AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Extensive local service infrastructure, technical personnel and sustained portfolio expansion support a modest service franchise advantage. Independent providers' substantial unit share limits evidence of exclusion or superior economics.
durability · 3/4 · Four consecutive years of 4% maintenance portfolio expansion, continuing equipment wear and growing modernization activity demonstrate durable recurring demand. This supports durability without proving perpetual advantage or contractual lock-in.
customer dependency · 2/4 · Maintenance and repair demand is recurring, but dependence on Otis specifically is limited by transferable contracts and cross-manufacturer servicing. Portfolio growth is indirect evidence of customer continuity, not a retention rate.
erosion resilience · 2/4 · Service growth and improved pricing show resilience, while a 160-basis-point Service operating margin decline in the first half of 2026 demonstrates that cost pressure can erode economics.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · First-half 2026 Service results explicitly report improved pricing alongside higher volume. This establishes positive realized pricing, but its magnitude and contribution are undisclosed and costs continued to pressure profitability.
retention · 3/4 · Four years of maintenance portfolio expansion, three-year repair growth and subsequent maintenance and repair sales growth provide strong indirect evidence of repeat demand. These results do not isolate renewals, customer losses or acquisition contributions.
margin resilience · 2/4 · Gross margin rose from 29.5% in 2023 to 30.3% in 2025, aided by mix and productivity. First-half 2026 gross margin fell 20 basis points and Service operating margin fell 160 basis points despite improved pricing. Outcomes are mixed and do not isolate pricing power.
contractual freedom · 2/4 · Otis sometimes includes commodity-linked escalation and adjusts future contract prices. Existing contracts can delay delivery for a year or more and prevent full cost pass-through, establishing meaningful limits on repricing.
Predictability94
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 2.93
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.41
Financial strength36
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 26.82
- netDebtEbitGrade
- 27.38
- interestCoverageGrade
- 80.27
- currentRatioGrade
- 7.93
- Debt / FCF (x)
- 6.12
- Net debt / operating income (x)
- 3.63
- Interest coverage (x)
- 9.83
- Current ratio (x)
- 0.85
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 159.36
- 3-year average dilution (%)
- -2.21
- 3-year average SBC / revenue (%)
- 0.51
- cashConversionGrade
- 98.53
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · 2025 operating cash flow was $1.6 billion. First-half 2026 operating cash flow rose to $680 million against $77 million of capital expenditure, but $807 million of buybacks and $330 million of dividends exceeded operating cash generation, alongside debt issuance and a cash decline. These actual allocations show cash generation and substantial distributions, with mixed funding discipline and no demonstrated acquisition or buyback returns.
incentive alignment · 2/4 · Actual 2023–2025 PSU payouts were reduced to 82% of target after a negative relative shareholder return adjustment, demonstrating performance sensitivity. Shareholder objections to one-time 2024 awards provide contrary evidence. Beneficial ownership amounts and full award terms are missing.
execution · 2/4 · Maintenance and modernization growth and $51 million of realized first-half 2026 UpLift savings demonstrate execution. However, 2025 New Equipment sales and operating profit declined, and 2026 Service margin compression persisted. The overall record is mixed rather than uniformly strong.
governance · 2/4 · An independent Audit Committee, adopted auditor preapproval procedures and actual compensation oversight changes support functioning governance. Controversial one-time awards temper that assessment; disclosed responses do not yet demonstrate durable resolution.
Evidence
Our reach is global, our people are local We maintain approximately 2.5 million customer units worldwide We serve customers in more than 200 countries and territories We have 72,000 colleagues, including 45,000 field professionals We have over 1,400 branches and offices and a direct physical presence in more than 70 countries Executing on our strategy We remain focused on executing our strategic pillars to drive long-term, sustainable growth, while continuing to refine our business to meet evolving customer and passenger needs.
Proxy statement / Creating value in 2025 / Global service footprint · Filed 17/04/2026
Our maintenance portfolio expanded 4% for the fourth consecutive year, to roughly 2.5 million units, supporting the durability of our recurring revenue base.
Proxy statement / Financial highlights / Maintenance portfolio growth · Filed 17/04/2026
Similar to most other electro-mechanical equipment, elevators and escalators are subject to wear and tear over time, which can erode equipment functionality.
Item 1 / Business / Equipment wear · Filed 05/02/2026
STRATEGIC PILLARS 2025 RESULTS Accelerate Service portfolio growth • Grew Service portfolio by 4%, marking our fourth year at 4% or greater • Ended 2025 with approximately 1.1 million units connected globally(1) and grew subscription revenue by 35% • Sustained growth in our repair business across all regions, marking a three-year CAGR of approximately 10% Deliver modernization value • Grew modernization orders by 26% at constant currency(2) with all regions growing beyond 10%, outpacing the market • Grew modernization sales by approximately 10% at constant currency(2), for the second consecutive year, and increased modernization backlog by 30% at constant currency(2) • Supported growth through our enhanced commercial strategy, including modular upgrades solutions and an expanded sales team, both of which were enabled by industrialized manufacturing and installation capabilities Sustain New Equipment growth • Increased New Equipment backlog by 2% at constant currency(2) • Accelerated orders of our Gen3 and Gen360 products, up two points from prior year as a percentage of total orders • Continued implementation of common platform products, factory transformation and material productivity to better serve our New Equipment customers while reducing costs Advance digitalization • Consolidated multiple endpoints, streamlined solutions to strengthen cyber resilience and simplify management, creating a more efficient and secure foundation for digital operations • Migrated workloads to a multicloud platform, enhancing agility, data accessibility and automation capabilities, streamlining the application portfolio, and improving operational efficiency • Implemented advanced platforms to optimize finance operations and introduced intelligent automation and deployed AI-driven tools and digital assistants to enhance colleague productivity and streamline workflows, embedding data-driven decision-making and automation into everyday business practices Focus and empower our workforce • Continued deployment of Otis University global leadership program; additionally delivered simulated learning solutions for leaders to enhance decision-making and business performance, as well as for frontline supervisors and people leaders new in their roles • Achieved 10% increase in the realization of executive succession plans, underscoring our continued focus on strengthening leadership pipelines, enhancing organizational continuity and improving the overall health of our succession-planning processes • Achieved record high Inclusion score and maintained our highest overall Pulse engagement score • Concluded our UpLift program and progressed our transition roadmap for Global Business Services to simplify and standardize our processes so our customer-facing colleagues can focus on delivering exceptional customer service (1) Includes units in warranty period.
Proxy statement / Strategic pillars / 2025 operating achievements · Filed 17/04/2026
We believe our global presence, local relationships and proven track record in executing complex elevator and escalator solutions contribute to our iconic brand, reputation and competitive position in the industry.
Item 1 / Business / Management assessment of competitive position · Filed 05/02/2026
These independent service providers have an aggregate portfolio of about 50% of service units, but account for a smaller percentage of the service business when measured by value because of the types of units and level of maintenance covered by these providers.
Item 1 / Business / Independent service providers · Filed 05/02/2026
Our Service sales personnel seek to win service contracts upon the expiration or termination of existing service contracts from customers by offering a superior value proposition through service excellence, an engaged and technically sophisticated group of field service technicians, a streamlined customer experience and reliable elevator and escalator operating performance.
Item 1 / Business / Competition for expiring service contracts · Filed 05/02/2026
The Service segment provides maintenance and repair services for both our products and those of other manufacturers, and provides modernization services to upgrade elevators and escalators.
Note 16 / Segment Financial Data / Service segment · Filed 23/07/2026
Higher volume and improved pricing were partially offset by higher costs resulting from organizational initiatives, higher labor costs including the impact of ongoing costs to support operational execution and productivity, higher material costs, and mix.
MD&A / Service / Six months ended June 30, 2026 / Pricing and operating costs · Filed 23/07/2026
Operating margin decreased (160) basis points.
MD&A / Service / Six months ended June 30, 2026 / Operating margin · Filed 23/07/2026
Six Months Ended June 30, 2026 Net sales The organic sales increase of 7% is due to increases in maintenance and repair of 5% and in modernization of 16%.
MD&A / Service / Six months ended June 30, 2026 / Organic sales growth · Filed 23/07/2026
When possible and appropriate, we also include price escalation linked to commodity prices in contracts with our customers and take pricing actions for future contracts.
Market risk / Commodity pricing / Customer escalation provisions · Filed 05/02/2026
However, products and services delivered to our customers can be provided a year or more after being agreed to, and not all raw material price increases can be passed along to customers with existing contracts.
Market risk / Commodity pricing / Existing contract limitations · Filed 05/02/2026
30 Table of Contents Gross Margin (dollars in millions) 2025 2024 2023 Gross margin $ 4,370 $ 4,257 $ 4,193 Gross margin percentage 30.3 % 29.9 % 29.5 % Gross margin percentage increased 40 basis points in 2025 compared to 2024, primarily due to the increase in Service sales and decrease in New Equipment sales and the benefits from productivity, partially offset by the inflationary pressures described above.
MD&A / Gross Margin / 2023–2025 results and drivers · Filed 05/02/2026
Gross Margin Quarter Ended June 30, Six Months Ended June 30, (dollars in millions) 2026 2025 2026 2025 Gross margin $ 1,136 $ 1,089 $ 2,218 $ 2,090 Gross margin percentage 29.4 % 30.3 % 29.9 % 30.1 % Gross margin percentage decreased (90) basis points and (20) basis points for the quarter and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, due to the cost increases described above, partially offset by an increase in Service sales and decrease in New Equipment sales.
MD&A / Gross Margin / Quarter and six months ended June 30, 2026 · Filed 23/07/2026
9 Table of Contents OTIS WORLDWIDE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, (dollars in millions) 2026 2025 Operating Activities: Net income $ 802 $ 679 Adjustments to reconcile net income to net cash flows provided by operating activities: Depreciation and amortization 83 86 Deferred income tax expense (benefit) (38) (74) Stock compensation cost 39 44 Change in operating assets and liabilities, net of acquisitions: Accounts receivable, net (300) (146) Contract assets and liabilities, current 284 70 Inventories (79) (15) Other current assets 67 10 Accounts payable (48) (212) Accrued liabilities (68) 23 Pension contributions (21) (27) Other operating activities, net (41) (33) Net cash flows provided by (used in) operating activities 680 405 Investing Activities: Capital expenditures (77) (70) Acquisitions of businesses and intangible assets, net of cash (Note 5) (193) (82) Net proceeds from the sale of fixed assets — 34 Purchase of short-term investments (84) — Receipts (payments) on settlements of derivative contracts 35 (200) Other investing activities, net 3 (2) Net cash flows provided by (used in) investing activities (316) (320) Financing Activities: Net proceeds from (repayments of) borrowings (maturities of 90 days or less) (33) 473 Proceeds from issuance of long-term debt 700 — Payment of debt issuance costs (5) — Repayment of long-term debt (135) (1,300) Dividends paid on Common Stock (330) (319) Repurchases of Common Stock (807) (561) Acquisition of noncontrolling interest shares (10) — Dividends paid to noncontrolling interest (7) (5) Other financing activities, net 6 (10) Net cash flows provided by (used in) financing activities (621) (1,722) Effect of exchange rate changes on cash and cash equivalents 1 19 Net increase (decrease) in cash, cash equivalents and restricted cash (256) (1,618) Cash, cash equivalents and restricted cash, beginning of year 1,105 2,321 Cash, cash equivalents and restricted cash, end of period 849 703 Less: Restricted cash 36 15 Cash and cash equivalents, end of period $ 813 $ 688 See accompanying Notes to Condensed Consolidated Financial Statements.
Condensed Consolidated Statements of Cash Flows / Six months ended June 30, 2026 and 2025 · Filed 23/07/2026
2025 Results Percentage change from 2024 SALES GAAP $14.4B ~Flat organic sales growth(1) BACKLOG / UNITS New Equipment backlog growth(1) 2% 2% Modernization backlog growth(1) 30% 30% Maintenance portfolio growth 4% 4% CASH FLOW Operating cash flow $1.6B ~2% Adjusted free cash flow(1) $1.6B ~1% DILUTED EARNINGS PER SHARE GAAP $3.50 (14%) Adjusted(1) $4.05 6% (1) As defined more fully in Appendix A on pages 108-111, Otis refers to non-GAAP sales as organic sales, non-GAAP backlog growth at constant currency as backlog growth, non-GAAP operating profit as adjusted operating profit, non-GAAP cash flow as adjusted free cash flow and non-GAAP diluted earnings per share as adjusted diluted EPS.
Proxy statement / 2025 financial highlights / Cash flow and earnings · Filed 17/04/2026
The table below presents approximate cash outflows related to the restructuring actions during the six months ended June 30, 2026, and the expected cash payments to complete the actions announced: (dollars in millions) UpLift Actions Other Actions Total Restructuring Cash outflows during the six months ended June 30, 2026 $ 14 $ 12 $ 26 Expected cash payments remaining to complete actions announced 44 42 86 The approved UpLift restructuring actions generated approximately $103 million in annual recurring savings at the end of 2025, primarily in Selling, general and administrative expenses, and of which approximately $51 million was realized during the six months ended June 30, 2026, including $12 million of incremental savings compared to the same period in 2025.
MD&A / Restructuring / Cash commitments and realized UpLift savings · Filed 23/07/2026
Performance Goals Threshold Target Maximum Actual Weight Payout Factor Cumulative EPS $9.49 $11.16 $12.83 $11.42 60% 1.16 Average Organic Sales Growth 1.0% 3.0% 5.0% 2.4% 40% 0.85 Weighted Average of Performance Goals 1.03 Relative TSR Multiplier -20% Final Payout Factor 0.82 Holders of 2023-2025 PSUs received a payout equal to 82% of the sum of the target number of PSUs granted plus any accumulated dividend equivalents.
Executive compensation / Actual 2023–2025 PSU performance and payout · Filed 17/04/2026
Responsive Actions Across our numerous shareholder conversations since last year’s annual meeting, the primary feedback we heard was that while our shareholders continued to express strong overall support for our structural compensation programs and design, the 2025 Say-on-Pay vote outcome was related specifically and narrowly to the granting of one-time equity awards in 2024 to certain Named Executive Officers (NEOs), primarily our CEO, Judy Marks.
Executive compensation / Shareholder feedback on 2024 one-time equity awards · Filed 17/04/2026
In August 2025, Kathy Hopinkah Hannan was appointed as the new Compensation Committee Chair, and the Compensation Committee appointed a new leading independent compensation consultant to conduct a fresh review of our compensation program and ensure continued objective advice on program design and alignment with shareholder interests.
Independent Lead Director letter / Compensation oversight changes · Filed 17/04/2026
These include: • The Audit Committee, composed solely of independent directors, engages in regular executive sessions with PwC.
Audit Committee / Independent membership and auditor executive sessions · Filed 17/04/2026
92 // 112 TABLE OF CONTENTS Proposal 3 Policy on Audit Committee preapproval of audit and permissible non-audit services of independent auditor The Audit Committee has adopted procedures requiring its review and approval in advance of all audit and permissible non-audit services provided by Otis’ independent auditor.
Audit Committee / Adopted auditor service preapproval procedures · Filed 17/04/2026
107 // 112 TABLE OF CONTENTS Appendix A: Reconciliation of GAAP measures to corresponding non-GAAP measures RECONCILIATION OF OPERATING PROFIT & OPERATING PROFIT MARGIN (GAAP) TO CORRESPONDING NON-GAAP MEASURES Year Ended December 31, (dollars in millions) 2025 ($) 2024 ($) Net Sales New Equipment 4,989 5,367 Service 9,442 8,894 Total Net Sales 14,431 14,261 Operating Profit New Equipment 240 329 Service 2,374 2,185 Total segment operating profit 2,614 2,514 Corporate and Unallocated (481) (506) Total Otis GAAP Operating Profit 2,133 2,008 UpLift restructuring 76 31 Other restructuring 54 40 UpLift transformation costs 69 65 Separation-related adjustments(1) 70 177 Litigation-related settlements costs(2) 21 18 Held for sale impairment 10 18 Other, net 1 (1) Total Otis Adjusted Operating Profit 2,434 2,356 Reported Total Operating Profit Margin 14.8% 14.1% Adjusted Total Operating Profit Margin 16.9% 16.5% (1) Separation-related adjustments in the year ended December 31, 2025, represent estimated amounts due to RTX Corporation (our former parent) in accordance with the Tax Matters Agreement, including those amounts related to a favorable ruling received in August 2024 regarding a tax litigation in Germany.
Appendix A / 2025 and 2024 segment results and GAAP reconciliation · Filed 17/04/2026
