Revenue Analysis
Total and Operating Revenue: There has been incremental growth in total revenue, from $2.0 billion in March 2023 to $2.19 billion by March 2024. Operating revenue mirrored the pattern of total revenue, indicating a consistent operational scale during the period.
Gross Profit Margins: Gross profit followed an upward trajectory, starting at approximately $1.412 billion in March 2023 and reaching about $1.547 billion by March 2024. The increases correspond with revenue growth, suggesting maintained or improved efficiency in managing production costs or product pricing strategy.
Cost Management
Cost of Revenue: The cost of revenue has seen variations, with the lowest reported at $505 million in March 2023, increasing to $643 million by March 2024. This variation corresponds with revenue growth phases, reflecting the direct cost implications of enhanced sales activities.
Operating Expense: Operating expenses rose significantly from $684 million in March 2023 to $746 million in March 2024. This suggests increased operational activity possibly linked to broader market reach or enhancements in operational scope.
Total Expenses: Total expenses have escalated from $1.272 billion in March 2023 to approximately $1.389 billion by March 2024, indicating increased operating costs alongside revenue and gross profit growth.
Profitability Analysis
EBITDA: EBITDA expanded from $880 million in March 2023 to $931 million in March 2024, highlighting an improved earnings before interest, taxes, depreciation, and amortization, showcasing an overall upward profitability trend.
Operating Income: Operating income displayed growth from $728 million to $801 million within the same period, which likely indicates efficient management of operating expenses relative to revenue.
Pretax Income and Net Income: Pretax income has seen a healthy increase from $697 million to $747 million. Net income also progressed positively from $552 million to $599 million, reinforcing the company’s profitability.
Cash Flow Indicators
Reconciled Depreciation: Reconciled Depreciation was fairly stable, slightly increasing from $120 million in March 2023 to $126 million by March 2024, which could reflect steady investment in capital assets.
Interest Expense: The interest expense fluctuated mildly, climbing from $63 million in March 2023 to $58 million by March 2024, suggesting effective debt management strategies.
Taxation
Tax Rate: The effective tax rate ranged from 16.9% to 23.2%, reflecting slight variations in fiscal charges likely due to changes in deductible amounts and earnings before taxes.
Tax Provision: Tax provisions were managed efficiently, with values like $146 million in March 2023 growing to $148 million by March 2024, reflecting adjustments to the pretax income levels.
Tax Effect of Unusual Items: The tax effect of unusual items varied, with figures such as -$6.28 million in March 2023, showing the tax impact of non-recurring items.
Shareholder Metrics
Diluted and Basic EPS: Earnings per share (both diluted and basic) increased from 1.19 in March 2023 to 1.31 by March 2024. This uptrend signifies a stronger return to shareholders over time.
Average Shares: The number of shares (diluted) ranged from around 464.6 million in March 2023 to approximately 458.8 million by March 2024, indicating a marginal reduction and possibly some share repurchase activities.
Net Income Available to Common Stockholders: This figure consistently matched the net income, standing at $552 million in March 2023 and rising to $599 million in March 2024, confirming that total net income was available to common shareholders.
Conclusion
In reviewing 3 years of ZTS’s financial performance, the company has shown a positive trajectory in revenue growth, cost management, and profitability. The stable cash-flow and tax management further complement its financial strength. A combination of growth strategies and operational efficiency contributes to this ongoing success, providing a reliable investment avenue for stakeholders.