Elanco Animal Health Inc (ELAN) 2023 Q4 法說會逐字稿

Good morning. My name is Krista, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Elanco Animal Health's Fourth Quarter Earnings Conference Call. (Operator Instructions)

早安.我叫克里斯塔，今天我將擔任你們的會議接線生。現在，我歡迎大家參加 Elanco Animal Health 第四季財報電話會議。 （操作員說明）

I would now like to turn the conference over to Katy Grissom, Head of Investor Relations. Katy, you may begin.

現在我想將會議交給投資人關係主管 Katy Grissom。凱蒂，你可以開始了。

Good morning. Thank you for joining us for Elanco Animal Health's Fourth Quarter and Full Year 2023 Earnings Call. I'm Katy Grissom, Head of Investor Relations. Joining me on today's call are Jeff Simmons, our President and Chief Executive Officer; Todd Young, our Chief Financial Officer; and Scott Purucker from Investor Relations. The slides referenced during this call are available on the Investor Relations section of elanco.com. Today's discussion will include forward-looking statements. These statements are based on our current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from our forecast. For more information, see the risk factors in today's earnings press release as well as our latest Form 10-K and 10-Q filed with the SEC. We do not undertake any duty to update any forward-looking statements. Our remarks today will focus on our non-GAAP financial measures. Reconciliations of these non-GAAP measures are included in the appendix of today's slides and in the earnings press release. After our prepared remarks, we'll be happy to take your questions. I'll now turn the call over to Jeff.

早安.感謝您參加 Elanco Animal Health 2023 年第四季和全年財報電話會議。我是凱蒂·格里索姆，投資者關係主管。參加今天電話會議的還有我們的總裁兼執行長傑夫‧西蒙斯 (Jeff Simmons)； Todd Young，我們的財務長；和投資者關係部的 Scott Purucker。本次電話會議中引用的投影片可在 elanco.com 的投資者關係部分取得。今天的討論將包括前瞻性陳述。這些陳述是基於我們目前的假設和預期，並受到風險和不確定性的影響，可能導致實際結果與我們的預測有重大差異。欲了解更多信息，請參閱今天的收益新聞稿中的風險因素以及我們向 SEC 提交的最新 10-K 和 10-Q 表格。我們不承擔更新任何前瞻性陳述的責任。我們今天的演講將重點討論我們的非公認會計準則財務指標。這些非公認會計原則措施的調節包含在今天投影片的附錄和收益新聞稿中。在我們準備好的發言之後，我們將很樂意回答您的問題。我現在將電話轉給傑夫。

Thanks, Katy. Good morning, everyone. Today, Elanco reported fourth quarter and full year results for 2023. Our strong performance last year gives us confidence that our innovation, portfolio and productivity strategy is working and that our actions and investments to launch our new innovations and optimize our core portfolio are paying off. As we enter 2024, we are focused on advancing our strategy to deliver these 3 priorities: sustained revenue growth, innovation and improved cash conversion.

謝謝，凱蒂。大家，早安。今天，Elanco 公佈了2023 年第四季和全年業績。去年的強勁表現讓我們相信，我們的創新、產品組合和生產力策略正在發揮作用，我們為推出新創新和優化核心產品組合而採取的行動和投資正在獲得回報。進入 2024 年，我們將專注於推進策略，以實現以下 3 個優先事項：持續收入成長、創新和改善現金轉換。

Starting on Slide 4 with revenue growth. In the fourth quarter, we delivered 5% constant currency revenue growth in line with our performance in the third quarter. Fourth quarter growth was driven by innovation, strength across our farm animal business, improved conditions in the European Pet Health retail market and increased price. While we exceeded our sales expectations and demonstrated strong operating expense management for the quarter, adjusted EBITDA was adversely impacted by approximately $18 million of unexpected items, primarily related to the 54% devaluation of the Argentinian peso that occurred in December. Our fourth quarter sales growth drivers, along with the strength in our U.S. Pet Health retail business led to a return to full year constant currency sales growth at 1%. Importantly, we expect growth to continue in 2024 at 1% to 3%, even before the potential upside of our late-stage pipeline. On innovation, we made significant progress in 2023 with the approval and launch of our Canine Parvovirus Monoclonal Antibody or CPMA, and Adtab, our new over-the-counter oral parasiticide in Europe as well as the submissions to our 3 late-stage potential blockbuster products that have a path towards approval in the first half of 2024. We exceeded our expectations for innovation revenue in 2023, and our outlook for 2024 puts us on track to deliver our expected $600 million to $700 million of contribution by 2025. We continue to prioritize free cash flow improvements, paying down debt and reducing leverage and exceeded our debt paydown expectations from our November guidance. In 2024, we expect cash available for debt paydown to be approximately $300 million, 4x that of 2023. Earlier this month, we announced the sale of our Aqua Business to Merck Animal Health, allowing us to prioritize our investments going forward in larger markets with greater earnings potential and meaningfully improve our leverage profile. We expect net debt to adjusted EBITDA to be in the mid-4x range by the end of this year and the high 3x to low 4x range by the end of 2025. We Importantly, we are making disciplined decisions and taking actions to reallocate capital within our operations and invest for the future. Today, we announced a strategic restructuring that will allow us to do 3 things: first, shift resources from Farm Animal to Pet Health across the international business as we drive adoption of innovation products and prepare to globalize our late-stage pipeline. It also allows us to capitalize on efficiencies resulting from the completion of our ERP system integration and concentrate roles into strategic locations, and lastly, it allows us to transition our business model to distribution or other third-party models in certain markets, notably Argentina. The restructuring will impact approximately 420 personnel or about 4% of the global workforce and is expected to deliver net savings of $20 million to $25 million in 2024, annualizing the $30 million to $35 million of savings in 2025 and beyond.

從幻燈片 4 開始，收入成長。第四季度，我們實現了 5% 的固定貨幣收入成長，與第三季的業績一致。第四季的成長是由創新、農場動物業務的實力、歐洲寵物保健零售市場狀況的改善以及價格上漲所推動的。雖然我們超出了我們的銷售預期，並展示了本季強勁的營運費用管理，但調整後的 EBITDA 受到約 1800 萬美元的意外項目的不利影響，主要與 12 月發生的阿根廷比索貶值 54% 有關。我們在第四季度銷售成長的推動力，加上我們美國寵物保健零售業務的強勁，導致全年以固定匯率計算的銷售成長恢復到 1%。重要的是，我們預計 2024 年的成長將繼續保持 1% 至 3%，甚至在我們的後期研發管線出現潛在上升空間之前也是如此。在創新方面，我們在2023 年取得了重大進展，我們的犬細小病毒單株抗體（CPMA）和Adtab（我們在歐洲的新型非處方口服寄生蟲藥）以及向我們的3 個後期潛在重磅炸彈藥物提交的申請產品預計在2024 年上半年獲得批准。我們在2023 年的創新收入超出了我們的預期，我們對2024 年的展望使我們預計在2025 年之前實現預期的6 億至7 億美元的貢獻。我們將繼續優先考慮改善自由現金流、償還債務和降低槓桿，超出了我們 11 月指導中的債務償還預期。到2024 年，我們預計可用於償還債務的現金約為3 億美元，是2023 年的4 倍。本月早些時候，我們宣布將水業務出售給默克動物保健公司，使我們能夠優先考慮在更大的市場進行投資更大的獲利潛力並有意義地改善我們的槓桿狀況。我們預計，到今年年底，淨債務與調整後EBITDA 之比將達到4 倍中段，到2025 年底將達到3 倍高至4 倍低。重要的是，我們正在做出嚴格的決策，並採取行動在年內重新分配資本。我們的營運和未來投資。今天，我們宣布了一項策略重組，這將使我們能夠做三件事：首先，在我們推動創新產品的採用並準備全球化我們的後期產品線的同時，將整個國際業務的資源從農場動物轉移到寵物健康。它還使我們能夠利用完成ERP 系統整合所帶來的效率，並將角色集中到戰略位置，最後，它使我們能夠將業務模式轉變為某些市場（尤其是阿根廷）的分銷或其他第三方模式。此次重組將影響約 420 名員工，約佔全球勞動力的 4%，預計到 2024 年將淨節省 2,000 萬至 2,500 萬美元，按年計算，到 2025 年及以後可節省 3,000 萬至 3,500 萬美元。

The savings will be reinvested in areas with more significant value creation opportunity, specifically in pet health globally and livestock sustainability. While we expect a limited amount of top line headwind from the shift to distribution markets, we do not expect our restructuring efforts to have a meaningful downside to sales otherwise, notably in international Farm Animal markets where we expect to realize savings.

節省下來的資金將重新投資於具有更大價值創造機會的領域，特別是全球寵物健康和牲畜永續性。雖然我們預計向分銷市場的轉變會帶來有限的頂線阻力，但我們預計我們的重組努力不會對銷售產生有意義的負面影響，特別是在我們希望實現節省的國際農場動物市場。

We have a strong track record of delivering productivity and we'll continue to look for additional opportunities to more efficiently allocate capital. I credit our senior leadership with these proactive actions that we believe will set Elanco up to deliver our next era of growth.

我們在提高生產力方面擁有良好的記錄，我們將繼續尋找更多機會來更有效地分配資本。我相信我們的高層領導層採取了這些積極行動，我們相信這些行動將使 Elanco 實現下一個成長時代。

Moving to Slide 5. Our full year constant currency revenue growth of 1% was led by Farm Animal, but we saw marked improvement in our Pet Health business as well.

轉向幻燈片 5。我們全年 1% 的固定貨幣收入成長主要由農場動物帶動，但我們也看到寵物健康業務的顯著改善。

Starting in Farm Animal. 4% constant currency revenue growth for the full year for Farm Animal represented accelerated growth rates for poultry, cattle and swine compared to 2022. The team executed across the business but especially in places where we have strong market positions, notably international poultry and U.S. cattle. International Farm Animal, the largest revenue contributor of our 4 quadrants delivered 4% constant currency revenue growth, primarily driven by increased price and strength in poultry. A result of robust underlying demand and share growth in key markets like the U.K., Brazil and China.

從農場動物開始。與2022 年相比，農場動物全年4% 的恆定貨幣收入成長意味著家禽、牛和豬的成長率加快。該團隊在整個業務中執行，尤其是在我們擁有強大市場地位的地方，特別是國際家禽和美國牛。 International Farm Animal 是我們 4 個象限中最大的收入貢獻者，其穩定貨幣收入成長了 4%，這主要是受到價格上漲和家禽實力的推動。這是英國、巴西和中國等主要市場強勁的潛在需求和份額成長的結果。

Our U.S. Farm Animal business also delivered 4% growth for 2023, driven by increased price and strength in cattle and swine with poultry improving in the fourth quarter. Experior, delivered $18 million in the fourth quarter, above the expected annualized run rate of $70 million that we shared in November. We remain encouraged by Experior's progress and expect continued growth for the product globally in 2024.

我們的美國農場動物業務在 2023 年也實現了 4% 的成長，這得益於牛和豬的價格上漲和實力增強，以及第四季度家禽的改善。 Experior 在第四季度交付了 1800 萬美元，高於我們在 11 月分享的 7000 萬美元的預期年化運行率。我們仍然對 Experior 的進展感到鼓舞，並預計 2024 年該產品在全球範圍內將持續成長。

Moving to Pet Health. Global revenue declined 1% in constant currency, representing an encouraging improvement from the 5% constant currency decline in 2022. For the U.S. Pet Health business, revenue declined 1%, a significant improvement from a 9% decline in 2022. Enhancements in share of voice, physical availability, innovation contribution and increased price were more than offset by competitive pressure in the vet clinic market.

轉向寵物健康。以固定匯率計算，全球營收下降了1%，較2022 年固定匯率下降5% 的情況有了令人鼓舞的改善。美國寵物保健業務的收入下降了1%，較2022 年下降9% 有了顯著改善。聲音、物理可用性、創新貢獻和價格上漲都被獸醫診所市場的競爭壓力所抵消。

Our OTC Parasiticide business had a strong year in 2023, growing net sales 11% in retail channels as our top 6 retailers grew dispensing sales in both units and dollars. In the vet clinic, we are encouraged by the growth of Credelio and new products like CPMA, ZORBIUM and Bexacat. As we look towards 2024, we are investing in an expanded sales force and implementing enhanced incentives to drive growth ahead of our anticipated new innovation launches in the vet clinic this year.

我們的非處方寄生蟲藥業務在 2023 年表現強勁，零售通路的淨銷售額增長了 11%，因為我們的六大零售商的配藥銷售額（單位和美元）均有所增長。在獸醫診所，我們對 Credelio 的發展以及 CPMA、ZORBIUM 和 Bexacat 等新產品感到鼓舞。展望 2024 年，我們正在投資擴大銷售隊伍，並實施強化激勵措施，以在今年預計在獸醫診所推出新創新之前推動成長。

Finally, in international Pet Health, the 1% constant currency revenue decline was primarily driven by demand pressure in the Spain retail market in the first half of the year, which more than offset the encouraging growth from the Credelio family and Adtab in Europe. The Spain situation improved in the second half of the year, and we expect that market to recover in the first half of 2024.

最後，在國際寵物健康領域，1%的恆定貨幣收入下降主要是由於上半年西班牙零售市場的需求壓力，遠遠抵消了歐洲Credelio家族和Adtab令人鼓舞的成長。西班牙情況在下半年有所改善，我們預計市場將在 2024 年上半年復甦。

Moving to Slide 6. I'll cover our execution highlights across our innovation, portfolio and productivity strategy for 2023. Starting with productivity. Improving cash conversion continues to be a key priority across the organization. We continue to drive cross-functional efforts to improve net working capital, specifically on balance sheet inventory management which gradually improved in the second half of the year with inventory being a source of cash in the fourth quarter. For the full year, we paid down $76 million of gross debt and finished with a year-end leverage at 5.6x, slightly better than the midpoint of our November guidance. Finally, earlier this year, we achieved a significant milestone of completing our ERP system integration which will free up over $100 million of free cash flow for debt paydown in 2024.

前往投影片 6。我將介紹 2023 年創新、產品組合和生產力策略的執行亮點。從生產力開始。改善現金轉換仍然是整個組織的首要任務。我們繼續推動跨職能工作，以改善淨營運資本，特別是資產負債表庫存管理，該管理在下半年逐漸改善，庫存成為第四季度的現金來源。全年，我們償還了 7,600 萬美元的總債務，年終槓桿率為 5.6 倍，略高於 11 月指引的中位數。最後，今年早些時候，我們實現了完成 ERP 系統整合的重要里程碑，這將釋放超過 1 億美元的自由現金流，用於在 2024 年償還債務。

Moving now to portfolio. Price growth was 4% for the year, up from our previous average of 2%, with 4% in both Pet Health and Farm Animal. The core portfolio continues to stabilize driven by stronger commercial capabilities, global omnichannel approach and the complement of new innovation. We continue to invest in our highest value creation opportunities across commercial, R&D and manufacturing.

現在轉向投資組合。今年的價格成長率為 4%，高於我們先前 2% 的平均水平，其中寵物保健和農場動物的價格成長率為 4%。在更強的商業能力、全球全通路方法和新創新的補充的推動下，核心產品組合持續穩定。我們持續投資於商業、研發和製造領域的最高價值創造機會。

Now on Innovation, where we had a very productive year of submissions, new product approvals in major markets and advancement of our early-stage pipeline. End-market innovation contributed $275 million of revenue in 2023, representing 3 percentage points of growth for Elanco and more than doubling the contribution from 2022. Growth was led by Experior NutriQuest on the Farm Animal side and Credelio Plus, Credelio Cat, Adtab and CPMA on the Pet Health side, with life cycle management and geo expansions also contributing across both. CPMA finished in line with our expectations in 2023 with sales of $6 million. Expanded supply capacity and increased marketing efforts aimed at both veterinarians and pet owners are expected to make this product a key contributor to growth in 2024. On the late-stage pipeline, our 3 differentiated assets, Credelio Quattro, Zenrelia and Bovaer are all progressing with the FDA. As we shared previously, the regulatory process is rolling and iterative at this stage, and we are an ongoing productive dialogue with the FDA Center for Veterinary Medicine. These 3 potential blockbusters continue to have a path towards U.S. approval in the first half of 2024. While we are focused on the U.S. market first for these products, we are pleased to share we have also completed submissions for Zenrelia in 9 additional markets, including EU, U.K. and Australia. Additionally, the team continues to deliver targeted life cycle management, which extends the life and the value of existing brands, helping to stabilize and protect the core.

現在在創新方面，我們度過了非常有成效的一年，我們的提交、新產品在主要市場的批准以及我們早期管道的進展。 2023 年，終端市場創新貢獻了 2.75 億美元的收入，為 Elanco 增長了 3 個百分點，是 2022 年貢獻的兩倍多。增長由 Farm Animal 方面的 Experior NutriQuest 以及 Credelio Plus、Credelio Cat、Adtab 和 CPMA 引領在寵物健康方面，生命週期管理和地理擴張也為兩者做出了貢獻。 CPMA 2023 年銷售額達到 600 萬美元，符合我們的預期。供應能力的擴大和針對獸醫和寵物主人的營銷力度的加大，預計將使該產品成為2024 年增長的關鍵貢獻者。在後期管道中，我們的3 個差異化資產Credelio Quattro、Zenrelia 和Bovaer 都在取得進展FDA。正如我們之前分享的，現階段監管流程正在滾動和迭代，我們正在與 FDA 獸醫中心進行持續富有成效的對話。這3 種潛在的重磅藥物將繼續在2024 年上半年獲得美國批准。雖然我們首先關注這些產品的美國市場，但我們很高興地告訴大家，我們還完成了Zenrelia 在9 個其他市場的提交，包括歐盟、英國和澳洲。此外，團隊繼續提供有針對性的生命週期管理，延長現有品牌的壽命和價值，有助於穩定和保護核心。

Total innovation sales in 2024 are expected to be $350 million to $400 million before the potential upside from our 3 late-stage pipeline assets, putting us well on track to deliver the $600 million to $700 million of innovation sales by 2025. Finally, 2023 marks significant progress in our early-stage portfolio with a number of promising assets in our next wave expected to drive growth in the second half of the decade. A special credit to Ellen de Brabander and her global R&D and regulatory team as they've really set Elanco up to deliver significant high-impact innovation in major markets for the years ahead.

在我們的3 個後期管道資產產生潛在成長之前，2024 年的創新銷售額總額預計將達到3.5 億至4 億美元，這使我們預計在2025 年實現6 億至7 億美元的創新銷售額。最後，2023 年即將到來我們的早期投資組合取得了重大進展，下一波浪潮中的一些有前途的資產預計將推動本世紀後半葉的成長。特別值得讚揚的是 Ellen de Brabander 及其全球研發和監管團隊，因為他們真正讓 Elanco 為未來幾年在主要市場提供重大、高影響力的創新做好了準備。

Before I cover our outlook for 2024, on Slide 8, I want to briefly discuss the announcement we made earlier this month to sell our Aqua business for approximately $1.3 billion. This decision was a result of a strategic process that started about a year ago as we evaluated the expected growth drivers of our business in the future. We saw the opportunity to focus our investment in larger markets with greater earnings potential, namely pet health and livestock sustainability, which are aligned with our pipeline efforts. We expect the transaction to close around midyear. Importantly, with over $1 billion of expected proceeds from this transaction, combined with improved free cash flow from the business, we expect to accelerate debt pay down. We are deeply grateful to our Aqua team's dedication to delivering to our customers as well as our bigger purpose of enriching lives with animal protein.

在我在幻燈片 8 上介紹我們對 2024 年的展望之前，我想簡要討論我們本月早些時候宣布的以約 13 億美元出售 Aqua 業務的公告。這項決定是大約一年前開始的策略流程的結果，當時我們評估了未來業務的預期成長動力。我們看到了將投資重點放在具有更大盈利潛力的更大市場的機會，即寵物健康和牲畜可持續性，這與我們的管道工作相一致。我們預計交易將於年中左右完成。重要的是，由於此交易的預期收益超過 10 億美元，加上業務自由現金流的改善，我們預計將加速債務償還。我們非常感謝我們的 Aqua 團隊致力於為客戶提供服務，以及我們用動物蛋白豐富生活的更大目標。

Now moving to our outlook for 2024 on Slide 9. As we begin the year, we remain confident in the resilient underlying demand for animal care. Our outlook for the animal health market reflects underlying tailwinds from the humanization of pets and global protein demand, balanced by economic conditions impacting consumers, cyclical and profitability factors in livestock and the macroeconomic and political tensions around the world.

現在轉向投影片 9 中我們對 2024 年的展望。在新年伊始，我們對動物照護的潛在需求的彈性仍然充滿信心。我們對動物保健市場的前景反映了寵物人性化和全球蛋白質需求的潛在推動力，並受到影響消費者的經濟狀況、牲畜的周期性和盈利因素以及世界各地的宏觀經濟和政治緊張局勢的平衡。

Despite this, we believe Elanco is uniquely well suited for growth this year. Our innovation expectations, our investment in key capabilities, our restructuring actions, the experienced team and differentiated omnichannel strategy contribute to this confidence. For the full year 2024, we expect 1% to 3% constant currency revenue growth. This includes price growth of approximately 3% and incremental innovation revenue contribution of at least 2% to 3%. Headwinds on a year-over-year core volumes are expected to lessen sequentially as we stabilize our base business through improved execution and lapping as well some regulatory and macroeconomic challenges last year. Importantly, our guidance includes the Aqua business for the full year, but it excludes the contribution from our 3 late-stage products currently under regulatory review with the FDA. We plan to update our expectations in line with our quarterly cadence to account for the transaction close and product approvals. This year, we expect revenue growth in both Pet Health and Farm Animal. For Pet Health, we see value drivers across all parts of our omnichannel strategy. Improved supply and innovation led by CPMA and Adtab are expected to be tailwinds.

儘管如此，我們相信 Elanco 非常適合今年的成長。我們的創新期望、我們對關鍵能力的投資、我們的重組行動、經驗豐富的團隊和差異化的全通路策略都有助於增強這種信心。對於 2024 年全年，我們預計貨幣收入將保持 1% 至 3% 的恆定成長。這包括約 3% 的價格成長和至少 2% 至 3% 的增量創新收入貢獻。隨著我們透過改善執行和研磨以及去年的一些監管和宏觀經濟挑戰來穩定我們的基礎業務，預計將比核心銷售的不利因素逐漸減少。重要的是，我們的指導包括全年的 Aqua 業務，但不包括我們目前正在接受 FDA 監管審查的 3 種後期產品的貢獻。我們計劃根據季度節奏更新我們的預期，以考慮交易完成和產品批准。今年，我們預計寵物健康和農場動物的收入都會成長。對於寵物健康，我們看到了全通路策略各部分的價值驅動因素。 CPMA 和 Adtab 主導的供應改善和創新預計將成為推動因素。

Our overall SG&A is increasing in 2024 as we reallocate investment from other parts of the business into our Pet Health portfolio. As part of this, we have expanded our U.S. field force, increased investment in efforts with our corporate groups and are shifting resources in our international business to support improved share of voice. Importantly, this increased investment will be front half loaded. As we increased promotional investments behind our market-leading retail OTC parasiticide business during the Northern Hemisphere flea and tick season. On the retail side, we've expanded fiscal availability in new channels like [Club and Dollar] and within the existing channels like mass, pet specialty and grocery. These efforts in both the U.S. and Europe paired with enhanced brand activations are expected to drive increased awareness. Overall, our Pet Health business is set up for improved performance and growth in 2024, even ahead of our anticipated new products in Parasiticides and Dermatology.

隨著我們將業務其他部分的投資重新分配到我們的寵物健康產品組合中，我們的整體銷售及管理費用 (SG&A) 將於 2024 年增加。作為其中的一部分，我們擴大了美國的現場隊伍，增加了對我們企業集團的投資，並正在轉移我們國際業務的資源，以支持提高話語權。重要的是，這項增加的投資將是前期的一半。在北半球跳蚤和蜱蟲季節期間，我們增加了對市場領先的零售非處方藥殺蟲劑業務的促銷投資。在零售方面，我們擴大了[Club and Dollar]等新通路以及大眾、寵物專業和雜貨等現有通路的財務可用性。美國和歐洲的這些努力加上增強的品牌活化預計將提高知名度。總體而言，我們的寵物健康業務的目標是在 2024 年提高業績和成長，甚至領先於我們預期的殺寄生蟲劑和皮膚病學新產品。

Moving to Farm Animal. We also expect growth for this business globally with innovation, and price offsetting market challenges and generic pressure. We expect poultry and cattle to remain growth drivers. The livestock sustainability market continues to develop and the functionality of the carbon credit marketplace has been validated. We look towards the Bovaer approval as a catalyst for further expansion. The durability and the diversity of our global farm animal business is well positioned for both revenue and market share growth in 2024. With that, I'll turn it over to Todd.

轉向農場動物。我們也預計該業務將透過創新、價格抵消市場挑戰和普遍壓力而在全球範圍內實現成長。我們預計家禽和牛仍將是成長動力。畜牧業永續發展市場不斷發展，碳信用市場的功能也得到了驗證。我們期待 Bovaer 的批准成為進一步擴張的催化劑。我們全球農場動物業務的耐用性和多樣性為 2024 年收入和市場份額的成長奠定了良好的基礎。這樣，我將把它交給托德。

Thank you, Jeff, and good morning, everyone. I will focus my comments on our fourth quarter and full year adjusted measures. So please refer to today's earnings press release for a detailed description of the year-over-year changes in our reported results.

謝謝你，傑夫，大家早安。我的評論將重點放在我們的第四季和全年調整後的措施。因此，請參閱今天的收益新聞稿，了解我們報告的業績同比變化的詳細說明。

Starting on Slide 11. In the fourth quarter, revenue was $1.035 billion, a 5% increase with price growing 3%. Slides 12 and 13 break down our revenue performance in the quarter by price, rate and volume as well as species and region. For Pet Health globally, we declined 1% in constant currency in the quarter. Our U.S. business declined 5% as competitive pressure in the veterinary clinic was partially offset by innovation revenue, increased price and an improved retail inventory situation compared to the reduced purchasing we experienced in the fourth quarter of last year.

從投影片 11 開始。第四季營收為 10.35 億美元，成長 5%，價格成長 3%。幻燈片 12 和 13 按價格、費率、數量以及物種和地區細分了我們本季的收入表現。對於全球寵物健康，以固定匯率計算，本季我們下降了 1%。我們的美國業務下降了 5%，因為與去年第四季度採購減少相比，創新收入、價格上漲和零售庫存狀況改善部分抵消了獸醫診所的競爭壓力。

Our international pet health business grew 4% in constant currency, primarily driven by the economic rebound in Europe compared to the back half of last year and innovation revenue, partially offset by soft market dynamics in several Asian countries. Globally, sales of Seresto grew 25% in the quarter driven by the U.S., which implemented a lower list price starting in December to maximize elasticity of the brand and the rebound in Europe I just described. The Advantage family sales declined 8% in the quarter, primarily driven by international markets. Both products benefited from the improved retail inventory situation in the U.S. in the quarter compared to last year.

以固定匯率計算，我們的國際寵物保健業務成長了 4%，這主要是受到歐洲經濟與去年下半年相比的反彈和創新收入的推動，但部分被幾個亞洲國家疲軟的市場動態所抵消。在全球範圍內，Seresto 的銷售額在本季度增長了25%，這主要得益於美國從12 月開始實施較低的標價，以最大限度地提高該品牌的彈性以及我剛才描述的歐洲的反彈。 Advantage 系列銷售額在本季下降了 8%，這主要是由國際市場推動的。與去年相比，這兩種產品都受益於本季美國零售庫存狀況的改善。

Shifting to Farm Animal. Global revenue grew 10% in constant currency in the fourth quarter. As anticipated in our November guidance, U.S. Farm Animal growth was driven by a resupply for cattle vaccines strong Experior growth and favorable timing of poultry rotations. While we expected U.S. Farm Animal to have a strong quarter, the 28% growth was significantly higher than we expected which is the key contributor to us delivering above the top end of our revenue guidance. Solid international Farm Animal growth of 3% was driven by continued strength in international poultry.

轉向農場動物。以固定匯率計算，第四季全球營收成長了 10%。正如我們在 11 月指導中所預期的那樣，美國農場動物的增長是由牛疫苗補給、Experior 強勁增長和家禽輪換的有利時機推動的。雖然我們預計美國農場動物業務將有一個強勁的季度，但 28% 的成長明顯高於我們的預期，這是我們實現高於收入指導上限的關鍵因素。國際家禽市場的持續強勁推動了國際農場動物 3% 的穩健成長。

Continuing down the income statement on Slide 14. Gross margin decreased 440 basis points to 50.1%. The decline was driven by an approximate 150 basis point headwind from slowing manufacturing output as we work to reduce balance sheet inventory as well as unfavorable manufacturing performance, including higher-than-expected inflation on certain key inputs and higher affiliate expenses, including a recently implemented higher import duty rate in Argentina, partially offset by improved price. Operating expenses declined 3% year-over-year in the quarter. R&D expenses were largely in line year-over-year, while SG&A declined 3% driven by disciplined cost management across the business and savings from completing our systems integration partially offset by higher employee-related expenses.

繼續查看投影片 14 的損益表。毛利率下降 440 個基點至 50.1%。造成這一下降的原因是，我們努力減少資產負債表庫存，導致製造業產出放緩，帶來約150 個基點的逆風，以及不利的製造業績效，包括某些關鍵投入的通膨高於預期以及附屬費用的增加，其中包括最近實施的阿根廷進口關稅提高，部分被價格上漲所抵銷。本季營運費用較去年同期下降 3%。研發費用與去年同期基本持平，而由於整個企業嚴格的成本管理以及完成系統整合所節省的成本，SG&A 下降了 3%，但員工相關費用的增加部分抵消了這一點。

Moving to Slide 15, where we bridge adjusted EBITDA and adjusted EPS to our guidance from November. Adjusted EBITDA was $165 million in the quarter. Along with the gross margin headwinds from unfavorable mix and manufacturing performance, this was adversely impacted by approximately $18 million of unexpected items primarily related to Argentina. Adjusted earnings per share was $0.08 in the quarter. Our adjusted effective tax rate in the fourth quarter was 39.7%, primarily as a result of unfavorable return to provision adjustments partially offset by the benefit of certain refundable state income tax credits.

轉向幻燈片 15，我們將調整後的 EBITDA 和調整後的 EPS 與 11 月份的指導進行銜接。本季調整後 EBITDA 為 1.65 億美元。除了不利的組合和製造業績帶來的毛利率不利因素外，主要與阿根廷相關的約 1800 萬美元的意外項目也對其產生了不利影響。本季調整後每股收益為 0.08 美元。我們在第四季度調整後的有效稅率為 39.7%，主要是由於撥備調整的不利回報被某些可退還的州所得稅抵免的好處部分抵消。

On Slide 16, I'll provide a few comments on our 2023 full year performance. We delivered just over $4.4 billion in sales with 1% constant currency growth driven by improved price, adoption of new products and strength in international poultry. These were partially offset by competitive pressure in the U.S. vet clinic, a soft European economic environment in the first half of last year and generic pressure and changes in regulatory requirements in the U.S. farm business.

在投影片 16 上，我將對我們 2023 年全年業績發表一些評論。在價格上漲、新產品採用和國際家禽實力的推動下，我們的銷售額略高於 44 億美元，匯率穩定成長 1%。這些因素被美國獸醫診所的競爭壓力、去年上半年歐洲經濟環境疲軟以及美國農場企業監管要求的普遍壓力和變化所部分抵消。

On Slides 27 to 28, we provided additional revenue breakdowns, including by top affiliates and certain products. Continuing down the P&L. Gross margin was 56.3%, a decrease of 30 basis points compared to last year. The impact of slowing down manufacturing output and inflation was partially offset by improved price. These factors, combined with a 2% increase in operating expenses and the fourth quarter impact of the devaluation and duty rate in Argentina resulted in adjusted EBITDA of $979 million for the full year.

在投影片 27 至 28 中，我們提供了額外的收入細目，包括頂級附屬公司和某些產品的收入細目。繼續降低損益表。毛利率為56.3%，較去年下降30個基點。製造業產出和通膨放緩的影響被價格上漲部分抵銷。這些因素，加上營業費用增加 2%，以及第四季阿根廷貨幣貶值和關稅的影響，導致全年調整後 EBITDA 達到 9.79 億美元。

Adjusted earnings per share was $0.89 compared to $1.11 last year with $0.14 coming from higher interest expense and tax. Our non-GAAP tax rate increased from 17.7% in 2022 to 22.3% in 2023, primarily driven by the items I described impacting the fourth quarter. Before moving to our 2024 guidance, let me offer a few words on our cash, debt and working capital on Slide 18. Operating cash flow was $271 million for the full year and $157 million in the fourth quarter. The year-over-year increase in the fourth quarter reflects improved net working capital performance specifically on inventory and receivables, partially offset by higher cash interest costs. We ended the year with net debt of $5.472 billion and the net leverage ratio at 5.6x.

調整後每股收益為 0.89 美元，去年為 1.11 美元，其中 0.14 美元來自較高的利息支出和稅收。我們的非公認會計原則稅率從 2022 年的 17.7% 增加到 2023 年的 22.3%，這主要是受到我所描述的影響第四季度的項目的推動。在談到我們的 2024 年指引之前，讓我在投影片 18 上簡單介紹我們的現金、債務和營運資金。全年營運現金流為 2.71 億美元，第四季營運現金流為 1.57 億美元。第四季的年增率反映了淨營運資本績效的改善，特別是在庫存和應收帳款方面，但部分被較高的現金利息成本所抵銷。年底，我們的淨債務為 54.72 億美元，淨槓桿率為 5.6 倍。

We reduced gross debt by $76 million for the full year, exceeding our November expectations of $50 million. In a moment, I'll touch on our expectations for debt paydown in 2024 and the factors improving our cash outlook.

我們全年總債務減少了 7,600 萬美元，超出了我們 11 月預期的 5,000 萬美元。稍後，我將談談我們對 2024 年債務償還的預期以及改善我們現金前景的因素。

Now let's move to our 2024 financial guidance, starting on Slide 20. As Jeff mentioned, today's guidance includes full year contribution from our Aqua business but excludes contribution from our 3 key late-stage pipeline assets, Credelio Quattro, Zenrelia and Bovaer. We will update our guidance throughout the year to reflect evolution on both topics. For the year, we expect revenue to be between $4.45 billion and $4.54 billion or approximately 1% to 3% constant currency growth. We expect innovation to contribute $350 million to $400 million or $75 million to $125 million of growth year-over-year. Credelio Quattro, Zenrelia and Bovaer would increase this range and regardless of timing once launched, we expect these products to be accretive to EBITDA in 2024. Additionally, we expect a revenue headwind of approximately $50 million as a result of strategic choices to change our distribution model, primarily in Argentina, exit low-margin distribution agreements and the continued phase out of contract manufacturing agreements. Gross margin is expected to decline slightly in 2024 as benefits from revenue growth will be more than offset by the impact of actions we are taking to slow down our manufacturing output, to reduce balance sheet inventory and improve net working capital. The headwinds experienced in the second half of 2023 related to this and certain increased operating costs are expected to continue in the first half of the year, improving in the third quarter and shifting to a tailwind in the fourth quarter.

現在讓我們從投影片20 開始討論2024 年財務指引。正如Jeff 所提到的，今天的指引包括我們Aqua 業務的全年貢獻，但不包括我們3 個關鍵後期管道資產Credelio Quattro、Zenrelia 和Bovaer 的貢獻。我們將全年更新我們的指南，以反映這兩個主題的演變。我們預計今年的營收將在 44.5 億美元至 45.4 億美元之間，即以恆定匯率計算約 1% 至 3% 的成長率。我們預計創新將年比貢獻 3.5 億至 4 億美元或 7,500 萬至 1.25 億美元的成長。 Credelio Quattro、Zenrelia 和 Bovaer 將擴大這一範圍，無論何時推出，我們預計這些產品將在 2024 年增加 EBITDA。此外，由於改變我們的分銷的戰略選擇，我們預計收入逆風約為 5000 萬美元模式，主要是在阿根廷，退出低利潤分銷協議並繼續逐步取消合約製造協議。預計 2024 年毛利率將略有下降，因為收入成長帶來的好處將被我們為減緩製造業產出、減少資產負債表庫存和改善淨營運資本而採取的行動的影響所抵消。與此相關的 2023 年下半年遇到的不利因素以及營運成本的某些增加預計將在今年上半年持續，並在第三季度有所改善，並在第四季度轉為有利因素。

Operating expenses are expected to increase 2% to 4% in 2024, driven by increased employee-related expenses and investment in commercial capabilities to support our Pet Health business. The increase is expected to be partially offset by reduced expenses, primarily in the second half of the year for the restructuring we announced this morning taking advantage of efficiencies resulting from our ERP system consolidation and reallocating resources to the business areas and countries with ability to generate greater earnings potential over time.

由於員工相關費用增加以及支持寵物健康業務的商業能力投資的推動，預計 2024 年營運費用將增加 2% 至 4%。預計這一增長將被費用減少部分抵消，主要是在今年下半年，我們宣布了重組，利用我們的 ERP 系統整合帶來的效率，並將資源重新分配給有能力產生的業務領域和國家。隨著時間的推移，獲利潛力會更大。

For adjusted EBITDA, we expect $960 million to $1.01 billion. We anticipate adjusted EPS of $0.87 to $0.95. Given the cadence of dynamics in gross margin and operating expenses, adjusted EBITDA and adjusted EPS are expected to decline in the first half of the year and increase in the second half of the year.

對於調整後的 EBITDA，我們預計為 9.6 億美元至 10.1 億美元。我們預計調整後每股收益為 0.87 美元至 0.95 美元。鑑於毛利率和營業費用的動態變化，調整後的 EBITDA 和調整後的每股盈餘預計將在上半年下降，下半年上升。

Slide 22 provides year-over-year bridges for adjusted EBITDA and adjusted EPS. And Slide 32 in the appendix provides a number of additional assumptions to help support your modeling efforts.

幻燈片 22 提供了調整後 EBITDA 和調整後 EPS 的同比橋樑。附錄中的投影片 32 提供了許多額外的假設來幫助支持您的建模工作。

On Slide 23, we share our first quarter 2024 guidance. We expect revenue of $1.16 billion to $1.185 billion, adjusted EBITDA of $255 million to $275 million and adjusted EPS of $0.25 to $0.28. As a reminder, as a result of our ERP system blackout in 2023, approximately $100 million of revenue, $80 million adjusted EBITDA and $0.13 of adjusted EPS shifted into the first quarter from the second quarter. In addition to the manufacturing headwinds discussed above impacting the first quarter, we are also increasing our investments in pet health with both the U.S. sales force expansion and the increase in promotional investments behind our retail OTC products. Given the timing of the Northern Hemisphere flea and tick season, we are making these investments starting in Q1, which will be in advance of the savings we expect to realize from the restructuring we announced this morning.

在投影片 23 上，我們分享了 2024 年第一季的指導。我們預計營收為 11.6 億美元至 11.85 億美元，調整後 EBITDA 為 2.55 億美元至 2.75 億美元，調整後每股收益為 0.25 美元至 0.28 美元。提醒一下，由於 2023 年我們的 ERP 系統停電，大約 1 億美元的收入、8000 萬美元的調整後 EBITDA 和 0.13 美元的調整後每股收益從第二季度轉移到第一季。除了上述討論的影響第一季的製造業逆風外，我們還隨著美國銷售隊伍的擴張和零售 OTC 產品促銷投資的增加，增加了對寵物健康的投資。考慮到北半球跳蚤和蜱蟲季節的時間，我們將從第一季開始進行這些投資，這將先於我們預計從今天早上宣布的重組中實現的節省。

Finally, I'll share a few comments on our cash and balance sheet expectations for 2024 on Slide 25. We expect meaningful improvement in free cash flow conversion with $280 million to $320 million available for debt paydown, about 4x more than our $76 million in 2023. The improvement is driven by reduced project costs, most notably, moving past our ERP system implementation, plus lower cash interest and improved net working capital from our inventory efforts offset by slightly higher CapEx to support new launches. Using the same assumptions for innovation in the Aqua transaction as we did with the P&L. At year-end 2024, we expect the net leverage ratio to be between 5.2 and 5.5x. With the anticipated $1.05 billion to $1.1 billion in net proceeds from the Aqua transaction, we expect to reduce our net leverage to the mid-4x range by year-end. Now I'll hand it back to Jeff for closing comments.

最後，我將在投影片25 上分享我們對2024 年現金和資產負債表預期的一些評論。我們預計自由現金流轉換將出現有意義的改善，可用於償還債務的金額為2.8 億至3.2 億美元，大約是我們7,600 萬美元的4 倍。2023 年。這項改善是由專案成本降低所推動的，最顯著的是，我們的ERP 系統實施已經過去了，加上現金利息的降低和庫存工作帶來的淨營運資本的改善，被支持新產品發布的略高的資本支出所抵銷。在 Aqua 交易中使用與損益表相同的創新假設。到 2024 年底，我們預計淨槓桿率將在 5.2 至 5.5 倍之間。預計 Aqua 交易將帶來 10.5 億至 11 億美元的淨收益，我們預計到年底將淨槓桿率降低至 4 倍左右。現在我將把它交還給傑夫以供結束評論。

Thanks, Todd. As we enter our 70th year as a company and as the longest standing brand in animal health, we are humbled by the opportunity to serve our customers around the globe. The farmers, veterinarians and pet owners and the animals in their care. As we enter 2024, we are laser-focused on 3 priorities: sustained revenue growth, innovation and improved cash conversion. Importantly, this management team is taking disciplined, decisive actions to improve our earnings potential and leverage profile over time as evidenced by the sale of our Aqua business for over $1 billion of net proceeds, the restructuring announced today to reallocate resources to higher value creation areas. Our investment in expanding our U.S. Pet Health field force to enhance share of voice and maximize innovation in our highest-margin business area and our focused efforts to manage manufacturing throughput to improve net working capital performance while investing to support the launch of differentiated products in years to come. These are difficult but the right decisions. We are executing on our IPP strategy. Our investments, our improved capabilities and experienced team delivered a return to top line growth in 2023, and that growth will continue in 2024. We are encouraged by our strong pipeline and the next wave of innovation, which we expect to fuel long-term sustainable growth for Elanco. With that, I'll turn it over to Katy to moderate the Q&A.

謝謝，托德。在我們作為一家公司和動物保健領域歷史最悠久的品牌進入 70 週年之際，我們對有機會為全球客戶提供服務感到深感榮幸。農民、獸醫、寵物主人以及他們照顧的動物。進入 2024 年，我們將重點關注 3 個優先事項：持續收入成長、創新和改善現金轉換。重要的是，該管理團隊正在採取嚴格、果斷的行動，以隨著時間的推移提高我們的盈利潛力和槓桿狀況，以超過10 億美元的淨收益出售Aqua 業務就證明了這一點，今天宣布的重組旨在將資源重新分配到更高價值創造領域。我們投資擴大我們的美國寵物健康現場隊伍，以提高利潤率最高的業務領域的話語權並最大限度地創新，並集中精力管理製造吞吐量，以提高淨營運資本績效，同時投資支持多年來推出差異化產品來。這些都是困難但正確的決定。我們正在執行 IPP 策略。我們的投資、改進的能力和經驗豐富的團隊在2023 年實現了營收成長，而這種成長將在2024 年繼續。我們對我們強大的產品線和下一波創新感到鼓舞，我們預計這將推動長期可持續發展Elanco 的成長。這樣，我將把它交給凱蒂來主持問答。

Thanks, Jeff. We'd like to take questions from as many callers as possible, so we ask that you limit yourself to one question and one follow-up. Operator, please provide the instructions for the Q&A session, and then we'll take the first caller.

謝謝，傑夫。我們希望回答盡可能多的來電者提出的問題，因此我們要求您將自己限制在一個問題和一個後續行動上。接線員，請提供問答環節的說明，然後我們將接聽第一個來電者。

(Operator Instructions) Your first question comes from the line of Jon Block from Stifel.

（操作員說明）您的第一個問題來自 Stifel 的 Jon Block。

Jeff, it's good to see the filings that you mentioned for Zenrelia, on U.S. Any thoughts, high-level thoughts on the approval time lines for EU, U.K. and Australia, when you look at one of your competitors, I believe it's actually about 40% of worldwide applicable revenues outside the United States is where it actually resides. So certainly, it seems like a material opportunity. Any more color on potential approval time lines on U.S.

Jeff，很高興看到您提到的關於美國 Zenrelia 的申請。任何想法，關於歐盟、英國和澳大利亞批准時間表的高層想法，當您查看您的競爭對手之一時，我相信它實際上約為 40美國以外的全球適用收入的百分比是其實際居住地。當然，這似乎是一個重要的機會。關於美國潛在批准時間表的更多信息

Yes. Thanks, John. Yes, we've made a lot of progress and would say that Zenrelia will be the fastest product in the history of Elanco and globalizing the major innovations. So 9 major markets we made submissions in and it's very similar, I think, to the U.S. on these submissions or final submissions in the case of about a year. It varies from Japan, Australia to Europe. But if you figure that, we count on this being in an early 2025 mode when we would start to get these approvals.

是的。謝謝，約翰。是的，我們已經取得了巨大進展，可以說 Zenrelia 將成為 Elanco 史上最快的產品，並將重大創新全球化。我們在 9 個主要市場提交了意見，我認為這些意見或最終提交的情況與美國在大約一年的情況下非常相似。從日本、澳洲到歐洲，情況各不相同。但如果你這麼想的話，我們預計會在 2025 年初開始獲得這些批准。

Got it. Helpful. And then for the second question might be a little bit of a 2-parter, but -- so my thought was that the ADUFA date for Zenrelia was in February. And Jeff, can you discuss any high-level thoughts on -- it still remains to get done after any interaction with the agency? Do you have increased conviction with Zenrelia in 1H '24 approval time line? And Todd, quickly just to pivot, the 2024 GMs being down, arguably, that's off of sort of a lower number where people's hedge were at a couple of months ago. How do we think about the cadence of GMs for you guys? Usually, you have the benefit from parasiticides in 1H. But at the same time, you're trying to slow the plant and that's going to be a headwind. So any thoughts around GM cadence throughout 24?

知道了。有幫助。第二個問題可能有點像 2 方問題，但是 - 所以我的想法是 Zenrelia 的 ADUFA 日期是 2 月份。傑夫，您能否討論一下任何高層想法——在與該機構進行任何互動後，仍有待完成？您對 Zenrelia 在 1H '24 批准時間表內的信心是否增強了？托德（Todd）很快就轉向了，2024 年的通用汽車可以說是下降了，這比人們幾個月前的對沖數字要低。對你們來說，我們如何看待 GM 的節奏？通常，您會在 1 小時內受益於殺寄生蟲劑。但同時，你試著減慢工廠的速度，這將是一個逆風。那麼對於 24 小時內 GM 的節奏有什麼想法嗎？

Yes, John. No update today on the Zenrelia time line. We continue really with no change in terms of just a very productive dialogue with the FDA. We believe that market adoption, as we know, will be driven on value and execution. But again, the dialogue with the FDA is going well. No change. When there is change, of course, we'll be announcing approval and if there's any change to that, we'll let you know. So no change at all.

是的，約翰。 Zenrelia 時間軸今天沒有更新。我們繼續與 FDA 進行非常有成效的對話，沒有任何改變。我們相信，正如我們所知，市場採用將取決於價值和執行。但同樣，與 FDA 的對話進展順利。不用找了。當然，如果有變化，我們會宣布批准，如果有任何變化，我們會通知您。所以根本沒有改變。

John, thanks for the question on gross margin. As you know, for the full year, we expect gross margin to be pretty close to the same in '24 as '23 the cadence of that will be a little different. We'll still have higher gross margins in the first half of the year, but just not as high as we would have had last year because of the plant slowdowns. And so it's a -- first half of the year, slightly lower than last year. Q3 becomes pretty much in line. And then Q4, we get a tailwind as we started to slow down the plants during Q3 of '23, such that we don't have that same headwind in the fourth quarter of '24.

約翰，感謝您提出有關毛利率的問題。如您所知，就全年而言，我們預計 24 年的毛利率與 23 年的毛利率非常接近，但節奏會略有不同。今年上半年我們的毛利率仍然較高，但由於工廠放緩，毛利率不會像去年那麼高。今年上半年，略低於去年。第三季變得幾乎一致。然後第四季度，我們得到了順風，因為我們在 23 年第三季度開始放慢工廠的速度，這樣我們在 24 年第四季就不會遇到同樣的逆風。

Your next question comes from the line of Erin Wright from Morgan Stanley.

您的下一個問題來自摩根士丹利的艾琳·賴特 (Erin Wright)。

Another one on Zenrelia. Can you talk a little bit about the latest thoughts on your go-to-market strategy for Zenrelia? Your thoughts on differentiation of the product, leveraging distribution, price, how you can leverage also your position even the online channels, just given that this is a significant category for the online channel as well.

另一張是關於 Zenrelia 的。您能否談談您對 Zenrelia 上市策略的最新想法？您對產品差異化、利用分銷、價格、如何利用您的地位甚至線上管道的想法，因為這也是線上管道的一個重要類別。

Yes. Thanks, Erin, and thanks for the focus from you and John. As you know, we're excited about entering the Derm market. It will be a new market for us. We've got Zenrelia followed by our IL-31 short-acting both of these being differentiated assets. And our next wave of innovation that Ellen has made a lot of progress on and her team this year and bringing more products into development into our pipeline in Derm, there will be added assets. So this is a market we're going to be in and be a key player in, in the decade. So -- and I think we come back consistently as we look at this market and see that there's still a lot of un-medicalized dogs that are leaving vets without being treated. There's a strong desire for more choice by vets and pet owner and these fundamentals, we believe matter that this is a market that wants choice, and it's globalizing, as John just referenced as well.

是的。謝謝艾琳，也謝謝你和約翰的注意。如您所知，我們對進入 Derm 市場感到很興奮。這對我們來說將是一個新市場。我們有 Zenrelia，其次是我們的 IL-31 短效藥物，這兩種藥物都是差異化資產。 Ellen 和她的團隊今年在我們的下一波創新中取得了很大進展，並將更多產品帶入我們 Derm 的管道中，將會有更多的資產。因此，這是一個我們將在十年內進入並成為關鍵參與者的市場。因此，我認為，當我們觀察這個市場時，我們會發現仍然有很多未接受治療的狗未經治療就離開了獸醫。獸醫和寵物主人強烈渴望有更多選擇，而這些基本面，我們相信這是一個需要選擇的市場，而且它正在全球化，正如約翰剛才所提到的。

So I would emphasize that we continue to feel strongly that our differentiation is going to be as key as well. When you look at how we're going to launch this product, maybe just a couple of points, First of all, we keep coming back to the two most important pillars, our value and then execution. So value gets around the differentiation in the product the product itself, the portfolio that it's going to be in.

因此，我要強調的是，我們仍然強烈地認為我們的差異化也將是關鍵。當你看到我們將如何推出這個產品時，也許只有幾點，首先，我們不斷回到兩個最重要的支柱，我們的價值和執行。因此，價值圍繞著產品、產品本身以及產品組合的差異化。

And then as you look at execution, the first thing that we really focused on, Erin, was getting the share of voice at a level that can be extremely competitive, and we believe we're there now. We've got this sales force in place out there, selling parvo, preparing and we need to create share of voice high enough to create awareness at the vet clinic so that when the product gets into the market, that vet clinic is aware, and then we will start to turn up additional factors like digital and DTC. So that's going to be the staged approach.

然後，當你看看執行時，我們真正關注的第一件事，艾琳，是在極具競爭力的水平上獲得話語權，我們相信我們現在已經做到了。我們已經組建了一支銷售隊伍，銷售細小病毒，做好準備，我們需要創造足夠高的聲音份額，以提高獸醫診所的認識，這樣當產品進入市場時，獸醫診所就會意識到，並且然後我們將開始提出其他因素，例如數字和DTC。這將是分階段的方法。

We're still looking at distribution. The great news is we've got lots more options with distribution, given our ERP setup. We will intend to price to value and focus. We believe innovation will be rewarded and differentiation will be rewarded. So we will focus on a value-based pricing approach relative to our differentiation. And I think the last thing is what Derm does with us now is it adds kind of the fourth pillar, we've got para, we've got therapy, and we've got the vaccines. And we think as we look at corporates and other vet clinics, other segments, that fourth pillar having Derm and that total portfolio is going to give us advantage. And that will be a key part of our launch strategy as well, Erin.

我們仍在考慮分配。好消息是，考慮到我們的 ERP 設置，我們在分銷方面有更多選擇。我們將打算根據價值和重點進行定價。我們相信創新將得到回報，差異化也將得到回報。因此，我們將專注於與我們的差異化相關的基於價值的定價方法。我認為 Derm 現在對我們所做的最後一件事是它增加了第四個支柱，我們有帕拉，我們有治療，我們有疫苗。我們認為，當我們審視企業和其他獸醫診所、其他細分市場時，擁有 Derm 的第四個支柱以及整個產品組合將為我們帶來優勢。艾琳，這也將是我們發布策略的關鍵部分。

Okay. And then just on restructuring and the bigger picture around the sale of Aqua too and are you just continuing to evaluate other parts of your businesses here or what other segments could you evaluate as potential divestitures?

好的。然後，關於重組和圍繞 Aqua 出售的大局，您是否繼續評估您的業務的其他部分，或者您可以評估哪些其他部分作為潛在的資產剝離？

Yes. Maybe just a comment here. Here's how we're looking at it. I mean we are concentrating on our focus. Let me be very clear on pet health and livestock sustainability. And both of these decisions, both the sale of our Aqua business and the restructuring we announced today is all around creating enough resources to win and align to our pipeline in these bigger markets with greater earnings potential with these large blockbuster differentiated assets that we have. We have no intention of making any more strategic decisions here relative to other segments. Really, I would highlight coming to the restructuring. We're doing really 3 things as my comments that I made this morning. We're shifting resources into these markets, pet health and livestock sustainability, think like in Europe, we're going to move to a much more of a B2B approach in pigs and put a lot more resources and pets.

是的。也許只是在這裡發表評論。我們是這樣看待它的。我的意思是我們正在集中精力。讓我非常清楚地說明寵物健康和牲畜永續性。這些決定，無論是出售我們的Aqua 業務，還是我們今天宣布的重組，都是為了創造足夠的資源，以利用我們擁有的這些大型差異化資產贏得更大的市場，並與我們的管道保持一致，並具有更大的獲利潛力。我們無意在此做出任何相對於其他細分市場更具策略性的決策。確實，我要強調的是重組。正如我今天早上所說的那樣，我們實際上正在做三件事。我們正在將資源轉移到這些市場、寵物健康和牲畜永續性方面，就像在歐洲一樣，我們將在養豬方面轉向更多的 B2B 方法，並投入更多的資源和寵物。

Second is we're going to capitalize on this ERP implementation that's now done and concentrate roles in strategic areas.

其次，我們將利用現已完成的 ERP 實施，並將角色集中在策略領域。

And then lastly and importantly, is we're going to transition our business model in nonstrategic markets like Argentina. We've got about 90 countries we're in. About 45 of them were in with people and we're moving some additional markets like Argentina into what we're doing in the other 45, which is using a distribution model. So all of this allows us more resources that we can double down on these big areas, pet health and livestock sustainability.

最後也是重要的是，我們將在阿根廷等非策略市場轉變我們的商業模式。我們已經進入了大約 90 個國家。其中大約 45 個國家是與人合作的，我們正在將一些額外的市場（例如阿根廷）轉移到我們在其他 45 個國家所做的事情，即使用分銷模式。因此，所有這些都為我們提供了更多資源，使我們可以在寵物健康和牲畜永續性等大領域加倍投入。

Your next question comes from the line of Michael Ryskin from Bank of America Securities

您的下一個問題來自美國銀行證券公司的 Michael Ryskin

Can you guys hear me?

你們聽得到我說話嗎？

Yes.

是的。

Great. So first, I want to clarify a question on the guide for you, Todd. I think you're really clear that the revenues from the Zenrelia, Credelio Quattro, Bovaer are not included in the guide. But I want to be clear on how much of the cost is because from an OpEx perspective, obviously, the expansion of the commercial sales force, things like that, you've already put that in the place, that's already in numbers that today's, but what about incremental spend as the products get approved? So let's say they get approved, let's say to go to market and you do put some of that digital and DTC spend behind it in the second half of this year. Is that already included in the OpEx numbers? Or would that also be incremental just like the revenues?

偉大的。首先，我想為您澄清一個關於指南的問題，Todd。我認為您非常清楚 Zenrelia、Credelio Quattro、Bovaer 的收入並未包含在指南中。但我想弄清楚成本有多少，因為從營運支出的角度來看，顯然，商業銷售隊伍的擴張，諸如此類的事情，你已經把它放在了適當的位置，這已經是今天的數字了，但是產品獲得批准後的增量支出又如何呢？假設它們獲得批准，進入市場，並且您確實在今年下半年投入了一些數字和 DTC 支出。這是否已包含在營運支出數字中？或者說這也會像收入一樣是增量的嗎？

So Mike, those will also be incremental but what we did say in the prepared remarks is that we expect it to be accretive to EBITDA. So the EBITDA guidance you have will get better with the launch of the big [tree].

麥克，這些也將是增量的，但我們在準備好的發言中確實說過，我們預計它將增加 EBITDA。因此，隨著大樹的推出，您的 EBITDA 指導將會變得更好。

Got it. Okay. No, that's helpful. I just want to get that clarification on like how the model would change as the products get approved. So I appreciate that. And then a follow-up question on again on the guide for '24. I think you talked about 3% price to revenues, about 2% to 3% from existing innovation so from regular Credelio and Galliprant things like that but 2% total business constant currency. So volumes, another year of down volumes.

知道了。好的。不，這很有幫助。我只是想澄清一下，隨著產品獲得批准，模型將如何變化。所以我很欣賞這一點。然後是關於 24 年指南的後續問題。我想你談到了 3% 的價格與收入，大約 2% 到 3% 來自現有的創新，所以來自常規的 Credelio 和 Galliprant 之類的東西，但 2% 的總業務不變貨幣。因此，銷量又是銷量下降的一年。

Could you break that again into what you're expecting from end market versus specific headwinds to the legacy portfolio or maybe headwinds for competition? Just help us sort of deconvolute the volume expectation to '24 a little bit.

您能否再次將其分解為您對終端市場與傳統投資組合的特定阻力或競爭阻力的預期？只要幫助我們將 24 年的銷售預期稍微解構一下即可。

Sure, Mike. We do expect volumes down in 2024. Volumes were down in 2023, but less than they were in 2022. Some of this is just the competition inside the vet clinic that we've called out previously. You'll see Trifexis declined 21% in '23. It's down to being about $82 million in total revenue. So it's still a big product for us, but one that we just know has greater competition there. You'll also see both Seresto and Advantage family were down last year. Again, that's a lot of that's in the vet clinic. The retail side of our business in the U.S. grew double-digits. It was really strong as Bobby and his team got to more points of distribution, more physical availability, the share of voice and all of the work they're doing. So some of the volumes are that legacy. Experior ramp is great. As you know, that generally takes out Optaflexx, which is a different part of the portfolio. And so impacts volumes as Experior ramp.

當然，麥克。我們確實預計 2024 年的銷量會下降。2023 年的銷量會下降，但比 2022 年要少。其中一些只是我們之前指出的獸醫診所內部的競爭。您會看到 Trifexis 在 2023 年下降了 21%。總收入降至約 8,200 萬美元。所以它對我們來說仍然是一個大產品，但我們知道那裡的競爭更加激烈。您還會看到Seresto 和Advantage 系列去年均出現下滑。再說一遍，其中很多都是在獸醫診所裡進行的。我們在美國的零售業務實現了兩位數成長。當鮑比和他的團隊獲得更多的分發點、更多的實體可用性、聲音共享以及他們正在做的所有工作時，這真的很強大。所以有些卷是遺產。經驗坡道很棒。如您所知，這通常會淘汰 Optaflexx，它是產品組合的不同部分。因此，隨著 Experior 的成長，產量也會受到影響。

So overall, we continue to feel very good about the sales momentum we have, the acceleration in '23 versus '22 and so as we move forward, we have that. There's also an impact from these 2 different countries on volume as we exit some of the low-margin distribution and flip Argentina and a few other markets to using a third-party distributor versus our own internal people on the ground.

因此，總體而言，我們仍然對我們的銷售勢頭感到非常滿意，23 年與 22 年相比，銷售勢頭有所加速，因此，隨著我們向前邁進，我們已經做到了這一點。當我們退出一些低利潤分銷並轉向阿根廷和其他一些市場，轉而使用第三方分銷商而不是我們自己的內部人員時，這兩個不同的國家/地區也會對銷售產生影響。

Your next question comes from the line of Balaji Prasad from Barclays.

你的下一個問題來自巴克萊銀行的巴拉吉·普拉薩德（Balaji Prasad）。

Firstly, with regards to the decline in Pet Health in 4Q and outlook. So you spoke about competitive pressure in veterinary clinics. Can you help us understand if this is transient or otherwise, is it driven by new launches from competitors? Or are there some other factors at work? Also in 2024, as we speak about enhancing the sales force, could you quantify the sales force add? And do you think you'll be adequately staffed to support the new launches?

首先，關於寵物健康第四季的下滑及展望。所以你談到了獸醫診所的競爭壓力。您能否幫助我們了解這是暫時的還是其他原因，是否是由競爭對手推出的新產品所推動的？還是還有其他因素在作用？同樣在 2024 年，當我們談到增強銷售團隊時，您能否量化增加的銷售團隊？您認為您有足夠的人員來支援新產品的發布嗎？

Yes. Thank you very much. Yes, highest level just on the U.S. Pet and I would step back and say we've made a lot of progress in U.S. Pet overall. And at the highest level, I think our -- we're much more competitive today. We've seen significant improvement in our overall engagement. Our team and I think the strategy is working that Todd just highlighted in terms of share of voice, physical availability, innovation and price. So we're much more competitive as an organization today. And 2023 was a strong year. If you step back and look, it was -- we saw an 8-point improvement sequentially from down minus 9 in 2022 to minus 1 overall. And I see this from the standpoint of stronger portfolios, more share of voice, a stronger team. We've changed incentives for the sales force and just our overall portfolio is stronger when you start adding Bexacat, ZORBIUM and now Parvo and Parvo is opening a lot of doors for the vet clinic. So as we step back, there's no question we're set up, and we see nice growth coming ahead of our total global Pet Health business and Farm Animal business, both contributing to growth in 2024. No question, the competitiveness in the vet clinic in the U.S. is high. I mean without question, I would say there's a few factors that we would note is there's always the seasonality and weather factors. There's some economics we've seen more on the retail side, where there's some trade down and the competitive pressure inside the vet clinic. I think we're well positioned as we're bringing innovation as we're -- there's an anticipation of these blockbusters that are coming and our omnichannel approach, being able to have the retail business complementing the vet clinic business, we're probably better indexed relative to those vet visits than most companies.

是的。非常感謝。是的，美國寵物的最高水平，我會退後一步說，我們在美國寵物整體上取得了巨大進展。在最高水平上，我認為我們今天更具競爭力。我們發現我們的整體參與度有了顯著改善。我們的團隊和我認為托德剛才在語音份額、物理可用性、創新和價格方面強調的策略正在發揮作用。因此，今天我們作為一個組織更具競爭力。 2023 年是強勁的一年。如果你退一步看，我們看到了 8 個百分點的改善，從 2022 年的負 9 點到整體的負 1 點。我從更強大的產品組合、更多的話語權和更強大的團隊的角度來看這一點。我們改變了對銷售人員的激勵措施，當你開始添加 Bexacat、ZORBIUM 時，我們的整體產品組合變得更加強大，現在 Parvo 和 Parvo 為獸醫診所打開了許多大門。因此，當我們退後一步時，毫無疑問我們已經做好了準備，我們看到全球寵物健康業務和農場動物業務都將實現良好增長，這兩者都將促進2024 年的增長。毫無疑問，獸醫診所的競爭力在美國是很高的。我的意思是，毫無疑問，我想說，我們要注意一些因素，那就是季節性和天氣因素。我們在零售方面看到了更多的一些經濟因素，其中存在一些貿易下降和獸醫診所內部的競爭壓力。我認為我們處於有利地位，因為我們正在帶來創新——人們預計這些即將到來的重磅炸彈以及我們的全渠道方法，能夠讓零售業務補充獸醫診所業務，我們可能會與大多數公司相比，相對於獸醫就診的索引較好。

Your next question comes from the line of Umer Raffat from Evercore ISI.

您的下一個問題來自 Evercore ISI 的 Umer Raffat。

Just two here, if I may. First, there's some language on distribution model changes. Could you just confirm there's no changes in distributor strategy in U.S. nor are there any payment term extensions in the U.S. for 2024? And then secondly, on heading into your sort of Quattro launch, there's some feedback that Zoetis is starting to preempt that potentially by making free tape warm treatments available in case a dog does contract tape worms. How are you thinking about that relative to your differentiation and expectations for launch?

如果可以的話，這裡只有兩個。首先，有一些關於分銷模式變化的語言。您能否確認美國的經銷商策略沒有變化，美國的付款期限也沒有延長至 2024 年？其次，在即將推出 Quattro 時，有一些反饋稱 Zoetis 正在開始先發製人，提供免費的膠帶溫暖治療，以防狗狗感染膠帶蟲。相對於您的差異化和對發布的期望，您如何看待這一點？

Well, let me take the first one, Umer, and I'll pass over to Jeff on tape worm. So with respect to distribution, we're really speaking in this case to like Argentina. As Jeff mentioned, we're in 90 countries in total with people on the ground and about 45. Those other countries we use distributors to take our products to market and we just sell to them. So that's what we're speaking to. With respect to the U.S., we are bringing some [bear] products into the U.S. distribution channel. It's reflected in the guidance. It's not material. But with our system consolidation, we're able to now be more efficient and do it one way versus having 2 different models that we've been running the last few years. Jeff, on...

好吧，讓我來談談第一個，烏默，我將把磁帶交給傑夫。因此，就分配而言，我們實際上是在談論阿根廷。正如傑夫所提到的，我們在 90 個國家/地區共有大約 45 個員工。在其他國家/地區，我們透過經銷商將我們的產品推向市場，然後我們只向他們銷售。這就是我們正在談論的。至於美國，我們正在將一些[熊]產品引入美國分銷管道。這反映在指導上。這不是物質的。但透過我們的系統整合，我們現在能夠提高效率，並以一種方式完成任務，而不是過去幾年運行的兩種不同模型。傑夫，關於...

Yes. Thanks, Umer. Yes, we're excited about Credelio Quattro and again, no update. The time line continues. We continue to have productive dialogue with the FDA. I think I would just back up and just make a couple of comments. I think we know parasiticides is really an uninvolved category for pet parents and vets that recommendation is key. So I come back to the core strategy, which is making sure share of voice is high. And noted, yes, we've added our 75 reps they've got experience are in the field right now and they're trained and they're adding value as we speak, selling Parvo and other products, so we've got the share of voice.

是的。謝謝，烏默。是的，我們對 Credelio Quattro 感到很興奮，但再次沒有更新。時間線還在繼續。我們繼續與 FDA 進行富有成效的對話。我想我會支持並發表一些評論。我認為我們知道殺寄生蟲劑對於寵物父母和獸醫來說確實是一個不涉及的類別，推薦是關鍵。所以我回到核心策略，即確保較高的話語權份額。並指出，是的，我們已經增加了 75 名代表，他們現在在現場，他們接受過培訓，正在增加價值，銷售 Parvo 和其他產品，所以我們已經有了份額的聲音。

And then the second is, yes, differentiation. And we believe there's a few fundamentals that are key as you look at differentiation. One is broader coverage is always better, and full solutions are definitely preferred by the veterinarian. The second is diagnostics that can match the disease and there's evidence today with increased diagnostics from IDEXX and others around tape worm that this concern is there, and it's a zoonotic concern as well. I think that's second. And with more people and more focus, both on the diagnostic side and the animal health side, the awareness is higher that usually leads to more prevalence. And I think the last trend is zoonotic concerns, Umer, continue to be there, especially after COVID and specific to tape worms, look, one common tape worm is transmitted by fleas but there's many tapeworms relevant to domestic dogs and have the potential to carry tapeworms and that's a serious disease impact. So we always say that if all else is equal, why wouldn't use a product with more coverage. So that's our approach. Again, we've got the right teams in place preparing for the launch. We've had a long history in parasiticides with the broadest portfolio in and outside the vet and we're excited to be bringing Quattro to the market.

第二個是，是的，差異化。我們相信，當您考慮差異化時，有一些關鍵的基本面。一是覆蓋範圍越廣越好，獸醫肯定更喜歡完整的解決方案。第二個是可以匹配疾病的診斷方法，今天有證據表明，IDEXX 和其他有關絛蟲的診斷不斷增加，這種擔憂確實存在，而且也是一種人畜共患問題。我認為是第二位。隨著越來越多的人在診斷方面和動物健康方面更加關注，人們的認識也會提高，這通常會導致患病率更高。我認為最後一個趨勢是人畜共患問題，Umer，繼續存在，特別是在新冠疫情之後，具體到絛蟲，看，一種常見的絛蟲是通過跳蚤傳播的，但有許多絛蟲與家養狗有關，並且有可能攜帶絛蟲，這是一種嚴重的疾病影響。所以我們總是說，如果其他條件都相同，為什麼不使用覆蓋範圍更大的產品呢？這就是我們的方法。同樣，我們已經安排了合適的團隊為發布做準備。我們在殺寄生蟲劑領域擁有悠久的歷史，在獸醫內外擁有最廣泛的產品組合，我們很高興將 Quattro 推向市場。

And just one thing, Umer, on your payment terms. Payment terms generally stay the same. We're always different things with different customers. But overall, accounts receivables was a big inflow of cash in Q4 as we had strong operating cash flow performance relative to previous quarters. And a lot of that was just the work done by our teams around the globe to collect cash and really focus with our one system to get after AR in a better way.

烏默，只有一件事是關於您的付款條件。付款條件通常不變。對於不同的客戶，我們總是採取不同的做法。但總體而言，應收帳款是第四季度的大量現金流入，因為與前幾季相比，我們的經營現金流表現強勁。其中很大一部分只是我們在全球的團隊所做的工作，目的是籌集資金，並真正專注於我們的一個系統，以更好的方式追隨 AR。

Your next question comes from the line of Glen Santangelo from Jefferies.

您的下一個問題來自 Jefferies 的 Glen Santangelo。

Just 2 quick ones for me. I just want to follow up on the competitive pressure in the vet clinics. It sounds like you're certainly making some progress. And I'm just kind of curious about your confidence in the ability to take those 3% price increases this year that you're forecasting in the guidance. Have you taken those already? And has there been any pushback as far as those are concerned.

對我來說只有 2 個快速的。我只是想跟進獸醫診所的競爭壓力。聽起來你確實取得了一些進展。我只是好奇您對今年 3% 的價格上漲（您在指南中預測的）能力的信心。你已經拿走了那些嗎？就這些而言，是否存在任何阻力？

Yes. First of all, Glen, thank you for the coverage and joining the interest in research on Elanco. Yes. So absolutely, there's -- the competitive pressure is there. I would believe, as I've said, we're in a much stronger position with stronger teams stronger portfolio, and I think a lot of the tactics that we're doing relative to this. And I think the anticipation of our innovation as well, Glen, really creates partnerships with distributors, corporate clinics and others. It's opened a lot more doors which has been strong. And I would say even the introduction and an example of proof point, if you point to the introduction of the latest broad spectrum parasiticide, what we're actually seeing is really more share taken within those and actually less share compared to other competitive launches taken from us. And I think that shows differentiation, our segmentation, digital, all these things are working. So we're set up well. And relative to price, we've continued to execute price in a very value-based way and more innovation always allows us to bring those prices and we've not seen a pushback on price and continue to see strong resilience for the market and a lot of interest and adoption from the vet side of our products and our portfolio.

是的。首先，Glen，感謝您的報告以及對 Elanco 研究的興趣。是的。所以絕對存在競爭壓力。我相信，正如我所說，我們處於更強大的地位，擁有更強大的團隊和更強大的產品組合，我認為我們正在採取的許多策略都與此相關。我認為格倫，對我們創新的期望確實與經銷商、企業診所和其他人建立了合作關係。它打開了更多的大門，而且非常堅固。我想說，即使是介紹和證明點的例子，如果你指出最新的廣譜殺蟲劑的介紹，我們實際上看到的是，與其他競爭性產品相比，這些產品中所佔的份額實際上更多，而實際上所佔的份額更少來自我們。我認為這表明了差異化、我們的細分、數位化，所有這些事情都在發揮作用。所以我們已經安排好了。相對於價格，我們繼續以非常基於價值的方式執行價格，更多的創新總是讓我們能夠提供這些價格，我們沒有看到價格的回落，並且繼續看到市場的強大彈性和獸醫方面對我們的產品和產品組合表現出極大的興趣和採用。

Perfect. Maybe if I can just ask one revenue follow-up here. I'm just trying to triangulate your comments on innovation sales in 2025. And I appreciate you don't want to talk about 2025 at this point. But you're sort of guiding people to $600 million to $700 million of sales from new innovation products. And if I sort of back out what you've done so far in '23 and what you're expecting in '24. Is it fair to say that we can sort of triangulate what you're sort of talking about with respect to the 3 pending launches?

完美的。也許我可以在這裡詢問一項收入後續情況。我只是想對您對 2025 年創新銷售的評論進行三角分析。我很高興您現在不想談論 2025 年。但你正在引導人們從新的創新產品中獲得 6 億至 7 億美元的銷售額。如果我有點反駁你在 23 年迄今為止所做的事情以及你對 24 年的期望。公平地說，我們可以對您所談論的 3 個待發布產品進行三角測量嗎？

Yes. We have, again, been very consistent to the commitment of $600 million to $700 million. It is an all exact math. As you do see, as Todd as a reference, you're going to have Experior climb and you're going to have some overlap and products that come out, such as an Optaflexx, so but yes, as you -- we start to guide to the $350 million, $400 million this year, before the new products, then with the launches of the new products and our IL-31 that we have come in 2025, those products will contribute. And yes, we're staying and feel very confident in our commitment of the $600 million to $700 million by the end of '25. That is correct.

是的。我們再次非常一致地履行了 6 億至 7 億美元的承諾。這是一個完全精確的數學。正如您所看到的，以 Todd 作為參考，您將進行 Experior 攀爬，並且將出現一些重疊和產品，例如 Optaflexx，所以但是，是的，正如您一樣，我們開始今年在新產品推出之前預計將達到3.5 億美元、4 億美元，然後隨著新產品和我們在2025 年推出的IL-31 的推出，這些產品將做出貢獻。是的，我們會留下來，並對 25 年底前 6 億至 7 億美元的承諾非常有信心。那是對的。

Your next question comes from Chris Schott from JPMorgan.

您的下一個問題來自摩根大通的克里斯·肖特。

Just two questions for me. Maybe first on just the Parvo opportunity in 2024. Just any additional color on how much inventory you have this year and how big of a product that could become? And maybe just as you think about longer term, would that just update us on the ex U.S. opportunity for Parvo. And then my second question was just on gross margins. Just any color you can provide on how much some of these inventory and manufacturing slowdown actions are having on gross margins in 2024? I'm really just trying to get some color on what the underlying trends are as we start to think about kind of beyond this year of where gross margins can go?

對我來說只有兩個問題。也許首先是 2024 年的 Parvo 機會。是否有任何關於今年您有多少庫存以及可能成為多大的產品的額外資訊？也許就像您考慮更長期的情況一樣，這是否只是讓我們了解 Parvo 在美國的最新機會。然後我的第二個問題是關於毛利率。您能否提供任何顏色來說明這些庫存和製造放緩行動對 2024 年毛利率的影響有多大？我真的只是想了解一些基本趨勢，因為我們開始思考今年之後的毛利率會走向何方？

Yes. Thanks, Chris, for the question on Parvo, I'll take that one first. It did land in line with our expectations in the quarter. But the bigger news is, yes, we've demonstrated the ability to scale our 2,000 leader which gives us confidence that we've got the capacity and the supply to really go into the marketplace full force, and we're doing that with our new sales force right now. The product is performing well. That's very important. I think another important note, Chris, is the products are in about 3,300. Clinics and more so with the general practitioners, which demonstrates that there's -- this is out there. There's prevalence and many clinics are seeing this. 73% of the adoption of those clinics is in general practitioners 12 or so is in the shelter market. So we see the uptake initially. We're seeing reorders as well. So we see this product being a key contributor to growth and a real step up this year.

是的。謝謝克里斯，關於 Parvo 的問題，我先回答這個問題。它確實符合我們本季的預期。但更重要的消息是，是的，我們已經展示了擴大 2,000 名領導者規模的能力，這讓我們相信我們有能力和供應來真正全力進入市場，而且我們正在透過我們的現在有新的銷售隊伍。該產品表現良好。這非常重要。 Chris，我認為另一個重要的注意事項是產品大約有 3,300 種。診所，尤其是全科醫生，這表明存在——這是存在的。這種情況很普遍，許多診所都看到了這種情況。這些診所中 73% 是全科醫生，其中 12% 左右是在庇護所市場。所以我們最初看到了採用率。我們也看到了重新訂購的情況。因此，我們認為該產品是今年成長的關鍵貢獻者和真正的進步。

And then yes, we would -- and we've launched also, just to highlight, we've launched a pretty significant Defender campaign to really drive just awareness of Parvo. Right out of the gate, we've got about 1.2 billion impressions in social media marketing campaign that we're doing. We've set a charge with a vet clinic industry and a pledge to save 1 million puppies by the end of the decade. So all of that, I think, is just creating awareness, strong marketing, more share of voice.

然後是的，我們會 - 我們也推出了，只是為了強調，我們推出了一項非常重要的 Defender 活動，以真正提高人們對 Parvo 的認識。我們正在進行的社群媒體行銷活動一開始就獲得了大約 12 億次展示。我們向獸醫診所產業提出了一項要求，並承諾在本世紀末拯救 100 萬隻小狗。因此，我認為，這一切只是為了提高知名度、強而有力的行銷、更多的話語權。

And then yes, the next thing is we are starting to target key markets internationally where we can actually bring that product in where there's a higher prevalence of Parvo, and that may not be always the typical just a European market. There are other emerging markets as well with higher Parvo, and we see a blockbuster here potential as we globalize the product. So off to a good start, we'll definitely be updating you quarter-to-quarter on some of the key metrics and the adoption.

然後，是的，接下來我們開始瞄準國際關鍵市場，我們實際上可以將該產品引入細小病毒流行率較高的地區，而這可能並不總是典型的歐洲市場。其他新興市場也有更高的 Parvo，隨著我們將產品全球化，我們看到了這裡的巨大潛力。因此，有一個好的開端，我們肯定會每季向您通報一些關鍵指標和採用的最新情況。

Chris, with respect to the manufacturing slowdown embedded in our guidance for 2024 is 150 to 170 basis point headwind from those plant slowdowns.

Chris，就我們 2024 年指引中包含的製造業放緩而言，這些工廠放緩帶來了 150 至 170 個基點的阻力。

Your next question comes from Steve Scala from TD Cowen.

您的下一個問題來自 TD Cowen 的 Steve Scala。

This is Chris on for Steve. We had two. First, on the new launch, are there any other gating factors for U.S. launch post-FDA approval like state [mobile] approvals, building inventory or contracting with distributors?

這是克里斯替史蒂夫發言。我們有兩個。首先，對於新產品的上市，FDA 批准後在美國上市是否還有其他限制因素，例如國家[移動]批准、建立庫存或與分銷商簽訂合約？

And then second, on the U.S. sales force, what sort of initial feedback have you received? And has that had any positive impact on the positioning of the company's current portfolio?

其次，關於美國銷售隊伍，您收到了什麼樣的初步回饋？這對公司目前投資組合的定位有什麼正面影響嗎？

Thanks, Chris, real quick. As we've noted here on gating factors, we expect that upon approval, there's typically a couple of months before actually there is a launch, and that's driven heavily by manufacturing, packaging, labeling and that's the typical gating factor. And then a lot of positive feedback. We had a tremendous interest and many, many applications and believe we selected a very experienced strong sales force. And actually, the transition has gone faster and we don't believe the distraction factor may be as high as we expected, and we're looking forward to that sales force with that added investment in the first half to help us ramp our existing sales here in the first half.

謝謝，克里斯，很快。正如我們在此關於限制因素所指出的那樣，我們預計在獲得批准後，通常需要幾個月的時間才能真正發布，這在很大程度上是由製造、包裝、標籤驅動的，這是典型的限制因素。然後很多正面的回饋。我們對此產生了極大的興趣，並收到了很多很多的申請，並相信我們選擇了一支經驗豐富、實力雄厚的銷售團隊。事實上，轉型進展得更快，我們認為幹擾因素可能沒有我們預期的那麼高，我們期待銷售人員在上個半年增加投資，幫助我們提高現有銷售額上半場在這裡。

Your next question comes from the line of Navann Ty from BNP Paribas.

您的下一個問題來自法國巴黎銀行的 Navann Ty。

My first one is you touch base on pricing for Zenrelia, are you able to expand on general pricing strategy versus potential differentiation for Quattro, Bovaer, and Zenrelia?

我的第一個問題是您對 Zenrelia 的定價進行了了解，您是否能夠擴展一般定價策略與 Quattro、Bovaer 和 Zenrelia 的潛在差異化？

And my second question is just a clarification. Does EPS guidance reflects the lower interest expenses resulting from the Aqua sale?

我的第二個問題只是一個澄清。每股盈餘指引是否反映了 Aqua 出售帶來的較低利息支出？

Let me take the first one, Navann, and welcome back to coverage. We have not reduced interest expense in our guidance for the Aqua sales. So that's that interest expense is as if Aqua sale doesn't happen. So we'll update all the guidance for Aqua post conclusion of that sale on a quarterly call.

讓我談談第一個，納文，歡迎回到報道。我們沒有減少 Aqua 銷售指導中的利息支出。因此，利息支出就好像 Aqua 銷售沒有發生一樣。因此，我們將在銷售結束後的季度電話會議上更新 Aqua 的所有指導。

Yes. Navann, on all of our products, actually, we see in the future blockbusters with the differentiation with our portfolio, we intend to price for value. We see this in past innovations that have been launched, and we believe that innovation will be rewarded and that will be part of our offering.

是的。納萬，實際上，在我們所有的產品上，我們看到未來的大片與我們的產品組合具有差異化，我們打算按價值定價。我們在過去推出的創新中看到了這一點，我們相信創新將會得到回報，這將成為我們產品的一部分。

Your next question comes from Nathan Rich from Goldman Sachs.

您的下一個問題來自高盛的內森·里奇。

Great. Just a few quick ones at the end here. So Todd, you highlighted the $20 million to $25 million investment in Pet Health in the first quarter. Could you give us a rough split between what's related to the field force expansion versus what might be promotional dollars focused on parasiticides, just as we think about maybe what the underlying kind of expense base goes up in 2024?

偉大的。最後只是一些快速的。托德，您強調了第一季對寵物健康的 2000 萬至 2500 萬美元的投資。正如我們思考 2024 年潛在的費用基礎可能會增加的情況一樣，您能否給我們粗略地劃分一下與現場部隊擴張相關的費用和可能集中在殺寄生蟲劑上的促銷費用？

And then on the OTC growth for '24, anything more specific you could share on your expectations for Advantage and Seresto this year? And then lastly, Jeff, maybe just going back to your comments on having that kind of full or more innovative portfolio in pet health with Derm and Parvo. Could you maybe talk about what that means in the market and the flexibility that gives you? Is that better access to corporate accounts, the ability to use volume discounts? Just any additional color there would be great.

然後，關於 24 年的 OTC 成長，您對今年對 Advantage 和 Seresto 的期望有什麼更具體的分享嗎？最後，Jeff，也許只是回到您對 Derm 和 Parvo 在寵物健康領域擁有這種完整或更創新的產品組合的評論。您能否談談這對市場意味著什麼以及為您帶來的靈活性？這是更好地存取公司帳戶、使用批量折扣的能力嗎？只要有任何額外的顏色就會很棒。

Sure, Nate. Thanks for the question. Yes, there's about -- the total investment for the sales force is about $20 million on a full year basis. So essentially, that's pretty -- given its people, it's pretty standard over the course of the year. So about [$5 million] in Q1. And then the investments in Pet Health are really about the promotional spend. And a lot of that is to drive Adtab, which we're excited about, the first oral parasiticide in the OTC markets in Europe. And part of our kind of odd to the first half, second half is the restructuring we announced today, that's going to provide a lot of savings that we're using to fund these incremental investments behind big opportunities, but that savings is more second half loaded where with the Northern Hemisphere parasiticide season, we really got to make the investments in the first half to drive the uptake of those products.

當然，內特。謝謝你的提問。是的，全年銷售隊伍的總投資約為 2,000 萬美元。所以從本質上來說，這很不錯——考慮到它的員工，這在一年中是相當標準的。第一季約 [500 萬美元]。然後，對寵物健康的投資實際上是關於促銷支出。其中很大一部分是為了推動 Adtab，我們對此感到興奮，它是歐洲非處方藥市場上的第一個口服寄生蟲藥。我們上半年和下半年的一些奇怪之處是我們今天宣布的重組，這將提供大量節省，我們將用這些節省來為這些大機會背後的增量投資提供資金，但下半年節省的更多隨著北半球殺蟲劑季節的到來，我們確實必須在上半年投資以推動這些產品的使用。

With respect to Seresto and Ad family, we're not guiding by product today. But overall, we are feeling good about the positioning of those in retail, and that's a big place where we have leadership, and we expect that leadership to continue.

關於 Seresto 和 Ad 系列，我們今天不以產品為指導。但總的來說，我們對零售業的定位感覺良好，這是我們擁有領導地位的重要領域，我們希望這種領導地位能持續下去。

Yes. And then relative to just the overall portfolio, I would say no matter the segment, when you enter a clinic and have all 4 dimensions that I just mentioned, and Derm will be the new one for us. It really puts us in a unique position as the next company to be able to do that, and that just gives that optionality to the vet and we'll be looking at that against all segments, but I do think that will be a major factor and a major differentiator to most of the major animal health companies to be able to have the breadth of the portfolio that we do have with the Derm addition.

是的。然後相對於整體產品組合，我想說，無論是哪個細分市場，當你進入一家診所並擁有我剛才提到的所有 4 個維度時，Derm 將成為我們的新維度。作為下一家能夠做到這一點的公司，這確實使我們處於獨特的地位，這只是為獸醫提供了選擇權，我們將針對所有細分市場進行研究，但我確實認為這將是一個主要因素與大多數主要動物保健公司相比，我們的一個主要區別是能夠擁有我們所擁有的Derm 產品組合的廣泛性。

Your last question today comes from Brandon Vazquez from William Blair.

今天的最後一個問題來自威廉布萊爾的布蘭登巴斯克斯。

Can I just ask one, I'll ask two upfront here. First, on the FDA conversations that you guys are having? I guess, as you get closer to an approval here in first half '24 that you're reiterating, I think maybe I would have expected you could give a little bit more confidence or a little narrowing of the time frame. So am I -- what am I over reading that? Is there anything going on in conversations? Do you guys feel more confident as you're going through these discussions? And then maybe the second one is just highlight a key -- couple of key products within innovation in that bucket that are driving growth into '24?

我可以只問一個嗎，我會先問兩個。首先，關於你們正在與 FDA 進行的對話？我想，當你在 24 年上半年重申你越來越接近批准時，我想也許我會期望你能給予更多一點信心或稍微縮小一點時間範圍。我也是──我讀完這篇文章到底讀了什麼？談話中是否有事情發生？當你們進行這些討論時，你們是否感到更有信心了？然後，也許第二個只是強調了一個關鍵——該領域創新中的幾個關鍵產品正在推動 24 世紀的成長？

Yes. Let me take the second one first. There's no question, and we're excited about Experior. Experior exceeded our $70 million run rate at ended the year at $54 million and with that growth and that trajectory we see and a shortage of cattle numbers, Experior plays into all of that relative to the value proposition. So and then, of course, Parvo will be a driver, one we don't talk as much about, but with this restructuring, we're really adding significant investment in Adtab in Europe that had a good strong finish to the year. So those would be the 3 key that I would point to. And then, look, Brandon, I wouldn't read into anything. We're -- our confidence remains. Our confidence in the differentiation remains. These are great assets. Our regulatory team is doing a great job, and we're in a very proactive, productive dialogue with the CBM, and we'll update you if anything does change.

是的。我先來說第二個。毫無疑問，我們對 Experior 感到非常興奮。截至年底，Experior 的運行率超過了 7000 萬美元，達到了 5400 萬美元，隨著我們看到的增長和軌跡以及牛數量的短缺，Experior 發揮了與價值主張相關的所有這些作用。當然，Parvo 將成為一個推動者，我們不會過多談論這一點，但透過這次重組，我們確實增加了對歐洲 Adtab 的大量投資，該公司在今年取得了良好的業績。所以這就是我要指出的第三個關鍵。然後，聽著，布蘭登，我不會解讀任何東西。我們的信心依然存在。我們對差異化的信心依然存在。這些都是巨大的資產。我們的監管團隊做得很好，我們正在與 CBM 進行非常積極、富有成效的對話，如果有任何變化，我們會向您通報最新情況。

Thank you, ladies and gentlemen. I will now turn the conference over to Jeff Simmons for closing remarks.

謝謝你們，女士們、先生們。我現在將會議交給傑夫·西蒙斯（Jeff Simmons）致閉幕詞。

I know we're on time here, but I just want to say to everybody, thank you for the time. I think 2023, the second half really marks progress and momentum. Two quarters at 5% constant currency growth, we doubled our innovation. We increased our debt paydown beyond our expectations. And as you look to '24, the priorities remain the same: sustained growth on the top line innovation and bringing innovation forward and cash. And against all of those metrics, we have inside the guide, strong expectations to continue to make great progress. Thank you for your interest and your investment in Elanco. We look forward to a very exciting year and a year with high engagement with all of you.

我知道我們準時到達，但我只想對大家說，謝謝你們抽出時間。我認為2023年下半年確實標誌著進步和勢頭。兩個季度，以 5% 的恆定匯率成長，我們的創新能力翻了一番。我們的債務償還超出了我們的預期。展望 24 年，優先事項保持不變：營收創新的持續成長以及推動創新和現金。根據所有這些指標，我們在指南中強烈期望繼續取得巨大進展。感謝您對 Elanco 的關注與投資。我們期待著非常激動人心的一年，也是與大家高度互動的一年。

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。