Zoetis Services LLC

PARSIPPANY, N.J.--( BUSINESS WIRE )--Zoetis today published its 2022 Sustainability Report “Together We Are Making a Difference for a Better World”, describing the company’s progress toward achieving its Driven to Care long-term sustainability aspirations and continued disclosure on environmental, social and governance (ESG) topics. The report highlights the company’s journey to advance sustainability in Animal Health for a better future through specific actions that support Communities, Animals and the Planet. These commitments build on Zoetis’ purpose and help achieve the United Nations’ Sustainable Development Goals (SDGs). Included in the report is the company’s ESG Index, which shares key ESG performance indicators, including those identified by the Sustainability Accounting Standards Board (SASB) for the healthcare – biotechnology and pharmaceuticals industry. The Index also includes environmental and social data as well as details on how Zoetis supports the Taskforce on Climate-related Financial Disclosure (TCFD) and its commitment to disclosing progress aligned with TCFD recommendations. “In our third year of reporting to our Driven to Care aspirations and targets, we continue to make significant progress in our journey toward building a healthier future for our communities, animals and the planet,” said Jeannette Ferran Astorga, Executive Vice President, Corporate Affairs, Communications and Chief Sustainability Officer at Zoetis and President of the Zoetis Foundation. “The progress we’ve made toward our sustainability commitments would not be possible without the dedication, creativity and innovation of our colleagues who champion our purpose by contributing to a better future for us all.” Communities – Care and Collaboration Zoetis invested $7.4 million in communities through corporate giving in 2022, with approximately $2.2 million in monetary and in-kind contributions to support approximately 186,000 pet owners in need and approximately $1.7 million in monetary and product contributions to help more than 560,000 animals impacted by disaster. The Zoetis Foundation also distributed $5.7 million in grants supporting 25 initiatives across 20 countries in 2022, significantly increasing grant funding to advance farmer and veterinary education, livelihoods, and well-being. Specifically, the Zoetis Foundation provided grants of $2.5 million in scholarships to veterinary students to support more than 500 students. In its commitment to advancing an inclusive veterinary profession, the Zoetis Foundation is the Founding Sponsor of the It Takes a Village Foundation's “Vet for a Day” program, helping advance diversity and inclusion in the veterinary field. In 2022, the “Vet for a Day” program reached approximately 300 students, enabling kids from diverse backgrounds to learn about veterinary medicine. The report also highlights progress made since 2020 toward the company’s diversity, equity and inclusion (DE&I) aspirations for 2025, including: Increased representation of women at the director level and above globally from 32% to 37%, aspiring to reach 40% by 2025 Increased representation of Black colleagues in the U.S. from 4.0% to 4.8%, aspiring to reach 5% by 2025 Increased representation of people of color at all levels in the U.S. from 21.0% to 24.6%, aspiring to reach 25% by 2025 Increased representation of Latinx colleagues from 5.0% to 6.4%, exceeding our aspiration of reaching 6% by 2025 The Zoetis executive team is now 60% women and 40% from racially or ethnically diverse backgrounds, including Asian, Black and Hispanic/Latinx. As part of ongoing efforts to support colleagues, Zoetis signed on to PrideVMC’s Gender Identity Bill of Rights (GIBOR), a document that affirms the rights of transgender, non-binary, and gender non-conforming persons, and provides guidance on how workplaces can support their employees by identifying and eliminating discriminatory practices. Zoetis engaged with 1,236 global active members across eight Colleague Resource Groups and launched Cultural Explorer training in eight languages to encourage respectful curiosity and open conversation about differences to deepen mutual understanding and value for colleagues’ unique contributions to the workplace. Animals - Innovation in Animal Health With the world’s population approaching the United Nations projected 10 billion people by 2050, some of our greatest challenges are emerging at the intersection of human, animal, environmental and economic health. By enhancing the health of livestock, innovative solutions can help contribute to the economic and environmental well-being of farmers and communities as well as support global food security. In 2022, Zoetis received approval for several livestock vaccines in additional markets, which support the Health for Animals Roadmap to Reducing the Need for Antibiotics . This includes recombinant vector vaccines in Brazil, India, Mexico, and the U.S. that can positively impact welfare and productivity of poultry, as well as expanded regulatory approval for a vaccine to help protect cattle against Mycoplasma bovis . Additional new products support cattle producers’ health and productivity goals as well as pork producers’ animal welfare and productivity goals, all to improve their sustainability. Zoetis also announced a research collaboration with scientists in New Zealand to explore mechanisms that may inhibit methane emissions from grazing ruminants and, in turn, reduce greenhouse gas (GHG) emissions. Furthermore, the company invested in research to support understanding how genetic testing and genomic predictions can help improve dairy cattle health outcomes by reducing disease incidence and antibiotic use while also improving productivity. Zoetis reported progress on five years of its African Livestock Productivity and Health Advancement (A.L.P.H.A.) initiative with the aim to help improve livestock health and positively impact farmers’ livelihoods in Sub-Saharan Africa. At the completion of the initiative, Zoetis trained over 30,000 farmers, veterinary professionals, distributors and lab personnel – 30% were women – and treated 9.7 million cows and 196 million chickens in the region. With continued support from the Bill & Melinda Gates Foundation, Zoetis launched A.L.P.H.A. Plus - a new five-year initiative that will scale up the initial efforts with expansion into seven additional countries in Africa and aquaculture in addition to cattle and poultry. The success of the A.L.P.H.A. initiative is further supported by Zoetis’ inclusion in Fortune’s 2022 Change the World list, underscoring the initiative’s impact to grow access to veterinary care in emerging markets and to help achieve the UN SDGs for No Poverty, Zero Hunger and Gender Equality, among others. Planet – the Drive to Protect our Planet To reduce GHG emissions throughout the company’s operations and manage climate risks, Zoetis set a goal in 2022 to achieve carbon neutrality in its own operations by 2030, with a focus on Scope 1 and 2 emissions from its manufacturing and R&D operations, office locations and fleet vehicles. Aligned with its RE100 commitment, Zoetis reported 14.7% renewable electricity sourced to date and installed four photovoltaic solar arrays at three manufacturing sites and one R&D site. To date, 31% of the company’s manufacturing sites operate with 100% renewable electricity. Zoetis exceeded and retired its target to reduce energy intensity by 5% at its manufacturing and R&D sites, with a 13.5% reduction. In 2022, the company developed a roadmap to achieve its carbon neutrality target that includes short-, medium- and long-term initiatives, including capital expense planning. Specifically, Zoetis conducted energy and carbon assessments at 10 of its largest energy consuming sites, accounting for approximately 90% of the company’s energy footprint, which helped identify more than 100 energy efficiency projects. Minimizing fleet emissions also are part of the company’s journey to carbon neutrality in its own operations, and in 2022, electric vehicles represented 1.2% of Zoetis’ total fleet, while hybrids accounted for 10%. The company continued to take meaningful steps to reduce its environmental footprint and improve its products’ environmental impact throughout their life cycle in markets around the world. The report highlights initiatives in Japan, Canada and the U.S. that help streamline Zoetis’ process, reduce packaging and divert packaging from landfills, including by transitioning prescription labeling to QR codes, and removing cotton from product packaging. Zoetis also created a sustainable packaging guidance document for suppliers to provide packaging specification guidelines for all products delivered to Zoetis. For more detailed disclosure on the company’s ESG programs, practices and policies, please see zoetis.com/sustainability or download Zoetis’ 2022 Sustainability Report . Zoetis will continue to share updates on its sustainability activities, including progress against its Driven to Care goals, and report annually. 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 www.zoetis.com . DISCLOSURE NOTICES Forward-Looking Statements: This press release and the 2022 Sustainability Report (including the 2022 SASB and ESG Index) contain forward-looking statements which reflect the current views of Zoetis with respect to: our progress toward our Driven to Care aspirations; our sustainability, energy and climate goals, targets and plans; our business plans or prospects; expectations regarding future operating or financial performance; the plans and future work of the Zoetis Foundation, 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. All trademarks are the property of Zoetis Services LLC or a related company or a licensor unless otherwise noted. © 2023 Zoetis Services LLC. All rights reserved. ZTS-COR ZTS-IR

PARSIPPANY, N.J.--( BUSINESS WIRE )-- Zoetis Inc. (NYSE:ZTS) today announced that the U.S. Food and Drug Administration (FDA) has approved Librela™ (bedinvetmab injection) for the control of pain associated with osteoarthritis (OA) in dogs. Librela is the first and only once-monthly, anti-NGF monoclonal antibody treatment for canine OA pain and is approved as safe and effective in providing long-term control of OA pain symptoms in dogs, which can improve their mobility and overall quality of life. 1,2 The Unmet Need in Canine OA Canine OA is a painful and progressive disease that is highly prevalent. In studies, 40% of dogs have signs of OA. 3,4 With an estimated 86 million dogs living in the U.S. households, a high percentage of dogs are likely experiencing OA pain. 5 OA does not only impact older dogs – it affects dogs of all ages, sizes, and breeds. 6 OA can affect any dog, even as young as 1 year old. The pain of OA can impact a dog’s physical and emotional health. Signs of OA include, but are not limited to, difficulty in going up or down stairs, lagging behind on walks, hesitation to jump up or down, limping after exercise and becoming more withdrawn. Despite the prevalence of OA pain in dogs in the U.S., only 33% with OA are actively being treated. 7 Failure to treat canine OA can result in increased pain, decreased mobility and a significant impact on dogs’ overall health and well-being. 8 Current treatment choices have limitations, including lack of effectiveness, difficulty in administration and safety concerns, which contribute to the overall low treatment rate for OA pain. 9 With once-monthly injections administered by a veterinary professional, Librela may also reduce pet owner stress about missing a daily treatment dose and help maintain the human-animal bond. “Zoetis has a 25-year legacy in pain management and has revolutionized how the veterinary industry approaches this critical area of pet care,” said Laura Olsen, Senior Vice President, U.S. Petcare, at Zoetis. “The FDA approval of Librela represents a significant step forward in our ability to provide comfort to dogs living with the chronic pain associated with OA, ultimately strengthening the unbreakable bond people share with their pets.” Clinical Trial Results Librela represents a new era in pain management as the first monoclonal antibody approved in the U.S to control OA pain in dogs. This once monthly injection works differently from other pain medications – it’s unique mode of action targets Nerve Growth Factor (NGF), a key component of OA pain. In two field studies, dogs administered Librela as a monthly injection demonstrated a reduction in OA pain compared to dogs that received the placebo and by reducing pain, Librela was shown to help their mobility and overall quality of life. 10 While effectiveness may not be seen until after the second dose of Librela, some dogs may experience a reduction in pain as early as seven days after the first dose. 10 Additionally, in a continuation study, dogs treated with bedinvetmab experienced lasting OA pain relief over the course of the study with monthly injections. 10 “Pain is often overlooked in dogs for two primary reasons: the signs of OA pain are misinterpreted as normal aging and OA pain is not considered in younger dogs,” said Dr. Duncan Lascelles, Professor of Translational Research in Pain and Surgery at North Carolina State University and recent past Chair of the WSAVA Global Pain Council. “As our understanding of canine pain expands, Librela provides a unique monthly treatment to control OA pain in dogs by targeting NGF, helping to improve their comfort, mobility and overall well-being.” Adverse events were similar to what would be expected for this population of dogs with OA. The most common adverse events reported in dogs treated with Librela included urinary tract infections, bacterial skin infections, dermatitis and increased blood urea nitrogen (BUN).* Positive Clinical Experience Reported from European Veterinarians Librela was granted marketing authorization by the European Medicines Agency (EMA) in 2020 and the product was launched in 2021. Librela has been used by veterinarians in Europe for more than two years as a treatment option for OA pain in dogs with over 4.6 million doses distributed. 11 European veterinarians who have used Librela rated their overall satisfaction 8.6 out of 10, the highest of any OA pain medication evaluated. 12 European veterinarians who have used Librela also rated Librela very highly on top product attributes for OA pain medications, including: reduces OA pain, improves mobility, and improves quality-of-life. 12 About Librela™ (bedinvetmab injection) Librela is a monoclonal antibody therapy administered in the clinic that targets Nerve Growth Factor (NGF) to control canine OA pain. Librela functions like naturally produced antibodies and is metabolized and eliminated via normal protein degradation pathways with minimal involvement of the liver or kidneys. 13 Librela also has been approved for use in Canada, Brazil, Australia, New Zealand, Japan and other markets across South America and Asia. Librela is expected to be available to veterinarians in the U.S. in late 2023. To learn more, please visit zoetisus.com/products/dogs/librela . IMPORTANT SAFETY INFORMATION ABOUT LIBRELA™ See full Prescribing Information at LibrelaPI.com . For use in dogs only. Women who are pregnant, trying to conceive or breastfeeding should take extreme care to avoid self-injection. Hypersensitivity reactions, including anaphylaxis, could potentially occur with self-injection. Librela should not be used in breeding dogs or in pregnant or lactating dogs. Librela should not be administered to dogs with known hypersensitivity to bedinvetmab. The most common adverse events reported in a clinical study were urinary tract infections, bacterial skin infections and dermatitis. 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 www.zoetis.com . 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, expectations regarding products, including timing of shipments, 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. *For the vast majority of dogs, an increase in BUN was not associated with clinical signs or changes in other renal parameters. __________________________________ 1 Brown DC, Boston RC, Coyne JC, Farrar JT. Development and psychometric testing of an instrument designed to measure chronic pain in dogs with osteoarthritis. Am J Vet Res . 2007;68(6):631-637. doi:10.2460/ajvr.68.6.631. 2 Brown DC, Boston RC, Coyne JC, Farrar JT. Ability of the Canine Brief Pain Inventory to detect response to treatment in dogs with osteoarthritis. J Am Vet Med Assoc . 2008;233(8):1278-1283. doi:10.2460/javma.233.8.1278. 3 IHS Markit. (2021) Canine and Feline Pain Market 2021: Animal Health Market Analysis. 4 Wright A, et al. Identification of canine osteoarthritis using an owner-reported questionnaire and treatment monitoring using functional mobility tests. J Small Anim Pract, 2022. http://doi.org.libproxy1.nus.edu.sg/10.1111/jsap.13500 5 AVMA: U.S. Pet Ownership & Demographics Sourcebook, 2022 6 Anderson KL, Zulch H, O’Neill DG, Meeson RL, Collins LM. Risk factors for canine osteoarthritis and its predisposing arthropathies: a systematic review. Front Vet Sci . 2020;7:200. doi:10.3389/fvets.2020.00220 7 R: PetTrak US Pain Factored National January 2023. 8 Lascelles BDX, et al. Measurement of chronic pain in companion animals: discussions from the Pain in Animals Workshop (PAW) 2017. Vet J . 2019;250(8):71-78. 9 Enomoto M, et al. Anti-nerve growth factor monoclonal antibodies for the control of pain in dogs and cats. Veterinary Record. 2018. doi: 10.1136/vr.104590. 10 Corral, MJ, et al. A prospective, randomized, blinded, placebo-controlled multisite clinical study of bedinvetmab, a canine monoclonal antibody targeting nerve growth factor, in dogs with osteoarthritis. Vet Anaesth Analg . 2021;48:943-955. 11 Data on File. November 2022. 12 ZMR: Librela Post Launch Tracker Wave 3 UK/Germany/France/Spain/Italy 2022 13 Keizer RJ, Huitema AD, Schellens JH, Beijnen JH. Clinical pharmacokinetics of therapeutic monoclonal antibodies. Clin Pharmacokinet . 2010;49(8):493-507. All trademarks are the property of Zoetis Services LLC or a related company or a licensor unless otherwise noted. © 2023 Zoetis Services LLC. All rights reserved. LIB-00015A ZTS-COR ZTS-IR

Reports Revenue of $2.0 Billion, Growing 1%, and Net Income of $529 Million, or $1.13 per Diluted Share, Decreasing 4% and 3%, Respectively, on a Reported Basis for Third Quarter 2022 Delivers 5% Operational Growth in Revenue and 2% Operational Growth in Adjusted Net Income for Third Quarter 2022 Reports Adjusted Net Income of $566 Million, or Adjusted Diluted EPS of $1.21, for Third Quarter 2022 Lowers Full Year 2022 Revenue Guidance to $8.000 - $8.075 Billion, with Diluted EPS of $4.51 to $4.59 on a Reported Basis, or $4.83 to $4.90 on an Adjusted Basis PARSIPPANY, N.J.--(BUSINESS WIRE)-- Zoetis Inc. (NYSE: ZTS) today reported its financial results for the third quarter of 2022 and lowered its guidance for full year 2022 to reflect lower than expected sales due to continued supply constraints, veterinary workforce challenges, and the negative impact of recent changes to foreign exchange rates. The company reported revenue of $2.0 billion for the third quarter of 2022, an increase of 1% compared with the third quarter of 2021. Net income for the third quarter of 2022 was $529 million, or $1.13 per diluted share, a decrease of 4% and 3%, respectively, on a reported basis. On an operational1 basis, revenue for the third quarter of 2022 increased 5%, excluding the impact of foreign currency. Adjusted net income for the third quarter of 2022 increased 2% operationally, excluding the impact of foreign currency. Adjusted net income2 for the third quarter of 2022 was $566 million, or $1.21 per diluted share, which declined 5% and 3%, respectively, on a reported basis. Adjusted net income for the third quarter of 2022 excludes the net impact of $37 million for purchase accounting adjustments, acquisition-related costs and certain significant items. EXECUTIVE COMMENTARY "As the world continues to face dynamic market conditions and uncertainty in the global economy, our business has been tested and continues to perform well based on our diverse, durable product portfolio and global scale,” said Kristin Peck, Chief Executive Officer of Zoetis. "In the third quarter, we delivered 5% operational revenue growth, reflecting steady performance across our innovation-driven companion animal portfolio, especially internationally. We reported 2% operational growth in adjusted net income this quarter. This lower than usual growth on the bottom line was due primarily to a more favorable tax rate in the year-ago quarter.” “While we remain confident in the strength and growth drivers of our business, we are lowering 2022 guidance to reflect lower than expected sales in the second half of the year related to continued supply constraints, veterinary workforce challenges and recent changes to foreign exchange rates." 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 third quarter of 2022: Revenue in the U.S. segment was $1.090 billion, an increase of 2% compared with the third quarter of 2021. Sales of companion animal products increased 6%, driven by growth in the company’s parasiticide portfolio, primarily Simparica Trio®, which were tempered by supply constraints. The company’s key dermatology portfolio also contributed to growth across both the Apoquel® and Cytopoint® brands. Sales of livestock products declined 7% in the quarter. Sales of cattle products declined as a result of generic competition for Draxxin®. Sales of poultry products declined due to the expanded use of lower cost alternatives and generic competition for Zoamix®, the company’s alternative to antibiotics in medicated feed additives. Sales of swine products decreased as a result of increased competition for vaccines. Revenue in the International segment was $889 million, a decrease of 2% on a reported basis and an increase of 8% operationally compared with the third quarter of 2021. Sales of companion animal products grew 6% on a reported basis and 17% operationally. Growth resulted from increased sales of the company’s recently launched monoclonal antibody products for osteoarthritis pain, Librela® and Solensia®, as well as increased sales in the key dermatology portfolio across both the Apoquel and Cytopoint brands, including the recently launched chewable version of Apoquel. Companion animal vaccines and Simparica Trio also contributed to growth in the quarter. Sales of livestock products declined 8% on a reported basis and were flat operationally. Growth in the company’s fish portfolio was primarily the result of increased sales of vaccines across key salmon markets, including Norway and Chile. Sales of sheep products grew due to favorable market conditions and new product launches in Australia, while sales of the company’s poultry portfolio grew due to market growth and demand generation efforts across Latin America. Growth in fish, sheep and poultry was offset by reduced sales in the company’s swine and cattle portfolios. Sales of swine products decreased in the quarter due to supply constraints across international markets, as well as lower sales across Europe due to reduced exports to China and higher input costs for producers. The company’s cattle portfolio declined primarily due to supply constraints and an unfavorable macro environment for producers in Brazil. INVESTMENTS IN GROWTH Zoetis continues to pave the way in the development of monoclonal antibody (mAb) therapies to treat osteoarthritis (OA) pain in dogs and cats. Since its last quarterly earnings announcement, the company received approval in Japan and Australia for Librela (bedinvetmab), the first injectable mAb for alleviation of pain associated with OA in dogs. Librela is also approved in the European Union (EU), Canada, Brazil, Chile and other international markets. Additionally, Solensia (frunevetmab), the first injectable mAb for the alleviation of pain associated with OA in cats, was approved in Japan and Chile. It is also approved in the U.S., the EU, Canada, Australia and other international markets. In dermatology, Zoetis received approval in Australia, Canada and Japan for Apoquel Chewable Tablets. Previously approved in the EU, Mexico and other international markets, the new chewable version of Apoquel (oclacitinib) provides veterinarians and pet owners with a palatable, convenient solution to quickly and safely stop the cycle of pruritus in allergic dogs and clinical signs of atopic dermatitis in dogs. On the livestock side of the business, Zoetis gained approval in the U.S. for Valcor™, a broad spectrum combination endectocide for the treatment of internal and external parasites in cattle. Additionally, Zoetis enhanced its swine vaccine portfolio in the U.S. with the approval of Lawsotek™, a vaccine that helps protect healthy pigs three weeks of age or older against disease caused by the common bacterium Lawsonia intracellularis. The company also received an expanded label approval from the U.S. Food and Drug Administration (FDA) on three beef implant products. Synovex Choice®, Synovex Plus® and Synovex® One Feedlot are now approved for reimplanting programs, providing beef producers with enhanced flexibility to more broadly use these technologies to help them meet their productivity goals. In Business Development news, Zoetis completed its acquisition of Jurox, a privately held animal health company based in Australia. The acquisition brings Zoetis a range of companion animal and livestock products primed for global expansion, and provides the company with future growth opportunities, manufacturing capacity and increased capabilities in Australia, its fourth largest market based on 2021 revenue. Additionally, Basepaws, a privately held petcare genetics company acquired by Zoetis in June, recently launched a comprehensive portfolio exclusively for veterinary professionals. The portfolio consists of genetic tests that screen for 64 feline health markers and over 210 canine health markers, the business’ first entry into canine genetics. FINANCIAL GUIDANCE Zoetis is lowering its full year 2022 guidance to reflect lower than expected sales due to continued supply constraints, veterinary workforce challenges, as well as the negative impact of recent changes to foreign exchange rates. This includes: Revenue between $8.000 billion to $8.075 billion Reported diluted EPS between $4.51 to $4.59 Adjusted diluted EPS between $4.83 to $4.90 This guidance reflects foreign exchange rates as of late October. 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 third quarter 2022 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 November 3, 2022. 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 70 years innovating ways to predict, prevent, detect, and treat animal illness, Zoetis continues to stand by those raising and caring for animals worldwide -- from livestock farmers to veterinarians and pet owners. 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 $7.8 billion in 2021 with approximately 12,100 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. 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, 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2021, 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. Such risks and uncertainties may be amplified by the COVID-19 global pandemic and its potential impact on the global economy and our business. 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 Nine Months Ended September 30, September 30, 2022 2021 % Change 2022 2021 % Change Revenue $ 2,002 $ 1,990 1 $ 6,040 $ 5,809 4 Costs and expenses: Cost of sales 607 586 4 1,801 1,703 6 Selling, general and administrative expenses 501 504 (1 ) 1,495 1,408 6 Research and development expenses 134 132 2 391 370 6 Amortization of intangible assets 37 40 (8 ) 115 121 (5 ) Restructuring charges and certain acquisition-related costs 6 9 (33 ) 9 39 (77 ) Interest expense, net of capitalized interest 53 56 (5 ) 159 170 (6 ) Other (income)/deductions–net (3 ) 4 * 6 16 (63 ) Income before provision for taxes on income 667 659 1 2,064 1,982 4 Provision for taxes on income 139 107 30 413 361 14 Net income before allocation to noncontrolling interests 528 552 (4 ) 1,651 1,621 2 Less: Net loss attributable to noncontrolling interests (1 ) — * (2 ) (2 ) — Net income attributable to Zoetis Inc. $ 529 $ 552 (4 ) $ 1,653 $ 1,623 2 Earnings per share—basic $ 1.13 $ 1.16 (3 ) $ 3.52 $ 3.42 3 Earnings per share—diluted $ 1.13 $ 1.16 (3 ) $ 3.51 $ 3.40 3 Weighted-average shares used to calculate earnings per share Basic 467.8 474.0 470.0 474.8 Diluted 469.1 476.3 471.6 477.1 (a) The condensed consolidated statements of income present the three and nine months ended September 30, 2022 and 2021. Subsidiaries operating outside the United States are included for the three and nine months ended August 31, 2022 and 2021. * 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 September 30, 2022 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 607 $ (1 ) $ — $ (1 ) $ 605 Gross profit 1,395 1 — 1 1,397 Selling, general and administrative expenses 501 (8 ) — — 493 Amortization of intangible assets 37 (31 ) — — 6 Restructuring charges and certain acquisition-related costs 6 — (1 ) (5 ) — Income before provision for taxes on income 667 40 1 6 714 Provision for taxes on income 139 9 — 1 149 Net income attributable to Zoetis 529 31 1 5 566 Earnings per common share attributable to Zoetis–diluted 1.13 0.07 — 0.01 1.21 Three Months Ended September 30, 2021 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 586 $ (2 ) $ — $ (1 ) $ 583 Gross profit 1,404 2 — 1 1,407 Selling, general and administrative expenses 504 (8 ) — — 496 Amortization of intangible assets 40 (35 ) — — 5 Restructuring charges and certain acquisition-related costs 9 — (1 ) (8 ) — Other (income)/deductions–net 4 — — (3 ) 1 Income before provision for taxes on income 659 45 1 12 717 Provision for taxes on income 107 10 — 3 120 Net income attributable to Zoetis 552 35 1 9 597 Earnings per common share attributable to Zoetis–diluted 1.16 0.07 — 0.02 1.25 (a) The condensed consolidated statements of income present the three months ended September 30, 2022 and 2021. Subsidiaries operating outside the United States are included for the three months ended August 31, 2022 and 2021. (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) Nine Months Ended September 30, 2022 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 1,801 $ (3 ) $ — $ (8 ) $ 1,790 Gross profit 4,239 3 — 8 4,250 Selling, general and administrative expenses 1,495 (22 ) — — 1,473 Amortization of intangible assets 115 (95 ) — — 20 Restructuring charges and certain acquisition-related costs 9 — (4 ) (5 ) — Other (income)/deductions–net 6 — — 3 9 Income before provision for taxes on income 2,064 120 4 10 2,198 Provision for taxes on income 413 28 1 — 442 Net income attributable to Zoetis 1,653 92 3 10 1,758 Earnings per common share attributable to Zoetis–diluted 3.51 0.20 — 0.02 3.73 Nine Months Ended September 30, 2021 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 1,703 $ (5 ) $ — $ (7 ) $ 1,691 Gross profit 4,106 5 — 7 4,118 Selling, general and administrative expenses 1,408 (23 ) — — 1,385 Research and development expenses 370 (1 ) — — 369 Amortization of intangible assets 121 (104 ) — — 17 Restructuring charges and certain acquisition-related costs 39 — (8 ) (31 ) — Other (income)/deductions–net 16 — — (6 ) 10 Income before provision for taxes on income 1,982 133 8 44 2,167 Provision for taxes on income 361 30 1 11 403 Net income attributable to Zoetis 1,623 103 7 33 1,766 Earnings per common share attributable to Zoetis–diluted 3.40 0.22 0.01 0.07 3.70 (a) The condensed consolidated statements of income present the nine months ended September 30, 2022 and 2021. Subsidiaries operating outside the United States are included for the nine months ended August 31, 2022 and 2021. (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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Integration costs(a) $ 1 $ 1 $ 4 $ 6 Restructuring charges(b) — — — 2 Total acquisition-related costs—pre-tax 1 1 4 8 Income taxes(c) — — 1 1 Total acquisition-related costs—net of tax $ 1 $ 1 $ 3 $ 7 (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) Represents exit and employee termination costs, included in Restructuring charges and certain acquisition-related costs. (c) 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Other restructuring charges and cost-reduction/productivity initiatives(a) $ 4 $ 7 $ 7 $ 22 Certain asset impairment charges(b) 2 5 6 19 Net loss on sale of assets(c) — — — 3 Other — — (3 ) — Total certain significant items—pre-tax 6 12 10 44 Income taxes(d) 1 3 — 11 Total certain significant items—net of tax $ 5 $ 9 $ 10 $ 33 (a) For the three and nine months ended September 30, 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. For the three months ended September 30, 2021, primarily represents employee termination costs associated with the realignment of our international operations, included in Restructuring charges and certain acquisition-related costs. For the nine months ended September 30, 2021, primarily represents employee termination costs associated with the realignment of our international operations and other costs associated with cost-reduction and productivity initiatives, included in Restructuring charges and certain acquisition-related costs. (b) For the three and nine months ended September 30, 2022, represents inventory and certain asset impairment charges primarily related to the consolidation of manufacturing sites in China, included in Cost of sales and Restructuring charges and certain acquisition-related costs, respectively. For the three months ended September 30, 2021, primarily represents asset impairment charges related to a dairy product termination, included in Other (income)/deductions-net. For the nine months ended September 30, 2021, primarily represents asset impairment charges related to the consolidation of manufacturing sites in China, included in Restructuring charges and certain acquisition-related costs, and a certain dairy product termination in Denmark, included in Other (income)/deductions-net. (c) Represents a net loss related to the sale of certain assets of our poultry automation business located in the U.S. and Canada, 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 also includes tax expense related to changes in valuation allowances for the nine months ended September 30, 2022. ZOETIS INC. ADJUSTED SELECTED COSTS, EXPENSES AND INCOME(a) (UNAUDITED) (millions of dollars) Three Months Ended September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) Adjusted cost of sales $ 605 $ 583 4 % (2 ) % 6 % as a percent of revenue 30.2 % 29.3 % NA NA NA Adjusted SG&A expenses 493 496 (1 ) % (4 ) % 3 % Adjusted R&D expenses 134 132 2 % (2 ) % 4 % Adjusted net income attributable to Zoetis 566 597 (5 ) % (7 ) % 2 % Nine Months Ended September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) Adjusted cost of sales $ 1,790 $ 1,691 6 % (1 ) % 7 % as a percent of revenue 29.6 % 29.1 % NA NA NA Adjusted SG&A expenses 1,473 1,385 6 % (3 ) % 9 % Adjusted R&D expenses 391 369 6 % (2 ) % 8 % Adjusted net income attributable to Zoetis 1,758 1,766 — % (6 ) % 6 % (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. 2022 GUIDANCE Selected Line Items (millions of dollars, except per share amounts) Full Year 2022 Revenue $8,000 to $8,075 Operational growth(a) 7% to 8% Adjusted cost of sales as a percentage of revenue(b) Approximately 30% Adjusted SG&A expenses(b) $1,970 to $2,000 Adjusted R&D expenses(b) $530 to $540 Adjusted interest expense and other (income)/deductions-net(b) Approximately $215 Effective tax rate on adjusted income(b) Approximately 20% Adjusted diluted EPS(b) $4.83 to $4.90 Adjusted net income(b) $2,270 to $2,310 Operational growth(a)(c) 9% to 11% Certain significant items and acquisition-related costs(d) $20 to $25 The guidance reflects foreign exchange rates as of late October 2022. Reconciliations of 2022 reported guidance to 2022 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 ~ 30.2% ~ (0.1)% ~ (0.1)% ~ 30.0% SG&A expenses $2,000 to $2,030 ~ $(30) $1,970 to $2,000 R&D expenses $531 to $541 ~ $(1) $530 to $540 Interest expense and other (income)/deductions-net ~ $215 ~ $215 Effective tax rate ~ 20% ~ 20% Diluted EPS $4.51 to $4.59 $0.04 to $0.05 ~ $0.27 $4.83 to $4.90 Net income attributable to Zoetis $2,120 to $2,165 $20 to $25 ~ $125 $2,270 to $2,310 (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 September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) Revenue: Companion Animal $ 1,271 $ 1,202 6 % (4 ) % 10 % Livestock 708 767 (8 ) % (5 ) % (3 ) % Contract Manufacturing & Human Health 23 21 10 % (5 ) % 15 % Total Revenue $ 2,002 $ 1,990 1 % (4 ) % 5 % U.S. Companion Animal $ 819 $ 775 6 % — % 6 % Livestock 271 290 (7 ) % — % (7 ) % Total U.S. Revenue $ 1,090 $ 1,065 2 % — % 2 % International Companion Animal $ 452 $ 427 6 % (11 ) % 17 % Livestock 437 477 (8 ) % (8 ) % — % Total International Revenue $ 889 $ 904 (2 ) % (10 ) % 8 % Companion Animal: Dogs and Cats $ 1,213 $ 1,142 6 % (4 ) % 10 % Horses 58 60 (3 ) % (4 ) % 1 % Total Companion Animal Revenue $ 1,271 $ 1,202 6 % (4 ) % 10 % Livestock: Cattle $ 371 $ 403 (8 ) % (4 ) % (4 ) % Swine 129 153 (16 ) % (5 ) % (11 ) % Poultry 116 124 (6 ) % (4 ) % (2 ) % Fish 60 56 7 % (12 ) % 19 % Sheep and other 32 31 3 % (9 ) % 12 % Total Livestock Revenue $ 708 $ 767 (8 ) % (5 ) % (3 ) % (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) Nine Months Ended September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) Revenue: Companion Animal $ 3,900 $ 3,507 11 % (3 ) % 14 % Livestock 2,081 2,245 (7 ) % (4 ) % (3 ) % Contract Manufacturing & Human Health 59 57 4 % (1 ) % 5 % Total Revenue $ 6,040 $ 5,809 4 % (3 ) % 7 % U.S. Companion Animal $ 2,488 $ 2,227 12 % — % 12 % Livestock 713 775 (8 ) % — % (8 ) % Total U.S. Revenue $ 3,201 $ 3,002 7 % — % 7 % International Companion Animal $ 1,412 $ 1,280 10 % (8 ) % 18 % Livestock 1,368 1,470 (7 ) % (6 ) % (1 ) % Total International Revenue $ 2,780 $ 2,750 1 % (7 ) % 8 % Companion Animal: Dogs and Cats $ 3,715 $ 3,319 12 % (3 ) % 15 % Horses 185 188 (2 ) % (4 ) % 2 % Total Companion Animal Revenue $ 3,900 $ 3,507 11 % (3 ) % 14 % Livestock: Cattle $ 1,063 $ 1,144 (7 ) % (4 ) % (3 ) % Swine 427 504 (15 ) % (3 ) % (12 ) % Poultry 361 389 (7 ) % (4 ) % (3 ) % Fish 151 132 14 % (8 ) % 22 % Sheep and other 79 76 4 % (7 ) % 11 % Total Livestock Revenue $ 2,081 $ 2,245 (7 ) % (4 ) % (3 ) % (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 September 30, % Change 2022 2021 Total Foreign Exchange Operational(a) Total International $ 888.8 $ 903.4 (2 ) % (10 ) % 8 % Australia 79.5 69.8 14 % (8 ) % 22 % Brazil 70.6 78.1 (10 ) % (1 ) % (9 ) % Canada 56.5 55.3 2 % (4 ) % 6 % Chile 30.9 32.6 (5 ) % (2 ) % (3 ) % China 92.1 71.5 29 % (6 ) % 35 % France 27.8 30.7 (9 ) % (13 ) % 4 % Germany 43.3 47.4 (9 ) % (15 ) % 6 % Italy 23.6 30.4 (22 ) % (12 ) % (10 ) % Japan 37.0 43.3 (15 ) % (20 ) % 5 % Mexico 32.6 31.3 4 % (1 ) % 5 % Spain 28.6 32.3 (11 ) % (13 ) % 2 % United Kingdom 59.7 61.1 (2 ) % (14 ) % 12 % Other developed markets 120.5 126.4 (5 ) % (13 ) % 8 % Other emerging markets 186.1 193.2 (4 ) % (11 ) % 7 % Nine Months Ended September 30, % Change 2022 2021 Total Foreign Exchange Operational(a) Total International $ 2,779.5 $ 2,749.6 1 % (7 ) % 8 % Australia 224.5 196.0 15 % (7 ) % 22 % Brazil 233.3 227.4 3 % 3 % — % Canada 172.3 168.5 2 % (2 ) % 4 % Chile 106.3 100.2 6 % (5 ) % 11 % China 291.0 288.9 1 % (1 ) % 2 % France 91.0 97.7 (7 ) % (10 ) % 3 % Germany 132.3 135.0 (2 ) % (11 ) % 9 % Italy 85.6 87.3 (2 ) % (11 ) % 9 % Japan 137.0 139.9 (2 ) % (14 ) % 12 % Mexico 100.6 97.8 3 % (1 ) % 4 % Spain 96.5 96.6 — % (11 ) % 11 % United Kingdom 174.2 173.2 1 % (8 ) % 9 % Other developed markets 353.8 349.9 1 % (10 ) % 11 % Other emerging markets 581.1 591.2 (2 ) % (11 ) % 9 % (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 September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) U.S.: Revenue $ 1,090 $ 1,065 2 % — % 2 % Cost of Sales 204 199 3 % — % 3 % Gross Profit 886 866 2 % — % 2 % Gross Margin 81.3 % 81.3 % Operating Expenses 206 183 13 % — % 13 % Other (income)/deductions-net 1 — * * * U.S. Earnings $ 679 $ 683 (1 ) % — % (1 ) % International: Revenue $ 889 $ 904 (2 ) % (10 ) % 8 % Cost of Sales 256 273 (6 ) % (7 ) % 1 % Gross Profit 633 631 — % (11 ) % 11 % Gross Margin 71.2 % 69.8 % Operating Expenses 150 152 (1 ) % (10 ) % 9 % Other (income)/deductions-net (3 ) (4 ) (25 ) % (5 ) % (20 ) % International Earnings $ 486 $ 483 1 % (11 ) % 12 % Total Reportable Segments $ 1,165 $ 1,166 — % (5 ) % 5 % Other business activities(c) (106 ) (106 ) — % Reconciling Items: Corporate(d) (245 ) (252 ) (3 ) % Purchase accounting adjustments(e) (40 ) (45 ) (11 ) % Acquisition-related costs(f) (1 ) (1 ) — % Certain significant items(g) (6 ) (12 ) (50 ) % Other unallocated(h) (100 ) (91 ) 10 % Total Earnings(i) $ 667 $ 659 1 % (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. ZOETIS INC. SEGMENT(a) EARNINGS (UNAUDITED) (millions of dollars) Nine Months Ended September 30, % Change 2022 2021 Total Foreign Exchange Operational(b) U.S.: Revenue $ 3,201 $ 3,002 7 % — % 7 % Cost of Sales 587 575 2 % — % 2 % Gross Profit 2,614 2,427 8 % — % 8 % Gross Margin 81.7 % 80.8 % Operating Expenses 578 484 19 % — % 19 % Other (income)/deductions-net (6 ) 2 * * * U.S. Earnings $ 2,042 $ 1,941 5 % — % 5 % International: Revenue $ 2,780 $ 2,750 1 % (7 ) % 8 % Cost of Sales 809 833 (3 ) % (5 ) % 2 % Gross Profit 1,971 1,917 3 % (8 ) % 11 % Gross Margin 70.9 % 69.7 % Operating Expenses 456 429 6 % (7 ) % 13 % Other (income)/deductions-net (5 ) (4 ) 25 % (12 ) % 37 % International Earnings $ 1,520 $ 1,492 2 % (9 ) % 11 % Total Reportable Segments $ 3,562 $ 3,433 4 % (4 ) % 8 % Other business activities(c) (315 ) (301 ) 5 % Reconciling Items: Corporate(d) (771 ) (744 ) 4 % Purchase accounting adjustments(e) (120 ) (133 ) (10 ) % Acquisition-related costs(f) (4 ) (8 ) (50 ) % Certain significant items(g) (10 ) (44 ) (77 ) % Other unallocated(h) (278 ) (221 ) 26 % Total Earnings(i) $ 2,064 $ 1,982 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.