Name: Zoetis Inc. (NYSE:ZTS) | Cash Flow Statement
Creator: Stock Analysis on Net

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Zoetis Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income before allocation to noncontrolling interests	2,340)	2,111)	2,034)	1,636)	1,500)
Depreciation and amortization expense	491)	465)	448)	441)	412)
Share-based compensation expense	60)	62)	58)	59)	67)
Asset write-offs and asset impairments	46)	53)	47)	43)	7)
Net gain on sale of businesses, excluding transaction costs	(118)	—)	—)	—)	—)
Provision for losses on inventory	115)	76)	46)	105)	68)
Deferred taxes	(61)	(286)	(80)	(62)	(79)
Settlement of derivative contracts	—)	114)	—)	(6)	—)
Employee benefit plan contribution from Pfizer Inc.	—)	3)	3)	3)	3)
Other non-cash adjustments	(8)	13)	—)	(8)	(32)
Accounts receivable	(102)	(137)	(155)	74)	(69)
Inventories	(361)	(486)	(366)	(346)	(104)
Other assets	(95)	35)	(7)	(68)	(51)
Accounts payable	13)	(29)	(17)	147)	(10)
Other liabilities	67)	(180)	227)	91)	91)
Other tax accounts, net	(34)	98)	(25)	17)	(8)
Other changes in assets and liabilities, net of acquisitions and divestitures	(512)	(699)	(343)	(85)	(151)
Adjustments to reconcile net income before noncontrolling interests to net cash provided by operating activities	13)	(199)	179)	490)	295)
Net cash provided by operating activities	2,353)	1,912)	2,213)	2,126)	1,795)
Capital expenditures	(732)	(586)	(477)	(453)	(460)
Acquisitions, net of cash acquired	(155)	(312)	(14)	(113)	(195)
Purchase of investments	(4)	(9)	(12)	—)	—)
Proceeds from maturities and redemptions of investments	—)	—)	—)	—)	101)
Proceeds from derivative instrument activity, net	12)	23)	44)	(27)	37)
Proceeds from sale of businesses, net of cash sold	96)	—)	—)	—)	—)
Net proceeds from sale of assets	4)	1)	2)	21)	21)
Other investing activities	2)	—)	(1)	—)	(8)
Net cash used in investing activities	(777)	(883)	(458)	(572)	(504)
Increase (decrease) in short-term borrowings, net	1)	2)	(4)	4)	(9)
Principal payments on long-term debt	(1,350)	—)	(600)	(500)	—)
Proceeds from issuance of long-term debt, senior notes, net of discount	—)	1,348)	—)	1,240)	—)
Payment of debt issuance costs	—)	(10)	—)	(12)	—)
Payment of consideration related to previous acquisitions	(3)	(1)	(6)	(2)	(9)
Share-based compensation-related proceeds, net of taxes paid on withholding shares	27)	(38)	(35)	20)	7)
Purchases of treasury stock	(1,092)	(1,594)	(743)	(250)	(626)
Cash dividends paid	(692)	(611)	(474)	(380)	(314)
Acquisition of a noncontrolling interest, net of cash acquired	—)	—)	—)	3)	—)
Net cash provided by (used in) financing activities	(3,109)	(904)	(1,862)	123)	(951)
Effect of exchange-rate changes on cash and cash equivalents	(7)	(29)	(12)	(7)	(8)
Net increase (decrease) in cash and cash equivalents	(1,540)	96)	(119)	1,670)	332)
Cash and cash equivalents at beginning of period	3,581)	3,485)	3,604)	1,934)	1,602)
Cash and cash equivalents at end of period	2,041)	3,581)	3,485)	3,604)	1,934)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial data indicates a period of consistent growth in profitability and operational cash generation from 2019 through 2023. Net income before allocation to noncontrolling interests rose steadily from 1,500 million USD in 2019 to 2,340 million USD in 2023, representing a strong upward trajectory in earnings. This growth is supported by net cash provided by operating activities, which generally increased over the period, peaking at 2,353 million USD in 2023, although a temporary dip was observed in 2022.

Operating Cash Flow and Working Capital: Cash flow from operations remained robust, driven by steady increases in depreciation and amortization expenses, which grew from 412 million USD in 2019 to 491 million USD in 2023. However, working capital management shows significant volatility. Inventories consistently acted as a drag on cash flow, with outflows increasing from 104 million USD in 2019 to a peak of 486 million USD in 2022, before moderating to 361 million USD in 2023. Other changes in assets and liabilities also exerted downward pressure on operating cash, particularly in 2022 and 2023.
Investing Activities and Capital Allocation: A clear trend of increasing capital intensity is observed. Capital expenditures grew substantially from 460 million USD in 2019 to 732 million USD in 2023, suggesting an aggressive investment in long-term infrastructure or capacity expansion. Net cash used in investing activities peaked in 2022 at 883 million USD, driven by a combination of higher capital expenditures and a 312 million USD outlay for acquisitions. The company maintains a pattern of strategic acquisitions, although the scale of these investments fluctuated annually.
Financing and Shareholder Returns: The company has prioritized shareholder returns through dividends and share repurchases. Cash dividends paid increased every year, rising from 314 million USD in 2019 to 692 million USD in 2023. Treasury stock purchases were substantial, particularly in 2022, when 1,594 million USD was spent on buybacks. Financing activities showed a massive net outflow in 2023, totaling 3,109 million USD, primarily due to a significant principal payment on long-term debt of 1,350 million USD and continued share repurchases of 1,092 million USD.
Liquidity and Cash Position: The cash and cash equivalents balance experienced significant fluctuations. After peaking at 3,604 million USD at the end of 2020, the balance declined to 2,041 million USD by the end of 2023. This reduction was primarily driven by the intensified financing outflows in the final year, including the large debt repayment and sustained shareholder distributions, which exceeded the cash generated from operations and investing activities.

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