Elanco Animal Health Reports Third Quarter 2024 Results
Elanco Animal Health (NYSE: ELAN) reported Q3 2024 revenue of $1,030 million, with 1% organic constant currency growth. The company posted reported net income of $364 million and adjusted net income of $66 million. Adjusted EBITDA was $163 million (15.8% of revenue), with reported EPS of $0.73 and adjusted EPS of $0.13.
The company recorded a pre-tax gain of $640 million from July 2024 aqua business divestiture and tightened its full-year 2024 guidance to revenue of $4,420-4,450 million. Notable achievements include U.S. FDA approvals for Zenrelia and Credelio Quattro. For 2025, Elanco expects mid-single-digit organic revenue growth, with adjusted EBITDA growth in low single digits.
Elanco Animal Health (NYSE: ELAN) ha riportato un fatturato per il terzo trimestre del 2024 di $1.030 milioni, con una crescita organica a cambi costanti dell'1%. L'azienda ha registrato un reddito netto riportato di $364 milioni e un reddito netto rettificato di $66 milioni. L'EBITDA rettificato è stato di $163 milioni (15,8% del fatturato), con un utile per azione riportato di $0,73 e un utile per azione rettificato di $0,13.
L'azienda ha registrato un guadagno ante imposte di $640 milioni dalla dismissione del business acquatico di luglio 2024 e ha rafforzato le previsioni per l'intero anno 2024, prevedendo un fatturato di $4.420-4.450 milioni. Tra i risultati notevoli ci sono le approvazioni della FDA degli Stati Uniti per Zenrelia e Credelio Quattro. Per il 2025, Elanco prevede una crescita organica del fatturato a cifre singole medie, con una crescita dell'EBITDA rettificato a cifre singole basse.
Elanco Animal Health (NYSE: ELAN) reportó ingresos del tercer trimestre de 2024 por $1,030 millones, con un crecimiento orgánico a tipos de cambio constantes del 1%. La compañía reportó un ingreso neto de $364 millones y un ingreso neto ajustado de $66 millones. El EBITDA ajustado fue de $163 millones (15.8% de los ingresos), con ganancias por acción reportadas de $0.73 y ganancias por acción ajustadas de $0.13.
La empresa registró una ganancia antes de impuestos de $640 millones por la desinversión del negocio acuático de julio de 2024 y ajustó su guía de ingresos para el año completo 2024 a $4,420-4,450 millones. Los logros notables incluyen las aprobaciones de la FDA de EE. UU. para Zenrelia y Credelio Quattro. Para 2025, Elanco espera un crecimiento orgánico de los ingresos de un solo dígito medio, con un crecimiento del EBITDA ajustado en un dígito bajo.
엘란코 동물 건강 (NYSE: ELAN)은 2024년 3분기 수익으로 10억 3천만 달러를 보고하며, 유기적인 고정 환율 성장률은 1%였습니다. 이 회사는 보고된 순이익이 3억 6천 4백만 달러, 조정된 순이익이 6천 6백만 달러를 기록했습니다. 조정된 EBITDA는 1억 6천 3백만 달러(수익의 15.8%)로 보고된 주당 순이익은 0.73달러, 조정된 주당 순이익은 0.13달러였습니다.
이 회사는 2024년 7월 수산 사업 매각으로 인해 세전 이익 6억 4천만 달러를 기록했으며, 2024년 전체 연도 예상 수익을 44억 2천만~44억 5천만 달러로 조정했습니다. 주목할 만한 성과로는 미국 FDA의 Zenrelia 및 Credelio Quattro 승인 등이 있습니다. 2025년에는 엘란코가 중간 단일 성장률의 유기적 수익 성장을 예상하고 있으며, 조정된 EBITDA는 저단일 성장률을 기대하고 있습니다.
Elanco Animal Health (NYSE: ELAN) a rapporté un revenu de 1 030 millions de dollars pour le troisième trimestre 2024, avec une croissance organique à taux de change constant de 1 %. L'entreprise a enregistré un revenu net déclaré de 364 millions de dollars et un revenu net ajusté de 66 millions de dollars. L'EBITDA ajusté s'élevait à 163 millions de dollars (15,8 % du revenu), avec un bénéfice par action déclaré de 0,73 $ et un bénéfice par action ajusté de 0,13 $.
L'entreprise a enregistré un gain avant impôt de 640 millions de dollars suite à la cession de son activité aquatique en juillet 2024 et a resserré ses prévisions pour l'année 2024, anticipant des revenus entre 4 420 et 4 450 millions de dollars. Parmi les réalisations notables, on trouve les approbations de la FDA américaine pour Zenrelia et Credelio Quattro. Pour 2025, Elanco prévoit une croissance organique des revenus à un chiffre moyen, avec une croissance de l'EBITDA ajusté à un chiffre bas.
Elanco Tiergesundheit (NYSE: ELAN) berichtete für das 3. Quartal 2024 einen Umsatz von 1.030 Millionen Dollar, mit einem organischen Wachstum bei konstanten Wechselkursen von 1%. Das Unternehmen meldete einen berichteten Nettogewinn von 364 Millionen Dollar und einen bereinigten Nettogewinn von 66 Millionen Dollar. Das bereinigte EBITDA betrug 163 Millionen Dollar (15,8% des Umsatzes), mit einem berichteten Gewinn pro Aktie von 0,73 Dollar und einem bereinigten Gewinn pro Aktie von 0,13 Dollar.
Das Unternehmen verbuchte einen Vorsteuergewinn von 640 Millionen Dollar aus der Veräußerung des Aquageschäfts im Juli 2024 und straffte seine Umsatzprognose für das Gesamtjahr 2024 auf 4.420-4.450 Millionen Dollar. Zu den bemerkenswerten Erfolgen zählen die FDA-Zulassungen in den USA für Zenrelia und Credelio Quattro. Für 2025 erwartet Elanco ein organisches Umsatzwachstum im mittleren einstelligen Bereich mit einem bereinigten EBITDA-Wachstum im niedrigen einstelligen Bereich.
- Pre-tax gain of $640 million from aqua business divestiture
- Fifth consecutive quarter of organic constant currency revenue growth
- Net leverage ratio improved to 4.3x, down 1.3x from previous quarter
- Seresto revenue increased 22% excluding forex impact
- FDA approvals for new products Zenrelia and Credelio Quattro
- Adjusted EBITDA decreased 24% to $163 million compared to Q3 2023
- Pet Health revenue declined 2% to $486 million
- Gross profit margin declined 220 basis points year-over-year
- Adjusted EPS decreased 28% to $0.13 compared to Q3 2023
- Operating expenses increased with marketing and selling up 3%
Insights
The Q3 2024 results present a mixed picture for Elanco. Revenue declined
Key concerns include declining Pet Health revenue (
The guidance tightening suggests management's increased confidence in near-term execution, though manufacturing challenges and U.K. CMO headwinds could impact 2025 profitability.
The animal health market dynamics are evident in Elanco's performance. The company's innovative products like Experior and Zenrelia are gaining traction, while competitive pressures in U.S. veterinary channels and Australian markets are creating headwinds. The strategic shift toward pet health innovation is timely, targeting the lucrative companion animal segment.
The
- Third Quarter 2024 Financial Results
- Revenue of
, organic constant currency growth of$1,030 million 1% - Reported Net Income of
, Adjusted Net Income of$364 million $66 million - Adjusted EBITDA of
, or$163 million 15.8% of Revenue - Reported EPS of
, Adjusted EPS of$0.73 $0.13 - Net leverage ratio of 4.3x Adjusted EBITDA
- Pre-tax gain of
from July 2024 divestiture of the aqua business$640 million
- Revenue of
- Tightening full year 2024 financial guidance to reflect current assumptions:
- Revenue of
to$4,420 , with organic constant currency growth of$4,450 million 3% - Reported Net Income of
to$286 ; Reported EPS of$317 million to$0.58 $0.64 - Adjusted EBITDA of
to$900 ; Adjusted EPS of$930 million to$0.89 $0.95
- Revenue of
- Received
U.S. FDA approval for Zenrelia™ and Credelio Quattro™, bringing innovation to the largest pet health markets - In 2025, innovation ramp expected to accelerate organic constant currency revenue growth to mid-single digits, with adjusted EBITDA growth, excluding the aqua divestiture, expected in the low single digits, with underlying mid-single growth offset by expected headwinds from
U.K. CMO
"Elanco's expanding portfolio supported our fifth consecutive quarter of underlying organic constant currency revenue growth in the third quarter, and we continue to expect
Select Business Highlights Since the Last Earnings Call
- Received
U.S. FDA approval for Zenrelia, a JAK inhibitor targeting control of pruritus and atopic dermatitis in dogs, with product launch in both theU.S. andBrazil in late September 2024. Additionally, the company has received approval for Zenrelia inCanada andJapan . - Received
U.S. FDA approval for Credelio Quattro, the first and only parasiticide for dogs to protect against fleas, ticks, heartworms, roundworms, hookworms and three different species of tapeworm, with product launch expected in the first quarter of 2025. - Feeding of Bovaer®, a first-in-class methane reducing feed ingredient for dairy cattle, began and multiple consumer packaged goods companies signed agreements to buy inset carbon credits.
- Experior, an innovative feed ingredient for the reduction of ammonia gas emissions in cattle, received multiple combination clearance approvals from the
U.S. FDA in October with Rumensin®, Tylan® and MGA®, allowing for broader expansion into heifers, which represent nearly40% of theU.S. fed cattle population. - Announced
expansion of biologics manufacturing facility in$130 million Elwood, Kansas to enable further growth of the company's monoclonal antibody platform.
Financial Results
Third Quarter Results (dollars in millions, except per share amounts) | 2024 | 2023 | Change (%) | Organic CC |
Pet Health | (2) % | (2) % | ||
Farm Animal | (6) % | 3 % | ||
Cattle | 5 % | 6 % | ||
Poultry | 2 % | 3 % | ||
Swine | (5) % | (5) % | ||
Aqua | (98) % | |||
Contract Manufacturing | 17 % | 18 % | ||
Total Revenue | (4) % | 1 % | ||
Reported Net Income (Loss) | 133 % | |||
Adjusted EBITDA | (24) % | |||
Reported EPS | 133 % | |||
Adjusted EPS | (28) % |
1Organic CC Growth = Representing revenue growth excluding revenue from the aqua business, which we divested July 9, 2024, and the impact of foreign exchange rates. |
Numbers may not add due to rounding. |
In the third quarter of 2024, revenue was
Pet Health revenue was
The Advantage® Family of products, contributed
Farm Animal revenue was
Gross profit was
Total operating expenses were
Asset impairment, restructuring and other special charges were
During the third quarter of 2024, the company recorded a pre-tax gain on the divestiture of the aqua business of
Reported net interest expense was
The reported effective tax rate was
Net income for the third quarter of 2024 was
Working Capital and Balance Sheet
Cash provided by operations was
As of September 30, 2024, Elanco's net leverage ratio was 4.3x adjusted EBITDA, a reduction of 1.3x compared to June 30, 2024. The company expects to end the year with a net leverage ratio in the mid-4x range.
Financial Guidance
Elanco is tightening financial guidance for the full year 2024, summarized in the following table.
2024 Full Year (dollars in millions, except per share amounts) | August Guidance | November Guidance | ||||||
Revenue | to | to | ||||||
Reported Net Income | to | to | ||||||
Adjusted EBITDA | to | to | ||||||
Reported Earnings per Share | to | to | ||||||
Adjusted Earnings per Share | to | to |
The tightened 2024 revenue guidance continues to reflect
To support framing of future expectations, the company estimates that in the first half of 2024 revenue of
Additionally, the company is providing guidance for the fourth quarter of 2024, as summarized in the following table:
2024 Fourth Quarter (dollars in millions, except per share amounts) |
Guidance | |||
Revenue | to | |||
Reported Net Loss | to | |||
Adjusted EBITDA | to | |||
Reported Loss per Share | to | |||
Adjusted Earnings per Share | to |
For the fourth quarter of 2024, the company anticipates revenue between
"We are encouraged by the acceleration of constant currency sales growth from
The 2024 financial guidance and 2025 outlook reflects foreign currency exchange rates as of late October. 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. The company expects to provide detailed 2025 financial guidance during its fourth quarter 2024 earnings call at the end of February 2025.
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 third quarter financial and operational results, discuss fourth 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 fourth 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, including at our contract manufacturers;
- 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 and changes in our credit ratings that lead to higher borrowing expenses and may restrict access to credit;
- changes in interest rates that may adversely affect our earnings and cash flows;
- 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 plan 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 growth excluding the impact of divestitures and 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 constant currency revenue growth as revenue growth excluding the impact of foreign exchange rates. We define organic constant currency revenue growth as revenue growth excluding revenue from the aqua business, which we divested July 9, 2024.
Elanco Animal Health Incorporated Unaudited Condensed Consolidated Statements of Operations (Dollars and shares in millions, except per share data) | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 1,030 | $ 1,068 | $ 3,419 | $ 3,382 | |||
Costs, expenses and other: | |||||||
Cost of sales | 492 | 487 | 1,502 | 1,415 | |||
Research and development | 87 | 86 | 263 | 248 | |||
Marketing, selling and administrative | 323 | 313 | 1,014 | 993 | |||
Amortization of intangible assets | 133 | 140 | 397 | 410 | |||
Asset impairment, restructuring and other special charges | 17 | 16 | 143 | 91 | |||
Goodwill impairment | — | 1,042 | — | 1,042 | |||
Gain on divestiture | (640) | — | (640) | — | |||
Interest expense, net of capitalized interest | 58 | 72 | 189 | 210 | |||
Other expense, net | 1 | 9 | 12 | 41 | |||
Income (loss) before income taxes | $ 559 | $ (1,097) | $ 539 | $ (1,068) | |||
Income tax expense (benefit) | 195 | (1) | 193 | 22 | |||
Net income (loss) | $ 364 | $ (1,096) | $ 346 | $ (1,090) | |||
Earnings (loss) per share: | |||||||
Basic | $ 0.74 | $ (2.22) | $ 0.70 | $ (2.21) | |||
Diluted | $ 0.73 | $ (2.22) | $ 0.70 | $ (2.21) | |||
Weighted-average shares outstanding: | |||||||
Basic | 494.3 | 492.7 | 493.9 | 492.1 | |||
Diluted | 497.7 | 492.7 | 496.9 | 492.1 |
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 September 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 September 30, 2024 and 2023, to selected Non-GAAP adjusted information:
Three months ended September 30, 2024 | Three months ended September 30, 2023 | ||||||||||
GAAP | Adjusted | Non- | GAAP | Adjusted | Non- | ||||||
Cost of sales | $ 492 | $ — | $ 492 | $ 487 | $ 1 | $ 486 | |||||
Amortization of intangible assets | 133 | 133 | — | 140 | 140 | — | |||||
Asset impairment, restructuring and other special charges (1) | 17 | 17 | — | 16 | 16 | — | |||||
Goodwill impairment | — | — | — | 1,042 | 1,042 | — | |||||
Gain on divestiture | (640) | (640) | — | — | — | — | |||||
Interest expense, net of capitalized interest (2) | 58 | 12 | 46 | 72 | — | 72 | |||||
Other expense, net (3) | 1 | — | 1 | 9 | 6 | 3 | |||||
Income (loss) before taxes | 559 | (478) | 81 | (1,097) | 1,205 | 108 | |||||
Income tax expense (benefit) (4) | 195 | 180 | 15 | (1) | (19) | 18 | |||||
Net income (loss) | $ 364 | $ (298) | $ 66 | $ (1,096) | $ 1,186 | $ 90 | |||||
Earnings (loss) per share: | |||||||||||
basic | $ 0.74 | $ (0.61) | $ 0.13 | $ (2.22) | $ 2.40 | $ 0.18 | |||||
diluted | $ 0.73 | $ (0.60) | $ 0.13 | $ (2.22) | $ 2.40 | $ 0.18 | |||||
Adjusted weighted average shares outstanding: | |||||||||||
basic | 494.3 | 494.3 | 494.3 | 492.7 | 492.7 | 492.7 | |||||
diluted | 497.7 | 497.7 | 497.7 | 492.7 | 494.4 | 494.4 |
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 September 30, 2024 and 2023, include the following: | |
(1) | Adjustments of | |
(2) | Adjustments of | |
(3) | Adjustments of | |
(4) | Adjustments of |
Three Months Ended September 30, | |||
2024 | 2023 | ||
As reported diluted EPS | $ 0.73 | $ (2.22) | |
Amortization of intangible assets | 0.27 | 0.29 | |
Asset impairment, restructuring and other special charges | 0.04 | 0.03 | |
Goodwill impairment | — | 2.11 | |
Gain on divestiture | (1.29) | — | |
Interest expense, net of capitalized interest | 0.02 | — | |
Other expense, net | — | 0.01 | |
Subtotal | (0.96) | 2.44 | |
Tax impact of adjustments | 0.36 | (0.04) | |
Total adjustments to diluted EPS | $ (0.60) | $ 2.40 | |
Adjusted diluted EPS (1) | $ 0.13 | $ 0.18 |
Numbers may not add due to rounding. | ||
(1) | 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 nine months ended September 30, 2024 and 2023, to Selected Non-GAAP Adjusted information:
Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | ||||||||||
GAAP | Adjusted | Non- | GAAP | Adjusted | Non- | ||||||
Cost of sales | $ 1,502 | $ — | $ 1,502 | $ 1,415 | $ 2 | $ 1,413 | |||||
Amortization of intangible assets | 397 | 397 | — | 410 | 410 | — | |||||
Asset impairment, restructuring and other special charges (1) | 143 | 143 | — | 91 | 91 | — | |||||
Goodwill impairment | — | — | — | 1,042 | 1,042 | — | |||||
Gain on divestiture | (640) | (640) | — | — | — | — | |||||
Interest expense, net of capitalized interest (2) | 189 | 12 | 177 | 210 | — | 210 | |||||
Other expense, net (3) | 12 | 4 | 8 | 41 | 25 | 16 | |||||
Income (loss) before taxes | 539 | (84) | 455 | (1,068) | 1,570 | 502 | |||||
Income tax expense (benefit) (4) | 193 | 118 | 75 | 22 | (80) | 102 | |||||
Net income (loss) | $ 346 | $ 34 | $ 380 | $ (1,090) | $ 1,490 | $ 400 | |||||
Earnings (loss) per share: | |||||||||||
basic | $ 0.70 | $ 0.07 | $ 0.77 | $ (2.21) | $ 3.03 | $ 0.81 | |||||
diluted | $ 0.70 | $ 0.06 | $ 0.76 | $ (2.21) | $ 3.02 | $ 0.81 | |||||
Adjusted weighted-average shares outstanding: | |||||||||||
basic | 493.9 | 493.9 | 493.9 | 492.1 | 492.1 | 492.1 | |||||
diluted | 496.9 | 496.9 | 496.9 | 492.1 | 493.4 | 493.4 |
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 nine months ended September 30, 2024 and 2023, include the following: | |
(1) | Adjustments of | |
(2) | Adjustments of | |
(3) | Adjustments of | |
(4) | Adjustments of |
Nine Months Ended September 30, | |||
2024 | 2023 | ||
As reported diluted EPS | $ 0.70 | $ (2.21) | |
Cost of sales | — | 0.01 | |
Amortization of intangible assets | 0.80 | 0.83 | |
Asset impairment, restructuring and other special charges | 0.29 | 0.18 | |
Goodwill impairment | — | 2.11 | |
Gain on divestiture | (1.29) | — | |
Interest expense, net of capitalized interest | 0.02 | — | |
Other expense, net | 0.01 | 0.05 | |
Subtotal | (0.17) | 3.18 | |
Tax impact of adjustments (1) | 0.23 | (0.16) | |
Total Adjustments to diluted EPS | $ 0.06 | $ 3.02 | |
Adjusted diluted EPS (2) | $ 0.76 | $ 0.81 |
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 nine months ended September 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 September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Reported net income (loss) | $ 364 | $ (1,096) | $ 346 | $ (1,090) | |||
Net interest expense | 58 | 72 | 189 | 210 | |||
Income tax expense (benefit) | 195 | (1) | 193 | 22 | |||
Depreciation and amortization | 169 | 173 | 498 | 523 | |||
EBITDA | $ 786 | $ (852) | $ 1,226 | $ (335) | |||
Non-GAAP adjustments: | |||||||
Cost of sales | $ — | $ 1 | $ — | $ 2 | |||
Asset impairment, restructuring and other special charges | 17 | 16 | 143 | 91 | |||
Goodwill impairment | — | 1,042 | — | 1,042 | |||
Gain on divestiture | (640) | — | (640) | — | |||
Other expense, net | — | 6 | 4 | 25 | |||
Accelerated depreciation and amortization (1) | — | — | — | (10) | |||
Adjusted EBITDA | $ 163 | $ 214 | $ 733 | $ 814 | |||
Adjusted EBITDA margin | 15.8 % | 20.0 % | 21.4 % | 24.1 % |
Numbers may not add due to rounding. | |
(1) | Represents depreciation and amortization of certain assets that was accelerated and became fully depreciated and amortized by June 30, 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 September 30, 2024:
Long-term debt | $ 4,313 | |
Current portion of long-term debt | 44 | |
Less: Unamortized debt issuance costs | (30) | |
Total gross debt | 4,387 | |
Less: Cash and cash equivalents | 490 | |
Net Debt | $ 3,897 |
The following is a reconciliation of the impact per share from the gain on divestiture:
Gain on divestiture | $ (640) | |
Tax impact of gain on divestiture | 171 | |
Impact of gain on divestiture, net of tax | (469) | |
Per share impact of gain on divestiture, net of tax (1) | $ (0.94) |
Numbers may not add due to rounding. | |
(1) | Per share impact of the gain on divestiture, net of tax is calculated by gain on divestiture, net of tax divided by the diluted adjusted weighted average shares outstanding for the three months ended September 30, 2024. |
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 | 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(1) | to |
Numbers may not add due to rounding. | |
(1) | Adjusted EPS is calculated as the sum of reported EPS and total adjustments to EPS. |
Reconciliation of 2024 full year reported net income to 2024 adjusted EBITDA guidance is as follows:
$ millions | Full Year 2024 Guidance | ||
Reported net income | to | ||
Net interest expense | Approx. | ||
Income tax expense | 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 | 20.9 % |
Reconciliation of 2024 fourth quarter reported EPS guidance to 2024 fourth quarter adjusted EPS guidance is as follows:
Fourth Quarter 2024 Guidance | |||
Reported loss per share | to | ||
Amortization of intangible assets | Approx. | ||
Asset impairment, restructuring and other special charges (1) | to | ||
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 fourth quarter reported net loss to Reconciliation of 2024 fourth quarter adjusted EBITDA guidance is as follows:
$ millions | Fourth Quarter 2024 Guidance | ||
Reported net loss | to | ||
Net interest expense | Approx. | ||
Income tax expense (provision) | to | ||
Depreciation and amortization | Approx. | ||
EBITDA | to | ||
Non-GAAP adjustments | |||
Asset impairment, restructuring and other special charges | Approx. | ||
Adjusted EBITDA | to | ||
Adjusted EBITDA margin | 16.7 % | to | 19.1 % |
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
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