Otis Worldwide (OTIS) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $3.6 billion, down 3.2% year-over-year, with Service growth offsetting New Equipment declines.

• Adjusted EPS rose 15.2% to $1.06, GAAP EPS increased 13.3% to $1.02, driven by strong Service segment performance and margin expansion.

• Modernization orders and backlog grew double digits, with orders up 14% and backlog up 17% at constant currency.

• Maintenance portfolio units rose 4.2%; $300 million in share repurchases in Q2 and $600 million year-to-date.

• UpLift transformation program increased expected run rate savings to $175 million by mid-2025.

Financial highlights

• Q2 adjusted operating profit was $613 million, up from $590 million; GAAP operating profit was $570 million.

• Adjusted operating profit margin expanded 110 bps to 17.0%; GAAP margin rose 20 bps to 15.8%.

• Adjusted EPS was $1.06 (up 15.2%); GAAP EPS was $1.02 (up 13.3%).

• Adjusted SG&A as a percentage of sales improved by 30 bps to 12.3%.

• Adjusted free cash flow for Q2 was $353 million.

Outlook and guidance

• 2024 net sales expected at $14.3–$14.5 billion, with organic growth of 1%–3%.

• Adjusted operating profit forecasted at $2.40–$2.45 billion; adjusted EPS raised to $3.85–$3.90, up 9%–10%.

• Adjusted free cash flow expected at $1.5–$1.6 billion.

• Organic New Equipment sales projected down mid-single digits; Service organic sales up 6%–7%.

• UpLift run rate savings target increased to $175 million by mid-2025.