Otis Worldwide : Earnings Document

Q2 2021 Earnings Call

July 26, 2021

© 2021 OTIS WORLDWIDE CORPORATION.

Forward-Looking Statements

Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted.

This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management's current expectations or plans for Otis' future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as "believe," "expect," "expectations," "plans," "strategy," "prospects," "estimate," "project," "target," "anticipate," "will," "should," "see," "guidance," "outlook," "confident," "goals" and other words of similar meaning in connection with a discussion of future operating or financial performance or the separation and distribution. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, uses of cash, dividends, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Otis following its separation from United Technologies Corporation, including the estimated costs associated with the separation and distribution and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. For those statements, Otis claims the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation: (1) the effect of economic conditions in the industries and markets in which Otis and its businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 and its effects, among other things, on global supply, demand, and distribution disruptions as the outbreak continues and results in an increasingly prolonged period of travel, commercial and/or other similar restrictions and limitations), natural disasters and the financial condition of Otis' customers and suppliers; (2) challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; (3) future levels of indebtedness and capital spending and research and development spending; (4) future availability of credit and factors that may affect such availability, including credit market conditions in the U.S. and other countries in which Otis and its businesses operate and Otis' capital structure; (5) the timing and scope of future repurchases of Otis' common stock, which may be suspended at any time due to various factors, including market conditions and the level of other investing activities and uses of cash; (6) fluctuations in prices of and delays and disruption in delivery of materials and services from suppliers; (7) cost reduction efforts and restructuring costs and savings and other consequences thereof; (8) new business and investment opportunities; (9) the anticipated benefits of moving away from diversification and balance of operations across product lines, regions and industries; (10) the outcome of legal proceedings, investigations and other contingencies; (11) pension plan assumptions and future contributions; (12) the impact of the negotiation of collective bargaining agreements and labor disputes; (13) the effect of changes in political conditions in the U.S., including the new U.S. Administration, and other countries in which Otis and its businesses operate, including China's response to the new U.S. administration and the United Kingdom's recent withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; (14) the effect of changes in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which Otis and its businesses operate, including changes as a result of the new U.S. Administration; (15) the ability of Otis to retain and hire key personnel;

1. the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; (17) the expected benefits of the separation and distribution and the timing thereof; (18) the determination by the Internal Revenue Service and other tax authorities that the distribution or certain related transactions should be treated as taxable transactions; (19) risks associated with indebtedness incurred as a result of financing transactions undertaken in connection with the separation; (20) the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the separation will exceed Otis' estimates; and (21) the impact of the separation on Otis' businesses and Otis' resources, systems, procedures and controls, diversion of management's attention and the impact on relationships with customers, suppliers, employees and other business counterparties. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary from those stated in forward-looking statements, see Otis' registration statements on Form 10 and Form S-3 and the reports of Otis on Forms 10-K,10-Q and 8-K filed with or furnished to the SEC from time to time. Any forward-looking statement speaks only as of the date on which it is made, and Otis assumes no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

© 2021 OTIS WORLDWIDE CORPORATION.

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Highlights

Positive momentum…executing on long-term strategy

• Q2 New Equipment share gain, up ~1 pt1
• Maintenance portfolio up 3%
• Organic2 sales growth in both segments
• • New Equipment growth in all regions
  • Service growth in all lines of business
• Margin expansion in both segments
• Launched new, IoT connected platforms

Creating value for shareholders

• Increasing full year share repurchase target to
  ~$750M…$0.5B completed in 1H21

Driving ESG initiatives…goals embedded in long-term strategy

1 Based on Otis internal estimates

2 See appendix for additional information regarding these non-GAAP financial measures.

© 2021 OTIS WORLDWIDE CORPORATION.

Q2 orders

Innovation

M City Phase 3

Mississauga, Canada

U.S. Bank Tower	Gen360™ platform
Los Angeles, California

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Q2 2021 update

Q2 2021

Results

Revised 2021

Outlook

• • New Equipment orders up 23.9% at constant currency1…up 9.4% on a rolling 12- month basis
  • New Equipment backlog up 10% and 5% at constant currency1
  • Organic1 sales up 15.4%...New Equipment up 25.4%, Service up 7.8%
  • Adjusted operating profit margin1 expanded 40 bps
  • Free cash flow1 of $493M…151% conversion1 of GAAP net income
• Improved across all key metrics
• Net sales of $14.1 to $14.2B, up 10.5 to 11%; organic up 7.5 to 8%
• Adjusted operating profit1 of $2.16 to $2.18B, up $240 to $260M; constant currency1 up $170 to $190M
• Adjusted diluted EPS1 of $2.89 to $2.93, up 15 to 16%
• Free cash flow1 of $1.45 to $1.50B…~120% conversion1 of GAAP net income

1 See appendix for additional information regarding these non-GAAP financial measures

© 2021 OTIS WORLDWIDE CORPORATION.

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Q2 2021 results

($ millions, except per share amounts)

Sales

3,701

3,029

Q2 2020	Q2 2021
Organic1	15.4%
FX	6.5%
Net acquisitions/other	0.3%
Total net sales	22.2%

Operating profit

GAAP	416	561
Adjusted1		572
	457
Adjusted	15.1%	15.5%
margin1
	Q2 2020	Q2 2021

Q2 adjusted operating profit1 up $115M…up $80M at constant currency1

Q2 adjusted operating profit margin1 expanded 40 bps, including ~60 bps of segment mix headwind

Diluted earnings per share

GAAP	$0.52	$0.76
Adjusted1		$0.79
	$0.56

Q2 2020	Q2 2021
Adjusted EPS1 drivers
Operating profit	$0.18
Tax	$0.06
Net interest	$0.02
NCI / Other	($0.03)

1 See appendix for additional information regarding these non-GAAP financial measures

© 2021 OTIS WORLDWIDE CORPORATION.

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