Zoetis Inc.

Please stand by, your program is about to begin. Welcome to the third quarter 2023 Financial Results Conference call and webcast for Zoetis. Hosting the call today is Steve Frank, Vice President of Investor Relations for Zoetis. The presentation materials and additional financial tables are currently posted on the Investor Relations section of Zoetis.com. The presentation slides can be managed by you, the viewer, and will not be forwarded automatically. In addition, a replay of this call will be made available approximately two hours after the conclusion of the call via dial-in or on our investor relations section of zoetis.com. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question during that time, please press star 1 on your telephone keypad. If at any point your questions have been answered, you may remove yourself from the queue by pressing star 2. In the interest of time, we ask that you please limit yourself to one question and then queue up again with any follow-ups. Your line will be muted when you complete your question. 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, operator. Good morning, everyone, and welcome to the Zoetis third quarter 2023 earnings call. I am joined today by Kristin Peck, our chief executive officer, and Whitney 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 the company's 8K filing dated today, Thursday, November 2nd, 2023. 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 welcome, everyone, to our third quarter earnings call for 2023. We generated strong performance in the third quarter, driven by our diverse companion animal portfolio of key dermatology products, pet parasiticides, monoclonal antibodies for osteoarthritis pain, and diagnostics. We delivered 8% operational growth in revenue and 13% operational growth in adjusted net income despite continued market challenges in China. We showed balanced segment growth this quarter with 8% operational growth internationally and 8% growth in the US. Our companion animal portfolio grew 11% and our livestock portfolio grew 3% operational operationally in 3Q, in line with our overall expectations. Through the first nine months of the year, we have grown our revenue 7% operationally as customers place a premium on the animal health benefits that our products deliver, even in times of economic and geopolitical uncertainty. As the market leader in animal health, we compete in an essential global industry that has been resilient during various economic cycles. and we continue growing above the market based on a steady pipeline of new products, lifecycle innovations, and commercial execution. We are on track to achieve our full-year operational guidance and have narrowed it around the midpoint of the range as we continue to balance headwinds and tailwinds in the marketplace. We are executing well on the drivers where we have more control, like the successful launch of Labrella in the U.S., while also mitigating the downside of macroeconomic declines in China, both of which were not considered in our original guidance this year. Once again, our diverse portfolio across product categories and geographies generates durable, reliable, long-term growth. We continue to expect our key companion animal franchises to be our core catalyst for growth. We anticipate strong growth in our market-leading dermatology portfolio for the year. building on the ongoing direct-to-consumer, or DTC, digital campaigns that support disease and product awareness, as well as the continued introduction of lifecycle innovations like Apoquil Chewable. Our Semperica franchise and broader portfolio of parasiticides continue to form well in this increasingly competitive product category, based on our innovative and highly effective products and promotional support from DTC. In terms of new products, we're very pleased with the U.S. launch of Labrella, our canine monoclonal antibody for osteoarthritis or OA pain. This product has been very well received by veterinarians and pet owners in the U.S., as well as other major markets globally, and we have built ample supply for continued growth in the U.S. and elsewhere. Silencia, our monoclonal antibody for OA pain in cats, has also been well received by veterinarians in markets around the world, as we look to help increase medicalization of cats. We're building awareness of this condition among cat owners and introducing our monoclonal antibody treatment through DTC campaigns, as well as AI tools like Cat Pain IQ, which helps vets and pet owners use videos to identify this condition. Our diagnostic portfolio has been showing stronger year-over-year performance in 2023, with 14% operational growth in the third quarter, and we continue to refine this business to better serve customer needs across our comprehensive portfolio. For example, we're simplifying our reference lab service and operating model in the U.S. and focusing on expanding our larger regional hubs, which can deliver one-day turnaround and have more modernized operations. We also continue to emphasize the benefits of AI technology and our virtual lab services to enhance the speed and quality of our diagnostic solutions. With all this in mind, we are narrowing our full year guidance for operational growth to a range of 6.5% to 7.5% in revenue and a range of 7.5% to 8.5% in adjusted net income, keeping the same midpoint as our prior guidance. Whitney will provide more details on guidance in his remarks. We continue to see strong underlying customer demand this year and into 2024. even while recovery in China is still a notable uncertainty. The majority of vet practices in the U.S. continue to see high customer demand for veterinary services. However, labor constraints and more limited hours continue to hamper their ability to meet this demand. Year to date, clinic visits are flat as we expected. We did see a modest decline in clinic visits this quarter in the U.S., while clinic visit revenues and average revenue per visit were up. Looking ahead, we remain confident in the sustainable underlying demand for animal health based on the strength of the human-animal bond, people's willingness to spend on pet health, and the essential need for safe and secure food supply. We expect to achieve double-digit operational growth for our companion animal portfolio this year and low single-digit operational growth in our livestock portfolio. Before I wrap up, I want to reiterate a theme I discussed earlier this year at Investor Day. It's the confidence we have in sustaining our key market-leading franchises across dermatology, pet parasiticides, and osteoarthritis pain based on lifecycle innovations in these categories, as well as the pipeline we are exploring in other areas of unmet need. We are firmly committed to investing in our portfolio, as well as the DTC programs and capabilities we need to support our growth while managing costs and creating value for our shareholders. Despite economic and geopolitical uncertainties in China and elsewhere, we believe we will continue to grow faster than the market for the remainder of 2023 and into 2024. This confidence stems from our diverse portfolio across markets and species, our industry-leading franchises, the ongoing launch of Labrella, and the operational excellence and agility that our people deliver every day for our business and for our customers. So thank you, and let me hand this over to Wetni. Wetni.