Otis Worldwide Q4 Earnings Meet Estimates, Sales Miss, Stock Down

Core Insights - Otis Worldwide Corporation (OTIS) reported mixed fourth-quarter 2025 results, with earnings meeting the Zacks Consensus Estimate while net sales fell short [1][9] - Year-over-year growth was observed in both net sales and earnings, driven primarily by Service sales [2][4] Financial Performance - Adjusted earnings per share (EPS) for Q4 2025 were $1.03, a 10.8% increase from the previous year's EPS of $0.93 [4] - Net sales reached $3.8 billion, missing the consensus estimate of $3.9 billion by 2.7%, but reflecting a 3.3% year-over-year increase [4] - Adjusted operating margin expanded by 70 basis points year over year to 16.6% [5] Segment Analysis - Service segment net sales increased by 8% year over year to $2.5 billion, with organic sales rising by 5% [6] - New Equipment segment net sales fell by 5% year over year to $1.29 billion, with organic sales declining by 6% [7] - The modernization backlog increased by 30% year over year at constant currency [6] Operational Outlook - The company outlined a confident 2026 outlook, projecting adjusted EPS growth in the mid- to high-single-digit range [3][14] - Expected net sales for 2026 are projected to be between $15 billion and $15.3 billion, indicating approximately 4.2%-6.3% year-over-year growth [13] Cash Flow and Financial Position - As of December 31, 2025, cash and cash equivalents were $1.1 billion, down from $2.3 billion at the end of 2024 [11] - Adjusted free cash flow (FCF) totaled $1.58 billion at the end of 2025, up from $1.57 billion a year ago [11]