. for Key in of sales increases the growth quarter million U.S. declining dermatology was $XXX decline by significant Cytopoint third due its in in injectable in of sales products clinics. preferred high sales Apoquel quarter. animal offset buy-in sales ahead negatively launched

growth advertising OA through clinic feline of drive penetration continue Solensia DTC see We to our expect awareness in to solid and campaigns.

supply several revenues U.S. livestock the our which resulting from and in primarily impacted inventories. XXXX quarter, cattle improved our business XX% partner replenished where channel have outages, our grew we throughout

While impact continue we benefit quarter. see replenishment will this is to largely to improved the supply, from isolated

due also expanded saw to claims. We label in Synovex growth

growth poultry business by also sales to Our driven of contributed expanded vaccines.

on from acquisition, both and antibodies Jurox our products livestock well XX% animal completed segment, the sales on Moving as X% monoclonal a small resulted companion international to fourth of the our revenue where animal grew XX%. of quarter as parasiticides, alleviation of operationally osteoarthritis in reported in which animal basis companion and last with pain, of year. was for our quarter revenue the growing Increased impact

removal performance by the growth of of driven XXXX. were Solensia. million in-place generated operational allocations We the half encouraged by that Librela and be $XX first continue the XX% supply strong demand of underlying or to and for Librela

Solensia quarter internationally, sales million driven by the stronger in demand. first delivered $X

Trio flea, market revenue with in expanding million share XX% small to parasiticides operationally growing to contributor the growth tick, our animal international was top and the space. heartworm $XX Simparica in for due

portfolio international patients. saw and in major markets, most compliance the driven of was key across Our by operational dermatology flat We quarter. operational higher growth our double-digit new

offset was large in XXXX. by Apoquel growth buy-ups pre-priced Japan of in this However, QX

in benefited our Our price with emerging which in from markets. segment international four species. by cattle operational certain Growth our quarter driven livestock in increases grew of core the also XX% portfolio, was growth five

in high demand benefit our Jurox of favorable with with the as Our the East Australia impact Eastern market had price. to contributed the due to an in Poultry penetration as well well also of and quarter the as Middle sheep growth Europe in business account quarter acquisition. exceptional as higher conditions key

offset to continues portfolio driven Swine vaccines strong growth the supply for fish constraints with salmon in by in Norway. markets. some our well, sales flat lastly, quarter partially was China, intermittent perform And in by in

headcount higher to manufacturing gross a the increases. was moving of foreign year, from growth XX.X% with prior by exchange lifecycle and XX small quarter. mix. basis, price operationally QX disruptive, for spend XX% expansion, driven operating Adjusted and offset compared pipeline to This Now the on priority animal resulting capital began of XXXX, costs remains T&E. an operational favorable increased U.S. the XX% rest projects P&L largely compensation costs innovation grew the basis management. in margins expenses our XX% SG&A our driven result operationally our Adjusted candidates, basis in of as and product advancing reported allocation. by points force and R&D novel first for declined a on R&D of related on project higher unfavorable of higher include field by partially which

basis adjusted income period quarter associated tax the settlement quarter with underpaid a benefit benefits partially the period by of products. for income. XXX related and mix a of sales favorable benefit higher The by quarter Other offset driven rate favorable of related in less intangible the are royalties U.S. to foreign points increase discrete to an in the and XX.X% deductions of lower earnings, the prior for in reflective effective tax derived net in current jurisdictional certain was

net $XXX million. operationally for operationally X% finally, quarter. in first adjusted diluted were EPS the income declined expenditures declined and the quarter And adjusted Capital X%

We year anticipating the significant a expenditures in full are increase XXXX. capital still for of

as million XXXX. We capacity manufacturing support a and versus make of repurchased over the investments for including dosage. future $XXX Zoetis as our oral monoclonal continue grew well antibodies to growth, solid dividend quarter, XX% In to shares QX we

for the year Now, XXXX. moving on guidance to full

as the has first we gone have expected. largely quarter mentioned, we As

exchange therefore We our provided Note XXXX as reflects reaffirming late during earnings April. foreign call. that February's guidance rates guidance of are

been rates volatile have exchange quarter. Foreign over the

of We volatility to monitor will continue the this impact forward. going

$X.XXX revenue a $X.XXX billion For and operational of the to X% year, between representing to expect we growth. continue billion X% range

of the income billion of in guidance. EPS consistent reported be to finally, to $X.XX X%. be to the the with representing X% to billion to also this to adjusted range net $X.XX of of growth range and expect to to February $X.XX in We continue our diluted we be expected And adjusted both $X.XX operational EPS diluted $X.XX range $X.XX, in

full more go summarize our in in to deliver to before our on Q&A, year confident ability expect remain commitments growth Just to subsequent we normalized guidance we quarters. and

to our or faster market. We see to confident fundamentals underlying to portfolio will positive allow in-line in and us continue trends are innovative solid go the that the demand with continue and than

Now, line for to the the Operator? things questions. open I'll operator over hand your to

Instructions]. take Stifel. [Operator our Block first Jon We'll question from from Please go ahead.

you the Good Thanks is you million out delta. ask think over companion if math, crude both if but morning. guys. And Appreciate a I'll down in animal it. it's upfront sort I up U.S. the now I in sales -- and landed point normalized And rough were channel like Kristin? X% X% sales XXXX U.S., over $XXX some basis quantify of that. importantly, then were

of [does you these] parasiticides do I So whatever working $XX million Librela, can can be one, down bridge that then inventory week, $XX expected quicker And there's I bridge helpful. quarter, a there? last (ph) you to easier you still guys think XH. million a an one, get said by you to approval guess would how or

lot your is of bid to are there's So you again, it. launch on Kristin, launch the it that the that believe chomping feel Solensia how demand the call a end year. at serve do we to XH, at then And ability the users before full get of

an you at all to Librela expect ‘XX? call supply do XH Thanks it, So U.S. be issue guys.

that in as could the We very to not launch early that's is then full the launch launch, full second always to we've for a pretty our timing straightforward. -- include product second your start in But I'll reasons. be in late we again, of very launch the would and the do in we continue late half. with the numbers year. expected in and with continue Librela year. for The a numbers expect first year I'll the first obviously, of launch, obvious approval said question. in the the experience Yes, full Librela do Jon. reiterate we exactly our the Sure, go half not It's to to year, for

experience. we So, early do would

did no, we As the launch very launch, saying. in do late we don't any -- this on we've anticipate not it's if based always we're it done full year a we be supply launch challenges challenges, on or what XXXX, a in there. with full early will see full And XXXX, whether year any a late

question a think complexity what and think the trend I is in we second with again, it don't in we you distributor, a quarter time there's that on going Obviously, your we'll bunch the of in-line really today. On one. continue. that spend lot is to on see expected But of

me the been is probably get this Let let hearing what because the details know this biggest I question all early we've into morning.

go So, details? Wetteny, you to through the want some of

of normalized levels just start the second bit are you in me the we little Jon, here. And normalized quarter. here more Sure. here at details step levels, there, And start give sitting we're question first? yes, I’ll your and at was, a back let

As the through would got coming the we're in pre-price constraints. pieces fourth call XXXX buy-in we call, above fourth into levels on of quarter. I how normal said, quarter last have parasiticides, given the ran given there year And Driven pricing of in we year, in pre-priced on saw you recall increased was we our Kristin by some the came we may the as supply the we recovery what into that as promotions of supply level more described we buy-in and with, late buy-in.

the the that that we So, the range to first destocking end to see which for why would we said X% at have quarter is X%. quarter, the growth below year be of we expected low the of in

I by is quarter in interest to not those say of the guidance And experienced given as we into the seen but saw rising normalized slightly the we And end reflected the that way, down we've unexpected. been we and our April, have reiterated rates, range that then normal destocking more we first started that we we've into as quarter, as got just and destocking So step lower today. have would the historically. -- in

of not they return guidance in in normal And stay our terms or about they'll now. is assumption we're levels where anticipating so back to a inventories that are

you if demand Now look strong. to end very market at the they clear, be remain dynamics,

on As up X% distributors out And earnings volume a quarter. we were owners the quarter on X%, of about by in the in patients, look XX% a for at ago. for year into vet first our quarter. versus you in We've and look out release, increased retail, up clinics visit if year seen if pet sales were increased you said basis a the visit the sales in at time derm example,

international we've animal. -- where And in normalization destocking we've so by markets we livestock then, you U.S. and the way, didn't seen again, international and the XX% our haven't across the don't saw expect operational to that in we companion and seen markets since see of growth see seen level

And into when without an we so levels contemplated guidance in initial the again, factored extremely February. return and these are we're those back and guidance, our gave to

Stanley. question with Please from And will Erin our ahead. take Morgan go we next Wright

questions, one on Great. on one livestock, companion. Thanks. Two

continue and year? Can So, the of the given flat the us in there coming you for that quarters, on you segment that side, should in a across U.S. livestock how the the livestock much quarter? the benefit in strength livestock stocking for expect was quantify in

seeing and customers you going your declined distribution And across think on retail that that animal what how segment the that derm product the and little you in and that drove companion Apoquel with change channel, does touched ahead shifting about proactively you volatility competitors bit no side, a decline, Thanks. this direct you're of strategy, of mentioned to side are but alternative you channel for leveraging that competition? on

to reiterated Again, which for resupply or year. key but expected, in our As grow what expect as by of was we a line in we continue Sure. was with Thanks, driven products we a lot remarks, flattish prepared did increased livestock growth mentioned, Erin. XX% the you the really growth supply for livestock of

in a If a we you slightly return genuinely it's depend Is the is our growth going sort or If you'll travel such back it slightly number look more at markets even in Brazil of Australia dining U.S. look or of our some will see of that if supply at really and to it down? U.S. lot China you drive in of onetime up around into markets saw, China. this. on or it's out of we world think and a as I the business, getting export to think the

we're is animal. to very growth guidance continue Wetteny’s we which to our expecting the in for So into point, a gets strong flattish livestock back have companion number, year which expect built and obviously double to digit is

the As of Wetteny this back you pull in the growth digit in did at one-time largely out, decline, it derm you quarter, promotions fact, is remarks, in take Japan pre-price the mentioned to And if had look issue QX in out double but of Japan. you destocking to his the for international U.S. XXXX, if due buy-ins that as and the

this of the in expectations, performance for again, of really indicative year. it our importantly is our view but with our expectations So not line was

growth the and the double-digit overall for year for to expect rest of the for continue We dermatology. year

strong. out invest, really in love Our right owners really it, it it, stays Cytopoint, more on the of it clinic. in seeing uptick of are the the lot remain efficacy seeing of We're now and more pet obviously sales because a benefits compliance

see would continue underscore to think compliance, it there. we I As the growth here our again we'll shift

from customers is I'd not did thing in seeing that And any increases the that mentioned Wetteny other on price do. grow the visits mentioned derm we're we QX. continue really pushback to And

continue year guidance, growth expect double for last growth the derm. digit for strong derm we to for our So per

similar just non-indicative the year here, add quarter to is that first Aaron, the overall I would Yes, of results.

etcetera, channels, that. And we around your see so point changing don't retail to us

our off for change expect expectations year. the we But second the key in I for a two. changing we'll start. the mix growth fact rest franchise, between continue and overall picture both we're for derm the derm of to quarter lead derm internationally. the remain to and strong for same U.S. actually think And not to those the that, the the the Cytopoint In

Please take next ahead. And our Michael with we question go America. Ryskin of from will Bank

for question guys. taking Great. the Thanks

want of First, sort to through line ask the the rest top I about of progression the year.

as think start what could some point and you just of softness implied now me talked we billion on year the right you'd your us to of to now is quarter. sort But there saw go from steep the I relatively growth. XX% you second distributors numbers operational that the to you previously when about given let any through rest you a in $X.XX give additional and color ramp just hit

just in XQ versus to to XQ the up So XQ. XQ XQ, step talk about XQ,

expected to a on this Librela the follow product was comment touched year, launch Trio. the that, on And other competitor you wondering Kristin, then to could guys as on Simparica you earlier, I if but

market day, of We but are how in curious tariff haven't you're any the the rest that. your your on of thoughts some that's hearing doing of changed going are seen what that what if on products regarding yet. parasiticides of competitors can some on your competitors just stocking, And some promotions of and that what's year. of Thanks. doing with what through their your sort with impacting terms view Obviously have of come on

turn she'll in for Kristen. start launch And then to the over I'll for Librela cover it year line progression sure with competition. and Mike. top Hey, I'll

balance in So board quarter. to year, ago, expect second normalized which what the the the into across second a and with across the mix got of progression just particularly as starting cadence normalized call we're year about a year. the start we've respect balance normalized the mentioned we halfway I'll to quarter, more bit the growth but I And obviously with for the strong little derm of for already

is would rate QX, with I respect operational referring thing to to. and say I'm growth normalized that's One

the headwind headwind three for are I a second on that points about in rates was of If about you on FX, at take first example, the would look two based quarter of expect quarter. right points where now,

out turns and up line. reported slightly and So it FX on take second unfavorable where on on based the around That bottom slightly in the top growth, map being you should when you now rates favorable the into on growth to at consideration. line operational ends half that year, are the year-on-year again

So I the should quarter, would at But X% starting the that's just of the progression. we get again, expect sort guidance X%. you growth with reiterated through think how that normalized to to second to

pick And Sure. was me let other second question, product. the your which up

to Simparica But are in that of the second first We to quarter, at half expect continuing share. we the want for look competition Trio. you the year I underscore gained as actually

we was in the So strong and and said Trio underlying Again, of in continue with as indicative with not we it it's expectations. year competition in performance, Simparica year. second strong the growth remainder expect the demand competition for you our even of said, the there's very for U.S line to with coming, we if Even look half. our the at

The expect. competition. this did we than expecting good been it's have we later news So is

important their before, not even any ran ahead we're promotions if pricing if are they mind They expecting promotions, in of launch. change own their that very in gained business. it, really about this the they think strong now look would And at even I those leader to the it's with quarter. we keep share As we've right quarter. you And they radically them with HEARTGARD cannibalize I NexGard, to we think given talked about would think really

the of do confident for strength our said the year. Trio half competition. second it, owner remain very they'll for we satisfaction expect We in we of of the In pet we before in think bring we of the as said of Simparica Simparica a confident relationships the growth as the product Trio. So strength remain in with that I strong the year, but

question Rich Nathan next take ahead. go Please with from We'll Goldman our Sachs.

for Great. the Thanks questions.

like Sorry pull January by out to the quarter just of little price destocking animal February the impact might keep in occurred the quarter. It saw pre and companion like first how the maybe could sounded have fourth sales of honing about you talk and in quarter. month destocking a seems month? the kind into the buy-in on played from It dynamics, U.S. the later the but forward bulk bit

think I the is looking maybe visibility kind second quarter. the quarter? improvement played think as just this in comment people get out on April better the the just to business of are second is you how where we March Could into heading or on about

Yes.

We anticipated quarter to as the QX. out we dynamics So coming call destocking. and discussed saw be as prior just of to question look, of the from the given of some as answer in start happy I'll we destocking the

little we color a mentioned of if growth might more what supply clinics, last is market you had you in X% quarter. our too in sales looks playing as its call, we year exactly terms we the at recovery give demand distribution think the look have bit on of impact the cadence like. last perhaps I'll volume end which that of thought. on out an our the As about helpful on we When said be out to the would the year, timing

of the those played look the out If for above quarter, how they're actually you that end at number. March,

said, would saying end seen see and the markets we've anything of of the growth would the the we're what to normalized in strong balance we a and second here I'm starting haven't second that quarter So, that in sitting for year. a we I quarter, as the in current indicate this slowdown. middle of And are the quarter had terms start

go up. also stay lower Yeah. ranges, Wetteny that current We which do they our they reiterate expects And but their at is environment, guidance the I think end that rate not levels, are to very the what given this interest low they believe is said expectation that back of our level. at I want earlier, will

So at again, in guidance is at the our stay confidence that providing not back that will levels up, the they're now. they assuming going we're they're

to Chen Cantor. And we go ahead. Louise will with next Please go

here. taking Hi, my thanks for questions

And while had what's in what you've you. longer here? ask front? that remainder some will be will since then going wanted on you're to for on be you, I discuss year also Thank been event, event. pipeline disclosing your additional anything a of And more to your to wanted that So the diagnostics you the you you the upcoming things ask over. outlook term guidance, from products, going that of are What business? key the business, investor It's investor

Sure.

lot We looking Investor investors We a our are about. a what the to excited to Day. talking they're over time spent for last six as of months our

there will and our confidence gotten term of long lot focus to We've a R&D. on Our medium our growth questions expectations. pipeline on really in obviously be building

Rob our of R&D Head other as So, Polzer, members And we see more of give introducing be will you to leadership on our in also coming you'll our detail R&D team. release, our press look portfolio. to to us mentioned we forward

meet you get to So them well. as

term give excited We're medium as around short view and in you to the what long confidence growth those. share aspirations we detail and more all some of

to So diagnostics? you take on her want second question Wetteny, do

happy Yes, to, Kristen.

the the the back particularly strong our U.S. would you about of in we will of the So at out instruments, expect consistent force year. guidance, consumables if U.S. into given Those perspective from year year. change placements this to if look to diagnostics, look you to the seen we And very expect productivity In see saw well. and see drive in the our we last return first quarter. we ago field diagnostics made rest at said quarter, growth the the look half the on new to across increased from would including with where terms that we did of we change in improvements the second that growth we a our this images year a actually as team, productivity have help

which are -- on long those drive to believe the in made, going we for growth to believe firmly that again, lapping we're innovation we And continue addition diagnostics. that term of in work we terms changes business to

ahead. we next with question take Sandler. our Westenberg from Please Piper And will David go

Hi. Thank you for taking the question.

think parasiticide about to Simparica August the heavy to being the portfolio is distributor get the So just so season. dynamics I on usually in franchise March in Trio here, and

outlook, any negative in that happened the sales season at impact it some way, a we the of product? think be destocking flea another any maybe the annual do you Put going do the and this this missing the or to kind net a tick you take for of the step dynamics As take timing a distributor dynamic? of of of zoom back is have of think with

distributor And inventory see livestock then the wouldn't right? same of dynamic. some have in that dynamics, same price same increases the Therefore, So on increases question reiterate companion. just doesn't to price the you the the not on the it portfolio, mean like I livestock in as were

just down. to if And inventory levels up inventory more, just sheet could squeeze you. then -- see didn't want I if the the or or balance so yet, I wanted one trended see to just Thank I

one. Sorry. That was

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earlier. Let the want me and what with I'll we start take other Wetteny I to Trio two. said underscore let then

We out. have in demand strong very sales

you demand it Trio and the as a needed. it's so tick quarter for And season first saw effect has the in no was product we as at on issue. where what going, the the in But stocking flea look and

full have We supply in.

going a supply in I the remember QX us thought competitor. shelves unusual had was a put the at into restock Trying to issues complicated of as launch we inventory in QX channel think more and be against we putting the what QX, lot as a of XXXX QX makes it you a to little of was QX. what end and

quarter-to-quarter remains So the I to think in gained quarter. dynamics, We stocking demand strong. product underscore there's but I some want for this obviously share

sales so anything would which to levels, that at QX do is the normally QX and at normally of no, look the inventory in parasiticides. see we We strongest normal we are to QX product if QX you now the not agree is

continue we unique the the product we for stocking demand end the or But to don't and and is the demand relatively some see XXXX. Obviously, of quarter-to-quarter that look very as for for for through year. strong the you the that importantly product. there product of beginning So, stuff see signals at growth strong the we XXXX actually the is think anything

the half. competition we second said assuming Even in as

were certain I there year, couple of have look last we're touch any slightly look, livestock. products not recovery We're been if the of might maybe increase prepared of middle bottom overall, think where Look, we commentary, movement the of for range, Yes, our in livestock. the given I'll in the the the dynamics on you not in other terms the range some of. parts we as ended meaningful quarter speak seeing mentioned but in at to I towards in question, supply there same mean your to

certain launch as we know, ramping our respect inventories. anticipating and inventory, sheet And with to approval certain you other drive up are to of will then balance products, that on products continue

First, if cash you increase, on because to receivables they're and NAP. really to inventories performance on saw strong last operating as year look quarter, continue the flows at actually we favourable other

flows year versus favorable cash operating a overall, So look ago.

take And Barclays. we Prasad with go Balaji from our next Please question will ahead.

for good the me. from Hi, Couple morning, everyone. questions. Thanks

this you which Firstly, it side chain of would could an growth and impacting chain [indiscernible] in give year? products Trio foresee your supply on any in supply XXXX, update any issue or issues be or the key the vaccine impacted you anticipate

is the to derm you I decline? sure independent decline Thanks. led a derm segment. help Can fully. the provide what This and got not the wasn't I segment numbers understand Secondly, us around some distributed

maybe in into be. biologics. as on small level monoclonal your first have But chain, resolved Sure. regards the at mentioned expected, as from that's the before you would chain I'll before. With importantly XXXX look supply challenges We're build parasiticides some have with we back completely or supply we products have as we answer on on the Wetteny normalized derm as supply these whether normal can question indicated chain. my of challenges start our supply and the antibodies. we always we to We been in saw they

don't in But some our that are previous foresee always But in been we small my these you up has any segment some as of specific supply normalized chain forward. those expected, XXXX As at we maybe have challenges going if can derm Wetteny generally have. and competitors have can supply of on questions? bios all number build normalized you chain comments levels. clarify We'll

happy be I'd to. Yes,

is we in look, in derm retail in story U.S. from the So terms that saw of the buy-ins pre-price destocking QX. similar into

quarter. look As last second a the significant if in well and at rate Japan year growth that you you you by as at in way go have Japan reporting look ago, driven seen in saw buy those ups pre-price other And our Apoquel. a the year first quarter, you QX, if the then for would in

international. taking I account if for the digit were growth I into double what see for both U.S. say to said, form you franchise in So would pro results you just quarter and the derm the first the will

go Chris ahead. we'll Please question And Schott from next take JPMorgan. with our

Chris. This you Hi. our taking (ph) questions. on for is Thank [Katarina] for so much

investments impact acquisition Mars will have diagnostics and question Does you're so diagnostics, the pet you'll increases any thoughts the you price the feedback you on first price increases, diagnostics the Thank on that market? much. initial proposed of in second in or it increases owners of thoughts seeing is the market? and on So, XXXX. any veterinarians any plans beginning then the the price Zoetis’ year, how on and Heska change pushback are making be from approaching from any or And the that in

it's reference with our invest then Sure. your at around take I second committees continues Thanks, and U.S. care. specifically in point acquisition pricing. lab [Katarina] the area. question look your sound take executed of on margin a our reference we resonating We've Most offering, our confirms it building market robust XXXX to veterinary the importantly the really first virtual lab, in think importantly images, to in strategy, network reinforces I'll innovation that Wetteny around and the diagnostics (ph). let Heska to attractive start incredibly question the really customers. be our think our our continuing first we had we believe of as lab investment

really edge a rolling in the we leading really really differentiates experience And that's innovation in is cutting lab, care, we differentiator. it's space, reference side. focus overall virtual of what in which with around medicine, innovation is and the innovation innovation think on is point customer what our our And out think

strategy. we diagnostics. growth no, going that see really So to focus on we're innovative as And acquisition accelerate really our our reconfirming

group second our to take around want So, pricing? questions you of do Wetteny,

price have the any of end that's on versus Yes, up sure. last price Look, year. given pressure X% took seen our terms We in demand increases. we X% market not quarter

significant If for And clinics, that retail dynamics at patient example, market but into out to described you're to seeing increased from pet growth seeing you're earlier, growth look owners. visits, etcetera. we importantly, distributors end significant from you see the we continue derm, in also

quarter in way, So quarter. the despite have terms grew international, XX% seen in some which any there by pre-price in the normal And price if increase. we companion buy you of in fourth animal the in, well given look as resistance at and not price is increases we

any signs So seen of that. we haven't

marginally at but said that actually on not the previously level If Draxxin, offsets some we've animal. some at previously and we meaningful that volume offset would of of we the have companion -- see offset price as to we increases you some not the the Draxxin some seen that impact side. livestock, some positively on can saw in the price actually look We seen just of offsetting

good market told what shape terms prices. of reaction in all in So in seeing terms of our to we're

into early means tell. of that too in to won't it yet. We what XXXX, go for And terms

our Brandon William Vazquez with ahead. question we'll take from go next Please Blair. And

good Thanks the morning. for taking question. Hi,

is one guidance. first just The on

kind like growth of high year strong started double you if read of the You digits X% to looking operational year for noise off start creating despite kind you're X% of inventory reiterated I the through don't a maybe single But operational digits, pretty even know, levels at, little that, growth. bit to here. guide

get already of read kind the given operational the would you're in you question So low strength basically end year what that noise? being if to of that through the growth you the seeing range

mid guidance I I the see, so we high dynamics strength think the we end see end to market would you that look, of at there, So if that our certainly supports look say.

I'll is start through halfway already mix we're you we'll normalized If year. for point, of of see including this the it And balance the what year reiterate and the way for we're which the rate second the growth again, at quarter. strong look to the means and seeing that the by quarter rest

one livestock expect we year. mind, in went our change We what to from of be saying And plus it's keep including basically right, We're the didn't Right? livestock flattish, for thing. from could same the saying guidance one. minus the balance

has how thought the and as the exactly rest played QX the essentially therefore out year same. is of we So

of out point no would guidance I the the feel any, where how more on starting as you the our range in in say, what inventory And the about probable than is noise terms we for we are the in second particularly, great described it's other, levels. us so And year. quarter, despite

And we'll go ahead. next to go (ph). PD [Steve with Cohen] Scholar Please

questions. A you. of couple Thank

is manufacturing currently the don't progress facility on least First, products based increased or the combination? predominantly stage some have at Georgia, current positive late in investment which R&D new on forecasts for we visibility is outside the for or this

can in Should And dosing tell on species, remarks, mainly disruptive novel to pipeline. untreated something more we that existing the referred you a to directed get Thank during meeting? in window the species, is diseases, wider improve else? you. within at currently prepared likely May if innovation claims us And expect or this you the

a facility. it as think able great current be a outside a we'll target to of market, our workforce with products tons of Georgia sense. our in well. build current a the and good that really be that of for strong found well really antibodies in products the makes The flexibility, really gives opportunity things to It's lot about us labor as exciting centre new we which access support large South we Sure. of right manufacturing and to very facility It of is as of different lots both launching what the Atlanta, use to growth some facility in new monoclonal will out

So we see -- facility's currently ability and the actually both do that intention. the is it’s we to

fully expect operational both As would we mentioned prepared in be my at I and remarks, it point. to that doing XXXX by

of expecting opportunity be will new of looking which disease there. about markets, give We'll the we're pipeline that you also We'll give the you markets portfolio. more been areas we've we're help we the about And We'll around so regards we'll you new those whole With we what pain details we've lot what those to look market. for Day, some size asked what a talk at of It sense and looks Investor mentioned before. like. like. now. what our could A are lot a think will talk markets doing

a sort some emerging that give new technologies novel you monoclonal new also some of big both attack as think And technologies. with can about species we'll talk we So areas -- we basis our importantly then of information key of in markets lastly, these about monoclonal on on talked we antibodies.

this And the to Kristin program there closing time. remarks. no turn are at for questions Peck back further I'll

Thank you.

animal to see time just our health. positive a fundamental and we've what really summarize, on of which drivers for based look, talked sustainable So the long very for product is about we demand

high really markets. capabilities going that And are portfolio. emerging invest that to pipeline environment forward the chain. industry's diverse with we and And has pain, most that ensuring we we're we in. adapt continue to talk dynamic growth operate forward the and look And as can the that We diagnostics is this We'll durable sharing to a while science future support this in going year really innovative dermatology, more parasiticides, founded we this all on Zoetis growth confident the about to you. and key talent, focused five about quality the on by and our catalyst; supply global supported remain this pet and

And Rob go at the market create value investments growth health the Investor that And for you'll XXth. animal confidence our importantly, Polzer, strategies our shareholders. ability our more have we're me, May to faster pipeline, our Head to our and in that of hear our the than on vision, R&D, about for Wetteny, we industry. from Our making that there Day

event I the New week Exchange. the we or Stock York you virtually can us this and at all So, announced hope join

Investor can our information on you website. As details our find always, Relations about more

joining much So thanks so for us today.

Thank does your today's conclude Thank participation. program. you you. for This

any You time. may disconnect at