Otis delivers solid fourth quarter and full year results; announces 2025 outlook with sustained earnings growth driven by continued Service momentum
Fourth quarter 2024
Full year 2024
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:
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 fina
