Zoetis Inc.

When posing your question, please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Steve Frank. Steve, you may begin.

Thank you. Good morning, everyone, and welcome to the Zoleta Second Quarter 2021 Earnings Call. I am joined today by Kristen Peck, our Chief Executive Officer. and by Wetney Joseph, our Chief Financial Officer. Before we begin, I'll remind you that the slides presented on this call are available on the investor relations section of our website, and that our remarks today will include forward-looking statements, and that actual results could differ materially from those projections. For a list and description of certain factors that could cause results to differ, I refer you to the forward-looking statements in today's press release, and our SEC filings, including but not limited to our annual report on Form 10-K and our reports on Form 10-Q. Our remarks today will also include references to certain financial measures which were not prepared in accordance with generally accepted accounting principles or U.S. GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures is included in the financial tables that accompany our earnings press release. and in the company's 8K filing dated today, Thursday, August 5th, 2021. We also cite operational results, which exclude the impact of foreign exchange. With that, I will turn the call over to Kristen.

Thank you, Steve, and good morning, everyone. I hope you and your loved ones are all staying healthy and getting vaccinated for COVID-19. I'd like to start the call by welcoming our new Chief Financial Officer, Watney Joseph, who is joining me on the call today. As the former CFO of Catalan, Whitney is a veteran of the biopharma industry and very familiar with many of you in the investment community. Whitney joined us on June 1st and is off to a fast start, learning all about the company and animal health, everything from cattle runs and drought impacts to pet care trends and parasiticide season. I am confident that Whitney will make strong contribution to our ongoing market performance, value creation, and leadership in animal health. I also want to take a moment to thank Glenn David for his partnership and all of his contributions to Zoetis as CFO over the last five years. Glenn has taken on a new role overseeing our international operations and other business units, including Pharmac, BioDevices, and Pumpkin Pet Insurance. I know he will bring his signature leadership qualities, business skills, and industry knowledge to this role and continue driving profitable growth in these areas. Now turning to the second quarter, we achieved strong results once again, with 22% operational growth in revenue and 28% operational growth in adjusted net income. Our companion animal portfolio generated 36% operational revenue growth, driven by our pet care parasiticides, key dermatology products, vaccines, and diagnostics. Meanwhile, livestock product sales were up 3% operationally and remain in line with our expectations for more moderate growth this year. The second quarter results also reflected favorable comparisons to last year's second quarter when the uncertainty of COVID-19 and related lockdowns were most severely felt across the animal health industry. We are raising full-year guidance for revenue and adjusted income again this quarter to reflect our first half performance and confidence in the underlying growth drivers of our business. We remain on track for a very strong year and continue to focus on sustaining our investment in long-term growth opportunities. With a strong cash flow and positive outlook, we are investing internally and externally in innovative new products, market expansion plans, and direct-to-consumer promotions that will support future growth. Our team has been delivering strong growth based on internally developed companion animal parasiticides. led by our Empirica, ProHeart, and Revolution Plus franchises. We've redefined care for the dermatology category with our development of Apoquel and Cytopoint, and we see more growth potential coming from our monoclonal antibodies for osteoarthritis pain, new vector vaccines for poultry, and the industry's first cloud-based diagnostic platform with AI capabilities. In terms of our monoclonal antibodies for alleviation of OA pain in dogs and cats, we continue to anticipate U.S. approval for Labrella and Silencia in 2022. Meanwhile, initial customer response from vets and pet owners in Europe has been excellent, and we recently received approval of Silencia in Canada. I always say with great pride that we have the best field force in the animal health industry, and we will continue to expand their scope, effectiveness, and digital tools in ways that can enhance our customers' experience and support our growth objectives. We've also seen a positive return on our investment in direct-to-consumer promotions for Semperica, Apoquel, and Disease Awareness over the years. And DTHC remains an area of ongoing investment to support our parasiticide and dermatology portfolios. And finally, we continue to look externally for business development opportunities that can complement our portfolio and expand our market presence or capabilities. Yesterday, we announced plans to acquire Jurox, a privately held animal health company based in Australia. Expected to close in the first half of 2022, the acquisition will provide us with growth opportunities, manufacturing capacity, and increased capabilities in Australia, our fifth largest market, and also bring us a range of companion animal and livestock products primed for global expansion. As I wrap up my remarks, our growth story for this year remains very consistent, based on three recurring catalysts. First, our companion animal portfolio, driven by our triple combinations in Perica Trio and other parasiticides, our dermatology treatments, Apical and Cytopoint, new monoclonal antibodies for pain, and our VetScan diagnostic systems. The entire portfolio is benefiting from strong pet care trends in terms of increasing clinic visits, rising spend per visit, and a focus on diagnostics and specialty care, especially among newer and younger generations of pet owners. Recent estimates for market growth in companion animal products are in the high single digits, and Zoetis continues to expect to grow faster than the market. We're gaining share in the approximately $5 billion global parasiticides market for pets, and we're excited by veterinarian and pet owner responses to our new monoclonal antibodies for pain. We also continue to see progress in the early launch of vet scan images, which leads to our second catalyst for growth, diagnostics, which posted 38% operational revenue growth in the second quarter, and access to vet clinics in the U.S. rebounded from the year-ago quarter. Our third growth catalyst is international, where we continue to generate strong operational growth, driven by China and Brazil, which grew at 30% and 40%, respectively. All our catalysts for growth are buoyed by our priority to champion a healthier and more sustainable future through commitments to our communities, animals, and the planet. You can read more about our progress on these ESG goals in our first sustainability report, which was published in June. In closing, we had a great second quarter, and we're focused on delivering a record-setting year. The market dynamics in animal health remain strong, steady, and resilient, even during the challenging times, based on people's unbreakable bond with animals. For the remainder of the year, our diverse portfolio, innovative pet care products, strengthened diagnostics, and expansion in international markets will continue driving our performance. Now, let me hand things off to Wetney.