This Pet Health Company Sees Growing Demand For Farm-Animal Products, Cost Savings From Restructuring

Elanco Animal Health Inc ELAN reported fourth-quarter 2023 revenue of $1.035 billion, up 5% reported growth or 5% excluding the impact of foreign exchange rates, above the consensus of $1.00 billion. The management expected fourth-quarter revenues of $978 million-$1.02 million.

The company posted adjusted EPS of $0.08, down 59% Y/Y, missing the consensus of $0.11 and on the lower end of the management guidance of $0.07-$0.13.

Pet Health revenue was $416 million, down 1% on both a reported and constant currency basis, with a 3% increase from price in the quarter primarily driven by continued competitive pressure on certain products in the U.S. veterinary channel, partially offset by increased price.

Also Read: Elanco Animal Health To Offload Aqua Business For $1.3B, Plans To Lower Debt Burden.

Farm Animal revenue was $610 million, up 10% on both a reported and constant currency basis, with a 4% increase in price due to strength in poultry globally, revenue from new products, resupply of cattle vaccines in the quarter, and increased price, partially offset by continued declines in international swine and sheep.

Gross profit margin declined 440 bps to 50.1%, primarily driven by planned reduced throughput at certain manufacturing sites to reduce balance sheet inventory and improve cash conversion, unfavorable manufacturing performance including inflation, and higher affiliate expenses.

Elanco Animal Health announced that restructuring impacted approximately 420 personnel and will result in a charge to 2024 reported results of $50 million-$55 million and generating approximately $30 million-$35 million in annualized savings.

Guidance: Elanco Animal Health forecasts fiscal year 2024 sales of $4.45 billion-$4.54 billion versus the consensus of $4.51 billion and adjusted EPS of $0.87-$0.95 versus the consensus of $0.89.

Elanco Animal Health expects first-quarter 2024 sales of $1.16 billion-$1.185 billion versus the consensus of $1.22 billion, with adjusted EPS guidance of $0.25-$0.28 versus the consensus of $0.30.

“As we look at 2024, we expect our existing portfolio to deliver constant currency revenue growth of 1% to 3%, with both pet health and farm animal expected to contribute to growth,” said Jeff Simmons, President and CEO.

Price Action: ELAN shares are down 0.58% at $16.28 on the last check Monday.

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