Zoetis Inc. Q4 FY2024 earnings call

• In 2024, Zoetis reported an excellent full year result in line with the high end of November guidance, with double-digit operational revenue growth of 11%.
• US revenue grew 11%, while internationally, revenue grew 10% operationally. Companion animal portfolio had 14% operational revenue growth, and livestock portfolio had 5% operational revenue growth.
• The global Simparica franchise grew 28% operationally in 2024, with the triple combination market (pioneered by Simparica Trio) projected to more than double by 2028. OA pain franchises grew 80% operationally, and key dermatology franchise grew 17% operationally.
• The divestiture of the medicated feed additive product portfolio was a strategic move to streamline the portfolio. Zoetis is guiding to 6%-8% organic operational revenue growth in 2025 and 6%-8% organic operational growth in adjusted net income.

Companion Animal Portfolio: In 2024, the companion animal portfolio grew 14% operationally. The global Simparica franchise grew 28% operationally. OA pain franchises (Librela and Solensia) saw 80% operational revenue growth, with Librela's US launch being the most successful in Zoetis' history, becoming the fourth largest product in the US pet care portfolio. The key dermatology franchise grew 17% operationally. On a regional basis, US companion animal revenue grew 15%, while international companion animal grew 10% operationally. Livestock Portfolio: The livestock portfolio had 5% operational revenue growth in 2024, but this included a divestiture of medicated feed additive products. Excluding the divestiture, organic operational growth was higher. US livestock declined 1% due to the divestiture, but organic operational growth was 6%. International livestock grew 8% operationally.

• 2025 organic operational revenue growth is guided to be in the range of 6% to 8%.
• Adjusted net income organic operational growth is expected to be in the range of 6% to 8%.
• Revenue is projected to be between $9.225 billion and $9.375 billion.
• Adjusted net income is expected to be between $2.7 billion and $2.75 billion.
• Adjusted diluted EPS is expected to be between $6 and $6.10, and reported diluted EPS is expected to be between $5.70 and $5.80.

• Competition in markets, such as potential new entrants in the derm market which could impact growth.
• Impact of foreign exchange rates on financial results.
• Geopolitical dynamics and regulatory changes that may affect business operations.

Q: Michael Ryskin from Bank of America asked about competition in derm and other franchises, and investments.

A: Wetteny Joseph responded that they factor in various competition scenarios, see a large opportunity in derm with 20 million untreated or undertreated dogs globally, and leverage field force and investments to drive operational leverage.

Q: Erin Wright from Morgan Stanley asked about Librela's vet response, US contributions, and margin improvement.

A: Kristin Peck responded that Librela's label update helps vets understand real-world adverse events and there's continued growth into moderate patients, and Wetteny Joseph mentioned margin improvement from MFA divestiture and mix shift.