Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q4 2020 Earnings Presentation
30 slides from Otis Worldwide's earnings presentation, Feb 1, 2021
Slide 1: Q4 2020 Earnings Call
Q4 2020 Earnings Call February 1, 2021 © 2021 O TIS W O RLDW IDE CORPORATION.
Slide 2: Forward-Looking Statements
Forward-Looking Statements Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted. This communicat ion cont ains stat ements which, to the ext ent they are not s t atements of historical or pres ent fact , cons t itute “forw ard-looking s t ateme
Slide 3: Full year 2020 results
Full year 2020 results New Equipment backlog up 2% v ersus prior year at constant currency1 Organic 1 sales down 2.1%..NE down 4.0%, Serv ice down 0.7% Adjusted operating profit1 up $52M at constant Otis returns to the NYSE currency1 …$17M improv ement from the prior outlook at the as an independent
Slide 4: 2020: Making progress on strategic priorities
2020: Making progress on strategic priorities • ~60 bps1 of New Equipment share gain New Equipment • Surpassed 1 million Gen2 units sold…launched Gen2 Prime in I ndia • Maintenance portfolio units up 2%...grow th in all major regions Service • Strong productiv ity…110 bps of adjusted operating profi
Slide 5: 2021 outlook
2021 outlook Industry New Equipment growth 1 (units) Americas EMEA Asia Otis Dow n Up Dow n 2020 mid M SD slightly teens • Net sales of $13.3 to $13.6B, up 4.5 to 6.5% at actual currency; organic 2 up 2 to 4% Up Up Up 2021E slightly LSD M SD • Adjusted operating profit2 of $2.0 to $2.1B, up $125 to
Slide 6: Q4 2020 results
Q4 2020 results ($ millions, ex cept per share amounts) Sales Operating profit Diluted earnings per share 3,493 GAAP 436 440 GAAP $0.50 $0.58 3,353 Adjusted 1 473 509 $0.66 Adjusted 1 $0.47 Adjusted 14.1% 14.6% margin1 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Organic1 1.3% Q4 adjusted operati
Slide 7: New Equipment
New Equipment ($ millions) Q4 Results Net sales • Orders down ~3.5% at constant currency 1 Y/Y …growth in EMEA and Asia 1,427 1,531 7.3% Organic1 • FY share up ~60 bps2 4.8% • New Equipment backlog up 2% at constant currency1 Q4 2019 Q4 2020 Operating profit • Organic1 sales up 4.8% GAAP 81 80 (1.2%
Slide 8: Service
Service ($ millions) Net sales Y/Y Q4 Results 1,926 1,962 1.9% • Maintenance units up 2% v ersus prior Organic1 year…HSD growth in China (1.4%) • Modernization orders up 4.9% at constant currency1...up double digits in Asia Q4 2019 Q4 2020 Operating profit • Organic1 sales down 1.4% GAAP 422 421 (0.
Slide 9: Full year 2020 adjusted operating profit drivers
Full year 2020 adjusted operating profit1 drivers Actual currency ($54M) + $59M + $42M + $47M up $52M at constant currency 1 $(5)M $42M $(45)M $55M M aterial productivity Productivity Corporate costs Cost containment Cost containment Transactional FX Volume Volume $1,919M $1,872M Under-absorption /
Slide 10: 2021 financial outlook
2021 financial outlook Outlook Otis up 2 to 4% Organic1 sales New Equipment up 2 to 5% Service up 2 to 4% Constant currency1 up $75 to $125M Adjusted operating profit1 Actual currency up $125 to $175M Adjusted net income & Adjusted net income1 $1,160 to $1,200M EPS1 Adjusted EPS 1 $2.67 to $2.77, up
Slide 11: 2021 organic sales outlook
2021 organic1 sales outlook 2020 Actual Outlook Outlook drivers New Equipment Down 4.0% up 2 to 5% • 2020 New Equipment Americas Down 3.3% up low to mid single backlog up 2% at constant currency1 ... accelerating conv ersion EMEA Down 5.5% up low single • New Equipment market Asia Down 3.5% up mid s
Slide 12: 2021 adjusted operating profit drivers
2021 adjusted operating profit1 drivers Actual currency + $40 – 60M + $100 – 140M $(15) – (25M) + $125 – 175M up $75 to $125M at constant currency1 $(15) – (25M) ~$50M $60 – 100M $30 – 50M $2,045 - 2,095M Volume Volume Transactional FX EUR @ 1.19 Material & field Productiv ity Standalone costs CNY @
Slide 13: Otis fundamentals
Otis fundamentals1 Iconic global brand in a large, growing industry Gaining share in NE2 & accelerating Service Sustainable growth over the medium-term portfolio growth Driving profitability Expanding margins through growth & productivity Investing through the cycle Sustainable level of R&D and Cape
Slide 14: © 2021 O TIS WO RLDWIDE CORPORATION.
© 2021 O TIS WO RLDWIDE CORPORATION. 14
Slide 15: Appendix
Appendix © 2021 O TIS WO RLDWIDE CORPORATION. 15
Slide 16: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency 1) Remaining performance obligation New Equipment orders Y/Y 16.2 16.5 16.4 + 1% Modernization + 3% Q4 2020 2020 Region Y/Y Y/Y Maintenance Total Otis (3.5%) (2.7%) 0% & Repair Americas (21.0%) (6.1%) EMEA 1.2% (1.8%) New Equipment + 2% As
Slide 17: Q4 2020 adjusted operating profit drivers
Appendix Q4 2020 adjusted operating profit1 drivers Actual currency + $8M + $23M + $5M + $36M +$19M at constant currency 1 $17M $4M $8M $7M Volume Productivity $509M M aterial productivity Volume Price & mix $473M Bad debt China investments Field inefficiencies Q4 2019 adjusted New Service Corporate
Slide 18: Full year 2020 results
Appendix Full year 2020 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 1,814 1,639 GAAP $2.58 $2.08 13,118 12,756 Adjusted 1 Adjusted 1 $2.52 1,872 1,919 $2.24 Adjusted 14.3% 15.0% margin1 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 Organic1
Slide 19: New Equipment
Appendix New Equipment ($ millions) Net sales Y/Y FY Results 5,648 5,371 (4.9%) • Orders down 2.7% at constant currency 1 Organic1 (4.0%) • Share up ~60 bps2 FY 2019 FY 2020 • Organic1 sales down 4.0% – Americas down 3.3% Operating profit – EMEA down 5.5% GAAP 393 318 (19.1%) – Asia down 3.5% Adjust
Slide 20: Service
Appendix Service ($ millions) Net sales Y/Y 7,470 7,385 (1.1%) FY Results Organic1 • Modernization orders down 1.3% at (0.7%) constant currency1 • Organic1 sales down 0.7% FY 2019 FY 2020 – Maintenance & Repair down 0.9% Operating profit – Modernization ~flat GAAP 1,603 1,611 0.5% 1,599 1,658 • Adju
Slide 21: Additional information
Appendix Additional information FY20 Actual FY21 outlook Restructuring expense $77M $60 – 70M Non-service pension expense $5M $10 – 15M Net interest expense $123M ~$135M Adjusted effective tax rate 30.4% ~29.5% Noncontrolling interest expense $150M ~$175M Capital expenditures $183M $160 – 170M Dilut
Slide 22: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Ot is Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information det ermined under GAAP wi
Slide 23: 2019 Pro forma standalone financials reconciliation
Appendix 2019 Pro forma standalone financials reconciliation ($millions) ( a) Reflects costs for certain functions and services performed by UTC organizations that are allocated to Otis for purposes of carve-out financial statements. ( b) Adjus tments have been made to 2019 to represent estimated st
Slide 24: 2020 GAAP to adjusted financials reconciliation
Appendix 2020 GAAP to adjusted financials reconciliation ($millions) ( a) Reflects costs for certain functions and services performed by UTC organizations that were allocated to Otis for purposes of carve-out financial statements. ( b) Non-service pension expense included in GAAP net income attribut
Slide 25: Organic sales reconciliation
Appendix Organic sales reconciliation New Maintenance Q4 2020 Total Otis Service Modernization Equipment & Repair Organic 1.3% 4.8% (1.4%) (1.1%) (2.5%) FX 2.6% 2.3% 2.9% 2.8% 3.0% Net acquisitions / divestitures 0.3% 0.2% 0.4% 0.4% 0.3% Other 0.0% 0.0% 0.0% 0.0% 0.0% Total net sales growth 4.2% 7.3
Slide 26: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q4 2019 Q4 2020 Y/Y FY 2019 FY 2020 Y/Y New Equipment Adjusted operating profit 82 90 8 402 348 (54) Impact of foreign exchange (1) (1) 9 9 Adjusted operating profit at constant currency 82 89 7 402 357 (45) Service A
Slide 27: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q4 2019 Q4 2020 FY 2019 FY 2020 SG&A expense 481 537 1,810 1,924 Restructuring (10) (28) (35) (55) One-time separation costs (33) (37) (43) (106) UTC allocated corporate expenses (a) (24) 0 (80) (16) Standalone public company costs (b) 38 0 133 0 Other (2) 1
Slide 28: Diluted earnings per share reconciliation
Appendix Diluted earnings per share reconciliation Q4 2019 Q4 2020 FY 2019 FY 2020 GAAP diluted earnings per share $0.50 $0.58 $2.58 $2.08 Impact of non-recurring items on diluted earnings per share ($0.03) $0.08 ($0.34) $0.44 Adjusted diluted earnings per share $0.47 $0.66 $2.24 $2.52 © 2021 O TIS
Slide 29: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q4 2019 Q4 2020 FY 2019 FY 2020 Operating cash flow 1 454 309 1,469 1,480 Capital expenditures (47) (71) (145) (183) Free cash flow 407 238 1,324 1,297 GAAP net income 218 251 1,116 906 FCF conversion 187% 95% 119% 143% 1 Operat ing cash flow exclud
Slide 30: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) Q4 Q3 Q4 ($billions) 2019 2020 2020 RPO at actual currency 16.4 16.9 17.2 FX (0.2) (0.4) (0.8) RPO at constant currency 16.2 16.5 16.4 New Equipment backlog Q4 Growth % 2020 Constant currency 2% FX 4% Actual currency 6% © 2021 O T