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- **Service Dominance**: 6% Service growth (14% modernization) drove Q3 results, with operating margin up 20 bps to 17.1%.
- **Modernization Surge**: 27% order growth and $337M free cash flow highlight multiyear modernization opportunity.
- **China Stabilization**: New Equipment sales down 20% YoY in Q3, but sequential improvement expected; modernization orders +150% YoY.
- **Margin Expansion**: Service margins at record 25.5%, with repair accelerating to 10%+ in Q4.
- **EPS Growth**: Full-year adjusted EPS guidance raised to $4.04-4.08 (+5-7% YoY), supported by Service flywheel and cost savings.

**【CEO Summary Section】**
- **Q3 Highlights**: Organic sales grew 2% driven by 6% Service growth (including 14% modernization sales). Adjusted operating profit margin expanded 20 basis points to 17.1%, and adjusted EPS rose 9% to $1.09. Free cash flow was $337 million, with full-year guidance of $1.45 billion.
- **Modernization Momentum**: Modernization orders surged 27%, with backlog up 22%. Notable projects include Shanghai's largest bond-funded renewal and Dubai's SkyRise elevator installation.
- **Portfolio Growth**: Service portfolio nears 2.5 million units, with maintenance growing 4% and repair accelerating to 7% YoY.

**【CFO Financial Commentary】**
- **Service Segment**: Operating profit rose $49 million (70 bps margin expansion) due to repair acceleration and modernization backlog conversion. Repair sales expected to exceed 10% growth in Q4.
- **New Equipment**: Organic sales declined 5% (excluding China, +7%), but orders returned to growth for 5th consecutive quarter. China transformation savings of $30 million/year expected, with 2025 restructuring costs reduced to $220 million.
- **Financial Outlook**: Full-year net sales $14.5-14.6 billion, adjusted EPS $4.04-4.08 (+5-7% YoY). Free cash flow guidance maintained at $1.45 billion.

**【Q&A Key Highlights】**
- **Service Retention**: CEO Judy Marks emphasized rebuilding customer trust through investments in service excellence, targeting sequential improvement in retention rates.
- **China New Equipment**: Sales down 20% YoY in Q3, but sequential stabilization expected. Modernization orders up 150% YoY, driven by bond stimulus.
- **Free Cash Flow**: CFO Cristina Mendez noted working capital headwinds but expects 2026 return to 100% conversion rate. Q4 cash flow projected similar to 2024 levels.
- **Repair Growth**: Repair sales ramping up to 10%+ in Q4, supporting Service margin expansion and customer satisfaction.


Otis Worldwide Corporation (OTIS) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

OTIS

OTIS fundamentals

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