On October 25, 2023, Otis Worldwide Corp (OTIS, Financial) reported its third quarter 2023 earnings, revealing a strong performance with net sales of $3.5 billion, marking a 5.2% organic growth. The GAAP diluted earnings per share (EPS) of $0.91 was up 18.2% versus the prior year and adjusted EPS increased 18.8% to $0.95.
Financial Highlights
Third quarter net sales of $3.5 billion increased 5.4% versus the prior year with a 5.2% increase in organic sales and a 0.6% benefit from foreign exchange. GAAP operating profit of $571 million increased $42 million and adjusted operating profit of $595 million increased $52 million driven by Service. GAAP operating profit margin expanded 40 basis points to 16.2% and adjusted operating profit margin expanded 60 basis points to 16.9%.
GAAP EPS of $0.91 increased 18.2% compared to prior year and adjusted EPS of $0.95 increased 18.8% as strong operational performance, effective tax rate improvement, and a lower share count contributed to 15 cents of adjusted EPS growth.
New Equipment and Service Performance
In the third quarter, net sales of New Equipment of $1.4 billion decreased 0.8% with a 1.0% increase in organic sales that was partially offset by a 0.9% headwind from foreign exchange. GAAP operating profit decreased $6 million to $94 million and adjusted operating profit increased $10 million at constant currency.
Service net sales of $2.1 billion increased 10.1% with a 8.4% increase in organic sales and a 1.8% benefit from foreign exchange. GAAP operating profit of $507 million increased $61 million and adjusted operating profit of $518 million increased $53 million at constant currency.
Outlook for 2023
Otis is revising its full year outlook with adjusted net sales of ~$14.1 billion, up ~4%, organic sales up ~5.5%, adjusted operating profit of ~$2.265 billion, up ~$170 million at constant currency; up ~$140 million at actual currency, adjusted EPS of ~$3.52, up ~11%, and free cash flow of ~$1.5 billion with conversion of ~105% of GAAP net income.
Otis Worldwide Corp (OTIS, Financial) continues to demonstrate strong financial performance, driven by its Service-driven business model. The company's ability to execute and deliver value for shareholders, customers, and colleagues is evident in its Q3 2023 results and updated full-year outlook.
