Slide 1: Q1 2023 Earnings Call
Q1 2023 Earnings Call April 26, 2023 © 2023 OT IS WOR L D WID E COR PORATION .
Slide 2: Forward-Looking Statements
Forward-Looking Statements Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted. This communication contains statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under th
Slide 3: Q1 2023 highlights
TBU Q1 2023 highlights Q1 Orders Strong performance to start the year • New Equipment share up ~70 bps1 • Accelerated maintenance portfolio growth, up 4.2% • Organic2 sales up 3.6%, the tenth consecutive quarter of growth • Adjusted EPS2 up 5.3%... benefit from operational Blue Line Metro Carsch-Hau
Slide 4: Q1 2023 update
Q1 2023 update • New Equipment orders up 7.4% at constant currency1 • New Equipment backlog up 3% and adjusted backlog up 10% at constant currency 1 Q1 2023 • Modernization orders up 29%…backlog up 13% at constant currency 1 Results • Organic1 sales up 3.6%... Service up 6.3%, New Equipment ~flat •
Slide 5: Q1 2023 results
Q1 2023 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 3,414 3,346 GAAP 526 513 GAAP $0.73 $0.79 Adjusted 1 Adjusted1 Adjusted 1 3,360 3,346 537 $0.80 518 $0.76 Adjusted margin1 16.0% 15.5% Q1 2022 Q1 2023 Q1 2022 Q1 2023 Q1 2022 Q1 2023 Adjuste
Slide 6: New Equipment
New Equipment ($ millions) Net sales Q1 Results Y/Y GAAP 1,422 1,307 (8.1%) • Orders up 7.4% at constant currency 1 driven by Adjusted1 (4.9%) double-digit growth in Asia Pacific & mid teens 1,375 growth in the Americas 1,307 Organic1 • New Equipment share up ~70 bps2 (0.1%) • New Equipment backlog
Slide 7: Service
Service ($ millions) Net sales Y/Y Q1 Results GAAP 1,992 2,039 2.4% • Maintenance units up 4.2% v ersus prior 2,039 year…growth in all regions Adjusted 1 2.7% 1,985 Organic1 • Modernization orders up 29% at constant 6.3% currency 1 with growth in all regions…backlog up 13% at constant currency 1 • O
Slide 8: 2023 financial outlook
2023 financial outlook Prior outlook Current outlook Otis up 4 to 6% Otis up 4 to 6% Organic1 sales New Equipment up 3 to 5% New Equipment up 3 to 5% Service up 5 to 7% Service up 5 to 7% Constant currency up $130 to $175M up $130 to $175M adj. operating profit11 Otis up 20 to 30 bps Otis up 20 to 3
Slide 9: 2023 organic sales outlook
2023 organic1 sales outlook Prior outlook Current outlook (Feb 2, 2023) Outlook drivers New Equipment up 3 to 5% up 3 to 5% • New Equipment and modernization backlog Americas up mid single up mid single execution • Accelerated maintenance EMEA up mid single up mid single portfolio growth, up 4.2% in
Slide 10: 2023 adjusted EPS outlook growth drivers
2023 adjusted EPS1 outlook growth drivers + $130 to 175M at constant currency1 ($40M) to ($25M) ($0.07) to ($0.04) $0.06 to $0.07 FY: $0.23 to $0.31 EUR @ 1.06 Zardoya2 ($0.04) CNY @ 6.93 Shares Volume Tax Productivity $3.40 to $3.50 I nterest / other Pricing + 7 to 10% $3.17 Commodities Wage / mate
Slide 11: Otis fundamentals…driving value creation
Otis fundamentals…driving value creation 1 Sales Operating Profit Cash & Capital Deployment • Invest in innovation • Drop through from volume • Reduce effective tax rate • Optimize supply chain & • Gain New Equipment share • Make targeted investments installation process • Accelerate portfolio growt
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Slide 13: Appendix
Appendix © 2023 OT IS WOR L D WID E COR PORATION . 13
Slide 14: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency 1) Adjusted remaining New Equipment orders performance obligation1 Y/Y + 7% 16.8 17.4 Q1 2023 12-month 16.2 Region Modernization + 13% Y/Y rolling Total Otis 7.4% 7.4% Maintenance + 3% & Repair Americas 15.4% 18.9% EMEA 1.3% 13.0% New Asia
Slide 15: Q1 2023 adjusted operating profit drivers
Appendix Q1 2023 adjusted operating profit1 drivers Actual currency ($24M) + 20M ($15M) ($19M) +$7M at constant currency1 ($14M) $40M ($26M) ($19M) Productivity Volume Regional mix Pricing $537M Product mix Productivity $518M Annual wage inflation Material costs Q1 2022 adjusted New Service Corporat
Slide 16: Additional information
Appendix Additional information Actuals FY23 Outlook Prior 1Q23 Updated (Feb 1, 2023) Restructuring expense $5M ~$60M ~$60M Non-service pension expense $0M <$5M <$5M Adjusted net interest expense (a) $33M ~$150M ~$150M Adjusted effective tax rate (b) 26.6% 26.0 to 26.5% 26.0 to 26.5% Noncontrolling
Slide 17: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Otis Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 18: 2023 GAAP to adjusted financials reconciliation
Appendix 2023 GAAP to adjusted financials reconciliation New Corporate/ ($millions) Otis Serv ice Equipment other Sales 1Q23 1Q23 1Q23 1Q23 Net sales 3,346 1,307 2,039 0 Income Net income attributable to Otis 331 Noncont rolling int erest in subsidiaries’ 21 I ncome t ax ex pense 128 Net int erest e
Slide 19: 2022 GAAP to adjusted financials reconciliation
Appendix 2022 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Serv ice Corporate/other FY Sales 1Q22 2Q22 3Q22 4Q22 1Q22 2Q22 3Q22 4Q22 FY 2022 1Q22 2Q22 3Q22 Q422 FY 2022 1Q22 2Q22 3Q22 Q422 FY 2022 2022 Net sales 3,414 3,488 3,344 3,439 13,685 1,422 1,534 1,447 1,461 5,86
Slide 20: Organic sales reconciliation
Appendix Organic sales reconciliation Maintenance & Q1 2023 Total Otis New Equipment Service Modernization Repair Organic 3.6% (0.1%) 6.3% 7.0% 3.3% FX (4.4%) (4.8%) (4.1%) (4.4%) (3.8%) Net acquisitions / divestitures (1.2%) (3.2%) 0.2% 0.2% 0.8% Total net sales growth (2.0%) (8.1%) 2.4% 2.8% 0.3%
Slide 21: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q1 2022 Q1 2023 Y/Y New Equipment Adjusted operating profit 93 69 (24) Impact of foreign exchange 5 5 Adjusted operating profit at constant currency 93 74 (19) Service Adjusted operating profit 459 479 20 Impact of fo
Slide 22: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q1 2022 Q1 2023 SG&A expense 459 455 Restructuring (11) (3) Russia (5) - One-time separation costs (3) - Adjusted SG&A 440 452 Adjust ed SG&A % of sales 13.1% 13.5% © 2023 OT IS WOR L D WID E COR PORATION . 22
Slide 23: Diluted earnings per share reconciliation
Appendix Diluted earnings per share reconciliation Q1 2022 Q1 2023 GAAP diluted earnings per share $0.73 $0.79 Impact of non-recurring items on diluted earnings per share $0.03 $0.01 Adjusted diluted earnings per share $0.76 $0.80 Q1 2022 Q1 2023 Effective tax rate 27.8% 26.7% Impact of adjustments
Slide 24: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q1 2022 Q1 2023 Operating cash flow1 504 278 Capital expenditures (30) (25) Free cash flow 474 253 GAAP net income 311 331 FCF conversion 152% 76% 1 Operating cash flow excludes div idends paid to noncontrolling interests. © 2023 OT IS WOR L D WID E
Slide 25: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) ($billions) Q1 2022 Q4 2022 Q1 2023 RPO at actual currency (GAAP measure) 17.5 17.2 17.9 Russia (0.2) - - FX/other1 (1.1) (0.4) (0.5) Adjusted RPO at constant currency 16.2 16.8 17.4 New Equipment backlog Modernization backlog Gro