Q4 2023 Zoetis Inc Earnings Call

Operator: Please stand by; your program is about to begin. Welcome to the fourth quarter and full year 2023 financial results conference call and webcast for Zoetis. Hosting the call today is Steve Frank, Vice President of Investor Relations for Zoetis. The presentation materials and additional financial tables are currently posted on the Investor Relations section of Zoetis.com. The presentation slides can be managed by you, the viewer, and will not be forwarded automatically.

Please standby your program is about to begin.

Welcome to the fourth quarter and full year 2023 financial results conference call and webcast for hosting the call today is Steve Frank Vice President of Investor Relations for the latest the presentation materials and additional financial tables are currently posted on the Investor Relations section of the latest dot com the presentation.

Slides can be managed by you the viewer and will not be forwarded automatically. In addition, a replay of this call will be available approximately two hours. After the conclusion of this call via dial in or on the Investor Relations section of the wettest Dot com at this time all participants have been placed in a listen only mode and the floor will be open for your question.

Operator: In addition, a replay of this call will be available approximately two hours after the conclusion of this call via dial-in or on the Investor Relations section of Zoetis.com. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.

Following the presentation. If you would like to ask a question at that time. Please press star one on your telephone keypad. If at any point. Your question has been answered you may remove yourself from the queue by pressing star two and the interest of time, we ask that you limit yourself to one question and then queue up again with any follow up your line will be.

Operator: In the interest of time, we ask that you limit yourself to one question and then queue up again with any follow-ups. Your line will be muted when you complete your question. When posing your question, please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star 0. It has been my pleasure to turn the floor over to Steve Frank. Steve, you may begin. Thank you, operator. Good morning, everyone, and welcome to the Zoetis fourth quarter and full year 2023 earnings call. I am joined today by Kristin Peck, our chief executive officer, and Wetteny Joseph, our chief financial officer. Before we begin, I'll remind you that the slides presented on this call are available in 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.

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.

Steve Frank: Thank you operator, good morning, everyone and welcome to the <unk> fourth quarter and full year 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.

Steve Frank: And that our remarks today will include forward looking statements and that actual results could differ materially from those projections for a list and description of certain factors that could cause results to differ I refer you to the forward looking statements in today's press release, and our SEC filings, including but not limited to our annual report on <unk>.

Operator: 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 that were not prepared in accordance with generally accepted accounting principles or U.S. GAAP.

Steve Frank: Form 10-K, and our reports on Form 10-Q.

Our remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U S. GAAP a reconciliation of these non-GAAP financial measures to.

Steve Frank: A reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures is included in the financial tables that accompany our earnings press release and the company's 8K filing dated today, Tuesday, February 13, 2024. We also cite operational results that exclude the impact of foreign exchange. With that, I will turn the call over to Kristin.

Steve Frank: For the most directly comparable U S. GAAP measures is included in the financial tables that accompany our earnings press release.

In the company's 8-K filing dated today Tuesday February 13th 2024, we also cite operational results, which exclude the impact of foreign exchange with that I will turn the call over to Kristin.

Kristin C. Peck: Thank you, Steve, and welcome, everyone, to our fourth quarter and full year 2023 earnings call. Today, we reported strong full-year results driven by the success of our diverse portfolio across markets and species, game-changing innovation, and the outstanding commitment of our purpose-driven colleagues. We delivered 7% operational revenue growth, growing faster than the industry, propelled by steady demand for innovative products that enable our customers and the animals they care for to thrive. With the ongoing momentum of our monoclonal antibodies for osteoarthritis, or OA pain, we saw segment growth of 6% in the U.S. and 9% operational growth internationally.

Kristin C. Peck: Thank you, Steve and welcome everyone to our fourth quarter and full year 2023 earnings call. Today, We reported strong full year results driven by the success of our diverse portfolio across markets and species game changing innovation in the outstanding commitment of our purpose driven colleagues, we delivered 7% operational revenue growth gross.

Kristin C. Peck: Faster than the industry propelled by steady demand, our innovative products that enable our customers and the animals they care for to thrive with.

Kristin C. Peck: With the ongoing momentum of our monoclonal antibodies for osteoarthritis or OA pain, we saw segment growth of 6% of the U S and 9% operational growth internationally, our companion animal portfolio remains a key growth driver up 8% operationally and we saw a return to growth of our livestock portfolio up 6%.

Kristin C. Peck: Our companion animal portfolio remains a key growth driver, up 8% operationally, and we saw a return to growth for our livestock portfolio, up 6% operationally. While we continue to operate in an environment of global uncertainty, our diversity across markets, species, and therapeutic areas has sustained our performance, further demonstrating that animal health is a durable, essential, and growing industry. Our track record of innovation, from pioneering breakthroughs to product lifecycle enhancements, has solidified our position as the industry leader, consistently growing above the market, and enabled us to create market-leading franchises. We don't just follow trends; we make markets. The launch of Labrella and Silencia, the first two injectable monoclonal antibodies for the alleviation of osteoarthritis, is fundamentally improving the quality of life for dogs and cats and strengthening the human-animal bond.

Kristin C. Peck: Operationally, while we continue to operate in an environment of global uncertainty our diversity across markets species and therapeutic areas has sustained our performance further demonstrating that animal health is a durable essential and growing industry. Our track record of innovation from pioneering breakthrough to product.

Kristin C. Peck: Cycle enhancements has solidified our position as the industry leader consistently growing above the market and enabled us to create market leading franchises. We don't just follow trends we make markets.

Kristin C. Peck: The launch of <unk>. The first two injectable monoclonal antibodies for the alleviation of osteoarthritis is fundamentally improving the quality of life for dogs, and cats and strengthening the human animal bond. That's why today <unk> remained the number one selling OA pain product in Europe.

Kristin C. Peck: That's why today Labrella remains the number one selling OA pain product in Europe. At Investor Day last May, and again at the J.P. Morgan Healthcare Conference, I shared that our own pain franchise could have peak sales exceeding $1 billion. And we are excited about Librello's performance since its U.S. launch in October, which reaffirms that view. Due to high clinic penetration, we've activated our direct-to-consumer, or DTC, efforts faster than any other product in our history, which we expect to provide a tailwind for commercial growth. Similarly, Silencia has also been well-received with strong clinic penetration around the world, with increased opportunity as we generate more awareness of OA pain in cats.

Kristin C. Peck: At Investor Day last May and again at the JP Morgan Healthcare conference I shared that our own pain franchise could have peak sales exceeding $1 billion.

Kristin C. Peck: And we are excited about la <unk> performance since its U S launch in October, which reaffirms that view due to high clinic penetration, we activated our direct to consumer or DTC efforts faster than any other product in our history, which we expect to provide a tailwind for commercial growth.

Kristin C. Peck: Similarly, <unk> has also been well received with strong clinic penetration around the world with increased opportunity as we generate more awareness of OA pain in cats.

Kristin C. Peck: Within our dermatology franchise, we've established ourselves as the trusted partner to veterinarians. And after nearly a decade of impressive growth, we still believe we have room to expand this market. Increasing pet owners' awareness that itch is a medical condition that requires treatment, improved compliance, and the opportunity to address even more unmet needs underpin our optimism.

Kristin C. Peck: Within our dermatology franchise, we've established ourselves as the trusted partner to veterinarians and after nearly a decade of impressive growth. We still believe we have room to expand this market.

Kristin C. Peck: Increasing pet owners' awareness that edge is a medical condition that requires treatment improved compliance and the opportunity to address even more unmet needs underpins our optimism.

Kristin C. Peck: We remain confident that we can sustain growth thanks to our differentiated products like Cytopoint and Apical Chewable, the first and only chewable treatment for the control of allergic itch and inflammation in dogs. Our parasiticide portfolio, and particularly some paracetreo, remains a key growth driver, even in the face of increasing competition. This continued success highlights our strategic execution, label strength, and the efficacy of our products. The performance across our key product franchises not only reinforces our market-leading position but also shows that our innovations consistently meet the evolving demands in veterinary medicine. As we begin in 2024, we will stay disciplined and adaptable to the evolving macroeconomic and geopolitical backdrop around the world and focus on executing our plans and continuing to grow faster than the market. Two durable global trends give us confidence in that future growth: the powerful human-animal bond and the world's growing need for a sustainable supply of animal protein.

Kristin C. Peck: We remain confident that we can sustain growth thanks to our differentiated products like <unk> and <unk>, the first and only chewable treatment for the control of allergic edge and inflammation in dogs.

Kristin C. Peck: Our parasiticide portfolio and particularly some Paragon trio remains a key growth driver even in the face of increasing competition. This continued success highlights our strategic execution label strength and the efficacy of our products.

Kristin C. Peck: The performance across our key product franchises, not only reinforces our market leading position, but also that our innovation consistently meet the evolving demands in veterinary medicine as.

Kristin C. Peck: As we begin in 2024, we will see disciplined and adaptable to the evolving macroeconomic and geopolitical backdrop around the world and focus on executing our plan and continuing to grow faster than the market.

Kristin C. Peck: <unk> durable global trends give us confidence in that future growth the powerful human animal bond and the worlds growing need for a sustainable supply of animal protein.

Kristin C. Peck: Our commitment to operational excellence ensures we are ready to scale to meet those demands and navigate unforeseen challenges while delivering shareholder value. Looking ahead, we are committed to our track record of value creation and above market performance. Our dedication to innovation remains the cornerstone of our market-leading position.

Kristin C. Peck: Our commitment to operational excellence ensures we are ready to scale to meet those demands and navigate unforeseen challenges while delivering shareholder value.

Looking ahead, we are committed to our track record of value creation and above market performance.

Kristin C. Peck: Our dedication to innovation remains the cornerstone of our market leading position, we've consistently demonstrated agility outpacing the market to bring groundbreaking solutions that meet and exceed customer expectations.

Kristin C. Peck: We've consistently demonstrated agility, outpacing the market to bring groundbreaking solutions that meet and exceed customer expectations. We will continue to leverage that advantage, and we're guiding to a range of 7% to 9% operational revenue growth in 2024 and adjusted net income growth in the range of 9% to 11% operationally, which reflects our ongoing investments in R&D, supply chains, and commercial excellence to cultivate new markets, drive growth, and create value. As you've heard me say time and time again, we are confident in our strategy, portfolio, pipeline, and capabilities to deliver value to shareholders and customers while performing above the market. Our focus positions us well to navigate potential challenges and capitalize on emerging opportunities. In closing, we will continue our relentless pursuit to exceed customer expectations and invest in advancing the capabilities that differentiate Zoetis. As we look to 2024, I could not be more excited about our future.

Kristin C. Peck: We will continue to leverage that advantage and we're guiding to a range of 7% to 9% operational revenue growth in 2024, and adjusted net income growth in the range of 9% to 11% operationally, which reflects our ongoing investments in R&D supply chain and commercial excellence to cultivate new market.

Kristin C. Peck: Drive growth and create value at <unk>.

Kristin C. Peck: You've heard me say time and time again, we are confident in our strategy portfolio pipeline and capabilities to deliver value to shareholders and customers, while performing above the market, our focus positions us well to navigate potential challenges and capitalize on emerging opportunities in.

Kristin C. Peck: In closing, we will continue our relentless pursuit to exceed customer expectations and invest in advancing the capabilities that differentiate valletta.

Kristin C. Peck: As we look to 2024 I could not be more excited about our future.

Kristin C. Peck: Our key growth drivers will continue to showcase our commitment to nurturing the world and humankind by advancing care for animals. And our ongoing innovations will expand the market, reaffirm our best-in-class product portfolio, and defend our position amidst competition. I want to reiterate the four tenets of our value proposition discussed on Investor Day.

Kristin C. Peck: Our key growth drivers will continue to showcase our commitment to nurturing the world humankind by advancing care for animals, and our ongoing innovations will expand the market reaffirm our best in class product portfolio and defend our position amid competition.

I want to reiterate the four tenets of our value proposition discussed on Investor day, we will grow revenue faster than the market, we will invest in innovation and growth capabilities, we commit to growing adjusted net income faster than revenue and we will return excess capital to shareholders.

Kristin C. Peck: We will grow revenue faster than the market. We will invest in innovation and growth capabilities. We commit to growing adjusted net income faster than revenue, and we will return excess capital to shareholders. While there is a need and demand to improve the quality of life for animals, Zoetis will continue leading the way and setting the standards for performance and growth. This is core to our vision, to be the most trusted and valued animal health company, shaping the future of animal care through innovation, customer obsession, and purpose-driven colleagues. Thank you. Now, let me hand it over to Wetteny. Wetteny.

While there is need and demand to improve the quality of Viper animals.

Kristin C. Peck: <unk> will continue leading the way and setting the standard for performance and growth.

Kristin C. Peck: This is core to our vision to be the most trusted and valued animal health company shaping the future of animal care through innovation customer obsession and purpose driven colleagues. Thank you now let me hand, it over to Whitney <unk>. Thank.

Wetteny Joseph: Thank you, Kristin, and good morning, everyone. As Kristin mentioned, we had a strong year in 2023, with revenue of $8.5 billion and adjusted net income of $2.5 billion. Our full-year revenue was near the top end of our guidance, while our adjusted net income was slightly below our guidance range, primarily due to the impact of foreign exchange, as well as an impairment charge related to a prior acquisition.

Wetteny Joseph: Thank you Kristen and good morning, everyone.

Wetteny Joseph: As Christian mentioned, we had a strong year in 2023 with revenue of $8 5 billion and adjusted net income of $2 5 billion.

Wetteny Joseph: Our full year revenue was near the top end of our guidance range, while our adjusted net income was slightly below our guidance range, primarily due to the impact of foreign exchange as well as an impairment charge related to a prior acquisition.

Wetteny Joseph: Our revenue growth was broad, with strong growth across both our U.S. and international segments, both our companion animal and livestock portfolios, and due to both price and volume. Whole year revenue grew 6% on a reported basis and 7% on an operational basis, with adjusted net income increasing 7% on both a reported and an operational basis. Of the 7% operational revenue growth, 5% is from price, and 2% is from volume. Biome Growth was driven primarily by new products, including our monoclonal antibodies for OA pain, Librella, and Salencia, as well as archaeodermatology products and St. Barica Trio.

Wetteny Joseph: Our revenue growth was broad with strong growth across both our U S and international segments, both our companion animal and livestock portfolios and due to both price and volume.

Wetteny Joseph: Full year revenue grew 6% on a reported basis and 7% operationally with adjusted net income increasing 7% on both a reported and operational basis.

Wetteny Joseph: Of the 7% operational revenue growth, 5% or some price.

Wetteny Joseph: 2% is one government.

Wetteny Joseph: Volume growth was driven primarily by new products, including our monoclonal antibody for pain, the gorilla influenza as well as our key dermatology products and <unk> materials.

Wetteny Joseph: On a segment basis, our U.S. business posted $4.6 billion in revenue, growing 6% on the year, while our international segment reported revenue of $3.9 billion, with operational growth of 9% for the full year. Additionally, while China represents less than 5% of our global revenues, the ongoing economic weakness there continues to impact our business and represents a half a percentage point drag on our total company and operational revenue growth for the year, entirely in volume. Our full-year growth was driven by continued demand for our innovative companion animal portfolio, which grew 8% operationally. Our lifecycle portfolio also had a strong year with operational growth of 6%. Performance in Companion Animals was led by OSA Maps, which posted $321 million in global revenue for the year.

Wetteny Joseph: On a segment basis, our U S business posted $4 $6 billion in revenue growing 6% in the year, while the international segment reported revenue of $3 9 billion.

Wetteny Joseph: With operational growth of 9% on the full year.

Wetteny Joseph: Additionally, while China represents less than 5% of our global revenues the ongoing economic weakness there continues to impact our business and represented a half a percentage point drag on our total company operational revenue growth for the year and parlay enrollment.

Wetteny Joseph: Our full year growth was driven by continued demand for our innovative companion animal portfolio, which grew 8% operationally.

Wetteny Joseph: Our lifestyle portfolio also had a solid year with operational growth of 6%.

Wetteny Joseph: Performance in companion animal was led by <unk>, which posted $321 million in global revenue for the year.

Wetteny Joseph: The World came from first wave European markets, as well as from the impact of new launch markets in 2023, including the U.S. We continue to see penetration of our pain maps grow within vet clinics and a high level of satisfaction among both vets and pet owners. Our Q-dermatology products generated $1.4 billion in sales globally, posting strong growth of 8% for the year on an operational basis. Empirica Trio contributed global revenue of $813 million in 2023, representing growth of 9% operationally, despite distributor inventory headwinds in Q1 and aggressive competitive promotions for much of the year. Our companion animal diagnostics portfolio recorded $356 million in revenue and grew 7% operationally, with growth contributions from both the U.S. and international markets. Our lifetime portfolio had a strong year, with 6% operational revenue growth driven by both price and volume. Moving on to our Q4 financial results, which were another strong quarter, We close Q4 with revenue of $2.2 billion, representing an increase of 8% on both a reported and operational basis, posting our third consecutive quarter of at least 8% operational revenue growth. Despite a tough comparative, particularly in U.S. companions.

Wetteny Joseph: Growth came from first wave European markets as well as from the impact of new launch markets in 2023, including the U S.

Wetteny Joseph: We continue to see penetration of our pain maps grow within vet clinics and a high level of satisfaction amongst both vets and pet owners.

Wetteny Joseph: Our key dermatology products generated $1 $4 billion in sales globally, posting strong growth of 8% for the year on an operational basis.

Wetteny Joseph: <unk> contributed revenue of $813 million in 2023, representing growth of 9% operationally despite distributor inventory headwinds in Q1 and aggressive competitive promotions for much of the year.

Wetteny Joseph: Our companion animal diagnostics portfolio recorded $356 million in revenue and grew 7% operationally with growth contributions from both the U S and international.

Wetteny Joseph: Our lifestyle portfolio had a strong year with 6% operational revenue growth driven by both price and volume.

Wetteny Joseph: Moving onto our Q4 financial results, which was another strong quarter.

Wetteny Joseph: We closed Q4 with revenue of $2 2 billion, representing an increase of 8% on both a reported and operational basis, posting a third consecutive quarter of at least 8% operational revenue growth.

Wetteny Joseph: Despite a tough comparative particularly in U S companion animal.

Wetteny Joseph: Adjusted net income of $569 million is an increase of 6% on both a reported and an operational basis. Of the 8% operational revenue growth, 6% is from price, and 2% is from volume. Volume growth consisted of 4% growth from new products and a 2% decline in our inline products. Volume from our Kettering Methodology products was flat in the port.

Wetteny Joseph: Adjusted net income of $569 million.

Wetteny Joseph: An increase of 6% on both a reported and an operational basis.

Of the 8% operational revenue growth, 6% is from price and 2% this alone.

Wetteny Joseph: Volume growth consisted of 4% growth from new products, and a 2% decline in our inline products.

Wetteny Joseph: Volume from our key dermatology products was flat in the quarter.

Wetteny Joseph: On a segment basis, our U.S. business posted $1.2 billion in revenue, growing 9% on the quarter, while our international segment reported revenue of $982 million, with operational growth of 8% on the quarter. Our companion animal portfolio was the main driver of revenue growth in the quarter, growing 10% operationally. Lifestyle also contributed with operational growth of 6%.

On a segment basis, our U S business posted $1 $2 billion in revenue growing 9% on the quarter, while international segment reported revenue of $982 million with operational growth of 8% on the quarter.

Wetteny Joseph: Our companion animal portfolio was the main driver of revenue growth in the quarter growing 10% operationally.

Wetteny Joseph: Stock also contributed with operational growth of 6%.

Wetteny Joseph: We saw double-digit growth in both our U.S. and our international segments, driven by our innovative products. Our OAP maps were the primary driver of growth, posting $124 million in combined revenue in the quarter. Global growth came primarily from the impact of new launch markets bolstered by the Q4 full launch of Lubella in the U.S., and Paraca Trio generated $208 million globally in the quarter, representing growth of 21% operational. Price was the primary driver of growth in the quarter, followed by volume growth driven by expanded DTC advertising support globally, as well as some increased fill-force support. Our key dermatology products generated $375 million in sales globally, posting growth of 7% on an operational basis. Our Companion Animal Diagnostics portfolio recorded revenue of $87 million and grew 8% operationally with gross contributions from both the U.S. and internationally. Our livestock products ended the year on a positive note with growth of 6% operationally, growing in both our U.S. and international sectors.

Wetteny Joseph: We saw double digit companion animal growth in both our U S and our international segment driven by our innovative products.

Wetteny Joseph: Our <unk> were the primary driver of growth posting $124 million in combined revenue in the quarter.

Wetteny Joseph: Global growth came primarily from the impact of new launch markets bolstered by the Q4 full launch of labella in the U S.

Wetteny Joseph: <unk> generated $208 million globally in the quarter representing growth of 21% operationally.

Wetteny Joseph: Price was the primary driver of growth in the quarter, followed by volume growth driven by expanded DTC advertising for globally as well as from increased field force focus.

Wetteny Joseph: Our key dermatology products generated $375 million in sales globally, posting growth of 7% on an operational basis.

Wetteny Joseph: Our companion animal diagnostics portfolio recorded revenue of $87 million and grew 8% operationally with growth contributions from both the U S and international.

Wetteny Joseph: Our lifestyle products ended the year on a signal with growth of 6% operational growing in both our U S and international segments.

Wetteny Joseph: Wealth was driven equally by price, which grew despite headwinds from drafts and price decreases, as well as by volume, with growth in Cenevex from our expanded label claim. Now moving on to revenue growth by segment for the quarter, U.S. revenue was $1.2 billion in the quarter, growing 9%, with companion animal sales growing 10%, and livestock sales growing 4%.

Wetteny Joseph: Growth was driven equally by price, which grew despite headwinds from Jackson price decreases as well as by volume with growth incentive X from our expanded label claims.

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

Wetteny Joseph: U S revenue was $1 $2 billion in the quarter grew at 9% with companion animal sales growing 10% and livestock sales growing 4%.

Wetteny Joseph: Companion Animal again posted double-digit growth in the quarter, bolstered by the full launch of Lugrella at the start of the quarter, all while facing a tough comparative quarter with promotional activity and heavier-than-normal pre-priced buy-in at the end of last year. In the U.S., vaccinated visits were flat for the quarter and flat for the year, while we continue to see solid clinical revenue and revenue per visit growth of 6% for the quarter and 7.5% for the year. Our U.S. companion animal revenue growth continues to outpace veterinary clinic revenue growth, due in part to our innovative therapeutics, as well as our strong presence in the retail channel. Moving on to product performance, growth in the U.S. was driven by our pain medication, Simpericatrio, and our key dermatology portfolio.

Wetteny Joseph: Companion animal again posted double digit growth in the quarter bolstered by the full launch of labella at the start of the quarter, all wisely, while facing a tough comparative quarter with promotional activity and heavier than normal reprice volume at the end of last year.

Wetteny Joseph: In the U S direct lending visits were flat on the quarter and flat for the year, while we continue to see solid clinical revenue and revenue per visit growth of 6% for the quarter and seven spices.

Wetteny Joseph: 5% for the year.

Wetteny Joseph: Our U S companion animal revenue growth continues to outpace veterinary clinic revenue growth due in part to our innovative therapeutics as well as our strong presence in the retail channel.

Wetteny Joseph: Moving on to product performance growth in the U S was driven by our <unk> <unk> and our key dermatology portfolio.

Wetteny Joseph: Our combined paymaps posted $58 million in U.S. dollars in Q3. We moved to a full launch of Lubella in the U.S. early in the fourth quarter, and we have been pleased with the results our field force has been able to drive thus far. Lobella posted $ 44 million in U.S. sales in the quarter, which is at the higher end of our initial expectation.

Wetteny Joseph: Our combined team maps posted $58 million in U S sales in Q4.

Wetteny Joseph: We move to a full launch of labella in the U S. Early in the fourth quarter and we have been pleased with the results of our field force has been able to drive thus far.

Wetteny Joseph: Labella posted $44 million in U S sales in the quarter, which is at the higher end of our initial expectations.

Wetteny Joseph: It's important to note that while we are not leveraging distribution for our pain maps, there is a significant clinic stocking impact in the first few months after launch. We have seen higher than expected penetration and reorder rates through the end of the year, as well as rapid patient share growth in the canine pain category. Valencia had sales of $14 million in Q4 in the U.S. We have seen a marked increase in feline bed visits and feline revenue growth in the clinic. In the U.S., feline OA patients are up 23% for 2023, and Pryor-Katria posted U.S. sales of $185 million in the quarter, going 17% Growth was driven primarily by price as we were in promotion in Q4 2022, following our Q3 2022 supply challenge, and in advance of a then expected competitor launch in early 2023.

Wetteny Joseph: It is important to note that while we are not leveraging distribution for athene maps Theres significant clinic stocking impact in the first few months after launch.

Wetteny Joseph: We have seen higher than expected penetration and reorder rates through the end of the year as well as rapid patient share growth in the <unk> category.

Wetteny Joseph: <unk> had sales of $14 million in Q4 in the U S.

We have seen a marked increase in <unk> bed business interline revenue growth in the clinic.

Wetteny Joseph: In the U S feline OA patients are up 23% for 2023.

Wetteny Joseph: In practice for you posted U S sales of $185 million in the quarter growing 17%.

Wetteny Joseph: Growth was driven primarily by price as we were in promotions in Q4 of 2022. Following our Q3 2022 supply challenges and in advance of a Dan expected competitive launch in early 2023.

Wetteny Joseph: In our second quarter, with competition in the trip combination space, we continue to see patient share growth in Soprano-Catrio. We remain confident in our ability to compete and grow in this space. Through the strength of our label, we tell channel presence, strong corporate and specialty relationships, and the significant advantage of being first-to-market. Either way, Dermatologe products sales in the U.S. were $252 million in a quarter, growing 6% Cytopoint continues to drive growth through both price and volume, with VET and PET owners preferring its injectable method of administration.

Wetteny Joseph: Our second quarter with competition in the Triple combination fees, we continue to see patient share growth into profit trio.

Wetteny Joseph: We remain confident in our ability to compete and grow in this space due to the strength of our label retail channel presence strong corporate and specialty relationships and a significant advantage of being first to market.

Wetteny Joseph: Get them out there with wireless product sales in the U S with $252 million in the quarter growing 6%.

Wetteny Joseph: <unk> sales continued to drive growth through both price and volume with vets and pet owners, referring is injectable method of administration.

Wetteny Joseph: The apricot franchise growth is driven by better net price realization on lower volume due to promotional activity at the end of last year. Our U.S. Companion Animal Diagnostics portfolio posted growth of 9% in the quarter. U.S. livestock grew 4% in the quarter, primarily driven by growth in poultry as a result of favorable rotation back to certain medicated feed additives and the extended use of zooming, as well as share gains due to competitor supply. Cells of both swine and cattle products increased in the quarter, primarily as a result of an increased supply of vaccines that were limited in the same quarter of the prior year. Moving on to our international segment, where revenue in the quarter grew 9% on a rewarded basis and 8% excluding the impact of 2020. International Companion Animal Group, 10% operationally, and Lifestyle, who's 7% operationally. China represented a 3% drag on our international segment's operational revenue growth in the quarter.

Wetteny Joseph: Africa franchise growth is driven by better net price realization on lower volume due to promotional activity at the end of last year.

Wetteny Joseph: Our U S companion animal diagnostics portfolio posted growth of 9% in the quarter.

Wetteny Joseph: U S livestock grew 4% in the quarter, primarily driven by growth in poultry as a result of favorable rotation back to certain medicated feed additives and the extended use absorbing as.

Wetteny Joseph: As well as share gains due to competitor supply constraints.

Wetteny Joseph: Sales of both swine and cattle products increased in the quarter, primarily as a result of increased supply of vaccines that we're limited in the same quarter of the prior year.

Wetteny Joseph: Moving onto our international segment, where revenue in the quarter grew 9% on a reported basis and 8% excluding the impact of foreign exchange International.

Wetteny Joseph: International Companion animal grew 10% operationally and livestock grew 7% operationally.

Wetteny Joseph: China represented 3% drag.

Wetteny Joseph: Greg on our international segment operational revenue growth in the quarter.

Wetteny Joseph: Our sales of companion animal products were led by our pain maps, our ketone metallurgy products, and our small animal parasites portfolio. Wealth in our OA paying products was equally driven by filled force focus and DTC awareness campaigns in early launch European markets, as well as continued uptake in markets launched earlier this year. The dollar sales were $53 million international only, with 93% operational growth in the quarter. Valencia sales were $13 million internationally in the quarter, scoring 77% operational.

Wetteny Joseph: Higher sales of companion animal products was led by our <unk>, our key dermatology products and our small animal parasiticide portfolio.

Wetteny Joseph: Growth in our OA pain products was equally driven by full force focus and DTC awareness campaigns and poorly launched European markets as well as continued uptake in markets launched earlier this year.

Wetteny Joseph: Gibraltar sales were $53 million internationally with 93% operational growth in the quarter.

Wetteny Joseph: So lindsay ourselves were $13 million internationally in the quarter growing 77% operationally.

Wetteny Joseph: Our international key dermatology portfolio contributed $123 million in revenue, posting growth of 10% in the quarter on an operational basis. We continue to see benefits for Apricot from our DTC awareness campaigns across several international markets, and convergence of Apricot chewable has been positive. Wealth Insider Point continues to benefit from higher rates of conversion from Apple Bill and overall market wealth. Our International Small Animal Fair Suicide Portfolio grew 4% operationally, driven by our Simparica franchise, with Simparica posting $48 million in revenue and growing 32% on an operational basis in the quarter, driven primarily by price, a strong fair suicide season, and demand generation in emerging markets. The Brecker trio contributed $23 million internationally, growing 72% operationally, driven by high peak season sales in Australia and continued uptake in Europe driven by key account penetration and field force effectiveness.

Wetteny Joseph: Our international and key dermatology portfolio contributed $123 million revenue posting growth of 10% in the quarter on an operational basis.

Wetteny Joseph: We continue to see benefit to Africa from our DTC awareness campaigns across several international markets and convergence of ethical approval has been positive.

Wetteny Joseph: <unk> continues to benefit from higher rates of conversion from <unk> and overall market growth.

Our international small animal parasiticide portfolio grew 4% operationally driven by our <unk> franchise with <unk> posting $48 million in revenue and growing 32% on an operational basis in the quarter driven primarily by price.

Wetteny Joseph: Versus high season, and demand generation and emerging markets.

Wetteny Joseph: <unk> contributed $23 million internationally growing 72% operationally driven by high peak season sales in Australia and continued uptake in Europe, driven by key account penetration and field force effectiveness.

Wetteny Joseph: This growth was partially offset by a 33% operational decline in our Revolution franchise, which generates a high proportion of sales in China, where we had a tough comparative quarter due to the return of supply in Q4 of 2022, as well as the ongoing impact of the current economic conditions. Continuing on to international livestock, which is 7% operationally, driven primarily by price increases in all species, especially in high inflationary markets. Our policy portfolio also benefited from favorable MFA rotations in certain markets. However, China had an unfavorable impact on our international livestock sales in the quarter, particularly in our swine portfolio.

Wetteny Joseph: This growth was partially offset by a 33% operational decline in a resolution franchise, which generates a high proportion of sales in China, where we had a tough comparative quarter due to the return of supply in Q4 of 2022.

Wetteny Joseph: As well as the ongoing impact of the current economic conditions.

Wetteny Joseph: Continuing on to international livestock, which grew 7% operationally driven primarily by price increases in all species, especially in high inflationary markets.

Our poultry portfolio also benefited from favorable MFA rotations in certain markets.

Wetteny Joseph: China had an unfavorable impact on our international lifestyle sales in the quarter, particularly in our swine portfolio.

Wetteny Joseph: Now moving on to the rest of the P&L for the quarter. Adjusted gross margins of 67.1% decreased 100 basis points on a reported basis compared to the prior year. On an operational basis, adjusted gross margins decreased by 20%.

Wetteny Joseph: Now moving onto the rest of the P&L for the quarter adjusted.

Wetteny Joseph: Adjusted gross margins of 67, 1% decreased 100 basis points on a reported basis compared to the prior year.

Wetteny Joseph: On an operational basis, adjusted gross margins decreased by 20 basis points, resulting primarily from higher manufacturing costs, which were partially offset by price increases and lower freight costs.

Wetteny Joseph: Resulting primarily from higher manufacturing costs, which were partially offset by price increases and lower freight costs. Adjusted operating expenses increased 11% operationally, driven primarily by higher SG&A expenses, which were 10% operationally, primarily due to higher competition-related expenses as well as a charitable contribution related to the funding of the Zoetis Foundation. R&D expenses grew 17% on an operational basis, driven by higher compensationary expenses, as well as portfolio progression of key pipeline projects. Finally, other incoming deductions were higher in the quarter due to an impairment charge related to an acquisition. The adjusted effective tax rate for the quarter was 18.8%, a decrease of 200 basis points, primarily due to higher net discrete tax benefits in the quarter, a higher benefit in the U.S. related to foreign-derived intangible income, and a more favorable jurisdictional mix of earnings.

Wetteny Joseph: Adjusted operating expenses increased 11% operationally driven primarily by higher SG&A expenses, which grew 10% operationally primarily due to higher compensation related expenses as well as a as a charitable contribution related to the funding of the Zumiez Foundation.

Wetteny Joseph: R&D expenses grew 17% on an operational basis, driven by higher compensation related expenses as well as portfolio progression of key pipeline projects.

Wetteny Joseph: Finally, other income and deductions were higher in the quarter due to an impairment charge related to an acquisition.

Wetteny Joseph: The adjusted effective tax rate for the quarter was 18, 8% a decrease of 200 basis points, primarily due to higher than net discrete tax benefits in the quarter, a higher benefit in the U S related to foreign derived intangible income and a more favorable jurisdictional mix of earnings.

Wetteny Joseph: Adjusted End Income grew 6% operationally, and Adjusted Diluted EPS grew 7% operationally for the quarter. Capital expenditures in the fourth quarter were $198 million. For the full year, we had capital expenditures of $732 million.

Wetteny Joseph: Adjusted net income grew 6% operationally and adjusted diluted EPS grew 7% operationally for the quarter.

Wetteny Joseph: Capital expenditures in the fourth quarter were $198 million.

Wetteny Joseph: For the full year, we had capital expenditures of $732 million.

Wetteny Joseph: Lastly, we continue to return excess capital to shareholders. For the year, we have returned approximately $1.8 billion to shareholders through a combination of share purchases and dividends. In December, we announced a 15% annual dividend, continuing our commitment to grow our dividend at or faster than the growth in adjusted net income. Now, moving on to our guidance for the full year 2024. Please note that guidance reflects foreign exchange rates as of late January. We are expecting foreign exchange to have an unfavorable impact on our growth compared with the prior year.

Wetteny Joseph: Lastly, we continue to return excess capital to shareholders for.

Wetteny Joseph: For the year, we have returned approximately $1 8 billion to shareholders through a combination of share repurchases and dividends.

Wetteny Joseph: In December we announced a 15% annual dividend increase continuing our commitment to grow our dividend at or faster than the growth in adjusted net income.

Wetteny Joseph: Now moving onto our guidance for the full year 2024. Please.

Wetteny Joseph: Please note that guidance reflects foreign exchange rates as of late January.

Wetteny Joseph: We are expecting foreign exchange to have an unfavorable impact on our growth versus the prior year.

Wetteny Joseph: At Net Revenue, we expect foreign exchange to negatively impact our growth by 90%, with the impact being more pronounced early in the year and decreasing later in the year. At Adjusted Net Income, we expect FX to negatively impact our growth by 150%, with a significant unfavorable impact in the first half of the year, transitioning to slight favorability in the second half of the year. As a reminder, we do not actively forecast effects, so these estimates assume rates remain where they were as of late January. For 2024, we are projecting revenue between $9.075 and $9.225 billion, representing a range of 7% to 9% operational growth, with growth across both price and volume. We expect companion animals to be the primary growth driver in 2020. With the expected impact of the U.S. March on Bluebella, we expect to see robust growth from our four pay maps, both in the U.S. and internationally. Our current clinical penetration levels for Lubella in the U.S. are exceeding our expectations.

Wetteny Joseph: At net revenue, we expect foreign exchange to negatively impact our growth by 90 basis points with the impact being more pronounced early in the year and decreasing later in the year.

Wetteny Joseph: And adjusted net income, we expect FX to negatively impact our growth by 150 basis points with significant unfavorable impact in the first half of the year transitioning despite variability in the second half of the year.

As a reminder, we do not accurately forecast FX. So these estimates assume rates remain where they were as of late January.

Wetteny Joseph: For 2024, we are projecting revenue between $9 zero 75, and $9 225 billion.

Wetteny Joseph: Representing a range of 7% to 9% operational growth with growth across both price and volume.

Wetteny Joseph: We expect companion animal to be the primary growth driver in 2024.

Wetteny Joseph: With the expected impact of the U S. Marshals rubella, we expect to see robust growth from our <unk>, both in the U S and internationally.

Our current clinic penetration levels will umbrella in the U S are exceeding our expectations and as Chris mentioned, we have launched our DTC efforts ahead of schedule to drive increased pet owner awareness.

Wetteny Joseph: And as Kristin mentioned, we have launched our DTC efforts ahead of schedule to drive increased head owner awareness. Even with the expectation of competitive entrants, we anticipate mid- to high-single-digit growth in both sympathetic atrio and orchid dermatology portfolios for Lifestyle, 2023 Extended RxHC. Our growth during the year benefited from several tailwinds, including improvements in supply in certain markets, as well as competitive out-of-state growth. While our outlook for the upcoming year is more optimistic than it was as we entered 2020, We do expect our growth rate to normalize and be in line with livestock industry growth. I'd like to briefly touch upon the key assumptions that underpin our expectations for revenue growth. For Companion Animal, we are not projecting a significant change to the current VECC lending. We expect U.S. visits to grow flat to 1%, especially in the first half, as the situation worsens over the course of 2020. Now, moving on to the rest of the PNC.

Wetteny Joseph: Even with the expectation of competitive entrants, we anticipate mid to high single digit growth in both <unk> and our key dermatology portfolio.

Wetteny Joseph: While livestock 2020, we exceeded our expectations.

Wetteny Joseph: Our growth in the year benefited from several tailwind.

Wetteny Joseph: Improvements in supply in certain markets as well as competitive auto stocks.

Wetteny Joseph: While our outlook for the upcoming year is more optimistic than it was as we enter 2023, we do expect our growth rates to normalize and be in line with lifestyle industry growth.

Wetteny Joseph: I'd like to briefly touch upon the key assumptions that underpin our expectations for revenue growth.

Wetteny Joseph: For companion animal we are now projecting significant change to the current Vic lending strengths.

Wetteny Joseph: We expect U S visits to grow flat to 1% and expect to see growth in therapeutic visits aided by the impact of our OA pain products.

Wetteny Joseph: Core companion animal Parasiticide, we continue to expect meaningful growth Once America trio.

Wetteny Joseph: Adjusted cost of sales as a percentage of revenue is expected to be approximately 29.5%. With the increase from 2023, focus on supporting primary drivers of revenue growth. The adjusted R&D expenses for 2024 are expected to be between $665 and $675 million. Span is driven by the advancement of key pipeline projects, as well as higher competition-related expenses. Adjusted interest expense and other income and deductions are expected to be approximately $210 million.

Wetteny Joseph: We expect new entrants will have continued to drive the conversion from topical <unk> callers to triple combination parasiticide.

Wetteny Joseph: Where we are the market leader.

Wetteny Joseph: The key dermatology products, we are prepared for competition and confident in our ability to defend and grow our share through our three differentiated dermatology products the strength of our customer relationships and the expertise. We have gained from almost 10 years in this space.

Wetteny Joseph: Lastly, while we are not assuming a change in the current economic situation in China, We do expect the headwind to growth, especially in the first half as the situation worsened over the course of 2023.

Wetteny Joseph: This is significantly higher than the prior year, as our growth here is negatively impacted by the non-recurring World Peace Settlement income we reflected in Q1 of 2023, as well as the impact of lower interest rates. Adjusted net income is expected to be in the range of $2.65 to $2.70 billion, representing operational growth of 9% to 11%. We expect the adjusted diluted EPS to be in the range of $5.74 to $5.84 and the reported diluted EPS to be in the range of 5,034 cents to 5,044.

Wetteny Joseph: Now moving on to the rest of the P&L.

Wetteny Joseph: Adjusted cost of sales as a percentage of revenue is expected to be approximately 29, 5%.

Wetteny Joseph: We continue to make investments to ensure we can support expected future growth in our portfolio, especially in monoclonal antibodies.

Wetteny Joseph: These investments are driving short term margin impact from lower site utilization. This was offset by price increases and favorable product mix.

Wetteny Joseph: Adjusted SG&A expenses for the year are expected to be between two seven and $2 2 billion with the increase from 2023 focused on supporting primary drivers of revenue growth.

Wetteny Joseph: And finally, we are anticipating capital expenditures in 2024 to be in the range of $800 to $850 million. These levels remain elevated compared to historical spin levels as we continue to make investments to support our future.

Wetteny Joseph: Adjusted R&D expenses for 2024 is expected to be between 665 and $675 million.

Operator: 2023 was another strong year. Even with distributor inventory headwinds entering the year and a challenging economic environment, especially in China, we again outperformed the market. Operator?

Wetteny Joseph: Spend is driven by the advancement of key pipeline projects as well as higher compensation related expenses.

Wetteny Joseph: Adjusted interest expense and other income and deductions is expected to be approximately $210 million.

Kristin C. Peck: Great, thanks for taking my question. So can you talk a little bit about the reorder rates and feedback and expectations around Librella for 2024 in the US and about some of those stocking dynamics that we should think about quarter to quarter? And then a bigger picture question just on margins and profitability, and there are some moving factors in 2024, such as FX and the ramp up of Librella in that way on margins. But can you talk a little bit more about the potential margin leverage that you could see across your business as you expand in some of those faster growing and higher margin categories in 2025 and beyond? And could you describe a little bit more about that longer-term margin leverage? Thanks. Thank you, Erin. I will take the first question on Labrella and let Wetteny take the second question.

Wetteny Joseph: This is significantly higher than the prior year as our growth here is negatively impacted by the nonrecurring royalty settlement income we reflected in Q1 of 2023 as well as the impact of lower interest income.

Wetteny Joseph: Our adjusted effective tax rate for 2024 is expected to be in the range of 20% to 21%.

Wetteny Joseph: Adjusted net income is expected to be in the range of $2 65 to $2 701 billion, representing operational growth of 9% to 11%.

Wetteny Joseph: Our guidance once again reflects our value proposition of growing revenue in line with or faster than the market and growing adjusted net income faster than revenue.

Wetteny Joseph: We expect adjusted diluted EPS to be in the range of $5 74 to.

Wetteny Joseph: <unk> thousand 84.

Wetteny Joseph: And reported diluted EPS to be in the range of $5 34.

Wetteny Joseph: To $5 44.

Kristin C. Peck: Yeah, we were very pleased with how we did with Labrella in the first full quarter of launch in Q4. As you saw, we did about $44 million in the quarter, 47 for the year, including the early experience trial. And really, how we achieved that was our penetration was ahead of schedule, as we mentioned in the prepared remarks. Given that penetration, which is in the high 60s, we actually began DTC ahead of what we were expecting. Reorder rates are coming in exactly where we expected, in line with our expectations.

Wetteny Joseph: And finally, we are anticipating capital expenditures in 2024 to be in the range of $800 million to $850 million.

Wetteny Joseph: These levels remain elevated compared to historical spend levels as we continue to make investments to support our future growth.

Wetteny Joseph: Summarized.

Wetteny Joseph: 2023 was another strong year.

Wetteny Joseph: Even with distributor inventory headwinds entering the year in a challenging economic environment, especially in China.

Kristin C. Peck: So that makes us really confident as we go into the year. You know, we're looking at what your other question was, you know, what kind of stocking or inventory bills we saw in the clinics. It's hard to give you a firm number. It's somewhere between a quarter and a third, I would say, overall in stock.

Wetteny Joseph: We again outperformed the market.

Wetteny Joseph: We continue to grow share given in spaces, where we faced new competition and we remain confident in our ability to expand existing markets and create new ones in the future.

Wetteny Joseph: As we move into 2024, our guidance highlights our ability to again grow faster than the market driven by our innovative product portfolio and multiple sources of growth as well as our ability to grow our bottom line faster than our pipeline, while making meaningful investments for the future and returning significant excess capital.

Kristin C. Peck: But look, you know, this is the number one selling pain product in Europe, and we have no doubt it will be that in the U.S. as well. So we're quite pleased and, you know, certainly ahead of our plan for penetration. And look, with our direct-to-consumer advertising investments, we've already started late last year and into Q1 to drive growth in this product in the U.S.

Speaker Change: To our shareholders.

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

Speaker Change: Operator.

Wetteny Joseph: Yeah, sure. Look, when looking at the margins, yes, indeed, there are some moving factors when you think about 2024 and then beyond. We do have Labrella in 2023, as we said at Investor Day. If you look at our monoclonal antibodies at peak, particularly as we ramp up production in our capacity, which was built to make sure that we're confident in being able to take advantage of demand, they start out being diluted to the overall company average.

Speaker Change: Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: We will take our first question from Erin Wright with Morgan Stanley. Please go ahead.

Erin Wilson Wright: Great. Thanks for taking my question. So can you talk a little bit about the reorder rates and feedback and expectations around like Wella for 2024 and may in the U S and in some of those stocking dynamics that we should think about quarter to quarter.

Wetteny Joseph: For example, in 2023, as we go into 2024, Labrella becomes accretive to our overall margins but still below what you would consider our innovative companion animal products. And as we exit 2024 into 2025 and beyond, it becomes more in line with our innovative companion animal products. So, overall, beyond 2024, I won't give you specific guidance here in terms of what to expect, but I think if you look at it, we continue to expect companion animals to outpace the growth of livestock, so that mix will continue to be favorable for us.

Erin Wilson Wright: A bigger picture question, just on margins and profitability.

Erin Wilson Wright: And there are some moving factors in 2024.

Erin Wilson Wright: And the ramp up of like Orela that weigh on margins, but can you talk a little bit more about the potential margin leverage that you could see across your business as you're expanding some of those faster growing and higher margin categories in 2025 and beyond.

Erin Wilson Wright: If you could describe a little bit more about that longer term margin leverage. Thanks.

Wetteny Joseph: And as we get into the higher levels of production for monoclonal antibodies, they're also accretive to overall margins, and we're positioned to be able to leverage our AGMA base as well. So, all of those should translate to margin expansion through the P&L over time. But as we've demonstrated, we're not afraid to make the right investments behind our products, behind our key franchises as we see them, investments in R&D, as you saw in 2023. And as the guide implies, R&D will continue to grow faster than revenue as well. So, those investments will slightly offset some of those costs, but we're positioned to continue to expand. Thank you. We'll take our next question from Michael Ryskin with Bank of America. Please go ahead.

Speaker Change: Thank you Erinn I will take the first question on the boiler and let me take that second question. Yes. We were very pleased with how we did with labella in this first full quarter of launch in Q4 as you saw we did about $44 million in the quarter or <unk> 47 for the year, including the early experience trial.

Speaker Change: And really how we achieve that was our penetration was ahead of schedule as we mentioned in the prepared remarks.

Speaker Change: We given that penetration, which is in the high <unk>. We actually began DTC ahead of what we were expecting a reorder rates are coming in exactly where we expected in line with our expectations. So that makes us really confident as we go into the year. We're looking at what your other question was what kind of stocking or inventory build we saw in the clinic, it's hard to give you a firm number at summer.

Operator: Great. Thanks for taking the question, guys. First, I want to touch on margins, maybe both for 2023 and 2024. So it looks like you're leading. This is a question for you. I know that you were the one who called out the headwinds, but I'm wondering if you could give us a sense of the impact on the envelope math.

Speaker Change: Between a quarter and a third I would say overall in stocking, but look this is the number one selling pain product in Europe, and we have no doubt it will be that in the U S. As well. So we're quite pleased and certainly ahead of our plan on penetration and look with our direct to consumer advertising investments. We have already started late last year and into Q1 to drive growth in this product.

Wetteny Joseph: You got into about 100 bps of margin expansion in 2024, but you also did finish 23 lower than we would have expected. I think 4Q especially came in significantly lower, and you called out some headwinds during the call in terms of FX. You called out some timing, some contributions to the Zoetis Charitable Foundation. Any way you could back that out, give us a cleaner number for what margins should have been in 23, and then maybe what some of those one-time headwinds would have as an impact on 2024, just to give us a better sense of underlying margins and underlying bps. And then my second question is just following up on Librella.

Speaker Change: In the U S. So I'll, let me take the second question, Yes, sure look off when looking at.

Speaker Change: Margins, yes, indeed, there are some moving factors when you think about 2024 and beyond.

Speaker Change: We do have labella in 2023, as we've said at Investor Day, If you look at our monoclonal antibodies.

Speaker Change: Particularly as we ramp up production in our when our capacity, which was built to make sure that we're confident in being able to take advantage of demand.

Speaker Change: They start either being diluted to the overall company average for example in 2023 as we go into 2024 Liberal it becomes accretive to our overall margins, but still below whether you would consider or.

Speaker Change: Our innovative from a companion animal products and as we exit 'twenty into 2025 and beyond it becomes more in line with our innovative companion animal products. So overall beyond 'twenty four I won't give you specific guidance here in terms of what to.

Wetteny Joseph: I don't believe you actually quantified a target, so I want to just give you what you did in 4Q, a major focus point is something like $200 million to $250 million for Librella in 2024. Is that reasonable? And especially, that's for the US, but then on the OUS side, we've heard some concerns maybe coming out of Europe, and it seems like Librella has sort of been a little bit flat over the last couple quarters in international markets. So any call-out on what's going on internationally? Yeah, sure, Mike. Let me take this and see what Kristin wants to add.

Speaker Change: We expect but I think if you look at it we continue to expect companion animal to outpace the growth of livestock. So that mix will continue to be favorable for us and as we get into the higher levels of production for monoclonal antibodies. They are also accretive to overall margins and we're positioned to be able to leverage our SG&A base as well so all of those should translate.

Speaker Change: So margin expansion through the P&L over time, but as we've demonstrated we're not afraid to make the right investments behind our products behind our key franchises as we see them and investments in R&D as you saw in 2023 and as the guide implies R&D will continue to grow faster than revenue as well. So those investments will slightly offset some of those lower.

Wetteny Joseph: So take a look at margins. Indeed, in 2024, we are guiding to about 100 basis points of expansion and margin. Keep in mind, when you look at 2023 and how we ended, Q4 had about 100 basis points of margin impact, and about 80 of that is from FX. So you're talking about roughly 20 basis points when you consider manufacturing costs and a little bit of mix. Now, looking at the mix, we had clearly a really strong end and, quite frankly, a strong year in livestock. And we're actually here at the national sales meeting for our livestock with our livestock team in Utah.

Speaker Change: Physicians and continue to expand.

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

Michael: Great. Thanks for taking the question guys.

Michael: First of all I want to touch on on margins maybe.

Michael: For 2023 and 2024, so it looks like your guidance.

Wetteny Joseph: And look, they've had a great year, and we expect livestock to continue to grow as we go into 2024, but it clearly ended stronger at the end. So that created a little bit of a mix, and as well as the well-performing expectations exiting the year, they are also, as I said, a bit diluted. So when you look at mix and manufacturing costs, you're still talking about about 20 basis points of headwind exiting 2023. Most of the impact here is coming from FX, about 80 basis points. The other items that we referenced in our prepared commentary with respect to their impact on the quarter and how we ended, FX, as I just said, that had an impact on our finish here. If you take a look at FX, which is clearly non-operating, and you factor non-recurring items like the impairment charge for the prior acquisition, those two items are about 7 cents of headwind in the quarter in 2023 in the fourth quarter. So that's really the vast majority of what you saw impacting us here. But, of course, we don't forecast FX.

Michael: Back in the envelope math youre guiding to about 100 bps of margin expansion in 2024, but you also did finished 23 lower than we would have expected I think <unk> specialty came in cigna.

Michael: Significantly lower and you called out some headwinds during the call in terms of FX you.

Call. It through time makes a contribution to the charitable foundation any way you could kind of backed that out give us sort of a cleaner number for what margins should have been in 'twenty three and then maybe what some of those onetime.

Michael: Onetime headwinds would have an impact to 2024.

Michael: Give us a better sense of underlying margins and underlying EPS and.

Michael: And then my second question is just following up on Libra I don't believe you actually quantified targets. So I want to just given what you did in <unk> major focus point is something like $200 million to $250 million for Libra for 2024.

Michael: Reasonable.

Wetteny Joseph: So what we baked into our guidance for 2024 is essentially what would happen if we assume FX rates stay where they are at the end of January here. And with that, on a constant basis, we would expect to extend margins in 2024. And so that's really consistent with how we've approached our forecasting in the past, and I'll sit here and guess at what FX is going to do throughout the year 2024. And that will have an impact, either favorable or unfavorable, depending on how that goes. For the other part of your question, I just want to maybe talk a little bit about Lubella and how we expect her.

Michael: And especially.

Michael: For U S with and on the <unk> side.

Michael: Heard some some concerns maybe coming out of the Europe.

Michael: And it seems like <unk> has sort of been flat over the last couple of quarters.

Speaker Change: In international markets, So any color on what's going on internationally. Thanks.

Speaker Change: Yes, sure Mike Let me, let me take I'll take this and then see what Chris and wants to add so take a look at margins.

Speaker Change: In 2024, we are guiding to about 100 basis points of expansion in margins keep in mind. When you look at 2023 and how we ended.

Speaker Change: Q4 had about 100 basis points of margin impact.

Wetteny Joseph: Clearly, when you think about how we will deliver on 7% to 9% operational growth in revenue, price is a pretty significant factor. We continue to expect to be running prices above our historic levels of 2 to 3 points and perhaps slightly below what you saw in 2023 at 5%. And then Lubella, with the U.S. launch, clearly is going to be a significant factor. Certainly, $44 million in the quarter in Q4, and I was, again, very pleased to see that. We do see about a quarter to a third of that being initial stocking. So you can model that out in terms of what that would translate to.

Speaker Change: And about <unk> of that is from FX. So you are talking about roughly 20 basis points.

Speaker Change: When you consider manufacturing costs and little bit of mix now looking at mix, we had clearly.

Speaker Change: Really strong and quite frankly, a strong year in livestock and we're actually here at the national sales meeting for our livestock with our lifestyle team in Utah.

Speaker Change: And look we've had a great year and we expect lifestyle continue to grow as you go into 2024, but clearly ended stronger at the end so that create a little bit of a mix and as well as the gorilla outperforming our expectations exiting the year is also as I said a bit diluted when youll get mix.

Wetteny Joseph: We're still in the early stages of our launch, but we're very pleased with what we're seeing so far, as we discussed already. In international, we could not be more pleased with what we're seeing. If you look at international, the fourth quarter, you still have about 47% growth if you look at the base markets where we were launched at the beginning of the year. And then the new markets are driving another bit of growth. You have another $12 million contribution from those new markets, in addition to the U.S. 44.

Speaker Change: And manufacturing costs, you're still talking about about 20 basis points of headwind exited 23. Most of the impact here is is coming from FX of about 80 basis points.

Speaker Change: Items that we referenced in our prepared commentary with respect to to impact on the quarter and how we ended on FX.

Speaker Change: And then the impact on our.

Speaker Change: On our <unk>.

Speaker Change: Finish here if you take a look at FX, which is clearly not operational and you factor nonrecurring item like the.

Wetteny Joseph: So I think what we have to really take into account here is, as we've been launching in markets in Europe, there is some stocking that happens from quarter to quarter as we do those launches. If you factor that out, and you just focus on those markets that were already launched, we're talking about 47% growth in the quarter, which has been consistent over the last few quarters, about 50%, give or take growth. So we're going to be more pleased with what we're seeing in international markets. No, it's great.

Speaker Change: The impairment charge for the prior acquisition those two items of about seven cents of headwinds.

Speaker Change: In the quarter in 2023 in the fourth quarter. So that's really the vast majority of what you saw impacting us here of course, we don't forecast FX. So what we baked into our guidance for 2024, essentially what would happen. If we assume FX rates stay where they are at the end of January here and with that on a constant basis, we would.

Wetteny Joseph: Thank you. We'll move next to Jon Block with Stiefel. Please go ahead. Great. Thanks, guys. Good morning.

Speaker Change: To extend margins in 2024, and so that's really consistent with how we've approached our forecasting in the past and I'll sit here and guess what FX is going to do throughout the year of 2024 and that will have an impact either favorable or unfavorable depending on how that goes for the other part of your question I just wanted to.

Operator: Wendy, any revenue cadence in the year to call out? You've got sort of that easier 1Q23 comp, but you were also noting, you know, more acute Chinese headwinds in the first half. So just how do we think about it? Do we sort of look at it on a two-year cycle basis? We're building the guidance for the full year, you know, maybe GM a little bit below what we were thinking, but SG&A expenses. Despite the investments, Kristin, that you called out, the accelerated DTC, SG&A was a little bit lower than where our heads were at, so maybe you can just talk through those items, why we're only seeing, it seems like low to mid-single-digit I don't know if some of that's blunted by FX.

Speaker Change: Maybe talk a little bit about <unk>.

Speaker Change: We expect with Wella clearly when you think about how we will deliver on 7% to 9% operational growth in revenue price is a pretty significant factor. We continue to expect to be running price above our historic levels of two to three points.

Speaker Change: And perhaps slightly below what you saw in 2023 of 5% and then look well over the U S. Launch clearly is going to be a significant factor certainly $44 million in the quarter in Q4 was again.

Wetteny Joseph: And then just finally, I'm sorry, Librella, due to the stocking, do you still expect Librella to be up in the U.S. for Q23 to 1Q24 as it absorbs the stocking? Thanks, guys. Look, I'll take the cadence point first and then see what else I want to add in terms of Labrella expectations.

Speaker Change: Very pleased to see that we do see about a quarter to a third of that being us initial stocking. So you can model that out in terms of what that would translate to we're still in the early stages of our launch although we're pleased with what we're seeing so far.

Speaker Change: We discussed already and international we couldn't be more pleased with what we're seeing if you look at international.

Wetteny Joseph: Look, sitting here, I would expect a roughly balanced cadence across the year. Now, let's take a look at Q1, which is a specific point you raised in your question, Jon. If you look at Q1, certainly, if you look at companion animals in the U.S., there's an easier comp. We had de-stocking in the first quarter last year, clearly something we look to see as an easier comp that we come up against. But at the same time, you had a 12% growth quarter in livestock in Q1. And so I think if you look at the balance, those don't complete the balance, but it's livestock growth both in the U.S. as well as internationally. And then you have China, which clearly started to deteriorate further in terms of the economic conditions there throughout the year.

Speaker Change: The fourth quarter, you still have about 47% growth if you look at the base.

Markets, where we were launched at the beginning of the year and then the new markets are driving.

Speaker Change: Another a bit of growth you have in those 12 million contribution from those new markets. In addition to the U S. 44, So I think where we have to really take into account here as we've been launching in markets in Europe. There is some stocking that happens from quarter to quarter as we do those launches if you factor those out and you just focus on those markets that were already launched we're talking about 47% growth in the quarter, which has been consistent over the last few.

Speaker Change: <unk> is about 60% give or take so we couldn't be more pleased with what we're seeing in international markets.

Speaker Change: No that's great.

Speaker Change: Thank you.

Speaker Change: Jon Block with Stifel. Please go ahead.

Jon Block: Great. Thanks, guys good morning.

Wetteny Joseph: So that becomes a heavier, I would say, headwind coming into Q1, as well as the weather conditions in Australia, et cetera, having an impact there. So I think if you balance those out, and the last point I'll make is Labrella is clearly very pleased with how we exit Q4 and enter into Q1, but it's going to continue to contribute more and more as we go through the year. So Q2 and Q3 would be more than Q1. Therefore, the contribution from Labrella accelerates through the year, yet it doesn't have as much, relatively speaking, in Q1. And when you take all those into consideration, I actually see a roughly balanced year.

Any revenue cadence in the year to call out.

Jon Block: I've heard the easier $1 23 call, but you also noting in a more acute China headwinds in the first half. So just how do we think about it we sort of look at it on a two year stack basis.

Jon Block: And then on the guidance for the full year, maybe GM for a little bit below what we were thinking but SG&A expense. Despite the investments Christian that you called out the accelerated DTC. The SG&A was a little bit lower than where our heads were adds maybe you can just talk through those items why we're only seeing.

Jon Block: It seems like low to mid single digit SG&A growth year over year I don't know if some of thats appointed by FX and then just finally I'm sorry, <unk> due to the stocking do you still expect life relative.

Wetteny Joseph: Now, we did make references to FX, so from a reported basis, that, again, taking a look at where the FX rates were a couple weeks ago, you do have a heavier impact in terms of both revenue and bottom line. When FX is a factor, hopefully, what we provide in prepared commentary is helpful there. So that's the other piece you have to think about. But when I think about operational-based growth, I mean, we did exit the year with good momentum as we exited Q4 and Q1. Again, looking at U.S. Companion Animal, but that's how I think about it.

Jon Block: In the U S for Q2, 23 to <unk> 24, as it absorbs the stocking thanks guys.

Speaker Change: I'll take the cadence.

Speaker Change: First and then see where Chris and wants to add in terms of labella expectations.

Speaker Change: Look sitting here I would expect a roughly balanced cadence.

Wetteny Joseph: Now, is Q1 going to be higher than Q4? From a Labrella perspective, I think if you factor about a quarter to a third of the impact coming from stocking, that's $12 to $15 million. So even if you had a flat, that means you grew by $12 to $15 going into Q1.

Speaker Change: Across the year now, let's take a look at Q1, which is the specific point you raised in your question. John When you look at Q1, certainly if you look at companion animal in the U S. There's an easier comp we had destocking in the first quarter last year clearly is something we look to see is an easier comp that we come up against but at the same time.

Wetteny Joseph: I won't call it exactly here right now, but what I would say is we're pleased with how the product is performing, but we are still in the early stages of this. Thank you. We'll take our next question from David Westenberg of Piper Sandler. Please go ahead.

Speaker Change: You had a 12% growth quarter in livestock in Q1.

Speaker Change: And so I think if you look at if you look balanced.

Speaker Change: I believe the balance, but it's lifestyle growth both in the U S as well as international and then you have China, which clearly started more deteriorated in terms of the economic conditions. There throughout the year. So that becomes a heavier I would say a headwind coming into Q1 as well as the conditions weather conditions in Australia et cetera are having an impact there. So I think if you balance those out and less.

Kristin C. Peck: Hi, thank you for taking the question. So last year, we saw some discounting in front of the NexGuard combo launch. Do you anticipate there might be similar competitive dynamics in front of Olenka's Quattro launch? And how are you thinking about that in consideration of gross margins? And then just the second one on just the DTC efforts on Librella, I don't think there is DC allowed in Europe, but can you talk about maybe some of the learnings that you learned in Europe in terms of marketing and how they might apply specifically around communication with the vet? The vet obviously is the one that understands the superior safety profile of monoclonal antibodies and maybe how that messaging can come out. Thank you. Sure. I'll start with that one, and Wetteny can certainly build on it.

Speaker Change: Point I'll make is look relatively to very pleased with how we exited Q4 and enter into Q1, but it is going to continue to contribute more and more as you go through the year. So Q2, and Q3 would be more than Q1. Therefore, the contribution from umbrella accelerates through the year and it doesn't have as much relatively speaking in Q1. So when you take all those into consideration actually you see a roughly balanced year.

Speaker Change: Now we did make references to FX. So from a reported basis that again, taking a look at where the FX rates were a couple weeks ago, you do have a heavier impact in terms of both revenue and bottom line when FX factor hopefully what we provided in prepared commentary is helpful. There.

Kristin C. Peck: I mean, I want to first underscore that we had a very strong Q4 with TRIO, with 21% growth in the quarter with competition. You know, for the year overall, TRIO grew 9%. So, you know, we're very pleased with that. As we guided, and Wetteny mentioned earlier, we're expecting mid to high single-digit growth in TRIO for the year. So this obviously underlines, and we think we'll see that both in price and in volume. So we do anticipate, obviously, a competitor entering. You know, I'm not exactly sure what, you know, how Cordillo Quattro will do it.

Speaker Change: The other piece you have to think about but when I think about operational base growth I mean, we did exit the year with good momentum.

Speaker Change: As we exited Q4 in this Q1 again looking at U S companion animal, but thats, how I think about it now is Q1 going to be higher than Q4 from a logo perspective, I think if you factor about a quarter to a third of the impact coming from.

Speaker Change: From stocking that's $12 million to $15 million. So even if you had a flat that means you grew by 12 15 going into Q1 I won't call. It exactly here right now what I would say is we're pleased with how the product is performing but we are still in the early stages of this launch.

Thank you we'll take our next question from David <unk> with Piper Sandler. Please go ahead.

Kristin C. Peck: You know, our expectation is that it is not a differentiated product. You know, they do mention tapeworm, but you get tapeworms from fleas, and we absolutely control fleas. So, you know, therefore, that's really not a differentiated product. So, you know, we are used to having good competitors, obviously, with NexGuard. I'm sure there'll be some heavy promotion, but I think our strength, honestly, with our corporate accounts, you know, the experience of switching is low for people with this product. It's very unlikely someone on TRIO is going to switch.

David: Hi, Thank you for taking the question so last.

Last year, we saw some discounting in front of the next scarred combo launch do you anticipate there might be similar competitive dynamics in front of Lincoln's Cuatro launch and how are you thinking about that in consideration with the gross margins and then just a second one on just the DTC efforts in Libra I don't think there is D C allowed in Europe, but.

Kristin C. Peck: We're doing quite well with retail and auto ship, which I think also protects us. And we expect, you know, a new competitor to expand the market. What we're seeing a lot is a movement into the triple combos out of topicals, collars, et cetera.

David: Can you talk about maybe some of the learnings that you learned in Europe in terms of marketing and how they might apply specifically around.

David: Communication of the VAT.

David: Obviously is the one that understands disappears safety profile with monoclonal antibodies and maybe how that messaging can come out. Thank you.

Kristin C. Peck: So, you know, as we look at that, we're confident in our TRIO number as we look into the year. And with regard to your question on, you know, what we've learned from Labrella in Europe, so we cannot do branded advertising for Labrella in Europe, but we can do general advertising for disease awareness and encourage people who have pets, both dogs and cats, with osteoarthritis pain to bring them to the vet. And we are seeing, you know, the real impact of that disease awareness. I think it's been a long time since, you know, pet owners have not had a product that they could turn to and encourage them that there is a new product and that they should go to the vet and be seen. We are seeing, you know, really positive uplift from direct-to-consumer advertising, even when it's not branded. So, I don't know, Whetney, if you want to add to that? Yeah, look, I think, you know, you covered it, Kristen.

David: Sure.

Speaker Change: Start with that one and what you can certainly build on it.

Speaker Change: I wanted to first underscore we had a very strong Q4 with trio with 21% growth in the quarter with competition for the year overall trio grew 9%.

Speaker Change: So we're very pleased with that as we guided and Whitney mentioned earlier, we're expecting mid to high single digit growth in trio for the year. So this obviously underscores then we think we'll see that both in price and in volume. So we do anticipate obviously a competitor entering im not exactly sure what how <unk> will do it our expectation.

Speaker Change: That is not a differentiated product they do mentioned taper them, but to get paperwork from pleased then we actually control. So therefore, that's really not a differentiated products. So we abuse do having good competitors, obviously with NASCAR I'm sure there'll be some heavy promotional but I think our strength honestly with our corporate accounts the experienced <unk>.

Wetteny Joseph: TRIO has been performing really well for us in the face of direct competition in the U.S.; I couldn't be more pleased. And to be gaining patient share in the face of competition, I think that speaks a lot to what we've been talking about, which is the power of our relationships, the strength of our label, and being first to market. So, look, there'll be some initial, I'm sure, heavy promotion that happens when a new competitor comes in with factors some of that into our thinking here. But until we see the label and see what they do, we won't, you know, hone in on specific reactions and so on.

Speaker Change: Looking as well for people with this product, it's very unlikely somewhat entre is going to switch, we're doing quite well with retail and auto ship, which I think also protects us.

Speaker Change: We expect a new competitor or to expand the market, but we're seeing a lot is our movement into the triple combos out of topical <unk> et cetera. So as we look at that we are confident in our trio number as we look into the year and with regards to your question on why did we learn from labella in Europe. So we cannot do branded advertising <unk>.

Speaker Change: <unk> in Europe, but we can do overall advertising for a disease awareness and encouraging people, who have pets, both dogs and cats with osteoarthritis pain can bring them to that and we are seeing real impact of that disease awareness I think it's been a long time, where pet owners have not had a product that they can turn to you and encouraging them that there is a new <unk>.

Wetteny Joseph: But we're very confident in our ability to grow and continue to grow the franchise. And we're saying we're going to see mid- to high-single-digit growth across TRIO in 2024 as well. Thank you. Our next question is from Nathan Rich with Goldman Sachs. Please go ahead.

Speaker Change: And that they should go to that and be seen we are seeing really positive uplift from direct to consumer advertising, even when it's not brand itself. I know if you wanted to add into that yeah look I think you covered it Chris <unk> has been performing really well for us in the face of direct competition in the U S couldn't be more pleased to be gaining patient share in the face of competition I think that speaks.

Kristin C. Peck: Great, good morning, and thanks for the questions. I wanted to ask about the DERM franchise; I think you talked about mid to high single-digit growth for the franchise overall. I guess specifically, are you assuming a headwind within that guidance from, you know, the competitive entry that's likely to occur against Applequell this year? And can you talk about the strategies you're maybe putting in place to defend market share for that product? And then a quick follow-up on China; could you maybe frame the type of headwind that you expect in China in 2024? And does that impact more on the companion or livestock side of the market? Thank you. Sure, I'll take the DERM question, and I think Wetteny can follow up on your China question.

Speaker Change: Lots of what we've been talking about which is the power of our relationships the strength of our label and being first to market.

Speaker Change: There'll be some initial I'm sure heavy promotion that happens when a new competitor comes in with factor some of that into our thinking here, but until we see the label and see what they do we won't hold in on specific.

Speaker Change: And so on but we're very confident in our ability to grow continue growth franchise, and we're saying we're going to see mid to high single digit growth across trio in 2024 as well.

Kristin C. Peck: Look, we saw, you know, strong growth both in the quarter and overall in DERM at 8 percent, and I just want to underscore that that growth is obviously understated given the price, you know, if you're looking at the pre-price buy-in that we saw in late 2022. As we look at our guidance for mid to high single-digit growth for our DERM franchise in 2024, that is the expectation that we will see a competitor launch. We expect this, you know, market to continue to expand and grow, as we've talked about. There are 85 million dogs in the U.S. who have paritis

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

Nathan Rich: Great Good morning, and thanks for the questions I.

Nathan Rich: I wanted to ask on the Derm franchise I think you had talked about mid to high single digit growth for the franchise. Overall I guess, specifically are you assuming a headwind within that guidance from the competitive entry.

This is likely to occur against Apple <unk>. This year and can you talk about the strategies or maybe putting in place to defend.

Kristin C. Peck: There are still over 6 million untreated dogs and 3.5 million who are treated but with steroids and sort of over-the-counter products. So, we strongly believe this is a market we can continue to expand. Look, we've had two products on the market for 7 and 10 years, respectively. We've had millions of dogs on these products. Our products have been proven over time to be safe and efficacious, and they're trusted by pet owners. They're trusted by veterinarians, too.

Nathan Rich: Market share for that product and then a quick follow up on China could you maybe frame the type of headwind that you expect in China in 2024, and does that impact more on the companion or livestock side of the market. Thank you.

Speaker Change: Sure I'll take the tariff question and then I think what you can follow up on your China question.

Kristin C. Peck: And we're seeing more and more a switch to Cytopoint, you know, both a preference for compliance by both the pet owner and the vet. And, you know, our competition is expected to come in a film-coated tablet. And if you look at that, we're really focused on investing in Applico Chewables and moving them to Chewables, which, you know, pet owners really prefer. We've been successful in doing this in Europe.

Speaker Change: We saw strong growth both in the quarter and overall in term at 8% and I just want to underscore that that growth is obviously understated given the price.

Speaker Change: As you're looking at the pre price buy in that we saw in late 2022, as we look at our guidance for mid to high single digit growth for our <unk> franchise. In 2024 that is the expectation that we will see a competitor launch.

Speaker Change: We expect this market to continue to expand and grow as we've talked about there are $885 million in the U S. You have freight if there is still over 6 million untreated dogs and $3 5 million, who are treated with steroids and sort of over the counter products. So we strongly believe this is a market. We can continue to expand look we've had two.

Kristin C. Peck: We're quite focused on doing this in the U.S. And we're also continuing to look at innovation in the short term and in the long term. So, you know, we are going to defend this franchise. We're confident in this franchise. Our guidance of mid to high single digits demonstrates that we believe we can continue to grow this market in the U.S. and around the world, not just defend our brand, but continue to bring lifecycle innovation to the space over time to grow our share. What? Do you want to take China?

Speaker Change: <unk> been on the market seven and 10 years, respectively.

Speaker Change: Millions of tonnes on these products that our products have been proven over time to be safe and efficacious and they are trusted by pet owners they attracted by that.

Speaker Change: And we're seeing more and more <unk> switched to <unk>.

Wetteny Joseph: Yeah, sure. And one point on DERM, you know, of course, we have a mid to high single-digit growth expectation that we laid out in our guidance. Of course, across a broad range of expectations, there are various scenarios around competitor entry, timing, pricing, et cetera, that will play into that. And the label that they have, of course, will play into how that plays out. But we're confident in our ability to grow. Our franchise has been around for a decade in this space.

Both our preference for compliance by both the pet owner and the vet and our competition, we're expecting to come in a film coated tablet.

Speaker Change: And if you look at that we're really focused on investing in apical curable and moving them to <unk>, which pet owners really prefer we've been successful in doing this in Europe, we're quite focused on doing this in the U S. And we're also continuing to look at innovation in the short term and the long acting. So we are going to defend this franchise. We're confident in this franchise.

Wetteny Joseph: On China, we've been consistent on this one. I think, you know, we continue to see the broad economic situation there remain where it is. We're not expecting things to deteriorate or improve, at least through the first half of our year. And we also have stronger comps similar to the second half of 2023, a little bit less so into the first half of 24, but still a headwind into the first half of 24.

Speaker Change: Our guidance of mid to high single digits demonstrates that we believe we can continue to grow this market in the U S and around the world not just defend our brand, but continue to bring lifecycle innovation to the space overtime to outgrow our share.

Speaker Change: I think China, Yes, sure and one point on <unk> of course, we have a mid to high single digit growth expectation that we laid out in our guidance of course across a broad range of expectation there.

Speaker Change: Various scenarios around competitor entry timing.

Wetteny Joseph: You continue to see consumer confidence being low, and swine prices are remaining fairly depressed in consumption there as well. So all those factors, of course, long term, we continue to expect China to be a strong growth market. It has done exceptionally well for us over the last decade, but in the near term, we're not expecting that to be a contribution to growth. In fact, we'll see some declining comps in the first half of China.

Speaker Change: Pricing et cetera will play into that in the label that they have of course will be playing into how that plays out but we're confident in our ability to grow our franchise has been around for decades in this space on China. We've been consistent on this one I think we continue to see sort.

Speaker Change: So to the broad economic situation there to remain where it is we're not we're not expecting it to ignore nor improve at least through the first half of our year and we also have stronger comps similar to the second half of 2023, a little bit less so into the first half of 'twenty four but still a headwind into the first half of 2004, you continuing to see consumer confidence.

Wetteny Joseph: Thank you. We'll take our next question from Balaji Prasad with Barclays. Please go ahead. Hi, good morning, everyone. And thanks for the questions.

Kristin C. Peck: Firstly, I just wanted to understand the currency dynamics better, considering that most of the nearly 100 basis points it lost on revenue and 150 basis points it lost on EPS seems to be going from here. Why is the effect so severe, and are any particular currencies hurting you? I mean, my general understanding is with $4 billion of $4 plus billion of export revenues and the dollar weakening, the impact could have been the other way around. The second question concerns the FDA letter that Zoetis received on Liberla in November. I wanted to understand how frequent and normal these kinds of letters are on the animal health side and the issues that FDA found with Liberla's promotion with the inclusion of the P-value on the secondary endpoints, and what is the current status now with regard to your communication with the FDA. So, Balaji, I'll take your second question first, and then let Wetteny take it. I assume you're referencing the letter I sent back in November. You know, honestly, the letter was uneventful and was well addressed.

Speaker Change: LOE in swine prices are remaining fairly depressed in consumption there as well so all those factors because long term, we continue to expect China to be a strong growth market. It has done exceptionally well for us over the last decade, but in the near term we're not expecting.

Speaker Change: That to be.

Speaker Change: The contribution to growth in fact, we will see some decline in comps in the first half on China.

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

Prasad: Hi, good morning, everyone and thanks for the questions couple Firstly I just wanted to understand the currency dynamics better considering that most of the nearly 100 basis points eight on revenue and 150 basis points on EPS seems to be going from your why isn't it <unk> in any particular currencies, earning Gil I mean, my general understanding is.

Prasad: With $4 billion of.

Prasad: Four plus billion dollars makes sports revenues and Donal weakening.

Prasad: The impact would have been the other way round.

Prasad: Second question is around the FDA letter.

Kristin C. Peck: We immediately resolved the request for clarification. It was what you're talking about was a request for clarification on our promotional materials. We just made a minor change to the promotional materials and how we represented some statistical data. The concerns are well addressed, and the modifications were accepted by the FDA. I mean, this isn't uncommon.

Prasad: It has received on Libre line number.

Prasad: I wanted to understand how frequent are normal are these kinds of levels on the animal health side and the issues that FDA found with liberalized promotion with the inclusion of the P value on the secondary endpoints and what is the current status now with regard to your communication with FDA. Thank you.

Wetteny Joseph: So, you know, that was easily resolved last year because that was a minor issue. But, Wetteny, do you want to take the second question? Yeah, sure. On currency dynamics, and again, we don't forecast the effects, so we tend to report out what we see the impact is. And the dollar continues to strengthen against the number of currencies that we operate in, and there's a little bit of a disproportional effect that we see on some of the higher inflationary markets like Argentina. If you follow Argentina, there have been two really significant drops in terms of FX rates versus the dollar, if you look back as we ended last year, both in December and, I think, back in August.

Speaker Change: Kevin I'll take your second question first and then let me take it I assume youre referencing the letter back in November.

Kevin: Honestly the letters uneventful and was well addressed we immediately resolve the request for clarification, what youre talking about the request for clarification on our promotional materials. We just made a minor change to the promotional materials.

Kevin: And highly represented some statistical data the concerns are well addressing the modifications are accepted by the FDA I mean this isn't uncommon so.

Speaker Change: That was easily resolved last year that was a minor issue, but let me you want to take the second question, yes, sure on currency dynamics and again, we don't forecast FX. So we tend to report out where we see the impact is in the.

Speaker Change: The dollar continues to strengthen against the number of currencies that we operate in and there is a little bit of a disproportional effect that we see on some of the higher inflationary markets like Argentina, If you follow Argentina.

Two really significant.

Speaker Change: Josh in terms of <unk>.

Wetteny Joseph: And there's a little bit of a delayed effect on those. Clearly, there's an impact on the top line that we've talked about, but there's also a little bit of a delayed effect if you look at the impact it has on inventory and receivables that are on the books at the time. So, by the time you collect those, they have a greater impact, which is why you see the impact down the bottom line. So, combinations of Argentina, Brazil, and Turkey are more pronounced in their relative percentage of our revenues, given how significantly they devalue. That's what you see in play out.

Speaker Change: FX rates versus the dollar a few followed back as we ended last year. Both in December and I think back in August and there is a little bit of a delayed effect on those clearly has an impact on top line that we've talked about but there's also a little bit of a delayed effect. If you look at the impact it has on inventory and receivables that are on the books at the time. So I assume you collect those that have a greater impact which is why you see you get back down to the bottom line.

Speaker Change: So a combination of Argentina, Brazil, Turkey, there was a more pronounced and their relative percentage of our revenues given how significantly they devalue, that's what you're seeing play out but really across the board. If you look at how the dollar ended the year at ended.

Operator: But really across the board, if you look at how the dollar ended the year, it ended a bit stronger than you saw throughout the average of the year. Thank you. We'll take our next question from Brandon Vazquez with William Blair. Please go ahead. Hi, everyone.

Speaker Change: Stronger.

Speaker Change: As you saw throughout the average of the year.

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

Wetteny Joseph: Thanks for taking the question. First, can you talk a little bit about the pre-priced buy-in in the quarter? Are you able to quantify how much of a headwind that was?

Brandon Vazquez: Hi, everyone. Thanks for taking the question first can you talk a little bit about the pre price bonding in the quarter are you able to quantify how much of a headwind that was and then maybe talk about should we expect that to be a headwind going forward. At all are you guys still working through that and a follow up to that maybe higher level is there anything in the pipeline or kind of in product cycle management that you guys can.

Wetteny Joseph: And then maybe talk about whether we should expect that to be a headwind going forward at all? Are you guys still working through that? And a follow-up to that, maybe at a higher level, is there anything in the pipeline or kind of in product cycle management that you guys can share with us? You're still spending a lot of money on R&D. And even for next year, it looks like that may not be a specific area to get leverage off of the R&D line. So anything that you'd be able to share with us there would be helpful.

Brandon Vazquez: Can you share with US you still spending a lot of money in R&D and even for next year. It looks like that may not be a specific area to get leverage off of the R&D lines, so anything that you'd be able to share with us there would be helpful. Thank you.

Wetteny Joseph: Thank you. Yeah, sure. I'll take the first one, and then Kristin will cover the second one.

Speaker Change: Yeah sure I'll take the first one and then Christian will cover the second one look theres always some level of pre priced buying in or as we exit the year given.

Wetteny Joseph: Look, there's always some level of free price buying as we exit the year, given what our price increases are going to be. I would say, compared to the prior year, where there was higher-than-average free price buying, as in 2022 into 2023, which had the effect of 2024, we more actively managed customer orders in terms of free price buying in 2023. And that gave us, really, first the underlying market strength and momentum that we carried into, but also, I would say, our order position walking into January 2024. We're certainly in a better position than, say, the prior year. So, we more actively managed those, but there's always some level in the market. Sure.

Speaker Change: What our price increases are going to be I would say compared to the prior year, where there was higher than average reprice buying as even in 2022, and 2023, which had the effect on 24, we will actively managed.

Christian: Customer orders in terms of price buying exiting 2023, and that gave us really first the underlying market strength and momentum that we carried into but also most of our quarter positioned walking into January 2024, where suddenly and better positioned than say the prior year. So we more actively manage those but theres always some level.

Kristin C. Peck: And the question with regard to R&D, obviously, we are very confident in our pipeline. I think we've been the most innovative company in animal health. And if you look at how we, you know, exceeded market growth every year for the last 11 years, it is due to the innovation in our pipeline.

Christian: And the numbers sure and the question with regard to R&D. Obviously, we are very confident in our pipeline I think we've been the most innovative company in animal health and you look at the how.

Christian: How we exceeded market growth every year for the last 11 years. It is due to the innovation in our pipeline. We are investing both for the short medium and long term in animal health different than human health that really makes a difference you look at sort of what I call like lifecycle enhancements that we just launched such as <unk>, which will significantly.

Kristin C. Peck: We are investing both in the short, medium, and long term in animal health, which is different than human health, that really makes a difference. If you look at sort of what I call, like, life cycle enhancements that we just launched, such as Apical Chewable, which will significantly support our key brands. We're also looking at pretty disruptive innovations as well. As you look at sort of the short one to three year term of innovation, we're excited, you know, really for some of our long acting.

Christian: <unk> support our key brand. We're also looking at pretty disruptive innovations as well as you look at sort of the short one to three year term of innovation. We're excited really for some of our long acting and we've talked a lot about investing in the medium to long term and really important new franchises as well such as renal chronic.

Kristin C. Peck: And we've talked a lot about investing in the medium to long term and really important new franchises as well, such as renal and chronic kidney disease spaces, looking at cardiology, looking at oncology, and diabetes. There are really important spaces of unmet medical need and animal health that we're really excited to tackle. We're continuing to invest in our diagnostics as well as in our livestock business, looking at new vaccines and immunomodulators and our genetic business. So, you know, we have a very diverse pipeline because we have a diverse portfolio. So we're continuing to invest in that and remain very confident in that. Thank you. We'll take our next question from Chris Schott with J.P. Morgan. Please go ahead.

Christian: Kidney disease spaces looking at cardiology looking at oncology and diabetes. This really important spaces of unmet medical need in animal health that we're really excited to tackle and we're continuing to invest behind our diagnostic as well as behind our livestock business looking at new vaccines, and immuno modulators and our genetics business, though.

Christian: We have a very diverse pipeline because we have a diverse portfolio. So we're continuing to invest behind that I remain very confident in that.

Christian: Thank you we will take our next question from Chris Schott with Jpmorgan. Please go ahead.

Kristin C. Peck: Great. Thanks so much for the questions. Just two for me.

Chris Schott: Okay, great. Thanks, so much for the questions just two from me just latest.

Kristin C. Peck: On visit growth, I know it's not the primary driver of growth for your business, but you're targeting zero to 1% this year. I'm just trying to get more color on what the underlying kind of dynamics here are. Is this mostly still capacity? Is it macro dynamics? Any color there would be appreciated.

Chris Schott: Is it growth I know, it's not the primary driver of growth for your business, but you are targeting.

Chris Schott: Zero to 1% this year and I'm, just trying to get more color on what is the underlying kind of dynamics here or is this mostly still that capacity is it macro dynamics just any color there would be appreciated and then my second question was just coming back to La <unk> ex U S. From your perspective, how penetrated is the market for monoclonal <unk> at this point and where do you see the largest opportunity for.

Kristin C. Peck: And then my second question was just coming back to Librella XUS. From your perspective, how penetrated is the market for monoclonals at this point, and where do you see the largest opportunity for growth in these markets? I'm giving you a sense of like we're in the second inning or the seventh inning of the Ramp XUS.

Chris Schott: Growth in these markets I'm curious if that something like that were in the second inning or the seventh inning of the ramp ex U S. Thanks.

Kristin C. Peck: Thanks. Sure, I mean, you know, starting on the first, we are not very lean, as we've spoken about many times before about vet visits. I mean, obviously, they're not inconsequential.

Chris Schott: Sure.

Speaker Change: Starting on the first we are not very levered as we spoken about many times before to that business I mean, obviously they are not inconsequential.

Kristin C. Peck: You know, our view of zero to one is that's where it's historically been. That is historically what you see in vet clinic visits over time. So I think we're really saying it's back to normal. You know, what's really happening is there's strong end market demand. There remains some capacity issues, you know, in the US, but I think some of that's being addressed by more stuff going to auto ship and retail and online, which is also, you know, supporting it. But, you know, we really sort of view the year as you look into the year 2023.

Speaker Change: Our view a zero to one that's where it's historically been that is historically, what you see in vet clinic visits over time. So I think we're really saying is back to normal whats really having a this strong end market demand there remains some capacity issues.

Speaker Change: In the U S. But I think some of that is being addressed by more SaaS going to auto ship and retail and online which has also been supporting it but we really sort of view the year as you looked into the year for 2023, although we thought flat visits we thought revenue and revenue per visit up seven five <unk>.

Kristin C. Peck: You know, although we saw flat vet visits, we saw revenue and revenue per visit up seven and a half percent. So, you know, we really are seeing, obviously, really strong growth overall in revenue. And we're much more correlated over time with that, just given the strength of our portfolio, etc. And to your second question with regard to Labrella outside the US, I think we're still in the early innings. And really, where I think we see the growth is right now that the product is primarily being used in severe dogs. I think getting it into more moderate dogs, I mean, obviously, you know, at least if someone, I mean, you know, in my 50s, I would say, you know, my hip hurts right now. But everyone doesn't know that it is around me.

So we really are seeing really strong growth obviously overall in revenue and we are much more correlated overtime with that just given the strength of our portfolio et cetera and to your second question with regards to labella outside the U S. I think we're still early innings, and really where I think we see the growth is right now thats product is primarily being used.

Speaker Change: <unk> in severe dogs, I think getting it into more minor Adonis I mean, I think obviously at least somewhat.

Speaker Change: In my <unk> I will say.

Speaker Change: Hip hurts right now, but everyone doesn't know that it is around me and so the reality is osteoarthritis exists in animals long before they are limping and can't walk up the stairs and the more we can control that pain. Early I think is critical so I think what we're really trying to change the paradigm is getting with wood pellet in first line use for AMOLED with osteoarthritis pain and.

Kristin C. Peck: And so the reality is osteoarthritis exists in animals long before they're limping and can't walk up the stairs. And the more we can control that pain early, I think it's critical. So I think what we're really trying to, you know, change the paradigm is getting Labrella into first line use for animals with osteoarthritis pain and getting it into more of those moderate dogs. And we think the more we can do that, the more we can continue to grow the market here and grow our franchise. So we know, we believe we're in the early innings, you know, across the globe with regard to osteoarthritis pain with both Labrella and certainly with Silencia, where we still have to continue to grow awareness about osteoarthritis pain in cats. We'll take our next question from Steven Scala with TD Cohen. Please go ahead. Hi, this is Chris.

Speaker Change: Getting it into more of those moderate down and we think we more we can do that the more we can continue to grow the market share and grow our franchise. So we know we believe we are in early innings across the globe with regards to osteoarthritis pain with both labella and certainly with <unk>, where we still have to continue to grow awareness for osteoarthritis pain in cats.

Speaker Change: We will take our next question from Stephen Scouten with TV Cowen. Please go ahead.

Speaker Change: Hi, This is Chris on for Steve two questions first on <unk>.

Kristin C. Peck: I have two questions. First, on Librelo, to what degree are U.S. debt capacity constraints a headwind to longer-term treatment compliance? And then, is there a regulatory path for the approval of an at-home owner-administered formulation? Thank you. Sure, you know, obviously making sure that pet owners can get in monthly for their injections is critical. So, vet capacity is certainly something that we're quite focused on, but I think, you know, after the first visit, this is an injection that can certainly be done by a vet tech. And I think the industry is really focused, and we've been partnering with corporations, with the AVMA, with lots of people to really think about how to change the paradigm of vets to vet techs and clinics and things like that.

Chris Schott: To what degree of U S debt capacity constraints, the headwind to longer term treatment compliance and then is that given to the path for the approval of an at home administered.

Chris Schott: Administrated formulation. Thank you.

Chris Schott: Sure, obviously, making sure that pet owners can get in monthly for their injections is critical so that capacity is certainly something that we're quite focused on but I think after the first visit. This is an injection that can certainly be done by <unk> and I think the industry is really focused and we've been partnering with corporate.

Chris Schott: With the AVMA with lots of people to really think about how to change the paradigm of that's to that tax in clinics and things like that so we believe there are solutions to really address some of that capacity issues, so far globally and by the way this quebec capacity issues not singular issue with global so far it hasnt affected the growth.

Kristin C. Peck: So, we believe there are solutions to, you know, really, you know, address some of the vet capacity issues, you know, so far, globally. And by the way, this vet capacity issue is not just a U.S. issue; it's global. So far, it hasn't affected the growth of our key products. And your second question is with regard to home delivery. Want to take that one?

Chris Schott: All of our key products.

Chris Schott: And your second questions with regard to home delivery, we will take that one yes look I think the regulatory path to that.

Wetteny Joseph: Yeah, look, I think the regulatory path to that isn't really the direction we're going in terms of where we think we can make an impact here. Lifestyle innovation, not only in our ORA-paying MAVs but across our portfolio, is really, really important. And as I look ahead, I think longer-acting formulations, both Salencia and Labrella, will be the direction that will help with this, even though, as Kristen said, we're not seeing any significant impact in terms of our ability to grow the MAVs. I think initial visits where the vet has to see the PET and do the injection beyond that, the techs are able to do it, et cetera, and that We'll take our next question from Navon Tai with BNP Paratus. Please go ahead. Hi. Hi, good morning. Thanks for taking my questions. I have two, one on Librela and one on TRIO.

Isn't really the direction, we're going in terms of where we think we can make an impact here lifecycle innovation not only in <unk>, but across our portfolio are really really important and as I look ahead, I think longer acting.

Chris Schott: Formulations are both Celesio and look well it will be.

Chris Schott: Direction that will help with this even though as Kristian said, we're not seeing any significant impact in terms of our ability to grow the maths I think initial visits where there is it has to see the pet and do the injection beyond that the techs are able to do it et cetera, and that varies a bit, but we don't see that as being a significant it. Thanks Louis.

Chris Schott: We will take our next question from Nevada tie with BNP Paribas. Please go ahead.

Nevada: Hi, Hi, good morning, Thanks for taking my questions I have two one on.

Nevada: But on one on trio.

Wetteny Joseph: First one on Librela, with continued investments in 2024, what are the remaining SG&A needs in addition to the current DTC campaign? And, just a clarification, do you currently expect Librela to become potentially gross margin accretive in 2025? And then on TRIO, can you help us explain the switches from NexGard Plus to NexGard Plus? Are they mostly from BI's own NexGard rather than from SympaRica TRIO, and do you see uptake from BI on younger dogs and puppies mostly?

Nevada: First one on library with continued investments in 2024, what are the remaining SG&A. In addition to the current DTC campaign and just a clarification do you currently expect <unk> to become <unk>.

Nevada: Potentially gross margin accretive in 2025.

Nevada: And then on trio.

Nevada: Can you help us explain.

Nevada: Switches from <unk>.

Nevada: Your next bill plus other mostly from Nick.

Nevada: Next call because other than from synthetic HBO.

Nevada: And do you see uptake.

Nevada: Tom on the young adult from Tobey. Thank you.

Wetteny Joseph: Thank you. I think the first one on Labrella, look, of course, we are going to be making investments, and we have already started because, as you heard in the prepared commentary, our penetration levels are running above our expectations, and we've launched DTC on Labrella, and we're already doing DTC across Europe and international markets as well. As we look ahead, we did make significant investments in our field force going back about a year and a half or so ago, so we're able to leverage those investments, and we don't see incremental investments beyond those to drive our expectations and take advantage of demand for the product. The gross margin picture, as I mentioned earlier, is dilutive if you look at 2023, and particularly because you saw outperformed expectations on Labrella in 2023

Nevada: <unk>.

Speaker Change: I'll take the first one on <unk>.

Hello.

Speaker Change: Of course, we are going to be making investments and we already started because as you heard in the prepared commentary our penetration levels are running above our expectations. We've launched DTC on the gorilla and we're already doing the TCE across Europe and international markets as well as we look ahead, we did make significant investments in our field force going back about a year and a half or so ago. So.

Speaker Change: What's the leverage those investments and we don't see our incremental investments beyond those to drive our expectations and take advantage of demand on the product. The gross margin picture as I as I mentioned earlier. It is dilutive. If you look at 2023, and particularly because you saw us outperform expectations on the gorilla in 2023 right.

Wetteny Joseph: As you go into 2024, Labrella margins are actually accretive to the overall company margin leverage, so 70%-ish gross margins for the company, Labrella is above that, but it's below the gross margins that you would see in our innovative companion animal brand. As we get beyond 2024, you will start to see at those innovative levels, which is well above the company average, so hopefully that helps clarify that point.

Speaker Change: As you go into 2024, but below margins are actually accretive to the overall company margin leverage above so 70% ish.

Speaker Change: Gross margins for the company and the well is above that but it is below the gross margins that you would see innovative companion animal brands as we get beyond 2024, you will start to see at those innovative levels, which is above well above the company average so hopefully that helps clarify that point.

Wetteny Joseph: TRIO, as we've said, we've seen really strong performance in TRIO, posting double-digit growth. TRIO grew 17% in the U.S. in Q4, and we continue to gain patient share, which means, again, switching is low when you have a product that's safe applications and been in the market for almost four years now, so we're very pleased with what we're seeing. I don't know if, Kristen, if you want to add anything.

Speaker Change: As we've said we've seen really strong performance in trio posting double digit growth trio grew 17% in the U S. In Q4, and we continue to gain patient share, which means again switching is low when you have a product thats safe efficacious and been in the market.

Speaker Change: Almost four years now so we're very pleased with what we're seeing Chris since you want to add the only guidance, we're doing quite well as topic do you have specifically with regards to puppies copies or on the <unk> label. So I just want to emphasize that I know it wasn't on the original some haircut. So I mean really if youre looking at and you start to see a lot of puppies and we see a lot of conversion from single and dual agent customers to a triple combination and certainly movement.

Kristin C. Peck: We're doing quite well with puppies. You asked specifically with regard to puppies. I mean, puppies are on the TRIO label, so I just want to emphasize that. I know it wasn't on the original Simperica.

Kristin C. Peck: So, I mean, really, if you're looking at new starts, we see a lot of puppies, and we see a lot of conversion from single and dual-agent customers to a triple combination and certainly a movement of more people from topical to oral. So there are lots of ways for us to continue to gain market share for that product, but we're doing quite well with puppies to answer that other part of your question. And there appear to be no further questions at this time. I'll turn the call back to the speakers for any closing remarks. Great, thank you all so much for the questions and honestly for your continued interest in Zoetis. You know, I want to underscore that the enduring strength of the human-animal bond, pet owners' expectations of human-quality health care for pets, and the need for safe and secure food supply all underscore that the animal health industry is essential and very durable.

Speaker Change: <unk> to more people.

Speaker Change: From Topicals to oral so there's lots of ways for us to continue to gain market share offer that product, but we're doing quite well with copies to answer that other part of your question.

Speaker Change: And there seems to be no further questions. At this time I will turn the call back to the speakers for any closing remarks.

Speaker Change: Great. Thank you all so much for the questions and honestly for continued interest in <unk>.

Speaker Change: I want to underscore that the enduring strength of the human animal bond for a pet owners' expectations of human quality health care for pets, and the need for safe and secure food supply I'll underscore the animal health industry is essential and Gary durable, we remain confident about our strategy and the ongoing value proposition because we know that our colleagues will make a difference every day in <unk>.

Kristin C. Peck: We remain confident about our strategy and the ongoing value proposition because we know that our colleagues will make a difference every day in everything that we do. And with their support, I want to reiterate that we expect to grow faster than the market again in 2024, not just in line, and to grow operational revenue by mid to high single digits. We are firmly committed to investing in our innovative pipeline, our portfolio, and the DTC programs we need to support the broadening and building of billion-dollar franchises. The animal health industry is resilient, even in times of uncertainty, and we're poised to navigate these challenges because of our portfolio diversity, our commitment to exceptional customer experience, operational excellence, and agility.

Speaker Change: Everything that we're doing and with their support I want to reiterate that we expect to grow faster than the market again in 2020 for not just in line and to grow operational revenue by mid to high single digits. We are firmly committed to investing in our innovative pipeline our portfolio and the DTC programs, we need to support the broadening and building.

Speaker Change: Franchises, the animal health industry is resilient, even in times of uncertainty and we're poised to navigate these challenges because our portfolio diversity, our commitment to exceptional customer experience operational excellence and agility and we look forward to keeping you updated on our progress on future calls. Thank you for joining US today guys have a great day.

Kristin C. Peck: And we look forward to keeping you updated on our progress and future calls. Thanks so much for joining us today. Guys.

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

Operator: Have a great day. Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change:

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].