QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
ý | Accelerated Filer | ¨ | |||||||||
Non-accelerated Filer | ¨ | Smaller Reporting Company | |||||||||
Emerging Growth Company |
Page | |||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions, except per share amounts; shares in millions) | 2023 | 2022 | ||||||||||||
Net sales: | ||||||||||||||
Product sales | $ | $ | ||||||||||||
Service sales | ||||||||||||||
Costs and expenses: | ||||||||||||||
Cost of products sold | ||||||||||||||
Cost of services sold | ||||||||||||||
Research and development | ||||||||||||||
Selling, general and administrative | ||||||||||||||
Other income (expense), net | ||||||||||||||
Operating profit | ||||||||||||||
Non-service pension cost (benefit) | ||||||||||||||
Interest expense (income), net | ||||||||||||||
Net income before income taxes | ||||||||||||||
Income tax expense | ||||||||||||||
Net income | ||||||||||||||
Less: Noncontrolling interest in subsidiaries' earnings | ||||||||||||||
Net income attributable to Otis Worldwide Corporation | $ | $ | ||||||||||||
Earnings per share (Note 2): | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average number of shares outstanding: | ||||||||||||||
Basic shares | ||||||||||||||
Diluted shares | ||||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||
Foreign currency translation adjustments | ( | |||||||||||||
Pension and postretirement benefit plan adjustments | ||||||||||||||
Change in unrealized cash flow hedging | ||||||||||||||
Other comprehensive income (loss), net of tax | ( | |||||||||||||
Comprehensive income (loss), net of tax | ||||||||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interest | ( | |||||||||||||
Comprehensive income attributable to Otis Worldwide Corporation | $ | $ |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable (net of allowance for expected credit losses of $ | ||||||||||||||
Contract assets | ||||||||||||||
Inventories | ||||||||||||||
Other current assets | ||||||||||||||
Total Current Assets | ||||||||||||||
Future income tax benefits | ||||||||||||||
Fixed assets (net of accumulated depreciation of $ | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Other assets | ||||||||||||||
Total Assets | $ | $ | ||||||||||||
Liabilities and Equity (Deficit) | ||||||||||||||
Short-term borrowings and current portion of long-term debt | $ | $ | ||||||||||||
Accounts payable | ||||||||||||||
Accrued liabilities | ||||||||||||||
Contract liabilities | ||||||||||||||
Total Current Liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Future pension and postretirement benefit obligations | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Future income tax obligations | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total Liabilities | ||||||||||||||
Commitments and contingent liabilities (Note 16) | ||||||||||||||
Redeemable noncontrolling interest | ||||||||||||||
Shareholders' Equity (Deficit): | ||||||||||||||
Common Stock and additional paid-in capital | ||||||||||||||
Treasury Stock | ( | ( | ||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Accumulated other comprehensive income (loss) | ( | ( | ||||||||||||
Total Shareholders' Equity (Deficit) | ( | ( | ||||||||||||
Noncontrolling interest | ||||||||||||||
Total Equity (Deficit) | ( | ( | ||||||||||||
Total Liabilities and Equity (Deficit) | $ | $ |
Common Stock and Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders' (Deficit) Equity | Noncontrolling Interest | Total (Deficit) Equity | Redeemable Noncontrolling Interest | |||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation and Common Stock issued under employee plans | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | — | ( | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||
Repurchase of Common Shares | — | ( | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||
Dividends attributable to noncontrolling interest | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Acquisitions, disposals and other changes | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Quarter Ended March 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation and Common Stock issued under employee plans | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared ($ | — | ( | — | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||
Repurchase of Common Shares | — | ( | — | — | ( | — | ( | — | ||||||||||||||||||||||||||||||||||||||||||
Dividends attributable to noncontrolling interest | — | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Reclassification of noncontrolling interest to redeemable noncontrolling interest | — | — | ( | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Acquisitions, disposals and other changes | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Operating Activities: | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash flows provided by operating activities, net of acquisitions and dispositions: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Deferred income tax expense (benefit) | ( | |||||||||||||
Stock compensation cost | ||||||||||||||
Change in operating assets and liabilities: | ||||||||||||||
Accounts receivable, net | ( | |||||||||||||
Contract assets and liabilities, current | ||||||||||||||
Inventories | ( | ( | ||||||||||||
Other current assets | ( | |||||||||||||
Accounts payable | ( | ( | ||||||||||||
Accrued liabilities | ( | ( | ||||||||||||
Pension contributions | ( | ( | ||||||||||||
Other operating activities, net | ||||||||||||||
Net cash flows provided by operating activities | ||||||||||||||
Investing Activities: | ||||||||||||||
Capital expenditures | ( | ( | ||||||||||||
Acquisitions of businesses and intangible assets, net of cash (Note 6) | ( | ( | ||||||||||||
Proceeds from the sale of (investments in) marketable securities | ( | |||||||||||||
Receipts (payments) on settlements of derivative contracts | ||||||||||||||
Other investing activities, net | ||||||||||||||
Net cash flows provided by (used in) investing activities | ( | ( | ||||||||||||
Financing Activities: | ||||||||||||||
Net proceeds from (repayments of) borrowings (maturities of 90 days or less) | ( | |||||||||||||
Repayment of long-term debt | ( | |||||||||||||
Dividends paid on Common Stock | ( | ( | ||||||||||||
Repurchases of Common Stock | ( | ( | ||||||||||||
Dividends paid to noncontrolling interest | ( | ( | ||||||||||||
Other financing activities, net | ( | ( | ||||||||||||
Net cash flows provided by (used in) financing activities | ( | ( | ||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | ( | |||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents and restricted cash, beginning of year | ||||||||||||||
Cash, cash equivalents and restricted cash, end of period | ||||||||||||||
Less: Restricted cash | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions, except per share amounts; shares in millions) | 2023 | 2022 | ||||||||||||
Net income attributable to Otis Worldwide Corporation | $ | $ | ||||||||||||
Impact of redeemable noncontrolling interest | ||||||||||||||
Net income attributable to common shareholders | $ | $ | ||||||||||||
Basic weighted average number of shares outstanding | ||||||||||||||
Stock awards and equity units (share equivalent) | ||||||||||||||
Diluted weighted average number of shares outstanding | ||||||||||||||
Earnings Per Share of Common Stock: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Contract assets, current | $ | $ | ||||||||||||
Total contract assets | ||||||||||||||
Contract liabilities, current | ||||||||||||||
Contract liabilities, non-current (included within Other long-term liabilities) | ||||||||||||||
Total contract liabilities | ||||||||||||||
Net contract liabilities | $ | $ |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Trade receivables | $ | $ | ||||||||||||
Unbilled receivables | ||||||||||||||
Miscellaneous receivables | ||||||||||||||
Customer financing notes receivable | ||||||||||||||
Less: allowance for expected credit losses | ||||||||||||||
Accounts receivable, net | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Balance as of January 1 | $ | $ | ||||||||||||
Provision for expected credit losses | ||||||||||||||
Write-offs charged against the allowance for expected credit losses | ( | ( | ||||||||||||
Foreign exchange and other | ||||||||||||||
Balance as of March 31 | $ | $ | ||||||||||||
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Raw materials and work-in-process | $ | $ | ||||||||||||
Finished goods | ||||||||||||||
Total | $ | $ |
(dollars in millions) | Balance as of December 31, 2022 | Goodwill Resulting from Business Combinations | Foreign Currency Translation and Other | Balance as of March 31, 2023 | ||||||||||||||||||||||
New Equipment | $ | $ | $ | $ | ||||||||||||||||||||||
Service | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Commercial paper | $ | $ | ||||||||||||
Other borrowings | ||||||||||||||
Total short-term borrowings | $ | $ |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
$ | $ | |||||||||||||
Other (including finance leases) | ||||||||||||||
Total principal long-term debt | ||||||||||||||
Other (discounts and debt issuance costs) | ( | ( | ||||||||||||
Total long-term debt | ||||||||||||||
Less: current portion | ||||||||||||||
Long-term debt, net of current portion | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Debt issuance costs amortization | $ | $ | ||||||||||||
Total interest expense on external debt |
March 31, 2023 | December 31, 2022 | |||||||||||||
Short-term borrowings | % | % | ||||||||||||
Total long-term debt | % | % |
Quarter Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Short-term borrowings | % | % | ||||||||||||
Total long-term debt | % | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Defined benefit plans | $ | $ | ||||||||||||
Defined contribution plans | ||||||||||||||
Multi-employer pension and postretirement plans |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Service cost | $ | $ | ||||||||||||
Interest cost | ||||||||||||||
Expected return on plan assets | ( | ( | ||||||||||||
Recognized actuarial net loss | ||||||||||||||
Total net periodic benefit cost | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Stock-based compensation expense (Share Based) | $ | $ | ||||||||||||
Stock-based compensation expense (income) (Liability Awards) | ( | |||||||||||||
Total gross stock-based compensation expense | ||||||||||||||
Less: future tax benefit | ||||||||||||||
Stock-based compensation expense, net of tax | $ | $ |
(dollars in millions) | Foreign Currency Translation | Defined Benefit Pension and Postretirement Plans | Unrealized Hedging Gains (Losses) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||
Quarter Ended March 31, 2023 | ||||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications, net | ( | ( | ||||||||||||||||||||||||
Amounts reclassified, pre-tax | ( | ( | ||||||||||||||||||||||||
Tax expense (benefit) reclassified | ||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
(dollars in millions) | Foreign Currency Translation | Defined Benefit Pension and Postretirement Plans | Unrealized Hedging Gains (Losses) | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||
Quarter Ended March 31, 2022 | ||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications, net | ||||||||||||||||||||||||||
Amounts reclassified, pre-tax | ( | ( | ||||||||||||||||||||||||
Tax expense (benefit) reclassified | ( | ( | ||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
New Equipment | $ | $ | ||||||||||||
Service | ||||||||||||||
Total | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Cost of products and services sold | $ | $ | ||||||||||||
Selling, general and administrative | ||||||||||||||
Total | $ | $ |
(dollars in millions) | ||||||||
Restructuring accruals as of December 31, 2022 | $ | |||||||
Net restructuring costs | ||||||||
Utilization, foreign exchange and other costs | ( | |||||||
Balance as of March 31, 2023 | $ | |||||||
(dollars in millions) | Balance Sheet Classification | March 31, 2023 | December 31, 2022 | |||||||||||||||||
Derivatives designated as Cash flow hedging instruments: | ||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Other current assets | $ | $ | |||||||||||||||||
Commodity contracts | Other current assets | |||||||||||||||||||
Foreign exchange contracts | Other assets | |||||||||||||||||||
Total asset derivatives | $ | $ | ||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Accrued liabilities | $ | ( | $ | ( | |||||||||||||||
Commodity contracts | Accrued liabilities | ( | ( | |||||||||||||||||
Total liability derivatives | $ | ( | $ | ( | ||||||||||||||||
Derivatives not designated as Cash flow hedging instruments: | ||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Other current assets | $ | $ | |||||||||||||||||
Commodity contracts | Other current assets | |||||||||||||||||||
Foreign exchange contracts | Other assets | |||||||||||||||||||
Total asset derivatives | $ | $ | ||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Accrued liabilities | $ | ( | $ | ( | |||||||||||||||
Commodity contracts | Accrued liabilities | ( | ( | |||||||||||||||||
Foreign exchange contracts | Other long-term liabilities | ( | ( | |||||||||||||||||
Total liability derivatives | $ | ( | $ | ( |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Gain (loss) recorded in Accumulated other comprehensive income (loss) | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Foreign exchange contracts | $ | $ |
March 31, 2023 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||||||||||||
Marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||||
Derivative liabilities | ( | ( | ||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||||||||||||
Marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||||
Derivative liabilities | ( | ( | ||||||||||||||||||||||||
March 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||
(dollars in millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||||
Long-term receivables, net | $ | $ | $ | $ | ||||||||||||||||||||||
Customer financing notes receivable, net | ||||||||||||||||||||||||||
Short-term borrowings | ( | ( | ( | ( | ||||||||||||||||||||||
Long-term debt, including current portion (excluding leases and other) | ( | ( | ( | ( | ||||||||||||||||||||||
Long-term liabilities, including current portion | ( | ( | ( | ( |
March 31, 2023 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Long-term receivables, net | $ | $ | $ | $ | ||||||||||||||||||||||
Customer financing notes receivable, net | ||||||||||||||||||||||||||
Short-term borrowings | ( | ( | ||||||||||||||||||||||||
Long-term debt, including current portion (excluding leases and other) | ( | ( | ||||||||||||||||||||||||
Long-term liabilities, including current portion | ( | ( |
December 31, 2022 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Long-term receivables, net | $ | $ | $ | $ | ||||||||||||||||||||||
Customer financing notes receivable, net | ||||||||||||||||||||||||||
Short-term borrowings | ( | ( | ||||||||||||||||||||||||
Long-term debt, including current portion (excluding leases and other) | ( | ( | ||||||||||||||||||||||||
Long-term liabilities, including current portion | ( | ( |
(dollars in millions) | 2023 | 2022 | ||||||||||||
Balance as of December 31 | $ | $ | ||||||||||||
Warranties | ||||||||||||||
Settlements made | ( | ( | ||||||||||||
Foreign exchange and other | ||||||||||||||
Balance as of March 31 | $ | $ |
Net Sales | Operating Profit | Operating Profit Margin | ||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
New Equipment | $ | $ | $ | $ | % | % | ||||||||||||||||||||||||||||||||
Service | % | % | ||||||||||||||||||||||||||||||||||||
Total segments | % | % | ||||||||||||||||||||||||||||||||||||
General corporate expenses and other | ( | ( | ||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | % | % | ||||||||||||||||||||||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
United States Operations | $ | $ | ||||||||||||
International Operations | ||||||||||||||
China | ||||||||||||||
Other | ||||||||||||||
Total | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
New Equipment | $ | $ | ||||||||||||
Maintenance and Repair | ||||||||||||||
Modernization | ||||||||||||||
Total Service | ||||||||||||||
Total | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Net sales | $ | 3,346 | $ | 3,414 | ||||||||||
Percentage change year-over-year | (2.0) | % |
Components of Net sales change: | Quarter Ended March 31, 2023 | |||||||
Organic volume | 3.6 | % | ||||||
Foreign currency translation | (4.4) | % | ||||||
Acquisitions and divestitures, net | (1.2) | % | ||||||
Total % change | (2.0) | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Total cost of products and services sold | $ | 2,350 | $ | 2,408 | ||||||||||
Percentage change year-over-year | (2.4) | % |
Components of Cost of Products and Services Sold change: | Quarter Ended March 31, 2023 | |||||||
Organic volume | 3.9 | % | ||||||
Foreign currency translation | (4.7) | % | ||||||
Acquisitions and divestitures, net and other | (1.6) | % | ||||||
Total % change | (2.4) | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Gross margin | $ | 996 | $ | 1,006 | ||||||||||
Gross margin percentage | 29.8 | % | 29.5 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Research and development | $ | 35 | $ | 37 | ||||||||||
Percentage of Net sales | 1.0 | % | 1.1 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Selling, general and administrative | $ | 455 | $ | 459 | ||||||||||
Percentage of Net sales | 13.6 | % | 13.4 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Restructuring costs | $ | 5 | $ | 14 |
(dollars in millions) | ||||||||
Cash outflows during the quarter ended March 31, 2023 | $ | 10 | ||||||
Expected cash payments remaining to complete actions announced | 46 |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Other income (expense), net | $ | 7 | $ | 16 |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Interest expense (income), net | $ | 33 | $ | 37 |
Quarter Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Effective tax rate | 26.7 | % | 27.8 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Noncontrolling interest in subsidiaries' earnings | $ | 21 | $ | 42 | ||||||||||
Net income attributable to Otis Worldwide Corporation | $ | 331 | $ | 311 | ||||||||||
Net Sales | Operating Profit | Operating Profit Margin | ||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
New Equipment | $ | 1,307 | $ | 1,422 | $ | 67 | $ | 93 | 5.1 | % | 6.5 | % | ||||||||||||||||||||||||||
Service | 2,039 | 1,992 | 476 | 447 | 23.3 | % | 22.4 | % | ||||||||||||||||||||||||||||||
Total segment | 3,346 | 3,414 | 543 | 540 | 16.2 | % | 15.8 | % | ||||||||||||||||||||||||||||||
General corporate expenses and other | — | — | (30) | (14) | — | — | ||||||||||||||||||||||||||||||||
Total | $ | 3,346 | $ | 3,414 | $ | 513 | $ | 526 | 15.3 | % | 15.4 | % | ||||||||||||||||||||||||||
Quarter Ended March 31, | ||||||||||||||||||||||||||
(dollars in millions) | 2023 | 2022 | Change | Change | ||||||||||||||||||||||
Net sales | $ | 1,307 | $ | 1,422 | $ | (115) | (8.1) | % | ||||||||||||||||||
Cost of sales | 1,098 | 1,190 | (92) | (7.7) | % | |||||||||||||||||||||
209 | 232 | (23) | (9.9) | % | ||||||||||||||||||||||
Operating expenses | 142 | 139 | 3 | 2.2 | % | |||||||||||||||||||||
Operating profit | $ | 67 | $ | 93 | $ | (26) | (28.0) | % | ||||||||||||||||||
Operating profit margin | 5.1 | % | 6.5 | % |
Components of Net sales change: | Quarter Ended March 31, 2023 | |||||||
Organic volume | (0.1) | % | ||||||
Foreign currency translation | (4.8) | % | ||||||
Acquisitions/Divestitures, net and Other | (3.2) | % | ||||||
Total % change | (8.1) | % |
Quarter Ended March 31, | ||||||||||||||||||||||||||
(dollars in millions) | 2023 | 2022 | Change | Change | ||||||||||||||||||||||
Net sales | $ | 2,039 | $ | 1,992 | $ | 47 | 2.4 | % | ||||||||||||||||||
Cost of sales | 1,252 | 1,218 | 34 | 2.8 | % | |||||||||||||||||||||
787 | 774 | 13 | 1.7 | % | ||||||||||||||||||||||
Operating expenses | 311 | 327 | (16) | (4.9) | % | |||||||||||||||||||||
Operating profit | $ | 476 | $ | 447 | $ | 29 | 6.5 | % | ||||||||||||||||||
Operating profit margin | 23.3 | % | 22.4 | % |
Components of Net sales change: | Quarter Ended March 31, 2023 | |||||||
Organic volume | 6.3 | % | ||||||
Foreign currency translation | (4.1) | % | ||||||
Acquisitions/Divestitures, net | 0.2 | % | ||||||
Total % change | 2.4 | % |
Components of Net sales change: | Maintenance and Repair | Modernization | ||||||||||||
Organic volume | 7.0 | % | 3.3 | % | ||||||||||
Foreign currency translation | (4.4) | % | (3.8) | % | ||||||||||
Acquisitions/Divestitures, net | 0.2 | % | 0.8 | % | ||||||||||
Total % change | 2.8 | % | 0.3 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
General corporate expenses and other | $ | (30) | $ | (14) |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Cash and cash equivalents | $ | 1,117 | $ | 1,189 | ||||||||||
Total debt | 6,762 | 6,768 | ||||||||||||
Net debt (total debt less cash and cash equivalents) | 5,645 | 5,579 | ||||||||||||
Total equity | (4,767) | (4,799) | ||||||||||||
Total capitalization (total debt plus total equity) | 1,995 | 1,969 | ||||||||||||
Net capitalization (total debt plus total equity less cash and cash equivalents) | 878 | 780 | ||||||||||||
Total debt to total capitalization | 339 | % | 344 | % | ||||||||||
Net debt to net capitalization | 643 | % | 715 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2023 | 2022 | ||||||||||||
Net cash flows provided by (used in): | ||||||||||||||
Operating activities | $ | 278 | $ | 504 | ||||||||||
Investing activities | (21) | (17) | ||||||||||||
Financing activities | (341) | (823) | ||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | 10 | (63) | ||||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (74) | $ | (399) |
(dollars in millions) | Quarter Ended March 31, 2023 | |||||||
OWC Statement of Operations - Standalone and Unconsolidated | ||||||||
Revenue | $ | — | ||||||
Cost of revenue | — | |||||||
Operating expenses | 2 | |||||||
Income from consolidated subsidiaries | 60 | |||||||
Income (loss) from operations excluding income from consolidated subsidiaries | (2) | |||||||
Net income (loss) excluding income from consolidated subsidiaries | (28) |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
OWC Balance Sheet - Standalone and Unconsolidated | ||||||||||||||
Current assets (excluding intercompany receivables from non-guarantor subsidiaries) | $ | 111 | $ | 94 | ||||||||||
Current assets (intercompany receivables from non-guarantor subsidiaries) | — | — | ||||||||||||
Noncurrent assets, investments in consolidated subsidiaries | 1,236 | 1,236 | ||||||||||||
Noncurrent assets (excluding investments in consolidated subsidiaries) | 44 | 45 | ||||||||||||
Current liabilities (intercompany payables to non-guarantor subsidiaries) | 3,383 | 3,090 | ||||||||||||
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 144 | 166 | ||||||||||||
Noncurrent liabilities | 5,188 | 5,186 |
(dollars in millions) | Quarter Ended March 31, 2023 | |||||||
Highland Statement of Operations - Standalone and Unconsolidated | ||||||||
Revenue | $ | — | ||||||
Cost of revenue | — | |||||||
Operating expenses | — | |||||||
Income from consolidated subsidiaries | — | |||||||
Income (loss) from operations excluding income from consolidated subsidiaries | — | |||||||
Net income (loss) excluding income from consolidated subsidiaries | (21) |
(dollars in millions) | March 31, 2023 | December 31, 2022 | ||||||||||||
Highland Balance Sheet - Standalone and Unconsolidated | ||||||||||||||
Current assets (excluding intercompany receivables from non-guarantor subsidiaries) | $ | — | $ | — | ||||||||||
Current assets (intercompany receivables from non-guarantor subsidiaries) | 1 | 195 | ||||||||||||
Noncurrent assets (investments in consolidated subsidiaries) | 15,716 | 12,524 | ||||||||||||
Noncurrent assets (intercompany receivables from non-guarantor subsidiaries) | 581 | 572 | ||||||||||||
Noncurrent assets (excluding investments in consolidated subsidiaries) | — | — | ||||||||||||
Current liabilities (intercompany payables to non-guarantor subsidiaries) | 382 | — | ||||||||||||
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 542 | 532 | ||||||||||||
Noncurrent liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 1,177 | 1,160 | ||||||||||||
Noncurrent liabilities (intercompany payables to non-guarantor subsidiaries) | 3,244 | — |
2023 | Total Number of Shares Purchased (thousands) | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of a Publicly Announced Program (thousands) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (dollars in millions) | ||||||||||||||||||||||
January 1 - January 31 | — | $ | — | — | $ | 2,000 | ||||||||||||||||||||
February 1 - February 28 | 1,027 | 83.70 | 1,027 | $ | 1,914 | |||||||||||||||||||||
March 1 - March 31 | 1,047 | 85.10 | 1,047 | $ | 1,825 | |||||||||||||||||||||
Total | 2,074 | $ | 84.41 | 2,074 |
Exhibit Number | Exhibit Description | |||||||
10.1 | ||||||||
15 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
31.3 | ||||||||
32 | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document.* | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.* | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* | |||||||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. | |||||||
OTIS WORLDWIDE CORPORATION (Registrant) | |||||||||||
Dated: | April 27, 2023 | by: | /s/ ANURAG MAHESHWARI | ||||||||
Anurag Maheshwari | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(on behalf of the Registrant and as the Registrant's Principal Financial Officer) | |||||||||||
Dated: | April 27, 2023 | by: | /s/ MICHAEL P. RYAN | ||||||||
Michael P. Ryan | |||||||||||
Vice President and Chief Accounting Officer | |||||||||||
(on behalf of the Registrant and as the Registrant's Principal Accounting Officer) |
Date: | April 27, 2023 | /s/ JUDITH F. MARKS | |||||||||
Judith F. Marks | |||||||||||
Chair, President and Chief Executive Officer |
Date: | April 27, 2023 | /s/ ANURAG MAHESHWARI | |||||||||
Anurag Maheshwari | |||||||||||
Executive Vice President and Chief Financial Officer |
Date: | April 27, 2023 | /s/ MICHAEL P. RYAN | |||||||||
Michael P. Ryan | |||||||||||
Vice President and Chief Accounting Officer |
Date: | April 27, 2023 | /s/ JUDITH F. MARKS | ||||||
Judith F. Marks | ||||||||
Chair, President and Chief Executive Officer | ||||||||
Date: | April 27, 2023 | /s/ ANURAG MAHESHWARI | ||||||
Anurag Maheshwari | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Date: | April 27, 2023 | /s/ MICHAEL P. RYAN | ||||||
Michael P. Ryan | ||||||||
Vice President and Chief Accounting Officer |
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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 352 | $ 353 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (34) | 0 |
Pension and postretirement benefit plan adjustments | 0 | 2 |
Change in unrealized cash flow hedging | 3 | 0 |
Other comprehensive income (loss), net of tax | (31) | 2 |
Comprehensive income (loss), net of tax | 321 | 355 |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (24) | 23 |
Comprehensive income attributable to Otis Worldwide Corporation | $ 297 | $ 378 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for expected credit losses | $ 139 | $ 152 |
Accumulated depreciation | $ 1,183 | $ 1,151 |
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends declared (in usd per share) | $ 0.29 | $ 0.24 |
General |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The Condensed Consolidated Financial Statements as of March 31, 2023 and for the quarters ended March 31, 2023 and 2022 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The Condensed Consolidated Balance Sheet as of December 31, 2022 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States ("U.S."). The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for fiscal year 2022 ("2022 Form 10-K" or "Form 10-K"). Unless the context otherwise requires, references to "Otis", "we", "us", "our" and "the Company" refer to Otis Worldwide Corporation and its subsidiaries. There have been no changes to the Company's significant accounting policies described in the Company's Form 10-K that have a material impact on the Company's Condensed Consolidated Financial Statements and the related notes. Certain amounts presented in the prior period have been reclassified to conform to the current period presentation, which are immaterial. Use of Estimates. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available to us and the unknown future impacts of macroeconomic developments, including inflationary pressures, higher interest rates and tighter credit conditions, as of March 31, 2023 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, financial assets and revenue recognition. While there was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2023 and for the quarters ended March 31, 2023 and 2022, respectively, resulting from our assessments of these matters, future assessment of our expectations of the magnitude and duration of these macroeconomic developments, as well as other factors, could result in material impacts to our Condensed Consolidated Financial Statements in future reporting periods. We also assessed certain accounting matters as they relate to the ongoing conflict between Russia and Ukraine, including, but not limited to our allowance for credit losses, the carrying value of long-lived assets, revenue recognition and the classification of assets. There was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2023 and for the quarter ended March 31, 2023 resulting from our assessment of these matters. We continue to assess the impact on our results of operations, financial position and overall performance as the situation develops and any broader implications it may have on the global economy. Supplier Finance Programs. On January 1, 2023, we adopted ASU No. 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period. Certain Otis subsidiaries participate in supplier finance programs, under which we agree to pay third-party financial institutions the stated amounts of confirmed invoices from suppliers on the original maturity dates of the invoices, while the participating suppliers generally have the ability to sell, or otherwise pledge as collateral, their receivables from the Company to the participating financial institutions. Our obligations to suppliers, including the amounts due and scheduled payment dates, are not impacted by the suppliers' decisions to sell their receivables to the financial institutions, or otherwise pledge their receivables as collateral, under these arrangements. The Company is not a party to the arrangements between the suppliers and the financial institutions, and the Company's payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices. Based on the applicable supplier agreements, the maturity dates of these supplier invoices can range between 30 and 105 days from the invoice date. The outstanding obligations confirmed by the Company as valid to the financial institutions under our supplier finance programs were $404 million and $564 million as of March 31, 2023 and December 31, 2022, respectively. These obligations are included in Accounts payable in the Condensed Consolidated Balance Sheets, and all activity related to the obligations is presented within operating activities on the Consolidated Statements of Cash Flows. The Company or the finance institutions may terminate the agreements with advanced notice. Otis has pledged no assets in connection with its supplier finance programs. Revision. As previously disclosed in our Form 10-Q for the quarter ended June 30, 2022, following the filing of the Company’s Form 10-Q for the quarterly period ended March 31, 2022, we identified an error in the presentation of the shares of Zardoya Otis, S.A. ("Zardoya Otis", later renamed Otis Mobility S.A.) owned by the third party Euro Syns, S.A ("Euro Syns"). Upon revisiting the accounting as of March 31, 2022, the Company determined that the shares owned by Euro Syns that were recorded in Redeemable non-controlling interest for $409 million should have been classified in Forward purchase agreement (a separate new financial statement line item within current liabilities), resulting in a net decrease in Redeemable noncontrolling interest of $409 million. The effects of these corrections are reflected in these Condensed Consolidated Financial Statements for the quarters ended March 31, 2023 and 2022, including in the Condensed Consolidated Statement of Changes in Equity for the quarter ended March 31, 2022, and will be reflected in future filings, as applicable. There was no impact of this error on the Condensed Consolidated Statement of Operations, Statement of Comprehensive Income or the Statement of Cash Flows for the quarter ended March 31, 2022.
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Earnings per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share
The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the Common Stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards' assumed proceeds exceed the average market price of the common shares during the period. There were 1.1 million and 2.6 million of anti-dilutive stock awards excluded from the computation for the quarters ended March 31, 2023 and 2022, respectively.
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Revenue Recognition |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606: Revenue from Contracts with Customers. Contract Assets and Liabilities. Contract assets reflect revenue recognized in advance of customer billing. Contract liabilities are recognized when a customer pays consideration, or we have a right to receive an amount of unconditional consideration, in advance of the satisfaction of performance obligations under the contract. We typically receive progress payments from our customers as we perform our work over time. Total Contract assets and Contract liabilities as of March 31, 2023 and December 31, 2022 are as follows:
Contract assets increased by $46 million during the quarter ended March 31, 2023 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $318 million during the quarter ended March 31, 2023 primarily due to contract billings in excess of revenue earned. In the quarters ended March 31, 2023 and 2022, we recognized revenue of $0.9 billion and $1.0 billion related to contract liabilities as of January 1, 2023 and 2022, respectively. Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of March 31, 2023, our total RPO was $17.9 billion. Of the total RPO as of March 31, 2023, we expect 90% will be recognized as sales over the following 24 months.
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Accounts Receivable, Net |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable, net consisted of the following as of March 31, 2023 and December 31, 2022:
The changes in allowance for expected credit losses related to Accounts receivable, net for the quarters ended March 31, 2023 and 2022, respectively, are as follows:
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Inventories |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories
Raw materials, work-in-process and finished goods are net of valuation write-downs of $97 million and $96 million as of March 31, 2023 and December 31, 2022, respectively.
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Business Acquisitions, Goodwill and Intangible Assets |
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Business Combinations, Goodwill, and Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions, Goodwill and Intangible Assets | Business Acquisitions, Goodwill and Intangible Assets Business Acquisitions. Our acquisitions of businesses and intangible assets, net of cash, totaled $16 million and $8 million in the quarters ended March 31, 2023 and 2022, respectively. The acquisitions consisted of a number of acquisitions primarily in our Service segment. Transaction costs incurred were not considered significant. Goodwill. Changes in our Goodwill balances during the quarter ended March 31, 2023 were as follows:
Intangible Assets. Intangible assets cost and accumulated amortization were $2,043 million and $1,683 million, respectively, as of March 31, 2023, and $2,026 million and $1,657 million, respectively, as of December 31, 2022. Amortization of intangible assets for the quarters ended March 31, 2023 and 2022 was $17 million and $19 million, respectively. Excluding the impact of currency translation adjustments, there were no other significant changes in our Intangible assets during the quarters ended March 31, 2023 and 2022.
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Borrowings and Lines of Credit |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Lines of Credit | Borrowings and Lines of Credit
Commercial Paper. As of March 31, 2023, there were $75 million in borrowings outstanding under the Company's $1.5 billion commercial paper programs, including €60 million of Euro denominated commercial paper. We use our commercial paper borrowings for general corporate purposes including to finance acquisitions, pay dividends, repurchase shares and for debt refinancing. The need for commercial paper borrowings may arise if the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S. For details regarding the Company's short-term borrowings activity in 2022, refer to Note 10 of the Company's audited consolidated financial statements and notes thereto included in our 2022 Form 10-K. Long-term debt. On March 10, 2023, the Company entered into a new credit agreement ("Credit Agreement") with various banks providing for a $1.5 billion unsecured, unsubordinated 5-year revolving credit facility, with an interest rate on US Dollar denominated borrowings at Otis' option of the Term Secured Overnight Financing Rate ("SOFR") plus 0.10% or a base rate, and an interest rate on Euro denominated borrowings at Otis' option of the EURIBO rate or a daily simple Euro Short Term Rate ("ESTR"), plus, in each case, an applicable margin. The applicable margin initially is 1.25% for Term SOFR rate, EURIBO rate and daily simple ESTR rate borrowings, and 0.25% for base rate borrowings, and can fluctuate determined by reference to Otis' public debt ratings, as specified in the Credit Agreement. As of March 31, 2023, there were no borrowings under the Credit Agreement. The undrawn portion of the Credit Agreement serves as a backstop for the issuance of commercial paper. On March 10, 2023, we also terminated all commitments outstanding under the previous existing credit agreement, which was scheduled to expire on April 3, 2025. As of March 31, 2023, the Company is in compliance with all covenants in the revolving credit agreement and the indentures governing all outstanding long-term debt. Long-term debt consisted of the following:
We may redeem the notes at our option pursuant to certain terms. For additional details regarding the Company's debt activity in 2022, refer to Note 10 of the Company's audited consolidated financial statements and notes thereto included in our 2022 Form 10-K. Debt discounts and debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Condensed Consolidated Statements of Operations for the quarters ended March 31, 2023 and 2022 reflects the following:
The unamortized debt issuance costs as of March 31, 2023 and December 31, 2022 were $40 million and $42 million, respectively. The weighted average maturity of our long-term debt as of March 31, 2023 is approximately 8.3 years. The weighted average interest expense rate on our borrowings outstanding as of March 31, 2023 and December 31, 2022 was as follows:
The weighted average interest expense rate on our borrowings during the quarters ended March 31, 2023 and 2022 was as follows:
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans Pension and Postretirement Plans. The Company sponsors both funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit plans, and defined contribution plans. Contributions to our plans were as follows:
The following table illustrates the components of net periodic benefit cost for the Company's defined benefit pension plans:
Postretirement Benefit Plans. The Company sponsors postretirement benefit plans that provide health benefits to eligible retirees. The postretirement plans are unfunded. The net periodic benefit cost was less than $1 million for the quarters ended March 31, 2023 and 2022, respectively. Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of March 31, 2023, approximately 23 million shares remain available for awards under the Plan. Stock-based Compensation Expense The Company measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the Condensed Consolidated Statements of Operations over the award's applicable vesting period. A forfeiture rate assumption is applied on grant date to adjust the expense recognition for awards that are not expected to vest. Stock-based compensation expense and the resulting tax benefits were as follows:
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Stock |
3 Months Ended |
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Mar. 31, 2023 | |
Equity [Abstract] | |
Stock | Stock Preferred Stock. There are 125 million shares of $0.01 par value Preferred Stock authorized, of which none were issued as of March 31, 2023 and December 31, 2022. Common Stock. There are 2 billion shares of $0.01 par value Common Stock authorized. As of March 31, 2023, 436.1 million shares of Common Stock were issued, which includes 22.9 million shares of treasury stock. As of December 31, 2022, 435.6 million shares of Common Stock were issued, which included 20.8 million shares of treasury stock. Share Repurchase Program. As of March 31, 2023, the Company was authorized by the Board of Directors to purchase up to $2.0 billion of Common Stock under a share repurchase program, of which $1.8 billion was remaining at such time. During the quarters ended March 31, 2023 and 2022, the Company repurchased 2.1 million and 2.6 million shares, respectively, for approximately $175 million and $200 million, respectively. The Company's share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be purchased in the open market, in privately negotiated transactions, under accelerated share repurchase programs or under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
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Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax, for the quarters ended March 31, 2023 and 2022 is provided below:
Amounts reclassified that relate to defined benefit pension and postretirement plans include amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented. See Note 8, "Employee Benefit Plans" for additional information.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The decrease in the effective tax rate for the quarter ended March 31, 2023, is primarily due to the impact of foreign currency on a distribution of previously taxed income and a change in the mix of earnings. Otis conducts business globally and, as a result, Otis or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the ordinary course of business, Otis could be subject to examination by taxing authorities throughout the world, including such major jurisdictions as Austria, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Netherlands, Portugal, South Korea, Spain, Switzerland, the United Kingdom, and the United States. With a few exceptions, Otis is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2010. A subsidiary of Otis engaged in tax-related litigation in Belgium received a favorable appellate court decision in 2018. The Belgian Tax Authorities appealed the decision to the Court of Cassation (the equivalent of Supreme Court in Belgium). On December 4, 2020, the Court of Cassation overturned the decision of the appellate court and remanded the case to the appellate court for reconsideration. Following a hearing on March 20, 2023, the Antwerp Appellate Court ruled against the Company. Otis is evaluating the decision to determine if grounds for appeal exist. The associated tax and interest have been fully reserved and are included in the range below. In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. The evaluation considers any additional worldwide uncertain tax positions, the closure of tax statutes or the re-valuation of current uncertain tax positions arising from the issuance of legislation, regulatory or other guidance or developments in examinations, in appeals, or in the courts. Based on the preceding factors, it is reasonably possible that within the next 12 months unrecognized tax benefits could change within the range of a $20 million increase to a $340 million decrease and associated interest could change within the range of a $5 million increase to a $145 million decrease. See Note 16, “Contingent Liabilities” for discussion regarding uncertain tax positions, included in the above range, related to pending litigation with respect to certain deductions claimed in Germany.
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Restructuring Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Costs | Restructuring Costs We initiate restructuring actions to keep our cost structure competitive. Charges generally arise from severance related to workforce reductions, and to a lesser degree, facility exit and lease termination costs associated with the consolidation of office and manufacturing operations. During the quarters ended March 31, 2023 and 2022, we recorded restructuring costs totaling $5 million and $14 million, respectively, for new and ongoing restructuring actions. We recorded these charges as follows:
The restructuring expenses incurred during the quarters ended March 31, 2023 and 2022, were primarily the result of restructuring programs initiated during 2023 and 2022. We are targeting to complete in 2023 the majority of remaining restructuring actions initiated in the quarter ended March 31, 2023 and the full year 2022, with certain utilization beyond 2023 due to legal requirements in the applicable jurisdictions. Expected total costs for the restructuring actions initiated are $71 million, including $26 million to New Equipment and $45 million to Service operating segments, respectively. Remaining costs to incur for the restructuring actions initiated are expected to be $10 million, including $3 million to New Equipment and $7 million to Service operating segments, respectively. The following table summarizes the accrual balance and utilization for restructuring actions, which are primarily for severance costs and most will require cash payment:
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Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under ASC 815, Derivatives and Hedging. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, commodity prices and foreign exchange rates. These fluctuations can increase the costs of financing, investing in and operating the business. We may use derivative instruments, including swaps, forward contracts and options, to manage certain foreign currency, commodity price and interest rate exposures. The average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $4.0 billion and $3.9 billion as of March 31, 2023 and December 31, 2022, respectively. The average of the notional amount of contracts hedging commodity purchases was $24 million and $20 million as of March 31, 2023 and December 31, 2022, respectively. The following table summarizes the fair value and presentation on the Condensed Consolidated Balance Sheets for derivative instruments as of March 31, 2023 and December 31, 2022:
Derivatives designated as Cash flow hedging instruments. The amounts of gain or (loss) attributable to foreign exchange and commodity contract activity reclassified from Accumulated other comprehensive income (loss) were immaterial for the quarters ended March 31, 2023 and 2022, respectively. The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) as of March 31, 2023 and December 31, 2022 are presented in the table below:
The Company utilizes the critical terms match method in assessing firm commitment derivatives and regression testing in assessing commodity derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective. Assuming current market conditions continue, a pre-tax gain of $1 million is expected to be reclassified from Accumulated other comprehensive income (loss) into Cost of products sold to reflect the fixed prices obtained from foreign exchange and commodity hedging within the next 12 months. All derivative contracts accounted for as cash flow hedges as of March 31, 2023 will mature by February 2027. Net Investment Hedges. We have foreign-denominated long-term debt and foreign exchange forward contracts that qualify as net investment hedges. Changes in the value of these net investment hedges due to foreign currency gains or losses are deferred as foreign currency translation adjustments in Other comprehensive income (loss) on the Condensed Consolidated Statements of Comprehensive Income, and will remain in Accumulated other comprehensive income (loss) until the hedged investment is sold or substantially liquidated. We evaluate the effectiveness of the net investment hedges each quarter. We have ¥21.5 billion of Japanese Yen denominated long-term debt, which qualifies as a net investment hedge against our investments in Japanese businesses. As of March 31, 2023, the net investment hedge is deemed to be effective. During the quarters ended March 31, 2023 and 2022, we recognized a loss of $1 million and a gain of $12 million, respectively, associated with this net investment hedge in Other comprehensive income (loss). As of March 31, 2023, we have a notional amount of a foreign exchange forward contract of €95 million, which qualifies as a net investment hedge against our investments in certain European businesses. The maturity date of this derivative instrument is in 2023. As of March 31, 2023, the net investment hedge is deemed to be effective. During the quarter ended March 31, 2023, we recognized a gain of $1 million associated with this net investment hedge in Other comprehensive income (loss). Derivatives not designated as Cash flow hedging instruments. The net effect of derivatives not designated as Cash flow hedging instruments within Other income (expense) net, on the Condensed Consolidated Statements of Operations was as follows:
The effects of derivatives not designated as Cash flow hedge instruments within Cost of products sold on the Condensed Consolidated Statements of Operations were gains of $1 million and losses of $3 million in the quarters ended March 31, 2023 and 2022, respectively.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Valuation Techniques. Our marketable securities include investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. The fair value gains or losses related to our marketable securities are recorded through net income. Our derivative assets and liabilities include foreign exchange and commodity contracts that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. As of March 31, 2023, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks. The fair values of the current portion of the Company's financial instruments that are not carried at fair value approximated their carrying values because of the short-term nature of the current portion. The fair value of receivables, including customer financing notes receivable, net, that were issued long-term are based on the discounted values of their related cash flows at interest rates reflecting the attributes of the counterparties, including geographic location. Customer-specific risk, including credit risk, is already considered in the carrying value of those receivables. Our notes, as described in Note 7, "Borrowings and Lines of Credit", are measured at fair value using closing bond prices from active markets. Recurring Fair Value Measurements. In accordance with the provisions of ASC 820: Fair Value Measurements, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and non-recurring basis in our Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:
Fair Value of Financial Instruments. The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value as of March 31, 2023 and December 31, 2022:
The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:
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Guarantees |
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Guarantees and Product Warranties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees | Guarantees The Company provides service and warranty on its products beyond normal service and warranty policies. The changes in the carrying amount of service and product guarantees for the quarters ended March 31, 2023 and 2022 are as follows:
The Company provides certain financial guarantees to third parties. As of March 31, 2023, Otis has stand-by letters of credit with maximum potential payment totaling $151 million. We accrue costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with ASC Topic 460: Guarantees, we record these liabilities at fair value. As of March 31, 2023, Otis has determined there are no estimated costs probable under these guarantees.
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Contingent Liabilities |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | Contingent Liabilities Except as otherwise noted, while we are unable to predict the final outcome, based on information currently available, we do not believe that resolution of any of the following matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. In addition to the specific amounts noted below, where we have recorded loss contingency accruals for the below and other matters, the amounts in aggregate are not material. Legal costs generally are expensed when incurred. Environmental. As previously disclosed, the Company's operations are subject to environmental regulation by authorities with jurisdiction over its operations. The Company has accrued for the costs of environmental remediation activities, including, but not limited to, investigatory, remediation, operating and maintenance costs and performance guarantees, and periodically reassesses these amounts. Management believes that the likelihood of incurring losses materially in excess of amounts accrued is remote. The outstanding liability for environmental obligations was $5 million as of March 31, 2023 and December 31, 2022, and is principally included in Other long-term liabilities on the Condensed Consolidated Balance Sheets. Legal Proceedings. German Tax Litigation As previously disclosed, we have been involved in administrative review proceedings with the German Tax Office, which concern approximately €215 million (approximately $232 million as of March 31, 2023) of tax benefits that we have claimed related to a 1998 reorganization of the corporate structure of our operations in Germany. Upon audit, these tax benefits were disallowed by the German Tax Office. We estimate interest associated with the aforementioned tax benefits is an additional approximately €118 million (approximately $127 million as of March 31, 2023). In August 2012, a suit was filed in the local German Tax Court (Berlin-Brandenburg). In 2015, our former parent United Technologies Corporation ("UTC"), now Raytheon Technologies Corporation ("RTX"), made tax and interest payments to German tax authorities of €275 million (approximately $300 million) in order to avoid additional interest accruals pending final resolution of this matter. In March 2016, the local German Tax Court dismissed the suit, and we appealed this decision to the German Federal Tax Court. Following a hearing in July 2018, the German Federal Tax Court remanded the matter to the local German Tax Court for further proceedings. In December 2020, the local German Tax Court ruled against the Company. On January 26, 2021, the Company filed an appeal with the German Federal Tax Court. On February 8, 2022, the Company received the decision of the German Federal Tax Court, in which the Court remanded the case for reconsideration by the local German Tax Court. Despite the remand, there is no assurance that the local German Tax Court will rule in the Company's favor, and the decision of the German Tax Office ultimately could be sustained. The local German Tax Court has scheduled a hearing for June 12, 2023, and a decision is expected later this year. Pursuant to the Tax Matters Agreement ("TMA") with our former parent, UTC, the Company retains the liability associated with the remaining interest, and has recorded an interest accrual of €45 million (approximately $48 million as of March 31, 2023), net of payments and other deductions, included within Accrued liabilities on the Condensed Consolidated Balance Sheets as of March 31, 2023. If the Company prevails in this matter, any recoveries would be allocated between RTX and the Company pursuant to the terms of the TMA. Asbestos Matters As previously disclosed, we have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos. While we have never manufactured any asbestos-containing component parts, and no longer incorporate asbestos in any current products, certain of our historical products have contained components manufactured by third parties incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or were covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos-related claims were not material individually or in the aggregate as of and for the periods ended March 31, 2023 and December 31, 2022. The estimated range of total liabilities to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $21 million to $43 million as of March 31, 2023 and December 31, 2022. Because no amount within the range of estimates is more likely to occur than any other, we have recorded the minimum amount of $21 million, which is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022. Amounts are on a pre-tax basis, not discounted, and exclude the Company's legal fees to defend the asbestos claims (which will continue to be expensed as they are incurred). In addition, the Company has an insurance recovery receivable for probable asbestos-related recoveries of approximately $5 million, which is principally included in Other assets on our Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022. Putative Class Action Lawsuit On August 12, 2020, a putative class action lawsuit, (Geraud Darnis et al. v. Raytheon Technologies Corporation et al.), was filed in the United States District Court for the District of Connecticut (the "Court") against Otis, RTX, Carrier Global Corporation ("Carrier"), each of their directors, and various incentive and deferred compensation plans in connection with the separation of Otis and Carrier from UTC (the "Separation") in April 2020. On September 13, 2021, plaintiffs filed an amended complaint against the three company defendants only. The named plaintiffs are former employees of UTC and its current and former subsidiaries, including Otis and Carrier. They seek to recover monetary damages, as well as related declaratory and equitable relief, based on claimed decreases in the value of long-term incentive awards and deferred compensation under nonqualified deferred compensation plans allegedly caused by the formula used to calculate the adjustments to such awards and deferred compensation from RTX, Carrier, and Otis following the spin-offs of Carrier and Otis and the subsequent combination of UTC and Raytheon Company. On September 30, 2022, in response to motions to dismiss filed by the defendants, the Court dismissed the class action in its entirety with prejudice. The plaintiffs appealed the decision on October 26, 2022. At this time, we do not believe this action will have a material adverse effect on our business, financial conditions, cash flows or results of operations. Other. As previously disclosed, we have commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the normal course of business. We accrue contingencies based on a range of possible outcomes. If no amount within this range is a better estimate than any other, we accrue the minimum amount. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, we expect that the outcome of such claims, individually or in the aggregate, will not have a material adverse effect on our business, financial condition, cash flows or results of operations. As previously disclosed, in certain European countries, claims for overcharges on elevators and escalators related to civil cartel cases have been made, which we have accrued for based on our evaluation of the claims. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, historical settlement experience of these cases has not been material to the business, financial condition, cash flows or results of operations, however the future outcome of these cases cannot be determined. As previously disclosed, in the ordinary course of business, the Company is also routinely a defendant in, party to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some of these proceedings, claims for substantial monetary damages are asserted against the Company and its subsidiaries and could result in fines, penalties, compensatory or treble damages or non-monetary relief. We do not believe that these matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition.
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Segment Financial Data |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Financial Data | Segment Financial Data Our operations are classified into two operating segments: New Equipment and Service. Through the New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators as well as escalators and moving walkways to customers in the residential and commercial building and infrastructure projects. The Service segment provides maintenance and repair services for both our products and those of other manufacturers, and provides modernization services to upgrade elevators and escalators. The operating segments are generally based on the management structure of the Company, how management allocates resources, assesses performance and makes strategic and operational decisions. Segment Information. Segment information for the quarters ended March 31, 2023 and 2022 are as follows:
Total assets are not presented for each segment as they are not presented to, or reviewed by, the Chief Operating Decision Maker. Geographic Sales. Geographic Net sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. and China, there were no individually significant countries with sales exceeding 10% of Net sales during the quarters ended March 31, 2023 and 2022.
Disaggregated Sales by Type. Segment Net sales disaggregated by product and service type for the quarters ended March 31, 2023 and 2022 are as follows:
Major Customers. There were no customers that individually accounted for 10% or more of the Company's consolidated Net sales for the quarters ended March 31, 2023 and 2022.
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Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Pronouncements | Accounting Pronouncements Recent Accounting Pronouncements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early application permitted. The Company adopted ASU 2021-08 effective January 1, 2023. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements. In September 2022, the FASB issued ASU No. 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted ASU 2022-04 effective January 1, 2023. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements, as disclosed in Note 1, "General". Future Accounting Pronouncements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which allows ASU 2020-04 to be adopted and applied prospectively to contract modifications made on or before December 31, 2024. We are currently evaluating the impact of adopting this standard but do not expect it to have a material impact on our Condensed Consolidated Financial Statements. Other new accounting pronouncements issued but not effective until after March 31, 2023 did not and are not expected to have a material impact on our financial position, results of operations or liquidity.
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General (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. |
Earnings per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted |
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Revenue Recognition (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of contract assets and liabilities | Total Contract assets and Contract liabilities as of March 31, 2023 and December 31, 2022 are as follows:
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Accounts Receivable, Net (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts, notes, loans and financing receivable | Accounts receivable, net consisted of the following as of March 31, 2023 and December 31, 2022:
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Accounts receivable, allowance for credit loss | The changes in allowance for expected credit losses related to Accounts receivable, net for the quarters ended March 31, 2023 and 2022, respectively, are as follows:
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Inventories (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory |
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Business Acquisitions, Goodwill and Intangible Assets (Tables) |
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Business Combinations, Goodwill, and Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | Changes in our Goodwill balances during the quarter ended March 31, 2023 were as follows:
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Borrowings and Lines of Credit (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of short-term debt |
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Schedule of long-term debt | Long-term debt consisted of the following:
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Schedule of debt | Debt discounts and debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Condensed Consolidated Statements of Operations for the quarters ended March 31, 2023 and 2022 reflects the following:
The weighted average interest expense rate on our borrowings during the quarters ended March 31, 2023 and 2022 was as follows:
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Employee Benefit Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of defined benefit plans disclosures | Contributions to our plans were as follows:
The following table illustrates the components of net periodic benefit cost for the Company's defined benefit pension plans:
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Share-based payment arrangement, expensed and capitalized, amount | Stock-based compensation expense and the resulting tax benefits were as follows:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax, for the quarters ended March 31, 2023 and 2022 is provided below:
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Restructuring Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring and related costs | We recorded these charges as follows:
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Schedule of restructuring reserve by type of cost | The following table summarizes the accrual balance and utilization for restructuring actions, which are primarily for severance costs and most will require cash payment:
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Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments in statement of financial position, fair value | The following table summarizes the fair value and presentation on the Condensed Consolidated Balance Sheets for derivative instruments as of March 31, 2023 and December 31, 2022:
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Schedule of cash flow hedges included in accumulated other comprehensive income (loss) | The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) as of March 31, 2023 and December 31, 2022 are presented in the table below:
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Derivative instruments, gain (loss) | The net effect of derivatives not designated as Cash flow hedging instruments within Other income (expense) net, on the Condensed Consolidated Statements of Operations was as follows:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements, recurring and nonrecurring | In accordance with the provisions of ASC 820: Fair Value Measurements, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and non-recurring basis in our Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:
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Fair value, by balance sheet grouping | The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value as of March 31, 2023 and December 31, 2022:
The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022:
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Guarantees (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees and Product Warranties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product warranty disclosure | The changes in the carrying amount of service and product guarantees for the quarters ended March 31, 2023 and 2022 are as follows:
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Segment Financial Data (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information, by segment | Segment information for the quarters ended March 31, 2023 and 2022 are as follows:
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Schedule of segment reporting information, by geographic markets | Geographic Net sales are attributed to the geographic regions based on their location of origin. With the exception of the U.S. and China, there were no individually significant countries with sales exceeding 10% of Net sales during the quarters ended March 31, 2023 and 2022.
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Segment reporting disclosure, sales type | Segment Net sales disaggregated by product and service type for the quarters ended March 31, 2023 and 2022 are as follows:
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Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Net Income (Loss) Attributable to Parent [Abstract] | ||
Net income attributable to Otis Worldwide Corporation | $ 331 | $ 311 |
Impact of redeemable noncontrolling interest | 0 | 0 |
Net income attributable to common shareholders | $ 331 | $ 311 |
Basic weighted average number of shares outstanding (in shares) | 414,300,000 | 424,200,000 |
Stock awards and equity units (share equivalent) (in shares) | 3,500,000 | 3,500,000 |
Diluted weighted average number of shares outstanding (in shares) | 417,800,000 | 427,700,000 |
Earnings Per Share of Common Stock: | ||
Basic (in usd per share) | $ 0.80 | $ 0.73 |
Diluted (in usd per share) | $ 0.79 | $ 0.73 |
Antidilutive securities excluded from computation of EPS (in shares) | 1,100,000 | 2,600,000 |
Revenue Recognition - Contract With Customer, Assets and Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract assets, current | $ 710 | $ 664 |
Total contract assets | 710 | 664 |
Contract liabilities, current | 2,983 | 2,662 |
Contract liabilities, non-current (included within Other long-term liabilities) | 49 | 52 |
Total contract liabilities | 3,032 | 2,714 |
Net contract liabilities | $ 2,322 | $ 2,050 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Increase in contract assets | $ 46 | |
Increase in contract liabilities | 318 | |
Revenue recognized | 900 | $ 1,000 |
Revenue, remaining performance obligation | $ 17,900 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, percentage | 90.00% | |
Remaining performance obligation, expected timing of satisfaction period | 24 months |
Accounts Receivable, Net - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Receivables [Abstract] | ||||
Trade receivables | $ 3,203 | $ 3,231 | ||
Unbilled receivables | 133 | 103 | ||
Miscellaneous receivables | 91 | 91 | ||
Customer financing notes receivable | 76 | 84 | ||
Total receivables | 3,503 | 3,509 | ||
Less: allowance for expected credit losses | 139 | 152 | $ 188 | $ 175 |
Accounts receivable, net | $ 3,364 | $ 3,357 |
Accounts Receivable, Net - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 152 | $ 175 |
Provision for expected credit losses | 6 | 7 |
Write-offs charged against the allowance for expected credit losses | (20) | (2) |
Foreign exchange and other | 1 | 8 |
Ending balance | $ 139 | $ 188 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and work-in-process | $ 180 | $ 166 |
Finished goods | 462 | 451 |
Total | 642 | 617 |
Inventory valuation reserves | $ 97 | $ 96 |
Business Acquisitions, Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Business Combinations, Goodwill, and Intangible Assets [Abstract] | |||
Investments in businesses, net of cash acquired | $ 16 | $ 8 | |
Intangible assets cost | 2,043 | $ 2,026 | |
Intangible assets, accumulated amortization | 1,683 | $ 1,657 | |
Amortization of intangible assets | $ 17 | $ 19 |
Business Acquisitions, Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | $ 1,567 |
Goodwill Resulting from Business Combinations | 0 |
Foreign Currency Translation and Other | 3 |
Goodwill - Ending Balance | 1,570 |
New Equipment | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 292 |
Goodwill Resulting from Business Combinations | 0 |
Foreign Currency Translation and Other | 1 |
Goodwill - Ending Balance | 293 |
Services | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 1,275 |
Goodwill Resulting from Business Combinations | 0 |
Foreign Currency Translation and Other | 2 |
Goodwill - Ending Balance | $ 1,277 |
Borrowings and Lines of Credit - Short-Term Borrowings (Details) € in Millions, $ in Millions |
Mar. 31, 2023
USD ($)
|
Mar. 31, 2023
EUR (€)
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|
Debt Disclosure [Abstract] | |||
Commercial paper | $ 75 | € 60 | $ 94 |
Other borrowings | 32 | 45 | |
Total short-term borrowings | $ 107 | $ 139 |
Borrowings and Lines of Credit - Schedule of Debt Issuance Expenses (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Disclosure [Abstract] | ||
Debt issuance costs amortization | $ 3 | $ 3 |
Total interest expense on external debt | $ 33 | $ 36 |
Borrowings and Lines of Credit - Schedule of Average Interest Rates on Borrowings (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Long-term Debt | |||
Debt Instrument [Line Items] | |||
Average interest expense rate on borrowings | 2.00% | 2.00% | |
Average interest expense rate during period | 2.00% | 2.00% | |
Short-term Debt | |||
Debt Instrument [Line Items] | |||
Average interest expense rate on borrowings | 3.40% | 4.70% | |
Average interest expense rate during period | 4.80% | 0.40% |
Employee Benefit Plans - Schedule of Defined Benefit Plan Disclosures (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plans | $ 14 | $ 12 |
Defined contribution plans | 19 | 20 |
Multi-employer pension and postretirement plans | 34 | 23 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 7 | 10 |
Interest cost | 8 | 4 |
Expected return on plan assets | (8) | (6) |
Recognized actuarial net loss | 0 | 3 |
Total net periodic benefit cost | 7 | 11 |
Other Postretirement Benefits Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total net periodic benefit cost | $ 1 | $ 1 |
Employee Benefit Plans - Schedule of Share-based Compensation and Related Income Tax Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Stock-based compensation expense | $ 15 | $ 12 |
Less: future tax benefit | 2 | 1 |
Stock-based compensation expense, net of tax | 13 | 11 |
Share-based Payment Arrangement | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Stock-based compensation expense | 15 | 13 |
Liability Awards, Share-Based Compensation Arrangement | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Stock-based compensation expense | $ 0 | $ (1) |
Employee Benefit Plans - Narrative (Details) shares in Millions, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
shares
| |
Retirement Benefits [Abstract] | |
Common stock shares available for awards (in shares) | shares | 23 |
Unrecognized compensation cost | $ | $ 101 |
Unrecognized compensation cost, period for recognition | 2 years 1 month 6 days |
Stock (Details) - USD ($) $ / shares in Units, shares in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Equity [Abstract] | |||
Preferred stock, shares authorized (in shares) | 125.0 | 125.0 | |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares outstanding (in shares) | 0.0 | 0.0 | |
Preferred stock, shares issued (in shares) | 0.0 | 0.0 | |
Common stock, shares authorized (in shares) | 2,000.0 | 2,000.0 | |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | |
Common stock, shares issued (in shares) | 436.1 | 435.6 | |
Treasury stock (in shares) | 22.9 | 20.8 | |
Stock repurchase program, authorized amount | $ 2,000,000,000 | ||
Stock repurchase program, remaining authorized shares amount | $ 1,800,000,000 | ||
Stock repurchase during period (in shares) | 2.1 | 2.6 | |
Stock repurchased during period | $ 175,000,000 | $ 200,000,000 |
Income Taxes (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Increase in unrecognized tax benefits reasonably possible | $ 20 |
Decrease in unrecognized tax benefits reasonably possible | 340 |
Increase in unrecognized tax benefits, accrued interest, is reasonably possible | 5 |
Decrease in unrecognized tax benefits, accrued interest, is reasonably possible | $ 145 |
Restructuring Costs - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 5 | $ 14 |
New Equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 2 | 4 |
Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 3 | $ 10 |
2022 Actions | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected costs | 71 | |
Remaining costs | 10 | |
2022 Actions | New Equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected costs | 26 | |
Remaining costs | 3 | |
2022 Actions | Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Expected costs | 45 | |
Remaining costs | $ 7 |
Restructuring Costs - Schedule of Pretax Restructuring Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 5 | $ 14 |
New Equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 2 | 4 |
Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 3 | 10 |
Cost of products and services sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 2 | 3 |
Selling, general and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 3 | $ 11 |
Restructuring Costs - Pre-Tax Restructuring Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 5 | $ 14 |
Cost of products and services sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 2 | 3 |
Selling, general and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 3 | $ 11 |
Restructuring Costs - Restructuring Roll forward (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Reserve [Roll Forward] | ||
Net restructuring costs | $ 5 | $ 14 |
2022 Actions | Severance costs | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | 41 | |
Net restructuring costs | 5 | |
Utilization, foreign exchange and other costs | (10) | |
Restructuring reserve, ending balance | $ 36 |
Financial Instruments - Schedule of Gain (Loss) on Derivative Instruments Reclassified From OCI (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gain (loss) recorded in Accumulated other comprehensive income (loss) | $ 6 | $ 3 |
Financial Instruments - Schedule of Gain (Loss) on Derivative Instruments in Other Income (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Foreign Exchange Contract | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Foreign exchange contracts | $ 3 | $ 6 |
Guarantees - Guarantees and Product Warranties Rollforward (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Movement Warranties [Roll Forward] | ||
Beginning balance | $ 13 | $ 20 |
Warranties | 0 | 0 |
Settlements made | (1) | (4) |
Foreign exchange and other | 1 | 1 |
Ending balance | $ 13 | $ 17 |
Guarantees - Narrative (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Standby Letter of Credit | |
Guarantor Obligations [Line Items] | |
Guarantor obligation, maximum exposure | $ 151 |
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