Slide 1: Q2 2021 Earnings Call
Q2 2021 Earnings Call July 26, 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 Positive momentum…executing on long-term strategy Q2 orders Innovation • Q2 New Equipment share gain, up ~1 pt1 • Maintenance portfolio up 3% • Organic2 sales growth in both segments • New Equipment growth in all regions • Service growth in all lines of business • Margin expansion in both
Slide 4: Q2 2021 update
Q2 2021 update • New Equipment orders up 23.9% at constant currency1…up 9.4% on a rolling 12- month basis Q2 2021 • New Equipment backlog up 10% and 5% at constant currency1 Results • Organic1 sales up 15.4%...New Equipment up 25.4%, Service up 7.8% • Adjusted operating profit margin1 expanded 40 bp
Slide 5: Q2 2021 results
Q2 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share 3,701 GAAP 416 561 GAAP $0.52 $0.76 572 $0.79 Adjusted1 Adjusted1 3,029 457 $0.56 Adjusted 15.5% margin1 15.1% Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 2020 Q2 2021 Q2 adjusted operating profit1 up Adj
Slide 6: New Equipment
New Equipment ($ millions) Net sales Q2 Results Y/Y • Orders up 23.9% at constant currency1… 1,727 1,294 33.5% growth in all regions…record bookings in Organic1 China 25.4% • New Equipment share up ~1 pt2 Q2 2020 Q2 2021 • New Equipment backlog up 10%, and 5% at constant currency1…broad based growth
Slide 7: Service
Service ($ millions) Net sales Q2 Results Y/Y 1,974 13.8% • Maintenance units up 3% versus prior 1,735 year…growth in all regions Organic1 7.8% • Modernization orders up 16.8% at constant currency1…growth in the Americas and EMEA Q2 2020 Q2 2021 • Organic1 sales up 7.8% Operating profit – Maintenanc
Slide 8: 2021 financial outlook
2021 financial outlook Improving 2021 outlook across key metrics Prior outlook Current outlook Otis up 4 to 6% Otis up 7.5 to 8.0% Organic1 sales New Equipment up 7.5 to 8.5% New Equipment up 12.0 to 13.0% Service up 2 to 4% Service up 4.0 to 4.5% Adjusted operating Constant currency1 up $120 to $16
Slide 9: 2021 organic sales outlook
2021 organic1 sales outlook Prior outlook (April 26, 2021) Updated outlook Outlook drivers New Equipment up 7.5 to 8.5% up 12.0 to 13.0% • Q2 New Equipment Americas up high single up low teens backlog up 10%, 5% at constant currency1... accelerating conversion EMEA up low to mid single up mid to hig
Slide 10: 2021 adjusted operating profit drivers
2021 adjusted operating profit1 drivers Actual currency + $110 – 120M + $140 – 155M $(10) – (15M) + $240 – 260M up $170 to $190M at constant currency1 ~$70M $(10) – (15M) $85 – 100M $95 – 105M $2,160 - 2,180M Volume Volume Transactional FX EUR @ 1.19 Material & installation Productivity Standalone c
Slide 11: Otis fundamentals
Otis fundamentals1 Iconic global brand in a large, growing industry Gaining share in NE2 & accelerating Service Sustainable growth over the medium-term portfolio growth Driving profitability Expanding margins through growth & productivity Investing through the cycle Sustainable level of R&D and Cape
Slide 12: © 2021 OTIS WORLDWIDE CORPORATION.
© 2021 OTIS WORLDWIDE CORPORATION. 12
Slide 13: Appendix
Appendix © 2021 OTIS WORLDWIDE CORPORATION. 13
Slide 14: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency1) Remaining performance obligation New Equipment orders Y/Y 16.5 16.9 17.0 + 3% Modernization + 4% YTD 12- Q2 2021 2021 month Maintenance Region Y/Y Y/Y rolling + 2% & Repair Total Otis 23.9% 21.4% 9.4% Americas 47.3% 29.5% 5.0% EMEA 19.0%
Slide 15: Q2 2021 adjusted operating profit drivers
Appendix Q2 2021 adjusted operating profit1 drivers Actual currency + $64M + $55M $(4M) + $115M +$80M at constant currency1 $35M $(3M) $31M $52M Volume Volume $572M Material & installation Pricing productivity Standalone costs $457M Price & mix Prior year cost Commodities containment actions Q2 2020
Slide 16: H1 2021 results
Appendix H1 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share 7,109 GAAP 745 1,070 GAAP $0.90 $1.47 $1.51 5,995 Adjusted1 1,105 907 Adjusted1 $1.17 Adjusted 15.5% margin1 15.1% H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 Adjusted EPS1 drivers O
Slide 17: New Equipment
New Equipment ($ millions) Net sales H1 Results Y/Y • Orders up 21.4% at constant currency1 3,185 31.8% 2,417 Organic1 • New Equipment share up ~1.5 pts2 25.3% • Organic1 sales up 25.3% – Americas up 28.6% H1 2020 H1 2021 – EMEA up 18.5% Operating profit – Asia up 26.0% GAAP 143 251 75.5% 264 • Adju
Slide 18: Service
Service ($ millions) Net sales H1 Results Y/Y 3,924 9.7% • Modernization orders up 8.2% at constant 3,578 currency1 Organic1 4.5% • Organic1 sales up 4.5% – Maintenance & Repair up 4.4% H1 2020 H1 2021 – Modernization up 4.7% Operating profit • Adjusted operating profit1 up $90M and GAAP 781 871 11.
Slide 19: Financial performance
Financial performance ($ billions) Otis New Equipment Service 14.1 to 14.2 7.5 7.4 ~7.9 Net Sales 13.1 12.8 6.2 to 6.3 5.6 5.4 7.5 to 4.0 to 8.0% 12 to 4.5% 4.7% 13% Organic1 (0.7%) sales (2.1%) growth (4.0%) 2019 2020 2021E 2019 2020 2021E 2019 2020 2021E 2.16 to 2.18 Adjusted 1.9 1.9 ~1.8 operatin
Slide 20: Additional information
Appendix Additional information Actuals FY21 Outlook Prior 1Q21 2Q21 1H21 Updated (April 26, 2021) Restructuring expense $15M $11M $26M $60 – 70M $60 – 70M Non-service pension expense $2M $2M $4M $10 – 15M $10 – 15M Net interest expense $32M $27M $59M ~$125M ~$120M Adjusted effective tax rate 28.7%
Slide 21: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Otis Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 22: GAAP to adjusted financials reconciliation
Appendix GAAP to adjusted financials reconciliation ($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 23: 2021 GAAP to adjusted financials reconciliation
Appendix 2021 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales 1Q20 2Q20 1Q21 2Q21 1Q20 2Q20 1Q21 2Q21 1Q20 2Q20 1Q21 2Q21 1Q20 2Q20 1Q21 2Q21 Net sales 2,966 3,029 3,408 3,701 1,123 1,294 1,458 1,727 1,843 1,735 1,950 1,974 0 0 0 0 Income Net i
Slide 24: Organic sales reconciliation
Appendix Organic sales reconciliation New Maintenance Q2 2021 Total Otis Service Modernization Equipment & Repair Organic 15.4% 25.4% 7.8% 7.5% 9.3% FX 6.5% 7.9% 5.7% 5.7% 4.8% Net acquisitions / divestitures 0.3% 0.2% 0.3% 0.4% 0.3% Total net sales growth 22.2% 33.5% 13.8% 13.6% 14.4% New Maintenan
Slide 25: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q2 2020 Q2 2021 Y/Y H1 2020 H1 2021 Y/Y New Equipment Adjusted operating profit 91 155 64 156 264 108 Impact of foreign exchange -- (12) (12) -- (17) (17) Adjusted operating profit at constant currency 91 143 52 156 2
Slide 26: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q2 2020 Q2 2021 H1 2020 H1 2021 SG&A expense 441 484 906 966 Restructuring (10) (1) (16) (12) One-time separation costs (21) (3) (53) (12) UTC allocated corporate expenses (a) 0 0 (16) 0 Other 1 (1) 0 0 Adjusted SG&A 411 480 821 942 Adjusted SG&A % of sales 1
Slide 27: Diluted earnings per share reconciliation
Appendix Diluted earnings per share reconciliation Q2 2020 Q2 2021 H1 2020 H1 2021 GAAP diluted earnings per share $0.52 $0.76 $0.90 $1.47 Impact of non-recurring items on diluted earnings per share $0.04 $0.03 $0.27 $0.04 Adjusted diluted earnings per share $0.56 $0.79 $1.17 $1.51 © 2021 OTIS WORLD
Slide 28: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q2 2020 Q2 2021 H1 2020 H1 2021 Operating cash flow1 664 533 823 1,118 Capital expenditures (36) (40) (75) (84) Free cash flow 628 493 748 1,034 GAAP net income 224 326 389 634 FCF conversion 280% 151% 192% 163% 1 Operating cash flow excludes divide
Slide 29: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) Q2 Q1 Q2 ($billions) 2020 2021 2021 RPO at actual currency 16.4 17.3 17.5 FX/other1 0.1 (0.4) (0.5) RPO at constant currency 16.5 16.9 17.0 New Equipment backlog Q2 Growth % 2021 Actual currency 10% FX (5%) Constant currency 5% 1