Zoetis announces first quarter 2019 results
Parsippany, n.j.--(business wire)--zoetis inc. (nyse: zts) today reported its financial results for the first quarter of 2019 and updated its guidance for full year 2019. the company reported revenue of $1.5 billion for the first quarter of 2019, an increase of 7% compared with the first quarter of 2018. net income for the first quarter of 2019 was $312 million, or $0.65 per diluted share, a decrease of 11% and 10%, respectively, on a reported basis. adjusted net income1 for the first quarter of 2019 was $424 million, or $0.88 per diluted share, an increase of 16% and 17%, respectively, on a reported basis. adjusted net income for the first quarter of 2019 excludes the net impact of $112 million for purchase accounting adjustments, acquisition-related costs and certain significant items. on an operational2 basis, revenue for the first quarter of 2019 increased 11%, excluding the impact of foreign currency. adjusted net income for the first quarter of 2019 increased 18% operationally, excluding the impact of foreign currency. executive commentary “we are off to a solid start for the year, with 11% operational growth in the first quarter,” said juan ramΌn alaix, chief executive officer at zoetis. “our companion animal portfolio is leading the way, driven by diagnostic sales from the acquisition of abaxis, as well as strong global sales of our parasiticides and key dermatology products. we were able to achieve double-digit growth this quarter, even as we faced challenges in certain swine and cattle markets. this quarter’s performance once again highlights the benefits of our diverse product portfolio, which we believe provides long-term stability to our business in this dynamic and global industry.” “despite these temporary challenges, we remain confident in our projections for the year, and we are maintaining our guidance for operational revenue growth and adjusted eps targets,” said alaix. quarterly highlights zoetis organizes and manages its commercial operations across two regional segments: united states (u.s.) and international. within these segments, the company delivers a diverse portfolio of products for livestock and companion animals tailored to local trends and customer needs. in the first quarter of 2019: revenue in the u.s. segment was $718 million, an increase of 13% compared with the first quarter of 2018. sales of companion animal products grew 30% driven primarily by the acquisition of abaxis, parasiticides (mainly revolution® plus for cats and simparica® for dogs), and key dermatology products. sales of livestock products declined 7% in the quarter, with declines in cattle and swine more than offsetting growth in poultry. our cattle and swine product sales were impacted by the timing of distributor purchasing patterns for medicated feed additive products. poultry growth was largely due to increased sales of our portfolio of alternatives to antibiotics in medicated feed additives. revenue in the international segment was $718 million, a decrease of 1% on a reported basis and an increase of 7% operationally, compared with the first quarter of 2018. sales of companion animal products grew 15% on a reported basis and 23% on an operational basis. growth resulted primarily from increased sales across our key dermatology portfolio, the acquisition of abaxis, and simparica. sales of livestock products declined 9% on a reported basis and 1% operationally, due to the negative impact of african swine fever in china, as well as the divestiture of certain agribusiness products in japan; this decline was partially offset by growth across poultry, fish and sheep. investments in growth as the world leader in animal health, zoetis continues to invest in strengthening its diverse portfolio of solutions across the continuum of animal healthcare to help veterinarians and farmers predict, prevent, detect and treat disease. since our last quarterly earnings announcement, zoetis received approval of apoquel® (oclacitinib tablet) in china, one of zoetis’ largest companion animal markets. other key companion animal products, including cytopoint® (lokivetmab) and simparica (sarolaner) for dogs, and revolution plus (selamectin and sarolaner topical solution) for cats, continued to gain approvals in markets outside the u.s. additionally, core eq innovator™, the first and only combination vaccine to offer protection against five core equine diseases, was approved in canada. in livestock, zoetis launched clarifide® plus for jersey cattle in the u.s., the first genomic test for this specific breed that provides direct indication of the genetic risk factors for seven of the most common and costly adult cow diseases. financial guidance zoetis is updating its full year 2019 guidance, primarily to reflect changes in foreign currency, which includes: revenue between $6.100 billion and $6.225 billion reported diluted eps between $2.79 and $2.93 adjusted diluted eps between $3.42 and $3.52 this guidance reflects foreign exchange rates as of late april. additional details on guidance are included in the financial tables and will be discussed on the company's conference call this morning. webcast & conference call details zoetis will host a webcast and conference call at 8:30 a.m. (et) today, during which company executives will review first quarter 2019 results, discuss financial guidance and respond to questions from financial analysts. investors and the public may access the live webcast by visiting the zoetis website at http://investor.zoetis.com/events-presentations. a replay of the webcast will be archived and made available on may 2, 2019. about zoetis zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. building on more than 65 years of experience in animal health, zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and a range of services. zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. in 2018, the company generated annual revenue of $5.8 billion with approximately 10,000 employees. for more information, visit www.zoetis.com. 1 adjusted net income and its components and adjusted diluted earnings per share (non-gaap financial measures) are defined as reported net income attributable to zoetis and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. 2 operational revenue growth (a non-gaap financial measure) is defined as growth excluding the impact of foreign exchange. disclosure notices forward-looking statements: this press release contains forward-looking statements, which reflect the current views of zoetis with respect to business plans or prospects, future operating or financial performance, future guidance, future operating models, expectations regarding products, expectations regarding the performance of acquired companies and our ability to integrate new businesses, expectations regarding the financial impact of acquisitions, future use of cash and dividend payments, tax rate and tax regimes, changes in the tax regimes and laws in other jurisdictions, and other future events. these statements are not guarantees of future performance or actions. forward-looking statements are subject to risks and uncertainties. if one or more of these risks or uncertainties materialize, or if management's underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. forward-looking statements speak only as of the date on which they are made. zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. a further list and description of risks, uncertainties and other matters can be found in our annual report on form 10-k for the fiscal year ended december 31, 2018, including in the sections thereof captioned “forward-looking statements and factors that may affect future results” and “item 1a. risk factors,” in our quarterly reports on form 10-q and in our current reports on form 8-k. these filings and subsequent filings are available online at www.sec.gov, www.zoetis.com, or on request from zoetis. use of non-gaap financial measures: we use non-gaap financial measures, such as adjusted net income, adjusted diluted earnings per share and operational results (which exclude the impact of foreign exchange), to assess and analyze our results and trends and to make financial and operational decisions. we believe these non-gaap financial measures are also useful to investors because they provide greater transparency regarding our operating performance. the non-gaap financial measures included in this press release should not be considered alternatives to measurements required by gaap, such as net income, operating income, and earnings per share, and should not be considered measures of liquidity. these non-gaap financial measures are unlikely to be comparable with non-gaap information provided by other companies. reconciliation of non-gaap financial measures and gaap financial measures are included in the tables accompanying this press release and are posted on our website at www.zoetis.com. internet posting of information: we routinely post information that may be important to investors in the 'investors' section of our website at www.zoetis.com, on our facebook page at http://www.facebook.com/zoetis and on twitter @zoetis. we encourage investors and potential investors to consult our website regularly and to follow us on facebook and twitter for important information about us. condensed consolidated statements of income(a) restructuring charges and certain acquisition-related costs * calculation not meaningful. certain amounts and percentages may reflect rounding adjustments. gaap reported(a) purchaseaccountingadjustments acquisition-relatedcosts(1) certainsignificantitems(2) non-gaapadjusted(b) restructuring charges and certain acquisition-relatedcosts gaap reported(a) purchaseaccountingadjustments acquisition-relatedcosts(1) certainsignificantitems(2) non-gaapadjusted(b) restructuring charges and certain acquisition-relatedcosts see notes to reconciliation of gaap reported to non-gaap adjusted information for notes (1) and (2). certain amounts may reflect rounding adjustments. zoetis inc. (millions of dollars) integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes. included in restructuring charges and certain acquisition-related costs. represents employee termination costs, included in restructuring charges and certain acquisition-related costs. included in provision for taxes on income. income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. certain amounts may reflect rounding adjustments. (2) certain significant items include the following: represents consulting fees, included in cost of sales, related to cost-reduction and productivity initiatives. for the three months ended march 31, 2019, represents a change in estimate related to inventory costing, included in cost of sales. included in provision for taxes on income. income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. for the first quarter ended march 31, 2018, also includes a net tax benefit related to a measurement-period adjustment to the provisional one-time mandatory deemed repatriation tax on the company's undistributed non-u.s. earnings pursuant to the tax cuts and jobs act. certain amounts may reflect rounding adjustments. adjusted selected costs, expenses and income(a) foreignexchange operational(b) selected line items (millions of dollars, except per share amounts) full year 2019 the guidance reflects foreign exchange rates as of late april 2019. reconciliations of 2019 reported guidance to 2019 adjusted guidance follows: reported certain significantitems andacquisition-relatedcosts(e) purchaseaccounting consolidated revenue by segment(a) and species foreignexchange * calculation not meaningful. certain amounts and percentages may reflect rounding adjustments. foreignexchange certain amounts and percentages may reflect rounding adjustments. segment(a) earnings foreignexchange u.s.: international: * calculation not meaningful. certain amounts and percentages may reflect rounding adjustments.
