Otis Worldwide Earnings Miss Estimates in Q4, Stock Price Decreases

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$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$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$4.00 and $4.10, indicating a year-over-year growth of 4-7% [14]