01—Abstract
Summary
Summary of the 8-K filed January 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Otis Worldwide Corporation (NYSE: OTIS) reported fourth quarter and full year 2023 results on January 31, 2024, as furnished in Exhibit 99, a press release.
For the full year, net sales were $14.2 billiona, up 3.8% reported and 5.6% organic. GAAP EPS rose 14.5% to $3.39 and adjusted EPS rose 11.7% to $3.54. GAAP operating profit was $2,186 million, and GAAP operating profit margin expanded 50 basis points to 15.4%.
Full-year GAAP cash flow from operations was $1.6 billionb, free cash flow was $1.49 billion, and adjusted free cash flow was $1.53 billion. Fourth quarter net sales were $3.62 billion, up 5.3%, with organic sales up 3.8%. Service organic sales grew 6.8% and New Equipment organic sales were roughly flat.
New Equipment orders rose 3% at constant currency, and Modernization backlog grew 15%. Otis distributed approximately $1.35 billionc to shareholders in 2023, including $800 million through share repurchases. For 2024, Otis expects net sales of $14.5 to $14.8 billion, organic sales growth of 3 to 5% (Service up 6 to 7%, New Equipment approximately flat), adjusted EPS of $3.80 to $3.90, and adjusted free cash flow of approximately $1.6 billion.
02—Key points
Key Highlights
- Full-year 2023 net sales of $14,209 million, up 3.8% reported and 5.6% organic; Service organic growth of 7.7% for the year.
- Q4 2023 GAAP EPS of $0.79, up 11.3%; adjusted EPS of $0.87, up 16.0%.
- Full-year GAAP EPS of $3.39, up 14.5%; adjusted EPS of $3.54, up 11.7%.
- Q4 New Equipment orders up 3% and backlog up 2%; Modernization orders up 11% and backlog up 15%.
- Full-year free cash flow of $1,489 million and adjusted free cash flow of $1,534 million; cash from operations of $1,627 million.
- Returned approximately $1.35 billion to shareholders in 2023, including $800 million in share repurchases.
- 2024 outlook: organic sales up 3 to 5%, adjusted EPS of $3.80 to $3.90, and adjusted free cash flow of approximately $1.6 billion.
03—Questions
Frequently Asked Questions
How did Otis perform in the fourth quarter of 2023?
Net sales were $3,620 million, up 5.3% year over year, with organic sales up 3.8%. GAAP operating profit was $522 million, and adjusted operating profit was $566 million. Service organic sales grew 6.8%, while New Equipment organic sales were roughly flat.
What is Otis's 2024 guidance?
Otis expects net sales of $14.5 to $14.8 billion, up 2 to 4%, and organic sales growth of 3 to 5%. Service organic sales are expected to rise 6 to 7%, and New Equipment organic sales are expected to be approximately flat. Adjusted operating profit is guided to $2.40 to $2.45 billion, and adjusted EPS to $3.80 to $3.90.
What drove the increase in adjusted EPS?
In the fourth quarter, adjusted EPS grew 16.0% to $0.87, aided by strong operational performance, a lower effective tax rate, and a lower share count, which together contributed 12 cents of adjusted EPS growth. For the full year, growth was driven by operating profit gains, a lower effective tax rate, lower noncontrolling interest, and a lower share count.
How much cash did Otis generate and return to shareholders in 2023?
Cash flow from operations was $1,627 million, free cash flow was $1,489 million, and adjusted free cash flow was $1,534 million. Otis distributed approximately $1.35 billion to shareholders, including $800 million through share repurchases, according to CEO Judy Marks.
What were the restructuring charges related to UpLift?
The UpLift restructuring charge was $25 million in the fourth quarter and $25 million for the full year 2023. UpLift transformation costs were $12 million in the fourth quarter and $16 million for the full year.
04—Continue