Summary of Otis Worldwide (NYSE:OTIS) 2026 Conference Call Company Overview - **Company**: Otis Worldwide - **Date**: March 18, 2026 - **Speaker**: Cristina Méndez, CFO Key Points Industry and Market Dynamics - **Service Business Growth**: The service segment has shown mid-single-digit growth with expanding margins of 50 basis points per annum, driven by an aging installed base of units and modernization opportunities [3][4] - **New Equipment Challenges**: New equipment sales have faced a decline, particularly in China, impacting revenues by approximately $400 million annually in 2024 and 2025 [3][4] - **Total Addressable Market (TAM)**: The aging population of installed units (9 million out of 23 million units are 15-20 years old) presents a significant modernization opportunity, with revenues growing in double digits [4] Financial Performance - **EPS Growth**: Despite challenges in new equipment, Otis has delivered steady EPS growth, attributed to the resilience of the service business [3] - **Repair and Maintenance Growth**: Repair services are expected to grow approximately 10% in Q1, with high single-digit growth projected for the full year [9][22] - **Pricing Strategy**: The company is implementing a micro-pricing strategy to align prices with customer value, expecting a price increase of 4% compared to 3% in the previous year [10] Regional Insights - **Americas Performance**: The Americas region has shown strong order growth, with a backlog increasing in the low teens percentage [11] - **Middle East Impact**: Geopolitical issues in the Middle East have caused temporary disruptions, with an estimated $20 million impact on new equipment and modernization revenues [12][13] - **China Market**: The modernization program in China is expected to grow by 15%-40% compared to the previous year, with government support for residential modernization [35][38] Operational Strategies - **Mechanic Hiring**: Otis has hired 1,000 mechanics last year and onboarded 200 in the first two months of 2026 to support growth plans [9][14] - **Attrition Rates**: The company has stabilized its attrition rate outside of China at 94.5%, focusing on quality service to improve customer retention [57][58] - **Investment in Technology**: Otis is leveraging AI algorithms for pricing strategies and improving operational efficiency [10][70] Financial Guidance - **EPS Projections**: EPS for Q1 is expected to be down 3%-5% year-over-year, primarily due to calendarization of investments and temporary impacts from geopolitical issues [14][20] - **Margin Expectations**: Margins are expected to expand by 10-20 basis points, lower than the previous 50 basis points due to investments and the growth of lower-margin modernization services [71][70] - **Cash Flow Conversion**: The company anticipates maintaining a 100% cash flow conversion rate, supported by the growth in modernization services [118][119] Capital Allocation and M&A Strategy - **Dividend and Buybacks**: Otis plans to maintain a 40% payout of dividends and continue share buybacks to return excess cash to shareholders [122] - **M&A Focus**: The company is looking for small, accretive acquisitions in the industry, particularly ISPs that can be easily integrated [123][124] Conclusion - **Outlook**: Otis remains optimistic about the core business performance, particularly in maintenance and repair, despite temporary disruptions from geopolitical conflicts. The company is well-positioned to capitalize on modernization opportunities and improve service efficiency [136][137]

Q4 2025 Earnings Call January 28, 2026 © 2026 OTIS WORLDWIDE CORPORATION. Forward-Looking Statements Note: All results and expectations in this presentation reflect continuing operations unless otherwise noted. This communication contains statements which, to the extent they are not statements of historical or present fact, constitute "forward-looking statements" under the securities laws. From time to time, oral or written forward-looking statements may also be included in other information released to the ...

Core Insights - Otis Worldwide Corporation reported solid fourth quarter and full year results for 2025, with a focus on its Service strategy driving growth and profitability [1][2]. Financial Performance - Full year net sales reached $14.4 billion, reflecting a 1% increase, with flat organic sales [3][8]. - Fourth quarter net sales of $3.8 billion increased by 3% year-over-year, primarily driven by Service sales growth of 8% [4][28]. - GAAP earnings per share (EPS) for the full year decreased by 14% to $3.50, while adjusted EPS increased by 6% to $4.05 [9][32]. Service Segment - Service net sales for the fourth quarter were $2.5 billion, up 8% year-over-year, with organic sales growth of 5% [10][12]. - The Service operating profit margin expanded by 100 basis points to 25.5% in the fourth quarter, driven by higher volume and favorable pricing [11][12]. - Full year Service net sales increased by 6% to $9.4 billion, with a 5% increase in organic sales [12][10]. New Equipment Segment - New Equipment net sales for the fourth quarter decreased by 5% to $1.3 billion, with a significant decline in China impacting overall performance [13][16]. - Full year New Equipment sales decreased by 7% to $5.0 billion, with a notable decline in China and the Americas [16][15]. - New Equipment backlog increased by 6% at actual currency, indicating potential future growth despite current sales challenges [15][37]. Cash Flow and Capital Management - The company generated adjusted free cash flow of $1.6 billion for the full year, with a fourth quarter cash flow from operations of $817 million [17][18]. - Otis executed a balanced capital management strategy, repurchasing approximately $800 million in shares and returning $1.5 billion to shareholders [2][4]. 2026 Outlook - For 2026, Otis expects organic sales growth in the low to mid-single digits, adjusted EPS growth in the mid to high single digits, and adjusted free cash flow of $1.6 to $1.7 billion [1][22].

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Financial Data and Key Metrics Changes - Otis reported net sales of $3.7 billion for Q3 2025, with organic sales up 2%, driven by a 6% increase in service and a 14% increase in modernization sales [7][14] - Adjusted operating profit margin expanded by 20 basis points to 17.1%, with adjusted earnings per share increasing by approximately 9% [7][14] - Adjusted free cash flow increased to $337 million in the quarter, with a year-to-date total of $766 million [14][25] Business Line Data and Key Metrics Changes - Service organic sales grew 6%, with maintenance and repair organic sales up 4% and repair business accelerating to 7% growth [16][18] - Modernization sales saw significant acceleration with organic sales growth of 14%, supported by a strong backlog [18] - New equipment orders grew 4%, with a notable decline in China impacting overall performance [8][19] Market Data and Key Metrics Changes - New equipment orders in the Americas grew mid-single digits, while EMEA saw high teens growth driven by Southern Europe and the Middle East [10][22] - In Asia, new equipment orders declined, particularly in China, which is expected to see a mid-single digit decline for the second half of the year [10][22] - The total backlog, including maintenance and repair, remains near historically high levels, supporting future growth [10][11] Company Strategy and Development Direction - Otis is focused on a service-driven business model, with a commitment to customer-centric innovation through products like Otis Arise MOD packages [8][9] - The company anticipates being in the early stages of a multi-year growth cycle in modernization, driven by an aging installed base [11][32] - Otis aims to maintain a strong service portfolio, with expectations for continued growth in maintenance and repair [28][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving trends in the Americas, particularly in infrastructure and residential sectors [22][39] - The outlook for EMEA remains stable, while Asia, particularly China, is expected to face challenges [22][28] - The company expects adjusted operating profit to grow, driven by service segment strength, despite ongoing challenges in new equipment sales [24][31] Other Important Information - Otis completed approximately $250 million in share repurchases during Q3, bringing the year-to-date total to approximately $800 million [8][25] - 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 [9] Q&A Session Summary Question: Can you talk about maintenance efforts regarding retention and recapture? - Management acknowledged the need to improve customer retention and recapture rates, indicating a long journey ahead but positive trends in customer satisfaction and portfolio growth [36][38] Question: What factors contributed to the improved outlook for the Americas? - Management highlighted strong demand in residential and infrastructure sectors, along with improved execution at job sites, leading to a positive outlook for revenue growth in the Americas [39][40] Question: Can you discuss the visibility on repair activity growth? - Management noted a sequential improvement in repair activity, with expectations for growth to reach 10% in Q4, driven by an aging installed base and improved backlog conversion [43][45] Question: What is the outlook for service margins beyond Q4? - Management expressed confidence in maintaining service margin expansion, driven by volume growth and productivity, despite potential headwinds from modernization mix [63][66] Question: How is pricing evolving in different regions? - Management reported that service pricing increased across various regions, with China showing stabilization in pricing trends [53][70]

Q3 2025 Performance Highlights - Organic sales increased by 2%, with Service up by 6%[8] - Adjusted operating profit margin expanded by 20 bps, with Service expanding by 70 bps[8, 16] - Adjusted EPS increased by 9%[8] - Maintenance portfolio units grew by 4%[7, 8] - Modernization orders increased by 27%, and backlog increased by 22% at constant currency[8] - New Equipment orders increased by 4%, at constant currency[8] Orders and Backlog (Q3 2025) - Total Otis orders increased by 9%[9] - New Equipment orders increased by 4%, or 7% excluding China[9] - Modernization orders increased by 27%, or 16% excluding China[9] - Total backlog increased by 3%[9] - New Equipment backlog decreased by 1%, but increased by 8% excluding China[9] - Modernization backlog increased by 22%, or 20% excluding China[9] 2025 Outlook - Net sales are projected to be between $145 billion and $146 billion, with organic growth of approximately 1%[32] - Adjusted operating profit is expected to be between $24 billion and $25 billion, an increase of $75 million to $95 million at actual currency[32] - Adjusted EPS is projected to be between $404 and $408, representing a growth of 5% to 7%[32] - Adjusted free cash flow is estimated to be approximately $145 billion[32]

Core Insights - The average stock performance of companies with the highest paid women CEOs has underperformed compared to the S&P 500, with a gain of only 16.3% last year versus the S&P 500's 23.3% [1] - Year-to-date, these stocks have risen an average of just 5.9%, trailing the S&P 500's 11.5% gain [2] Company Performance - Otis Worldwide, led by CEO Judith Marks, had a 2024 compensation of $42.1 million, but its shares rose only 3.5% last year and are down 3.5% this year [3] - Equinix, with CEO Adaire Rita Fox-Martin earning $37 million, saw its shares increase by 17.1% last year, although they are down 15% year-to-date [4] - Citigroup's CEO Jane Fraser, with a pay of $31.1 million, achieved a nearly 37% increase in shares last year and an additional 33% gain this year [5] Summary of Top Paid Women CEOs - The following table summarizes the performance and compensation of the top paid women CEOs in 2024: | Company | Symbol | CEO | 2024 Stock % Change | YTD Stock % Change | 2024 Pay ($ million) | |---------------------|--------|-----------------------|---------------------|---------------------|-----------------------| | Otis Worldwide | | Judith Marks | 3.5% | -3.5% | 42.1 | | Equinix | EQIX | Adaire Rita Fox-Martin| 17.1% | -15.0% | 37 | | Citigroup | | Jane Fraser | 36.8% | 33.2% | 31.1 | | Advanced Micro | | | -18.1% | 78.4% | 31 | | General Motors | | Mary Barra | 48.3% | 3.9% | 29.5 | | Williams-Sonoma | | Laura Alber | 83.5% | -2.0% | 27.7 | | Expedia Group | | Arlane Gorin | 22.8% | 12.9% | 25.1 | | Canaan | | Julie Sweet | -11.3% | -47.2% | 24.9 | | United Parcel | | Carol Tome | -19.8% | -34.2% | 24.1 | | Northrop Grumman | | Kathy Warden | 0.2% | 32.9% | 24.1 | [6][7]

Company Overview - Otis Worldwide Corporation is the world's leading elevator and escalator manufacturing, installation, and service company [2] - The company moves 2.4 billion people daily and maintains approximately 2.4 million customer units globally, representing the industry's largest service portfolio [2] - Headquartered in Connecticut, USA, Otis employs 72,000 people, including 44,000 field professionals, dedicated to meeting diverse customer needs in over 200 countries and territories [2] Upcoming Event - Judy Marks, Chair, CEO & President of Otis, will participate in a fireside chat at the 13th annual Laguna conference hosted by Morgan Stanley on September 12, 2025, at 10:00 a.m. PT (1:00 p.m. ET) [1] - The presentation will be broadcast live on the company's official website [1]

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Q2 2025 Financial Performance - Service organic sales increased by 4%[6, 7] - Modernization orders grew by 22%[7, 8] - Adjusted operating profit margin remained flat at 17%[15, 58] - The company repurchased approximately $300 million of shares in Q2, and about $550 million year-to-date[7] - Adjusted EPS was $1.05[84] Orders and Backlog - New Equipment orders decreased by 1%, but increased by 11% excluding China[7, 8] - Modernization backlog increased by 16% at constant currency[7, 8] - New Equipment backlog decreased by 3%[8, 50] Segment Results - Service segment organic sales increased by 4%[19] and operating profit increased by $26 million at constant currency[20] - New Equipment segment organic sales decreased by 11%[24] and operating profit decreased by $41 million at constant currency[25] Outlook - The company expects organic sales to increase by approximately 1%[30, 33] - Adjusted operating profit is projected to be between $2.4 billion and $2.5 billion[32] - Adjusted EPS is expected to be between $4.00 and $4.10, representing a 4% to 7% increase[32, 41]