Otis Worldwide Corporation (OTIS) Q1 2022 - Earnings Call Transcript

For the period ending March 31, 2022

April 25, 2022 8:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Otis First Quarter 2022 Earnings Conference Call. This call is being carried live on the Internet and recorded for replay. Presentation materials are available for download from Otis’ website at www.otis.com. I will now turn it over to Michael Rednor, Senior Director of Investor Relations. You may begin.

Michael Rednor - Senior Director, Investor Relations

Thank you, Latonia. Welcome to Otis’ first quarter 2022 earnings conference call. On the call with me today are Judy Marks, Chair, CEO and President; and Rahul Ghai, Executive Vice President and CFO. Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring and significant non-recurring items. A reconciliation of these measures can be found in the appendix of the webcast. We also remind listeners that the presentation contains forward-looking statements, which are subject to risks and uncertainties. Otis’ SEC filings, including our Form 10-K and quarterly reports on Form 10-Q, provide details on important factors that could cause actual results to differ materially.

With that, I’d like to turn the call over to Judy.

Judy Marks - Chair, CEO and President

Thank you, Mike and thank you everyone for joining us. We hope that everyone listening is safe and well. We had a strong start to the year, reflected in our financial results and in the progress made on our balanced capital allocation strategy. We grew organic sales, expanded margins and achieved high single-digit adjusted EPS growth, while driving growth in all regions in new equipment orders and our maintenance portfolio. Our service business experienced favorable pricing and grew revenue, margins and adjusted operating profit. In addition, we generated nearly $0.5 billion in free cash flow while continuing to return the majority of our cash generated to shareholders.

In Q1, we completed $200 million in share repurchases and received Board approval of a $1 billion share repurchase authorization. In April, we announced a 20.8% increase to our quarterly dividend, while acquiring the remaining interest in Zardoya Otis. After settlement of the tender offer in mid-April, we now have over 95% ownership of Zardoya Otis and expect to automatically delist it in early May. Timing was better than our prior expectations and is expected to add another $0.02 of EPS accretion in 2022. This progress sets us up well for the remainder of 2022 and beyond.