01—Abstract
Summary
Summary of the 10-Q filed July 23, 2026. Cited figures are marked; the original filing is the authoritative source.
Otis Worldwide Corporation's Form 10-Q for the quarter ended June 30, 2026 shows net sales of $3.86 billiona for the quarter, up from $3.60 billion a year earlier, with organic volume up 6% driven by Service (up 9%) and partly offset by New Equipment (down 1%).
Quarterly operating profit rose to $575 millionb from $547 million, and net income attributable to Otis was $428 million, or $1.12 diluted EPS, versus $0.99 a year earlier. Service remained the core growth engine, with Service net sales of $2.58 billion and operating profit of $599 million, while New Equipment operating profit fell to $40 million from $68 million on lower China and EMEA volumes and a 3.1% operating margin. For the six months, net sales were $7.43 billion and net income attributable to Otis was $768 million, or $1.99 diluted EPS.
Operating cash flow was $680 millionc versus $405 million a year earlier, while the company repurchased $807 million of common stock and paid $330 million in dividends. Total debt rose to $8.44 billion at June 30, 2026 from $7.96 billion at December 31, 2025, and cash fell to $813 million. Total equity was a deficit of $5.56 billion, reflecting cumulative treasury stock purchases.
The filing also notes a remaining $55 milliond indemnity payable to RTX related to the German tax litigation, expected German tax refunds of approximately $356 million, and total remaining performance obligations of approximately $19.7 billion, about 75% of which is expected to be recognized over the following 24 months. Tariffs and ongoing Middle East and Russia-Ukraine conflicts are flagged as sources of uncertainty, though management does not currently expect a significant impact on liquidity.
02—Key points
Key Highlights
- Net sales rose to $3.86 billion in Q2 2026 from $3.60 billion, a 7% increase, with organic volume up 6%, driven by Service organic growth of 9%.
- Service segment operating profit reached $599 million in the quarter (23.2% margin), while New Equipment operating profit fell to $40 million from $68 million (3.1% margin) on China and EMEA weakness.
- Diluted EPS was $1.12 for the quarter versus $0.99, and $1.99 for the six months versus $1.60.
- Six-month operating cash flow of $680 million improved from $405 million, while share repurchases totaled $807 million and dividends paid were $330 million.
- Total debt increased to $8.44 billion from $7.96 billion at year-end 2025 after a $700 million three-year note issuance in May 2026; cash and equivalents declined to $813 million.
- Total shareholders' deficit was $(5.75) billion at June 30, 2026, and the company has $500 million remaining under its $2.0 billion repurchase authorization.
- Remaining performance obligations totaled approximately $19.7 billion, with about 75% expected to be recognized over the following 24 months.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed July 23, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $3.86B$3.60B | +7.3% |
| R&D Expenses | $39.00M$38.00M | +2.6% |
| SG&A Expenses | $520.00M$499.00M | +4.2% |
| Operating Expenses | $3.28B$3.04B | +7.9% |
| Operating Income | $575.00M$547.00M | +5.1% |
| Interest Expense | $62.00M$50.00M | +24.0% |
| Net Income | $428.00M$393.00M | +8.9% |
| EPS (Basic) | $1.12$1.00 | +12.0% |
| EPS (Diluted) | $1.12$0.99 | +13.1% |
| Shares Outstanding (Basic) | 382.60M393.70M | −2.8% |
| Shares Outstanding (Diluted) | 383.50M395.80M | −3.1% |
05—Questions
Frequently Asked Questions
What drove the increase in Otis's quarterly earnings?
Operating profit rose to $575 million from $547 million, supported by higher Service sales and a lower effective tax rate of 17.9% versus 18.8%. Service operating profit increased $21 million, partly offset by a $28 million decline in New Equipment operating profit.
How is the New Equipment segment performing?
New Equipment net sales were $1.28 billion, roughly flat, with organic volume down 1%. The filing attributes the decline mainly to a high-teens decline in China and a mid-single-digit decline in EMEA, offset by about 10% growth in the Americas. Operating margin fell 220 basis points to 3.1%.
What are the main risks flagged in the filing?
The filing cites tariffs in the U.S. and other countries, customer demand and liquidity, supplier capacity constraints, and the Middle East and Russia-Ukraine conflicts. It also notes a remaining $55 million indemnity payable to RTX tied to the German tax litigation, with the final amount subject to continuing dispute under the Tax Matters Agreement.
How did Otis fund shareholder returns and debt activity in the first half of 2026?
Otis repurchased $807 million of common stock and paid $330 million in dividends, funded largely by operating cash flow and a $700 million three-year note issued in May 2026 at 4.488%. The company also repaid a Japanese yen note of 0.370% at maturity in March 2026 and had no commercial paper outstanding at June 30, 2026.
What is Otis's liquidity position at June 30, 2026?
Cash and cash equivalents were $813 million, of which about 73% was held by foreign subsidiaries. The company had a $1.5 billion undrawn revolving credit facility maturing in August 2030 and stated it does not expect a significant impact to its liquidity from current macroeconomic conditions.
06—Continue