Otis Worldwide : First Quarter 2026 Earnings Conference Call Presentation

Published: 2026-04-22 11:30:32 ET OTIS

Published on 04/22/2026 at 11:30 am EDT

April 22, 2026

Solid start to the year, supported by continued strength in Service...

Organic1 sales up 1%… Service up 5%

Repair organic1 sales up 10%

Modernization orders up 11%; backlog up 30% at constant currency1

New Equipment orders up 1% at constant currency1, up 5% excluding China

Adjusted free cash flow1 of $272M… up 46%

…while executing a disciplined capital allocation strategy…

Repurchased ~$400M of shares

Increased quarterly dividend by 5% in April… increased 120% since spin

Acquired majority stake in WeMaintainTM

...and positioning the business for long-term value creation

Continued investments in Service capabilities

Advanced innovation with the launch of Otis Robust , a heavy-duty elevator range, and Viva solutions supporting aging populations

Q1 2026

Service organic1 sales growth

11%

modernization orders growth2

New Equipment backlog growth1

$272M

adjusted free cash flow1

1 See appendix for additional information regarding these non-GAAP financial measures.

2 At constant currency.

Q1 2026 highlights

(YOY Changes)

Orders1

Total Otis

Otis ex-China

New Equipment

Modernization

11%

Total

Metropolitan Transport Authority Marseille, France

Austin Convention Center Texas, USA

Backlog1

ex-China

Total Otis Otis

New Equipment 3% 11%

Modernization 30% 30%

Total 9% 15%

1 At constant currency. See appendix for additional information regarding these

non-GAAP financial measures.

Runyuan Community Harbin, China

Otis RobustTM

Diluted earnings per share

GAAP

$0.61

$0.87

Adjusted1

Adjusted EPS1 drivers

($ millions, except per share amounts)

Sales

Organic1 FX

Net acquisitions/other

Total net sales

~Flat

Operating profit

GAAP

411

539

Adjusted1

Adjusted margin1

Adjusted operating profit down $38M at constant currency1, excluding $28M of FX tailwinds

Adjusted operating profit margin1 contracted 130 basis points to 15.4%, driven by unfavorable segment performance partially offset by segment mix

Operational

($0.07)

$0.05

Other

($0.01)

1 See appendix for additional information regarding these non-GAAP financial measures.

Service 94%

($ millions) Segment Operating

Operating Profit

Y/Y

Operating profit margin

(160) bps

Operating profit down $10M at constant currency1

Volume Pricing

Labor & material costs

Investments net of productivity Mix

Sales

Y/Y

11%

Organic1

Organic1 sales up 5%

Maintenance & repair up 4%

Modernization up 6%

Profit

Sales

Y/Y

(1%)

Organic1

(5%)

Organic1 sales down 5%

Americas down 1%

EMEA up 1%

Asia down 13%

Asia Pacific down MSD

China down >20%

($ millions)

Operating Profit

Y/Y

(42%)

Operating profit margin

(240) bps

Operating profit down $27M at constant currency1

Productivity

Volume Price & mix

New Equipment 6%

Segment Operating Profit

Impacts on Q1 Service margin

Confidence in recovery - focus areas

Q1 Investments

~$5M maintenance excellence

~$10M sales & pricing capabilities

Ongoing onboarding of field FTEs to address repair and modernization

Portfolio mix shift to Asia Pacific / China

Monetize Service excellence investments, continuing retention improvement and topline growth

Ramp up modernization backlog conversion and

sustain repair growth momentum

Last 12 months portfolio growth

up slightly

up HSD

up ~10%

Drive portfolio growth in highest-value regions

>Capture flow through of micro pricing initiatives

started in Q4 2025

Americas and EMEA

Asia Pacific China

Timing of revenue and cost recovery

Fuel, logistics & other cost headwinds

Shipment delays due to conflict in the Middle East

Fuel & logistics surcharges implemented

Execute up to $20M run-rate cost reduction in non-front line related activities

Industry units

New Equipment

2026 VPY:

Americas up

Otis

Net sales of $15.1 to $15.3B; organic2 up low to mid-single digits

Adjusted operating profit2 of ~$2.5B,

Change in industry units ~8%

~6%

~2%

EMEA up

Asia down

up $20M to $60M at constant currency2; up $60M to $100M at actual currency

Industry $ value growth

Modernization

Adjusted EPS2 $4.20 to $4.24, up 4% to 5%

Adjusted free cash flow2 of $1.6B to 1.65B

Disciplined capital allocation

Share repurchases of ~$800M

New Equipment & modernization market outlook remains unchanged

1 Based on Otis internal estimates for the markets in which we operate.

2 See appendix for additional information regarding these non-GAAP financial measures.

Prior outlook (Jan 28, 2026)

Current outlook

Service sales (Organic)

up mid to high single digits

New Equipment sales (Organic)

down low single digits to flat

Total sales (Organic)

up low to mid-single digits

Total net sales

$15.0B to $15.3B

$15.1B to $15.3B

1 See appendix for additional information regarding these non-GAAP financial measures.

Organic1 sales

up low to mid-single digits

Constant currency1 adj. op profit1

up $20 to $60M

Adjusted free cash flow1

~$1.625B

$32M

$40M

~ Flat

$46M

$40M

Adjusted operating profit1 growth sustained despite incremental investments and geopolitical headwinds

1 See appendix for additional information regarding these non-GAAP financial measures

$4.05

+ $20M to $60M

at constant currency1

$0.03 to $0.10

~$0.08

FX BOY

EUR @ 1.18

CNY @ 6.96

~$0.02

$4.20 to $4.24

1 1

MSD adjusted EPS1 growth

1 See appendix for additional information regarding these non-GAAP financial measures.

Appendix

($ billions, at constant currency1)

Remaining performance obligation

Y/Y

Modernization orders

Q1 2026 Y/Y

Otis ex-China 6%

Total Otis 11%

Modernization

18.6 18.9 19.6

30%

Maintenance & repair

New

Equipment

New Equipment orders

Region

Q1 2026 Y/Y

Total Otis

Otis ex-China

Americas

24%

EMEA

Asia

(17%)

Appendix

Actual currency ($28M) +$19M ($1M) ($10M)

($38M) at constant currency1

Price & Mix

+ Pricing

Labor and material costs

Investments net of productivity Mix

1 1

Adjusted operating profit margin1 of 15.4%

1 See additional information regarding these non-GAAP financial measures.

Appendix

Otis Worldwide Corporation ("Otis") reports its financial results in accordance with accounting principles generally accepted in the United States ("GAAP"). We supplement the reporting of our financial information determined under GAAP with certain non-GAAP financial information. The non-GAAP information presented provides investors with additional useful information, but should not be considered in isolation or as substitutes for the related GAAP measures. Moreover, other companies may define non-GAAP measures differently, which limits the usefulness of these measures for comparisons with such other companies. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure. A reconciliation of the non-GAAP measures (referenced in this press release) to the corresponding amounts prepared in accordance with GAAP appears in the attached tables. These tables provide additional information as to the items and amounts that have been excluded from the adjusted measures. Below are our non-GAAP financial measures

Non-GAAP measure

Definition

Organic sales

Represents consolidated net sales (a GAAP measure), excluding the impact of foreign currency translation, acquisitions and divestitures completed in the preceding twelve months and other significant items of a non-recurring and/or nonoperational nature ("other significant items"). Management believes organic sales is a useful measure in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Adjusted selling, general and administrative ("SG&A") expense

Represents SG&A expense (a GAAP measure), excluding restructuring costs and other significant items.

Adjusted operating profit

Represents income from continuing operations (a GAAP measure), excluding restructuring costs and other significant items.

Adjusted net interest expense

Represents net interest expense (a GAAP measure), adjusted for the impacts of non-recurring acquisition related financing costs and related net interest expense pending the completion of a transaction and other significant items.

Adjusted noncontrolling interest in earnings

Represents noncontrolling interest in earnings (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.

Adjusted net income

Represents net income attributable to Otis Worldwide Corporation (a GAAP measure), excluding restructuring costs and other significant items, including related tax effects.

Adjusted earnings per share ("EPS")

Represents diluted earnings per share attributable to common shareholders (a GAAP measure), adjusted for the per share impact of restructuring and other significant items, including related tax effects.

Adjusted effective tax rate

Represents the effective tax rate (a GAAP measure) adjusted for other significant items and the tax impact of restructuring costs and other significant items.

Constant currency

GAAP financial results include the impact of changes in foreign currency exchange rates ("AFX"). We use the non-GAAP measure "at constant currency" or "CFX" to show changes in our financial results without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, income statement results are translated in U.S. dollars at the average exchange rate for the period presented. Management believes that this non-GAAP measure is useful in providing period-to-period comparisons of the results of the Company's ongoing operational performance.

Free cash flow

Represents cash flow from operations (a GAAP measure) less capital expenditures. Management believes free cash flow is a useful measure of liquidity and an additional basis for assessing Otis' ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.

Adjusted free cash flow

Represents cash flow from operations (a GAAP measure) less capital expenditures, adjusted to exclude certain items management believes affect the comparability of operating results. Management believes adjusted free cash flow is a useful measure of liquidity that provides investors additional information regarding the Company's ability to fund its activities, including the financing of acquisitions, debt service, repurchases of common stock and distribution of earnings to shareholders. Adjusted free cash flow should not be considered an alternative to, or more meaningful than, net cash flows provided by operating activities, or any other measure of liquidity presented in accordance with GAAP.

Management believes that organic sales, adjusted SG&A expense, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted EPS and the adjusted effective tax rate are useful measures in providing period-to-period comparisons of the results of the Company's ongoing operational performance

When we provide our expectations for adjusted net sales, organic sales, adjusted operating profit, adjusted net interest expense, adjusted noncontrolling interest in earnings, adjusted net income, adjusted effective tax rate, adjusted EPS, free cash flow and adjusted free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures (expected diluted EPS from continuing operations, operating profit, the effective tax rate, net sales and expected cash flow from operations) generally is not available without unreasonable effort due to potentially high variability, complexity and low visibility as to the items that would be excluded from the GAAP measure in the relevant future period, such as unusual gains and losses, the ultimate outcome of pending litigation, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes or their probable significance. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results.

Appendix

FY26 outlook

Prior

(Jan 026)

28, 2

Current

Actuals

1Q26

UpLift restructuring expense $0M ~$20M ~$20M

Other restructuring expense $7M ~$60M ~$60M Non-service pension cost (benefit) $0M ~$5M ~$5M Adjusted net interest expense $59M ~$265M ~$265M

Adjusted effective tax rate 26.7% ~24.5% ~24.5% Adjusted noncontrolling interest expense $13M ~$60M ~$60M Capital expenditures $33M ~$160M ~$160M

Diluted shares outstanding 389.6M ~389M ~388M

Currency exposure

2025 sales

USD

30%

EUR

25%

CNY

11%

Other

34%

Appendix

($ millions)

Income

1Q26

Net income attributable to Otis

340

Noncontrolling interest in subsidiaries' earnings

Income tax expense (benefit)

127

Net interest expense

GAAP operating profit

539

Other restructuring

Separation-related adjustments (a)

Other, net

(1)

Adjusted operating profit

550

Adjusted operating profit margin

15.4%

Adjusted net interest expense

(59)

Adjusted pre-tax profit

491

Adjusted income tax expense

(131)

Adjusted effective tax rate (b)

26.7%

Adjusted noncontrolling interest

(13)

Adjusted net income

347

Adjusted EPS

$0.89

Separation-related adjustments in the quarter ended March 31, 2026 represent estimated amounts due to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement, including those amounts related to a favorable ruling received in August 2024 regarding a tax litigation in Germany.

The adjusted effective tax rate represents the effective tax rate (a GAAP measure) adjusted for other significant items and the tax impact of restructuring costs and other significant items.

Appendix

2025 GAAP to adjusted financials reconciliation

($ millions)

Income

1Q25

2Q25

3Q25

4Q25

FY 2025

Net income attributable to Otis

243

393

374

1,384

Noncontrolling interest in subsidiaries' earnings

Income tax expense (benefit)

110

129

142

479

Net interest expense

196

Non-service pension benefit (expense)

(1)

GAAP operating profit

411

547

586

589

2,133

UpLift restructuring

Other restructuring

UpLift transformation costs

Separation-related adjustments (a)

Litigation and settlement costs (b)

Held for sale impairment

Other, net

(1)

Adjusted operating profit

560

612

632

630

2,434

Adjusted operating profit margin

16.7%

17.0%

17.1%

16.6%

16.9%

Non-service pension (expense)

(4)

(3)

Adjusted net interest expense (c) (d)

(46)

(57)

(61)

(65)

(229)

Adjusted pre-tax profit

514

555

567

566

2,202

Adjusted income tax expense (d)

(131)

(121)

(139)

(151)

(542)

Adjusted effective tax rate (e)

25.6%

21.8%

24.5%

26.7%

24.6%

Adjusted noncontrolling interest (d) (f)

(15)

(18)

(17)

(11)

(61)

Adjusted net income

368

416

411

404

1,599

Adjusted EPS

$0.92

$1.05

$1.03

$4.05

Separation-related adjustments in the year ended December 31, 2025 represent estimated amounts due to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement, including those amounts related to a favorable ruling received in August 2024 regarding a tax litigation in Germany.

Litigation-related settlement costs in the year ended December 31, 2025 represent the aggregate amount of settlement costs and increase in loss contingency accruals, excluding legal costs, for certain legal matters that are outside of the ordinary course of business due to the size, complexity and unique facts of these matters.

In August 2024, we received a favorable ruling regarding a tax litigation in Germany. As a result, income tax benefits and related interest income were recorded in 2024. Net interest expense is reflected as adjusted

without $3 million for the year ended December 31, 2025.

Certain tax reserves were adjusted in 2025. As a result, Net interest expense and Noncontrolling interest are reflected as adjusted without $30 million of interest income and $16 million of the noncontrolling interest share of the reserves adjustments for the year ended December 31, 2025.

The adjusted effective tax rate represents the effective tax rate (a GAAP measure) adjusted for other significant items and the tax impact of restructuring costs and other significant items.

Noncontrolling interest is reflected as adjusted without $6 million of the noncontrolling interest share of Other restructuring for the year ended December 31, 2025.

Disclaimer

Otis Worldwide Corporation published this content on April 22, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 22, 2026 at 15:29 UTC.