Earning Date, Transcript Summary & Report

Double-Digit Revenue Growth: Zoetis Inc. reported an excellent full year result in line with the high end of their November guidance, achieving double-digit operational revenue growth of 11%.

Revenue Growth Across Markets: The US revenue grew 11%, while international revenue grew 10% operationally, indicating strong performance across markets.

Companion Animal Revenue Growth: The companion animal portfolio saw a remarkable 14% operational revenue growth, showcasing the strength of their product offerings.

Simparica Franchise Growth: The global Simparica franchise grew 28% operationally, driven by the increasing demand for triple combination treatments, which are projected to double in value by 2028.

Osteoarthritis Pain Franchise Growth: The osteoarthritis pain franchises, including Librela and Solensia, grew revenue by 80% operationally, with Librela becoming the fourth largest product in the US pet care portfolio in less than a year.

Dermatology Franchise Revenue Growth: The key dermatology franchise grew revenue by 17% operationally, with a significant addressable market still available for growth.

Livestock Revenue Growth: The livestock portfolio achieved 5% operational revenue growth, exceeding initial expectations despite the divestiture of certain products.

Shareholder Returns Strategy: Zoetis returned over $2.6 billion to shareholders in 2024, including a 15% increase in dividend rate and a $6 billion share repurchase program.

Organic Revenue Growth Projection: The company is projecting organic operational revenue growth of 6% to 8% for 2025, indicating confidence in sustained growth.

Innovative Product Pipeline: Zoetis expects to maintain a strong pipeline of innovative products, with at least one major approval anticipated annually over the next several years.

Livestock Portfolio Challenges: The livestock portfolio faced challenges due to the divestiture of the medicated feed additive product portfolio, which impacted overall revenue growth.

Livestock Business Decline: Despite strong performance in the companion animal segment, the livestock business declined 1% on the year due to the MFA divestiture, indicating potential vulnerabilities in this area.

Foreign Exchange Impact Forecast: The company anticipates foreign exchange headwinds of approximately $250 million to revenue and $50 million to adjusted net income for 2025, which could negatively impact financial performance.

Livestock Growth Expectations: The guidance for 2025 reflects a normalization of growth expectations, particularly for livestock, which may not see the same favorable pricing tailwinds as in 2024.

SG&A Expense Increase: Adjusted SG&A expenses are expected to increase, reflecting normalization of compensation tied to 2024 performance, which could pressure margins.

Tax Rate Impact on Income: The adjusted effective tax rate for 2025 is expected to be at the higher end of the historical range due to higher taxes on foreign earnings, which may affect net income.

Evolving Operating Environment Risks: The company noted that the operating environment is evolving with new entrants and shifting geopolitical dynamics, which could pose risks to future growth.