Zoetis Q2 Results Meet Estimates, Boosts 2014 Outlook

(RTTNews) - Zoetis, Inc. (ZTS), the former animal health business of Pfizer Inc. (PFE), reported Tuesday a profit for the second quarter that grew six percent from last year, reflecting improved revenues across operating segments and most regions.

Both adjusted earnings per share and quarterly revenues matched analysts' expectations. The company also raised its earnings and revenue forecast for the full-year 2014.

"In the second quarter, we generated 6% operational growth in revenue, based on the strong performance of our livestock products. We benefited from positive economic conditions for livestock producers versus the year-ago quarter, especially in the U.S., Canada and Brazil. This performance helped offset the impact of the PED virus in swine and slower growth in companion animal products," CEO Juan Ramón Alaix said in a statement.

Alaix added that sales of Apoquel, which continues to have limited supply, contributed to the company's growth in companion animal revenue and were somewhat offset by increased competition in other product areas.

The Florham Park, New Jersey-based company reported net income of $136 million or $0.27 per share for the second quarter, higher than $128 million or $0.26 per share in the prior-year quarter.

Results for the latest quarter include the net impact of $0.11 per share for purchase accounting adjustments, acquisition-related costs and certain significant items.

Excluding items, adjusted net income for the quarter was $189 million or $0.38 per share, compared to $178 million or $0.36 per share in the year-ago quarter. On an operational basis, adjusted net income increased 11 percent, with foreign currency having a negative impact of 5 percentage points.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.38 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 4 percent to $1.16 billion from $1.11 billion in the same quarter last year, and matched eight Wall Street analysts' consensus estimate of $1.16 billion.

Revenue reflected an operational increase of 6 percent, with foreign currency having a negative impact of 2 percentage points.

Livestock revenues improved 5 percent to $703 million, and companion animal revenue grew 1 percent to $439 million from a year ago. Contract manufacturing revenues increased 33 percent to $16 million from last year.

Total U.S. revenue grew 5 percent to $459 million, and Europe/Africa/Middle East revenues increased 7 percent to $284 million, while Canada/Latin America revenue remained flat with last year $214 million. Meanwhile, total Asia/Pacific revenues edged down 1 percent to $185 million from a year ago.

On an operational basis (excluding foreign exchange), Europe/Africa/Middle East revenues increased 4 percent, Canada/Latin America revenue grew 11 percent and Asia/Pacific revenues improved 5 percent from last year.

"We continue making progress on establishing our Zoetis systems and infrastructure as we complete our stand-up programs. We remain confident in our business model and outlook, and we are increasing the lower end of the guidance range for revenue and adjusted EPS for the full year 2014," added Glenn David, Senior Vice President of Finance Operations and Acting CFO.

Looking ahead to fiscal 2014, Zoetis raised adjusted earnings guidance to a range of $1.50 to $1.54 per share from the prior forecast range of $1.48 to $1.54 per share. The company now anticipates revenues between $4.675 billion and $4.750 billion, up from the previous projection between $4.65 billion and $4.75 billion.

Street is currently looking for full-year 2014 earnings of $1.54 per share, on annual revenues of $4.72 billion.

In Tuesday's regular trading session, ZTS is currently trading at $32.83, down $0.41 or 1.23% on a volume of 0.99 million shares.