Pyrantel Pamoate

PARSIPPANY, N.J.--( BUSINESS WIRE )-- Zoetis Inc . (NYSE: ZTS) today reported its financial results for the fourth quarter and full year 2023 as well as provided full year guidance for 2024. The company reported revenue of $2.2 billion for the fourth quarter of 2023, which was an increase of 8% compared with the fourth quarter of 2022, on both a reported and operational 1 basis. Net income for the fourth quarter of 2023 was $525 million, or $1.14 per diluted share, an increase of 14% and 15%, respectively, on a reported basis. Adjusted net income 2 for the fourth quarter of 2023 was $569 million, or $1.24 per diluted share, an increase of 6% and 8%, respectively, on a reported and operational basis. Adjusted net income for the fourth quarter of 2023 excludes the net impact of $44 million for purchase accounting adjustments, acquisition-related costs and certain significant items. For full year 2023, the company reported revenue of $8.5 billion, an increase of 6% compared with full year 2022. On an operational basis, revenue for full year 2023 increased 7%, excluding the impact of foreign currency. Net income for full year 2023 was $2.3 billion, or $5.07 per diluted share, an increase of 11% and 13%, respectively, on a reported basis. Adjusted net income for full year 2023 was $2.5 billion, or $5.32 per diluted share, an increase of 7% and 9%, respectively, on a reported and operational basis. Adjusted net income for full year 2023 excludes the net impact of $113 million for purchase accounting adjustments, acquisition-related costs and certain significant items. EXECUTIVE COMMENTARY “ Zoetis delivered another strong performance in 2023 thanks to our diverse portfolio across markets and species and our dedicated colleagues,” said Kristin Peck, Chief Executive Officer of Zoetis. “ We grew revenue 7% operationally, driven by our innovative companion animal franchises across pain, dermatology and parasiticides. We also grew our adjusted net income 7% operationally, while continuing to support investments in R&D, supply chain, and commercial excellence capabilities that will drive our next phase of growth.” “ We are excited by the momentum of Librela in the U.S. and around the world as we work to build our next billion-dollar franchise. In addition to OA pain, we are well-positioned for growth in our other key franchises, including dermatology, parasiticides and diagnostics, and will continue to invest in solutions that will shape and expand the future of animal health. We are committed to continuing our track record of innovation and growing faster than the market, even during times of global uncertainty, and are guiding to full-year operational growth of 7% to 9% in revenue in 2024,” said Peck. QUARTERLY HIGHLIGHTS Zoetis organizes and manages its commercial operations across two regional segments: 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 2023: Revenue in the U.S. segment was $1.2 billion, an increase of 9% compared with the fourth quarter of 2022. Sales of companion animal products increased 10%, driven by the company’s monoclonal antibody (mAb) products for osteoarthritis (OA) pain, Librela ™ for dogs and Solensia ® for cats, as well as the company's flea, tick and heartworm combination product for dogs, Simparica Trio ® . Also contributing to growth in the quarter was the company's dermatology portfolio, including Apoquel ® and Cytopoint ® . Sales of livestock products increased 4% in the quarter. Growth in the poultry product portfolio was the result of favorable rotations back to certain medicated feed additives (MFAs) and the expanded use of Zoamix ® . Sales of both swine and cattle products increased in the quarter, primarily as a result of increased supply of vaccines that were limited in the same quarter the year prior. Revenue in the International segment was $982 million, reflecting a 9% increase on a reported basis and an increase of 8% operationally compared with the fourth quarter of 2022. Sales of companion animal products grew 13% on a reported basis and 10% operationally. Growth in the quarter was driven by the company’s monoclonal antibody products for OA pain, Librela for dogs and Solensia for cats, as well as key dermatology products, Apoquel and Cytopoint. Also contributing to growth in the quarter were Simparica ® and Simparica Trio. Sales of livestock products increased 5% on a reported basis and 7% operationally. Growth in both the company’s cattle and poultry product portfolios were driven largely by price increases across the broader international segment. The fish product portfolio grew as a result of a new vaccine launch in Norway. Sales in the sheep product portfolio declined due to unfavorable market conditions in Australia and New Zealand, while sales in the swine product portfolio decreased in China primarily due to unfavorable market conditions and a difficult comparative period versus the same quarter of the prior year. INVESTMENTS IN GROWTH Zoetis continues to advance innovation and care for animals across the globe. Since its last quarterly earnings announcement, Solensia (frunevetmab injection), the first injectable monoclonal antibody for the alleviation of pain associated with osteoarthritis in cats, received approval in Brazil. Additionally, Simparica Trio (sarolaner/moxidectin/pyrantel), the company’s triple combination oral parasiticide for dogs, was approved in China. The company expanded its Vetscan Imagyst ™ diagnostics platform in the U.S. to include new applications for artificial intelligence (AI) urine sediment analysis for dogs and cats. On the livestock side of the business, Zoetis received approval in Mexico for Poulvac ® Procerta ® HVT-IBD-ND , a part of the company’s recombinant vector vaccine portfolio for poultry, which provides early, robust protection against Marek’s, infectious bursal and Newcastle disease viruses with one dose. Poulvac Procerta HVT-IBD , which provides protection against Marek’s and infectious bursal viruses, was approved in the EU. Zoetis also continues to grow key product franchises through additional claim extensions in major markets. In the fourth quarter, Simparica Trio received approval in Japan for claims related to efficacy against sarcoptic and demodectic manges. Revolution ® Plus (selamectin/sarolaner), the company’s topical combination product that treats ticks, fleas, ear mites, lice and gastrointestinal worms and prevents heartworm disease in cats, received approval in the U.S. for claims related to the treatment and control of lone star tick infestations, making it the only parasiticide for cats on the market to defend against four types of ticks. FINANCIAL GUIDANCE Zoetis is providing full year 2024 guidance, which includes: Revenue between $9.075 billion to $9.225 billion ( operational growth of 7% to 9%) Reported net income between $2.468 billion to $2.513 billion Adjusted net income between $2.650 billion to $2.700 billion ( operational growth of 9% to 11%) Reported diluted EPS between $5.34 to $5.44 Adjusted diluted EPS between $5.74 to $5.84 This guidance reflects foreign exchange rates as of late January 2024. Additional details on guidance are included in the financial tables and will be discussed on the company's conference call this morning. WEBCAST & CONFERENCE CALL DETAILS Zoetis will host a webcast and conference call at 8:30 a.m. (ET) today, during which company executives will review fourth quarter and full year 2023 results, discuss financial guidance and respond to questions from financial analysts. Investors and the public may access the live webcast by visiting the Zoetis website at http://investor.zoetis.com/events-presentations . A replay of the webcast will be archived and made available on February 13, 2024. About Zoetis As the world’s leading animal health company, Zoetis is driven by a singular purpose: to nurture our world and humankind by advancing care for animals. After innovating ways to predict, prevent, detect, and treat animal illness for more than 70 years, Zoetis continues to stand by those raising and caring for animals worldwide – from veterinarians and pet owners to livestock farmers and ranchers. The company’s leading portfolio and pipeline of medicines, vaccines, diagnostics and technologies make a difference in over 100 countries. A Fortune 500 company, Zoetis generated revenue of $8.5 billion in 2023 with approximately 14,100 employees. For more information, visit www.zoetis.com . 1 Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. 2 Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as reported net income and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. DISCLOSURE NOTICES Forward-Looking Statements : This press release contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospects, future operating or financial performance, future guidance, future operating models; R&D costs; timing and likelihood of success; expectations regarding products, product approvals or products under development and expected timing of product launches; disruptions in our global supply chain; expectations regarding the performance of acquired companies and our ability to integrate new businesses; expectations regarding the financial impact of acquisitions; future use of cash, dividend payments and share repurchases; tax rates and tax regimes and any changes thereto; and other future events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management's underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our most recent Annual Report on Form 10-K, including in the sections thereof captioned “ Forward-Looking Statements and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. These filings and subsequent filings are available online at www.sec.gov , www.zoetis.com , or on request from Zoetis. Use of Non-GAAP Financial Measures: We use non-GAAP financial measures, such as adjusted net income, adjusted diluted earnings per share and operational results (which exclude the impact of foreign exchange), to assess and analyze our results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this press release should not be considered alternatives to measurements required by GAAP, such as net income, operating income, and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliations of non-GAAP financial measures and the most directly comparable GAAP financial measures are included in the tables accompanying this press release and are posted on our website at www.zoetis.com . Internet Posting of Information: We routinely post information that may be important to investors on the 'Investor Relations' section of our website at www.zoetis.com , as well as on LinkedIn, Facebook, X (formerly Twitter) and YouTube. We encourage investors and potential investors to consult our website regularly and to follow us on social media for company news and information. ZTS-COR ZTS-IR ZTS-FIN ZOETIS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a) (UNAUDITED) (millions of dollars, except per share data) Three Months Ended December 31, % Change Twelve Months Ended December 31, % Change 2023 2022 2023 2022 Revenue $ 2,213 $ 2,040 8 $ 8,544 $ 8,080 6 Costs and expenses: Cost of sales 728 653 11 2,561 2,454 4 Selling, general and administrative expenses 565 514 10 2,151 2,009 7 Research and development expenses 174 148 18 614 539 14 Amortization of intangible assets 37 35 6 149 150 (1 ) Restructuring charges and certain acquisition-related costs 8 2 * 53 11 * Interest expense 59 62 (5 ) 239 221 8 Other (income)/deductions–net (8 ) 34 * (159 ) 40 * Income before provision for taxes on income 650 592 10 2,936 2,656 11 Provision for taxes on income 127 132 (4 ) 596 545 9 Net income before allocation to noncontrolling interests 523 460 14 2,340 2,111 11 Less: Net loss attributable to noncontrolling interests (2 ) (1 ) * (4 ) (3 ) 33 Net income attributable to Zoetis $ 525 $ 461 14 $ 2,344 $ 2,114 11 Earnings per share—basic $ 1.14 $ 0.99 15 $ 5.08 $ 4.51 13 Earnings per share—diluted $ 1.14 $ 0.99 15 $ 5.07 $ 4.49 13 Weighted-average shares used to calculate earnings per share Basic 459.0 465.6 461.2 468.9 Diluted 460.1 466.8 462.3 470.4 (a) The Condensed Consolidated Statements of Income present the three and twelve months ended December 31, 2023 and 2022. Subsidiaries operating outside the U.S. are included for the three and twelve months ended November 30, 2023 and 2022. * Calculation not meaningful. ZOETIS INC. RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS (UNAUDITED) (millions of dollars, except per share data) Three Months Ended December 31, 2023 GAAP Reported (a) Purchase Accounting Adjustments Acquisition- Related Costs (1) Certain Significant Items (2) Non-GAAP Adjusted (b) Cost of sales $ 728 $ — $ — $ (1 ) $ 727 Gross profit 1,485 — — 1 1,486 Selling, general and administrative expenses 565 (3 ) — — 562 Research and development expenses 174 — — — 174 Amortization of intangible assets 37 (32 ) — — 5 Restructuring charges and certain acquisition-related costs 8 — (1 ) (7 ) — Other (income)/deductions–net (8 ) — — (4 ) (12 ) Income before provision for taxes on income 650 35 1 12 698 Provision for taxes on income 127 6 1 (3 ) 131 Net income attributable to Zoetis 525 29 — 15 569 Earnings per common share attributable to Zoetis–diluted 1.14 0.07 — 0.03 1.24 Three Months Ended December 31, 2022 GAAP Reported (a) Purchase Accounting Adjustments Acquisition- Related Costs (1) Certain Significant Items (2) Non-GAAP Adjusted (b) Cost of sales $ 653 $ (3 ) $ — $ — $ 650 Gross profit 1,387 3 — — 1,390 Selling, general and administrative expenses 514 (7 ) — — 507 Research and development expenses 148 (1 ) — — 147 Amortization of intangible assets 35 (29 ) — — 6 Restructuring charges and certain acquisition-related costs 2 — (1 ) (1 ) — Other (income)/deductions–net 34 — — (45 ) (11 ) Income before provision for taxes on income 592 40 1 46 679 Provision for taxes on income 132 12 — (3 ) 141 Net income attributable to Zoetis 461 28 1 49 539 Earnings per common share attributable to Zoetis–diluted 0.99 0.06 — 0.10 1.15 (a) The Condensed Consolidated Statements of Income present the three months ended December 31, 2023 and 2022. Subsidiaries operating outside the U.S. are included for the three months ended November 30, 2023 and 2022. (b) Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2). ZOETIS INC. RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS (UNAUDITED) (millions of dollars, except per share data) Twelve Months Ended December 31, 2023 GAAP Reported (a) Purchase Accounting Adjustments Acquisition- Related Costs (1) Certain Significant Items (2) Non-GAAP Adjusted (b) Cost of sales $ 2,561 $ (10 ) $ — $ (3 ) $ 2,548 Gross profit 5,983 10 — 3 5,996 Selling, general and administrative expenses 2,151 (21 ) — — 2,130 Research and development expenses 614 (1 ) — — 613 Amortization of intangible assets 149 (127 ) — — 22 Restructuring charges and certain acquisition-related costs 53 — (9 ) (44 ) — Other (income)/deductions–net (159 ) — — 80 (79 ) Income before provision for taxes on income 2,936 159 9 (33 ) 3,071 Provision for taxes on income 596 32 2 (12 ) 618 Net income attributable to Zoetis 2,344 127 7 (21 ) 2,457 Earnings per common share attributable to Zoetis–diluted 5.07 0.28 0.02 (0.05 ) 5.32 Twelve Months Ended December 31, 2022 GAAP Reported (a) Purchase Accounting Adjustments Acquisition- Related Costs (1) Certain Significant Items (2) Non-GAAP Adjusted (b) Cost of sales $ 2,454 $ (6 ) $ — $ (8 ) $ 2,440 Gross profit 5,626 6 — 8 5,640 Selling, general and administrative expenses 2,009 (29 ) — — 1,980 Research and development expenses 539 (1 ) — — 538 Amortization of intangible assets 150 (124 ) — — 26 Restructuring charges and certain acquisition-related costs 11 — (5 ) (6 ) — Other (income)/deductions–net 40 — — (42 ) (2 ) Income before provision for taxes on income 2,656 160 5 56 2,877 Provision for taxes on income 545 40 1 (3 ) 583 Net income attributable to Zoetis 2,114 120 4 59 2,297 Earnings per common share attributable to Zoetis–diluted 4.49 0.26 0.01 0.12 4.88 (a) The Condensed Consolidated Statements of Income present the twelve months ended December 31, 2023 and 2022. Subsidiaries operating outside the U.S. are included for the twelve months ended November 30, 2023 and 2022. (b) Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2). ZOETIS INC. NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS (UNAUDITED) (millions of dollars) (1) Acquisition-related costs include the following: Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Transaction costs (a) $ — $ 1 $ 4 $ 1 Integration costs (b) — — 3 4 Restructuring charges (c) 1 — 2 — Total acquisition-related costs—pre-tax 1 1 9 5 Income taxes (d) 1 — 2 1 Total acquisition-related costs—net of tax $ — $ 1 $ 7 $ 4 (a) Transaction costs represent external costs directly related to acquiring businesses and primarily includes expenditures for banking, legal, accounting and other similar services. Included in Restructuring charges and certain acquisition-related costs . (b) Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes. Included in Restructuring charges and certain acquisition-related costs . (c) Restructuring charges represent employee termination costs, included in Restructuring charges and certain acquisition-related costs. (d) Included in Provision for taxes on income . Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. (2) Certain significant items include the following: Three Months Ended December 31, Twelve Months Ended December 31, 2023 2022 2023 2022 Other restructuring charges and cost-reduction/productivity initiatives (a) $ 8 $ 1 $ 44 $ 8 Certain asset impairment charges (b) 3 41 24 47 Net gain on sale of businesses (c) — — (101 ) — Other 1 4 — 1 Total certain significant items—pre-tax 12 46 (33 ) 56 Income taxes (d) (3 ) (3 ) (12 ) (3 ) Total certain significant items—net of tax $ 15 $ 49 $ (21 ) $ 59 (a) For the three and twelve months ended December 31, 2023, primarily represents employee termination and exit costs related to organizational structure refinements and other cost-reduction and productivity initiatives, primarily included in Restructuring charges and certain acquisition-related costs. For the twelve months ended December 31, 2022, primarily represents employee termination and exit costs associated with cost-reduction and productivity initiatives in certain international markets, included in Restructuring charges and certain acquisition-related costs , as well as product transfer costs, included in Cost of sales. (b) For the twelve months ended December 31, 2023, primarily represents certain asset impairment charges related to our precision animal health and diagnostics businesses, primarily included in Other (income)/deductions–net . For the three and twelve months ended December 31, 2022, primarily represents asset impairment charges related to customer relationships, developed technology rights and property, plant and equipment in our diagnostics, poultry, cattle and swine businesses, included in Other (income)/deductions-net. (c) Primarily represents a net gain on the sale of a majority interest in our pet insurance business, included in Other (income)/deductions–net . (d) Included in Provision for taxes on income . Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. Income taxes in Certain significant items also includes: For the three and twelve months ended December 31, 2023, includes a tax expense related to changes to prior years' tax positions with regard to the one-time mandatory deemed repatriation tax under the Tax Cuts and Jobs Act. For the twelve months ended December 31, 2023, also includes a benefit from the tax loss on the divestiture of Performance Livestock Analytics. For the three and twelve months ended December 31, 2022, includes a tax charge related to changes in uncertain tax positions. For the twelve months ended December 31, 2022, also includes a tax charge related to changes in valuation allowances related to impairment of certain assets. ZOETIS INC. ADJUSTED SELECTED COSTS AND EXPENSES (a) (UNAUDITED) (millions of dollars) Three Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) Adjusted cost of sales $ 727 $ 650 12 % 3 % 9 % As a percent of revenue 32.9 % 31.9 % NA NA NA Adjusted SG&A expenses 562 507 11 % 1 % 10 % Adjusted R&D expenses 174 147 18 % 1 % 17 % Adjusted net income attributable to Zoetis 569 539 6 % — % 6 % Twelve Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) Adjusted cost of sales $ 2,548 $ 2,440 4 % (4 )% 8 % As a percent of revenue 29.8 % 30.2 % NA NA NA Adjusted SG&A expenses 2,130 1,980 8 % (1 )% 9 % Adjusted R&D expenses 613 538 14 % — % 14 % Adjusted net income attributable to Zoetis 2,457 2,297 7 % — % 7 % (a) Adjusted cost of sales, adjusted selling, general, and administrative (SG&A) expenses, adjusted research and development (R&D) expenses, and adjusted net income (non-GAAP financial measures) are defined as the corresponding reported U.S. GAAP income statement line items excluding purchase accounting adjustments, acquisition-related costs, and certain significant items. These adjusted income statement line item measures are not, and should not be viewed as, substitutes for the corresponding U.S. GAAP line items. The corresponding GAAP line items and reconciliations of reported to adjusted information are provided in Condensed Consolidated Statements of Income and Reconciliation of GAAP Reported to Non-GAAP Adjusted Information. (b) Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. ZOETIS INC. 2024 GUIDANCE Selected Line Items (millions of dollars, except per share amounts) Full Year 2024 Revenue $9,075 to $9,225 Operational growth (a) 7% to 9% Adjusted cost of sales as a percentage of revenue (b) Approximately 29.5% Adjusted SG&A expenses (b) $2,170 to $2,220 Adjusted R&D expenses (b) $665 to $675 Adjusted interest expense and other (income)/deductions-net (b) Approximately $210 Effective tax rate on adjusted income (b) 20.0% to 21.0% Adjusted diluted EPS (b) $5.74 to $5.84 Adjusted net income (b) $2,650 to $2,700 Operational growth (a)(c) 9% to 11% Certain significant items and acquisition-related costs (d) $70 - $75 The guidance reflects foreign exchange rates as of late January 2024. Reconciliations of 2024 reported guidance to 2024 adjusted guidance follows: (millions of dollars, except per share amounts) Reported Certain significant items and acquisition-related costs (d) Purchase accounting Adjusted (b) Cost of sales as a percentage of revenue ~ 29.6% ~ (0.1%) ~ 29.5% SG&A expenses $2,191 to $2,241 ~ $(21) $2,170 to $2,220 R&D expenses $666 to $676 ~ $(1) $665 to $675 Interest expense and other (income)/deductions ~ $240 ~ $30 ~ $270 Effective tax rate 20.0% to 21.0% 20.0% to 21.0% Diluted EPS $5.34 to $5.44 ~ $0.16 ~ $0.24 $5.74 to $5.84 Net income attributable to Zoetis $2,468 to $2,513 $70 - $75 ~ $112 $2,650 to $2,700 (a) Operational growth (a non-GAAP financial measure) excludes the impact of foreign exchange. (b) Adjusted net income and its components and adjusted diluted EPS are defined as reported U.S. GAAP net income and its components and reported diluted EPS excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted cost of sales, adjusted SG&A expenses, adjusted R&D expenses, and adjusted interest expense and other (income)/deductions-net are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. Despite the importance of these measures to management in goal setting and performance measurement, adjusted net income and its components and adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, adjusted net income and its components and adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Adjusted net income and its components and adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. Adjusted net income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. (c) We do not provide a reconciliation of forward-looking non-GAAP adjusted net income operational growth to the most directly comparable U.S. GAAP reported financial measure because we are unable to calculate with reasonable certainty the foreign exchange impact of unusual gains and losses, acquisition-related expenses, potential future asset impairments and other certain significant items, without unreasonable effort. The foreign exchange impacts of these items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period. (d) Primarily includes certain nonrecurring costs related to acquisitions and other charges. ZOETIS INC. CONSOLIDATED REVENUE BY SEGMENT (a) AND SPECIES (UNAUDITED) (millions of dollars) Three Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) Revenue: Companion Animal $ 1,448 $ 1,303 1 % 1 % 10 % Livestock 745 710 5 % (1 )% 6 % Contract Manufacturing & Human Health 20 27 (26 )% 1 % (27 )% Total Revenue $ 2,213 $ 2,040 8 % — % 8 % U.S. Companion Animal $ 941 $ 853 10 % — % 10 % Livestock 270 259 4 % — % 4 % Total U.S. Revenue $ 1,211 $ 1,112 9 % — % 9 % International Companion Animal $ 507 $ 450 13 % 3 % 10 % Livestock 475 451 5 % (2 )% 7 % Total International Revenue $ 982 $ 901 9 % 1 % 8 % Companion Animal: Dogs and Cats $ 1,360 $ 1,224 11 % 1 % 10 % Horses 88 79 11 % — % 11 % Total Companion Animal Revenue $ 1,448 $ 1,303 11 % 1 % 10 % Livestock: Cattle $ 401 $ 377 6 % (1 )% 7 % Swine 139 138 1 % 1 % — % Poultry 127 115 10 % (3 )% 13 % Fish 62 61 2 % (3 )% 5 % Sheep and other 16 19 (16 )% 1 % (17 )% Total Livestock Revenue $ 745 $ 710 5 % (1 )% 6 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. ZOETIS INC. CONSOLIDATED REVENUE BY SEGMENT (a) AND SPECIES (UNAUDITED) (millions of dollars) Twelve Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) Revenue: Companion Animal $ 5,576 $ 5,203 7 % (1 )% 8 % Livestock 2,890 2,791 4 % (2 )% 6 % Contract Manufacturing & Human Health 78 86 (9 )% 1 % (10 )% Total Revenue $ 8,544 $ 8,080 6 % (1 )% 7 % U.S. Companion Animal $ 3,529 $ 3,341 6 % — % 6 % Livestock 1,026 972 6 % — % 6 % Total U.S. Revenue $ 4,555 $ 4,313 6 % — % 6 % International Companion Animal $ 2,047 $ 1,862 10 % (2 )% 12 % Livestock 1,864 1,819 2 % (5 )% 7 % Total International Revenue $ 3,911 $ 3,681 6 % (3 )% 9 % Companion Animal: Dogs and Cats $ 5,291 $ 4,939 7 % (1 )% 8 % Horses 285 264 8 % (1 )% 9 % Total Companion Animal Revenue $ 5,576 $ 5,203 7 % (1 )% 8 % Livestock: Cattle $ 1,503 $ 1,440 4 % (3 )% 7 % Swine 543 565 (4 )% (2 )% (2 )% Poultry 524 476 10 % (3 )% 13 % Fish 220 212 4 % (4 )% 8 % Sheep and other 100 98 2 % (6 )% 8 % Total Livestock Revenue $ 2,890 $ 2,791 4 % (2 )% 6 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. ZOETIS INC. CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS (UNAUDITED) (millions of dollars) Three Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (a) Total International $ 982.1 $ 901.3 9 % 1 % 8 % Australia 75.0 64.2 17 % (2 )% 19 % Brazil 117.2 96.2 22 % 7 % 15 % Canada 71.1 65.2 9 % (2 )% 11 % Chile 31.4 34.8 (10 )% 1 % (11 )% China 64.7 91.4 (29 )% (1 )% (28 )% France 40.5 35.1 15 % 8 % 7 % Germany 54.1 44.0 23 % 8 % 15 % Italy 33.9 25.6 32 % 9 % 23 % Japan 38.0 36.1 5 % (4 )% 9 % Mexico 43.3 35.6 22 % 14 % 8 % Spain 27.3 21.3 28 % 9 % 19 % United Kingdom 67.9 60.3 13 % 9 % 4 % Other Developed 138.3 114.6 21 % 4 % 17 % Other Emerging 179.4 176.9 1 % (13 )% 14 % Twelve Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (a) Total International $ 3,911.2 $ 3,680.8 6 % (3 )% 9 % Australia 322.7 288.7 12 % (5 )% 17 % Brazil 392.7 329.5 19 % 4 % 15 % Canada 254.6 237.5 7 % (5 )% 12 % Chile 140.2 141.1 (1 )% 1 % (2 )% China 320.0 382.4 (16 )% (5 )% (11 )% France 142.4 126.1 13 % 2 % 11 % Germany 202.4 176.3 15 % 3 % 12 % Italy 120.8 111.2 9 % 3 % 6 % Japan 157.9 173.1 (9 )% (8 )% (1 )% Mexico 162.4 136.2 19 % 13 % 6 % Spain 121.6 117.8 3 % 1 % 2 % United Kingdom 277.0 234.5 18 % (1 )% 19 % Other Developed 512.2 468.4 9 % (2 )% 11 % Other Emerging 784.3 758.0 3 % (13 )% 16 % (a) Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. ZOETIS INC. SEGMENT (a) EARNINGS (UNAUDITED) (millions of dollars) Three Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) U.S.: Revenue $ 1,211 $ 1,112 9 % — % 9 % Cost of sales 255 216 18 % — % 18 % Gross profit 956 896 7 % — % 7 % Gross margin 78.9 % 80.6 % Operating expenses 184 187 (2 )% — % (2 )% Other (income)/deductions-net 6 (12 ) * * * U.S. Earnings $ 766 $ 721 6 % — % 6 % International: Revenue $ 982 $ 901 9 % 1 % 8 % Cost of sales 322 274 18 % 1 % 17 % Gross profit 660 627 5 % — % 5 % Gross margin 67.2 % 69.6 % Operating expenses 165 155 6 % 1 % 5 % Other (income)/deductions-net 1 2 * * * International Earnings $ 494 $ 470 5 % — % 5 % Total Reportable Segments $ 1,260 $ 1,191 6 % — % 6 % Other business activities (c) (142 ) (109 ) 30 % Reconciling Items: Corporate (d) (320 ) (302 ) 6 % Purchase accounting adjustments (e) (35 ) (40 ) (13 )% Acquisition-related costs (f) (1 ) (1 ) — % Certain significant items (g) (12 ) (46 ) (74 )% Other unallocated (h) (100 ) (101 ) (1 )% Total Earnings (i) $ 650 $ 592 10 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. (c) Other business activities reflect the research and development costs managed by our research and development organization, as well as our contract manufacturing business and human health business. (d) Corporate includes, among other things, certain costs associated with information technology, administration expenses, interest income and expense, certain compensation costs and other costs not charged to our operating segments. (e) Purchase accounting adjustments include certain charges related to the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment not charged to our operating segments. (f) Acquisition-related costs include costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs. (g) Certain significant items includes substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include certain asset impairment charges, restructuring charges and implementation costs associated with cost-reduction/productivity initiatives that are not associated with an acquisition and the impact of divestiture-related gains and losses. (h) Includes overhead expenses associated with our global manufacturing and supply operations not directly attributable to an operating segment, as well as certain procurement costs. (i) Defined as income before provision for taxes on income. * Calculation not meaningful. ZOETIS INC. SEGMENT (a) EARNINGS (UNAUDITED) (millions of dollars) Twelve Months Ended December 31, % Change 2023 2022 Total Foreign Exchange Operational (b) U.S.: Revenue $ 4,555 $ 4,313 6 % — % 6 % Cost of sales 900 803 12 % — % 12 % Gross profit 3,655 3,510 4 % — % 4 % Gross margin 80.2 % 81.4 % Operating expenses 786 765 3 % — % 3 % Other (income)/deductions-net 6 (18 ) * * * U.S. Earnings $ 2,863 $ 2,763 4 % — % 4 % International: Revenue $ 3,911 $ 3,681 6 % (3 )% 9 % Cost of sales 1,234 1,083 14 % (5 )% 19 % Gross profit 2,677 2,598 3 % (2 )% 5 % Gross margin 68.4 % 70.6 % Operating expenses 638 611 4 % (4 )% 8 % Other (income)/deductions-net 2 (3 ) * * * International Earnings $ 2,037 $ 1,990 2 % (2 )% 4 % Total Reportable Segments $ 4,900 $ 4,753 3 % (1 )% 4 % Other business activities (c) (496 ) (424 ) 17 % Reconciling Items: Corporate (d) (1,042 ) (1,073 ) (3 )% Purchase accounting adjustments (e) (159 ) (160 ) (1 )% Acquisition-related costs (f) (9 ) (5 ) 80 % Certain significant items (g) 33 (56 ) * Other unallocated (h) (291 ) (379 ) (23 )% Total Earnings (i) $ 2,936 $ 2,656 11 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. (c) Other business activities reflect the research and development costs managed by our research and development organization, as well as our contract manufacturing business and human health business. (d) Corporate includes, among other things, certain costs associated with information technology, administration expenses, interest income and expense, certain compensation costs and other costs not charged to our operating segments. (e) Purchase accounting adjustments include certain charges related to the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment not charged to our operating segments. (f) Acquisition-related costs include costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs. (g) Certain significant items includes substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include certain asset impairment charges, restructuring charges and implementation costs associated with cost-reduction/productivity initiatives that are not associated with an acquisition and the impact of divestiture-related gains and losses. (h) Includes overhead expenses associated with our global manufacturing and supply operations not directly attributable to an operating segment, as well as certain procurement costs. (i) Defined as income before provision for taxes on income. * Calculation not meaningful.

Reports Revenue of $2.0 Billion, Growing 1%, and Net Income of $552 Million, or $1.19 per Diluted Share, Decreasing 7% and 6%, Respectively, on a Reported Basis for First Quarter 2023 Delivers 4% Operational Growth in Revenue and a 3% Operational Decline in Adjusted Net Income for First Quarter 2023 Reports Adjusted Net Income of $607 Million, or Adjusted Diluted EPS of $1.31, for First Quarter 2023 Maintains Full Year 2023 Revenue Guidance of $8.575 - $8.725 Billion, with Diluted EPS of $5.03 to $5.14 on a Reported Basis, or $5.34 to $5.44 on an Adjusted Basis Maintains Full-Year Operational Revenue Growth of 6% to 8% and Full-Year Operational Growth in Adjusted Net Income of 7% to 9% PARSIPPANY, N.J.--(BUSINESS WIRE)--Zoetis Inc. (NYSE: ZTS) today reported its financial results for the first quarter of 2023 and maintained its guidance for full year 2023. The company reported revenue of $2.0 billion for the first quarter of 2023, an increase of 1% compared with the first quarter of 2022. On an operational1 basis, revenue for the first quarter of 2023 increased 4% compared with the first quarter of 2022, excluding the impact of foreign currency. Net income for the first quarter of 2023 was $552 million, or $1.19 per diluted share, a decrease of 7% and 6%, respectively, on a reported basis. Adjusted net income2 for the first quarter of 2023 was $607 million, or $1.31 per diluted share, which declined 3% and 1%, respectively, on a reported and operational basis. Adjusted net income for the first quarter of 2023 excludes the net impact of $55 million for purchase accounting adjustments, acquisition-related costs and certain significant items. EXECUTIVE COMMENTARY “Today, we reported solid first-quarter results of 4% operational growth in revenue, as expected, based on our diverse portfolio and strength in international markets,” said Kristin Peck, Chief Executive Officer of Zoetis. “Our International segment led the way, growing revenue 10% operationally, and was partially offset by a decline of 1% in the U.S. Our livestock portfolio drove our results, with 12% operational growth in revenue, while companion animal product revenues were flat operationally. The performance in livestock was based on double-digit operational growth for cattle, poultry, sheep and fish, while our U.S. companion animal portfolio was impacted primarily by short-term effects of distributors de-stocking." “We continue to see strong end-market demand in companion animal channels, based on data from veterinary clinics, retailers and pet owners. While our sales into distributors declined in the quarter, our product sales from distributors out to the veterinary clinics were up approximately 8%3, affirming a healthy petcare market in the U.S." “We are reiterating our full-year guidance for operational growth of 6% to 8% in revenue and 7% to 9% in adjusted net income. Looking ahead, we see positive indicators and strong demand for our animal health products, and we remain committed to delivering strong growth in 2023, based on our market leadership, innovative franchises, and diverse portfolio, while continuing to invest for the future.” QUARTERLY HIGHLIGHTS Zoetis organizes and manages its commercial operations across two segments: 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 first quarter of 2023: Revenue in the U.S. segment was $1.005 billion, a decrease of 1% compared with the first quarter of 2022. Sales of companion animal products decreased 7%, driven by distributor de-stocking across the portfolio as well as higher purchases in the fourth quarter of 2022 ahead of expected price increases and based on promotional activities. Sales of livestock products increased 15% in the quarter. Sales of cattle products increased primarily due to improved supply of key products as well as growth across our beef implant portfolio, benefiting from expanded label approval in re-implanting programs. The company’s poultry portfolio increased due to expanded sales of vaccines despite a challenging economic environment resulting from higher feed costs and the impact of avian influenza on the commercial layer flock. This growth was partially offset by a decrease in sales of swine products in the quarter due to decreased disease prevalence. Revenue in the International segment was $978 million, an increase of 3% on a reported basis and an increase of 10% operationally compared with the first quarter of 2022. Sales of companion animal products grew 3% on a reported basis and 10% operationally. Contributing to growth in the quarter were the company’s monoclonal antibody products for osteoarthritis pain — Librela® for dogs and Solensia® for cats — as well as Simparica Trio®. Also contributing to growth in the quarter was key dermatology product Cytopoint® and feline vaccines. Sales of livestock products grew 3% on a reported basis and 10% operationally. Growth in the company’s cattle portfolio was the result of increased sales in Australia and smaller emerging markets. Sales of sheep products grew due to favorable market conditions in Australia and the acquisition of Jurox. Sales of the company’s poultry portfolio increased due to market growth and demand generation efforts in several key geographies, while growth in the fish portfolio was the result of increased sales of vaccines across key salmon markets, primarily Norway. INVESTMENTS IN GROWTH Zoetis continues to grow key product franchises through incremental claim extensions. Simparica Trio (sarolaner/moxidectin/pyrantel), our triple combination oral parasiticide, received approval in the European Union (EU) for three new claims – prevention of eyeworms and efficacy against sarcoptic and demodectic mange. Additionally, in Japan, the company gained approvals for new indications of Cytopoint, our monoclonal antibody for allergy treatment in dogs, and anti-infective Draxxin® for pigs. Zoetis also received approval in additional markets for new livestock products. Protivity®, the first modified live vaccine to offer protection against Mycoplasma bovis in healthy cattle, was approved in the EU and Mexico (previously approved in the U.S. and Canada), and Lawsotek™, a vaccine that helps protect healthy pigs three weeks of age or older against disease caused by the common bacterium Lawsonia intracellularis, was approved in Canada (previously approved in the U.S.). Additionally, the company recently purchased a manufacturing site outside Atlanta, Georgia, which will be used to manufacture monoclonal antibodies, vaccines and petcare products. The facility will help ensure long-term supply of key product franchises across all global markets and is expected to begin operations in 2026. FINANCIAL GUIDANCE Zoetis is maintaining its full year 2023 guidance, which includes: Revenue between $8.575 billion to $8.725 billion (operational growth of 6% to 8%) Reported net income between $2.345 billion to $2.400 billion Adjusted net income between $2.490 billion to $2.540 billion (operational growth of 7% to 9%) Reported diluted EPS between $5.03 to $5.14 Adjusted diluted EPS between $5.34 to $5.44 This guidance reflects foreign exchange rates as of late April. Additional details on guidance are included in the financial tables and will be discussed on the company's conference call this morning. WEBCAST & CONFERENCE CALL DETAILS Zoetis will host a webcast and conference call at 8:30 a.m. (ET) today, during which company executives will review first quarter 2023 results, discuss financial guidance and respond to questions from financial analysts. Investors and the public may access the live webcast by visiting the Zoetis website at . A replay of the webcast will be archived and made available on May 4, 2023. About Zoetis As the world’s leading animal health company, Zoetis is driven by a singular purpose: to nurture our world and humankind by advancing care for animals. After innovating ways to predict, prevent, detect, and treat animal illness for more than 70 years, Zoetis continues to stand by those raising and caring for animals worldwide -- from veterinarians and pet owners to livestock farmers and ranchers. The company’s leading portfolio and pipeline of medicines, vaccines, diagnostics and technologies make a difference in over 100 countries. A Fortune 500 company, Zoetis generated revenue of $8.1 billion in 2022 with approximately 13,800 employees. For more information, visit . 1 Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. 2 Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as reported net income and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. 3Source: Animalytix Q1 2023 Animal Health Industry Data Report DISCLOSURE NOTICES Forward-Looking Statements: This press release contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospects, future operating or financial performance, future guidance, future operating models; disruptions in our global supply chain; R&D costs; timing and likelihood of success; expectations regarding products, product approvals or products under development and expected timing of product launches; the impact of the coronavirus (COVID-19) global pandemic and any recovery therefrom on our business, supply chain, customers and employees; expectations regarding the performance of acquired companies and our ability to integrate new businesses; expectations regarding the financial impact of acquisitions; future use of cash, dividend payments and share repurchases; tax rate and tax regimes and any changes thereto; and other future events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management's underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our most recent Annual Report on Form 10-K, including in the sections thereof captioned “Forward-Looking Statements and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. These filings and subsequent filings are available online at , , or on request from Zoetis. Use of Non-GAAP Financial Measures: We use non-GAAP financial measures, such as adjusted net income, adjusted diluted earnings per share and operational results (which exclude the impact of foreign exchange), to assess and analyze our results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this press release should not be considered alternatives to measurements required by GAAP, such as net income, operating income, and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliations of non-GAAP financial measures and the most directly comparable GAAP financial measures are included in the tables accompanying this press release and are posted on our website at . Internet Posting of Information: We routinely post information that may be important to investors in the 'Investors' section of our website at , on our Facebook page at and on Twitter@zoetis. We encourage investors and potential investors to consult our website regularly and to follow us on Facebook and Twitter for important information about us. ZTS-COR ZTS-IR ZTS-FIN ZOETIS INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a) (UNAUDITED) (millions of dollars, except per share data) Three Months Ended March 31, 2023 2022 % Change Revenue $ 2,000 $ 1,986 1 Costs and expenses: Cost of sales 588 569 3 Selling, general and administrative expenses 505 465 9 Research and development expenses 142 122 16 Amortization of intangible assets 37 41 (10) Restructuring charges and certain acquisition-related costs 21 2 * Interest expense, net of capitalized interest 63 53 19 Other (income)/deductions–net (53) 7 * Income before provision for taxes on income 697 727 (4) Provision for taxes on income 146 133 10 Net income before allocation to noncontrolling interests 551 594 (7) Less: Net loss attributable to noncontrolling interests (1) (1) — Net income attributable to Zoetis Inc. $ 552 $ 595 (7) Earnings per share—basic $ 1.19 $ 1.26 (6) Earnings per share—diluted $ 1.19 $ 1.26 (6) Weighted-average shares used to calculate earnings per share Basic 463.5 472.2 Diluted 464.6 474.1 (a)The condensed consolidated statements of income present the three months ended March 31, 2023 and 2022. Subsidiaries operating outside the United States are included for the three months ended February 28, 2023 and 2022. * Calculation not meaningful. ZOETIS INC. RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS (UNAUDITED) (millions of dollars, except per share data) Three Months Ended March 31, 2023 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 588 $ (4) $ — $ — $ 584 Gross profit 1,412 4 — — 1,416 Selling, general and administrative expenses 505 (7) — — 498 Amortization of intangible assets 37 (31) — — 6 Restructuring charges and certain acquisition-related costs 21 — (1) (20) — Other (income)/deductions–net (53) — — (2) (55) Income before provision for taxes on income 697 42 1 22 762 Provision for taxes on income 146 8 — 2 156 Net income attributable to Zoetis 552 34 1 20 607 Earnings per common share attributable to Zoetis–diluted 1.19 0.07 — 0.05 1.31 Three Months Ended March 31, 2022 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 569 $ (1) $ — $ (3) $ 565 Gross profit 1,417 1 — 3 1,421 Selling, general and administrative expenses 465 (7) — — 458 Amortization of intangible assets 41 (32) — — 9 Restructuring charges and certain acquisition-related costs 2 — (2) — — Other (income)/deductions–net 7 — — 3 10 Income before provision for taxes on income 727 40 2 — 769 Provision for taxes on income 133 10 1 1 145 Net income attributable to Zoetis 595 30 1 (1) 625 Earnings per common share attributable to Zoetis–diluted 1.26 0.06 — — 1.32 (a) The condensed consolidated statements of income present the three months ended March 31, 2023 and 2022. Subsidiaries operating outside the United States are included for the three months ended February 28, 2023 and 2022. (b) Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2). ZOETIS INC. NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS (UNAUDITED) (millions of dollars) (1) Acquisition-related costs include the following: Three Months Ended March 31, 2023 2022 Integration costs(a) $ 1 $ 2 Total acquisition-related costs—pre-tax 1 2 Income taxes(b) — 1 Total acquisition-related costs—net of tax $ 1 $ 1 (a) Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes. Included in Restructuring charges and certain acquisition-related costs. (b) Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. (2) Certain significant items include the following: Three Months Ended March 31, 2023 2022 Other restructuring charges and cost-reduction/productivity initiatives(a) $ 20 $ 2 Other 2 (2) Total certain significant items—pre-tax 22 — Income taxes(b) 2 1 Total certain significant items—net of tax $ 20 $ (1) (a) For the three months ended March 31, 2023, primarily consisted of employee termination costs related to organizational structure refinements, included in Restructuring charges and certain acquisition-related costs. For the three months ended March 31, 2022, primarily consisted of product transfer costs, included in Cost of sales. (b) Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction's applicable tax rate. ZOETIS INC. ADJUSTED SELECTED COSTS, EXPENSES AND INCOME(a) (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2023 2022 Total Foreign Exchange Operational(b) Adjusted cost of sales $ 584 $ 565 3 % (9) % 12 % as a percent of revenue 29.2 % 28.4 % NA NA NA Adjusted SG&A expenses 498 458 9 % (2) % 11 % Adjusted R&D expenses 142 122 16 % (3) % 19 % Adjusted net income attributable to Zoetis 607 625 (3) % — % (3) % (a) Adjusted cost of sales, adjusted selling, general, and administrative (SG&A) expenses, adjusted research and development (R&D) expenses, and adjusted net income (non-GAAP financial measures) are defined as the corresponding reported U.S. GAAP income statement line items excluding purchase accounting adjustments, acquisition-related costs and certain significant items. These adjusted income statement line item measures are not, and should not be viewed as, substitutes for the corresponding U.S. GAAP line items. The corresponding GAAP line items and reconciliations of reported to adjusted information are provided in Condensed Consolidated Statements of Income and Reconciliation of GAAP Reported to Non-GAAP Adjusted Information. (b) Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. ZOETIS INC. 2023 GUIDANCE Selected Line Items (millions of dollars, except per share amounts) Full Year 2023 Revenue $8,575 to $8,725 Operational growth(a) 6% to 8% Adjusted cost of sales as a percentage of revenue(b) 29.5% to 30.0% Adjusted SG&A expenses(b) $2,060 to $2,100 Adjusted R&D expenses(b) $635 to $660 Adjusted interest expense and other (income)/deductions-net(b) Approximately $170 Effective tax rate on adjusted income(b) 20.0% to 21.0% Adjusted diluted EPS(b) $5.34 to $5.44 Adjusted net income(b) $2,490 to $2,540 Operational growth(a)(c) 7% to 9% Certain significant items and acquisition-related costs(d) $20 - $25 The guidance reflects foreign exchange rates as of late April 2023. Reconciliations of 2023 reported guidance to 2023 adjusted guidance follows: (millions of dollars, except per share amounts) Reported Certain significant items and acquisition-related costs(d) Purchase accounting Adjusted(c) Cost of sales as a percentage of revenue 29.7% to 30.2% ~ (0.1%) ~ (0.1%) 29.5% to 30.0% SG&A expenses $2,090 to $2,130 ~ $(30) $2,060 to $2,100 R&D expenses $636 to $661 ~ $(1) $635 to $660 Interest expense and other (income)/deductions-net ~ $170 ~ $170 Effective tax rate 20.0% to 21.0% 20.0% to 21.0% Diluted EPS $5.03 to $5.14 $0.04 - $0.05 ~ $0.26 $5.34 to $5.44 Net income attributable to Zoetis $2,345 to $2,400 $20 - $25 ~ $120 $2,490 to $2,540 (a) Operational growth (a non-GAAP financial measure) excludes the impact of foreign exchange. (b) Adjusted net income and its components and adjusted diluted EPS are defined as reported U.S. GAAP net income and its components and reported diluted EPS excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted cost of sales, adjusted SG&A expenses, adjusted R&D expenses, and adjusted interest expense and other (income)/deductions-net are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. Despite the importance of these measures to management in goal setting and performance measurement, adjusted net income and its components and adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, adjusted net income and its components and adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Adjusted net income and its components and adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance. Adjusted net income and its components and adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. (c) We do not provide a reconciliation of forward-looking non-GAAP adjusted net income operational growth to the most directly comparable U.S. GAAP reported financial measure because we are unable to calculate with reasonable certainty the foreign exchange impact of unusual gains and losses, acquisition-related expenses, potential future asset impairments and other certain significant items, without unreasonable effort. The foreign exchange impacts of these items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP reported results for the guidance period. (d) Primarily includes certain nonrecurring costs related to acquisitions and other charges. ZOETIS INC. CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2023 2022 Total Foreign Exchange Operational(b) Revenue: Companion Animal $ 1,225 $ 1,263 (3) % (3) % — % Livestock 758 705 8 % (4) % 12 % Contract Manufacturing & Human Health 17 18 (6) % (2) % (4) % Total Revenue $ 2,000 $ 1,986 1 % (3) % 4 % U.S. Companion Animal $ 721 $ 774 (7) % — % (7) % Livestock 284 246 15 % — % 15 % Total U.S. Revenue $ 1,005 $ 1,020 (1) % — % (1) % International Companion Animal $ 504 $ 489 3 % (7) % 10 % Livestock 474 459 3 % (7) % 10 % Total International Revenue $ 978 $ 948 3 % (7) % 10 % Companion Animal: Dogs and Cats $ 1,153 $ 1,199 (4) % (3) % (1) % Horses 72 64 13 % (3) % 16 % Total Companion Animal Revenue $ 1,225 $ 1,263 (3) % (3) % — % Livestock: Cattle $ 399 $ 364 10 % (3) % 13 % Swine 142 154 (8) % (5) % (3) % Poultry 139 124 12 % (5) % 17 % Fish 49 44 11 % (7) % 18 % Sheep and other 29 19 53 % (8) % 61 % Total Livestock Revenue $ 758 $ 705 8 % (4) % 12 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. ZOETIS INC. CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2023 2022 Total Foreign Exchange Operational(a) Total International $ 977.5 $ 947.5 3 % (7) % 10 % Australia 81.8 64.9 26 % (6) % 32 % Brazil 84.0 76.8 9 % 5 % 4 % Canada 50.1 49.0 2 % (6) % 8 % Chile 39.2 41.2 (5) % — % (5) % China 102.2 102.7 — % (8) % 8 % France 33.7 31.9 6 % (6) % 12 % Germany 45.3 43.1 5 % (6) % 11 % Italy 25.5 30.4 (16) % (5) % (11) % Japan 39.1 59.1 (34) % (11) % (23) % Mexico 38.6 34.8 11 % 8 % 3 % Spain 32.9 33.4 (1) % (5) % 4 % United Kingdom 68.2 63.5 7 % (12) % 19 % Other developed markets 121.9 115.2 6 % (7) % 13 % Other emerging markets 215.0 201.5 7 % (13) % 20 % (a) Operational revenue growth (a non-GAAP financial measure) is defined as revenue growth excluding the impact of foreign exchange. ZOETIS INC. SEGMENT(a) EARNINGS (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2023 2022 Total Foreign Exchange Operational(b) U.S.: Revenue $ 1,005 $ 1,020 (1) % — % (1) % Cost of Sales 203 185 10 % — % 10 % Gross Profit 802 835 (4) % — % (4) % Gross Margin 79.8 % 81.9 % Operating Expenses 188 165 14 % — % 14 % Other (income)/deductions-net — — * * * U.S. Earnings $ 614 $ 670 (8) % — % (8) % International: Revenue $ 978 $ 948 3 % (7) % 10 % Cost of Sales 291 265 10 % (10) % 20 % Gross Profit 687 683 1 % (5) % 6 % Gross Margin 70.2 % 72.0 % Operating Expenses 151 145 4 % (7) % 11 % Other (income)/deductions-net 1 — * * * International Earnings $ 535 $ 538 (1) % (5) % 4 % Total Reportable Segments $ 1,149 $ 1,208 (5) % (2) % (3) % Other business activities(c) (114) (98) 16 % Reconciling Items: Corporate(d) (208) (259) (20) % Purchase accounting adjustments(e) (42) (40) 5 % Acquisition-related costs(f) (1) (2) (50) % Certain significant items(g) (22) — * Other unallocated(h) (65) (82) (21) % Total Earnings(i) $ 697 $ 727 (4) % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange. (c) Other business activities includes the research and development costs managed by our research and development organization, as well as our contract manufacturing business and human health business. (d) Corporate includes, among other things, certain costs associated with information technology, administration expenses, interest income and expense, certain compensation costs and other costs not charged to our operating segments. (e) Purchase accounting adjustments include certain charges related to the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment not charged to our operating segments. (f) Acquisition-related costs include costs associated with acquiring and integrating newly acquired businesses, such as transaction costs and integration costs. (g) Certain significant items includes substantive, unusual items that, either as a result of their nature or size, would not be expected to occur as part of our normal business on a regular basis. Such items primarily include certain asset impairment charges, restructuring charges and implementation costs associated with cost-reduction/productivity initiatives that are not associated with an acquisition and the impact of divestiture-related gains and losses. (h) Includes overhead expenses associated with our global manufacturing and supply operations not directly attributable to an operating segment, as well as certain procurement costs. (i) Defined as income before provision for taxes on income. * Calculation not meaningful.