Research Update: Otis Worldwide Corp. Outlook Revised To Stable From Negative On Resilient Operating Performance, Improving Debt Leverage

We expect the resilience of Otis' maintenance business, diverse property type exposure, and its $16 billion backlog will result in S&P Global Ratings-adjusted EBITDA generation of $2.3 billion to $2.5 billion annually over the next two years and keep adjusted leverage below 3x, despite the potential for weakening construction activity in some areas. We forecast that Otis' leverage will improve from the high-2x area at the end of fiscal 2020 to the mid-2x area over the next 12-24 months as EBITDA gradually improves. Furthermore, we believe the company can sustain profitability through a potentially modest decrease in construction activity, as demonstrated during 2020. Therefore, we are revising our outlook on Otis to stable from negative and affirming all our ratings,

...- We expect the resilience of Otis' maintenance business, diverse property type exposure, and its $16 billion backlog will result in S&P Global Ratings-adjusted EBITDA generation of $2.3 billion to $2.5 billion annually over the next two years and keep adjusted leverage below 3x, despite the potential for weakening construction activity in some areas. - We forecast that Otis' leverage will improve from the high-2x area at the end of fiscal 2020 to the mid-2x area over the next 12-24 months as EBITDA gradually improves. Furthermore, we believe the company can sustain profitability through a potentially modest decrease in construction activity, as demonstrated during 2020. - Therefore, we are revising our outlook on Otis to stable from negative and affirming all our ratings, including our '###' issuer credit rating on the company. - The stable outlook reflects our expectation that good near-term revenue visibility and ability to preserve margins will offset any potential regional slow-down...

Research Update