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) | 2024 | 2023 | ||||||||||||
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) | 2024 | 2023 | ||||||||||||
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, 2024 | December 31, 2023 | ||||||||||||
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) | $ | $ |
(dollars in millions, except per share amounts) | 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 | ||||||||||||||||||||||||||||||||||||||||||
Quarter Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2023 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
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, 2024 | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
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, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
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 (used in) operating activities | ||||||||||||||
Investing Activities: | ||||||||||||||
Capital expenditures | ( | ( | ||||||||||||
Acquisitions of businesses and intangible assets, net of cash (Note 6) | ( | ( | ||||||||||||
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) | ( | |||||||||||||
Dividends paid on Common Stock | ( | ( | ||||||||||||
Repurchases of Common Stock | ( | ( | ||||||||||||
Acquisition of noncontrolling interest shares | ( | |||||||||||||
Dividends paid to noncontrolling interest | ( | ( | ||||||||||||
Other financing activities, net | ( | ( | ||||||||||||
Net cash flows provided by (used in) financing activities | ( | ( | ||||||||||||
Effect of 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) | 2024 | 2023 | ||||||||||||
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, 2024 | December 31, 2023 | ||||||||||||
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, 2024 | December 31, 2023 | ||||||||||||
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) | 2024 | 2023 | ||||||||||||
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, 2024 | December 31, 2023 | ||||||||||||
Raw materials and work-in-process | $ | $ | ||||||||||||
Finished goods | ||||||||||||||
Total | $ | $ |
(dollars in millions) | Balance as of December 31, 2023 | Goodwill Resulting from Business Combinations | Foreign Currency Translation and Other | Balance as of March 31, 2024 | ||||||||||||||||||||||
New Equipment | $ | $ | $ | ( | $ | |||||||||||||||||||||
Service | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
Commercial paper | $ | $ | ||||||||||||
Other borrowings | ||||||||||||||
Total short-term borrowings | $ | $ |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
$ | $ | |||||||||||||
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) | 2024 | 2023 | ||||||||||||
Debt issuance costs amortization | $ | $ | ||||||||||||
Total interest expense on external debt |
March 31, 2024 | December 31, 2023 | |||||||||||||
Short-term commercial paper | ||||||||||||||
Total long-term debt |
Quarter Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Short-term commercial paper | ||||||||||||||
Total long-term debt |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Defined benefit plans | $ | $ | ||||||||||||
Defined contribution plans | ||||||||||||||
Multi-employer pension and postretirement plans |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
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) | 2024 | 2023 | ||||||||||||
Stock-based compensation expense (Share Based) | $ | $ | ||||||||||||
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, 2024 | ||||||||||||||||||||||||||
Balance as of December 31, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications, net | ( | ( | ||||||||||||||||||||||||
Amounts reclassified, pre-tax | ||||||||||||||||||||||||||
Tax benefit reclassified | ||||||||||||||||||||||||||
Balance as of March 31, 2024 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
(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 benefit reclassified | ||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
Quarter Ended March 31, 2024 | Quarter Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||
(dollars in millions) | UpLift | Other | Total | UpLift | Other | Total | ||||||||||||||||||||||||||||||||
Cost of products and services sold | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Selling, general and administrative | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
(dollars in millions) | UpLift Actions | Other Actions | Total Restructuring Actions | |||||||||||||||||
Restructuring accruals as of December 31, 2023 | $ | $ | $ | |||||||||||||||||
Net restructuring costs | ||||||||||||||||||||
Utilization, foreign exchange and other costs | ( | ( | ( | |||||||||||||||||
Restructuring accruals as of March 31, 2024 | $ | $ | $ | |||||||||||||||||
(dollars in millions) | Balance Sheet Classification | March 31, 2024 | December 31, 2023 | |||||||||||||||||
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 | $ | ( | $ | ( | |||||||||||||||
Foreign exchange contracts | Other long-term liabilities | ( | ||||||||||||||||||
Total liability derivatives | $ | ( | $ | ( | ||||||||||||||||
Derivatives not designated as Cash flow hedging instruments: | ||||||||||||||||||||
Asset Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Other current assets | $ | $ | |||||||||||||||||
Foreign exchange contracts | Other assets | |||||||||||||||||||
Total asset derivatives | $ | $ | ||||||||||||||||||
Liability Derivatives: | ||||||||||||||||||||
Foreign exchange contracts | Accrued liabilities | $ | ( | $ | ( | |||||||||||||||
Foreign exchange contracts | Other long-term liabilities | ( | ( | |||||||||||||||||
Total liability derivatives | $ | ( | $ | ( |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
Gain (loss) recorded in Accumulated other comprehensive income (loss) | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Foreign currency denominated long-term debt | $ | $ | ( | |||||||||||
Foreign currency forward contracts | ||||||||||||||
Total | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Foreign exchange contracts | $ | ( | $ |
March 31, 2024 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||||||||||||
Marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||||
Derivative liabilities | ( | ( | ||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||
(dollars in millions) | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Recurring fair value measurements: | ||||||||||||||||||||||||||
Marketable securities | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||||
Derivative liabilities | ( | ( | ||||||||||||||||||||||||
March 31, 2024 | December 31, 2023 | |||||||||||||||||||||||||
(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, 2024 | ||||||||||||||||||||||||||
(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, 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 | ( | ( |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Net Sales | ||||||||||||||
New Equipment | $ | $ | ||||||||||||
Service | ||||||||||||||
Total | $ | $ | ||||||||||||
Operating Performance | ||||||||||||||
New Equipment operating profit | $ | $ | ||||||||||||
Service operating profit | ||||||||||||||
Total segment operating profit | ||||||||||||||
Corporate and Unallocated | ||||||||||||||
General corporate expenses and other | ( | ( | ||||||||||||
UpLift restructuring actions | ( | |||||||||||||
Other restructuring actions | ( | ( | ||||||||||||
UpLift transformation costs | ( | |||||||||||||
Separation-related reserve adjustment | ||||||||||||||
Total company operating profit | ||||||||||||||
Non-service pension cost (benefit) | ||||||||||||||
Interest expense (income), net | ||||||||||||||
Net income before income taxes | $ | $ |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
United States Operations | $ | $ | ||||||||||||
International Operations | ||||||||||||||
China | ||||||||||||||
Other | ||||||||||||||
Total | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
New Equipment | $ | $ | ||||||||||||
Maintenance and Repair | ||||||||||||||
Modernization | ||||||||||||||
Total Service | ||||||||||||||
Total | $ | $ | ||||||||||||
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
UpLift restructuring action costs | $ | 1 | $ | — | ||||||||||
UpLift transformation costs | 12 | — | ||||||||||||
Total UpLift costs | $ | 13 | $ | — |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Net sales | $ | 3,437 | $ | 3,346 | ||||||||||
Percentage change year-over-year | 2.7 | % |
Components of Net sales change: | Quarter Ended March 31, 2024 | |||||||
Organic volume | 3.8 | % | ||||||
Foreign currency translation | (1.2) | % | ||||||
Acquisitions and divestitures, net | 0.1 | % | ||||||
Total % change | 2.7 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Total cost of products and services sold | $ | 2,409 | $ | 2,350 | ||||||||||
Percentage change year-over-year | 2.5 | % |
Components of Cost of Products and Services Sold change: | Quarter Ended March 31, 2024 | |||||||
Organic volume | 3.6 | % | ||||||
Foreign currency translation | (1.3) | % | ||||||
Acquisitions and divestitures, net and other | 0.2 | % | ||||||
Total % change | 2.5 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Gross margin | $ | 1,028 | $ | 996 | ||||||||||
Gross margin percentage | 29.9 | % | 29.8 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Research and development | $ | 36 | $ | 35 | ||||||||||
Percentage of Net sales | 1.0 | % | 1.0 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Selling, general and administrative | $ | 462 | $ | 455 | ||||||||||
Percentage of Net sales | 13.4 | % | 13.6 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
UpLift restructuring action costs | $ | 1 | $ | — | ||||||||||
Other restructuring action costs | 19 | 5 | ||||||||||||
Total restructuring costs | $ | 20 | $ | 5 |
(dollars in millions) | UpLift Actions | Other Actions | Total Restructuring | |||||||||||||||||
Cash outflows during the three months ended March 31, 2024 | $ | 7 | $ | 13 | $ | 20 | ||||||||||||||
Expected cash payments remaining to complete actions announced | 31 | 57 | 88 |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Other income (expense), net | $ | 14 | $ | 7 |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Interest expense (income), net | $ | 44 | $ | 33 |
Quarter Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Effective tax rate | 25.2 | % | 26.7 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Noncontrolling interest in subsidiaries' earnings | $ | 21 | $ | 21 | ||||||||||
Net income attributable to Otis Worldwide Corporation | $ | 353 | $ | 331 | ||||||||||
Net Sales | Operating Profit | Operating Profit Margin | ||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
New Equipment | $ | 1,280 | $ | 1,307 | $ | 71 | $ | 69 | 5.5% | 5.3% | ||||||||||||||||||||||||||||
Service | 2,157 | 2,039 | 523 | 479 | 24.2% | 23.5% | ||||||||||||||||||||||||||||||||
Total segment | $ | 3,437 | $ | 3,346 | 594 | 548 | 17.3% | 16.4% | ||||||||||||||||||||||||||||||
Corporate and Unallocated | ||||||||||||||||||||||||||||||||||||||
General corporate expenses and other | (33) | (30) | ||||||||||||||||||||||||||||||||||||
UpLift restructuring actions | (1) | — | ||||||||||||||||||||||||||||||||||||
Other restructuring actions | (19) | (5) | ||||||||||||||||||||||||||||||||||||
UpLift transformation costs | (12) | — | ||||||||||||||||||||||||||||||||||||
Separation-related reserve adjustment | 15 | — | ||||||||||||||||||||||||||||||||||||
Consolidated Operating Profit | $ | 544 | $ | 513 | 15.8% | 15.3% | ||||||||||||||||||||||||||||||||
Quarter Ended March 31, | ||||||||||||||||||||||||||
(dollars in millions) | 2024 | 2023 | Change | Change | ||||||||||||||||||||||
Net sales | $ | 1,280 | $ | 1,307 | $ | (27) | (2.1)% | |||||||||||||||||||
Cost of sales | 1,065 | 1,097 | (32) | (2.9)% | ||||||||||||||||||||||
215 | 210 | 5 | 2.4% | |||||||||||||||||||||||
Operating expenses | 144 | 141 | 3 | 2.1% | ||||||||||||||||||||||
Operating profit | $ | 71 | $ | 69 | $ | 2 | 2.9% | |||||||||||||||||||
Operating profit margin | 5.5 | % | 5.3 | % |
Components of Net sales change: | Quarter Ended March 31, 2024 | |||||||
Organic volume | (0.5) | % | ||||||
Foreign currency translation | (1.6) | % | ||||||
Acquisitions and divestitures, net and other | — | % | ||||||
Total % change | (2.1) | % |
Quarter Ended March 31, | ||||||||||||||||||||||||||
(dollars in millions) | 2024 | 2023 | Change | Change | ||||||||||||||||||||||
Net sales | $ | 2,157 | $ | 2,039 | $ | 118 | 5.8 | % | ||||||||||||||||||
Cost of sales | 1,339 | 1,251 | 88 | 7.0 | % | |||||||||||||||||||||
818 | 788 | 30 | 3.8 | % | ||||||||||||||||||||||
Operating expenses | 295 | 309 | (14) | (4.5) | % | |||||||||||||||||||||
Operating profit | $ | 523 | $ | 479 | $ | 44 | 9.2 | % | ||||||||||||||||||
Operating profit margin | 24.2 | % | 23.5 | % |
Components of Net sales change: | Quarter Ended March 31, 2024 | |||||||
Organic volume | 6.5 | % | ||||||
Foreign currency translation | (0.8) | % | ||||||
Acquisitions and divestitures, net | 0.1 | % | ||||||
Total % change | 5.8 | % |
Components of Net sales change: | Maintenance and Repair | Modernization | ||||||||||||
Organic volume | 5.8 | % | 9.7 | % | ||||||||||
Foreign currency translation | (0.7) | % | (1.6) | % | ||||||||||
Acquisitions and divestitures, net | 0.2 | % | — | % | ||||||||||
Total % change | 5.3 | % | 8.1 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
General corporate expenses and other | $ | (33) | $ | (30) | ||||||||||
UpLift restructuring actions | (1) | — | ||||||||||||
Other restructuring actions | (19) | (5) | ||||||||||||
UpLift transformation costs | (12) | — | ||||||||||||
Separation-related reserve adjustment | 15 | — | ||||||||||||
Total Corporate and Unallocated | $ | (50) | $ | (35) |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
Cash and cash equivalents | $ | 884 | $ | 1,274 | ||||||||||
Total debt | 6,881 | 6,898 | ||||||||||||
Net debt (total debt less cash and cash equivalents) | 5,997 | 5,624 | ||||||||||||
Total equity | (4,940) | (4,855) | ||||||||||||
Total capitalization (total debt plus total equity) | 1,941 | 2,043 | ||||||||||||
Net capitalization (total debt plus total equity less cash and cash equivalents) | 1,057 | 769 | ||||||||||||
Total debt to total capitalization | 355 | % | 338 | % | ||||||||||
Net debt to net capitalization | 567 | % | 731 | % |
Quarter Ended March 31, | ||||||||||||||
(dollars in millions) | 2024 | 2023 | ||||||||||||
Net cash flows provided by (used in): | ||||||||||||||
Operating activities | $ | 171 | $ | 278 | ||||||||||
Investing activities | (79) | (21) | ||||||||||||
Financing activities | (467) | (341) | ||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (18) | 10 | ||||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (393) | $ | (74) |
(dollars in millions) | Quarter Ended March 31, 2024 | |||||||
OWC Statement of Operations - Standalone and Unconsolidated | ||||||||
Revenue | $ | — | ||||||
Cost of revenue | — | |||||||
Operating expenses | 3 | |||||||
Income from consolidated subsidiaries | 48 | |||||||
Income (loss) from operations excluding income from consolidated subsidiaries | 12 | |||||||
Net income (loss) excluding income from consolidated subsidiaries | (19) |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
OWC Balance Sheet - Standalone and Unconsolidated | ||||||||||||||
Current assets (intercompany receivables from non-guarantor subsidiaries) | $ | — | $ | — | ||||||||||
Current assets (excluding intercompany receivables from non-guarantor subsidiaries) | 98 | 63 | ||||||||||||
Noncurrent assets (investments in consolidated subsidiaries) | 1,236 | 1,236 | ||||||||||||
Noncurrent assets (excluding investments in consolidated subsidiaries) | 38 | 43 | ||||||||||||
Current liabilities (intercompany payables to non-guarantor subsidiaries) | 4,228 | 3,753 | ||||||||||||
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 108 | 119 | ||||||||||||
Noncurrent liabilities | 5,855 | 5,880 |
(dollars in millions) | Quarter Ended March 31, 2024 | |||||||
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 | (64) |
(dollars in millions) | March 31, 2024 | December 31, 2023 | ||||||||||||
Highland Balance Sheet - Standalone and Unconsolidated | ||||||||||||||
Current assets (intercompany receivables from non-guarantor subsidiaries) | $ | — | $ | 75 | ||||||||||
Current assets (excluding intercompany receivables from non-guarantor subsidiaries) | — | — | ||||||||||||
Noncurrent assets (investments in consolidated subsidiaries) | 15,711 | 15,711 | ||||||||||||
Noncurrent assets (intercompany receivables from non-guarantor subsidiaries) | 513 | 518 | ||||||||||||
Noncurrent assets (excluding investments in consolidated subsidiaries) | — | — | ||||||||||||
Current liabilities (intercompany payables to non-guarantor subsidiaries) | 363 | — | ||||||||||||
Current liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 3 | 1 | ||||||||||||
Noncurrent liabilities (intercompany payables to non-guarantor subsidiaries) | 3,484 | 3,467 | ||||||||||||
Noncurrent liabilities (excluding intercompany payables to non-guarantor subsidiaries) | 1,185 | 1,199 |
2024 | 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 | 1,895 | $ | 87.65 | 1,895 | $ | 1,034 | ||||||||||||||||||||
February 1 - February 29 | 1,282 | 91.59 | 1,282 | $ | 916 | |||||||||||||||||||||
March 1 - March 31 | 173 | 95.57 | 173 | $ | 900 | |||||||||||||||||||||
Total | 3,350 | $ | 89.57 | 3,350 |
Exhibit Number | Exhibit Description | |||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
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 25, 2024 | 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 25, 2024 | by: | /s/ MICHAEL P. RYAN | ||||||||
Michael P. Ryan | |||||||||||
Senior Vice President and Chief Accounting Officer | |||||||||||
(on behalf of the Registrant and as the Registrant's Principal Accounting Officer) |
Should the value of the securities fall following the acquisition, it is possible that Income Tax/NIC that would have arisen because of any future chargeable event (in the absence of an election) would have been less than the Income Tax/NIC due by reason of this election. Should this be the case, there is no Income Tax/NIC relief available under Part 7 of ITEPA 2003; nor is it available if the securities acquired are subsequently transferred, forfeited or revert to the original owner. |
Employing Company | Company Registration Number | ||||
Otis Ltd. | 147366 |
Should the value of the securities fall following the acquisition, it is possible that Income Tax/NIC that would have arisen because of any future chargeable event (in the absence of an election) would have been less than the Income Tax/NIC due by reason of this election. Should this be the case, there is no Income Tax/NIC relief available under Part 7 of ITEPA 2003; nor is it available if the securities acquired are subsequently transferred, forfeited or revert to the original owner. |
Employing Company | Company Registration Number | ||||
Otis Ltd. | 147366 | ||||
Retirement Type | Service Recipient Consents to Early Retirement * | Exercise Period | ||||||
Normal Retirement (age 65) | N/A | SARs may be exercised until the expiration of their term | ||||||
Early Retirement on or after age 55 + 10 years of continuous service as of the Termination Date | Yes | SARs may be exercised until the expiration of their term | ||||||
No | SARs may be exercised for three (3) years following the Termination Date or until the expiration of the SAR, whichever is earlier | |||||||
* The Service Recipient’s consent to the Participant’s Retirement will be at the sole discretion of the Service Recipient based on its ability to effectively transition the Participant’s responsibilities as of the Termination Date and such other factors as it may deem appropriate. |
Should the value of the securities fall following the acquisition, it is possible that Income Tax/NIC that would have arisen because of any future chargeable event (in the absence of an election) would have been less than the Income Tax/NIC due by reason of this election. Should this be the case, there is no Income Tax/NIC relief available under Part 7 of ITEPA 2003; nor is it available if the securities acquired are subsequently transferred, forfeited or revert to the original owner. |
Employing Company | Company Registration Number | ||||
Otis Ltd. | 147366 | ||||
Date: | April 25, 2024 | /s/ JUDITH F. MARKS | |||||||||
Judith F. Marks | |||||||||||
Chair, President and Chief Executive Officer |
Date: | April 25, 2024 | /s/ ANURAG MAHESHWARI | |||||||||
Anurag Maheshwari | |||||||||||
Executive Vice President and Chief Financial Officer |
Date: | April 25, 2024 | /s/ MICHAEL P. RYAN | |||||||||
Michael P. Ryan | |||||||||||
Senior Vice President and Chief Accounting Officer |
Date: | April 25, 2024 | /s/ JUDITH F. MARKS | ||||||
Judith F. Marks | ||||||||
Chair, President and Chief Executive Officer | ||||||||
Date: | April 25, 2024 | /s/ ANURAG MAHESHWARI | ||||||
Anurag Maheshwari | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Date: | April 25, 2024 | /s/ MICHAEL P. RYAN | ||||||
Michael P. Ryan | ||||||||
Senior Vice President and Chief Accounting Officer |
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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 374 | $ 352 |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | (25) | (34) |
Pension and postretirement benefit plan adjustments | 9 | 0 |
Change in unrealized cash flow hedging | 3 | 3 |
Other comprehensive income (loss), net of tax | (13) | (31) |
Comprehensive income (loss), net of tax | 361 | 321 |
Less: Comprehensive (income) loss attributable to noncontrolling interest | (14) | (24) |
Comprehensive income attributable to Otis Worldwide Corporation | $ 347 | $ 297 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for expected credit losses | $ 133 | $ 130 |
Accumulated depreciation | $ 1,238 | $ 1,232 |
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends declared (in usd per share) | $ 0.34 | $ 0.29 |
General |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The Condensed Consolidated Financial Statements as of March 31, 2024 and for the quarters ended March 31, 2024 and 2023 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, 2023 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 2023 ("2023 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 2023 Form 10-K that have a material impact on the Company's Condensed Consolidated Financial Statements and the related notes. 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, 2024 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, 2024 and for the quarters ended March 31, 2024 and 2023 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 and the war in Israel and Gaza, 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, 2024 and for the quarters ended March 31, 2024 and 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 situations develop and any broader implications they may have on the global economy. Supplier Finance Programs. 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. The outstanding obligations confirmed by the Company as valid to the financial institutions under our supplier finance programs were $510 million and $627 million as of March 31, 2024 and December 31, 2023, 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 Condensed Consolidated Statements of Cash Flows.
|
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 1.4 million and 1.1 million of anti-dilutive stock awards excluded from the computation for the quarters ended March 31, 2024 and 2023, respectively.
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Revenue Recognition |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 receive payments from customers based on the terms established in our contracts, which are progress payments as we perform contract work over time, payments in advance of performing work, or in some cases, payments upon completion of work. Total Contract assets and Contract liabilities as of March 31, 2024 and December 31, 2023 are as follows:
Contract assets decreased by $1 million during the quarter ended March 31, 2024 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $250 million during the quarter ended March 31, 2024 primarily due to billings on contracts in excess of revenue earned. In the quarters ended March 31, 2024 and 2023, we recognized revenue of approximately $1.0 billion and $0.9 billion related to contract liabilities as of January 1, 2024 and 2023, 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, 2024, our total RPO was approximately $18.3 billion. Of the total RPO as of March 31, 2024, we expect approximately 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, 2024 and December 31, 2023:
The changes in allowance for expected credit losses related to Accounts receivable, net for the quarter ended March 31, 2024 and 2023, respectively, are as follows:
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Inventories |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following as of March 31, 2024 and December 31, 2023:
Raw materials, work-in-process and finished goods are net of valuation write-downs of $88 million and $87 million as of March 31, 2024 and December 31, 2023, 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 $30 million and $16 million in the quarters ended March 31, 2024 and 2023, respectively, and were primarily in our Service segment. Transaction costs incurred were not considered significant. Goodwill. Changes in our Goodwill balances during the quarter ended March 31, 2024 were as follows:
Intangible Assets. Intangible assets cost and accumulated amortization were $2,064 million and $1,721 million, respectively, as of March 31, 2024, and $2,072 million and $1,737 million, respectively, as of December 31, 2023. Amortization of intangible assets for the quarters ended March 31, 2024 and 2023 was $15 million and $17 million, respectively. Excluding the impact of acquisitions and currency translation adjustments, there were no other significant changes in our Intangible assets during the quarters ended March 31, 2024 and 2023.
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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, 2024, there were no borrowings outstanding under the Company's $1.5 billion commercial paper programs. 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 borrowing activity in 2023, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2023 Form 10-K. Long-term debt. As of March 31, 2024, we had a revolving credit agreement with various banks providing for a $1.5 billion unsecured, unsubordinated five-year revolving credit facility, maturing March 10, 2028. As of March 31, 2024, there were no borrowings under the revolving credit agreement. As of March 31, 2024, 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 any series of notes at our option pursuant to certain terms. For additional details regarding the Company's debt activity in 2023, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2023 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, 2024 and 2023 reflects the following:
The unamortized debt issuance costs as of March 31, 2024 and December 31, 2023 were $40 million and $42 million, respectively. The weighted average maturity of our long-term debt as of March 31, 2024 is approximately 7.6 years. The weighted average interest expense rate on our borrowings outstanding as of March 31, 2024 and December 31, 2023 was as follows:
The weighted average interest expense rate on our borrowings during the quarters ended March 31, 2024 and 2023 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, 2024 and 2023, respectively. Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of March 31, 2024, approximately 20 million shares remain available for awards under the Plan. 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:
As of March 31, 2024, following our annual grant issuance on February 7, 2024, there was approximately $117 million of total unrecognized compensation cost related to non-vested equity awards granted under the Plan. This cost is expected to be recognized ratably over a weighted-average period of 2.1 years.
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Stock |
3 Months Ended |
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Mar. 31, 2024 | |
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, 2024 and December 31, 2023. Common Stock. There are 2 billion shares of $0.01 par value Common Stock authorized. As of March 31, 2024 and December 31, 2023, 438.0 million and 437.0 million shares of Common Stock were issued, respectively, which includes 33.7 million and 30.4 million shares of treasury stock, respectively. Treasury Stock. As of March 31, 2024, 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 approximately $900 million was remaining at such time. During the quarters ended March 31, 2024 and 2023, the Company repurchased 3.4 million and 2.1 million shares, respectively, for $300 million and $175 million, respectively. Share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired in Treasury Stock on the Condensed Consolidated Balance Sheets. 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, 2024 and 2023 is provided below:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The decrease in the effective tax rate for the quarter ended March 31, 2024 is primarily the result of the tax impact of a reduction of our contractual indemnity obligation payable to RTX that resulted from the Tax Matters Agreement ("TMA") and the excess tax benefit associated with stock option exercises in the quarter. 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 2013. 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 the 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 has decided not to appeal the decision, which marks the end of this litigation. Otis expects to receive the assessment for tax and interest in 2024. 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 $10 million increase to a $340 million decrease and associated interest could change within the range of a $10 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 and Transformation Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Transformation Costs | Restructuring and Transformation Costs We initiate restructuring actions to keep our cost structure competitive. Charges generally arise from severance related to workforce reductions, and facility exit and lease termination costs associated with the consolidation of office and manufacturing operations. During the quarters ended March 31, 2024 and 2023, we recorded restructuring costs for new and ongoing restructuring actions, including UpLift actions beginning in 2023, as follows:
Restructuring costs, unless otherwise indicated, were approximately 30% New Equipment and 70% Service. Although this reflects the segments to which the restructuring costs relate, refer to Note 17 for more information about our measure of segment performance (segment operating profit), which no longer includes restructuring costs, among other items, beginning in the first quarter of 2024. UpLift Restructuring Actions and Transformation Costs. During the third quarter of 2023, we announced UpLift to transform our operating model. UpLift includes, among other aspects, the standardization of our processes and improvement of our supply chain procurement, as well as restructuring actions. UpLift restructuring actions of up to $55 million were approved in 2023, which are primarily severance related costs. We expect these actions to be mostly completed and cash to be paid by the end of 2024, with certain payments to be completed in 2025. Expected total costs and remaining costs to incur for the approved actions identified to-date are approximately $50 million and $24 million, respectively, of which approximately 30% relates to New Equipment and 70% relates to Service. In the quarter ended March 31, 2024, we incurred $12 million of incremental, non-restructuring costs associated with transforming our operating model as a part of UpLift ("UpLift transformation costs"), including consulting and personnel costs, which are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations. Other Restructuring Actions. The other restructuring expenses incurred during the quarter ended March 31, 2024 and 2023, were primarily the result of restructuring programs initiated during 2024 and 2023. We are targeting to complete by the end of 2024 the majority of remaining other restructuring actions initiated in the quarter ended March 31, 2024 and the full year 2023, with certain utilization beyond 2024 due to contractual obligations or legal requirements in the applicable jurisdictions. Expected total costs and remaining costs to incur for the other restructuring actions initiated are $83 million and $23 million, respectively, of which approximately 30% relates to New Equipment and 70% relates to Service. Restructuring Accruals. 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 four-quarter average of the notional amount of foreign exchange contracts hedging foreign currency transactions was $4.9 billion and $4.6 billion as of March 31, 2024 and December 31, 2023, respectively. The four-quarter average of the notional amount of contracts hedging commodity purchases was $18 million and $21 million as of March 31, 2024 and December 31, 2023, respectively. The following table summarizes the fair value and presentation on the Condensed Consolidated Balance Sheets for derivative instruments as of March 31, 2024 and December 31, 2023:
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, 2024 and 2023, respectively. The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) as of March 31, 2024 and December 31, 2023 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, 2024 will mature by December 2028. Net Investment Hedges. We may use non-derivative instruments (foreign currency denominated borrowings) and derivative instruments (foreign exchange forward contracts) to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. For instruments that are designated and qualify as a hedge of net investment in foreign operations and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in foreign currency translation within 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. The remainder of the change in value of such instruments is recorded in earnings, including to the extent foreign currency denominated borrowings are not designated in, or are de-designated from, a net investment hedge relationship. Our use of foreign exchange forward contracts designated as hedges of the Company's net investment in foreign subsidiaries can vary depending on the Company's desired foreign exchange risk coverage. We have ¥21.5 billion of Japanese Yen denominated long-term debt that qualifies as a net investment hedge against our investments in Japanese businesses, as well as foreign exchange forward contracts with notional amounts of €120 million and HK$2 billion that qualify as net investment hedges against our investments in certain European and Asian businesses. The net investment hedges are deemed to be effective. The maturity dates of the current non-derivative and derivative instruments designated in net investment hedges range from 2024 to 2026. Additionally, we had a foreign exchange forward contract with a notional amount of €95 million that matured during the second quarter of 2023. This qualified as a net investment hedge and was deemed to be effective until maturity. The following table summarizes the amounts of gains (losses) recognized in other comprehensive income (loss) related to non-derivative and derivative instruments designated as net investment hedges:
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 losses of less than $1 million and gains of $1 million in the quarters ended March 31, 2024 and 2023, 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 and third party 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, 2024, 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. Due to their short-term nature, the carrying value approximated fair value for the current portion of the Company’s financial instruments not carried at fair value. 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 long-term debt, as described in Note 7, "Borrowings and Lines of Credit", is 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, 2024 and December 31, 2023:
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, 2024 and December 31, 2023:
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, 2024 and December 31, 2023:
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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 carrying amount of service and product guarantees were $11 million and $12 million as of March 31, 2024 and December 31, 2023, respectively. The Company provides certain financial guarantees to third parties. As of March 31, 2024, Otis has stand-by letters of credit with maximum potential payment totaling $139 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, 2024, Otis has determined there are no estimated costs probable under these guarantees.
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Contingent Liabilities |
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Mar. 31, 2024 | |
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. For details regarding the Company's outstanding liability for environmental obligations, refer to Note 21 of the Company's audited consolidated financial statements and notes thereto included in our 2023 Form 10-K. Legal Proceedings. German Tax Litigation We have been involved in administrative review proceedings with the German Tax Office, which concern approximately €215 million (approximately $233 million as of March 31, 2024) 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 $128 million as of March 31, 2024). 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 RTX 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. The local German Tax Court held a hearing on June 12, 2023, and issued a decision in favor of Otis on July 21, 2023. On September 14, 2023, the German tax authorities filed an appeal to the German Federal Tax Court. The German Federal Tax Court is expected to rule on the appeal later in 2024. As a result of the appeal filing, this matter remains contested, and the Company cannot assess the ultimate outcome of this case. Pursuant to the 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, 2024), net of payments and other deductions, included within Accrued liabilities on the Condensed Consolidated Balance Sheets as of March 31, 2024. 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 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, 2024 and December 31, 2023. The estimated range of total liabilities to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $11 million to $22 million as of March 31, 2024, and approximately $20 million to $43 million as of December 31, 2023. Since no amount within the range of estimates is more likely to occur than any other, we have recorded the minimum amounts of $11 million and $20 million as of March 31, 2024 and December 31, 2023, respectively, which are principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheets. 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 $3 million and $5 million as of March 31, 2024 and December 31, 2023, respectively, which are principally included in Other assets on our Condensed Consolidated Balance Sheets. Other. 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. 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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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. Otis discloses segment operating profit as its measure of segment performance, reconciled to total Otis operating profit. Segment operating profit excludes certain expenses and income that are not allocated to segments (as described below in "Corporate and Unallocated"). Effective in the first quarter of 2024, the measure of segment performance used by Otis' Chief Operating Decision Maker ("CODM") changed and, as a result, Otis' disclosed measure of segment performance (segment operating profit) was updated. The change to segment operating profit aligns with the update to how the CODM assesses performance and allocates resources for the Company's segments, and therefore is our measure of segment profitability in accordance with GAAP under ASC 280, Segment Reporting. As a result of the change, restructuring costs and other items not allocated to the operating segments are presented as part of Corporate and Unallocated. The financial information presented herein reflects the impact of the measure of segment performance change for all periods presented. Segment information for the quarters ended March 31, 2024 and 2023 are as follows:
Corporate and Unallocated includes a Separation-related reserve adjustment, which represents the reduction of our contractual indemnity obligation payable to RTX that resulted from the TMA. This benefit is recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations during the quarter ended March 31, 2024. 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, 2024 and 2023.
Disaggregated Sales by Type. Segment Net sales disaggregated by product and service type for the quarters ended March 31, 2024 and 2023 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, 2024 and 2023.
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Accounting Pronouncements |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Accounting Pronouncements | 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 do not expect the adoption of this standard to have a material impact on our Condensed Consolidated Financial Statements. 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 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations, which 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 adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements, as disclosed in Note 1, "General". In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Ventures Formations (Subtopic 805-60): Recognition and initial measurement ("ASU 2023-05"), which requires that joint ventures, upon formation, apply a new basis of accounting by initially measuring assets and liabilities at fair value. The amendments in ASU 2023-05 are effective for joint ventures that are formed on or after January 1, 2025. Early adoption is permitted. We are currently evaluating the impact of this standard, however we do not expect it to have a material impact on our Condensed Consolidated Financial Statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the impact of this standard; however, we do not expect it to have a material impact on our Condensed Consolidated Financial Statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this standard; however, we 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, 2024 did not and are not expected to have a material impact on our financial position, results of operations or liquidity.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In April 2024, we notified the noncontrolling shareholders of one of our subsidiaries that we are exercising our call option to acquire all of their outstanding shares. The value to purchase these shares is estimated to be approximately $70 million and is reflected in Redeemable noncontrolling interest in our Condensed Consolidated Balance Sheet as of March 31, 2024. The purchase of these shares is expected to be completed in the third quarter of 2024.
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General (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
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.
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Earnings per Share (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted |
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Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of contract assets and liabilities | Total Contract assets and Contract liabilities as of March 31, 2024 and December 31, 2023 are as follows:
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Accounts Receivable, Net (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accounts, notes, loans and financing receivable | Accounts receivable, net consisted of the following as of March 31, 2024 and December 31, 2023:
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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 quarter ended March 31, 2024 and 2023, respectively, are as follows:
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Inventories (Tables) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventory | Inventories consisted of the following as of March 31, 2024 and December 31, 2023:
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Business Acquisitions, Goodwill and Intangible Assets (Tables) |
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Schedule of goodwill | Changes in our Goodwill balances during the quarter ended March 31, 2024 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, 2024 and 2023 reflects the following:
The weighted average interest expense rate on our borrowings during the quarters ended March 31, 2024 and 2023 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) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2024 and 2023 is provided below:
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Restructuring and Transformation Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring and related costs | During the quarters ended March 31, 2024 and 2023, we recorded restructuring costs for new and ongoing restructuring actions, including UpLift actions beginning in 2023, 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, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2024 and December 31, 2023:
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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, 2024 and December 31, 2023 are presented in the table below:
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Derivative instruments, gain (loss) | The following table summarizes the amounts of gains (losses) recognized in other comprehensive income (loss) related to non-derivative and derivative instruments designated as net investment hedges:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2024 and December 31, 2023:
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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, 2024 and December 31, 2023:
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, 2024 and December 31, 2023:
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Segment Financial Data (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information, by segment | Segment information for the quarters ended March 31, 2024 and 2023 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, 2024 and 2023.
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Segment reporting disclosure, sales type | Segment Net sales disaggregated by product and service type for the quarters ended March 31, 2024 and 2023 are as follows:
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General (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Outstanding obligations under supplier finance programs | $ 510 | $ 627 |
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Net Income (Loss) Attributable to Parent [Abstract] | ||
Net income attributable to Otis Worldwide Corporation | $ 353 | $ 331 |
Impact of redeemable noncontrolling interest | 0 | 0 |
Net income attributable to common shareholders | $ 353 | $ 331 |
Basic weighted average number of shares outstanding (in shares) | 405,200,000 | 414,300,000 |
Stock awards and equity units (share equivalent) (in shares) | 2,900,000 | 3,500,000 |
Diluted weighted average number of shares outstanding (in shares) | 408,100,000 | 417,800,000 |
Earnings Per Share of Common Stock: | ||
Basic (in usd per share) | $ 0.87 | $ 0.80 |
Diluted (in usd per share) | $ 0.86 | $ 0.79 |
Antidilutive securities excluded from computation of EPS (in shares) | 1,400,000 | 1,100,000 |
Revenue Recognition - Contract With Customer, Assets and Liabilities (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
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Revenue from Contract with Customer [Abstract] | ||
Contract assets, current | $ 716 | $ 717 |
Total contract assets | 716 | 717 |
Contract liabilities, current | 2,951 | 2,696 |
Contract liabilities, non-current (included within Other long-term liabilities) | 43 | 48 |
Total contract liabilities | 2,994 | 2,744 |
Net contract liabilities | $ 2,278 | $ 2,027 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Decrease in contract assets | $ 1 | |
Decrease in contract liabilities | 250 | |
Revenue recognized | 1,000 | $ 900 |
Revenue, remaining performance obligation | $ 18,300 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | ||
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, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|---|
Receivables [Abstract] | ||||
Trade receivables | $ 3,466 | $ 3,390 | ||
Unbilled receivables | 151 | 119 | ||
Miscellaneous receivables | 107 | 96 | ||
Customer financing notes receivable | 63 | 63 | ||
Total receivables | 3,787 | 3,668 | ||
Less: allowance for expected credit losses | (133) | (130) | $ (139) | $ (152) |
Accounts receivable, net | $ 3,654 | $ 3,538 |
Accounts Receivable, Net - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 130 | $ 152 |
Provision for expected credit losses | 6 | 6 |
Write-offs charged against the allowance for expected credit losses | (2) | (20) |
Foreign exchange and other | (1) | 1 |
Ending balance | $ 133 | $ 139 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and work-in-process | $ 148 | $ 154 |
Finished goods | 445 | 458 |
Total | 593 | 612 |
Inventory valuation reserves | $ 88 | $ 87 |
Business Acquisitions, Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Business Combinations, Goodwill, and Intangible Assets [Abstract] | |||
Investments in businesses, net of cash acquired | $ 30 | $ 16 | |
Intangible assets cost | 2,064 | $ 2,072 | |
Intangible assets, accumulated amortization | 1,721 | $ 1,737 | |
Amortization of intangible assets | $ 15 | $ 17 |
Business Acquisitions, Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | $ 1,588 |
Goodwill Resulting from Business Combinations | 14 |
Foreign Currency Translation and Other | (27) |
Goodwill - Ending Balance | 1,575 |
New Equipment | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 295 |
Goodwill Resulting from Business Combinations | 0 |
Foreign Currency Translation and Other | (5) |
Goodwill - Ending Balance | 290 |
Service | |
Goodwill [Roll Forward] | |
Goodwill - Beginning Balance | 1,293 |
Goodwill Resulting from Business Combinations | 14 |
Foreign Currency Translation and Other | (22) |
Goodwill - Ending Balance | $ 1,285 |
Borrowings and Lines of Credit - Short-Term Borrowings (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Debt Disclosure [Abstract] | ||
Commercial paper | $ 0 | $ 0 |
Other borrowings | 35,000,000 | 32,000,000 |
Total short-term borrowings | $ 35,000,000 | $ 32,000,000 |
Borrowings and Lines of Credit - Narrative (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
Line of Credit Facility [Line Items] | ||
Commercial paper | $ 0 | $ 0 |
Debt instrument, carrying amount | 6,888,000,000 | 6,910,000,000 |
Unamortized debt issuance cost | $ 40,000,000 | 42,000,000 |
Long term debt, average remaining maturity | 7 years 7 months 6 days | |
Unsubordinated Commercial Paper | Unsecured Notes | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, face amount | $ 1,500,000,000 | |
Notes 5.250% due 2028 | ||
Line of Credit Facility [Line Items] | ||
Debt instrument, carrying amount | $ 750,000,000 | 750,000,000 |
Debt instrument, interest rate, stated percentage | 5.25% | |
Five Year Revolving Credit Facility, Amended | Unsecured Notes | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 1,500,000,000 | |
Debt instrument, term | 5 years | |
Debt instrument, carrying amount | $ 0 |
Borrowings and Lines of Credit - Schedule of Debt Issuance Expenses (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Debt Disclosure [Abstract] | ||
Debt issuance costs amortization | $ 2 | $ 3 |
Total interest expense on external debt | $ 43 | $ 33 |
Borrowings and Lines of Credit - Schedule of Average Interest Rates on Borrowings (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Long-term Debt | |||
Debt Instrument [Line Items] | |||
Average interest expense rate on borrowings | 2.50% | 2.50% | |
Average interest expense rate during period | 2.50% | 2.00% | |
Short-term Debt | |||
Debt Instrument [Line Items] | |||
Average interest expense rate on borrowings | 0.00% | 0.00% | |
Average interest expense rate during period | 5.50% | 4.80% |
Employee Benefit Plans - Schedule of Defined Benefit Plan Disclosures (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Defined Benefit Plan Disclosure [Line Items] | ||
Defined benefit plans | $ 12 | $ 14 |
Defined contribution plans | 20 | 19 |
Multi-employer pension and postretirement plans | 40 | 34 |
Pension Plan | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 8 | 7 |
Interest cost | 8 | 8 |
Expected return on plan assets | (8) | (8) |
Recognized actuarial net loss | 0 | 0 |
Total net periodic benefit cost | 8 | 7 |
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, 2024 |
Mar. 31, 2023 |
|
Retirement Benefits [Abstract] | ||
Stock-based compensation expense | $ 16 | $ 15 |
Less: future tax benefit | (2) | (2) |
Stock-based compensation expense, net of tax | $ 14 | $ 13 |
Employee Benefit Plans - Narrative (Details) shares in Millions, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
shares
| |
Retirement Benefits [Abstract] | |
Common stock shares available for awards (in shares) | shares | 20 |
Unrecognized compensation cost | $ | $ 117 |
Unrecognized compensation cost, period for recognition | 2 years 1 month 6 days |
Income Taxes (Details) $ in Millions |
Mar. 31, 2024
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Increase in unrecognized tax benefits reasonably possible | $ 10 |
Decrease in unrecognized tax benefits reasonably possible | 340 |
Increase in unrecognized tax benefits, accrued interest, is reasonably possible | 10 |
Decrease in unrecognized tax benefits, accrued interest, is reasonably possible | $ 145 |
Restructuring and Transformation Costs - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | |||
Net restructuring costs | $ 20 | $ 5 | |
UpLift | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected costs | 50 | ||
Transformation costs | 12 | ||
Remaining costs | 24 | ||
Net restructuring costs | 1 | 0 | |
UpLift | Severance costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Approved restructuring actions | $ 55 | ||
Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected costs | 83 | ||
Remaining costs | 23 | ||
Net restructuring costs | $ 19 | $ 5 | |
New Equipment | |||
Restructuring Cost and Reserve [Line Items] | |||
Percentage of costs | 30.00% | ||
Service | |||
Restructuring Cost and Reserve [Line Items] | |||
Percentage of costs | 70.00% |
Restructuring and Transformation Costs - Pre-Tax Restructuring Costs (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 20 | $ 5 |
Cost of products and services sold | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | 5 | 2 |
Selling, general and administrative | ||
Restructuring Cost and Reserve [Line Items] | ||
Net restructuring costs | $ 15 | $ 3 |
Restructuring and Transformation Costs - Restructuring Roll forward (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | $ 48 | |
Net restructuring costs | 20 | $ 5 |
Utilization, foreign exchange and other costs | (28) | |
Restructuring reserve, ending balance | 40 | |
UpLift | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | 13 | |
Net restructuring costs | 1 | 0 |
Utilization, foreign exchange and other costs | (8) | |
Restructuring reserve, ending balance | 6 | |
Other | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | 35 | |
Net restructuring costs | 19 | $ 5 |
Utilization, foreign exchange and other costs | (20) | |
Restructuring reserve, ending balance | $ 34 |
Financial Instruments - Schedule of Gain (Loss) on Derivative Instruments Reclassified From OCI (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gain (loss) recorded in Accumulated other comprehensive income (loss) | $ 4 | $ 1 |
Financial Instruments - Schedule of Gain (Loss) on Derivative and Non-Derivative Instruments (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Net Investment Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Net investment hedge, gain (loss) | $ 8 | $ 0 |
Foreign currency denominated long-term debt | Net Investment Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Net investment hedge, gain (loss) | 8 | (1) |
Foreign currency forward contracts | Net Investment Hedging | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Net investment hedge, gain (loss) | 0 | 1 |
Foreign exchange contracts | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Foreign exchange contracts | $ (1) | $ 3 |
Guarantees - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Guarantor Obligations [Line Items] | ||
Carrying amount of service and product guarantees | $ 11 | $ 12 |
Standby Letter of Credit | ||
Guarantor Obligations [Line Items] | ||
Guarantor obligation, maximum exposure | $ 139 |
Contingent Liabilities (Details) € in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Mar. 31, 2024
USD ($)
|
Mar. 31, 2024
EUR (€)
|
Mar. 31, 2023
USD ($)
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2015
EUR (€)
|
Mar. 31, 2024
EUR (€)
|
Dec. 31, 2023
USD ($)
|
|
Loss Contingencies [Line Items] | |||||||
Income tax benefit | $ (126) | $ (128) | |||||
German Tax Office Against Otis | |||||||
Loss Contingencies [Line Items] | |||||||
Income tax benefit | 233 | € 215 | |||||
Disallowed tax benefit, estimated interest expense | 128 | € 118 | |||||
Unrecognized tax benefits, interest on income taxes expense | $ 300 | € 275 | |||||
Unrecognized tax benefits, interest on income taxes accrued | 48 | € 45 | |||||
Asbestos Matter | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency accrual | 11 | $ 20 | |||||
Insurance recovery receivable | 3 | 5 | |||||
Asbestos Matter | Minimum | |||||||
Loss Contingencies [Line Items] | |||||||
Estimate of possible loss | 11 | 20 | |||||
Asbestos Matter | Maximum | |||||||
Loss Contingencies [Line Items] | |||||||
Estimate of possible loss | $ 22 | $ 43 |
Subsequent Events (Details) $ in Millions |
3 Months Ended |
---|---|
Sep. 30, 2024
USD ($)
| |
Subsequent Event | Forecast | |
Subsequent Event [Line Items] | |
Cost to purchase shares | $ 70 |
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