Q3 2024 Elanco Animal Health Inc Earnings Call Transcript
Key Points
- Elanco Animal Health Inc (ELAN) achieved key milestones in its innovation portfolio, with new products driving growth and improved cash flow.
- The company received US FDA approval for Centralia and Credelio Quattro, expected to be significant competitors in the pet health market.
- Elanco paid down $1.3 billion of debt in the third quarter, reducing net leverage significantly.
- The company expects organic revenue growth to accelerate to mid-single digits in 2025, driven by new product launches.
- Elanco's farm animal business showed strong performance, with Experior expected to reach blockbuster status with sales exceeding $100 million globally this year.
- U.S. Pet Health revenue declined 4% in the quarter due to competitive pressure and vaccine supply volatility.
- The international farm animal segment experienced a 3% organic constant currency revenue decline due to commercial model changes and a product recall.
- Gross margin declined by 230 basis points to 52.2% of revenue, impacted by product mix, inflation, and unfavorable manufacturing performance.
- The company faces an adjusted EBITDA headwind due to the insolvency of a key UK contract manufacturing organization.
- Elanco's total pet health revenue declined 2% in the third quarter, with competitive pressure in the veterinary clinic contributing to the decline.
(Audio in progress)
2024 our consistent strategy focused on growth, innovation and cash is paying off with innovative new products driving growth, enabling improved cash flow. Beginning on Slide 4, we achieved key milestones dancing our innovation portfolio and productivity strategy. Third quarter revenue growth, excluding the impact of our aqua divestiture, was led by our U.S. farm and international pet health businesses. For Elanco overall we expect organic growth to accelerate sequentially in the fourth quarter and into next year.
Since our last earnings call, we achieved several milestones for key potential blockbuster products as we now shift from regulatory into commercial launch mode. On a pet outside, we received US, FDA approval for both Centralia and Credelio Quattro positively differentiated products expected to be meaningful competitors in the two largest markets in pet health. On the farm side, both there so the first on-farm feeding into dairy cows to fly, we'll is beginning to move as
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