Zoetis Inc.

Please stand by, your program is about to begin. Welcome to the first quarter 2024 Financial Results Conference call-in 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 available approximately two hours after the conclusion of the call via dial-in or on the 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 at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. In the interest of time, we ask that you 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 First Quarter 2024 Earnings Call. I am joined today by Kristen 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 US GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable US GAAP measures is included in the financial tables that accompany our earnings press release and the company's 8-K filing dated today. Thursday, May 2, 2024. We also cite operational results, which exclude the impact of foreign exchange. And with that, I will turn the call over to Kristen.

Thank you, Steve, and good morning, everyone, and welcome to our first quarter earnings call for 2024. Today, we reported outstanding first quarter results, underscored by steady demand for our products, a focused strategy, and our purpose-driven colleagues. We delivered 12% operational revenue growth and grew adjusted net income 15% operationally in line with the tenets of our value proposition. Driven by the launch of our osteoarthritis pain franchise, the U.S. led the way with 16% growth and 8% operational growth internationally. More specifically, globally, Librella grew 189% operationally, including $40 million in sales in the U.S. in line with our expectations. The powerful human-animal bond fuels demand for our companion animal portfolio with 20% growth operationally, while livestock declined 1% operationally. This quarter's results, even amidst global uncertainty, are a testament, once again, to the power of our diverse and durable portfolio across markets, species, and therapeutic areas. It also highlights the continued rise and resilience of the animal health industry. Our purpose and performance are rooted in science, which has always been the great disruptor. And as animal health is increasingly essential for nutrition and companionship, caregivers demand even more high-quality innovation. That means we identify the most prevalent areas of unmet veterinary need and invest in, develop, manufacture, and deliver life-changing products that customers have been waiting for. Take, for example, Labrella and Silencia, our injectable monoclonal antibodies to treat OA pain in dogs and cats, which are helping millions of pets return to play. With more than 18 million doses distributed worldwide, we are providing long-lasting relief to animals, many of whom were previously undiagnosed or untreated due to the limitations of NSAIDs. With nearly 40% of all dogs suffering from OA pain globally, We believe just one-third of those are being treated, so we're just scratching the surface of care. And cats are visiting the clinic more often. In fact, we're helping curb clinic fears with BondCat, the first FDA-approved product to alleviate anxiety in cats, which means we're expanding care in a historically under-medicalized area of the market. We understand that social media is a forum for convening. a place for pet owners to connect and to share. But we also have a responsibility to empower our customers to make informed decisions grounded in science and data. We are unwavering in our commitment to rigorous safety and quality standards, which has earned us the trust and confidence of veterinarians worldwide. Backed by that commitment, Labrella and Silencia are safe and effective. They are anchored in 10 years of science and have been used in Europe for more than three years. In the U.S., 78% of veterinarians who are at the center of care are very satisfied with Labrella. This is driven by real world experience and consistent with the feedback we hear in other markets. And our research indicates that 46% of vets globally will treat OA earlier and 65% will treat more dogs now that Labrella is available. To accurately reaffirm the safety and efficacy of these therapies, we are doubling down. working directly with veterinarians who need these products, hosting live sessions with our chief medical officer, and expanding online education and training while deploying capital to expand our DTC strategy. And veterinarians continue to be confident in Labella, as evidenced by a recent blind survey of U.S. vets confirming that perception and intent to prescribe remain unchanged. We remain confident that OA pain could be our next billion-dollar franchise. because we are meeting the needs of an underserved market. We are growing by nearly every metric, including adoption, penetration, reorder rates, patient share, and expanded utilization. And looking at our four-week rolling average in the U.S., we're excited to report that sales steadily increased through April. Our performance speaks to the power of the human-animal bond. Discerning pet owners want options, and they will work with their vets to find relief for their best friends. Beyond OA pain, Duetis has been able to lead the market in other key categories because we deeply understand our customers' needs. This allows us to not only compete in existing markets, but again, to create entirely new ones. And science has created something completely unique to our industry, $2 billion franchises. Our parasitized portfolio expanded the total market based on deep customer insights. Before Semperica and Semperica Trio, we were number five in this category. These innovations changed how we compete. Today, we are number two and continue gaining share and growing the market, even in the face of competition. Similarly, we were first to recognize that new therapies were needed to treat canine itch safely and effectively. That market foresight changed the treatment paradigm and revolutionized pet care. A decade of dermatology has led to three products, 20 major life cycle enhancements, including Cytopoint, the first ever animal health monoclonal antibody, and the first chewable with apical chew. From what was once believed to be just a $100 million market has grown to $1.4 billion because we know what our customers need. Today, more than 18 million dogs are treated for allergic itch and atopic dermatitis, and another 13 million remain untreated globally. We built a billion-dollar franchise and demonstrated the durability of our portfolio. And we will continue growing this franchise, underpinned by strong brand equity, first mover advantage, lifecycle innovation, and strong customer relationships. We've led in parasiticides, dermatology, and now OA pain. And each time our innovations have created new categories in animal health, you've seen the total industry opportunity expand. Now moving to livestock. I am sure you all saw the news this week on the announcement of our agreement with Fibro Animal Health to sell our global medicated feed additives and certain water-soluble product portfolios and related assets for $350 million. This deal is another great example of Zoetis' disciplined capital allocation strategy to focus investments in areas with the greatest growth potential and innovation that are aligned with our key capabilities. I'm confident that under Fibro's management, the global reach of these products will continue to expand to meet customer needs worldwide. We remain very committed to livestock and to sharpening our focus and our core innovative livestock growth areas, including preventatives, antibiotic alternatives, and genetics. In summary, for more than 70 years, Zoetis has been leading the industry with our commitment to innovation. We've invested over $5 billion in R&D since our IPO, which has brought more than 300 product lines to the market. Science is, and always has been, the great disruptor, and at the core of our success in delivering the innovations that veterinarians, livestock producers, and pet owners expect from us. Our pursuit of science has led to breakthroughs in dermatology, like Cytopoint and Apical Chew, in parasiticides with Sempericatrio, and now the latest in OA pain with Urella and Silencia that are revolutionizing animal health. Blazing new trails isn't easy, but time and again, our purpose-driven colleagues have proven their ability to expand our industry leadership and forge entirely new markets. And we remain committed to delivering strong growth through innovative franchises and diverse portfolio while continuing to invest for the future. Looking ahead to the remainder of 2024, our increased operational guidance reflects the resilience of the animal health market and the execution of our strategic growth priorities. We will continue to be disciplined yet adaptable in our approach to the opportunities, potential challenges, and economic shifts that occur throughout the year. And with that, I will turn it over to Watney.