Zoetis (ZTS) 2 May 242024 Q1 Earnings call transcript

Welcome to the First Quarter 2024 Financial Results Conference Call and 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 2 hours after the conclusion of the call via dial-in or on the Investor Relations section of zoetis.com.

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

I by operator. welcome Officer; First Call. to you, and the joined Thank Good Chief Zoetis Quarter morning, Wetteny Joseph, XXXX Financial Chief Peck, our Kristin everyone, our and am Executive today Officer. Earnings

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

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

call And the that, with I will over Kristin. to turn

XXXX. Steve, Thank for morning, our call everyone, and earnings good first you, and welcome quarter to

of a focused growth our our tenet net first reported revenue outstanding in XX% adjusted line and quarter results, our underscored strategy we proposition. income with products, demand colleagues. Today, XX% grew steady We by purpose-driven value and operational delivered the operationally for

in U.S. More $XX with XX% and launch our Librela XXX% specifically, of X% sales U.S., our operational expectations. line including the led way the with internationally. the growth in the operationally, Driven globally, grew in growth million osteoarthritis pain by franchise,

human portfolio X% declined XX% powerful operationally, operationally. demand animal for companion with bond our while animal fueled The growth livestock

the the rise power industry. again, of are markets, amidst the therapeutic highlights health durable of quarter's portfolio across resilience a and our global species continued even testament, and and uncertainty also results diverse to once animal This It areas.

Our been manufacture the as innovation. needs disruptor. life-changing and even prevalent deliver that we veterinary increasingly more identify purpose has is essential develop, animal and science, products and in, caregivers which companionship, customers And area nutrition the That of for are high-quality waiting in performance always for. demand have and rooted great means health been invest most unmet

being play. and doses treat of Librela we Solensia, example, for animals, millions in limitations antibodies cats, are pain dogs to of pets Take, return or whom suffering those relief nearly believe from XX% monoclonal OA With just undiagnosed all OA we X/X to to and were due helping of than long-lasting untreated injectable of previously are more XX to dogs globally, which are providing million With worldwide, NSAIDs. of pain our many treated. distributed

scratching So just the surface we're of care.

visiting cats are more often. clinic And the

market. In care the cat, fact, clinic to historically Bonqat, we're first expanding helping in product the anxiety alleviate a area under-medicalized we're with which in fears FDA-approved curb means of

and is customers science to informed decisions make but media a to empower responsibility a social form that in convening, for data. pet our owners understand to to We connect for and grounded place have also we share,

in Solensia Backed Europe XX trust They in anchored effective. Librela more commitment which our the We been are of used and us years. X and confidence earned commitment, unwavering of are science and by in to and and that for safe than safety quality worldwide. standards, has have rigorous years veterinarians are

earlier of Librela. consistent available. by research vet And the very other is that feedback OA XX% of real-world will indicates markets. Librela and This driven In treat our who that are of and are experience more in treat dogs we with XX% now U.S., veterinarians care the XX% the center with at hear globally satisfied will is

reaffirm accurately we expand veterinarians and who directly down, are live expanding doubling while need capital therapies, and with these these DTC Medical our training deploying online working efficacy and sessions education our strategy. safety to To Officer with of Chief the products, hosting

And veterinarians a evidenced that U.S. confident of in prescribe and vets blind recent continue survey be as confirming to Librela to unchanged. perception, intent by remain

$X be confident pain remain we could underserved market. of OA are meeting because We that an next our billion needs the franchise

expanded at nearly the U.S., metric, X-week by including rolling every our average steadily patient excited utilization. growing increased penetration, and through we're to are looking rates, adoption, reorder that April. We sales share in And report

of power and to pet want find Discerning the best relief friends. to vets owners bond. work Our their with performance the their human options, animal speaks will they for

unique been to Zoetis billion categories franchises. customers' two to again, able not other entirely something to the our deeply we allows OA pain, created completely us in because This $X lead key industry, And science to compete needs. in market has ones. has our create Beyond existing but only markets, new understand

portfolio market parasiticide deep insights. total Our on expanded based the customer

Before Trio, #X we in we this and even the of competition. face Today, are changed share These innovations we the compete. Simparica continue how in market and #X gaining Simparica were category. and growing

care. dermatology XX Similarly, pet and products; we foresight enhancements, to including were new the to cycle has were chew. life Cytopoint, first treat the and decade ever antibody monoclonal first major the canine led itch revolutionized X with market and therapies paradigm changed animal Apoquel of health safely chewable recognize effectively. A first to needed that That treatment

XX are a dermatitis more what We itch equity, untreated another and will durability innovations And grown just allergic million the continue From by relationships. $X atopic our built need. this remain $XXX to what strong because strong for has be $X.X once and globally. of and demonstrated million billion portfolio. and market to billion was treated we Today, know underpinned we million dogs first-mover a customers cycle believed than franchise life XX franchise advantage, growing customer our brand

seen And pain. categories now the each industry OA dermatology have total time We've opportunity expand. you've and our animal led created new health, innovations in parasiticides, in

assets moving Health global our you sure portfolios livestock. saw medicated this with and of week feed all innovation additives disciplined growth $XXX for on capital Zoetis' another focus are I'm product sell announcement in the the news to greatest to that and key and the investments great potential is allocation strategy Now deal certain Phibro This water-soluble example our agreement aligned million. with to related capabilities. Animal areas our of with

meet and the just livestock including preventative remain core of I'm growth that livestock worldwide. under continue innovative sharpening products Phibro's and We these reach confident to very needs our expand committed management, and areas, to to focus will customer our genetics. antibiotic alternatives global

the years, has been the product invested We've since IPO, industry XX $X R&D expect than producers that more more Science commitment to XXX with the leading always and market. lines our at over owners our veterinarians, has is the our disruptor been pet and has innovations for than great the Zoetis core livestock to summary, from and brought In in in delivering success innovation. of billion us. which

that in of chew; parasiticide Our Solensia animal OA like now pursuit breakthroughs and with in with Apoquel and led Simparica has in Cytopoint dermatology, pain Librela revolutionizing science to and health. are the Trio; latest

our But colleagues industry have easy. isn't purpose-driven time expand their our again, to ability proven trails markets. entirely and new leadership new and forge Blazing

future. committed our growth remain continuing franchises while delivering diverse to and for through innovative to portfolio strong And the we invest

and the of resilience of execution to the strategic the our remainder market of reflects operational growth increased guidance ahead the health XXXX, animal Looking our priorities.

to continue to opportunities, and challenges yet shifts throughout adaptable be the the in will that approach disciplined, We potential our occurred economic year.

that, over Wetteny. will to turn And it I with

you, good and everyone. morning, Thank

particularly start our outstanding well the of an had to across the species. we mentioned, price products, Kristin innovative As as strength underlying driven animal by companion as portfolio, growth year all our

a XX% operational basis. the on generated In first of $X.X reported and basis revenue an we growing XX% quarter, billion, on

income million basis reported an grew a net on $XXX Adjusted of XX% and operational on basis. X%

portfolio, underlying operational was XX% quarter animal a to aided comparative the due our growth of by our impact weak Our in companion strength of business. animal the revenue U.S. companion

timing headwinds for in of to However, last economic supply tough the diagnostics was inventory of the and sales U.S. products majority due our growth the to ] model in China, of related probability [ by related quarter to offset certain conditions comparative destocking impact livestock a this change. year to

is revenue X% the from volume. XX% growth X% with operational in price Of growth,

across saw especially was price X% hyperinflationary overall While our Argentina, price to price our portfolio, markets, which growth. favorably impacted by contributed growth we

for The Trio. volume monoclonal pain, growth Librela our was antibodies Solensia, driven OA Simparica and key as our well as primarily by products, new and including products dermatology

basis, revenue of segment the International on with posted a operational billion the growing X% growth $X On billion in the reported revenue, of while in quarter, XX% quarter. segment U.S. our $X.X

was an which animal of portfolio main growing was declined partially the QX, operationally. growth on Our in XX% revenue basis. growth operational driver offset by livestock, This X% companion

with International our strong companion segments of by this operational contributions volume performance growth animal innovative price. double-digit our and our saw both from quarter, in and U.S. products both driven the again We

of million as as quarter, growth the Simparica for generating growth saw operational continued Trio Trio was in primary the in with $XXX demand competition. globally, growth XX%. share well of strong We even patient representing driver

U.S. early meds the showed in came and launch our contributor muscle significant expansion the an In from launch Global posting also were markets, pain the surveys OA OA therapy in on more internationally. in quarter. into a growth, Our and vet markets, cases. million to recent moderate both EU $XXX impact growth new increase of

driven million primarily a in quarter global grew our by initial Apoquel to XX% we including products seeing franchise, in U.S. stocking key was modest from revenue. the with Growth are dermatology Our impact solid the dermatology Chewable, Apoquel operationally conversion distributor where within $XXX in

and treatment. Cytopoint of driven growth pet injectable continues for by be vet owner to methods preference

portfolio to growth remaining in portfolio. off XX% direct-only for U.S. These distribution transition to declines anticipated by model global as partially change. declines inventory declined Our their diagnostics U.S. distribution operationally declines sold our our diagnostics partners our a animal model by U.S. offset internationally. driven companion due were our were with the

well in as portfolio in by was offset a declined the especially in as comparative Our economic markets. conditions This prior livestock China. the tough price ongoing growth X% as year partially from quarter by our decline in expected, U.S. the International operationally, impacts other driven

segment the to U.S. the revenue quarter. in the quarter. billion growing XX% growth impact quarter as portfolio, quarter, for Now livestock of dermatology our the moving key and animal a the of with U.S. decline. driven was companion as Trio, revenue $X.X performance weak XX% on in Simparica the The animal was by X% Librela growth and of in comparative companion launch a posting well by of the impact

clinic companion quarter vet where animal in growth the we U.S. outstanding Our saw visits decrease X.X%. came

see in continued We wellness visits drove growth the decline. visits to while the therapeutic

retail is total these fulfillment, put continued to alternative on for impacting in without which channels. home and clinic expected pressure is delivery outpace preference dynamic continued on owner based our growing visits expectations outgrowth to revenue. the pet vet Sales for clinic This vet

X.X% grew reflects clinic X%, the in visit willingness owner per respectively, pet spend to and which and pay. revenue decline, visit the Despite continued

performance. product Trio posted Simparica growing XX%. of million sales to Turning quarter, $XXX in the

space. to continue the the triple-combination leader be market parasiticide We in

allowed through Our to the leading drive us to clinic. even compliance footprint at increased with wellness continue dosage channels visits growth declines has in across

we due to In realization as addition the in seeing more to as dynamics. to targeted a comparable price vets channel prior are well weak period programs favorable year, discount

product price in both prior quarter, dermatology and comparable the U.S. The $XXX Apoquel year. We both for growing were the the million weak growth in benefited Cytopoint. from across sales and Both XX%. a also volume and in period saw

dermatology growth higher periodic we share clinic. the products well visits quarter, in saw both our as In our remained as for demand the high. patient Market in

we compliance. to April, At Additionally, our Apoquel autoship the Chewable made beginning available growth of bolster of retail partners. through continued distribution programs

from meds, in combined million build underlying generated $XX with demand Solensia, launch QX. $XX in on in full posted continuing U.S. sales Librela QX pain vet our Librela to in quarter of momentum year. last the Our a the and million

the the last expectations. which growth in robust with we Librela, sequential initial impact seeing Excluding in we of clinic provided have stocking, line are quarter quarter,

in penetration which in strong We to XX%, as positive the rates, reorder points clinic approaching which real-world growth as among pet continued owners. all to well see are satisfaction good of and

the but our not also performance. safety of just efficacy Librela, in in expected We remain and confident

X-week U.S., attention. trailing average even Kristin sales increased steady media we trends into seen have April, the As in increasing our alluded after to, the in

see sales. million Solensia, in the which quarter, to steady year continued of We QX progress had U.S. more in than sales doubling $XX prior our

We needs market development, have we far. are the with our thus significant but indicated progress feline pleased

increase feline U.S., in patient market-leading pool the a for and since now pain is significant we medicalized launch. OA seen Solensia the have in the product

quarter, with Our clinic driven portfolio U.S. inventory companion our demand. diagnostics the change. animal channel work-downs our in underlying distributor strategy XX% has declined This our is and negligible destocking by in primarily expectations on impact following line

the in in X% declined the while underlying livestock business U.S. was as performance quarter our quarter expected.

cattle. return Our in XX% due reflective the period grew primarily we in of a of several results XXXX, strong supply products, to on of which comparative are QX in

Sales decreased well as to of swine as vaccines products JAKs. sales declined due of

result in In competition poultry, increased additive a generic feed of we saw declines as our products. medicated

our Companion animal products Moving dermatology international revenue operationally. in where grew driven X% livestock pain on basis exchange. of parasiticides. meds, grew of growth operationally animal X% small partially animal on were a and and Increased key to and oral sales foreign offset excluding companion grew products, the by X% segment was by International reported vaccines impacts This China. our impact XX%

new meds $lXX operationally the combined million, and XX% growing in million markets XX% quarter. wave balanced grew Growth $XX Our sales International launch were revenue to first OA Librela in our is operationally. markets. across pain EU International

latest moderate we which the DTC patients surveys increasing We the of now of in remain of seen OA in with where OA. pleased markets, owner European represents in the use the the in Librela evolution see Europe. campaigns to in our Librela's advertising pet to have cases, expansion vet according continue majority success We awareness

Solensia quarter, growing on sales $XX operational the in basis. were an XX% internationally million

Our quarter, $XXX impacted increased compliance certain the We posting Growth was driven in portfolio of our grew major prepriced growth saw across buy-ups XX% most favorably markets, in also sales. operational operationally in higher and patients. double-digit Japan International key by new European markets. and by dermatology million

in $XX operationally in by from parasiticides well sales. Europe force as grew Our franchise in Trio uptake contributions key portfolio and International as growth operationally XX% growing driven by launch small our account sales benefited Simparica Simparica with animal from continued Trio penetration Trio's X% driven effectiveness to million China.

$XX which in posted high growth sales on of XX% revenue, quarter. in an in a was offset This by franchise, million generates decline Revolution Simparica XX% growing operational a basis in partially operational the China. proportion our

our in increases declines supply by Price driven comparative across livestock the as year livestock period to price a tough prior quarter operationally partially certain of the grew species, return inflationary in high all X% was International driven markets. growth by of volume products. by offset the in partially due of

Australia. related by declines due driven conditions in volume a The comparable were tough in worsening supply market to to and cattle livestock period

China, Our herd where swine lower reduction International saw volume portfolio a prices by saw declines in we as well sizes. driven as hog

and a on to New as expected sheep, weather reductions in In supply herd we well saw conditions declines as from due Zealand constraints Australia key product.

continue consumer we spending see quarter, low in urban unemployment last reduced higher where economic mentioned we challenges As and have to China, spending.

prices seeing also the moderate and to are our smaller year on companion The throughout continue across both to in animal expected slowdown to in headwinds is We but a expect livestock with herd the late growth pork see we and lower impact livestock. sizes. year,

the of rest Now XX of reported Adjusted the P&L the declined on points basis XX.X% the moving for margins compared gross a basis to to quarter. year. on prior

basis points of Foreign exchange our had unfavorable adjusted XXX impact on reported margins. gross an

lower freight favorable due costs, in hyperinflationary we mix markets. and especially margins costs increases, by higher to manufacturing FX, partially saw price Excluding higher offset

primarily operationally, of OA growth advertising expenses as compensation-related on mainly higher meds. by increased our increased operationally, due well Adjusted SG&A expenses XX% XX% pain to as promotion and driven operating spend

grew driven both R&D our as on an higher related XX% by spend acquisitions as recent advancements operational candidates. project to of pipeline basis, well

the more tax XX intangible rate of U.S. XX.X%, a favorable effective in and higher foreign-derived primarily of income benefit was points, due a adjusted decrease mix for to basis quarter The earnings. to the a related jurisdictional

royalty adjusted to income of prior a from million nonrecurring growth settlement. grew finally, our XX% despite And net $XX the operationally benefit year headwind

operationally diluted for quarter. Adjusted XX% the grew EPS

were $XXX expenditures Capital quarter in million. first the

Zoetis quarter, shares. million the of In $XXX repurchased we

more medicated is demonstrates health, to our recent strategic that genetic announcement divestiture productivity investments products our to aligned disciplined livestock are on to food innovative us our to will moving remain sustainability. biologic portfolio strategy water-soluble on allocation focus programs solutions divest including animal additive focused that to Health. our to with certain transaction comment and advance that This on other Animal Phibro I a and solutions, and This allow priorities. wanted guidance, vaccine, Before capital Zoetis'

full on to moving guidance for year XXXX. Now

ability quarter an had highlighted we multiple of first mentioned, outstanding deliver have we through growth. that As sources our to

parasiticides dermatology companion especially and in key exceeded in performance Our our franchises, our animal, expectations.

progress to our confident the expectations. to pleased be the with U.S. we Additionally, are in ability Librela launch and of continue meet of

adjusted call. guidance our our during issued by operational and income raising earnings rates by reported revenue approximately that guidance our therefore, exchange X% in exchange are, our approximately We XXXX impacted February. February's April. Note reported provided compared negatively The reflects initial guidance guidance guidance foreign updated X% to of late foreign net when as rates

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

in well companion performance in reflective of is as increase products. parasiticides our due animal and as growth operational dermatology impact Argentina's Our pricing key to

operational our now digit to Simparica expect high be year to be growth key for single-digit expect our products we while We double Trio in range. full growth in the dermatology

As we of we U.S. with Librela. our remain stated earlier, pleased launch

for unchanged. for Librela expectations the remain year Our

expect range Moving growth P&L. of to to down billion, income $X.XX net XX% now adjusted we of $X.XX XX%. in operational representing to the billion be the

expect finally, and $X.XX be $X.XX to EPS And $X.XX adjusted $X.XX. range be we of in reported EPS to the diluted to of range diluted to the in

before year. our with are start very the Q&A, Just pleased go to to to summarize we we

operationally, we and This and markets. dependability our outpace areas While reflective reported us continued continually across growth diversity across various allows animal to key exchange-related of that our highlights major the are health of results most to foreign growth headwinds, our therapeutic the market. deliver

new innovation way, launching for and the new animals. care medical of to lead creating Additionally, markets we that standard increases continue the

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

first Ryskin America. coming with [Operator of take Instructions] It's question. from our Michael Bank With that, we will

Great.

there's right just just stocking Librela. to guide taking you've obviously, moving like ask change. comments of It got Apoquel the the FX Chewable, all now: many you're Argentina, want so the pieces the price I moves, seems in some about First, and for

in decide do to year of like to what the that upside see as to went that? into downside the risks as the early this the go risks raise you what Just And just sort guide, through year? or you

just operationally follow-up companion, was is all And both strength weaker and bit little a quarter margin all the I'll a on not price, year. raising the you're My With question, EPS in. the in still then gross margin. with and for squeeze quick the in question

the So animal just the what's going on flow-through for isn't better? portfolio with margin companion why gross and the

happy this, very year, clearly operational to Look, take quarter at revenue; to XX% an from be income we're I'll growth pleased with start with this. Mike. more Couldn't perspective. adjusted the at pleased operational outstanding XX% delivering be net an

that think and In of later that performance guidance laid increasing course, the comps, quarter, in is of The you takes when of I guidance, offsetting perspective. are to question, the performance. how we these do largely and prior operational into into about we terms the puts out. which feeds an our puts go there decide part the year are And think as think into we your takes, from the go

look saw the International perspective. an at the in performance we puts growth in ramp the quarter continue lot our growth from Librela of as a that you U.S., and seeing not us but key when gave the terms across only But of Trio launch takes, confidence the you in of derm, and markets underpinning operational clearly the from to

supply the business, activity, are where also had because impacts, of destocking comps in look year given market But we promotional as pricing Australia particularly We about well timing been headwinds the as those at livestock, then had New cetera, expected, some the there year companion of strong last U.S. with Argentina the talking comps talked China we across as particular, about cetera. that last and the when et in and we've animal well we some timing in and the et of Yes, the at length Zealand. easier you

at the X we those, the what basis points range despite a we X XX% operational of is royalty when into operational think end at take look again, to line, we've year, that settlement an growth estimate then that's in there's probably the delivered. sort we quarter. look a in you bottom we coming tailwind had growth so when adjusted same is the we on that offsetting would But So a last element up with of net still income an net

in we that clinic leading and that market despite We're see And confidence across had the competition, visits we at the into with the underlying though XX% Trio, have seeing of products. well. year, so revenue with increased the early up it's phenomenal still demand XX% our periodic a million $XXX as dermatology. head-to-head U.S. quarter, in for

to did realization when market us revised be including to price guidance take able So globe, -- still in increased hyperinflationary and guidance confident the these seeing into we from a all be today. delivering across Argentina, very consideration that and gave those so price raise enough the we're we the like confidence

of margins, that. terms give let in Now cover me sure just you I make --

If headwind headline, margins the right, down point had basis you FX XXX about are nearly look basis about this. gross the in at points. XX

I significant it's a that in in there last as right? prior times to remind that occurred to year, important was Argentina as December In August. think well X devaluation everyone

actually their month is in in International devaluation our operations December close earlier. books first quarter. mind, a our Keep The

is December actually QX. So

you particularly that effects impact cost lower and on of goods the you're at as well sold, seeing Argentina as as the devaluation P&L. the COGS, of out, play in look So inventories

margins, factor that aided again expansion And XX%. gross we had which when in into at way out, basis and those so the operationally actually income adjusted expansion point net our growing XXX you our of about a

next Jon with Stifel. our question And from comes Block

of the I'm both this ask on clear. so The big. line as guess well. I top was questions upfront a Wetteny, getting hope Argentina, lot is strength of I'll

the the bps for XXX guide year. by raised revenue You

You quarter right. I have growth of if year-over-year that in bps the mentioned Argentina, XXX from

hope call trying I is the everyone Argentina market's is Argentina for it, the contribution incremental to out figure that environment. from raise that's I clear. year? think is, like due what like But the growth hyperinflationary do to what ex

not. if Let me it's know

thoughts [ very in recheck just Kristin, select so And Librela, the would issues dogs rate. have some on then I'll that might about AEs, studies hear follow-up on company just that call And to the be a your helpful great. does would that. comments And with do any, run neurological we maybe gears, plan addressing love drug issues April to safe on and ], it, shift maybe

the take first Kristin the and we top Librela. XXX look the Argentina I'll and question you quarter. contribution a here, prepared Look, point then as cover in quoted in said to it, the at the there's basis commentary I will way line from Argentina

market. if And that we're that year look in early so price I we'll were we'll say, and go. volume hyperinflationary it's actuals still in still the watch have price early anticipate. we're again, and we as pegging and between plays continue looking And at year. to to It's in on the a look, to the But we take based out We're what to market. what how

the so really how if year, you if you for them the XX you don't in from it. contribution any take million, price well, on, and as year, growth contribution the quarter, there's But on business. the which at above is say between were the answer continues growing basis kind in seeing, XXX right? certainly, more which the other And this effect, is rest for you'd we're we And to perform right? of The said say, delivering Trio, well to of could derm I that's to our expectations for spread points our XX% from for basis raise XXX well is look So $XXX us. the you as here points account from the franchise points basis somewhere underlying there,

are that those, to say, significant would line gave. guide we top the And contributors so I

line in piece there by is points as the of from of significant is a So And contribution operational increasing I terms underlying a basis Argentina the but well. growth. say would the business range that, top we're XXX of

it's Sure, in efficacy I'll I been question I have XX approved Librela. over and in X overall on safety countries. of look for in XX% rate more of single to if the I and XX,XXX. It events, of over first, is mean, X.XX% globally. under X XX Jon. the And your years to the than per you important rare, which in utmost is million than adverse that to confidence classified the it's the no And EMEA XX want take reported across about it's underscore Librela. mind that at And more has dogs XX,XXX guidelines adverse out globe really we think of or used keep the part event over as second

what pharmaceutical So of these remain safety we remain we're important in an data. very very confident trends events and the that in understand watch product. carefully. adverse does part reported We we It's confident efficacy We make this that any the of every very company to sure seeing.

want underscore, market been really I to they've the on for X years.

number so frequent as the polydipsia, wanted; they polyuria, is to working which to events well continue being drinking; as we And efficacy, of it's third be maybe frequent So in. top which are, lack watch adverse the the one, and AEs coming today are that is clear, not urination.

XX,XXX. talking than side you're not effect. in about So the other a ones In X more other words, remain rare

answers question. that your hopefully, So

Our Wright Erin Morgan next Stanley. will with come from question

Great.

given from trends one attention. the we starts, mentioning, do were think Librela, since another stellar how like of has just here kind Just the the looked just new on second you quarterly that like about then that quarter. in also And how progression patient the media

other to margin made targets profile further just prune And presumably X Zoetis skewed of about and that? focus the businesses. What higher-margin which does see business, livestock the And alone be mix can improved you think broader line Do because have kind these this the with road the you on opportunities that? to it feed you down rationalization business higher-growth, X lifts then more selling the the additives do growth a of and the just to your sense. like potentially portfolio and years how could on look and in on long-term top

let livestock take why and that. there I you the you -- got Wetteny, Librela Wetteny? performance start and I'll the question then with Sure. can don't questions after

delivered contributing million we part Look, QX performance growth as we a a and on well U.S. growth big million But our International really Clearly, the that. Librela. saw $XXX prior to. pleased see happy be revenue we're very That's over year. the Librela. the And we is for to the uptake. International I'd $XX across markets, with XXX% continue Yes, across in of markets our sequential strong quarter of

European very there continue been is surveyed, moderate very pleased cases which actually than more X We're encouraging, well, progress of years. we as for now the they're indicating having as that being when product out seeing clinics XX% vet the cases, to

the which confident again be we into to We're of In you and we very we as said in ramp as see expectations Librela gave as the quarter we no quarter Librela said that basis specific if there's $XX for get able we as guidance clearly, on the a increasing quarter-by-quarter. in in into look at going through say, the that very stocking the number. would And U.S. QX, prepared commentary, caused us and look April, to of the X-week to to progression I -- our continue year, well. the to steadily at orders beyond But in be at million as the not little Kristin terms to continue for look well, rolling in we

length into product of the well at very more as for We percent had And clinics speak the initial did year end holidays and stocking X.X very that into which saw we factor the months quarter. launch in Now quickly, launch lot the fast to about in XX-plus stocking there's that. the the means in fourth that. February the about at have a a in in we penetration you

that I somewhere high would range. of being stocking, a likely that in the and it's Now we X/X you between give X/X end range of say of

that factor as you year, to the and this $XX product. really a this continue million growth when substantial the into in sequential momentum in said, So is Librela, we see we

we have The of markets last that quarter thing is launched everyone in would the number year. one I a remind second International, we in did

expect we terms international meaningful Those through we the would So still you as we'll lapping of Japan go so as be of how be the progression product to But see strong included in the those. remind well lapping rest for is and we the those Australia, growth Brazil, for year growth sequential to continue across what we'll as markets. Librela. expect I Canada,

your take livestock. question I'll on Erin, And Sure. second

our period outbreak As in generally DRAXXIN has with X%. I we grown X% I and globe. grew at on [ about times, around some know many you we for less across when a ] the and the disease facing LOE livestock large historically have to were time talked industry of

levels. over you're seeing Zoetis those turning the is year going into more think I this last year historic and But is we're to

look is there. you to that we year, had Wetteny as we sort not you the comparable think mentioned, if this expect Again, QX level. as at above of a that at be indication I look good

range. in very the we livestock. So confident that believe end higher remain end at of again We we'll

We do. As team, we a our at that medicated leadership We divestiture we divested every look at of in water-soluble highest investing sure feed have. areas you as our We This to care Pumpkin around disciplined to allocation. last we've want look is the make we're assets, of be the additive continue portfolio capital continued year. and growth. and something to Pet our that, asset

think how that the I something that's we just company. manage So part of a rigorous actually is

are we doubling genetics industry I to solutions. to our about down and what And livestock the as new investing overall real medicated livestock growth in really biologics we alternatives, the the additives and into antibiotic livestock, and potential what you of genetic divestiture think overall preventatives, But help growth of in into at strength are the and portfolio as the vaccines will the great company see of think margins. divestiture and focus the had and obviously, feed do our overall with core also increase on playing look really of in

this ability continue again, as done our and faster in every than So -- livestock we'll we've year, market. have as remain but to look in confident our at and year we portfolio, grow always to especially the

David is with Sandler. from question coming next Our Westenberg Piper

Congrats on quarter. the

and April it Librela on commentary like and there's of sales, lot sounds build. week-on-week a gave you So

that confirm or out like end you. is versus in you're to or looking [ at stocking Just clinic fact that market administration sales ] from

of Veterinarians advertising DT track media sales on there? that stuff. changes the confirm just like some social I product. are want really kind seems kind or is the any is It to there's if there consumer of behind

squeeze then And just I more. if finally, could in one just

in the assumptions what terms derm, is in on high there? competitive terms single-digit that assumption of of In launch your

at Yes, stab add some. a may this I'll take Kristin David. then Look, and

you of and clinics look when all, very in keep to First at in turnaround is Librela fast. the U.S., direct sales is mind, Librela the sold

What out to there's to from we're coming clinics what actually from so what are we're week the seeing dynamics week directly seeing. play And terms in sort ordering. of is of no channel

And then on continues DTC be look, track. to

our increase big U.S. really Librela SG&A the and behind of in you part that. our see in said prepared commentary, we in our spend and a part pain is is clearly, of franchise, As the promotion advertising

when of XX%. performance very about you course, $XXX derm, then here, million, pleased with And our up think

But to really Now we to demand. growth take strong able is see strong across derm. that, still there be we neutralize we that. comp underlying some and when really, continue for soft in And price

course, early of it's the year. still Now in

activity some the are or we different short-term can was confident time, of back the into near-term at right? to thinking competition, which from up So do as we how be in said last the mid- of mindful, look in post which grow we remain those at, our there we ability as while half, are around doing what's franchises range, terms we digit. promotional And is continue we we're high single Trio, land factor competition. our to in particularly So single-digit our we in that what scenarios to timing factoring high

increase continues So to clearly, confidence there. our

is with from coming question Prasad Barclays. Balaji our And next

Okay.

Brandon question Vazquez will take William from next with Blair. our We

talk starting of any dogs here. First, the going OA are about more guys two OA you years. this you market because help opportunity moderate over coming bigger to Anything push that the do the to kind population? that seems -- as you pockets you Librela, of on Librela, from grows the ask I'll as to upfront in used development severe that On maybe be see can can being and guys

you're Follow-up, now. second in spending R&D million over is question $XXX

out the can innovation, the to the with that might I held think nice guys for life us cycle share be year you you that guys near pipeline a updates or Any meaningful new about us, either year. last from coming medium Day Investor products term? in in we're

I want take take you Librela can to the one and first R&D Sure. question? the Wetteny, on do

to. market, continue we after Yes. a years European as survey the I'd seeing Librela, are happy in X of the Look, the markets. performance did a and vet to we And U.S. across moderate of both more said, certainly We be International. we transition having be the very lot recent clinics complete pleased with to cases.

are seeing vets, based on surveys, fact, more some into coming and saying than even cases now In the mix. cases are XX% moderate the of mild they're

So encouraging. that's very

also that months now somewhere we're surveys contributed vets. increase and to in going and X on therapy with is X again, on those And months between what estimating an based

and So that progression is we and what on seeing markets. count that anticipate, across International we're

forward. to But And very still we've early we product, as the progression Kristin? as we the drive on to We're the that move educate that's continue to we'll in talked vets sort of U.S. would expect. continue about,

our really growth R&D. areas we Sure. Day, near-term was, ago, in you antibodies, is year a investing the remain some very our areas, And I many launches. Investor key in Brandon, which really the Yes, we quarter a the of confident because will saw of behind on be which the of to both R&D that mentioned key in therapeutic guess, less your the at more some strong in little question monoclonal pipeline our second probably that than long-lasting

We with to But of on that's obviously, today's the making announcements launches. more are regards some that. going not call, to any be near-term

renal, where cardiovascular diagnostics talked huge see potential. excited look continue you invest look about, as then as to areas And to at we you oncology we as at very and and in those

always last are more oncology, said at year, we the in cardiology, you as look years-plus renal, range. those we As X said, in

So there. there's no updates near-term

continue we to launch But products.

look to I anxiety you lot rest It If an Bonqat, script seem cats, -- cat our around for population, at product spoke but -- date which cats very in we more clinic, the importantly, overall, As we unlock products, can may about on huge other important. for the sell a not our can is the it's as that's my to which of the portfolio. under-medicalized. of get a meet has of more needs really and

extend all really So give we will antibodies, for monoclonal the should such that our term. see, we've but can long-acting both deliver I of of R&D. know seeing some in life near Librela in products, on also our like you But to as really I you important the you're innovative what the and Solensia, you're continued dying think cycle life that innovations visibility in more and franchises be as which don't pipeline

with question Scala TD Steve coming Our is next from Cowen.

This two Steve for is Scala. on We Chris questions. had

livestock, impacts on influenza? First, you on any are of ongoing seeing outbreak avian HXNX

U.S. rate? spend share medicines the animal categories? other trends change consumer adoption on are on market, wallet, versus any of underlying pet And you what abandonment And then in of second and U.S. companion are product seeing pet in seeing share you

there's if of the are Thanks, to Wetteny, Look, (sic) anything those, ]. outbreak to you, missed, jump certainly, continuing like all watch we, HXNX. take I'll and Steve of try in. Chris [ I can you

stand as address that HXNX, our to and If governments we customers both diagnostics at and the solutions globe you they look side portfolio have and capabilities, ready look across at on the vaccine potential the we the both support side. on to

think that. reassure safe. support To Data ] base the that from date, FISS this we do many I of ready we not has morning have [ milk been needed. out reassuring do like requested when I peer But mean, is companies, authorities our people people, the that's to government safe. out come to stand meat to data is came want I that

our to not seen any business have to regards whatsoever this. impact we with So

detection, This others, supporting certainly given them portfolio is do and and can around customers. real FDA we And diagnostics the engaged as this on surveillance focus focus which sure our what our more a we issue we're and through our that major U.S. more is biosecurity making well. for and with

date we no, to our impacts have to not So that. on any seen business

growth, not is trend. are globally. there, to just to some not been Regards isolated the drivers have increase pets there's to -- here of they And in national I and that during adopted but and all be pets bringing a U.S. a we and significant U.S. seen not their all COVID U.S., aging looking overall back at the that the those in shelters. know U.S. as our people continue

visit know look in of there some as what's And seen talk changes their spend changing. reality I sort talked Obviously, is or you as things are they you and care. at has that and that treats Wetteny like the pet spend But visit seeing getting we're around their some want to U.S., needs look per is clear at again, if per as and collars And visits, and essential. you been it's animal increase this. that. consumer long been we've when care, sentiment really skipping quarter continue animals which about, care they really their animal They is when what about health the the consumers and look animal time owners in invest X% in a up care. care, [indiscernible] are talked the you to And about at we've in health not for think trends on of the in take in means, U.S.,

year we we human-animal expect that's a certainly the our the bond, saw, seeing the our say portfolio industry well. is year will And continue invest the what at guidance their is driven the for really what strength animal very by we're that resilient pets, this of is health companion and health for animal in the to quarter. in another of people look You that you as as being operational expanded reason

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

devaluation? First, just the price in contemplated price revenue the December year. I like increase increase a sounds with the increase. the Argentina wasn't and initial for operational you referenced the on range coincide that guess, clarification price It

in I'd in like the imagine I forward, about over think guess, assuming the should year, of dynamics change that the we going similar So impact be balance I major that market. as the guess, currency no contribution

correct it? about think the to is way that So

And to about decision? that Chewable impact and line then you as distribution. well broader think just that to through the as And selling potential the that maybe on about on you decided for the as Could factors selling any derm, portfolio Apoquel top through distribution. Apoquel led the company start margins of talk portfolio benefits

the clearly, to what to see beyond price take factored I'll on have in. us fairly take our in and ability one, the prior guidance occurred and first Argentina. plans we to perhaps continue market just devaluation Nathan, issuing that we Look, significantly

won't all, do we hyperinflationary yes, here going what's market what to after so a FX going forecast so monitor or in sit to and And we'll to continue happen Argentina. is It is that.

only we're there. our the through an to factoring way to for of ability And well. what And are forecast sort so here the second on thinking so we're quarter, seeing and we're into through forecast, continue one of do that. all quarter year that the as But we rest our happen can't will we

are we a So how bit measured in that. we treat

getting is think underlying And of from I rest certainly would giving we've would of the how of X/X of say increase a earlier, I I half terms said portion increase we're somewhere the say in our operational to as coming the between we are business, a rest portion, would price again, the from that. coming I is talked guidance of is the about coming what because it operational to from lift from there. that that. about,

vets and a a very one, is element Chewable products these owners there's palatable and pet pet as the to to they've and on years, over in Apoquel from derm, important X Apoquel owners. And terms wants satisfaction in perhaps start In and an been see of if We've Kristin chewable. I'll clearly, preference vets products of launched level derm market because, with for years Look, then and have the high add. Cytopoint, respectively. we among XX have

one as a defense as And a market need so that part as, an strategy. well of the we see in meeting, important

important as Apoquel be to so a competition derm, believe to we And we in And will the competition tablet. that more is conversion anticipate film-coated likely Chewable us.

Europe, We we across years. at being markets. international that chewable if you particular, have in the about of conversion couple conversion to XX% the market after are occur now In last seeing look

So that's encouraging. very

launch at same as U.S. We the in time just the launched Librela. we

in here. potentially want conversion, into the to that And to that so thinking look accelerate transition went we hence, what

in out X growth contribution XX% early. of the And perhaps points from only little still of saw the key relatively be might so there that. it's you in here, There's bit coming a quarter derm,

more And defense is so occur we'll some important of it that part our quarter, of second see in the an strategy. but

from Barclays. We take Prasad our Balaji question will next with

also are Apologies my earlier in missing for case my spot repeat. a questions and

for to for they at Librela, want the the on curious one. they to does So reacts messaging it how how total with understand dogs your treat changed, in and how has all, use, market, this mean what that if addressable vets

rest can half year? the was the was and before understanding us to two, understand help that I think quarterly XQ expected cadence than you second weakest of be the stronger XH. the the quarter for And

print, the of alter any the cadence On this this in does back quarterly way?

on Librela. Balaji, I take you one the on cadence. And I'll Sure. first take quarterly your Wetteny, question, can second expect

always a a education As our the should significantly than access Certainly, we has vets, it understand ever be with think used, that to been cetera. it, et about center vets we've it And have how better focus vets understand media, they at on how vets that ensuring be product, since committed always been the are of providing. increased approaching vets of been we're care. they when lot and around to we've our should are educated we've the used, make their of lot education more that And sure access. the social

X,XXX over We've that webinars. done things we've done. So

Dr. sessions to interactive daily have make Officer, Richard can Medical they Goldstein, We with sessions. have Chief our sure

team. We always-on have support an customer

from with you're seeing access confidence have feel as Wetteny pets, really what is their prescribing vets you who look need. that not are product the why product. efficacy how and their seeing the And think, of really, such more, they but the in I safety confidence in to confidence And that that to they the regards is from mentioned, a in product, as confident just the strongly the the the experience, positive they product that, about vets and you're at education

we and every in and talked we've veterinary invest operations about, market. have, lot in education, always As a vet in Zoetis we our

have that's as make more there's KOLs, down vet doubled wants external social to who access we that sure something the the I to Clearly, both access to been with to ensure understand well understand so So they can media, as more has veterinary our any this to experts, best is think product. internally education strength. this

the talked that believe in fact understand this the Librela, be efficacy confidence Librela into the be rooted just franchise that commit product really to to will in not this $X but this Solensia, to of that And billion make and will they and a and this we Zoetis that in sure our is we're about underscores again product. continue we've pet we safety -- this product and and continue for both and category, product owners investment putting vet

Balaji, And I'll specific quarterly respect and of in terms with question to the cadence answer Yes. Librela.

it overall, If for I that recap can mean certainly conversation. you

moved markets, quarter first $XX mind, keep quarter. clearly, as million the on growth the And look, really But in contribution see our in strong to continue we across international well. which XX%

for us. So continue those will drive to growth

and would go, but we of quarters the as to we continue quarter the contribution be that lapping terms fourth And to then, year. up expect delivered the course, that the of exact of fourth the of terms in million we'll $XX ultra-specific get quarter $XX launch. won't million growth, the in the in ramp first from We percentage through quarter

our Santangelo take from We'll next question Jefferies. Glen with

shift obviously, of you the encouraging curious you any a in derm I'm second. might your Kristin, presumably if the to competitive launches and impact you XXXX BI But for price? out the take for sort coming launch in outlook that to of Elanco think landscape ability the that look kind continues could may be in if noticeable the just be given anticipate recent half, of or to here. anything Trio second Hey,

I weakening with the is at consumer reason time competition price company's maybe concerned consistent same increases ability the historically. have impact about and increasing the some what take getting you ask a are would And done to

commentary, of sort So helpful. think, any be high-level would I

at start and it's you invest based and that, our think I can our franchises. I'll innovation historical the we then, performance, can remain Sure. this build across We really on you in and look confident one. certainly local on Wetteny, very

Simparica at competition the We the guys, we're of in and when clear, were from QX and share if and with let's leader We're entered #X. Trio now in Simparica look paras be we facing U.S. X.X% #X, we grew you our in parasiticide,

very we even to So grow strong with competition, share. continue

our our we competition. So we with grow dermatology confident and even remain can franchises parasiticides to continue

with and We really I alternative very with strength, seeing our our growth strength franchises has there. Trio derm always retail. in channels, mean, our owners, with space delivery paras vets, for most and companies think both home obviously, competitive been in a operating pet tremendous the in

at And autoship. the we see look strength great there you as

We autoship out we there, continue think absolutely which compliance, important. which increases to is increase really

at, you for As look the example, they XX%. grew channels, alternative

a in that of But channel. Now adjust little bit weaker for you that, all alternative the last a at comp if was even year. that's XX%-plus growth look you if

increased the what some on So of which of look the strength channels, of continue life as grow to at benefit well have can doing our with the innovation cycle products, new this as leveraging we of we franchise if really believe we're portfolio, that our based you our these strength compliance. Chewable,

Wetteny, not you just our know, again, 'XX. want add confidence on I that. back for it's but So to 'XX, if for anything don't

is two consumer. we would are things. a seeing only One, say the not weakening thing Look, I

You if saw we those. across of still year, high from us and Trio And derm the of for each we have post our high last growth normalize even tailwinds double-digit key growth franchise. double-digit across some

innovation. products demand our continued demonstrates and certainly that so And

look, guidance but of The XXXX is, other as ahead to competition. grow and here, one the confident in look we're to I ability give our specific we we're in say would going not face to

But what be Now we're and short-term against. might compete impact. are products have see that some beyond we'll some to going we're our those, activity there promotional the labels in that can confident

our next Chris take Schott We'll JPMorgan. question with from

Just two me. questions for

benefit quantify on more give a maybe the you continuing Just can of saw little dynamic here? you just a color if size there's on channel And that. Trio, us

in U.S. be the a saw U.S. would the may second initial bit the U.S. be the was or happening which moderate that Librela out? is simultaneously with to of we Should sensitive ex the we've one severe seen a different we then is kind some other? pets, or you're business similar scaling OA is thinking over in little a headlines the past those of then where think maybe more uptake X severe expect of I And moderate U.S., dynamic kind where Or market the year month the and each piece and further of less

up Sure. let can Thanks, question. Chris. the I'll Librela. Trio take, I on Wetteny, you -- follow

dynamics no. answer short we're no absolutely. here. is channel There's the that Yes, Look, seeing

ago, a mentioned the destocking more dynamics we last the year prepriced in have where prior you moment just coming As of did -- and I promotions in year from saw quarter timing promotional buy-ups.

did provide so tailwind And some here. that

we the growth that we're precision no percentage our And growth and you I from here, if million factor in $XXX estimates growing the that -- So may last about tailwinds is growth XX%. we posted XX% would account but internal same were say year, in that's to say that for of globally, the U.S., if there's seeing. the half

current in channel there's of year. dynamics still speak to Trio, in growth So terms of on and inventories significant very remaining the no

regards often question desperate have with first a on mean, for markets I and U.S., moderate. therapy Europe and severe in the in in to who Sure. it put are your we second into dogs that the And is historically new to the Librela is seen launched moving what initially

But lesson after we've that learned years X Europe. in

sure into we're launch we that moderate. And in making that as so U.S. the we get

U.S., of impact mild, we see early and balance As moderate have a that. for and severe was the we experience Trial, example, made that did they they that about the there you the in cases sure more the think in Experience of product can so

of which to think -- And the which is more Wetteny of in I mild what than of also in you earlier, have about that is now the look moderate outside -- data XX% increase when you compliance. is tremendous you're cases, growth. some moderate U.S. of right an even As patients we do spoke at seeing that

compliance now U.S. between months, is to X So the from X up X X months outside and

sure early for mild we Europe, and making similar and sure get severe where we into Experience a this is So in first-line moderate the and that our is mild, cases that be the we designed U.S. market in as the Trial goal can with a launching to as product vets were and that as conversion make we therapy in to faster U.S. can that moderate, are we

in focus So about think that as is our U.S. brand that we the certainly growing

our with question We'll from Ty final take Navann BNP.

have for so just the out Thanks your how launch many on some color online reach from effect after dialogue of you your far? interested sessions? the Librela. so far? if I vets vet product in approximately follow-ups. FDA, with education Also early any? is to a did What surveillance And a common that early Is the from the

U.S. on vets in tech first question out through vet vet with your a to our We that, any regards to, we've With you. we've our U.S. customer Medical out from Thank Officer Sure. the of ours who's think Chief every directly bulletins that's letters the really in to reached the -- almost reached critical.

Medical office Any for with sure and We've Goldstein. to operations the of Richard those U.S. every and just invited open veterinary vets example, not to working to really have our across access group area webinars they these vets internal make in Officer, hours our our with external. Chief can join,

date. to So thousands attended have these vets of webinars

we it's sure have veterinarian's more with is to engage -- urgency are something questions more ways them, to that that this do. Obviously, the we we make answered. normally had to put sure it make Again,

demonstration trailing the X-week to continue the accelerate, I they that still Wetteny that you getting appropriately this are prescribe as as vets is as think education And need there. product at sales look confidently fact our mentioned, to

And with with regards questions FDA. regards interactions with to the the our to

sharing brand, any expand dialogue a from FDA as a you course As as new for in you a are the the information us, information around that, normal the those with we covering and conversations that all the them. know of you sharing That's time. having company have business global U.S. regular launch and with the

the a honestly, of product's course do that's market usual we launch product, a So on would when and what years. for even the as we

there. and course the they So sure we usual the need to information be continue to all a they that have collaborate FDA make with

there's there with engagement normal the FDA. out So the ordinary the nothing in of

no any to speakers are at questions for call closing the And I'll remarks. time. turn this there further the

to want Thank our I on And sorry, back outstanding to you. you. I value. was colleagues Thank for to this their performance me. want I thank for this reiterate commitment. that focus today. really Look creating really you joining to see want thank Look, our hopefully, -- shareholder everyone quarter. an

I XXXX. as momentum to think forward it's look strong a we continued start in

that preferred veterinary before at obsessed world-class, a most capabilities what aimed Everything from addressing expanded in are needs unrivaled they're pressing established many purpose-driven the customers. the support investment scientific invest future breakthroughs continue have care others. pipeline capabilities as We we in to are we trusted R&D to believe us at is customer widely even recognized colleagues. anticipating to firmly manufacturing we Zoetis partner to talent, do our the and the a and Zoetis' by that And growth. will our And and will

of treatments our lives. because So as products our we remain Based performance, well. industry-leading and customers I committed agree change of efficacy safety our to and the on our record products track our of think

to so the us. much So throughout thanks look engaging for forward We quarter. joining

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

may disconnect time. You any at