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Otis Worldwide Corp (OTIS) Q3 2021 Earnings Call Transcript

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Otis Worldwide Corp (NYSE: OTIS)
Q3 2021 Earnings Call
Oct 25, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Otis' Third Quarter 2021 Earnings Conference Call. This call is being carried live on the Internet and recorded for replay. Presentation materials are available for download at Otis' website at www.otis.com.

I will now turn over to Michael Rednor, Senior Director of Investor Relations.

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Michael Rednor -- Senior Director of Investor Relations

Thank you, Michelle. Welcome to Otis' third quarter 2021 earnings conference call. On the call with me today are Judy Marks, President and Chief Executive Officer; and Rahul Ghai, Executive Vice President and Chief Financial Officer.

Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring and significant non-recurring items. The company will also refer to adjusted results where adjustments were made as though Otis was a stand-alone company in the current period and prior year. A reconciliation of these measures can be found in the appendix of the webcast.

We also remind listeners that the presentation contains forward-looking statements, which are subject to risks and uncertainties. Otis' SEC filings, including our Form 10-K and quarterly reports on Form 10-Q provide details on important factors that could cause actual results to differ materially.

With that, I'd like to turn the call over to Judy.

Judy Marks -- President & Chief Executive Officer

Thank you, Mike, and thank you everyone for joining us. We hope that everyone listening is safe and well.

Otis continue to make significant progress driving our long-term strategic priorities as reflected in the strong financial performance year-to-date. In the third quarter, we grew organic sales and expanded margins in both segments. We gained approximately 1.5 points of New Equipment share this quarter and year-to-date, on top of 60 basis points in the prior year. On a year-to-date basis, New Equipment orders were up mid-teens with growth in all regions, reflecting our continued focus on providing value for our customers and a recovery in our end markets throughout the year.

In the quarter, New Equipment orders were particularly strong in Asia, up mid-teens where we secured an order for the Hong Kong International Airport extending an over 20-year relationship with this customer. We will install over 100 escalators and moving walkways to keep passengers moving across the concourse. This is further progress of our sub-strategy to win in infrastructure.

In China, we're seeing traction on our new Gen3 connected elevators, reaffirming our investment in the innovation that Otis ONE provides to our customers and passengers. Just a few months after officially launching our Gen3 elevator, we secured our first repeat customer in China for the new platform. Jilin Longchang Property Developer Company ordered an additional 123 Gen3 elevator systems for four more commercial and residential projects in Northeast China.

We're also making progress on deploying our Gen360 connected elevator platform in EMEA. In the first few months after launch, we received several Gen360 awards, adding more than 50% to the pilot phase volumes.

Moving to Service. In the quarter, we grew our industry-leading maintenance portfolio by 3%; a goal we set for ourselves entering the year and grew organic Service sales for the third consecutive quarter. In the Americas, Otis was selected to continue a 35-year partnership with One Commerce Square in downtown Philadelphia. Otis installed the building's original elevators in the 1980s and has been maintaining the unit since then. Otis will now modernize the building's elevators, including the introduction of our Compass 360 destination dispatching system. Our own portfolio modernization awards are a testament to Otis service excellence and long-standing customer relationships.

The strong year-to-date company performance and robust cash flow generation in excess of 140% of net income enabled us to complete $725 million in share repurchases. In September, we announced a tender offer for the remaining interest in Zardoya Otis, a premier elevator business in Spain, Portugal and Morocco, with a strong service presence. The transaction will simplify our corporate structure and operations, while optimizing alignment of assets and debt financing in Europe. We expect this transaction to be mid-single-digit percentage accretive in 2023.

In parallel with this strong financial performance, we made additional progress on our ESG initiatives. Focusing on sustainability has always been an integral part of our operations culture and achieving ISO 14001 certification for all of our factories is an important part of our existing efforts. We're pleased that this quarter we achieved this goal, years ahead of schedule, adding our factories in Korea and Florence, South Carolina. We're proud to see several programs recognized at these two factories, including power consumption reduction programs, robust package recycling processes and lubricant leakage prevention measures. In addition, in Florence, we launched a pilot for zero-waste-to-landfill program that will scale to other manufacturing sites next year as we work toward our goal of having all factories eligible for a zero-waste-to-landfill certification by 2025.

We also made progress on our social initiatives, launching the second year of our Made to Move Communities signature CSR program. Participating colleagues will guide 200 student participants from 20 schools across 12 countries and territories to develop creative mobility solutions, while also helping to close the STEM skills gap. This year, we aim to make a difference by helping communities adapt and leverage better design and newer technologies to address the mobility, health and safety concerns of older populations. We look forward to sharing these solutions and highlights of the program with you during our Lift Our Communities month in April of next year.

Now turning to Slide 4; Q3 results and 2021 outlook. New Equipment orders were up 3.8% in Q3, and up 10.3% on a rolling 12-month basis. Organic sales were up 8.1% in the third quarter with 14.1% organic growth in the New Equipment segment, and 3.6% organic growth in the Service segment. Adjusted operating profit was up $63 million and margin expanded 20 basis points despite a 50 basis point impact from segment mix as the New Equipment business grew faster than the Service business.

Year-to-date, we generated robust free cash flow of $1.4 billion or 141% conversion of GAAP net income. This positive momentum and our progress on our long-term strategy, gives us the confidence to improve our 2021 outlook and positions us well to build upon this strong performance in 2022. We now expect sales for the year to be approximately $14.3 billion, up 11.8% to 12.3% versus the prior year, and up 8.5% to 9% organically. Adjusted operating profit is expected to be in the range of $2.18 billion to $2.19 billion, up $260 million to $270 million at actual currency, and up $195 million to $205 million at constant currency. We're improving adjusted EPS from the prior outlook by $0.04 at the midpoint and $0.06 from the low end and now expect it to be approximately $2.95; a 17% increase versus the prior year. Lastly, we're improving our free cash flow outlook to approximately $1.5 billion to $1.55 billion with 125% conversion of GAAP net income.

With that, I'll turn it over to Rahul to walk through our Q3 results and 2021 outlook in more detail.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Thank you, Judy, and good morning everyone.

Starting with third quarter results on Slide 5. Net sales grew 10.8% to $3.6 billion as the strong growth momentum continued in New Equipment, and Service grew for the third consecutive quarter. Adjusted operating profit was up 12.5% or $63 million and up $52 million at constant currency, primarily from the benefit of higher volume in both segments. Installation productivity initiatives in New Equipment and favorable Service pricing and productivity helped to offset the headwinds from commodity inflation and the absence of temporary cost actions taken last year to alleviate the impact from COVID-19.

We maintained the focus on cost containment, while continuing to invest in the business. Adjusted SG&A was down 70 basis points as a percentage of sales, despite the step up in public company expenses. R&D and other strategic investments were up slightly versus prior year and were about flat as a percentage of sales. This strong focus on execution resulted in 20 basis points of margin expansion in the quarter and 70 basis points of margin expansion at constant segment mix. Third quarter adjusted EPS was up 11.6% or $0.08, driven by $0.11 of operating profit growth, partially offset by $0.04 from a higher adjusted tax rate due to the absence of a cumulative year-to-date tax benefit in the third quarter of 2020. On a year-to-date basis, the adjusted tax rate is down by 180 basis points.

Moving to Slide 6. New Equipment orders were up 3.8% at constant currency. Orders momentum remained strong in Asia, up mid-teens, including sixth consecutive quarter of growth in China. As expected, after 47% growth in the second quarter, orders declined year-over-year in the Americas, primarily due to timing as awards which precede order booking in North America were up approximately 24% versus the prior year. EMEA was down 1.8% from the timing of major project orders. Proposal volumes in the quarter also continued to show signs of strong demand globally, up double-digits. Total company backlog increased 4% and 1% at constant currency from strong growth in China. Pricing on new orders declined by over 1 point and backlog margin was down about 1 point versus prior year. Both, pricing on new orders and backlog margin, were about flat sequentially.

Year-to-date, New Equipment orders were up 15%, including 13% growth in the Americas, mid-single-digit growth in EMEA, and approximately 20% growth in Asia. Organic sales were up 14.1% with growth in all regions. Americas was up mid-teens, driven by strong backlog execution as the business surpassed pre-COVID levels. EMEA was up low-single-digits and Asia grew high-teens, driven by China, where organic sales were up double-digits. New Equipment adjusted operating profit was up $33 million from higher volume. Pricing was marginally unfavorable in the quarter and higher commodity prices were a headwind of $35 million, but we more than mitigated these impacts through strong installation execution, including favorable project closeouts, leading to 80 basis points of adjusted operating profit margin expansion.

Service segment results on Slide 7. Maintenance portfolio units were up 3% versus the prior year with global improvements in retention, recapture and conversion rates. The number of units increased in all regions, and China was up high-teens, accelerating from the mid-teens growth in the second quarter. There was pressure on modernization demand in the third quarter and modernization orders were down 4.1% at constant currency as growth in EMEA and Asia was offset by decline in the Americas, primarily driven by timing of orders as the market is recovering strongly in 2021. Overall, modernization backlog was up 2% at constant currency.

Service organic sales were up 3.6% with growth for the third consecutive quarter, as the business continues to recover from the impact of COVID. Maintenance & Repair grew 4.7% with strong recovery in repair and low single-digit growth in contractual maintenance sales. Modernization sales were down 1.2% as growth in Europe and China was more than offset by declines in Asia Pacific from lingering COVID-related lockdowns, and in the Americas from supply chain shortages. Adjusted operating profit grew $27 million as higher volume productivity initiatives and improved pricing and mix more than offset the absence of favorability from COVID-related cost containment actions taken in the prior year. Adjusted operating profit margin expanded for the seventh consecutive quarter and was up 30 basis points.

Overall, year-to-date results reflect solid performance with approximately 1.5 points of New Equipment share gain; our best portfolio growth in the last decade, 11% organic sales growth and $261 million of adjusted operating profit growth with margin expansion in both segments.

We also generated close to $1.4 billion in free cash flow, enabling us to complete $725 million in share repurchases, raise dividends earlier this year, continue with bolt-on acquisitions, and announce the tender offer for the remaining stake in Zardoya Otis.

Looking forward to the balance of the year on Slide 8. We feel confident about strong growth across all key metrics for the year. We now expect organic sales to be up 8.5% to 9%, up 1 point from the prior outlook with improvement in New Equipment segment. We now expect operating profit to grow between $260 million to $270 million, up $15 million from prior outlook at the midpoint with sales growth, operating profit growth and margin expansion in both segments. Adjusted EPS is now expected to be approximately $2.95; $0.04 higher than prior outlook at the midpoint, and up 17% versus the prior year. The year-over-year EPS increase is driven by strong operating profit growth, a reduction in the adjusted tax rate, and a reduced share count.

The adjusted tax rate is now expected to be in a range of 28.5% to 29%; more than 150 basis point reduction versus the prior year and a 25 basis point improvement from the prior outlook at the midpoint. Following strong year-to-date cash generation from net income growth and over $300 million reduction in working capital from the end of last year, we now expect free cash flow for the year to be between $1.5 billion to $1.55 billion. This is up $50 million from the prior outlook from improved net income and reduced working capital.

Taking a further look at the organic sales outlook on Slide 9. New Equipment is now projected to be up 15% to 15.5%, driven by accelerated backlog conversion and a 15% year-to-date orders growth. This is an increase of more than 250 basis points from the prior outlook and over 11 point improvement from our expectations at the beginning of the year. This broad-based improvement in expectations is supported by robust market growth in all regions, strong year-to-date performance and continued backlog growth. Americas is now up high-teens -- sorry up mid-teens; EMEA up high-single-digits; and Asia up high-teens, driven by China.

In Service, we are adjusting our outlook to approximately 4% growth, the lower end of the prior range, reflecting slower than expected recovery on modernization in the second half of the year. Modernization is now expected to be up approximately 4% for the year from up mid-single-digit previously driven by COVID-related job site restrictions in Asia Pacific, slower decision making in EMEA and some parts shortages in the Americas. Despite the resurgence of COVID in Asia Pacific, there is no change to the Maintenance & Repair outlook, that is still expected to be up approximately 4% for the year, driven by continued maintenance portfolio growth and recovery in discretionary repair.

Overall, the organic sales growth outlook of 8.5% to 9% reflects a strong year-to-date performance and good momentum positioning us well to deliver growth across all regions and all lines of business, while building backlog to support continued growth in 2022.

Switching to operating profit on Slide 10. We now expect operating profit to be up between $260 million to $270 million versus the prior year with margin expansion of 30 basis points. At constant currency, operating profit is expected to be up between $195 million to $205 million. This represents an improvement of $15 million versus the prior outlook from the impact of updated volume expectations in both segments and actions taken to reduce the corporate expenses. FX tailwind is now expected to be approximately $65 million from $70 million that we were expecting previously, primarily due to the recent strengthening of the U.S. dollar against the euro impacting the profit growth in the Service business.

The year-over-year growth in operating profit reflects the benefits of higher volume, Service productivity initiatives, favorable Service pricing and strong installation execution. It is partially offset by unfavorable New Equipment price mix, headwinds from the absence of prior-year cost containment actions related to COVID-19 and higher commodity prices. The headwind from commodities is now expected to be between $80 million to $90 million for the year; at the higher end of what we communicated in July, driven partially by higher New Equipment volume in the year. The broader price increases announced last quarter have been rolled out and will help to alleviate the impact from higher commodity prices in 2022.

Overall, this strong outlook puts us more than $1 billion ahead of our 2019 reported revenue with 100 basis points of margin expansion. 2021 sales, earnings and margin in both segments are expected to be higher than 2019 and adjusted EPS is expected to be up more than 30% versus 2019, reflecting broad-based improvement in performance, driven by our ability to execute implementation of the long-term strategy and the benefits of a solid end market recovery.

And with that, I'll request Michelle to please open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Nigel Coe with Wolfe Research. Your line is open. Please go ahead.

Nigel Coe -- Wolfe Research -- Analyst

Thanks, good morning. Hope everyone's well. So, I hate to start off with the obvious question, but maybe we'd just talk about China, obviously a lot of noise in that country. I know there's a -- in the appendix, there's a useful chart around sort of risky developers, but just curious what you're seeing on the ground, real time and then maybe just how share price and mix is evolving in China.

Judy Marks -- President & Chief Executive Officer

Sure. Good morning, Nigel. Good to hear from you. So let me try to put China into context and we hope that chart was helpful. As we entered this year, we were expecting mid-single-digit growth in China. We have actually seen stronger growth year-to-date and the segment itself, we believe, will end the year at high-single-digits. Through the first nine months, all sectors in China have been strong; residential, commercial and infrastructure. We've seen increased activity in Tier 1 and 2 cities, as well as in infrastructure and with our key accounts. The third quarter segment, we believe, grew mid-single-digit, and we anticipate and have planned for the fourth quarter to be down correspondingly mid-single-digit.

So if we go back to '20, we thought it was going to be mid-single-digit growth, we've seen that. '21, we've seen high-single-digit growth. We're still seeing healthy demand. This is the sixth quarter in a row that we've had New Equipment growth in China, but we're trying to be prudent for 2022 and we've actually planned for a flattish market there and we're going to control what we can and what we know how to control. There is clearly heightened possibilities, there could be declines next year, given the macro environment in the property sector, but we believe that the strategy we've put in place and the initiatives we've put for sales coverage, for share gain and for price are really all paying off. We've added, agents and distributors. So now we're at 2,300. We've added another 150 A&Ds in the third quarter. As Rahul shared in his opening comments, our portfolio growth is in the high-teens. So our Service strategy is paying off with more coverage and more Service depots. And our proposal volume was up significantly this quarter.

So, again, we're being prudent, we're watching what's going on. But we have put in place price increases. Those will yield in '22. They won't yield quicker than that because of our long-cycle business, but we're managing that as well. And I just will call your attention to that chart in the appendix and just put that as well into context. We did 10s of millions of dollars of revenue across approximately 10 customers that have breached either the two or three red lines with their liquidity issues. And we share that those 10 customers are less than 3% of our China sales through the third quarter and less than 1% of Otis sales through the third quarter and -- but we've been mitigating this since the three red line policy has come into play and for any of these customers across these red lines, we've moved to a cash -- advance cash basis. So we are working this on an account-by-account basis. We do not believe and we've shared that the exposure is not large and we're going to continue to managing this effectively and executing our strategy.

Nigel Coe -- Wolfe Research -- Analyst

Thanks, Judy. That's very helpful. And then obviously supply chain is another key issue. One of your competitors called out some impacts from that, but also called out some project delays which be behind some of the New Equipment's weakness that they saw. I'm just curious, are you seeing any -- it doesn't seem like it, but are you seeing any weaknesses caused by delays on the construction projects and are we seeing inflationary impact on steel, causing some delays to tendering activities out there?

Judy Marks -- President & Chief Executive Officer

Let me start with the steel and, Rahul, please add. We're not seeing delays due to steel. Obviously steel and again it's, in our New Equipment business, about $300 million a year of commodities that we purchase. We've been able to purchase it. But obviously with the steel prices at fairly escalated prices and Rahul shared, we've increased $80 million to $90 million our impact on commodities this year, primarily driven by our volumes being up versus what we shared with you in July. So steel is not causing delays. We are not seeing significant delays on job sites in terms of labor. We're all watching installation subcontract labor, especially in Europe, but in terms of Otis labor, we have not had any delays in any of our job sites.

And we've put plans in place. Our supply chain team has been dealing with this extremely effectively now for almost two years. Whether it's semiconductors, ocean freight, we have not had delays in delivering to job sites from our New Equipment, some of that's the benefit of our factories being local and our supply chains being local with global agreements, but we have done everything from spot buys and redesigning some of our chipsets, from an engineering perspective to use more common chips, to make sure there was no impact to our customers. So we've not seen that. But Rahul, I'd like you to add.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

The only place -- and I'm sure we'll get there during the call, Nigel, is on modernization. It does impact our revenue because, as Judy said, on New Equipment, we can manage the shortages wherever we see them because we can have multiple shipments to the job site. Elevator doesn't go in one box or if it is completed unit, we actually assemble the elevator, as you guys know, on the job site. So it goes in couple of dozen crates, right? So whatever parts are short, we can ship them later. But on modernization jobs, it's a little bit harder because they're shorter in duration. So on modernization, we've seen some impact from raw material shortages and there is a little bit of a construction delay. It's not -- as Judy said, we are not experiencing delays from our factories. We can manage that. But there is a little bit of a construction slowdown for other shortages and that's impacting some revenue on the New Equipment side, especially here in the U.S., but other than that, I think we are OK overall.

Nigel Coe -- Wolfe Research -- Analyst

Perfect. I'll leave it there. Thank you very much.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Thanks, Nigel.

Operator

Thank you. And our next question comes from the line of Jeff Sprague with Vertical Research. Your line is open. Please go ahead.

Jeffrey Sprague -- Vertical Research -- Analyst

Yeah. Thank you and good morning everyone.

Judy Marks -- President & Chief Executive Officer

Morning, Jeff.

Jeffrey Sprague -- Vertical Research -- Analyst

Good morning. Could we just talk about price a little bit first, I guess. Well, I think that price was down 1 point but but also flat sequentially. Is that correct? But really the larger question is a little bit of color on kind of the competitive environment as you see it. Your -- it does appear you're taking some share. Is there a competitive price response that you're dealing with there? And maybe a little bit of color on the price that you do have in the market currently when you do expect it to show up in the P&L.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah, let me start with the pricing and I'll hand it to Judy to add some color on the competitive dynamics here. So overall, I think the numbers you quoted, Jeff, are exactly right. Pricing -- our overall pricing was down maybe slightly more than 1 point in Q3 here and was consistent with the book margins in Q2. And on a regional basis, EMEA was better year-over-year and pricing trends in both Asia Pacific and China were largely consistent with the first half and Americas pricing was slightly worse than first half, and it's more the mix of customers is where we saw the pressure. The distribution was a smaller share of orders and that's a little bit -- comes at a little bit better pricing. But pricing in Americas in the volume business was consistent with the first half.

So you put all that in context, the fact is the pricing trends, basically what we saw in the first half, is continuing into Q3. So no sequential change from the first half into Q3. And the price increases that we've put in place, we've rolled them out pretty much across the board at this point and where you will see that impact is those quotes have not yet converted to orders, which is fairly typical because that's the cycle from quotation to orders and they'll probably start up maybe showing up in late Q4 or early Q1. And the benefit of that, as Judy said in response to Nigel's question, will probably show up in 2022. Let me pause there, see if -- and Judy if you want to add something on competitive dynamics.

Judy Marks -- President & Chief Executive Officer

And listen, Jeff, we're seeing strong competition, I think, across the board and we're seeing varying levels of price increase and we have rolled out -- we shared with you in our second quarter earnings, that we had rolled out some limited price increases early in the year and then we went, right after our second quarter earnings call ended, global price increases at varying levels to understand and see what we could get in the market, because we have, obviously, cost increases in terms of inflationary labor costs, as well as input costs and commodities. Rahul hit it right on.

And the only thing I would tell you is we are seeing some headwinds on pricing, but we're up -- our New Equipment margins are up 150 basis points year-to-date. So we're able to, as we've always said, try to get it with price but we understand the lag time, increase our installation efficiency, which we did very well in the third quarter globally, as well as continue to control what we can in terms of productivity in our factories, material productivity and every lever we have. So it's going to be competitive. It's going to continue to be, but the end markets are growing across the globe, so strong demand, and we're going to continue to try and get price everywhere we can.

Jeffrey Sprague -- Vertical Research -- Analyst

Great. And then just a follow-up on China for me. Maybe just a little bit more color on what you're seeing on kind of bid and proposal on forward pipeline. And then really the nature of my question is, it seems like there is some government pressure on these developers to complete projects, right, which may give us some forward momentum. But in terms of kind of the -- what you can see on the horizon, the visibility that you have, just any other color there I think would be interesting.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yes. So Jeff what I'll say there is, I think I said in my prepared remarks, our proposal volume was up very strongly across the board and it was very, very strong in China. And it's -- our proposal volume was up close to 40% in China. I think that goes back to what Judy said earlier is it's driven by all the things that we have done, our increase in our channel partners, increase in our sales force. Our sales force is up by more than 10% in addition to the growth in the channel partners. So we have invested a ton to increase our reach in China, which is up close to 10 points as well. So all the things that we are doing is driving incremental activity on our side.

But if you step back and even look at the market overall, if you look at the floor space under construction is up 8% year-to-date and 10%- plus over 2019. The real estate investment is up 9% year-over-year. So -- and historically, there has been a very, very strong correlation between these two metrics and the elevator growth. But the reality is the situation is fluid today and after a very strong start in the first half, this -- the starts have slowed down in the last couple of months. So we are watching it very, very carefully. But again, I think if you want to grow the overall economy next year, even if you say that the Chinese government doesn't set a target of 6% but they set a target of 5%, with 30% of the GDP coming from the property market, it will be hard for them to achieve 5% to 6% growth next year with the property market being down. So this is where, I think, going back to what Judy said earlier, we expect the market to be more stable for next year, but again we'll keep watching it and keep doing what we can control, which is driving incremental effort on our side and the healthy proposal activity is a good sign for us to come.

Judy Marks -- President & Chief Executive Officer

Yeah, Jeff, let me just add one or two other things. As we said, our share gain on New Equipment share, both for the quarter and for the year, so far is 150 basis points. It's at least that in China, so, including in the third quarter. So we're -- our strategy really is working there. Second, we've already been approached by people other than these developers in local governments to finish some job sites on an advance cash basis. So we believe the work in progress is going to continue even with the developers that are experiencing two or three red lines. And so we're -- but again we're being prudent, we're planning for a flattish '22 and we're going to continue to execute our strategies to gain share in that flattish '22.

Jeffrey Sprague -- Vertical Research -- Analyst

Great, thanks for the color.

Operator

Thank you. And our next question comes from the line of Julian Mitchell with Barclays. Your line is open. Please go ahead.

Julian Mitchell -- Barclays -- Analyst

Hi, good morning. Just wanted to follow up on the backlog margin because I thought that maybe pricing would be sort of filtering through more quickly, but I think the backlog margins down 100 points, and it was down, I think, 50 points in Q2. So how should we think about the backlog margin sort of from here looking out over the next two or three quarters?

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah, no, I think, Julian, you're exactly right. The back -- the numbers you quoted are exactly right. Backlog margin was down about 1 point. And last quarter we did, say, kind of 0.5 point, so you're exactly right. So it got slightly worse, and again I think going back to what we said earlier, what you will see is that the pricing that we have put out in the market, that should start showing up in late Q4 or early Q1 and that is where you will see -- start seeing an improvement in both our book margin and backlog margin. So that is when we expect the trends to turn. But in the meanwhile, going back to our earlier response, we are just continuing to execute, really, really well on the installation side and that is what's driving our increase in year-to-date margin.

So that is offsetting both the pricing pressure and the commodity headwinds. I mean, despite both those headwinds between incremental volumes that drives higher absorption and the installation execution, which we've said was always our priority, between those two things, that's what's helping us continue to grow our New Equipment margin. And if you look at even the full year guide, last quarter we said, maybe it's 90 basis points in this quarter, it's up 90 basis points for the year, margin expansion, and this guide, we think, it's between 90 basis points to 100 basis points. So despite everything, we are actually improving our margin outlook on the New Equipment segment for the year.

Judy Marks -- President & Chief Executive Officer

Yeah, Julian, we've really pivoted to grow off our Service productivity, process changes, technology changes to really -- we've always believed there was opportunity on installation and that's where we've been focused again, especially with trying to overcome both the backlog margin and the commodity pressures on New Equipment and that's what you're seeing come through.

Julian Mitchell -- Barclays -- Analyst

That's helpful. And then maybe just on the New Equipment orders by region. So clearly people are very focused on the China and Asia numbers. But in Q3, those were very good still. I thought what was more interesting for me was Americas and EMEA. I realize it's lumpy but you had the down orders there on New Equipment. I just wondered, when you compare this upcycle in non-residential with the one 12 years ago, this upcycle has recovered far more quickly out of the recession than coming out of 2009. So the slope of it from here, you sort of thinking that we had an exceptionally strong V-shape and now the growth from here is fairly muted. Again, this is sort of ex-Asia and ex-China.

Judy Marks -- President & Chief Executive Officer

Yeah, let me talk to the Americas first. I mean if you look at our guide, first of all, we've seen a faster sustained recovery in the Americas, whether you go back to the GFC or 12 years ago, Julian. It's at the end of the GFC, which is really when we felt it more in the Americas and our guide has us going up mid-teens from the low-teens. We've got a strong backlog execution and, year-to-date in the Americas, if you take out the lumpiness and just go year-to-date, we're at 13.3% growth in the Americas in a 12-month roll of a healthy number as well. So we see the Americas doing -- coming back strong. The Dodge Momentum Index was up to 164.9 and the Architects Billing Index was at 56.6. So the -- these are trending the right way and we're doing well. Again, it's -- and no one quarter makes an orders book. We don't control all the timing on those orders. But year-to-date, the Americas has done tremendously, incredible second quarter and now again in the third quarter.

EMEA 6.3% year-to-date, down a little in the third quarter, but that's kind of timing and we think we'll see both of those nicely accelerate in Q4 and that's important for us. We want to end the year with higher than the 1% backlog we're sitting at today. And our entire team understands that. We believe we can do that in the Americas because the awards are up, as Rahul said in his opening remarks, and that is a leading indicator, where we've got the awards already and we've got the LOI's and now we have to move it to a booking and get everything finished. But we expect a strong fourth quarter and plan to end the year with a backlog that will -- of 2%-plus, hopefully closer to 3%. We'll have to see where that comes out so that we start '22 strong.

Julian Mitchell -- Barclays -- Analyst

That's great. Thank you.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Thanks, Julian.

Operator

Thank you. And our next question comes from the line of Patrick Baumann with J.P. Morgan. Your line is open. Please go ahead.

Patrick Baumann -- J.P. Morgan -- Analyst

Hi, good morning, Judy. Good morning, Rahul. Thanks for taking my questions. First one, just on the China exposure you detailed in the appendix. Just wanted to test the sensitivity on that versus the macro stat. So -- I mean you said you're planning for a flattish market. Does the assumption for a flattish market there embed any decline in floor starts? I'm just trying to understand how much of your initiatives there and your exposures there could help mitigate a decline in floor starts.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah, I think it's an interesting question, Patrick. Again it's hard to draw a direct correlation between any of these metrics into [Speech Overlap] exactly the elevator markets because it depends on what's going on in the market, how many buildings are under construction, we're obviously declining. And the floor starts have been down just the last couple of months after a very, very strong first half. So it's been -- we've seen them in the last couple of months, but again, the first half was very strong.

So that is where if you come back and if you look at the other metrics, which I won't repeat because you've gone through those, like the construction and the real estate investment, I mean, they've -- historically, they've had a pretty high correlation with the elevator market. So that is where we saw, at least [Phonetic], the market is going to be more flattish for next year. And keep in mind, that start level is at more than 600,000 units and comes after two very strong years of growth; high-single-digits this year and mid-single-digits last year. So we think if the market stabilizes at this level, that's a very healthy demand for the market and driven by all those self-help initiatives that we are driving gives us an opportunity to continue to drive gains in our China business.

Patrick Baumann -- J.P. Morgan -- Analyst

Okay. So it's not as simple as taking 20% of sales and saying, OK, floor starts are down 10%, that's what we should attribute to Otis. It's more complex than that.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

For sure. Yes.

Patrick Baumann -- J.P. Morgan -- Analyst

And then if you could -- just as a follow-up, can you help bridge that 20% of sales from China down to earnings, how big a percentage of earnings is that when we take into account like the impacts from joint ventures etc.? And then within that, how much of that earnings is aftermarket or service versus kind of direct to residential OE exposure?

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Well, yeah, we haven't -- we typically do not report that way, Patrick. But let me see what we can do here on the call. So if you take our China business and our year-to-date sales of about $2.1 billion or so, so that's our revenue for China year-to-date. Now it's typically 80-20, 80% New Equipment and 20% Service. So -- and the Service business is accelerating very, very nicely as well, driven by the portfolio growth that we've been talking about. And what we've said historically is that China is one of our more profitable New Equipment businesses, in fact, the most profitable of all regions in terms of how we report. And on the Service side, it is the least profitable of our regions. So -- and then you put the mix on top of it, so that the mix in the New Equipment-Service mix also works against the overall drop in China.

So that said, [Indecipherable] the overall, I mean, you put all that together, the China profitability is maybe overall lower than where orders reports. So that's kind of where we are. And then obviously the JV shares, we've got two JVs in China. And we've not disclosed our ownership, but obviously some somewhere between 50% to 100%. So it's somewhere in there. But you're right, I mean obviously the profit that we earn in China gets shared with our JV partners.

Patrick Baumann -- J.P. Morgan -- Analyst

Right. So without giving a specific number on that, obviously less than 20% of earnings, but is it less than 10% of earnings? I don't want an exact number, just kind of curious as a follow-up.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Patrick, I just want to stay away from that on the call. I think that's -- we report via our segments. I think we've provided enough color here and I think you guys can more than [Indecipherable] all of you guys to do the math. So we'll leave it there. [Speech Overlap]

Patrick Baumann -- J.P. Morgan -- Analyst

Okay. Thanks so much, I appreciate the time.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Thanks, Patrick.

Operator

Thank you. And our next question comes from the line of Cai von Rumohr with Cowen. Your line is open. Please go ahead.

Cai von Rumohr -- Cowen and Company -- Analyst

Yeah. Thanks so much for taking...

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Good morning, Cai.

Cai von Rumohr -- Cowen and Company -- Analyst

Yes, good morning, Rahul. So first Q4 cash flow, it looks like you're guiding to $170 million, maybe refresh my memory in terms of what do you have that kind of depresses that number.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

So first, Cai, really great year on cash. I mean if you think about the working capital reduction that we've been able to drive, we've had our third consecutive quarter of negative working capital. It's down, as I said in my prepared remarks, more than $300 million from where we ended the year. So very, very strong performance on cash. Now, the two things that kind of -- I would say three things that work as you go from sequentially from 3Q to 4Q, the first is that there is historically a buildup of working capital between third quarter and fourth quarters. So if you look at the last couple of years where cash flow is available, you will see an increase in working capital from the third quarter to the fourth quarter. So that's one driver.

The second is, based on the guide that we've provided, there is lower net income in the fourth quarter than in the third quarter. So that's the second piece. And we still have that tax payment in one of the European countries that we've alluded to before. That's a long-standing tax matter that pre-dates spin, that we still need to make in the fourth quarter here and that we've cited previously between at 10s of millions of dollars. So those are the kind of the three big levers, I would say, as we go from third quarter to fourth quarter cash flow. So that is why fourth quarter cash flow is less, but still $50 million higher than where we were three months ago and it's driven by improvement in net income and better working capital performance and a very, very healthy number for the year. I think it's close to 125%.

Judy Marks -- President & Chief Executive Officer

Yeah, and we're going to be past our mid-term guidance we gave at Investor Day in terms of cash flow for the second year.

Cai von Rumohr -- Cowen and Company -- Analyst

Yeah, so the -- yeah, the big abnormal thing is the tax payment. And then on the Zardoya purchase, I mean if you took that cash and bought back stock, it looks like Zardoya is modestly maybe 1% accretive to full year basis. And you already control it. So maybe walk us through some of the potential opportunities. For example, I think we've discussed this offline, but Spain has a tax rate of 25%. I mean, do you -- and I assume you're going to issue euro bond debt. And so, are you able to expense that at a higher tax rate? So what are some of the benefits from the consolidation?

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Well, let me talk about the financial piece...

Judy Marks -- President & Chief Executive Officer

And I'll talk about the operational.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah. Then Judy -- I'll hand it over to Judy to kind of talk about the operational opportunities that we have. So from a financial standpoint, Cai, It's very, very straightforward. I mean, you look at our -- there is a -- and I think we said that in our press release, about $80 million of net cash outflow that we make to our JV partners there, both minority and the family, the small share -- individual shareowner and the institutional shareowners and the family combined, so that's about $80 million. Now if we -- so that obviously -- that's something that we don't have to make once we have full control and ownership of Zardoya. And then we will borrow, as you said. Our intention is to borrow in Europe. So we'll do the borrowing in Europe, and so that is where if you net the two out, we expect mid-single-digit percentage accretion in 2023. Now in 2022, it's going to be less than that because the fact is that it's going to take us a few months here. We just filed the prospectus. It's going to take three to four months for that filing to get approved. Then we launch the tender, then there is a delisting period and it may take us time to ramp up to the full ownership.

So there is going to be a staggered increase in our ownership and that is where I think we said in the press release, we expect maybe $0.04 to $0.05 of accretion in 2022, just given the timing of the close and the timing of acquisition of shares. So those two things will get us to $0.04 to $0.05 -- I think we said $0.04 to $0.06 in the press release, so somewhere in that range for '22 and then mid-single-digit percentage accretion in 2023.

Hopefully that answers the question, Cai. And then I'll -- maybe Judy you want to talk about the operational...

Judy Marks -- President & Chief Executive Officer

Yeah, I'll just make it simple because of the time. I mean first, Cai, this is going to simplify our corporate structure. It will allow us to eliminate the only remaining listed subsidiary we have and will save the public company costs that go with that as well. But it really will allow us to streamline our operations in Europe, which gives us the launching point in the future for some strategic growth opportunities. It's a great Service portfolio. We have three factories there. We love this business and we think it just -- yes, we control it, which is why we're not worried about any implementation risks because we have operational control right now. But as we think about some future strategic growth opportunities across the continent, this is going to give us just that full capability to optimize everything from our talent to our operations in our facilities.

Cai von Rumohr -- Cowen and Company -- Analyst

Terrific, thank you very much.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Thanks, Cai.

Operator

Thank you. And our next question comes from the line of John Walsh with Credit Suisse. Your line is open. Please go ahead.

John Walsh -- Credit Suisse -- Analyst

Hi, good morning everyone.

Judy Marks -- President & Chief Executive Officer

Morning, John.

John Walsh -- Credit Suisse -- Analyst

Hi. So a lot of ground covered around pricing and commodities, but I'm just curious if you can help us think about maybe 2022 or maybe I'll even broaden it and just say in a deflationary environment, if we start to get some relief around commodities, if we've kind of hit the peak pain, so to say, this year, how do we think about your ability to kind of capture positive price cost spread? Are there certain things in your contracts or do some of those escalators maybe go away? Just trying to understand the price cost dynamics as we think into next year if we are starting to see some relief in commodities.

Judy Marks -- President & Chief Executive Officer

So, yeah, that's a great question, John. And we have escalation capabilities in our Service contracts in most of Europe and the Americas that are primarily indexed to labor and most of those tend to renew, the majority, in the first quarter of the year. So we believe that will be to our benefit. Those clauses are resident in those contracts, and have been there for many, many years. We just haven't been able to exercise them. So we will certainly try to flow through Service price increases and we'll see what the market will bear there, but we have the ability to do that and the majority of them are indexed to labor. But there are some small portion that are indexed to material or commodities. Again we haven't had that opportunity. It is a customer negotiation point, but we think that will at least start off '22 stronger in terms of Service pricing.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah. And on New Equipment, again, I think we've said that before. We expect some commodity headwinds next year, John, on the New Equipment side. We do -- given where the commodity prices were in the first half of this year, we expect first half of next year to kind of be in the same range as where we were in the second half of this year, so call it $30 million to $35 million a quarter, so maybe $70 million for the first half. And then beyond that, if you look at the commodity forwards today, they start going the other way starting May, June of '22 and we start -- right now the forwards would project that there will be tailwind in the second half of next year. But it's too early to call that.

But again, go back to our pieces, it's going to be that for next year, we can continue driving earnings expansion, both -- in both segments; New Equipment coming from higher volume, given where Judy said, there'll be a plan to ending the backlog at kind of in that low-single-digit growth range. So we'll continue to drive revenue growth in the New Equipment segment with incremental -- some help from pricing that we've already put in place and our continued execution installation. We think we can use all that to offset any commodity headwinds in the first half and drive earnings expansion. And on Service, I think our pricing should be a tailwind for next year, given where prices are and the volume should accelerate to kind of more mid-single-digit growth, which is what we expect.

Judy Marks -- President & Chief Executive Officer

Yeah. We've seen really good year-to-date snapback on repair, John, and we expect that to continue in fourth quarter and into next year globally, and then if we can get some of these maintenance escalators. But Service pricing has been held up really strong.

John Walsh -- Credit Suisse -- Analyst

Yeah. No, I appreciate the details there. And then maybe just a follow-up here on China. A lot of ground covered already, but as I think about Otis' opportunity within China, there is kind of the market piece, but also the share gains and was just curious as you look in a flat market, if that does prove to be the case, how should we think about Otis' ability to gain share in a flat market? Is this 1.5 points kind of the right bogey? Could it be better? Should we temper ourselves a little bit? Just would love to get your thoughts on that.

Judy Marks -- President & Chief Executive Officer

Yeah. And we'll share more obviously as we give guidance in '22. But our China team has taken on the challenge to grow share and grow portfolio and they've done both robustly this year. And we've lived through declining markets, you go back to '15, to '18, we were the first to emerge, really '18, '19 and to drive price increases there when others didn't want to follow. And now we've really, I think, proven share gain for two straight years and again sixth consecutive quarter of New Equipment growth while we're getting that share gain and driving profitability. So whether it's flat or up, we intend to gain share.

John Walsh -- Credit Suisse -- Analyst

Great, thanks for taking the questions.

Judy Marks -- President & Chief Executive Officer

Sure.

Operator

Thank you. And our next question comes from the line of Miguel Borrega with Exane BNP Paribas. Your line is open. Please go ahead.

Miguel Borrega -- Exane BNP Paribas -- Analyst

Hi, good morning everyone. I've got a couple of question, if I may. The first one, again, coming back on China. Can you comment on how are your clients reacting to this pre-payments that you're asking for? I believe you mentioned on Slide 16. Is this something you just started asking or are you now rolling over to all new orders instead of a select few?

Judy Marks -- President & Chief Executive Officer

So we have been -- the three red lines came into effect, if I get the month right, August of '20, but some -- certainly sometime during the '20 third quarter. And we've been monitoring this closely and if we have clients who are not going to go to this cash payment, then we've stopped taking orders from them, to be candid. We're managing it effectively and, what we think is, prudently in a risk mitigation perspective, so that we don't get out ahead of their liquidity issues or become the holder of their liquidity issues. So they understand it. We've been very upfront with them. Again, we go account by account. That's why you have these relationships and we have these open discussions.

Miguel Borrega -- Exane BNP Paribas -- Analyst

Thank you. And I would be interested in understanding the 10% increase that you mentioned on your sales force in China. Can you shed some color on when -- where are you investing? Are these Tier 1 cities or are you extending more into Tier 3 cities? And can you remind us your exposure in terms of segments in China resi-commercial and infrastructure?

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Yeah, so our sales force, I mean, obviously it's pretty broad-based, Miguel, and it's both in the Tier 1 and Tier 2 cities. I mean that is something we've done so that as we are adding more channel partners we need our sales force to support the channel partners that we are hiring and gain our fair share of wallet from those agents and distributors. So that is where our incremental sales force is going and it's split between both New Equipment and Service because that's the -- that's what we need to do to drive our Service portfolio growth.

And in terms of our overall make, I think we are -- we do fairly well in every segment, both residential-commercial and infrastructure. So we have a fairly strong presence across all verticals. Now obviously, it depends on where the market is and we've been -- we've been focused a lot more on the infrastructure recently and that is where -- if you look back at what we've shared on our Investor Day, that is where we have gained a few points of share. So we continue to do well across all segments. And I think our share base -- share gain is fairly broad-based.

Miguel Borrega -- Exane BNP Paribas -- Analyst

Thank you very much.

Judy Marks -- President & Chief Executive Officer

Thanks, Miguel.

Operator

Thank you. And our next question comes from the line of Nick Housden with RBC Capital. Your line is open. Please go ahead.

Nicholas Housden -- RBC Capital Markets -- Analyst

Yeah. Hi everyone. Thank you for taking my questions. Just a couple of quick ones for me. You've mentioned productivity gain a few times as a driver of the pretty good margin result. I'm just wondering if you can maybe quantify that a little bit more and also tell us, to what extent, there is still potential here going forward in the next few quarters.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

So our productivity gain is coming from both segments, Nick. It's coming from New Equipment. We are -- it's -- we spoke about the material productivity starting right when we did our first Investor Day. So we've been talking about that's a key driver for us. So we continue to push really, really hard on that. In addition, we've been driving installation efficiency. So that means better project closeouts and ending the project at a higher margin than what we booked at. And that includes both using fewer hours to install the product and taking cost out of the material because not the entire material cost comes from the fact -- there is incremental material procurement that happens in the field. So we've been spending a lot of time and effort to understanding where the supply base is and how we can take cost out of that. So that has been the major push here and that is where you're seeing. And again, we are in early stages of that. We just started it, we saw good results in Q2, we saw good results in Q3. So we're in early stages of that and we need that installation efficiency to continue to get better as we get into '22. So that will be a push for us.

And on Service productivity, which again has been a tailwind for us despite catch-up of maintenance hours and all the COVID-related headwinds that we are absorbing, our Q3 hours are still down year-over-year to maintain an elevator. So that comes from the push that we have on Otis ONE and some of the other productivity things that we're doing. So that is what is driving our Service productivity, which continues to be -- which continue to be strong in Q2.

Judy Marks -- President & Chief Executive Officer

Yeah. And that's obviously what drives our profitability, yeah.

Nicholas Housden -- RBC Capital Markets -- Analyst

That's great. And then just very quickly on the tax rate. You mentioned 28.5% to 29% for this year. Is that about the right number going forward or should we expect something a bit different?

Judy Marks -- President & Chief Executive Officer

No. So, we guided at Investor Day and after that actually, that we expect that to continue to go down and to get to about 26.5% at really -- that's what we're expecting over the mid term, really two strong years in a row, Nick. We had brought it down to about 30.4% last year from over 34% in our first year and then another, as we said, 180 basis points this year to get us to the midpoint between 28.5% and 29%. So really good focus and it's -- now what we have to do is operationalize a lot of it, but we know the path, we know the trajectory and we're going to continue down that path to get us closer to that 26.5%.

Nicholas Housden -- RBC Capital Markets -- Analyst

That's great, thank you very much.

Operator

Thank you. And our last question comes from the line of Joel Spungin with Berenberg. Your line is open. Please go ahead.

Joel Spungin -- Berenberg -- Analyst

Yeah. Good morning. You've obviously covered a lot. So just two quickly. Maybe if I can just start with China again on your Slide 16, just to help me understand when you talk about the 3% of China sales, that's -- is that both your direct and indirect total exposure to those property development, so including sales by a third-party distributors, whatever it might be? And I guess the reason I'm asking just maybe to open up because I'm interested to hear your thoughts is that the risk here might not just be with potentially an Evergrande or whoever is going bust, but actually that it causes distress in the distribution network in China and that you have exposure to distributors who might be put at risk if some of these guys go under. So, yeah, I'm just wondering if you can talk a little bit more about that in terms of what this 3% number is just to clarify that.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

So the 3% represents our sales to these customers, both direct and indirect, yes. So that's a total exposure to these customers. I think your question, Joel, is right, if -- and I think it goes to a broader contagion issue, which obviously is not represented on this chart. And again that goes back to all the discussion that we -- Joel, that we've had on this call around our expectations for the China market. So not to rehash all of that, but we do expect that this is going to be -- we do expect the China elevator and escalator market to be more flattish next year. So that's our current expectation. And -- but this 3% is our total exposure to these customers.

Judy Marks -- President & Chief Executive Officer

All-in.

Rahul Ghai -- Executive Vice President and Chief Financial Officer

All-in.

Joel Spungin -- Berenberg -- Analyst

Okay, thank you. And then maybe just one final one, quickly, which was just on your comments around modernization, which I thought were interesting. I mean it sounds like you're slightly tempering your expectations for the fourth quarter in terms of modernization. Do you think that there is -- there are some bottlenecks here, like some of these issues are likely to result in some pent-up demand being released in 2022? I'm just interested, for example, your comments about EMEA going through delayed decision making, whether or not that's likely to sort of come through faster maybe next year.

Judy Marks -- President & Chief Executive Officer

Yeah. In mod, Joel, we think it really is demand delay versus disruption -- versus elimination actually or destruction. The challenge on mod is it is somewhat more bespoke than New Equipment and custom, and that, at least in the Americas, has created a little bit of a supply chain challenge for us. So we're dealing with it. I think we've appropriately tempered the fourth quarter to the low end of the Service guidance for that reason. But we don't see this or the EMEA demand or the Asia Pacific demand going away by any point. Modernization is going to continue to grow and we know what we need to do. If you look all-in, year-to-date, our orders are up 4.3% and our sales are up 2.7%. So we think the fourth quarter reflects that kind of knowledge as well as what we're experiencing and '22 should be stronger.

Joel Spungin -- Berenberg -- Analyst

Okay, thanks very much.

Operator

Thank you. And that concludes our question-and-answer session. I would like to turn the conference back over to Judy Marks for any further remarks.

Judy Marks -- President & Chief Executive Officer

Yeah. Thanks, Michelle. This solid year-to-date performance, positive momentum and our ability to execute on our long-term strategy gives us confidence we'll deliver a strong close to 2021 with high-single-digit organic sales growth, $260 million to $270 million in operating profit growth and high-teens EPS growth. While the external environment remains fluid, I'm confident the investments we've made over the last few years and our progress as an independent company have set a new path and will position us well for 2022.

As always, we remain focused on driving value for our customers, our colleagues, our communities and our shareholders. Thank you for joining us today and stay safe and well.

Operator

[Operator Closing Remarks]

Duration: 67 minutes

Call participants:

Michael Rednor -- Senior Director of Investor Relations

Judy Marks -- President & Chief Executive Officer

Rahul Ghai -- Executive Vice President and Chief Financial Officer

Nigel Coe -- Wolfe Research -- Analyst

Jeffrey Sprague -- Vertical Research -- Analyst

Julian Mitchell -- Barclays -- Analyst

Patrick Baumann -- J.P. Morgan -- Analyst

Cai von Rumohr -- Cowen and Company -- Analyst

John Walsh -- Credit Suisse -- Analyst

Miguel Borrega -- Exane BNP Paribas -- Analyst

Nicholas Housden -- RBC Capital Markets -- Analyst

Joel Spungin -- Berenberg -- Analyst

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