Q4 2024 Otis Worldwide Corp Earnings Call Transcript
Key Points
- Otis Worldwide Corp (OTIS) achieved organic sales growth of 1.9% in the fourth quarter, driven by a strong performance in the service segment, which grew 7.8%.
- The company reported its highest quarterly adjusted free cash flow since its spin-off, amounting to $682 million, driven by excellent collections and a reduction in networking capital.
- Modernization orders grew 18% in the fourth quarter, with a backlog increase of 13% at constant currency, positioning the company well for future growth.
- Otis Worldwide Corp (OTIS) received a gold rating from EcoVadis for the third consecutive year, highlighting its commitment to ESG initiatives.
- The company expanded its maintenance portfolio by more than 4% for the third consecutive year, reaching approximately 2.4 million units, leading the industry.
- New equipment orders declined 4% in the fourth quarter, primarily due to challenging market conditions in China, where orders fell more than 20%.
- The new equipment backlog at constant currency was down 4% compared to the previous year, with a significant decline in China impacting overall performance.
- Despite strong service performance, new equipment organic sales were down 6.8% in the quarter, with China experiencing a decline of over 20%.
- The company faces continued macroeconomic headwinds in the new equipment market, particularly in China, which is expected to decline approximately 10% in 2025.
- Otis Worldwide Corp (OTIS) anticipates a challenging first half of 2025 for new equipment, with expected declines in the Americas due to a lower backlog and market pressures.
Good morning and welcome to Otis's fourth-quarter 2024 earnings conference call. This call is being recorded (technical difficulty) -- is being carried live on the internet and recorded for replay. Presentation materials are available for download from Otis's website at www.otis.com.
I'll now turn it over to Rob Quartaro, Vice President of Investor relations. Please go ahead.
Thank you, Sarah. Welcome to Otis' fourth-quarter 2024 earnings conference call. On the call with me today are Judy Marks, Chair, CEO and President; and Christina Mendez, Executive Vice President and CFO. Please note, except where otherwise noted, the company will speak to results from continuing operations excluding restructuring and significant non-recurring items. A reconciliation of these measures can be found in the appendix of the webcast.
We also remind listeners that the presentation contains forward-looking statements which are
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