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]