Otis delivers continued strong Service performance with
high single digit Service sales growth
- GAAP EPS up 47.3% and adjusted EPS up 1.1%
- Service net sales up 7.2% and Service organic sales up
7.7%
- Maintenance portfolio units increased 4.2%
- Mod orders up 3%, backlog up 14%, up 12% at constant
currency
- GAAP cash flow from operations of $394
million; adjusted free cash flow of $381 million
- Share repurchases of $200
million
- YTD GAAP EPS up 24.2% and YTD adjusted EPS up 8.2%, share
repurchases of $800 million
- Updated full-year outlook1: adjusted EPS of
~$3.85 with ~6.5% Service organic
sales growth and ~75 basis points of Service margin expansion
FARMINGTON, Conn., Oct. 30,
2024 /PRNewswire/ -- Otis Worldwide Corporation
(NYSE:OTIS) reported third quarter 2024 net sales of $3.5 billion with organic sales up 1.2%. GAAP
earnings per share (EPS) increased 47.3% to $1.34 and adjusted EPS increased 1.1% to
$0.96.
"Otis returned to top-line growth in the third quarter as we
continue to demonstrate the strength of our Service-driven business
model. Modernization organic sales accelerated to mid-teens, and
our portfolio grew more than 4% for the eighth consecutive
quarter," said Judy Marks, Chair,
CEO & President. "For the balance of the year, we remain
focused on driving productivity to offset the persistent headwinds
we have faced in New Equipment, while Service performance continues
its steady global growth trajectory supported by continued
portfolio growth complemented by a solid modernization backlog. As
we execute on our customer-centric strategy we expect to finish
2024 with another year of solid EPS growth."
Key Figures
|
($ millions,
except per share amounts)
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
Net sales
|
$
3,548
|
|
$
3,523
|
|
0.7 %
|
|
1.5 %
|
|
$ 10,586
|
|
$ 10,589
|
|
— %
|
|
1.4 %
|
|
Organic sales
growth
|
|
|
|
|
|
|
1.2 %
|
|
|
|
|
|
|
|
1.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Operating
profit
|
$ 363
|
|
$ 571
|
|
$
(208)
|
|
|
|
$
1,477
|
|
$
1,664
|
|
$
(187)
|
|
|
|
Operating profit
margin
|
10.2 %
|
|
16.2 %
|
|
(600) bps
|
|
|
|
14.0 %
|
|
15.7 %
|
|
(170) bps
|
|
|
|
Net income
|
$ 540
|
|
$ 376
|
|
43.6 %
|
|
|
|
$
1,308
|
|
$
1,083
|
|
20.8 %
|
|
|
|
Earnings per
share
|
$ 1.34
|
|
$ 0.91
|
|
47.3 %
|
|
|
|
$ 3.23
|
|
$ 2.60
|
|
24.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted non-GAAP
comparison
|
|
Operating
profit
|
$ 599
|
|
$ 595
|
|
$
4
|
|
$
8
|
|
$
1,773
|
|
$
1,703
|
|
$
70
|
|
$ 96
|
|
Operating profit
margin
|
16.9 %
|
|
16.9 %
|
|
0 bps
|
|
|
|
16.7 %
|
|
16.1 %
|
|
60 bps
|
|
|
|
Net income
|
$ 385
|
|
$ 395
|
|
(2.5) %
|
|
|
|
$
1,174
|
|
$
1,113
|
|
5.5 %
|
|
|
|
Earnings per
share
|
$ 0.96
|
|
$ 0.95
|
|
1.1 %
|
|
|
|
$ 2.90
|
|
$ 2.68
|
|
8.2 %
|
|
|
Third quarter net sales of $3.5
billion increased 0.7% versus the prior year, driven by
Service.
Third quarter GAAP operating profit of $363 million decreased $208 million driven primarily by
separation-related adjustments based on non-recurring tax items.
Adjusted operating profit of $599
million increased $4 million
at actual currency and $8 million at
constant currency, driven by Service. GAAP operating profit margin
contracted 600 basis points to 10.2% and adjusted operating profit
margin of 16.9% was flat versus the prior year, driven by favorable
segment mix offset by New Equipment segment performance and
headwinds in corporate costs.
GAAP EPS of $1.34 increased 47.3%
compared to the prior year primarily driven by non-recurring tax
benefit and related interest income. Adjusted EPS of $0.96 increased 1.1% due to solid operational
performance and a lower share count.
New Equipment
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
($
millions)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
Net sales
|
|
$
1,309
|
|
$
1,435
|
|
(8.8) %
|
|
(8.1) %
|
|
$
4,010
|
|
$
4,346
|
|
(7.7) %
|
|
(6.2) %
|
|
Organic
sales
|
|
|
|
|
|
|
|
(8.2) %
|
|
|
|
|
|
|
|
(6.3) %
|
|
Segment operating
profit
|
|
$
84
|
|
$ 104
|
|
$ (20)
|
|
$ (20)
|
|
$ 265
|
|
$ 292
|
|
$ (27)
|
|
$ (20)
|
|
Segment operating
profit margin
|
|
6.4 %
|
|
7.2 %
|
|
(80) bps
|
|
|
|
6.6 %
|
|
6.7 %
|
|
(10) bps
|
|
|
In the third quarter, net sales of $1.3
billion decreased 8.8% versus the prior year, with low
single digit organic sales growth in Asia
Pacific and the Americas more than offset by a greater than
20% decline in China. Organic
sales were roughly flat in EMEA.
Segment operating profit of $84
million decreased $20 million
at actual and constant currency from the impacts of lower volume
and unfavorable mix, partially offset by price, productivity and
commodity tailwinds. Segment operating profit margin contracted 80
basis points to 6.4%.
New Equipment orders were down 3% at constant currency with
greater than 20% growth in the Americas and high single digit
growth in Asia Pacific more than
offset by high single digit decline in EMEA and greater than 20%
decline in China. New Equipment
backlog decreased 1% at actual currency and decreased 3% at
constant currency.
Service
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
($
millions)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Y/Y
(CFX)
|
|
Net sales
|
|
$
2,239
|
|
$
2,088
|
|
7.2 %
|
|
8.0 %
|
|
$
6,576
|
|
$
6,243
|
|
5.3 %
|
|
6.6 %
|
|
Organic
sales
|
|
|
|
|
|
|
|
7.7 %
|
|
|
|
|
|
|
|
6.4 %
|
|
Segment operating
profit
|
|
$ 555
|
|
$ 518
|
|
$
37
|
|
$
40
|
|
$
1,616
|
|
$
1,496
|
|
$ 120
|
|
$ 138
|
|
Segment operating
profit margin
|
|
24.8 %
|
|
24.8 %
|
|
0 bps
|
|
|
|
24.6 %
|
|
24.0 %
|
|
60 bps
|
|
|
In the third quarter, net sales of $2.2
billion increased 7.2% with a 7.7% increase in organic
sales. Organic maintenance and repair sales increased 6.4% and
organic modernization sales increased 13.7%.
Segment operating profit of $555
million increased $37 million
at actual currency and $40 million at
constant currency due to higher volume, favorable pricing and
productivity, partially offset by annual wage inflation. Segment
operating profit margin of 24.8% was flat against strong third
quarter margin expansion in the prior year.
Cash flow
|
|
Quarter Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
($
millions)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
2024
|
|
2023
|
|
Y/Y
|
|
Cash flow from
operations
|
|
$
394
|
|
$
306
|
|
$
88
|
|
$
873
|
|
$
1,030
|
|
$
(157)
|
|
Free cash
flow
|
|
$
362
|
|
$
272
|
|
$
90
|
|
$
786
|
|
$
934
|
|
$
(148)
|
|
Adjusted free cash
flow
|
|
$
381
|
|
$
274
|
|
$
107
|
|
$
889
|
|
$
961
|
|
$
(72)
|
Third quarter cash flow changes were driven by an increase
in net income partially offset by changes in working capital.
2024 Outlook1
Otis is revising its
full year outlook:
- Net sales of ~$14.2 billion
- Organic sales up ~1.5%
- Organic New Equipment sales down mid to high single digits
- Organic Service sales up ~6.5%
- Adjusted operating profit of ~$2.375
billion, up ~$140 million at
constant currency; up ~$105 million
at actual currency
- Adjusted EPS of ~$3.85, up ~9%;
adjusted effective tax rate of approximately 25.0%
- Adjusted free cash flow of approximately $1.4 billion to $1.5
billion
1Note: When we provide outlook for organic sales,
adjusted operating profit, adjusted effective tax rate and adjusted
free cash flow on a forward-looking basis, a reconciliation of the
differences between the non-GAAP expectations and the corresponding
GAAP measures generally is not available without unreasonable
effort. See "Use and Definitions of Non-GAAP Financial Measures"
below for additional information.
About Otis
Otis is the world's leading elevator and
escalator manufacturing, installation and service company. We move
2.3 billion people a day and maintain approximately 2.3 million
customer units worldwide, the industry's largest maintenance
portfolio. Headquartered in Connecticut,
USA, Otis is 71,000 people strong, including 42,000 field
professionals, all committed to meeting the diverse needs of our
customers and passengers in more than 200 countries and territories
worldwide. For more information, visit www.otis.com and follow us
on LinkedIn, Instagram, and Facebook @OtisElevatorCo.
Use and Definitions of Non-GAAP Financial Measures
Otis Worldwide Corporation ("Otis") reports its financial
results in accordance with accounting principles generally accepted
in the United States ("GAAP"). We
supplement the reporting of our financial information determined
under GAAP with certain non-GAAP financial information. The
non-GAAP information presented provides investors with additional
useful information, but should not be considered in isolation or as
substitutes for the related GAAP measures. Moreover, other
companies may define non-GAAP measures differently, which limits
the usefulness of these measures for comparisons with such other
companies. We encourage investors to review our financial
statements and publicly filed reports in their entirety and not to
rely on any single financial measure. A reconciliation of the
non-GAAP measures (referenced in this press release) to the
corresponding amounts prepared in accordance with GAAP appears in
the attached tables. These tables provide additional information as
to the items and amounts that have been excluded from the adjusted
measures. Below are our non-GAAP financial measures:
|
Non-GAAP
measure
|
Definition
|
|
Organic
sales
|
Represents consolidated
net sales (a GAAP measure), excluding the impact of foreign
currency translation, acquisitions and divestitures completed in
the preceding twelve months and other significant items of a
non-recurring and/or nonoperational nature ("other significant
items"). Management believes organic sales is a useful measure in
providing period-to-period comparisons of the results of the
Company's ongoing operational performance.
|
|
Adjusted selling,
general and
administrative
("SG&A") expense
|
Represents SG&A
expense (a GAAP measure), excluding restructuring costs and other
significant items.
|
|
Adjusted operating
profit
|
Represents income from
continuing operations (a GAAP measure), excluding restructuring
costs and other significant items.
|
|
Adjusted net interest
expense
|
Represents net interest
expense (a GAAP measure), adjusted for the impacts of non-recurring
acquisition related financing costs and related net interest
expense pending the completion of a transaction and other
significant items.
|
|
Adjusted noncontrolling
interest in
earnings
|
Represents
noncontrolling interest in earnings (a GAAP measure), excluding
restructuring costs and other significant items, including related
tax effects.
|
|
Adjusted net
income
|
Represents net income
attributable to Otis Worldwide Corporation (a GAAP measure),
excluding restructuring costs and other significant items,
including related tax effects.
|
|
Adjusted earnings per
share ("EPS")
|
Represents diluted
earnings per share attributable to common shareholders (a GAAP
measure), adjusted for the per share impact of restructuring and
other significant items, including related tax effects.
|
|
Adjusted effective tax
rate
|
Represents the
effective tax rate (a GAAP measure) adjusted for other significant
items and the tax impact of restructuring costs and other
significant items.
|
|
Constant
currency
|
GAAP financial results
include the impact of changes in foreign currency exchange rates
("AFX"). We use the non-GAAP measure "at constant currency" or
"CFX" to show changes in our financial results without giving
effect to period-to-period currency fluctuations. Under U.S. GAAP,
income statement results are translated in U.S. dollars at the
average exchange rate for the period presented. Management believes
that this non-GAAP measure is useful in providing period-to-period
comparisons of the results of the Company's ongoing operational
performance.
|
|
Free cash
flow
|
Represents cash flow
from operations (a GAAP measure) less capital expenditures.
Management believes free cash flow is a useful measure of liquidity
and an additional basis for assessing Otis' ability to fund its
activities, including the financing of acquisitions, debt service,
repurchases of common stock and distribution of earnings to
shareholders. Free cash flow should not be considered an
alternative to, or more meaningful than, net cash flows provided by
operating activities, or any other measure of liquidity presented
in accordance with GAAP.
|
|
Adjusted free cash
flow
|
Represents cash flow
from operations (a GAAP measure) less capital expenditures,
adjusted to exclude certain items management believes affect the
comparability of operating results. Management believes adjusted
free cash flow is a useful measure of liquidity that provides
investors additional information regarding the Company's ability to
fund its activities, including the financing of acquisitions, debt
service, repurchases of common stock and distribution of earnings
to shareholders. Adjusted free cash flow should not be considered
an alternative to, or more meaningful than, net cash flows provided
by operating activities, or any other measure of liquidity
presented in accordance with GAAP.
|
Management believes that organic sales, adjusted SG&A,
adjusted operating profit, adjusted net interest expense, adjusted
noncontrolling interest in earnings, adjusted net income, adjusted
EPS and the adjusted effective tax rate are useful measures in
providing period-to-period comparisons of the results of the
Company's ongoing operational performance.
When we provide our expectations for adjusted net sales, organic
sales, adjusted operating profit, adjusted net interest expense,
adjusted noncontrolling interest in earnings, adjusted net income,
adjusted effective tax rate, adjusted EPS, free cash flow and
adjusted free cash flow on a forward-looking basis, a
reconciliation of the differences between the non-GAAP expectations
and the corresponding GAAP measures (expected diluted EPS from
continuing operations, operating profit, the effective tax rate,
net sales and expected cash flow from operations) generally is not
available without unreasonable effort due to potentially high
variability, complexity and low visibility as to the items that
would be excluded from the GAAP measure in the relevant future
period, such as unusual gains and losses, the ultimate outcome of
pending litigation, fluctuations in foreign currency exchange
rates, the impact and timing of potential acquisitions and
divestitures, and other structural changes or their probable
significance. The variability of the excluded items may have a
significant, and potentially unpredictable, impact on our future
GAAP results.
Cautionary Statement
This communication contains statements which, to the extent they
are not statements of historical or present fact, constitute
"forward-looking statements" under the securities laws. From time
to time, oral or written forward-looking statements may also be
included in other information released to the public. These
forward-looking statements are intended to provide management's
current expectations or plans for Otis' future operating and
financial performance, based on assumptions currently believed to
be valid. Forward-looking statements can be identified by the use
of words such as "believe," "expect," "expectations," "plans,"
"strategy," "prospects," "estimate," "project," "target,"
"anticipate," "will," "should," "see," "guidance," "outlook,"
"medium-term," "near-term," "confident," "goals" and other words of
similar meaning in connection with a discussion of future operating
or financial performance. Forward-looking statements may include,
among other things, statements relating to future sales, earnings,
cash flow, results of operations, uses of cash, dividends, share
repurchases, tax rates, research & development spend,
restructuring actions (including UpLift), credit ratings, net
indebtedness and other measures of financial performance or
potential future plans, strategies or transactions, or statements
that relate to climate change and our intent to achieve certain
environmental, social and governance targets or goals, including
operational impacts and costs associated therewith, and other
statements that are not historical facts. All forward-looking
statements involve risks, uncertainties and other factors that may
cause actual results to differ materially from those expressed or
implied in the forward-looking statements. For those statements,
Otis claims the protection of the safe harbor for forward-looking
statements contained in the U.S. Private Securities Litigation
Reform Act of 1995. Such risks, uncertainties and other factors
include, without limitation: (1) the effect of economic conditions
in the industries and markets in which Otis and its businesses
operate and any changes therein, including financial market
conditions, fluctuations in commodity prices and other inflationary
pressures, interest rates and foreign currency exchange rates,
levels of end market demand in construction, pandemic health
issues, natural disasters, whether as a result of climate change or
otherwise, and the financial condition of Otis' customers and
suppliers; (2) the effect of changes in political conditions in the
U.S., including in connection with the results of the 2024
elections or otherwise, and other countries in which Otis and its
businesses operate, including the effects of the ongoing conflict
between Russia and Ukraine, the conflicts in the Middle East, and tensions between the U.S. and
China, on general market
conditions, commodity costs, global trade policies and related
sanctions and export controls, and currency exchange rates in the
near term and beyond; (3) challenges in the development,
production, delivery, support, performance and realization of the
anticipated benefits of advanced technologies and new products and
services; (4) future levels of indebtedness, capital spending and
research and development spending; (5) future availability of
credit and factors that may affect such availability or costs
thereof, including credit market conditions and Otis' capital
structure; (6) the timing and scope of future repurchases of Otis'
common stock, which may be suspended at any time due to various
factors, including market conditions and the level of other
investing activities and uses of cash; (7) fluctuations in prices
and delays and disruption in delivery of materials and services
from suppliers, whether as a result of changes in general economic
conditions, geopolitical conflicts or otherwise; (8) cost reduction
or containment actions, restructuring costs and related savings and
other consequences thereof, including with respect to UpLift; (9)
new business and investment opportunities; (10) the outcome of
legal proceedings, investigations and other contingencies; (11)
pension plan assumptions and future contributions; (12) the impact
of the negotiation of collective bargaining agreements and labor
disputes and labor inflation in the markets in which Otis and its
businesses operate globally; (13) the effect of changes in tax,
environmental, regulatory (including among other things
import/export) and other laws and regulations in the U.S.,
including in connection with the results of the 2024 election, and
other countries in which Otis and its businesses operate; (14) the
ability of Otis to retain and hire key personnel; (15) the scope,
nature, impact or timing of acquisition and divestiture activity,
the integration of acquired businesses into existing businesses and
realization of synergies and opportunities for growth and
innovation and incurrence of related costs; (16) the determination
by the Internal Revenue Service and other tax authorities that the
distribution or certain related transactions should be treated as
taxable transactions in connection with the separation (the
"Separation") of Otis and Carrier Global Corporation ("Carrier")
from United Technologies Corporation (now known as RTX Corporation
("RTX"); and (17) our obligations and disputes that have or may
hereafter arise under the agreements we entered into with RTX and
Carrier in connection with the Separation. The above list of
factors is not exhaustive or necessarily in order of importance.
For additional information on identifying factors that may cause
actual results to vary from those stated in forward-looking
statements, see Otis' registration statement on Form 10 and the
reports of Otis on Forms 10-K, 10-Q and 8-K filed with or furnished
to the SEC from time to time. Any forward-looking statement speaks
only as of the date on which it is made, and Otis assumes no
obligation to update or revise such statement, whether as a result
of new information, future events or otherwise, except as required
by applicable law.
|
Otis Worldwide
Corporation
Condensed
Consolidated Statements of Operations
|
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(amounts in
millions, except per share amounts)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net Sales
|
|
$
3,548
|
|
$
3,523
|
|
$
10,586
|
|
$
10,589
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
|
|
|
Cost of products and
services sold
|
|
2,470
|
|
2,477
|
|
7,401
|
|
7,464
|
|
Research and
development
|
|
40
|
|
36
|
|
115
|
|
107
|
|
Selling, general and
administrative
|
|
455
|
|
452
|
|
1,366
|
|
1,386
|
|
Total Costs and
Expenses
|
|
2,965
|
|
2,965
|
|
8,882
|
|
8,957
|
|
Other income (expense),
net
|
|
(220)
|
|
13
|
|
(227)
|
|
32
|
|
Operating
profit
|
|
363
|
|
571
|
|
1,477
|
|
1,664
|
|
Non-service pension
cost (benefit)
|
|
1
|
|
—
|
|
—
|
|
1
|
|
Interest expense
(income), net
|
|
(150)
|
|
39
|
|
(79)
|
|
109
|
|
Net income before
income taxes
|
|
512
|
|
532
|
|
1,556
|
|
1,554
|
|
Income tax expense
(benefit)
|
|
(45)
|
|
137
|
|
175
|
|
400
|
|
Net income
|
|
557
|
|
395
|
|
1,381
|
|
1,154
|
|
Less: Noncontrolling
interest in subsidiaries' earnings
|
|
17
|
|
19
|
|
73
|
|
71
|
|
Net income attributable
to Otis Worldwide Corporation
|
|
$
540
|
|
$
376
|
|
$
1,308
|
|
$
1,083
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of
Common Stock:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.35
|
|
$
0.92
|
|
$
3.25
|
|
$
2.62
|
|
Diluted
|
|
$
1.34
|
|
$
0.91
|
|
$
3.23
|
|
$
2.60
|
|
Weighted Average Number
of Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
Basic shares
|
|
400.2
|
|
410.8
|
|
402.7
|
|
412.6
|
|
Diluted
Shares
|
|
402.7
|
|
413.7
|
|
405.4
|
|
415.8
|
|
Otis Worldwide
Corporation
Reconciliation of
Reported (GAAP) to Adjusted Operating Profit & Operating Profit
Margin
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
$
1,309
|
|
$
1,435
|
|
$
4,010
|
|
$
4,346
|
|
Service
|
|
2,239
|
|
2,088
|
|
6,576
|
|
6,243
|
|
Total Net
Sales
|
|
$
3,548
|
|
$
3,523
|
|
$ 10,586
|
|
$ 10,589
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
$
84
|
|
$
104
|
|
$
265
|
|
$
292
|
|
Service
|
|
555
|
|
518
|
|
1,616
|
|
1,496
|
|
Total segment operating
profit
|
|
639
|
|
622
|
|
1,881
|
|
1,788
|
|
Corporate and
Unallocated
|
|
(276)
|
|
(51)
|
|
(404)
|
|
(124)
|
|
Total Otis GAAP
Operating Profit
|
|
363
|
|
571
|
|
1,477
|
|
1,664
|
|
UpLift
restructuring
|
|
4
|
|
—
|
|
11
|
|
—
|
|
Other
restructuring
|
|
5
|
|
21
|
|
29
|
|
36
|
|
UpLift transformation
costs
|
|
18
|
|
4
|
|
45
|
|
4
|
|
Separation-related
adjustments 1
|
|
193
|
|
—
|
|
177
|
|
—
|
|
Litigation and
settlement costs 2
|
|
—
|
|
—
|
|
18
|
|
—
|
|
Held for sale
impairment
|
|
18
|
|
—
|
|
18
|
|
—
|
|
Other, net
|
|
(2)
|
|
(1)
|
|
(2)
|
|
(1)
|
|
Total Otis Adjusted
Operating Profit
|
|
$
599
|
|
$
595
|
|
$
1,773
|
|
$
1,703
|
|
Reported Total
Operating Profit Margin
|
|
10.2 %
|
|
16.2 %
|
|
14.0 %
|
|
15.7 %
|
|
Adjusted Total
Operating Profit Margin
|
|
16.9 %
|
|
16.9 %
|
|
16.7 %
|
|
16.1 %
|
|
|
1
Separation-related adjustments in the quarter and nine months ended
September 30, 2024 represent amounts due to RTX Corporation (our
former parent) in accordance with the Tax Matters Agreement,
including those amounts related to a favorable ruling received in
August 2024 regarding a tax litigation in Germany.
|
|
|
2
Litigation-related settlement costs in the nine months ended
September 30, 2024 represent the aggregate amount of settlement
costs and increase in loss contingency accruals, excluding legal
costs, for certain legal matters that are outside of the ordinary
course of business due to the size, complexity and unique facts of
these matters.
|
|
|
Otis discloses segment
operating profit as its measure of segment performance, reconciled
to total Otis operating profit. Segment operating profit exclude
certain expenses and income that are not allocated to segments (as
described above as "Corporate and Unallocated").
|
|
|
Effective in the first
quarter of 2024, the measure of segment performance used by Otis'
Chief Operating Decision Maker ("CODM") changed and, as a result,
Otis' disclosed measure of segment performance (segment operating
profit) was updated. The change to segment operating profit aligns
with the update to how the CODM assesses performance and allocates
resources for the Company's segments, and therefore is our measure
of segment profitability.
|
|
|
As a result of the
change, restructuring costs and other items not allocated to the
operating segments are presented as part of Corporate and
Unallocated. The financial information presented herein reflects
the impact of the measure of segment performance change for all
periods presented.
|
|
Otis Worldwide
Corporation
Reconciliation of
Reported (GAAP) to Adjusted (Non-GAAP) Net Income, Earnings Per
Share, and Effective Tax Rate
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(dollars in
millions, except per share amounts)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Adjusted Operating
Profit
|
|
$
599
|
|
$
595
|
|
$
1,773
|
|
$
1,703
|
|
Non-service pension
cost (benefit)
|
|
1
|
|
—
|
|
—
|
|
1
|
|
Adjusted net interest
expense 1, 2
|
|
51
|
|
39
|
|
143
|
|
109
|
|
Adjusted income from
operations before income taxes
|
|
547
|
|
556
|
|
1,630
|
|
1,593
|
|
Income tax expense
(benefit)
|
|
(45)
|
|
137
|
|
175
|
|
400
|
|
Tax impact on
restructuring and non-recurring items
|
|
5
|
|
5
|
|
24
|
|
9
|
|
Non-recurring tax items
1, 2
|
|
185
|
|
—
|
|
195
|
|
—
|
|
Adjusted net income
from operations
|
|
402
|
|
414
|
|
1,236
|
|
1,184
|
|
Adjusted noncontrolling
interest 1
|
|
17
|
|
19
|
|
62
|
|
71
|
|
Adjusted net income
attributable to common shareholders
|
|
$
385
|
|
$
395
|
|
$
1,174
|
|
$
1,113
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to common shareholders
|
|
$
540
|
|
$
376
|
|
$
1,308
|
|
$
1,083
|
|
UpLift
restructuring
|
|
4
|
|
—
|
|
11
|
|
—
|
|
Other
restructuring
|
|
5
|
|
21
|
|
29
|
|
36
|
|
UpLift transformation
costs
|
|
18
|
|
4
|
|
45
|
|
4
|
|
Separation-related
adjustments
|
|
193
|
|
—
|
|
177
|
|
—
|
|
Litigation-related
settlement costs
|
|
—
|
|
—
|
|
18
|
|
—
|
|
Held for sale
impairment
|
|
18
|
|
—
|
|
18
|
|
—
|
|
Interest income related
to non-recurring tax items 1, 2
|
|
(200)
|
|
—
|
|
(210)
|
|
—
|
|
Tax effects of
restructuring, non-recurring items and other adjustments
|
|
(5)
|
|
(5)
|
|
(24)
|
|
(9)
|
|
Non-recurring tax items
1, 2
|
|
(185)
|
|
—
|
|
(195)
|
|
—
|
|
Other, net
|
|
(3)
|
|
(1)
|
|
(3)
|
|
(1)
|
|
Adjusted net income
attributable to common shareholders
|
|
$
385
|
|
$
395
|
|
$
1,174
|
|
$
1,113
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per
Share
|
|
$
1.34
|
|
$
0.91
|
|
$
3.23
|
|
$
2.60
|
|
Impact to diluted
earnings per share
|
|
(0.38)
|
|
0.04
|
|
(0.33)
|
|
0.08
|
|
Adjusted Earnings
Per Share
|
|
$
0.96
|
|
$
0.95
|
|
$
2.90
|
|
$
2.68
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate
|
|
(8.8) %
|
|
25.8 %
|
|
11.2 %
|
|
25.7 %
|
|
Impact of adjustments
on effective tax rate
|
|
35.5 %
|
|
(0.3) %
|
|
13.0 %
|
|
— %
|
|
Adjusted Effective
Tax Rate
|
|
26.7 %
|
|
25.5 %
|
|
24.2 %
|
|
25.7 %
|
|
|
1 Certain
tax reserves were adjusted in the second quarter of 2024. As a
result, Net interest expense and Noncontrolling interest are
reflected as adjusted without $21 million of interest income and
$11 million of the noncontrolling interest share of the reserves
adjustments, respectively, for the nine months ended September 30,
2024.
|
|
|
2 In August
2024, we received a favorable ruling regarding a tax litigation in
Germany. As a result, income tax benefits and related interest
income were recorded in the third quarter of 2024. Net interest
expense is reflected as adjusted without $200 million of interest
income for the quarter and nine months ended September 30,
2024.
|
|
Otis Worldwide
Corporation
Components of
Changes in Net Sales
|
|
|
|
|
Quarter Ended
September 30, 2024 Compared with Quarter Ended September 30,
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors Contributing
to Total % Change in Net Sales
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions
/
Divestitures,
net and Other
|
|
Total
|
|
New
Equipment
|
|
(8.2) %
|
|
(0.7) %
|
|
0.1 %
|
|
(8.8) %
|
|
Service
|
|
7.7 %
|
|
(0.8) %
|
|
0.3 %
|
|
7.2 %
|
|
Maintenance and
Repair
|
|
6.4 %
|
|
(0.7) %
|
|
0.4 %
|
|
6.1 %
|
|
Modernization
|
|
13.7 %
|
|
(1.1) %
|
|
— %
|
|
12.6 %
|
|
Total Net
Sales
|
|
1.2 %
|
|
(0.8) %
|
|
0.3 %
|
|
0.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2024 Compared with Nine Months Ended September 30,
2023
|
|
|
|
|
|
|
|
|
Factors Contributing
to Total % Change in Net Sales
|
|
|
Organic
|
|
FX
Translation
|
|
Acquisitions
/
Divestitures,
net and Other
|
|
Total
|
|
New
Equipment
|
|
(6.3) %
|
|
(1.5) %
|
|
0.1 %
|
|
(7.7) %
|
|
Service
|
|
6.4 %
|
|
(1.3) %
|
|
0.2 %
|
|
5.3 %
|
|
Maintenance and
Repair
|
|
5.7 %
|
|
(1.3) %
|
|
0.3 %
|
|
4.7 %
|
|
Modernization
|
|
9.7 %
|
|
(1.8) %
|
|
0.1 %
|
|
8.0 %
|
|
Total Net
Sales
|
|
1.2 %
|
|
(1.4) %
|
|
0.2 %
|
|
— %
|
|
Components of
Changes in New Equipment Backlog
|
|
|
|
September 30,
2024
|
|
|
Y/Y Growth
%
|
|
New Equipment Backlog
increase at actual currency
|
|
(1) %
|
|
Foreign exchange impact
to New Equipment Backlog
|
|
(2) %
|
|
New Equipment Backlog
increase at constant currency
|
|
(3) %
|
|
|
Components of
Changes in Modernization Backlog
|
|
|
|
September 30,
2024
|
|
|
Y/Y Growth
%
|
|
Modernization Backlog
increase at actual currency
|
|
14 %
|
|
Foreign exchange impact
to Modernization Backlog
|
|
(2) %
|
|
Modernization Backlog
increase at constant currency
|
|
12 %
|
|
Otis Worldwide
Corporation
Reconciliation of
Segment and Total Adjusted Operating Profit at Constant
Currency
|
|
|
Quarter Ended
September 30, 2024 Compared with Quarter Ended September 30,
2023
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
|
|
|
|
|
|
Segment Operating
Profit
|
|
$
84
|
|
$
104
|
|
$
(20)
|
|
Impact of foreign
exchange
|
|
—
|
|
—
|
|
—
|
|
Segment Operating
Profit at constant currency
|
|
$
84
|
|
$
104
|
|
$
(20)
|
|
|
|
|
|
|
|
|
Service
|
|
|
|
|
|
|
|
Segment Operating
Profit
|
|
$
555
|
|
$
518
|
|
$
37
|
|
Impact of foreign
exchange
|
|
3
|
|
—
|
|
3
|
|
Segment Operating
Profit at constant currency
|
|
$
558
|
|
$
518
|
|
$
40
|
|
|
|
|
|
|
|
|
Otis
Consolidated
|
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
|
$
599
|
|
$
595
|
|
$
4
|
|
Impact of foreign
exchange
|
|
4
|
|
—
|
|
4
|
|
Adjusted Operating
Profit at constant currency
|
|
$
603
|
|
$
595
|
|
$
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2024 Compared with Nine Months Ended September 30,
2023
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
2024
|
|
2023
|
|
Y/Y
|
|
|
|
|
|
|
|
|
New
Equipment
|
|
|
|
|
|
|
|
Segment Operating
Profit
|
|
$
265
|
|
$
292
|
|
$
(27)
|
|
Impact of foreign
exchange
|
|
7
|
|
—
|
|
7
|
|
Segment Operating
Profit at constant currency
|
|
$
272
|
|
$
292
|
|
$
(20)
|
|
|
|
|
|
|
|
|
Service
|
|
|
|
|
|
|
|
Segment Operating
Profit
|
|
$
1,616
|
|
$
1,496
|
|
$
120
|
|
Impact of foreign
exchange
|
|
18
|
|
—
|
|
18
|
|
Segment Operating
Profit at constant currency
|
|
$
1,634
|
|
$
1,496
|
|
$
138
|
|
|
|
|
|
|
|
|
Otis
Consolidated
|
|
|
|
|
|
|
|
Adjusted Operating
Profit
|
|
$
1,773
|
|
$
1,703
|
|
$
70
|
|
Impact of foreign
exchange
|
|
26
|
|
—
|
|
26
|
|
Adjusted Operating
Profit at constant currency
|
|
$
1,799
|
|
$
1,703
|
|
$
96
|
|
Otis Worldwide
Corporation
Condensed
Consolidated Balance Sheet
|
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
(amounts in
millions)
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
827
|
|
$
1,274
|
|
Accounts receivable,
net
|
|
3,604
|
|
3,538
|
|
Contract
assets
|
|
776
|
|
717
|
|
Inventories
|
|
625
|
|
612
|
|
Other current
assets
|
|
663
|
|
259
|
|
Total Current
Assets
|
|
6,495
|
|
6,400
|
|
Future income tax
benefits
|
|
315
|
|
323
|
|
Fixed assets,
net
|
|
721
|
|
727
|
|
Operating lease
right-of-use assets
|
|
409
|
|
416
|
|
Intangible assets,
net
|
|
330
|
|
335
|
|
Goodwill
|
|
1,630
|
|
1,588
|
|
Other assets
|
|
361
|
|
328
|
|
Total
Assets
|
|
$
10,261
|
|
$
10,117
|
|
|
|
|
|
|
Liabilities and
Equity (Deficit)
|
|
|
|
|
|
Short-term borrowings
and current portion of long-term debt
|
|
$
1,667
|
|
$
32
|
|
Accounts
payable
|
|
1,779
|
|
1,878
|
|
Accrued
liabilities
|
|
1,864
|
|
1,873
|
|
Contract
liabilities
|
|
2,787
|
|
2,696
|
|
Total Current
Liabilities
|
|
8,097
|
|
6,479
|
|
Long-term
debt
|
|
5,596
|
|
6,866
|
|
Future pension and
postretirement benefit obligations
|
|
462
|
|
462
|
|
Operating lease
liabilities
|
|
286
|
|
292
|
|
Future income tax
obligations
|
|
215
|
|
245
|
|
Other long-term
liabilities
|
|
385
|
|
493
|
|
Total
Liabilities
|
|
15,041
|
|
14,837
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
55
|
|
135
|
|
Shareholders' Equity
(Deficit):
|
|
|
|
|
|
Common Stock and
additional paid-in capital
|
|
245
|
|
213
|
|
Treasury
Stock
|
|
(3,189)
|
|
(2,382)
|
|
Accumulated
deficit
|
|
(1,153)
|
|
(2,005)
|
|
Accumulated other
comprehensive income (loss)
|
|
(804)
|
|
(750)
|
|
Total Shareholders'
Equity (Deficit)
|
|
(4,901)
|
|
(4,924)
|
|
Noncontrolling
interest
|
|
66
|
|
69
|
|
Total Equity
(Deficit)
|
|
(4,835)
|
|
(4,855)
|
|
Total Liabilities
and Equity (Deficit)
|
|
$
10,261
|
|
$
10,117
|
|
Otis Worldwide
Corporation
Condensed
Consolidated Statement of Cash Flows
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
Net income from
operations
|
|
$
557
|
|
$
395
|
|
$ 1,381
|
|
$ 1,154
|
|
Adjustments to
reconcile net income to net cash flows provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
48
|
|
46
|
|
133
|
|
145
|
|
Deferred income tax
expense (benefit)
|
|
(1)
|
|
(18)
|
|
(26)
|
|
(34)
|
|
Stock compensation
cost
|
|
16
|
|
15
|
|
52
|
|
49
|
|
Gain from reversal of
German Tax Litigation interest accrual
|
|
(50)
|
|
—
|
|
(50)
|
|
—
|
|
Change in:
|
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
78
|
|
(10)
|
|
(93)
|
|
(214)
|
|
Contract assets and
liabilities, current
|
|
(84)
|
|
(86)
|
|
23
|
|
68
|
|
Inventories
|
|
(4)
|
|
13
|
|
(14)
|
|
(8)
|
|
Other current
assets
|
|
(313)
|
|
34
|
|
(373)
|
|
(4)
|
|
Accounts
payable
|
|
14
|
|
(78)
|
|
(115)
|
|
(35)
|
|
Accrued
liabilities
|
|
129
|
|
19
|
|
2
|
|
(66)
|
|
Pension
contributions
|
|
(10)
|
|
(8)
|
|
(34)
|
|
(32)
|
|
Other operating
activities, net
|
|
14
|
|
(16)
|
|
(13)
|
|
7
|
|
Net cash flows
provided by (used in) operating activities
|
|
394
|
|
306
|
|
873
|
|
1,030
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(32)
|
|
(34)
|
|
(87)
|
|
(96)
|
|
Acquisitions of
businesses and intangible assets, net of cash
|
|
(30)
|
|
(7)
|
|
(70)
|
|
(27)
|
|
Proceeds from sale of
(investments in) marketable securities, net
|
|
(9)
|
|
(2)
|
|
(9)
|
|
(2)
|
|
Other investing
activities, net
|
|
(42)
|
|
2
|
|
(44)
|
|
(7)
|
|
Net cash flows
provided by (used in) investing activities
|
|
(113)
|
|
(41)
|
|
(210)
|
|
(132)
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in
short-term borrowings, net
|
|
2
|
|
(147)
|
|
325
|
|
(90)
|
|
Issuance of long-term
debt, net
|
|
—
|
|
747
|
|
—
|
|
747
|
|
Payment of debt
issuance costs
|
|
—
|
|
(6)
|
|
—
|
|
(6)
|
|
Dividends paid on
Common Stock
|
|
(155)
|
|
(139)
|
|
(450)
|
|
(400)
|
|
Repurchases of Common
Stock
|
|
(200)
|
|
(225)
|
|
(800)
|
|
(575)
|
|
Dividends paid to
noncontrolling interest
|
|
(70)
|
|
(61)
|
|
(81)
|
|
(76)
|
|
Acquisition of
noncontrolling interest shares
|
|
—
|
|
—
|
|
(75)
|
|
—
|
|
Other financing
activities, net
|
|
—
|
|
(2)
|
|
(21)
|
|
(18)
|
|
Net cash flows
provided by (used in) financing activities
|
|
(423)
|
|
167
|
|
(1,102)
|
|
(418)
|
|
Summary of
Activity:
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
394
|
|
306
|
|
873
|
|
1,030
|
|
Net cash provided by
(used in) investing activities
|
|
(113)
|
|
(41)
|
|
(210)
|
|
(132)
|
|
Net cash provided by
(used in) financing activities
|
|
(423)
|
|
167
|
|
(1,102)
|
|
(418)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
23
|
|
(18)
|
|
(9)
|
|
(34)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
(119)
|
|
414
|
|
(448)
|
|
446
|
|
Cash, cash equivalents
and restricted cash, beginning of period
|
|
951
|
|
1,227
|
|
1,280
|
|
1,195
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
832
|
|
1,641
|
|
832
|
|
1,641
|
|
Less: Restricted
cash
|
|
5
|
|
5
|
|
5
|
|
5
|
|
Cash and cash
equivalents, end of period
|
|
$
827
|
|
$ 1,636
|
|
$
827
|
|
$ 1,636
|
|
Otis Worldwide
Corporation
Adjusted Free Cash
Flow Reconciliation
|
|
|
|
Quarter Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(dollars in
millions)
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net cash flows provided
by operating activities (GAAP)
|
|
$
394
|
|
$
306
|
|
$
873
|
|
$
1,030
|
|
Capital
expenditures
|
|
(32)
|
|
(34)
|
|
(87)
|
|
(96)
|
|
Free cash flow
(Non-GAAP)
|
|
362
|
|
272
|
|
786
|
|
934
|
|
Adjustments
for:
|
|
|
|
|
|
|
|
|
|
UpLift restructuring
payments
|
|
6
|
|
—
|
|
20
|
|
—
|
|
UpLift transformation
payments
|
|
13
|
|
2
|
|
34
|
|
2
|
|
Separation-related
payments 1
|
|
—
|
|
—
|
|
49
|
|
25
|
|
Adjusted free cash flow
(Non-GAAP)
|
|
$
381
|
|
$
274
|
|
$
889
|
|
$
961
|
|
|
|
|
|
|
|
|
|
|
1 In April
of 2023 and 2024, respectively, we made payments to RTX Corporation
(our former parent) in accordance with the Tax Matters Agreement.
These annual payments are anticipated to conclude in
2026.
|
Media Contact:
Katy Padgett
+1-860-674-3047
Kathleen.Padgett@otis.com
Investor Relations Contact:
Michael Rednor
+1-860-676-6011
investorrelations@otis.com
View original
content:https://www.prnewswire.com/news-releases/otis-reports-third-quarter-2024-results-302291394.html
SOURCE Otis Worldwide Corporation
