Otis Worldwide Corp

Previous wording

We are the world’s leading elevator and escalator manufacturing, installation and service company. Our Company is organized into two segments, New Equipment and Service. Through our New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings and infrastructure projects. Our New Equipment customers include real-estate and building developers and general contractors who develop and/or design buildings for residential, commercial, retail or mixed-use activity. We sell our New Equipment directly to customers, as well as through agents and distributors.

Current wording

We are the world’s leading elevator and escalator manufacturing, installation, service and modernization company. Our Company is organized into two segments, New Equipment and Service. Through our New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings and infrastructure projects. Our New Equipment customers include real-estate and building developers and general contractors who develop and/or design buildings for residential, commercial, retail or mixed-use activity. We sell our New Equipment directly to customers, as well as through agents and distributors.

Previous wording

Through our Service segment, we perform maintenance and repair services for both our own products and those of other manufacturers and provide modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services to address equipment and component wear and tear and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics to complex upgrades of larger components and sub-systems. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

Current wording

Through our Service segment, we perform maintenance and repair services for both our own products and those of other manufacturers and provide modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services to address equipment and component wear and tear and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics to complex upgrades of larger components and sub-systems, including the machine, ropes or belts, safety systems and the entire car or escalator. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

Previous wording

Announced in July 2023, UpLift is a program to transform our operating model. UpLift includes the standardization of our processes and improvement of our supply chain procurement, among other aspects of the program, as well as organizational changes which result in restructuring actions. We expect UpLift to generate approximately $200 million in annual run-rate savings by the second half of 2025, with restructuring and other incremental costs to complete the transformation ("UpLift transformation costs") of approximately $300 million.

Current wording

Announced in July 2023, UpLift is a program to transform our operating model. As of December 31, 2025, total restructuring and other incremental costs to complete the transformation ("UpLift transformation costs") were approximately $300 million, including trailing restructuring costs expected in 2026 of $18 million. The Company generated run-rate savings of approximately $200 million.

Previous wording

Based on indemnity payments made to RTX and adjustments to indemnity payable in the quarter ended September 30, 2025, the Company now estimates the amount payable to RTX to be $218 million, resulting in indemnification expense of $4 million and $62 million in the quarter and nine months ended September 30, 2025, respectively. This indemnification expense is included in Other income (expense), net in the Condensed Consolidated Statements of Operations for the quarter ended and nine months ended September 30, 2025. This estimate could further change due to the parties' continuing dispute concerning the scope of the final indemnity amount, which will be resolved pursuant to the procedures set forth in the TMA.

Current wording

In August 2024, we received a favorable ruling regarding a German tax litigation. Pursuant to the Tax Matters Agreement ("TMA") with United Technologies Corporation ("UTC"), our former parent, subsequently renamed RTX Corporation ("RTX"), and based on the facts and contractual provisions, additional information received from RTX and indemnity payments during 2025, the Company estimated the amount payable to RTX as a result of the outcome of the German tax litigation to be $56 million as of December 31, 2025. Based on indemnity payments made to RTX and adjustments to the indemnity payable in the quarter ended March 31, 2026, the Company now estimates the remaining amount payable to RTX to be $55 million, resulting in indemnification expense of $5 million and $52 million for the quarters ended March 31, 2026 and 2025, respectively. This indemnification expense is included in Other income (expense), net in the Condensed Consolidated Statements of Operations for the quarters ended March 31, 2026 and 2025. This estimate could further change due to the parties' continuing dispute concerning the scope of the final indemnity amount, which will be resolved pursuant to the procedures set forth in the TMA.

Previous wording

Global macroeconomic conditions have impacted, and continue to impact, aspects of the Company's operations and overall financial performance during the quarters and nine months ended September 30, 2025 and 2024. These macroeconomic conditions include, among others, inflationary pressures, high interest rates, tighter credit conditions, the U.S. federal government shutdown and changes in global trade policies including higher tariffs in the U.S. and other countries. These macroeconomic trends could continue to impact our business, including impacts to overall financial performance during the remainder of 2025, as a result of the following, among other things:

Current wording

Global macroeconomic conditions have impacted, and continue to impact, aspects of the Company's operations and overall financial performance during the quarters ended March 31, 2026 and 2025. These macroeconomic conditions include, among others, geopolitical conflicts, inflationary pressures, high interest rates, tighter credit conditionsand changes in global trade policies including higher tariffs in the U.S. and other countries. These macroeconomic trends could continue to impact our business, including impacts to overall financial performance during the remainder of 2026, as a result of the following, among other things:

Previous wording

Other than the estimated potential impact from new tariffs currently in effect of approximately $25 million to $35 million during 2025, we currently do not expectany significant impact to our capital and financial resources from these macroeconomic conditions, including to our overall liquidity position based on our available cash and cash equivalents and our access to credit facilities and the capital markets.

Current wording

We currently do not expectany significant impact to our capital and financial resources from these macroeconomic conditions, including to our overall liquidity position based on our available cash and cash equivalents and our access to credit facilities and the capital markets.

Previous wording

The ongoing conflict between Russia and Ukraine has resulted in worldwide geopolitical and macroeconomic uncertainty, including volatile commodity markets, foreign exchange fluctuations, supply chain disruptions, increased risk of cybersecurity incidents, reputational risk, increased operating costs (including fuel and other input costs), environmental, health and safety risks related to securing and maintaining facilities, additional sanctions and other regulations (including restrictions on the transfer of funds to and from Russia). We do not have operations in Russia.

Current wording

The ongoing conflicts in the Middle East, as well as between Russia and Ukraine have resulted in worldwide geopolitical and macroeconomic uncertainty, including volatile commodity markets, foreign exchange fluctuations, supply chain disruptions, increased risk of cybersecurity incidents, reputational risk, increased operating costs (including fuel and other input costs), environmental, health and safety risks related to securing and maintaining facilities, additional sanctions and other regulations (including restrictions on the transfer of funds to and from Russia). We do not have operations in Russia or Iran. Additionally, we do not have operations or material net sales in Israel, Gaza or Lebanon.

Previous wording

Additionally, we do not have operations or material net sales in Israel or Gaza. Although we have operations in the Middle East and transport products through the Red Sea, we currently do not expect the ongoing instability in that region to have a material impact on our business.

Current wording

Although we have operations in the Middle East and transport products through the Middle East, we currently do not expect the recent conflicts in that region to have a material impact on our business.

Previous wording

To the extent possible, we continue to operate our business in Ukraine, which represented less than 1% of our revenue and operating profit for the nine months ended September 30, 2025 and year ended December 31, 2024.

Current wording

To the extent possible, we continue to operate our business in Ukraine. We do not have material revenue or operating profit in Ukraine.

Previous wording

The factors contributing to the total percentage change year-over-year in total Net sales for the quarter and nine months ended September 30, 2025 are as follows:

Current wording

The factors contributing to the total percentage change year-over-year in total Net sales for the quarter ended March 31, 2026 are as follows:

Previous wording

The Organic volume increase of 2% for the quarter ended September 30, 2025 was driven by an increase of 6% in Service, partially offset by a decrease of (5)% in New Equipment. The Organic volume for the nine months ended September 30, 2025 was flat driven by an increase of 5% in Service, offset by a decrease of (8)% in New Equipment.

Current wording

The Organic volume increase of 1% for the quarter ended March 31, 2026 was driven by an increase of 5% in Service, partially offset by a decrease of (5)% in New Equipment.

Previous wording

The factors contributing to the percentage change year-over-year for the quarter and nine months ended September 30, 2025 in total cost of products and services sold are as follows:

Current wording

The factors contributing to the percentage change year-over-year for the quarter ended March 31, 2026 in total cost of products and services sold are as follows:

Previous wording

The Organic volume for total cost of products and services sold increased 1% for the quarter ended September 30, 2025 and was flat for the nine months ended September 30, 2025, primarily driven by the organic sales changes noted above. Productivity was partially offset by inflationary pressures, including higher labor costs.

Current wording

The Organic volume for total cost of products and services sold increased 2% for the quarter ended March 31, 2026, primarily driven by the organic sales changes noted above and the impacts of higher labor and material costs, partially offset by productivity.

Previous wording

Gross margin percentage increased 30 and 20 basis points for the quarter and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, due to the increase in Service sales and decrease in New Equipment sales and the benefits from productivity, partially offset by the inflationary pressures described above.

Current wording

Gross margin percentage increased 40 basis points for the quarter ended March 31, 2026, when compared to the same period in 2025, due to the increase in Service sales and decrease in New Equipment sales and the benefits from productivity, partially offset by the cost increases described above.

Previous wording

Research and development was relatively flat for the quarter and nine months ended September 30, 2025, when compared to the same periods in 2024.

Current wording

Research and development was relatively flat for the quarter ended March 31, 2026, when compared to the same period in 2025.

Previous wording

Selling, general and administrative expenses increased $49 million and $101 million for the quarter and nine months ended September 30, 2025, respectively, when compared to the same periods in 2024, driven by higher restructuring costs, annual wage increases, other employment costs and the impacts from foreign exchange, partially offset by savings resulting from UpLift.

Current wording

Selling, general and administrative expenses increased $46 million for the quarter ended March 31, 2026, when compared to the same period in 2025, driven by annual wage increases, higher costs resulting from organizational initiatives, costs to support ongoing operational execution and the impacts from foreign exchange, partially offset by savings resulting from restructuring actions and lower restructuring costs.

Previous wording

Selling, general and administrative expenses as a percentage of Net sales increased 90 basis points for the quarter and nine months ended September 30, 2025, when compared to the same periods in 2024.

Current wording

Selling, general and administrative expenses as a percentage of Net sales increased 40 basis points for the quarter ended March 31, 2026, when compared to the same period in 2025.

Previous wording

UpLift restructuring costs are primarily severance costs and are recorded primarily in Selling, general and administrative in the Condensed Consolidated Statements of Operations. UpLift transformation costs are primarily for consultants, third-party service providers and personnel focused on designing and implementing a centralized service delivery model that supports our new organizational structure, including the standardization of our supply chain and digital technology procurement. These costs are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

Current wording

Transformation costs were $23 million in the quarter ended March 31, 2025, which are primarily for consultants, third-party service providers and personnel focused on designing and implementing a centralized service delivery model that supports our new organizational structure, including the standardization of our supply chain and digital technology procurement. These UpLift transformation costs are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations.

Previous wording

Other restructuring costs were $41 million for the nine months ended September 30, 2025 and included $25 million of costs related to 2025 actions and $16 million of costs related to 2024 actions.

Current wording

Other restructuring costs were $7 million for the quarter ended March 31, 2026 and included $4 million of costs related to 2026 actions and $3 million of costs related to 2025 actions.

Previous wording

Most of the expected charges will require cash payments, which we have funded and expect to continue to fund with cash generated from operations. The table below presents approximate cash outflows related to the restructuring actions during the nine months ended September 30, 2025, and the expected cash payments to complete the actions announced:

Current wording

Most of the expected charges will require cash payments, which we have funded and expect to continue to fund with cash generated from operations. The table below presents approximate cash outflows related to the restructuring actions during the quarter ended March 31, 2026, and the expected cash payments to complete the actions announced:

Previous wording

The approved UpLift restructuring actions are expected to generate approximately $102 million in annual recurring savings by 2025, primarily in Selling, general and administrative expenses, and of which approximately $63 million was realized during the nine months ended September 30, 2025, including $37 million of incremental savings compared to the same period in 2024.

Current wording

The approved UpLift restructuring actions generated approximately $103 million in annual recurring savings at the end of 2025, primarily in Selling, general and administrative expenses, and of which approximately $25 million was realized during the quarter ended March 31, 2026, including $6 million of incremental savings compared to the same period in 2025.

Previous wording

For other restructuring actions, we generally expect to achieve annual recurring savings within the two-year period subsequent to initiating the actions, including $24 million for the 2025 actions and $28 million for the 2024 actions, of which approximately 60% relates to Cost of products and services sold and 40% relates to Selling, general and administrative expenses. Approximately $30 million of savings was realized for the 2025 and 2024 actions during the nine months ended September 30, 2025.

Current wording

For other restructuring actions, we generally expect to achieve annual recurring savings within the two-year period subsequent to initiating the actions, including $7 million for the 2026 actions and $38 million for the 2025 actions, of which approximately 25% relates to Cost of products and services sold and 75% relates to Selling, general and administrative expenses. Approximately $9 million of savings was realized for the 2026 and 2025 actions during the quarter ended March 31, 2026.

Previous wording

In January 2025, we announced the reorganization of our operations in China. Among other aspects, this reorganization will result in restructuring actions of approximately $40 million. These actions primarily include severance-related costs, and we expect these actions to be mostly completed and any cash to be paid by the end of 2025. Amounts related to the reorganization of operations in China are included within Other restructuring.

Current wording

In January 2025, we announced the reorganization of our operations in China. Among other aspects, this reorganization will result in restructuring actions of approximately $30 million. These actions primarily included severance-related costs, and these actions were substantially completed as of December 31, 2025. Amounts related to the reorganization of operations in China are included within Other restructuring.

Previous wording

The change in Other income (expense), net of $126 million for the nine months ended September 30, 2025 compared to the same period in 2024, was primarily driven by lower Separation-related adjustments of $113 million, gains on the sale of fixed assets of $15 million, lower impairment loss related to net assets held for sale of $7 million and favorable foreign currency mark-to-market adjustments, partially offset by higher UpLift transformation costs of $6 million.

Current wording

The change in Other income (expense), net of $94 million for the quarter ended March 31, 2026 compared to the same period in 2025, was partially driven by lower Separation-related adjustments of $47 million. The change is also impacted by the absence of prior period items including, $23 million of UpLift transformation costs, $21 million of non-recurring litigation-related settlement costs, $10 million of impairment loss related to net assets held for sale, and the gain on sale of fixed assets.

Previous wording

The changes in Interest expense (income), net of $211 million for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024, were primarily driven by the absence of $200 million interest income related to a favorable ruling received in August 2024 regarding a tax litigation in Germany, higher interest expense related to the $600 million and €850 million unsecured, unsubordinated debt issued in November 2024, as well as the $500 million unsecured, unsubordinated debt issued in September 2025, partially offset by lower interest expense related to the repayment of the $1.3 billion unsecured, unsubordinated debt in April 2025. The nine months ended September 30, 2025 was also impacted by interest reserve adjustments related to non-recurring tax items and higher interest income when compared to the same period in 2024.

Current wording

The changes in Interest expense (income), net of $14 million for the quarter ended March 31, 2026, compared to the same period in 2025, were primarily driven by lower interest income and higher interest expense related to the $500 million unsecured, unsubordinated debt issued in September 2025, partially offset by lower interest expense related to the repayment of the $1.3 billion unsecured, unsubordinated debt in April 2025.

Previous wording

The average interest rate on our long-term debt was 2.9% and 2.8% for the quarter and nine months ended September 30, 2025, respectively and 2.5% for the same periods in 2024. For additional discussion of borrowings, see Note 7 to the Condensed Consolidated Financial Statements.

Current wording

The average interest rate on our long-term debt for the quarters ended March 31, 2026 and 2025 was 3.0% and 2.7%, respectively. For additional discussion of borrowings, see Note 6 to the Condensed Consolidated Financial Statements.

Previous wording

The increase in the effective tax rate for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024, is primarily due to the absence of estimated tax benefits arising from the resolution of the German tax litigation recorded in 2024. In addition to the German tax litigation, the increase in the effective tax rate for the nine months ended September 30, 2025, compared to the same period in 2024, is due to the tax effect of the increase in our estimated nondeductible TMA indemnity obligation payable to RTX recorded in 2025 and the absence of the reduction in a deferred tax liability related to the mitigation of future repatriation costs recorded in 2024. These impacts were partially offset by an incremental benefit related to foreign-derived intangible income and foreign valuation allowance releases recorded in 2025.

Current wording

The decrease in the effective tax rate for the quarter ended March 31, 2026, compared to the same period in 2025, is primarily due to the absence of the impact of the increase in our estimated nondeductible TMA indemnity obligation payable to RTX recorded in the quarter ended March 31, 2025.

Previous wording

Noncontrolling interest in subsidiaries' earnings decreased $12 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily driven by increased ownership of our subsidiary in Japan during the second quarter of 2024 and lower net income from non-wholly owned subsidiaries. Other than our acquisition of the noncontrolling shares of our subsidiary in Japan during 2024, ownership interest in the underlying non-wholly owned subsidiaries has remained generally consistent year-over-year.

Current wording

Noncontrolling interest in subsidiaries' earnings was flat for the quarter ended March 31, 2026 compared to the same period in 2025. Other than our acquisition of the noncontrolling shares of Otis Electric Elevator Company Limited during the fourth quarter of 2025, ownership interest in the underlying non-wholly owned subsidiaries has remained generally consistent year-over-year.

Previous wording

Net income attributable to Otis Worldwide Corporation decreased for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024, due to a higher effective tax rate and higher interest expense, partially offset by higher operating profit (including the impact of foreign exchange rates). The nine months ended September 30, 2025 was also impacted by lower noncontrolling interest in subsidiaries' earnings, when compared to the same period in 2024.

Current wording

Net income attributable to Otis Worldwide Corporation increased for the quarter ended March 31, 2026, compared to the same period in 2025, due to higher operating profit (including the impact of foreign exchange rates) and a lower effective tax rate, partially offset by higher interest expense.

Previous wording

Summary performance for New Equipment for the quarters and nine months ended September 30, 2025 and 2024 was as follows:

Current wording

Summary performance for New Equipment for the quarters ended March 31, 2026 and 2025 was as follows:

Previous wording

Summary analysis of the Net sales change for New Equipment for the quarter and nine months ended September 30, 2025 compared with thesame periods in 2024 was as follows:

Current wording

Summary analysis of the Net sales change for New Equipment for the quarter ended March 31, 2026 compared with thesame period in 2025 was as follows:

Previous wording

The organic sales decrease of (8)% was primarily driven by a greater than (20)% decline in China and high single-digit decline in Americas, partially offset by mid single-digit growth in EMEA and Asia Pacific.

Current wording

The organic sales decrease of (5)% was primarily driven by a greater than (20)% decline in China, mid single-digit decline in Asia Pacific and low single-digit decline in Americas, partially offset by low single-digit growth in EMEA.

Previous wording

New Equipment operating profit decreased $(25) million. The impacts of lower volume, unfavorable price and tariff headwinds, and regional and product mix were partially offset by productivity, including the benefits of restructuring actions. Operating margin decreased (170) basis points.

Current wording

New Equipment operating profit decreased $(28) million. The impacts of lower volume, unfavorable price, regional and product mix and higher costs resulting from organizational initiatives were partially offset by productivity. Operating margin decreased (240) basis points.

Previous wording

The Service segment performs maintenance and repair services for both our products, and those of other manufacturers, and provides modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services that address equipment and component wear and tear, and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics, to complex upgrades of larger components and sub-systems. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

Current wording

The Service segment performs maintenance and repair services for both our products, and those of other manufacturers, and provides modernization services to upgrade elevators and escalators. Maintenance services include inspections to ensure code compliance, preventive maintenance offerings and other customized maintenance offerings tailored to meet customer needs, as well as repair services that address equipment and component wear and tear, and breakdowns. Modernization services enhance equipment operation and improve building functionality. Modernization offerings can range from relatively simple upgrades of interior finishes and aesthetics, to complex upgrades of larger components and sub-systems, including the machine, ropes or belts, safety systems and the entire car or escalator. Our typical Service customers include building owners, facility managers, housing associations and government agencies that operate buildings where elevators and escalators are installed.

Previous wording

Summary performance for Service for thequarters and nine months ended September 30, 2025 and 2024 was as follows:

Current wording

Summary performance for Service for thequarters ended March 31, 2026 and 2025 was as follows:

Previous wording

Summary analysis of Service Net sales change for the quarter and nine months ended September 30, 2025 compared with thesame periods in 2024 was as follows:

Current wording

Summary analysis of Service Net sales change for the quarter ended March 31, 2026 compared with thesame period in 2025 was as follows:

Previous wording

The organic sales increase of 6% is due to increases in maintenance and repair of 4% and in modernization of 14%.

Current wording

The organic sales increase of 5% is due to increases in maintenance and repair of 4% and in modernization of 6%.

Previous wording

Service operating profit increased $66 million including foreign exchange tailwinds of $17 million. Higher volume, improved pricing and productivity, were partially offset by inflationary pressures including higher labor costs, and mix. Operating margin increased 70 basis points.

Current wording

Service operating profit increased $19 million including foreign exchange tailwinds of $29 million. Higher volume and improved pricing were more than offset by higher costs resulting from organizational initiatives, costs to support ongoing operational execution, higher labor and material costs, and mix. Operating margin decreased (160) basis points.

Previous wording

Noncontrolling interest in subsidiaries' earnings was relatively flat for the quarter ended September 30, 2025 compared to the same period in 2024.

Current wording

General corporate expenses and other was relatively flat for the quarter ended March 31, 2026 compared to the same period in 2025.

Previous wording

We expect to fund our ongoing operating, investing and financing requirements mainly through cash flows from operations, available liquidity through cash on hand and available bank lines of credit and access to capital markets.

Current wording

We expect to fund our ongoing operating, investing and financing requirements mainly through cash flows from operations, available liquidity through cash on hand, available bank lines of credit and access to capital markets.