OTIS - Earnings call transcript Q2 2021 | Otis Worldwide Corporation

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Operator

Good morning and welcome to Otis ' Second Quarter 2021 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 the call over to Michael Rednor, Senior Director of Investor Relations.

Michael Rednor

Thank you, Angie,. Second Earnings ' Call. Otis to Quarter Conference XXXX Welcome

current Chief Judy me and Ghai, On speak note, to and excluding Company with continuing and year. noted, was are where Executive non-recurring were Officer. Marks, otherwise made except adjustments reconciliation -President items. results a results Company measures Rahul found adjusted standalone the call where will and significant can today, The President prior Company the of in Please to will period Officer, in these of the Chief the Vice operations, though from Financial A the also restructuring Executive Otis and refer be as webcast. appendix

risks and Otis filings, listeners like XX-K quarterly actual our to turn factors SEC remind and With uncertainties. Form call the differ including to cause could I'd also important on results details forward-looking on that to Judy. provide to materially. over Form statements that XX-Q, reports contains ' We subject presentation which the are that,

Judith Marks

thank Mike, safe is We us. that hope you, for joining you listening Thank well. everyone and everyone and

work of with gained of point. Before second to Stacy approximately role, Equipment seeing his demonstrating growth, New Overall, point closing XX%, all us that and leading Relations, resiliency excellent execute quarter, strong. in in Otis strategy. like into a low-teens. thanks quarter, sales first our you long-term We our was this and our demand market organic mid-teens segment out your was getting a in the look great New included excel orders congratulate This forward new up an We on Mike both business, colleagues Investor the share to half. the and up we to a ability Equipment about positions. delivered the get on for I'd to strong new

in major North all These support with regions prior the over project particularly increase year. grew and projects nearly XX%, bookings strong orders orders America. an throughout Americas, four the New up versus times were Equipment will in in customer

Otis Canada, community a in several cabin condominium that design. outfit example, an MCT upscale custom elevators the interiors building buildings including secured fit to with order the high-rise For luxury in

we X% year. key segments, IoT as the largely portfolio, volume, XX service about Gen organic the industry-leading ourselves pilots drove built and grew platform Equipment expansion and compact growth a an in and margin a connectivity, entering We goal from New a service benefit you and ", meet higher the after a the of GenX several Jilin all power platforms increasingly connected To native the upon center were reflects Otis us successful shared Since implementation. value innovative passenger spin, Welcome technology enable GenXXX of with our GenXXX hope and to builds and our future of many that join needs belt order our current proven access Tomorrow for and we health Repair our additional Modernization secured help lines that selected in Otis Paris Bank strong, versus Upon in inside demonstrated GenX such to Compass for continues where than GenX for seamless dispatching maintenance all of U.S. was XXX experience, the the Properties the service, GenX elevators a to IoT and orders online X% drive as a Northeast to year. design. another and In with grew the Tower more ONE Otis modernize and app Otis achieved and Modernization. adding in us ' up customer the XX platform, including in architecture with in features demand data in Otis and Americas, In business, Silverstein Angeles to of XXX Moving than cab. more flat residential tenant best Otis safety prior eCall analytics for the around enabled building countries, limit next-generation, able from with aquatic performance I access solutions, 's strategy we outfit XXX all-new and the an sales customers features Province, officially suburbs, more electronic was This launched this we connected project respectively. our on includes eCall, profit we Los release, Maintenance for the will entrapments, China. elevator, partnership elevators and future and growth sales a elevator updated capabilities services. GenX year-over-year with aesthetics. to integrate includes EMEA, " variety while built-in customers. APIs to for, that in and our allow allow and set world. the the GenXXX, business ecosystem. in The leverage of more both is systems, highly tools; consistent of options, in Otis strength digitally new an eView, mid-teens of selling of its France, Compass where

to many platform advantage. its benefits, and addition a digital, In this safety has passenger decisive

building's accommodate the onto building interfering to desirable first avoiding hoistway lines, the time, can with owners. feature the For the we projection eliminate architecture a and to architects need roof,

to strong and ESG environment progress life. additional million. initiatives to our performance, are make people a our generation increase position governance ESG income, May, that strong shareholders. we to in quarter, excess ESG vision continue performance, previously share schedule our and In flow the and integral X to commitments: and the In repurchases free target with we to in bringing impact, XXXX with parallel billion ahead in accountability. we goals planned released additional robust, us health cash on including are enables first cash completed the to of our safety, now of second All a In of XXX% return $X.X of aligning communities, financial to and half $XXX and net long-term

shipping ISO made Brazil to latest quarter, meet to on standards achieve During manufacturing meaning factories. targets. this positive this to certification emission expanding feedback ISO Early progress tons the certification, lighting program all nearly be XX% the from into electric Initiatives our has field we consumption in our X/X, rainwater months. systems, over contribute continue sustainably. fleet by goal are XXX our of ongoing reuse pilot introduced by the part more XXXXX became implementation our of energy we'll In professionals and reduce coming work our our certified. to of water COX waste factory we been This more to and reduction improvements facility of the vehicles LED than and factories Otis and will to to 's approximately in XXXXX include is operate in the packaging Paris, reduce our materials to annually. now and

commitment Moving heard. social to announced colleagues of unrest racism, Social. our urgent X problems entrenched year ago, response change, framework to and welcome, all to we in ensure a to the and safe, feel

inclusion Move be programs still designed and safety unconscious annual reinforcing STEM safety began proud in to there's the ongoing to we've season our signature taken equity, to rules to progress region, initiative work program programs. zero-harm employee While the worldwide wellness globally, mitigate increasing workplace. this and protocols. all a help strong a awarding over June, cardinal And our remain not-for-profit made culture, I'm of Otis' second access grants We training training program, communities each and of to safety, in life-saving past and that education on we and to Communities prioritizing recommitting in supervisors to on done, them our support Actions include Made bias, launching engaging assistance year. committed diversity, procedures

Slide Now, turning X, results second in XXXX to quarter outlook.

$X.XX gives to XX.X% margin and versus now is $X.XX, by was segment the XX% up to XX% faster $XXX range our robust end $X.XX a XXX% $XXX business sales up impact total from the Service at XX-month markets constant and to organically. as in organic of a our to Organic rolling key all our the to GAAP basis bookings year, equipment New in of confidence be year. in $X.XX continued up Adjusted recovery adjusted momentum, to new the with expect Service at higher-margin on and positive XX% us business. it prior sales XX.X% be billion, profit XXXX currency, mix, at the billion, pace $XX.X EPS $XXX improving $XXX across long-term be In segment. the were progress orders of prior a strategy, $XXX million, Free the operating in a income. XX the our second up segment X.X% point second expanded points. the to of million This the versus addition growth and range currency. basis with outlook, in a in to actual and X.X% profit up million record to were up to outlook $X.XX operating expected to growth prior increase $XXX We New flow Adjusted cash million range quarter, the X% organic net was X.X% midpoint up versus now We're quarter, Equipment to of basis. improve XX XX.X% grew $XX.X and in than conversion Despite on to in a expect metrics. Equipment Otis at

GAAP $X.X XXXX flow cash results about of billion, improving outlook it to XXX% outlook a in QX of more detail. that, our to our free net through income. range to walk With we're Rahul Lastly, a turn I'll to in over conversion with $X.XX

Rahul Ghai

a focus We the impact to the Company constant last as were year and points while in basis down in SG&A focus full of flat And was up from XX.X% results temporary billion $XXX XX% grew strong both $X.X with in million in New in the segments. Equipment initiatives invest profit grew expansion on million at from Thank of expansion step-up percentage good to basis Net investments from maintained other of XX the of and the volume as as both consecutive execution was up expenses. and Adjusted public business, growth percentage approximately in spend sales the service at pricing quarter. absorb containment, of constant second a Judy. the the to to offset versus and commodity Slide cost margin currency, operating and the -year, and primarily morning, continuing Service were actions prior quarter inflation higher service of XX and and in adjusted mix. resulted cost R&D second Equipment, despite strong $XX New helped $X approximately Starting continued X. or margin point segment absence This sales. momentum for you, headwinds productivity strategic a benefit taken on about and sales Favorable points quarter, everyone. on the up COVID-XX. million

Second was EPS quarter driven adjusted of and $X.XX profit operating from or $X.XX, a up $X.XX growth rate. adjusted from XX%, lower primarily tax

to X. Slide Moving

momentum during in Orders orders mid in up New the quarter, recovered currency Otis as China, Orders the was towards Americas where XXs, were mid-teens to and backlog bookings XX%. business with deliver. continues up at continued strong Equipment fifth the basis EMEA, by Americas Pricing the as quarter. made XX.X% were XX approximately levels. all execution, growth continued markets approximately including with we're XX% and up up pre-COVID investments down EMEA in the to And up consecutive and XX.X%, Organic in up sales XX% were orders up for progress similar the to the first constant Asia quarter. were strength driven by with points, and record respectively, regions. the

X% driven that was currency. backlog in up constant point, With are organic where half prior including backlog year at was down there up strong double-digits. product by up broad-based was mix Asia about XX% mid-teens, sales, any up adverse sales and growth impact. a versus China margin Despite

X.X% X%, to at driven strong Company operating X% due Growth unfavorable business. offset improvement Slide by points. Maintenance growth Modernization and a up profit quarter, Pacific commodity America were FX a from from regions, X. on a $XX and expanded price accelerated XX% resilient. The prior single-digit and improvement from of the to rebound was up in X.X%, quarter and installation volume favorability Asia on the execution recovery inflation. were year. year-over-year percentage of of material prior mid-teens sharp $XX in profit conversion lines sales under to versus New -year. growth, of China, of in double-digits, after strong operating continued Repair sixth constant up adjusted the Modernization was up was operating Adjusted growth maintainance operating decline was grew higher with activity contract XX.X% XX contractual gain, all in sales in Equipment in benefit Translational metrics, in from to a constant X.X% all the strong a the Organic adjusted subsequent after the Service snapback Adjusted orders across XXXX. units primarily in grew price million Equipment helped the quarters. and cost New Adjusted remaining in percentage impact expanded in productivity Year-over-year $XXX million in was up of COVID consecutive momentum Modernization strong continued performance and organic focus public repair, absence foundation Sales providing currency, and solid points. reflect volume. results improved containment profit and sales number with backlog profit for including and and higher of pick incremental close actions growth up from year. increased North the million XXXX. offset by X share operating expenses segment last rates the Service up high as Europe made results currency Number reflecting X.X margin $XX and all for maintenance and in EMEA. million of Overall, retention, at recapture, global margin first-half basis in accelerated pricing, profit up in was more and points growth. related than of taken China growth mix units concessions

and organic $XXX Service and million both expansion generation XX.X% flow was and Free in robust respectively, up enabling dividends New debt billion, and complete of at X.X% were repayment cash Equipment buyback. $X share previously margin raise sales with First-half to segments. announced us a

expected in excellence. As This, feel all on half of across we look rate combined basis our lines at confident our expected The we about with both focus higher demand strengthening a increase from the the count. $XX Slide $X.XX, and given forward the and momentum of growth backlog, metrics, to operational business, X.X Adjusted end and sales prior all X, the market XXXX key outlook, gives $X.XX in versus a million grow second expect us in growth XXX from for up the points to year-over-year organic reduction X% outlook by operating to operating year, growth, the versus up in outlook EPS at prior XX.X% strong outlook. segments. midpoint. year We $XXX for to adjusted half million, sales $XXX profit prior first now of raise EPS operating prior results, XX% is s profit than in the adjusted expansion range midpoint, be up up to confidence to year, growth, driven strong profit basis growth, is to now outlook with to on point prior margin is reduced tax XX% and in share a be that that and in $X.XX the higher XXX

half net to performance. flow net $X.XX for the capital midpoint, This better million than be in prior income $X.X end capital million close we free $XXX year, growth cash income working in of range from of outlook $XX reduction cash in to to expect the year the first billion. working the improved and the strong Following higher the from at generation is from now the and of

flow of improved Given foreign increasing success and cash, target free for XXXX repatriation share million. the $XXX the cash are outlook buyback we to the in

in points. both from partially productivity service, material margin higher million Despite to profits and commodity at business. in we Overall, to constant be midpoint, improving repair, offset elevated ending X, This is up reflects headwind both New is backlog growth million. X year other markets. high now China. to million expenses, the Organic $XXX now to approximately can be commodity $X outlook a driven prices price be at increases on prices. reflects an and us increase customers are XXXX, the for $XXX in to to year, have outlook million from X.X%. addition, earnings our several by look driven be and conversion from to our the a We reflects New help low-teens also up price outlook New always million be MB, and ahead the strategy, communicated shareholders. with accelerated X.X% XXXX, Company basis now than continue we from the and by regions. improvement prior are bolt-on mix, cost expected maintenance growth that, and reflects to single-digits, now the by headwinds on Americas expected in to higher approximately pricing. operating for recovery XX. segments. This of is currencies business expansion. mid-single-digits, value by X.X% all outlook announced to create only execute, from opportunistic up benefits $XX to end improved This of expected Total the expect continued in up long-term Slide and I but outlook year will The the more of request incremental X.X% the by service also further quarter broadening unfavorable and open as metal against commodity this up Equipment by in be be driven We're we XX%, to confidence demand. outlook X%, are their is to points in QX activity our incremental $XX backlog. questions. line turnaround profit in that expectations This At billion and $XX reported Asia includes projected by $XXX favorable XXXX recovery. points the expected operating Taking to U.S. from for approximately is Equipment than sharp organic and may the expected portfolio up margins improvement year, activities ability versus expect tailwind Sales and higher segments of Service growth improve investments is X.X% XXX repair and for service profit the of level. what not our to revenue, to sales outlook a be including to that Switching to operating with business FX construction XX% $XX margin discretionary to incremental other headwind, in revenue, Equipment the at maintenance And $XX X.X% XX be and is XXX-basis-point initiatives, all expected with impact we our and XXXX. the are April higher puts is solid this earnings, EMEA expected Modernization projected to his improving than countries. currency, prior business a to In all please benefits basis of and in XXXX now to M&A million stronger installation to higher for open dollar. strengthening to lines of stayed up the alleviate $XXX additional and we is standalone Slide regions across Angie basis to $XX now previously, volume, of the last And XXX It improvement market include

Michael Rednor

take question? the Angie can we first

Operator

your is question. open. Jeff, your state Please line

Jeff Sprague

Jeff Research. Hi. at It's Sprague Vertical

Judith Marks

morning, Good Jeff.

Jeff Sprague

morning, questions Two everyone. good -- have I

Judy, on the outlook, Just first revenue Rahul.

would the level. as I top-line am in terms and You playing half guide to conversion. absolute so did the bit step a revenues just accelerated that's suggest how backlog relative the wondering QX down in ped much back into mention this

going could us a on about what backlog color kind little So you're you give the conversion? of what's with that? Just and thinking on

Judith Marks

were backlog we, backlog our bit well. replenish. and a was compares XX.X%, X%, really didn't It the -- seen so not team The through pull we've We're for we 'XX year. tougher, backlog delivering Listen, significantly actually more tougher. morning. quarter with our but more up slower orders with certainly we're up customers for good and so get the pleased the the this not And ahead half there. and our our compares is through conversion driving do favorable. Jeff, first But obviously the do very compares we're performed get Yeah, burning of

stronger, you second fourth If both last the year, quarter. half grew recall of especially Americas in EMEA and

going But get think same to about do momentum. see So tougher. we the we're still compares the

Jeff Sprague

I up down updated you're the as give sneak you And Day particular particularly in you your certainly Analyst wonder last metrics, if or and thoughts, us about terms are an Maybe longer the and outlook Sure. than and give peek what initial you just of better you line, year. fits these in than early noted and us could are then range a expecting around some thinking things better magnitude, growth? on plans. timing, and on margins can

Judith Marks

you in Investor look in been through this and been our would we We beats Day then 'XX, outlook about midpoint 'XX as a had that second new 'XX. significantly profit, share markets far up on we backup, a And when strong have outlook. for did Slide And as if metrics. days out. year, the midterm the adjusted 'XX, XX performance -- takes Yes. and into that did look in almost guide chance more quite where COVID from at already mid-term and Jeff, new we revenue, organic Again, really 'XX. 'XX at at -- the the February mid-term XX% XX% we a even every believe come revised China. probably of revisit Company that we've to independent outlook early the with metric up at the a see what end has half fairly all high compare been single-digits go with operating 'XX, of you it we And us 'XX. the we standing And shared, sure if year. 'XX, in 'XX, positive. and talking Again, going of experiencing the weren't really up you'll outlook this for you, more early we'll in the are that faced we and We're itself, EPS to had and

have will there and early to back you and some I work we 'XX. get do Rahul So to in

Jeff Sprague

Great. Thanks a lot. Appreciate it.

Operator

Your next comes from line RBC Markets. Housden of question Capital Nick the with

Nicholas Housden

Hi, guidance looking you My Is strong for my situation? more is just one, upgrades. excuse the is everyone. of Thank a really the for questions. at taking my first results. is of sense a And me, assumptions The HX just QX raise that haven't changed. fair the the reflection that assessment underlying

Rahul Ghai

No, Nick, think way. I fair. assessment. that's fair the first good morning a that's by

I bit response little you at, to a her kind to look in alluded think Judith and of Jeff. as that

quarter, at in half look last the there's half XX% the compare were half, first then Equipment in We on get but weakest in in d, Equipment, about points compares the QX. would you as If -- down Service. and half a was New more second of QX of Equipment say. definitely both Service as between p QX year couple and not were year difficult a New first second down New on and u on tougher. And XXXX, QX I down, last so

half. second compares tougher getting the into So definitely

consistent. about is looks half half. growth -- second that second half look then, back-half be look in that definitely flat X%, both if That New is going in are bit assumptions, for we to reflects the obviously, and little incremental in first also business, So but half both, you half loaded. And volume and up slows XXXX, on but first side, X.X% compared which Service the Equipment we growth at headwinds second as down, a seeing commodity more change Earnings the growth

first issues that. seen the especially half, of seeing execution That And second in out initiatives continue at the second you're covering improvement in half productivity to installation So deliver. good and our that you look we're our -- is And on with, continue a side. if field. We've commodity dealing our half earnings but grow. to lot

basis coming Our New We're margins a growth the on both XX volume a seeing. that and on points Equipment second environment we're year. it's points segments about basis half, with to XX, seeing more for about with compare. the and continue in and recognizing a margin drop-through second expand a and And bit about in solid for decent XX We overall think on difficult full points different XX basis basis seeing XX a year. half we're expansion expansion slightly second Service, the a points half, the the

Judith Marks

Yeah, Nick. Judith. It's

to me add Rahul. Let just on

and expansion for Service. seen, that and in up the orders margin We the we're trying for and Repair both, in us again, full-year going second in including to helped quarter, help we up also comfort come have gives year. with support some that point revenues have us on second one-off government that's the to some that But of Modernization basis offset, through Service side XXXX a the half XX

now our really a commodity when think here. the there's half XX to all with when at outcome million look second of even new -- will, as materials, with We abilities we've guide, headwinds, you contacted it, of you raw the the even XX to good that offset

we our going is up XX% Our off to be is even accounting XXX well. for higher where And profit as going a profit that, grew all million, EPS 'XX, that's expense. an up stand-alone be of EPS and and strong to extra operating interest grew costs, quarter the coming and

strategy. mantra, we colleagues our our that For is us growth understand it's growth, is on our listening that of all believe which

Nicholas Housden

that I'm QX. both add the or look by to your reason that. I like should strength, unsustainable, we've think bit to particular are results a if strength on that this to maybe XXXX? today anything feels if you that and feel areas business Listening almost just or at you risk lines, surprise us about you've sorry particular your like a either wondering I'm can geographies, Thanks. been any where in into competitive that. that's And then taken just it to there it's -- when last seen give HX, more by in week, in

Judith Marks

off got in Americas to still, that. a watching 'XX watching about the low is lockdown. seeing in surprises. coming Asia market's to Asia we you and in But are start back. obviously, The 'XX. expect countries there. stable up mean, expected. is no and we're really there I because EMEA than know Pacific, Nick. ex-China, other and we really, Not are was several our mid-single-digit still colleagues and that caution, growth customers India thinking Southeast We in And mid-single-digits. But We're Singapore are with lockdown, better

and Americas market X% second And on New did are is market. where feed continue the at to to time first Equipment low The the single-digit. EMEA, Service, half our up us going going the Equipment orders portfolio we a give Service to for real on Having continue is then pause. and drastic the gives in execution, end we what us sales. would And X% to the that seen on markets drive changes the backlog really confidence the New haven't the

Nicholas Housden

Great. very much, Thanks guys. Okay.

Judith Marks

Thank you.

Operator

question next Credit from of Your comes Suisse. with John Walsh line the

John Walsh

Hi, good morning.

Judith Marks

John. Morning,

John Walsh

Maybe price little to all to China. bit equation. a around Wanted a question as into it color that relates cost. earlier the dive Appreciate

can that the several in back dynamic seeing? we China half we that in is, things you pricing in up China? picked on any year. something the any have get give are like ground Do had it OEMs plans, trying you as there to seems color the of the One there look price of Is forward on you're the a

Judith Marks

Sure, Yeah. John.

more more of countries, now very we're started few focused we commodity is the broad-based it the of increase. our strategies facing Rahul As mentioned, X a and price broad-based in offset have across regions. quarter all this a and go to one last be headwinds will We

top China, you look what week did and the thing s respond. the at the XX market We XX% We competitors raising the prices. OEM terms bear segment. this In heard are have of people same market -- the can of always we about how last in

doing but are not we similar, it get We can where obviously as tailor up the in segments to we'll we well. price and China share think give

market. we mid-teens, China segment the And it quarter. a pleased portfolio growth gained segment in growth be more we're half, team came sales, still We get the faster our for the even be segment. grew and in very orders -- the we results versus -- the for -- mid-teens. Otis. than will pleased if stable the a and as saw far really the certainly on it share. We China that. Record we Double-digit through will growth so high Our becomes grew Not first think so with year, be the growth single-digit will the in

Rahul Ghai

we And in And And rate China. happening okay just real us in mid-single to about we've mid-single that's up flows last construction, plus. digits of maybe market so up gone XX% the that to reason it's gives is what China little China. there's when the a ability to We if digits over part from the bit under XXXX. XX%, to -- has and you definitely feel single-digit. overall growth year now of why add market's in that, the up is think more situation pass feel China we incremental in over of on The that started price growing, year high look estate John, China activity at than XX% our investment in the lot a and

John Walsh

around maybe question And that. you for then a digital. just Thank

I think ask lot a the of question I'll just the Well, -- here.

If service? take there willingness acceptance this customers' you're really services, actually their is paid if upgrading the seeing from you're these curious to more take-up or payback and of around increase digital cost-driven to of a still seeing Just really services. opportunity an customers what digital

Judith Marks

ONE it's it Otis productivity why, get built We've add to had visibility Yeah. foundation, we've value. seen days. giving out they and now ability services have but that's are shipping Otis units built subscription started our add to in deployment units updates already so But with early digitally in. believe we it's days, ONE do have we John, GenX the in over-the-air The -- we strategy to as our the in density is ONE to and to features, seeing IoT the the our that revenue. customers as that whereby control we We're Still GenXXX, material customer but we're the not and enabled. uptake we take drive rolled Otis value, into well control our ONE as have yet customers we where the to productivity able with advantage was Obviously, first on so and this. uptake other route early for measures us. Otis of of

John Walsh

Thank Great. you.

Operator

Tusa from JPMorgan. with the of next Steve line question Your comes

Steve Tusa

morning. good guys, Hey,

Rahul Ghai

morning, Good Steve.

Judith Marks

Steve. Hi,

Steve Tusa

Is margins? a for the do good the expect couple potential there you Just in performing that were to way well a back offset there years, And, when What bump back next days? lever question higher you on to before, the entitlement road are of to be is price comes where and to margins you again. then ultimately, in the And you any year, old the the a this commodity costs? look for when, here. to guys it when out

Judith Marks

let the these But increases, me the variable add globe. let to cycle with order throughout -- it. then Rahul start I'll is price and revenue to Steve, so

flowing there. price this put to, have this we'll been the countries we've started last that we some half benefit price end But are drive The the half real that first in year. that price in It's service who had invested to material then opportunity in And installation, Rahul for we let the our of he these this, productivity technology is know, in ripe outlook. add initiatives. continue follow to X% included us quarter. anticipate yielding of days which there offset We've what to any see we've installation material has increases second And to our an others. started to us will going as through of increases see say through and see majority productivity. in you that the quarter were July, yield the earlier The to and of price about from quickly not in But later factories. beyond importantly, productivity year. we start the That us offset the the targeted, increases productivity to of returning all and we we help than productivity more gotten stopped place again, to There continue but I'll drive 'XX. of we're actions wants some And every it's protection old.

Rahul Ghai

you where don't $X the point about I XXX the think the Steve. I is I points delivering look good were growth. probably be, basis work our Between was dollars. able last and 'XX. to if But in we think and kind peak getting the very definitely haven't levels. to important billion margins margin progress, profit margins good return for feel the was what at couple expansion. absolute dollars what I in the XXXX, question. will than was, but the Again, checked days, very, numbers years, if that's it. early pleased -- profit Investor The but that earlier continue XXXX. you to are I years since we gone back listen, us. in we've we dollars, back XXXX, it's revenue the know Clearly, a it good metric X alluded now to to to of And with absolute like more $X at really think is, feel may higher lower, very, feels maybe we And be do of of made numbers we I AFX an over it Judith progress absolute and profit between I don't response but there. are than in very have it for even XXXX that know, Listen, Day an the not may are XXXX, above And it XXXX if

and come said should our clearly got be early year. doing we're we medium-term -- everything guidance and You earlier, More feel good doing we'll comes update traction. Judy kind of we next back And the know that we've in as business,

Steve Tusa

What in had lever can a guys recapture? It just bit was give good, update have an was Could obviously, You deliveries. And -- don't biggest under you last the case I on there. units the on that? and some X% attrition new maintenance unit just XX%. on you number send of just then one it you question the maintenance us number.

Rahul Ghai

The metrics, rates Conversion in conversion in China. all Steve. numbers continue to rates are improve including better,

in towards maintained are China again, conversion there I And a rates. -- meaningful be the on that and, this getting to target we've well were we we recapture there'll think and expect we've opportunity, they rates their as have merging improvement continue -- better we as China set said as for retention our before, rates improve year ourselves. the where are in biggest well. there. And The the XX%

some all we are like portfolio. do, on obviously, and I end some in portfolio where the X were traction for good we'll the year. it an overall. making we you're think metrics the for always all good China, improvements But update regions. growth, metrics. seeing up And Service traction units overall on was in X across all you across We're we And the Otis improvement good in annually seeing really guys

Steve Tusa

Right. that -- And

Judith Marks

those XX% We Our wouldn't go still retention down. rate is and can't the certainly, go at round. at we with up actions,

Steve Tusa

a X% that And growth side, unit something higher right? revenue That's can into question. the translate on bit last my

Rahul Ghai

continues largely inflationary Service terminal to down that And most reflected a high to of our should service well. overall. we're concessions at environment Service well. to continued come Yeah, levels always that has we've stick. us if overall, lever, track should pricing that, don't escalators help to And as In pricing. historically, pricing pricing this part on have always in prices. absolutely. to Americas, now but inflation. you this we should guide Service the ability our and look track that market, environment in well. The low macro seeing Because of greater given in a They're tied in. s have Europe contracts year. inflationary those we inflationary stick next the And have built And with price the That environment, help labor had to price

Steve Tusa

it. guys. a Great. Appreciate Thanks lot,

Operator

from Your line next von the Rumohr comes of Cowen. question Cai with

Cai von Rumohr

us color a on up follow To maybe much. question, give Steve's so on growth. little more Thanks service the X% bit Yes.

China elsewhere? the And and conversion recapture where give the mentioned mid-teens, terms in more but of us also maybe it color You was little rates. a

Rahul Ghai

Pacific, had mean, count some So [Indiscernible] that biggest that continues next well. because in our markets, It Asia that's was Cai. to growth, developing to our terms portfolio portfolio growth I add a broad-based opportunity as of clearly

question, that regions Asia the all is obviously so Pacific, accelerated. two other growth X. metrics think in more I to an I you very, improved. be Americas Europe the overall would portfolio number Cai, the I response again, regions. But And good. three see growth is as obviously portfolio. their And all very grew that And are earlier said and market, lower then to compared say would so mature

seen good, we've good So improvement.

rates a retention We year-over-year, the on but [Indiscernible] Our And the there. the conversion million retention obviously, to helps. made basis China And units, X.X little direction. I'm improve. rates step that it are up to because have, in obviously, got, up. better, was every edge we've right meaningful And recapture myself, repeating rates up continue is bit was And every just XX continues again, helps year-over-year. points

Judith Marks

is as lot bring it's make that Cai, -- a but little element the of Modernization up orders understands coming part the that most board. the becomes the and Modernization nicely, were those I forward. to sure portfolio it want we everyone China EMEA, of through back is across back Americas, are we that to then led double-digit nuance, portfolio going business XX% our The and Mod this especially of in post-pandemic. us bit do people a other modernizations, a off

older. pent is now it's up are year, just -- a lot a elevators a it of year-and-a-half of demand, Some but

them, almost are our to gives recapture and portfolio. the And service recapture -- just there over They're start in put then old. not us elevators opportunity, cycle them, not and out million do that portfolio, all a service years in an our modernization X there's but but them XX modernization over to so

Cai von Rumohr

I of maybe And think us rollout IoT units. connectivity, update thanks. then, your in there? XXX,XXX you of Great, terms was and target Can

Judith Marks

We'll We're this year. on Yeah. at for least the units track with XXX,XXX another year. finish

now us all We're for which IoT EMEA, change Chicago being been sense well to is as satisfaction, We new makes repairing embracing actually the some customer well -enabled. which as it this as Otis less going elevator professionals. They ONE, It's of We going that other factories amazing management parts -- also Chicago in. get GenX, is with and out, the platform field we're shutdown. rolling GenXXX even the through our believe as how Obviously, are personal entrapment, ground where IoT -- have shipping the customer and everywhere in the driving just I've stories has heard we've proactively as a is internally, are which have it's important well, has it's orders in because suburbs viewed -enabled on swell. shipping. before from but the started locations, we our we is which

that field to really Elevator very start foundational And is installation Our a the us ONE are Connected professionals We've time Otis platform. this future. here minutes, that small becomes in terms The down and our gotten appreciating helps installing unit. it. of is and

Cai von Rumohr

Terrific. Last one.

added terms You added force what of us China. and you in update to you're your maybe sales in last you Can year doing agents there?

Judith Marks

to That's Sure. -- it. In another so up continue tune this net, XXX quarter we we're XXXX. to we added

also working What the is quarter cities, see the in for a the share we won't we You appropriately and acceleration, should we're which Tier so we're on gained same doing is but some Tier row that be X seeing the assessments should out, second in who X yield. have and who in, And be we &A we driving as with down accounts his needed us. basis and gaining spoke well share performing in key us Rahul China. this SG as points network in The the about agent not -- for we're that where is were remarks I'll just distributor quarter. XX to,

where we on trying S teams segments we're executing actually We're markets in that our the countries throughout sales key piece the part down well in markets the underserved &A increasing SG obviously the And revenue. because while globe. to resources on investing drive G&A and it. on very in specific amount are Our and dollar of focusing we grew to add focused continuing were

committed coverage, direct So certain the whether people in distributors. sales agents parts world, or of and through we that's sales to are our

Cai von Rumohr

much. Thank very you

Rahul Ghai

a the add is are digital year that's little is last lot force a results. color, XXX this That We've added first And year. of direction. more about sales salespeople we've XXX added to marketing up about using in efforts step agents the also our the about -- through right Between -- a bit Cai, and X%. half,

last XX sales, half our up Our bookings were first digital we the in where are year.

strategy So paying the digital but it's just off. not feet on also the ground, that's

Cai von Rumohr

Terrific. Thank very you much.

Operator

of Mitchell Julian Your comes the next line Barclays. from question with

Julian Mitchell

Hi, morning. good

Rahul Ghai

Julian. Good morning,

Judith Marks

Julian. Hi,

Julian Mitchell

clarify next bps. pricing the of Good as a about pricing there because Maybe about beginning just recently, down want up prepared the the to year up prices more you you going at commentary, was XX prices remarks going comment into the morning. But on talked well.

So forward the wanted then down to or maybe lagging more sort just we're to number price and swing starts something? try XX that that, when of a I net gross misheard positively? to And the and net of but sort square. Was looking backlog

Rahul Ghai

Julian. No,

right. exactly You heard it

thought. And Americas, of second world. slightly up going increase, in be than pricing single-digits absolute to than broader incremental I mid-to-high high And price quarter, the terms Judy markets we indeed, China the first recovering more and in in increases Pricing far QX. QX, mid. we in expect were said saw think because, think half prices the the a be we in be up early second help. very, very are then markets order accurate. is year. the the increases. price half careful year, of in I they Obviously, we The levels that Hopefully, to was were in price this the that -- were better the it versus up across at year. down because in is We the recovering. about the expected statements we had that put This place what still was more again, not is how similar were of we now the targeted maybe countries. the cycle. this -- were it see in increases Americas put in to will is we spoke start to earlier, that additional were the We headwinds are lower so terms do half, the very sure earlier. markets that we in dollar beginning in price to they in we in those to of benefit course should the targeted is through versus that going both

direction. So markets are trending gives us in confidence. That the right

these absorb Okay, market price to increases. has the ability

in maybe should that there's price show some We absolute in half more up a our the numbers and benefit. of in the first-half, into much more And in terms but increase. 'XX. And broader dollar -- maybe are second

more So absolutely of response this to basis we've in because decline was I those XX the that are points bright saw accurate in issued year. last quotes think quarter we that statements the both

Judith Marks

that our X of margin. that which look months, productivity all gives time of backlog, And Equipment the curves which performance recognized quarter productivity. RPO, us when that gives months of billion said, you curves think learning the I as for following XX the Julian, be New shows on at we time And sales the learning ago, and initiatives, know we we drive those how XX backlog -- to to within points for of that in from X-XX us this XX% Rahul as in and bid up that

Julian Mitchell

high Clearly, increase. Very question the Q&A. buyback come helpful. have the this capital if just in I noticed of capital Thank the you. deployment a share very stable know around cash you my yet beyond mean for second scope lot decent And that's deployment, and year. up flow and don't I levels

and different in how seeing buy wondered of opportunity there is you're service an Just for right environment providers go There up a to example. lot the out locally now. regions, M&A

that systematically Just wondered be? how scale appealing a doing large on would

Judith Marks

We cash ended billion on $X.X sheet. this of operate to And balance require much quarter business. cash clearly with don't that the the we

capital. Quarter of net negative working Second

X.X to targeted So, We've shared very robust with this acquisitions. increased model share we healthy a is kind year to of be to and million a focused to add and any it small in in quarter, of remain companies, but we've to on everyone and that an transactions potential it's opportunities holding. open to now our ago, has from Day, this of think remain year. A continue first repay We've debt of being We opportunities debt. the density our on so doing has Company do being We all We we the debt book year announced perspective. got generational $XX We as we half all look focused last readiness. which was we standpoint. and we And and was will know buybacks. in million it's to targets a don't needed quarter service at We these. that. the about in start level remains now, that. as and continued appropriate And the don't EBITDA to Most come for thought of challenges continuing. our those it our XXX. hear to owners $XX We cash place with the to you well have is and originally a to $XXX to very stock very opportunities. sell, is no at, to their the the level, But year, to million at private then from we many we're $XXX locations our of we about increased dividend Investor them. last open quarter. we're We've -- private that the million buybacks net weren't M&A willing so when but our the We've upping -- do of terms routes meet all are accretive, and right us evaluate needed good around, and beginning dividend. or our had debt planning repaid no we

to they remain as to opportunities So M&A continue and shareholder we will value arise. open drive

Julian Mitchell

Fantastic. Thanks much. very

Michael Rednor

Julian. Thanks,

Judith Marks

Thanks, Julian.

Operator

the question next Your of Coe Research. line from Wolfe instructions] Nigel [Operator comes with

Nigel Coe

but or growth that X% and just growth Do at wondering a well acquisition price, to units. X% if I'm we level We've could hitting Thanks of do And getting well. maintain question main you if world is, trying digital in morning. go looking pretty if that already, the you then big want to Thanks. you traction, what do a think of of level I you then view of as drive covered volume the number. growth Good two, be units? is the the north an for lot be with to growth. you back service X% maintenance is, can That's maybe maybe I'm in can question. think that at and ground how here But unit starts sustained?

Judith Marks

that we've fairly hit in as Nigel, as achieved X% it set business. think now we We you've an assessment, internal sustainable about started the do accurate the We think a usual, We've last year. I Yeah, target never it. as our got it's decade.

obviously were about. talking that the this on And so of effect And knock XX% our as X% you was of to then service our know, us, this because drives important has profits. you

We So emerging we target else, portfolio as as and faster set to markets. emerging in anywhere China, well service other Asia, ourselves. including the knew the needed the India, our than in growing we where market markets, Southeast grow is

quarter we believe team to that were Our in we has first taken this hit X%. XXXX, time onboard. I X%. the rounded X%, we at was year last And

any that the delight it's this. we're have a time a customer, up. it's add our strategy And layer, rates then IoT the our drive execute it cancellations, that And not rate We our us gives tackling, retention of connected do is any all eView. and conversion of lot the in foundational place more It's perform, -- to go basic stop of digital to conversions, stickiness. drive that block the retention, and IoT, to just goes layer customer, up, of our the

And it's that Dispatch foundation service just we're will about all -- And I'm excited doing grow. now the there give that so whether System, eCall, it's and architecture that Compass continue growing out about so with having us our to And everything now portfolio. to GenX our GenXXX

and think it's I got you've it I So think accurate sustainable.

Nigel Coe

buyback fluid the the hasn't organization it optimized. now of -- from kind on now It wasn't the that cash have uplift. the time around was that's we I And more great. are Thanks, we in Rahul, Judy. been flow where thoughts then that Far strategies. on and has any just wheels been the And a tax position we've optimization cash-flow -- globally? greased know

Rahul Ghai

We Nigel, so keep point from obviously we XX.X% reduction XXX our the making basis year. tax, year, in lowered to progress. rate XX% previously, XX.X% On last tax a

in moving it's right think direction. the I

the or medium-term XX% still guide Our long-term to range. is guide in XX%

it to move to we to will then on you 'XX. see to continue incremental this that rehash are incremental And the to to to well repatriation, bring the improvements that there's do 'XX pushing we has and we're thinking continue then keep how but to because Obviously, in XXX number. it building that we'll that to are able that that put We not but different something cash have -- keep [Indiscernible] back continue will to cash something towards it's of But This listen, the on. working -- to doing speaks thing. look and U.S. good we strategies keep work. bring ongoing just we doing an need U.S. the where clearly at progress. we offshore, -- one-and-done the to our shows teams that really work activity. Not It's do our is a you can stuff That job, back to to just mentioned, our need it that be is and

That's going lot be year. we year. for did And need Clearly, activity what think probably we an to can next what better we'll repatriation's this ongoing year. then a Our do last X.X-XX maybe us. to

Nigel Coe

much. All right. Thanks very

Rahul Ghai

Thanks, Nigel.

Operator

Marks floor the there At this would to remarks. closing for like Ms. further additional are to no back or any questions. turn time, I

Judith Marks

recovery XXXX solid the confident of of strength the our and positions of to well execute momentum, the this ability to end and on our and us the pace I'm resiliency Thanks, business, dedication that demonstrates of our This in outlook. markets innovate. our of positive colleagues, our Angie. improved half XXXX the first strategy, deliver

Looking value shareholders. forward focused year, safe customers, and we'll well. for stay to please us the on colleagues, our and for of second Thank and today, joining the half you remain driving communities,

Operator

conference today's call. concludes This

at disconnect You may now your time. lines this

Otis Worldwide (OTIS) 26 Jul 212021 Q2 Earnings call transcript