Key financial results
- Otis delivered net sales of $3.9 billion with organic sales up 6% in the third quarter.
Otis delivered net sales of $3.9 billion with organic sales up 6%.
- Adjusted operating profit decreased $3 million to 16% of sales, contracting by 110 basis points.
Adjusted operating profit, excluding a $3 million foreign exchange headwind, decreased $3 million in the quarter. Adjusted operating margin contracted by 110 basis points to 16%.
- Adjusted EPS was flat year-over-year.
Adjusted EPS was flat year-over-year as the benefits from a lower share count and minority interest were offset by a higher tax rate, higher interest and unfavorable foreign exchange rates.
- Adjusted free cash flow reached approximately $272 million in the quarter and $834 million through the first 9 months of the year.
Business segment results
- Service: Service organic sales increased 7%, with maintenance and repair organic sales growing 4% and maintenance increasing 2%.
- Service: Modernization organic sales grew approximately 20% in the quarter.
Modernization sales increased approximately 20%, supported by a strong execution and the conversion of a robust backlog entering the quarter.
- Service: Service operating profit was $633 million, representing a segment operating margin of 24.2%.
- New Equipment: New equipment organic sales increased 3% for the first time since 2023.
In New Equipment, organic sales increased for the first time since 2023 to 3%.
- New Equipment: Americas new equipment organic sales increased 13%, while China new equipment sales declined greater than 20%.
- New Equipment: New equipment operating profit was $42 million with an operating margin of 3.2%.
New Equipment operating profit of $42 million declined $22 million at constant currency. Operating profit margin was 3.2%
Capital allocation
- Management did not discuss share buybacks, dividends, or specific M&A deployment figures on the call.
Industry trends and dynamics
- New Equipment: Global new equipment markets are expected to stabilize across all regions except China, which remains under pressure.
We expect the global new equipment market to stabilize with growth across all regions except China, where the market is expected to remain under pressure, but with declines moderating.
- Modernization: Modernization demand remains robust with double-digit growth expected across all regions.
Competitive landscape
- Management stated they maintain a robust bolt-on M&A plan but are not looking for distraction or market concentration issues in Europe.
What we're not looking for is distraction and what we're not looking for is the need for us to have to justify market concentrations in certain parts of Europe.
Macroeconomic environment
- China: China's new equipment market was impacted by the 828 rule book guidance favoring finishing units over presales.
Growth opportunities and strategies
- Digital: Otis continues to deploy AI-enabled micro pricing tools and field service tools to improve productivity and consistency.
In pricing, our AI-enabled micro pricing capabilities support more consistent and disciplined pricing decisions.
- Wins: Major wins were secured globally, including at Rutgers University, Wuhan Metro, 99 City Road in London, and UOB Plaza in Jakarta.
Financial guidance and outlook
- Sales: Otis continues to expect full year net sales of $15.1 billion to $15.3 billion.
We continue to expect net sales of $15.1 billion to $15.3 billion, with low to mid-single-digit organic sales growth.
- Profit: Adjusted operating profit outlook remains between down $30 million and flat on actual currency.
Our adjusted operating profit outlook remains unchanged in the range of down $30 million to flat on an actual currency basis
- Cash Flow: Adjusted free cash flow outlook is around $1.5 billion.
Our adjusted free cash flow outlook is around $1.5 billion.
- EPS: Adjusted EPS is expected to be in the range of $4.01 to $4.05.
We continue to expect adjusted EPS in the range of $4.01 to $4.05.
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Net sales | $3.9 billion | 6% organic growth |
| Service organic sales | N/A | 7% |
| New Equipment organic sales | N/A | 3% |
| Service operating margin | 24.2% | Down 130 basis points year-over-year, up 100 basis points sequentially |
| New Equipment operating margin | 3.2% | Down 150 basis points from the prior year |
| Adjusted free cash flow | approximately $272 million | Up 9% year-to-date |
How management sounded
Balanced (+25 on our -100 to +100 scale). Management highlighted healthy demand, positive new equipment growth, and robust modernization momentum while remaining disciplined on pricing and execution. Management sounded more upbeat than on 6% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Progression of China market conditions and government bond stimulus policies.
- Retention rates and the lag effect of service quality improvements.
- Execution and conversion rates of the robust modernization backlog.
Earlier calls
- Q2 2026 (Jul 22, 2026), tone Cautious: Otis reported second quarter net sales of $3.9 billion with organic sales up 6%, driven by strong service growth, while adjusted operating profit margin declined 180 basis points to 15.2% due to productivity and cost headwinds.
