Company Overview - Otis Worldwide Corporation is the largest player in the escalator and elevator industry, which operates in an oligopolistic market structure [1] - Approximately 50% of the company's revenues are derived from its core business activities [1] Investment Strategy - The company is positioned as a growth portfolio, appealing to long-term growth and dividend-growth investors [1] - The focus is on identifying undervalued stocks and high-quality dividend growers that provide reliable cash flow for reinvestment [1] Financial Performance - Sustained profitability is emphasized as a key driver of returns, characterized by strong margins, stable and expanding free cash flow, and high returns on invested capital [1]

Group 1 - Otis Worldwide Corporation declared a quarterly dividend of $0.42 per share, payable on September 5, 2025, to shareholders of record by August 15, 2025 [1] - Otis is the world's leading elevator and escalator manufacturing, installation, and service company, moving 2.4 billion people daily and maintaining approximately 2.4 million customer units globally [2] - The company employs 72,000 people, including 44,000 field professionals, and operates in over 200 countries and territories [2] Group 2 - The company emphasizes its commitment to meeting diverse customer needs through its extensive service portfolio [2] - Otis maintains a strong market presence and is focused on innovation in manufacturing, installation, and maintenance of its products [2]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________________ FORM 10-Q ____________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR (Exact name of registrant as specified in its charter) ____________________________________ One Carrier Place, Farmington, Connecticut 06032 (Address of principal executive offices, including zip code ...

Okay, let's talk about some moves uh that we have on our desk today. Josh Brown bought more Otus Worldwide. Why so.>> Yeah, Otis reported yesterday and uh it was slightly disappointing, but I really like the stock as at least an intermediate term hold. And uh I think the thing that was weak was the thing I care the least about selling new elevators. It's part of the business, but it's not the better part of the business. The better part of the business is the service and maintenance contracts.This is recess ...

Core Insights - The article expresses a personal affinity for Otis Worldwide (NYSE: OTIS) and highlights the author's disappointment in encountering a different elevator brand during a recent hotel visit [1]. Company Overview - Otis Worldwide is recognized as a leading company in the elevator industry, with a focus on quality and innovation [1]. Investment Perspective - The author emphasizes a long-term investment strategy, particularly in high-quality, dividend-paying companies, indicating a belief in the stability and growth potential of Otis Worldwide [1].

Core Viewpoint - Otis Worldwide (OTIS) is experiencing significant selling pressure, with a recent decline of 8.4% over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, supported by analyst consensus for better-than-expected earnings [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is a momentum oscillator that indicates whether a stock is overbought or oversold, with readings below 30 typically signaling an oversold condition [2] - OTIS has an RSI reading of 29.49, suggesting that the heavy selling may be exhausting, indicating a possible bounce back towards equilibrium in supply and demand [5] Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts for OTIS, with earnings estimates for the current year being raised, resulting in a 0.6% increase in the consensus EPS estimate over the last 30 days [6] - An upward trend in earnings estimate revisions is generally associated with price appreciation in the near term [6] Group 3: Analyst Ratings - OTIS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Core Insights - Otis Worldwide Corporation (OTIS) reported mixed results for Q2 2025, with adjusted earnings exceeding estimates while net sales fell short [1][4] - Year-over-year, both top line and bottom line experienced declines [1] Financial Performance - Adjusted earnings were $1.05 per share, surpassing the Zacks Consensus Estimate of $1.02 by 2.9%, but down 1% from $1.06 in the prior year [4] - Net sales totaled $3.6 billion, missing the consensus mark of $3.69 billion by 2.4% and showing a slight decline of 0.2% year-over-year [4] - Organic net sales decreased by 2% year-over-year, with currency headwinds impacting sales by 1% [4] Segment Analysis - The New Equipment segment saw net sales drop by 10% year-over-year to $1.28 billion, with organic sales declining 11% [7] - The Service segment reported a 6% increase in net sales to $2.32 billion, driven by a 4% rise in organic maintenance and repair sales and a 5% increase in organic modernization sales [6] - Modernization backlog at constant currency increased by 16% year-over-year [6] Operational Metrics - Adjusted operating margin remained flat at 17%, with reduced contributions from the New Equipment segment offset by growth in the Service segment [5] - Segment operating margin for Service expanded by 20 basis points to 24.9%, while New Equipment's margin contracted by 240 basis points to 5.3% [7][8] Guidance and Outlook - OTIS revised its 2025 guidance, now expecting net sales between $14.5 billion and $14.6 billion, indicating 1-2% year-over-year growth [13] - Organic sales growth is projected at approximately 1%, down from a previous expectation of 2-4% [13] - Adjusted free cash flow is now expected to be between $1.4 billion and $1.5 billion, reduced from an earlier estimate of approximately $1.6 billion [16] Financial Position - As of June 30, 2025, cash and cash equivalents stood at $688 million, down from $2.3 billion at the end of 2024 [11] - Long-term debt increased to $7.07 billion from $6.97 billion at the end of 2024 [11] - Net cash flows from operating activities were $405 million for the first half of 2025, down from $479 million a year ago [11]

Financial Data and Key Metrics Changes - Otis reported net sales of $3.6 billion, flat year-over-year, with organic sales down 2% [18] - Adjusted EPS for the first half of the year was $1.97, growing 2% compared to the same period last year [9] - Adjusted operating profit margin remained flat at 17% year-over-year [18] Business Line Data and Key Metrics Changes - Service segment organic sales grew 4%, driven by maintenance and repair growth of 4% and a repair business growth of 6% [20][21] - New equipment organic sales declined 11%, with EMEA sales growing 7% but offset by declines in China, Americas, and Asia Pacific [22] - Modernization organic sales grew 5%, with notable growth in China exceeding 20% [21] Market Data and Key Metrics Changes - Combined new equipment and modernization orders grew 4%, with orders in the Americas and Asia Pacific increasing significantly [12][13] - In China, new equipment orders declined by more than 20%, while the rest of the world saw an 11% increase [13] - The backlog for new equipment remained flat year-over-year, but excluding China, it increased by 10% [12] Company Strategy and Development Direction - The company is focused on achieving $200 million in run rate savings by year-end through initiatives like Uplift and China transformation [7] - Otis aims to enhance customer centricity and invest in growth despite economic challenges, particularly in China [7][30] - The modernization opportunity is driven by an aging installed base of 22 million units, expected to support multiyear growth [14] Management's Comments on Operating Environment and Future Outlook - Management anticipates a low single-digit decline in the Americas and a high single-digit decline in Asia, primarily due to challenges in China [25][26] - The global new equipment market is expected to decline mid-single digits in 2025, with service organic sales growth expected to ramp up [26][30] - Management remains optimistic about the service business, which represents approximately 90% of total operating profit [30] Other Important Information - The company completed approximately $300 million in share repurchases in Q2, totaling $550 million year-to-date [9] - Otis has been recognized for its sustainability efforts, being included in various climate leader lists [10] Q&A Session Summary Question: Can you unpack service growth and retention? - Management noted that service revenue growth is equal to portfolio growth, with churn and mix affecting results. Repair sales increased significantly, and they expect further growth in the coming quarters [45][49][51] Question: What is the outlook for new equipment orders in the Americas and China? - Management reported strong performance in North America with a 15% increase in new equipment orders, while China remains weak but is expected to stabilize [60][62] Question: How will free cash flow look in the second half of the year? - Free cash flow is expected to align with the second half of 2024, with a focus on stabilizing new equipment and improving collections in service [84][86] Question: What are the dynamics around operating margins and tariff impacts? - Management indicated that while tariffs will be a headwind, improvements in service margins and productivity from ongoing initiatives will help offset these impacts [113][115]

Financial Data and Key Metrics Changes - Otis reported net sales of $3.6 billion, flat year-over-year, with organic sales down 2% [17] - Adjusted EPS for the first half of the year was $1.97, growing 2% compared to the same period last year [7] - Adjusted operating profit margin remained flat at 17% year-over-year [17] - Adjusted free cash flow was $243 million for the quarter [18] Business Line Data and Key Metrics Changes - The Service segment saw organic sales growth of 4%, driven by maintenance and repair [19] - New equipment organic sales declined by 11%, with EMEA growing 7% but offset by declines in China, Americas, and Asia Pacific [21] - Modernization organic sales grew 5%, with a strong backlog up 16% at constant currency [20] Market Data and Key Metrics Changes - Orders in The Americas increased by 15%, while China saw a decline of over 20% [58][62] - Excluding China, new equipment orders grew by 11% [62] - The global new equipment market is expected to decline mid-single digits in 2025, with China anticipated to decline approximately 10% for the remainder of the year [25][26] Company Strategy and Development Direction - Otis is focused on customer-centric initiatives and cost-saving measures, targeting $200 million in run rate savings by year-end [6] - The company is executing a transformation in China to adapt to market conditions, with a focus on modernization and service growth [80] - The modernization opportunity is driven by an aging installed base of 22 million units, expected to create a multi-year growth cycle [13] Management's Comments on Operating Environment and Future Outlook - Management noted continued economic challenges in China but expressed optimism for future growth in the region [60] - The service business is expected to remain resilient, representing approximately 90% of total operating profit [28] - Adjusted EPS outlook for 2025 remains unchanged at $4 to $4.1 per share, indicating a growth of 4% to 7% compared to 2024 [29] Other Important Information - Otis completed approximately $300 million in share repurchases in the second quarter, totaling $550 million year-to-date [7] - The company received several sustainability awards, highlighting its commitment to environmental performance [9] Q&A Session Summary Question: Can you unpack service growth and retention during this economic period? - Management indicated that service revenue growth is aligned with portfolio growth, with churn and mix affecting overall performance. Retention improved slightly in Q2 compared to Q1 [44][52] Question: What are the growth pockets in The Americas despite multifamily drag? - North America saw a strong performance in infrastructure projects, with new equipment orders up 15%. Multifamily orders were flat year-over-year, which is seen as a positive sign [58][59] Question: What is the outlook for China and its impact on next year's performance? - The new equipment market in China remains weak, but management expects sequential improvement. The focus is on value and retaining service portfolio [60][62] Question: How will free cash flow and operating margins be affected in the second half? - Free cash flow is expected to stabilize, with service growth offsetting declines in new equipment. Operating margins are anticipated to improve due to strong service performance and cost-saving initiatives [82][110]

Q2 2025 Earnings Call July 23, 2025 © 2025 OTIS WORLDWIDE CORPORATION. Forward-Looking Statements © 2025 OTIS WORLDWIDE CORPORATION. 2 Q2 2025 highlights Solid second quarter performance driven by Service strength... Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted. ...Delivering long-term value to all stakeholders This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward- ...