Otis Worldwide — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the quarter ended September 30, 2026, were $3.9 billion, up 6% year-over-year, with organic sales growth of 6%.
• Year-to-date net sales were $11.3 billion, up 7% year-over-year, with organic sales growth of 4%.
• GAAP operating profit for the quarter was $620 million, an increase of $34 million year-over-year; adjusted operating profit was $626 million, a decrease of $6 million year-over-year.
• Year-to-date GAAP operating profit was $1.7 billion, an increase of $190 million; adjusted operating profit was $1.8 billion, a decrease of $41 million year-over-year.
• GAAP earnings per share (EPS) increased 14% to $1.08 for the quarter; adjusted EPS was flat at $1.05.
• Year-to-date GAAP EPS was $3.07, up 20%; adjusted EPS was $2.96, down 2%.
• Service operating profit margin improved 100 basis points sequentially to 24.2% for the quarter.
• Operating cash flow was $337 million for the quarter and $1.0 billion for the year-to-date period.
• Adjusted free cash flow was $272 million for the quarter and $834 million for the year-to-date period.
• Total cash flow from operations for the nine months ended September 30, 2026, was $1.0 billion, up $238 million year-over-year.

Guidance and Future Outlook:

• Otis is maintaining its full-year 2026 outlook for net sales of $15.1 to $15.3 billion.
• Full-year organic sales are expected to grow at a low to mid-single-digit rate.
• Full-year organic New Equipment sales are expected to decline at a low single-digit rate to flat.
• Full-year organic Service sales are expected to grow at a mid to high single-digit rate.
• Full-year adjusted operating profit is expected to be approximately $2.4 billion, down $30 million to flat at actual currency and down $45 to $15 million at constant currency.
• Full-year adjusted EPS is expected to be between $4.01 and $4.05.
• Full-year adjusted free cash flow is expected to be approximately $1.5 billion, revised down from a prior range of $1.50 to $1.55 billion.

Business Segments and Product Lines:

• Service net sales grew 8% year-over-year (organic growth of 7%) to $2.6 billion for the quarter; year-to-date Service sales grew 10% (organic growth of 7%) to $7.6 billion.
• Service organic maintenance and repair sales increased 4% for the quarter; modernization sales increased 20%.
• New Equipment net sales grew 3% year-over-year (organic growth of 3%) to $1.3 billion for the quarter; year-to-date sales grew 1% (organic decline of 1%) to $3.7 billion.
• New Equipment orders increased 1% at constant currency for the quarter.
• New Equipment backlog increased 4% at actual and constant currency.
• Modernization orders increased 10% at constant currency for the quarter.
• Modernization backlog increased 20% at actual and constant currency.
• Service segment operating profit was $633 million for the quarter, up $12 million year-over-year.
• New Equipment segment operating profit was $42 million for the quarter, down $17 million year-over-year.

Market and Competitive Landscape:

• Service growth was driven by sustained performance across all Service lines, including double-digit modernization growth and high single-digit repair growth.
• New Equipment growth was driven by low teens growth in the Americas, mid-single digit growth in EMEA, and high single digit growth in Asia Pacific.
• New Equipment sales were partially offset by a decline of greater than 20% in China.
• New Equipment orders were partially offset by a low teens decline in China.
• Otis maintains the industry's largest Service portfolio with approximately 2.5 million customer units worldwide.

Risks and Challenges:

• Service operating profit margin contracted 130 basis points year-over-year to 24.2%, impacted by higher labor costs, ongoing strategic initiatives, and unfavorable mix, partially offset by higher volume and favorable pricing.
• New Equipment segment operating profit margin contracted 150 basis points year-over-year to 3.2%, driven by unfavorable price and mix.
• Adjusted operating profit margin for the quarter declined 110 basis points to 16.0% due to unfavorable segment performance.
• Adjusted EPS was impacted by a higher tax rate, higher interest, and unfavorable foreign exchange rates.
• Forward-looking statements note risks including economic conditions, geopolitical conflicts, commodity prices, labor disputes, and the realization of benefits from transformation initiatives like UpLift.

Management Commentary and Tone:

• Chair, CEO & President Judy Marks stated the company delivered strong top-line growth supported by sustained Service performance and New Equipment growth.
• Management highlighted investments in field capability and AI-enabled pricing as drivers for growth and margin improvement.
• Management expressed confidence in the "Service flywheel strategy" and steps taken to build a stronger foundation for sustained growth.
• The tone indicated confidence in maintaining the full-year outlook despite margin pressures in the New Equipment segment.

Other Key Points:

• Share repurchases totaled approximately $800 million year-to-date.
• Dividends paid totaled approximately $500 million year-to-date.
• Total capital returned to shareholders year-to-date was approximately $1.3 billion.
• The company reported a favorable ruling in August 2024 regarding tax litigation in Germany, resulting in income tax benefits and related interest income recorded in 2024, with refunds anticipated to continue through 2026.
• Separation-related adjustments and UpLift transformation costs were excluded from adjusted measures; UpLift restructuring costs were absent in the current quarter compared to the prior year.
• Cash flow changes were driven by an increase in net income offset by changes in working capital.