Q3 2023 Zoetis Inc Earnings Call

Standby [music].

Speaker 1: about to begin.

Speaker 2: Welcome to the third quarter 2023 financial results conference con webcast for Zoetis. Hosting the call today is Steve Frank, Vice President of Investor Relations for Zoetis.

Welcome to the third quarter 2023 financial results conference call and webcast, Brazil. It is hosting the call today is Steve Frank Vice President of Investor Relations for Zelle latest.

Speaker 2: 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.

The presentation materials and additional financial tables are currently posted on the Investor Relations section of <unk> Dot com. The presentation slides can be managed by you the beeler 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 <unk> Dot com.

Speaker 2: 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.

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 one on your telephone keypad. If at any point your questions have been answered you may remove yourself from the queue by pressing star two.

Speaker 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.

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.

Speaker 2: 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.

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.

Speaker 3: 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 Wetney Joseph, our chief financial officer.

Thank you operator, good morning, everyone and welcome to the <unk> third quarter 2023 earnings call I'm 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.

Speaker 3: 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.

And that our remarks today will include forward looking statements and that actual results could differ materially from those projections.

Speaker 3: 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 .

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.

Speaker 3: 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 8K filing dated today, Thursday, November 2nd, 2020.

Generally accepted accounting principles.

Our 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 8-K filing data today Thursday November <unk> 2023.

Speaker 3: We also cite operational results, which exclude the impact of foreign exchange. With that, I will turn to the next slide.

We also cite operational results, which exclude the impact of foreign exchange with that I will turn the call over to Kristin.

Speaker 4: 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.

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 parasiticide monoclonal antibodies for osteoarthritis pain and diagnostics, we delivered 8% operational growth in.

Speaker 4: 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 U.S.

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 U S. R.

Speaker 4: Our companion animal portfolio grew 11% and our livestock portfolio grew 3% operational, operationally in 3Q, in line with our overall expectations.

Our companion animal portfolio grew 11% and our livestock portfolio grew 3% operational operationally in <unk> 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.

Speaker 4: 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.

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 innovation and commercial execution.

Speaker 4: 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.

Speaker 4: 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 market.

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 tailwind in the marketplace. We are executing well on the drivers where we have more control like the successful launch of <unk> in the U S. While also mitigating the downside of Mac.

Speaker 4: We are executing well on the drivers where we have more control, like the successful launch of LeBrella in the U.S., while also mitigating the downside of macroeconomic declines in China, both of which were not considered in our original guidance of the pier.

Pro economic declines in China, both of which were not considered in our original guidance this year.

Speaker 4: Once again, our diverse portfolio across product categories and geographies generate durable, reliable long-term growth. We continue to expect our key companion animal franchises to be our core catalyst for growth.

Once again, our diverse portfolio across product categories and geographies generate durable reliable long term growth. We continue to expect our key companion animal franchises to be our core catalysts for growth.

Speaker 4: 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 applicable chewable.

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 <unk> chewable or.

Speaker 4: Our Simperica 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.

Our comparative franchise and broader portfolio of parasiticide continue to perform well in this increasingly competitive product category based on our innovative and highly effective products and promotional support from DTC.

Speaker 4: In terms of new products, we're very pleased with the US launch of LeBrela, Arcaneine, Monaco and Abadi for off-dirt, right-ass or O.A.

In terms of new products, we're very pleased with the U S launch of Labella, 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 <unk>.

Speaker 4: This product has been very well received by veterinarians and pioneers in the US, as well as other major markets globally. And we have built ample supply for continued growth in the US and else.

Square Celestia, 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 were building awareness of this condition among cat owners and introducing our monoclonal antibody treatment through DTC campaigns.

Speaker 4: Celensia, our monocle antibody for OA-PANN and CATS, has also been well received by veterinarians and 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 monocle antibody treatment through DTC campaigns, as well as AI tools like CAT Payne IQ, which helps that and pet owners use videos to identify this condition.

As well as AI tools like cat paint IQ, which helps vets and pet owners use videos to identify this condition.

Speaker 4: Our diagnostic portfolio has been showing stronger year over year for performance in 2023, which 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, and have more modernized operations.

Our diagnostics 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 at all.

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.

Speaker 4: We also continue to emphasize the benefits of AI technology and our virtual lab services to enhance the speed and quality of our diagnostic.

Speaker 4: 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. Rodney will provide more details and guidance in his remarks.

All of this in mind, we are narrowing our full year guidance for operational growth to a range of six five to seven 5% in revenue and a range of seven five to eight 5% and adjusted net income keeping the same midpoint as our prior guidance, what Neil will provide more details on guidance in his remarks.

Speaker 4: We continue to see strong underlying customer demand this year and into 2024, even while recovery in China is still a notable uncertainty.

We continue to see strong underlying customer demand this year and into 2024, even while recovery in China is still a notable uncertainty.

Speaker 4: The majority of that practices in the US continue to see high customer demand for veterinary services. However, labor constraints and more limited hours continue to hamper their ability to meet

The majority of that 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.

Speaker 4: Year-to-date, clinic visits are flat, as we expected. We did see a modest decline in clinic visits this quarter in the US, while clinic visit revenues in average revenue per visit were up.

While clinic visit revenues and average revenue per visit were up.

Speaker 4: 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.

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.

Speaker 4: We expect to achieve double-digit operational growth for a companion animal portfolio this year, and low single-digit operational growth in our livestock portfolio.

Single digit operational growth and 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 parasiticide and osteoarthritis pain, they've been lifecycle innovation in these categories.

Speaker 4: 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 pairs, citatide, and osteoarthritis pain. They've been life cycle innovations in these categories. As well as the pipeline, we are exploring in other areas of unmatched

These 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 program and capabilities, we need to support our growth, while managing costs and creating value for our shareholders.

Speaker 4: 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.

Speaker 4: 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 sectors.

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 2020 for this confidence stems from our diverse portfolio across markets and species are industry leading franchises the.

Speaker 4: our industry's eating franchises, the ongoing launch of LeBrela, and the operational excellence in agility that our people deliver every day for our business and for our customers. So thank you and let me hand this over to Whitney. Whitney. Thank you.

Ongoing launch of Labella, and the operational excellence and agility that our people deliver everyday for our business and for our customers.

So thank you and let me hand, this over to Whitney Whitney.

Thank you Christian and good morning, everyone.

Speaker 5: As Kristin mentioned, we had a strong third quarter with broad-based growth across both our US and international sector.

As Christian mentioned, we had a strong third quarter with broad based growth across both our U S and international segments across both companion animal and lifestyle portfolios and across both price and volume.

Speaker 5: across both companion animal and livestock portfolios, and across both price and volume.

Speaker 5: For the quarter, we're able to deliver results in light with our expectations, even in light of continued headwinds in China.

For the quarter were able to deliver results in line with our expectations given in light of continued headwinds in China.

Speaker 5: In the third quarter, regenerated revenue of $2.2 billion, going 70% on a reported basis, and 8% on unauthorization.

In the third quarter, we generated revenue of $2 2 billion growing 7% on a reported basis and 8% on an operational basis.

Speaker 5: Adjust the net income of $629 million, who 11% on a reported basis, and 13% on an operational...

Adjusted net income of $629 million grew 11% on a reported basis and 13% on an operational basis.

Speaker 5: of the 8% operational revenue growth, 5% is one price, and 3% is one volume.

Of the 8% operational revenue growth, 5%, it's one price and 3% this one volume.

Speaker 5: Volume growth consisted of 2% from new products, including our monocologant bodies for a pain to the bella insolentia, and 1% from our keto-metallic portfolio.

Volume growth consisted of 2% from new products, including our monoclonal antibodies for ethane labella, Insulins and 1% from our key dermatology portfolio.

Speaker 5: Our companion animal portfolio was the main driver of revenue growth growing 11% operation.

Our companion animal portfolio was the main driver of revenue growth growing 11% operationally livestock also contributed with operational growth of 3% in the quarter.

Speaker 5: Livestock also contributed with operational growth of 3% in the quarter.

Yeah.

Speaker 5: Compantant animal growth was again driven by our innovative products with double digit operational growth in our key dermatology portfolio, our monoclonal antibodies for orey pain, the brill insolentia, and subbaricotrio.

Companion animal growth was again, driven by our innovative products with double digit operational growth in our key dermatology portfolio.

Monoclonal antibodies for pain for Brilinta, Lithia and <unk>.

Speaker 5: Our key dermatology products generated $393 million in sales globally, posting growth of 14% on an operational basis, with double digit growth in both the US and international.

Our key dermatology products generated $393 million in sales globally, posting growth of 14% on an operational basis with double digit growth in both the U S and international.

Speaker 5: Globally, our monoclonal antibodies for OAPAIN posted $77 million in combined revenue in the quarter.

Globally, our monoclonal antibodies for pain posted $77 million in combined revenue in the quarter.

Speaker 5: Wealth came primarily from our European markets, as well as from the impact of new launch markets internationally.

Growth came primarily from our European markets as well as from the impact of new launch markets internationally.

Speaker 5: With the October full launch of Lubella in the US, our OAPain products are now available in most major markets.

With the October full launch of new Bell in the U S. O opinion products are now available in most major markets.

Speaker 5: The Bercutrio posted global revenue of $206 million in the quarter, representing growth of 20% operationally versus the comparable 2022 period.

The perpetual posted global revenue of $206 million in the quarter, representing growth of 20% operationally versus the comparable 2022 period.

Speaker 5: Growth was driven by expanded DTC advertising support globally, as well as from increased field force and promotional focus.

Growth was driven by expanded DTC advertising support globally as well as from increased field force and promotional focus.

Speaker 5: Our companion animal diagnostics portfolio recorded revenue of $90 million and grew 14% operationally, with growth contributions from both the U.S. and internationally.

Our companion animal diagnostics portfolio reported revenue of $90 million and grew 14% operationally with growth contributions from both the U S and international.

Speaker 5: Our lifecycle portfolio grew 3% operationally, with international growth partially offset by a slight decline in the U.S.

Our lifestyle portfolio grew 3% operationally with international growth, partially offset by a slight decline in the U S.

Speaker 5: Wealth in livestock was driven primarily by price, especially in high inflationary markets.

Growth in livestock was driven primarily by price, especially in high inflationary markets.

Speaker 5: We also saw volume growth in our poultry portfolio, driven by increased usage of vaccines, as well as our anti-carculeal product, Zoromix, in the UX.

We also saw volume growth in our poultry portfolio driven by increased usage of vaccines as well as our anti clock Silvio product. So it makes in the U S.

Now moving on to revenue growth by segment for the quarter.

Speaker 5: US revenue was 1.2 billion dollars in the quarter, going 8%. With comparing animal products to only 11% and livestock sales declining 2%.

U S revenue was $1 $2 billion in the quarter growing 8% with companion animal products growing 11% and livestock sales declining 2%.

Speaker 5: On the companion animal side, while vet clinic visits declined 1.5% in the quarter, we continue to see robust clinic revenue growth, up 6% versus a year ago. Average revenue per visit...

On the companion animal side, while vet clinic visits declined one 5% in the quarter, we continued to see robust cleaning revenue growth up 6% versus a year ago.

Average revenue per visit is up over 7% on a year to date basis clearly visits are flat while clinic revenue is growing 8%.

Speaker 5: On a year-to-day basis, clinic visits are flat, while clinic revenue is growing 8%.

Speaker 5: These trends highlight the continued durability of pet owner willingness to spend as well as the continued impact of vet clinic staffing challenges.

These trends highlight the continued durability of pet owners' willingness to spend as well as the continued impact of vet clinic staffing challenges.

Yeah.

Speaker 5: Our companion animal revenue growth continues to outpace veterinary clinic revenue growth, due in part to our continued upsized growth in retail channels.

Our companion animal revenue growth continues to outpace veterinary clinic revenue growth due in part to our continued outsized growth in retail channel.

Speaker 5: Turning to product performance, companion animal growth in the U.S. was driven by our Ketermetology portfolio, Semperika Trio, and Solentia.

Turning to product performance companion animal growth in the U S was driven by our key dermatology portfolio Simpatico trio and Celesio.

Speaker 5: Q-dermatology product sales in the U.S. were $260 million in the quarter, growing 13%.

<unk> product sales in the U S were $260 million in the quarter growing 13%.

Speaker 5: Spider point cells continue to drive growth in the quarter, with vets showing a preference for injectables due to higher compliance, and pet owners appreciating the longer duration of treatment.

<unk> sales continued to drive growth in the quarter with vets, showing a preference for injectables due to higher compliance and pet owners appreciating the longer duration of treatment.

Speaker 5: Apical cells were driven by growth in the retail channel, as pet owners continue to rely more heavily on retail for ongoing pharmacy needs, as well as retail auto-shaped programs that drive higher compliance.

Africa ourselves, which isn't by growth in the retail channel as pet owners continue to rely more heavily on retail for ongoing pharmacy needs as well as retail auto ship programs that drive higher compliance.

Speaker 5: Our latest dermatology lifecycle innovation, Apricot Shrovel, was launched in the US in October .

Our latest dermatology lifecycle innovation I forgot shovel was launched in the U S. In October.

Speaker 5: Apricot Truble has been well-received in Europe as pet owners favor the ease of Truble administration over film-coated tablets.

<unk> has been well received in Europe as pet owners favor the ease of <unk> administration over film coated tablets.

The Americas posted U S sales of $184 million in the quarter growing 17% driven by increased focus in our parasiticide promotional programs.

Speaker 5: Emberra-Cotrillo posted U.S. sales of $184 million in the quarter, growing 17%, driven by increased focus in our Paracetamide promotional program.

Speaker 5: continue to see patient-shared growth in Sympathetica Trio, even with the recent competitive launch in the triple combination.

We continue to see patient share growth in <unk>, even with the recent competitive launch and the triple combination space.

Speaker 5: remain confident in our ability to compete through our superior label, strong retail channel presence, and the strength of our corporate and specialty relationships.

We remain confident in our ability to compete through our superior label strong retail channel presence and the strength of our corporate and specialty relationships.

Speaker 5: In the U.S., our OA pain products posted sales of $15 million in the quarter. We continue to see solid plantar penetration growth for Silencia, as well as an uptick in feline clinic visits, and expect to continue to drive awareness of feline OA through our DTC advertising campaign.

In the U S O if hain products posted sales of $50 million in the quarter. We continued to see solid player penetration growth for <unk> as well as an uptick in feline clinic visits and expect to continue to drive awareness of <unk> through our DTC advertising campaigns.

Speaker 5: Librela has been well-received by early experience program participants and their patients during the third quarter. We moved to a full launch in mid-October. We have been very pleased with post-launch performance thus far and are confident that we have ample supply to meet our demand expectations.

The boiler has been well received by early experience program participants and their patients during the third quarter.

We move to a full launch in mid October.

We have been very pleased with post launch performance, thus far and are confident that we have ample supply to meet our demand expectations.

Speaker 5: Our U.S. Companion Animal Diagnostics portfolio posted growth of 18% in the quarter, as we continue to see positive results from the new field force we introduced last year.

Our U S companion animal diagnostics portfolio posted growth of 18% in the quarter as we continued to see positive results from the new field Force, we introduced last year.

Speaker 5: We saw strong placement growth in the quarter, especially on our images device.

We saw strong placement growth in the quarter, especially on our imaging device.

Speaker 5: U.S. livestock sales declined 2% in the quarter, primarily resulting from the timing of supply on certain cattle products in the prior year, where we had an improved supply position and restocking in the channel, which drove a strong comparable quarter.

U S livestock sales declined 2% in the quarter, primarily resulting from the timing of supply on certain Caddo products in the prior year, where we had an improved supply position and restocking in the channel, which drove a strong comparable quarter.

Speaker 5: The Q3 decline was partially offset by growth in our cattle productivity implant Cinevex due to expended label claims.

The Q3 decline was partially offset by growth in our Caddo productivity implant <unk> due to expanded label claims.

Speaker 5: The cattle decline was partially offset by growth in poultry due to vaccines and the expended use of Zoramix, an alternative to antibiotic-medicated feed additives.

The carload decline was partially offset by growth in poultry due to vaccines and the expanded use of <unk>, an alternative to antibiotic medicated feed additives.

Speaker 5: Moving on to our international segment, where revenue grew 8% on both a reported and operational basis.

Moving onto our international segment, where revenue grew 8% on both a reported and operational basis in the quarter.

Speaker 5: International companion animal revenue grew 12% operationally and livestock grew 5% operationally.

International Companion animal revenue grew 12% operationally and livestock grew 5% operationally.

Speaker 5: increased cells of companion animal products resulted from growth in our modern accordance to bodies for oapane, archaeology products, and our small animal fairs synthesized portfolio.

Increased sales of companion animal products resulted from growth in our monoclonal antibodies for pain, all key dermatology products and our small animal parasiticide portfolio.

Speaker 5: Growth in our OA pain products was bolstered by filled force focus and DTC awareness campaigns in early launch European markets, specifically the UK and Germany, as well as the continued uptake in markets launched earlier this year.

Growth in our oil paint products was bolstered by sales force focus and DTC awareness campaigns and early launch European markets, specifically, the UK and Germany as well as the continued uptake in markets launched earlier this year.

Speaker 5: Cabela's sales were $50 million internationally, or 55% operational growth in the quarter, despite a slightly more difficult comparator in Q3 of 2022 due to the removal of supply constraints in our international market.

Gibraltar sales were $50 million internationally or 55% operational growth in the quarter. Despite a slightly more difficult comparator in Q3 of 2022 due to the removal of supply constraints in our international markets.

Speaker 5: remain confident in our ability to supply or forecast a demand for libretta. So let's hear sales with 12.

We remain confident in our ability to supply our forecasted demand for lubricants.

So, let's see yourselves with $12 million in the quarter.

Speaker 5: Our international key dermatology portfolio contributed $133 million in revenue and grew 17% operation.

Our international key dermatology portfolio contributed $133 million of revenue and grew 17% operationally we.

Speaker 5: We saw double digit growth across most of our major markets and strong uptake of our group.

We saw double digit growth across most of our major markets and strong uptake of our <unk>.

Speaker 5: Apocrygmal was driven primarily by the delayed itch season in Europe and Canada.

Our core growth was driven primarily by the delayed each season in Europe and Canada.

Speaker 5: SpriterPoint growth was driven by continued patient expansion and higher compliance in existing patients.

<unk> growth was driven by continued patient expansion and higher compliance and existing patients.

Our international small animal parasiticide portfolio of growth of 9% operationally, what's driven by our <unk> franchise with <unk> posting $40 million in revenue growing 29% operationally driven primarily by demand generation and emerging markets.

Speaker 5: Our international small animal parasites portfolio growth of 9% operationally was driven by our Simperica franchise, with Simperica posting $40 million in revenue, growing 29% operationally, driven primarily by demand generation in emerging markets.

Speaker 5: Empirica Trio posted $23 million, growing 47% on an operational basis, driven by growth in corporate account contracts.

Empire kosher you posted $23 million growing 47% on an operational basis driven by growth in corporate account contracts with.

Speaker 5: the empirical franchise performance was partially offset by a 16% operational decline in revolution franchise driven by a difficult comparable period in China due to the return of supply in the prior year, as well as the ongoing impact of the current economic conditions.

So Erika franchise performance was partially offset by a 16% operational decline in revolution franchise, driven by a difficult comparable period in China due to the return of supply in the prior year as well as the ongoing impact of the current economic conditions.

Speaker 5: As Christin mentioned, we are seeing declines in China due to the ongoing economic challenges, particularly on the campaign animal side, which were not fully reflected in our initial guide.

As Christian mentioned, we are seeing declines in China due to the ongoing economic challenges, particularly on the companion animal side, which were not fully reflected in our initial guidance.

Speaker 5: We continue to monitor economic conditions. However, we are not expecting an improvement this year or into the first half of next year.

We continue to monitor economic conditions. However, we are not expecting an improvement this year or into the first half of next year.

Our international livestock segment grew 5% operationally in the quarter, driven primarily by price increases, especially in high inflationary markets.

Speaker 5: our international life supply segment, who 5% operational in the quarter, during primarily by price increases, especially in high inflationary markets.

Speaker 5: Growth was driven primarily by our cattle portfolio, which were 8% operation.

Growth was driven primarily by our cattle portfolio, which grew 8% operationally.

Speaker 5: Brazil was the largest contributor, where we have seen price growth, supply recovery on certain products, as well as continued improvement in cattle industry dynamics.

<unk> was the largest contributor where we have seen price will supply recovery in certain products as well as continued improvement in cattle industry dynamics.

Speaker 5: Additionally, the prior was a weak comparative period due to the impact of supply disruptions and a more uncertain industry dynamic led to a lowering of channel inventories in the quarter.

Additionally, the prior was a weak comparative period due to the impact of supply disruptions and a more uncertain industry dynamic led to a lowering of channel inventories in the quarter.

Speaker 5: Our poultry business also contributed to growth in the quarter, growing 9% operationally due to increased key account penetration in emerging markets.

Our poultry business also contributed to growth in the quarter growing 9% operationally due to increased key account penetration in emerging markets.

Now moving onto the rest of the P&L for the quarter.

Speaker 5: Adjusted gross margin of 70.5% improved 70 basis points on a reported basis compared to the prior year, primarily driven by the impact of price increases and lower freight charges.

Adjusted gross margin of 75% improved 70 basis points on a reported basis compared to the prior year, primarily driven by the impact of price increases and lower freight charges. This.

Speaker 5: This was partially offset by higher manufacturing costs, inventory charges and product mix.

This was partially offset by higher manufacturing costs inventory charges and product mix.

Speaker 5: Adjusted operating expenses increased 7% operationally, driven primarily by higher SG&A expenses, which were 5% operationally due to higher compensation-related expenses.

Adjusted operating expenses increased 7% operationally driven primarily by higher SG&A expenses, which grew 5% operationally due to higher compensation related expenses.

Speaker 5: R&D expenses grew 13% on an operational basis in the quarter, driven by higher compensation-related expenses, as well as increased project spend for our pipeline projects. The adjusted effective...

R&D expenses grew 13% on an operational basis in the quarter driven by higher compensation related expenses as well as increased project spend for our pipeline projects.

The adjusted effective tax rate for the quarter was 19, 6% a decrease of 130 basis points due to favorable jurisdictional mix of earnings and a higher benefit in the U S related to foreign derived intangible income, partially offset by lower net discrete tax benefits.

Speaker 5: a due case of 130 basis points due to favorable jurisdictional mix of earnings and a higher benefit in the US related to foreign derived intangible income, partially offset by lower net discrete tax bet.

Speaker 5: And finally, adjusted net income with 13% operationally and adjusted deluded EPS with 15% operationally with a quarter.

And finally, adjusted net income grew 13% operationally and adjusted diluted EPS grew 15% operationally for the quarter.

Capital expenditures in the third quarter were $145 million, we now expect full year capital expenditures to be in the range of 725 million to $750 million.

Speaker 5: Capital expenditures in the third quarter were $145 million. We now expect full-year capital expenditures to be in the range of $725 million to $750 million.

Speaker 5: and the quarter repurchased $250,000,000 of the wetest shares.

In the quarter, we repurchased $250 million of the weighted shares.

Now moving to guidance for the full year of 2023.

Speaker 5: Please note that guidance reflects foreign exchange rates as of late October , which reflects the continued strengthening of the US dollar.

Please note that guidance reflects foreign exchange rates as of late October which reflect the continued strengthening of the U S. Dollar.

Speaker 5: Beginning with revenue for the full year due to unfravable foreign exchange rates. We are revising our reported revenue range while narrowing our guidance on operational revenue.

Beginning with revenue for the full year due to unfavorable foreign exchange rates, we are revising our reported revenue range, while narrowing our guidance on operational revenue growth.

Speaker 5: We expect revenue between $8.475 and $8.55 billion, with a range of 6.5% to 7.5% operational growth. Previous Guidance was 6% to 18%

We expect revenue between $8 $4, 75, and 855 billion with a range of six 5% to seven 5% operational growth our previous guidance was 6% to 8%.

Speaker 5: We have been pleased with our operational performance thus far. While foreign exchange headwinds have been larger than expected, our year-to-date operational revenue growth of 7% is in line with our expectations.

We have been pleased with our operational performance, thus far while foreign exchange headwinds have been larger than expected our year to date operational revenue growth of 7% is in line with our expectations.

Speaker 5: We expect to benefit from the approval and launch of Lubella in the U.S., which was included in our revised guidance last quarter, as well as the performance of our livestock business. However, ongoing uncertainty in China has continued to offset upside potential.

We expect to benefit from the approval and launch of Labella in the U S, which was included in our revised guidance last quarter as well as the performance of our lifestyle business. However, ongoing uncertainty in China has continued to offset upside potential.

Speaker 5: We are expecting adjusted net income to be in the range of 2.49 billion to 2.51 billion dollars. Also slightly lower driven by unfraviable point.

We are expecting adjusted net income to be in the range of $2 49 billion to $2. Five 1 billion also slightly lower driven by unfavorable foreign exchange.

Speaker 5: Operation only, we are gnawing our growth expectations to a range of 7.5% to 8.5%. Previously, 7% to 9%.

Operationally, we are narrowing our growth expectations to a range of seven 5% to eight 5% previously 7% to 9%.

Expected reported diluted EPS narrows to a range of $5 14 to.

Speaker 5: Expected reported diluted DPS narrows to a range of $5.14 to $5.21.

To $5 21.

Speaker 5: and adjusted the LUDDPS narrows to $5.38 to $5.40.

And adjusted diluted EPS narrows to $5 38.

To $5 43.

Speaker 5: Finally, to summarize before we go to Q&A. Our broad-based growth across species and jagu.

Finally to summarize before we go to Q&A, our broad based growth across species and geographies. Despite the challenging economic environment in China, continuing to highlight the resilience of our portfolio and of the animal health industry.

Speaker 5: by the challenging economic environment in China. Continuing to highlight the resilience of our portfolio and of the animal health industry.

Speaker 5: remain committed to growing above the industry, given our innovative portfolio, commercial execution, and multiple sources of online growth.

<unk> committed to growing above the industry driven by our innovative portfolio commercial execution and multiple sources of inline growth now.

Speaker 5: Now, I'll hand things over to the operator to open the line for your questions.

Now I'll hand things over to the operator to open the line for your questions operator.

Speaker 2: Certainly at this time again if you would like to ask a question please press star 1 on your touch tone phone. You may withdraw your questions at any time by pressing star 2. In the interest of time we do ask that you limit yourself to one question and then queue up again with any follow-ups. We'll take our first question from John Block with CIFIL. Please go ahead.

Certainly sir at this time again, if you would like to ask a question. Please press star one on your Touchtone phone.

You may withdraw your questions at any time by pressing star two.

Interest of time would you ask that you limit yourself to one question and then queue up again with any follow ups. We will take our first question from Jon Block with Stifel. Please go ahead.

Speaker 6: Great things guys, good morning. I promised one long question. So in the companion animal, the overall revenue was a bit shy of what we had expected, but you're really a great performance. You know, we call it sort of the big five product. So he's topic Durham, Trio, MADS, you know, the big five were all.

Great. Thanks, guys good morning.

Just one follow up question. So in companion animal the overall revenue was a bit shy of what we had expected, but you really have great performance.

What we call sort of the big five products. So atopic derm trio match the big five were all.

Speaker 6: head of our estimate. So maybe you guys can talk a little bit about the ongoing uptake of some of those key big five products.

Ahead of our estimate so maybe if you guys can talk a little bit about the ongoing uptake of some of those key big five products, even with the more difficult consumer right because people view some of those discretionary.

Speaker 6: even with a more difficult consumer, right? Because people view some of those as discretionary, again, the result for really strong, and even despite the more difficult consumer. And in the flip side would just be like anything to side regarding the legacy products, right? So if you back into legacy, that might have been modestly down year over year. And a quick part B on the follow up.

Again, the results were really strong.

Even despite the more difficult consumer.

And then the flip side would just be like anything to say regarding the legacy products right. So if you back into legacy that might have been modestly down year over year and quick part B on the follow up question you mentioned faster growth pursue what is the market and get in 'twenty. Four I don't think were really surprised by that you've done.

Speaker 6: Chris, and you mentioned faster growth for Soetis, than market and get in 24. I don't think we're really surprised by that. You've done that year and year and year and hour. But can I push you a little bit on how we should think about for Soetis in 24 versus Soetis in 23? In other words, if we take into account the OA pain uptake, if you would, can we see accelerated growth for the company in 24 versus 23? What we think about all the moving parts?

That year in year out.

Can I push you a little bit on how we should think about <unk> and 'twenty four versus to what is in 'twenty three in other words, if we can.

Take into account the OA pain uptake if you would.

Could we see accelerated growth for the company and 24 versus <unk> 23.

When we think about all the moving parts. Thanks guys.

Speaker 4: wow okay so down great question i think there's like twenty questions that one so i don't know how we would do that but i'll let me start in that i'll let me build on it uh... to your point we had really strong growth across our franchises and to look at dermatology with fourteen percent in the quarter paris at ten percent diagnostics at fourteen percent and the overall pain portfolio at ninety one percent

Wow, Okay. So John Great question I think there was like 20 questions you've outlined I don't know Hollywood do that but I'll, let me start and then I'll, let let me build on it.

To your point, we had really strong growth across our franchises and if you look at dermatology with 14% in the quarter Perez at 10% diagnostics at 14% and the overall pain portfolio at 91%.

Speaker 4: So there really was strong growth across all those. Obviously leading their growth there will be pain. And as you look into 2024, we see that as well as, you know, we significant optimism about where that's going to go. We're very pleased with where that launch is.

So there really was strong growth across all of those obviously, leading the growth there will be pain and as you look into 2024, we see that as well with significant optimism about where that's going to go we're very pleased with where that launch is these are both libretto <unk> two products that are very early in their lifecycle with significant growth and I think.

Speaker 4: These are both LeBrella and Celensia, two products that are very early in their life cycle with significant growth. And I think, you know, if you really double click, if you look at International, who already have these products in the market for a while, you're seeing great growth. Importantly, we're continuing to see really strong components.

If you really double click if you look at international crew already had these products in the market for a while youre seeing great growth importantly, we are continuing to see really strong compliance on those products across Europe.

Who currently has a dog who was an early experience who have got their second dose. The libra the difference that it makes I really can't see it.

Any pet owners are taking their doors off these world leading medications. So maybe what any if you want to take on some of the detailed questions you had around Durham Perez and so lumpy, but to your point, we remain very optimistic looking into 2024 about the strength of our companion animal portfolio and the 11% was in line with what we expected it to be honest, but why do you want.

Speaker 5: on some of the detailed questions you had around Durham, Paris and Celensia. But to your point, we remain very optimistic looking into 2024 about the strength of our companion animal portfolio. And the 11% within line with what we expected to be honest. But what do you want to give more detail on some of that? Yeah, absolutely. Look, the 11% growth operationally in companion animals right in line with our expectation coming into the quarter. And the overall growth of 8% operational, what you even say is likely above, if you recall, on the last call, we said expect you three to come in somewhere between the mid and the high end of our growth rate. So that's roughly within 7 and 8. So at the high end of that. But in terms of consumer look.

To give more detail on some of that yes, absolutely look the 11% growth operationally in companion animal was right in line with our expectation coming into the quarter and the overall growth of 8% operational I would even say slightly above if you recall on the last call. We said expect Q3 to come in somewhere between the mid and the high end of our growth rates. So that's rough.

Speaker 5: And the overall growth of 8% operational would even say is likely above, if you recall, on the last call we said expect you to come in somewhere between.

Speaker 5: the mid and the high end of our world rate. So that's roughly within seven and eight. So at the high end of that. But in terms of consumer, look, as you've said time and time again, if you look at the therapeutics category in terms of the value and pet health, as well as some of the chronic conditions that Christian mentioned.

700, <unk> so at the high end of that but in terms of consumer look as we've said time and time again if.

If you look at the therapeutics category in terms of the value in pet health as well as some of the chronic conditions as Christian mentioned.

Speaker 5: You know, consumers have not been treating those as discretionary, even when you see some relative stuff, softness, and pet spend. It doesn't carry over into the health care piece in terms of therapeutics, et cetera. And we've seen that play out in many ways, even as I'm sure we'll get into clinic visits or slightly down in the water. Clinic revenue is up almost 7%, and we're going faster than that. Again, retail being a part of that, and we'll get into a little bit more detail. When I look at these big products as you describe them.

Consumers have not been treating those as discretionary even when you see some some relative softness in pet spend it doesn't carryover into the health care piece in terms of therapeutics et cetera, and we've seen that play out.

Even as I'm sure, we'll get into a clinic visits are slightly down in the quarter.

Vince clinic revenue is up almost 7% and we're growing faster than that again retail being a part of that and we'll get into that a little bit more detail. When I look at these big projects as you describe them John Darren <unk>, all up double digits and up across U S and international I mean, our growth this quarter was broad based.

Speaker 5: Durham, TRiO, Mavs, all up double digits and up across US and international. Our growth this quarter is broad-based.

Speaker 5: across the campaign animal life.us international price 5% volume.

Across companion animal livestock U S International price, 5% volume on 3%, so really broad based and I think that really underscores.

Speaker 5: on 3% so really broad-based and I think that really underscores

Speaker 5: the breadth of our products as well as our innovation and the value that consumer and pet owners place on products. The legacy products, when I look at inline, keep in mind, when we talk price, we tend to.

The breadth of our products as well as our innovation and the value that consumer and pet owners placed on products. The legacy products that when I look at in mind keep in mind, when we talk price we tend to see price lift in those legacy products as well, but one other volume it wasn't down in my products are actually flat on the quarter year on year with some lift on price so.

Speaker 5: price lift in those legs products as well, but when I was evaluating, it wasn't down. In my products were actually flat on the quarter year and year with some lift on price. So hopefully that helps. But I share the optimism, Kristen, described with respect to 2024. I mean, we have multiple sources of growth, not only the well-alonged.

That helps but I share the optimism Kristin described with respect to 2024, I mean, we have multiple sources of growth.

Not only the <unk> launch in the U S. You've got continued growth across international markets full umbrella insulins here as well.

Speaker 5: You've got continued growth across international markets, Fulibrella and Salencia as well. And of course, we'll have price as a lever in addition to inline products we just talked about. Livestock is now back to growth, and we'll look at what that looks like when we come back with guidance next year. And then we expect growth across our key franchises as well in terms of DERM, Paris, and diagnostics. So I'll cap it there. That was a long answer to a long question, but we'll take the next one.

And of course, we will have price as a lever. In addition to inline products. We just talked about livestock is now back to growth and we will look at what that looks like when we come back with guidance on next year.

And then we expect growth across our key franchises as well in terms of derm, Paris and diagnostics. So our cap. It there there was a long answer to a long question.

But we will take the next one.

Speaker 2: Certainly. We'll take our next question from Erin Wright with Morgan Stanley . Please go ahead.

Certainly we will take our next question from Erin Wright with Morgan Stanley. Please go ahead.

Speaker 7: Great thanks. On my brella, can you talk a little bit about the initial feedback for US practices where the will will be in the initial clinic level stocking? I think you said your expectations are in tax there, but any lumpiness quarter to quarter that we should be thinking about has anything changed in terms of your expectations there. And then as we think about margin expansion next year, given my brella won't be at critical mass so that when they weigh on the growth margin, but is there still some underlying operating leverage that we should think about across the business?

Great. Thanks, Mike Brad can you talk a little bit about the initial feedback for U S practices will there be any initial clinic level stocking I think you said your expectations are intact there.

Any lumpiness quarter to quarter that we should be thinking about has anything changed in terms of your expectations. There and then as we think about margin expansion next year, given my grella wont be at critical mass. So that may weigh on the gross margin, but is there still some underlying operating leverage that we should think about across the business. Thanks.

Speaker 4: Sure, thanks Aaron, I'll take the first half of a question and we'll wait and take the second half of the question. You know, we launched in the US the early experience trial in September with 400 clinics. As I mentioned, my dog's copy was actually one of those dogs.

Sure. Thanks, Erinn I'll take the first half of the question well, let me take the second half of the question we launched in the U S. The early experience trial in September with 400 clinics as I mentioned my dog copy was actually one of those dogs. We went to full launch in mid October once we got a full dose in and Thats really the uptake was really strong.

Speaker 4: We went to full launch in mid-October once we got a full dose in and that's, you know, really the uptake was really strong, very pleased with the result.

Very pleased with the results. We're obviously still in the early stages, but we're seeing it very similar to what we saw in Europe.

Speaker 4: We're obviously still in the early stages, but we're seeing it very similar to what we saw in Europe . Both vets and pet owners are super excited. We made sure that we've got ample supply as Bob Wettney and I mentioned, because we do see this as a strong ramp as you saw what happened in international. International had a supply constraint for a while, and as soon as we opened that, we saw where that really went. So we continue to see really strong demand. Penetrations going really well in the clinics in the US.

Both <unk> and pet owners are Super excited we made sure that we've got ample supplies of Whitney and I mentioned, because we do see this as a strong ramp as you saw what happened in international International had a supply constraint for a while and as soon as we open that we saw were that really weren't so we continue to see really strong demand penetration is going really well.

The clinics in the U S.

Speaker 4: and the experience is broadening. There'll be some small initial stocking for sure in some of those clinics.

And the experiences broadening there'll be some small initial stocking for sure in some of those clinics, but I don't know that I would call that lumpiness going into next year that definitely was.

Speaker 4: But I don't I don't know that I would call that lumpiness going into next year. The definitely was you know obviously they they stock it and you know our hope is we continue to just

Obviously, the de stocking in our hope as we continue to just continue to drive that growth going forward. It is the number one selling OA pain product in Europe, we expect it to obviously be the same in the U S. If you look at the U S. In particular, Erin there are $26 million Medicalized dogs with OE. So this is a big one.

Speaker 4: you know continue to drive that growth, you know, going forward. You know, it is the number one selling OAPAN product in Europe . We expect it to obviously be the same in the US.

Speaker 4: If you look at the US in particular, Aaron, there are 26 million medicalized dogs with OA.

Speaker 5: So this is a big market that we're going after and this is a game-changing product. So we really see that it's very strong potential with this. We think LeBrello will expand the market. And as we've mentioned before, we really do think LeBrello and Celensia alone can be a $1 billion portfolio for us. And that's in a market today that was only $400 million. So I think that's sort of underscored where we see growth there. But do you want to talk about the margin expansion, if you want me? Sure, I will. You're right, Aaron, in terms of, as we said, a way to look at my ad.

Market that we're going after and this is a game changing product. So we really see that it's very strong potential with it we think <unk> will expand the market and as we've mentioned before we really do think liberal insolently alone can be a $1 billion.

Portfolio for us.

That's in a market today that was only $400 million. So I think that sort of underscores where we see growth there, but do you want to talk about the margin expansion issue I'm sure I will look youre right Aaron in terms of as we said when I look at maps.

Speaker 5: at peak, once they ramp up, they'll be additive and accretive to our gross margins.

At peak once they ramp up they will be additive and accretive to our gross margins.

Speaker 5: We believe they're also accretive to our contribution margin even when there are What I'll say is subscale in terms of getting to the towards their peak So as we launch into the US which is a large market, obviously as you said We'll see a little bit of a headwind from a gross margin perspective But given many of the investments that we need to drive this field force, etc Already in the books if you will there'll be some incremental A MP and DTC and so on and once we we have the right level of penetration of the product and clinics

We believe there are also accretive to our contribution margin even when there are what I'll say is subscale in terms of getting to the towards their peaks. So as we launch into the U S, which is a large market. Obviously as you said, we'll see a little bit of a headwind from a gross margin perspective, but given many of the investments that we need to drive this field force et cetera, we're already in.

The books, if you will there'll be some incremental A&P and DTC is once we have the right level of penetration of the product and clinics.

Speaker 5: But that's still going to leave room for contribution margin left in the product. So that will be I would say a factor from the world's margins and end point

But that's still going to leave room for contribution margin lift in the product so that will be.

Factor from a gross margin standpoint look we will give more precision in terms of guidance for 'twenty for the next call but.

Speaker 5: Look, we'll give more precision in terms of guidance for 24 at the next call, but as you can read from us and what we're saying today, we're very excited about 24. We're optimistic on 24, giving the levers as you describe.

As you can as you can read from us and what we're saying today, we're very excited about 'twenty four we're optimistic on 24, given the levers I just described so in line with what we said at Investor Day, we expect to grow in the mid to high single digits. I think youll continue to see us look for margin expansion given the mixed up.

Speaker 5: So in line with what we said yesterday, we expect to grow them into high single digits.

Speaker 5: I think you'll continue to see us look for margin expansion given the mix up

Speaker 5: in companion animal versus last bite, but I won't give you anymore, anymore specific the next.

Companion animal versus last night, but I won't give you any more any more specific than that.

Speaker 2: Thank you. We'll take our next question from Nathan Rich with Goldman Sachs. Please go ahead.

Thank you we'll take our next question from Nathan Rich with Goldman Sachs. Please go ahead.

Speaker 3: Great. Thanks so much for the question. I wanted to stick with Lobrella and Kristen specifically asked about, you know, how vets are diagnosing OA pain and starting dogs on therapy. You obviously talked about the, you know, large number of pets that could benefit from this but, you know, relatively few dogs on treatment. I guess, you know, anything you can share in terms of diagnosis rates for practices that were in the Early Experience Program and where those, you know, diagnoses are coming from are these dogs currently on a pain product and maybe switching to Lobrella or these, you know, new dogs being diagnosed. Anything there would be great. And then a quick follow-up on the international performance of Lobrella. It looks like it was roughly flat sequentially on a constant currency basis. Any learnings on seasonality or anything like that on the international side now that that's been on the market for a little bit?

Great. Thanks, so much for the question I wanted to stick with <unk> and Kristin specifically ask about how that sort of diagnosing OA pain and starting on therapy. Obviously, you talked about the large number of pads that could benefit from this but relatively few dogs on treatment I guess anything you can share in terms of diagnosis.

Rates for practices that were in the early experience program.

And where those diagnoses are coming from are these dogs currently on a pain product and maybe switching total umbrella or these new doctors being diagnosed.

Anything there would be great and then a quick follow up on the international performance of Labella. It looks like it was roughly flat sequentially on a constant currency basis, any learnings on seasonality or anything like that on the international side now that thats been on the market for a little bit.

Speaker 4: Sure, a few things I'd say there. Unlike cat pain, which we can certainly talk about if someone has a question on it, dog OA pain and osteoarthritis has been diagnosed quite well by vets. This is not hard to diagnose. Dogs, unlike cats, do not hide it.

Sure.

A few things I'd say there.

Unlike cat pain, which we can certainly talk about if someone has a question on it.

OA pain, and osteoarthritis had been diagnosed quite well by that this is not hard to diagnose <unk>. Unlike do not highlight you consents are less active.

Speaker 4: You can sense their less active, they, you know, they limp, they don't want to go upstairs. It is not hard to diagnose and a lot of these dogs are already being treated.

They don't want to go upstairs. It is not hard to diagnose and a lot of these drugs are already being treated they're being treated with our product <unk> and <unk>.

Other OE product as diets for this so this is not a you know a space where there is not a developed market and develop protocol for diagnosis that is not the case in cap, where we do have to really develop protocols for diagnosis and what we saw initially is the first time they can honor the most symptomatic.

Speaker 4: a space where there's not a developed market, a developed protocol for diagnosis. That is not the case in CAST, where we do have to really develop protocols for diagnosis. You know, what we saw initially is the first dogs they put on are the most symptomatic dogs, where they know that like, you know, they really are really struggling. I think if you look at what we've seen in international is as best get more comfortable with this, they then start, you know, providing it for dogs earlier in the OAP, which actually is even better. They have greater quality of life over time. So our experience of diagnosis is really coming out of international, which is normally initially the dogs they first put it on are the ones suffering the most where their pet owners are begging for it. And then over time you move into earlier stages of OAP. But again, this is not one that is hard to diagnose for best. They have protocols to do that today. So we're not really as concerned here in the, you know, diagnosis part. I think what we really need to do and we receive growth in 24 and beyond in 25 and 26 is having that really, you know, provide, you know, product like Limer, LeBrella to dogs earlier in their disease.

They know that.

Really are really struggling I think if you look at what we've seen in international is as that get more comfortable with that they then start providing it for dogs earlier in the OA pain, which actually even better they have greater quality of life over time. So our experience of diagnosis is really coming out of international which is normally initially the dogs. They first started ananda one suffering the most where they are.

Pet owners are begging for it and then over time you move into earlier stages of OA, but again. This is not one that is hard to diagnose for that they have protocols to do that today. So we're not really as concerned here in the diagnosis part I think what we really need to do and where we see growth in 'twenty four and beyond in 'twenty five 'twenty six is having that's really.

Speaker 5: is having that really provide a product like Limer LeBrella to jobs earlier in their disease, which I think will be a good growth driver. And an international is that is definitely an application for seeing phenomenal growth right now. It is definitely not flat. But when you do want to get into some of the specifics of the international growth situation now? Yeah, absolutely. Look, if you look at LeBrella, we deliver 53 million.

Provide.

A product like liver labella to Doug earlier in their disease, which I think we'll be in good growth driver and in international as that is definitely advocate for seeing phenomenal growth right. Now it is definitely not flat, but when did you want to get into some of the specifics of the international.

Situations, Yeah, absolutely look if you look at it the grella, we deliver $53 million in revenues in Q3, that's 65% growth operationally now if you look at the pre existing markets.

Speaker 5: in revenues in Q3, that's 65% growth operation only. Now, if you look at the pre-existing markets, they were up about 33%. So that's an incremental 10 or $11 million in the quarter year on year growth in the pre-existing markets. And then new markets that have been launched this year is about 10 million. That includes a little bit from the US from the early experience program. So.

They were up about 33%, so that's an incremental $10 million to $11 million in the quarter.

On year growth in the preexisting markets and then new markets that have been launched this year.

10 million that includes a little bit from the U S from the early experience program. So.

Speaker 5: year-on-year growth and then sequentially I think was your question and we're still up a few million sequentially. Just keep in mind Q3 last year as we've said we have a bit of a tougher comp for Q3 because that's when we released

Year on year growth in <unk> sequentially I think it was your question and we're still up a few million.

Sequentially just keep in mind Q3 last year as we've said we have a bit of a tougher comp for Q3, because that's when we released sort of.

Speaker 5: sort of the allocations that we're on in the supply constraints. So that is factoring a little bit, but we still have 33% in the EU sort of locations, markets where we previously launched. So that's still very robust, we'll despite the cost.

Applications that were on in the supply constraints. So that is factoring in a little bit, but we still have 33% in the in.

In the EU us sort of a.

Locations in markets, where we previously launched so thats still very robust growth despite the comp.

Speaker 2: Thank you. We'll take our next question from David Westenberg with Piper Sandler. Please go ahead.

Thank you we'll take our next question from David Westin Berg with Piper Sandler. Please go ahead.

Speaker 8: Hi, thanks for taking the questions. Just on 2024 on Derm, do you expect a competitive launch outside of the one we already know from Alanko? How comfortable do you feel about your decision to price apaquo-chewables at parity with your existing products? And are there any analogs for chewables as a competitive differentiator in front of a competitive launch?

Hi, Thanks for taking the questions just on 2024 on <unk> do you expect the competitive launch outside of the one we already know from our Langkow how feel comfortable do you feel about your decision to price <unk> at parity or at <unk>.

With with your existing products and there are there any analogs for chewables as a competitive differentiator in front of a competitive launch and just as a quick follow up on the R&D. It did step down a little bit and I think youre guiding for it down is there anything are we reading into it too much to say, maybe there is not a new product or a significant new product in 2020 for 2025.

Speaker 8: And just as a quick follow-up on the R&D, it did step down a little bit, and I think you're guiding for it down. Is there anything – are we reading in it too much to say, you know, maybe there's not a new product – a significant new product in 2024, 2025, and – or reading into that too much?

And maybe.

Reading into that too much alright. Thank you.

Speaker 5: Sure, as we look for competition in dermatology, to your question, we are expecting competition in the second half of next year. Our knowledge is that really there's only one that we're aware of at this point that we're expecting in 2024. We obviously don't know when in the second half that it will be coming, but we're well positioned for competition. As you know, we've been preparing for competition for a while. We both have Cytopoint, we have monoclonal antibodies, we've got ApoQuel, we've got CHU. We've got a pipeline behind that continued life cycle innovations with longer duration monoclonal antibodies, other species. So dermatology is a critical portfolio for us. We're continuing to grow. We did 14% in the quarter. So we're gonna invest heavily behind this to make sure that we can continue to grow both our portfolio and the market overall. And if you look at chewable pricing, our strategy was let's move everybody to a product that's even easier, that their dog likes even more, that they see as a treat before you have competition, which we're expecting to be in a film coated tablet, similar to the original ApoQuel. So we do see this as a really strong defense strategy for us. We've been seeing great. If you look at the growth in international in the quarter, it was led by the conversion to ApoQuel chewable. And in the US, a lot of the growth in Derm for us was also led by retail, which has done really, really well. To your point on R&D, I'll let Whitney take it, but there's absolutely nothing going on there in the sense of any weakness in our portfolio. But Whitney, do you wanna talk about sort of what drove some of that? Yeah, absolutely. Look, as Kristen just said, we remain on target.

Sure.

Look for competition in dermatology to your question, we are expecting competition in the second half of next year. Our knowledge is really there's only one that we're aware of at this point that we're expecting in 2024, we obviously don't know when in the second half.

That it would be coming but we're well positioned for competition as you know we've been preparing for competition for a while we both have sight of point, we have multiple antibodies. We've got <unk>. We've got to we've got a pipeline behind that of continued lifecycle innovations with.

No.

Longer duration monoclonal antibodies other species. So dermatology is a critical portfolio for us we're continuing to grow we did 14% in the quarter. So we're going to invest heavily behind that to make sure that we can continue to grow both our portfolio and the market overall and as you look at chewable pricing.

Our strategy was let's move everybody to a product that's even easier that their dog likes even more that they see as a treat before you have competition, which we're expecting to be in a film coated tablet similar to the original apical. So we do see this as a really strong defense strategy for us.

<unk> seen great as you look at the growth in international in the quarter. It was led by the conversion to agricultural and in the U S. A lot of the growth in Europe for US was also led by retail which has done really really well to your point on R&D I'll, let let me take it but there is absolutely nothing going on there in the central.

Any weakness in our portfolio, but what did you want to talk about sort of what drove some of that yes, absolutely look as Chris just said.

We remain on target.

Speaker 5: with our regulatory milestones with the effect of R&D. R&D spend was up about 13% year over year on the quarter. So clearly well above our revenue growth rate. So what you're seeing in terms of our overall expectations for the year versus where we're landing is just a matter of timing on the span across projects. But nothing significant or notable there. Again, we continue to drive innovation both across new innovation as well as life cycle innovation across our portfolio. We're very excited about the progress we're making.

With our regulatory milestones with respect to R&D R&D spend was up about 13% year over year on the quarter, So clearly well above our revenue growth rate. So.

What youre seeing in terms of our overall expectations for the year versus where we're lending is just a matter of timing on the span across projects, but nothing significant or notable.

We continue to drive innovation both across.

New innovation as well as lifecycle innovation across our portfolio and we're very excited about the progress we're making in R&D, it's mostly just timing of investments.

Speaker 4: It's mostly just timing of investments. I mean, it varies quarter to quarter.

Varies quarter to quarter.

Speaker 2: Thank you, we'll take our next question from Mike Ricekin with Think of America. Please go ahead.

Thank you we'll take our next question from Mike <unk> with Bank of America. Please go ahead.

Speaker 9: Great. Thanks for taking the question. Mostly, I want to focus on TRIO. You had a really solid result in the U.S., but it's still sort of in that ramping up phase. Can you talk a little bit about what you're seeing in the market between yourself and the key competitors, you know, BI, Merck, Elanco, and specifically BI just launched NetGuard Plus. We saw a relatively surprising decline in Bravecto revenues from Merck. So I'm just curious, you know, any change to competitive dynamic?

Alright, thanks for taking the question.

I want to focus on trio.

Really solid results in the U S, but it's still sort of in that ramping up phase can you talk a little bit about what youre seeing in the market between yourself and the key competitors behind Merck's Alanco, specifically beyond just launched NASCAR plus we saw relatively surprising decline in <unk> revenues from Merck. So I'm, just curious any change to <unk>.

Kind of dynamics anything youre seeing in terms of pricing or stocking or destocking.

Speaker 9: pricing or stocking or de-stocking and how that impacts Trio. And then just a follow-up on the very last question, CapEx as well, you slashed the guide this year pretty significantly, I think I heard you say with me, from 725 to 750 and previously it was I think 900 to a billion. So just curious, did that get pushed down into 24 as well or is there any other difference?

And how that industrial and then just a follow up on the very last question.

Capex as well you slashed the guide this year pretty significantly I think I heard you say Whitney.

725 to 750, and previously was I think 900 to a $1 billion. So just curious did that get pushed out into 'twenty four as well or is there.

Any other change there thanks.

Speaker 4: Sure, I'll take the first half of the question, see if Wetnei wants to build on it, and then Wetnei, if you wanna handle the capex question. We did see strong growth in TRiO in the quarter, 20% in Q3 for TRiO. It remains the number one sweet tick heartworm in the US by revenue. And really importantly, it's continuing to grow share. It's up 3% in the quarter. It's also growing patient share, which was up 2% in the quarter. So we're expecting solid growth this year. Obviously, there's a new competitor, but in the Q4, I would also say to watch, we got a challenging comp as you look at us in Q4. You remember we got back into stock and ran a number of promotions in Q4 of last year, but we continue to expect strong growth for the year there, even with the stocking that we saw in the US in Q1 and the pre-priced buying as we talked about before that you had in Q4 of 2022. So we see this as a franchise that will continue to grow. A lot of our growth is really being driven by our auto ship, by retail, which remains very strong for us with our corporate accounts.

Sure I'll take the first half of the questions is what they want to build on it and then let me if you want to handle the Capex question, we did see strong growth in trio in the quarter.

20% in Q3 for trio it remains the number one fleet tick heartworm in the U S by revenue and really importantly, it's continuing to grow share is up 3% in the quarter is also growing patient share, which was up 2% in the quarter. So we're expecting solid growth. This year, obviously there is a new.

Competitor, but in the Q4 I would also say to watch we got a challenging comp as you look at it in Q4, you remember we got back into stock and ran a number of promotions in Q4 of last year, but we continue to expect strong growth for the year there even with the Destocking that we saw in the U S in Q1 and the pre <unk>.

As we talked about before that you had in Q4 of 2022. So we see this as a franchise that will continue to grow a lot of our growth is really being driven by our auto ship by retail which remains very strong for us with our corporate accounts and this is also a category. We you do see low switching once you get on a product. So we do believe.

Speaker 5: This is also a category where you do see low switching once you get on a product. We do believe we have the broadest portfolio, but continue to see strength in TRIO, so we're happy with the growth we've seen there. Anything I've missed there and you want to talk about CAPEX? Yes, sure. Look, on TRIO, I think you covered it well, $206 million of revenue in the quarter. That's up 20% operationally.

The broadest portfolio, but continue to see strength in trio.

We're happy with the growth we've seen there, but anything you are diagnosed there and you want to talk about Capex, yes, sure local Ontario, I think you covered it well $206 million of revenue in the quarter, that's up 20% operationally, we're very pleased with that including the patient share gains the Christian already.

Speaker 5: We're very pleased with that, including the patient share gains that Kristen already

Speaker 5: already described. On CapEx, yes, we did reduce our CapEx expectations for the year from about 950 to a billion dams of 725 to 750.

Already described.

Capex, yes, we did reduce our capex expectations for the year from about 952 1 billion down to 725 to 750.

Speaker 5: This is really on timing or project spend we're being committed to the investments that we're making and this is still representing about a 25% increase.

This is really on timing of project spend we remain committed to the investments that we're making and this is still representing about a 25% increase in capex year over year. So as we said at Investor Day expect Capex to remain elevated for the next couple of years and they will start to bring that down sort of in the range of growth rate that approximates our revenue growth range.

Speaker 5: in CapEx year over year. So, as we said at Investor Day, expect CapEx to remain elevated for the next couple of years and then we'll start to bring that down sort of in the range of a growth rate that approximates our revenue growth.

Speaker 5: as you go beyond 24, 25 timeframe. So again, really, really just a matter of timing is what you're seeing from the cabinet.

As you go beyond beyond 'twenty four 'twenty five timeframe. So again really really just a matter of timing what are you seeing from a capex standpoint.

Speaker 2: Thank you. We'll take a nice question from Brandon Vasquez with William Bludier. Please go ahead.

Thank you we'll take our next question from Brandon Vazquez with William Blair. Please go ahead.

Speaker 10: Hi, good morning. Thanks for taking the question on on the companion animal side of things is a nice strong quarter. You know, I think you had said if I heard you correctly that in 20 23 you expect full year organic growth double digit.

Hi, good morning, Thanks for taking the question on the companion animal side of things is a nice strong quarter. I think you had said if I heard you correctly that in 2023, you expect full year organic growth double digits.

Speaker 10: Your question being, I think you're at 7% year-to-date, I'm kind of being a little dangerous here and playing with my model lives, but I think it implies kind of like a high-team organic growth in companion animal in the fourth quarter. One, am I thinking about that correctly and then two, what's kind of given you the confidence that the business can do that, especially I think Q4 is a little bit more difficult year-over-year comp. Thanks.

The question being I think you are at 7% year to date.

<unk> being a little dangerous here and playing with my model wise, but I think it implies kind of like a high teens organic growth in companion animal in the fourth quarter one in Miami.

Thinking about that correctly, and then two what's kind of giving you the confidence that.

The business can do that especially I think Q4 is a little bit of a more difficult year over year comp. Thanks.

Speaker 5: Yeah, I'll be happy to take that. Look, we continue to see, as you saw this quarter, 11% operational growth in companion animal. And though we have some tough comps, as Kristen just referenced with the trio answer in the previous question, we are expecting very, very strong growth across companion animal in Q4. Keep in mind, we have some comps.

Yes, I'll be happy to take that look we continue to see as you saw this quarter, 11% operational growth in companion animal and Dolby have some tough comps as Christian just just referenced with the trio.

I'll answer the previous question, we are expecting very very strong growth across companion animal in Q4 keep in mind, we have some comp challenges with respect to the livestock, which will decelerate from from what it is on a year to date basis about 6% to a low single digit growth. So as you look at what's factored into the guidance that we just gave and narrowing the range.

Speaker 5: challenges with respect to livestock, which will decelerate from what it is on a year-to-day basis about 6% to a low single-digit growth. So if you look at what's factored into the guidance that we just gave in narrowing the range but still maintaining our midpoint, if you will, you can factor that into your equation in terms of what the livestock versus companion animal mix is as we exit the year.

But still maintaining our midpoint. If you will you can factor that into your equation in terms of what the lifestyle versus companion animal mixes as we as we exit the year.

Speaker 2: Thank you. We'll take our next question from Bellaji Prasad with Barclays. Please go ahead.

Thank you we'll take our next question from <unk> Prasad with Barclays. Please go ahead.

Speaker 11: Hi, good morning. A couple of questions for me. Firstly, to the extent you can without commenting on any 24 guidance, can you highlight some of the macro factors and how you expect that to change? Speaking, looking at the diagnostic space, consumer trends, better option volume. And secondly, a bit more specific. Can you speak about your liberal supply plans? You recently opened a facility, new facility in Lincoln, and what impact does it have for supply, cost and margins?

Hi, good morning.

Couple of questions from me firstly to the extent you can without commenting on any 24 guidance can you highlight some of the macro factors and how you expect that to change.

Looking at.

The diagnostic space and human trends better option volume.

And secondly, a bit more specificity can you speak about your liberalized supply plans you recently opened up the new facility in Lincoln and what impact does it add floor supply costs and margins. Thank you.

Speaker 4: Sure, I'll start with the beginning and then maybe you can build on it. You know, we continue to see very strong macro drivers in animal health. It's really led by, you know, the humanization of pets, which is a global trend. It's also led, you know, we continue to look at 2024 as to who's adopting those pets, which is more millennial and Gen Z and importantly, more high income households.

Sure I'll start at the beginning and then maybe you can build on it we continue to see very strong macro drivers and in animal health. It's really led by the Humanization of pets, which is a global trend is also led we continue to look at 2024 as to who's adopting those pad, which is more of a millennial and gen Z and importantly.

High income households.

Speaker 4: who are really raising the standard of care that they want to spend on their pets. We see this as important drivers as we bring real innovation to the market with Labrella, with Silencia, certainly continuing with Cytopoint, which is growing very strongly. So we look at the drivers of pet care globally, which is really who's adopting the pets, how they want to spend on their pets, and looking at revenue per clinic, which continues to grow very strongly, which is what we're really correlated against. It's something that continues into 2024. These are strong macro drivers for us. As we've spoken about on the livestock side, we really believe that market historically, and we believe in the future, will continue to grow 2% to 4% in the low single digits. And as we said, we were gonna return to that growth rate as we started to fully lap the challenges with Jackson. So as you look at livestock, what's driving that is a growing middle class and more consumption of protein.

Who are really raising the standard of care that they want to spend on their pets. We see this as important drivers as we bring real innovation to the market with la <unk> with Valencia.

Certainly continuing with site a point, which is growing very strongly so we look at the drivers of the pet care globally, which is really who is adopting the patch how they want to spend on their pets and looking at revenue per clinic, which continues to grow very strongly which is what we're really correlated against something that continues into 2024. These are strong macro driver.

For us as we've spoken about on the livestock side, we really believe that market historically and we believe in the future. We will continue to grow 2% to 4% low single digits and as we said we were going to return to that growth rate as we started to fully lap the challenges of the Jackson. So if you look at livestock, what's driving that is a growing middle class.

More consumption of protein.

Speaker 4: You know, with the whole ozempic-Wolgovi thing aside, which really, you know, hasn't really impacted livestock or the, you know, the consumption of protein globally, really because of who's really driving a lot of that growth, which is, you know, middle classes across the globe, and more and more people entering that and, you know, seeing and upgrading their protein. So, we look at those macro drivers, and we really don't see any changes. We look into not just 2024, but 2025 and 2026.

The Hull Zentec will go we thing aside, which really hasnt really impacted livestock or the consumption of protein globally really because of who is really driving a lot of that growth, which is the middle classes across the globe and more and more people entering that and seeing in upgrading their protein. So we look at those macro drivers and we really don't see any.

If you look into not just 2024, but 2025 and 2026 and.

Speaker 5: And when we bring innovation to those markets, we believe we can continue to grow ahead of that. So, Wendy, I'm not sure if I'm listening there, and if you want to take the second half of this question. Nothing, you can cover the macro dynamics well, Kristen. On the supply question, respect to LeBrella.

And when we bring innovation to those markets. We believe we can continue to grow ahead of that so when the I'm not sure if I listen anything there and if you want to take the second half of the question nothing you can cover the macro dynamics well Kristen on the supply question with respect to Labella, we are very confident in our supply plans to meet the demand expectations.

Speaker 5: We are very confident in our supply plans to meet the demand expectations.

Speaker 5: for Librella that we have certainly for 24 and beyond.

Full umbrella.

That we have certainly for 'twenty four and beyond.

Speaker 5: Mentioning the Lincoln facility, certainly in addition to both our internal capacity and third party that we are using, we continue to invest internally. And I think if you look at Lincoln, that would be a factor, particularly as you go beyond 2024 with respect to supply planning, Fulibrella, and other MAPs as well. So again, very confident in our ability to meet those.

Mentioning the Lincoln facility Sydney. In addition to both our internal capacity and third party that we are using we continue to invest internally and I think if you look at Lincoln that'll be a factor, particularly as you go beyond 2024 with respect to supply planning a fully boiler and other maps as well so again very confident in our ability to meet those.

Speaker 5: the men expectations and we've already factored the ramp that we saw in Europe in our thinking around around the men there as well.

Demand expectations, and we've already factored the ramp that we saw in Europe.

Thinking around around demand there as well.

Speaker 2: Thank you. We'll pick our next question from Chris Schott with JP Morgan. Please go ahead.

Thank you we'll take our next question from Chris Schott with Jpmorgan. Please go ahead.

Speaker 12: This is a Katarina on for Chris. Thank you so much for taking our questions. Also first very quickly just on veterinary visits in the pressure We've been seeing there

This is a kind of arena on for Chris. Thank you so much for taking our questions. So first very quickly just on veterinary visits and the pressure. We can see there recently can you just remind us how sensitive which led us to this dynamic and maybe your latest thinking around how visits are going to trend maybe into <unk> and potentially into 2024, if you want to comment on that.

Speaker 12: Can you just remind us how sensitive Zooladis is to this dynamic and maybe your latest thinking around how visits are going to trend maybe into 4Q and potentially into 2024 if you want to comment on that. And then the second question is just on your cattle. Can you just elaborate a little bit more on the dynamics you saw in the quarter? Because I think one of your competitors mentioned the timing of the cattle and kind of was shifted earlier this year. Is this something that you saw as well? And is that potentially create a headwind for you as you think about the fourth quarter? Thank you so much.

And then the second question is just on U S. Cattle can you just elaborate a little bit more on the dynamics you saw in the quarter because I think one of the competitor one of your competitors mentioned.

The timing of the California kind of shifted earlier. This year is this something that you saw as well and does that potentially create a headwind previously think about the fourth quarter. Thank you so much.

Speaker 4: Thanks, Ekaterina. I'll take your first question and Whitney can build on me and then take the second, you know, that this is where a flat year to date, which is what we've expected what we've talked about previously in the quarter. They were down around one and a half percent.

Thank you Curt Irina I'll take your first question on what you can build on me and then take the second.

That visits were flat year to date, which is what we've expected and what we've talked about previously in the quarter they were down around one 5%.

Speaker 4: You know, as you've discussed, we're really not as reliant on vet visits. The better proxy for us is revenue. Because again, remember that a lot of our products don't need to be purchased in the clinic. You know, if you look at both auto shifts, as you look at retail, you look at chronic medications.

As he discussed we're really not as reliant on vet visits the better proxy for US is revenue because again remember that a lot of our product don't need to be purchased in the clinic. Yet if you look at both auto ship as you look at retail you look at chronic medications.

All of this continues to have us be a higher correlation with overall revenue growth in the clinic. So historically as we've talked about before that clinic visits are flat to maybe 1% and if you look at where they stand today. There is still ahead of where they were pre pandemic. So we don't pay as much attention to that vet clinic visits as you look.

Speaker 5: they stand today, they're still ahead of where they were pre-pandemic. So, you know, we don't pay as much attention to that vet clinic visit. If you look at revenue in the clinic, our growth in companion animal was higher than even that number, and that's because we're driving so much innovation there overall. So, you know, if you look at vet clinic visits, we're not as tied to that number as we've, you know, continued to say. So, I don't know if there's anything I missed there, Whitney, you want to build on and then you want to take the second question? Yeah, sure. The only thing I would add on the vet clinic visits is you see our growth continues to outpace that of the clinic growth, and the vet visits were not as, they're important, right? But we're not as sensitive to visits because therapeutics and chronic indications tend to power through that, and you can still see a volume growth even as visits are down, and then the retail piece.

Revenue in the clinic or growth in companion animal are higher than even that number and that's because we're driving so much innovation there overall so.

If you look at vet clinic visits were not as tied to that number as we continue to say.

So I don't know if theres anything I missed there what do you want to build on it and then he will take the second question, Yes, sure. The only thing I would add on the vet clinic visits as you see our growth continues to outpace that of the clinic growth in vet visits were not as.

Speaker 5: They're important, right, but we're not as sensitive.

They are important right, but we're not as sensitive to visits because therapeutics in chronic indications tend to power through that and you could still see a volume growth even as visits are down and then the retail piece, which has continued to grow we've seen an additional two four percentage points.

Speaker 5: The visits because therapeutics and chronic indications tend to power through that and you can still see a volume growth, even as visits are down and then the retail piece, which is continuing to grow. We've seen

Speaker 5: An additional two full percentage points as a percentage of our pet care revenues in the US each year. So we've gone from...

As a percentage of our pet care revenues in the U S. Each year, so we've gone from.

Speaker 5: you know, all the way to 11% from about 5% just a few years ago. So, we continue to see that in the quarter, it was up about 35% if you look at our retail sales. So, those are the factors I would add. With respect to the cattle dynamics and livestock in general, I would say, clearly we've had a very strong start to the year through the first nine months. Livestock is up.

Our policy of 11% from about 5% just a few years ago. So we continue to see that in the quarter was up about 35%. If you look at our retail sales. So those are the factors that would add with respect to the capital dynamics in livestock in general I would say clearly we've had a very strong start to the year through the first nine months lifecycle.

Speaker 5: about 6%, clearly we're signaling that will come down in the fourth quarter. And that's really more of a factor of variability across quarters, given the timing of supply that we've had in the prior year versus the current year, the timing of when we've taken price adjustments for Jackson, for example, which impacted Q2 versus Q3, as well as Q4 this year, as we're anticipating a step in that at the end of the year. So that will put some more...

Up about 6% included we're signaling that will come down in the fourth quarter and Thats really more of a factor of variability across quarters, given the timing of supply that we had in the prior year versus the current year the timing of when we've taken price adjustments with Jackson for example, which impacted Q2 versus Q3 as well as Q4. This year as we were anticipating.

Uh huh.

Step in that.

At the end of the year, so that will put some more.

Speaker 5: pressure on Q4. We factored all that into our guidance that we've just issued today, which we are still in line with our expectations that we started the year with, which is right around our midpoint. We just narrowed it. So all those are in. With respect to cattle dynamics around, we haven't seen anything that would say there's a pronounced shift . . . .

First of all in Q4, we factored all that into our guidance that we've just.

Issued today, which we are still in line with our expectations that we started the year with which is right around our mid point you just narrowed it. So all of those are in with respect to capital dynamics around we havent seen anything that would say there is a pronounced shift with respect to the cattle run here, but.

Speaker 5: with respect to the cattle run here. But again, we factored all these items into our thinking and what we've just iterated today from a guidance panel.

But again, we factored all these items into our thinking and what we've just iterate it today from a guidance standpoint.

Speaker 2: So you will take our next question from Steve Scallow with TD Cowan. Please go ahead.

Thank you we'll take our next question from Steve Scala with TD Cowen. Please go ahead.

Speaker 13: Hi, this is Chris. I'm Steve. Thanks for taking our questions. We had to first on the US on the parasite market. Can you provide an update on the estimated volume share of topicals and colors today?

Hi, This is Chris on for Steve Thanks for taking our questions we had Q.

First on the U S. On the parasiticide market can you provide an update on the estimated volume share topic wholesome apollo's today.

Speaker 13: And then, looking ahead to 2024, what is the risk of significant pricing pressure on TRIO from the launch of Cudelio Quattro? Assuming a non-inferior product label, price seems like the main lever they could leverage to grow their market share. And then, clarifying question on U.S. Librello. Can you confirm that U.S. sales was zero in Q3? And then, looking ahead to Q4, do you still expect sales to be immaterial for the full year?

And then looking ahead to 2020, what is the risk of significant patient until you hear from the margins Codelco Quadro.

Assuming a non inferior product label types seems like the main lever they could leverage to grow their market share.

No.

And then one question on <unk> can you please.

U S sales.

Sales in Q3.

And then looking ahead to Q4 do you still expect sales to be immaterial for the full year.

Thank you.

Speaker 5: Yeah, look, I'm not sure if I got the second question, but I'm going to give it a shot and then ask you to clarify. On the paracetamides market, we still estimate in terms of volume, nearly half is still in the collars and topicals. But from a value perspective, dollars more significantly leaning on the oils and prescription. As you know, those are at higher price points.

Yes.

Im not sure if I if I got the second question, but I'm going to give it a shot and then ask you to clarify on the parasiticide market. We still estimate in terms of volume and nearly half is still in the callers and topical but from a value perspective dollars more significantly leaning on the holes are in prescription.

As you know those are at higher price points.

Speaker 5: I think you were asking a specific question about share for specific products within the topicals and collars, and I don't have that to hand.

You're asking a specific question about share for specific products within the topical and colors that I don't have that to hand, but if it was a different question I would ask you to clarify after I give you an answer on the gorilla.

Speaker 5: But if it was a different question, I'll ask you to clarify after I give you an answer on the breller.

Speaker 5: So, Librella in the third quarter was minimal. As you know, in September , we had our early experience program. That was only about 400 clinics, very limited.

So the gorilla in the third quarter was minimal as you know in September we had our early experience program that was only about 400 clinics very limited with kols to get them using the product and being able to talk about it et cetera on helping with refining protocols and so on and so the number was $3 million in the quarter not meaningful at all and given the timing of.

Speaker 5: with KOLs to get them using the product and being able to talk about it, etc., and helping with refining protocols and so on. And so the number was like maybe $3 million in the quarter, not meaningful at all. And given the timing of the full launch in October and with the holidays coming, it is not going to have a meaningful impact on the full year growth.

The full launch in October and with the holidays coming it is not going to have a meaningful impact on the full year growth.

Speaker 14: Again, on that point, but I'll ask you to clarify if I didn't get the question right on the Paris.

Again on that point, but I'll ask you to clarify.

Didn't get the question right on the Paris.

Alright and disappears.

Disconnected at this time.

Next question Steve.

Speaker 2: And there are no further questions at this time. I'll turn it back to Kristin for closing remarks.

And there are no further questions at this time I will turn it back to Christian for closing remarks.

Speaker 4: Great, thank you everybody, great questions today. Once again, we wanna reiterate that we remain confident in our ability to achieve our full year guidance based on the diverse and innovative portfolio that continues to drive our success.

Great. Thank you everybody great questions today once again, we want to reiterate that we remain confident in our ability to achieve our full year guidance based on the diverse and innovative portfolio that continues to drive our success. We are firmly committed to continuing to invest in that portfolio. As we look at the opportunities ahead of us through DTC and building our capabilities to <unk>.

Speaker 4: We are firmly committed to continuing to invest in that portfolio as we look at the opportunities ahead of us through DTC and building our capabilities to support our growth, but we'll also continue to manage our costs to make sure we're creating value for our shareholders.

Support our growth, but will also continue to manage our cost to make sure we're creating value for our shareholders.

Speaker 4: We continue to grow faster than the market by focusing on our people, on our colleagues, and on operational excellence and agility. They deliver every day for our business and for our customers. So we look forward to updating you on the full year and our long-term value proposition and hopefully seeing many of you in San Francisco at the JPMorgan Healthcare Conference to kick off 2024. Thanks everybody.

We continue to grow faster than the market by focusing on our people on our colleagues and on operational excellence and agility, they deliver everyday for our business and for our customers. So we look forward to updating you on the full year and our long term value proposition and hopefully seeing many of you in San Francisco at the Jpmorgan Health care conference to kick off 2024, thanks, everybody.

Speaker 2: Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Thank you. This does conclude today's program. Thank you for your participation you may disconnect at any time.

Yeah.