Otis Worldwide Corp.

Overview Key strengths Key risks Recurring service activity which results in relatively stable end-market demand. Competitive original equipment market dominated by large, capable incumbents. Solid market position and engineering expertise as one of four global OEMs, with the largest service portfolio. Narrow product range compared with large industrial manufacturing peers. Well-balanced geographic mix. Exposure to weakness in China?s residential property development market. Strong free cash flow. Service generates 85% of Otis Worldwide Corp. ?s operating income before corporate expenses. The segment?s performance was steady during the 2008 financial crisis and the COVID-19 pandemic, both of which both caused Otis? new equipment segment sales to fall, as we project will occur through 2025. Despite the weak new equipment outlook, we forecast

...A stable, profitable service segment should continue to support credit metrics while new equipment sales decline. Service generates 85% of Otis Worldwide Corp.'s operating income before corporate expenses. The segment's performance was steady during the 2008 financial crisis and the COVID-19 pandemic, both of which both caused Otis' new equipment segment sales to fall, as we project will occur through 2025. Despite the weak new equipment outlook, we forecast continued EBITDA growth and credit metric improvement in 2025-2026 as the rest of the business offsets weakness in China's property market....

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