Otis Worldwide Corporation · NYSE:OTIS
Otis Worldwide — Q1 2022 Earnings Presentation
31 slides from Otis Worldwide's earnings presentation, Apr 25, 2022
Slide 1: Q1 2022 Earnings Call
Q1 2022 Earnings Call April 25, 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: Q1 2022 highlights
Q1 2022 highlights Orders Strong start to the year • New Equipment share gain, up ~1 pt1 • Maintenance portfolio up >3%... retention, conversion and recapture rates up year-over-year • Organic2 sales growth, driven by Service • Adjusted EPS2 up 6.9%...driven by operating profit growth and progress o
Slide 4: Q1 2022 update
Q1 2022 update • New Equipment orders up 8.8% at constant currency1…up 10.9% on a rolling 12- month basis Q1 2022 • New Equipment backlog up 4% and 6% at constant currency1 Results • Organic1 sales up 3.1%... Service up 5.8%, New Equipment down 0.5% • Adjusted operating profit margin1 expanded 30 bp
Slide 5: Q1 2022 results
Q1 2022 results ($ millions, except per share amounts) Sales Operating profit Diluted earnings per share GAAP 509 526 GAAP $0.71 $0.73 $0.77 542 Adjusted1 Adjusted1 $0.72 3,414 533 15.9% 3,408 Adjusted margin1 15.6% Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Organic1 3.1% Constant Currency1 29
Slide 6: New Equipment
New Equipment ($ millions) Net sales Q1 Results Y/Y • Orders up 8.8% at constant currency1… 1,458 growth in all regions with 8th consecutive (2.5%) 1,422 quarter of growth in China Organic1 (0.5%) • 1Q22 New Equipment share up ~1 pt2 • New Equipment backlog up 4%, and 6% at Q1 2021 Q1 2022 constant
Slide 7: Service
Service ($ millions) Net sales Q1 Results Y/Y 1,992 • Maintenance units up >3% versus prior 2.2% year…growth in all regions 1,950 Organic1 • Modernization orders down 5.9% at constant 5.8% currency1…up 5.7% on a rolling 12-month basis…backlog up 3% Q1 2021 Q1 2022 • Organic1 sales up 5.8% Operating
Slide 8: 2022 financial outlook
2022 financial outlook Current outlook Prior outlook (excludes Russia3) Otis up 2.5 to 4.5% Otis up 3 to 4% Organic1 sales New Equipment up 0.5 to 3.0% New Equipment flat to up 1.5% Service up 4.0 to 6.0% Service up 5.0 to 6.0% Otis up ~30 bps Otis up ~30 bps Adjusted operating New Equipment flat to
Slide 9: 2022 organic sales outlook
2022 organic1 sales outlook Prior outlook Updated outlook Outlook drivers (January 31, 2022) (excluding Russia2) • Q1 New Equipment New Equipment up 0.5 to 3.0% flat to up 1.5% backlog up 6% at constant currency1…conversion Americas up low single up low single slower than prior estimate due to custo
Slide 10: 2022 adjusted EPS growth outlook drivers
2022 adjusted EPS1 growth outlook drivers ~ $0.05 + $105 to 155M at constant currency1 (~$65M) $0.06 to $0.04 ($0.02) to ($0.04) ~($0.11) ~ $0.12 $0.17 to $0.26 $3.22 to $3.27 EUR @ 1.10 Russia2 CNY @ 6.35 +9 to 11% $0.06 Volume Productivity $2.95 Pricing Commodities 2021 adjusted Operational FX Zar
Slide 11: Otis fundamentals…driving value creation
Otis fundamentals…driving value creation1 Sales Operating Profit Cash & Capital Deployment • Invest in innovation • Drop through from volume • Reduce effective tax rate • Optimize supply chain & • Gain New Equipment share • Make targeted investments installation process • Accelerate portfolio growth
Slide 12: Slide 12
Slide 13: Appendix
Appendix © 2022 OTIS WORLDWIDE CORPORATION. 13
Slide 14: Backlog and orders
Appendix Backlog and orders ($billions, at constant currency1) Remaining performance obligation New Equipment orders Y/Y 17.8 + 4% 17.1 17.2 Modernization + 3% Q1 2022 12-month Region Y/Y rolling Maintenance + 3% Total Otis 8.8% 10.9% & Repair Americas 9.1% 13.0% EMEA 16.8% 7.8% New Equipment + 6% A
Slide 15: Q1 2022 adjusted operating profit drivers
Appendix Q1 2022 adjusted operating profit1 drivers Actual currency ($12M) + $17M + $4M + $9M +$29M at constant currency1 $3M ($20M) $40M ($14M) Installation productivity Volume Bad debt Pricing $542M $533M Commodities Productivity Volume Labor inflation Q1 2021 adjusted New Service Corporate / FX Q
Slide 16: Additional information
Appendix Additional information Actuals FY22 Outlook Prior 1Q22 Updated (Jan 31, 2022) Restructuring expense $14M $70 to $75M $70 to $75M Non-service pension expense $0M ~$8M ~$5M Adjusted net interest expense (a) $32M $130 to $135M $130 to $135M Adjusted effective tax rate (b) 27.3% 27.5 to 28.0% ~
Slide 17: Use and Definitions of Non-GAAP Financial Measures
Appendix Use and Definitions of Non-GAAP Financial Measures Otis Worldwide Corporation (“Otis”) reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with
Slide 18: Q1 2022 GAAP to adjusted financials reconciliation
Appendix Q1 2022 GAAP to adjusted financials reconciliation New Corporate/ ($millions) Otis Service Equipment other Sales 1Q22 1Q22 1Q22 1Q22 Net sales 3,414 1,422 1,992 0 Income Net income attributable to Otis 311 Noncontrolling interest in subsidiaries’ 42 Income tax expense 136 Net interest expen
Slide 19: 2021 GAAP to adjusted financials reconciliation
Appendix 2021 GAAP to adjusted financials reconciliation ($millions) Otis New Equipment Service Corporate/other Sales 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q21 2Q21 3Q21 4Q21 FY 2021 Net sales 3,408 3,701 3,620 3,569 14,298 1,458 1,727 1,681 1,562 6,428
Slide 20: Organic sales reconciliation
Appendix Organic sales reconciliation Maintenance & Q1 2022 Total Otis New Equipment Service Modernization Repair Organic 3.1% (0.5%) 5.8% 5.6% 6.9% FX (3.0%) (1.9%) (3.8%) (3.9%) (3.4%) Net acquisitions / divestitures 0.1% (0.1%) 0.2% 0.2% 0.0% Total net sales growth 0.2% (2.5%) 2.2% 1.9% 3.5% © 20
Slide 21: Adjusted operating profit at constant currency reconciliation
Appendix Adjusted operating profit at constant currency reconciliation ($millions) Q1 2021 Q1 2022 Y/Y New Equipment Adjusted operating profit 109 97 (12) Impact of foreign exchange (2) (2) Adjusted operating profit at constant currency 109 95 (14) Service Adjusted operating profit 440 457 17 Impact
Slide 22: SG&A reconciliation
Appendix SG&A reconciliation ($millions) Q1 2021 Q1 2022 SG&A expense 482 459 Restructuring (11) (11) One-time separation costs (9) (3) Adjusted SG&A 462 445 Adjusted SG&A % of sales 13.6% 13.0% © 2022 OTIS WORLDWIDE CORPORATION. 22
Slide 23: Diluted EPS and Tax reconciliations
Appendix Diluted EPS and Tax reconciliations Q1 2021 Q1 2022 GAAP diluted earnings per share $0.71 $0.73 Impact of non-recurring items on diluted earnings per share $0.01 $0.04 Adjusted diluted earnings per share $0.72 $0.77 Q1 2021 Q1 2022 Effective tax rate 25.9% 27.8% Impact of adjustments on eff
Slide 24: Free cash flow reconciliation
Appendix Free cash flow reconciliation ($millions) Q1 2021 Q1 2022 Operating cash flow1 585 504 Capital expenditures (44) (30) Free cash flow 541 474 GAAP net income 308 311 FCF conversion 176% 152% 1 Operating cash flow excludes dividends paid to noncontrolling interests. © 2022 OTIS WORLDWIDE CORP
Slide 25: Other reconciliations
Appendix Other reconciliations Remaining performance obligation (RPO) ($billions) Q1 2021 Q4 2021 Q1 2022 RPO at actual currency 17.3 17.1 17.5 FX/other1 (0.2) 0.1 0.3 RPO at constant currency 17.1 17.2 17.8 New Equipment backlog Growth % Q1 2022 Actual currency 4% FX 2% Constant currency 6% 1 Balan
Slide 26: Adjusted historical results and 2022 outlook excluding Russia
Adjusted historical results and 2022 outlook excluding Russia © 2022 OTIS WORLDWIDE CORPORATION. 26
Slide 27: 2022 outlook (excluding Russia)
Appendix 2022 outlook (excluding Russia2) ($ millions) Total Otis New Equipment Service + 3 to 4% + 5 to 6% organic organic Adjusted 14,045 7,837 net sales Flat to +1.5% 6,208 organic +~30 bps +~70 bps Adjusted 15.4% margin1 7.1% (20) to 23.0% (60) bps 2021 2022 2021 2022 2021 2022 outlook outlook o
Slide 28: Otis Russia
Appendix Otis Russia TRAILING 5 QUARTERS ($millions) Otis New Equipment Service Corporate/other Sales 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 Net sales 53 72 65 63 253 54 45 64 57 54 220 47 8 8 8 9 33 7 - - -
Slide 29: Total Otis results excluding Russia
Appendix Total Otis results excluding Russia TRAILING 5 QUARTERS ($millions) Otis New Equipment Service Corporate/other Sales 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 1Q21 2Q21 3Q21 4Q21 FY 2021 1Q22 Net sales 3,408 3,701 3,620 3,569 14,298 3
Slide 30: Backlog and orders excluding Russia
Appendix Backlog and orders excluding Russia ($billions, at constant currency1) Adjusted remaining performance obligation1 New Equipment orders (excluding Russia) (excluding Russia) Y/Y 17.6 + 4% 16.9 17.1 Modernization + 3% Q1 2022 12-month Region Y/Y rolling Maintenance + 3% Total Otis 6.7% 10.2%
Slide 31: Other reconciliations excluding Russia
Appendix Other reconciliations excluding Russia Remaining performance obligation (RPO) ($billions) Q1 2021 Q4 2021 Q1 2022 RPO at actual currency (GAAP measure) 17.3 17.1 17.5 Russia (0.2) 0.0 (0.2) FX/other1 (0.2) 0.1 0.3 Adjusted RPO at constant currency 16.9 17.1 17.6 New Equipment backlog Growth