Otis Worldwide Corporation (NYSE:OTIS) Q3 2024 Earnings Call Transcript October 30, 2024 8:30 AM ET

Company Participants

Michael Rednor - Senior Vice President of Investor Relations
Judy Marks - Chair, Chief Executive Officer and President
Cristina Mendez - Executive Vice President & Chief Financial Officer

Conference Call Participants

Nigel Coe - Wolfe Research
Jeffrey Sprague - Vertical Research Partners
Julian Mitchell - Barclays
Joe O’Dea - Wells Fargo
Chris Snyder - Morgan Stanley
Patrick Bowman - JP Morgan Chase

Operator

Good morning, and welcome to Otis’ Third Quarter 2024 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'll now turn it over to Michael Rednor, Senior Vice President of Investor Relations. Please go ahead.

Michael Rednor

Thank you, Christa. Welcome to Otis' third quarter 2024 earnings conference call. On the call with me today are Judy Marks, Chair, CEO and President; and Cristina Mendez, Executive Vice President & CFO. Please note, except where otherwise noted, the company will speak to results from continuing operations excluding restructuring and significant nonrecurring 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 additional details on important factors that could cause actual results to differ materially.

Now, I'd like to turn the call over to Judy.

Judy Marks

Thank you, Mike, and good morning, afternoon, and evening, everyone. Thank you for joining us. I hope all are safe and well. Starting with Q3 highlights on slide 3, Otis returned to topline growth in the third quarter as we continued to demonstrate the strength of our Service-driven business model with solid third quarter results. In Service, we delivered high single digit growth in Q3, bringing year-to-date service organic sales to 6.4% with all lines of business contributing. We achieved maintenance portfolio growth of 4.2% and our modernization backlog increased 12% at constant currency. Through the first nine months of 2024, we have expanded overall adjusted operating profit margin by 60 basis points and achieved adjusted EPS growth of 8.2%.

In Q3, we generated $381 million in adjusted free cash flow and completed $200 million in share repurchases. Year-to-date, we've generated approximately $900 million in adjusted free cash flow and returned $800 million through share repurchases as we execute on our disciplined capital allocation strategy. Otis had several exciting accomplishments recently. For example, our manufacturing hub in Korea obtained ISO 50001 certification. Otis now has 11 manufacturing sites certified through the global standard for establishing, implementing, maintaining, and improving energy management. In addition, we announced the expansion of our Bengaluru manufacturing facility. This will increase our capacity and capabilities to help meet the growing residential, commercial, and infrastructure demand for elevators and escalators in India, while also expanding our localized manufacturing strategy in the country. And last, earlier this month, we're proud to name one of the world's Best Employers by Forbes Magazine for the third year in a row, reflecting our commitment to our colleagues' wellbeing.