Financial Data and Key Metrics Changes - Otis reported net sales of $3.7 billion with organic sales up 2%, driven by a 6% increase in service and a 14% increase in modernization organic sales [4][12] - Adjusted operating profit margin expanded by 20 basis points to 17.1%, with adjusted EPS growing approximately 9% to $0.09 in the quarter [13][28] - Adjusted free cash flow increased to $337 million in the quarter, with a year-to-date total of $766 million [13] Business Line Data and Key Metrics Changes - Service organic sales grew 6%, with maintenance and repair organic sales increasing by 4% and repair business accelerating to 7% growth year over year [14][15] - Modernization sales saw significant acceleration with organic sales growth of 14%, supported by a robust backlog [15] - New equipment organic sales declined 5%, with EMEA sales growing 3% and Americas declining 7% [16] Market Data and Key Metrics Changes - New equipment orders grew 4%, with notable strength in the Americas and EMEA, while Asia saw a low single-digit decline [8][9] - The total backlog, including maintenance and repair, increased by 22%, positioning the company well for future growth [9] - In China, new equipment sales declined approximately 20% in the third quarter, but the decline is expected to moderate in the second half of the year [16][24] Company Strategy and Development Direction - Otis is focused on customer-centric innovation, launching new modernization packages to capture long-term demand [7] - The company anticipates a multi-year growth cycle in modernization driven by the aging installed base of 22 million units [9] - Otis aims to improve customer retention and satisfaction through investments in service excellence and operational execution [32][82] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Americas market, upgrading the outlook to low single-digit growth due to strong demand in infrastructure and residential sectors [19] - The company expects total net sales for the year to be between $14.5 billion and $14.6 billion, with organic sales growth of approximately 1% [20] - Management highlighted the importance of maintaining service growth and improving repair activity, projecting a 10% growth in repair for the fourth quarter [14][21] Other Important Information - Otis completed approximately $250 million in share repurchases during the third quarter, bringing the year-to-date total to approximately $800 million [6] - The company was recognized by TIME magazine as one of the World's Best Companies for 2025 and by Forbes as one of the World's Best Employers [7] Q&A Session Summary Question: Can you talk about efforts on the maintenance side regarding retention and recapture? - Management acknowledged the need for improvement in customer retention and highlighted ongoing investments in service excellence to rebuild trust and improve retention rates [32] Question: What is the outlook for new equipment in the Americas? - Management expressed a positive outlook for the Americas, citing strong demand in residential and infrastructure sectors, and noted that backlog growth supports future revenue [36] Question: Can you discuss the visibility on repair growth? - Management indicated a strong visibility on repair growth, projecting 10% growth in the fourth quarter, driven by improved backlog conversion and customer satisfaction [41] Question: What are the expectations for service margins going forward? - Management expects service margins to continue expanding, driven by volume growth and improved pricing, despite some headwinds from modernization mix [70][72] Question: How is the pricing environment in China? - Management noted stabilization in pricing in China, with expectations for continued growth in service and modernization driven by government stimulus [75][76]

Financial Data and Key Metrics Changes - Otis reported net sales of $3.7 billion with organic sales up 2%, driven by a 6% increase in service and a 14% growth in modernization organic sales [4][12] - Adjusted operating profit margin expanded by 20 basis points to 17.1%, with adjusted EPS growing approximately 9% to $0.09 in the quarter [13][21] - Adjusted free cash flow increased to $337 million in the quarter, with a year-to-date total of $766 million [13][21] Business Line Data and Key Metrics Changes - Service organic sales grew 6%, with maintenance and repair organic sales increasing by 4% and repair business accelerating to 7% growth year over year [14][15] - Modernization sales saw significant acceleration with organic sales growth of 14%, supported by a robust backlog [15][24] - New equipment organic sales declined 5%, with EMEA sales growing 3% and Americas declining 7% [16][17] Market Data and Key Metrics Changes - New equipment orders grew 4%, with notable strength in the Americas and EMEA, while Asia experienced a low single-digit decline [5][8] - The total backlog, including maintenance and repair, increased by 22%, indicating strong future growth potential [8][9] - In China, new equipment orders are expected to decline mid single digits for the second half of the year at constant currency [8][19] Company Strategy and Development Direction - Otis is focused on customer-centric innovation, launching the Otis Arise MOD packages to capture long-term modernization demand [6][7] - The company is in the early stages of a multi-year growth cycle in modernization, driven by the aging installed base of 22 million units [9][29] - Otis aims to improve customer retention and satisfaction through investments in service excellence and operational execution [32][82] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Americas market, upgrading the outlook to low single-digit growth due to strong demand in infrastructure and residential sectors [19][20] - The outlook for EMEA remains unchanged, with expected low single-digit growth, while Asia is anticipated to decline high single digits [20][24] - The company expects total net sales for the year to be between $14.5 billion and $14.6 billion, with organic sales growth of approximately 1% [21][24] Other Important Information - Otis completed approximately $250 million in share repurchases during the third quarter, bringing the year-to-date total to approximately $800 million [6][21] - The company was recognized by TIME magazine as one of the World's Best Companies for 2025 and by Forbes as one of the World's Best Employers [7] Q&A Session Summary Question: Can you talk about efforts on the maintenance side regarding retention and recapture? - Management acknowledged the need for improvement in customer retention and emphasized ongoing investments in service excellence to rebuild trust and achieve a 94% retention rate [32] Question: What is the outlook for new equipment in the Americas? - Management noted improved demand in residential and infrastructure sectors, leading to a positive outlook for new equipment sales in the Americas [36] Question: Can you discuss the visibility on repair activity growth? - Management indicated a strong upward trend in repair activity, expecting growth to reach 10% in the fourth quarter, driven by improved backlog conversion [41] Question: What are the expectations for service margins moving forward? - Management expressed confidence in maintaining service margin expansion, with a target of around 25% for the full year, driven by volume growth and pricing strategies [72] Question: How is the company addressing the decline in new equipment sales? - Management highlighted ongoing cost management and productivity improvements as key strategies to mitigate the impact of declining new equipment sales [27][56]

Financial Data and Key Metrics Changes - Otis Worldwide Corporation reported net sales of $3.3 billion with organic sales flat year over year [24] - Adjusted operating profit increased by 3% excluding a $16 million foreign exchange headwind, with adjusted operating profit margin expanding by 40 basis points to 16.7% [24][11] - Adjusted EPS grew by 5% or $0.04 in the quarter, driven by solid operational performance and a lower share count [25] Business Line Data and Key Metrics Changes - Service organic sales grew by 4%, with maintenance and repair services increasing by 3% and modernization orders rising by 12% [10][26] - New equipment organic sales declined by 7%, with EMEA sales growing mid-single digits and APAC growing approximately 10% [29][30] - Service operating profit increased to $537 million, with operating profit margins expanding to 24.6% [28] Market Data and Key Metrics Changes - Americas saw strong orders performance, growing mid-teens, while Asia Pacific orders grew greater than 20%, primarily driven by India and Southeast Asia [15][16] - New equipment orders in China declined greater than 20%, aligning with expectations, while EMEA experienced mid-single digit declines [15][16] - The total backlog, including maintenance and repair, remains at historically high levels, positioning the company well for future quarters [14] Company Strategy and Development Direction - The company is focused on service-driven business models and modernization opportunities, with a projected multiyear growth cycle in modernizations due to an aging installed base [17][19] - Otis is implementing transformation initiatives, including Uplift and a China transformation program, to drive process efficiencies and capture service and modernization opportunities [50][52] - The company anticipates adjusted free cash flow of approximately $1.6 billion, primarily returning capital to shareholders through dividends and share repurchases [44] Management's Comments on Operating Environment and Future Outlook - Management expects the global new equipment market to stabilize later in 2025, with a projected decline in new equipment units of mid-single digits for the year [35][36] - The service business, representing approximately 90% of segment operating income, is largely insulated from tariff impacts, with expectations for continued growth [39][40] - Management remains optimistic about the service flywheel model and anticipates stronger growth in the second half of the year due to backlog execution and cost savings realization [57][60] Other Important Information - The company announced an 8% increase in its dividend, bringing cumulative dividend increases since the spin-off to approximately 110% [12][44] - Otis was recognized by Fortune as one of the world's most admired companies and named to the Wall Street Journal's best-managed companies list [12] Q&A Session Summary Question: Can you provide clarity on the gross headwind from tariffs? - Management indicated that the annualized impact of China tariffs is around $90 million, with mitigation efforts expected to offset half of this amount [66][68] Question: Are you seeing any impact at the local level in China regarding US companies? - Management stated that there is no overt targeting of Otis Worldwide Corporation in China, and they continue to develop relationships at all levels of government [78] Question: What is the pricing strategy in response to tariffs? - Management confirmed that they have increased prices across new equipment and maintenance services, with a focus on passing inflation costs to customers [80] Question: What is the outlook for new equipment orders in China? - Management expects the China market to be down 15% in the second quarter, with a gradual improvement anticipated in the second half of the year [84] Question: Can you elaborate on the project delays in the Americas? - Management noted that project delays are primarily due to uncertainty around global trade policies, but they remain optimistic about backlog execution and future orders [122][126]