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]