Otis Worldwide Corporation

What they do

Otis designs, manufactures, sells and installs passenger and freight elevators, escalators and moving walkways for residential, commercial and infrastructure projects through its New Equipment segment. Its Service segment performs maintenance, repair and modernization for its own equipment and that of other manufacturers, serving building owners, facility managers, housing associations and government agencies. The company runs a centralized operating model intended to convert new installations into service contracts and operates through more than 1,400 branches and offices, with a direct presence in over 70 countries.

Revenue drivers

• Service — Maintenance, repair and modernization of elevators and escalators, including units made by other manufacturers; contributed 65% of 2025 net sales and 91% of segment operating profit.
• New Equipment — Design, manufacture, sale and installation of elevators, escalators and moving walkways to developers, general contractors and government agencies; contributed 35% of 2025 net sales and 9% of segment operating profit, with revenue recognized on a percentage-of-completion basis.
• International operations — Approximately 71% of 2025 net sales came from outside the U.S., with sales in China and certain other geographies supported by agents and distributors in addition to Otis' direct sales force.
• Modernization — Upgrades ranging from interior finishes to major component and subsystem replacement (machine, ropes or belts, safety systems, entire car or escalator); second-quarter 2026 modernization orders rose 9% at constant currency and backlog rose 24%, or 26% at constant currency.

Recent performance

Second-quarter 2026 net sales were $3,859 million, up 7% versus the prior year with organic sales up 6%, driven by Service net sales up 11% (organic up 9%) while New Equipment net sales were flat and organic New Equipment sales declined 1%. GAAP operating profit rose $28 million to $575 million, but adjusted operating profit fell $25 million to $587 million, and adjusted EPS declined 4% to $1.01. First-half 2026 net sales were $7,425 million, up 7% with organic growth of 4%, GAAP operating profit of $1,114 million was up $156 million, and adjusted operating profit of $1,137 million was down $35 million. Operating cash flow was $680 million in the first half and $267 million in the second quarter, with roughly $800 million of share repurchases in the first half. Full-year 2025 revenue was $14.43 billion with net income of $1.38 billion and diluted EPS of $3.50.

Strategy

Otis is executing UpLift, an operating-model transformation announced in July 2023 that has generated approximately $200 million of annual run-rate savings and incurred total costs of $282 million through 2025, including $132 million of restructuring and $150 million of transformation costs. The strategy centers on growing the maintenance portfolio by converting new equipment installations into service contracts under a centralized operating model. Management is investing in service quality, pricing initiatives and digital technology such as the Otis ONE IoT platform, with a focus on front-line operating excellence. The company returned capital through approximately $800 million of share repurchases in the first half of 2026 under a $2.0 billion board-authorized program approved January 16, 2025, of which about $500 million remained available as of June 30, 2026.

Risks

• Construction and infrastructure cyclicality — A slowdown in building and remodeling activity or reduced public spending on infrastructure projects could lower demand for New Equipment and modernization work.
• Input cost and trade pressures — Commodity, materials and wage inflation, along with tariffs and trade barriers, can raise costs and pressure margins in both segments.
• Disruption and natural events — War, terrorism, civil unrest, pandemics, fires, hurricanes, earthquakes and other disasters can damage facilities, interrupt supply chains or limit access to building sites for installation and service.
• Restructuring execution — UpLift carries approximately $18 million of trailing restructuring costs expected in 2026, and failure to realize the targeted savings could weigh on selling, general and administrative expenses.

Outlook

Management cites strong backlog in both modernization and New Equipment, with modernization backlog up 24% (26% at constant currency), as providing visibility and supporting expected growth in coming quarters. It describes taking a measured approach to the second-half outlook while expressing confidence in the durability of the Service-led growth model. Otis says an aging installed base and customer focus on reliability, uptime and service quality are driving demand in modernization and repair. The company continues to invest in service quality, pricing and digital technology with an emphasis on front-line execution globally.