Elanco Animal Health Reports Second Quarter 2024 Results
Elanco Animal Health (NYSE: ELAN) reported Q2 2024 results with revenue of $1,184 million, a 12% increase. The company saw a net loss of $50 million and adjusted net income of $147 million. Adjusted EBITDA stood at $275 million, 23.2% of revenue, while adjusted EPS was $0.30.
Elanco raised its full-year revenue guidance to $4,410-$4,460 million, reflecting 3-4% organic constant currency growth. The net income forecast is $314-$352 million, with adjusted EPS at $0.88-$0.96. The company completed the sale of its aqua business, reducing debt by $1.3 billion.
Key products like Experior, Adtab, and Credelio Plus contributed to growth. FDA approvals for Bovaer and the pending approval for Zenrelia are expected to boost future revenues. Pet Health revenue rose 12% to $579 million, while Farm Animal revenue increased 13% to $594 million. Gross profit was $689 million, 58.2% of revenue. Elanco projects $1.02-$1.05 billion in Q3 2024 revenue and $0.09-$0.14 in adjusted EPS.
Elanco Animal Health (NYSE: ELAN) ha riportato i risultati del secondo trimestre 2024, con un fatturato di $1.184 milioni, registrando un aumento del 12%. L'azienda ha riportato una perdita netta di $50 milioni e un utile netto rettificato di $147 milioni. L'EBITDA rettificato si è attestato a $275 milioni, pari al 23,2% del fatturato, mentre l'utile per azione rettificato era di $0,30.
Elanco ha alzato la sua previsione di fatturato per l'intero anno a $4.410-$4.460 milioni, riflettendo una crescita organica in valuta costante del 3-4%. La previsione di utile netto è compresa tra $314-$352 milioni, con un utile per azione rettificato compreso tra $0,88-$0,96. L'azienda ha completato la vendita della sua attività acquatica, riducendo il debito di $1,3 miliardi.
I prodotti chiave come Experior, Adtab e Credelio Plus hanno contribuito alla crescita. Le approvazioni della FDA per Bovaer e l'approvazione in sospeso per Zenrelia sono attese per aumentare i ricavi futuri. Il fatturato nella salute degli animali domestici è aumentato del 12% raggiungendo $579 milioni, mentre il fatturato degli animali da allevamento è aumentato del 13% raggiungendo $594 milioni. L'utile lordo è stato di $689 milioni, pari al 58,2% del fatturato. Elanco prevede un fatturato di $1,02-$1,05 miliardi nel terzo trimestre del 2024 e un utile per azione rettificato di $0,09-$0,14.
Elanco Animal Health (NYSE: ELAN) informó los resultados del segundo trimestre de 2024, con unos ingresos de $1,184 millones, un aumento del 12%. La compañía tuvo una Pérdida neta de $50 millones y un ingreso neto ajustado de $147 millones. El EBITDA ajustado se situó en $275 millones, el 23.2% de los ingresos, mientras que el BPA ajustado fue de $0.30.
Elanco elevó su guía de ingresos para todo el año a $4,410-$4,460 millones, lo que refleja un crecimiento orgánico en moneda constante del 3-4%. La previsión de ingresos netos es de $314-$352 millones, con BPA ajustado de $0.88-$0.96. La compañía completó la venta de su negocio acuático, reduciendo la deuda en $1.3 mil millones.
Productos clave como Experior, Adtab y Credelio Plus contribuyeron al crecimiento. Las aprobaciones de la FDA para Bovaer y la aprobación pendiente para Zenrelia se espera que impulsen los ingresos futuros. Los ingresos de Salud Animal de Compañía aumentaron un 12% a $579 millones, mientras que los ingresos de Animales de Granja crecieron un 13% a $594 millones. La ganancia bruta fue de $689 millones, el 58.2% de los ingresos. Elanco proyecta ingresos de $1.02-$1.05 mil millones en el tercer trimestre de 2024 y un BPA ajustado de $0.09-$0.14.
엘란코 애니멀 헬스(NYSE: ELAN)는 2024년 2분기 실적을 발표하였으며, 매출은 11억 8,400만 달러로 12% 증가했습니다. 회사는 순손실 5천만 달러와 조정된 순이익 1억 4,700만 달러를 기록했습니다. 조정된 EBITDA는 2억 7,500만 달러로 매출의 23.2%를 차지하며, 조정된 EPS는 0.30달러였습니다.
엘란코는 연간 매출 전망을 44억 1,000만~44억 6,000만 달러로 상향 조정했으며, 이는 3-4%의 유기적 상수 통화 성장률을 반영합니다. 순이익 전망은 3억 1,400만~3억 5,200만 달러이며 조정된 EPS는 0.88~0.96달러입니다. 회사는 수산 사업 매각을 완료하여 부채를 13억 달러 줄였습니다.
Experior, Adtab 및 Credelio Plus와 같은 주요 제품들이 성장에 기여했습니다. Bovaer에 대한 FDA 승인과 Zenrelia의 대기 중인 승인은 향후 매출 증대를 기대하게 만듭니다. 반려동물 건강 매출은 12% 증가하여 5억 7,900만 달러에 이르렀으며, 농장 동물 매출은 13% 증가하여 5억 9,400만 달러에 달했습니다. 총 이익은 6억 8,900만 달러로 매출의 58.2%를 차지했습니다. 엘란코는 2024년 3분기 매출을 10억 2,000만~10억 5,000만 달러로 예상하며, 조정된 EPS는 0.09~0.14달러를 예상합니다.
Elanco Animal Health (NYSE: ELAN) a annoncé les résultats du deuxième trimestre 2024, avec un chiffre d'affaires de 1,184 million de dollars, soit une augmentation de 12 %. L'entreprise a enregistré une perte nette de 50 millions de dollars et un résultat net ajusté de 147 millions de dollars. L'EBITDA ajusté s'est élevé à 275 millions de dollars, soit 23,2 % du chiffre d'affaires, tandis que le BPA ajusté était de 0,30 $.
Elanco a relevé ses prévisions de chiffre d'affaires pour l'année complète à 4,410-4,460 millions de dollars, reflétant une croissance organique à taux de change constant de 3 à 4 %. La prévision de résultat net se situe entre 314 et 352 millions de dollars, avec un BPA ajusté entre 0,88 et 0,96 $. L'entreprise a finalisé la vente de son activité aquatique, réduisant sa dette de 1,3 milliard de dollars.
Des produits clés comme Experior, Adtab et Credelio Plus ont contribué à la croissance. Les approbations de la FDA pour Bovaer et l'approbation en attente pour Zenrelia devraient stimuler les revenus futurs. Les revenus de la santé animale de compagnie ont augmenté de 12 % pour atteindre 579 millions de dollars, tandis que les revenus des animaux d'élevage ont augmenté de 13 % pour atteindre 594 millions de dollars. Le bénéfice brut s'élevait à 689 millions de dollars, soit 58,2 % du chiffre d'affaires. Elanco prévoit un chiffre d'affaires de 1,02 à 1,05 milliard de dollars pour le troisième trimestre 2024 et un BPA ajusté de 0,09 à 0,14 $.
Elanco Animal Health (NYSE: ELAN) hat die Ergebnisse des 2. Quartals 2024 bekannt gegeben, mit einem Umsatz von 1.184 Millionen US-Dollar, was einem Anstieg von 12% entspricht. Das Unternehmen verzeichnete einen Nettoverlust von 50 Millionen US-Dollar und einen bereinigten Nettogewinn von 147 Millionen US-Dollar. Der bereinigte EBITDA betrug 275 Millionen US-Dollar, was 23,2% des Umsatzes ausmacht, während der bereinigte Gewinn pro Aktie 0,30 US-Dollar betrug.
Elanco hat die Umsatzprognose für das Gesamtjahr auf 4.410–4.460 Millionen US-Dollar angehoben, was ein organisches Wachstum in konstantem Währung von 3-4% widerspiegelt. Die Nettoertragsprognose liegt bei 314–352 Millionen US-Dollar, mit einem bereinigten Gewinn pro Aktie von 0,88–0,96 US-Dollar. Das Unternehmen hat den Verkauf seines Aquageschäfts abgeschlossen und dadurch die Verschuldung um 1,3 Milliarden US-Dollar reduziert.
Schlüsselprodukte wie Experior, Adtab und Credelio Plus haben zum Wachstum beigetragen. Die FDA-Zulassungen für Bovaer und die ausstehende Zulassung für Zenrelia sollen zukünftige Umsätze steigern. Der Umsatz im Bereich Haustiergesundheit stieg um 12% auf 579 Millionen US-Dollar, während der Umsatz im Landwirtschaftssektor um 13% auf 594 Millionen US-Dollar anstieg. Der Bruttogewinn betrug 689 Millionen US-Dollar, was 58,2% des Umsatzes darstellt. Elanco prognostiziert einen Umsatz von 1,02–1,05 Milliarden US-Dollar im 3. Quartal 2024 und einen bereinigten Gewinn pro Aktie von 0,09–0,14 US-Dollar.
- Revenue increased by 12% to $1,184 million.
- Adjusted net income reached $147 million.
- Adjusted EBITDA was $275 million, 23.2% of revenue.
- Full-year revenue guidance raised to $4,410-$4,460 million.
- Debt reduced by $1.3 billion following the sale of the aqua business.
- Pet Health revenue increased by 12% to $579 million.
- Farm Animal revenue grew by 13% to $594 million.
- Reported net loss of $50 million.
- Gross profit margin declined by 70 basis points due to inflation and sales mix.
Insights
Elanco's Q2 2024 results show positive momentum, with revenue up
- Organic constant currency revenue growth raised to
3-4% for full year 2024 - Completed
$1.2 billion debt paydown from aqua business sale - Pipeline progress with Bovaer and Zenrelia nearing approval
However, challenges remain with a reported net loss of
Elanco's product portfolio shows encouraging signs, particularly in Farm Animal and new innovations:
- Farm Animal revenue up
14% CC, driven by U.S. cattle and global poultry - Experior (cattle feed efficiency) performing well
- Bovaer (methane reduction) and Zenrelia (canine dermatitis) nearing commercialization
- Innovation revenue of
$209 million in H1, with$400-450 million expected for full year
Pet Health faces some headwinds from U.S. competition, but international markets show strength. The pipeline, especially Bovaer, Zenrelia and Credelio Quattro, could be transformative if successfully launched and adopted.
Elanco's market positioning appears mixed:
- Strong in Farm Animal, especially U.S. cattle and global poultry
- Challenges in U.S. Pet Health, but growth in European markets
- Advantage family and Seresto showing resilience, especially internationally
The company's focus on innovation and sustainability (e.g., Bovaer for methane reduction) aligns with market trends. However, competitive pressures in U.S. veterinary channels need addressing. The aqua business divestiture allows greater focus on core areas but removes a potential growth driver. Overall, Elanco's diverse portfolio and pipeline provide opportunities, but execution in key markets will be critical for sustained growth.
Raises Full Year Revenue and Maintains Adjusted EBITDA Guidance Excluding Aqua Divestiture
- Second Quarter 2024 Financial Results
- Revenue of
$1,184 million - Reported Net Loss of
$50 million $147 million - Adjusted EBITDA of
$275 million 23.2% of Revenue - Reported EPS of
$(0.10) $0.30 - Net leverage ratio of 5.6x Adjusted EBITDA
- Year over year growth rates are meaningfully impacted by a shift in customer purchasing related to the ERP Blackout in 2023, with an estimated
$90 $110 million
- Revenue of
- Updating full year 2024 financial guidance to reflect aqua divestiture and expected contribution from Bovaer and Zenrelia:
- Revenue of
$4,410 $4,460 million 3% to4% - Reported Net Income of
$314 $352 million $0.63 $0.71 - Adjusted EBITDA of
$900 $940 million $0.88 $0.96
- Revenue of
- Completed sale of aqua business in July, resulting in
$1.2 billion - Zenrelia, a JAK inhibitor targeting control of pruritus and atopic dermatitis in dogs, has been submitted to the FDA, initiating the final 60-day administrative review period with approval expected in late September
"Elanco made significant progress on the three strategic outcomes of our IPP strategy in the second quarter – grow revenue, deliver innovation and improve cash. The second quarter represents our fourth consecutive quarter of underlying constant currency revenue growth, with
Select Business Highlights Since the Last Earnings Call
- Innovation revenue was
$209 million $400 $450 million - For Bovaer, a first-in-class methane reducing feed ingredient for dairy cattle, the
U.S. Food and Drug Administration (FDA) completed its comprehensive, multi-year review in May 2024. Commercial activities are underway, and we expect producers to begin feeding the product in the third quarter. - For Zenrelia, a JAK inhibitor targeting control of pruritus and atopic dermatitis in dogs, the company confirmed in its late June update that it received confirmation from the FDA that all major technical sections (Effectiveness, Safety and Chemistry, Manufacturing, and Controls (CMC)) were complete and shared expectations of a box warning in the label. As of late July, all minor sections including Labeling, are complete with the FDA and the final 60-day administrative window is underway. The company expects to receive final FDA approval late in September, with launch in early October. Additionally, the company received approval in
Brazil in the second quarter, with expected launch in the fourth quarter of 2024. - For Credelio Quattro, a broad spectrum oral parasiticide targeting control of fleas, ticks and internal parasites, the company confirmed in its late June update that two of the three major technical sections, Effectiveness and Safety, were complete. Final FDA approval is expected in the fourth quarter of 2024, with product launch in the first quarter of 2025.
- The company completed the sale of its aqua business on July 9, 2024. Proceeds from the sale and year to date operating cash flow have allowed the company to pay down approximately
$1.3B - The company released its 2023 Environmental, Social and Governance Report, demonstrating progress in the sustainability of its internal operations and customer collaborations.
Financial Results
In April 2023, the company completed the successful integration of the legacy Bayer Animal Health business into Elanco's ERP system and shared service center network. As a result of the integration, the company communicated commercial shipping blackout periods impacting April 2023 (the "ERP Blackout"). As reported last year, the company believes the first quarter of 2023 benefited from approximately
Second Quarter Results (dollars in millions, except per share amounts) | 2024 | 2023 | Change (%) | CC Change1 (%) |
Pet Health | 12 % | 13 % | ||
Farm Animal | 13 % | 14 % | ||
Cattle | 22 % | 22 % | ||
Poultry | 11 % | 14 % | ||
Swine | 1 % | 2 % | ||
Aqua | (2) % | 0 % | ||
Contract Manufacturing | (8) % | (8) % | ||
Total Revenue | 12 % | 13 % | ||
Reported Net Loss | (48) % | |||
Adjusted EBITDA | 24 % | |||
Reported EPS | (50) % | |||
Adjusted EPS | 67 % |
1 CC = Constant Currency, representing the growth rate excluding the impact of foreign exchange rates. |
Numbers may not add due to rounding. |
The following table summarizes the estimated impact on year over year growth rates from the ERP Blackout on revenue:
Second Quarter Results (dollars in millions) | 2024 | CC Change1 (%) | Estimated ERP | Estimated ERP |
Pet Health | 13 % | |||
Farm Animal | 14 % | Approx. | ||
Contract Manufacturing | (8) % | |||
Total Revenue | 13 % |
1 CC = Constant Currency, representing the growth rate excluding the impact of foreign exchange rates. |
Numbers may not add due to rounding. |
In the second quarter of 2024, revenue was
Pet Health revenue was
The Advantage® Family of products, inclusive of AdTab, contributed
Farm Animal revenue was
Gross profit was
Total operating expenses were
Asset impairment, restructuring and other special charges were
Net interest expense was
The reported effective tax rate was (61.3)% in the second quarter of 2024, compared to (23.0)% in the second quarter of 2023. The adjusted effective tax rate decreased to
The following table summarizes the estimated impact on year over year growth rates from the ERP Blackout on adjusted EBITDA and adjusted EPS:
Second Quarter Results (dollars in millions, except per share amounts) | 2024 | Change (%) | Estimated ERP | Estimated ERP |
Adjusted EBITDA | 24 % | |||
Adjusted EPS | 67 % |
Net loss for the second quarter of 2024 was
Working Capital and Balance Sheet
Cash provided by operations was
As of June 30, 2024, Elanco's net leverage ratio was 5.6x adjusted EBITDA, flat compared to December 31, 2023. The company expects to end the year with a net leverage ratio in the mid-4x range.
First Half Results (dollars in millions, except per share amounts) | 2024 | 2023 | Change (%) | CC Change1 (%) |
Pet Health | 2 % | 2 % | ||
Farm Animal | 5 % | 5 % | ||
Cattle | 9 % | 9 % | ||
Poultry | 9 % | 11 % | ||
Swine | (9) % | (8) % | ||
Aqua | (11) % | (9) % | ||
Contract Manufacturing | 0 % | 1 % | ||
Total Revenue | 3 % | 4 % | ||
Reported Net (Loss) Income | (400) % | |||
Adjusted EBITDA | (5) % | |||
Reported EPS | (500) % | |||
Adjusted EPS | 0 % |
1 CC = Constant Currency, representing the growth rate excluding the impact of foreign exchange rates. |
Numbers may not add due to rounding |
In the first half of 2024, revenue was
Pet Health revenue was
The Advantage® Family of products contributed
Farm Animal revenue was
Financial Guidance
Elanco is updating financial guidance for the full year 2024, summarized in the following table.
2024 Full Year (dollars in millions, except per share amounts) | May Guidance | August Guidance | ||||||
Revenue | to | to | ||||||
Reported Net (Loss) Income | to | to | ||||||
Adjusted EBITDA | to | to | ||||||
Reported (Loss) Earnings per Share | to | to | ||||||
Adjusted Earnings per Share | to | to | ||||||
The company is updating 2024 financial guidance to reflect the second quarter overperformance and updated expectations for the second half of the year, including the expected contribution from Bovaer and Zenrelia and the removal of the aqua business. Removing the expectations for the aqua business drove a guidance reduction of
The company now anticipates revenue between
The company now anticipates adjusted EBITDA of
The company now anticipates adjusted EPS of
"Our efforts to improve operating cash flow and focus on deleveraging are being realized. In early July, we successfully closed the sale of our aqua business as expected. With cash flow from operations and transaction proceeds subsequent to the end of the second quarter we have paid down approximately
The company is providing guidance for the third quarter of 2024, as summarized in the following table:
2024 Third Quarter (dollars in millions, except per share amounts) | Guidance | |||
Revenue | to | |||
Reported Net Income | to | |||
Adjusted EBITDA | to | |||
Reported Earnings per Share | to | |||
Adjusted Earnings per Share | to | |||
For the third quarter of 2024, the company anticipates revenue between
The financial guidance reflects foreign currency exchange rates as of the beginning of August. Further details on guidance, including GAAP reported to non-GAAP adjusted reconciliations, are included in the financial tables of this press release and will be discussed on the company's conference call this morning.
WEBCAST & CONFERENCE CALL DETAILS
Elanco will host a webcast and conference call at 8:00 a.m. Eastern time today, during which company executives will review second quarter financial and operational results, discuss third quarter and full year 2024 financial guidance, and respond to questions from analysts. Investors, analysts, members of the media and the public may access the live webcast and accompanying slides by visiting the Elanco website at https://investor.elanco.com and selecting Events and Presentations. A replay of the webcast will be archived and made available a few hours after the event on the company's website, at https://investor.elanco.com/events-and-presentations/default.aspx#module-event-upcoming.
ABOUT ELANCO
Elanco Animal Health Incorporated (NYSE: ELAN) is a global leader in animal health dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets, creating value for farmers, pet owners, veterinarians, stakeholders and society as a whole. With nearly 70 years of animal health heritage, we are committed to helping our customers improve the health of animals in their care, while also making a meaningful impact on our local and global communities. At Elanco, we are driven by our vision of Food and Companionship Enriching Life and our Elanco Healthy Purpose™ – all to advance the health of animals, people, the planet and our enterprise. Learn more at www.elanco.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements concerning product launches and revenue from such products, our 2024 full year and third quarter guidance and long-term expectations, our expectations regarding debt levels, and expectations regarding our industry and our operations, performance and financial condition, and including, in particular, statements relating to our business, growth strategies, distribution strategies, product development efforts and future expenses.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important risk factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions, including but not limited to the following:
- operating in a highly competitive industry;
- the success of our research and development (R&D) and licensing efforts;
- the impact of disruptive innovations and advances in veterinary medical practices, animal health technologies and alternatives to animal-derived protein;
- competition from generic products that may be viewed as more cost-effective;
- changes in regulatory restrictions on the use of antibiotics in farm animals;
- an outbreak of infectious disease carried by farm animals;
- risks related to the evaluation of animals;
- consolidation of our customers and distributors;
- the impact of increased or decreased sales into our distribution channels resulting in fluctuations in our revenues;
- our dependence on the success of our top products;
- our ability to complete acquisitions and divestitures and to successfully integrate the businesses we acquire;
- our ability to implement our business strategies or achieve targeted cost efficiencies and gross margin improvements;
- manufacturing problems and capacity imbalances;
- fluctuations in inventory levels in our distribution channels;
- risks related to the use of artificial intelligence (AI) in our business;
- our dependence on sophisticated information technology systems and infrastructure, including the use of third-party, cloud-based technologies, and the impact of outages or breaches of the information technology systems and infrastructure we rely on;
- the impact of weather conditions, including those related to climate change, and the availability of natural resources;
- demand, supply and operational challenges associated with the effects of a human disease outbreak, epidemic, pandemic or other widespread public health concern;
- the loss of key personnel or highly skilled employees;
- adverse effects of labor disputes, strikes and/or work stoppages;
- the effect of our substantial indebtedness on our business, including restrictions in our debt agreements that limit our operating flexibility, changes in our credit ratings that lead to higher borrowing expenses and may restrict access to credit and changes in interest rates that may adversely affect our earnings and cash flows;
- changes in interest rates;
- risks related to the write-down of goodwill or identifiable intangible assets;
- the lack of availability or significant increases in the cost of raw materials;
- risks related to our presence in foreign markets;
- risks related to currency rate fluctuations;
- risks related to underfunded pension plan liabilities;
- our current plans not to pay dividends and restrictions on our ability to pay dividends;
- the potential impact that actions by activist shareholders could have on the pursuit of our business strategies;
- risks related to tax expense or exposure;
- actions by regulatory bodies, including as a result of their interpretation of studies on product safety;
- the possible slowing or cessation of acceptance and/or adoption of our farm animal sustainability initiatives;
- the impact of increased regulation or decreased governmental financial support related to the raising, processing or consumption of farm animals;
- risks related to the modification of foreign trade policy;
- the impact of litigation, regulatory investigations, and other legal matters, including the risk to our reputation and the risk that our insurance policies may be insufficient to protect us from the impact of such matters;
- challenges to our intellectual property rights or our alleged violation of rights of others;
- misuse, off-label or counterfeiting use of our products;
- unanticipated safety, quality or efficacy concerns and the impact of identified concerns associated with our products;
- insufficient insurance coverage against hazards and claims;
- compliance with privacy laws and security of information; and
- risks related to environmental, health and safety laws and regulations.
For additional information about the factors that could cause actual results to differ materially from forward-looking statements, please see the company's latest Form 10-K and Form 10-Qs filed with the Securities and Exchange Commission. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this press release. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this press release. We caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this press release. Any forward-looking statement made by us in this press release speaks only as of the date thereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should be viewed as historical data.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as revenue excluding the impact of foreign exchange rate effects, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted EPS, adjusted gross profit, adjusted gross margin, net debt and net debt leverage to assess and analyze our operational results and trends as explained in more detail in the reconciliation tables later in this release.
We believe these non-GAAP financial measures are useful to investors because they provide greater transparency regarding our operating performance. Reconciliation of non-GAAP financial measures and reported
Availability of Certain Information
We use our website to disclose important company information to investors, customers, employees and others interested in Elanco. We encourage investors to consult our website regularly for important information about Elanco, including an Investor Overview presentation containing a general overview of the business, which can be found in the Events and Presentations page of our website.
Additional Information
We define innovation revenue as revenue from new products, lifecycle management and certain geographic expansions and business development transactions that is incremental in reference to product revenue in 2020 and does not include the expected impact of cannibalization on the base portfolio.
We define organic revenue growth as revenue growth excluding prior year revenue from the aqua business, which we divested July 9, 2024.
We define project spend as cash costs associated with the independent company stand-up, Bayer business integration and Bayer ERP system integration.
Elanco Animal Health Incorporated | |||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||
(Dollars and shares in millions, except per share data) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 1,184 | $ 1,057 | $ 2,389 | $ 2,314 | |||
Costs, expenses and other: | |||||||
Cost of sales | 495 | 434 | 1,010 | 928 | |||
Research and development | 89 | 81 | 176 | 162 | |||
Marketing, selling and administrative | 354 | 353 | 691 | 680 | |||
Amortization of intangible assets | 131 | 136 | 264 | 270 | |||
Asset impairment, restructuring and other special | 80 | 35 | 126 | 75 | |||
Interest expense, net of capitalized interest | 65 | 74 | 131 | 138 | |||
Other expense, net | 2 | 23 | 11 | 32 | |||
(Loss) income before income taxes | $ (32) | $ (79) | $ (20) | $ 29 | |||
Income tax expense (benefit) | 18 | 18 | (2) | 23 | |||
Net (loss) income | $ (50) | $ (97) | $ (18) | $ 6 | |||
(Loss) earnings per share: | |||||||
Basic | $ (0.10) | $ (0.20) | $ (0.04) | $ 0.01 | |||
Diluted | $ (0.10) | $ (0.20) | $ (0.04) | $ 0.01 | |||
Weighted-average shares outstanding: | |||||||
Basic | 494.2 | 492.6 | 493.7 | 491.8 | |||
Diluted | 494.2 | 492.6 | 493.7 | 492.7 | |||
Elanco Animal Health Incorporated
Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information
(Unaudited)
(Dollars and shares in millions, except per share data)
We define adjusted gross profit as total revenue less adjusted cost of sales and adjusted gross margin as adjusted gross profit divided by total revenue.
We define adjusted net income as net income excluding amortization of intangible assets, purchase accounting adjustments to inventory, acquisition and divestiture-related charges, including integration and separation costs, severance, goodwill and other asset impairments, gains on sale of assets and related costs, facility exit costs, tax valuation allowances and other specified significant items, such as unusual or non-recurring items that are unrelated to our long-term operations adjusted for income tax expense associated with the excluded financial items.
We define adjusted EBITDA as net income adjusted for interest expense (income), which includes debt extinguishment losses, income tax expense (benefit) and depreciation and amortization, further adjusted to exclude purchase accounting adjustments to inventory, acquisition and divestiture-related charges, including integration and separation costs, severance, goodwill and other asset impairments, gains on sale of assets and related costs, facility exit costs and other specified significant items, such as unusual or non-recurring items that are unrelated to our long-term operations.
We define adjusted EPS as adjusted net income divided by the number of weighted-average shares outstanding for the periods ended June 30, 2024 and 2023.
We define gross debt as the sum of the current portion of long-term debt and long-term debt excluding unamortized debt issuance costs. We define net debt as gross debt less cash and cash equivalents on the balance sheet. We define the net leverage ratio as net debt divided by trailing twelve month adjusted EBITDA. This calculation does not include Term Loan B covenant-related adjustments that reduce this leverage ratio.
The following is a reconciliation of GAAP Reported for the three months ended June 30, 2024 and 2023, to selected Non-GAAP adjusted information:
Three months ended June 30, 2024 | Three months ended June 30, 2023 | ||||||||||
GAAP | Adjusted | Non- | GAAP | Adjusted | Non- | ||||||
Amortization of intangible assets | 131 | 131 | — | 136 | 136 | — | |||||
Asset impairment, restructuring and | 80 | 80 | — | 35 | 35 | — | |||||
Other expense, net (2) | 2 | (2) | 4 | 23 | 21 | 2 | |||||
(Loss) income before taxes | (32) | 209 | 177 | (79) | 192 | 113 | |||||
Income tax expense (3) | 18 | (12) | 30 | 18 | (5) | 23 | |||||
Net (loss) income | $ (50) | $ 197 | $ 147 | $ (97) | $ 187 | $ 90 | |||||
(Loss) earnings per share: | |||||||||||
basic | $ (0.10) | $ 0.40 | $ 0.30 | $ (0.20) | $ 0.38 | $ 0.18 | |||||
diluted | $ (0.10) | $ 0.40 | $ 0.30 | $ (0.20) | $ 0.38 | $ 0.18 | |||||
Adjusted weighted average shares outstanding: | |||||||||||
basic | 494.2 | 494.2 | 494.2 | 492.6 | 492.6 | 492.6 | |||||
diluted | 494.2 | 497.1 | 497.1 | 492.6 | 492.6 | 492.6 | |||||
Numbers may not add due to rounding. |
The table above reflects only line items with non-GAAP adjustments. |
(a) | The company uses adjusted (i.e., "non-GAAP") financial measures that differ from financial statements reported in conformity with GAAP. The company believes these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the company's ongoing operations. They can also assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. | |
(b) | Adjustments to certain GAAP reported measures for the three months ended June 30, 2024 and 2023, include the following: | |
(1) | Adjustments of | |
(2) | Adjustments of | |
(3) | Adjustments of | |
Three Months Ended June 30, | |||
2024 | 2023 | ||
As reported diluted EPS | $ (0.10) | $ (0.20) | |
Amortization of intangible assets | 0.26 | 0.28 | |
Asset impairment, restructuring and other special charges | 0.16 | 0.07 | |
Other expense, net | 0.00 | 0.04 | |
Subtotal | 0.42 | 0.39 | |
Tax impact of adjustments (1) | (0.02) | (0.01) | |
Total adjustments to diluted EPS | $ 0.40 | $ 0.38 | |
Adjusted diluted EPS (2) | $ 0.30 | $ 0.18 | |
Numbers may not add due to rounding. |
(1) | 2023 includes a favorable adjustment relating to the increase in the valuation allowance recorded against our deferred tax assets (impact of | |
(2) | Adjusted diluted EPS is calculated as the sum of as reported diluted EPS and total adjustments to diluted EPS. |
The following is a reconciliation of GAAP Reported for the six months ended June 30, 2024 and 2023, to Selected Non-GAAP Adjusted information:
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
GAAP | Adjusted | Non- | GAAP | Adjusted | Non- | ||||||
Cost of sales (1) | $ 1,010 | $ — | $ 1,010 | $ 928 | $ 1 | $ 927 | |||||
Amortization of intangible assets | 264 | 264 | — | 270 | 270 | — | |||||
Asset impairment, restructuring | 126 | 126 | — | 75 | 75 | — | |||||
Other expense, net (3) | 11 | 3 | 8 | 32 | 19 | 13 | |||||
(Loss) income before taxes | (20) | 393 | 373 | 29 | 365 | 394 | |||||
Income tax (benefit) expense (4) | (2) | (61) | 59 | 23 | (61) | 84 | |||||
Net (loss) income | $ (18) | $ 332 | $ 314 | $ 6 | $ 304 | $ 310 | |||||
(Loss) earnings per share: | |||||||||||
basic | $ (0.04) | $ 0.68 | $ 0.64 | $ 0.01 | $ 0.62 | $ 0.63 | |||||
diluted | $ (0.04) | $ 0.67 | $ 0.63 | $ 0.01 | $ 0.62 | $ 0.63 | |||||
Adjusted weighted-average shares | |||||||||||
basic | 493.7 | 493.7 | 493.7 | 491.8 | 491.8 | 491.8 | |||||
diluted | 493.7 | 496.5 | 496.5 | 492.7 | 492.7 | 492.7 | |||||
Numbers may not add due to rounding. |
The table above reflects only line items with non-GAAP adjustments. |
(a) | The company uses adjusted (i.e., "non-GAAP") financial measures that differ from financial statements reported in conformity with GAAP. The company believes these non-GAAP measures provide useful information to investors. Among other things, they may help investors evaluate the company's ongoing operations. They can also assist in making meaningful period-over-period comparisons and in identifying operating trends that would otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including to allocate resources. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. | |
(b) | Adjustments to certain GAAP reported measures for the six months ended June 30, 2024 and 2023, include the following: | |
(1) | Adjustments of | |
(2) | Adjustments of | |
(3) | Adjustments of | |
(4) | Adjustments of | |
Six Months Ended June 30, | |||
2024 | 2023 | ||
As reported diluted EPS | $ (0.04) | $ 0.01 | |
Amortization of intangible assets | 0.53 | 0.55 | |
Asset impairment, restructuring and other special charges | 0.25 | 0.15 | |
Other expense, net | 0.01 | 0.04 | |
Subtotal | 0.79 | 0.74 | |
Tax impact of adjustments (1) | (0.12) | (0.12) | |
Total Adjustments to diluted EPS | $ 0.67 | $ 0.62 | |
Adjusted diluted EPS (2) | $ 0.63 | $ 0.63 | |
Numbers may not add due to rounding. |
(1) | 2023 includes a favorable adjustment relating to the increase in the valuation allowance recorded against our deferred tax assets (impact of |
(2) | Adjusted diluted EPS is calculated as the sum of as reported diluted EPS and total adjustments to diluted EPS. |
For the periods presented, we have not made adjustments for all items that may be considered unrelated to our long-term operations. We believe adjusted EBITDA, when used in conjunction with our results presented in accordance with GAAP and its reconciliation to net income (loss), enhances investors' understanding of our performance, valuation and prospects for the future. We also believe adjusted EBITDA is a measure used in the animal health industry by analysts as a valuable performance metric for investors. The following is a reconciliation of GAAP net income (loss) for the three and six months ended June 30, 2024 and 2023, to EBITDA, adjusted EBITDA and adjusted EBITDA Margin, which is adjusted EBITDA divided by total revenue, for the respective periods:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Reported net (loss) income | $ (50) | $ (97) | $ (18) | $ 6 | |||
Net interest expense | 65 | 74 | 131 | 138 | |||
Income tax expense (benefit) | 18 | 18 | (2) | 23 | |||
Depreciation and amortization | 164 | 177 | 329 | 350 | |||
EBITDA | $ 197 | $ 171 | $ 440 | $ 516 | |||
Non-GAAP adjustments: | |||||||
Cost of sales | $ — | $ — | $ — | $ 1 | |||
Asset impairment, restructuring and other special charges | 80 | 35 | 126 | 75 | |||
Other expense, net | (2) | 21 | 3 | 19 | |||
Accelerated depreciation and amortization (1) | — | (5) | — | (10) | |||
Adjusted EBITDA | $ 275 | $ 222 | $ 569 | $ 601 | |||
Adjusted EBITDA margin | 23.2 % | 21.0 % | 23.8 % | 26.0 % | |||
Numbers may not add due to rounding. |
(1) | Represents depreciation and amortization of certain assets that was accelerated during the three and six months ended June 30, 2023. These assets became fully depreciated and amortized during the second quarter of 2023. This amount must be added back to arrive at adjusted EBITDA because it is included in asset impairment, restructuring and other special charges but has already been excluded from EBITDA in the "Depreciation and amortization" row above. |
The following is a reconciliation of gross debt to net debt as of June 30, 2024:
Long-term debt | $ 5,463 | |
Current portion of long-term debt | 213 | |
Less: Unamortized debt issuance costs | (43) | |
Total gross debt | 5,719 | |
Less: Cash and cash equivalents | 416 | |
Net Debt | $ 5,303 |
Elanco Animal Health Incorporated
Guidance
Reconciliation of 2024 full year reported EPS guidance to 2024 adjusted EPS guidance is as follows:
Full Year 2024 Guidance | |||
Reported earnings per share | to | ||
Amortization of intangible assets | Approx. | ||
Asset impairment, restructuring and other special charges(1) | to | ||
Gain on divestiture | Approx. | ||
Other expense, net | Approx. | ||
Subtotal | to | ||
Tax impact of adjustments | to | ||
Total adjustments to EPS | Approx. | ||
Adjusted earnings per share(2) | to | ||
Numbers may not add due to rounding. |
(1) | Asset impairment, restructuring and other special charges adjustments primarily relate to a pet health IPR&D asset (IL-4R) impairment charge recorded during the second quarter of 2024, charges related to the restructuring plan announced in February 2024 and acquisition integration and divestiture-related costs. |
(2) | Adjusted EPS is calculated as the sum of reported EPS and total adjustments to EPS. |
Reconciliation of 2024 full year reported net loss to 2024 adjusted EBITDA guidance is as follows:
$ millions | Full Year 2024 Guidance | ||
Reported net income | to | ||
Net interest expense | Approx. | ||
Income tax benefit | to | ||
Depreciation and amortization | Approx. | ||
EBITDA | to | ||
Non-GAAP adjustments | |||
Asset impairment, restructuring and other special charges | Approx. | ||
Gain on divestiture | Approx. | ||
Other income, net | Approx. | ||
Adjusted EBITDA | to | ||
Adjusted EBITDA margin | 20.4 % | to | 21.1 % |
Reconciliation of 2024 third quarter reported EPS guidance to 2024 third quarter adjusted EPS guidance is as follows:
Third Quarter 2024 Guidance | |||
Reported earnings per share | to | ||
Amortization of intangible assets | Approx. | ||
Asset impairment, restructuring and other special charges (1) | to | ||
Gain on divestiture | Approx. | ||
Other expense, net | Approx. | ||
Subtotal | to | ||
Tax impact of adjustments | to | ||
Total adjustments to EPS | to | ||
Adjusted earnings per share (2) | to | ||
Numbers may not add due to rounding. |
(1) | Asset impairment, restructuring and other special charges adjustments primarily relate to costs associated with the divestiture of our aqua business and charges related to the restructuring plan announced in February 2024. |
(2) | Adjusted EPS is calculated as the sum of reported EPS and total adjustments to EPS. |
Reconciliation of 2024 third quarter reported net loss to Reconciliation of 2024 third quarter adjusted EBITDA guidance is as follows:
$ millions | Third Quarter 2024 Guidance | ||
Reported net income | to | ||
Net interest expense | Approx. | ||
Income tax provision | to | ||
Depreciation and amortization | Approx. | ||
EBITDA | to | ||
Non-GAAP adjustments | |||
Asset impairment, restructuring and other special charges | Approx. | ||
Gain on divestiture | Approx. | ||
Adjusted EBITDA | to | ||
Adjusted EBITDA margin | 13.7 % | to | 16.2 % |
Investor Contact: Kathryn Grissom (317) 273-9284 or kathryn.grissom@elancoah.com
Media Contact: Colleen Parr Dekker (317) 989-7011 or colleen.dekker@elancoah.com
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SOURCE Elanco Animal Health
FAQ
What were Elanco Animal Health's Q2 2024 financial results?
What is Elanco Animal Health's full-year revenue guidance for 2024?
How did Elanco Animal Health perform in the Pet Health and Farm Animal segments in Q2 2024?
What is the expected Q3 2024 revenue for Elanco Animal Health?
How much debt did Elanco reduce with the sale of its aqua business?
