• Revenue: $9.3 billion for the year, growing 8% on a reported basis and 11% operationally.
• Adjusted Net Income: $2.7 billion, growing 10% on a reported basis and 15% operationally.
• Companion Animal Portfolio Revenue Growth: 14% operationally.
• Simparica Franchise Revenue: $1.4 billion, growing 28% operationally.
• Simparica Trio Revenue: Exceeded $1 billion globally.
• OA Pain Franchises Revenue: $581 million globally, growing 80% operationally.
• Key Dermatology Franchise Revenue: $1.6 billion, growing 17% operationally.
• Livestock Portfolio Revenue: $2.9 billion, growing 5% operationally.
• US Revenue Growth: 11% for the year.
• International Revenue Growth: 10% operationally for the year.
• Adjusted Gross Margin: 70.7%, growing 50 basis points on a reported basis.
• Adjusted Operating Expenses Growth: 10% operationally for the year.
• Share Repurchase: $1.9 billion of Zoetis shares repurchased in 2024.
• Dividend Increase: 15% during the year, distributing $786 million to shareholders.
• 2025 Revenue Guidance: $9.225 billion to $9.375 billion, representing 6% to 8% organic operational growth.
• 2025 Adjusted Net Income Guidance: $2.7 billion to $2.75 billion, representing 6% to 8% organic operational growth.
• 2025 Adjusted Diluted EPS Guidance: $6 to $6.10.

• Warning! GuruFocus has detected 5 Warning Signs with OGN.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zoetis Inc (NYSE:ZTS) reported double-digit operational revenue growth of 11% for the full year 2024, driven by strong demand for its products.
• The company's companion animal portfolio saw a 14% operational revenue growth, with significant contributions from the Simparica franchise and OA pain franchises.
• Zoetis Inc (NYSE:ZTS) achieved a 15% operational growth in adjusted net income, reflecting strong financial performance.
• The company successfully launched Librela in the US, marking it as the most successful launch in its history, contributing to an 80% operational revenue growth in the OA pain franchises.
• Zoetis Inc (NYSE:ZTS) maintained a strong commitment to innovation, with expectations of at least one major product approval annually over the next several years, supporting long-term growth.

Negative Points

• The livestock portfolio faced headwinds due to the divestiture of the Medicated Feed Additives product portfolio, impacting overall growth.
• Foreign exchange posed a challenge, with a reported unfavorable impact on gross margins and revenue projections for 2025.
• The company anticipates increased competition in key areas such as dermatology, which could impact growth in the latter half of 2025.
• Zoetis Inc (NYSE:ZTS) faces potential headwinds from new market entrants and regulatory changes, which could affect future performance.
• The company's guidance for 2025 reflects a slowdown in price-driven growth compared to previous years, indicating potential challenges in maintaining high growth rates.

Q & A Highlights

Q: Can you discuss the impact of competition on your growth expectations, particularly in the dermatology segment, and any strategic adjustments you're making in response? A: Wetteny Joseph, CFO, explained that Zoetis delivered strong growth in 2024, with double-digit growth across major franchises, including dermatology. The company expects continued double-digit growth in 2025, factoring in potential competition in the second half of the year. Zoetis is leveraging investments in field force and marketing to support key brands and drive operational leverage.

Q: How are veterinarians responding to Librela following the label change, and what are your expectations for its contribution in 2025? A: Kristin Peck, CEO, stated that the label change has helped veterinarians understand how to prescribe Librela better. The product has been successful, with $581 million in sales and 80% growth in 2024. The company expects continued growth in the OA pain category, with no new products included in the 2025 guidance.

Q: What is the expected revenue cadence for 2025, considering potential competition and R&D expenses? A: Wetteny Joseph, CFO, noted that the company expects strong demand trends from 2024 to continue into 2025. While competition is anticipated in the second half of the year, Zoetis expects a stronger first half. R&D expenses are expected to align more closely with revenue growth, reflecting the pipeline's progress.

Q: How is the overall pet population trending, and what are the implications for Zoetis' growth? A: Kristin Peck, CEO, highlighted the stability of the pet population and the strong human-animal bond as key growth drivers. The aging pet population and increased adoption by millennials and Gen Z are expected to support continued growth in the animal health industry.

Q: Can you discuss the potential impact of new product approvals on Zoetis' growth, particularly in chronic kidney disease and oncology? A: Kristin Peck, CEO, emphasized that Zoetis has multiple growth drivers, including potential blockbusters in chronic kidney disease and oncology. The total addressable market for these areas is significant, with chronic kidney disease estimated at $3-4 billion and oncology at $1.2-1.7 billion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.