01—Abstract
Summary
Summary of the 8-K filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Otis Worldwide Corporation (NYSE: OTIS) reported first quarter 2024 results on April 24, 2024, with net sales of $3.4 billiona ($3,437 million), up 2.7% year over year, and organic sales growth of 3.8%.
GAAP operating profit rose $31 million to $544 millionb, with GAAP operating profit margin expanding 50 basis points to 15.8%. GAAP EPS increased 8.9% to $0.86, and adjusted EPS increased 10.0% to $0.88. Service was the main driver: Service net sales rose 5.8% (organic up 6.5%), while New Equipment net sales fell 2.1% (organic roughly flat, at (0.5)%).
New Equipment orders were down 10% at constant currency, while Modernization orders were up 13% and Modernization backlog was up 14%. Cash flow was weaker than the prior year. Cash flow from operations was $171 millionc, down $107 million, and adjusted free cash flow was $155 million, down $98 million, driven by changes in working capital.
The company repurchased $300 milliond of common stock in the quarter and, as of the filing, had raised its full-year share repurchase target to $1 billion. Otis updated its 2024 outlook, raising adjusted EPS to $3.83 to $3.90 (up 8 to 10%) and guiding to net sales of $14.5 to $14.8 billion, organic sales growth of 3 to 5%, and adjusted free cash flow of approximately $1.6 billion. Management also raised the quarterly dividend by 14.7%.
02—Key points
Key Highlights
- Net sales of $3,437 million, up 2.7% year over year; organic sales up 3.8%, with a 1.2% foreign exchange headwind.
- GAAP EPS of $0.86, up 8.9%; adjusted EPS of $0.88, up 10.0%.
- Service net sales of $2,157 million, up 5.8% (organic up 6.5%); Service segment operating profit margin expanded 70 basis points to 24.2%.
- New Equipment net sales of $1,280 million, down 2.1%; orders down 10% at constant currency, and backlog down 2% at actual currency.
- Modernization orders up 13% and backlog up 14%; maintenance portfolio units increased 4.1%.
- Cash flow from operations of $171 million (down $107 million) and adjusted free cash flow of $155 million (down $98 million), reflecting working capital changes.
- Full-year outlook raised: adjusted EPS of $3.83 to $3.90, and share repurchase target increased to $1 billion; quarterly dividend raised 14.7%.
03—Questions
Frequently Asked Questions
How did Otis perform in the first quarter of 2024?
Net sales were $3,437 million, up 2.7% year over year, and organic sales grew 3.8%. GAAP operating profit rose $31 million to $544 million, and GAAP operating profit margin expanded 50 basis points to 15.8%. GAAP EPS was $0.86, up 8.9%, and adjusted EPS was $0.88, up 10.0%.
Why did New Equipment results weaken while Service grew?
New Equipment net sales fell 2.1% (organic roughly flat), with strong Americas performance offset by a decline in China. New Equipment orders were down 10% at constant currency, with declines in the Americas and China partly offset by growth in EMEA and Asia Pacific. Service net sales rose 5.8% (organic up 6.5%), driven by higher volume and favorable pricing and productivity.
What changed in Otis's 2024 outlook?
Otis increased its adjusted EPS outlook to $3.83 to $3.90, up 8 to 10%. It also guided to net sales of $14.5 to $14.8 billion, organic sales growth of 3 to 5%, adjusted operating profit of $2.40 to $2.45 billion, and adjusted free cash flow of approximately $1.6 billion.
How did Otis return capital to shareholders?
Otis repurchased $300 million of common stock in the first quarter and paid $138 million in dividends on common stock. It raised its full-year share repurchase target to $1 billion and increased the quarterly dividend by 14.7%.
Why did cash flow decline in the quarter?
Cash flow from operations was $171 million, down $107 million from the prior year, and adjusted free cash flow was $155 million, down $98 million. The filing attributes the decline to changes in working capital, which more than offset an increase in net income.
04—Continue