OTIS REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS | News

FARMINGTON, Conn., Jan. 31, 2022 /PRNewswire/ — Otis Worldwide Corporation (NYSE:OTIS) reported full year net sales of $14.3 billion with 8.9% organic growth. GAAP diluted earnings per share (EPS) increased 38.9% to $2.89 and adjusted diluted EPS increased 19.4% to $3.01.

“Otis delivered a strong fourth quarter, capping an excellent year as we continued to execute on our long-term strategy and provide innovative solutions and services to our customers. Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders,” said President and CEO Judy Marks. “We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities.”

Key Figures

($ millions, except per

Quarter Ended December 31,

Year Ended December 31,

 share amounts)

2021

2020

Y/Y

Y/Y (CFX)

2021

2020

Y/Y

Y/Y (CFX)

Net sales

$  3,569

$  3,493

2.2 %

2.9 %

$  14,298

$  12,756

12.1 %

9.1 %

Organic sales

2.8 %

8.9 %

GAAP

Operating profit

$   496

$   440

$      56

$               2,108

$               1,639

$     469

Operating profit margin

13.9 %

12.6 %

130 bps

14.7 %

12.8 %

190 bps

Net income

$   281

$   251

12.0 %

$               1,246

$  906

37.5 %

Earnings per share

$  0.65

$  0.58

12.1 %

$  2.89

$ 2.08

38.9 %

Adjusted non-GAAP comparison

Operating profit

$   520

$   509

$      11

$             21

$               2,191

$               1,919

$     272

$          210

Operating profit margin

14.6 %

14.6 %

0 bps

15.3 %

15.0 %

30 bps

Net income

$   310

$   288

7.6 %

$               1,297

$               1,096

18.3 %

Earnings per share

$  0.72

$  0.66

9.1 %

$  3.01

$ 2.52

19.4 %

Fourth quarter net sales of $3.6 billion increased 2.2%, with a 2.8% increase in organic sales. Organic sales increased 1.2% in New Equipment and increased 4.0% in Service.

Fourth quarter GAAP operating profit increased $56 million and adjusted operating profit increased $11 million and $21 million at constant currency driven by segment operating profit growth. GAAP operating profit also benefited from lower non-recurring separation costs. GAAP operating profit margin expanded 130 basis points to 13.9% and adjusted operating profit margin was flat versus prior year at 14.6%.

GAAP EPS increased 12.1% to $0.65 and adjusted EPS increased 9.1% to $0.72, driven by operating profit growth and a lower effective tax rate.

Full year net sales increased 12.1% driven by a 8.9% increase in organic sales and a 3.0% benefit from foreign exchange. GAAP and adjusted operating profit increased $469 million and $272 million, respectively, driven by segment operating profit growth. GAAP operating profit also benefited from the absence of a fixed asset impairment charge taken in the prior year and lower non-recurring separation costs. GAAP and adjusted operating profit margin expanded 190 basis points and 30 basis points, respectively. GAAP and adjusted EPS increased 38.9% and 19.4%, respectively, driven by operating profit growth and a reduction in the effective tax rate.

New Equipment

Quarter Ended December 31,

Year Ended December 31,

($ millions)

2021

2020

Y/Y

Y/Y (CFX)

2021

2020

Y/Y

Y/Y (CFX)

Net sales

$  1,562

$  1,531

2.0       %

1.2   %

$  6,428

$  5,371

19.7         %

15.6         %

Organic sales

1.2   %

15.5         %

GAAP

Operating profit

$      77

$      80

$      (3)

$   459

$   318

$   141

Operating profit margin

4.9   %

5.2   %

(30) bps

7.1   %

5.9   %

120 bps

Adjusted non-GAAP comparison

Operating profit

$      83

$      90

$      (7)

$         (11)

$   482

$   348

$   134

$        105

Operating profit margin

5.3 %

5.9 %

(60) bps

7.5 %

6.5 %

100 bps

In the fourth quarter, net sales of $1.6 billion increased 2.0% with a 1.2% increase in organic sales. Organic sales were up 11.9% in Asia, partially offset by a decline of 9.5% and 6.3% in the Americas and EMEA, respectively, due to tougher compares as the business recovered from the impact of COVID-19 in the fourth quarter of the prior year.

GAAP operating profit decreased $3 million to $77 million and adjusted operating profit decreased $7 million to $83 million as installation productivity and favorable project performance partially mitigated commodity and mix headwinds. GAAP and adjusted operating profit margin contracted 30 basis points and 60 basis points, respectively.

Fourth quarter New Equipment orders were up 7.3% at constant currency from growth in the Americas and Asia and full year New Equipment orders were up 13.2% with growth in all regions. New equipment backlog at constant currency increased 3% versus the prior year.

Full year net sales increased 19.7% with a 15.5% increase in organic sales driven by strong growth in all regions. GAAP operating profit increased $141 million and adjusted operating profit increased $134 million primarily due to higher volume. GAAP and adjusted operating profit margin expanded 120 basis points and 100 basis points, respectively.

Service

Quarter Ended December 31,

Year Ended December 31,

($ millions)

2021

2020

Y/Y

Y/Y (CFX)

2021

2020

Y/Y

Y/Y (CFX)

Net sales

$  2,007

$  1,962

2.3 %

4.2 %

$  7,870

$  7,385

6.6       %

4.3 %

Organic sales

4.0 %

4.1 %

GAAP

Operating profit

$   447

$   421

$      26

$  1,762

$  1,611

$   151

Operating profit margin

22.3 %

21.5 %

80 bps

22.4 %

21.8 %

60 bps

Adjusted non-GAAP comparison

Operating profit

$   462

$   442

$      20

$          34

$  1,795

$  1,658

$   137

$        104

Operating profit margin

23.0 %

22.5 %

50 bps

22.8 %

22.5 %

30 bps

In the fourth quarter, net sales of $2.0 billion increased 2.3%, with a 4.0% increase in organic sales. Organic maintenance and repair sales increased 4.3% and organic modernization sales increased 2.2%.

GAAP operating profit of $447 million increased $26 million and adjusted operating profit of $462 million increased $20 million and $34 million at constant currency as higher volume, productivity and favorable pricing and mix were partially offset by the absence of field cost containment actions related to COVID-19 taken in the prior year. GAAP and adjusted operating profit margin expanded 80 basis points and 50 basis points, respectively.

Full year net sales increased 6.6% with a 4.1% increase in organic sales. GAAP operating profit increased $151 million and adjusted operating profit increased $137 million primarily due to higher volume. GAAP and adjusted operating profit margin expanded 60 basis points and 30 basis points, respectively.

Cash flow

Quarter Ended December 31,

Year Ended December 31,

($ millions)

2021

2020

Y/Y

2021

2020

Y/Y

Cash flow from operations

$         277

$         309

$             (32)

$     1,750

$     1,480

$            270

Free cash flow

$         236

$         238

$               (2)

$     1,594

$     1,297

$            297

Free cash flow conversion

84 %

95 %

128 %

143 %

Fourth quarter cash from operations of $277 million decreased $32 million and free cash flow of $236 million decreased $2 million as higher GAAP net income and the timing of tax and benefit payments was more than offset by an increase in working capital. In addition, free cash flow benefited from a $30 million reduction in capital expenditures.

Full year cash from operations of $1.8 billion increased $270 million and full year free cash flow of $1.6 billion increased $297 million driven by higher GAAP net income and a reduction in capital expenditures.

2022 Outlook*

Otis is announcing its full year outlook:

  • Net sales of $14.4 to $14.7 billion, up 1 to 3%
  • Organic sales up 2.5 to 4.5%
    • Organic New Equipment sales up 0.5 to 3.0%
    • Organic Service sales up 4 to 6%
  • Adjusted operating profit of $2.24 to $2.3 billion, up $95 to $165 million at constant currency; up $50 to $120 million at actual currency
  • Adjusted EPS of $3.20 to $3.30, up 6 to 10%; adjusted effective tax rate between 27.5% and 28.0%
  • Free cash flow of approximately $1.6 billion with conversion of 115 to 120% of GAAP net income

*Note: When we provide outlook for organic sales, adjusted operating profit, adjusted EPS, adjusted effective tax rate and 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 billion people a day and maintain approximately 2.1 million customer units worldwide, the industry’s largest maintenance portfolio. Headquartered in Connecticut, USA, Otis is 70,000 people strong, including 41,000 field professionals, all committed to meeting 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, Facebook and Twitter @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.

Organic sales, adjusted selling, general and administrative (“SG&A”) expense, earnings before interest taxes and depreciation (“EBITDA”), adjusted EBITDA, adjusted operating profit, adjusted net income, adjusted diluted earnings per share (“EPS”), adjusted effective tax rate and free cash flow are non-GAAP financial measures.

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 SG&A expense represents SG&A expense (a GAAP measure), excluding restructuring costs, other significant items and allocated costs for certain functions and services previously performed by United Technologies Corporation (“UTC”) prior to our separation (“UTC allocated costs”) and including solely for fiscal years prior to 2020 estimated standalone public company costs, as though Otis’ operations had been conducted independently from UTC (“standalone costs”). Standalone costs for fiscal years prior to 2020 are based on quarterly estimates determined during Otis’ annual planning process for the 2020 fiscal year. Recurring standalone costs for 2021 and 2020 are not adjusted.

Adjusted operating profit represents income from continuing operations (a GAAP measure), excluding restructuring costs, other non-recurring significant items, UTC allocated costs and including solely for fiscal years prior to 2020 estimated standalone public company costs.

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.

Adjusted net income represents net income from continuing operations (a GAAP measure), excluding restructuring costs and other non-recurring significant items, UTC allocated costs, adjusted net interest expense and including solely for fiscal years prior to 2020 estimated standalone public company costs, estimated adjustments to non-service pension expense, net interest expense and income tax expense as if Otis was a standalone public company (“standalone operating income adjustments”). Adjusted EPS represents diluted earnings per share from continuing operations (a GAAP measure), adjusted for the per share impact of restructuring, other significant items and solely for fiscal years prior to 2020 standalone operating income adjustments.

The adjusted effective tax rate represents the effective tax rate (a GAAP measure) adjusted for the tax impact of restructuring costs, non-recurring significant items, adjusted net interest expense and solely for fiscal year prior to 2020 the tax impact of the additional adjustments (estimated standalone public company costs, interest expense and non-service pension expense).

EBITDA represents net income from operations (a GAAP measure), adjusted for noncontrolling interests, income tax expense, net interest expense, non-service pension expense and depreciation and amortization. Adjusted EBITDA represents EBITDA, as calculated above, adjusted for the impact of restructuring, other significant items and UTC allocated costs, including solely for fiscal years prior to 2020 estimated standalone public company costs. Management believes that adjusted SG&A, EBITDA, adjusted EBITDA, adjusted operating profit, 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 and to the extent applicable as if it had been a standalone public company for fiscal years prior to 2020.

Additionally, 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 is a non-GAAP financial measure that 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.

When we provide our expectations for organic sales, adjusted operating profit, adjusted net interest expense, adjusted net income, adjusted effective tax rate, adjusted EPS and 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, the proposed tender offer by Otis to acquire all of the issued and outstanding shares of Zardoya Otis, S.A (the “Tender Offer”) and the separation (the “Separation”) from United Technologies Corporation (now known as Raytheon Technologies Corporation (“RTX”)). 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, credit ratings, net indebtedness and other measures of financial performance or potential future plans, strategies or transactions of Otis following the Separation or in connection with the Tender Offer, including the estimated costs associated with the Separation and the Tender Offer, 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 in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, pandemic health issues (including COVID-19 and variants thereof and the ongoing economic recovery therefrom and their effects on, among other things, global supply, demand and distribution), natural disasters and the financial condition of Otis’ customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness, capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, credit market conditions and Otis’ capital structure; (5) the timing and scope of future repurchases of Otis’ common stock (“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; (6) fluctuations in prices and delays and disruption in delivery of materials and services from suppliers, whether as a result of COVID-19 or otherwise; (7) cost reduction or containment actions, restructuring costs and related savings and other consequences thereof; (8) new business and investment opportunities; (9) the outcome of legal proceedings, investigations and other contingencies; (10) pension plan assumptions and future contributions; (11) the impact of the negotiation of collective bargaining agreements and labor disputes; (12) the effect of changes in political conditions in the U.S. and other countries in which Otis and its businesses operate on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (13) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. 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, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (16) the timing of closing, if any, of the Tender Offer and the ability to achieve the expected benefits of the Tender Offer and the timing thereof; (17) the ability to achieve the expected benefits of the Separation; (18) the determination by the Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions; and (19) the amount of our obligations and nature of our contractual restrictions pursuant to, and disputes that have or may hereafter arise under the agreements we entered into with RTX and Carrier Corporation 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)

2021

2020

2021

2020

Net Sales

$           3,569

$           3,493

$         14,298

$         12,756

Costs and Expenses:

Cost of products and services sold

2,530

2,481

10,105

8,977

Research and development

46

40

159

152

Selling, general and administrative

503

537

1,948

1,924

Total Costs and Expenses

3,079

3,058

12,212

11,053

Other income (expense), net

6

5

22

(64)

Operating profit

496

440

2,108

1,639

Non-service pension cost (benefit)

5

6

11

6

Interest expense (income), net

44

37

136

122

Net income before income taxes

447

397

1,961

1,511

Income tax expense

137

118

541

455

Net income

310

279

1,420

1,056

Less: Noncontrolling interest in subsidiaries’ earnings

29

28

174

150

Net income attributable to Otis Worldwide Corporation

$               281

$               251

$           1,246

$               906

Earnings Per Share of Common Stock:

Basic

$              0.66

$              0.58

$              2.91

$              2.09

Diluted

$              0.65

$              0.58

$              2.89

$              2.08

Weighted Average Number of Shares Outstanding:

Basic shares

424.9

433.4

427.7

433.2

Diluted Shares

429.1

435.8

431.4

434.6

 

Otis Worldwide Corporation

Segment Net Sales and Operating Profit

Quarter Ended

December 31,

Quarter Ended

December 31,

(Unaudited)

(Unaudited)

(dollars in millions)

2021

2020

Reported

Adjusted

Reported

Adjusted

Net Sales

New Equipment

$        1,562

$        1,562

$        1,531

$        1,531

Service

2,007

2,007

1,962

1,962

Consolidated Net Sales

$        3,569

$        3,569

$        3,493

$        3,493

Operating Profit

New Equipment

$             77

$             83

$             80

$             90

Service

447

462

421

442

Segment Operating Profit

524

545

501

532

General corporate expenses and other

(28)

(25)

(61)

(23)

Consolidated Operating Profit

$           496

$           520

$           440

$           509

Segment Operating Profit Margin

New Equipment

4.9 %

5.3 %

5.2 %

5.9 %

Service

22.3 %

23.0 %

21.5 %

22.5 %

Total Operating Profit Margin

13.9 %

14.6 %

12.6 %

14.6 %

 

Year Ended

December 31,

Year Ended

December 31,

(Unaudited)

(Unaudited)

(dollars in millions)

2021

2020

Reported

Adjusted

Reported

Adjusted

Net Sales

New Equipment

$        6,428

$        6,428

$        5,371

$        5,371

Service

7,870

7,870

7,385

7,385

Consolidated Net Sales

$     14,298

$     14,298

$     12,756

$     12,756

Operating Profit

New Equipment

$           459

$           482

$           318

$           348

Service

1,762

1,795

1,611

1,658

Segment Operating Profit

2,221

2,277

1,929

2,006

General corporate expenses and other

(113)

(86)

(290)

(87)

Consolidated Operating Profit

$        2,108

$        2,191

$        1,639

$        1,919

Segment Operating Profit Margin

New Equipment

7.1 %

7.5 %

5.9 %

6.5 %

Service

22.4 %

22.8 %

21.8 %

22.5 %

Total Operating Profit Margin

14.7 %

15.3 %

12.8 %

15.0 %

 

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)

2021

2020

2021

2020

New Equipment

Net sales

$        1,562

$        1,531

$        6,428

$        5,371

GAAP Operating profit

77

80

459

318

Restructuring

6

10

23

30

Adjusted New Equipment Operating Profit

$             83

$             90

$           482

$           348

Adjusted operating profit margin

5.3 %

5.9 %

7.5 %

6.5 %

Service

Net sales

$        2,007

$        1,962

$        7,870

$        7,385

GAAP Operating profit

447

421

1,762

1,611

Restructuring

15

21

33

47

Adjusted Service Operating Profit

$           462

$           442

$        1,795

$        1,658

Adjusted Operating Profit Margin

23.0 %

22.5 %

22.8 %

22.5 %

Adjusted general corporate expenses and other

$            (25)

$            (23)

$            (86)

$            (87)

Adjusted Total Operating Profit

$           520

$           509

$        2,191

$        1,919

Total Otis

GAAP Operating profit

$           496

$           440

$        2,108

$        1,639

Restructuring

21

31

56

77

   One-time separation costs

3

37

27

119

   Expected insurance recovery

(17)

(17)

   Fixed asset impairment  

18

85

   UTC allocated corporate expenses

16

Adjusted Total Operating Profit

$           520

$           509

$        2,191

$        1,919

Adjusted Operating Profit Margin

14.6 %

14.6 %

15.3 %

15.0 %

 

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)

2021

2020

2021

2020

Adjusted Operating Profit

$          520

$          509

$       2,191

$       1,919

Non-service pension cost (benefit)

5

5

11

5

Net interest expense 1

30

38

122

123

Adjusted income from operations before income taxes

485

466

2,058

1,791

Income tax expense

137

118

541

455

Tax impact on restructuring and non-recurring items

9

11

20

58

Non-recurring tax items

21

26

32

Adjusted net income from operations

339

316

1,471

1,246

Noncontrolling interest

29

28

174

150

Adjusted net income attributable to common shareholders

$          310

$          288

$       1,297

$       1,096

GAAP income attributable to common shareholders

$          281

$          251

$       1,246

$          906

Restructuring

21

31

56

77

One-time separation costs

3

37

27

119

Zardoya Otis Tender Offer debt costs 1

14

14

Expected insurance recovery

(17)

(17)

Fixed asset impairment

18

85

UTC allocated corporate expenses

16

Tax effects of restructuring, non-recurring items and other

(9)

(11)

(20)

(58)

Non-recurring tax items

(21)

(26)

(32)

Adjusted net income attributable to common shareholders

$          310

$          288

$       1,297

$       1,096

Diluted Earnings Per Share

$         0.65

$         0.58

$         2.89

$         2.08

  Impact to diluted earnings per share

0.07

0.08

0.12

0.44

Adjusted Diluted Earnings Per Share

$         0.72

$         0.66

$         3.01

$         2.52

Effective Tax Rate

30.6 %

29.8 %

27.6 %

30.1 %

  Impact of adjustments on effective tax rate

(0.5) %

2.3  %

0.9  %

0.3  %

Adjusted Effective Tax Rate

30.1 %

32.1 %

28.5 %

30.4 %

1

Otis incurred interest costs associated with financing the Zardoya Otis Tender Offer. Interest expense for the current quarter and year-to-date are reflected as

adjusted without those costs.

 

Otis Worldwide Corporation

Components of Changes in Net Sales

Quarter Ended December 31, 2021 Compared with Quarter Ended December 31, 2020

Factors Contributing to Total % Change in Net Sales

Organic

FX

Translation

Acquisitions /

Divestitures, net

Total

New Equipment

1.2%

0.8%

—%

2.0%

Service

4.0%

(1.9)%

0.2%

2.3%

Maintenance and Repair

4.3%

(1.7)%

0.2%

2.8%

Modernization

2.2%

(1.9)%

—%

0.3%

Total Net Sales

2.8%

(0.7)%

0.1%

2.2%

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

Factors Contributing to Total % Change in Net Sales

Organic

FX

Translation

Acquisitions /

Divestitures, net

Total

New Equipment

15.5%

4.1%

0.1%

19.7%

Service

4.1%

2.3%

0.2%

6.6%

Maintenance and Repair

4.5%

2.2%

0.3%

7.0%

Modernization

2.5%

1.9%

0.1%

4.5%

Total Net Sales

8.9%

3.0%

0.2%

12.1%

 

Components of New Equipment Backlog

Growth %

Q4 2021

New Equipment Backlog increase at actual currency

1%

Foreign exchange impact to New Equipment Backlog

2%

New Equipment Backlog at constant currency

3%

 

Otis Worldwide Corporation

Reconciliation of Adjusted Operating Profit at Constant Currency

Quarter Ended December 31, 2021 Compared with Quarter Ended December 31, 2020

(dollars in millions)

2021

2020

Y/Y

New Equipment

Adjusted Operating Profit

$                       83

$                       90

$                        (7)

Impact of foreign exchange

(4)

(4)

Adjusted Operating Profit at constant currency

$                       79

$                       90

$                      (11)

Service

Adjusted Operating Profit

$                     462

$                     442

$                       20

Impact of foreign exchange

14

14

Adjusted Operating Profit at constant currency

$                     476

$                     442

$                       34

Otis Consolidated

Adjusted Operating Profit

$                     520

$                     509

$                       11

Impact of foreign exchange

10

10

Adjusted Operating Profit at constant currency

$                     530

$                     509

$                       21

Year Ended December 31, 2021 Compared with Year Ended December 31, 2020

(dollars in millions)

2021

2020

Y/Y

New Equipment

Adjusted Operating Profit

$                     482

$                     348

$                     134

Impact of foreign exchange

(29)

(29)

Adjusted Operating Profit at constant currency

$                     453

$                     348

$                     105

Service

Adjusted Operating Profit

$                  1,795

$                  1,658

$                     137

Impact of foreign exchange

(33)

(33)

Adjusted Operating Profit at constant currency

$                  1,762

$                  1,658

$                     104

Otis Consolidated

Adjusted Operating Profit

$                  2,191

$                  1,919

$                     272

Impact of foreign exchange

(62)

(62)

Adjusted Operating Profit at constant currency

$                  2,129

$                  1,919

$                     210

 

Otis Worldwide Corporation

Consolidated Balance Sheet

December 31, 2021

December 31, 2020

(amounts in millions)

(Unaudited)

Assets

Cash and cash equivalents

$                         1,565

$                         1,782

Restricted cash

1,910

17

Accounts receivable, net

3,232

3,148

Contract assets

550

458

Inventories, net

622

659

Other current assets

382

429

Total Current Assets

8,261

6,493

Future income tax benefits

335

334

Fixed assets, net

774

774

Operating lease right-of-use assets

526

542

Intangible assets, net

419

484

Goodwill

1,667

1,773

Other assets

297

310

Total Assets

$                      12,279

$                      10,710

Liabilities and (Deficit) Equity

Short-term borrowings

$                              24

$                            701

Accounts payable

1,556

1,453

Accrued liabilities

1,993

1,977

Contract liabilities

2,674

2,542

Total Current Liabilities

6,247

6,673

Long-term debt

7,249

5,262

Future pension and postretirement benefit obligations

558

654

Operating lease liabilities

336

367

Future income tax obligations

267

321

Other long-term liabilities

606

634

Total Liabilities

15,263

13,911

Redeemable noncontrolling interest

160

194

Shareholders’ (Deficit) Equity:

Preferred Stock

Common Stock and additional paid-in-capital

119

59

Treasury Stock

(725)

Accumulated deficit

(2,256)

(3,106)

Accumulated other comprehensive income (loss)

(763)

(815)

Total Shareholders’ (Deficit) Equity

(3,625)

(3,862)

Noncontrolling interest

481

467

Total (Deficit) Equity

(3,144)

(3,395)

Total Liabilities and (Deficit) Equity

$                      12,279

$                      10,710

 

Otis Worldwide Corporation

Condensed Consolidated Statement of Cash Flows

Quarter Ended December 31,

Year Ended December 31,

(Unaudited)

(Unaudited)

(dollars in millions)

2021

2020

2021

2020

Operating Activities:

Net income from operations

$             310

$             279

$           1,420

$           1,056

Adjustments to reconcile net income to net cash flows provided by

operating activities:

Depreciation and amortization

51

51

203

191

Stock compensation cost

17

19

65

63

Loss on fixed asset impairment

16

71

Change in:

Accounts receivable, net

(45)

(84)

(152)

(163)

Contract assets and liabilities, current

(87)

5

53

282

Inventories, net

(4)

25

14

(76)

Accounts payable

(100)

1

130

20

Pension contributions

(14)

(36)

(37)

(64)

Other operating activities, net

149

33

54

100

Net cash flows provided by operating activities

277

309

1,750

1,480

Investing Activities:

Capital expenditures

(41)

(71)

(156)

(183)

Investments in businesses and intangible assets, net of cash acquired

(21)

(3)

(80)

(53)

Proceeds from sale of (investments in) equity securities

40

(51)

Other investing activities, net

42

10

107

(66)

Net cash flows used in investing activities

(20)

(64)

(89)

(353)

Financing Activities:

Increase (decrease) in short-term borrowings, net

(10)

137

(655)

647

Proceeds from issuance of long-term debt

1,831

2,030

6,300

Payment of debt issuance costs

(14)

(25)

(43)

Repayment of long-term debt

(250)

(1,000)

Dividends paid on Common Stock

(102)

(87)

(393)

(260)

Repurchases of Common Stock

(725)

Dividends paid to noncontrolling interest

(25)

(24)

(155)

(149)

Net transfers to UTC

(6,330)

Other financing activities, net

(1)

(31)

(19)

(9)

Net cash flows provided by (used in) financing activities

1,679

(255)

58

(844)

Summary of Activity:

Net cash provided by operating activities

277

309

1,750

1,480

Net cash used in investing activities

(20)

(64)

(89)

(353)

Net cash provided by (used in) financing activities

1,679

(255)

58

(844)

Effect of foreign exchange rate changes on cash and cash equivalents

(32)

59

(43)

59

Net increase in cash, cash equivalents and restricted cash

1,904

49

1,676

342

Cash, cash equivalents and restricted cash, beginning of period

1,573

1,752

1,801

1,459

Cash, cash equivalents and restricted cash, end of period

3,477

1,801

3,477

1,801

Less: Restricted cash

1,912

19

1,912

19

Cash and cash equivalents, end of period

$          1,565

$          1,782

$           1,565

$           1,782

 

Otis Worldwide Corporation

Free Cash Flow Reconciliation

Quarter Ended December 31,

(Unaudited)

(dollars in millions)

2021

2020

Net income attributable to common shareholders

$               281

$               251

Net cash flows provided by operating activities

$               277

$               309

Net cash flows provided by operating activities as a percentage of net

income attributable to common shareholders

99 %

123 %

Capital expenditures

(41)

(71)

Capital expenditures as a percentage of net income attributable to

common shareholders

(15) %

(28) %

Free cash flow

$               236

$               238

Free cash flow as a percentage of net income attributable to

common shareholders

84 %

95 %

Year Ended December 31,

(Unaudited)

(dollars in millions)

2021

2020

Net income attributable to common shareholders

$           1,246

$               906

Net cash flows provided by operating activities

$           1,750

$           1,480

Net cash flows provided by operating activities as a percentage of net

income attributable to common shareholders

140 %

163 %

Capital expenditures

(156)

(183)

Capital expenditures as a percentage of net income attributable to

common shareholders

(12) %

(20) %

Free cash flow

$           1,594

$           1,297

Free cash flow as a percentage of net income attributable to

common shareholders

128 %

143 %

Media Contact:

Ray Hernandez

+1-860-674-3029

Ray.Hernandez@otis.com

Investor Relations Contact:

Michael Rednor

+1-860-676-6011

investorrelations@otis.com  

View original content:https://www.prnewswire.com/news-releases/otis-reports-fourth-quarter-and-full-year-2021-results-301471382.html

SOURCE Otis Worldwide Corporation



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