Q2 2024 Zoetis Inc Earnings Call

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Operator: Welcome to the second quarter of 2024 financial result conference call-in webcast for Zoetis.

Speaker Change: Welcome to the second quarter 2024 financial results conference call and webcast for <unk>.

Steve Frank: 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 fully forwarded automatically. In addition, a replay of this call will be available approximately two hours after the conclusion of the call via dial-in or on the Investor Relations section of Zoetis.com. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation.

Speaker Change: Hosting the call today is Steve Frank Vice President of Investor Relations for the latest.

Speaker Change: The presentation materials and additional financial tables are currently posted on the Investor Relations section of that let us 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 the call via dial in or on the Investor Relations section.

Speaker Change: One of the wettest dot com.

Speaker Change: 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 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.

Operator: 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. In the interest of time, we ask that you please limit yourself to one question, and then queue up again with any follow-ups. Your line will be muted when you complete your question. When posing your question, please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero.

Speaker Change: In the interest of time, we ask that you. Please limit yourself to one question and then queue up again with any follow ups. Your line will be muted. When you complete your question when posing your question. Please pickup 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: It is my pleasure to turn the floor over to Steve Frank.

Steve Frank: Steve, you may begin.

Speaker Change: Yes.

Steve Frank: Thank you, operator. Good morning, everyone, and welcome to the Zoetis second quarter of 2024 earnings call. I am joined today by Chris and Pat, our Chief Executive Officer, and Whitney Joseph, our Chief Financial Officer. Before we begin, I'll remind you that the slides presented on this call are available on the Investor Relations section of our website, and that our remarks today will include forward-looking statements, and that actual results could differ materially from those projections.

Steve Frank: Thank you operator, and good morning, everyone and welcome to the <unk> second quarter 2024 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.

Steve Frank: For a list in description of certain factors that could cause results to differ, I refer you to the forward-looking statements in today's press release and our SEC filings, including, but not limited to, our annual report on Form 10-K and our reports on Form 10-Q. Our remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles, or US GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable US GAAP measures is included in the financial tables that accompany our earnings press release in the company's 8-K filing.

Steve Frank: 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 are.

Steve Frank: Our remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U S. GAAP a reconciliation of these non-GAAP financial measures to the most directly comparable U S. GAAP measures is included in the financial tables that accompany our earnings press release and the Companys 8-K.

Kristin: <unk> data today Tuesday August six 2024, we also cite operational results, which exclude the impact of foreign exchange with that I will turn the call over to Kristin.

Kristin Peck: Thank you, Steve, and good morning, everyone. Thank you for joining our second quarter earnings call for 2024. We had another outstanding quarter, growing revenue 11% operationally, and 18% operational growth in adjusted net income. Success was fueled by strong demand for innovative products, our ability to capture and expand markets, and the dedication of our purpose-driven colleagues. Segment growth was well-balanced with 12% growth in the US, and 10% operational revenue growth internationally, even against a strong comparative quarter. Our innovative companion animal portfolio grew 12% operationally, while our livestock portfolio saw 9% operational growth across species and geographies.

Kristin: Thank you, Steve and good morning, everyone. Thank you for joining our second quarter earnings call for 2024, we had another outstanding quarter growing revenue, 11% operationally and 18% operational growth in adjusted net income success was fueled by strong demand for innovative products our ability to capture.

Kristin: And expand markets and the dedication of our purpose driven colleagues.

Kristin: Segment growth was well balanced with 12% growth in the U S and 10% operational revenue growth internationally, even against a strong comparative quarter, our innovative companion animal portfolio grew 12% operationally, while our livestock portfolio saw a 9% operational growth across species and geographies.

Kristin Peck: It's been an excellent first half of 2024, growing revenue 12% operationally, highlighting that our leadership stems from both industry-leading innovation and differentiated execution. We remain focused on our core strategy, delivering consistent results for our customers, the animals in their care, and our shareholders. And our unwavering commitment to excellence has resulted in the most diverse and comprehensive animal health portfolio. We leave the industry and R&D investment, bringing over 300 science-driven innovations to market, including three of the top five best-selling products in animal health: Apoquel, Sampericutrio, and Cytopling. With our global footprint and world-class manufacturing facilities, we ensure consistent quality and on-time delivery. Our early investments in digital transformation, power, and exceptional customer experience while positioning us for future growth.

Kristin: It's been an excellent first half of 2020 for growing revenue, 12% operationally highlighting that our leadership stems from both industry, leading innovation and differentiated execution. We remain focused on our core strategy delivering consistent results for our customers the animals in their care and our shareholders and runway.

Kristin: Ever and commitment to excellence has resulted in the most diverse and comprehensive animal health portfolio, we lead the industry in R&D investment, bringing over 300 science driven innovations to market, including three of the top five best selling products in animal health, <unk>, <unk> and <unk> with our global <unk>.

Kristin: Print and World class manufacturing facilities, we ensure consistent quality and on time delivery. Our early investments in digital transformation, our an exceptional customer experience, while positioning us for future growth, we continuously refine our commercial strategies and for effective launches and market penetration.

Kristin Peck: We continuously refine our commercial strategies for effective launches and market penetration. And our powerful brand recognition, targeted direct-to-consumer campaigns, experienced sales reps, and medical experts help us capture new market share and win loyalty. Our customers are at the center of everything we do, from understanding their challenges to exceeding their expectations. Scientific innovation enables us to meet their demands while creating new markets. Our commercial execution allows us to defend and grow that market leadership. The animal health industry has proven essential and resilient in all types of climates, but it's also dynamic and growing, and we are well positioned to seize the opportunity.

Kristin: And our powerful brand recognition targeted direct to consumer campaign experienced sales reps and medical experts help us capture new market share and win loyalty our customers are at the center of everything we do from understanding their challenges to exceeding their expectations scientific.

Kristin Peck: Our customers are at the center of everything we do, from understanding their challenges to exceeding their expectations.

Kristin: <unk> enables us to meet their demands, while creating new markets, our commercial execution allows us to defend and grow that market leadership.

Kristin: The animal health industry has proven essential and resilient in all types of climates, but it's also dynamic and growing and we are well positioned to seize the opportunity look no further than our revolutionary osteoarthritis pain franchise labella for dogs and so as the upper cap, we are developing a market with <unk>.

Kristin Peck: Look no further than our revolutionary osteoarthritis pain franchise, LeBrell for dogs and Selencia for cats. We are developing a market with breakthrough products that are safer and more effective while offering convenience for veterinarians and tight owners. The results speak for themselves. Globally, LeBrell grew 142 percent operationally this quarter, fueled by the successful and ongoing US launch. But again, it's innovation coupled with execution. Take Selencia, for example. Despite launching in Europe three years ago, we've reported 60 percent operational growth of this quarter. Our breakthroughs are driving increased feline clinic visits, which in turn expands the total market.

Kristin: Breakthrough products that are safer and more effective while offering convenience for veterinarians and pet owners. The results speak for themselves globally Lowbrow grew a 142% operationally this quarter fueled by the successful and ongoing U S launch, but again its innovation coupled with execution.

Kristin: It takes the last year for example, despite launching in Europe three years ago, we reported 60% operational growth. This quarter. Our breakthroughs are driving increased beeline clinic visits which in turn expand the total market.

Kristin Peck: We, along with veterinarians and pet owners, are excited about how these safe and efficacious products are revolutionizing first line treatment for chronic pain and death in cats of all ages. Given our proven track records of building and scaling billion-dollar franchises, we remain confident about the OA pain trajectory. But we don't just launch products; we cultivate them for long-term success. Our key dermatology franchise exemplifies this commitment, delivering strong 18 percent operational growth. Driven by Apple Quail and Apple Quail chewable, along with Cytopoint, we have transformed the management of a topic dermatitis and dog, providing safe, effective, and convenient solutions.

Kristin: We along with veterinarians and pet owners are excited about how these safe and efficacious products are revolutionizing first line treatments for chronic pain and <unk>.

Kristin: <unk> of all agents given our proven track record of building and scaling billion dollar franchises, we remain confident about the OA pain trajectory, but we don't do have launched products, we cultivate them for long term success, our key dermatology franchise exemplifies this commitment delivering strong 18 <unk>.

Kristin: Operational growth driven by <unk> and App approachable, along with side of point, we have transform the management of atopic dermatitis in dogs, providing safe effective and convenient solution with over 23 million dogs treated globally and a decade of proven results <unk> is the <unk>.

Kristin Peck: With over 23 million dogs treated globally and a decade of proven results, Apple Quail is the world's number one prescribed oral medication for allergic itch. And it is overwhelmingly endorsed by veterinarians worldwide. With approximately 90 percent satisfaction, reflecting the trust and confidence they place in our market-leading brands. And we are still unlocking the opportunity. Today, there are approximately 20 million dollars globally, with under treated or untreated paritic itch, presenting a vast untapped market. Take the US, for example. We estimate that 10 million dogs are currently receiving veterinary treatment for itch. While a majority, or roughly 70 percent, receive Apple Quail or Cytopoint, there are 3 million dogs prescribed alternative options like steroids.

Kristin: The number one prescribed oral medication further to get and it is overwhelmingly endorsed by veterinarians worldwide with approximately 90% satisfaction, reflecting the trust and confidence they place in our market leading brands and we are still unlocking the opportunity today there are approximately.

Kristin: <unk> <unk> $20 million globally with under treated or untreated periodic pitch presenting a vast untapped market take the U S. For example, we estimate that 10 million are currently receiving veterinary treatment for edge, while the majority or roughly 70% receive Apple cider point there are three.

Kristin: <unk> million dogs prescribed alternative options like steroids. Moreover, an estimated 8 million are treated with over the counter products or not treated at all this highlights the potential addressable market of $11 million in the U S alone that could benefit from our safe and effective therapies internationally.

Kristin Peck: Moreover, an estimated 8 million dogs are treated with over-the-counter products, or are not treated at all. This highlights the potential addressable market of 11 million dogs in the US, alone, that could benefit from our safe and effective therapies. Internationally, the trend is similar, with room for even more growth as dogs become increasingly medicalized, underscoring a significant global market opportunity that will fuel our ongoing growth. To solidify our leadership and win new patients, we are focused on DTC marketing to raise awareness, enhance medical education to improve compliance, and expanding retail partnerships. Our ability to execute extends to the sympathetic of franchise, which grew 22 percent operationally for the quarter.

The trend is similar with room for even more growth as dogs become increasingly medicalized underscoring a significant global market opportunity that will fuel our ongoing growth to solidify our leadership and win new patients. We are focused on DTC marketing to raise awareness enhanced medical education to improve compliance.

Kristin: And expanding retail partnerships, our ability to execute extends to the <unk> franchise, which grew 22% operationally for the quarter, we have not only navigated the changing competitive landscape, but embrace new opportunities with confidence and agility.

Kristin Peck: We have not only navigated the changing competitive landscape, but embraced new opportunities with confidence and agility. Several pre-trends are viewing our growth. First, pet owner demographics are shifting. They are younger, more affluent, and connected by the powerful human-animal bond. They are highly engaged and willing to invest in their pet health and well-being. Second, and what need will say more on this? There's a significant channel shift aimed at meeting the evolving needs of these younger pet owners. We are making our products more accessible, ensuring they are available where and when they need them. This combination is a crucial part of our growth strategy, and the results are reflected in our performance.

Kristin: Several pre trends are fueling our growth first pet owner demographics are shifting their younger more affluent and connected by the powerful human animal bond. They are highly engaged and willing to invest in their pet health and wellbeing.

Kristin: And what we will say more on this there was a significant channel shift aimed at meeting the evolving needs of these younger pet owners, we are making our products more accessible ensuring they are available where and when they need them. This combination is a crucial part of our growth strategy and the results are reflected in our performance.

Kristin Peck: In this dynamic environment, our execution across all phases, from launch to expansion to defense, sets us apart, showcasing we can introduce, sustain, and grow products in a competitive market. Our focus on innovation and execution cuts across every part of the business to create shareholder value. In our livestock portfolio, the sale of our Medicaid feed additive and certain water soluble product portfolios remains on track to close in the second half of the year. Meanwhile, we are focusing on innovative solutions for producers, including preventive, antibiotic alternatives, and genetics. As the demand for healthy and sustainable animal protein continues to rise, we remain committed to supporting our livestock customers.

Kristin: In this dynamic environment, our execution across all phases from launch to expansion to defense set us apart showcasing we can introduce sustain and grow products in a competitive market.

Kristin: Our focus on innovation and execution cut across every part of the business to create shareholder value and our livestock portfolio. The sale of our medicated feed additives and certain water soluble product portfolios remained on track to close in the second half of the year. Meanwhile, we are focusing on innovative solutions for <unk>.

Kristin: Users, including preventative antibiotic alternatives and genetics.

Kristin: As the demand for healthy and sustainable animal protein continues to rise we remain committed to supporting our livestock customers our dedication to meeting their needs and adapting to the evolving market condition ensures that we are well positioned to contribute to their success.

Kristin Peck: Our dedication to meeting their needs and adapting to the evolving market conditions ensures that we are well positioned. We are able to contribute to their success. Building on our outstanding performance this quarter, we remain confident in our ability to grow faster than the market and through competition, as reflected in our raised guidance. While macroeconomic headwinds persist, animal health remains resilient, and the whitest is strong operational execution, and innovative, diverse, and durable portfolio enable us to navigate all kinds of market conditions effectively.

Speaker Change: Building on our outstanding performance this quarter, we remain confident in our ability to grow faster than the market and through competition as reflected in our raised guidance.

Speaker Change: While macroeconomic headwinds persist animal health remains resilient and the wireless is strong operational execution and innovative diverse and durable portfolio enable us to navigate all kinds of market conditions effectively we further demonstrated our commitment to shareholders and confidence in our growth trajectory with a recent.

Kristin Peck: We further demonstrated our commitment to shareholders and confidence in our growth trajectory with a recent announcement of a board-approved $6 billion share repurchase program, which Whitney will elaborate on. The animal health landscape is evolving, and our innovations are at the forefront. And while breakthrough innovation is a cornerstone of our strategy, our success is rooted in multiple drivers of growth. We are not just launching new products; we are transforming existing ones to unlock their full potential and better serve customer needs through life cycle innovations. That means taking proven therapies and developing new formulations, uses, and delivery methods, maximizing their impact and reach.

Speaker Change: <unk> of our board approved $6 billion share repurchase program, which <unk> will elaborate on the.

Speaker Change: The animal health landscape is evolving and our innovations are at the forefront and while breakthrough innovation is the cornerstone of our strategy. Our success is rooted in multiple drivers of growth. We're not just launching new products, we are transforming existing ones to unlock their full potential and better serve customer needs through lifecycle innovations.

Speaker Change: That means taking proven therapies and developing new formulations uses and delivery methods maximizing their impact and reach.

Kristin Peck: This translates to value created for customers and shareholders alike by allowing us to bring critical new solutions to market faster, minimizing development risk and cost by leveraging existing safety profiles of proven products and expanding the reach of established products. Our commitment to life cycle innovation is just one reason we are the leader in animal health. When combined with our market leadership, deep customer insights, strategic investment, and our purpose-driven colleagues, we are uniquely positioned to deliver against the four tenets of our value proposition. To grow revenues faster than the market, to invest in innovation and growth capabilities, to grow adjusted income faster than revenue, and to return excess capital to shareholders.

Speaker Change: This translates to value created for customers and shareholders alike by allowing us to bring critical new solutions to market faster minimizing development risks and costs by leveraging existing safety profiles of proven products and expanding the reach of established products.

Speaker Change: Our commitment to lifecycle innovation is just one reason we are the leader in animal health when combined with our market leadership deep customer insights strategic investments and our purpose driven colleagues, we are uniquely positioned to deliver against the four tenants of our value proposition.

Speaker Change: To grow revenues faster than the market to invest in innovation and growth capabilities to grow adjusted net income faster than revenue and to return excess capital to shareholders, our differentiated execution and innovative diverse and durable portfolio ensures we are not just keeping pace, we are setting the pace and reader.

Kristin Peck: Our differentiated execution and innovative, diverse, and durable portfolio ensures we are not just keeping pace; we are setting the pace and redefining what's possible in animal health.

Whitney: Finding what's possible in animal health with that let me hand, it off the Whitney Whitney.

Wetteny Joseph: With that, Lyndy Handidoff, Wetteny. Wetteny, thank you, Kristin, and good morning, everyone. As you heard, Kristin mentioned our ability to execute on our commercial and strategic plans during another outstanding quarter. We simultaneously executed across product launches, market expansion, and market defense to propel us to a strong first half. In the second quarter, we posted $2.4 billion in revenue, growing 8% on a reported basis, and 11% operation only, but just an income of $711 million, who had 9% on a reported basis, and 18% operation only. What a league world was driven by our innovative, companion animal portfolio.

Whitney: Thank you Kristen and good morning, everyone.

Whitney: As you heard Kristian mentioned, our ability to execute on our commercial and strategic plans do you have another outstanding quarter.

Whitney: We simultaneously executed across product launches and market expansion and market defense to propel us to a strong first half.

Speaker Change: In the second quarter, we posted $2 $4 billion in revenue growing 8% on a reported basis and 11% operationally.

Speaker Change: Adjusted net income of $711 million grew 9% on a reported basis and a 10% operationally.

Kristin Peck: for the League World was driven by our innovative companion animal portfolio. Looking closer at our success in execution, I'd like to focus first on OAPAINC, now making up more than 65% of total cases. Despite our early success, we still have significant room for continued expansion.

Speaker Change: Quarterly growth was driven by our innovative companion animal portfolio.

Wetteny Joseph: Globally, or a paid mad, posted $149 million. Our empirical franchise posted revenue of $384 million, which includes $209 million from San Faricotrio, and our key dermatology franchise contributed $414 million. Our lifestyle portfolio also saw strong growth, with $694 million in revenue. Looking closer at our success and execution, I'd like to focus first on OA Payne. As we continue to execute our U.S. launch strategy, we remain confident in our OA Pay Interjectory. Based on our experience launching other billion-dollar franchises, we know that first-in-class therapies require significantly more market development than lagging local likes. In the U.S., we have reached over 9,000 vets and veterinary technicians through interactive information sessions with our chief medical officer and industry carols.

Matt: Globally or hey, Matt.

Speaker Change: $149 million Awesome Petco franchise posted revenue of $384 million, which includes $299 million from some America trio and all key dermatology franchise contributed $414 million.

Speaker Change: Our lifestyle portfolio also saw strong growth with $694 million in revenue.

Speaker Change: Looking closer at our success in execution I'd like to focus first on the way to think.

Speaker Change: As we continue to execute our U S launch strategy, we remain confident in our OA pain trajectory.

Based on our experience launching other 1 billion dollar franchises, we know that first in class therapies require significantly more market development than lagging lookalikes.

Speaker Change: In the U S. We have reached over 9000 vests in veterinary technicians through interactive information sessions, with our Chief Medical officer and industry Kols.

Wetteny Joseph: This is on top of the thousands of interactions our sales reps and medical teams have had on individual vet visits. These interactions ensure our customers have the tools and resources to reinforce the safety and efficacy of Librella and Celentia with pet owners. Additionally, we are deploying capital to expand our DCC strategy. Pet owners know their pets better than anyone, and we want to help them detect the fines of OA and the available treatment options. We know these therapies are improving lives based on the positive testimonials from pet owners. The positive impact and reception of Librella are reflected in the market adoption.

Speaker Change: This is on top of the thousands of interactions our sales reps and medical teams have had an individual vet visits.

Speaker Change: These interactions and ensure our customers have the tools and resources to reinforce the safety and efficacy of labella influenza with pet owners.

Speaker Change: Additionally, we are deploying capital to expand our DTC strategy.

Speaker Change: But theres no there, perhaps better than anyone and we want to help them take the signs of OA and the available treatment options.

Speaker Change: We know these therapies are improving lives based on the positive testimonials from pet owners.

Speaker Change: The positive impact and reception of the Wella are reflected in the market adoption.

Wetteny Joseph: In the U.S., we see record penetration, with over 80% of clinics now purchasing the product. No products in our history have penetrated this quickly. Reorder rates are approaching 90%, which is a leading indicator of customer satisfaction. In Europe, broadband is expanding to moderate and mild OA cases that were largely untreated, now making up more than 65% of total cases. This is just a glimpse into what we expect in the U.S. over time, as Librella continues to expand the adjustable market and gain market share. Despite our early success, we still have significant room for continued expansion.

Speaker Change: In the U S. We see record penetration with over 80% of clinics now purchasing the product.

Speaker Change: No product in our history as penetrated this quickly.

Speaker Change: We order rates are approaching 90%, which is a leading indicator of customer satisfaction.

Speaker Change: In Europe, <unk> is expanding to moderate and mild OA cases that were largely untreated.

Speaker Change: Now, making up more than 65% of total cases.

Speaker Change: This is just a glimpse into what we expect in the U S overtime and labella continues to expand the addressable market and gain market share.

Speaker Change: Despite our early success, we still have significant room for continued expansion.

Wetteny Joseph: Our focus on the execution doesn't stop after we launch a product. After more than a decade of exceptional safety and efficacy, our key dermatology franchise is still a critical performance driver, growing 18% operationally in the quarter. In the U.S., Durham clinic visits are increasing, driving volume growth across both Apple Quell and Cytopoint. The franchise, including Apple Quell, Apple Quell Truable, and Cytopoint, is designed to cover multiple needs across different dermatological indications, and their different methods of administration suit any vet or pet owner preference. Our Durham relief from acute and seasonal conditions, as well as treatment for dogs with lifelong chronic conditions, which make up the majority of total Durham revenue.

Speaker Change: Our focus on the execution doesn't stop after we launch a product after more than a decade of exceptional safety and efficacy.

Kristin Peck: Our key dermatology franchise is still a critical performance driver, growing 18% operationally in the quarter. In global studies, veterinarians report approximately 90% of satisfaction with apical safety and efficacy. Performance was driven by our O.A. Payne Mavs, Simperica Trio, and our Key Dermatology franchise. In the clinic, the usage of injectable therapeutic treatment is growing to offset the alternative channel shift.

Speaker Change: Key dermatology franchise is still a critical performance driver growing 18% operationally in the quarter.

Speaker Change: In the U S Derm clinic visits by increasing driving volume growth across both <unk> and <unk>.

Speaker Change: The franchise, including Apple Quill.

Speaker Change: Chewable Insider point is designed to cover multiple needs across different dermatological indications and there are different methods of administration suite invest or pet owner preference.

Speaker Change: Our derm products also address the full spectrum of periodic cases, providing relief from acute and seasonal conditions as well as treatment for adults with lifelong chronic conditions, which make up the majority of total derm revenue.

Wetteny Joseph: And vets and pet owners are extremely happy with the results. In global studies, veterinarians report approximately 90% of that satisfaction with Apple Quell safety and efficacy. Our comprehensive portfolio meets vets' needs and the needs of their patients, and we are confident in our ability to grow revenue even in the face of competition. That confidence is filled at the significant opportunities for market expansion that Kristen mentioned earlier. First, we are targeting the 8 million dogs in the U.S. with a topic dermatitis that are either untreated or not treated by a vet to direct the consumer advertising, helping to educate pet owners on the signs of an itchy dog and our prescription treatment options.

Speaker Change: And vets and pet owners are extremely happy with the results in global studies Veterinarians report approximately 90% of our satisfaction with <unk> safety and efficacy.

Speaker Change: Our comprehensive portfolio meets <unk> needs and the needs of their patients and we are confident in our ability to grow revenue even in the face of competition.

Speaker Change: That confidence is fueled by the significant opportunities for market expansion that Christian mentioned earlier.

Christian: First we are targeting the $8 million in the U S with atopic dermatitis, either untreated will not treated by a vet to a direct to consumer advertising, helping to educate pet owners on the signs of an itchy dog and all prescription treatment options.

Wetteny Joseph: Additionally, in the U.S., there are 3 million dogs who are prescribed alternative products like steroids. We are confident in our ability to win these new customers through our proven safety and efficacy. We are also drawing more doses from the same patient base due to trends within pet health care, including preference to injectable therapies, trouble formulations, and alternative channel growth increasing compliance. Lastly, there are many markets where our key dermatology franchise is in the early stages of maturity. These markets provide long-term growth trajectory and are outstanding as a national growth highlights this momentum. Our excellent execution on our repayment launches and key dermatology expansion has contributed to a great first half of the year.

Speaker Change: Additionally, in the U S. There are 3 million dogs, who are prescribed alternative products like steroids. We are confident in our ability to win these new customers through our proven safety and efficacy.

Speaker Change: We're also drawing more doses from the same patient base due to the trends within pet health care, including referenced will injectable therapies, cubo formulations and alternative channel growth increasing compliance.

Wetteny Joseph: Now, let's move on to our segment results. U.S. Revenue grew 12% in the quarter, with companion animal growing 13% and livestock posting 11% growth. For the first time, cells across our U.S. companion animal portfolio surpassed $1 billion in the quarter. Performance was driven by our OA Payne Mabs, Semperica Trio, and our key dermatology franchise. Our portfolio growth was largely driven by trends in retail and home delivery, reflecting the evolution of pet-owned preference for convenience and increased compliance on dispensing oral medications. In the clinic, usage of injectable therapeutic treatment is growing to offset the alternative channel shift.

Wetteny Joseph: Our OA Payne Mabs, LeBrell, and Celensia posted a combined $71 million in U.S. cells in Q2. LeBrell generated $53 million, primarily on increased clinic utilization. As I mentioned to date, market adoption is higher than any product in our history. Thus, we are confident in our trajectories. Celensia posted $18 million in revenue. We continue to be pleased with what we are seeing in the fill-line OA space. As Kristin mentioned, we see positive trends in three line, three line away visits, which have nearly doubled since our launch almost two years ago. We posted 26% moving average total growth over the past 12 months, the majority of which was in the competitive market, highlighting not only our first mover advantage, but also the stickiness of our customer base.

Speaker Change: In U S sales in Q2.

Speaker Change: The Bella generated $53 million, primarily on increased clinical utilization.

Speaker Change: As I mentioned to date.

Speaker Change: Market adoption is higher than any product in our history. Thus we are confident in our trajectory.

Speaker Change: So, let's see a posted a $2 million in revenue we continue to be pleased with what we're seeing in the fee line or space.

Kristin Peck: As Kristin mentioned, we see positive trends in feline OA visits, which have nearly doubled since our launch almost two years ago. We are entering our second year with competition in the triple combination parasiticide market, and we continue to execute on not just defending our leadership position with TRIO but growing. Lastly, in the Vet Channel, Sampaio Cotrillo is winning with puppies, a leading indicator of future performance, in the absence of meaningful differentiation.

Speaker Change: As Christian mentioned, we see positive trends in fee Lyle feline OE visits which have nearly doubled since our launch almost two years ago.

Speaker Change: And Parker trio posted U S growth of 19% in the quarter on $254 million in revenue.

Speaker Change: We are entering our second year with competition and the Triple combination parasiticide market and we continue to execute on not just defending our leadership position with trio, but growing it.

Speaker Change: Again, we do not take a launch and done mentality.

Speaker Change: We posted a 26% moving average total growth over the past 12 months, the majority of which was in a competitive market highlighting not only our first mover advantage, but also the stickiness of our customer base.

Wetteny Joseph: Lastly, in the VET channel, St. Patrick Trillo is winning with puppies, a leading indicator of future performance. In the absence of meaningful differentiation, VETs and pet owners are reluctant to switch from a safe, efficacious product. Either Metology product sales in the US were $283 million for the quarter, going 17%. Apocryl was the largest growth driver, with apocryl trouble benefiting from increased conversion. Side-of-point growth continues to be driven by VET and pet owner preference for injectable solutions, especially for chronic cases. Earlier, Kristin alluded to shifting pet owner demographics and the evolving landscape. Much of our success with St.

Speaker Change: Lastly, in the vet channel some Packer trio is winning with puppies.

Speaker Change: A leading indicator of future performance.

Speaker Change: In the absence of meaningful differentiation.

Speaker Change: <unk> and pet owners are reluctant to switch from a safe efficacious product.

Kristin Peck: Cytopoint growth continues to be driven by vet and pet owner preference for injectable solutions, especially for chronic cases. Currently, Simperico Trio is the best-selling prescription product in the retail channel, and Apple Quill is second. We estimate that over 20% of trio cells and one-third of apical cells now come via the retail channel.

Wetteny Joseph: Patrick Trillo and Apocryl has been bolstered by our ability to win in the growing retail and home delivery space. The convenience of these channels for self-administered products is increasingly popular with pet owners, and we are committed to making our products available where our customers need them. Currently, St. Patrick Trillo is the best selling prescription product in the retail channel, and Apocryl is second. We estimate that over 20% of Trillo sales and one-third of Apocryl sales now come via the retail channel. Additionally, the alternative channel growth rate for both Trillo and Apocryl exceeded the overall growth rate for these products this quarter.

Wetteny Joseph: Growing pet owner preference for alternative channel convenience has led to a decline in product-only clinic visits. This is why visits are not the best indicator of our performance, given we have consistently grown volume in an evolving landscape. Our US-compane animal diagnosis for Trillo grew 5% in the quarter, returning to growth after Q1 distributor inventory worked down following our channel strategies changed. US-class bot had a strong quarter, growing 11%, giving primarily from the timing of supply and incentive here, which had a soft, comfortable period last year.

Speaker Change: Following our channel strategy change.

Kristin Peck: U.S. Lifeblock had a strong quarter, going 11%, driven primarily from the timing of supply on septic here, which had a soft, comfortable period last year. Companion animal grew 12% operationally, and livestock grew 8% operationally. Wealth was driven by Simparica, growing 38% operationally to $59 million in sales in the quarter. Adjusted gross margins of 71.7% declined 70 basis points on a reported basis.

Speaker Change: U S livestock had a strong quarter growing 11% driven primarily from the timing of supply onset of year, which had a soft comparable period last year.

Wetteny Joseph: Moving on to our international segment, revenue grew 4% on a reported basis and 10% excluding the impact of foreign exchange. Compane animal grew 12% operation only, and last bot grew 8% operation only. Our international companion animal portfolio growth was driven by our St. Perrica, Keither Metology, and our pain franchises, partially offset by impacts in China. Our international St. Berkha franchise grew 35% operation on it. World was driven by St. Berkha growing 38% operation on it to $159 million in sales in the quarter. We continued to see increased use in Latin America and Eastern Europe, as well as price benefits in high inflationary markets.

Speaker Change: Moving onto our international segment revenue grew 4% on a reported basis and 10% excluding the impact of foreign exchange.

Speaker Change: Companion animal grew 12% operationally and livestock grew 8% operationally.

Speaker Change: Our international Companion animal portfolio growth was driven by US America key dermatology and pain franchises, partially offset by impacts in China.

Speaker Change: Our international <unk> franchise grew 35% operational.

Speaker Change: Growth was driven by <unk> growing 38% operation to $59 million in sales in the quarter. We continued to see increased use in Latin America, and eastern Europe, as well as price benefits in high inflationary markets.

Wetteny Joseph: St. Berkha trio grew 31% operation on $45 million in sales, benefiting from key account growth in Europe, continued focus on DTC, and the positive impact of our recent launch in China. Our key dermatology franchise grew 19% operation in the quarter, posting $131 million in sales. We saw double-digit growth across most of our major markets driven by higher compliance and new patients. World was partially offset by headwinds in Japan due to pre-priced buyings in Q1. As we highlighted earlier, we continued to see significant opportunity for growth. Many international markets are in the early stages of market development, with significant runway for growth.

Speaker Change: The broker trio with 31% operationally on $45 million and sales benefiting from key account growth in Europe, continuing to focus on DTC and the positive impact of our recent launch in China.

Our key dermatology franchise grew 19% operationally in the quarter posting $131 million in sales.

Wetteny Joseph: Internationally, our oil paint maps grew 35% operation on it, posting $79 million in combined revenue. Internationally, wealth sales were $63 million, growing 32% operation on it. As we highlighted last quarter, we have lapped the launches in our last significant international markets, which occurred in Q2 of 2023. The length of sales were $16 million growing 49% operationally. Our international companion animal diagnostics portfolio grew 15% operationally, with strong performance across much of Asia and Europe. Internationally, companion animal growth was partially offset by expected declines in China driven by revolution franchise. Internationally, our lifestyle grew 8% operationally in the quarter, driven by price increases primarily in cattle and poultry in high inflationary markets.

Wetteny Joseph: We saw strong growth in our fish portfolio this quarter with contributions from price and volume driven by strong demand for vaccines in Norway. Growth in price and fish, especially offset by volume declines in most of our other lifestyle species, due to our challenging comparable quarter as well as the impact of unfavorable rotations. As expected, the economic challenges in China persist, putting pressure on certain companion animal products as well as livestock, especially swine. Consistent with what we have said for several quarters, the impact on our growth is expected to moderate late in the year, but continued headwinds are expected throughout the year across companion animal and livestock.

Wetteny Joseph: The school discipline across the P&L is one of the things that unlocks successful execution. As we move on to some of the highlights, we wanted to reaffirm our continued commitment to reinvesting in our business and our confidence in the returns we see from those investments. Adjust the growth margins of 71.7% declined 70 basis points on a reported basis, for an exchange had an unfavorable impact of 130 basis points. Excluding effects, we saw higher margins due to price increases, favorable mix, and lower freight costs, partially offset by higher manufacturing costs, especially in high inflationary markets. Justed operating expenses increased 9% operational.

Speaker Change: Fiscal discipline across the P&L is one of the things that unlocks successful execution.

Speaker Change: As we move onto some of the highlights we wanted to reaffirm our continued commitment to reinvesting in our business and our confidence in the returns we see from those investments.

Speaker Change: Adjusted gross margins of 71, 7% declined 70 basis points on a reported basis.

Speaker Change: Foreign exchange had an unfavorable impact of 130 basis points.

Speaker Change: Excluding FX, we saw higher margins due to price increases favorable mix and lower freight costs, partially offset by higher manufacturing costs, especially in high inflationary markets.

Speaker Change: Adjusted operating operating expenses.

Speaker Change: Increased 9% operational.

Wetteny Joseph: Contributing to this growth was as DNA increases of 70% operational and 17% operational growth in R&D. Improvings an operational growth margin and put an expense growth contributed to adjusted income, which grew 18% operational. Adjusted I want to highlight our share repurchase program. In the quarter, we repurchased a record high $533 million in shares. Additionally, on August 1st, we announced that we received voter approval for the new $6 billion share repurchase program, our largest program to date. The shares are expected to be repurchased over a multi-year period of up to four years, and the program can be canceled at any time.

Speaker Change: Contributing to this growth was SG&A increases of 7% operationally and 17% operational growth in R&D.

Kristin Peck: Adjusted Operating Expenses, Improvements in operational growth margin and prudent expense growth contributed to adjusted net income, which grew 18% operationally. This commitment reflects continued confidence in our ability to return value to shareholders. Now, moving on to guidance for full year 2024. In closing, before we go to Q&A, the strength and diversity of our portfolio and our relations, We have the utmost confidence in our best-in-class portfolio and colleagues to continue to set the benchmark moving forward. Now, I'll hand things over to the operator to open the line for your questions.

Speaker Change: Improvements in operational gross margin and prudent expense growth contributor to adjusted net income which grew 18% operationally.

Speaker Change: Adjusted diluted EPS grew 20% operationally for the quarter.

Speaker Change: Lastly, I want to highlight our share repurchase program in.

Speaker Change: In the quarter repurchased a record high of $533 million in shares.

Wetteny Joseph: The company's previous $3.5 billion share repurchase program, which was approved in December 2021, is expected to be completed this year. This commitment reflects continued confidence in our ability to return value to shareholders.

Wetteny Joseph: Before moving to guidance, an update on the planned divestiture of our medicated fit additive portfolio. As Kristen mentioned, we are expecting this divestiture to close sometime in the second half. Our current guidance is not reflective of the sale and may be adjusted subsequent to the close of the deal. As we stated in our April announcement, this portfolio generated approximately $400 million in revenue in 2023, with roughly linear seasonality.

Wetteny Joseph: Now moving on to guidance for four years, 2024. Our outstanding first half performance, particularly in our St. Perrica, in key dermatology franchises, demonstrated our ability to drive growth through execution across our business and gives us confidence going forward. Thus, we are raising our 2024 guidance provided during May's earnings call. Please note that guidance reflects foreign exchange rates of late July. For the year, we expect revenue between $9.1 and $9.25 billion, a range of 9% to 11% operational growth. As we stated earlier, our early paint trajectory remains on track. Our expectations for umbrella for the year remain unchanged.

Wetteny Joseph: We now expect adjusted net income to be in the range of $2.64 to $2.69 billion, representing operational growth of 13.5 to 15.5%. We are maintaining our commitment to grow adjusted net income faster than revenue over the long term while increasing our investment in demand-generating activities such as direct-to-consumer advertising. While we saw exceptional leverage this quarter, subsequent quarters may not have the same level of operating leverage due to the optimal timing of investments. Finally, we expected adjusted the load of DPS to be in the range of $5.78 to $5.88 and reported the load of DPS to be in the range of $5.35 to $5.45.

Speaker Change: Operating leverage due to the optimal timing of investments.

Speaker Change: Finally, we expect adjusted diluted EPS to be in the range of $5 78.

Speaker Change: To $5 88.

Speaker Change: And reported diluted EPS to be in the range of $5 35.

Speaker Change: To $5 45.

Wetteny Joseph: In closing, before we go to Q&A, the strength and diversity of our portfolio and our relationships, as well as our ability to execute on our strategic vision, continually allows us to outperform our peers. We have the utmost confidence in our best-in-class portfolio and colleagues to continue to set the benchmark moving forward.

Speaker Change: In closing before we go to Q&A, the strength and diversity of our portfolio and our relationships as well as our ability to execute on our strategic vision continually allows us to outperform our peers.

We have the utmost confidence in our best in class portfolio and colleagues to continue to set the benchmark moving forward.

Operator: Now, I'll hand things over to the operator to open the line for your questions. Operator? Thank you. And at this time, if you would like to ask a question, please press star one on your telephone keypad. You may withdraw your question at any time by pressing star two. Once again, that is star and one for your questions.

Operator: Thank you. We'll take our next question from Erin Wright with Morgan Stanley. Please go ahead.

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

Speaker Change: Greater.

Speaker Change: Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad you may withdraw your question at any time by pressing star to once again that is star and one for your questions. We will take our first question from Jon Block with Stifel. Please go ahead.

John Block: We will take our first question from John Block with Steve. Please go ahead.

John Block: Great. Thanks, guys, and good morning.

Jon Block: Great. Thanks, guys and good morning.

Wetteny Joseph: Wetteny, maybe the first one for you, was there a split between price and volume for the quarter? Sorry if I missed that. And then, you know, how do we think about pricing contribution from here? We'll call it a 2025 life cycle innovation, possibly make price somewhat more durable than maybe some people are anticipating.

Jon Block: Maybe the first one for you was there a split between price and volume for the quarter, sorry, if I missed that and then.

Kristin Peck: And then the second question, I'll just ask both up front. You know, Kristen, you got a lot of innovation to spend on for the DTC. And so, where do the best returns reside? You know, I can make the argument like, well, is the least penetrated, but apical and trio, arguably the annuity is longer. So maybe you can talk to how you're balancing the spend and the associated returns. Thank you.

Kristin Peck: Sure, John. I'll take the first part of the question, and then Kristen will just the second one. Look, if you look at the start we've had to the year, it's really been an outstanding start. We've seen demand across our innovative products and clearly a balanced growth picture when you look at the quarter, with the US going 12% international going 10. We saw a campaign animal growth at 12% and livestock 9 to get to your point around price and volume. I will cover the quarter, but then I'll remind you of what the first half of the year looks like and what we're anticipating for the balance of the year.

Wetteny Joseph: The quarter had about 8% price and 3% volume. Now, if you look at the price contributions, you have about two points coming in from Argentina, similar to the first quarter and as we anticipated in the second quarter. And that leaves you with roughly six points of price and three points of volume. Now, I will tell you on a year-to-day basis given where the cops were versus the prior year, you actually have a very balanced picture between price and volume. On a year-to-day basis, we've grown 12% operationally at the top line, separating out Argentina. You have 5% price and 5% volume.

Wetteny Joseph: And that's roughly the balance we expect for the full year. It's just a little bit of nuance on a year-over-year basis based on the cops that's driving much higher volume in Q1 and much higher pricing in Q2. The last point I'll make is Trio had another outstanding quarter, and we're getting better price realization from more targeted promotions. In fact, we did not run promotions in the second quarter compared to the last year, where we did run a promotion. So that has a little bit of dynamic also playing out on the price picture. If you follow that again, a very pleased with the performance overall, stronger price contribution coming from that.

Wetteny Joseph: We expect roughly balanced price volume picture for the year.

Kristin Peck: Thanks, and John, I'll take your second question. You know, look, if you saw in a quarter where we grew during by 18%, the St. Paragraphencherized at 22% and painted 142, clearly the DTC is having a very positive effect in ROI on each of these. We actually think about it in a much more detailed way than what you were mentioning. We don't just look at it by brand; we look at it by channel, so what is connected TV, TV, digital. And there's different ROI's for different. I mean, some of these are building markets, as you said. Some of these are just more consumer oriented.

Kristin Peck: You know, look at, if you look at parasitized consumers really do drive a lot of that spend themselves versus, you know, Durham in pain where you have both the consumer and the vet very involved. So we look at it both by product; we look at it seasonality. And I'd say we're investing, you know, significantly across all three where we really believe both there's an opportunity to drive compliance and as well as opportunity to grow these markets. So we're aggressively investing across each, but we look at it in a very detailed level to make sure the ROI of any given channel we're investing at any given time of the year makes the most.

Speaker Change: If theres, an opportunity to drive compliance and as well the opportunities to grow these markets. So we're aggressively investing across each but we look at it in a very detailed level to make sure. The ROI of any given channel we're investing at any given time of the year. It makes the most sense.

Erin Wright: Thank you.

Erin Wright: We'll take our next question from Erin Wright. With Morgan Stanley, please go ahead. Great. Thanks for taking my questions. On Librela first. So should we continue to see that sequential ramp in U.S.? Librela sales throughout the remainder of the year? And how are reorder rates, sell-out trends, kind of throughout the quarter? How did that progress relative to your expectations and thoughts on potential label changes there as well for Librela? And then my second question is on just the competitive positioning now. I guess can you speak to how you're thinking about that now, particularly in the dermatology category, but also in parasiticide and how much of the guidance update today was attributable to your view of your competitive positioning for the balance of the year.

Speaker Change: Thank you we'll take our next question from Erin Wright with Morgan Stanley. Please go ahead.

Erin Wright: Great. Thanks for taking my questions on unlike barela for so should we continue to see that sequential ramp in U S library sales throughout the remainder of the year and how our reorder rate sell out trend kind of throughout the quarter, how did that progress relative to your expectations and thoughts on potential label changes there as well for library.

Speaker Change: And then my second question is on just the competitive positioning now I guess can you speak to how you're thinking about that now, particularly in the dermatology category, but also in parasiticide and how much of the guidance update today was attributable to your view of your competitive positioning for the balance of the year.

Erin Wright: Thanks.

Kristin Peck: I'll take the first question.

Speaker Change: Thanks, I'll take the first question I'll, let let me take the second question on competition across all three.

Kristin Peck: I'll let Wetteny take the second question on competition across all three. You know, obviously very, very pleased with Librela's growth in the quarter to 142%. What we're really seeing is fundamentally improving the quality of life for dogs with OA pain. We've seen a really positive reception. You know, they find it safe and efficacious, and it's really making a real difference. To date, we have about 18 million doses. We're very pleased with the penetration to date in the U.S., which is 80% with the reorder rate at 86%. So, to your point on quarter-over-quarter growth, continuing to see and expect the rest of the year to see significant quarter-over-quarter growth in this product.

Speaker Change: Obviously, very very pleased with what relative growth in the quarter to 142%, but we're really seeing it as is fundamentally improving the quality of life for dogs with OA pain.

Speaker Change: We've seen a really positive reception it they find it safe and efficacious and it's really making a real difference to date, we have about 18 million doses.

Wetteny Joseph: As we mentioned on the last call, we are always in ongoing discussions with the FDA, certainly in the first year after launch as they're doing their post-marketing reviews. We had been in those. We had had dialogue with them about possible changes to the Rebella label, as we've had in many of the other markets we've operated in. You know, in those markets as you look at it, we continue to see positive trends quarter over quarter in Europe after label changes we had in both the EU and the UK in both 2022 and 2023. So, you know, these label changes, as you know, are not uncommon, as we talked about last quarter.

Wetteny Joseph: So, you know, we're really excited to see that with the growth we continue to see in Librela and really the excitement and positive stories from pet owners.

Wetteny Joseph: So, what do you want to take the second question? Sure. Look, when we look at the performance so far, it's been phenomenal across Durham and Trio for the first half of the year, as well as strong contributions. Obviously coming from our oil pain franchise, you heard the numbers coming in from Librela and Celensia, both in the US with the launch as well as internationally. When we think about the competitive landscape, look clearly given what we're seeing and what we anticipate continuing to this momentum in the business, we're raising guidance based on the core business. I would say Durham, in particular, when we look at the competitive landscape, we've raised our expectations on Durham to double digits.

Wetteny Joseph: We're seeing high single digits previously. When we look at Trio, the update isn't really meaningful. We were anticipating to be a late in the year competitive launch. Anyway, it's a third to come to market, et cetera. So, not any meaningful impact here in terms of how we think about the guidance. Thank you.

Operator: Thank you. We'll take our next question from Michael Ryskin with Bank of America. Please go ahead.

Michael Rice: We'll take our next question for Michael Rice, and with Bank of America, please go ahead. Great. Thanks.

Michael Rice: Both of my questions are going to be on the Durham market. So, first, just a quick one on Apple with Showable. You know, you watched that. and there's a lot of excitement around that. I was just wondering if you could have brought any color on how meaningful a contribution that's having to the better results you're seeing, or if you think it's more traditional apple quilt that's still a driving term. And, you know, are there any inventory dynamics there, which would be mindful of? What's there any stocking with distributors in the quarter or year to date, just an update on apple quilt showable.

Michael Rice: And then the follow-up on sort of the long-term opportunity, I think you gave a lot of color in the slides on the opportunity in Durham in terms of the under-penetrated market, the untreated opportunity, and steps you're taking to further penetrate that. My question is, that's been the case for a number of years, and you've had a Durham product on the market for over a decade now. So it seems like there is a sizable part of the market that's just resistant to treatment or possibly isn't going to the clinic, isn't amenable to this product. I'm just wondering how real do you think that opportunity is, and what the barrier there is?

Kristin Peck: the untreated opportunity and Durham product in the market for over a decade now, so it seems like there is a sizable part of the market that's just resistant to the treatment or possibly isn't.

Kristin Peck: Is that an education? Is that a cross-priced point? Is that a treatment modality issue? Just why is there still such a sizable un-addressed market in Durham and what sets you can do to further penetrate that? Thanks. Thanks, Mike.

Kristin Peck: I'll take the second question in the long-term opportunity, and then I'll let me cover anything that I miss, as well as cover all the dynamics you're asking for specifically around chewable. To your point, you know, our Durham portfolio has been on the market for 11 years, and we posted 18% growth in the quarter. So I would say that there is a significant opportunity to continue to expand the market. I appreciate your comment on the slide. We did try to add slides this quarter to try to bring to light some of the stories that we're talking about.

Wetteny Joseph: Again, get some of those numbers out there for you. And specifically what we were trying to address in that is the significant opportunity where we see two drivers really of the future growth. One is around compliance, and we're seeing really strong growth here around compliance. You know, we can increase compliance through retail and auto shift. I even think chewable, which Whitney will talk about, will help drive compliance. So I think there's a significant opportunity for more weeks and more months on therapy. And, you know, I also think there's a big opportunity to continue to expand the market and, you know, building on what Whitney said in his prepared remarks.

Speaker Change: And you know I also think there's a big opportunity to continue to expand the market and you know building on what <unk> said in his prepared remarks, you know Theres 3 million dog owners right now that are prescribed other products such as steroids that could be moved to our product and then there's 8 million dogs with OE, who might be using shampoos or things like that are over.

Kristin Peck: You know, there's three million dog owners right now that are prescribed other products, such as steroids, that could be moved to our product. And then there's eight million dogs with OA who might be using shampoos or things like that over-the-counter treatment, you know, or might not be using anything at all. We see those as significant opportunities to continue to grow the market. That's 11 million dogs in the US alone. And, as I mentioned in my remarks, internationally, we see the same key drivers and same opportunities. But with an additional one, which is that there's still many dogs yet to be medicalized and international.

Speaker Change: The counter treatments or might not be using anything at all we see those as significant opportunities to continue to grow the market. That's 11 million dogs in the U S alone and as I mentioned in my remarks internationally, we see the same key drivers and same opportunities, but with an additional one which is that there is still many dog yet to be medicalized and international and as those dogs.

Kristin Peck: And as those dogs become more medicalized across many countries in China, Brazil, et cetera, we see a significant opportunity there.

Speaker Change: Become more medical lives across many countries in China, Brazil, etcetera, we see a significant opportunity there, but I know you have a number of questions on chewable, which I'll, let let me build on it as well as anything else. He saw in Germany, one as you mentioned because when I when I look at the picture Mike I'm very excited about how we're thoughtfully targeting these sub parts of the business beyond.

Kristin Peck: But I know you have a number of questions and chewable, which I let Whitney build on it as well as anything else you saw in Germany. Look, when I look at the Durham picture, Mike, I'm very excited about how we're thoughtfully targeting these sub parts of the business beyond continuing to educate pet owners and so on, which is already benefiting us in terms of the growth we continue to see in this product 11 years later. So clearly, we are paying attention to those areas. And we think there are some real ways we can smartly and thoughtfully target here above the about 7 million that we are already treating with our products.

Speaker Change: Continuing to educate pet owners and so on which is already benefiting us in terms of the growth. We continue to see in this project 11 years. Later, so clearly we are penetrating those areas and we think there are some real ways, we can smartly and thoughtfully targets here above the about $7 million that we are already treating with our products. There is $11 million that we can go after here.

Kristin Peck: This is 11 million that we can go after here in the US alone. And Kristen just touched on that. And so we'll go into more detail on that, but we're very excited about how we're doing that there.

Wetteny Joseph: In terms of true, look, this is largely conversion from Africa. So I wouldn't say that it is necessarily contributing to overall growth, but an important part of our strategy as we look ahead. We've seen the conversion rates outside the US; for example, in those markets in Europe, we've been in for, I think, about two and a half or so years now. Those are now about 50% penetration in the US as we ended the quarter. We were approaching about a quarter conversion. I think we've crossed that sense. So we're in that ballpark. So clearly, meaningfully converting from Apple, which again is an important part of our business.

Wetteny Joseph: And we think could long-term contribute to overall growth, given the of Use and Preference to Pedalners, etc. Thank you.

Brandon Vazquez: We'll take our next question from Brandon Vazquez with William Blair. Please go ahead. Thank you for taking the question. Maybe I'm my first question. Can you just walk a little bit through the increased guidance, maybe on the top line in the bottom line, specifically what is being passed through there? I think not to pick on it was a great quarter. I think you beat a little bit more, especially on the organic growth relative to our estimates, and I think less than that beat was passed through.

Wetteny Joseph: So just curious if there's puts and takes to the rest of the year that we should be keeping in mind for both sales and EPS on the bottom line. Sure.

Kristin Peck: Sure. Look, first of all, let me just cover one last piece that I didn't cover on the last call, which was the contributions in terms of stocking around CHU. And then I will get, Brandon, to your question around the guidance and what went into it in terms of puts and takes and top versus bottom. First of all, there's very little contribution in terms of net inventory into distribution on CHU.

Wetteny Joseph: Look, first of all, let me just cover one last piece that I didn't cover on the last call, which was the contributions into the stocking around true. And then I will get Brandon to your question around the guidance and what went into it in terms of puts and takes and top versus bottom. First of all, there's very little contribution in terms of net inventory into distribution. On true, it's about four million dollars. So call it one percentage point out of the 18. We talked about one key term globally. So, not meaningful at all. Now, to your point around the guidance, look, we raised the midpoint of our guidance about 50 basis points to same on the bottom.

Kristin Peck: It's about $4 million, so call it one percentage point out of the 18 we talked about on KeyDerm globally, so not meaningful at all. Now, to your point around the guidance, look, we raised the midpoint of our guidance about 50 basis points, the same on the bottom. We are still very much committed and confident in driving operational sort of growth and expansion through the P&L. You're seeing about a 450 basis points separation between top line and bottom line, so clearly continuing to demonstrate our core value proposition to grow the bottom line faster than the top line.

Wetteny Joseph: We are still very much committed and confident in driving operational sort of growth and expansion through the P&L. You've seen about a 450 basis points separation between top line and bottom line. So clearly continuing to demonstrate our core value proposition to grow the bottom line faster than the top line. I think what you're seeing here in terms of the guide, why it's the same raise at top and bottom in terms of basis points, is because we see an opportunity to invest in the business in areas that will drive growth as we exit the year and enter into next year.

Kristin Peck: I think what you're seeing here in terms of the guide, why it's the same raise at top and bottom in terms of basis points is because we see an opportunity to invest in the business in areas that will drive growth as we exit the year and enter into next year. And as you said continuously, we will make those investments as we see those opportunities, but still, again, sticking to our commitment to driving top and bottom.

Wetteny Joseph: And, as you said continuously, we will make those investments as we see those opportunities, but still, again, sticking to our commitment to driving top and bottom.

Kristin Peck: Now, I think as you look at the back half of the year, I will note a couple of things. If you remember last year in the fourth quarter, we have basically an easier comp, particularly on just the bottom line in the fourth quarter, but these investments will impact the operational leverage you'll see in the third quarter. So expect that to be not at the levels that you're seeing in Q2 here as you map from the guidance and the implications in the back half. So clearly, the back half looks like about a 9% top line growth there at the top. Leverage on the back half, but more heavily weighted towards Q4 versus Q3 in terms of that level.

Wetteny Joseph: Now, I think as you look at the back half of the year, I will note a couple of things. If you remember last year in the fourth quarter, we have basically an easier comp, particularly on just the bottom line in the fourth quarter, but these investments will impact the operational leverage you'll see in the third quarter. So expect that to be not at the levels that you're seeing in Q2 here as you map from the guidance and the implications in the back half. So clearly, the back half looks like about a 9% top line growth there at the top leverage on the back half, but more heavily weighted towards Q4 versus Q3 in terms of leverage.

Wetteny Joseph: Thank you.

Steve Schalo: We'll take our next question from Steve Schalo with TDTO, and please go ahead. Hi, this is Chris.

Steve Schalo: I'm Steve Schalo. Thanks for taking our questions. We had just one on Dermatology. Can you provide any color on the breakdown of key germ cells between Apple Quell, Apple Chewable, and Side of Point? How do you see this split evolving over time, and does Apple Chewable provide extended patent protection for the brand? Thank you.

Wetteny Joseph: Sure. I'll cover both here. Look, really, when you look at the conversion strategy we have with Apple Chewable versus Apple Quell, we talk about the key germ franchise here versus breaking them out here. So we have 18% growth in key germ. If you look at both Apple Quell, their Apple Quell franchise as well as Side of Point with double-digit growth in the quarter. Again, we continue to emphasize the combination of Apple Quell and Apple Chewable versus breaking them out, which is the reason that you heard the commentary from us as you did. In terms of patent protection, look, there are various patents that cover the products both across the active ingredient as well as the formulation and dosing regimens, so they do vary.

Wetteny Joseph: But overall, if you look at the franchise, we're looking at patents that extend out to 2031. More details are available in the 10-K, if you want to pull that up from the last year. And of course, this year's 10K is available. Thank you.

Balaji Prasad: We'll take our next question from Balaji Prasad with Barclays. Please go ahead. Hi, good morning, and congratulations on the quarter. Just a couple for me. Firstly, I want to dig a bit into the advances of pricing. Is there a difference in how pet owners pursue price tags for pharmaceutical products versus diagnostics? The reason I'm asking is our veterinary survey consistently showing that pet owners are increasingly concerned about spending trends and diagnostics. It seems that this is not applicable on the pharmaceutical side. Would love you to take one.

Wetteny Joseph: Could you also just cite the fish vaccines business a bit, the growth, and in that context, what would an approval like Alfa Jack Micro translate to in terms of accelerating the 70 growth? Thank you.

Wetteny Joseph: So look, maybe I'll take a stab at the first one, Balaji. Look, I think you've seen that spending on animal health, particularly pet owners, is a doable spending. They see their pet health as essential. We've seen that time and time again, and every survey we've done, given the human-animal bond, et cetera, shows that. I think when you look at pet health spend, 86% of pet owners are saying that they would spend whatever it takes if their pet needed extensive veterinary care. We've done market studies as well that demonstrated pet owners had a 20% reduction in their budget.

Kristin Peck: So look, maybe I'll take a stab at the first one, Balaji. Look, I think you've seen that spend in animal health, particularly pet owners, is a doable spend. And they see their pet health as essential. We've seen that time and time again.

Kristin Peck: And every survey we've done on the human-animal bond, et cetera, shows that. I think when you look at pet health spending, 86% of pet owners are saying that they would spend whatever it takes if their pet needed extensive veterinary care. We've done market studies as well that demonstrate if pet owners had a 20% reduction in their budget, they would still spend the same on their pet's health. So clearly underscoring this importance in terms of the importance of the pet's health as a member of the family of pet owners. And we see that show up in terms of our numbers. I don't know if I have a view in terms of how that differentiates between therapeutics versus diagnostics.

Wetteny Joseph: They would still spend the same on their pet health. So clearly, underscoring this importance in terms of the importance of the pet health as a member of the family pet owners. And we see that show up in terms of our numbers.

Wetteny Joseph: I don't know if I have, you know, a view in terms of how that differentiates between, you know, therapeutics versus diagnostics. Clearly, as we look at the picture today, you can see strong volume growth in our business, even as you see versus robust price as well. So clearly, we see that opportunity to continue to drive the business that way. We are seeing some price realization. So it's not price to the end pet owners price into channels in terms of echoings, et cetera. But you see our abilities continue to take price and still drive volume in the business given the innovative solutions we're bringing that are addressing chronic conditions for pet owners that they really, really care about.

Kristin Peck: Clearly, as we look at the picture today, you can see strong volume growth in our business, even as you see very robust prices as well. So clearly, we see that opportunity to continue to drive the business. That way, we are seeing some price utilization. So it's not prices to the end pet owners, but prices into our channels in terms of vet clinics, et cetera. But you see our ability to continue to take price and still drive volume in the business given the innovative solutions we're bringing that are addressing chronic conditions for pet owners that they really, really care about.

Speaker Change: Picture today, you're continuing to see strong volume growth in our business, even as you see very robust price as well. So clearly we see that opportunity to continue to drive the business that we are seeing some price realization. So it's not priced and pet owners price into our channels in terms of Equinix et cetera, but you see our ability to continue to take price and still do.

Speaker Change: Volume in the business given the innovative solutions, we are bringing that are addressing chronic conditions for pet owners that they really really care about so we think that there is continued room to continue to do that in terms of the fixed vaccine I can't speak to the specific question you talked about clearly we saw 20% growth in our fish portfolio. This quarter. This is largely driven.

Wetteny Joseph: So we think that there's this continued room to continue to do that.

Kristin Peck: So we think that there's continued room to continue to do that. In terms of the phage vaccine, I can't speak to the specific vaccine you talked about. Clearly, we saw 20% growth in our phage portfolio this quarter. This is largely driven by demand for vaccines in Norway, very important market for us. So we've seen both price and volume there. Perhaps we'll take offline that specific one.

Wetteny Joseph: In terms of the face vaccine, I can't speak to the specific vaccine you talked about. Clearly, we saw 20% growth in our fish portfolio this quarter. This is lodged driven by demand for vaccines in Norway. Very important market for us.

Speaker Change: By demand for vaccines in Norway, very important market for sourcing both price and volume there, perhaps will take offline that specific one that you referenced.

Wetteny Joseph: We've seen both price and volume there; perhaps we'll take off line that specific one that you referenced. Thank you.

Operator: Thank you. We'll take our next question from David Westenberg with Piper Tindler. Please go ahead.

Speaker Change: Thank you we'll take our next question from David Westenburg with Piper Sandler. Please go ahead.

David Westenberg: We'll take our next question from David Westenberg with 5%. Let's go ahead. Hi, thank you for taking my question, and congrats on our great quote here. See, you have definitely have products that drive visits in themselves like Cytopoint and Librella, but you also do have wellness-dependent products such as vaccines. And maybe I'd argue pro heart. Heart is in that category.

David Westenburg: Hi, Thank you for taking my question and congrats on a great quarter here.

Speaker Change: So you definitely have products that drive visits and in themselves like Sino point.

Speaker Change: <unk>, but you also do have wellness dependent products, such as vaccines and maybe I'd argue pro.

Wetteny Joseph: Can you talk about how those wellness product products have been performing, your expectation for how they do the rest of the year and can you help frame the size of those kind of products in your portfolio. And then if I get to squeeze in one smaller one, were there any portfolio Bennett sales with your MFA portfolio that you're getting rid of? And why is that portfolio if there isn't more or less portfolio sales dependent? Thank you.

Speaker Change: As in that category can.

Wetteny Joseph: Sure, I'll take your MFA question, and then I'll let what may take the volumes and things like that across wellness and vaccine. If you think about our dedicated feed added to business, as you saw, you know, it was integrated into some of our portfolio contracts, but the majority of those contracts, the majority of the value is what may, you know, outline, you know, globally our MFA sales last year. In 2023, we're only 400 million. So, you know, it's not inconsequential, but it is not a material way of the way we negotiate. Most of our negotiations across portfolio and more innovative products that are central to our customers.

Wetteny Joseph: So, no, we are not concerned in livestock as we sold that business, and our ability to continue to leverage our portfolio to provide the best value for our customers. So, we're committed to continuing to do that.

Wetteny Joseph: And I'll let me take the second question sort of on the wellness. Look, David, I think, you know, your question on wellness in terms of what's happening across the portfolio, grants versus the rest, I think of the heart of that question is really what's happening around visits, which we have continuously talked about. That overall visits are not a good indicator for our business, and you see volume growth across our pet care business. Each quarter, even when overall visits are down. Now, to get to your point, if you look at apocryl side of point, the kid during franchise, if you look at trio and samperica franchise and or a pain, those are all seeing increased volume across the business.

Kristin Peck: Well, David, your question on wellness in terms of what's happening across the core portfolio brands versus the rest, I think at the heart of that question is really what's happening around visits, which we have continuously talked about, that overall visits are not a good indicator for our business, and you see volume growth across our pet care business each quarter, even when overall visits are down. Now, to get to your point, if you look at Apocryla's side point, the Kederm franchise, if you look at Trio and Samparica franchises and OI Payne, those are all seeing increased volume across the business.

Kristin Peck: I think if you then say what's happened to the rest of the portfolio, it contributed about two percentage points to our growth, and that's largely the price in this quarter, but that's just the dynamic versus the prior year in terms of both timing of when we had some vaccine availability in the prior year that added to supply last year, and therefore it's a comp item, if you will, and then China has its impact in terms of what do you think of the rest of the portfolio, so it's a little bit more price versus volume in the quarter, but overall, typically we see about one or two point contribution to growth from the rest of the portfolio, and that's what we're seeing this year. Again, I would underscore that we are seeing increased volumes across pet care regardless of the overall visit picture, and I think that's really what's important for us to win with a little bit.

Wetteny Joseph: I think if you then say what's happened to the rest of the portfolio, it continued about two percentage points to our growth. And that's largely the price in this quarter, but that's just a dynamic versus the prior year in terms of both timing of when we had some vaccines. And the availability in the prior year that added to supply last year and therefore to cop item, if you will, and then China has its impact in terms of what you could the rest of the portfolios, it's a little bit more price versus volume in the quarter.

Wetteny Joseph: But overall, typically we see about one or two point contribution to growth from the rest of the portfolio. And that's what we're seeing this year. Again, I would underscore that we are seeing increased volumes across pet care, regardless of the overall visit picture. And I think that's really what's important for us when we're still in our business.

Glen Santangelo: We'll take our next question from Glen Santangelo with Jeffries. Please go ahead. Next question.

Operator: We'll take our next question from Glen Santangelo with Jeff Rees. Please go ahead.

Kristin Peck: Oh yeah, thanks for taking my question. I maybe want to touch on some of the topics that we just talked about. But, you know, we get a lot of questions from investors talking about the sluggish sort of pet ownership and vet visit trends and, you know, taking all that into the context of a weakening consumer here. And Wetteny, I heard your comments regarding how you view the consumer and your comments regarding how strong the retail channel's been for you all.

Glen Santangelo: I may want to touch on some of the topics that we just talked about, but you know, we get a lot of questions from investors talking about these sluggish sort of pet ownership and that visit trends and taking all that into the context of a weakening consumer here. And when I heard your comments regarding, you know, how you view the consumer and your comments regarding how strong the retail channel has been for you all. But, you know, could you maybe help us reconcile some of those trends and data points as you think about, you know, taking the steps of raise guidance in the back half of the year.

Kristin Peck: But, you know, could you maybe help us reconcile some of those trends and data points as you think about, you know, taking the steps to raise guidance in the back half of the year? I mean, you know, how conservative, you know, are you with respect to the consumer and how you think about those trends in general? Thanks. Thanks.

Kristin Peck: I mean, you know, how conservative it, you know, are you with respect to the consumer and how you think about those trends in general.

Kristin Peck: Thanks. I'll start. Let's see if what you want to build anything here. I think what you're seeing is the, you know, you might see an impact in lower spending and pet discretionary. But, you know, we're continuing to see consumerity, pet, and medical care as very essential, and they are willing to spend. So if you look in the quarter, we saw about a 4% growth of revenue in the clinics, about 6.2 revenue per visit growth. I mean, obviously you're referencing the decline in overall clinic visits. But if you look at our, you know, US pet care numbers, we outpaced significantly, you know, overall, you know, in the US with 13% growth in our companion animal business.

Kristin Peck: So we're seeing very strong demand for our products. These pet owners are young; they're affluent. They see, you know, the pets as a central member of their family, and they are continuing to spend to keep their pets healthy and happy. So, you know, we are very optimistic as we look to the rest of this year and confident in the guidance that, that what we provided and confident, honestly, as we look into 2025, that the consumer, when it comes to essential veterinary care, you know, still is willing to spend. We've done multiple studies, as we referenced before. You know, 86% of pet owners would spend, quote, "whatever it takes" to take care of their pets.

Kristin Peck: And even when faced with a 20% reduction in their income, they would not change what they spend to take care of their pets.

Christopher Schott: Thank you.

Operator: Thank you. We'll take our next question from Chris Schott with J.P. Morgan. Please go ahead.

Christopher Schott: We'll take our next question from Chris Schott with JP Morgan. Please go ahead. Great. Thanks so much. Just two questions from me.

Christopher Schott: On Derm, is there an updated view on growth for that business in 2024 relative to the comments you made in one queue, just in light of the very strong first half results you've had? And maybe just a second part to the Derm question with your competitor announcing that their products may have a black box warning. Does that change your approach in terms of thinking about how you think you might either grow or defend the Derm franchise, promotions, marketing, etc., as you go through? Not just the second half of this year, about to 2025, or the plans largely unchanged in light of that update.

Wetteny Joseph: Thank you. Sure, Chris. Thanks for the question. Look, if we look at the growth, I mentioned earlier on the call given their competitive dynamics and, quite frankly, just the strength of our growth as we continue to expand the market: 18% growth in the second quarter. We are raising our expectations for Keep Derm franchise. We said last quarter would be high single digits.

Wetteny Joseph: We're not saying double-digit growth for 2025. Look, on your question, I'll start on the black box warning and turn over to Kristen to add any additional points. Clearly, a black box warning is the most serious warning that the FDA will have on a product, and when faced against a product that does not have one. Also has been in the market for 11 years. Over 23 million dollars have been treated with our apical product. The satisfaction levels being above 90% or around 90% both on safety and efficacy. That becomes a total order. So clearly, we talked about our excitement, quite frankly, around still unmet need out there in terms of under treated and untreated that we are targeting.

Speaker Change: Becomes a tall order so clearly we've talked about our excitement quite frankly around.

Speaker Change: We'll unmet need out there in terms of under treated and untreated that we are targeting regardless of competition because we believe an office here in terms of growing expanding use of our products is the best move regardless of the competition, but clearly will position us well versus a product that has a black box label.

Wetteny Joseph: We got us a competition because we believe an offense here in terms of growing. Expanding use of our products is the best move regardless of the competition, but clearly will position as well versus a product that has a black box level. And the only thing I add there is I think what's really exciting about Apical is that you don't have to trade off safety and efficacy there. It can be used across all durations of therapy, both, you know, acute seasonal and chronic. You know, I think the chewable really provides differentiation, especially at the consumer level.

Speaker Change: The only thing I'd add there is I think what's really exciting about <unk> is that you don't have to trade off safety and efficacy there. It can be used across all durations of therapy, both acute seasonal and <unk>.

Speaker Change: Chronic I think the chewable really provides differentiation, especially at the consumer level, you don't have to worry about vaccine status and it works very very quickly. So I think that's what also gives us optimism and our potential to continue to grow this franchise.

Wetteny Joseph: You don't have to worry about vaccine status, and it works very, very quickly. So I think that's what also gives us optimism and our potential to continue to grow this franchise. Thank you.

Operator: Thank you. We'll take our next question from Navann Thai with BNP Paratus. Please go ahead.

Van Ty: We'll take our next question from the Van Ty. Would be in people ravaged. Please go ahead. Hi, good morning. Thanks for taking my question. Just had one on Library.

Speaker Change: Thank you we'll take our next question from Nevada tie with BNP Paribas. Please go ahead.

Nevada tie: Hi, good morning, Thanks for taking my question.

Nevada tie: I had one on Libra, if you had any updated thoughts on the transition to the moderate population as well.

Wetteny Joseph: If you had any updated stock on the transition to the moderate population as well as the antitrust investigation in Europe.

Speaker Change: Trust investigation in Europe, and then second on the bad business and I know that you are not as sensitive as other players. If you have any outlook for that business for the full year next year. Thank you.

Wetteny Joseph: And then second on that visit, and I know that you are not sensitive as other players, but if you have any outlook for that visit for the four year next year. Thank you. Sure. First on your question on the EU Commission investigation. It actually has to do with an experimental compound that was part of the next bed acquisition, which was about seven years ago. We continue to believe our decision to stop the experimental compound with sound, rigorous, and baffle. And we're confident the concerns will be found will be unfounded when they finish their investigation with regards to that.

Kristin Peck: Sure. First, on your question about the EU Commission investigation, it actually has to do with an experimental compound that was part of the NECFET acquisition, which was about seven years ago. We continue to believe our decision to stop the experimental compound was sound, rigorous, and lawful, and we're confident the concerns will be unfounded when they finish their investigation with regard to that. You were asking me how we're doing internationally with regard to Labrella.

Wetteny Joseph: You know, you were asking me how we're doing in international with regards to Lebrella. Right now, about 65% of the cases are now mild to moderate, which we think is significant progress. This has been a big focus of ours, as we've mentioned on a previous call.

Kristin Peck: Right now, about 65% of the cases are now mild to moderate, which we think is significant progress. This has been a big focus of ours, as we've mentioned on previous calls. And with regards to your last point, I think on vet visits, we don't really have really good detailed information internationally on vet visits, so there's not great information. It ranges by market to market, and there's not great sources, so I don't have any specifics I can share.

Wetteny Joseph: And with regards to your last point, I think on vet visits, we don't really have really good detailed information internationally on vet visits. So there's not been no great information. It ranges by market to market. There's not great sources. So I don't have any specifics. I can share this. Thank you.

Wetteny Joseph: We'll take our next question from Thomas of Ortee with Netfront Research. Please go ahead. Hello, thanks for taking the question. Just I guess live stock, I know maybe not a top against a lot, but even excluding fish, your cattle poultry swide growth was pretty strong in the quarter. And it was just wondering, you know, the last couple of years have been difficult for livestock market with inflation and other pressures. Just, you know, whether you see maybe a more sustainable would be bid or high school digit growth in that market. I don't kind of think there's MFA is going to get it out there, but, but just otherwise whether the market may be improving.

Wetteny Joseph: Yes, I look great. We saw 9% growth in our livestock portfolio. As you said, continuously livestock tends to grow the market somewhere between 2% and 4%. Typically, this year we are seeing increased price, particularly in those hyperinflationary markets like Argentina, for example. And so we would expect livestock as a market to grow towards the higher end of that range. And we believe we will follow that range as well. If you look at what we would expect in our results. I think when you see high single digit growth rates like that, sometimes it's a comp, for example, in the US, septifier at an easier conferences prior year.

Wetteny Joseph: So you'll see an uptick in that, but overall we expect livestock to be in that 2 to 4 range. Perhaps a touch above that in this current environment, given the pricing environment on those hyperinflationary markets.

Operator: And there are no further questions at this time.

Kristin Peck: I'll turn the call back to the speakers for any closing remarks. Thank you. Thank everybody for joining the call today and for your questions.

Kristin Peck: Thank you. Thanks, everybody, for joining the call today and for your questions. Our ability to seamlessly integrate innovation and execution resulted in what I believe is an outstanding second quarter and first half of 2024. This led us to raise our guidance, and we are very excited about the continued momentum for the rest of the year. I think what we've clearly demonstrated is our ability to generate groundbreaking ideas and translate those into tangible results.

Kristin Peck: Our ability to seamlessly integrate innovation and execution resulted in what I believe is an outstanding second quarter and first half of 2024. It led us to raise our guidance. And we are very excited about the continued momentum for the rest of the year. I think what we've clearly demonstrated is our ability to generate groundbreaking ideas and translate those into tangible results. We are laser focused on our strategy to ensure remain at the forefront of the industry. I believe our diverse and durable portfolio of trusted and best in class products positions us well to capitalize on the emerging opportunities and to really redefine how animals are cared for for the long term.

Kristin Peck: We are laser-focused on our strategy to ensure we remain at the forefront of the industry. I believe our diverse and durable portfolio of trusted and best-in-class products positions us well to capitalize on emerging opportunities and to really redefine how animals are cared for for the long term. And finally, I want to express my heartfelt gratitude to all of our dedicated colleagues across the globe. We recently celebrated Purpose Month across our teams and geographies, highlighting how we bring our purpose to life every day with our customers, our communities, and each other. Their passion for nurturing the world and humankind by advancing care for animals is truly inspiring.

Kristin Peck: And finally, I want to express my heartfelt gratitude to all of our dedicated colleagues across the globe. We recently celebrated Purpose Months across our teams and geographies, highlighting how we bring our purpose to life every day with our customers, our communities, and each other. And their passion for nurturing the world in human time by advancing care for animals is truly inspiring. Your hard work and commitment are the driving force behind our success. And I want to thank you for everything that you do.

Kristin Peck: Your hard work and commitment are the driving force behind our success, and I want to thank you for everything that you do. And I want to thank all of you for joining us today. Have a great day!

Operator: I want to thank all of you for joining us today. Have a great day. Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time. David Westenberg, David Westenberg, David Westenberg,

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