Slide 1: Q2 2024 Earnings Call
Q2 2024 Earnings Call July 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: Q2 2024 highlights
Q2 2024 highlights Q2 2024 Solid second quarter highlights Service strength... • 4.2% Maintenance portfolio growth 5.1% 1 • Modernization orders up 13.8%; backlog up 17% at constant currency 1 Service organic sales growth 1 • Service organic sales up 5.1% • Margin expansion in both segments… Service
Slide 4: Q2 2024 orders & portfolio
Q2 2024 orders & portfolio Q2 2024 Orders New Equipment Y/Y 1 New Equipment orders (11.4%) 2 New Equipment backlog (3%) Unity The Amaryllis Versace San Francisco International Airport Delhi, India San Francisco, California Service Y/Y Portfolio units 4.2% 1 Modernization orders 13.8% 2 Modernization
Slide 5: Q2 2024 results
Q2 2024 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 580 570 GAAP $0.90 $1.02 3,720 3,601 Adjusted 1 613 Adjusted 1 $1.06 590 17.0% $0.92 15.9% Adjusted 1 margin Q2 2023 Q2 2024 Q2 2023 Q2 2024 Q2 2023 Q2 2024 1 Adjusted EPS drivers Organic 1
Slide 6: Q2 2024 segment net sales results
Q2 2024 segment net sales results ($ millions) New Equipment Service Otis Y/Y Y/Y 2,180 2,116 (11.4%) 3.0% 1,604 1,421 1 1 New Organic Organic Equipment (9.4%) 5.1% Service New Equipment Q2 2023 Q2 2024 Q2 2023 Q2 2024 Service 1 1 Organic sales down 9.4% Organic sales up 5.1% • Americas up 1.9% • Ma
Slide 7: Q2 2024 segment operating profit results
Q2 2024 segment operating profit results ($ millions) New Equipment Service Otis Y/Y Y/Y 538 499 Operating 119 (7.6%) 24.7% 7.8% profit 110 New 7.7% Equipment 7.4% 23.6% Operating +30 bps +110 bps profit margin Q2 2023 Q2 2024 Q2 2023 Q2 2024 Service Operating profit down $6M at constant Operating p
Slide 8: Industry & 2024 outlook
Industry & 2024 outlook1 Industry new equipment unit growth 1 Otis Down Down Down Down • Net sales of $14.3B to $14.5B; LSD LSD HSD M-HSD 2 organic up 1% to 3% 2 • Adjusted operating profit of $2.40B to $2.45B, up $160M 2 to $190M at constant currency ; up $135M to $175M at actual currency 2 America
Slide 9: UpLift savings
UpLift savings Targeted savings Process Leverage Indirect and Cumulative in-year benefits ($ millions) improvement 200 enterprise supply chain Incremental savings and scale optimization standardization 150 100 50 Additional savings driven by: 0 • Incremental streamlining of global operating model 20
Slide 10: 2024 organic sales outlook
2024 organic1 sales outlook Prior outlook (April 24, 2024) Current outlook Outlook drivers New Equipment ~flat down mid 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 down mid single
Slide 11: 2024 financial outlook
2024 financial outlook Prior outlook (April 24, 2024) Current outlook Constant currency up $160M to $190M up $160M to $190M adj. operating profit1 Segment and total Otis up ~50 bps Otis up ~80 bps adjusted operating New Equipment flat to up 10 bps New Equipment ~flat profit1 margin Service up ~50 bp
Slide 12: 2024 adjusted EPS growth outlook drivers
2024 adjusted EPS1 growth outlook drivers $160M to $190M ~($20M) ~($0.04) $0.04 to $0.07 FY24: + Shares + - Tax $0.28 to $0.36 EUR @ 1.08 CNY @ 7.23 Interest / other + Volume + Productivity $3.85 to $3.90 + Pricing $3.54 + Commodities + -- UpLift Mix & churn - Annual wage inflation Corporate/other 1
Slide 13: Otis fundamentals…driving value creation
Otis fundamentals…driving value creation • Invest in innovation Sustainable Sales • Gain New Equipment share • Accelerate portfolio growth growth • Deliver modernization value • Drop through from volume Operating • Optimize supply chain & Expand Profit installation process operating • Drive service
Slide 14: © 2024 OTIS WORLDWIDE CORPORATION.
© 2024 OTIS WORLDWIDE CORPORATION. 14
Slide 15: Appendix
Appendix © 2024 OTIS WORLDWIDE CORPORATION. 15
Slide 16: Backlog and orders
Appendix Backlog and orders 1 ($ billions, at constant currency ) 1 Remaining performance obligation New Equipment orders Y/Y Region Q2 2024 Y/Y H1 2024 Y/Y 12-month rolling 18.0 18.1 18.2 1% Total Otis (11.4%) (10.9%) (7.7%) Modernization 17% Americas (15.8%) (20.3%) (14.4%) EMEA 9.7% 14.9% 9.7% As
Slide 17: Q2 2024 adjusted operating profit drivers
Appendix Q2 2024 adjusted operating profit1 drivers Actual currency ($9M) +$39M ($7M) +$23M +$38M ($7M) ($15M) $51M ($6M) + Productivity + Volume + + -- Commodities Pricing + - Volume Productivity $613M $590M Mix Annual wage inflation Q2 2023 adjusted New Equipment Service Corporate/Other FX Q2 2024
Slide 18: H1 2024 results
Appendix H1 2024 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 1,093 1,114 GAAP $1.70 $1.89 7,066 7,038 1 1,174 1 $1.94 Adjusted 1,108 Adjusted $1.72 16.7% 15.7% Adjusted 1 margin H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 1 Adjusted EPS d
Slide 19: H1 2024 segment net sales results
Appendix H1 2024 segment net sales results ($ millions) New Equipment Service Otis Y/Y Y/Y 4,337 (7.2%) 4,155 4.4% 2,911 1 1 2,701 Organic Organic (5.4%) 5.8% New Equipment Service H1 2023 H1 2024 H1 2023 H1 2024 1 1 Organic sales down 5.4% Organic sales up 5.8% • Americas up 8.2% • Maintenance & re
Slide 20: H1 2024 segment operating profit results
Appendix H1 2024 segment operating profit results ($ millions) New Equipment Service Otis Y/Y 1,061 Y/Y 978 (3.7%) 8.5% 24.5% Operating 188 181 New profit Equipment 6.7% +20 bps 23.5% 6.5% +100 bps Operating profit margin Service H1 2023 H1 2024 H1 2023 H1 2024 1 1 Operating profit ~flat at constant
Slide 21: H1 2024 adjusted operating profit drivers
Appendix H1 2024 adjusted operating profit1 drivers Actual currency ($7M) +$83M ($10M) +$66M +$88M ($10M) ($22M) $98M $0M + Productivity + Volume + Pricing + Pricing + + -- - Commodities Productivity $1,174M $1,108M Volume Annual wage inflation Mix H1 2023 adjusted New Equipment Service Corporate/Ot
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: Additional information
Appendix Additional information Actuals FY24 outlook Prior 1Q24 2Q24 1H24 Updated (April 24, 2024) UpLift restructuring expense $1M $6M $7M $75 Other restructuring expense $19M $5M $24M to ~$100M $100M UpLift transformation costs $12M $15M $27M Non-service pension cost (benefit) $0M ($1M) ($1M) ~$5M
Slide 24: 2024 GAAP to adjusted financials reconciliation
Appendix 2024 GAAP to adjusted financials reconciliation ($ millions) Income 1Q24 2Q24 Net income attributable to Otis 353 415 Noncontrolling interest in subsidiaries’ earnings 21 35 Income tax expense 126 94 Net interest expense 44 27 Non-service pension benefit (expense) 0 (1) GAAP operating profi
Slide 25: 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 128 135 137 133 533 Net interest expense 33 37 39 41 150
Slide 26: Organic sales reconciliation
Appendix Organic sales reconciliation Maintenance & Q2 2024 Y/Y Total Otis New Equipment Service Modernization repair Organic (1.2%) (9.4%) 5.1% 4.9% 5.8% FX (2.1%) (2.1%) (2.3%) (2.2%) (2.5%) Net acquisitions / divestitures 0.1% 0.1% 0.2% 0.2% 0.3% Total net sales growth (3.2%) (11.4%) 3.0% 2.9% 3.
Slide 27: Segment and total adjusted operating profit at constant currency reconciliations
Appendix Segment and total adjusted operating profit at constant currency reconciliations ($ millions) Q2 2023 Q2 2024 Y/Y H1 2023 H1 2024 Y/Y New Equipment Operating profit 119 110 (9) 188 181 (7) Impact of foreign exchange 3 3 7 7 Operating profit at constant currency 119 113 (6) 188 188 — Service
Slide 28: SG&A reconciliation
Appendix SG&A reconciliation ($ millions) Q2 2023 Q2 2024 H1 2023 H1 2024 Net Sales 3,720 3,601 7,066 7,038 SG&A expense 479 449 934 911 UpLift Restructuring — (4) — (5) Other Restructuring (10) (1) (13) (15) Adjusted SG&A expense 469 444 921 891 Adjusted SG&A % of sales 12.6% 12.3% 13.0% 12.7% © 20
Slide 29: Diluted EPS and Tax reconciliations
Appendix Diluted EPS and Tax reconciliations Q2 2023 Q2 2024 H1 2023 H1 2024 GAAP diluted earnings per share $0.90 $1.02 $1.70 $1.89 Impact of non-recurring items on diluted earnings per share $0.02 $0.04 0.02 $0.05 Adjusted earnings per share $0.92 $1.06 $1.72 $1.94 Q2 2023 Q2 2024 H1 2023 H1 2024
Slide 30: Adjusted free cash flow reconciliation
Appendix Adjusted free cash flow reconciliation ($ millions) Q2 2023 Q2 2024 H1 2023 H1 2024 Operating cash flow 446 308 724 479 Capital expenditures (37) (24) (62) (55) Free cash flow 409 284 662 424 UpLift restructuring payments — 7 — 14 UpLift transformation payments — 13 — 21 Separation-related
Slide 31: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) ($ billions) Q2 2023 Q1 2024 Q2 2024 RPO at actual currency (GAAP measure) 18.3 18.3 18.2 FX (0.3) (0.2) — RPO at constant currency 18.0 18.1 18.2 Backlog New Maintenance Q2 2024 Y/Y Growth % Modernization Equipment & repair Actua