Otis Worldwide (NYSE:OTIS) reported third-quarter organic sales growth of 6%, its strongest organic sales performance in 13 quarters, as service revenue rose 7% and new-equipment sales returned to growth for the first time since 2023.
Chair, CEO and President Judy Marks said the quarter reflected continued progress in building a foundation for sustained growth, with modernization, repairs and service investments supporting the company’s results. Otis reported net sales of $3.9 billion and adjusted free cash flow of about $272 million during the quarter. Through the first nine months of 2026, adjusted free cash flow totaled $834 million, up 9% from the prior-year period.
Adjusted operating profit declined $3 million, excluding a $3 million foreign-exchange headwind, while adjusted operating margin declined 110 basis points to 16%. Adjusted earnings per share were flat year over year, as benefits from a lower share count and minority interests were offset by higher taxes, interest expense and unfavorable currency rates.
Service and modernization drive growth
Service organic sales increased 7%, including 4% growth in maintenance and repair. Repair sales rose 9%, while modernization organic sales increased about 20%. Modernization orders increased 10% and modernization backlog rose 20% at constant currency.
CFO Cristina Méndez said service operating profit increased $20 million at constant currency to $633 million. Service operating margin was 24.2%, down 130 basis points from a year earlier but up 100 basis points sequentially. Higher volumes and pricing more than offset labor costs, investments in service quality and growth initiatives, and unfavorable business mix, she said.
Management said modernization growth created a mix headwind for service margins but added profit dollars and expanded the company’s future service opportunity. Marks said Otis is seeking to improve modernization profitability through operating leverage, supply-chain efficiencies and improved installation productivity. The company has previously identified a 10% modernization margin as a medium-term goal.
Maintenance revenue grew 2%, reflecting 3% portfolio growth and 3% pricing, partially offset by churn and mix. Méndez said churn was somewhat worse than initially expected, though management said service-quality improvements are holding and retention improvement should follow over time.
Marks said customer retention is primarily driven by responsiveness and service quality rather than price. She said customers have cited value from Otis ONE connected technologies, preventive maintenance and proactive repair proposals.
New-equipment growth led by Americas
New-equipment organic sales rose 3%, led by a 13% increase in the Americas. Sales in EMEA increased 6%, while Asia-Pacific sales rose at a high-single-digit rate, supported by India and partly offset by weakness in Korea and Australasia. China new-equipment sales declined more than 20%.
New-equipment orders increased 1%, or 5% excluding China. Americas orders rose by a low-teens percentage, with North America recording its ninth consecutive quarter of order growth. EMEA and Asia-Pacific each posted low-single-digit order growth, while China orders declined at a low-teens rate, an improvement sequentially.
New-equipment backlog increased 4% at constant currency, or 8% excluding China. Marks said North America’s new-equipment backlog was up 14% and noted that the region’s approximately 18-month lead times provide visibility for continued sales conversion. She highlighted demand in hospitality, data centers, hospitals and industrial applications, including factories and fabrication facilities.
New-equipment operating profit was $42 million, down $22 million at constant currency. The segment’s operating margin fell 150 basis points to 3.2%, primarily because of unfavorable price and mix, partly offset by volume and productivity benefits.
In China, Marks said the company continues to shift toward service and modernization. China service represented 51% of the country’s Otis sales in the first quarter, while China accounted for 17% of Otis new-equipment revenue in the third quarter. Modernization orders in China rose more than 20%, and the company expects government bond stimulus focused on upgrading older residential buildings to continue through 2027.
Technology, workforce investments and outlook
Otis said it is deploying artificial intelligence-enabled and digital tools across service operations. These include an internal data intelligence tool intended to identify repair and modernization opportunities, micro-pricing capabilities, and field-service tools designed to improve scheduling, dispatching, mechanic routing and productivity.
The company also continued investments in field staffing and service quality. Marks said the company is adding technicians in higher-value markets including North America, Europe and Japan, and that newer employees are progressing through training. Otis used less subcontractor support for modernization execution during the third quarter as its workforce ramped.
Otis maintained its full-year outlook. The company expects:
- Net sales of $15.1 billion to $15.3 billion.
- Low- to mid-single-digit organic sales growth.
- Mid- to high-single-digit organic service sales growth.
- New-equipment sales ranging from down low single digits to flat.
- Adjusted operating profit from down $30 million to flat at actual currency, or down $45 million to down $15 million at constant currency.
- Adjusted free cash flow of about $1.5 billion.
- Adjusted EPS of $4.01 to $4.05.
Marks said Otis expects global new-equipment markets to stabilize, with growth in every region except China, where declines are expected to moderate. The company continues to expect a double-digit expansion in the modernization market on a dollar basis, supported by an aging installed base and demand for partial upgrades and full replacements.
About Otis Worldwide (NYSE:OTIS)
Otis Worldwide Corporation (NYSE: OTIS) is a global manufacturer and service provider for the elevator and escalator industry. The company designs, manufactures, installs, modernizes and maintains elevators, escalators and moving walkways for commercial buildings, residential developments, transportation hubs and other infrastructure projects.
Otis provides equipment for new construction as well as maintenance, repair and modernization services for existing systems. Its service operations support equipment from Otis and other manufacturers, helping building owners and operators manage the safety, performance and lifecycle of vertical transportation systems.
The company traces its history to 1853, when Elisha Otis demonstrated a safety device for elevators.
