Elanco Animal Health (ELAN) 5 Nov 212021 Q3 Earnings call transcript

Hello. And welcome to the Elanco Animal Health, Inc. Q3 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like the now Tiffany over Kanaga. to would call turn to I ma'am. go Please ahead,

Investor Thank Officer. Purucker morning. Health, Call. Head President and today's XXXX Animal joining Scott Simmons, Jeff our Third Earnings me our of Chief call Kanaga, Officer, are Tiffany Chief Good Relations. I'm for Young, Quarter from you Executive Investor us and joining on Todd Relations, for Elanco Financial

pipelines current community. forward-looking this and is Securities intended number during forms, anticipate Exchange about information promotional call, Commission. are statements differ is based could XX-K It conference to benefit be our those of listed a and for always, As on The sufficient and provide for and making the of materially on is XX-Q, and the latest our with Slide we in expectations including not investment the to decisions. results actual X prescribing projections due and outlined we those not products filed our factors,

You slides during that our in be referenced call non-GAAP the remarks, information measures can the turn release to Elanco.com. discuss of will to also happy on and After your slides press the The over about the release Investor will section take call contain now the financial this this further will our call. I we today press find prepared and we questions. Jeff.

morning, Thanks, Tiffany. Good everyone.

as well marking the An provided Investor inflection Elanco, moment well transparency, one combined of our We our of value towards our that sustainable an Day. important of newly are the as as creation. point for approaching anniversary as unprecedented established transformation, in commitments journey

exceeding of fourth our Investor since represents delivery of our quarter revenue consistently guidance quarter This Day.

IPP is it and our XXXX, strategy December. executing through on commitments our against is algorithm clear, progress And laid as last we we out are track. growth long-term As

in billion, $XX was both on with overperformance, revenue quarter X by again, nearly midpoint once Farm Slide our Health Animal. business, million, guidance Pet our the range which and $X.XXX sides surpassed of Third of

of Our adjusted million adjusted EPS of of EBITDA $X.XX above midpoint million $X was $XXX above midpoint. the guidance, and the $X.XX was

expanding our maintaining We growth, discussed raising initial guidance the revenue future while despite guidance, XXXX are in well also August. inflationary EBITDA as stand Day. full-year Today, we our August. for and adjusted from we above All and are of pressures in adjusted provided X targets December Investor EPS which margins reinvesting

$X.XX EBITDA stated. midpoint, $XXX can or is You higher growth the than we of on approximately X%, XX% a or or our business. up EPS is higher year than X% long-term guidance algorithm, originally at reflecting and Adjusted million million shaping X. see that is revenue total the X% slide At $XX guidance. December anticipate adjusted our diverse original strong expected be revenue providing higher. combined step durability toward nature up to the XXXX And

and year execution dynamics, gains Our gains competitive this pressure retail, fever balanced are generic African from brands, U.S. and our for in focus at Farm These challenges. includes with reemerging and share for tailwinds pressure, growth Animal. parasiticides Swine pain, momentum global

XXX We basis. Company our proforma steady adjusted margin basis anticipated making with expansion are targets of a combined year also approximately EBITDA on long-term this headway toward points

to by trajectory towards this margin XXXX. this goal priority sustain XXXX comprehensive of in Company-wide with XX% Our representative expansion the a to is given metric plan our important of

Elanco and actions core long-term recent end execute the while business, enabling Our at acquisition KindredBio strategic to plus are August creation, value access advances several well-positioned teams fast-growing of market. closed on the are 's billion-dollar to the accelerated The dermatology

to era in the launching expectations, potential our to Canine be KindredBio's as $XXX XXXX, KindredBio as bringing the total well Pet million internal to $XXX the X of XXXX. million million key a blockbusters ownership innovation $XXX Therapy, revenue additions, combination by next this the approximately full we by Parvovirus to growth. of adds Elanco of 's With leader pipeline Health expect plus

As Aaron de few part leader XXXX. And a share ago. early-stage highly execution, established focus as Pet of in Microbiome We our tenure. you of our end the of approaches. a Health during Schacht's now increased Ellen to the Brabander, carve-out in suited retain blockbuster The with our more we with which is on completed on have to the a a we weeks track Innovation, Head She by new is expected progress, separation building hope date high-value of ideally R&D accomplished foundation to Animal record details Health ultimately first quarter to minority leading Aaron late-stage of pipeline platform, potential R&D is stake. proven is development. be welcomed may drive the strong this

accelerating X%, quarter. We Finally, of productivity drove drivers a had occurred XXXX. of sale footprint, the Shawnee combined X, Xst, of comparisons U.S. the in guidance capex, capital. approximately all the grew will during January for revenue revenue the key are front, margin EBITDA Xrd we announced clinic combine vet midpoint on working Health low Trends sites. On year-over-year X/X reaching June, incrementally double-digit to On assuming Pet provide $XXX the forma the leading of the quarter support X the the growth of our increases closed. quarter. Bayer Company our million EPS traffic on basis, in the moderating are gross single-digit on pro we manufacturing performance. approximately in believe actions we versus On August X, acquisition tougher annual In reducing further ahead. our exit streamlining we strategic improving Slide efforts, adjusted to and adjusted consistent site these and upside

very our on a vaccine multiyear In business EDI a performance. still turn, is saw strong growth healthy basis. However,

matter, side the experience, As pandemic. and of in 's as vet first other the we well evaluate the compliance that longer-term stickiness programs the of represent the expansion improved market factors, the Pet on clinic should post as wellness COVID improving trends

international with as Family Seresto revenue third expectations from more Seresto on strength to creating year, historical long million, to was Global to X% weather-related Pet in Turning let each in full-year back in Seresto was revenue transient in We trusted runway X-year channel this XX% $XXX a track year-over-year. challenges and towards into trends. million, Advantage parasiticide in Health. the key remain brand. up gains initiatives saw rebounded while healthy XXXX. next the with Parasiticides, compared May. our for going quarter Both $XX revenue line OTC was place already a up grow continued U.S.

to U.S., competitive market, in most second is fastest-growing growth product quarter brand achieved the the expansion data Credelio, franchise Credelio of second a for to The international the Cat. Plus and the performing in the available well by data. industry Moving in oral field. parasiticide and Credelio supplemented recent quarter, and the global launches EDI the according is Credelio flagship year-to-date global

well greater our compliance provide a divested favorable durable and older down Plus. as retail, X% marketing see the quarter. And and our apparent world Legacy and to across traction rising product declines as for e-commerce, and vet opportunity sales continue and clinic and drove OTC Health good with are and numbers and Comfortis, the Elanco portfolio Pet in Trifexis teams Anticipated the industry brands, our as backdrop. Parasiticide expected the across pet driving Interceptor We Scripted

kinetic becoming Galliprant leader a grow data. towards nicely The blockbuster. to therapeutics, U.S. continues the in XXth as making in brand Finally, said branded outpaced our progress to in pain, market the according

Turning business. and to was historic business, now X% third In levels, versus elevated global quarter. remained and growth have strong Animal numbers for U.S., strength saw the quarter. the We share swine achieved Elanco legacy the Denagard We year-over-year. and the and cattle in up in feed cattle on driven Farm our performance in cattle were demand Optaflexx higher Rumensin, placements in EDI

dynamics. reflects cost, farm of beneficial reemergence presence as broadly start beyond as and and products of headwinds down supply as kept the value-based the offerings, prices financially from our experienced in animal herd well swine liquidation comprehensive ongoing fee last growth portfolio, In about China a on product lowest we discussed our the January. U.S. levels African XX% has Over swine, hog Our our industry their year, induced value at the on since through August. call our fever, higher for

the We continue quarter. expect in these macro challenges fourth to

that a swine overall better with targeting portfolio larger remains position market. are the competitive in producers Our business strong

as we are turn, for we in well-positioned believe rebounds. market success the outside So,

total growth to Our of is Chinese Elanco total point business still deliver at in poised percentage a least revenue XXXX. to

from prices benefiting of economies. mid-July, our reopened the to from protect In with salmon have is DNA Atlantic Clynav vaccine been positive demand Finally, most into we Global regions growth in Aqua, improvement international moving many XXXX have double-digit the our of drove international as now increased disease. from Aqua, use markets poultry significant driving since seen and markets pancreatic year-over-year conditions, which profitable salmon poultry consistently and pandemic recovered

Turning since are Day, to we Investor X, X Slides growing. and our

business, while any prioritizing our transforming are We innovation. Elanco's elevating

we have towards We guidance time, net of since QX commitments outperformed are same and revenue consistently on long-term leverage the year. margin our track our and targets. last synergy At

decisiveness moving accelerated and XXXX our enable to now X We outlines against strategy value-creation. in with details are to IPP with disciplined launched. all the of products which X several around of X pillars actions each have drive recent speed execution, innovation to strategic our Slide progress

million continue year. this to expect million to We to contribute $XX $XX these launches revenue in

well portfolio. product local expanded the tested continues those Credelio grow On time the the total our field to being In expanding systems. proposition farm and launched that Cat Elura where Plus feline substantiated Experior season. The value is in above are in quarter with both use Credelio from Australia and in packers. is running expectations, and performing animal, acceptance production side, producers innovation and the pet have health the in for parasiticide with

products quarter. of the We doubled number second have the the since on Cattle

U.S. We see unique ammonia the gas approved status for product, labeled first for emissions. this reduce continue to blockbuster product potential to FDA

hosted the across As global identifying accelerate change, industry on our protein pledge climate customers to Food Systems meaningful lead Nations to from Animal industry Summit, Elanco's a our as help progress. position animal to part partner emissions, United solution while opportunities we ahead of their leaders net to agriculture to be of zero journey the

of Additionally, profit-making through have changed the an operations. made companies important the Elanco recognizes that list, top was environmental world among their recently and impact XX social XXXX named which or Fortune's strategy

provide team's and owners, more Our stakeholders, to whole. Todd and Veterinarians, value pet continued execution over for our it to to hand our as society creating With our I'll color that, farmers, results and outlook. on commitment in a purpose

financial made focus comments reported underlying to on adjusted in Jeff. in presentation. net slide highlights, my appendix, the our trends XX at Thanks, our on arrive summarizes insights business. order to our results of XX including summary third measures the the find the the provide quarter can per share. our earnings Slide you income I'll On reported our performance adjusted to XX and to adjustments of

the of description So changes reported please detailed year-over-year refer to for earnings press release in today's our a results.

positive Bayer reflects year-over-year legacy key last acquisition, Looking Elanco. from Total sequential - points business see of were expense at percent despite global of acquisition, the exchange revenue order Slide as third visual and in top-line that we discipline, year retail on The total The we productivity versus points of with execution, the reflecting the past Hemisphere and improvement, the achieved parasiticide half XX% channel, volume expense range versus of price increase was our to poultry quarter of which on of a and Elanco's in will Animal pointed you measures quarter the continued The Elanco tailwinds. by portfolio, On foreign addition reflects guidance the health and gains. deceleration Animal increased first of seasonality third KindredBio. provided income XX% in for year. leverage basis XX.X%, reported a benefit Legacy Bayer increased compared Health quarter, XXX gross drivers this on in capture. the a Aqua, logistics the outperformance XX, X adjusted XXX season. Bayer magnitude, higher the XX was move benefit representation the Health the and revenue Slide is of operating currency up synergy basis pet a on Operating and basis cattle as performance, of recovery, increased driven revenue an the Northern August. XX%, our costs, the global Adjusted margin international

$XXX third the XX% increased line, year. versus XX.X%. was and adjusted rate for income margin the net At our points was quarter adjusted EBITDA XX.X%, million, up and EBITDA effective $XX basis adjusted Our our the XXX tax in bottom to last million, QX was quarter

quarter. performance, $XXX representing for full see acquisition for hold year the can Aqua, XX, the expect We've is X% products million closely. Now rate, Pet Swine, our in discuss Health On Legacy $XX in contributed let's by aid the more well. million Elanco performance. increase the drove of in our Cattle see X%. of performance on less of step mix the million sequential or reflects the of added XX%, that $XXX year-to-date, million and $XXX price, $XXX reflected our Legacy Legacy you and benefit a Bayer Slide of total quarter, for $XXX the total million of you XX, revenue category. or Lacey as contribution Elanco volume revenue, of slide. or a breakdown our Bayer analysis or on the and Bayer full will to portfolios and achieved half Slide volume Elanco XX% Elanco. On Poultry through contributed million to your seasonality. revenue XX% a The than quarter, down from the XX%, effect revenue a To

Looking price increases especially inflationary including pressure XX operations. drive we costs. implemented in ahead, U.S. performance SKUs, between are of transportation for levers we on have a the certain greater and focused breakdown revenue, international overall has our Slide than historically further to as risen provides

as performance our as have Pet and Animal, from benefited the all well of geographic addition of which Health manufacturing, by contract We outlined Bayer. further Farm

rate consisting a and secured senior facility million our file -- new sheet, retire On billion. on August third moving We our those offer million had facility B. in credit of used on $XXX loan a working few plus notes expect terms on of expect million to of our with end equivalents of on net remainder to at our to senior continue XXth. to was Net XX, debt. that loan X-year million a was of cash Slide credit interest bears me line leverage $XXX we quarter $XXX soon. cash are the $X.XX entered million floating balance $XXX capital and XX-Q very secured term of $XXX that words into new with of matured This August a points. quarter, [Indiscernible] the end ended used debt KindredBio. a and XXXX, XXth, We at But our the end we original projection its We Term The $XXX XXXX. in existing of million to a basis the XXX approximately and from to generally Loan At consistent drawn Elanco on the with purchase X.Xx QX, X.Xx the the pay of the fund revolving of of price. December hand at acquisition let

aggregate remained Additionally, to channel business. will in global XX. outlook our as update our prior full-year across and with quarter distribution Slide regularly we and That on U.S. fourth inventory levels consistent you, XXXX our starting quarters of transition the

of XXXX XX.X% We billion billion. EBITDA $X.XX our now full-year EPS, are XX%. for raising at total full-year maintaining despite higher our revenue adjusted expected $X.XX tax revenue approximately We XXXX rate and anticipate approximately a for and expected ranges than at guidance adjusted previously XXXX to

adjusted adjusted of to expect based XX%. $X.XXX margin a gross on billion $X.XX to and to an $X.XXX also EPS of $X.XX EBITDA of XX.XX% adjusted billion We

from reflecting non-cash We to EPS are quarter. reported third updating -$X.XX our -$X.XX the guidance X to impacts

As part this asset R&D portfolio required results. the P&L. a terminated write-down due through of value we Farm of observed to R&D project of This processes, our the action Animal in-process a efficacy

license a of liability for which with the and second the to the establishment is with milestone upon Therapy, the for chart was a Parvovirus of acquisition. agreement associated settled closing royalty payments relating The our KindredBio future

fourth quarter guidance providing we to XXXX. Moving Slide for of are XX, the

of of $X.XX. and of $X.XXX adjusted EPS $XXX to to $X.XX $XXX EBITDA billion to $X.XXX We revenue a expect million adjusted billion, million

year-over-year a change a do note. want have fourth quarter These revenue year. fundamental comparisons we our are I decline. that, from not emphasize to one-time performance, reflects but fourth well-known items of X impacts business include of in core quarter reflecting Our number last guidance a

quarter parasiticides First, the in order for XXXX. we the OTC of approximately the large a versus had retail first XXXX quarter of fourth $XX million of customer

had vaccine stock-outs. U.S. Second, $XX incremental due implant from revenue cattle million to and competitor we

the we certain our manufacturing from representing manufacturing we Speke for TriRx, million Third, of discontinued decline and exited Fourth, production XXXX, human $XX the growth year-over-year start low-margin of the product sales our Lilly, facility to are Shawnee million. a due hormone at sale $XX contract in facing to facility.

reflects Excluding headwind the in of African comparisons, in range growth to flipping incorporating $XX a specific tailwind million our Also, X.X%. of to a challenges in underlying total XXXX revenue flat Swine fever, XXXX. the from

synergy drive to both adjusted goods the at $X.XX EBITDA, our initiatives and of year-over-year at expected the continue productivity cost up are midpoint. up of capture pursue and sold on quarter midpoint to guidance OpEx, $XX teams and EPS range fourth global which million adjusted Our

close want quarter to results note to in and will head out guidance initial and solutions February, owners, in fourth while growth that global we discussing towards adjusted late growth progression our EPS with continues revenue continued XXXX we As XXXX our around with EBITDA against anticipated balanced pet we long-term XXXX, XXXX. provide I our to portfolio and in algorithm Veterinarians forward our the provide to farmers, our world, look adjusted

I'll Jeff Now, it hand closing back to for comments.

approximately Todd. quarterly track XXXX. as we since to consistently nature and XXX adjusted and acquiring extending To of of in strong basis an growth our business commercial this diverse approximately we Animal move record durability global approximately Health. year, to of adjusted Bayer drive post of summarize, points. The revenue our Thanks, execution Further continue our expected margin results increase and X% XX%, execution is EBITDA to And EBITDA by growth

on delivering our Food on XXXX, our Companionship adjusted commitments to XXXX, EPS in revenue, Life. grow to financial on focused vision and are Enriching EBITDA, delivering and while and continue teams excited in Our adjusted of

of pursue leaves today to Tiffany health. wish she to exciting opportunity as Elanco after an I'd outside like animal Finally, success,

across engagement Q&A. of we experience to and over as Relations. leadership. Tiffany transparency, to to a XX Dave And Elanco it the continue accountability. expect will serve Dave's combined Treasurer, that, seamless our and will Head I Interim years of Investor in moderate shareholder With Pugh Our transition will Lilly turn under I our consistency, prioritize with

like We'd as Jeff. as to take Thanks, questions callers from many possible.

you So, first provide then follow-up. one take one we the ask please session, the Q&A and for yourself limit we'll the to caller. instructions and Lisa, question that

first question Ryskin Bank Instructions] with of Michael from Your the [Operator line America. of comes

I'm both guys Thanks in going for quarter. squeeze follow Riskin Great. the the away. on up my first and right to question, taking congrats and my

updates comments, now of performance should this do seeing that the is Parasiticide? be long-term So you on how to or for product Derm maintained you're light be comp And thinking timing first, your million. that the some run $XXX more relative more we provide Thanks. X% you thinking of blockbusters, should the Derm thinking year of to for numbers Kindred take follow-up, highlighted just XXXX rate target those as and in a for [Indiscernible] or like Is doable, those specifically XXXX when blockbusters, into any next early year of X%. we we're year innovation to Jeff, about potential $XXX XXXX beyond, of and areas. the million X% growth, that Can account adjusted comp to

Michael. Thanks,

going we and on First, to said, we revenue, continue do see EPS on growth XXXX, as forward. EBITDA,

share in our We that also, stated, as in QX results Todd February. guidance will

quarters this that momentum proving I and 'XX. I the the quarter, now few is into algorithm Very sequential think will important creating carry note, clearly, to strategy is 'XX are four think things just backup. right. to a

have a and more Company. We durable diverse

and in growth franchise here's and forward focus segment. believe as Galliprant, Omni 'XX. Farm growth backdrops well Against Channel I portfolios and continuing, mean, as support, Animal in innovation that Credelio and innovation, digital think expansion. will business growth, plans Pet our revenue anybody with key the balanced. year's to I brands, innovation, be first, this Animal our we to I next good continued and margin year's industry the both in more Farm that as for And convert the our will contributors for the we think the industry, go Seresto, lead are in what

the leverage very couple do in shared -- but will development really our center forward. play regular the growth a emphasize, would our assets more go be So, of we becoming teams. what just as of is back in team, closed really to just $XXX Investor than derm August, all hold yes, to going Northstar their we're before we've in time. team I this the teams our as and Ellen these has of that portfolio. development There We into a durable World-class and that year already all Kindred, We're integrated that I highlight million a belief Day key to by derm onboard a all at in assets. Michael. that. And can basis. first this engaged differentiated, we right growth complement I'm we any in ago. go between nice our want believe up And, Relative see solidify has to weeks place, I these we the nicely mentioned. to the already kept all, be XXXX -- we say, not engaging our been we going and and only that Conference during on things algorithm retained into And we specifics it much people. highlighted

starts and as progresses the results of that continue we go the forward. we'll more plans, and impact innovation As to communicate to

We'll All caller. take right. next Mike. Thanks, the

question next Evercore from comes the line Umer Raffat with ISI. of Your

on taking this. is the for Ellen. Mike I apologies got quarter. This DiFiore, much for so missed Umer. A in I Hi. congrats questions disconnected, Thanks my and for just so if question

there. XQ. the first offer year, all are It macro suffering that macroeconomic pressure, the there? experienced it's messaged half in turnaround you. turnaround and be pressures difference explained prior poultry general you organization, consistently the that in is, given the headwinds been Maybe may this newer color aqua, that Just sudden seemed vision on color sudden in from my this that some of Thank for thoughts producers and like the have could And what international social and may your of seemingly the there's follow-up past. R&D

Thanks, Michael.

today. of a part call of Ellen is all, First the not

We we have will of the forward. part look calls to Ellen go as

as into pullback had as just and well And market now predicted was unrelated high lot placed of of is she's problem No the and say will be mentioned, just in quick see being we'll returning just integrated people pipeline that some poultry rise. of winning. that's XXXX stores shares based part rebound in. with to seeing by couple as year that be U.S. into I are insights. would sharing significant that way, and been international in right to back portfolios her know are now And process. weeks chickens recovery a ZoaShield the I restaurants and seen those barns of A by and team as so in able answer great we economic rebound. go she's in those product XXXX, Relative highlight I the planning that half as poultry is in. yes, important. to a purchasing will a had markets the year. COVID of had She's our mid-sized seeing and in I market key As this the we We to caused really the think we we We're are prices shared questions, Xnd driven have a the into is a and we're we engaging this. on poultry, that beginning of that. that the

next We'll the take Thanks. caller.

comes the Goldman Nathan question Rich line with Sachs. next of from Your

side pipeline any R&D, Jeff be we guess. kind going Maybe You Todd, and Health, some Health ability reprioritization there any after. pass seeing the probably side? question the Animal or you're see you. on maybe maybe last Pet on of on follow-up inflation maybe costs. any larger focus on just Could R&D morning. you're but help for in ability a dynamics the that there. the of about question opportunities the maybe you difference I Do Farm the the could And focus you to talked on on increases greater to understand your of that in a change Is Pet priorities? on price to narrowing in take to then -- focus Good just the the Hi. versus us on there to expect Thank

acquisition question, got we've you just is and increase parasiticides, Thanks in late-stage in development some industry. products what has that would It percentage, assets. like us blockbuster just on just 's strategic Microbiome to the and do for as wellness. quarter, to she our the especially going larger is into an but would her increase I lot footprint, in even we the as biggest must increased allowing I Kindred of the Ellen the late-stage and in experience going during line R&D the pain as Pet blockbusters reducing refilling portfolio, a like TriRx strengthen derm, is and in not we of an pet the early-stage these move will Platform, Absolutely, the value very on carveout highlight put Ellen and like this brings one. I this our name against have just announcement our the is start our a With Nathan. What the think share pipelines, potential made clear I on, only resources another proposition forward. focus markets on of

So what is, and clear to resources I of change relative And our as believe out I -- integrated be I see agenda. the removed size. change allows coming is the I've work, that, increased say any already to which don't has that focus. Microbiome that the into agenda. shared, Ellen will will

most the in late-stage industry. of the robust One pipelines

the On question of inflation.

full hold As expect that for we the called out, we've year. X% increased year-to-date, to and prices

OTC, as some of retail, best-in-class for consumer, lot Health. Animal price looking Seresto are more your targeting like our Pet we on products versus We Farm the there. space type do With greater a think increases question, products e-commerce have

very on and And to product the little bring. makes at side products globe, that to look generic can continue farmers there's time, what a side, to Animal house where as see kind pressure continue same our of provider On keep price bit the do we're well. that. look across we moment At the animals the value-based to Farm to it the sense we'll healthy, of for more

Thanks, caller. We'll the take Nate. next

comes Chris JPMorgan. Schott the with question next The line from of

Great. much. Thanks so

hitting prescription heading so about those and this type some et I go versus something supply there we season, think of there's this sense sense going just to impact doing or we as we more out as the look I'm -- on think should you'd inflation come how impact year out have c., And legacy there? we get products is there floor should the X% of question that to annualizing the up a side following year? I as well. and on XXXX, from trying to be greater thinking guess I market, Just you Thanks of so coming to you or most erosion about longer-term like of I'm TriRx sense shorter-term of trying the much. there Trifexis is like that next be inflation. accelerating impact phenomena next either or think year a newer know, that are to felt or sure -- business as products just comments, triple to you offsets? get a [Indiscernible] is OTC impact into, was previously just we with chain said impact? is are like to from to or -- which I'm get the on a second is do just about this

manufacturing are A inflation lot as something bottlenecks productivity Chris, across lot working got costs a well the on lot trade to facilities, costs. offset input our we've get at a continuing our and of team of initiatives question, your routes to on up both that is our Company-wide transportation basis. as certainly to our the out a to open customers. globe paying new imports of attention transportation That shipping are with to products First

great flat continuing through the will to has to But certainly headwind next to but headwind try of fight ways this finding strive into a a we volumes. continue we're reach likely be it a keeping to So team's goal as our and year of year. costs to job it, been grow doing

of think that thing that And you've ours what is is forward year. as you our parasiticide because ones I took. can of, I results very parasiticides out do I more with going of dynamics being entrance the as forward, see brands, a are some but growing of the impacted. far played we of hit the so market, acquisition quarter market. were to R&D see the others think, and parasiticide only a we It think, with the largest in and I to strategy, Chris is holistic And is also we see this which go on also global as -- Relative this it's approach Not innovation, our and very but this the Bayer. What surprise competitive. that the dynamic legacy not key

Credelio in new holistic we our Plus and brands. Credelio from we the fastest-growing Interceptor retail, believe across new U.S. the market, and cat's taken of as with approach, then outside brand go legacy oral working a I Credelio and Plus, innovations digital, distribution shows continue working. partner, is our expanding being Credelio So of use going products Plus very forward, And combination that's We're the U.S., would innovations then the to second competitive which to know the utilized the partnerships. franchise playing is outside which

be holistic continue a going Legacy global forward. to grow approach So, brands continuing will impacted. to

us strategy We go forward. we we do see specifically our working noted as haven't and but how much,

Chris. Thank you,

Next caller.

comes Our Jon with Stifel. from next question Block

Great guys. Good Thanks. morning.

ask First in just both as wide for I'll XQ innovation. guess range well. question, EBITDA upfront I

wide essentially million of is For $XX EBITDA, revenue. is in the as ranges as

Todd, the you Jeff. we've tack roughly on variables to that X a then out low-end, of maybe the the take considering for some And call months quick left high-end got us the year. So, could would or just

Credelio the side. on Just

heard I It had I growth. sure. double-digit. been think wasn't I

quarter of So, Thanks, was or third Credelio, overall. for another growth Company reference growth double-digit 'XX the you just did guys. quarter the of of

So, Jon.

inflationary know. on We've but less costs our had otherwise EBITDA maintained as to offset of We margin back. only we previously into the than been as have we That's carried to EBITDA, sort beat the guidance add some has midpoint guidance, by the deliver us million. the one negatively QX to our thing there's forecasted. you and allowing in beat of helping On depreciation QX saw, QX essentially of gross but $X over less impacting us it

through guidance to confident this the morning. continuing So, and overall, drive delivering we're your in we're providing

haven't the come specific Credelio at And as with to say growth Plus is, shared, and or into. launch won't seeing a we'll that globe Credelio. strong to Credelio we will Credelio will were product Overall, What continues as this initially that Yes, Credelio go -- a detail in I've That's as is, very given time Australia. growth seeing bi-country very grow, the across Jon. then product XXXX. in and I much we category. Relative by Cats, we between from into this get Europe, globally first competitive, franchise, and yes, Japan, and driven

John. Thanks,

caller. Next

comes line question of Your Barclays. Balaji from with Prasad next the

morning, Good results. and on HI. congrats the

questions two specific from Just me.

claim end indicated indications prophylactic Firstly, next goal? And can the demonstrated with still thought Is be would that indications And the and on now your the expectation launch that its or if they management the expect had the and the in on year. the context some expectations the provide on market. around approval Kindred conversations year the therapeutic understanding into by you case of submitting June. my so, that bold therapeutic there both Kindred's of

[Indiscernible], on years? you and the of do X that Thanks. us license couple over with additional next for see to believe product generate lateral still come, this more you about X growth Secondly, of can to grow do

our Balaji. continuing Thanks, through What parvovirus will progress say that I are Great is pipeline. to the nicely we on questions.

expecting lot that. more approval and a not are giving into than We the detail whole launch XXXX. in market We're

things will guidance. working we We'll has make the XXXX our this is more nicely. are here see I into what we're a as on What as that are market likely and regulators also say we with progressing get comments is We -- at year looking dollars from from great and the a puppies One not study XXX,XXX that some Kindred, needs, there's solution. they're does you've really spending was as of of launch. Banfield parvovirus, with heard the every data thousands shows have not

create And These supply supply able are manufacturing. X. this market, a in that's as that factors have available so, product chain in we're all the Is will some well as we've numerous the one believe factor. chain, lot two being going one complexities the really our give they to and where And to the can't a so, excited complement is our about really to we're only offer out a this drive Veterinarians and generics, Company, Balaji, of to puppy portfolio. there. today solution being is there's a that, anticipating But size a the this new new that timing what portfolio so, that there's owner But product across more launch. great play. parvovirus. we're and U.S., even beginning, generics. more opportunity. say will I'd Europe, in there's have if is we a will there us is, there's this There the a country -- more X, other from said This a be markets will On veterinarian Increxxa, the And enter.

offering gives in season mostly, as be approach picked Disease now. brand a strong a And to especially of are up and And And it's move point a we We as continue U.S. our little we'll cattle Respiratory confined And will leaders to portfolio. to is at continue products within the through with producers us case our forward, Increxxa, U.S. the the beef a this being and from in cattle a that continued that it we because very in portfolio. portfolio above then portfolio. expectations our nice fall the Bayer see performing value-based wrapping up portfolio, this we're we Bovine significant in Increxxa you number launching update

We'll please. take caller, the next

John next question comes Blair. from Your with Kreger William

much. you you year you then, If us And Todd, the to give on reported. one a you would drive -- maybe next see of just just very update you the some goals Jeff, to from you. like integration to have? Hi. now, DSO Thanks an the quick go that for where a where could receivable with relative Bayer the margin XX Thanks.

year, Yes, behaviors a productivity Without question, quick. just constant agenda. shown John, around as by this we've our energy really

is costs. looking productivity have We everything to play, in that footprint, a at from Company-wide infrastructure well SKUs agenda

aspects and optimize look on to So, capabilities kind Company, all at commercial, especially of pipeline, the our we continue to areas, is as key the how is can anything Relative of we we need. oriented. next non-value or that that focusing

use infrastructure. shown But So, maybe as this are infrastructure mostly against with very that journey will and across And others, we this be not as [Indiscernible] continue mostly update be on very, Novartis it. it'll we'll with to valued, you. aggressive Company-wide productivity and we've that continue but and

first QX got We're having animal, Thinking question has across by year. as work which but change the is cash. to DSOs. for our farm the longer the focused the on influenced it's continuing thanks terms payment seasonality more by collections, the to be U.S. retail Jon, globe relative on a general in about than driven business, to matter of half the international

continue from customers our globe. to we and and collecting two overall, So get around cash our operating the different more efficient systems,

cash we think should on collecting of focus to QX I continue our the on we XX inside as be next So, in a year timely basis.

Thank Jon. you,

Next caller, please.

Raymond Your with next Elliot James. from Wilbur comes question

Todd. And up questioning, of line follow maybe I just could Thanks. that

opportunity I point side in growth you're of earlier to there's percentage particularly there, deliver still to Company's going still But a heard the market. would movement about full-year forward. year, some the from swings and exiting acquisitions track flow the comments, the the lot going your cash the of around track in a a obviously, the and certainly, to -- pressures little given expect livestock thinking capital. basis? difficult top-line Chinese in more bit positive question a cash just this on Specifically, China. growth quarter the operating But Jeff, you And on be be for working incrementally

just market? initiatives swine Thanks. about of talk in terms continuing just drive growth outside and you increasing from to can maybe to you So, an of China, levers the available the other some contribution of

the to see in Elliot, shortly, in going million, expect we to to on progress XX-Q flow, operating your we're and question, is in your file you'll grow $XXX again continue QX to cash that and XXXX. year-to-date a

business, We this our us producers, large On rebound. I continue do Elliot. I believe has that, I these Yes, outsize therapeutic China, to as that do really we start something, well-positioned, portfolio. Swine ourselves, say performance-based as with absolutely. of I of the mentioned, bring see that, brought to that as and Because size this we're our relative Swine fever believe though and claims allowed would its portfolio our to believe in to we target we African will mentioned.

industry owners, the and I Advantage will very in Pet side. nicely relative business is that key would poultry, of question think most lead Elanco and pet working has reaching veterinarians. fourth lastly, then the what kind lot the say We're business. other concentrated putting energy the a Seresto specifically. side nutritional And well. in to brought, with that to with be a poultry the will as and I change a Drontal, our leg doing the then integrating play a very there, business. in health long history poultry as China in and to answer to the strong are of we stool really and I to material brands The business in brought your Bayer is continue the be And Aqua well

growth water it -- have will smaller, where Our driver. runway warm still but long well. that Aqua a a growth has we It's nice it's of it warm as a nice there, business water

continue of voice So a share even into going growth and on key diverse for the for 'XX see lot business a prospects great team, customers to units, reaching efficiently. China. Chinese But portfolio time leadership we most and nice appropriate spending of

Thanks, Elliot.

Next caller.

from of Citi. comes the next with question Your line Noven Cai

to morning. continue good Hi, low-cost switch continued to On restore poultry you products.

I benefited you. it Thank recent discuss on the inventory you if stocking And any dialogue with second SEC. have you the and from it have globally as SEC So, case. could Maybe durable do a the most you trend? question and U.S in see

very over this of it's based. They maximizing are have I've I spend -- about Noven. learned the customers industry in - value. and And -- Thanks, group. analytics time is about with poultry low What of what as years all really lot they value would the not protein becomes cost, strongest XX say it's any a those

have I service with allowed SEC. globally. we've is health, business again, poultry the that That's believe report. want else strongly, very the were in And the largest number that to to nothing to one us seen SEC, customers. new our performance of continue really what databases, cooperating our all our so, There's distribution I with and our what's grow, or in the bring strategy our there's offering the or report. And scope we business also emphasize, to change to our confident appropriate changes we Relative appropriate. one is done Nothing And no were to new actions share, with and to and context in have comment. portfolio

Thank one We'll you. take caller. more

Your next question comes from David Wester with Guggenheim Securities.

the for taking Thanks Hi. question.

is that livestock models year macro, generally of and comping on our you might a it, in is direction, on positive context I both second in then year, the there on just if the any you. freight that of of next can but remind to And my missed way be to this about value of wait industry. -- I costs be weight context seeing that in do as might MFAs in we there. apologize we So, access question kind trends macro think kind value the the we to saw negative any of Thank us

Dave. Yes,

same chain. portfolio question, have high more the products correct. there mean, complexity, supply Just can I is I every But a the miss have in you -- companies. level. health here. do in is that jump weight, without dynamics you MFA's at touched more We quick I across on like, If think and and anything more animal Todd, not something the that

means to Fever. a that. an we've we to said, market I see a XXXX is swine, half Todd as think We benefited in I will African swine the costs. relative challenge extreme to first pressure context is will say portfolio to strong Swine very you a of rebound against globally. to with and On there But maybe way lot want as that On usually a basis, added probably productivity agenda extremeness down the that well other is, level it are interventions -- X. some as and of believe to and watch what working year, that of seen highest at go will yes, we just But think livestock those would we up an with there that our offset in but China, -- but and As be last not going I continued QX. be in in for

see challenges beef. what most a as Asia. number think strong, I first is in of X. the in then again, to then for have we as be they've a were time, a grown with are I Exports full yards think think I these international economics beneficiary positive, I markets. and the And compare that cattle And on X remain to probably half been that's see especially the the poultry continues Feed continue number of sustaining. long

those X material the key would ones So would that, be I highlight.

you, take remark a you We'll closing from now. Jeff. Thank

acquisition, you is decisions emphasize; she you, delivery. very in working algorithm, her. delivery. very, we're she Bayer it's best to the been our important as to Okay. believe ones, distribution her Day of this want wish Investor I to IR and I leader. just key for your making forward thank would enters look for the of and represents is representative highlights right a have quarter the I our like of Conference like great X What with quarters strategy, opportunity our X quarters going I that These Tiffany to changes. consistent milestone. and And of all of Pugh been our Elanco. all Interim been us a our of say, all, That interest Dave forward. thank first I our new would has as to relationship

do. do in durable Company from the strengthened productivity and Pet as see Farm portfolio Animal a on have on We're our as tailwinds. of a with appropriate executing the to There the a driving to work both pipeline us We we're side Company-wide the transformation more new that's headwinds for We well lots industry a with positive backdrop everything side. are agenda.

of well. that trying you challenging scores execute very In important say by our with work as times continues as and loyal, noted very I world, way some engagement improving that Elanco got doing this well in very do focused animals. quarter a in of Our the on we're too thank to want we've the to employee risen things base have as side society

great everybody interest again day. your you that, with thank have So, for and a

concludes today's This conference.

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