Otis Worldwide (US:OTIS)2025-02-04 21:50Financial 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].