Adjusted EPS improved to $0.80, beating the consensus of $0.76.
Adjusted operating profit decreased 19% Y/Y to $518 million, and the margin contracted by 50 bps to 15.5%.
New Equipment sales of $1.31 billion fell 8.1% Y/Y and -4.9% on an adjusted basis. Adjusted operating margin contracted 150 bps to 5.3%.
New Equipment orders were up 7% Y/Y at constant currency. The new equipment backlog increased 3% Y/Y, and the adjusted backlog increased 10% Y/Y at constant currency.
Service sales of $2.04 billion (+2.4% Y/Y), a 6.3% increase on an organic basis. Adjusted operating profit margin expanded by 40 bps to 23.5%.
Otis generated cash from operations of $278 million for the quarter, compared to $504 million a year ago.
Free cash flow was $253 million. It held cash and equivalents of $1.12 billion as of March 31, 2023.
Dividend: Recently, OTIS increased its quarterly dividend by 17.2% to $0.34 per share, payable on June 9, 2023, to shareholders of record at the close of business on May 19, 2023.
"Otis delivered a strong start to the year with our maintenance portfolio up more than 4%, organic sales growth for the tenth consecutive quarter, and strong Service performance contributing to mid-single digit adjusted EPS growth. Our strong New Equipment and modernization order performance in the quarter drove backlog expansion which will continue to support long-term maintenance portfolio growth," commented Judy Marks, Chair, CEO & President.
FY23 Outlook: Otis revised its outlook and now expects Adjusted net sales of $13.9 billion - $14.2 billion (prior view for sales of $13.8 billion-$14.1 billion) versus the consensus of $14.04 billion, and Organic sales up 4% - 6%.
It expects adjusted operating profit of $2.2 billion-$2.3 billion (prior $2.2 billion-$2.25 billion) and Adjusted EPS of $3.40-$3.50 (prior $3.35-$3.50) versus the consensus of $3.44.
OTIS sees a free cash flow of $1.5 billion-$1.55 billion with a conversion of 105 to 115% of GAAP net income and Share repurchases of $700 million to $800 million.
Price Action: OTIS shares are trading lower by 0.62% at $82.14 on the last check Wednesday.
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