01—Abstract
Summary
Summary of the 10-Q filed April 23, 2026. Cited figures are marked; the original filing is the authoritative source.
Otis Worldwide Corporation reported first-quarter 2026 net sales of $3.57 billiona, up from $3.35 billion in the prior-year quarter.
Operating profit rose to $539 millionb from $411 million, and net income attributable to Otis Worldwide Corporation increased to $340 million from $243 million. Diluted earnings per share were $0.87, compared with $0.61. The Service segment drove the growth, with net sales of $2.42 billion versus $2.19 billion and operating profit of $556 million versus $537 million.
New Equipment net sales were roughly flat at $1.15 billionc versus $1.16 billion, but its operating profit fell to $38 million from $66 million, and its operating profit margin declined to 3.3% from 5.7%. The filing attributes the New Equipment decline partly to a greater than (20)% sales drop in China. Cash generation improved, with operating cash flow of $413 million versus $190 million.
The company repurchased $400 milliond of common stock and paid $163 million in dividends, leaving $834 million of cash and cash equivalents at March 31, 2026, against total debt of $7.82 billion. Total equity was a deficit of $5.51 billion. The filing also records a $114 million out-of-period equity adjustment related to earlier step acquisitions.
Otis reports total remaining performance obligations of approximately $19.8 billion, with about 75% expected to be recognized over the following 24 months. Key open items for investors include the German tax litigation, where Otis expects refunds of approximately $358 million, while the amount payable to RTX Corporation under the Tax Matters Agreement has been reduced to $55 million.
The filing also flags that new U.S. and other tariffs could have a material impact on 2026 results. In April 2026, Otis acquired a majority stake in a French company for approximately $170 million, funded by cash on hand and commercial paper.
02—Key points
Key Highlights
- Net sales rose to $3.57 billion from $3.35 billion, with the filing citing 1% organic volume growth and 5% from foreign currency translation.
- Operating profit increased to $539 million from $411 million, and diluted EPS rose to $0.87 from $0.61.
- Service segment net sales grew to $2.42 billion from $2.19 billion, with organic volume up 5%; Service operating profit increased to $556 million.
- New Equipment operating profit fell to $38 million from $66 million, with operating margin down to 3.3% from 5.7% amid lower volume and unfavorable price and mix; China sales declined by more than 20%.
- Operating cash flow more than doubled to $413 million from $190 million, supported by contract billings and German tax refunds.
- Otis returned $563 million to shareholders in the quarter through $400 million of share repurchases and $163 million of dividends, with about $900 million left under its $2.0 billion repurchase authorization.
- Total shareholders' deficit widened to $(5.68) billion, and the company recorded a $114 million out-of-period equity adjustment tied to earlier step acquisitions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 23, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $3.57B$3.35B | +6.4% |
| R&D Expenses | $38.00M$37.00M | +2.7% |
| SG&A Expenses | $510.00M$464.00M | +9.9% |
| Operating Expenses | $3.03B$2.85B | +6.4% |
| Operating Income | $539.00M$411.00M | +31.1% |
| Interest Expense | $58.00M$57.00M | +1.8% |
| Net Income | $340.00M$243.00M | +39.9% |
| EPS (Basic) | $0.88$0.61 | +44.3% |
| EPS (Diluted) | $0.87$0.61 | +42.6% |
| Shares Outstanding (Basic) | 388.10M396.60M | −2.1% |
| Shares Outstanding (Diluted) | 389.60M399.10M | −2.4% |
05—Questions
Frequently Asked Questions
What drove the improvement in earnings this quarter?
Operating profit rose to $539 million from $411 million, mainly because Other income (expense), net improved to $5 million from $(89) million. The filing notes lower Separation-related adjustments of $47 million and the absence of prior-year items including $23 million of UpLift transformation costs, $21 million of litigation-related settlement costs, and $10 million of held-for-sale impairment. Service segment operating profit also increased by $19 million.
Why did New Equipment profitability decline?
New Equipment operating profit decreased to $38 million from $66 million, and operating margin fell to 3.3% from 5.7%. The filing attributes this to lower volume, unfavorable price, regional and product mix, and higher costs from organizational initiatives, partly offset by productivity. Organic sales declined 5%, with a greater than (20)% decline in China.
What is the status of the German tax litigation and the amount owed to RTX?
Otis prevailed in the German tax case and expects total refunds of approximately €309 million, or about $358 million, with refunds continuing through 2026. The estimated indemnity payable to RTX Corporation under the Tax Matters Agreement is now $55 million, down from $56 million at December 31, 2025, and the parties continue to dispute the scope of the final amount. The quarter included $5 million of indemnification expense, compared with $52 million in the prior-year quarter.
How is Otis's liquidity and capital allocation position?
Cash and cash equivalents were $834 million at March 31, 2026, and total debt was $7.82 billion. The company repaid ¥21.5 billion of 0.370% notes at maturity in March using cash on hand, and it had $35 million of commercial paper outstanding. The $1.5 billion revolving credit facility was undrawn. The company repurchased $400 million of stock during the quarter and has about $900 million remaining under its program.
What significant events occurred after the quarter ended?
In April 2026, Otis acquired the majority of ownership of a French company for approximately $170 million, funded by cash on hand and commercial paper borrowings. Management expects to finalize the purchase price allocation by the time of the Q2 2026 Form 10-Q.
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