Segment Financial Data

3 Months Ended

Mar. 31, 2025

Segment Reporting [Abstract]

Segment Financial Data

Segment Financial Data

Our operations are classified into two operating segments: New Equipment and Service. Through the New Equipment segment, we design, manufacture, sell and install a wide range of passenger and freight elevators as well as escalators and moving walkways to customers in the residential, commercial and infrastructure projects. 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. The operating segments are generally based on the management structure of the Company, as well as how management allocates resources, assesses performance and makes strategic and operational decisions.

Segment Information. Otis discloses segment operating profit as its measure of segment performance, reconciled to Net income before income taxes. Segment operating profit excludes certain expenses and income that are not allocated to segments (as described below in "Corporate and Unallocated").

Otis' Chief Operating Decision Maker ("CODM"), is the Company's Chief Executive Officer. The CODM assesses the performance of each operating segment and allocates resources to those segments based on net sales and segment operating profit. The CODM compares segment operating profit results to prior periods and forecasted amounts to assess performance and to make decisions regarding the allocation of capital and other investments. The discrete asset information for each segment is not presented to, or reviewed by, the CODM.

Segment information for the quarter ended March 31, 2025 is as follows:

	Quarter Ended March 31, 2025
(dollars in millions)	New Equipment		Service		Total
Net Sales	$	1,163	$	2,187	$	3,350
Costs and expenses:
Cost of sales	962		1,363		2,325
Selling, general and administrative	110		282		392
Other including research and development	25		5		30
Total segment operating profit	$	66	$	537	603
Corporate and Unallocated
General corporate expenses and other					43
UpLift restructuring					20
Other restructuring					23
UpLift transformation costs					23
Separation-related adjustments					52
Litigation-related settlement costs					21
Held for sale impairment					10
Total company operating profit					411
Non-service pension cost (benefit)					—
Interest expense (income), net					45
Net income before income taxes					$	366

Segment information for the quarter ended March 31, 2024 is as follows:

	Quarter Ended March 31, 2024
(dollars in millions)	New Equipment		Service		Total
Net Sales	$	1,280	$	2,157	$	3,437
Costs and expenses:
Cost of sales	1,065		1,339		2,404
Selling, general and administrative	121		291		412
Other including research and development	23		4		27
Total segment operating profit	$	71	$	523	594
Corporate and Unallocated
General corporate expenses and other					33
UpLift restructuring					1
Other restructuring					19
UpLift transformation costs					12
Separation-related adjustments					(15)
Total company operating profit					544
Non-service pension cost (benefit)					—
Interest expense (income), net					44
Net income before income taxes					$	500

Corporate and Unallocated includes adjustments related to the Separation, litigation-related settlement costs, impairment loss related to net assets held for sale, restructuring costs and UpLift transformation costs.

Separation-related adjustments, represent net adjustments of amounts due to and from RTX in accordance with the TMA. Separation-related adjustments in 2025 represent amounts due to RTX related to a favorable ruling received in August 2024 regarding the German tax litigation. Separation-related adjustments in 2024 include a reduction of our contractual indemnity obligation payable to RTX that resulted from the TMA and receipts from RTX in accordance with the TMA. These adjustments are recorded in Other income (expense), net in our Condensed Consolidated Statements of Operations during the quarters ended March 31, 2025 and 2024, respectively. See Note 11, "Income Taxes" and Note 16, "Contingent Liabilities" for additional information about the German tax litigation.

Litigation-related settlement costs in quarter ended March 31, 2025 represent the aggregate amount of settlement costs and increase in loss contingency accruals, excluding legal costs, for certain legal matters that are outside of the ordinary course of business due to the size, complexity and/or unique facts of these matters.

Impairment loss related to net assets held for sale is recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations in the quarter ended March 31, 2025. See Note 6, "Business Acquisitions, Dispositions, Goodwill and Intangible Assets" for additional information about the held for sale assets and liabilities.

Refer to Note 12, "Restructuring and Transformation Costs" for more information about restructuring and UpLift transformation costs.