Otis Worldwide Corporation reported first‑quarter 2026 results with net sales of $3.57 billion, up 6% year‑over‑year, and GAAP earnings per share of $0.87, a 43% increase from the $0.61 GAAP EPS reported in Q1 2025.
The Service segment drove the top‑line growth, with service sales rising 5% to $1.78 billion. Repair revenue climbed 16% to $1.12 billion, and modernization orders increased 11% to $1.04 billion. Service operating profit reached $556 million, reflecting strong demand and pricing power in the maintenance and modernization business.
The New Equipment segment faced headwinds: new‑equipment orders grew 1% to $1.02 billion and backlog rose 3% to $1.07 billion, but operating profit fell to $38 million. The decline was attributed to cost inflation, tariff headwinds, and a mix shift toward lower‑margin products in China and Asia Pacific.
Revenue beat consensus estimates of $3.5 billion by roughly $70 million, driven by the robust Service performance. However, adjusted EPS of $0.89 missed the consensus of $0.91, reflecting margin compression from higher labor and material costs and significant investments in service growth.
Management reaffirmed its 2026 guidance, maintaining a revenue outlook of $15.1 billion to $15.3 billion and adjusted EPS guidance of $4.20 to $4.24, unchanged from prior guidance. The guidance signals confidence in sustaining growth despite near‑term pressures.
Chair, CEO and President Judy Marks said, "Otis delivered a solid quarter, with net sales up 6%. All Service lines of business grew, led by repair which grew 16% at actual currency and 10% organically. Orders and backlog strengthened: modernization orders were up 11% and backlog was up 30% at constant currency. New Equipment orders grew 1% and backlog grew 3% at constant currency. Otis delivered operating cash flow of $413 million and adjusted free cash flow of $272 million, up significantly from a year ago." She added, "While underlying demand remains solid as reflected in our order activity, we faced near‑term pressures, reflected in our Service margins, from cost headwinds and investments in growth."
Investors responded with a muted reaction, reflecting the revenue beat but EPS miss. The mixed outcome underscores the company’s strong Service momentum alongside ongoing cost pressures in the New Equipment business.
The results highlight a resilient Service segment that continues to generate recurring revenue, while the New Equipment segment remains vulnerable to geopolitical and cost headwinds. The company’s guidance, unchanged from prior expectations, indicates management’s confidence in maintaining growth trajectories, but margin compression signals the need for disciplined cost management and operational execution in the near term.
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