On this page of StockholderLetter.com we present the 4/5/2024 shareholder letter from Otis Worldwide Corp — ticker symbol OTIS. Reading current and past OTIS letters to shareholders can bring important insights into the investment thesis.
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4/5/2024 Letter Continued (Full PDF)
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4/6/2023 OTIS Stockholder Letter
• 4/4/2025 OTIS Stockholder Letter
• More "Industrial Machinery & Equipment" Category Stockholder Letters
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OTIS Benford's Law Stock Score = 94
4/5/2024 Letter Continued (Full PDF)
•
4/6/2023 OTIS Stockholder Letter•
4/4/2025 OTIS Stockholder Letter•
More "Industrial Machinery & Equipment" Category Stockholder Letters•
OTIS Benford's Law Stock Score = 94OTIS 4/5/2024 Shareholder/Stockholder Letter Transcript:
Otis Worldwide Corporation Annual Report 2023 OTIS WORLDWIDE CORPORATION ANNUAL REPORT 2023 In 2023, we moved our company forward by meeting the needs of our stakeholders around the world. $14.2B 71,000 Net Sales Colleagues ~2.3M ~900,000 Maintenance Units Connected Units OTIS WORLDWIDE CORPORATION ANNUAL REPORT 2023 In March 2023, Otis Chair, Chief Executive Of cer and President Judy Marks greeted colleagues at One Za abeel in Dubai, United Arab Emirates. It s a landmark mixed-use complex with ve double-deck and 27 SkyRise elevators and our Compass360 dispatching system. Dear Shareholders, In our 170th year in business and fourth as an independent company, Otis once again demonstrated our strengths, including solid execution of our strategy, operational excellence and strong nancial performance. We continued to prove that our long-term strategy meets the needs of our communities, customers and passengers around the world. I remain humbled to lead this organization of 71,000 colleagues. We are committed to serving our customers by innovating and launching new connected products and deploying ef cient eld operations as we expand our maintenance portfolio and grow our repair and modernization business. shareholders throughout the year. We repurchased $800 million in shares, reducing our share count by nearly 10 million shares, or approximately 2%. In total, we paid out approximately $1.35 billion to shareholders. In addition, we used $36 million for 20 strategic bolt-on acquisitions. RESULTS-DRIVEN DIGITALLY FOCUSED Organic sales1 increased by 5.6%, leading to net sales of $14.2 billion, with Service organic sales increasing by 7.7% and New Equipment organic sales growing by 2.6%. Our focus on operational excellence driving productivity across the company led to an increase in adjusted operating pro t1 of approximately 7%, to $2.269 billion, and adjusted operating margins1 of 16.0%, a 30-basis-point increase over 2022. Pro t growth, coupled with capital-allocation initiatives and ongoing efforts to reduce our tax rate, drove an 11.7% increase in adjusted earnings per share1 to $3.54. We continue to invest in our business to remain the leader in the industry we founded. We spent $144 million on research and development and $138 million on capital expenditures. These investments support the development and launch of new equipment such as the Gen3 Core in North America, our newest connected elevator. We also expanded the availability of our most innovative, digitally native elevator platform with the launch of Gen360 in China. We generated $1.53 billion in adjusted free cash ow.1 In April 2023, our Board of Directors increased our dividend by 17.2% to a quarterly rate of $0.34, resulting in a payout of $539 million to 1 See pages 4 to 6 for additional information regarding non-GAAP nancial measures. We progressed our digital strategy, with approximately 900,000 units connected globally and Otis ONE deployed in 30 countries and territories. Digitalization is improving customer experiences and supporting overall Service performance. 1 OTIS WORLDWIDE CORPORATION ANNUAL REPORT 2023 I am con dent in our long term strategy and in our leadership team and colleagues who e ecute this strategy around the world every day. SERVICE-ORIENTED Organic maintenance and repair sales1 grew by 7.8%. Repair sales delivered a standout performance, growing by mid-teens percent. And for the second consecutive year, we increased our Service portfolio by more than 4%, ending 2023 with approximately 2.3 million units under maintenance, with growth across all regions. These results were led by double-digit growth in the China Service portfolio, which now stands at approximately 380,000 units. The global installed base continues to increase at a mid-single digit pace and stands at approximately 21.5 million units.2 The increase was led by Asia, up by mid- to high-single digits, with low-single digit increases in the Americas and EMEA. Regionally, we are becoming a more balanced and diversi ed Service-oriented company, with approximately 35% of our units under maintenance in Asia, approximately 15% in the Americas and roughly 50% in EMEA. Service comprises approximately 60% of our net sales and approximately 85% of our adjusted operating pro t.1 1 2 2 See pages 4 to 6 for additional information regarding non-GAAP nancial measures. Based on internal estimates. As the industry s global installed base ages, with approximately 7 million of the 21.5 million installed units now over 20 years old,2 modernization provides a signi cant and growing opportunity that we intend to seize. We have added Deliver Modernization Value as a fth strategic imperative. Our increased focus on modernization offerings and operations has already yielded clear progress in 2023, including modernization orders increasing by 17% and modernization organic sales1 by 7.3%. INCREASED SHARE IN NEW EQUIPMENT We executed against our multi-billion-dollar New Equipment backlog, driving 2.6% organic sales growth,1 with high-teens increases in Asia Paci c and strong growth in the Americas and EMEA. This growth more than offset a decline in China, which faced a challenging economic environment. At year-end, our backlog was up by 2% at constant currency,1 giving us good visibility into New Equipment sales in 2024. Otis increased our New Equipment unit share to roughly 20%,2 despite a weak market for new equipment industrywide. Global bookings for the industry dropped to approximately 850,0002 a decline of roughly 10%.2 Across the industry, Asia Paci c improved at approximately a low-single digit rate, while other regions bookings remained soft. EMEA saw a decline of roughly high-single digits, China slowed by just above 10% and the Americas declined in the low teens. PURPOSEFUL AND ACCOUNTABLE We have made tangible progress toward our 13 Environmental, Social and Governance goals in the categories of Health & Safety, Environment & Impact, People & Communities, and Governance & Accountability. These four pillars align with our Absolutes of Safety, Ethics and Quality and are embedded in our business strategy. Together, they drive our success through the impact we make in the communities where we do business, as well as our strong nancial results. OTIS WORLDWIDE CORPORATION ANNUAL REPORT 2023 FORWARD-LOOKING I am con dent in our long-term strategy and in our leadership team and colleagues who execute this strategy around the world every day exhibiting unwavering commitment to our customers, passengers and you, our shareholders. As we go forward in 2024, we remain committed to driving operational excellence and continuing to deliver value to all of our stakeholders, through the resilience of our Service-oriented business model. Thank you for your ongoing support. Judy Marks Chair, Chief Executive Of cer and President Cautionary Statement This Otis Annual Report contains forward-looking statements that are inherently subject to uncertainties and risks. Please see the section titled Cautionary Note Concerning Factors That May Affect Future Results included in our 2023 Form 10-K accompanied herewith and other lings with the Securities and Exchange Commission, for a list of factors that could cause our results to differ from those anticipated in any such forward-looking statements. oard of Directors Thomas A. Bartlett Kathy Hopinkah Hannan Margaret M. V. Preston Former President and Chief Executive Of cer, American Tower Corporation Former Global Lead Partner, National Managing Partner and Vice Chairman, KPMG, LLP Managing Director, Cohen Klingenstein, LLC Shailesh G. Jejurikar Former Chief Procurement Of cer, E. I. du Pont de Nemours and Company Jeffrey H. Black Former Senior Partner and Vice Chairman, Deloitte LLP Jill C. Brannon Executive Vice President and Chief Sales Of cer, FedEx Corporation Nelda J. Connors Founder and Chief Executive Of cer, Pine Grove Holdings, LLC Chief Operating Of cer, The Procter & Gamble Company Christopher J. Kearney Former Executive Chair, Otis Worldwide Corporation Former Chairman, SPX FLOW, Inc. Shelley Stewart, Jr. John H. Walker Former Chairman and Chief Executive Of cer, Global Brass and Copper Holdings, Inc. Judith F. Marks Chair, Chief Executive Of cer and President, Otis Worldwide Corporation ecutive eadership Judy Marks Nora LaFreniere Enrique Mi arro Viseras Chair, Chief Executive Of cer and President Executive Vice President & General Counsel President, Otis EMEA St phane de Montlivault Sally Loh President, Otis Asia Paci c President, Otis China Senior Vice President & Chief Communications Of cer Tracy Embree Abbe Luersman Perry Zheng President, Otis Americas Executive Vice President & Chief People Of cer Executive Vice President & Chief Product, Delivery and Customer Of cer Neil Green Executive Vice President & Chief Digital Of cer *As of January 1, 2024 Anurag Maheshwari Randi Tanguay Executive Vice President & Chief Financial Of cer 3