Otis Worldwide (OTIS) 24 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to Otis' First Quarter 2024 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'll now turn it over to Michael Rednor, Vice President of Investor Relations. Please go ahead.

Sarah. you, Thank First Otis' Earnings Call. Conference Welcome Quarter to XXXX

today Marks, Maheshwari, Chair, On Vice the and Judy me with Anurag call CEO are President; and CFO. President Executive and

where restructuring and the nonrecurring speak except Please can company these reconciliation webcast. significant noted, the be continuing excluding from found items. will in note, operations, to otherwise of results measures A the of appendix

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

like Judy. I'd Now call turn over to to the

Starting with in Mike, hard colleagues Service-driven the model, driven Investor as morning, Thank and we on strength outlined solid everyone. a afternoon sales organic X. Service good globe, Thank Otis continued of by quarter, demonstrating our year our the evening, during and started again joining commitment of growth our the confirming business. off you, February. Day across and achieved mid-single-digit Slide first us. and our you Through we the business for work

Equipment growth quarter excellence XX% equipment organic drove service basis XX With adjusting sales, by expanded margins X% solid and margins above all new across growth. with first X.X% sales while delivered across EPS of organization the challenging increased growth. adjusted the orders operational conditions in regions Mod and Delivering maintenance with quarter continue. and Modernization another and we market XX.X% profit XX operating Service both New XX We basis respectively. operating expanding points points, portfolio growth

excellence. our executed we quarter, capital strategy with This

of for from to it use our continue cash repatriate the work overseas We shareholders. and to benefit

million were we repurchase to quarter. the such, As of shares $XXX in able

our to Additionally, dividend. increase we announced a XX.X% quarterly yesterday,

doubled shareholder spin, we have delivering We our on value. emphasizing dividend since importance place the nearly

our gas expected science-based approved made our the important emissions environmental will towards report initiative Earlier near-term commitments year. this to on targets our This our our in this meaningful progress is shared published also later be our a reduction journey, science-based meeting greenhouse step month, steady and We ESG be next targets. progress goals. sustainability

Turning Slide X. to on performance our orders

by the due tough were the in as and orders high up EMEA double-digit offset down teens to in the a roughly currency backlog equipment constant quarter. year. quarter mid-single-digit Asia more versus versus and prior first prior the flat in Double-digit anticipated prior Americas our compare Nevertheless, Pacific the China. XX% than at Equipment decline in and versus growth in year were the New decline new growth was slightly

us above modernization consistent setting value and Service into imperative XXXX. XX% well side, currency, with and backlog quarter of we growth orders continue rest XX% the sales the at to portfolio another constant modernization growth the through new X% performance and deliver strategic solid growth for of demonstrating up year

and Reflecting elevators metro escalators be escalators city's new where lines. work connecting transfer of will the a the stations elevators the few and will to can we Metro world, hard The other Electric during theater, X Shenzhen X for I'll the at of passengers X. to installed expansion received quarter. provide Otis around the orders In China, XX our an colleagues highlight Line X grand

These well-certified with ONE, standards and towards be lead EMS elevators integration. in robot system and expand In to It's facility acute XX-story the Otis at the equipped Otis region. Canada Council's will will Building designed services Hospital, elevators that Canada, becoming provide Canada. step Panorama hospital a the important will Niagara South meet in the XX Green care and silver autonomous an is first mobile consolidate

since as continuing to we've elevators in done Japan, look Health tall In tower Hamamatsu city. We has Otis their the the of in Kingdom, elevators an has relationship, now X forward the Building in is upon X National will Wales XXXX contract, the X additional Act Hamamatsu nearly service and facilities and at customer country tower recently Service X the been our and Hospital, across covering for renewed years. Otis decades. the trusted for an Wales to And modernizing XXX-meter Cardif. many modernize we XXX at health XX United escalators University service elevators

contributing. market Slide Turning net or organic have from every driven quarter, delivered with to results in headwind, a exchange delivered sales $X X.X%. UpLift the tax was quarter, up a and $X.X million of Despite profit, segments both QX with share million Adjusted back grew XX% We first interest the expense. of results performance, strong headwinds the end foreign the operational improvement Early and rate, by lower growth since Adjusted billion X. EPS offset excluding quarter foreign dynamic from sales of conditions, count up on XXXX. operating translation increased exchange organic $XX $X.XX in in we

walk it to our detail. I'll Anurag through more turn that, in to With over results

decline Asia EMEA by backlog and conditions markets, due market you, the when and flat that This Americas to experienced quarter Judy. and were grew both solid digits, low backlog mentioned. compared segment China and in on a X. in first organic roughly with the conversion, Thank to Pacific sales performance sales driven mid-teens grew weaker equipment Starting the growth single key Slide Judy year. new double-digit prior lower

New in was to we pricing drive challenging, low commodity strong the digits. Americas, China, remains In and EMEA the mid-single Pacific productivity the to Asia capitalize lower first Equipment continue environment while up pricing in on quarter, prices. and

sales of regions with in and marking all of lines of business organic the across organic all in and quarter the Service XXth consecutive mid-single-digit growth. or X.X%, greater were sales billion sales growth quarter $X.X growth reflecting first

sales was Maintenance and repair and points organic drove volumes excluding On in more churn. impact and approximately Asia growth Modernization, well, continues growth, quarter. than to XX% and up of portfolio up X.X% in up from the the repair which perform maintenance pricing, China Pacific double-digit robust X mix

on Turning operating Slide X. to segment performance

points up profit Favorable operating currency. expansion. was XX and of margin Equipment more million, $X New than $XX headwinds constant at mix productivity million quarter basis offset pricing, commodity tailwinds and drove of First

$XXX Service currency points constant offset volume, million, expansion on was XX than favorable segment. the wage to more basis operating of $XX pricing of million higher inflation. up margin at as annual This and drop-through productivity for profit led

Additionally, grew year-over-year. as by overall the points ramp margins XX we of of UpLift expanded points cost in initiatives alongside XX%. percent improved sales basis all, basis adjusted a XX and EPS our controls, SG&A by All

generated following billings in from strong a working quarter. adjusted timing a the in cash first Shifting a and million the the reflecting of to cash. We in capital snapback free $XXX of build flow quarter, QX

a than our of Modernization including the business, markets. execution the to New off Equipment good start. productivity program are more strategy, the with strength The and subdued UpLift offset We combined efforts Service a of

and result our good raising of profit are a As sight line through with we guidance. rest year, the the of

outlook. to discuss our XXXX Judy back it turn to I'll

Now on Slide X.

I let XXXX financial discuss Before market our me updated you update briefly outlook, global on outlook. our

India, no activity remains Southeast weakness and revising down New Pacific single be to to prior market, Americas outlook to Asia down Equipment expect unchanged, down change digits outlook for We remain due high in There For EMEA expectations our sluggish. versus China We're is units. as as in strong. now down the pipeline low of and to mid-single Asia units Asia to digits remained the low-single-digit down our the be China. mid-single digits and infrastructure for to XX%

roll to units the years Although growth X mid-single growth now ago, and were installed Equipment Therefore, their the global low digits. remain booked strength that is over still Installed period. to year markets or past EMEA driven market the starting by we New challenging, off in with single-digit base growth add and in driven roughly Americas continues base Asia, rate so warranty Service growth X installed and units, a China. of roughly mid-single-digit are million anticipate by

outlook. to XXXX Turning financial Otis'

$XX.X sales of will within Anurag billion the We the X% $XX.X in overall prior changes to we expect modest although moment. to sales net segments, made with billion, in some discuss versus the organic growth which range a unchanged X%, outlook, of

range of up low with improvement at end actual $X.XX, million $X.XX to at in $XXX currency be up outlook. and from to profit operating up million $XXX is constant guide. expected end to $XXX million prior Adjusted to now $X.XX $XXX the the prior $XX is the low of million the X% XX% Adjusted currency, to expected the versus up EPS of million

free adjusted cash billion. in flow anticipate to at We approximately $X.X come

target shareholders, $X share repatriation to repurchases addition our to our approximately In returning we nearly free flow we're cash generated on to also well XXXX. raising are programs, for billion and all performing cash

In another EPS XXXX. Japan Otis Nippon acquiring cash. in be in in about $XX approximately are minority will and the interest million addition, for we $X.XX with $X.XX accretive to remaining This XXXX in

segment XXXX the With me detail. that, to more outline back Anurag to in let outlook

sales detailed outlook Taking and our a starting X. more look with Slide at on

organic outlook. total remain our with to sales expect We consistent prior

roughly to New For change single Equipment be to our flat, low expect outlook EMEA, sales, digits. up with organic we still no

driven sales However, we backlog by in conversion the now Pacific. approximately expect be China weaker and Equipment a Americas better-than-expected to New market, by XX%, offset down Asia

guide, our of within to Service including a maintenance repair grow Our anticipated prior overall range and organic X.X%. in with are to X% X.X% line X%, sales to

growth the sales prior as outlook we of expanding organic the to X%, execute anticipate approximately we backlog. Modernization, increase of on to versus For continue X% X% an

prior of million, end $XXX the At Service, to due expectations performance. to from guide, profit at due prior up we increase Service. continued contributions should approximately first XX. the to now points Turning expect year XX versus grow solid Slide $X at constant $XXX profit margin operating the quarter of midpoint million currency, million the On for to strong an operating high basis

still New from up of noted the we XX Equipment to puts is points. offsetting profit from previously be the backlog the of weaker flow-through mix basis operating net Better takes, margin adjusted flat Our China added pricing impact outlook. to and the anticipate

We alongside of XX and margin points adjusted productivity UpLift profit tailwinds a basis as expansion ramping volume, benefits. of pricing service expect overall operating result

our income cash largely There growth. change flow. and no to to billion, driven we net $X.X by adjusted of expect free Turning achieve outlook, flow to cash is

billion with $XXX $X.XX to in repatriation from our up recently shareholders, prior cash the our on allow announced to dividend, This, from up addition, continued in efforts outlook. billion In increase us billion previously. our to cash repurchase combined million approximately of us shares in $X.X gives confidence return $X

XX. Moving to the Slide EPS XXXX on bridge

by driven EPS by to our $X.XX entirely profit. have adjusted $X.XX $X.XX at growth the of That for to We guidance the low $X.XX. in of range growth of a operating EPS is raised almost over end midpoint,

me second provide we Before let Otis. with color to on the questions, some turn more Starting quarter.

high expect be above modernization and X% digits, growth maintenance equipment the with We challenged mid- portfolio should remain market Within down sequentially. Otis remain backlog holding for conditions, reflecting above new though Service, single steady to should to more growth XX%. growth

digits mid-single due rate headwinds and approximately roughly For sales, overall in growth XX% organic to roughly at down organically the expect versus equipment prior the year. we as growth when compare to new QX, quarter. organic the sales continue with compared year. in roughly to be the deterioration the netting quarter, a headwind growth tough recent x China anticipate for should Based prior Service same to flat a on rates, single-digit the we netting to prior low

profit. Turning to

Service are New anticipated to to right while or the anticipated margins are roughly Equipment be in margins come as slightly QX higher. around same X%,

implies this combination in headwind due further growth offset EPS lower half the growth benefit will and should interest growth benefits, operating tax when to EPS than count lead the share first rate volatility, come another of And of the tax in this Absent the of line largely from for XX%, $X.XX. profit greater. costs. to be second certain between and growth. driven ForEx around This higher the is to the halves up first quarter the approximately fairly Below $X.XX XX% timing more expected rate or should tax of year, with roughly the EPS on loaded impact, level adjusted by

continued first outlook closing, and leveraging for returned more billion Equipment on financial ability to expanding alongside the us shareholders. to quarter performance, further momentum Growing In portfolio, New back program, ramping to and our our our the well cheaper year. and UpLift backlog results up demonstrate set steady operational perform our cash strategy remainder create execute the to of $X.X

Sarah, that, please open line With for the questions.

of [Operator Melius Rob from Instructions] Research. Your with the line first question Wertheimer comes

you're well orders margins product solid out healthy bring where Is So up that it? as the product? kind around is continue as little customer talk around working just and embrace backlogs Would margin obviously above. my kind journey a about pricing, and little and is production of price you and you those it? about have growth. And orders in the lot a backlog the you standardizing you positive just a the showing know question Mods, are just drivers of if where a of driver there in the bit maybe double-digit-ish in on bit environment demand there there environment low for on wonder that. stuff, a could bunch I the is sales what of you on of that demand to I Do can pull on talk

Thanks, all regions. nicely Sure. up in was Listen, Mod Rob.

our on I think strategy is track.

Our strategy. Mod that still growth team be in more than a executing these is what early And are will market. decade-long days probably

what seeing. in XX% Orders up the we're quarter, So almost backlog we're really up XX%. encouraged by

China but the and Pacific standouts, well, side, saw digit. So after Asia now double-digit quarter did demand were the really Asia we Americas, nicely, we're of quarter just building a and double growth. The was quarter on Pacific standout really from too, in up

regions up. performing a volume by customers We're all seeing demand and of just again, good everyone, and we're mix are really projects package So major well.

than it equipment be of surpassing margin, surpassing some margins. inflection the Mod that but help Investor I'll I'll let to In higher saw Day was pleased in share that what important, New Anurag, be is shared think would to at add you margins would are and terms backlog, point really we QX, with the margins. for shortly turn Anurag we Mod Equipment what margins we that I color? over I'm now

Yes. Thanks.

to said higher Just new a to few that, margin. quarters we the we add should be ago, and that than so

of are on said, not Mod a does that make X now, And right margins. we in encouraged are we Equipment. as goes are see quarter Judy we by, margin here very trend, more what but more higher, and terms the and as New year seeing modestly the Mod by differential expansion We should between

Mod at the the that becoming the and out around more initiatives factory, margin side, productive right? be margin we we product the be cost, the on expansion. cost driving a really doing us mentioned of are across helping all of it's standardization, the is field at installation What's expansion and The more supply lower is driving

how a more very it's we that let's side but got control. on to So plays the see the that more and encouraged. we've lot than But product year do out,

regions. thing Rob, Mod Yes. several The units has million market that of potential last I'll add, of is every our in

significant all be growth regions. this won't We lopsided growth. anticipate So by

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

you're The TTM backlog in when again of TTM global down Equipment. looking constant at year-on-year, down. flat Just New overall wondered quarter. picture orders sort was the should currency like the orders on with be second It seems

not how you're Just if frame up of of should could the over confidence as book-to-bill the wondered how Equipment Equipment the and in you around, about expectations about New any sort in the year year? we New year-on-year say, think thinking backlog shrinking a the whole, balance

in about New down XX% first XX% second the the for -- in we down was was Yes. first quarter expected down to single digit second be quarter, mid- Thanks, the sorry, high Julian, question. Listen, quarter. in to Mod Equipment said, as the quarter,

kind seeing second year the because EMEA in year. half from of get better of compares Equipment we slowdown more New last XQ starting on year of the the the Americas towards progresses, especially the as side, do So started and the in

down than see the If So it flattish. a in be new the that be do equipment points. the what we could perform does, backlog line how with then progresses. of market we let's could of If better couple market,

low that as So to single be is digits. end year, we there flattish New Equipment possibility a the this could backlog down

years, where you see of we next And be on to backlogs Investor at growth a the of up side. few Equipment Mod is forward the mentioned expecting coming in But look to clearly, we're XX%. And kind the flattish. lot New the if as we Day, are Mod

and to the Mod perform well we backlog XXXX. year, be we in low into continue We the as single up should Equipment New Mod, end enter as that digit

on about of question sort bps XX year-on-year in good my up first said on just the maybe, be could up XX half. quarter then That's the Based XX, helpful. second quarter, what bps first QX year-on-year. and Service similarly in And margins, very second the the performance you

plus So it's margin way of Or the is reflecting back technician year, that of bps just around still specific to anything Maybe costs update any XX go? of or sort or for wage just long only headwind. April wages guide that happening a is there something the in with half? inflation that

Yes.

early a plus what questions, those pricing margins. like-for-like year, bit points, what -- Let factored X faster the with growth we've Service repair. bit the a on and the There's but X margin and in into It mix of me mix that it good in Julian, especially the well, job has do have Mod few there a field a We we're fantastic the team service play over of the we're as done side, outlook. we're again, is a that little as unpack our feeling and seeing, in of with backlog repairs a getting coming grows productivity in Americas. there. maintenance and than portfolio revenue especially little of we've repair start grows, done driving a But little in on kind to and

continue feel not that. of business our focus We to to offset you And Wage we're is points. basis seeing comfortable and is the Service unusual. XX anything service-driven profit watch So on productivity increasing, it. quarter to at and know, the we as our model. This now, adjusted right XXth model engine, we'll it operating inflation, our straight obviously,

of Your Research. Wolfe question Coe comes the from Nigel with next line

couple a of So hear Watchman, pleased thanks very that, there, proud for as times Judy. out a I so to called was

these have -- happen calls. it's very doesn't it often in So not

So...

I'm selecting them, know. Nigel. fun I

you quarter. guys the so unusual appreciate much give on that. color I for The to Yes. key quite

the this in a is as in line, a spirit second And just out -- lower, a we bit where just or new seems the should going quarter? but there then color some be to stuff that below anything just I in on unusual come have fill you're give kind wanted perhaps you the to maybe more us second us like tax out? of happening helping of So to maybe the here call model, rate think mean, bit world well? is I to

bit little quite quarter. the Yes. give Thanks give The we Equipment color for Nigel. question, outstanding the and New on a for Service typically we reason -- the good

quarter-to-quarter, more little the to highlight of which mating the a tax good tax it was But rate, And on because in down they items, bit wanted quarter kind discrete this asked color that at gave exactly in You year in team you coming much year. quarter. roughly it in the same at XX.X%. was bringing planning and obviously, time of The course shift fact so the the doing is for through in guide was coming of question the the lower full for XX% was a where is the really terms come. and job the

going the it's be yes, revenue. in higher the few of X.X% million dollars to to expense, a On corporate X% probably quarter,

As we ForEx, corporate for in unusual expense. except there, this have headwinds do that some get does nothing ForEx and reflected year, look at we our

increases points. XX probably X that So by basis to

it lengthening out business in to Mod, helpful. then flow, leading increasing just AR And else Or anything the to call That's to just curious cycles, it's that seeing is Okay. free the so in billing timing, may there I XQ anything Q. the on of but understand there? on really Anything was timing? mix from a AR cash mainly be

timing. few the if XXX% than conversion. back you we I have more look essentially mean at past It's years,

the We working little to couple down of that the part of a We and repurchase a conversion million XXX% that of unwinding to to already in payments of in also the happened $X.X was quarter, lower of New started a a the through get and quarter, but was but it reflected confident the this the course it up year. capital bit of billings billion. we'll are share dollars the get just because month orders, larger billion, the is March. due part, increasing second lot confidence of of Equipment of in where our million we built dividend hundred lower will to the $XXX $X timing We've

in So no structural change of generation. of cash real terms terms in flow

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

around clarify there there. and chatter pricing been, your on what just that ground? has from of a Can I bit peers little think China the you're you seeing

Yes.

China market it Let me New not the pricing where it's we the into anywhere are far break price and pricing. most in only New is getting are region Service the Equipment and we Equipment. globe, competitive in for by

the which we've we is in purchases and the just on it we new Now offset see -- equipment and with after of we're in we've of seen and competitive. XX% our see that It's the X that we But locked mean segment. single through weak. for seen years down. steel and bids, both the prices, we've that see to where bids, high it commodity already being public productivity digit year, down extremely is we've that the that's XX% I through market XX% down come itself, commodities, the calling are it quarter, through down. the And really segment volume and

that our Again, innovations and distributors work China brought New and at will new quarter, to grow focusing sales we'll be the continue we Steve, ask exercise focus, our some you -- for So channel the and in competitive. to we remain we agents with in dealers our tell and expect and about and XXXX product and if we continue increase to share. segment you Equipment would us, pricing units, XXX,XXX

are We're at driving more -- in and Otis on price grew really Otis flattish. us. that's China half and is We is but price ONE, XXX,XXX in cover for and Service portfolio. contributor Service than drivers units now and and are nice ONE But significant pricing, challenges. we challenging. our service more some with productivity in is Otis volume ONE density -- On productivity, kind China pricing. again, the of And a less

mean, mean, that basis? us a When you kind a of on magnitude that? bit is of any down XX, challenging, like you little I around give X, I magnitude just down say can year-over-year

is No. our commodities, everything and it's products Sally engineering on can even getting on terms an I we cost installation. perspective been of This focused Again, X year and the team are productivity, of pricing in from challenging of on challenging. there. just out mean

I So think done terms job as staying a we've there good in price can of really we neutral cost. as

right, And Steve, tailwind economy at look backlog to P&L, you of $XX Equipment for it's that, pricing just million But Pacific input coming higher Asia to because the deflationary Americas are down. having add through to for costs mid-single-digit Equipment EME backlog I New low. about so quarter, price mean year. us, increases, if in the flushing a our at still margin after the overall last New relative even is

good really building it margin, well. through really, So up terms and backlog it the progress of pushing in as P&L

Fargo. next of the Your Wells question Joe O'Dea comes with line from

in market, ABI your and how Momentum, Wanted most lead some aligns to with the you're recent prints, seeing on that of indexes. those observations clearly, Dodge what start just in softening

While same Americas a time, at the prior. little improving since New actually outlook bit Equipment your

whether incremental softening this long that any times seeing out on just America? there's kind And there North or so in of on the is of kind the ground if projects you're lead of result

Yes.

-- than weakness we And delivered the the New tell Equipment saw half weak because saw it that the was in America, up we 'XX. lesser North that our remained delivered pace you significantly in saw we segment backlog increased you the at I revenue would was we of in XX%. market on but a price we and QX, second So it

tough orders quarter Our last We the America first and us orders to first Canada several in challenge North major Canada had infrastructure year. the as was U.S. really compare. quarter in a

So tell I compare. a would it's of more you

more the Equipment I data ABI quarter less of are things Dow another similar XXXX this are contracting We Jones. is New latest below 'XX. and means 'XX expecting since at stability in the of than another now than XX.X%, in December which -- XX%, lowest less mean But

down Joe. and resi. is infrastructure What quarter becoming it as Commercial where watching tell America part you I of has Resi well. carefully, in this And the are stable. verticals compete been were than more is we we we're was So would down. for more stable North all where successful, that more

the on helpful. sounds to share repatriation. things, My capital execute related any M&A side on pipeline just the bolt-on like is some opportunities That's opportunities there repurchase able just there, increasing then what for and this And for seeing question you're just year, deployment opportunities of the the it being to to expectations on related year?

that cash made a in Anurag Well, time $XXX $X down bringing on million first continuing we repatriation, focus is we've significant cash on think Yes. how as Kudos do and this our to billion team, to our the I decrease shared spin. balance the since it can from to

time announced the So repatriate starts that's is since spin. billion allowed us repurchase increase. we've -- a and cash with the gave to first $X doing $XXX the This million we're and repatriation to us the that confidence share between

it's -- there. So of feeling confident But patriot buybacks our -- we're of cash fourth stock year buybacks.

get healthy. $XXX timing of book year, closed. We've to M&A, million kind We of of terms got the still In bolt-on those million $XX business when every business. of about It's outlook just a is bolt-ons. good

eventually, have to integrate be the locations decade. year For they and have knows they think They well to one I us how And be in to that that well. as have after be after us, -- year accretive. we've decade teams have of our right and -- the proven to and give density them

our market. is working, balance comes a obviously, to sheet. provider, anything I service again, opportunities working, else, market. come working. operational is don't anything up strong strategy our evaluate These capital the to leading elevator, But of our we've terms got In -- frequently strategy the And being escalator in generational, that we strategy continue is will

take feel at So the course, need have we'll look it. do a M&A, to we but don't to generational of

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

Just outlook tweaked sales that's XX%. growth Modernization. for X% against The on was to that's backlog the but growth a up X% guidance up to

XX to next converted backlog wouldn't understand just I'm just why that mean we I it expect of a is the higher can between to do it bit relationship maybe little months what Is there? So times, the that? to growth with than see trying sales growth and be

be up got There's conversion the not up So a next been backlog. more the time, if at in it. thing it it's It's our of quarters. X every sales as the same up going is right? double-digit X And is catches you which it growth, no why around should Yes, part Modernization increase. to actually conversion driving you margin And quarter. the sales look reason picking with

more the around standardization install it. to lead the reducing products, time of the think from I time it's reaching lead factory,

us are help I which those think get there. drivers will

it's up grows kind where quarters. at, mirror the is it direction, the in but should So there we few ticking and in of be backlog where right should next the

what packages, Nic, that's years, strategy, everything done in else. we've learned driving chain common is that's industrializing X over sales supply whether new Yes. specialization equipment taken service we've we've everything the whether installation beyond go-to-market and

focus So to conversion. expand we're as and margins trajectory. said, the backlog to going we're we there Mod on really encouraged by And continue continued

you for maybe And points it that was I the of you great. then were XXX couple points I'm a think commented in just I That's pricing pricing, quarter of X net, expecting Service on think misremembering, previously net but the basis that saying XXXX. times

come So wondering has the where I'm just points X extra from?

Just that spoke we mix to churn. and points XXX clarify, excludes basis the

over higher for we in little pricing business. being consistent there, a in pricing. gross than net was quarter the are but So it's what the Service seeing to it's flattish The a bit

to seeing that. mid-single-digit increases. price EME So is is close America

always Asia Pacific on lower has been side. the

there. seeing So sticking in from we're well pricing it's the market, over good a perspective, traction and

productivity on with besides the for business kind profit the What's side. And of that, the really the Service because more grow to is the clearly our on year. helping Service we of margins increase productivity that

Your next Miguel question of with line comes from BNP Paribas. Borrega the

got I've X questions.

The first on one, just China.

China of -- costs, price For That's mentioned in now, up you price look term, will X lower it'll know do do how several that seeing row quarters pricing, is? on product pressure you levels? at Equipment offsetting you your the converge When end margins the years keep you're at I then where pressure. New think competitors putting to long first this that in that going? but you are a my floor will you question. Western pricing do think you with you're long And if where ultimately think think

Yes.

But Let here trough. listen, margin me not declare on start, to we will Miguel, and -- a I'm the Anurag side. add

They'll As year in of in believe not and in quickly, we as price terms soon we see March efforts Again easing there and The action. I inflect. it see having respond. have changed in Development share can meeting tell the say, though, pricing as predicting the part you will China this with is government competitive underway. of we that that but the But Forum, our as government not multiple been China to respond as outlook. us we're or with see taking I segment, officials in sentiment has you can that China times. team we happens, many will pricing that are will It yet. and as our the obviously, the liquidity do have ability Margins? led

Yes.

between a Just the share pricing look think and segment, exactly. and at I of both. we It's the balance

if seeing pricing we We've taking and coming there, we're out as efficiencies. in chain China, cost also margins is seen prices. In us, for commodity down earlier and more mentioned, over supply tailwinds terms of it's

we rates balance X are between between going China. along. And continue we're between a profitability so find can all of to as go as in between maintaining margin, that grow price, our margin we we move to we forward, So our share,

now now. with a that's going Mod to last of Miguel, continue quarter. And continue. China that our double you're digit That's XX% grew Yes. of growing grow and to and seeing, in really being element revenue what Service

between see we market, China, do mature in a to but moving in see in of normally price becoming more every market Service. explicitly, you'll volume, it that, we trade So reflecting this and especially

That's great. just on follow-up allocation. And capital then a

upped So I the the you and after you're minorities buying in know buyback, Japan. dividend

Japan there's know the potential rest also, think mean bolt-ons, rationale Southeast buying Asia, versus be would much companies that about does of not how there? the out but talked I for about what more the world? So Asia Southeast targets in would you in you

approach to a Well, place a we in to matter a location how integrate for to to where got routes. model. similar and know where happen to is, us. It's be It's accretive M&A again to got be in it our no density where our it, it got it's bolt-ons, is adds

are works XXXX, up sell. in call to they're in markets world, bolt-ons back continued world. We highest business most fortunate Japan the Japan, interested where rates in in are for and in our that the team to when people we're Service that, rates integration has world. the ended in always that portfolio gone in extremely But has Now in well. And ready we're everywhere buying conversion our grow Schindler's

business our us partners everywhere our and legal get as sheet capital high-quality, well a get disciplined but us, our Otis, in order balance Nippon time felt was to good margin it order. -- done in for to as like else, it's entities with for we've we our we So thank in

that we future. made NCI did the it in line the like you'll us. Zardoya to So in And sense see just

will only for customers as our -- where for again, us shareholders. evaluate, and our as serving Other well said, I for properties other Otis sense larger but they as us, make for

question Khanna next of the line Your Gautam from with Cowen. comes

ask wanted India of still. specifically, to strength sounds just about -- and a that's like what source I it

dimensionalize just if the drivers relative you how big could to is rest that you what there? And If Asia-Pac? are big the about could talk

India like but yes, -- than the the different after unit -- XXXX. is like doing installed globally the more in We've our anywhere look Gautam, new highest market India mean far been we markets China like attributes I the first Yes. growth It's EMEA. India #X rates India China, the in it's conversion mature got equipment in thanks. because -- world.

The like got public in operating really and position. our and We've long there, we've and for We in India got product have company India an time. -- escalators. but residential, and every rapidly. so the -- especially population just area, class not growth higher-end Obviously, for moving rising multi-use. very driving we're really seeing large infrastructure middle demand is multifamily, urbanization, is I elevators there. factor is a across Made population, in had So but residents a commercial

in and We've we of colleagues. got double in growing, So India in the investing all over colleagues We're every it. digit, that market them terms we in and field see adding and investing it growing vertical country. are

significant quarter-over-quarter. Obviously, increase driving is our production factory

XX-plus but continues is where to points, -- It that supply hit and focus as some developing through quarter-after-quarter how ability mature more well. you market, chain. so understands business to it have a proven have market, even chain strong as level it a a of this do do well, just a ISPs, at under don't grows India, right our local of leadership this you of more mature like though Service our high-growth extremely portfolio convert have team competitive supply we of do and have growth. to the more market, SEBI's And has India managed cost Our significant we to it's has thousands effectively. it team competitive. that that And there But in in think really

very, are bullish continue And very there. we'll on to We India. invest

last changed own the helpful. wondered also times have still I lead any, just generally. constraints if how Where, supply And could your X just That's over exist, if about you talk chain months? and

this top for locked. a $XX reason million parts year, of locked $XX on this our magnets is savings year's. increase looking steel, get of in perspective commodities a cost Yes. of last I fairly and on instead commodities, in the rest million We supply terms last we that of we've you we've XX% for $XX is of million the chain are of say million, we standpoint, on drove $XX But only to we our commodities. from seen year the we locked, We million world. worked about certain comfort news of million. the well, any year $XX majority -- after the million good And productivity steel year, $XX issues. to fully we're XX% This are of From $XX can expect our at a on through think

So a chain now the has our team great optimizing. job supply challenges and done through is

they impacting some this So are got all. first there on are at sourcing, our out. there still quarter no chain. dual I recovering continue a New really, on And you, to some factories to And it's suppliers focus in call that people Equipment resiliency Are not delivered. our there's single supply tell smaller

session. concludes I closing will question-and-answer This remarks. the turn call to the Judy for

Sarah. Thank you,

pleased quarter joining Stay we quite our year. you the as steady remainder and safe and throughout for well. for with make our of are first We thank Everyone, shareholders customers delivering progress us. the value Goodbye. results

you for conference call. today's Thank joining. concludes This

may now disconnect. You