Elanco Announces 2019 Financial Guidance

• 2019 revenue is expected to be between $3.10 billion and $3.16 billion.
• Earnings per share (EPS) for 2019 are expected to be in the range of $0.36 to $0.48 on a reported basis and $1.02 to $1.12 on an adjusted basis.
• The company now expects 2018 EPS to be in the range of $0.15 to $0.17 on a reported basis. 
  On an adjusted basis, the company reaffirms its expectation for 2018 EPS to be in the range of $1.14 to $1.16.

 Elanco Animal Health Incorporated (NYSE: ELAN) today announced its updated 2018 and initial 2019 financial guidance, including 2019 revenue expectations in the range of $3.10 billion to $3.16 billion.

Elanco expects earnings per share (EPS) in 2019 of $0.36 to $0.48 on a reported basis and $1.02 to $1.12 on an adjusted basis.

Revenue in 2018 is still expected to be between $3.05 billion to $3.08 billion. EPS in 2018 are being adjusted to $0.15 to $0.17 (from $0.31 to $0.33) on a reported basis due to restructuring actions as part of the company’s productivity agenda and a charge due to an increase in contingent consideration liability. Adjusted EPS are still expected to be in the range of $1.14 to $1.16.

“Our financial expectations for 2019 build on the momentum we established in 2018, thanks to our targeted, value-generating strategy focused on Portfolio, Innovation and Productivity,” said Jeff Simmons, President and Chief Executive Officer of Elanco. “As we close out 2018 and look forward to our first full-year as a public company, we are well positioned to grow top line revenue through innovation and our targeted growth categories, while we expect our productivity agenda to continue to expand our operating margin.”

“Entering 2019, Elanco is positioned to capitalize on the positive fundamentals across the animal health industry, primarily the increasing pet ownership and spend, aging pets, and increasing global demand for protein,” said Todd Young, Executive Vice President and Chief Financial Officer. “In addition to executing on our commercial strategy, we are undertaking the steps to operate as a stand-alone entity, including creating the necessary back-office and governance structures. We also continue to drive efficiencies and productivity, as evidenced by our recently announced restructuring which eliminates direct presence in 16 countries and creates a flatter, leaner, and more focused organization that positions leaders closer to the customer.”

2018 Financial Guidance

Revenue is still expected to be between $3.05 billion to $3.08 billion.

		Full-Year 2018 Guidance
GAAP EPS		$0.15		to		$0.17
Cost of sales(1)		0.11
Amortization of intangible assets		0.54
Asset impairments, restructuring and other special charges(2)		0.38
Other-net, (income) expense(3)		0.10
Income before taxes		$1.28		to		$1.30
Tax impact of adjustments		(0.14)
Adjusted EPS		$1.14		to		$1.16

Adjustments to GAAP EPS include the following:

(1)		Excludes charges primarily associated with inventory adjustments related to the suspension of commercial activities for Imrestor, as well as the exit of the Larchwood, IA facility.
(2)		Excludes charges primarily associated with impairment and exit costs related to other facility closures as well as restructuring charges related to integration activities, organizational changes and the transition from affiliate presence to distribution models in a number of countries, impairment related to the suspension of commercial activities for Imrestor and costs associated with establishing stand-alone capabilities.
(3)		Excludes adjustments of contingent consideration related to Aratana.

2019 Financial Guidance

Elanco expects 2019 revenue of $3.10 billion to $3.16 billion. Core Revenue, which excludes Strategic Exits is expected to be $3.04 billion to $3.10 billion. Revenue from Strategic Exits is expected to be approximately $0.06 billion.

Elanco expects earnings per share for 2019 in the range of $0.36 to $0.48 on a reported basis and $1.02 to $1.12 on a non-GAAP basis. Non-GAAP earnings per share for 2019 exclude amortization of intangible assets and the costs associated with establishing stand-alone capabilities.

		Full-Year 2019 Guidance
GAAP EPS		$0.36		to		$0.48
Amortization of intangible assets		0.53
Expenses associated with establishing stand-alone capabilities		0.28		to		0.26
Income before taxes		$1.17		to		$1.27
Tax impact of adjustments		(0.15)
Adjusted EPS		$1.02		to		$1.12

WEBCAST & CONFERENCE CALL DETAILS

As previously announced, Elanco will host a webcast and conference call at 8:00 a.m. eastern today to discuss 2018 and 2019 financial guidance and respond to questions from financial analysts. Investors, analysts, members of the media and the public may access the live webcast and accompanying slides by visiting the Elanco website at https://investor.elanco.com and selecting Events and Presentations. A replay of the webcast will be archived and made available a few hours after the event on the company’s website, at https://investor.elanco.com/investor/events-and-presentations.

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