Otis Worldwide Corp. (NYSE:OTIS) reported third-quarter 2026 results Wednesday, posting adjusted EPS of $1.05, beating the $1.03 estimate, while sales of $3.914 billion topped the $3.875 billion estimate.
Revenue rose 6% to $3.914 billion from $3.690 billion a year earlier, with organic sales also up 6%. GAAP diluted EPS increased 14% to $1.08.
Shares fell after the report as adjusted operating margins contracted and the company’s full-year adjusted EPS outlook remained below the consensus estimate.
Profit Growth Slows As Margins Narrow
GAAP operating profit rose to $620 million from $586 million, while adjusted operating profit slipped to $626 million from $632 million.
Adjusted operating margin narrowed 110 basis points to 16.0%.
Otis said GAAP EPS benefited from the absence of prior-year UpLift transformation costs, separation-related adjustments and other nonrecurring items.
Service Growth, AI Pricing In Focus
Service sales rose 8% to $2.616 billion, with organic sales up 7%. Organic maintenance and repair sales increased 4%, while modernization sales jumped 20%.
Service operating profit rose to $633 million, with margin improving 100 basis points sequentially to 24.2%, though it remained 130 basis points below the year-ago level.
Modernization orders increased 10% at constant currency, and backlog rose 20%.
On the earnings call, CEO Judy Marks said, “We continue to execute the service investments we announced at the beginning of the year focused on growing field and pricing capabilities and improving service quality.”
Marks said, “In pricing, our AI-enabled micro-pricing capabilities support more consistent and disciplined pricing decisions.”
She also said customers are seeing more value from Otis One and preventive maintenance, though management acknowledged that improved service quality has not yet fully translated into lower churn.
CFO Cristina Méndez said churn “has come a little bit worse than initially expected.”
On fourth-quarter Service margins, she said, “Q4 is expected at the midpoint of the guide, and assuming that productivity and churn levels remain at current level, to be about the same level as Q3.”
New Equipment Remains Pressured By China
New Equipment sales rose 3% to $1.298 billion, while segment operating profit fell to $42 million from $59 million.
China sales declined more than 20%, partly offsetting growth elsewhere.
New Equipment orders rose 1% at constant currency, and backlog increased 4%.
Cash Flow And 2026 Outlook
Operating cash flow was $337 million, free cash flow was $298 million, and adjusted free cash flow was $272 million.
Over the first nine months, Otis returned about $1.3 billion to shareholders through roughly $800 million in share repurchases and $500 million in dividends.
Otis affirmed 2026 adjusted EPS guidance of $4.01 to $4.05 versus the $4.07 estimate and sales guidance of $15.1 billion to $15.3 billion versus the $15.292 billion estimate.
It also maintained adjusted operating profit guidance of about $2.4 billion and adjusted free cash flow of about $1.5 billion.
OTIS Price Action: Otis Worldwide shares were down 1.31% at $73.22 at the time of publication on Wednesday, according to Benzinga Pro data.
Photo: ZikG / Shutterstock.com
