Third quarter 2026
Filed Oct 28, 2026Otis reports 6% third-quarter net-sales growth, led by Service, while adjusted operating profit and adjusted EPS were flat to down and full-year outlook was maintained.
Service delivered 8% net-sales growth and sequential margin improvement, but New Equipment profit and margin declined, consolidated adjusted operating profit fell, and adjusted EPS was flat.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, quarter ended September 30GAAP | $3.91B | – | 6% |
| Organic sales growth, quarter ended September 30non-GAAP | 6% | – | 6% |
| Operating profit, quarter ended September 30GAAP | $620M | – | $34 million |
| Operating profit margin, quarter ended September 30GAAP | 15.8% | – | (10) bps |
| Net income, quarter ended September 30GAAP | $426M | – | – |
| Net income attributable to Otis Worldwide Corporation, quarter ended September 30GAAP | $414M | – | 11% |
| Diluted earnings per share, quarter ended September 30GAAP | $1.08 | – | 14% |
| Adjusted operating profit, quarter ended September 30non-GAAP | $626M | – | $(6) million |
| Adjusted operating profit at constant currency, quarter ended September 30non-GAAP | $629M | – | $(3) million |
| Adjusted operating profit margin, quarter ended September 30non-GAAP | 16.0% | – | (110) bps |
| Adjusted net income attributable to common shareholders, quarter ended September 30non-GAAP | $402M | – | (2)% |
| Adjusted diluted earnings per share, quarter ended September 30non-GAAP | $1.05 | – | —% |
| Effective tax rate, quarter ended September 30GAAP | 22.8% | – | – |
| Adjusted effective tax rate, quarter ended September 30non-GAAP | 25.7% | – | – |
| Service segment operating profit, quarter ended September 30GAAP | $633M | – | $12 million |
| Service segment operating profit margin, quarter ended September 30GAAP | 24.2% | 100 bps | (130) bps |
| New Equipment segment operating profit, quarter ended September 30GAAP | $42M | – | $(17) million |
| New Equipment segment operating profit margin, quarter ended September 30GAAP | 3.2% | – | (150) bps |
| Cash flow from operations, quarter ended September 30GAAP | $337M | – | $(37) million |
| Free cash flow, quarter ended September 30non-GAAP | $298M | – | $(39) million |
| Adjusted free cash flow, quarter ended September 30non-GAAP | $272M | – | $(65) million |
| Net sales, nine months ended September 30GAAP | $11.34B | – | 7% |
| Organic sales growth, nine months ended September 30non-GAAP | 4% | – | 4% |
| Operating profit, nine months ended September 30GAAP | $1.73B | – | $190 million |
| Operating profit margin, nine months ended September 30GAAP | 15.3% | – | 80 bps |
| Net income attributable to Otis Worldwide Corporation, nine months ended September 30GAAP | $1.18B | – | 17% |
| Diluted earnings per share, nine months ended September 30GAAP | $3.07 | – | 20% |
| Adjusted operating profit, nine months ended September 30non-GAAP | $1.76B | – | $(41) million |
| Adjusted operating profit margin, nine months ended September 30non-GAAP | 15.5% | – | (150) bps |
| Adjusted diluted earnings per share, nine months ended September 30non-GAAP | $2.96 | – | (2)% |
| Cash flow from operations, nine months ended September 30GAAP | $1.02B | – | $238 million |
| Free cash flow, nine months ended September 30non-GAAP | $901M | – | $229 million |
| Adjusted free cash flow, nine months ended September 30non-GAAP | $834M | – | $68 million |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Service, quarter ended September 30Organic maintenance and repair sales increased 4% and organic modernization sales increased 20%. | $2.62B | – | 8% |
| New Equipment, quarter ended September 30Low teens growth in the Americas, mid-single digit growth in EMEA, and high single digit growth in Asia Pacific were partially offset by a greater than 20% decline in China. | $1.30B | – | 3% |
| Service, nine months ended September 30Organic sales increased 7%. | $7.61B | – | 10% |
| New Equipment, nine months ended September 30Organic sales declined (1)%. | $3.73B | – | 1% |
Full year 2026 outlook
- RevenueNet sales of $15.1 to $15.3 billion
- NoteOrganic sales up low to mid-single digits
- NoteOrganic New Equipment sales down low single digits to flat
- NoteOrganic Service sales up mid to high single digits
- NoteAdjusted operating profit of approximately $2.4 billion, down $45 to $15 million at constant currency; down $30 million to flat at actual currency
- NoteAdjusted EPS of $4.01 to $4.05
- NoteAdjusted free cash flow of ~$1.5 billion (vs. prior range of $1.50 to $1.55 billion)
Capital returns
- Nine months ended September 30, 2026: Repurchases of Common Stock of $(807) million.
- Nine months ended September 30, 2026: Dividends paid on Common Stock of $(498) million.
- Year-to-date 2026: Share repurchases of approximately $800 million and dividends of approximately $500 million, returning approximately $1.3 billion to shareholders.
What drove it
- Service net sales increased 8%, with growth in all lines of business.
- Service segment operating profit increased from higher volume, favorable pricing and other employment related cost reductions, partly offset by higher labor cost, strategic initiatives and productivity, and unfavorable mix.
- Modernization orders were up 10% at constant currency and modernization backlog increased 20% at actual currency and constant currency.
- New Equipment orders were up 1% at constant currency and New Equipment backlog increased 4% at actual currency and constant currency.
- GAAP operating profit increased primarily due to the absence of UpLift transformation costs, separation-related adjustments, and other non-recurring items in the prior year.
Concerns
- Adjusted operating profit decreased $6 million at actual currency and $3 million at constant currency.
- Adjusted operating profit margin declined 110 bps to 16.0%.
- Service operating profit margin contracted 130 bps year over year to 24.2%.
- New Equipment segment operating profit decreased $17 million and its operating profit margin contracted 150 bps to 3.2%.
- New Equipment results included a greater than 20% decline in China.
- Third-quarter adjusted free cash flow decreased $65 million to $272 million.
What to watch
- Whether Service organic maintenance and repair growth of 4% and organic modernization growth of 20% continue.
- Service margin progression following the 100 bps sequential improvement to 24.2%.
- New Equipment price and mix, which management cited as primary drivers of the segment operating-profit decline.
- China New Equipment demand relative to growth in the Americas, EMEA, and Asia Pacific.
- Delivery against full-year adjusted free cash flow of ~$1.5 billion after $834 million in the first nine months.
Balance sheet and cash flow
- Cash and cash equivalents as of September 30, 2026: $866 million.
- Short-term borrowings and current portion of long-term debt as of September 30, 2026: $1,224 million.
- Long-term debt as of September 30, 2026: $7,051 million.
- Accounts receivable, net as of September 30, 2026: $4,058 million.
- Inventories as of September 30, 2026: $689 million.
- Capital expenditures were $(39) million for the quarter ended September 30, 2026 and $(116) million for the nine months ended September 30, 2026.
- Third-quarter cash flow changes were driven by an increase in net income offset by changes in working capital.
Analysis
Otis generated third-quarter net sales of $3,914 million, up 6%, with organic sales also up 6%. Service was the principal growth engine, with net sales up 8% to $2,616 million and organic sales up 7%. Service modernization was particularly strong, with organic sales up 20%, while organic maintenance and repair sales increased 4%. New Equipment net sales increased 3% to $1,298 million, as growth in the Americas, EMEA, and Asia Pacific was partly offset by a greater than 20% decline in China.
Profitability was mixed. GAAP operating profit increased $34 million to $620 million, primarily because prior-year results included UpLift transformation costs, separation-related adjustments, and other non-recurring items. Adjusted operating profit decreased $6 million to $626 million, while adjusted operating profit at constant currency decreased $3 million to $629 million. GAAP operating profit margin contracted 10 bps to 15.8%, and adjusted operating profit margin declined 110 bps to 16.0%.
Service remained the higher-margin business but showed year-over-year pressure. Service segment operating profit increased $12 million to $633 million, supported by volume, pricing and other employment related cost reductions, while its margin declined 130 bps to 24.2% amid higher labor cost, strategic initiatives and productivity, and unfavorable mix. The margin improved 100 bps sequentially. New Equipment was the principal earnings drag: segment operating profit declined $17 million to $42 million and margin fell 150 bps to 3.2%, primarily from unfavorable price and mix.
Cash generation declined in the quarter but remained ahead year to date. Third-quarter operating cash flow was $337 million, free cash flow was $298 million, and adjusted free cash flow was $272 million. For the first nine months, operating cash flow was $1,017 million and adjusted free cash flow was $834 million. The company repurchased $807 million of common stock and paid $498 million in common-stock dividends during the first nine months.
Otis maintained its full-year outlook for net sales of $15.1 to $15.3 billion, organic sales growth of low to mid-single digits, adjusted operating profit of approximately $2.4 billion, and adjusted EPS of $4.01 to $4.05. The adjusted free-cash-flow outlook is ~$1.5 billion, compared with a prior range of $1.50 to $1.55 billion stated in the current release. The operating outlook continues to depend on mid- to high-single-digit organic Service growth while Organic New Equipment sales are expected to be down low single digits to flat.
Management, verbatim
Otis delivered another quarter of strong top-line growth, supported by sustained performance across all Service lines and growth in New Equipment.
Judy Marks, Chair, CEO & President
The third quarter Service revenue growth and sequential margin improvement continue to reinforce our Service flywheel strategy and give us confidence in the steps we are taking to build a stronger foundation for sustained growth.
Judy Marks, Chair, CEO & President
Not in the filing
stated, not guessed- GAAP gross margin and adjusted gross margin were not reported.
- Fourth-quarter 2026 guidance was not reported.
- Forward-looking gross-margin, operating-expense, and tax-rate guidance were not reported.
- Prior-quarter consolidated financial metrics were not reported, except for the stated 100 bps sequential improvement in Service operating profit margin.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.