Otis Holds Third-Quarter Adjusted EPS Flat After Second-Quarter Drop

The Tip Desk · November 2, 2026 · 3 min read

Adjusted EPS held at $1.05 in the third quarter as Service sales rose 8% and the Service margin recovered 100 basis points sequentially.

Otis Worldwide Corporation (OTIS) reported third-quarter 2026 net sales of $3.91 billion, up 6% from a year earlier, with organic sales also up 6%. GAAP earnings were $1.08 a share, up 14%. Adjusted earnings were $1.05 a share, unchanged from the year-ago quarter after a 4% decline in the second quarter.

The elevator and escalator manufacturer said Service net sales rose 8% to $2.62 billion, with organic Service sales up 7%, after 11% reported and 9% organic growth in the second quarter. Organic modernization sales increased 20% and organic maintenance and repair sales increased 4%.

Service segment operating profit was $633 million. The company said higher volume, favorable pricing and other employment-related cost reductions were partially offset by higher labor cost, including the impact of ongoing strategic initiatives and productivity, and unfavorable mix. Service operating profit margin contracted 130 basis points year over year to 24.2% but improved 100 basis points sequentially. Chair, CEO and President Judy Marks said investments in field capability and AI-enabled pricing, combined with disciplined execution, supported double-digit modernization growth and high-single-digit repair growth and drove the incremental increase in Service margin to above 24%.

New Equipment net sales rose 3% to $1.30 billion, with organic sales up 3%, after a flat reported and 1% organic decline in the second quarter. The company attributed the third-quarter increase to low-teens growth in the Americas, mid-single-digit growth in EMEA and high-single-digit growth in Asia Pacific, partially offset by a greater than 20% decline in China. New Equipment segment operating profit fell $17 million to $42 million, and the segment margin contracted 150 basis points to 3.2%. The company said the profit decline came primarily from unfavorable price and mix, partially offset by productivity and higher volume.

GAAP operating profit increased $34 million to $620 million, which the company said was driven primarily by the absence of UpLift transformation costs, separation-related adjustments and other non-recurring items in the prior year. GAAP operating profit margin contracted 10 basis points to 15.8%. Adjusted operating profit decreased $6 million to $626 million, with the benefits from growth in Service more than offset by a decline in New Equipment. Adjusted operating profit margin declined 110 basis points to 16.0%, which the company said was driven by unfavorable segment performance, partially offset by segment mix, and that performance was impacted by ongoing investment in key Service growth initiatives. Adjusted EPS was unchanged at $1.05, with benefits from a lower share count and minority interest offset by a higher tax rate, higher interest and unfavorable FX rates.

Modernization orders were up 10% at constant currency and backlog was up 20% at actual and constant currency, after 9% order growth and 24% and 26% backlog growth in the second quarter. New Equipment orders were up 1% at constant currency and backlog increased 4% at actual and constant currency.

Operating cash flow was $337 million and adjusted free cash flow was $272 million. For the nine months ended September 30, operating cash flow was $1.02 billion and adjusted free cash flow was $834 million. The company said third-quarter cash-flow changes were driven by an increase in net income offset by changes in working capital.

Otis is maintaining its full-year outlook for net sales of $15.1 billion to $15.3 billion, organic sales up low to mid-single digits, adjusted operating profit of approximately $2.4 billion and adjusted EPS of $4.01 to $4.05. It narrowed adjusted free cash flow to about $1.5 billion from a prior range of $1.50 billion to $1.55 billion.