Earnings analysis · 10-Q
OTIS earnings analysis
Filed April 23, 2026 · Our reading of the company's report
The latest report
Otis reported quarterly net sales of $3,566 million, up 6% year-over-year, driven by Service growth while New Equipment declined. Consolidated operating profit improved to $539 million (15.1% margin) and operating cash…
Read full summary
Otis reported quarterly net sales of $3,566 million, up 6% year-over-year, driven by Service growth while New Equipment declined. Consolidated operating profit improved to $539 million (15.1% margin) and operating cash flow strengthened to $413 million, but New Equipment operating profit fell to $38 million and cash declined to $834 million vs $1,096 million at year-end.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
What stood out
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Revenue growth led by Service
Net sales were $3,566 million for the quarter, up 6% versus $3,350 million in prior year, with Service sales up to $2,417 million (an $230 million / 11% increase year-over-year).
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Improved consolidated operating profit and margin
Consolidated operating profit increased to $539 million from $411 million, pushing operating margin to 15.1% from 12.3% year-over-year.
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Gross margin expansion
Gross margin increased to $1,082 million, with gross margin percentage rising to 30.3% from 29.9% (a 40 bps improvement).
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Stronger operating cash flow
Net cash provided by operating activities improved to $413 million from $190 million in the prior-year quarter.
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Service profitability contribution
Service operating profit rose to $556 million from $537 million, supporting results despite margin pressure in the segment (23.0% vs 24.6%).
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UpLift savings realization
UpLift transformation run-rate savings were approximately $200 million (as of December 31, 2025) with $25 million of savings realized in the quarter.
What to watch
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New Equipment weakness and margin compression
New Equipment net sales fell to $1,149 million from $1,163 million (down $14 million, -1%), and New Equipment operating profit dropped to $38 million from $66 million (down $28 million, -42%), with operating margin compressing to 3.3% from 5.7%.
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Higher interest expense
Interest expense (income), net increased to $59 million from $45 million, reflecting higher net interest costs including issuance of $500 million debt in September 2025.
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Cash reduction and higher net debt
Cash and cash equivalents declined to $834 million as of March 31, 2026 from $1,096 million at December 31, 2025 (a $262 million decrease); net debt increased to $6,984 million from $6,860 million.
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Service margin deterioration
Although Service sales grew, Service operating margin declined to 23.0% from 24.6%, reflecting higher labor and material costs and organizational initiative costs.
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Indemnity estimate and potential variability
The Company estimated the remaining amount payable to RTX at $55 million as of March 31, 2026 (down from $56 million as of December 31, 2025) and recorded indemnification expense of $5 million for the quarter (vs $52 million in the prior-year quarter), noting this estimate could further change.
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SG&A and restructuring costs pressure
Selling, general and administrative expenses increased to $510 million from $464 million (up $46 million) and other restructuring costs of $7 million were recorded in the quarter.
Management's outlook
This 10-Q does not provide explicit numeric FY guidance. Management discusses expectations (e.g., funding through operating cash, liquidity of $834 million cash and a $1.5 billion revolving credit facility) but defers detailed numeric outlook to earnings disclosures (see the company's separate earnings release / 8-K).
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.