Otis Worldwide Reports Mixed Q3 Results, Net Income Boosted by Tax Benefits

Otis Worldwide Corporation reported its financial results for the quarter and nine months ended September 30, 2024, showing mixed performance across its segments. For the third quarter, net sales reached $3,548 million, a slight increase from $3,523 million in the same period of 2023. However, for the nine months, net sales decreased marginally to $10,586 million from $10,589 million year-over-year.

The New Equipment segment experienced a decline in sales, with revenues of $1,309 million for the quarter, down 8.8% from $1,435 million in 2023. This decline was attributed to a significant drop in sales in China, which fell over 20%. Conversely, the Service segment saw growth, with sales increasing to $2,239 million, up 7.2% from $2,088 million in the prior year. Operating profit for the quarter was $363 million, a decrease from $571 million in 2023, while the nine-month operating profit also fell to $1,477 million from $1,664 million.

Net income for the quarter was $557 million, a notable increase from $395 million in the same quarter of 2023. For the nine months, net income rose to $1,381 million from $1,154 million. The increase in net income was supported by a lower effective tax rate due to benefits from a favorable ruling in German tax litigation, which also contributed $185 million in income tax benefits and $200 million in related interest income.

The company’s gross margin improved, reaching 30.4% for the quarter, up from 29.7% in the same period last year, driven by higher Service sales growth and productivity improvements. Selling, general, and administrative expenses increased slightly for the quarter but decreased for the nine months compared to the previous year.

Strategically, Otis completed the acquisition of a noncontrolling interest in a subsidiary in Japan for approximately $70 million. The company also continued its UpLift transformation program, incurring $45 million in related costs during the nine months, with expected annual savings of approximately $175 million by mid-2025.

As of September 30, 2024, Otis had cash and cash equivalents of $827 million, down from $1,274 million at the end of 2023. Total debt increased to $7,263 million, reflecting ongoing investments and share repurchase activities, which totaled $800 million for the nine months. The company maintains a stable liquidity position despite macroeconomic challenges, including inflation and geopolitical uncertainties.