Tag: #Company

BankMobile Technologies, a subsidiary of Customers Bank, and Megalith Financial Acquisition Corp. agree to combine to bring a digital banking platform to the public market under the new name BM Technologies

Post author By Michelle Dryden
Post date August 6, 2020
No Comments on BankMobile Technologies, a subsidiary of Customers Bank, and Megalith Financial Acquisition Corp. agree to combine to bring a digital banking platform to the public market under the new name BM Technologies

BankMobile is one of the largest digital banking platforms in the country with over 2 million accounts

BankMobile Management to Lead Combined Company

MFAC has Binding Commitments for a $20 Million Private Placement for the Business Combination

Transaction Enterprise Value of $140 Million

Investor Calls on Thursday August 6^th: MFAC and BankMobile Technologies at 2pm; Customers Bancorp at 4pm

NEW YORK–(BUSINESS WIRE)–$CUBI #fintech–BankMobile Technologies, a subsidiary of Customers Bank (NYSE: CUBI), and one of America’s largest digital banking platforms, and Megalith Financial Acquisition Corp (NYSE: MFAC) (“MFAC”), a special purpose acquisition company, announced today that they have entered into a definitive merger agreement. Upon closing of the transaction, the combined company (the “Company”) will operate as BM Technologies Inc. and expects to be listed on the NYSE. The transaction reflects an enterprise value for the Company of $140 million. All BMT serviced deposits and loans will remain at Customers Bank immediately after the closing of the transaction. Upon the closing of the transaction, BM Technologies will be a financial technology company bringing banks and business partners together through its digital banking platform.

With over 2 million accounts, BankMobile Technology, Inc. (“BMT” or “BankMobile”) is one of the largest digital banking platforms in the country. Launched in January 2015, BankMobile’s mission has been to provide a compliant, mobile-first banking experience that is simple, affordable, and consumer-friendly. Named “Most Innovative Bank” by LendIt in 2019, BankMobile’s B2B2C Go-To-Market-Strategy leverages a multi-partner distribution model to generate high volume, low cost, customer acquisitions.

Today, BankMobile provides its Banking-as-a-Service (“BaaS”) platform to colleges and universities through BankMobile Disbursements, which reaches approximately one in every three college students in the country. Additionally, BankMobile recently announced the execution of an agreement with Google to introduce digital bank accounts, which will be available to its customers. BankMobile has also expanded its White-Label strategy most recently with T-Mobile for the launch of T-Mobile MONEY.

“We are thrilled to partner with MFAC to become a public company. In an era when digital banking continues to expand, we look forward to building our business over the coming years and taking advantage of all strategic opportunities,” said BankMobile CEO Luvleen Sidhu.

A.J. Dunklau, CEO of MFAC said, “There has been rapid growth of digital banking platforms, or neobanks, as many customers search for less burdensome access to banking services. We believe that BankMobile’s approach to collaborate with distribution partners and partner banks, positions it well to continue to grow as an increasing number of non-banks are looking to offer financial services to their existing customers. Accordingly, we believe that the opportunity to bring BankMobile to the public markets as a stand-alone company is highly attractive.”

BankMobile Highlights

Opportunity to disrupt massive U.S. banking market
- Consumer preferences are changing rapidly, and banks are slow to adapt
- Americans paid $34B in overdraft fees alone in 2017
- Non-Banks increasingly want to engage their customers via financial services; however, the technical and regulatory challenges are substantial

B2B2C model delivers high-volume, low-cost customer acquisitions
- By partnering with very large companies with established brand equity and loyal customer bases, BankMobile is able to leverage its technology and significantly reduce its customers acquisition costs while providing substantial benefits to its business partners
- BankMobile’s customer acquisition cost today averages less than $10 per new account

Collaborations with industry leading companies
- Recently announced an execution of an agreement with Google to introduce digital bank accounts built on BankMobile’s existing infrastructure.
- Partnership with T-Mobile in offering T-Mobile MONEY

Highly attractive distribution channel through market leading position in higher education reaches one in every three college students
- BankMobile provides its “Banking-as-a-Service” (BaaS) to colleges and universities through its BankMobile Disbursements business, which reaches more than five million students on 722 campuses nationwide

Unique offering delivers a full-service digital banking platform, connecting customers with a partner bank
- In addition to its omni-channel digital banking apps delivered on a modern technology platform, BankMobile provides full-service banking support and access to a bank partner
- The full-service digital banking platform includes back-office support, state of the art mobile-first onboarding systems, deposit operations, fraud management, and customer care

Attractive financial profile
- Enterprise Value of $140 million at only 1.3x 2021E Revenues and 1.0x 2022E Revenues

Highly experienced and recognized management team and board
- Executive management team averages 24 years of industry experience
- CEO, Luvleen Sidhu, graduate of Harvard University and Wharton School and recognized as 2019 Fintech Woman of the Year by LendIt Fintech
- Very experienced board of independent directors expected to be named shortly

Transaction Summary

The business combination transaction reflects an enterprise value for the Company of approximately $140 million. Customers Bank is to receive approximately $97 million in consideration comprised of cash, stock in the Company, and approximately $10 million in value attributed to a new technology license with BMT, with the total consideration subject to potential adjustment based on certain factors described in the merger agreement for the business combination (the “Merger Agreement”). In addition, at the closing, Customers Bank may be repaid a portion of the $40 million debt owed to it by BMT with the new Company assuming any unpaid debt. MFAC has received binding commitments of approximately $20 million for a common stock private placement, which commitments exceed the minimum cash closing condition required by the Merger Agreement. MFAC’s sponsor entity will forfeit the vast majority of its founder shares at the closing of the Transactions. The cash component of the consideration will be funded by a portion of MFAC’s cash in trust as well as a private placement from institutional investors and MFAC’s sponsor that will close concurrently with the closing of the business combination, in addition to BankMobile’s cash on its balance sheet in excess of an agreed upon cash reserve. The balance of the consideration will consist of shares of common stock in the combined Company, each to be valued at $10.38 per share. Customers Bank is expected to remain the largest investor in the Company by rolling over significant equity into the combined Company. Customers Bank will be subject to a standard lock-up period, but plans to reduce its ownership stake in BM Technologies gradually after the closing of the transaction.

In light of the relationship between MFAC’s sponsor and certain officers and directors of BankMobile’s ultimate parent entity Customers Bankcorp Inc. (“CUBI”), both MFAC and CUBI appointed special committees consisting of independent directors with full access to counsel and financial advisors. The special committees of each party reviewed this transaction and made unanimous recommendations to their respective boards of directors for approval.

The transaction is structured as a forward subsidiary merger, whereby BankMobile will merge with a newly-formed subsidiary of MFAC, with MFAC’s merger subsidiary continuing as the surviving entity and a wholly-owned subsidiary of MFAC. At the closing of the transaction, MFAC will change its name to BM Technologies.

The business combination and related equity financing (together, the “Transactions”) are expected to close in the fourth quarter 2020, pending MFAC stockholder approval and regulatory approval.

Advisors

Raymond James is acting as financial advisor to BankMobile and Customers Bank. Nelson Mullins Riley and Scarborough and Stradley Ronon Stevens & Young, LLP are acting as legal counsel to Customers Bank.

Boenning and Scattergood is acting as financial advisor to Customers Bancorp’s special committee and provided a fairness opinion for the transaction to the special committee. Duane Morris LLP is acting as independent counsel to Customers Bancorp’s special committee.

Keefe, Bruyette, & Woods, – a Stifel Company is acting as financial advisor and capital markets advisor to MFAC. Chardan is also acting as a capital markets advisor to MFAC. Ellenoff Grossman & Schole is acting as legal counsel to MFAC. Vantage Point Advisors is acting as a financial advisor to MFAC’s special committee and provided a fairness opinion for the transaction to the special committee.

Investor Call Details

MFAC and BMT will provide more information relating to the transaction on a pre-recorded investor call on Thursday, August 6 at 2:00 p.m. ET.

	Date:			Thursday, August 6, 2020
	Time:			2:00 PM EDT
	Dial-in:			+1 (877) 770-3647
	Participant Code:			59288071

Customers Bancorp will host a live investor call with Q&A on Thursday, August 6 at 4:00 p.m. ET.

	Date:			Thursday, August 6, 2020
	Time:			4:00 PM EDT
	Dial-in:			+1 (800) 357-9083
	Participant Code:			303651

Please dial in at least 10 minutes before the start of the call to ensure timely participation. A playback of the call will be available beginning August 6, 2020 at 7:00 PM EDT until 7:00 PM EDT on September 5, 2020. To listen, call within the United States 888-203-1112. Please use the replay passcode 7501016.

About BankMobile

Established in 2015, BankMobile Technologies is a division of Customers Bank and is among the largest mobile-first banking platforms in the U.S., offering checking and savings accounts, personal loans and credit cards. BankMobile, named the “Most Innovative Bank” by LendIt Fintech in 2019, provides an alternative banking experience to the traditional model. It is focused on technology, innovation, easy-to-use products and education with the mission of being “customer-obsessed” and creating “customers for life.” BankMobile employs a multi-partner distribution model, known as “Banking-as-a-Service” (BaaS), that enables the company to acquire customers at higher volumes and substantially lower expense than traditional banks. Its efficient operating model enables it to provide low-cost banking services to low/middle-income Americans who have been left behind by the high-fee model of “traditional” banks. Today, BankMobile Technologies provides its BaaS platform to colleges and universities and currently serves over two million account-holders at 722 campuses (covering one out of every three students in the U.S.). BankMobile Technologies is operating as the digital banking division of Customers Bank, which is a Federal Reserve regulated and FDIC-insured commercial bank. BankMobile is a technology company and is not a bank and does not provide banking services. For more information, please visit: www.bankmobile.com.

About Customers Bank

Customers Bancorp, Inc. is a bank holding company located in West Reading, Pennsylvania engaged in banking and related businesses through its bank subsidiary, Customers Bank. Customers Bank is a community-based, full-service bank with assets of approximately $17.9 billion at June 30, 2020. A member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, Customers Bank is an equal opportunity lender that provides a range of banking services to small and medium-sized businesses, professionals, individuals, and families through offices in Pennsylvania, Illinois, New York, Rhode Island, Massachusetts, New Hampshire and New Jersey. Committed to fostering customer loyalty, Customers Bank uses a High Tech/High Touch strategy that includes use of industry-leading technology to provide customers better access to their money, as well as Concierge Banking® by appointment at customers’ homes or offices 12 hours a day, seven days a week. Customers Bank offers a continually expanding portfolio of loans to small businesses, multi-family projects, mortgage companies and consumers. Customers Bancorp, Inc.’s voting common shares are listed on the New York Stock Exchange under the symbol CUBI. Additional information about Customers Bancorp, Inc. can be found on its website, http://www.customersbank.com.

About Megalith Financial Acquisition Corp

Megalith Financial Acquisition Corp. is a blank check company incorporated in Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, with a focus on the fintech or financial services industries. MFAC consummated its initial public offering on the NYSE in August 2018 and is listed under the symbol “MFAC”.

Forward Looking Statements

This press release contains, and certain oral statements made by representatives of MFAC, BankMobile and CUBI and their respective affiliates, from time to time may contain certain statements that are not historical facts but are “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “plan,” “intend,” “anticipate,” “believe,” “expect,” “estimate,” “forecast,” “target,” “project,” “predict,” “intend,” “plan” and “outlook” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Such forward-looking statements include estimated financial information, including forward-looking statements with respect to revenues and earnings, as well as forward-looking statements with respect to performance, strategies, prospects and other aspects of the businesses of MFAC, CUBI, Customers Bank and BankMobile, or the combined Company following completion of the proposed Transactions, which are based on current expectations that are subject to risks and uncertainties and are not predictions of actual performance. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement and the proposed Transactions; (2) the inability to complete the transactions contemplated by the Merger Agreement due to the failure to obtain approval of the stockholders of MFAC, any required regulatory approvals, or other conditions to closing in the Merger Agreement; (3) MFAC’s inability to meet the minimum cash requirements of the Merger Agreement due to a failure to complete the equity private placement or the amount of cash available following any redemptions by MFAC’s public stockholders; (4) the ability to meet NYSE listing standards following the consummation of the Transactions; (5) the risk that the proposed transaction disrupts current plans and operations of BankMobile as a result of the announcement and consummation of the Transactions; (6) the ability of CUBI and Customers Bank to recognize the anticipated benefits of the proposed Transactions, which may be affected by, among other things, competition, the ability of management to operate the combined Company as a stand-alone public company, the ability of the combined Company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees, and the costs involved in CUBI and Customers Bank continuing to provide certain services to the combined Company; (7) costs related to the proposed Transactions; (8) changes in applicable laws or regulations; (9) the possibility that the combined Company may be adversely affected by other economic, business, and/or competitive factors; and (10) other risks and uncertainties indicated from time to time in other documents filed or to be filed with the Securities and Exchange Commission (“SEC”) by MFAC or CUBI. Readers are cautioned that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on the current beliefs and assumptions by management of each of MFAC, CUBI, Customers Bank and BMT as of the date hereof and speak only as of the date they are made. Each of MFAC, CUBI, Customers Bank and BMT disclaims any obligation to update any forward-looking statement whether written or oral, except as may be required under applicable law.

For a more complete discussion of the assumptions, risks and uncertainties with respect to CUBI, you are encouraged to review the filings CUBI makes with the SEC, including its most recent annual report on Form 10-K for the year ended December 31, 2019, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in those Form 10-K and Form 10-Q filings, if any. For a more complete discussion of the assumptions, risks and uncertainties with respect to MFAC, you are encouraged to review the filings MFAC makes with the SEC, including its most recent annual report on Form 10-K for the year ended December 31, 2019, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments thereto, that update or provide information in addition to the information included in those Form 10-K and Form 10-Q filings, if any.

No Offer or Solicitation

This press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed transactions or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

No Assurances

There can be no assurance that the Transactions described herein will be completed, nor can there be any assurance, if such Transactions are completed, that the potential benefits of combining the companies will be realized. The description of the transactions contained herein is only a summary and is qualified in its entirety by reference to the definitive agreements relating to the Transactions, copies of which will be filed by MFAC with the SEC as an exhibit to a Current Report on Form 8-K.

Important Information about the Transactions and Where to Find It

In connection with the Transactions described herein, MFAC will file relevant materials with the SEC, including a definitive proxy statement for MFAC’s shareholders. Promptly after filing the definitive proxy statement with the SEC, MFAC will mail the proxy statement and a proxy card to each shareholder entitled to vote at the special meeting relating to the Transactions. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTIONS THAT MFAC WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MFAC, BANKMOBILE AND THE TRANSACTIONS. The preliminary proxy statement, the definitive proxy statement and other relevant materials in connection with the transactions (when they become available), and any other documents filed by MFAC with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or by writing to Megalith Financial Acquisition Corp. at 535 5th Avenue, 29th Floor, New York, New York 10017.

Participants in Solicitation

MFAC and BankMobile and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies from the holders of MFAC common stock in respect of the proposed Transactions. Information about MFAC’s directors and executive officers and their ownership of MFAC’s common stock is set forth in MFAC’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC, as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such filing. Other information regarding the interests of the participants in the proxy solicitation will be included in the proxy statement pertaining to the proposed Transactions when it becomes available. These documents can be obtained free of charge from the sources indicated above.

Contacts

For Customers Bancorp investor and media inquiries, please contact:

Customers Bancorp

Bob Ramsey

Director of Investor Relations, Customers Bancorp

rramsey@customersbank.com
484-926-7118

For Megalith Financial Acquisition Corp investor and media inquiries, please contact:

Megalith Financial Acquisition Corp.

A.J. Dunklau

Chief Executive Officer

aj@megalithfinancial.com
212-235-0438

Tags #Company, #Subsidiary, Banking, BankMobile Technologies, Customers Bank, Digital, Megalith Financial Acquisition Corp., Public Market, Public Market#Company

Business

Zoetis announces second quarter 2020 results

Post author By Michelle Dryden
Post date August 6, 2020
No Comments on Zoetis announces second quarter 2020 results

Reports Flat Revenue of $1.5 Billion, and Net Income of $377 Million, or $0.79 per Diluted Share, Increasing 2% and 3%, Respectively, on a Reported Basis for Second Quarter 2020
Reports Adjusted Net Income of $427 Million, or Adjusted Diluted EPS of $0.89 for Second Quarter 2020
Delivers 4% Operational Growth in Revenue and 4% Operational Growth in Adjusted Net Income for Second Quarter 2020
Raises and Narrows Full Year 2020 Revenue Guidance to $6.300 – $6.475 Billion and Diluted EPS of $3.14 – $3.32 on a Reported Basis, or $3.52 – $3.68 on an Adjusted Basis

PARSIPPANY, N.J.–(BUSINESS WIRE)–$ZTS #animalhealth—Zoetis Inc. (NYSE: ZTS) today reported its financial results for the second quarter of 2020 and raised and narrowed its guidance for full year 2020 to reflect the company’s current view of the estimated full-year impact of the COVID-19 pandemic and foreign currency headwinds.

The company reported revenue of $1.5 billion for the second quarter of 2020, which is flat compared with the second quarter of 2019. Net income for the second quarter of 2020 was $377 million, or $0.79 per diluted share, an increase of 2% and 3%, respectively, on a reported basis.

Adjusted net income¹ for the second quarter of 2020 was $427 million, or $0.89 per diluted share, a decrease of 2%, on a reported basis. Adjusted net income for the second quarter of 2020 excludes the net impact of $50 million for purchase accounting adjustments, acquisition-related costs and certain significant items.

On an operational² basis, revenue for the second quarter of 2020 increased 4%, excluding the impact of foreign currency. Adjusted net income for the second quarter of 2020 increased 4% operationally, excluding the impact of foreign currency.

EXECUTIVE COMMENTARY

“As an essential business supporting the global food supply and the care of people’s pets during the pandemic, Zoetis demonstrated greater resiliency than expected in the second quarter, with 4% operational growth in revenue and 4% operational growth in adjusted net income,” said Kristin Peck, Chief Executive Officer of Zoetis. “Our strong companion animal portfolio, based on our internal innovations, helped offset some of the deeper challenges in the livestock market today.”

“Looking ahead, we expect our overall revenue growth for the remainder of the year to be driven largely by companion animal products, especially parasiticides and our key dermatology portfolio, and we are raising our guidance to reflect our current outlook for the year. We will continue to invest in products that will strengthen the innovations and digital solutions that are needed by our customers across the continuum of care – from prediction and prevention to detection and treatment of diseases,” said Peck.

QUARTERLY HIGHLIGHTS

Zoetis organizes and manages its commercial operations across two segments: United States (U.S.) and International. Within these segments, the company delivers a diverse portfolio of products for companion animals and livestock, tailored to local trends and customer needs. In the second quarter of 2020:

Revenue in the U.S. segment was $823 million, an increase of 6% compared with the second quarter of 2019. Sales of companion animal products increased 19% driven primarily by growth in the Simparica^® franchise, including the continued launch of Simparica Trio^®, the company’s new triple combination parasiticide for dogs. Also contributing to growth was the company’s key dermatology portfolio across both the Cytopoint^® and Apoquel^® brands. Additionally, companion animal sales benefited from the recent acquisitions of Platinum Performance and its nutritional product formulas, as well as a number of regional diagnostic reference labs. Sales of livestock products decreased 18% in the quarter. Disruptions in the food supply chain including reduced producer processing capacity and continued channel migration from dining out to preparing food at home impacted producer profitability and resulted in a decline across each of the cattle, swine and poultry portfolios. The decline in the cattle portfolio was also the result of continued unfavorable market conditions in beef and dairy, while swine product sales were negatively impacted by increased competition.
Revenue in the International segment was $708 million, a decrease of 5% on a reported basis and an increase of 3% operationally compared with the second quarter of 2019. Sales of companion animal products declined 3% on a reported basis and grew 2% on an operational basis. Growth resulted from increased sales of the company’s key dermatology portfolio across both the Apoquel and Cytopoint brands, as well as the Simparica franchise, including the launch of Simparica Trio in Canada and certain markets in the EU. Sales of companion animal products in China continued to grow rapidly driven by strong underlying market dynamics. Growth in companion animal products was partially offset by the impact of COVID-19 and social distancing measures in certain EU markets and in Latin America, including Brazil, that resulted in decreased veterinary clinic traffic. Sales of livestock products declined 5% on a reported basis and grew 4% operationally. Sales of swine products grew as a result of expanding herd production in key accounts and increased biosecurity measures in the wake of African Swine Fever in China. The timing of seasonal vaccination protocols in key salmon markets and the recently launched parasiticide Alpha Flux^® were the primary drivers of growth in fish. Growth in our poultry portfolio was the result of increased sales of medicated feed additives and sales of biodevices. Sales of cattle products declined in the quarter due to the impact of COVID-19 in certain markets as well as the discontinuation of non-core products in Brazil.

INVESTMENTS IN GROWTH

Zoetis diversifies and grows its business through the introduction of new products, lifecycle innovations, business development initiatives, and entries into new markets and technologies. The company is increasingly focused on developing integrated solutions for pet owners, veterinarians and farmers that span the continuum of animal care – helping to predict, prevent, detect and treat diseases.

Since our last quarterly earnings announcement, Zoetis continued to bring leading products into new markets. In Brazil, Zoetis received approval for Vanguard^® B Oral, a vaccine that aids in preventing kennel cough in dogs, as well as Excenel^® RTU EZ (ceftiofur hydrochloride), an anti-infective that treats respiratory diseases in cattle and swine. Additionally, Fostera^® Gold PCV MH was approved in Australia. This vaccine provides livestock farmers with greater options and flexibility to reduce the clinical symptoms in pigs associated with porcine circovirus (PCV2) and Mycoplasma hyopneumoniae (M. hyo). Fostera Gold PCV Metastim was also approved in Australia to reduce the clinical symptoms associated with PCV2.

In addition to new product approvals and lifecycle innovations, Zoetis continues to support future growth through business development activities. In July, the company acquired Fish Vet Group as a strategic addition to its Pharmaq business, which develops and commercializes fish vaccines and offers services in vaccination and diagnostics for aquaculture. Adding Fish Vet Group grows the geographic reach and enhances the diagnostics expertise and testing services for fish farmers in major aquaculture markets.

FINANCIAL GUIDANCE

Zoetis is raising and narrowing its full year 2020 guidance, which includes:

Revenue between $6.300 billion and $6.475 billion
Reported diluted EPS between $3.14 and $3.32
Adjusted diluted EPS between $3.52 and $3.68

This guidance reflects foreign exchange rates as of mid-July. Additional details on guidance are included in the financial tables and will be discussed on the company’s conference call this morning.

WEBCAST & CONFERENCE CALL DETAILS

Zoetis will host a webcast and conference call at 8:30 a.m. (ET) today, during which company executives will review second quarter 2020 results, discuss financial guidance and respond to questions from financial analysts. Investors and the public may access the live webcast by visiting the Zoetis website at http://investor.zoetis.com/events-presentations. A replay of the webcast will be archived and made available on Aug. 6, 2020.

About Zoetis

Zoetis is the leading animal health company, dedicated to supporting its customers and their businesses. Building on more than 65 years of experience in animal health, Zoetis discovers, develops, manufactures and commercializes medicines, vaccines and diagnostic products, which are complemented by biodevices, genetic tests and precision livestock farming. Zoetis serves veterinarians, livestock producers and people who raise and care for farm and companion animals with sales of its products in more than 100 countries. In 2019, the company generated annual revenue of $6.3 billion with approximately 10,600 employees. For more information, visit www.zoetis.com.

¹Adjusted net income and its components and adjusted diluted earnings per share (non-GAAP financial measures) are defined as reported net income attributable to Zoetis and reported diluted earnings per share, excluding purchase accounting adjustments, acquisition-related costs and certain significant items.

²Operational revenue growth (a non-GAAP financial measure) is defined as growth excluding the impact of foreign exchange.

DISCLOSURE NOTICES

Forward-Looking Statements: This press release contains forward-looking statements, which reflect the current views of Zoetis with respect to: business plans or prospects; future operating or financial performance, future guidance, future operating models; expectations regarding products, product approvals or products under development; expected timing of product launches; the potential impact of the coronavirus (COVID-19) pandemic on our business, suppliers, customers and employees; expectations regarding the performance of acquired companies and our ability to integrate new businesses; expectations regarding the financial impact of acquisitions; future use of cash and dividend payments; tax rate and tax regimes; changes in the tax regimes and laws in other jurisdictions; and other future events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Zoetis expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, including in the sections thereof captioned “Forward-Looking Statements and Factors That May Affect Future Results” and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K. Such risks and uncertainties may be amplified by the coronavirus (COVID-19) pandemic and its potential impact on the global economy and our business. These filings and subsequent filings are available online at www.sec.gov, www.zoetis.com, or on request from Zoetis.

Use of Non-GAAP Financial Measures: We use non-GAAP financial measures, such as adjusted net income, adjusted diluted earnings per share and operational results (which exclude the impact of foreign exchange), to assess and analyze our results and trends and to make financial and operational decisions. We believe these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding our operating performance. The non-GAAP financial measures included in this press release should not be considered alternatives to measurements required by GAAP, such as net income, operating income, and earnings per share, and should not be considered measures of liquidity. These non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliation of non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this press release and are posted on our website at www.zoetis.com.

Internet Posting of Information: We routinely post information that may be important to investors in the ‘Investors’ section of our website at www.zoetis.com, on our Facebook page at http://www.facebook.com/zoetis and on Twitter@zoetis. We encourage investors and potential investors to consult our website regularly and to follow us on Facebook and Twitter for important information about us.

ZTS-IR

ZTS-FIN


ZOETIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME^(a)
(UNAUDITED)
(millions of dollars, except per share data)

	Quarter Ended					Six Months Ended
	June 30,					June 30,
	2020		2019		% Change	2020		2019		% Change
Revenue	$	1,548	$	1,547	—	$	3,082	$	3,002	3
Costs and expenses:
Cost of sales	451		465		(3)	910		983		(7)
Selling, general and administrative expenses	393		406		(3)	782		775		1
Research and development expenses	111		111		—	218		213		2
Amortization of intangible assets	40		39		3	80		77		4
Restructuring charges and certain acquisition-related costs	8		22		(64)	17		27		(37)
Interest expense, net of capitalized interest	58		55		5	111		111		—
Other (income)/deductions—net	5		(6)		*	(15)		(20)		(25)
Income before provision for taxes on income	482		455		6	979		836		17
Provision for taxes on income	106		84		26	180		153		18
Net income before allocation to noncontrolling interests	376		371		1	799		683		17
Less: Net loss attributable to noncontrolling interests	(1)		—		*	(1)		—		*
Net income attributable to Zoetis	$	377	$	371	2	$	800	$	683	17

Earnings per share—basic	$	0.79	$	0.77	3	$	1.68	$	1.43	17

Earnings per share—diluted	$	0.79	$	0.77	3	$	1.67	$	1.41	18

Weighted-average shares used to calculate earnings per share
Basic	475.3		478.8			475.4		479.2
Diluted	478.1		482.3			478.6		482.7

(a)		The condensed consolidated statements of income present the quarter and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States are included for the quarter and six months ended May 31, 2020 and May 31, 2019.
* Calculation not meaningful.


ZOETIS INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per share data)

	Quarter Ended June 30, 2020
	GAAP Reported^(a)		Purchase Accounting Adjustments		Acquisition- Related Costs⁽¹⁾		Certain Significant Items⁽²⁾		Non-GAAP Adjusted^(b)
Cost of sales	$	451	$	(2)	$	—	$	(1)	$	448
Gross profit	1,097		2		—		1		1,100
Selling, general and administrative expenses	393		(17)		—		(4)		372
Research and development expenses	111		(1)		—		—		110
Amortization of intangible assets	40		(33)		—		—		7
Restructuring charges and certain acquisition-related costs	8		—		(7)		(1)		—
Other (income)/deductions–net	5		—		—		—		5
Income before provision for taxes on income	482		53		7		6		548
Provision for taxes on income	106		14		1		1		122
Net income attributable to Zoetis	377		39		6		5		427
Earnings per common share attributable to Zoetis–diluted	0.79		0.08		0.01		0.01		0.89

	Quarter Ended June 30, 2019
	GAAP Reported^(a)		Purchase Accounting Adjustments		Acquisition- Related Costs⁽¹⁾		Certain Significant Items⁽²⁾		Non-GAAP Adjusted^(b)
Cost of sales	$	465	$	(5)	$	—	$	(3)	$	457
Gross profit	1,082		5		—		3		1,090
Selling, general and administrative expenses	406		(18)		—		—		388
Research and development expenses	111		(1)		—		—		110
Amortization of intangible assets	39		(34)		—		—		5
Restructuring charges and certain acquisition-related costs	22		—		(22)		—		—
Other (income)/deductions–net	(6)		—		—		—		(6)
Income before provision for taxes on income	455		58		22		3		538
Provision for taxes on income	84		13		4		1		102
Net income attributable to Zoetis	371		45		18		2		436
Earnings per common share attributable to Zoetis–diluted	0.77		0.09		0.04		—		0.90

(a)		The condensed consolidated statements of income present the quarter and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States are included for the second quarter ended May 31, 2020 and May 31, 2019.
(b)		Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2).


ZOETIS INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS – Continued
(UNAUDITED)
(millions of dollars, except per share data)

	Six Months Ended June 30, 2020
	GAAP Reported^(a)		Purchase Accounting Adjustments		Acquisition- Related Costs⁽¹⁾		Certain Significant Items⁽²⁾		Non-GAAP Adjusted^(b)
Cost of sales	$	910	$	(4)	$	—	$	(3)	$	903
Gross profit	2,172		4		—		3		2,179
Selling, general and administrative expenses	782		(35)		—		(6)		741
Research and development expenses	218		(1)		—		—		217
Amortization of intangible assets	80		(67)		—		—		13
Restructuring charges and certain acquisition-related costs	17		—		(14)		(3)		—
Other (income)/deductions–net	(15)		—		—		17		2
Income before provision for taxes on income	979		107		14		(5)		1,095
Provision for taxes on income	180		36		—		(2)		214
Net income attributable to Zoetis	800		71		14		(3)		882
Earnings per common share attributable to Zoetis–diluted	1.67		0.15		0.03		(0.01)		1.84

	Six Months Ended June 30, 2019
	GAAP Reported^(a)		Purchase Accounting Adjustments		Acquisition- Related Costs⁽¹⁾		Certain Significant Items⁽²⁾		Non-GAAP Adjusted^(b)
Cost of sales	$	983	$	(19)	$	—	$	(73)	$	891
Gross profit	2,019		19		—		73		2,111
Selling, general and administrative expenses	775		(36)		—		—		739
Research and development expenses	213		(1)		—		—		212
Amortization of intangible assets	77		(68)		—		—		9
Restructuring charges and certain acquisition-related costs	27		—		(27)		—		—
Other (income)/deductions–net	(20)		—		—		—		(20)
Income before provision for taxes on income	836		124		27		73		1,060
Provision for taxes on income	153		33		5		9		200
Net income attributable to Zoetis	683		91		22		64		860
Earnings per common share attributable to Zoetis–diluted	1.41		0.19		0.05		0.13		1.78

(a)		The condensed consolidated statements of income present the quarter and six months ended June 30, 2020 and June 30, 2019. Subsidiaries operating outside the United States are included for the second quarter ended May 31, 2020 and May 31, 2019.
(b)		Non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS are non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, non-GAAP adjusted net income and its components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP adjusted net income and its components, and non-GAAP adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted Information for notes (1) and (2).


ZOETIS INC.
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars)

(1) Acquisition-related costs include the following:

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Integration costs^(a)	$	6	$	8	$	12	$	9
Restructuring charges^(b)	1		14		2		18
Total acquisition-related costs—pre-tax	7		22		14		27
Income taxes^(c)	1		4		—		5
Total acquisition-related costs—net of tax	$	6	$	18	$	14	$	22

(a)		Integration costs represent external, incremental costs directly related to integrating acquired businesses and primarily include expenditures for consulting and the integration of systems and processes. Included in Restructuring charges and certain acquisition-related costs.
(b)		Represents employee termination costs, included in Restructuring charges and certain acquisition-related costs.
(c)		Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pre-tax amounts and applying that jurisdiction’s applicable tax rate. For the six months ended June 30, 2020, also includes a tax charge related to a remeasurement of deferred taxes resulting from the integration of acquired businesses.

(2) Certain significant items include the following:

	Quarter Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Operational efficiency initiative^(a)	$	—	$	—	$	(17)	$	—
Supply network strategy^(b)	1		3		3		5
Other restructuring charges and cost-reduction/productivity initiatives^(c)	1		—		3		—
Other^(d)	4		—		6		68
Total certain significant items—pre-tax	6		3		(5)		73
Income taxes^(e)	1		1		(2)		9
Total certain significant items—net of tax	$	5	$	2	$	(3)	$	64

(a)		Represents a net gain resulting from net cash proceeds received pursuant to an agreement related to the 2016 sale of certain U.S. manufacturing sites, included in Other (income)/deductions-net.
(b)		Represents consulting fees, included in Cost of sales, related to cost-reduction and productivity initiatives.
(c)		Represents employee termination costs incurred as a result of the CEO transition, included in Restructuring charges and certain acquisition-related costs.
(d)		For the quarter and six months ended June 30, 2020, primarily represents the modification of share-based compensation related to CEO transition costs, included in Selling, general and administrative expenses. For the six months ended June 30, 2019, represents a change in estimate related to inventory costing, included in Cost of sales.
(e)		Included in Provision for taxes on income. Income taxes include the tax effect of the associated pre-tax amounts, calculated by determining the jurisdictional location of the pretax amounts and applying that jurisdiction’s applicable tax rate.