Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q3 2024 Earnings Presentation
30 slides from Otis Worldwide's earnings presentation, Oct 30, 2024
Slide 1: Q3 2024 Earnings Call
Q3 2024 Earnings Call October 30, 2024 © 2024 OTIS WORLDWIDE CORPORATION.
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: Q3 2024 highlights
Q3 2024 highlights YTD 2024 Continued Service strength in the third quarter... 6.4% 1 • 4.2% Maintenance portfolio growth Service organic sales growth 1 • Modernization backlog up 12% at constant currency 1 • Organic sales up 1.2%, driven by Service 60 bps 1 • Service organic sales up 7.7%…maintenan
Slide 4: Q3 2024 orders & portfolio
Q3 2024 orders & portfolio Q3 2024 Orders New Equipment Y/Y 1 New Equipment orders (2.9%) 2 New Equipment backlog (3%) 101 Collins Street St. Luke's University Health, Melbourne, Australia Anderson Campus Bethlehem Township, Pennsylvania Service Y/Y Portfolio units 4.2% 1 Modernization orders 2.9% 2
Slide 5: Q3 2024 results
Q3 2024 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 571 363 GAAP $0.91 $1.34 1 1 Adjusted Adjusted 3,523 3,548 595 599 $0.95 $0.96 16.9% 16.9% Adjusted 1 margin Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Adjusted operating profit up $8M
Slide 6: Q3 2024 segment net sales results
Q3 2024 segment net sales results ($ millions) New Equipment Service Otis Y/Y Y/Y (8.8%) 2,239 7.2% 2,088 1,435 1,309 1 1 New Organic Organic Equipment (8.2%) 7.7% New Service Equipment Service Q3 2023 Q3 2024 Q3 2023 Q3 2024 1 1 Organic sales down 8.2% Organic sales up 7.7% • Americas up 2.4% • Mai
Slide 7: Q3 2024 segment operating profit results
Q3 2024 segment operating profit results ($ millions) New Equipment Service Otis Y/Y Y/Y 555 518 Operating 104 New (19.2%) 7.1% profit Equipment 84 24.8% 24.8% 7.2% Operating 6.4% (80) bps 0 bps profit margin Service Q3 2023 Q3 2024 Q3 2023 Q3 2024 Operating profit down $20M at constant Operating pr
Slide 8: Industry & 2024 outlook
Industry & 2024 outlook1 Industry new equipment unit growth 1 Otis Down Down Down 2 ~flat • Net sales of ~$14.2B; organic up ~1.5% LSD ~10% HSD 2 • Adjusted operating profit of ~$2.375B, 2 up ~$140M at constant currency ; up ~$105M at actual currency 2 • Adjusted EPS ~$3.85, up ~9% Americas EMEA Asi
Slide 9: 2024 organic sales outlook
2024 organic1 sales outlook Prior outlook (July 24, 2024) Current outlook Outlook drivers New Equipment down mid single down mid-high single • Strong maintenance portfolio growth and Americas up mid single up mid single Service pricing tailwinds EMEA up low single up low single • Accelerating Asia d
Slide 10: 2024 financial outlook
2024 financial outlook Prior outlook (July 24, 2024) Current outlook Constant currency up $160M to $190M up ~$140M adj. operating profit1 Segment and total Otis up ~80 bps Otis up ~70 bps adjusted operating New Equipment ~flat New Equipment down ~50 bps profit1 margin Service up ~75 bps Service up ~
Slide 11: 2024 adjusted EPS growth outlook drivers
2024 adjusted EPS1 growth outlook drivers 1 ~$140M at constant currency ($0.15) to ($0.10) ($30M) to ($35M) ~$0.11 ~$3.85 ~($0.06) ~$0.36 FY24: + Shares EUR @ 1.08 + Tax CNY @ 7.20 + + + - NCI - $3.54 Volume Service Interest + Productivity New Equipment + Pricing + Commodities + -- UpLift Mix & chur
Slide 12: Otis fundamentals…driving value creation
Otis fundamentals…driving value creation • Invest in innovation Sustainable Sales • Gain New Equipment share • Accelerate portfolio growth growth • Deliver modernization value • Drop through from volume Operating • Optimize supply chain & Expand Profit installation process operating • Drive service
Slide 13: © 2024 OTIS WORLDWIDE CORPORATION.
© 2024 OTIS WORLDWIDE CORPORATION. 13
Slide 14: Appendix
Appendix © 2024 OTIS WORLDWIDE CORPORATION. 14
Slide 15: Backlog and orders
Appendix Backlog and orders 1 ($ billions, at constant currency ) 1 Remaining performance obligation New Equipment orders Y/Y Region Q3 2024 Y/Y YTD 2024 Y/Y 12-month rolling 17.8 18.2 18.1 2% Total Otis (2.9%) (8.7%) (6.1%) Modernization 12% Americas 23.1% (9.5%) (5.9%) EMEA (6.6%) 8.0% 7.8% Asia (
Slide 16: Q3 2024 adjusted operating profit drivers
Appendix Q3 2024 adjusted operating profit1 drivers Actual currency ($20M) +$37M ($13M) +$4M +$8M at constant currency ($12M) ($4M) $40M $599M $595M ($20M) + Pricing + Volume + Productivity + Pricing + + -- - Commodities Productivity Volume Annual wage inflation Mix Q3 2023 adjusted New Equipment Se
Slide 17: YTD 2024 results
Appendix YTD 2024 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 1,664 1,477 GAAP $2.60 $3.23 1 1 Adjusted 1,773 Adjusted $2.90 10,589 10,586 1,703 $2.68 16.7% 16.1% Adjusted 1 margin YTD 2023 YTD 2024 YTD 2023 YTD 2024 YTD 2023 YTD 2024 1 Adjus
Slide 18: YTD 2024 segment net sales results
Appendix YTD 2024 segment net sales results ($ millions) New Equipment Service Otis Y/Y Y/Y 6,576 6,243 (7.7%) 5.3% 4,346 4,010 1 1 Organic Organic (6.3%) 6.4% New Equipment Service YTD 2023 YTD 2024 YTD 2023 YTD 2024 1 1 Organic sales down 6.3% Organic sales up 6.4% • Americas up 6.2% • Maintenance
Slide 19: YTD 2024 segment operating profit results
Appendix YTD 2024 segment operating profit results ($ millions) New Equipment Service Otis Y/Y 1,616 Y/Y 1,496 Operating 292 24.6% 265 (9.2%) 8.0% profit New Equipment 24.0% 6.7% Operating 6.6% (10) bps +60 bps profit margin Service YTD 2023 YTD 2024 YTD 2023 YTD 2024 1 1 Operating profit down $20M
Slide 20: YTD 2024 adjusted operating profit drivers
Appendix YTD 2024 adjusted operating profit1 drivers Actual currency ($27M) +$120M ($23M) +$70M +$96M at constant currency ($22M) ($26M) $138M $1,773M $1,703M ($20M) + Pricing + Volume + Productivity + Pricing + + -- - Commodities Productivity Volume Annual wage inflation Mix YTD 2023 adjusted New E
Slide 21: 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 22: Additional information
Appendix Additional information Actuals FY24 outlook Prior 1Q24 2Q24 3Q24 YTD24 Updated (July 24, 2024) UpLift restructuring expense $1M $6M $4M $11M Other restructuring expense $19M $5M $5M $29M ~$100M ~$100M UpLift transformation costs $12M $15M $18M $45M Non-service pension cost (benefit) $0M ($1
Slide 23: 2024 GAAP to adjusted financials reconciliation
Appendix 2024 GAAP to adjusted financials reconciliation ($ millions) Income 1Q24 2Q24 3Q24 Net income attributable to Otis 353 415 540 Noncontrolling interest in subsidiaries’ earnings 21 35 17 Income tax expense (benefit) 126 94 (45) Net interest expense 44 27 (150) Non-service pension benefit (ex
Slide 24: 2023 GAAP to adjusted financials reconciliation
Appendix 2023 GAAP to adjusted financials reconciliation ($ millions) Income 1Q23 2Q23 3Q23 4Q23 FY 2023 Net income attributable to Otis 331 376 376 323 1,406 Noncontrolling interest in subsidiaries’ earnings 21 31 19 21 92 Income tax expense (benefit) 128 135 137 133 533 Net interest expense 33 37
Slide 25: Organic sales reconciliation
Appendix Organic sales reconciliation Maintenance & Q3 2024 Y/Y Total Otis New Equipment Service Modernization repair Organic 1.2% (8.2%) 7.7% 6.4% 13.7% FX (0.8%) (0.7%) (0.8%) (0.7%) (1.1%) Net acquisitions / divestitures 0.3% 0.1% 0.3% 0.4% 0.0% Total net sales growth 0.7% (8.8%) 7.2% 6.1% 12.6%
Slide 26: Segment and total adjusted operating profit at constant currency reconciliations
Appendix Segment and total adjusted operating profit at constant currency reconciliations ($ millions) Q3 2023 Q3 2024 Y/Y YTD 2023 YTD 2024 Y/Y New Equipment Operating profit 104 84 (20) 292 265 (27) Impact of foreign exchange 0 0 7 7 Operating profit at constant currency 104 84 (20) 292 272 (20) S
Slide 27: SG&A reconciliation
Appendix SG&A reconciliation ($ millions) Q3 2023 Q3 2024 YTD 2023 YTD 2024 Net sales 3,523 3,548 10,589 10,586 SG&A expense 452 455 1,386 1,366 UpLift restructuring 0 (4) 0 (9) Other restructuring (12) (2) (25) (17) Separation-related / other (1) 2 (1) 2 Adjusted SG&A expense 439 451 1,360 1,342 Ad
Slide 28: Diluted EPS and Tax reconciliations
Appendix Diluted EPS and Tax reconciliations Q3 2023 Q3 2024 YTD 2023 YTD 2024 GAAP diluted earnings per share $0.91 $1.34 $2.60 $3.23 Impact of non-recurring items on diluted earnings per share $0.04 ($0.38) $0.08 ($0.33) Adjusted earnings per share $0.95 $0.96 $2.68 $2.90 Q3 2023 Q3 2024 YTD 2023
Slide 29: Adjusted free cash flow reconciliation
Appendix Adjusted free cash flow reconciliation ($ millions) Q3 2023 Q3 2024 YTD 2023 YTD 2024 Operating cash flow 306 394 1,030 873 Capital expenditures (34) (32) (96) (87) Free cash flow 272 362 934 786 UpLift restructuring payments 0 6 0 20 UpLift transformation payments 2 13 2 34 Separation-rela
Slide 30: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) ($ billions) Q3 2023 Q2 2024 Q3 2024 RPO at actual currency (GAAP measure) 17.8 18.2 18.6 FX 0.0 0.0 (0.5) RPO at constant currency 17.8 18.2 18.1 Backlog New Maintenance Q3 2024 Y/Y Growth Modernization Equipment & repair Actual