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 Q4 Earnings & Sales Top, New Equipment Orders Up 3%
Read MoreHide Full Article
Otis Worldwide Corporation (OTIS - Free Report) reported impressive results in fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Its quarterly results reflected 13 consecutive quarters of organic sales growth, and the results were marked by a mid-teens growth in adjusted earnings per share (EPS), the third consecutive quarter of high-single-digit organic sales growth in the Service segment, and a resurgence in New Equipment orders growth.
Full year 2023 also registered a notable mid-single-digit increase in organic sales, coupled with an expansion in operating profit margin and a robust low-teens growth in adjusted EPS.
Shares of this elevator and escalator manufacturing company gained 0.1% following the release on Jan 31.
Otis Worldwide Corporation Price, Consensus and EPS Surprise
The company reported quarterly earnings of 87 cents per share, surpassing the consensus estimate of 85 cents by 2.4% and increasing 16% from the year-ago quarter’s figure of 75 cents. The upside was mainly driven by operational improvement, a lower share count and effective tax rate improvement.
Net sales of $3.62 billion topped the consensus mark of $3.56 million by 1.3% and rose 5.3% on a year-over-year basis. Organically, net sales rose 3.8% year over year for the quarter. Currency fluctuations benefited sales by 1.4%.
Adjusted operating margin expanded 90 basis points (bps) to 15.6% from the year-ago period’s level, backed by the segments’ favorable performance and mix. Our model predicted the adjusted operating margin to expand 100 bps year over year to 15.7%.
Segment Details
New Equipment’s net sales of $1.47 billion grew 0.3%, but adjusted net sales edged down by 0.1% from the prior-year period. A 0.2% meager drop in organic sales was due to the decline in China, which partially offset growth in the Americas and Asia Pacific. Foreign exchange benefited sales modestly. Our model predicted organic sales for the New Equipment segment to grow 0.9% in the quarter.
New Equipment orders were up 3% at constant currency. This growth was propelled by double-digit expansion in EMEA, single-digit growth in the Americas, and modest single-digit growth in Asia Pacific. However, these positive trends were tempered by single-digit declines in China.
The New Equipment’s backlog at constant currency as well as on a GAAP basis increased 2% year over year.
Adjusted operating margin was up 120 bps year over year at 6.1%.
Service’s net sales increased 8.9% to $2.15 billion. A 6.8% rise in organic sales and a 1.9% benefit from foreign exchange helped the top line. Organic maintenance and repair sales grew 6.8% and organic modernization sales rose 7% from the prior-year quarter. Our model predicted organic sales for the Service segment to grow 5.8% in the quarter.
Modernization orders were up 11% at constant currency during the reported quarter. Modernization backlog at constant currency increased 15% year over year.
Adjusted operating margin registered an improvement of 10 bps year over year to 24%, driven by higher volume, favorable pricing and productivity, partially offset by labor inflation and higher material costs.
2023 Highlights
Adjusted earnings came in at $3.54 per share, reflecting an increase of 11.7% from $3.17. Net sales grew 3.8% to $14.2 billion. Organic sales registered a 5.6% uptick, slightly mitigated by a 1.2% headwind from foreign exchange.
The adjusted operating margin saw a 30-bps expansion, driven by robust performance in the Service segment and a favorable mix. However, this was partially offset by challenges in the corporate sector.
Segment-wise, New Equipment net sales decreased 0.9%, with a 2.6% increase in organic sales partially offset by a 2.1% headwind from foreign exchange. Service’s net sales rose by 7.4%, fueled by a 7.7% surge in organic sales. However, this growth was slightly tempered by a 0.4% headwind from foreign exchange.
Financial Position
Otis had cash and cash equivalents of $1.27 billion as of Dec 31, 2023. This compares favorably with the 2022-end figure of $1.19 billion. Long-term debt was $6.87 billion as of Dec 31, 2023, up from $6.1 billion at 2022-end.
Net cash flows provided by operating activities were $597 million for the December quarter, up from $464 million a year ago. In 2023, the metric rose 4.3% year over year to $1.63 billion.
Adjusted free cash flow (FCF) totaled $573 million for the quarter, up from $430 million a year ago. In 2023, FCF was 1.53 billion, up from $1.46 billion in 2022.
2024 Guidance
For 2024, the company expects net sales to be nearly $14.5-$14.8 billion. The new projection indicates approximately 2-4% growth. Organic sales growth is projected to be 3-5% (flat for New Equipment and up 6-7% for Service).
Adjusted operating profit is projected to be up $150-$190 million at constant currency.
Adjusted EPS is anticipated to be $3.80-$3.90. The updated outlook suggests 7-10% year-over-year growth.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in four consecutive quarters.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility, and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
OTIS Q4 Earnings & Sales Top, New Equipment Orders Up 3%
Otis Worldwide Corporation (OTIS - Free Report) reported impressive results in fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Its quarterly results reflected 13 consecutive quarters of organic sales growth, and the results were marked by a mid-teens growth in adjusted earnings per share (EPS), the third consecutive quarter of high-single-digit organic sales growth in the Service segment, and a resurgence in New Equipment orders growth.
Full year 2023 also registered a notable mid-single-digit increase in organic sales, coupled with an expansion in operating profit margin and a robust low-teens growth in adjusted EPS.
Shares of this elevator and escalator manufacturing company gained 0.1% following the release on Jan 31.
Otis Worldwide Corporation Price, Consensus and EPS Surprise
Otis Worldwide Corporation price-consensus-eps-surprise-chart | Otis Worldwide Corporation Quote
Earnings & Revenue Discussion
The company reported quarterly earnings of 87 cents per share, surpassing the consensus estimate of 85 cents by 2.4% and increasing 16% from the year-ago quarter’s figure of 75 cents. The upside was mainly driven by operational improvement, a lower share count and effective tax rate improvement.
Net sales of $3.62 billion topped the consensus mark of $3.56 million by 1.3% and rose 5.3% on a year-over-year basis. Organically, net sales rose 3.8% year over year for the quarter. Currency fluctuations benefited sales by 1.4%.
Adjusted operating margin expanded 90 basis points (bps) to 15.6% from the year-ago period’s level, backed by the segments’ favorable performance and mix. Our model predicted the adjusted operating margin to expand 100 bps year over year to 15.7%.
Segment Details
New Equipment’s net sales of $1.47 billion grew 0.3%, but adjusted net sales edged down by 0.1% from the prior-year period. A 0.2% meager drop in organic sales was due to the decline in China, which partially offset growth in the Americas and Asia Pacific. Foreign exchange benefited sales modestly. Our model predicted organic sales for the New Equipment segment to grow 0.9% in the quarter.
New Equipment orders were up 3% at constant currency. This growth was propelled by double-digit expansion in EMEA, single-digit growth in the Americas, and modest single-digit growth in Asia Pacific. However, these positive trends were tempered by single-digit declines in China.
The New Equipment’s backlog at constant currency as well as on a GAAP basis increased 2% year over year.
Adjusted operating margin was up 120 bps year over year at 6.1%.
Service’s net sales increased 8.9% to $2.15 billion. A 6.8% rise in organic sales and a 1.9% benefit from foreign exchange helped the top line. Organic maintenance and repair sales grew 6.8% and organic modernization sales rose 7% from the prior-year quarter. Our model predicted organic sales for the Service segment to grow 5.8% in the quarter.
Modernization orders were up 11% at constant currency during the reported quarter. Modernization backlog at constant currency increased 15% year over year.
Adjusted operating margin registered an improvement of 10 bps year over year to 24%, driven by higher volume, favorable pricing and productivity, partially offset by labor inflation and higher material costs.
2023 Highlights
Adjusted earnings came in at $3.54 per share, reflecting an increase of 11.7% from $3.17. Net sales grew 3.8% to $14.2 billion. Organic sales registered a 5.6% uptick, slightly mitigated by a 1.2% headwind from foreign exchange.
The adjusted operating margin saw a 30-bps expansion, driven by robust performance in the Service segment and a favorable mix. However, this was partially offset by challenges in the corporate sector.
Segment-wise, New Equipment net sales decreased 0.9%, with a 2.6% increase in organic sales partially offset by a 2.1% headwind from foreign exchange. Service’s net sales rose by 7.4%, fueled by a 7.7% surge in organic sales. However, this growth was slightly tempered by a 0.4% headwind from foreign exchange.
Financial Position
Otis had cash and cash equivalents of $1.27 billion as of Dec 31, 2023. This compares favorably with the 2022-end figure of $1.19 billion. Long-term debt was $6.87 billion as of Dec 31, 2023, up from $6.1 billion at 2022-end.
Net cash flows provided by operating activities were $597 million for the December quarter, up from $464 million a year ago. In 2023, the metric rose 4.3% year over year to $1.63 billion.
Adjusted free cash flow (FCF) totaled $573 million for the quarter, up from $430 million a year ago. In 2023, FCF was 1.53 billion, up from $1.46 billion in 2022.
2024 Guidance
For 2024, the company expects net sales to be nearly $14.5-$14.8 billion. The new projection indicates approximately 2-4% growth. Organic sales growth is projected to be 3-5% (flat for New Equipment and up 6-7% for Service).
Adjusted operating profit is projected to be up $150-$190 million at constant currency.
Adjusted EPS is anticipated to be $3.80-$3.90. The updated outlook suggests 7-10% year-over-year growth.
Adjusted FCF is expected to be $1.6 billion.
Zacks Rank & Some Recent Construction Releases
Otis currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year. Shares of this notable homebuilder lost more than 1% following the earnings release on Jan 30.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic that the enhanced affordability landscape will continue to attract prospective buyers.
D.R. Horton, Inc. (DHI - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76. Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
KB Home (KBH - Free Report) reported better-than-expected results in fourth-quarter fiscal 2023 (ended Nov 30, 2023). Both the earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in four consecutive quarters.
Looking forward to the first quarter and the entirety of 2024, KBH foresees enhanced conditions in the housing market and ongoing positive trends in the supply chain. Leveraging the advantages of its Built to Order model, which provides buyers with choices, flexibility, and affordability, the company is confident in its ability to effectively navigate potential fluctuations in housing market conditions.