Parsippany, New Jersey--(BUSINESS WIRE)--Zoetis Inc. (NYSE: ZTS) today announced the financial results for the second quarter of 2020, Year’s guidance to reflect the company’s current annual impact on the projected full-scale COVID-19 pandemic and foreign exchange headwinds.
The company reported revenue of $1.5 billion in the second quarter of 2020, the same as the second quarter of 2019. Net income for the second quarter of 2020 was US$377 million, or diluted earnings per share of US$0.79, an increase of 2% and 3%, respectively, based on the report.
Adjusted net income1 for the second quarter of 2020 was US$427 million, or diluted earnings per share of US$0.89, a decrease of 2% on a reported basis. Adjusted net income for the second quarter of 2020 does not include the $50 million net impact of procurement accounting adjustments, procurement-related costs, and certain major items.
On an operational basis, revenue in the second quarter of 2020 increased by 4%, excluding the impact of foreign currencies. In the second quarter of 2020, adjusted net income increased by 4% in operations, excluding the impact of foreign currencies.
"As an important business supporting global food supply and human pet care during the pandemic, Zoetis demonstrated greater flexibility than expected in the second quarter, with revenue operations increasing by 4% and adjusted net revenue operations by 4%," Zoetis CEO Kristin Peck (Kristin Peck). "Our strong companion animal product portfolio, based on our internal innovation, has helped offset some of the deeper challenges in today's livestock market."
"Looking forward, we expect that the overall revenue growth for the rest of this year will be mainly driven by companion animal products, especially parasiticides and our main dermatological product portfolio, and we are improving our guidance to reflect our current expectations for this year. Outlook. We will continue to invest in products to strengthen the innovative and digital solutions our customers need throughout the continuous care process-from prediction and prevention to disease detection and treatment," Peck said.
Zoetis organizes and manages its business operations across two divisions: United States (US) and International. In these market segments, the company provides a diversified product portfolio for companion animals and livestock, tailored to local trends and customer needs. The second quarter of 2020:
Zoetis achieves business diversification and development by introducing new products, life cycle innovations, business development plans, and entering new markets and technologies. The company is increasingly focusing on developing comprehensive solutions that span the animal care continuum for pet owners, veterinarians, and farmers—helping to predict, prevent, detect, and treat diseases.
Since the announcement of our last quarter's financial report, Soton has continued to bring leading products into new markets. In Brazil, Zoetis has received approval for the Vanguard® B Oral vaccine, a vaccine that helps prevent kennel cough, and Excenel® RTU EZ (ceftiofur hydrochloride), a vaccine for the treatment of respiratory diseases in cattle and pigs. Infectious drugs. In addition, Fostera® Gold PCV MH is approved in Australia. The vaccine provides more options and flexibility for livestock farmers to reduce the clinical symptoms of pigs associated with porcine circovirus (PCV2) and Mycoplasma hyopneumoniae (M.hyo). Fostera Gold PCV Metastim is also approved in Australia to reduce clinical symptoms associated with PCV2.
In addition to new product approvals and life cycle innovations, Shuo Teng continues to support future growth through business development activities. In July, the company acquired Fish Vet Group as a strategic supplement to its Pharmaq business, which develops and commercializes fish vaccines and provides vaccination and diagnostic services for aquaculture. The addition of the Fish Vet Group expands the geographic scope and enhances the diagnostic expertise and testing services of fish farmers in major aquaculture markets.
Zoetis is improving and narrowing its 2020 full-year guidance, which includes:
The guidelines reflect foreign exchange rates as of mid-July. Additional details about the guidance are included in the financial table and will be discussed in the company's conference call this morning.
Webcast and conference call details
Zoetis will host the webcast and conference call at 8:30 am (Eastern Time) this morning, during which company executives will review the results of the second quarter of 2020, discuss financial guidance and answer questions from financial analysts. Investors and the public can access the webcast by visiting the Zoetis website http://investor.zoetis.com/events-presentations. The replay of the webcast will be archived and available on August 6, 2020.
Zoetis is a leading animal health company dedicated to supporting its customers and their businesses. Zoetis has more than 65 years of experience in the field of animal health and is committed to discovering, developing, manufacturing and commercializing drugs, vaccines and diagnostic products, supplemented by biological equipment, genetic testing and precision animal husbandry. Zoetis serves veterinarians, livestock producers, and people who raise and care for farms and companion animals, and its products are sold in more than 100 countries. In 2019, the company had annual revenues of US$6.3 billion and approximately 10,600 employees. For more information, please visit www.zoetis.com.
1 Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as Zoetis’ reported net profit and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and Some major projects.
2 Operating income growth (non-GAAP financial measure) is defined as growth that does not include the effects of foreign exchange.
Forward-looking statements: This press release contains forward-looking statements that reflect Shuo Teng’s current views on the following aspects: business plans or prospects; future business or financial performance, future guidance, future operating models; product, product approval or Expectations of products under development; expected product launches; potential impact of the coronavirus (COVID-19) pandemic on our business, suppliers, customers, and employees; on the performance of acquired companies and our ability to integrate new businesses Expectations; expectations of the financial impact of the acquisition; future use of cash and dividend payments; tax rates and tax systems; changes in tax systems 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 become reality, or if management’s basic assumptions prove to be incorrect, actual results may differ materially from those expected in the forward-looking statements. Forward-looking statements only represent the conditions as of the date they are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statements due to new information, future events or other reasons. For a further list and description of risks, uncertainties and other matters, please refer to our annual report on Form 10-K for the fiscal year ended December 31, 2019, including the title "Forward-looking Statements and Factors That May Influence" Part of the future results" and "Project 1A. Risk factors," in our quarterly report on Form 10-Q and our current report on Form 8-K. The coronavirus (COVID-19) pandemic and its potential impact on the global economy and our business may amplify such risks And uncertainty. These documents and follow-up documents are available online at www.sec.gov, www.zoetis.com, or upon 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 operating results (excluding foreign exchange effects) to evaluate and analyze our performance and trends, and do Make financial and operational decisions. We believe that these non-GAAP financial measures are also useful to investors because they provide greater transparency to our operating performance. The non-GAAP financial measures included in this press release should not be regarded as alternatives to the measures required by GAAP, such as net income, operating income, and earnings per share, nor should they be regarded as liquidity measures. These non-GAAP financial measures are unlikely to be compared with non-GAAP information provided by other companies. The reconciliation of non-GAAP financial measures and GAAP financial measures is included in the table attached to this press release and posted on our website www.zoetis.com.
Internet information release: We often publish information that may be important to investors in the "investors" section of our website www.zoetis.com, our Facebook page http://www.facebook.com/zoetis and Twitter @zoetis . We encourage investors and potential investors to visit our website regularly and follow us on Facebook and Twitter to get important information about us.
Condensed statement of comprehensive income (a)
(Millions of dollars, except per share data)
Sales, general and administrative expenses
Restructuring expenses and certain acquisition-related costs
Interest expense, deducting capitalized interest
Income before income tax provision
Income tax reserve
Net income before distribution to non-controlling interests
Less: Net loss attributable to non-controlling interests
Net profit attributable to Shuo Teng
Weighted average shares used to calculate earnings per share
The condensed comprehensive income statement lists the quarters and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States include the quarter and six months ended May 31, 2020 and May 31, 2019.
Reconciliation of GAAP report and non-GAAP adjusted information
(Millions of dollars, except per share data)
Sales, general and administrative expenses
Restructuring expenses and certain acquisition-related costs
Income before income tax provision
Income tax reserve
Net profit attributable to Shuo Teng
Zoetis' diluted earnings per ordinary share
Sales, general and administrative expenses
Restructuring expenses and certain acquisition-related costs
Income before income tax provision
Income tax reserve
Net profit attributable to Shuo Teng
Zoetis' diluted earnings per ordinary share
The condensed comprehensive income statement lists the quarters and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States include the second quarter ending May 31, 2020 and May 31, 2019.
Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted earnings per share are not and should not be regarded as substitutes for US GAAP net income and its components and diluted earnings per share. Although these measures are important to management in terms of goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted earnings per share are non-GAAP financial measures and do not have the standardization required by US GAAP Meaning, therefore, their usefulness to investors is limited. Due to the non-standardization of definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (different from US GAAP net income and its components and diluted EPS) may not be measured similarly to other companies Standard calculations are compared. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted earnings per share are only used to give investors a more comprehensive understanding of how management evaluates performance.
Reconciliation of GAAP report and non-GAAP adjusted information
Certain line items-continued
(Millions of dollars, except per share data)
Sales, general and administrative expenses
Restructuring expenses and certain acquisition-related costs
Income before income tax provision
Income tax reserve
Net profit attributable to Shuo Teng
Zoetis' diluted earnings per ordinary share
Sales, general and administrative expenses
Restructuring expenses and certain acquisition-related costs
Income before income tax provision
Income tax reserve
Net profit attributable to Shuo Teng
Zoetis' diluted earnings per ordinary share
The condensed comprehensive income statement lists the quarters and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States include the second quarter ending May 31, 2020 and May 31, 2019.
Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted earnings per share are not and should not be regarded as substitutes for US GAAP net income and its components and diluted earnings per share. Although these measures are important to management in terms of goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted earnings per share are non-GAAP financial measures and do not have the standardization required by US GAAP Meaning, therefore, their usefulness to investors is limited. Due to the non-standardization of definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (different from US GAAP net income and its components and diluted EPS) may not be measured similarly to other companies Standard calculations are compared. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted earnings per share are only used to give investors a more comprehensive understanding of how management evaluates performance.
Reconciliation of GAAP report and non-GAAP adjusted information
(1) Acquisition-related costs include the following:
Total cost associated with the purchase-after tax
Integration cost represents the external incremental cost directly related to the integration of the acquired business, mainly including consulting and system and process integration expenditures. Included in restructuring expenses and certain acquisition-related costs.
Indicates that the cost of dismissal of employees is included in restructuring expenses and certain acquisition-related costs.
Included in the income tax reserve. Income tax includes the tax impact of the relevant pre-tax amount, which is calculated by determining the jurisdiction location of the pre-tax amount and applying the applicable tax rate of that jurisdiction. For the six months ended June 30, 2020, it also includes taxes related to the remeasurement of deferred taxes arising from the integration of acquired businesses.
(2) Some important projects include:
Other restructuring expenses and cost reduction/productivity measures (c)
Total of some important items-before tax
Total of some important items-after tax
Represents the net income generated from the net cash proceeds received under the 2016 agreement related to the sale of certain U.S. manufacturing bases, included in other (income)/deductions.
Representative consulting fees, included in the cost of sales, are related to cost reduction and productivity planning.
Represents the cost of dismissal of employees due to the transition of the CEO, which is included in restructuring expenses and certain acquisition-related costs.
For the quarter and six months ending June 30, 2020, it mainly represents the modification of share-based compensation related to CEO transition costs, which are included in sales, general, and administrative expenses. For the six months ended June 30, 2019, it represents estimated changes related to inventory costs, which are included in the cost of sales.
Included in the income tax reserve. Income tax includes the tax impact of the relevant pre-tax amount, which is calculated by determining the jurisdiction location of the pre-tax amount and applying the applicable tax rate of that jurisdiction.
Adjusted selected costs, expenses and revenue (a)
As a percentage of income
Adjusted SG&A fees
Adjusted research and development expenses
Adjusted net profit attributable to Shuo Teng
As a percentage of income
Adjusted SG&A fees
Adjusted research and development expenses
Adjusted net profit attributable to Shuo Teng
Adjusted cost of sales, adjusted sales, general and administrative (SG&A) expenses, adjusted research and development (R&D) expenses, and adjusted net profit (non-GAAP financial indicators) attributable to Soteng are defined as correspondingly reported US GAAP gains and losses The table does not include line items for procurement accounting adjustments, procurement-related costs, and certain important items. These adjusted income statement item indicators are not and should not be regarded as substitutes for the corresponding U.S. GAAP items. The corresponding GAAP line items and reconciliations reported to adjusted information are provided in the condensed consolidated income statement and GAAP reconciliations reported to non-GAAP adjusted information.
Operational growth (non-GAAP financial measure) is defined as growth that does not include foreign exchange effects.
Selected line items (millions of dollars, except per share amount)
Foreign exchange impact compared to the May 2020 guidance
Adjusted cost of sales as a percentage of revenue (b)
Adjusted SG&A fee (b)
Adjusted research and development expenses (b)
Adjusted interest expense and other (income)/net deductions (b)
Effective tax rate of adjusted income (b)
Certain major projects and acquisition-related costs (d)
This guide reflects current views on the estimated full-year impact of the COVID-19 outbreak, the state of the global economic recession, and foreign exchange rates as of mid-July 2020.
The adjustments between the 2020 report guidelines and the 2020 adjusted guidelines are as follows:
(Millions of dollars, except for the amount per share)
Certain major projects and acquisition-related costs (d)
Cost of sales as a percentage of revenue
Interest expense and other (income)/deductions-net
Net profit attributable to Shuo Teng
Operational growth (non-GAAP financial measures) does not include the impact of foreign exchange.
Adjusted net income and its components and adjusted diluted earnings per share are defined as reported U.S. generally accepted accounting principles net income and its components and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and Some important items. Adjusted cost of sales, adjusted SG&A expenses, adjusted R&D expenses, adjusted interest expenses and other (income)/deductions are the income statement items prepared on the same basis, so they are the overall adjusted income measurement indicators Part. Although these measures are important to management in terms of goal setting and performance measurement, adjusted net income and its components and adjusted diluted earnings per share are non-GAAP financial measures and do not have the standardized meaning of the United States GAAP regulations, so They are of limited use to investors in the following areas. Due to the non-standardization of the definition, adjusted net income and its components and adjusted diluted earnings per share (different from the US GAAP net income and its components and diluted earnings per share) may not be comparable to other companies Compare calculations of similar indicators. The adjusted net income and its components and adjusted diluted earnings per share are only used to give investors a more comprehensive understanding of how management evaluates performance. Adjusted net income and its components and adjusted diluted earnings per share are not and should not be regarded as substitutes for US GAAP net income and its components and diluted earnings per share.
We do not provide the reconciliation of forward-looking non-GAAP adjusted net income operating growth with the most directly comparable financial indicators in the US GAAP report, because we cannot calculate with reasonable certainty the foreign exchange impact of abnormal gains and losses, related to acquisition-related expenses, and potential future asset deductions. Value and some other major projects, there is no unreasonable effort. The foreign exchange impact of these items is uncertain, depends on various factors, and may have a significant impact on the results of the guidance period reported by the US GAAP.
Mainly include certain non-recurring costs related to acquisitions and other expenses.
Consolidated income by sector (a) and species
Contract manufacturing and human health
For an explanation of each part, please refer to Shuo Teng's latest annual report on Form 10-K.
Operating income growth (non-GAAP financial measure) is defined as income growth that does not include the effects of foreign exchange.
Consolidated income by sector (a) and species-continued
Contract manufacturing and human health
For an explanation of each part, please refer to Shuo Teng's latest annual report on Form 10-K.
Operating income growth (non-GAAP financial measure) is defined as income growth that does not include the effects of foreign exchange.
Comprehensive income of major international markets
Operating income growth (non-GAAP financial measure) is defined as income growth that does not include the effects of foreign exchange.
For an explanation of each part, please refer to Shuo Teng's latest annual report on Form 10-K.
Operational growth (non-GAAP financial measure) is defined as growth that does not include foreign exchange effects.
Other business activities reflect the R&D costs of our R&D organization and our contract manufacturing business and human health business management.
Businesses include (among other things) administrative expenses, interest expenses, certain compensation costs, certain procurement costs, and other costs not included in our operating segments.
Purchase accounting adjustments include certain expenses related to the fair value adjustment and amortization of inventories, intangible assets and real estate, plant and equipment that are not included in our operating segments.
Acquisition-related costs include costs related to the acquisition and integration of newly acquired businesses, such as transaction costs and integration costs.
Certain major projects include substantive and unusual projects. Due to their nature or scale, they are not expected to occur regularly as part of our normal business. These items mainly include restructuring expenses and implementation costs related to our cost reduction/productivity plans that are not related to acquisitions, costs related to operational efficiency plans and supply network strategies, and the impact of profit and loss related to asset divestiture.
Including indirect costs related to our manufacturing and supply business, which are not directly attributable to the operating department, and certain procurement costs.
Defined as income not included in income tax.
Segment (a) Revenue-continued
For an explanation of each part, please refer to Shuo Teng's latest annual report on Form 10-K.
Operational growth (non-GAAP financial measure) is defined as growth that does not include foreign exchange effects.
Other business activities reflect the R&D costs of our R&D organization and our contract manufacturing business and human health business management.
Businesses include (among other things) administrative expenses, interest expenses, certain compensation costs, certain procurement costs, and other costs not included in our operating segments.
Purchase accounting adjustments include certain expenses related to the fair value adjustment and amortization of inventories, intangible assets and real estate, plant and equipment that are not included in our operating segments.
Acquisition-related costs include costs related to the acquisition and integration of newly acquired businesses, such as transaction costs and integration costs.
Certain major projects include substantive and unusual projects. Due to their nature or scale, they are not expected to occur regularly as part of our normal business. These items mainly include restructuring expenses and implementation costs related to our cost reduction/productivity plans that are not related to acquisitions, costs related to operational efficiency plans and supply network strategies, and the impact of profit and loss related to asset divestiture.
Including indirect costs related to our manufacturing and supply business, which are not directly attributable to the operating department, and certain procurement costs.
Defined as income not included in income tax.
Media Contact: Bill Price 1-973-443-2742 (o) william.price@zoetis.com
Kristen Seely 1-973-443-2777 (o) kristen.seely@zoetis.com
Investor Contact: Steve Frank 1-973-822-7141 (o) steve.frank@zoetis.com
Keith Gaub 1-973-822-7154 (o) keith.gaub@zoetis.com
Zoetis reports financial results for the second quarter of 2020.
Media Contact: Bill Price 1-973-443-2742 (o) william.price@zoetis.com
Kristen Seely 1-973-443-2777 (o) kristen.seely@zoetis.com
Investor Contact: Steve Frank 1-973-822-7141 (o) steve.frank@zoetis.com
Keith Gaub 1-973-822-7154 (o) keith.gaub@zoetis.com