Otis Worldwide (OTIS) Q4 2023 earnings summary

Executive summary

• Q4 organic sales grew 3.8%; adjusted EPS rose 16.0% to $0.87, and adjusted operating margin expanded 90 bps to 15.6%.

• FY 2023 organic sales grew 5.6%; adjusted EPS rose 11.7% to $3.54, supported by Service growth and margin expansion.

• Service growth, maintenance portfolio expansion, and higher modernization orders supported results; New Equipment orders returned to growth in Q4.

Financial highlights

• Q4 net sales were $3.620B, up 5.3% reported and 3.8% organic; adjusted operating profit was $566M versus $505M.

• Q4 GAAP diluted EPS was $0.79 versus $0.71; adjusted diluted EPS was $0.87 versus $0.75.

• FY net sales were $14.209B, up 3.8% reported and 5.6% organically; adjusted operating profit was $2.269B versus $2.126B.

• FY GAAP diluted EPS was $3.39 versus $2.96; adjusted diluted EPS was $3.54 versus $3.17.

• FY cash from operations was $1.627B, free cash flow was $1.489B, and adjusted free cash flow was $1.534B; Q4 adjusted free cash flow was $573M.

Outlook and guidance

• FY 2024 net sales guidance is $14.5B–$14.8B, up 2%–4% at actual currency and 3%–5% organically.

• Adjusted operating profit guidance is $2.40B–$2.45B; adjusted EPS is $3.80–$3.90, up 7%–10%.

• Adjusted free cash flow is expected at ~$1.6B; adjusted effective tax rate guidance is ~25.5%.

• Organic New Equipment sales are expected to be flat; Service sales are forecast to grow 6%–7%, including Maintenance & Repair up 5.5%–6.5% and Modernization up 7%–8%.

• Adjusted operating margin guidance: New Equipment flat to up 10 bps, Service up 40–50 bps, and total adjusted margin down 50 bps; planned share repurchases are ~$800M.