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]

Core Insights - Otis Worldwide Corporation (OTIS) is set to report its fourth-quarter 2025 results on January 28, 2026, before market opening [1] - In the previous quarter, adjusted earnings exceeded the Zacks Consensus Estimate by 5%, and net sales surpassed the estimate by 1.2%, with year-over-year growth of 4% in net sales and 9.4% in earnings [1] Earnings Performance - OTIS has surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 1.7% [2] - The Zacks Consensus Estimate for adjusted EPS has increased to $1.03 from $1.02 over the past 60 days, reflecting a 10.8% increase from the previous year's adjusted EPS of 93 cents [3] - The consensus for net sales is projected at $3.9 billion, indicating a 6.2% growth from the prior year's figure of $3.68 billion [3] Revenue Breakdown - Fourth-quarter net sales are expected to rise year over year, driven by strong operational growth in the Service segment, which accounted for 65.9% of third-quarter 2025 net sales [4] - Maintenance and repair activities are anticipated to remain robust, with repair growth expected to accelerate to around 10% or higher in the fourth quarter [4] - Modernization revenues are also expected to contribute significantly, although growth may moderate sequentially due to timing issues with bond-funded projects in China [4] - In contrast, New Equipment sales, which contributed 34.1% of third-quarter net sales, are likely to negatively impact overall revenue, particularly due to declines in China [5] Segment Performance - The Service segment's net sales are predicted to increase by 11.6% year over year to $2.59 billion, while New Equipment segment sales are expected to decline by 1.1% to $1.34 billion [6] - Adjusted EBITDA is projected to rise by 10.7% to $698.3 million, with margins expanding by 60 basis points [8][12] Margin Analysis - The Service segment is expected to drive margin expansion due to higher service volumes, favorable pricing, and productivity initiatives [9] - However, New Equipment margins are likely to remain under pressure from lower volumes and unfavorable pricing in China, despite some cost savings from restructuring initiatives [10][11] - The adjusted operating margin for the New Equipment segment is expected to decrease to 3.8% from 4.7%, while the Service segment margin is anticipated to grow to 24.8% [11]