Otis Worldwide (US:OTIS)2026-01-28 11:09Financial Performance - Full year 2025 net sales reached $14.4 billion with flat organic growth[2] - Fourth quarter 2025 net sales of $3.8 billion increased 3% year-over-year, driven primarily by Service sales[5] - Service net sales increased 8% in Q4 2025, with organic sales growth of 5%[10] - Adjusted operating profit for 2025 was $2.4 billion, up $78 million year-over-year[8] - Operating cash flow for 2025 was $1.6 billion, reflecting a slight increase from the previous year[17] - Adjusted operating profit for the year ended December 31, 2025 was $2,434 million, up from $2,356 million in 2024, reflecting a year-over-year increase of 3%[31] - Adjusted diluted earnings per share for the year ended December 31, 2025 was $4.05, compared to $3.83 in 2024, marking a 5.7% increase[31] - Basic earnings per share (EPS) for Q4 2025 was $0.96, up from $0.85 in Q4 2024, indicating a growth of 12.9%[28] - GAAP EPS for 2025 decreased 14% to $3.50, while adjusted EPS increased 6% to $4.05[9] Sales and Orders - Modernization orders grew 43% in Q4 2025, with backlogs up 30%[3] - The service segment saw a 6% increase in net sales for the year, totaling $9,442 million compared to $8,894 million in 2024[30] - New equipment backlog increased by 6% at actual currency, while the impact of foreign exchange reduced this growth to 2% at constant currency[34] - Modernization backlog increased by 34% at actual currency, with a constant currency increase of 30% after accounting for foreign exchange impacts[35] Cash Flow and Liquidity - Free cash flow for the year ended December 31, 2025, was $1,444 million, slightly up from $1,437 million in 2024, indicating a growth of 0.5%[41] - Free cash flow is emphasized as a key measure of liquidity, aiding in funding activities such as acquisitions and shareholder distributions[23] - Adjusted free cash flow for 2026 is projected to be between $1.6 to $1.7 billion[20] - Share repurchases totaled approximately $800 million in 2025[4] Expenses and Costs - Total costs and expenses for Q4 2025 were $3,202 million, compared to $3,135 million in Q4 2024, marking an increase of 2.1%[28] - Research and development expenses for the year ended December 31, 2025, were $152 million, consistent with the previous year[28] Assets and Liabilities - Total assets decreased from $11,316 million in 2024 to $10,653 million in 2025, a decline of approximately 5.9%[39] - Total liabilities decreased from $16,044 million in 2024 to $15,924 million in 2025, a reduction of about 0.7%[39] - The company’s total current liabilities remained relatively stable, decreasing slightly from $7,749 million in 2024 to $7,656 million in 2025, a decline of about 1.2%[39] - The company’s goodwill increased from $1,548 million in 2024 to $1,695 million in 2025, reflecting an increase of approximately 9.5%[39] - The company’s total shareholders' equity (deficit) decreased from $(4,785) million in 2024 to $(5,346) million in 2025, a decline of approximately 11.7%[39] Future Outlook - The company plans for 2026 net sales of $15.0 to $15.3 billion, with organic sales expected to grow low to mid-single digits[20] - The company anticipates continued growth in organic sales, adjusted operating profit, and adjusted EPS in the upcoming quarters[24] - Otis is focused on enhancing its operational performance through strategic initiatives and potential acquisitions[25] - The company acknowledges various risks, including economic conditions and geopolitical factors, that may impact future performance[26] Tax and Income - The effective tax rate for the year ended December 31, 2025 was 24.8%, compared to 15.0% in 2024, reflecting an increase due to adjustments[31] - Net income from operations for the year ended December 31, 2025, was $1,455 million, down from $1,734 million in 2024, representing a decrease of about 16.1%[40] - The company paid dividends of $647 million in 2025, compared to $606 million in 2024, marking an increase of about 6.8%[40] Profit Margins - Operating profit for Q4 2025 was $589 million, up from $531 million in Q4 2024, reflecting a 10.9% increase[28] - The total operating profit margin for Q4 2025 was reported at 15.5%, compared to 14.4% in Q4 2024[30] - The service segment's operating profit for the year was $2,374 million, an increase of 8.6% from $2,185 million in 2024[37] - The new equipment segment's operating profit for the year was $240 million, down from $329 million in 2024, a decrease of 27%[37]