Zoetis Q1 Earnings Review

Zoetis reported results on 5/2 before the market opened. The company’s growth has been accelerating and all spotlights are currently placed on Librela. In this article, I’ll go over Zoetis financial performance, management commentary, and outlook. At the end, I will share my take on the quarter and what I’m doing with the position in the portfolio I manage.

The business generated 2.19 billion dollars in revenue, representing an increase of 9.5% YoY. Growth has been accelerating and staying in the range provided in the 2023 Investor Day. In that event, management guided for mid to high single-digit growth over the coming 3-5 years.

During the quarter, Zoetis had gross profit of 1.54bn, implying a margin of 70.6%, which was flat YoY. The company reported 801M in operating income, with a 36.6% margin, slightly expanding yearly. Lastly, Zoetis generated 599M in net income, whose margin stood at 27.4%, down 20bps.

Zoetis’ operating cash flow has been under some pressure due to building up inventory as well as investments destined for manufacturing capacity. In the quarter, cash from operating activities was 595M dollars, up from 549M last year. CapEx amounted to 140M.

The company returned a total of 537M dollars to shareholders. Management repurchased 339M dollars’ worth of stock, at an average price of $186.45 per share. In the past year, 1.1% of common shares were retired. At the same time, 198M were paid in the form of dividends, implying a $0.43 quarterly dividend per share, up from $0.375 last year.

Zoetis derives revenue from two main animal groups…