We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Otis Worldwide (OTIS) Q4 Earnings Top, Sales Lag, Stock Down
Read MoreHide Full Article
Otis Worldwide Corporation (OTIS - Free Report) reported strong earnings for fourth-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales improved from the year-ago figure but lagged the consensus mark marginally.
Yet, shares of this elevator and escalator manufacturing company fell more than 2% in the pre-market trading session on Jan 31.
President & CEO of Otis, Judy Marks, said, "Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders. We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities."
Earnings & Revenue Discussion
The company reported quarterly earnings of 72 cents per share, which surpassed the consensus estimate of 68 cents by 5.9% and grew 9.1% from the year-ago figure of 66 cents. The upside was mainly driven by operating profit growth and a lower effective tax rate.
Otis Worldwide Corporation Price, Consensus and EPS Surprise
Net sales of $3.57 billion marginally missed the consensus mark of $3.58 million but improved 2.2% on a year-over-year basis backed by solid segmental results. Organically, net sales grew 2.8% year over year for the quarter.
Adjusted operating margin expanded remained stable at 14.6% from the year-ago period, with margin expansion in Service offset by deterioration in the New Equipment business.
Segment Details
New Equipment’s revenues of $1.56 billion increased 2% from the prior-year period, backed by 1.2% organic growth. Organic sales were up 11.9% in Asia, partially offset by 9.5% and 6.3% decline in the Americas and EMEA, respectively. The decline was mainly due to tough business comparison as it recovered from COVID-19 woes a year ago. New Equipment orders were up 7.3% at constant currency.
Adjusted operating margin contracted 60 basis points (bps) year over year to 5.3% due to commodity and mix headwinds. New equipment backlog increased 3% at constant currency from the prior year.
Service revenues improved 2.3% year over year to $2.01 billion, backed by a 4% rise in organic sales. Organic maintenance and repair sales grew 4.3%, and organic modernization sales rose 2.2% from the prior-year quarter. Adjusted operating margin registered an improvement of 50 bps year over year to 23%.
Financial Position
Otis had cash and cash equivalents of $1.57 billion as of Dec 31, 2021. This compares unfavorably with 2020-end numbers of $1.78 billion. Long-term debt was $7.25 million as of Dec 31, 2021, up from $5.26 million at 2020-end.
Net cash flows provided by operating activities were $277 million for the fourth quarter, up from $309 million a year ago. Free cash flow totaled $236 million for the quarter, up from $238 million a year ago.
2021 Highlights
Adjusted earnings for 2021 came in at $3.01 per share, reflecting an increase of 19.4% from a year ago. Net sales of $14.3 billion jumped 12.1% from the 2020 level. Adjusted operating margin registered an improvement of 30 bps year over year to 15.3%.
2022 Guidance
For 2022, the company expects net sales to be within $14.4-$14.7 billion, indicating a 1-3% year-over-year increase. Organic sales growth is likely to be 2.5-4.5% (0.5-3% for New Equipment and 4-6% for Service). Adjusted operating profit is projected within $2.24-$2.3 billion, up $95-$165 million at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth. Adjusted effective tax rate is likely to be 27.5-28%. Free cash flow now is expected at $1.6 billion.
Weyerhaeuser Company (WY - Free Report) reported fourth-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate despite persistent supply-chain challenges and the ongoing pandemic.
Meritage Homes Corporation (MTH - Free Report) reported solid fourth-quarter 2021 results. Earnings surpassed the Zacks Consensus Estimate and improved significantly on a year-over-year basis. Revenues also improved from the year-ago period on the back of a strong housing market, thanks to the ongoing shortage of housing inventory, low-interest rates and favorable homebuying trends from millennials and baby boomers.
United Rentals, Inc. (URI - Free Report) reported better-than-expected fourth-quarter 2021 results. Better fleet absorption, higher revenues and stronger pricing helped the company end 2021 on a stronger note.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Otis Worldwide (OTIS) Q4 Earnings Top, Sales Lag, Stock Down
Otis Worldwide Corporation (OTIS - Free Report) reported strong earnings for fourth-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales improved from the year-ago figure but lagged the consensus mark marginally.
Yet, shares of this elevator and escalator manufacturing company fell more than 2% in the pre-market trading session on Jan 31.
President & CEO of Otis, Judy Marks, said, "Despite ongoing macro challenges in 2021, we achieved consistent and broad-based organic sales growth and margin expansion, grew our maintenance portfolio at the highest rate in over 10 years and gained share in New Equipment for the second consecutive year. Additionally, our continued robust cash flow generation enabled us to strategically deploy capital to create long-term value for all stakeholders. We are confident this momentum will continue in 2022 and beyond, positioning us to deliver on our financial commitments and advance ESG priorities."
Earnings & Revenue Discussion
The company reported quarterly earnings of 72 cents per share, which surpassed the consensus estimate of 68 cents by 5.9% and grew 9.1% from the year-ago figure of 66 cents. The upside was mainly driven by operating profit growth and a lower effective tax rate.
Otis Worldwide Corporation Price, Consensus and EPS Surprise
Otis Worldwide Corporation price-consensus-eps-surprise-chart | Otis Worldwide Corporation Quote
Net sales of $3.57 billion marginally missed the consensus mark of $3.58 million but improved 2.2% on a year-over-year basis backed by solid segmental results. Organically, net sales grew 2.8% year over year for the quarter.
Adjusted operating margin expanded remained stable at 14.6% from the year-ago period, with margin expansion in Service offset by deterioration in the New Equipment business.
Segment Details
New Equipment’s revenues of $1.56 billion increased 2% from the prior-year period, backed by 1.2% organic growth. Organic sales were up 11.9% in Asia, partially offset by 9.5% and 6.3% decline in the Americas and EMEA, respectively. The decline was mainly due to tough business comparison as it recovered from COVID-19 woes a year ago. New Equipment orders were up 7.3% at constant currency.
Adjusted operating margin contracted 60 basis points (bps) year over year to 5.3% due to commodity and mix headwinds. New equipment backlog increased 3% at constant currency from the prior year.
Service revenues improved 2.3% year over year to $2.01 billion, backed by a 4% rise in organic sales. Organic maintenance and repair sales grew 4.3%, and organic modernization sales rose 2.2% from the prior-year quarter. Adjusted operating margin registered an improvement of 50 bps year over year to 23%.
Financial Position
Otis had cash and cash equivalents of $1.57 billion as of Dec 31, 2021. This compares unfavorably with 2020-end numbers of $1.78 billion. Long-term debt was $7.25 million as of Dec 31, 2021, up from $5.26 million at 2020-end.
Net cash flows provided by operating activities were $277 million for the fourth quarter, up from $309 million a year ago. Free cash flow totaled $236 million for the quarter, up from $238 million a year ago.
2021 Highlights
Adjusted earnings for 2021 came in at $3.01 per share, reflecting an increase of 19.4% from a year ago. Net sales of $14.3 billion jumped 12.1% from the 2020 level. Adjusted operating margin registered an improvement of 30 bps year over year to 15.3%.
2022 Guidance
For 2022, the company expects net sales to be within $14.4-$14.7 billion, indicating a 1-3% year-over-year increase. Organic sales growth is likely to be 2.5-4.5% (0.5-3% for New Equipment and 4-6% for Service). Adjusted operating profit is projected within $2.24-$2.3 billion, up $95-$165 million at constant currency.
Adjusted earnings are anticipated to be $3.20-$3.30, suggesting 6-10% year-over-year growth. Adjusted effective tax rate is likely to be 27.5-28%. Free cash flow now is expected at $1.6 billion.
Zacks Rank
Otis currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
Weyerhaeuser Company (WY - Free Report) reported fourth-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate despite persistent supply-chain challenges and the ongoing pandemic.
Meritage Homes Corporation (MTH - Free Report) reported solid fourth-quarter 2021 results. Earnings surpassed the Zacks Consensus Estimate and improved significantly on a year-over-year basis. Revenues also improved from the year-ago period on the back of a strong housing market, thanks to the ongoing shortage of housing inventory, low-interest rates and favorable homebuying trends from millennials and baby boomers.
United Rentals, Inc. (URI - Free Report) reported better-than-expected fourth-quarter 2021 results. Better fleet absorption, higher revenues and stronger pricing helped the company end 2021 on a stronger note.