Tick Infestations

Study finds that the aggressive lone star tick is no match for Credelio GREENFIELD, Ind., Aug. 15, 2024 /PRNewswire/ -- Parasites & Vectors, a leading peer-reviewed journal focused on parasites and vector-borne pathogens published the results of a head-to-head study demonstrating that Credelio, a prescription flea and tick protection product from Elanco Animal Health, has the fastest initial speed of tick kill in just 12 hours and sustains that advantage throughout the dosing interval.1,2,3 According to the Centers for Disease Control (CDC), during 2019 – 2022, state and local health departments reported more than 45,000 human cases of tickborne disease to CDC.4 The Companion Animal Parasite Council (CAPC) recommends using products on pets that kill and/or repel ticks before pathogens are transmitted.5 Continue Reading Dr. Kathryn Reif, Bailey-Goodwin Endowed Associate Professor in Parasitology at Auburn University, highlights the importance of the study findings. The 2023 head-to-head study compared three popular prescription flea and tick treatment products for dogs, Credelio (lotilaner), Simparica TRIO (sarolaner, moxidectin, pyrantel), and NexGard (afoxolaner), tracking the comparative data for the relative speeds of kill of Amblyomma americanum (lone star tick). The 2023 head-to-head study compared three popular prescription flea and tick treatment products for dogs, Credelio (lotilaner), Simparica TRIO (sarolaner, moxidectin, pyrantel), and NexGard (afoxolaner), tracking the comparative data for the relative speeds of kill of Amblyomma americanum (lone star tick) – an aggressive and expanding tick found in the United States that is one of the hardest to kill. Not only is this tick hard to kill, but it can also transmit dangerous disease-causing pathogens to pets and people. The CDC recently provided in-depth tick surveillance information regarding the aggressive nature of the lone star tick that can bite humans and transmit bacterial and viral pathogens, as well as cause alpha-gal syndrome (red meat allergy).6 "The results of this head-to-head study establishes Credelio as the front runner in speed of tick kill in prescription flea and tick treatment products for dogs.1 This is important because the longer a tick is attached, the greater the risk of pathogen transmission," said Dr. Kathryn Reif, Bailey-Goodwin Endowed Associate Professor in Parasitology at Auburn University. "These pathogens can cause serious diseases, such as Rocky Mountain Spotted Fever and ehrlichiosis, so it is critical that veterinarians talk with pet owners about year-round parasite protection. Credelio's rapid and sustained speed of tick kill helps protect pets against pathogen-carrying ticks which can result in dangerous diseases."1 The study included dogs that were randomly allocated to one of four treatment groups: Credelio, Simparica TRIO, NexGard or untreated control. Live tick counts were performed on dogs by blinded investigators during regular intervals.1 The study results found that by all 12-hour evaluation intervals, only the Credelio group significantly reduced lone star ticks as compared to the untreated control group. The study observed that the Simparica TRIO and NexGard groups were not significantly different from the untreated control group by any of the 12-hour evaluation intervals. The study also showed that Credelio significantly reduced ticks at all 12- and 24-hour evaluation time points and only Credelio provides a rapid speed of kill throughout the entire month-long treatment period.1,2,3 Of the evaluated products, only Credelio killed ticks as fast at the end of the month as at the beginning of the month. "This study sets Credelio apart from competitors as it maintains a rapid speed of tick kill throughout the entire monthly dosing period," said David Gosche, DVM, Elanco Sr. Director of Technical Marketing.1,2,3 "This product maintains consistent levels of efficacy in tick kill throughout the month, outperforming the competitors tested." 1,2,3 Learn more about Credelio for dogs here. To read the full study findings, click here. ABOUT ELANCO Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets, creating value for farmers, pet owners, veterinarians, stakeholders, and society as a whole. With nearly 70 years of animal health heritage, we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose™ Sustainability Initiatives –all to advance the health of animals, people, and the planet. CREDELIO INDICATIONS Credelio kills adult fleas and is indicated for the treatment and prevention of flea infestations (Ctenocephalides felis) and the treatment and control of tick infestations [Amblyomma americanum (lone star tick), Dermacentor variabilis (American dog tick), Ixodes scapularis (black-legged tick) and Rhipicephalus sanguineus (brown dog tick)] for one month in dogs and puppies 8 weeks of age and older and weighing 4.4 pounds or greater. CREDELIO IMPORTANT SAFETY INFORMATION Lotilaner is a member of the isoxazoline class. This class has been associated with neurologic adverse reactions including tremors, ataxia, and seizures. Seizures have been reported in dogs receiving this class of drugs, even in dogs without a history of seizures. Use with caution in dogs with a history of seizures or neurologic disorders. The safe use of Credelio in breeding, pregnant or lactating dogs has not been evaluated. The most frequently reported adverse reactions are weight loss, elevated blood urea nitrogen, polyuria, and diarrhea. For full prescribing information see Credelio package insert. NexGard is a registered trademark of Boehringer Ingelheim Animal Health USA Inc. Simparica TRIO is a registered trademark of Zoetis Services LLC. Credelio, Elanco and the diagonal bar logo are trademarks of Elanco or its affiliates. Other company and product names are trademarks of their respective owners. © 2024 Elanco or its affiliates PM-US-24-1168 1 Ambylomma americanum (lone star tick) 2 Reif KE, Kollasch TM, Neilson JC, Herrin BH, Ryan WG, Bell MC, Beltz MS, Dryden MW, Jesudoss Chelladurai JRJ, Miller KR, Sutherland CJ. Comparative speed of kill provided by lotilaner (Credelio™), sarolaner (Simparica Trio™), and afoxolaner (NexGard™) to control Amblyomma americanum infestations on dogs. Parasite Vectors. 2024 Jul 20;17(1):313. 3 Based on the time to statistical significance vs control in a single study on days 21 and 28 for reinfestations. 4 Centers for Disease Control and Prevention. (n.d.). Tickborne Disease Surveillance Data Summary. Centers for Disease Control and Prevention. Retrieved August 8, 2024, from 5 Companion Animal Parasite Council | 2023 Annual Pet Parasite Forecasts (capcvet.org) 6 Centers for Disease Control and Prevention. (n.d.). Where Ticks Live. Centers for Disease Control and Prevention. Retrieved August 8, 2024, from Investor Contact: Katy Grissom (317) 273-9284 [email protected] Media Contact: Season Solorio (765) 316-0233 [email protected] SOURCE Elanco Animal Health

Reports Revenue of $2.2 Billion, Growing 10%, and Net Income of $599 Million, or $1.31 per Diluted Share, Increasing 9% and 10%, Respectively, on a Reported Basis for First Quarter 2024 Delivers 12% Operational Growth in Revenue and 15% Operational Growth in Adjusted Net Income for First Quarter 2024 Reports Adjusted Net Income of $634 Million, or Adjusted Diluted EPS of $1.38, for First Quarter 2024 Updates Full Year 2024 Revenue Guidance to $9.050 - $9.200 Billion, with Diluted EPS of $5.34 to $5.44 on a Reported Basis, or $5.71 to $5.81 on an Adjusted Basis Increases Full Year 2024 Operational Revenue Growth to 8.5% to 10.5% and Full-Year Operational Growth in Adjusted Net Income to 13% to 15% PARSIPPANY, N.J.--(BUSINESS WIRE)-- Zoetis Inc. (NYSE:ZTS) today reported its financial results for the first quarter of 2024 and updated its guidance for full year 2024. The company reported revenue of $2.2 billion for the first quarter of 2024, an increase of 10% compared with the first quarter of 2023. On an operational1 basis, revenue for the first quarter of 2024 increased 12% compared with the first quarter of 2023. Net income for the first quarter of 2024 was $599 million, or $1.31 per diluted share, an increase of 9% and 10%, respectively, on a reported basis. Adjusted net income2 for the first quarter of 2024 was $634 million, or $1.38 per diluted share, an increase of 4% and 5%, respectively, on a reported basis, and an increase of 15% and 17%, respectively, on an operational basis. Adjusted net income for the first quarter of 2024 excludes the net impact of $35 million for purchase accounting adjustments, acquisition-related costs and certain significant items. EXECUTIVE COMMENTARY “I am incredibly proud of our outstanding first quarter, once again proving our ability to grow revenue faster than the market. It is a testament to the strength of our diverse portfolio and our dedicated colleagues," said Kristin Peck, Chief Executive Officer of Zoetis. “We achieved 16% revenue growth in the U.S. and 8% operational revenue growth internationally, and our companion animal portfolio grew an impressive 20% operationally, fueled by our innovative franchises in pet parasiticides, osteoarthritis pain and dermatology. Our scientific breakthroughs have firmly established us as trusted and preferred partners to our customers, and we will continue to invest in the talent, pipeline and capabilities that will support future growth." “As the leader in animal health, we understand our customers' needs. Our innovation continues to be our differentiator, and we'll continue to lead the way by investing in areas of unmet need to advance care for animals. The strength of the human-animal bond and the growing demand for a secure and sustainable food supply reinforce the essential nature of the animal health industry and our innovative portfolio. We will continue to deliver strong growth in 2024, while investing 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 2024: Revenue in the U.S. segment was $1.2 billion, an increase of 16% compared with the first quarter of 2023. Sales of companion animal products increased 25%, due to growth in key franchises including Simparica Trio®, the company's flea, tick and heartworm combination product, the company's key dermatology portfolio, including Apoquel® and Cytopoint®, and the company's osteoarthritis (OA) pain products, Librela® for dogs and Solensia® for cats. Growth in the quarter was also due in part to a favorable comparative period in the prior year that was negatively impacted by distributor de-stocking and timing of promotional activity. Sales of livestock products declined 7% in the quarter. Sales of cattle products declined due to a difficult comparable period versus the same quarter last year. Revenue in the International segment was $1.0 billion, reflecting a 3% increase on a reported basis and an increase of 8% operationally compared with the first quarter of 2023. Sales of companion animal products grew 10% on a reported basis and 14% operationally. Growth in the quarter was driven by the company’s OA pain products, Librela for dogs and Solensia for cats, as well as its key dermatology products, Apoquel and Cytopoint. Also contributing to growth in the quarter was Simparica Trio. Sales of livestock products declined 4% on a reported basis and grew 2% operationally. Growth of both the company's cattle and poultry products were driven largely by price increases across the broader international segment. Sales of sheep products declined due to unexpected weather conditions and supply constraints in Australia. Sales of swine products decreased primarily due to unfavorable market conditions in China and generic competition. INVESTMENTS IN GROWTH Zoetis continues to advance innovation and care for animals across the globe. Since its last quarterly earnings announcement, the company gained approval in Brazil for Valcor™ (doramectin and levamisole injection), a prescription endectocide for the treatment and control of internal and external parasites in cattle. Protivity®, the first modified-live bacterial vaccine to offer protection against Mycoplasma bovis in healthy cattle, was approved in the U.K. In the U.S., Bonqat®3 (pregabalin oral solution) is now available to treat the alleviation of acute anxiety and fear associated with transportation and veterinary visits in cats, helping them have a fear-free visit. Zoetis also continues to grow key product franchises through additional claim extensions in major markets. Synovex Choice® was approved for an additional claim in the U.S., to increase rate of weight gain in growing beef steers and heifers in the dry lot production phase. Also approved in the U.S., is a new implant, Synovex® Primer™, that will be available for the dry lot market later in 2024. Excenel® RTU EZ (ceftiofur hydrochloride), received approval in Japan for new claims related to the treatment of cattle foot rot and puerperal fever (metritis). In companion animal, Revolution® Plus (selamectin/sarolaner), a topical combination product that treats ticks, fleas, ear mites, lice and gastrointestinal worms and prevents heartworm disease in cats, received approval in Canada for an additional claim 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. Additionally, the company recently signed an agreement to purchase a manufacturing site in Melbourne, Australia, that includes a currently leased site as well as additional space for expansion. The facility will be used to develop and manufacture vaccines for sheep, cattle, dogs, cats and horses and help ensure a long-term supply of products for Australia. In the U.S., Zoetis expanded its distribution center in Lee's Summit, Mo., making it the company's largest center as well as a hub for other distribution centers in the U.S., enhancing the company's capacity to distribute its key product franchises. On April 28, 2024, Zoetis signed a deal to sell its medicated feed additive (MFA) portfolio and related assets, to focus its investments on other livestock solutions, including vaccine, biologic and genetic programs. FINANCIAL GUIDANCE Zoetis is updating its full year reported 2024 guidance for foreign exchange, with an increase to operational growth due to inflation-related price increases in Argentina and the underlying strength in companion animal. Revenue between $9.050 billion to $9.200 billion (operational growth of 8.5% to 10.5%) Reported net income between $2.450 billion to $2.495 billion Adjusted net income between $2.620 billion to $2.670 billion (operational growth of 13% to 15%) Reported diluted EPS of $5.34 to $5.44 Adjusted diluted EPS between $5.71 to $5.81 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 2024 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 2, 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 . 1 Operational results (a non-GAAP financial measure) is defined as results 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. 3 Bonqat® is a trademark owned by Orion Corporation. It is manufactured by Orion Corporation and exclusively distributed in the United States by Zoetis. 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 , , 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 on the 'Investor Relations' section of our website at , 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 March 31, 2024 2023 % Change Revenue $ 2,190 $ 2,000 10 Costs and expenses: Cost of sales 643 588 9 Selling, general and administrative expenses 547 505 8 Research and development expenses 162 142 14 Amortization of intangible assets 37 37 — Restructuring charges and certain acquisition-related costs 4 21 (81) Interest expense, net of capitalized interest 58 63 (8) Other (income)/deductions–net (8 ) (53 ) (85) Income before provision for taxes on income 747 697 7 Provision for taxes on income 148 146 1 Net income before allocation to noncontrolling interests 599 551 9 Less: Net loss attributable to noncontrolling interests — (1 ) * Net income attributable to Zoetis Inc. $ 599 $ 552 9 Earnings per share—basic $ 1.31 $ 1.19 10 Earnings per share—diluted $ 1.31 $ 1.19 10 Weighted-average shares used to calculate earnings per share Basic 458.0 463.5 Diluted 458.8 464.6 (a) The condensed consolidated statements of income present the three months ended March 31, 2024 and 2023. Subsidiaries operating outside the United States are included for the three months ended February 29, 2024 and February 28, 2023. * 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, 2024 GAAP Reported(a) Purchase Accounting Adjustments Acquisition- Related Costs(1) Certain Significant Items(2) Non-GAAP Adjusted(b) Cost of sales $ 643 $ (1 ) $ — $ — $ 642 Gross profit 1,547 1 — — 1,548 Selling, general and administrative expenses 547 (3 ) — — 544 Research and development expenses 162 (1 ) — — 161 Amortization of intangible assets 37 (32 ) — — 5 Restructuring charges and certain acquisition-related costs 4 — — (4 ) — Other (income)/deductions–net (8 ) — — (2 ) (10 ) Income before provision for taxes on income 747 37 — 6 790 Provision for taxes on income 148 8 — — 156 Net income attributable to Zoetis 599 29 — 6 634 Earnings per common share attributable to Zoetis–diluted 1.31 0.06 — 0.01 1.38 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 (a) The condensed consolidated statements of income present the three months ended March 31, 2024 and 2023. Subsidiaries operating outside the United States are included for the three months ended February 29, 2024 and February 28, 2023. (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, 2024 2023 Integration costs(a) $ — $ 1 Total acquisition-related costs—pre-tax — 1 Income taxes(b) — — Total acquisition-related costs—net of tax $ — $ 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, 2024 2023 Other restructuring charges and cost-reduction/productivity initiatives(a) $ 4 $ 20 Other 2 2 Total certain significant items—pre-tax 6 22 Income taxes(b) — 2 Total certain significant items—net of tax $ 6 $ 20 (a) For the three months ended March 31, 2024, primarily consisted of employee termination costs related to organizational structure refinements, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative, included in Restructuring charges and certain acquisition-related costs. 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. (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 2024 2023 Total Foreign Exchange Operational(b) Adjusted cost of sales $ 642 $ 584 10 % 4 % 6 % as a percent of revenue 29.3 % 29.2 % NA NA NA Adjusted SG&A expenses 544 498 9 % (1 )% 10 % Adjusted R&D expenses 161 142 13 % — % 13 % Adjusted net income attributable to Zoetis 634 607 4 % (11 )% 15 % (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 results (a non-GAAP financial measure) is defined as results excluding the impact of foreign exchange. ZOETIS INC. 2024 GUIDANCE Selected Line Items (millions of dollars, except per share amounts) Full Year 2024 Revenue $9,050 to $9,200 Operational growth(a) 8.5% to 10.5% Adjusted cost of sales as a percentage of revenue(b) Approximately 29.8% 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 $200 Effective tax rate on adjusted income(b) 20.0% to 21.0% Adjusted diluted EPS(b) $5.71 to $5.81 Adjusted net income(b) $2,620 to $2,670 Operational growth(a)(c) 13% to 15% Certain significant items and acquisition-related costs(d) $60 - $65 The guidance reflects foreign exchange rates as of late April 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(c) Cost of sales as a percentage of revenue ~ 29.9% ~ (0.1%) ~ 29.8% SG&A expenses $2,181 to $2,231 ~ $(11) $2,170 to $2,220 R&D expenses $667 to $677 ~ $(2) $665 to $675 Interest expense and other (income)/deductions-net ~ $210 ~ $(10) ~ $200 Effective tax rate 20.0% to 21.0% 20.0% to 21.0% Diluted EPS $5.34 to $5.44 ~ $0.13 ~ $0.24 $5.71 to $5.81 Net income attributable to Zoetis $2,450 to $2,495 $60 - $65 ~ $110 $2,620 to $2,670 (a) Operational results (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 results 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 2024 2023 Total Foreign Exchange Operational(b) Revenue: Companion Animal $ 1,450 $ 1,225 18 % (2 )% 20 % Livestock 720 758 (5 )% (4 )% (1 )% Contract Manufacturing & Human Health 20 17 18 % 2 % 16 % Total Revenue $ 2,190 $ 2,000 10 % (2 )% 12 % U.S.: Companion Animal $ 898 $ 721 25 % — % 25 % Livestock 265 284 (7 )% — % (7 )% Total U.S. Revenue $ 1,163 $ 1,005 16 % — % 16 % International: Companion Animal $ 552 $ 504 10 % (4 )% 14 % Livestock 455 474 (4 )% (6 )% 2 % Total International Revenue $ 1,007 $ 978 3 % (5 )% 8 % Companion Animal: Dogs and Cats $ 1,384 $ 1,153 20 % (2 )% 22 % Horses 66 72 (8 )% (2 )% (6 )% Total Companion Animal Revenue $ 1,450 $ 1,225 18 % (2 )% 20 % Livestock: Cattle $ 391 $ 399 (2 )% (3 )% 1 % Poultry 139 139 — % (6 )% 6 % Swine 127 142 (11 )% (4 )% (7 )% Fish 45 49 (8 )% (2 )% (6 )% Sheep and other 18 29 (38 )% (5 )% (33 )% Total Livestock Revenue $ 720 $ 758 (5 )% (4 )% (1 )% (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational revenue results (a non-GAAP financial measure) is defined as revenue results excluding the impact of foreign exchange. ZOETIS INC. CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2024 2023 Total Foreign Exchange Operational(a) Total International $ 1,007 $ 978 3 % (5 )% 8 % Australia 73 82 (11 )% (4 )% (7 )% Brazil 101 84 20 % 7 % 13 % Canada 61 50 22 % 1 % 21 % Chile 31 39 (21 )% (4 )% (17 )% China 76 102 (25 )% (3 )% (22 )% France 41 34 21 % 1 % 20 % Germany 51 45 13 % 1 % 12 % Italy 28 26 8 % 2 % 6 % Japan 37 39 (5 )% (9 )% 4 % Mexico 44 39 13 % 10 % 3 % Spain 32 33 (3 )% 1 % (4 )% United Kingdom 77 68 13 % 4 % 9 % Other developed markets 127 122 4 % — % 4 % Other emerging markets 228 215 6 % (25 )% 31 % (a) Operational revenue results (a non-GAAP financial measure) is defined as revenue results excluding the impact of foreign exchange. ZOETIS INC. SEGMENT(a) EARNINGS (UNAUDITED) (millions of dollars) Three Months Ended March 31, % Change 2024 2023 Total Foreign Exchange Operational(b) U.S.: Revenue $ 1,163 $ 1,005 16 % — % 16 % Cost of Sales 217 203 7 % — % 7 % Gross Profit 946 802 18 % — % 18 % Gross Margin 81.3 % 79.8 % Operating Expenses 190 188 1 % — % 1 % Other (income)/deductions-net — — * * * U.S. Earnings $ 756 $ 614 23 % — % 23 % International: Revenue $ 1,007 $ 978 3 % (5 )% 8 % Cost of Sales 313 291 8 % 1 % 7 % Gross Profit 694 687 1 % (7 )% 8 % Gross Margin 68.9 % 70.2 % Operating Expenses 159 151 5 % (3 )% 8 % Other (income)/deductions-net — 1 * * * International Earnings $ 535 $ 535 — % (9 )% 9 % Total Reportable Segments $ 1,291 $ 1,149 12 % (4 )% 16 % Other business activities(c) (132 ) (114 ) 16 % Reconciling Items: Corporate(d) (288 ) (208 ) 38 % Purchase accounting adjustments(e) (37 ) (42 ) (12 )% Acquisition-related costs(f) — (1 ) * Certain significant items(g) (6 ) (22 ) (73 )% Other unallocated(h) (81 ) (65 ) 25 % Total Earnings(i) $ 747 $ 697 7 % (a) For a description of each segment, see Zoetis' most recent Annual Report on Form 10-K. (b) Operational results (a non-GAAP financial measure) is defined as results 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. View source version on businesswire.com: Contacts Media Contacts: Jenielle Alonso 1-973-945-4333 (o) jenielle.alonso@zoetis.com Laura Panza 1-973-975-5176 (o) laura.panza@zoetis.com Investor Contacts: Steve Frank 1-973-822-7141 (o) steve.frank@zoetis.com Nick Soonthornchai 1-973-443-2792 (o) nick.soonthornchai@zoetis.com Source: Zoetis Inc. View this news release online at:

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.