Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q3 2021 Earnings Presentation
30 slides from Otis Worldwide's earnings presentation, Oct 25, 2021
Slide 1: Q3 2021 Earnings Call
Q3 2021 Earnings Call October 25, 2021 © 2021 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: Highlights
Highlights Strong performance…continued execution on long- term strategy Q3 orders • Q3 New Equipment share gain, up ~1.5 pts1…up ~1.5 pts1 year-to-date • Maintenance portfolio up 3% • Organic2 sales growth in both segments • New Equipment growth in all regions • Service growth for third consecutive
Slide 4: Q3 2021 update
Q3 2021 update • New Equipment orders up 3.8% at constant currency1…up 10.3% on a rolling 12- month basis • New Equipment backlog up 4%...up 1% at constant currency1 Q3 2021 • Organic1 sales up 8.1%...New Equipment up 14.1%, Service up 3.6% Results • Adjusted operating profit margin1 expanded 20 bps
Slide 5: Q3 2021 results
Q3 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 454 542 GAAP $0.61 $0.77 3,620 $0.77 3,268 Adjusted1 566 Adjusted1 $0.69 Adjusted 503 margin1 15.6% 15.4% Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Organic1 8.1% Q3 adjusted operating
Slide 6: New Equipment
New Equipment ($ millions) Net sales Q3 Results Y/Y • Orders up 3.8% at constant currency1…6th 1,681 18.1% consecutive quarter of growth in China Organic1 1,423 14.1% • New Equipment share up ~1.5 pts2 • New Equipment backlog up 4%, and 1% at Q3 2020 Q3 2021 constant currency1 Operating profit GAAP
Slide 7: Service
Service ($ millions) Net sales Q3 Results Y/Y 1,939 5.1% • Maintenance units up 3% versus prior 1,845 year…growth in all regions Organic1 3.6% • Modernization orders down 4.1% at constant currency1…growth in EMEA and Asia Q3 2020 Q3 2021 • Organic1 sales up 3.6% Operating profit – Maintenance & Repa
Slide 8: 2021 financial outlook
2021 financial outlook Improving 2021 outlook Prior outlook Current outlook Otis up 7.5 to 8.0% Otis up 8.5 to 9.0% Organic1 sales New Equipment up 12.0 to 13.0% New Equipment up 15.0 to 15.5% Service up 4.0 to 4.5% Service up ~4.0% Adjusted operating Constant currency1 up $170 to $190M Constant cur
Slide 9: 2021 organic sales outlook
2021 organic1 sales outlook Prior outlook (July 26, 2021) Updated outlook Outlook drivers New Equipment up 12.0 to 13.0% up 15.0 to 15.5% • Q3 New Equipment backlog up 4%, 1% at constant Americas up low teens up mid teens currency1... accelerating conversion EMEA up mid to high single up high single
Slide 10: 2021 adjusted operating profit drivers
2021 adjusted operating profit1 drivers Actual currency + $130 – 135M + $130 – 135M $0M + $260 – 270M up $195 to 205M at constant currency1 ~$65M $0M $85 – 90M $110 – 115M $2,180 – 2,190M Volume Volume EUR @ 1.18 Material & installation Productivity CNY @ 6.45 $1,919M productivity Pricing Price & mi
Slide 11: Otis fundamentals
Otis fundamentals1 Iconic global brand in a large, growing industry Gaining share in NE2 & accelerating Service Sustainable growth over the medium-term portfolio growth Driving profitability Expanding margins through growth & productivity Investing through the cycle Sustainable level of R&D and Cape
Slide 12: © 2021 OTIS WORLDWIDE CORPORATION.
© 2021 OTIS WORLDWIDE CORPORATION. 12
Slide 13: Appendix
Appendix © 2021 OTIS WORLDWIDE CORPORATION. 13
Slide 14: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency1) Remaining performance obligation New Equipment orders Y/Y 16.7 17.0 17.0 + 2% Modernization + 2% YTD 12- Q3 2021 2021 month Maintenance Region Y/Y Y/Y rolling + 2% & Repair Total Otis 3.8% 15.1% 10.3% Americas (10.6%) 13.3% 3.6% EMEA (1.
Slide 15: Q3 2021 adjusted operating profit drivers
Appendix Q3 2021 adjusted operating profit1 drivers Actual currency + $33M + $27M $3M + $63M +$52M at constant currency1 $11M $3M $24M $25M Volume Volume $566M Installation Pricing and mix productivity Prior year cost $503M Commodities containment actions Q3 2020 adjusted New Service Corporate / FX
Slide 16: Customer profile in China
Appendix Customer profile in China Total Otis net sales Summary ~$10.7B (2021 YTD) Identified ~10 customers At-risk1 that have breached 2 or 3 developers red lines1 representing ~3% of Otis China sales year-to- date…< 1% of total Otis Rest of China sales world ~20% All other ~80% customers Implement
Slide 17: Year-to-date 2021 results
Appendix Year-to-date 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 1,199 1,612 GAAP $1.51 $2.23 10,729 1,671 $2.28 9,263 Adjusted1 Adjusted1 $1.86 1,410 Adjusted 15.6% margin1 15.2% YTD 2020 YTD 2021 YTD 2020 YTD 2021 YTD 2020 YTD 2021 Ad
Slide 18: New Equipment
Appendix New Equipment ($ millions) Net sales YTD Results Y/Y • Orders up 15.1% at constant currency1 4,866 26.7% 3,840 Organic1 • New Equipment share up ~1.5 pts2 21.1% • Organic1 sales up 21.1% – Americas up 23.8% YTD 2020 YTD 2021 – EMEA up 12.9% Operating profit – Asia up 22.7% GAAP 238 382 60.5
Slide 19: Service
Appendix Service ($ millions) Net sales YTD Results Y/Y 5,863 8.1% • Modernization orders up 4.3% at constant 5,423 currency1 Organic1 4.2% 5,423 5,863 • Organic1 sales up 4.2% – Maintenance & Repair up 4.5% YTD 2020 YTD 2021 – Modernization up 2.7% Operating profit • Adjusted operating profit1 up $
Slide 20: Financial performance
Appendix Financial performance ($ billions) Otis New Equipment Service ~14.3 7.5 7.4 ~7.9 Net Sales 13.1 12.8 ~6.4 5.6 5.4 8.5 to 15.0 to 9.0% ~4.0% 4.7% 15.5% Organic1 (0.7%) sales (2.1%) growth (4.0%) 2019 2020 2021E 2019 2020 2021E 2019 2020 2021E 2.18 to 2.19 Adjusted 1.9 1.9 ~1.8 operating ~0.5
Slide 21: Additional information
Appendix Additional information Actuals FY21 Outlook Prior 1Q21 2Q21 3Q21 YTD Updated (July 26, 2021) Restructuring expense $15M $11M $9M $35M $60 – 70M ~$60M Non-service pension expense $2M $2M $2M $6M $10 – 15M ~$12M Net interest expense $32M $27M $33M $92M ~$120M ~$125M Adjusted effective tax rat
Slide 22: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Otis Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 23: 2021 GAAP to adjusted financials reconciliation
Appendix 2021 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales 1Q20 2Q20 3Q20 1Q21 2Q21 3Q21 1Q20 2Q20 3Q’20 1Q21 2Q21 3Q21 1Q20 2Q20 3Q20 1Q21 2Q21 3Q21 1Q20 2Q20 3Q20 1Q21 2Q21 3Q21 Net sales 2,966 3,029 3,268 3,408 3,701 3,620 1,123 1,294 1,4
Slide 24: GAAP to adjusted financials reconciliation
Appendix GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 Net sales 13,118 12,756 5,648 5,371 7,470 7,385 0 0 Income Net income attributable to Otis 1,116 906 Noncontrolling interes
Slide 25: Organic sales reconciliation
Appendix Organic sales reconciliation New Maintenance Q3 2021 Total Otis Service Modernization Equipment & Repair Organic 8.1% 14.1% 3.6% 4.7% (1.2%) FX 2.5% 3.9% 1.3% 1.2% 1.2% Net acquisitions / divestitures 0.2% 0.1% 0.2% 0.3% 0.0% Total net sales growth 10.8% 18.1% 5.1% 6.2% 0.0% New Maintenance
Slide 26: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q3 2020 Q3 2021 Y/Y YTD 2020 YTD 2021 Y/Y New Equipment Adjusted operating profit 102 135 33 258 399 141 Impact of foreign exchange (8) (8) (25) (25) Adjusted operating profit at constant currency 102 127 25 258 374 1
Slide 27: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q3 2020 Q3 2021 YTD 2020 YTD 2021 SG&A expense 481 479 1,387 1,445 Restructuring (11) (4) (27) (16) One-time separation costs (18) (2) (69) (14) UTC allocated corporate expenses (a) 0 0 (16) 0 Other (1) 0 (3) 0 Adjusted SG&A 451 473 1,272 1,415 Adjusted SG&A
Slide 28: Diluted earnings per share reconciliation
Appendix Diluted earnings per share reconciliation Q3 2020 Q3 2021 YTD 2020 YTD 2021 GAAP diluted earnings per share $0.61 $0.77 $1.51 $2.23 Impact of non-recurring items on diluted earnings per share $0.08 $0.00 $0.35 $0.05 Adjusted diluted earnings per share $0.69 $0.77 $1.86 $2.28 © 2021 OTIS WOR
Slide 29: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q3 2020 Q3 2021 YTD 2020 YTD 2021 Operating cash flow1 348 355 1,171 1,473 Capital expenditures (37) (31) (112) (115) Free cash flow 311 324 1,059 1,358 GAAP net income 266 331 655 965 FCF conversion 117% 98% 162% 141% 1 Operating cash flow excludes
Slide 30: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) Q3 Q2 Q3 ($billions) 2020 2021 2021 RPO at actual currency 16.9 17.5 17.3 FX/other1 (0.2) (0.5) (0.3) RPO at constant currency 16.7 17.0 17.0 New Equipment backlog Q3 Growth % 2021 Actual currency 4% FX (3%) Constant currency 1% 1