Zoetis Inc. ZTS, the world's leading animal health company, today
hosted its first-ever Investor Day, discussing with investors and analysts the
company's leadership position in the animal health industry and the strategy
and initiatives underway that will drive growth and create value for
shareholders. The company also provided full-year 2015 financial guidance and
outlined its longer term financial goals through 2017.
“Zoetis has become the world leader in the $23 billion market for animal
health medicines and vaccines based on our unique combination of capabilities,
our diverse portfolio of more than 300 product lines, our global presence in
120 countries and critical investments that we have made in our operations,”
said Zoetis Chief Executive Officer Juan Ramón Alaix. “Our financial strength,
strong performance as a fully independent company, and prospects for growth as
the market leader position Zoetis to continue delivering sustained value to
shareholders.”
“Steady and growing demand for meat and milk proteins and pets for
companionship represent an attractive market opportunity for Zoetis to help
keep animals healthy and productive. Our singular focus on animal health makes
a difference in how we serve our customers, create innovative new products for
their needs, and deliver a reliable, high-quality supply of medicines and
vaccines, putting us in a strong position to continue growing in line with or
faster than the market.”
Combining Three Interconnected Capabilities for Market Success
During the meeting, Alaix and the Zoetis executive team provided an in-depth
review of the Zoetis business model and the unique characteristics that have
established the company as the world leader in animal health, growing revenue
faster than the market for the last three years (5.1% for Zoetis^2 vs. 4.6%
for the Animal Health Market).
* The company's four regional presidents – Clint Lewis, Joyce Lee, Dr.
Stefan Weiskopf and Dr. Alejandro Bernal – each described how they are
gaining market share through the company's direct selling model, with
approximately 3,500 customer-facing colleagues on the ground in 70
countries. The executives emphasized the unique growth drivers and
distinct needs in each of the regions, which are addressed with
local-market approaches and strategies.
* Dr. Catherine Knupp, Executive Vice President and President of Research &
Development (R&D), described the company's approach to R&D and building
enduring brands, including Zoetis' focus on customer needs, speed to
market, its ability to leverage its global capabilities, and drivers of
future revenue growth. Knupp highlighted examples of the company's
innovation with its recent dermatology breakthrough for dogs, APOQUEL^®,
and its continuous enhancement of the ceftiofur franchise over the last 25
years. Knupp also outlined the company's areas of focus for future
livestock and companion animal product innovations.
* Kristin Peck, Executive Vice President and Group President, discussed the
company's Manufacturing and Supply Network and how it enables Zoetis to
deliver high-quality, reliable supply at competitive costs through a mix
of internal and external supply sources. Peck described the company's
ongoing emphasis on productivity improvements and the high value customers
place on Zoetis' reliable, high-quality supply, its record of maintaining
its manufacturing excellence, and its ability to integrate acquisitions
seamlessly. She also outlined the company's plan to further optimize its
network for growth and gross margin improvement.
Future Outlook and Commitment to Generating Value for Shareholders
The company concluded its event with a discussion of its financial dynamics
and expectations over a three-year horizon, including announcing guidance for
full-year 2015.
“Zoetis participates in an industry where revenues are expected to grow in the
mid-single digits – 5% to 6% on an operational basis^3 – over the long-term,”
said Zoetis Executive Vice President and Chief Financial Officer Paul
Herendeen. “And, we expect to grow our revenue in line with or faster than the
market based on the combination of our industry-leading field-based resources,
R&D and high quality supply.
“Below the revenue line, we expect to generate modest improvements in gross
margin in the near term before accelerating after 2017. After 2015, we expect
to keep our operating expense growth in the range of the inflation rate,” said
Herendeen. “Considering all of these factors, we believe Zoetis is a company
that can grow adjusted net income^1 in the low, double-digits over the long
term.”
In his remarks, Herendeen indicated the company could grow revenue in the
range of 5% to 7% on an operational basis^3 for 2016 and 2017, and grow
adjusted net income in the range of 11% to 16% on an operational basis^3 for
2016 and 2017.
For full-year 2015, the company offered the following financial guidance:
* Revenue of between $4.850 billion to $4.950 billion (6.5% to 8.5% growth
on an operational basis^3)
* Reported diluted EPS for the full year of between $1.36 to $1.43 per share
* Adjusted diluted EPS^1 for the full year between $1.61 to $1.68 per share
Additional guidance on other items such as expenses and effective tax rate is
included in the financial tables accompanying this press release and on the
company's website.
Herendeen also outlined the company's priorities for capital allocation at the
meeting:
* The company will aggressively manage its operating costs to drive revenue
and support a complex growing business.
* It will use capital for value-creating business development activities
that add to or complement its existing business base such as the purchase
of assets of Abbott Animal Health, which the company announced yesterday,
to generate additional shareholder value.
* It will return capital to shareholders through continued dividend payments
and the utilization of a $500 million share repurchase authorization,
which was announced separately today.
A full replay of the company's webcast and copies of today's presentations
will be made available on http://www.zoetis.com/events-and-presentations.
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