Otis Worldwide Q1 Earnings Beat Estimates, Sales Miss, Stock Down

Core Insights - Otis Worldwide Corporation reported mixed results for Q1 2025, with adjusted earnings exceeding estimates while net sales fell short [1][5] - The company experienced a year-over-year decline in net sales but an increase in adjusted earnings [1] Financial Performance - Adjusted earnings were 92 cents per share, surpassing the Zacks Consensus Estimate of 91 cents by 1.1% and up 5% from 88 cents in the previous year [5] - Net sales totaled $3.35 billion, missing the consensus mark of $3.41 billion by 1.7% and declining 3% year-over-year, with organic sales remaining flat [5] - Adjusted operating margin expanded by 40 basis points to 16.7%, driven by favorable performance in the Service segment [6] Segment Analysis - New Equipment segment net sales were $1.16 billion, down 9% year-over-year, with organic sales declining 7% [7] - Service segment net sales increased 1% year-over-year to $2.19 billion, with organic maintenance and repair sales up 3% and modernization sales up 10% [10] - The backlog for New Equipment decreased by 4% at actual currency and 3% at constant currency [8] Strategic Outlook - Otis aims to focus on innovation and strategic initiatives to enhance growth momentum and shareholder value [3] - The company announced a dividend increase for the fifth consecutive year, reflecting confidence in its strategy [3] Financial Position - Cash and cash equivalents stood at $1.92 billion as of March 31, 2025, down from $2.3 billion at the end of 2024 [13] - Long-term debt decreased to $6.92 billion from $6.97 billion at the end of 2024 [13] - Adjusted free cash flow for the quarter was $186 million, up from $155 million a year ago [13] 2025 Guidance - Otis expects net sales between $14.6 billion and $14.8 billion, indicating approximately 3-4% growth [14] - Adjusted EPS is anticipated to be between $4.00 and $4.10, reflecting a year-over-year growth of 4-7% [15]