Core Viewpoint - Otis Worldwide reported mixed results for Q4 2024, with adjusted earnings missing estimates while net sales exceeded expectations, marking the second consecutive earnings miss after a strong performance in prior quarters [2][5]. Financial Performance - Adjusted earnings were 93 cents per share, missing the Zacks Consensus Estimate of 95 cents by 2.1%, but increased 6.9% year-over-year from 87 cents [5]. - Net sales reached $3.68 billion, slightly above the consensus mark of $3.65 billion, reflecting a 1.5% year-over-year growth, with organic sales increasing by 1.9% [5]. - Adjusted operating margin expanded by 30 basis points to 15.9%, driven by favorable performance in the Service segment [6]. Segment Analysis - **New Equipment Segment**: - Net sales were $1.36 billion, down 7.4% year-over-year, with organic sales declining 6.8% [7]. - Orders decreased by 4% at constant currency, with significant declines in China and EMEA [8]. - Operating margin contracted by 140 basis points to 4.7% due to lower volume and unfavorable mix [9]. - **Service Segment**: - Net sales increased by 7.6% year-over-year to $2.32 billion, supported by a 7.8% rise in organic sales [10]. - Operating margin improved by 50 basis points to 24.5%, aided by higher volume and favorable pricing [11]. Annual Highlights - For 2024, Otis Worldwide reported annual revenues of $14.26 billion, a 0.4% increase from $14.21 billion in 2023, with adjusted EPS rising to $3.83 from $3.54 [12]. - Adjusted operating margin for the year expanded by 50 basis points to 16.5% [12]. Financial Position - As of December 31, 2024, cash and cash equivalents were $2.3 billion, up from $1.27 billion at the end of 2023, while long-term debt increased to $6.97 billion [13]. - Net cash flows from operating activities were $1.56 billion, down from $1.63 billion a year ago, with adjusted free cash flow totaling $1.57 billion [13]. 2025 Outlook - Otis expects net sales between $14.1 billion and $14.4 billion, with organic sales growth projected between 2% and 4% [14]. - Adjusted EPS is anticipated to be between $4 and $4.10, indicating a year-over-year growth of 4-7% [15]. Estimate Trends - There has been a downward trend in estimates, with the consensus estimate shifting down by 5.23% [16]. VGM Scores - Otis Worldwide has a Growth Score of A but lags in Momentum with an F, resulting in an aggregate VGM Score of C [17].

Core Insights - Otis Worldwide's international operations are crucial for understanding its financial strength and growth potential [1][2] - The company's total revenue for the quarter was $3.68 billion, reflecting a year-over-year increase of 1.5% [4] International Revenue Breakdown - China contributed $483 million, accounting for 13.14% of total revenue, which was below the consensus estimate of $526.59 million, marking a surprise of -8.28% [5] - Other International regions generated $2.14 billion, representing 58.23% of total revenue, exceeding expectations by +4.17% compared to the forecast of $2.05 billion [6] Future Revenue Projections - Analysts project Otis Worldwide will achieve revenues of $3.44 billion for the ongoing fiscal quarter, a slight increase of 0.1% from the previous year, with contributions from China and Other International expected to be $483.71 million and $1.98 billion, respectively [7] - For the full year, total revenue is projected at $14.3 billion, indicating a rise of 0.3% from last year, with China expected to contribute $2.06 billion (14.4%) and Other International $8.31 billion (58.1%) [8] Market Dependency and Earnings Forecasts - The company's reliance on global markets for revenue presents both opportunities and risks, making the monitoring of international revenue trends essential for predicting future performance [9] - Wall Street analysts closely observe these patterns, especially in light of global interdependence and geopolitical issues, which can influence earnings forecasts [10]

Financial Performance - Net sales for 2024 reached $14,261 million, a slight increase of 0.4% compared to $14,209 million in 2023[332]. - Product sales decreased to $5,367 million in 2024, down 7.7% from $5,812 million in 2023, while service sales increased to $8,894 million, up 5.9% from $8,397 million[332]. - Operating profit for 2024 was $2,008 million, a decrease of 8.1% from $2,186 million in 2023[332]. - Net income attributable to Otis Worldwide Corporation increased to $1,645 million in 2024, up 17.0% from $1,406 million in 2023[332]. - Basic earnings per share rose to $4.10 in 2024, compared to $3.42 in 2023, reflecting a 19.9% increase[332]. - The company reported a comprehensive income attributable to Otis Worldwide Corporation of $1,650 million in 2024, compared to $1,248 million in 2023, an increase of 32.2%[334]. - Net income for 2024 was $1,734 million, an increase from $1,498 million in 2023 and $1,369 million in 2022[342]. - The company reported net cash flows provided by operating activities of $1,563 million in 2024, compared to $1,627 million in 2023[342]. - The effective income tax rate for 2024 was 15.0%, a decrease from 26.2% in 2023 and 27.5% in 2022[493]. Assets and Liabilities - Total assets increased to $11,316 million in 2024, up from $10,117 million in 2023, representing a growth of 11.9%[337]. - Total liabilities rose to $16,044 million in 2024, compared to $14,837 million in 2023, an increase of 8.1%[337]. - Cash and cash equivalents significantly increased to $2,300 million in 2024, up from $1,274 million in 2023, a growth of 80.1%[337]. - As of December 31, 2024, restricted cash balances were $21 million, up from $6 million in 2023[362]. - Current and long-term accounts receivable included retainage of $57 million and unbilled receivables of $129 million as of December 31, 2024[364]. - Total long-term debt increased from $6,866 million in 2023 to $8,273 million in 2024, with a significant portion due in 2025[450]. Cash Flow and Investments - The company completed the acquisition of all outstanding shares of its consolidated subsidiary in Japan for approximately $70 million in 2024[348]. - Business acquisitions totaled $87 million in 2024, compared to $36 million in 2023, indicating a significant increase in investment activity[438]. - The company repurchased $1,007 million of common stock in 2024, an increase from $800 million in 2023[342]. - The company repurchased 10.6 million shares of Common Stock for approximately $1.0 billion in 2024, compared to 9.6 million shares for $800 million in 2023[487]. Revenue Recognition and Contracts - The Company recognized $5.4 billion and $1.7 billion of revenue from new equipment and modernization contracts for the year ended December 31, 2024[327]. - The Company recognized revenue from maintenance contracts on a straight-line basis, aligning with the continuous nature of these services throughout the year[389]. - Revenue recognized from contract liabilities was approximately $2.0 billion for each of the years 2022, 2023, and 2024[431]. - The outstanding obligations confirmed under supplier finance programs were $714 million as of December 31, 2024, an increase from $627 million in 2023[398]. Taxation - A favorable ruling in German tax litigation resulted in income tax benefits of approximately $185 million and related interest income of approximately $200 million in 2024[345]. - The provision for income taxes in 2024 included a current tax expense of $336 million, down from $594 million in 2023[493]. - The company recognized a tax benefit related to the resolution of German tax litigation, contributing to the lower effective tax rate in 2024[494]. Pension and Employee Benefits - Contributions to employer-sponsored defined contribution plans were $71 million in 2024, up from $65 million in 2023[457]. - The actual return on plan assets for 2024 was $57 million, significantly higher than $13 million in 2023, contributing to an ending balance of $637 million in 2024 compared to $609 million in 2023[459]. - The net periodic pension cost for the employer in 2024 was $32 million, a slight decrease from $34 million in 2023[461]. - Total contributions to multiemployer defined benefit pension plans were $143 million in 2024, compared to $137 million in 2023 and $120 million in 2022[474]. Stock and Equity - Stock-based compensation expense for 2024 was $73 million, an increase from $64 million in 2023 and $66 million in 2022[479]. - The total intrinsic value of stock options and stock appreciation rights exercised during 2024 was $78 million, compared to $65 million in 2023 and $35 million in 2022[482]. - The company has $200 million remaining under its share repurchase program as of December 31, 2024[486]. - The company was authorized to purchase up to $2.0 billion of Common Stock under a new share repurchase program approved on January 16, 2025[488]. Risk Management - The Company utilizes derivative instruments, including forward contracts, as risk management tools to manage foreign currency and commodity price exposures[298]. - The Company does not enter into hedging contracts for speculative purposes, focusing instead on risk management[307]. - The Company’s derivative instruments are primarily used for risk management, with no speculative purposes involved[400]. Economic Conditions - The Company assesses the impact of macroeconomic conditions, including inflation and interest rates, on its financial statements[359]. - A 100 basis points increase in interest rates would have resulted in an approximate $400 million reduction on the fair value of fixed-rate debt as of December 31, 2024 and 2023[309].

Core Insights - Otis Worldwide Corporation reported mixed results for Q4 2024, with adjusted earnings missing estimates while net sales exceeded expectations, marking the second consecutive earnings miss after 18 prior quarters of beating estimates [1][3][4] - Year-over-year growth was observed in both top and bottom lines, driven by the Service segment, although the New Equipment segment faced challenges due to declining sales in China [2][4] Financial Performance - Adjusted earnings were reported at 93 cents per share, missing the Zacks Consensus Estimate of 95 cents by 2.1%, but increased 6.9% from the previous year's EPS of 87 cents [4] - Net sales reached $3.68 billion, slightly above the consensus mark of $3.65 billion, reflecting a 1.5% year-over-year growth, with organic sales increasing by 1.9% [4] - Adjusted operating margin expanded by 30 basis points year-over-year to 15.9%, driven by favorable performance in the Service segment [5] Segment Analysis - New Equipment segment net sales were $1.36 billion, down 7.4% year-over-year, with organic sales declining 6.8% and impacted by foreign exchange headwinds [6] - Service segment net sales increased by 7.6% year-over-year to $2.32 billion, supported by a 7.8% rise in organic sales [9] - The operating margin for the New Equipment segment contracted by 140 basis points to 4.7%, while the Service segment's operating margin expanded by 50 basis points to 24.5% [8][10] Annual Highlights - For the full year 2024, Otis reported revenues of $14.26 billion, a 0.4% increase from $14.21 billion in 2023, with adjusted EPS rising to $3.83 from $3.54 [11] - Adjusted operating margin for the year expanded by 50 basis points to 16.5% [11] Financial Position - As of December 31, 2024, Otis had cash and cash equivalents of $2.3 billion, up from $1.27 billion at the end of 2023, while long-term debt increased to $6.97 billion [12] - Net cash flows from operating activities were $1.56 billion, down from $1.63 billion a year ago, with adjusted free cash flow totaling $1.57 billion, up from $1.53 billion [12] 2025 Outlook - Otis expects net sales for 2025 to be between $14.1 billion and $14.4 billion, with organic sales growth projected between 2% and 4% [13] - Adjusted EPS is anticipated to be between $4.00 and $4.10, indicating a year-over-year growth of 4-7% [14]

Group 1 - Otis Worldwide reported revenue of $3.68 billion for the quarter ended December 2024, reflecting a 1.5% increase year-over-year [1] - The company's EPS for the quarter was $0.93, up from $0.87 in the same period last year [1] - Revenue exceeded the Zacks Consensus Estimate of $3.65 billion, resulting in a surprise of +0.72% [1] Group 2 - Net Sales from Service reached $2.32 billion, surpassing the estimated $2.30 billion, marking a year-over-year increase of +7.6% [4] - Net Sales from New Equipment totaled $1.36 billion, slightly above the estimate of $1.35 billion, but showed a year-over-year decline of -7.4% [4] - Adjusted Operating Profit for New Equipment was reported at $65 million, below the average estimate of $70.69 million [4] Group 3 - The stock of Otis Worldwide has returned +3.5% over the past month, outperforming the Zacks S&P 500 composite's +1.7% change [3] - The company currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company achieved organic sales growth of 1.9% in Q4 2024, with adjusted EPS growing approximately 8.2% [6][10][22] - Adjusted free cash flow reached $682 million in Q4, the highest quarterly result since the spin-off, contributing to a total of $1.6 billion for the year [7][10][22] - The adjusted operating profit margin expanded by 50 basis points, with overall adjusted operating profit margin increasing by 30 basis points or more each year since the spin-off [9][10][22] Business Line Data and Key Metrics Changes - Service segment organic sales grew by 7.8%, while new equipment organic sales declined by 6.8% [18][20] - Maintenance and repair sales increased by 5.6%, with modernization sales accelerating to 18% growth in Q4 [20][22] - Service operating profit accounted for 93% of overall operating profit, up from 89% the previous year [21][22] Market Data and Key Metrics Changes - New equipment orders declined by 4% in Q4, primarily due to challenging market conditions in China, where orders fell by more than 20% [10][11] - Excluding China, new equipment orders increased approximately 11%, with the Americas showing strong growth in the second half of the year [11][12] - The Asia Pacific region experienced over 20% growth in new equipment orders, while EMEA saw a decline of high single digits in Q4 [11][12] Company Strategy and Development Direction - The company is transforming its China business to focus more on service and modernization, shifting from new equipment sales [8][30] - The modernization opportunity in China is significant, with a target of over 20% annual growth in modernization orders [31][32] - The company aims to maintain a sustainable shareholder-driven management strategy, with plans for share repurchases and dividend growth [10][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the service-driven business model despite macro headwinds in the new equipment market [10][23] - The outlook for 2025 anticipates net sales growth of 2% to 4% organically, with adjusted EPS expected to be in the range of $4 to $4.10 [28][40] - The company expects the global new equipment market to decline mid single digits in units, primarily due to the ongoing challenges in China [27][28] Other Important Information - The company received a gold rating from Ecovadis for the third consecutive year, reflecting its commitment to ESG initiatives [9] - The company is targeting approximately $200 million in annual run rate savings by the second half of 2025 through its uplift program [7][35] Q&A Session Summary Question: Can you expand on the China cost initiatives? - Management highlighted the structural changes in China and the focus on becoming more service-oriented, with targeted savings around 2% of new equipment revenue [44][46] Question: What about the service margin in Q4? - Management acknowledged a decline in service margin due to investments in field professionals, which are critical for future growth [51][53] Question: What are the expectations for modernization margins in 2025? - Management indicated that modernization margins are expected to improve, with a target of reaching double-digit margins over the medium term [71][78] Question: Can you discuss the restructuring costs? - Management outlined that approximately $250 million is expected for restructuring, primarily related to the uplift program and the transformation in China [81][83] Question: What is the outlook for new equipment backlog? - Management noted that while the new equipment backlog is currently down, they expect stabilization in China and growth in other regions to positively impact backlog in 2025 [97][100]

Q4 2024 Earnings Call January 29, 2025 © 2025 OTIS WORLDWIDE CORPORATION. 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 the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the ...

分组1 - Otis Worldwide reported quarterly earnings of $0.93 per share, missing the Zacks Consensus Estimate of $0.95 per share, but showing an increase from $0.87 per share a year ago, resulting in an earnings surprise of -2.11% [1] - The company posted revenues of $3.68 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.72%, compared to year-ago revenues of $3.62 billion [2] - Over the last four quarters, Otis Worldwide has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] 分组2 - The stock has added about 3.5% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The current consensus EPS estimate for the coming quarter is $0.96 on $3.43 billion in revenues, and for the current fiscal year, it is $4.10 on $14.36 billion in revenues [7] - The Zacks Industry Rank for Building Products - Miscellaneous is currently in the bottom 31% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Core Insights - Otis Worldwide Corporation reported solid fourth quarter and full year results for 2024, with a focus on sustained earnings growth driven by service momentum [1][2][6] - The company anticipates organic sales growth of 2 to 4% and adjusted earnings per share (EPS) of $4.00 to $4.10 for the full year 2025 [1][20] Financial Performance - Fourth quarter 2024 net sales reached $3.7 billion, a 1.5% increase year-over-year, primarily driven by service sales [3][8] - Full year 2024 net sales totaled $14.3 billion, reflecting a 0.4% increase, with organic sales growth of 1.4% [1][6] - GAAP EPS for the fourth quarter was $0.84, up 6.3% from the previous year, while adjusted EPS increased 6.9% to $0.93 [5][6] Segment Performance - The service segment saw a 7.6% increase in net sales for the fourth quarter, with organic sales growth of 7.8% [13][14] - The modernization backlog grew in the low teens percentage, indicating strong demand in this area [2][8] - New equipment sales decreased by 7.4% in the fourth quarter, with a notable decline in China impacting overall performance [7][11] Cash Flow and Shareholder Returns - The company generated GAAP cash flow from operations of $690 million in the fourth quarter and $1.6 billion for the full year [16][8] - Otis repurchased $200 million of its shares in the fourth quarter and $1.0 billion for the full year [8][6] 2025 Outlook - Otis expects to achieve adjusted operating profit of $2.4 to $2.5 billion in 2025, reflecting an increase of $120 to $150 million at constant currency [20][18] - The company is implementing a China transformation program aimed at adapting its operating model to changing market conditions, with expected savings of $30 million by year-end 2025 [18][20]

Financial Performance - Full year 2024 net sales reached $14.3 billion, with a 1.4% organic growth[3] - Fourth quarter net sales of $3.7 billion increased by 1.5% year-over-year, driven by a 7.6% increase in Service sales[4] - GAAP EPS for 2024 increased by 20.1% to $4.07, while adjusted EPS rose by 8.2% to $3.83[8] - Net sales for Q4 2024 were $3,675 million, a slight increase from $3,620 million in Q4 2023, while total net sales for the year reached $14,261 million compared to $14,209 million in 2023[29] - Operating profit for Q4 2024 was $531 million, up from $522 million in Q4 2023, with total operating profit for the year at $2,008 million, down from $2,186 million in 2023[29] - Net income attributable to Otis Worldwide Corporation for Q4 2024 was $337 million, compared to $323 million in Q4 2023, with annual net income increasing to $1,645 million from $1,406 million[29] - Diluted earnings per share (EPS) for Q4 2024 was $0.84, up from $0.79 in Q4 2023, while annual diluted EPS increased to $4.07 from $3.39[29] - Adjusted net income attributable to common shareholders for the year ended December 31, 2024, was $1,548 million, up from $1,469 million in 2023[34] Cash Flow and Liquidity - Adjusted free cash flow for 2024 was $1.6 billion, with GAAP cash flow from operations at $1.6 billion[4] - The company maintained a free cash flow that is considered a useful measure of liquidity, although specific figures were not disclosed in the provided content[22] - Free cash flow for the year ended December 31, 2024, was $1,437 million, a decrease of 3.5% from $1,489 million in 2023[45] - Cash and cash equivalents at the end of December 2024 were $2,300 million, an increase of 80.1% from $1,274 million at the end of December 2023[44] - The adjusted free cash flow for the quarter ended December 31, 2024, was $682 million, compared to $573 million in the same quarter of 2023, indicating an increase of 19.1%[45] - The company reported a net cash flow from operating activities of $690 million for the quarter ended December 31, 2024, compared to $597 million for the same quarter in 2023, marking a 15.6% increase[44] Expenses and Profitability - Research and development expenses for Q4 2024 were $37 million, consistent with Q4 2023, and total R&D expenses for the year were $152 million, up from $144 million in 2023[29] - Selling, general and administrative (SG&A) expenses for Q4 2024 were $495 million, slightly down from $498 million in Q4 2023, with total SG&A for the year at $1,861 million compared to $1,884 million in 2023[29] - Service segment operating profit margin expanded by 50 basis points to 24.5% in Q4 2024[15] - Adjusted operating profit for Q4 2024 was $583 million, up from $566 million in Q4 2023, reflecting a year-over-year increase of 3.0%[34] - The operating profit margin for Q4 2024 was 15.9%, compared to 15.6% in Q4 2023, indicating improved profitability[34] - Service segment operating profit increased by $51 million year-over-year to $569 million in Q4 2024, reflecting strong performance in maintenance and repair services[40] Future Outlook - For 2025, Otis expects organic sales growth of 2% to 4% and adjusted EPS between $4.00 and $4.10[19] - The company anticipates adjusted operating profit of $2.4 to $2.5 billion for 2025, reflecting an increase of $120 to $150 million at constant currency[20] - Otis expects to continue focusing on organic sales growth, which excludes the impact of foreign currency translation and acquisitions, as a key performance measure[22] Assets and Liabilities - Total assets increased to $11,316 million in December 2024, up from $10,117 million in December 2023, representing a growth of 11.9%[43] - Total liabilities rose to $16,044 million in December 2024, up from $14,837 million in December 2023, indicating an increase of 8.1%[43] - Long-term debt stood at $6,973 million as of December 31, 2024, compared to $6,866 million a year earlier, reflecting an increase of 1.6%[43] - Total current assets increased to $7,670 million in December 2024, up from $6,400 million in December 2023, a growth of 19.9%[43] Market Performance - New Equipment net sales for Q4 2024 decreased by 7.4% to $1.4 billion, primarily due to a greater than 20% decline in China[10] - New equipment backlog decreased by 7% year-over-year at actual currency as of December 31, 2024[37] - Modernization backlog increased by 10% year-over-year at actual currency as of December 31, 2024, indicating strong demand in this segment[38] - The effective tax rate for Q4 2024 was 26.9%, a decrease from 27.9% in Q4 2023, reflecting improved tax efficiency[34] - The company paid dividends of $156 million on common stock in the quarter ended December 31, 2024, compared to $139 million in the same quarter of 2023, representing a 12.2% increase[44] - The company reported a non-service pension cost benefit of $0 million for Q4 2024, compared to a cost of $4 million in Q4 2023[29]