Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q1 2024 Earnings Presentation
26 slides from Otis Worldwide's earnings presentation, Apr 24, 2024
Slide 1: Q1 2024 Earnings Call
Q1 2024 Earnings Call April 24, 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: Q1 2024 highlights
Q1 2024 highlights Q1 2024 Strong first quarter... 1 • Organic sales up 3.8%...Service up 6.5%, New Equipment ~flat 3.8% • Margin expansion in both segments… Service expanded 70 bps, New organic sales growth 1 Equipment expanded 20 bps • Adjusted EPS up 10% 1 80 bps • Maintenance portfolio growth >4
Slide 4: Q1 2024 orders & portfolio
Q1 2024 orders & portfolio Q1 2024 Orders New Equipment Y/Y 1 New Equipment orders (10.3%) 2 New Equipment Backlog ~flat Shenzhen Metro Line 5 South Niagara Hospital Shenzhen, China Niagara Falls, Canada Service Y/Y Portfolio units 4.1% 1 Modernization orders 12.9% 2 Modernization Backlog 15% Hamama
Slide 5: Q1 2024 results
Q1 2024 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 513 544 GAAP $0.79 $0.86 561 Adjusted 1 Adjusted 1 $0.88 3,437 518 $0.80 3,346 16.3% Adjusted 15.5% 1 margin Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 1 Adjusted EPS drivers 1 Organic
Slide 6: Q1 2024 segment net sales results
Q1 2024 segment net sales results ($ millions) New Equipment Service Otis Y/Y Y/Y 2,157 (2.1%) 5.8% 1,307 2,039 1,280 1 1 NewNew Organic Organic Equipment Equipment ~flat 6.5% Service Q1 2023 Q1 2024 Q1 2023 Q1 2024 Service 1 1 Organic sales ~flat Organic sales up 6.5% • Americas up 15.2% • Maintena
Slide 7: Q1 2024 segment operating profit results
Q1 2024 segment operating profit results ($ millions) New Equipment Service Otis Y/Y Y/Y 523 479 71 Operating 2.9% 9.2% New 69 profit 5.5% 24.2% Equipment 23.5% 5.3% Operating +20 bps +70 bps profit margin Service Q1 2023 Q1 2024 Q1 2023 Q1 2024 Operating profit up $6M at constant Operating profit u
Slide 8: Market & 2024 outlook
Market & 2024 outlook1 Industry new equipment unit growth 1 Otis Down Down Down Down • Net sales of $14.5 to $14.8B; LSD LSD MSD MSD 2 organic up 3 to 5% 2 • Adjusted operating profit of $2.40 to $2.45B, up $160 2to $190M at constant currency ; up $135 to $175M at actual currency 2 • Adjusted EPS $3
Slide 9: 2024 organic sales outlook
2024 organic1 sales outlook Prior outlook (Jan 31, 2024) Current outlook Outlook drivers New Equipment ~flat ~flat • Strong maintenance portfolio growth and Americas up low single up mid single Service pricing tailwinds EMEA up low single up low single • Accelerating modernization and Asia down low
Slide 10: 2024 financial outlook
2024 financial outlook Prior outlook (Jan 31, 2024) Current outlook Constant currency up $150 to $190M up $160 to $190M adj. operating profit1 Segment and total Otis up ~50 bps Otis up ~50 bps adjusted operating New Equipment flat to up 10 bps New Equipment flat to up 10 bps profit1 margin Service u
Slide 11: 2024 adjusted EPS growth outlook drivers
2024 adjusted EPS1 growth outlook drivers +$160 to $190M ($25) to ($15M) ($0.04) to ($0.03) ~$0.05 FY24: + Shares + - EUR @ 1.08 Tax $0.28 to $0.34 CNY @ 7.23 Interest / other + Volume + Productivity $3.83 to $3.90 + Pricing $3.54 + Commodities + -- UpLift Mix & churn - Wage inflation Corporate/othe
Slide 12: Otis fundamentals…driving value creation
Otis fundamentals…driving value creation • Invest in innovation Sustainable Sales • Gain New Equipment share • Accelerate portfolio growth growth • Deliver modernization value • Drop through from volume Operating • Optimize supply chain & Expand Profit installation process operating • Drive service
Slide 13: © 2024 OTIS WORLDWIDE CORPORATION.
© 2024 OTIS WORLDWIDE CORPORATION. 13
Slide 14: Appendix
Appendix © 2024 OTIS WORLDWIDE CORPORATION. 14
Slide 15: Backlog and orders
Backlog and orders 1 ($ billions, at constant currency ) 1 Remaining performance obligation New Equipment orders Y/Y Region Q1 2024 Y/Y 12-month rolling 18.1 3% 17.6 17.6 Total Otis (10.3%) (8.3%) Modernization 15% Americas (24.5%) (20.0%) EMEA 20.6% 3.0% Asia (12.1%) (5.0%) Maintenance 4% & Repair
Slide 16: Q1 2024 adjusted operating profit drivers
Q1 2024 adjusted operating profit1 drivers Actual currency +$2M +$44M ($3M) +$43M +$50M ($3M) ($7M) $47M $6M + Pricing + Volume $561M + Productivity + Pricing + + -- - Commodities Productivity $518M Volume Annual wage inflation Mix Q1 2023 adjusted New Equipment Service Corporate/Other FX Q1 2024 ad
Slide 17: Use and Definitions of Non-GAAP Financial Measures
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
Slide 18: Additional information
Additional information Actuals FY24 outlook Prior 1Q24 Updated (Jan 31, 2024) UpLift restructuring expense $1M $75 $75 Other restructuring expense $19M to to $100M $100M UpLift transformation costs $12M Non-service pension expense $0M ~$5M ~$5M Net interest expense $44M ~$180M ~$180M Adjusted effect
Slide 19: 2024 GAAP to adjusted financials reconciliation
2024 GAAP to adjusted financials reconciliation ($ millions) Income 1Q24 Net income attributable to Otis 353 Noncontrolling interest in subsidiaries’ earnings 21 Income tax expense 126 Net interest expense 44 Non-service pension benefit (expense) 0 GAAP operating profit 544 UpLift Restructuring 1 Ot
Slide 20: 2023 GAAP to adjusted financials reconciliation
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 128 135 137 133 533 Net interest expense 33 37 39 41 150 Non-servi
Slide 21: Organic sales reconciliation
Organic sales reconciliation Maintenance & Q1 2024 Y/Y Total Otis New Equipment Service Modernization Repair Organic 3.8% (0.5%) 6.5% 5.8% 9.7% FX (1.2%) (1.6%) (0.8%) (0.7%) (1.6%) Net acquisitions / divestitures 0.1% —% 0.1% 0.2% —% Total net sales growth 2.7% (2.1%) 5.8% 5.3% 8.1% © 2024 OTIS WOR
Slide 22: Segment and total adjusted operating profit at constant currency reconciliations
Segment and total adjusted operating profit at constant currency reconciliations ($ millions) Q1 2023 Q1 2024 Y/Y New Equipment Operating profit 69 71 2 Impact of foreign exchange 4 4 Operating profit at constant currency 69 75 6 Service Operating profit 479 523 44 Impact of foreign exchange 3 3 Ope
Slide 23: SG&A reconciliation
SG&A reconciliation ($ millions) Q1 2023 Q1 2024 Net Sales 3,346 3,437 SG&A expense 455 462 UpLift Restructuring 0 (1) Other Restructuring (3) (14) Adjusted SG&A expense 452 447 Adjusted SG&A % of sales 13.5% 13.0% © 2024 OTIS WORLDWIDE CORPORATION. 23
Slide 24: Diluted EPS and Tax reconciliations
Diluted EPS and Tax reconciliations Q1 2023 Q1 2024 GAAP diluted earnings per share $0.79 $0.86 Impact of non-recurring items on diluted earnings per share $0.01 $0.02 Adjusted earnings per share $0.80 $0.88 Q1 2023 Q1 2024 Effective tax rate 26.7% 25.2% Impact of adjustments on effective tax rate (
Slide 25: Adjusted free cash flow reconciliation
Adjusted free cash flow reconciliation ($ millions) Q1 2023 Q1 2024 Operating cash flow 278 171 Capital expenditures (25) (31) Free cash flow 253 140 UpLift restructuring payments — 7 UpLift transformation payments — 8 Adjusted free cash flow 253 155 © 2024 OTIS WORLDWIDE CORPORATION. 25
Slide 26: Other reconciliations
Other reconciliations Remaining performance obligation (RPO) ($ billions) Q1 2023 Q4 2023 Q1 2024 RPO at actual currency (GAAP measure) 17.9 18.0 18.3 FX (0.3) (0.3) (0.2) RPO at constant currency 17.6 17.7 18.1 New Equipment backlog Modernization backlog Growth % Q1 2024 Y/Y Growth % Q1 2024 Y/Y Ac