Otis Worldwide Stock Earnings Reports

Otis delivered a mixed but constructive start to 2026. Total organic sales rose 1%, driven by a 5% increase in Service (maintenance, repair and modernization), while New Equipment sales declined, pressured by China. Modernization orders were a highlight (orders +11%, backlog +30% at constant currency), supporting multiyear visibility; combined backlog is near $20 billion. Repair demand is strong (repair organic sales ~+10%) and Management expects durable modernization and repair tailwinds as the global installed base ages. Service margin was pressured in Q1 (down ~160 bps to 23%) due to incremental investments in field and sales resources (~$50M incremental expected in 2026), negative portfolio mix (growth in lower-value markets), and timing delays/cost inflation (including impacts from the Middle East). Management is taking actions — scaling service investments that have shown early retention improvements, rolling out AI-driven micro-pricing, implementing fuel/logistics surcharges and targeted non-frontline cost reductions (targeting up to $20M run-rate savings, ~ $10M in 2026) — and expects sequential service margin improvement with margin expansion returning by year-end. New Equipment margins and sales should stabilize as Americas and other regions execute backlog; China remains the primary headwind but is expected to stabilize. Cash generation remains strong: adjusted free cash flow was ~$272M in Q1 (+46% YoY), the company completed ~$400M in buybacks in Q1 and raised the quarterly dividend by 5%. Updated 2026 guidance: Net sales $15.1B–$15.3B (low- to mid-single-digit organic growth), adjusted operating profit ~ $2.5B (up modestly YoY on a constant-currency basis), adjusted EPS $4.20–$4.24, and adjusted free cash flow $1.6B–$1.65B. Management reiterated confidence in the long-term service-led thesis and multi-year modernization opportunity.