Elanco Animal Health (ELAN) 8 Aug 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Elanco's Animal Health Second Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Katy Grissom, Head of Investor Relations. Katy, you may begin.

Good morning. us Animal joining XXXX Second for Call. Earnings you for Health's Elanco Quarter Thank Head Relations of Grissom, Katy I'm Investor and ESG.

Joining Simmons, of our are available Todd call elanco.com. The slides are Chief Investor the this Purucker today's Financial Officer; call during Scott Chief Young, me Executive our Investor Relations. and from on referenced President on and Officer; Jeff Relations section

and forward-looking our are will include from statements. that risks current subject and discussion are materially on These actual Today's based cause and assumptions expectations to differ results uncertainties could statements to forecast. our

see risk filed to forward-looking statement. latest information, Form more not the in For our as update any XX-Q and do the duty with today's release earnings any press XX-K in SEC. discussed as well We factors undertake

will press non-GAAP today's prepared appendix After the over Reconciliations Our financial included measures the turn earnings on of remarks, to non-GAAP questions. I be remarks to our Jeff. call the measures. release. are in today take these of your happy will in now we'll our slides and focus

consistent significant us, strength Since and health X. products. are added innovation, underlying quarter our results Slide delivered strategic outcomes: animal, contributions from Bovaer in call, international we Thanks, Elanco activities deliver Elanco revenue our pet X strategy. flow; Zenrelia consecutive the in our operational revenue; range underlying X and blockbuster on productivity update, growth and launch farm delivering EBITDA; milestones our portfolio metrics: morning, second Quattro quarter, last end late quarters. growth, everyone. make commercial continue on for each delivered our continued after by of driven behind U.S. innovation, innovation. Beginning to on growing key of and to the we completed to consecutive in underway guidance On new and EPS. our adjusted quarters Katy. With we to in and line May. X adjusted our progress of next achieved and revenue; in to notably a exceeding in the continue potential advancing June improving of with track earnings Credelio Good continue its review FDA top revenue fourth key the cash expect

window late the For Credelio final Quattro sale with the be approval And final expected proceeds quarter. With our XXXX. to Aqua repaid we billion leverage by administrative cash for Zenrelia, is expect from of business, flow mid-Xx in have in on and track $X.X of XX-day debt underway year. net the the end September. of the improved in remains approval level operating fourth the the in

expectations constant business our maintained be increase Looking in the innovation full the June. forward, business, outlook. revenue removal now X% we of year. remain half, the shared the in to the confident contribution expect We Aqua to organic second the X% currency year reflects in for in full This base and growth for expected

the are expectations offsetting we sales, investments adjusted improved with half. in EBITDA Aqua, Excluding strategic in launches for maintaining second increased

Aqua. of EPS maintaining expense removal our guidance adjusted and with interest offsetting We tax are lower the also

in Finally, XXXX operations, our sustainability we Purpose Healthy collaborations customer demonstrating Elanco's report beyond. efforts our issued ESG on progress and internal

currency created revenue of XXXX, Moving growth the on X%, half excludes delivered building first the revenue in year's X. the of year. for the of provide half by to XXXX. In This quarterly half growth mid-single-digit growth integration. We first back the Slide view ERP the phasing we of year-over-year constant last

at our U.S. with Pet deeper Health. four starting business Looking areas,

of the as for Zenrelia In market to U.S. last next Despite execution over revenue half improved we a declined drove the the Pet U.S. Quattro X%. of the level and a high quarters. bring -- enablers maintain year, competitive the strategic Pet Health X consistent XX us allows environment, optimism over this Our months. to the of Health Credelio first future

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results, in half later, are in patterns expected the However, retailer growth to but created year of dynamic more when more details to will line we trends. purchasing normalize the with in dispensing sales anticipate variability provide in the reported our back impacting Todd quarter. this retailers begin order net to

clinic drove months X or vet The the business antibody canine side, monoclonal launch CPMA, is parvovirus year. innovation through On nicely. supply improved our stabilization of the first across progressing and vaccine the the of

placed of and We in clinics to invest continue to X/X strategically penetration. have our product drive the target

quarter towards corporate However, as clinics portfolio our competition enhancing pressure next. are Strategic of the Zenrelia to in this the clinic, in the and particularly quarter the Quattro with business. look opportunities Credelio laying improved the sales increase to the for we our in groundwork performance first of U.S. parasiticides and in continues with pain of fourth force and addition vet year investments expand

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drive as brands of to leadership strengthen like and parasiticide continues Seresto Our share and we AdTab. growth voice the key invest retail of to

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Pet team. strong and contributions Our markets, a well-executed major of a and strategy Health on by exemplifies diverse part from of Ramiro benefits International the all innovation a Dr. growth portfolio, focus his concentrated business Cabral

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strength. position to and ability key in market continue our to areas business relative the in confidence have grow We of these

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cattle As low. remain feed on

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to deliver improved Regarding productivity, solutions successfully approach cross-functional are debt evaluate inventory. and and We've delivering we diagnose flow down. reduce pay sheet and operating improve to cash balance a taken processes

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in and operating have of flow $X.X and $XXX cash earlier, combined I the of year-to-date million repaid from As XXXX. sale Aqua the of improved the end billion with expect in net the mid-Xx said we by to close leverage level debt of XXXX proceeds be our

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Bovaer. on First,

to approximately XXX,XXX make steps activated based tracks progress have necessary on dairy to and good reduction which monetize we successfully it protocols, uplook on cows the enables methane in database, To our approved to farmers carbon. continue We date, commercialize.

The are complete. majority registrations of state

cows. California, on consumer carbon Bovaer Athian key dairy based to state. contracts still and a awaiting goods to dairy companies negotiating However, we're several is Rumensin with of the purchase feeding

feeding while interest overall value Animal a innovation. our enable believe era producers we the the we Bovaer this dairy are sustained high in encouraged to advantage next we Overall, for process and creates by Farm complex to the begin coming will Elanco from is expect and the While growth of competitive chain, progress cows months. across

Next on Zenrelia.

that period technical received complete. to end that share underway the review FDA confirmation major CMC is the June, safety in sections the Before all of XX-day the final administrative We're U.S. from were pleased and we effectiveness,

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regards expect to the and current market Zenrelia JAK be effectiveness positively continue the on that We to convenience. with differentiated will inhibitor from

U.S. and EU data submitted is package. of view our informed by part expected head-to-head Our data label the the as

include shared expected U.S. label will related June, box to a warning response As vaccine study. in our the

will expect adoption veterinary label language education this the slow it will we We believe focused require U.S. as initial product in curve the product. on the

the box expected in vaccine related XX% expectations for by warning to based treatment usage. Our being on days approximately limited language is

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Credelio Finally, on Quattro.

effectiveness complete. As safety the previously of sections' major and X technical X shared, are

the approval begin of this quarter this the later expect expected in quarter year. final the review fourth to final We administrative with

the of scale-up In addition the we which are first the quarter is optimize launch, targeted finalizing to manufacturing to for regulatory process, XXXX.

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prescription U.S. enhance Credelio the $XXX the our sales to business to of XXXX significantly U.S. addition growth beyond. million of expect about in and in XXXX, our which represents of We Pet parasiticides, Health Quattro portfolio of

very Elanco expect U.S. position clinic. vet in We these innovations the pet health to competitively

veterinarians vaccines therapeutics. just parasiticides, company As broad-spectrum second to comprehensive bring the offering product dermatology, a and to with

Elanco. the colleagues, are We regulatory our by supply, and sheer as to teams the and prepare R&D the product our of the colleagues manufacturing prepare we engagement excitement creativity for by diligence encouraged and of competitive launches, this era to by our team enter progress commercial important the marketing for

second our results provide quarter Now Todd financial it I'll more pass to to on and guidance.

detailed Today, comments refer Thank in adjusted and the so our today's for good a measures, will our quarter press of my second Jeff, I release morning, earnings results. reported to please you, everyone. changes focus on year-over-year description

for business million X%, to the estimated impacts The X% $X.XXX second $XXX contributed the comparison X% point $XX The Starting each estimated on reflecting ahead ERP an XX%, second XX% estimate this In to quarter, million noted year. a are revenue, the excluding in our we to quarter, second that shifted to foreign of XX XX. of or impact business of grew benefit rates. impacts increase Price the quarter first unfavorable billion in on XX Last quarter the the from area. expectations. Slide year, in X year-over-year we the We blackout into occurred delivered sales quarter. system of our of the quarter. second exchange underlying to XXXX percentage of slightly Slide growth

second pressure estimated year-over-year Health and of including percentage of Clinic, by from to For the currency grew to revenue specifically the pressure second was XX X% ERP XX% innovation the from decline revenue underlying the the with was products, recently a to was points in on This percentage year-over-year In XX launched benefit constant Pet growth offset partially growth quarter by points U.S., Health, approximately the benefit driven Pet quarter, products. Vet legacy ERP growth blackout. an XX CPMA. our blackout. In competitive

patterns to conservative in side management and inventory in second retailers. the revenue several attributable at the primarily On large more lower was purchasing retail changes of business, quarter XXXX

result the the of course inventory our our ERP cutover less top days. a year, Over of same built significantly to the purchasing the first retail period time half of year ahead customers and of compared last timing discount as

June, see July, focus market However, approximately the for we dispensing products mid-single-digit compared in first we our In those by on a in dispensing dispensing, the demand. positive for retailers encouraged the grew In in of are our XX% retailers. months continued end in decline key momentum and growth as and we X Elanco X OTC the May to year. top

XX benefit the of throughout the dispensing mentioned, of continued purchases and a XX% line with constant benefit ERP is of be dispensing Pet the in second retailer Jeff of Health from percentage the the to half back currency, blackout. strategy year-over-year execution our to growth more half drive expected compared will to grew As last growth year. International including expected approximately in points year, from we to

by impact, blackout business, the China the Plus products, Credelio AdTab the in business rebound underlying in retail market. the Excluding by the weakness growth was led Spain and primarily pet continued new driven and by offset

Farm Animal. to Moving

estimated growth Experior Our XX% points U.S. constant The to percentage resupply. X vaccine from global year-over-year of strength benefit by currency, grew driven with business and ERP underlying cattle an business in was blackout. continued with the growth cattle in adoption

U.S., year. quarter of second the last in to Additionally, tailwind provided rotations compared the timing of poultry a

in initial continue the difficult of face fourth driven positive in was continued the a poultry resupply Outside quarter, U.S., and year's compare in poultry vaccines third lapping to rotations. quarter, trends these and expect last growth the the created strength for of increased of will Latin cattle reduced manufacturing an demand We but plants decline partially sales on margin Kexxtone. Continuing expectations down basis cattle slowing The in in with America, XXX line by products quarter. in the Slide headwind of our was XX. the income point in offset gross statement approximate by

year. plant quarter to adjusted adjusted partially spend being quarter year. Product business, we million expect lap the positive EBITDA second the neutral Operating provided R&D performance the million expenses impact to to the a the to as of operating and positive of timing employee-related we impact includes to X% Slide European in $XX approximately our benefit starting year-over-year million illustrate ERP continue price. in of $XX in increased of EBITDA productivity quarter, be year-over-year the the this by We The in pet blackout of in system. On our slowdowns in flip to a fourth XX, last was was comparison on our $XXX and partially by investment mix half quarter margin driven to benefits have by in of offset Adjusted a expenses walks in offset EPS. back last and headwind one quarter. the from third

benefit $XX underlying to mix. in business, was manufacturing $X.XX lower negative Adjusted of of a inventory $X.XX For XXXX reduce XXXX. slowing the by Both were well includes balance from interest comparison in rate $XX tax than decline year-over-year as The million the the was million quarter product driven expense gross EPS blackout output margin second approximately to to sheet as quarter. year. lower ERP the and $X.XX in of last the in our from

Next, on working operations the and strategic Cash the on project an This sheet of to our to words let reduce $XXX or The last increase capital me quarter was operate and compared expenses a efforts by quarter XX. cash, reflects balance our second lower year. inventory. Slide provided million $XXX in of few debt increase million

of and are down Aqua Our quarter improved July, business. ended focused debt $X.X execution of strategy quarter. Subsequently, cash paid the we from the in net off of our in of million the generation. with to billion $XXX sale paying debt We proceeds $X.X billion, a with deliver reduction

in $XXX debt than of Importantly, our a interest in savings resulting the to XXXX, down year in of approximately transaction. cash portion taxes to million a allowed next expected pay out significant XXXX. expense increase us transaction tax to requires initially related be will the but related This paid more

additional down of June, from paydown. leverage in net updated first leverage quarter. and was X.Xx reflect information At the at XX flow impacting end the X.Xx, factors debt the key ratio the this have and appendix our XX of to end our Slides after We and cash

in mid-Xx and expect move to range. in We this Xx to range net lower the to year-end low Xx leverage expect ratio XXXX, high the

are XX. growth, the across move to Aqua a divestiture the of over the Now guidance, We we Slide impact on organic P&L. measure our financial introducing next full we months Today, let's use XX to the excludes that starting intend

we are and to maintaining contribution guidance including expectations base said, Jeff while organic from the As growth business include Bovaer. increased Zenrelia innovation, for our increasing

to our now X% we organic billion, approximately of year, be between This to full from to of driven over guidance, and increasing slight $X.XX May guidance the a provide representing the innovation For and May our removing million. Slides $X.XX August including expected walks expectations, sales revenue constant growth XX increase currency by is XX $XXX X%. billion million $XXX Aqua. to to expect contribution

are our after to year adjusted EBITDA organic $XXX attributable of million which $XXX maintaining We removing EBITDA million for Aqua. full is guidance, $XX approximately the now million adjusted to

in International margin on half Pet and offset headwinds Second Farm be by the in incremental quarter increased to Animal overperformance investments in and expected is the gross launches U.S. second year. of Health

are our sale fully business. On and a full $X.XX our associated expense. basis, now previous of we we the with $X.XX to pretax introducing of a to third are includes EBITDA range We GAAP the approximately On reduction $X.XX $XX $X.XX we on step-up XX, lower expect of the for of financial compared interest our EPS flow-through the tax gain $X.XX for guidance Aqua between the Slide This quarter. year. able the guidance full with and EPS, million For from for business Aqua year. adjusted were savings debt maintaining offset to adjusted the reduced

growth organic expect billion of X% X%. currency to constant to revenue billion, representing We $X.XX of $X.XX

of expect adjusted adjusted $XXX EBITDA to $X.XX. EPS and $XXX We million between million and $X.XX

Finally, Slide XX. moving to

EPS adjusted a quarter to guidance fourth represents and implied organic Our growth. EBITDA return

the change slowing margin are lap subside expected peso. year's output detriment Argentinian sequential gross devaluation manufacturing in the trajectory We down to of our from last we with headwinds as confident and the

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

several marking fourth business. currency Thanks, past marked organic underlying consecutive constant innovation, Todd. expected stabilizing business XXXX growth currency of With in QX, from Momentum the years. a X% demonstrates revenue raised growth mid-single-digit constant base increased over continued improvement the in to contributions revenue quarter our X% the in and

debt We transaction continue paydown. profile the our and quick execute the to with Aqua leverage on of improving completion

blockbuster product X the of innovation next launches major imminent upon us. each our now window is in X Importantly, With potential quarters.

trajectory. intend differentiated we have to regrets and strategically assets, invest We and launch with peak curve to the no maximize sales potential

these time, conference We Katy our label to We top more look some well have to and including upon to as for differentiation call talent the Q&A. With preparing for the support extensive forward industry and been our research efforts. I'll go-to-market approval Zenrelia conducting our on expected a details launches market that, more to it launch turn recruiting specifics provide strategies. to as moderate hosting on over

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

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

question session. Block comes will question-and-answer now Your Jon from We begin the Instructions] [Operator from first Stifel.

out on provide Zenrelia. launch, there. the call provide have you to How And trigger that response quarter here you nonresponders can help other know launch/ramp high-level I'll a the follow-up. In and think more then head-to-head study on one more then the on euthanasias, be And Zenrelia the -- I'll you'll of a of just we the you Maybe it, study earnings that label? us any if it about call I to will little the -- function that? Jeff, was timing start And but available fourth the could can words, XXXX. for the do in a bit seemed of have vax. warning comments vax --

you've day is do part we package, submission market intention the the was it was of done this do and as on and our Jon, I'll questions. work add against that part bit have intend the the that one you, I your all a of have we've the initial spoken -- directly, the head-to-head the incumbent want then answer June little that done to study I questions appreciate to the just But to of broader Thank first because We time appreciate of since is release. launch this context Yes. X European intend materials.

let just just to share, relative I me interest greatest just this product. context a of in continued help but that think couple share the Zenrelia messages, and to as like can everybody -- there's I'd So

excited we're to as dogs of about follow First, derm are that bringing the that IL-XX and untreated. that market, Zenrelia. U.S. digit double grow has and in about to millions excited in a Zenrelia. know, derm. market, We're fast-growing still with a going the pipeline you entering globally, Ellen continues We're We're

So -- and it's excited it. weeks about we're away, and

points A just context, going FDA respect process. couple we're to of in the

vets anticipate other where We will share that I'm and important are are we're how of limit look and the data experts, And as the that packages a and some and specific even end approval. points puts made that in on label Jon. the started, looking now full little studies approval, holding September study, at days at as we will think of Currently, to that comprehensive details, this comments product, limited earnings outside us that we derm. But approval the until after Jon a have a the we're this. here investor we track -- that, as label take to review do for a at there the call to XX-day has late our and I on I administrative will comment and well in go-to-market, look

and positively widely the adopted and differentiated We Then that see product of incumbent market in and and we prevent most the clear, vet needs First, as derm compelling. on as we others, research study being to vets. do, not are the of be better with package our all the clinics. These It's will value. interested market well positive very differentiation from X of that's we two value. efficacy it's in anything very we've do head-to-head top types said, expect with things. efficacy the label expect for across Zenrelia have as the indicate convenience that done Zenrelia

of that product be surveyed recently shelves. And think we key And lead their here that will Additionally, more on likely them carrying a XX% derm we will want have. objective to options. vets another

and JAKs as a class. confidence years modify it part look label response vets potential our studies supports that I educating there study. to it their a XX-year around very important. value that be or any and on itchy is days expectations modulators, the XX dogs the as They're this are vaccine this to since directly. administration, all we our in important just And initially limited the the we've release Zenrelia. question sounds, the while of immune all for Xx bridge point back vaccine acute vaccine think Another vaccine or is suppress target maybe data can Zenrelia, system, Zenrelia the dog's from be important this as they the to proposition dose should very is timing is class. And can related a And of the completed incumbent no response receiving the system XX% and months, forward got believe ago, I response common of even initial package, applicability is think to chronic study dogs the XX population assesses to again, is immune immune we excluded we that And that to what seasonal, data for which then, highlight solely very Jon, clearly that is being called over

was That great.

you. a follow-up. just quick as be Todd, I one this think might for

For new products. but to think due dollar-accretive obviously, XXXX, be, some these the new gross gross high-level I XXXX, margin-dilutive was likely prior, would the associated call investments in blockbusters it, with messaging profit that

just these blockbusters, you Zenrelia's a do label. we believe profit to can make flush out about more bit. think the explain lower, XXXX dollar-accretive need that still new to we going in you we neutral. price to investments When gross Now maybe Maybe think be is or more

will in team your all will Bovaer those 'XX work be those this the not Zenrelia excited be and you excited they to behind that also both guidance the of EBITDA Sure, and Quattro. We the year. to we're we're question in said, marketplace, last to to that get going bring months. early into excited the given will accretive the half quarter. half in and We're accretive Jeff where Certainly, Credelio next here X very going those to they're over today. to including flip investments the That where get fourth for we're I Jon. year. making coming hands for second do be EBITDA. these investments, gross appreciate not here And But Zenrelia the Quattr,o, the the vets to Credelio second in and been XXXX, have doing products as to investments margin-accretive, few but of expect be in

of line Your Michael next the comes question from Ryskin.

off be price in Black use vet more how keep value has Great. efficacy I the to that you Zenrelia the positioned your pricing you value to on And the how talked of the warning component this, share on as -- highlighting component willing lever to it plan just the to that are just vet. education changed way there's want Obviously, past. vet a you to terms about price But the the to and launch Jeff, Zenrelia. market? goes spend there's But pick the value in differentiator. Box and development? in a right you it's of and about left where gain -- vets talked clear, following that. in in You -- the to up how

for question. Mike, the Thanks, Yes.

ever to Let me going the be will first we're thing more and know of being that attention. the expansive going the one lot and happen to share marketing second of going to voice. launches is a to most is we by start market. This We're increase have

of the year are There's we're size do in untreated. you market market. occurred the is innovation when increase the so expect even of millions to far that's And half the first of going first grow. the new that to existing -- any derm, dogs this we growth even size in see still The thing

see number with what not so always we'll a driver in but it value and parallel, a and launches will one, be take And that U.S., follow and the perspective, value-based as market we we other growing, in be and we I'll do it. From we is price in that say, behind this we'll do approach. see Brazil, the globally, just will

we that we want is the well of and -- our efficacy overlay what we We comes believe look as look aspects. believe better against we and convenience as holistically will value we that differentiation other it approval as that with at most, as upon overlay positive all and vets at will value, well and aspects do

launch the We will the is, closely one We vets as will they with is X we think -- so understand the data. label, about vet-to-vet we understanding. a have objectives work want we the plan science,

is ever. product And data, get want use preparedness. that this will But we differentiation of the into things product. to will quickly appropriate the are use owners' clinics to have then It lot encourage one going with take launches programs do hands, to adjust most can of this we're so we this in done initially will us demonstrate product expansive ensure going going the be pet those way to can it. adoption. and one shifted vet-focused very the to a upon and of and to that And hands again, we've launch So of move we've to more experience. We're utilizing we intensity so effort want it that's a quickly,

know, -- more will we've therapeutics started, a approach. much and help will with you a offer, omnichannel voice, initially a will also It vaccines next-generation force, believe, of approach be well. And share and as sales digital We larger as of dimensional forward we multifaceted having capabilities. already more pair use

more call approval the after share this details we'll that the we'll again and -- right on of have. So

just portfolio. Okay. to part the second the question And actually on it again, second you to Jeff, took of the my breadth --

therapeutic Para-derm about talked You vaccines.

purchase comes the portfolio they about longer in time of make up all which of breadth their So we terms prioritize. they talk decision, how when

early from products to Now portfolio. jumped 'XX, of early you lot companion a to adding the 'XX

the for portfolio Is does arguably beyond launches? blockbusters, broadest value up products approach of change these the business the other plan, to that the vet. of in coming that rest of that terms XXXX? groups conversations of part consolidator your and first for some large first the as the Is tied new to How in or already? have proposition the You're you beyond the uplift distributors going the in of

a great it's Yes, question.

product would diabetes I us the in put that more I it's the the us add and between thing given other pretty ever more even is given antibody, increased are parvovirus it's sales important we've the monoclonal -- mean force access I and access. last think we clinics more I that's think been. now us year, than

we're blockbuster that markets two in pet the the was to about was launch Para. in U.S. our market differentiated pet two products, when in and goal products here largest So largest the Derm

so And one. we look clinics as question. And at two, this, is is one no access then to

will companies some at plans allows the will available and that believe already will are Zenrelia the Para from and interest distribution help started our interest lot offerings board, we portfolio to by our carried to and engagement a that, look which leverage and as are as we As will help across And of in help an and there corporates we portfolio. that Derm we Quattro even purchasing us relative today. the use which appropriate vaccine purchasing, of products we've is portfolio to well to even Quattro, Zenrelia. there's

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

It's on constructive all good hear language the to Zenrelia.

more. just pressure a little test that me let So

I As I dig euthanized than response the of dose Apoquel Xx out dogs Xx is into more X it, study were human the probably standard the not. that assuming I'm vaccine X study, had human. the and dose was know

trivial the these finding than also, me you to whatever like considering probably trivial Could color on then And was straightforward and sourcing trying I'm packaging. it getting the end you're safety out black of finally were on was So then stuff that? And my Could like a back CMC more timing the your study? the much X. some duration. more the more request? towards us to it is you just box, give euthanizations why it's just pronounced information euthanizations, or more X understand of a of is, that Credelio, is sounds on confirm cap the sense

Yes. much, Thanks, and questions. I Umer, very the appreciate

well the safe meet approved if label. and not effective is And veterinarians when I looking to know label, it you you though, by to product and the scale quarter first with the on approval, to there's before. tracking this thinking acts openly optimize FDA be the to quarter side, at studies got FDA, point can't is multiple the a just again and finalizing, this product. at the approval team, you us -- as think section as used manufacturing keep into FDA then about a it's leads us well. we ingredients, focus process, and in the quarter according I for you we're with and this educate on inform that our say we the to very technical be launch. you said to this I will and the you the will for vet complete. And out we it's approval move us into use those a on appropriate following in the community community will get once over safely, the and the and common as sense, believe confidence independent is approval, well, very the the fourth look my and maybe administrate upon experienced just us standards comments, will as important the when And when to again, to extensively of the will we last deemed launch sharing assure we at that's until questions, significantly track this we've to gate validation the approval process, it differentiation details and to through product marketplace. Bridging that will primary yes, and getting and simply respecting to I it's I still and complexity, more can how about with first assure look and very We guidance that, label will but value add or And that safety, our side, and holistically. I relative that we'll that approval that move use of we've the but answered that administrative and label process will done providing indicates that a product believe these of up that investors the of vet manufacturing set a give as Quattro,

a less black of have -- market feel we're may, launch the the the putting box a because I you're ultimately, I an black and while has confident than on profile incumbent Am emphasis I on But like I everything box. and if for don't in hearing very been else. should we Jeff, be. know they

and why in perspective important. confident put I'm as not So so to black just box you're trying that you're the into hearing on what is

take of approach the will make fully that educating strategy, -- planning box science the as are Look, we a indication sure again, product. all question and and is launch products We're and about that. which the understood. and about said, to altered labels warnings Yes. use accordingly. are No the vets, I to And data to, the an the label and is that how use our

products very at So use to in very and and utilized understand labels veterinarians wouldn't and is warnings the that the routinely believe also science inform. products do I box understand to goal you have that accordingly, are our and all. no, to opportune, the initially I and and and are that there's able common, read want and that's industry educate

derm of other stand shows, we that's XX% want safety won't think from market important. And options I as this value, efficacy what do better and So research want And vets they Umer, product. of and that's do very the away product the then and brings.

to the educate accordingly. detail, product again, We we this will you And and forward look and after with approval more of others. Umer, inform sharing

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

you for to a hands how this longer to And a process? upside And get Can of it's think just just guidance of my understand that? me. this going X Zenrelia. the launch the I'm than second education to EBITDA. vets is you duration talk around on of take place another where one the sense expect the a post update Just to the to something long get trying label was matter trying about Maybe question on just into just uptake? I'm get this flow-through and normalized can there. My Is it sales quarter? they'll and we some

product the mix investment of and in side? mentioned manufacturing launches. guess happening of how losses versus increased some then that what's its I I and this much between higher what's manufacturing investment think manufacturing the on you

Yes, our force, as the team -- Chris, will key we and technical we already are together in one, said, the to bringing leaders. first sales take parallel training we've opinion

is we've and reach the expansive will training resources. be will can increasing the and across probably This be most these able resources, force, of we clinics be backing the an away We'll to vet get be we'll to launch, to the our approach. DTC to I as ever the create sales this be quarter, will timing a this the be it can priority bring We'll before to So do Quattro this we in the It to as that's experience QX do. today, approach first, experience community U.S., product the KOLs launch fourth will be accelerated be and many priority. what That approaches. education. And Phase quickly. no the will increase done Educate quite top we question, so and will a multifaceted in using multifaceted initially -- priority. educate our an with want key

is the with on pleased there of between that in half, QX our driven guidance. some losses of with some us. that's back as we underlying by some vaccine QX There was back Very the sales and half the beat QX. manufacturing But the additional OpEx on primarily supply some headwinds strength of thanks was primarily, in Chris, hitting timing go business. for additional question into the

now XXXX. investing any have The launches. in to but other We're to Credelio won't going we our to in from becomes June, invest these update also going element Credelio behind Quattro be investing Quattro in Zenrelia. We're continue really revenue in given

But of before, gross cows for to that to process the the dairy thing because below for margin really XXX,XXX critical element noted excited got is uplook, well is manufacturing corporate methane. able as which set up. we're We've got required. remind a that on is be We've high-cost we've Bovaer. average other measure product The of the to folks

play. the expected, brought of the reduces than manufacturing come into we to that X cops because earlier U.S. this process different years significantly won't a use product And

world. that are those driving well business perform portfolios to innovations base as the things So are the across the continuing fundamentally, it. But driving

from of Stanley. Wright Erin Your the Morgan comes next question with line

administration On be there for label the of the pharmacies presumably, Zenrelia clarify and that Zenrelia kind you just of there, us more administration leverage geared some towards it stuff there. trying terms warning, safety around then geographies is of also I here much product there's online in -- it it seasonal, stickiness, -- caveat vaccines. And the you You couldn't in you that the that and guess and instance? may it omnichannel safety if similar capture for for do a ensure with how your --or can but definitely But the caveats the round, that around involved? to could about time auto experience apologies year And with of for the other question have market chronic, just you loyalty can will you approach? how do kind think mind? And how ship chronic do you use another have

Erin. Thanks,

believe the and as and strong and to product the On market label not why go the interest international specifics market, case But better in work the are option. to product stickiness nonresponders into it just won't the we emphasize, the take itching say, overall, believe in qualified been as by do there's each that, marketplace. will are we've We post label, having can we expect we to of market, They research question for what we or continue label FDA strongly our really believe we see, other that. Relative product label another will improve do we approved, And through that to this get now markets. that provide the with details. convenience, part be a and once with and efficacy the will and those, the the of approval warning and all interest create a wanted has chronic the Brazil, but to can of the dogs is acute. that necessary the we we we with not an and to driven believe your really what's first I in will has forward value, there until approach is. country we this one, on we'll as we those the this we understand this, vets and it is go said,

that we the the be and to top our market been of initially, there the this So ability able and we product that use label we've needs the research by in marketplace, create, that's we the have that approach and to market market. our can are can done out with with we veterinarians to yes, going believe research. with already label address to omnichannel represented the derm with

half? It how sounds Okay. And retail feel my terms just like channel, just your the in products, what seeing second in are you are And given on of you down normalize tightly on softness things of here you over-the-counter eye to in comfortable or an terms exposure follow-up's the then retail. consumer trade of inventory that any sort the levels consumer there? at keeping

quarter is that being question we our require the for buy Yes, dispensing. we Sales the will levels last continue retailers focus Thanks on of the Erin. year. to to driver them less inventory in and with down Pet than on primary have was U.S. line like Health. retail. as in inventory feel the quarter, dispensing second noted, That the built in this of Sure, year was

element first to of the we're grow half continues year. it the it July, transitioning noted, season. the of As of the out in year-to-date grew key And also

is attention So the consumer we of a do lot to. pay something

four-packs. We've seen sizes. two-packs on We has more purchased trade seen pack been down. have It some versus

And couple have back distribution we've some points primarily so lower-priced focus last in dollar the that well distribution about. we all of bringing that as points to on. continue stores XX,XXX very with do of we've of years, something the talked that's But over expanded doing been added options we

feel good we we Thanks. overall, spot forward. a as move like in So we're

Vazquez question Your Blair. comes from the William next line with Brandon of

switch. I'll Maybe

any what about there? one-times I actually on resupplying release there? talked vaccines. in of Were there us you comment there about haven't Farm We Animal Can U.S. think a more was press bit the was little Farm detail strong. Animal in yet a going give and was really just

basically, So just the what's and through get as to year trying how go we of at U.S. the rest at 'XX. strength Animal the Farm of is durable level in

Farm and that's well, poultry wide portfolio we're actually globally we've both stronger and the additives, every and Brandon. adding a strategy making especially got working Yes. U.S., therapeutics, Thank Yes, innovation portfolio in Animal very dairy swine. diverse medicated feed cattle, the -- beef, vaccines, is you, and from

this we're is value And ultimately team cyclical making continued cycle -- growing. beyond building our new we're share. life leading. with with Ellen's even pipeline, why where We're products. and and taking money and our on ultimately management we're product Elanco And customers We're comes the and portfolio, in from stickiness more low-margin making is our businesses, both

with experiencing look forward great execution. our to clearance with We effort coming. ] Bovaer So more [

Todd's to point. in year, uplook million The headed half sustainability extremely our this as on end X really is So in high. cows got next see interest of of the the nice innovations the the we $X Bovaer era database year. on coming farmer XXX,XXX the livestock second of and this side to by We've

extra and dairy pharma the a of species, so beef revenue also are stream and as interest the well. actually other in and farmer that demand lot and in leaning created And industry poultry level has the it's

don't to I of the a would you sales like fundamentals. -- Todd, that's to bit make the So know a comment little relative question.?

in growth then with year in adds to of in drive XX% of XX% put birds returned Prevacent portfolio, the growth it at QX, innovation We to Brian, in think business. of growth how growth X%, QX in now really and Experior, U.S. be this vaccine year, the portfolio really our for Yes, we're I last be this and to up XX% pleased we continue it Farm QX. QX swine,

leveraging So growth. team innovation is really that that and

and in over in the profitable to to excited Elanco all commit dairy add the that has, that Rumensin to to I'm growth has U.S. and seen really a given forward. for not coming Experior with team We forward. for going expect growth growth, portfolio that double-digit continued it be certainly, we've driver to continue to going nice come. pulling the momentum will it we're quarters Farm But

you if then And pipeline other and at maybe that shot beyond see to I'll Great. there's give guys are Zenrelia updates willing this point. take Quattro and any a

you second thinking with On to there's timing the pipeline a of to segments closer within that discussions IL-XX, guys half as discuss first be kind approval if would there And any FDA getting XX updates years, other R&D we're like the willing for? be on is the helpful. would half, that your then you're that any

continues. There's in a Yes. Ellen team and is -- and momentum excitement innovation. of lot the

First, you've of now Derm X parasiticide blockbuster new is a going quarters. per That's the that's growing in XX%. going And to been and be markets then accretive U.S. sustainability. XX% we're And those got growing and of as quarter into what accretive going intention. tracking livestock X to next we're our to. mentioned, market, markets. That's Pet sales be the Para Para broad-spectrum I are

be the then that's and 'XX. will not yes, be excitement. there's one U.S., said we'll in the about timing. we've IL-XX to And the is not continue that at talked the FDA, still so positively market well. with tracking. coming to we globalizing the lot look in Yes, others. We've That's big differentiated. And done. follow Zenrelia specifically That's There's of and that's and a So spaces USDA, the work as behind that,

second other the We're new would Antibodies then antibodies. of the Monoclonal Pain, that one in I behind with Derm, is And sustainability. say monoclonal the livestock Para, spaces. then this So investing and actually some

lot of to pipeline are potential. and that be of We globally building from we can to will already that billion has competitive advantage significant farmer the and $X by a we side the creation see interest market billion new sustained the tell that, create believe $X a we a that

the the and about So never want is is felt high-impact team and what And that of charge Ellen wave major doing. in exactly a innovation our of markets. better innovation of team constant And next said, developed. they're flow that's doing as being we R&D what

from Prasad comes question Barclays. from Your next Balaji

questions A me. couple from of

Firstly, on the competitive dynamics side.

one. Two, retailer I seeing. a the from the in out And And is if on different compaction stepping up in you losing that Or absolute example, you these how it, how is loss, and just parasiticides for that this the curious any, have distributor of think decline brands influencing on strength the you each you're quantify how share have is number, are Galliprant share been a behavior? that's market pain. impacted segments? behavior Could alone? side, rates called seeing we to bit I'm Farm are considering maybe the they more see impacting Animal how inflation seen macroenvironment market

market. at a we we at our and our look But part prospects our Galliprant, we Yes. of portfolio, diagnostics, but share market is Galliprant like we the Great competition. voice, it's Again, market continue And more the again, to more pipeline with Pain look challenged the Pain current very with with in of when of the continues grow. see of innovation, some going strong to questions. expectations, meeting the been with portfolio Pain our forward.

at poultry, level, is which say protein if just at strongest. just on would cattle segments, are I our I economics, look biggest then And highest and the what they the X

look has cattle, when on confined protein numbers economic which fewer at kept So you side, stronger. the there's cattle

even continues economic portfolio So our the is and fee to costs add have value when value down, significant come up. because protein meat

overall. beneficial been portfolio that we've to whole measure even these in that's help So got And Rumensin, tools that. Experior the can

in leading poultry more got portfolio. and side, way. no we've the And probably a protein significant demanded globally, more sustainable On more a

continue bringing mentioned, food replacements see on non-antibiotic poultry, to Todd there growth, to to consistent globally as package. and safety innovation from our [Onsior] we're We quarter-to-quarter

food protein saw got up in China, as and the is In pork we North to at poultry, bit have positioned, continue see China getting first America China. still shoot economics going in we it's we've dairy back, in as conversion look at sustained time, green a beef then look in benefited. competitive with we a prices we or that and fee our portfolio, as step advantage. But play to whether being to and quarter what safety good prices time, out growth especially are even forward breakeven. for disease, and -- multinational over little say a need swine I'd of leadership quite swine And first as well advantage, whole, I portfolios with sustained some

line Westenberg with of Your next the question comes Sandler. from David Piper

the patient you product X in least hour, the suggest ask about do We're so be JAK research, I'll -- at here. new than the on at tend different at in rather that Can starts just least up the with talk of U.S. IL-XX light my Cytopoint in Apoquel, the expected label we than just to

And different know ahead the it when really does then to I before et of to change differentiation, marketing, in to cetera. half-life at realize you the focus on too So product be? strategy technology. label that, IL-XX but going your try. terms versus least comes that used on on don't Kindred I thoughts to what probably want far get could I'm other Any extension

Thanks, Yes. David.

As bring you different that. to look at the growing continue categories see and are benefits, forms and derm market, nicely, we they and really, product both

with and it's as technology Kindred and again, see new globally, with complement, potential. with in other but label, long we've we came won't have launched again, other blockbuster its existing derm. got We've that differentiation, follow forms nice follow So and I will be assets got will from a see IL-XX. it comment really Zenrelia acting then we we'll on and we will of known. the we'll It -- a be that

growing real about and in at excited this change categories strategy in comments. really no time. Maybe and So key that really -- point with both just see X briefly close very just I'll

these quarter your progress First say represents company. future significantly all innovation for investors second inside And the you and all, the growth, Elanco believe thank have time. in the of this We been of for areas. for cash I priorities that, hey,

As we We're top innovation which in Todd seeing launching a we're digits. that. stabilizing row is X growing highlighted, on quarters base, move towards a start of mid-single critical to as of

X work we're at launching we're biggest and globally the strength next retail. Farm We over links of seeing the a debt leadership, our excited beginning in by with the and really vet in since Animal of X XX% share positive cash And major company we're the growth of year, the have that side, quarters. lot blockbusters priorities. flow. blockbusters to And on the and over these with around We reduced differentiation two

on strategy. our we're So laser-focused

growth. actually thank to and And global as one of next inside thankful life I know is better, lives going a the This of to the going want animal's to the passion the belief resolve wave The Elanco to and string X close, personally it's belief making the quarters And of a quarters, difference strongest that's what Elanco consistent and high is of one-Elanco everybody makes excited. because resolve engagement, innovation, I been I is of just and team around the taken. a it's a make. better. and do the I'm approach There's team.

visiting Thank time your shortly interest and you you. And thank for you after to We the look with Zenrelia in again, forward launch. Elanco.

This call. and concludes today's participation, now conference may for disconnect. you Thank your you