PARSIPPANY, N.J.--(BUSINESS WIRE)--Zoetis Inc. (NYSE: ZTS) today reported its financial results for the fourth quarter and full year 2019 and provided full year guidance for 2020.

The company reported revenue of $1.7 billion for the fourth quarter of 2019, which was an increase of 7% compared with the fourth quarter of 2018. Net income for the fourth quarter of 2019 was $384 million, or $0.80 per diluted share, compared with $345 million, or $0.71 per diluted share, in the fourth quarter of 2018.

Adjusted net income1 for the fourth quarter of 2019 was $440 million, or $0.92 per diluted share, an increase of 15% and 16%, respectively. Adjusted net income for the fourth quarter of 2019 excludes the net impact of $56 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational2 basis, revenue for the fourth quarter of 2019, excluding the impact of foreign exchange, increased 9% compared with the fourth quarter of 2018. Adjusted net income for the fourth quarter of 2019 increased 13% operationally, excluding the impact of foreign exchange.

For full year 2019, the company reported revenue of $6.3 billion, an increase of 7% compared with full year 2018. Net income for full year 2019 was $1.5 billion, or $3.11 per diluted share, an increase of 5% and 6%, respectively.

Adjusted net incomefor full year 2019 was $1.8 billion, or $3.64 per diluted share, an increase of 15% and 16%, respectively. Adjusted net income for full year 2019 excludes the net impact of $255 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational basis, revenue for full year 2019 increased 10%, excluding the impact of foreign exchange. Adjusted net income for full year 2019 increased 14% operationally, excluding the impact of foreign exchange.

EXECUTIVE COMMENTARY

“In 2019, Zoetis delivered another year of strong growth and market leadership thanks to our diverse and durable portfolio and commitment to continuous innovation,” said Kristin Peck, Chief Executive Officer of Zoetis. “We grew revenue 10% operationally, which is once again above market growth in a competitive, global sector. We also grew our adjusted net income faster than revenue, at 14% operationally, continuing to achieve our goal of growing profitability faster than revenue over the long term.”

“Looking ahead in 2020, we are excited about the launch of Simparica® Trio, our new triple combination parasiticide for dogs, and we will be heavily focused on bringing this key innovation to customers around the world,” said Peck. “Additionally, we will continue to advance our pipeline with innovations in parasiticides, monoclonal antibodies and vaccines; support our latest product launches and lifecycle innovations across the portfolio; and invest in newer growth areas for us such as diagnostics, digital and data analytics. For full year 2020, we expect operational growth of 7% to 9.5% in revenue and 8% to 11% in adjusted net income. As the new CEO of Zoetis, I look forward to carrying on the company’s successful formula of customer focus, innovation and execution, as we continue to deliver on our long-term value proposition to shareholders.”

QUARTERLY HIGHLIGHTS

Zoetis organizes and manages its commercial operations across two regional segments: the United States (U.S.) and International. Within these segments, the company delivers a diverse portfolio of products for companion animals and livestock tailored to local trends and customer needs. In the fourth quarter of 2019:

• Revenue in the U.S. segment was $861 million, an increase of 6% compared with the fourth quarter of 2018. Sales of companion animal products increased 15% driven primarily by growth in our key dermatology portfolio across both the Apoquel® and Cytopoint® brands. Additionally, companion animal sales benefited from the recent acquisition of Platinum Performance and its nutritional product formulas. Increased sales of parasiticides, including ProHeart® 12 and Simparica®, also significantly contributed to growth in the quarter. Sales of livestock products declined 3% in the quarter. This decline was the result of continued weakness in both the beef and dairy cattle sectors which more than offset double digit growth in poultry and swine. Growth in poultry was driven primarily by increased sales of Zoamix®, an alternative to antibiotics in medicated feed additives, while growth in swine was the result of increased sales of medicated feed additives and vaccines.

• Revenue in the International segment was $791 million, an increase of 9% on a reported basis and an increase of 12% operationally compared with the fourth quarter of 2018. Sales of companion animal products grew 23% on a reported basis and 26% on an operational basis. Growth resulted primarily from increased sales across our key dermatology portfolio and in certain parasiticides, including Simparica and the Revolution®/Stronghold® franchise, as well as growth across key markets in Western Europe and in China. New diagnostics accounts in the UK and emerging markets also contributed to growth. Sales of livestock products grew 2% on a reported basis and 5% operationally. Growth in our cattle portfolio was driven by favorable conditions in key markets, including Australia, Germany and Mexico, as well as other smaller developed markets. Alpha Flux®, a recently launched parasiticide that controls sea lice in salmon, was the primary driver of growth in fish, while promotional activities across Russia, India and Brazil drove growth in poultry. Sales of swine products declined as a result of the ongoing impact of African Swine Fever in China and other smaller markets in Southeast Asia.

INVESTMENTS IN GROWTH

Zoetis diversifies and grows its business through the introduction of new products, lifecycle innovations, business development initiatives, and entries into new markets and technologies. The company is increasingly focused on developing integrated solutions for pet owners, veterinarians and farmers that span the continuum of animal care - helping to predict, prevent, detect and treat diseases.

Since our last quarterly earnings announcement, Zoetis has continued to expand its reference laboratory capabilities in the U.S. with the acquisitions of Phoenix Lab and ZNLabs in November 2019 and Ethos Diagnostic Science this month. This builds on the company’s strategy to develop a more comprehensive diagnostics offering with enhanced value for veterinarians.

Zoetis also received approval for Rimadyl® (carprofen) for dogs in China, one of the fastest growing companion animal markets in the world. This product, approved in both chewable and injectable formulations, is indicated for the relief of pain and inflammation associated with osteoarthritis (chewables), and for the control of postoperative pain associated with soft tissue and orthopedic surgeries (injectable). It was first approved in the UK in 1993, and is an example of the product durability and longevity generated by the company’s focus on lifecycle innovation and geographic expansion.

FINANCIAL GUIDANCE

Zoetis is providing full year 2020 guidance, which includes:

• Revenue between $6.650 billion to $6.800 billion
• Reported diluted EPS between $3.53 to $3.65
• Adjusted diluted EPS between $3.90 to $4.00

This guidance reflects foreign exchange rates as of late January. Additional details on guidance are included in the financial tables and will be discussed on the company's conference call this morning.

About Zoetis

Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and precision livestock farming. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2019, the company generated annual revenue of $6.3 billion with approximately 10,600 employees. For more information, visit www.zoetis.com.