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Otis Worldwide Reports Strong First Quarter 2024 Results and Increases Full-Year Guidance
Otis Worldwide Corporation (NYSE: OTIS) has announced its financial results for the first quarter of 2024, showcasing continued growth in its service sector and significant margin expansion. The company has revised its full-year outlook upwards, reflecting strong operational performance and increased confidence in its market position.
Financial Highlights
- Net Sales: Otis reported an increase in net sales by 2.7% to $3.4 billion in Q1 2024, with organic sales growth of 3.8%. Service net sales saw a substantial increase of 5.8%, with organic sales up 6.5%.
- Earnings Per Share (EPS): GAAP EPS rose by 8.9% to $0.86, while adjusted EPS saw a 10% increase to $0.88.
- Operating Profit: GAAP operating profit increased by $31 million to $544 million, and the operating profit margin expanded by 50 basis points to 15.8%. Adjusted operating profit grew by $43 million to $561 million, with the margin expanding by 80 basis points to 16.3%.
Operational Performance
- Service Segment: The service segment continued to perform exceptionally with net sales increasing to $2.2 billion and segment operating profit margin expanding to 24.2%. Organic sales in maintenance and repair grew by 5.8%, and modernization sales increased by 9.7%.
- New Equipment Segment: Although new equipment net sales slightly declined by 2.1%, the segment operating profit margin improved due to favorable price adjustments and productivity gains. New equipment orders and backlog saw a downturn, influenced by market conditions in the Americas and China.
- Cash Flow: The company reported a decrease in cash flow from operations to $171 million, and adjusted free cash flow to $155 million, primarily due to changes in working capital.
Updated 2024 Outlook
Otis has raised its guidance for the full year of 2024 based on the strong performance in the first quarter and anticipated market conditions:
- Net Sales: Expected to be between $14.5 billion and $14.8 billion.
- Organic Sales Growth: Forecasted to increase by 3% to 5%.
- Adjusted Operating Profit: Projected to range from $2.40 billion to $2.45 billion, marking a significant increase at constant currency.
- Adjusted EPS: Adjusted to range from $3.83 to $3.90, reflecting an 8% to 10% increase from the previous guidance.
- Adjusted Free Cash Flow: Anticipated to be around $1.6 billion.
Executive Comments
Judy Marks, Chair, CEO & President of Otis, expressed optimism about the company's trajectory, highlighting the strength of the service-driven business model and the robust growth in maintenance portfolio units. "After delivering a strong first quarter, we are raising our EPS outlook driven by operational performance and increasing our share repurchase target to $1 billion for the year," Marks stated. She also noted the increase in the quarterly dividend by 14.7%, underscoring the company's commitment to shareholder value.
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