Otis Sales Rise 6% on Service Strength as Adjusted Profit Holds Flat

Otis Worldwide grew sales 6% in the third quarter on the strength of its service business, but adjusted profit slipped as the elevator maker kept investing in field operations and its new equipment business struggled in China.

The Farmington, Connecticut, company reported third-quarter net sales of $3.914 billion, up from $3.690 billion a year earlier, with organic sales also up 6%, according to the earnings release it filed with an 8-K on Wednesday.

Service carries the quarter

Service net sales rose 8% to $2.616 billion, with organic growth of 7%. Organic modernization sales jumped 20%, while organic maintenance and repair sales rose 4%. Modernization orders increased 10% at constant currency, and the modernization backlog rose 20%.

Service operating profit rose $12 million to $633 million. Segment margin contracted 130 basis points from a year earlier to 24.2% but improved 100 basis points from the second quarter, which Otis highlighted as a sign its investments are beginning to pay off.

New Equipment net sales rose 3% to $1.298 billion, with growth in the Americas, Europe, the Middle East and Africa, and Asia Pacific partly offset by a decline in China.

"Our investments in field capability and AI-enabled pricing, combined with disciplined execution, continue to support double digit modernization growth and high single digit repair growth," Chair, CEO and President Judy Marks said.

Earnings: GAAP up, adjusted flat

GAAP operating profit rose $34 million to $620 million, and GAAP earnings per share increased 14% to $1.08. Otis said the gain mainly reflected the absence of transformation costs, separation-related adjustments and other one-time items from a year earlier.

Adjusted operating profit fell $6 million to $626 million, and adjusted operating margin declined 110 basis points to 16.0%. Adjusted EPS was $1.05, flat with the prior year, as a lower share count was offset by a higher tax rate, higher interest expense and unfavorable currency.

Operating cash flow was $337 million and adjusted free cash flow $272 million. Year to date, Otis returned about $1.3 billion to shareholders through roughly $800 million of buybacks and about $500 million of dividends.

Outlook broadly maintained

Otis kept its full-year forecast for net sales of $15.1 billion to $15.3 billion and adjusted EPS of $4.01 to $4.05. It still expects organic sales to rise low to mid-single digits, with service up mid to high single digits and new equipment down low single digits to flat. Adjusted operating profit is still seen at about $2.4 billion.

The one change: adjusted free cash flow is now expected at about $1.5 billion, compared with a prior range of $1.50 billion to $1.55 billion, effectively the low end of the earlier range.

What it means

The quarter reinforces Otis' reliance on its recurring service base, which management calls its "service flywheel," as new installations remain under pressure in China. The sequential margin improvement in service is the metric investors are likely to track to judge whether the company's investment phase is starting to translate into profit.

Sources

1. Otis Form 8-K with third-quarter 2026 earnings release (Exhibit 99), filed Oct. 28, 2026 (accession 0001781335-26-000124)

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