• Revenue: Net sales of $3.5 billion in Q3, with organic sales up approximately 1%.

• Service Organic Sales Growth: 6.4% year-to-date, with Q3 growth at 7.7%.

• Maintenance Portfolio Growth: 4.2% in Q3.

• Modernization Backlog: Increased 12% at constant currency.

• Adjusted Operating Profit Margin: Expanded by 60 basis points year-to-date.

• Adjusted EPS Growth: 8.2% year-to-date, with Q3 growth of approximately 1%.

• Adjusted Free Cash Flow: $381 million in Q3; approximately $900 million year-to-date.

• Share Repurchases: $200 million in Q3; $800 million year-to-date.

• New Equipment Orders: Down 3% in Q3; excluding China, orders increased approximately 10%.

• New Equipment Backlog: Down 3% at constant currency; excluding China, up low single digits.

• Service Operating Profit Margin: 24.8% in Q3.

• Adjusted SG&A: Lower by $18 million year-to-date, improving as a percentage of sales by 10 basis points.

• 2024 Sales Outlook: Approximately $14.2 billion with organic sales growth of 1.5%.

• 2024 Adjusted EPS Outlook: Approximately $3.85, up 9%.

• 2024 Adjusted Free Cash Flow Outlook: $1.4 billion to $1.5 billion.

• Warning! GuruFocus has detected 4 Warning Signs with INMD.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Otis Worldwide Corp (NYSE:OTIS) achieved high single-digit growth in its service segment, with year-to-date service organic sales up 6.4%.

• The company reported a 4.2% growth in its maintenance portfolio and a 12% increase in its modernization backlog at constant currency.

• Otis Worldwide Corp (NYSE:OTIS) generated $381 million in adjusted free cash flow in Q3 and completed $200 million in share repurchases.

• The company expanded its manufacturing capabilities in India and received ISO 5,001 certification for its manufacturing hub in Korea.

• Otis Worldwide Corp (NYSE:OTIS) was named one of the World's Best Employers by Forbes Magazine for the third consecutive year.

Negative Points

• New equipment orders were down 3% in Q3, with a significant decline in China due to continued economic softness.

• The new equipment backlog at constant currency was down 3% compared to the previous year.

• China's new equipment sales declined by more than 20%, impacting overall sales performance.

• The company faced foreign exchange headwinds, which partially offset operational performance.

• Otis Worldwide Corp (NYSE:OTIS) revised its 2024 sales outlook to the low end of prior expectations, driven by challenges in China.

Q & A Highlights

Q: Can you elaborate on the pricing pressure in China and whether there's a change in strategy for the next year? A: Judith Marks, CEO, explained that the new equipment market in China remains weak, with a 15% decline this quarter. Otis is focusing on balancing volume, price, and liquidity to maintain a strong position for 2025. Despite a significant revenue drop in China, the company is still achieving organic top-line growth. The strategy is to pivot towards services, which is working well, with service revenue slightly up and portfolio units increasing.