Q2 2026 Otis Worldwide Corp Earnings Call Transcript
Key Points
- Otis Worldwide Corp (OTIS) achieved significant top-line growth with a 6% increase in organic sales, driven by strong service growth and improving trends in new equipment.
- The service segment saw a 9% organic sales growth, supported by 24% modernization growth and double-digit repair growth.
- The company delivered strong cash generation with an adjusted free cash flow of $290 million, up 19% year over year.
- Otis Worldwide Corp (OTIS) returned over $1.1 billion to shareholders through share repurchases and dividends in the first half of 2026.
- The new equipment backlog increased by 4% at constant currency, providing good visibility into future sales and supporting confidence in new equipment stability.
- Service margins declined year over year due to labor and material cost increases, impacting profitability.
- Adjusted operating profit decreased by $32 million in the quarter, with a decline in adjusted operating profit margin by 180 basis points to 15.2%.
- Retention rates have been slower to improve than expected, impacting the company's ability to fully capitalize on micro-pricing initiatives.
- Productivity and cost headwinds were higher than anticipated, driven by strategic investments in service excellence and inflationary pressures.
- New equipment organic sales declined by 1% in the quarter, with challenges in market conditions, particularly in China and EMEA.
Good morning, and welcome to Otis's second-quarter 2026 earnings conference call. This call is being carried live on the internet and recorded for replay. Presentation materials are available for download from Otis's website at www.otis.com.
I'll now turn it over to Imelda Suit, Senior Vice President, Treasurer, and Interim Head of Investor Relations. Please go ahead.
Thank you, Krista. Welcome to Otis's second-quarter 2026 earnings conference call. On the call with me today are Judy Marks, Chair, CEO, and President; and Cristina Méndez, Executive Vice President and CFO.
Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring and significant non-recurring items. A reconciliation of these measures can be found in the appendix of the webcast.
We also remind listeners that the presentation contains forward
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