OTIS REPORTS FOURTH QUARTER AND FULL YEAR 2024 RESULTS

Rhea-AI Summary

Otis Worldwide (NYSE:OTIS) reported strong Q4 and full-year 2024 results, with Q4 net sales increasing 1.5% and organic sales up 1.9%. The growth was primarily driven by Service performance, with Service sales rising 7.6% and organic Service sales up 7.8%.

For full-year 2024, the company achieved net sales of $14.3 billion, representing 0.4% net sales growth and 1.4% organic growth. GAAP EPS increased 20.1% to $4.07, while adjusted EPS rose 8.2% to $3.83. The maintenance portfolio expanded by 4.2% to approximately 2.4 million units, and modernization orders increased by 18% with backlog up 10% (13% at constant currency).

Looking ahead to 2025, Otis projects organic sales growth of 2-4%, adjusted EPS of $4.00-$4.10, and adjusted free cash flow of approximately $1.6 billion.

Positive

• Q4 Service sales growth of 7.6% with organic Service sales up 7.8%
• Full-year GAAP EPS increased 20.1% to $4.07
• Maintenance portfolio grew 4.2% to 2.4 million units
• Modernization orders up 18% with backlog growth of 13% at constant currency
• Strong cash flow generation with $1.6 billion in adjusted free cash flow
• $1.0 billion in share repurchases completed in 2024

Negative

• Modest overall net sales growth of only 0.4% for full-year 2024
• Q4 net sales growth to 1.5%

Insights

Financial Analyst

Otis's Q4 and full-year 2024 results reveal a compelling transformation toward a more profitable service-centric business model. The 7.8% organic growth in Service revenue during Q4, coupled with a 4.2% expansion in maintenance portfolio to 2.4 million units, demonstrates successful execution of their high-margin service strategy.

The 18% surge in modernization orders and 13% constant currency backlog growth are particularly significant as they create a robust pipeline for future service revenues. This modernization momentum typically yields 15-20% higher margins compared to new equipment installations, setting up stronger profitability trends for 2025-2026.

The company's financial health is exemplified by the strong free cash flow of $1.6B and strategic allocation of $1.0B to share repurchases. The 2025 outlook of 2-4% organic growth and projected EPS of $4.00-4.10 suggests continued momentum, supported by:

• Recurring service revenue expansion driving margin improvement
• Modernization backlog providing visibility into future growth
• Strong cash generation supporting shareholder returns
• Portfolio shift toward higher-margin business segments

The results validate Otis's strategic "flywheel" approach, where new equipment installations feed into service contracts, which then lead to modernization opportunities - creating a self-reinforcing cycle of growth in their most profitable segments.

Otis delivers solid fourth quarter and full year results; announces 2025 outlook with sustained earnings growth driven by continued Service momentum

Fourth quarter 2024

• Net sales up 1.5% and organic sales up 1.9%, driven by Service sales up 7.6% and Service organic sales up 7.8%
• GAAP EPS up 6.3% and adjusted EPS up 6.9% with continued margin expansion
• Maintenance portfolio units increased 4.2%
• Modernization orders up 18%; backlog up 10%, 13% at constant currency
• GAAP cash flow from operations of $690 million; adjusted free cash flow of $682 million; share repurchases of $200 million

Full year 2024

• Net sales up 0.4% and organic sales up 1.4%, driven by Service sales up 5.9% and Service organic sales up 6.8%
• GAAP EPS up 20.1% and adjusted EPS up 8.2%
• GAAP cash flow from operations of $1.6 billion, adjusted free cash flow of $1.6 billion; share repurchases of $1.0 billion

Outlook for full year 2025*: Organic sales up 2 to 4%, adjusted earnings per share of $4.00 to $4.10 and adjusted free cash flow of approximately $1.6 billion

FARMINGTON, Conn., Jan. 29, 2025 /PRNewswire/ -- Otis Worldwide Corporation (NYSE:OTIS) reported full year net sales of $14.3 billion with 1.4% organic growth. GAAP earnings per share (EPS) increased 20.1% to $4.07 and adjusted EPS increased 8.2% to $3.83.

"Otis finished 2024 with solid fourth quarter results including high single digit adjusted EPS growth, our highest cash flow since spin, and modernization orders up 18%," said Chair, CEO & President Judy Marks. "For the full year, we delivered organic sales growth and strong adjusted margin expansion for the fourth consecutive year. Our industry-leading maintenance portfolio grew 4.2% to approximately 2.4 million units, and our modernization backlog grew low teens. The quarter and the year show that our strategic New Equipment, Service and modernization flywheel is working with more growth in the higher margin elements of the business. As in 2023 and 2024, we enter 2025 with continued strong momentum."

*Note: When we provide outlook for organic sales, adjusted operating profit, adjusted EPS, adjusted effective tax rate and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

Key Figures

($ millions, except per share amounts)	Quarter Ended December 31,								Year Ended December 31,
	2024		2023		Y/Y		Y/Y (CFX)		2024		2023		Y/Y		Y/Y (CFX)
Net sales	$   3,675		$   3,620		1.5 %		2.3 %		$ 14,261		$ 14,209		0.4 %		1.6 %
Organic sales growth							1.9 %								1.4 %
GAAP
Operating profit	$       531		$       522		$           9				$   2,008		$   2,186		$   (178)
Operating profit margin	14.4 %		14.4 %		0 bps				14.1 %		15.4 %		(130) bps
Net income	$       337		$       323		4.3 %				$   1,645		$   1,406		17.0 %
Earnings per share	$      0.84		$      0.79		6.3 %				$     4.07		$     3.39		20.1 %
Adjusted non-GAAP comparison
Operating profit	$       583		$       566		$         17		$         22		$   2,356		$   2,269		$         87		$         118
Operating profit margin	15.9 %		15.6 %		30 bps				16.5 %		16.0 %		50 bps
Net income	$       374		$       356		5.1 %				$   1,548		$   1,469		5.4 %
Earnings per share	$      0.93		$      0.87		6.9 %				$     3.83		$     3.54		8.2 %

Fourth quarter net sales of $3.7 billion increased 1.5% versus the prior year, driven by Service.

Fourth quarter GAAP operating profit of $531 million increased $9 million and adjusted operating profit of $583 million increased $17 million at actual currency and $22 million at constant currency, driven by Service. GAAP operating profit margin was flat versus the prior year and adjusted operating profit margin expanded 30 basis points to 15.9%, driven by favorable Service segment performance and mix.

GAAP EPS of $0.84 increased 6.3% compared to the prior year and adjusted EPS increased 6.9% to $0.93 due to solid operational performance and a lower share count.

Full year net sales of $14.3 billion increased 0.4%, with a 1.4% increase in organic sales, driven by Service. GAAP operating profit of $2.0 billion decreased $178 million driven primarily by separation-related adjustments based on non-recurring tax items. Adjusted operating profit of $2.4 billion increased $87 million at actual currency and $118 million at constant currency, driven by Service. GAAP operating profit margin contracted 130 basis points to 14.1%, and adjusted operating profit margin expanded 50 basis points to 16.5%, driven by favorable Service segment performance and mix. GAAP EPS of $4.07 increased 20.1% compared to the prior year primarily driven by non-recurring tax benefit and related interest income, and adjusted EPS increased 8.2% to $3.83 due to solid operating profit growth, a reduction in the effective tax rate, a lower share count, and lower noncontrolling interest.

New Equipment

		Quarter Ended December 31,								Year Ended December 31,
($ millions)		2024		2023		Y/Y		Y/Y (CFX)		2024		2023		Y/Y		Y/Y (CFX)
Net sales		$   1,357		$   1,466		(7.4) %		(6.7) %		$   5,367		$   5,812		(7.7) %		(6.3) %
Organic sales								(6.8) %								(6.4) %
Segment operating profit		$        64		$        89		$     (25)		$    (24)		$      329		$      381		$     (52)		$    (44)
Segment operating profit margin		4.7 %		6.1 %		(140) bps				6.1 %		6.6 %		(50) bps

In the fourth quarter, net sales of $1.4 billion decreased 7.4% versus the prior year, with mid-single digit organic sales growth in the Americas, EMEA, and Asia Pacific more than offset by a greater than 20% decline in China.

Segment operating profit of $64 million decreased $25 million at actual currency and $24 million at constant currency from the impacts of lower volume and unfavorable mix, partially offset by price, productivity including the benefits from UpLift, and commodity tailwinds. Segment operating profit margin contracted 140 basis points to 4.7%.

New Equipment orders were down 4% at constant currency with greater than 20% growth in Asia Pacific and mid-teens growth in the Americas more than offset by high single digit decline in EMEA and a greater than 20% decline in China. Full year New Equipment orders were down 8% with low teens growth in Asia Pacific and mid-single digit growth in EMEA more than offset by mid-single digit decline in the Americas and a greater than 20% decline in China. New Equipment backlog decreased 7% at actual currency and 4% at constant currency.

Full year net sales of $5.4 billion decreased 7.7% versus the prior year, with mid-single digit organic sales growth in the Americas and Asia Pacific, and low single digit organic sales growth in EMEA more than offset by a greater than 20% decline in China. Segment operating profit of $329 million decreased $52 million at actual currency and $44 million at constant currency from the impacts of lower volume and unfavorable mix, partially offset by price, productivity including the benefits from UpLift, and commodity tailwinds. Segment operating profit margin contracted 50 basis points to 6.1%.

Service

		Quarter Ended December 31,								Year Ended December 31,
($ millions)		2024		2023		Y/Y		Y/Y (CFX)		2024		2023		Y/Y		Y/Y (CFX)
Net sales		$   2,318		$   2,154		7.6 %		8.3 %		$   8,894		$   8,397		5.9 %		7.1 %
Organic sales								7.8 %								6.8 %
Segment operating profit		$      569		$      518		$        51		$      54		$   2,185		$   2,014		$      171		$   192
Segment operating profit margin		24.5 %		24.0 %		50 bps				24.6 %		24.0 %		60 bps

In the fourth quarter, net sales of $2.3 billion increased 7.6% versus the prior year, with a 7.8% increase in organic sales. Organic maintenance and repair sales increased 5.6% and organic modernization sales increased 17.5%.

Segment operating profit of $569 million increased $51 million at actual currency and $54 million at constant currency due to higher volume, favorable pricing, and productivity including the benefits from UpLift, partially offset by annual wage inflation. Segment operating profit margin of 24.5% expanded 50 basis points.

Full year net sales of $8.9 billion increased 5.9% versus the prior year, with a 6.8% increase in organic sales. Organic maintenance and repair sales increased 5.7% and organic modernization sales increased 11.7%. Segment operating profit of $2.2 billion increased $171 million at actual currency and $192 million at constant currency due to higher volume, favorable pricing, and productivity including the benefits from UpLift, partially offset by annual wage inflation. Segment operating profit margin expanded 60 basis points to 24.6%.

Cash flow

		Quarter Ended December 31,						Year Ended December 31,
($ millions)		2024		2023		Y/Y		2024		2023		Y/Y
Cash flow from operations		$            690		$            597		$               93		$         1,563		$         1,627		$             (64)
Free cash flow		$            651		$            555		$               96		$         1,437		$         1,489		$             (52)
Adjusted free cash flow		$            682		$            573		$             109		$         1,571		$         1,534		$               37

Fourth quarter cash flow changes were driven by an increase in net income and the benefit from working capital reduction.

Full year cash flow changes were driven by an increase in net income, offset by changes in working capital. Working capital includes the benefit of accounts receivable net of accounts payable.

2025 Outlook*

Otis is announcing its full year outlook:

• Net sales of $14.1 to $14.4 billion, down 1 to up 1%
• Organic sales up 2 to 4%
  • Organic New Equipment sales down 1 to 4%
  • Organic Service sales up 6 to 7%
• Adjusted operating profit of $2.4 to $2.5 billion, up $120 to $150 million at constant currency; up $55 to $105 million at actual currency
• Adjusted EPS of $4.00 to $4.10, up 4 to 7%; adjusted effective tax rate of approximately 24.8%
• Adjusted free cash flow of approximately $1.6 billion

Otis continues strong execution on its UpLift program and is increasing expected run-rate savings to $200 million by the second half of 2025. Otis also launches its China transformation program to adjust its operating model to adapt to changing market conditions, with expected run-rate savings of $30 million by year-end 2025.

*Note: When we provide outlook for organic sales, adjusted operating profit, adjusted EPS, adjusted effective tax rate and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use and Definitions of Non-GAAP Financial Measures" below for additional information.

About Otis

Otis is the world's leading elevator and escalator manufacturing, installation and service company. We move 2.4 billion people a day and maintain approximately 2.4 million customer units worldwide, the industry's largest Service portfolio. Headquartered in Connecticut, USA, Otis is 72,000 people strong, including 44,000 field professionals, all committed to manufacturing, installing and maintaining products to meet the diverse needs of our customers and passengers in more than 200 countries and territories worldwide. For more information, visit www.otis.com and follow us on LinkedIn, Instagram, and Facebook @OtisElevatorCo.

Use and Definitions of Non-GAAP Financial Measures

Otis Worldwide Corporation ("Otis") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures (referenced in this press release) to the corresponding amounts prepared in accordance with GAAP appears in the attached tables. These tables provide additional information as to the items and amounts that have been excluded from the adjusted measures. Below are our non-GAAP financial measures:

Non-GAAP measure	Definition
Organic sales	Represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature ("other significant items"). Management believes organic sales is a useful measure in providing period-to-period comparisons of the results of the Company's ongoing operational performance.
Adjusted selling, general and administrative ("SG&A") expense	Represents SG&A expense (a GAAP measure), excluding restructuring costs and other significant items.
Adjusted operating profit	Represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items.
Adjusted net interest expense	Represents net interest expense (a GAAP measure), adjusted for the impacts of non-recurring acquisition related financing costs and related net interest expense pending the completion of a transaction and other significant items.
Adjusted noncontrolling interest in earnings	Represents noncontrolling interest in earnings (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.
Adjusted net income	Represents net income attributable to Otis Worldwide Corporation (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.
Adjusted earnings per share ("EPS")	Represents diluted earnings per share attributable to common shareholders (a GAAP measure), adjusted for the per share impact of restructuring and other significant items, including related tax effects.
Adjusted effective tax rate	Represents the effective tax rate (a GAAP measure) adjusted for other significant items and the tax impact of restructuring costs and other significant items.
Constant currency	GAAP financial results include the impact of changes in foreign currency exchange rates ("AFX"). We use the non-GAAP measure "at constant currency" or "CFX" to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.
Free cash flow	Represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Otis' ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.
Adjusted free cash flow	Represents cash flow from operations (a GAAP measure) less capital expenditures, adjusted to exclude certain items management believes affect the comparability of operating results. Management believes adjusted free cash flow is a useful measure of liquidity that provides investors additional information regarding the Company's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Adjusted free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.

Management believes that organic sales, adjusted SG&A, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted EPS and the adjusted effective tax rate are useful measures in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

When we provide our expectations for adjusted net sales, organic sales, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted effective tax rate, adjusted EPS, free cash flow and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, the effective tax rate, net sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Cautionary Statement

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for Otis' future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "medium-term," "near-term," "confident," "goals" and other words of similar meaning in connection with a discussion of future operating or financial performance. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, dividends, share repurchases, tax rates, research & development spend, restructuring or transformation actions (including UpLift and related reorganization and outsourcing activities), credit ratings, net indebtedness and other measures of financial performance or potential future plans, strategies or transactions, or statements that relate to climate change and our intent to achieve certain environmental, social and governance targets or goals, including operational impacts and costs associated therewith, and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, Otis claims the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate and any changes therein, including financial market conditions, fluctuations in commodity prices and other inflationary pressures, interest rates and foreign currency exchange rates, levels of end market demand in construction, pandemic health issues, natural disasters, whether as a result of climate change or otherwise, and the financial condition of Otis' customers and suppliers; (2) the effect of changes in political conditions in the U.S., including in connection with the new administration's policies and priorities, or otherwise, and other countries in which Otis and its businesses operate, including the effects of the ongoing conflict between Russia and Ukraine, the conflicts in the Middle East, and tensions between the U.S. and China, on general market conditions, commodity costs, global trade policies and related sanctions, export controls and tariffs, and currency exchange rates in the near term and beyond; (3) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (4) future levels of indebtedness, capital spending and research and development spending; (5) future availability of credit and factors that may affect such availability or costs thereof, including credit market conditions and Otis' capital structure; (6) the timing and scope of future repurchases of Otis' common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (7) fluctuations in prices and delays and disruption in delivery of materials and services from suppliers, whether as a result of changes in general economic conditions, geopolitical conflicts or otherwise; (8) cost reduction or containment actions, restructuring or transformation costs and related savings and other consequences thereof, including with respect to UpLift and related impacts of reorganization and outsourcing activities and change management; (9) new business and investment opportunities; (10) the outcome of legal proceedings, investigations and other contingencies; (11) pension plan assumptions and future contributions; (12) the impact of the negotiation of collective bargaining agreements and labor disputes, labor actions, including strikes or work stoppages, and labor inflation in the markets in which Otis and its businesses operate globally; (13) the effect of changes in tax, environmental, regulatory (including among other things import/export, tariffs, climate change or other ESG related legal and regulatory changes) and other laws and regulations in the U.S., including in connection with the new administration's policies and priorities, and other countries in which Otis and its businesses operate; (14) the ability of Otis to retain and hire key personnel; (15) the scope, nature, impact or timing of acquisition and divestiture activity, the integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (16) the determination by the Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions in connection with the separation (the "Separation") of Otis and Carrier Global Corporation ("Carrier") from United Technologies Corporation (now known as RTX Corporation ("RTX"); and (17) our obligations and disputes that have or may hereafter arise under the agreements we entered into with RTX and Carrier in connection with the Separation. 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 Otis' registration statement on Form 10 and 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.

 

Otis Worldwide Corporation

Condensed Consolidated Statements of Operations

			Quarter Ended December 31,				Year Ended December 31,
			(Unaudited)				(Unaudited)
(amounts in millions, except per share amounts)			2024		2023		2024		2023
Net Sales			$           3,675		$           3,620		$         14,261		$         14,209
Costs and Expenses:
	Cost of products and services sold		2,603		2,552		10,004		10,016
	Research and development		37		37		152		144
	Selling, general and administrative		495		498		1,861		1,884
	Total Costs and Expenses		3,135		3,087		12,017		12,044
Other income (expense), net			(9)		(11)		(236)		21
Operating profit			531		522		2,008		2,186
	Non-service pension cost (benefit)		—		4		—		5
	Interest expense (income), net		48		41		(31)		150
Net income before income taxes			483		477		2,039		2,031
	Income tax expense		130		133		305		533
Net income			353		344		1,734		1,498
	Less: Noncontrolling interest in subsidiaries' earnings		16		21		89		92
Net income attributable to Otis Worldwide Corporation			$               337		$               323		$           1,645		$           1,406
Earnings Per Share of Common Stock:
	Basic		$              0.85		$              0.79		$              4.10		$              3.42
	Diluted		$              0.84		$              0.79		$              4.07		$              3.39
Weighted Average Number of Shares Outstanding:
	Basic shares		398.7		408.0		401.7		411.4
	Diluted Shares		401.3		410.9		404.4		414.6

 

Otis Worldwide Corporation

Reconciliation of Reported (GAAP) to Adjusted Operating Profit & Operating Profit Margin

		Quarter Ended December 31,				Year Ended December 31,
		(Unaudited)				(Unaudited)
(dollars in millions)		2024		2023		2024		2023
Net Sales
New Equipment		$        1,357		$        1,466		$        5,367		$        5,812
Service		2,318		2,154		8,894		8,397
Total Net Sales		$        3,675		$        3,620		$     14,261		$     14,209
Operating Profit
New Equipment		$             64		$             89		$           329		$           381
Service		569		518		2,185		2,014
Total segment operating profit		633		607		2,514		2,395
Corporate and Unallocated		(102)		(85)		(506)		(209)
Total Otis GAAP Operating Profit		531		522		2,008		2,186
UpLift restructuring		20		25		31		25
Other restructuring		11		6		40		42
UpLift transformation costs		20		12		65		16
Separation-related adjustments 1		—		—		177		—
Litigation and settlement costs 2		—		—		18		—
Held for sale impairment		—		—		18		—
Other, net		1		1		(1)		—
Total Otis Adjusted Operating Profit		$           583		$           566		$        2,356		$        2,269
Reported Total Operating Profit Margin		14.4 %		14.4 %		14.1 %		15.4 %
Adjusted Total Operating Profit Margin		15.9 %		15.6 %		16.5 %		16.0 %

1 Separation-related adjustments in the year ended December 31, 2024 represent amounts due to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement, including those amounts related to a favorable ruling received in August 2024 regarding a tax litigation in Germany.

2 Litigation-related settlement costs in the year ended December 31, 2024 represent the aggregate amount of settlement costs and increase in loss contingency accruals, excluding legal costs, for certain legal matters that are outside of the ordinary course of business due to the size, complexity and unique facts of these matters.

Otis discloses segment operating profit as its measure of segment performance, reconciled to total Otis operating profit. Segment operating profit exclude certain expenses and income that are not allocated to segments (as described above as "Corporate and Unallocated").

Effective in the first quarter of 2024, the measure of segment performance used by Otis' Chief Operating Decision Maker ("CODM") changed and, as a result, Otis' disclosed measure of segment performance (segment operating profit) was updated. The change to segment operating profit aligns with the update to how the CODM assesses performance and allocates resources for the Company's segments, and therefore is our measure of segment profitability.

As a result of the change, restructuring costs and other items not allocated to the operating segments are presented as part of Corporate and Unallocated. The financial information presented herein reflects the impact of the measure of segment performance change for all periods presented.

 

Otis Worldwide Corporation

Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Net Income, Earnings Per Share, and Effective Tax Rate

		Quarter Ended December 31,				Year Ended December 31,
		(Unaudited)				(Unaudited)
(dollars in millions, except per share amounts)		2024		2023		2024		2023
Adjusted Operating Profit		$          583		$          566		$       2,356		$       2,269
Non-service pension cost (benefit)		—		4		—		5
Adjusted net interest expense 1, 2		48		41		191		150
Adjusted income from operations before income taxes		535		521		2,165		2,114
Income tax expense (benefit)		130		133		305		533
Tax impact on restructuring and non-recurring items		14		11		38		20
Non-recurring tax items 1, 2		(1)		—		194		—
Adjusted net income from operations		392		377		1,628		1,561
Adjusted noncontrolling interest 1,3		18		21		80		92
Adjusted net income attributable to common shareholders		$          374		$          356		$       1,548		$       1,469
GAAP income attributable to common shareholders		$          337		$          323		$       1,645		$       1,406
UpLift restructuring		20		25		31		25
Other restructuring		11		6		40		42
UpLift transformation costs		20		12		65		16
Separation-related adjustments		—		—		177		—
Litigation-related settlement costs		—		—		18		—
Held for sale impairment		—		—		18		—
Interest income related to non-recurring tax items 1, 2		(1)		—		(211)		—
Tax effects of restructuring, non-recurring items and other adjustments		(14)		(11)		(38)		(20)
Non-recurring tax items 1, 2		1		—		(194)		—
Other, net 3		—		1		(3)		—
Adjusted net income attributable to common shareholders		$          374		$          356		$       1,548		$       1,469
Diluted Earnings Per Share		$         0.84		$         0.79		$         4.07		$         3.39
Impact to diluted earnings per share		0.09		0.08		(0.24)		0.15
Adjusted Diluted Earnings Per Share		$         0.93		$         0.87		$         3.83		$         3.54
Effective Tax Rate		26.9 %		27.9 %		15.0 %		26.2 %
Impact of adjustments on effective tax rate		(0.2) %		(0.3) %		9.8 %		(0.1) %
Adjusted Effective Tax Rate		26.7 %		27.6 %		24.8 %		26.1 %

1 Certain tax reserves were adjusted in 2024. As a result, Net interest expense and Noncontrolling interest are reflected as adjusted without $21 million of interest income and $11 million of the noncontrolling interest share of the reserves adjustments for the year ended December 31, 2024.

2 In August 2024, we received a favorable ruling regarding a tax litigation in Germany. As a result, income tax benefits and related interest income were recorded in the third and fourth quarter of 2024. Net interest expense is reflected as adjusted without $1 million and $201 million of interest income for the quarter and year ended December 31, 2024, respectively.

3 Noncontrolling interest is reflected as adjusted without $2 million of the noncontrolling interest share of Other restructuring for the quarter and year ended December 31, 2024.

 

Otis Worldwide Corporation

Components of Changes in Net Sales

Quarter Ended December 31, 2024 Compared with Quarter Ended December 31, 2023
		Factors Contributing to Total % Change in Net Sales
		Organic		FX Translation		Acquisitions / Divestitures, net		Total
New Equipment		(6.8) %		(0.7) %		0.1 %		(7.4) %
Service		7.8 %		(0.7) %		0.5 %		7.6 %
Maintenance and Repair		5.6 %		(0.7) %		0.6 %		5.5 %
Modernization		17.5 %		(1.0) %		0.3 %		16.8 %
Total Net Sales		1.9 %		(0.8) %		0.4 %		1.5 %
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
		Factors Contributing to Total % Change in Net Sales
		Organic		FX Translation		Acquisitions / Divestitures, net		Total
New Equipment		(6.4) %		(1.4) %		0.1 %		(7.7) %
Service		6.8 %		(1.2) %		0.3 %		5.9 %
Maintenance and Repair		5.7 %		(1.1) %		0.3 %		4.9 %
Modernization		11.7 %		(1.5) %		0.1 %		10.3 %
Total Net Sales		1.4 %		(1.2) %		0.2 %		0.4 %

 

Components of New Equipment Backlog

		December 31, 2024
		Y/Y Growth %
New Equipment Backlog increase at actual currency		(7) %
Foreign exchange impact to New Equipment Backlog		3 %
New Equipment Backlog increase at constant currency		(4) %

 

Components of Modernization Backlog

		December 31, 2024
		Y/Y Growth %
Modernization Backlog increase at actual currency		10 %
Foreign exchange impact to Modernization Backlog		3 %
Modernization Backlog increase at constant currency		13 %

 

Otis Worldwide Corporation

Reconciliation of Segment and Total Adjusted Operating Profit at Constant Currency

Quarter Ended December 31, 2024 Compared with Quarter Ended December 31, 2023
(dollars in millions)		2024		2023		Y/Y
New Equipment
Segment Operating Profit		$                         64		$                         89		$                       (25)
Impact of foreign exchange		1		—		1
Segment Operating Profit at constant currency		$                         65		$                         89		$                       (24)
Service
Segment Operating Profit		$                      569		$                      518		$                         51
Impact of foreign exchange		3		—		3
Segment Operating Profit at constant currency		$                      572		$                      518		$                         54
Otis Consolidated
Adjusted Operating Profit		$                      583		$                      566		$                         17
Impact of foreign exchange		5		—		5
Adjusted Operating Profit at constant currency		$                      588		$                      566		$                         22
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
(dollars in millions)		2024		2023		Y/Y
New Equipment
Segment Operating Profit		$                      329		$                      381		$                       (52)
Impact of foreign exchange		8		—		8
Segment Operating Profit at constant currency		$                      337		$                      381		$                       (44)
Service
Segment Operating Profit		$                   2,185		$                   2,014		$                      171
Impact of foreign exchange		21		—		21
Segment Operating Profit at constant currency		$                   2,206		$                   2,014		$                      192
Otis Consolidated
Adjusted Operating Profit		$                   2,356		$                   2,269		$                         87
Impact of foreign exchange		31		—		31
Adjusted Operating Profit at constant currency		$                   2,387		$                   2,269		$                      118

 

Otis Worldwide Corporation

Condensed Consolidated Balance Sheet

		December 31, 2024		December 31, 2023
(dollars in millions)		(Unaudited)
Assets
Cash and cash equivalents		$                         2,300		$                         1,274
Accounts receivable, net		3,428		3,538
Contract assets		706		717
Inventories		557		612
Other current assets		679		259
Total Current Assets		7,670		6,400
Future income tax benefits		302		323
Fixed assets, net		701		727
Operating lease right-of-use assets		422		416
Intangible assets, net		311		335
Goodwill		1,548		1,588
Other assets		362		328
Total Assets		$                      11,316		$                      10,117
Liabilities and (Deficit) Equity
Short-term borrowings and current portion of long-term debt		$                         1,351		$                              32
Accounts payable		1,879		1,878
Accrued liabilities		1,921		1,873
Contract liabilities		2,598		2,696
Total Current Liabilities		7,749		6,479
Long-term debt		6,973		6,866
Future pension and post-retirement benefit obligations		434		462
Operating lease liabilities		298		292
Future income tax obligations		207		245
Other long-term liabilities		383		493
Total Liabilities		16,044		14,837
Redeemable noncontrolling interest		57		135
Shareholders' Equity (Deficit):
Common Stock and additional paid-in-capital		265		213
Treasury Stock		(3,390)		(2,382)
Accumulated deficit		(978)		(2,005)
Accumulated other comprehensive income (loss)		(745)		(750)
Total Shareholders' Equity (Deficit)		(4,848)		(4,924)
Noncontrolling interest		63		69
Total Equity (Deficit)		(4,785)		(4,855)
Total Liabilities and Equity (Deficit)		$                      11,316		$                      10,117

 

Otis Worldwide Corporation

Condensed Consolidated Statement of Cash Flows

		Quarter Ended December 31,				Year Ended December 31,
		(Unaudited)				(Unaudited)
(dollars in millions)		2024		2023		2024		2023
Operating Activities:
Net income from operations		$            353		$            344		$         1,734		$         1,498
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		48		48		181		193
Deferred income tax expense (benefit)		(5)		(27)		(31)		(61)
Stock compensation cost		21		15		73		64
Gain from reversal of German Tax Litigation interest accrual		—		—		(50)		—
Change in:
Accounts receivable, net		25		(25)		(68)		(239)
Contract assets and liabilities, current		(63)		(98)		(40)		(30)
Inventories		40		23		26		15
Other current assets		19		42		(354)		38
Accounts payable		172		187		57		152
Accrued liabilities		83		99		85		33
Pension contributions		(17)		(16)		(51)		(48)
Other operating activities, net		14		5		1		12
Net cash flows provided by (used in) operating activities		690		597		1,563		1,627
Investing Activities:
Capital expenditures		(39)		(42)		(126)		(138)
Acquisitions of businesses and intangible assets, net of cash		(17)		(9)		(87)		(36)
Proceeds from sale of (investments in) marketable securities, net		—		6		(9)		4
Other investing activities, net		102		(6)		58		(13)
Net cash flows provided by (used in) investing activities		46		(51)		(164)		(183)
Financing Activities:
Increase (decrease) in short-term borrowings, net		(314)		(23)		11		(113)
Issuance of long-term debt		1,497		—		1,497		747
Payment of debt issuance costs		(11)		—		(11)		(6)
Repayment of long-term debt		—		(534)		—		(534)
Dividends paid on Common Stock		(156)		(139)		(606)		(539)
Repurchases of Common Stock		(207)		(225)		(1,007)		(800)
Dividends paid to noncontrolling interest		(13)		(9)		(94)		(85)
Acquisition of noncontrolling interest shares		—		—		(75)		—
Other financing activities, net		(3)		(2)		(24)		(20)
Net cash flows provided by (used in) financing activities		793		(932)		(309)		(1,350)
Summary of Activity:
Net cash provided by (used in) operating activities		690		597		1,563		1,627
Net cash provided by (used in) investing activities		46		(51)		(164)		(183)
Net cash provided by (used in) financing activities		793		(932)		(309)		(1,350)
Effect of foreign exchange rate changes on cash and cash equivalents		(40)		25		(49)		(9)
Net increase (decrease) in cash, cash equivalents and restricted cash		1,489		(361)		1,041		85
Cash, cash equivalents and restricted cash, beginning of period		832		1,641		1,280		1,195
Cash, cash equivalents and restricted cash, end of period		2,321		1,280		2,321		1,280
Less: Restricted cash		21		6		21		6
Cash and cash equivalents, end of period		$         2,300		$         1,274		$         2,300		$         1,274

 

Otis Worldwide Corporation

Adjusted Free Cash Flow Reconciliation

		Quarter Ended December 31,				Year Ended December 31,
		(Unaudited)				(Unaudited)
(dollars in millions)		2024		2023		2024		2023
Net cash flows provided by operating activities (GAAP)		$            690		$         597		$         1,563		$     1,627
Capital expenditures		(39)		(42)		(126)		(138)
Free cash flow (Non-GAAP)		651		555		1,437		1,489
Adjustments for:
UpLift restructuring payments		$               12		$           12		$               32		$           12
UpLift transformation payments		20		6		54		8
Separation-related payments 1		—		—		49		25
German tax litigation refund		(1)		—		(1)		—
Adjusted free cash flow (Non-GAAP)		$            682		$         573		$         1,571		$     1,534
1 In April of 2023 and 2024, respectively, we made payments to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement. These annual payments are anticipated to conclude in 2026.

 

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-reports-fourth-quarter-and-full-year-2024-results-302363158.html

SOURCE Otis Worldwide Corporation

FAQ

What were Otis's (OTIS) key financial results for Q4 2024?

In Q4 2024, Otis reported net sales up 1.5%, organic sales up 1.9%, and Service sales growth of 7.6%. GAAP EPS increased 6.3% and adjusted EPS rose 6.9%.

How much did Otis (OTIS) spend on share repurchases in 2024?

Otis spent $1.0 billion on share repurchases during the full year 2024.

What is Otis's (OTIS) maintenance portfolio size and growth in 2024?

Otis's maintenance portfolio grew 4.2% to reach approximately 2.4 million units in 2024.

What is Otis's (OTIS) financial outlook for 2025?

For 2025, Otis projects organic sales growth of 2-4%, adjusted EPS of $4.00-$4.10, and adjusted free cash flow of approximately $1.6 billion.

How did Otis's (OTIS) modernization orders perform in Q4 2024?

Otis's modernization orders increased by 18% in Q4 2024, with the backlog up 10% (13% at constant currency).