Otis Authorizes $2 Billion for Share Repurchase

Rhea-AI Summary

Otis Worldwide (NYSE: OTIS) has announced a new $2 billion share repurchase program, effective January 16, 2025. The company's Board of Directors has simultaneously cancelled the remaining approximately $100 million authorized under the previous program from December 1, 2022.

The repurchases will be executed at the company's discretion through various means, including open market transactions and private negotiations, subject to market conditions. Otis, as the world's leading elevator and escalator company, serves approximately 2.3 million customer units worldwide and moves 2.3 billion people daily. The company employs 71,000 people globally, including 42,000 field professionals, operating in more than 200 countries and territories.

Positive

• Authorization of a substantial $2 billion share repurchase program
• Large service portfolio with 2.3 million customer units worldwide
• Strong global presence across 200+ countries and territories
• Significant daily customer reach of 2.3 billion people

Negative

• Cancellation of remaining $100 million from previous repurchase program

Insights

Financial Analyst

The $2 billion share repurchase authorization is a substantial commitment, representing approximately 5.4% of Otis's current market capitalization. This strategic move signals strong confidence in the company's financial health and future prospects. The timing is particularly noteworthy as it follows the near completion of their previous buyback program, with only $100 million remaining from the 2022 authorization.

Share repurchases typically support stock price appreciation by reducing the number of outstanding shares, thereby increasing earnings per share (EPS). For Otis, with its stable service-based revenue model and high recurring income from maintenance contracts, this buyback program is well-supported by the company's consistent cash flow generation. The elevator maintenance business provides predictable revenue streams, as their massive installed base of 2.3 million units requires regular servicing regardless of economic conditions.

The flexibility in execution method - whether through open market purchases, private transactions, or other means - allows management to optimize the timing and pricing of repurchases. This strategic optionality is particularly valuable in today's market environment where stock price volatility can create attractive entry points for buybacks.

Market Research Analyst

This buyback announcement comes at a strategic time in the elevator industry cycle. With global urbanization trends continuing and aging infrastructure requiring modernization, Otis's position as the industry leader with 71,000 employees across 200+ countries positions them well to capitalize on these secular trends. The service portfolio of 2.3 million units creates a robust moat, generating steady cash flows that support this capital return initiative.

The cancellation of the remaining $100 million from the previous program to initiate a larger $2 billion authorization demonstrates management's confidence in future cash flow generation. For context, this is one of the larger buyback programs in the industrial services sector, reflecting both the company's strong market position and the defensive nature of their business model. The daily movement of 2.3 billion people underscores the critical nature of their services and the stability of their revenue streams.

FARMINGTON, Conn., Jan. 16, 2025 /PRNewswire/ -- Otis Worldwide Corporation (NYSE: OTIS) today announced that its Board of Directors has authorized the repurchase of $2 Billion of Common Stock under a share repurchase program, effective January 16, 2025. In conjunction with the new authorization, the Board of Directors cancelled the remaining approximately $100 million authorized under the prior program, approved December 1, 2022. Share repurchases may take place from time to time, subject to market conditions and at the company's discretion, in the open market, through privately negotiated transactions or other means.

About Otis
Otis is the world's leading elevator and escalator manufacturing, installation and service company. We move 2.3 billion people a day and maintain approximately 2.3 million customer units worldwide, the industry's largest Service portfolio. Headquartered in Connecticut, USA, Otis is 71,000 people strong, including 42,000 field professionals, all committed to meeting the diverse needs of our customers and passengers in more than 200 countries and territories worldwide. To learn more, visit www.otis.com and follow us on LinkedIn, Instagram, and Facebook @OtisElevatorCo.

Cautionary Statement

This release includes statements related to anticipated earnings, cash flow and dividends that constitute "forward-looking statements" under the securities laws. All forward-looking statements involve risks, uncertainties and assumptions that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Otis is not obligated to purchase any shares under this authorization and may discontinue share repurchases at any time or periodically without notice. The timing, amount and form of future share repurchases under this authorization, if any, are subject to a number of risks and uncertainties. Risks and uncertainties include: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, future availability of credit and factors that may affect such availability or costs, levels of end market demand in construction, pandemic health issues, natural disasters and the financial condition of Otis' customers and suppliers; (2) risks associated with indebtedness; (3) challenges in the development and production of new products and services; and (4) the effect of changes in laws and regulations, political conditions and geopolitical conflicts in countries in which we operate and other factors beyond our control. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary from those stated in forward-looking statements, see the reports of Otis on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Otis assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Media Contact:	Investor Relations Contact:
Katy Padgett	Rob Quartaro
+1-860-674-3047	+1-860-676-6011
kathleen.padgett@otis.com	investorrelations@otis.com

View original content:https://www.prnewswire.com/news-releases/otis-authorizes-2-billion-for-share-repurchase-302353698.html

SOURCE Otis Worldwide Corporation

FAQ

What is the size of Otis's new share repurchase program announced in January 2025?

Otis announced a $2 billion share repurchase program, effective January 16, 2025.

How many customer units does Otis (OTIS) maintain worldwide?

Otis maintains approximately 2.3 million customer units worldwide, representing the industry's largest Service portfolio.

How many people does Otis (OTIS) transport daily through its elevators and escalators?

Otis moves 2.3 billion people daily through its elevator and escalator systems.

What happened to Otis's previous share repurchase program from December 2022?

The remaining approximately $100 million authorized under the December 1, 2022 program was cancelled in conjunction with the new $2 billion authorization.

How many employees does Otis (OTIS) have globally as of 2025?

Otis employs 71,000 people globally, including 42,000 field professionals.