Zoetis : First Quarter 2024 Financial Results - Investor Presentation

First Quarter

2024 Financial

Results

May 2, 2024

Forward-looking

Statements

This presentation 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.

Non-GAAP Financial

Information

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.

*GAAP refers to U.S. generally accepted accounting principles.

2

Kristin Peck

Chief Executive Officer

FIRST QUARTER FINANCIAL RESULTS

Key Takeaways

Outstanding Start to 2024

• Generated 12% operational1 revenue growth and a 15% operational increase in adjusted net income2, with U.S. revenue increasing 16% and International revenue up 8% operationally.
• Companion animal revenue grew 20% operationally, driven by our innovative franchises, with double-digit operational growth in both our U.S. and international segments and contributions from both volume and price.
• Although our livestock portfolio declined 1% operationally due to a tough comparative quarter in the U.S. and the impact of the economic conditions in China, we saw growth in our other international markets driven by price.

Updating and Increasing Guidance for 2024

• We are updating our 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 $9.050B and $9.200B with operational growth increased to 8.5% to 10.5%.
  • Reported net income between $2.450B and $2.495B; Adjusted net income between $2.620B and $2.670B with operational growth increased to 13% to 15%.
  • Reported diluted EPS of $5.34 to $5.44 with adjusted diluted EPS between $5.71 to $5.81.

1. Operational results (a non-GAAP financial measure) excludes the impact of foreign exchange.
2. Adjusted net income (a non-GAAP financial measure) is defined as reported GAAP net income, excluding purchase accounting adjustments, acquisition-related costs and certain significant items.

4

Wetteny Joseph

Executive Vice President and Chief Financial Officer

FIRST QUARTER FINANCIAL RESULTS

Income Statement Highlights

		First Quarter
	2024*	2023*	Change
Revenue	$2,190	$2,000	10%
Reported Net Income	599	552	9%
Reported Diluted Earnings Per Share	$1.31	$1.19	10%
Adjusted Net Income1	634	607	4%
Adjusted Diluted Earnings Per Share1	$1.38	$1.31	5%
* Millions of dollars, except per share data

1 Adjusted net income 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.

6

FIRST QUARTER FINANCIAL RESULTS

Adjusted Income Statement Highlights

			First Quarter
	2024*	2023*	Change	Foreign	Operational1
	Exchange
Revenue	$2,190	$2,000	10%	(2)%	12%
Adjusted Cost of Sales2	642	584	10%	4%	6%
as a percent of revenue3	29.3%	29.2%	NA	NA	NA
Adjusted SG&A Expenses2	544	498	9%	(1)%	10%
Adjusted R&D Expenses2	161	142	13%	-%	13%
Adjusted Operating Expenses4	710	646	10%	(1)%	11%
Effective Tax Rate on Adjusted Income2	19.7%	20.5%	NA	NA	NA
Adjusted Net Income2	634	607	4%	(11)%	15%
Adjusted Diluted Earnings Per Share2	$1.38	$1.31	5%	(12)%	17%

* Millions of dollars, except per share data NA - Not applicable

1. Operational results (a non-GAAP financial measure) excludes the impact of foreign exchange.
2. Adjusted net income and its components (non-GAAP financial measures) are defined as reported GAAP net income and its components, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Adjusted cost of sales, adjusted selling, general and administrative (SG&A) expenses and adjusted research and development (R&D) expenses are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. Effective tax rate on adjusted income (a non-GAAP financial measure) equals the adjusted provision for taxes on income (a non-GAAP financial measure) divided by adjusted income before provision for taxes on income (a non-GAAP financial measure).
3. Adjusted gross margin (a non-GAAP financial measure) was 70.7% and 70.8% in the first quarter of 2024 and 2023, respectively.
4. Adjusted operating expenses (a non-GAAP financial measure) of $710 million in the first quarter of 2024 and $646 million in the first quarter of 2023 includes adjusted amortization of intangible assets

7 of $5 million and $6 million in the first quarter of 2024 and 2023, respectively.

FIRST QUARTER FINANCIAL RESULTS

U.S. Segment Performance

		First Quarter
	2024*	2023*	Change
Revenue	$1,163	$1,005	16%
Companion Animal	898	721	25%
Livestock	265	284	(7)%
Cost of Sales	217	203	7%
Gross Profit	946	802	18%
Gross Margin	81.3%	79.8%	NA
Operating Expenses	190	188	1%
Other (Income)/Deductions - net	-	-	**
Earnings1	$756	$614	23%

* Millions of dollars, NA - Not applicable, **Calculation not meaningful

1 Defined as income before provision for taxes on income.

8

FIRST QUARTER FINANCIAL RESULTS

International Segment Performance

			First Quarter
				Foreign
	2024*	2023*	Change	Exchange	Operational1
Revenue	$1,007	$978	3%	(5)%	8%
Companion Animal	552	504	10%	(4)%	14%
Livestock	455	474	(4)%	(6)%	2%
Cost of Sales	313	291	8%	1%	7%
Gross Profit	694	687	1%	(7)%	8%
Gross Margin	68.9%	70.2%	NA	NA	NA
Operating Expenses	159	151	5%	(3)%	8%
Other (Income)/Deductions - net	-	1	**	**	**
Earnings2	$535	$535	-%	(9)%	9%

* Millions of dollars, NA - Not applicable, **Calculation not meaningful

1. Operational results (a non-GAAP financial measure) excludes the impact of foreign exchange.
2. Defined as income before provision for taxes on income.

9

FIRST QUARTER FINANCIAL RESULTS

International Segment Performance

			First Quarter
				Foreign
	2024*	2023*	Change	Exchange	Operational1
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%

* Millions of dollars

10 1 Operational results (a non-GAAP financial measure) excludes the impact of foreign exchange.