Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q4 2021 Earnings Presentation
34 slides from Otis Worldwide's earnings presentation, Jan 31, 2022
Slide 1: Q4 2021 Earnings Call
Q4 2021 Earnings Call January 31, 2022 © 2022 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: Full year 2021 results
Full year 2021 results Orders New Equipment orders up 13.2%...backlog up 3% versus prior year at constant currency1 Organic1 sales up 8.9%...NE up 15.5%, Service up 4.1% Taiwan Taoyuan International Adjusted operating profit1 up $272M…$7M above prior Sawyers Landing Airport Miami, Florida outlook at
Slide 4: 2021: Strong momentum on strategic priorities
2021: Strong momentum on strategic priorities • ~115 bps1 of New Equipment share gain New Equipment • Launched Gen3™ and Gen360™, digitally connected elevator platforms • Accelerated maintenance portfolio growth…units up 3% Service • Deployed ~100K Otis ONE™ units…~1/3 of portfolio units connected •
Slide 5: 2022 outlook
2022 outlook Industry New Equipment growth1 (units) Otis Americas EMEA Asia Up Up Up • Net sales of $14.4 to $14.7B, up 1 to 3% at 2021 LSD MSD HSD actual currency; organic2 up 2.5 to 4.5% Up Up Down • Adjusted operating profit2 of $2.24 to $2.3B, 2022E M-HSD LSD M-HSD up $95 to $165 at constant cur
Slide 6: Q4 2021 results
Q4 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 440 496 GAAP $0.58 $0.65 3,569 $0.72 Adjusted1 520 Adjusted1 $0.66 3,493 509 Adjusted margin1 14.6% 14.6% Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2020 Q4 2021 Organic1 2.8% Q4 adjusted operating
Slide 7: New Equipment
New Equipment ($ millions) Net sales Q4 Results Y/Y • Orders up 7.3% at constant currency1…7th 1,531 1,562 consecutive quarter of growth in China 2.0% Organic1 1.2% • FY New Equipment share up ~115 bps2 • New Equipment backlog up 1%, and 3% at Q4 2020 Q4 2021 constant currency1 Operating profit • Or
Slide 8: Service
Service ($ millions) Q4 Results Net sales Y/Y • Maintenance units up 3% versus prior 2,007 2.3% year…growth in EMEA and Asia, ~flat in 1,962 Organic1 Americas 4.0% • Modernization orders up 18.3% at constant currency1…backlog up 6% Q4 2020 Q4 2021 Operating profit • Organic1 sales up 4.0% – Maintena
Slide 9: Full year 2021 adjusted operating profit drivers
Full year 2021 adjusted operating profit1 drivers Actual currency + $134M + $137M + $1M + $272M up $210M at constant currency1 $62M $1M $104M $105M $2,191M Volume Volume EUR @ 1.18 Material & installation Productivity CNY @ 6.46 $1,919M productivity Pricing Price & mix Prior year cost Commodities co
Slide 10: 2022 financial outlook
2022 financial outlook 2021 actuals 2022 outlook Otis up 8.9% Otis up 2.5 to 4.5% Organic1 sales New Equipment up 15.5% New Equipment up 0.5 to 3.0% Service up 4.1% Service up 4.0 to 6.0% Otis 15.3%, up 30 bps Otis up ~30 bps Adjusted operating New Equipment 7.5%, up 100 bps New Equipment flat to up
Slide 11: 2022 organic sales outlook
2022 organic1 sales outlook 2021 Actual Outlook Outlook drivers New Equipment up 15.5% up 0.5 to 3.0% • Backlog conversion…2021 New Equipment backlog up Americas up 14.1% up low single 3%, modernization up 6% at constant currency1 EMEA up 7.1% up mid single • New Equipment and Service pricing tailwi
Slide 12: 2022 adjusted EPS growth outlook drivers
2022 adjusted EPS1 growth outlook drivers + $95 to 165M at constant currency1 (~$45M) ($0.02) to ($0.04) $0.02 to $0.03 ~ $0.10 ~($0.07) EUR @ 1.12 $0.16 to $0.27 CNY @ 6.35 $3.20 to $3.30 Volume Productivity $3.01 Pricing Commodities 2021 adjusted Operational FX Zardoya NCI (ex. Zardoya) Tax/other
Slide 13: Otis fundamentals
Otis fundamentals1 Iconic global brand in a large, growing industry Gaining share in NE2 & accelerating Service Sustainable growth over the medium-term portfolio growth Driving profitability Expanding margins through growth & productivity Investing through the cycle Sustainable level of R&D and Cape
Slide 14: © 2022 OTIS WORLDWIDE CORPORATION.
© 2022 OTIS WORLDWIDE CORPORATION. 14
Slide 15: Appendix
Appendix © 2022 OTIS WORLDWIDE CORPORATION. 15
Slide 16: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency1) Remaining performance obligation New Equipment orders Y/Y 16.5 17.0 17.0 + 3% Modernization + 6% Q4 2021 2021 Region Y/Y Y/Y Maintenance Total Otis 7.3% 13.2% + 3% & Repair Americas 18.0% 14.4% EMEA flat 4.4% New Equipment + 3% Asia 6.4%
Slide 17: Q4 2021 adjusted operating profit drivers
Appendix Q4 2021 adjusted operating profit1 drivers Actual currency ($7M) + $20M ($2M) + $11M +$21M at constant currency1 ($2M) ($10M) $34M ($11M) Installation productivity Volume Project performance Productivity $520M $509M Commodities Pricing and mix Mix Prior year cost containment actions Q4 2020
Slide 18: Full year 2021 results
Appendix Full year 2021 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 1,639 2,108 GAAP $2.08 $2.89 2,191 $3.01 14,298 Adjusted1 Adjusted1 $2.52 12,756 1,919 Adjusted 15.3% margin1 15.0% FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 Adjusted E
Slide 19: New Equipment
Appendix New Equipment ($ millions) Net sales FY Results Y/Y • Orders up 13.2% at constant currency1 6,428 19.7% 5,371 Organic1 • New Equipment share up ~115 bps2 15.5% • Organic1 sales up 15.5% – Americas up 14.1% FY 2020 FY 2021 – EMEA up 7.1% Operating profit – Asia up 19.7% GAAP 318 459 44.3% Ad
Slide 20: Service
Appendix Service ($ millions) Net sales FY Results Y/Y 7,870 6.6% • Modernization orders up 7.4% at constant 7,385 currency1 Organic1 4.1% • Organic1 sales up 4.1% – Maintenance & Repair up 4.5% FY 2020 FY 2021 – Modernization up 2.5% Operating profit • Adjusted operating profit1 up $137M and GAAP 1
Slide 21: China New Equipment
Appendix China New Equipment Otis China orders outgrowing the market1 Otis levers (% growth, units) • Rationalized brands and factory footprint ~2x market • Standardized product platforms and introduced new products…launched Gen3 ~10% • Expanded sales coverage and focus ~HSD ~MSD ~LSD Market Otis ~f
Slide 22: Customer profile in China
Appendix Customer profile in China Total Otis net sales ~$14.3B Summary (FY 2021) At-risk1 ~10 customers that have developers breached 2 or 3 red lines1 …~2% of Otis China sales in 2021 and < 0.5% of Rest of China All other total Otis sales world ~20% customers ~80% Implemented measures to limit exp
Slide 23: Financial performance
Appendix Financial performance ($ 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 8.9% 15.5% 4.1% 4.7% Organic1 (0.7%) sales (2.1%) growth (4.0%) 2019 2020 2021 2019 2020 2021 2019 2020 2021 2.2 Adjusted 1.9 1.9 1.8 operating 0.5 1.6 1.7 profit1 0.4 15.3% 0.3 15
Slide 24: Additional information
Appendix Additional information Actuals FY22 1Q21 2Q21 3Q21 4Q21 FY21 outlook Restructuring expense $15M $11M $9M $21M $56M $70 to $75M Non-service pension expense $2M $2M $2M $5M $11M ~$8M Adjusted net interest expense (a) $32M $27M $33M $30M $122M $130 to $135M Adjusted effective tax rate (b) 28.7
Slide 25: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Otis Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 26: 2021 GAAP to adjusted financials reconciliation
Appendix 2021 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 Net sales 3,408 3,701 3,620 3,569 14,298 1,458 1,727 1,681 1,562 6,428
Slide 27: 2020 GAAP to adjusted financials reconciliation
Appendix 2020 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales 1Q20 2Q20 3Q20 4Q20 FY 2020 1Q20 2Q20 3Q20 4Q20 FY 2020 1Q20 2Q20 3Q20 4Q20 FY 2020 1Q20 2Q20 3Q20 4Q20 FY 2020 Net sales 2,966 3,029 3,268 3,493 12,756 1,123 1,294 1,423 1,531 5,371
Slide 28: 2019 GAAP to adjusted financials reconciliation
Appendix 2019 GAAP to adjusted financials reconciliation New Corporate/ ($millions) Otis Equipment Service other Sales FY 2019 FY 2019 FY 2019 FY 2019 Net sales 13,118 5,648 7,470 0 Income Net income attributable to Otis 1,116 Noncontrolling interest in subsidiaries’ earnings 151 Income tax expense
Slide 29: Organic sales reconciliation
Appendix Organic sales reconciliation New Maintenance Q4 2021 Total Otis Service Modernization Equipment & Repair Organic 2.8% 1.2% 4.0% 4.3% 2.2% FX (0.7%) 0.8% (1.9%) (1.7%) (1.9%) Net acquisitions / divestitures 0.1% 0.0% 0.2% 0.2% 0.0% Total net sales growth 2.2% 2.0% 2.3% 2.8% 0.3% New Maintena
Slide 30: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q4 2020 Q4 2021 Y/Y FY 2020 FY 2021 Y/Y New Equipment Adjusted operating profit 90 83 (7) 348 482 134 Impact of foreign exchange (4) (4) (29) (29) Adjusted operating profit at constant currency 90 79 (11) 348 453 105
Slide 31: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q4 2020 Q4 2021 FY 2020 FY 2021 SG&A expense 537 503 1,924 1,948 Restructuring (28) (18) (55) (34) One-time separation costs (37) (2) (106) (16) UTC allocated corporate expenses (a) 0 0 (16) 0 Other 1 0 (2) 0 Adjusted SG&A 473 483 1,745 1,898 Adjusted SG&A %
Slide 32: Diluted earnings per share reconciliation
Appendix Diluted earnings per share reconciliation Q4 2020 Q4 2021 FY 2020 FY 2021 GAAP diluted earnings per share $0.58 $0.65 $2.08 $2.89 Impact of non-recurring items on diluted earnings per share $0.08 $0.07 $0.44 $0.12 Adjusted diluted earnings per share $0.66 $0.72 $2.52 $3.01 © 2022 OTIS WORLD
Slide 33: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q4 2020 Q4 2021 FY 2020 FY 2021 Operating cash flow1 309 277 1,480 1,750 Capital expenditures (71) (41) (183) (156) Free cash flow 238 236 1,297 1,594 GAAP net income 251 281 906 1,246 FCF conversion 95% 84% 143% 128% 1 Operating cash flow excludes
Slide 34: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) Q4 Q3 Q4 ($billions) 2020 2021 2021 RPO at actual currency 17.2 17.3 17.1 FX/other1 (0.7) (0.3) (0.1) RPO at constant currency 16.5 17.0 17.0 New Equipment backlog Q4 Growth % 2021 Actual currency 1% FX 2% Constant currency 3% 1 B