Zoetis Inc

Previous wording

Zoetis is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests and precision animal health. For over 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from veterinarians and pet owners to livestock farmers and ranchers.

Current wording

Zoetis is a global leader in the animal health industry, focused on the discovery, development, manufacture and commercialization of medicines, vaccines, diagnostic products and services, biodevices, genetic tests and precision animal health. For over 70 years, we have been innovating ways to predict, prevent, detect, and treat animal illness, and continue to stand by those raising and caring for animals worldwide - from veterinarians and pet owners to livestock producers.

Previous wording

Our companion animal and livestock products are primarily available by prescription through a veterinarian. On a more limited basis, in certain markets, we sell certain products through retail and e-commerce outlets. We also market our products by advertising to veterinarians, livestock producers and pet owners.

Current wording

Our companion animal and livestock products are primarily available by prescription through a veterinarian. On a more limited basis, in certain markets, we sell certain products through retail and e-commerce outlets. We also market our products by advertising to veterinarians, pet owners and livestock producers.

Previous wording

We have approximately 300 product lines that we sell in over 100 countries for the prediction, prevention, detection and treatment of diseases and conditions that affect various companion animal and livestock species. The diversity of our product portfolio and our global operations provides stability to our overall business. For instance, in livestock, impacts on our revenue that may result from disease outbreaks or weather conditions in a particular market or region are often offset by increased sales in other regions from exports and other species as consumers shift to other animal proteins.

Current wording

We have approximately 300 product lines that we sell in over 100 countries for the prediction, prevention, detection and treatment of diseases and conditions that affect various companion animal and livestock species. The diversity of our product portfolio and our global operations provides stability to our overall business.

Previous wording

Our quarterly financial results are subject to variability related to a number of factors including, but not limited to: the decline in global macroeconomic conditions, competitive dynamics, the regional conflict in the Middle East, geopolitical tensions with and economic uncertainty in China, inflation, global supply chain disruption, variability in distributor inventory stocking levels as a result of expected demand and promotional activities, weather patterns, herd management decisions, regulatory actions, disease outbreaks, product and geographic mix, timing of price increases and timing of investment decisions.

Current wording

Our quarterly financial results are subject to variability related to a number of factors including, but not limited to: tariffs and other trade protection measures, the decline in global macroeconomic conditions, competitive dynamics, geopolitical tensions with and economic uncertainty in China, inflation, global supply chain disruption, variability in distributor inventory stocking levels as a result of expected demand and promotional activities, weather patterns, herd management decisions, regulatory actions, disease outbreaks, product and geographic mix, timing of price increases and timing of investment decisions.

Previous wording

•an increase in certain compensation-related costs;

Current wording

Our business is subject to risks related to, among other factors, tariffs and other trade protection measures put in the place by the United States or other countries, as well as U.S. international trade relations, including those with China, Canada and the European Union. Starting in early 2025, the United States government announced additional tariffs on certain goods imported into the U.S. from numerous countries and multiple nations countered with reciprocal tariffs and other actions in response. While the final tariffs and other measures to be imposed, and their applicability to our business, remain uncertain, such actions may negatively impact demand and result in an increase in some product costs. We will continue to actively monitor the situation and evaluate actions that can be taken to moderate and/or minimize its effects. For further information regarding the impact of potential additional tariffs and trade protection measures on the Company, see Part II., Item 1A, Risk Factors in this Quarterly Report on Form 10-Q.

Previous wording

Sales of our livestock products have in the past, and may in the future be, adversely affected by the outbreak of disease carried by animals. Outbreaks of disease may reduce regional or global sales of particular animal-derived food products or result in reduced exports of such products, either due to heightened export restrictions or import prohibitions, which may reduce demand for our products. Also, the outbreak of any highly contagious disease near our main production sites could require us to immediately halt production of our products at such sites or force us to incur substantial expenses in procuring raw materials or products elsewhere. Alternatively, sales of products that treat specific disease outbreaks may increase.

Current wording

Sales of our livestock products have in the past, and may in the future be, adversely affected by the outbreak of disease carried by animals. Outbreaks of disease may reduce regional or global sales of particular animal-derived food products or result in reduced exports of such products, either due to heightened export restrictions or import prohibitions, which may reduce demand for our products. Also, the outbreak of any highly contagious

Previous wording

Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the nine months ended September 30, 2024, approximately 41% of our revenue was denominated in foreign currencies. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. As we operate in multiple foreign currencies, including the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese renminbi, euro and other currencies, changes in those currencies relative to the U.S. dollar will impact our revenue, cost of goods and expenses, and consequently, net income. Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the nine months ended September 30, 2024, approximately 59% of our total revenue was in U.S. dollars. Our year-over-year total revenue growth was unfavorably impacted by approximately 2% from changes in foreign currency values relative to the U.S. dollar. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.

Current wording

Significant portions of our revenue and costs are exposed to changes in foreign exchange rates. Our products are sold in more than 100 countries and, as a result, our revenue is influenced by changes in foreign exchange rates. For the three months ended March 31, 2025, approximately 42% of our revenue was denominated in foreign currencies. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. As we operate in multiple foreign currencies, including the Australian dollar, Brazilian real, British pound, Canadian dollar, Chinese renminbi, euro and other currencies, changes in those currencies relative to the U.S. dollar will impact our revenue, cost of goods and expenses, and consequently, net income. Exchange rate fluctuations may also have an impact beyond our reported financial results and directly impact operations. These fluctuations may affect the ability to buy and sell our goods and services between markets impacted by significant exchange rate variances. For the three months ended March 31, 2025, approximately 58% of our total revenue was in U.S. dollars. Our year-over-year total revenue growth was unfavorably impacted by approximately 4% from changes in foreign currency values relative to the U.S. dollar. For operations in highly inflationary economies, we translate monetary items at rates in effect at the balance sheet date, with translation adjustments recorded in Other (income)/deductions––net, and we translate non-monetary items at historical rates.

Previous wording

We believe that it is important to not only understand overall revenue and earnings results, but also “operational" results. Operational results is a non-GAAP financial measure defined as revenue or earnings results excluding the impact of foreign exchange. This measure provides information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a period-to-period comparison. We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S. GAAP reported results.

Current wording

We believe that it is important to not only understand overall revenue and earnings results, but also “operational” results. Operational results is a non-GAAP financial measure defined as revenue or earnings results excluding the impact of foreign exchange. This measure provide information on the change in revenue and earnings as if foreign currency exchange rates had not changed between the current and prior periods to facilitate a period-to-period comparison. We believe this non-GAAP measure provides a useful comparison to previous periods for the company and investors, but should not be viewed as a substitute for U.S. GAAP reported results.

Previous wording

Total revenue increased by $237 million, or 11%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023, an increase of $297 million, or 14%, on an operational basis. Operational revenue growth was comprised primarily of the following:

Current wording

Total revenue increased by $30 million, or 1%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, an increase of $103 million, or 5%, on an operational basis. Operational revenue growth was primarily due to the following:

Previous wording

•volume growth from other in-line products of approximately 3%; and

Current wording

•volume growth from other in-line products of approximately 1%,

Previous wording

Foreign exchange decreased reported revenue growth by approximately 3%.

Current wording

Foreign exchange decreased reported revenue growth by approximately 4%.

Previous wording

Cost of sales as a percentage of revenue was 29.4% in the three months ended September 30, 2024, compared with 29.7% in the three months ended September 30, 2023. The decrease was primarily as a result of:

Current wording

Cost of sales as a percentage of revenuewas 28.0% in the three months ended March 31, 2025, compared with 29.4% in the three months ended March 31, 2024. The decrease was primarily a result of:

Previous wording

SG&A expenses increased by $40 million, or 8%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023, primarily as a result of:

Current wording

SG&A expenses increased by $16 million, or 3%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, primarily as a result of:

Previous wording

(a)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 three and nine months ended September 30, 2023, income taxes in Certain significant items also includes a benefit from the tax loss on the divestiture of Performance Livestock Analytics, partially offset by a tax expense related to changes to prior years' tax positions with regard to the one-time mandatory deemed repatriation tax under the Tax Cuts and Jobs Act.

Current wording

•an increase in certain significant items;

Previous wording

•higher logistics and freight costs; and

Current wording

•lower logistics and freight costs.

Previous wording

•an increase in certain compensation-related costs to support innovation and portfolio progression;

Current wording

•an increase in certain compensation-related costs to support innovation and portfolio progression; and

Previous wording

Amortization of intangible assets decreased in the three and nine months ended versus the comparable prior year periods primarily due to asset impairments taken in 2023 and assets that became fully amortized, partially offset by intangible assets placed in service in 2023.

Current wording

Amortization of intangible assets decreased in the three months ended versus the comparable prior year period primarily due to assets that became fully amortized in the prior year.

Previous wording

Interest expense, net of capitalized interest, decreased in the three months ended September 30, 2024 versus the comparable prior year period. The decrease was primarily as a result of higher capitalized interest in the current period associated with capital projects to support our future growth.

Current wording

Interest expense, net of capitalized interest, decreased by $4 million, or 7%, in the three months ended March 31, 2025 versus the comparable prior year period primarily as a result of higher capitalized interest in the current period associated with capital projects to support our future growth.

Previous wording

The change in Other (income)/deductions—netin the three months ended September 30, 2024 versus the comparable prior year period was primarily as a result of lower foreign currency losses in the current period and certain asset impairment charges related to our diagnostics and precision animal health businesses in the prior year period.

Current wording

The change in Other (income)/deductions—netin the three months ended March 31, 2025 versus the comparable prior year period was primarily as a result of lower foreign currency losses in the current period, partially offset by lower interest income in the current period.

Previous wording

Our effective tax rate was 20.8% and 16.9% for the three months ended September 30, 2024 and 2023, respectively. The higher effective tax rate for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was primarily attributable to a benefit from the tax loss on the divestiture of Performance Livestock Analytics recorded in the third quarter of 2023, higher net discrete tax expenses and a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs), partially offset by a higher benefit in the U.S. related to foreign-derived intangible income. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible items and non-taxable items.

Current wording

Our effective tax rate was 22.1% and 19.8% for the three months ended March 31, 2025 and 2024, respectively. The higher effective tax rate for the three months ended March 31, 2025, compared with the three months ended March 31, 2024, was primarily attributable to higher net discrete tax expenses, less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs) and a lower benefit in the U.S. related to foreign-derived intangible income. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible items and non-taxable items.

Previous wording

•Companion animal revenue increased primarily due to growth in sales of Simparica Trio, our mAb products for OA pain, Librela and Solensia and key dermatology products, partially offset by lower sales of our small animal antiemetic product, Cerenia, and small animal diagnostics.

Current wording

•Companion animal revenue growth was primarily due to increased sales of Simparica Trio®, small animal diagnostics, key dermatology products and our mAb products for OA pain, Librela® and Solensia®, partially offset by lower sales of our small animal vaccines.

Previous wording

U.S. segment earnings increased by $420 million, or 20%, in the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, primarily due to higher revenue and lower operating expenses, partially offset by higher cost of sales.

Current wording

U.S. segment earnings increased by $23 million, or 3%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, primarily due to higher revenue and lower cost of sales, partially offset by higher operating expenses, as well as the impact of the MFA divestiture.

Previous wording

International segment revenue increased by $65 million, or 7%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023. Operational revenue increased by $125 million, or 13%, driven by growth of $58 million in companion animal products and $67 million in livestock products.

Current wording

International segment revenue was relatively flat in the three months ended March 31, 2025 compared with the three months ended March 31, 2024. Operational revenue increased by $73 million, or 7%, driven by growth of $56 million in companion animal products and $17 million in livestock products.

Previous wording

•Companion animal operational revenue growth was driven primarily by the growth in sales of key dermatology products, our mAb products for OA pain, Librela and Solensia, small animal parasiticides and vaccine products.

Current wording

•Companion animal operational revenue growth was driven primarily by increased sales of our Simparica® franchise products, key dermatology products and our mAb products for OA pain, Librela and Solensia.

Previous wording

•Livestock operational revenue growth was due to increased sales of cattle, poultry and fish products, partially offset by a decline in sheep products. Sales of cattle products grew due to price, partially offset by volume declines as compared to the prior year period due to prior year supply recoveries. Sales of products in our poultry portfolio grew due to price and demand generation efforts in key poultry markets. Sales of our fish portfolio grew due to increased vaccine sales in Norway, partially offset by lower sales of anti-infective products in Chile. Sales of sheep products declined primarily due to poor market conditions.

Current wording

•Livestock operational revenue growth was due to increased sales in our cattle and fish products, partially offset by lower sales of poultry products. Excluding the impact of the MFA divestiture, sales of cattle products grew largely due to price and sales of poultry products grew due to demand generation efforts in key poultry markets and price. Sales of our fish products grew due to increased vaccine sales in Norway.

Previous wording

•Additionally, International segment revenue was unfavorably impacted by foreign exchange which decreased revenue by $60 million, or 6%, primarily driven by the Argentinian peso, Brazilian real, Turkish lira, Mexican peso and Japanese yen.

Current wording

•Additionally, International segment revenue was unfavorably impacted by foreign exchange which decreased revenue by $72 million, or 7%, primarily driven by the Brazilian real, euro, Mexican peso, Argentinian peso and Turkish lira.

Previous wording

International segment earnings increased by $49 million, or 10%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023. Operational earnings growth was $76 million, or 15%, primarily due to higher revenue, partially offset by higher cost of sales and operating expenses.

Current wording

International segment earnings increased by $16 million, or 3%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024. Operational earnings growth was $35 million, or 7%, primarily due to higher revenue, partially offset by higher cost of sales and operating expenses, as well as the impact of the MFA divestiture.

Previous wording

Other business activities net loss increased by $13 million in the three months ended September 30, 2024, compared with the three months ended September 30, 2023, reflecting an increase in R&D costs due to an increase in higher project investments, certain compensation-related costs to support innovation, acquisitions and other operating costs.

Current wording

Other business activities net loss decreased by $3 million in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, reflecting a decrease in R&D costs primarily due to timing of spend related to projects and other strategic investments, partially offset by an increase in certain compensation-related costs and depreciation expense.

Previous wording

Corporate expenses increased by $48 million, or 19%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023, primarily due to higher compensation-related costs and investments in information technology.

Current wording

Corporate expenses decreased by $17 million, or 6%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, primarily due to favorable foreign exchange and lower compensation-related costs, partially offset by increased investments in information technology.

Previous wording

Other unallocated expenses decreased by $2 million, or 3%, in the three months ended September 30, 2024, compared with the three months ended September 30, 2023, primarily due to higher manufacturing costs and freight charges, partially offset by lower scrap charges and favorable foreign exchange.

Current wording

Other unallocated expenses increased by $1 million, or 1%, in the three months ended March 31, 2025, compared with the three months ended March 31, 2024, primarily due to higher manufacturing costs and higher inventory obsolescence, scrap and other charges, partially offset by lower freight charges and favorable foreign exchange.

Previous wording

A completely accurate comparison of internally developed intangible assets and acquired intangible assets cannot be achieved through adjusted net income. These components of adjusted net income are derived solely from the impact of the items listed above. We have not factored in the impact of any other differences in experience that might have occurred if we had discovered and developed those intangible assets on our own, and this approach does not intend to be representative of the results that would have occurred in those circumstances. For example, our R&D costs in total, and in the periods presented, may have been different; our speed to commercialization and resulting revenue, if any, may have been different; or our costs to manufacture may have been different. In addition, our marketing efforts may have been received differently by our customers. As such, in total, there can be no assurance that our adjusted net income amounts would have been the same as presented had we discovered and developed the acquired intangible assets.

Current wording

A completely accurate comparison of internally developed intangible assets and acquired intangible assets cannot be achieved through adjusted net income. These components of adjusted net income are derived solely from the impact of the items listed above. We have not factored in the impact of any other differences in experience that might have occurred if we had discovered and developed those intangible assets on our own, and this approach does not intend to be representative of the results that would have occurred in those circumstances. For example, our R&D costs in total, and in the periods presented, may have been different; our speed to commercialization and resulting revenue, if any, may have been different; or our costs to manufacture may have been different. In addition, our marketing efforts may have been received differently by our customers. As such, in

Previous wording

(a)The effective tax rate on adjusted pretax income was 20.8% and 19.6% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

(a)The effective tax rate on adjusted pretax income was 21.9% and 19.7% for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

The higher effective tax rate for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, was primarily attributable to a less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs) and higher net discrete tax expenses, partially offset by a higher benefit in the U.S. related to foreign-derived intangible income. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items.

Current wording

The higher effective tax rate for the three months ended March 31, 2025, compared with the three months ended March 31, 2024, was primarily attributable to higher net discrete tax expenses, less favorable jurisdictional mix of earnings (which includes the impact of the location of earnings and repatriation costs) and a lower benefit in the U.S. related to foreign-derived intangible income. Jurisdictional mix of earnings can vary depending on repatriation decisions, operating fluctuations in the normal course of business and the impact of non-deductible and non-taxable items.

Previous wording

(c) For the nine months ended September 30, 2024, primarily consisted of employee termination costs related to organizational structure refinements, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative.

Current wording

(b) For the three months ended March 31, 2024, primarily consisted of employee termination costs related to organizational structure refinements, partially offset by a reversal of certain employee termination costs as a result of a change in strategy from our 2015 operational efficiency initiative.

Previous wording

Accrued compensation and related items decreased primarily due to the payments of 2023 annual incentive bonuses, payments for sales incentive bonuses and savings plan contributions to eligible employees, as well as the timing of the bi-weekly payroll, partially offset by the accrual of 2024 annual incentive bonuses, sales incentive bonuses and savings plan contributions to eligible employees.

Current wording

Accrued compensation and related items decreased primarily due to the payments of 2024 annual incentive bonuses, savings plan contributions to eligible employees and payments for sales incentive bonuses, as well as the net timing of other payroll activity, partially offset by the accrual of 2025 annual incentive bonuses, sales incentive bonuses and savings plan contributions to eligible employees.

Previous wording

Net cash provided by operating activities was $2,048 million for the nine months ended September 30, 2024, compared with $1,456 million for the nine months ended September 30, 2023. The increase in operating cash flows was primarily attributable to higher inventory build-up of certain products in the prior period for increased demand and to mitigate potential supply constraints, as well as higher net income adjusted by non-cash items.

Current wording

Net cash provided by operating activities was $587 million for the three months ended March 31, 2025, compared with $595 million for the three months ended March 31, 2024. The decrease in operating cash flows was primarily attributable to timing of receipts and payments in the ordinary course of business, partially offset by higher net income adjusted by non-cash items.

Previous wording

Our net cash used in investing activities was $441 million for the nine months ended September 30, 2024, compared with net cash used in investing activities of $567 million for the nine months ended September 30, 2023. The net cash used in investing activities for the nine months ended September 30, 2024 was primarily due to capital expenditures. The net cash used in investing activities for the nine months ended September 30, 2023 was primarily due to capital expenditures and acquisitions, partially offset by net proceeds on the sale of a majority interest in our pet insurance business and net proceeds from derivative instrument activity.

Current wording

Our net cash used in investing activities was $175 million for the three months ended March 31, 2025, compared with net cash used in investing activities of $131 million for the three months ended March 31, 2024. The net cash used in investing activities for the three months ended March 31, 2025 and 2024 was primarily due to capital expenditures.

Previous wording

Our net cash used in financing activities was $1,915 million for the nine months ended September 30, 2024, compared with net cash used in financing activities of $2,712 million for the nine months ended September 30, 2023. The net cash used in financing activities for the nine months ended September 30, 2024 was primarily attributable to the purchase of treasury shares and related payment of excise taxes, the payment of dividends and taxes paid on withholding shares, partially offset by proceeds in connection with the issuance of common stock under our equity incentive plan. The net cash used in financing activities for the nine months ended September 30, 2023 was primarily attributable to the repayment of the $1.35 billion aggregate principal amount of our 2013 senior notes due 2023 in February 2023, the purchase of treasury shares, the payment of dividends and taxes paid on withholding shares, partially offset by proceeds in connection with the issuance of common stock under our equity incentive plan.

Current wording

Our net cash used in financing activities was $677 million for the three months ended March 31, 2025, compared with net cash used in financing activities of $524 million for the three months ended March 31, 2024. The net cash used in financing activities for the three months ended March 31, 2025 was primarily attributable to the purchase of treasury shares, the payment of dividends and taxes paid on withholding shares, partially offset by proceeds in connection with the issuance of common stock under our equity incentive plan. The net cash used in financing activities for the three months ended March 31, 2024 was primarily attributable to the purchase of treasury shares, the payment of dividends and taxes paid on withholding shares, partially offset by proceeds related to short-term borrowings and proceeds in connection with the issuance of common stock under our equity incentive plan.

Previous wording

(a) Accounts receivable are usually collected over a period of 45 to 75 days. For the nine months ended September 30, 2024 compared with December 31, 2023, the number of days that accounts receivables were outstanding remained within this range. We regularly monitor our accounts receivable for collectability, particularly in markets where economic conditions remain uncertain. We believe that our allowance for doubtful accounts is appropriate. Our assessment is based on such factors as past due aging, historical and expected collection patterns, the financial condition of our customers, the robust nature of our credit and collection practices and the economic environment.

Current wording

(a) Accounts receivable are usually collected over a period of 45 to 75 days. For the three months ended March 31, 2025 and December 31, 2024, the number of days that accounts receivables were outstanding remained within this range. We regularly monitor our accounts receivable for collectability, particularly in markets where economic conditions remain uncertain. We believe that our allowance for doubtful accounts is appropriate. Our assessment is based on such factors as past due aging, historical and expected collection patterns, the financial condition of our customers, the robust nature of our credit and collection practices and the economic environment.

Previous wording

In December 2022, we entered into an amended and restated revolving credit agreement with a syndicate of banks providing for a multi-year $1.0 billion senior unsecured revolving credit facility (the credit facility), which expires in December 2027. Subject to certain conditions, we have the right to increase the credit facility to up to $1.5 billion. The credit facility contains a financial covenant requiring us to not exceed a maximum total leverage ratio (the ratio of consolidated net debt as of the end of the period to consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) for such period) of 3.50:1. Upon entering into a material acquisition, the maximum total leverage ratio increases to 4.00:1, and extends until the fourth full consecutive fiscal quarter ended immediately following the consummation of a material acquisition. In addition, the credit facility contains other customary covenants.

Current wording

In December 2022, we entered into an amended and restated revolving credit agreement with a syndicate of banks providing for a multi-year $1.0 billion senior unsecured revolving credit facility (the credit facility), which expires in December 2027. Subject to certain conditions, we have the right to increase the credit facility to up to $1.5 billion. The credit facility contains a financial covenant requiring us to not exceed a maximum total leverage ratio (the ratio of consolidated net debt as of the end of the period to consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) for such period) of 3.50:1. Upon entering into a material acquisition, the maximum total leverage ratio increases to 4.00:1,