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Otis Worldwide 8-K Report, Financial Results (Oct 30, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed October 30, 2024
Period End
October 30, 2024
Security
OTIS
In the record · 2020–202610-K610-Q218-K63

OTIS filed 6 annual reports (10-K), 21 quarterly reports (10-Q) and 63 current reports (8-K) between 2020 and 2026.

  1. Material agreement8-K · Nov ’21Nov ’21
  2. Leadership change8-K · Oct ’23Oct ’23
  3. Leadership change8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Otis Worldwide Corporation reported third quarter 2024 results in a press release furnished as Exhibit 99 to this Form 8-K.

Net sales were $3,548 milliona, up 0.7% versus the prior year, with organic sales up 1.2%. Service drove results: Service net sales rose 7.2% and Service organic sales rose 7.7%, while New Equipment net sales fell 8.8%, with a greater than 20% decline in China. GAAP operating profit was $363 million, down $208 million, driven primarily by separation-related adjustments tied to non-recurring tax items.

Adjusted operating profit was $599 millionb, up $4 million at actual currency. GAAP diluted EPS rose 47.3% to $1.34, primarily from a non-recurring tax benefit and related interest income following a favorable German tax litigation ruling in August 2024. Adjusted EPS rose 1.1% to $0.96.

Cash flow from operations was $394 millionc in the quarter and adjusted free cash flow was $381 million. Share repurchases were $200 million in the quarter and $800 million year to date. Maintenance portfolio units increased 4.2% and modernization backlog rose 14% at actual currency.

New Equipment backlog declined 1% at actual currency. Otis revised its full-year 2024 outlook to net sales of about $14.2 billiond, organic sales growth of about 1.5%, adjusted operating profit of about $2.375 billion, adjusted EPS of about $3.85, and adjusted free cash flow of approximately $1.4 billion to $1.5 billion. Organic Service sales are expected to rise about 6.5%, while organic New Equipment sales are expected to fall in the mid to high single digits.

02—Key points

Key Highlights

  1. Net sales of $3,548 million rose 0.7% year over year, with organic sales up 1.2%, driven by Service.
  2. Service net sales increased 7.2% and organic Service sales increased 7.7%, with modernization organic sales up 13.7%.
  3. New Equipment net sales fell 8.8%, with a greater than 20% decline in China and segment operating profit down $20 million.
  4. GAAP EPS rose 47.3% to $1.34 on a non-recurring tax benefit tied to a favorable German tax litigation ruling; adjusted EPS rose 1.1% to $0.96.
  5. GAAP operating profit fell $208 million to $363 million, mainly due to separation-related adjustments; adjusted operating profit rose $4 million to $599 million.
  6. Operating cash flow was $394 million and adjusted free cash flow was $381 million; share repurchases totaled $200 million in the quarter and $800 million year to date.
  7. Full-year 2024 outlook revised to adjusted EPS of about $3.85 and adjusted free cash flow of approximately $1.4 billion to $1.5 billion.

03—Questions

Frequently Asked Questions

  1. Why did GAAP EPS rise so much while adjusted EPS grew only 1.1%?

    GAAP diluted EPS of $1.34 was primarily driven by a non-recurring tax benefit and related interest income from a favorable German tax litigation ruling received in August 2024. Adjusted EPS of $0.96 excludes these non-recurring tax items and separation-related adjustments, and rose 1.1% on solid operational performance and a lower share count.

  2. How did the Service and New Equipment segments perform?

    Service net sales rose 7.2% to $2,239 million, with segment operating profit of $555 million and a 24.8% margin. New Equipment net sales fell 8.8% to $1,309 million, with segment operating profit of $84 million and a 6.4% margin, reflecting lower volume and unfavorable mix. New Equipment orders were down 3% at constant currency.

  3. Why did GAAP operating profit decline by $208 million?

    GAAP operating profit of $363 million decreased $208 million, driven primarily by separation-related adjustments based on non-recurring tax items. These separation-related adjustments were $193 million in the quarter and represent amounts due to RTX Corporation under the Tax Matters Agreement.

  4. What is the revised full-year 2024 outlook?

    Otis expects net sales of about $14.2 billion, organic sales growth of about 1.5%, adjusted operating profit of about $2.375 billion, adjusted EPS of about $3.85, and adjusted free cash flow of approximately $1.4 billion to $1.5 billion. Organic Service sales are expected to rise about 6.5%, and organic New Equipment sales are expected to decline in the mid to high single digits.

04—Continue

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