Item 1. Financial Statements

OTIS WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

						Quarter Ended March 31,
(dollars in millions, except per share amounts; shares in millions)						2025						2024
Net sales:
Product sales						$	1,163					$	1,280
Service sales						2,187						2,157
						3,350						3,437
Costs and expenses:
Cost of products sold						976						1,067
Cost of services sold						1,373						1,342
Research and development						37						36
Selling, general and administrative						464						462
						2,850						2,907
Other income (expense), net						(89)						14
Operating profit						411						544
Non-service pension cost (benefit)						—						—
Interest expense (income), net						45						44
Net income before income taxes						366						500
Income tax expense (benefit)						110						126
Net income						256						374
Less: Noncontrolling interest in subsidiaries' earnings						13						21
Net income attributable to Otis Worldwide Corporation						$	243					$	353
Earnings per share (Note 2):
Basic						$	0.61					$	0.87
Diluted						$	0.61					$	0.86
Weighted average number of shares outstanding:
Basic shares						396.6						405.2
Diluted shares						399.1						408.1

See accompanying Notes to Condensed Consolidated Financial Statements.

OTIS WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Net income						$	256					$	374
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments						(123)						(25)
Pension and postretirement benefit plan adjustments						1						9
Change in unrealized cash flow hedging						—						3
Other comprehensive income (loss), net of tax						(122)						(13)
Comprehensive income (loss), net of tax						134						361
Less: Comprehensive (income) loss attributable to noncontrolling interest						(17)						(14)
Comprehensive income attributable to Otis Worldwide Corporation						$	117					$	347

See accompanying Notes to Condensed Consolidated Financial Statements.

OTIS WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in millions)						March 31, 2025						December 31, 2024
Assets
Cash and cash equivalents						$	1,918					$	2,300
Accounts receivable						3,570						3,428
Contract assets						690						706
Inventories						586						557
Other current assets						671						679
Total Current Assets						7,435						7,670
Future income tax benefits						305						302
Fixed assets (net of accumulated depreciation of $1,201 and $1,192)						708						701
Operating lease right-of-use assets						456						422
Intangible assets, net						326						311
Goodwill						1,588						1,548
Other assets						360						362
Total Assets						$	11,178					$	11,316
Liabilities and Equity (Deficit)
Short-term borrowings and current portion of long-term debt						$	1,483					$	1,351
Accounts payable						1,618						1,879
Accrued liabilities						1,921						1,921
Contract liabilities						2,870						2,598
Total Current Liabilities						7,892						7,749
Long-term debt						6,923						6,973
Future pension and postretirement benefit obligations						432						434
Operating lease liabilities						319						298
Future income tax obligations						217						207
Other long-term liabilities						386						383
Total Liabilities						16,169						16,044
Commitments and contingent liabilities (Note 16)
Redeemable noncontrolling interest						62						57
Shareholders' Equity (Deficit):
Common Stock and additional paid-in capital						278						265
Treasury Stock						(3,646)						(3,390)
Accumulated deficit						(889)						(978)
Accumulated other comprehensive income (loss)						(871)						(745)
Total Shareholders' Equity (Deficit)						(5,128)						(4,848)
Noncontrolling interest						75						63
Total Equity (Deficit)						(5,053)						(4,785)
Total Liabilities and Equity (Deficit)						$	11,178					$	11,316

See accompanying Notes to Condensed Consolidated Financial Statements.

OTIS WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(dollars in millions, except per share amounts)																		Common Stock and Additional Paid-In Capital						Treasury Stock						Accumulated Deficit						Accumulated Other Comprehensive Income (Loss)						Total Shareholders' (Deficit) Equity						Noncontrolling Interest						Total (Deficit) Equity						Redeemable Noncontrolling Interest
Quarter Ended March 31, 2025
Balance as of December 31, 2024																		$	265					$	(3,390)					$	(978)					$	(745)					$	(4,848)					$	63					$	(4,785)					$	57
Net income																		—						—						243						—						243						13						256						—
Other comprehensive income (loss), net of tax																		—						—						—						(126)						(126)						2						(124)						2
Stock-based compensation and Common Stock issued under employee plans																		13						—						—						—						13						—						13						—
Cash dividends declared ($0.39 per common share)																		—						—						(155)						—						(155)						—						(155)						—
Repurchase of Common Shares																		—						(256)						—						—						(256)						—						(256)						—
Dividends attributable to noncontrolling interest																		—						—						—						—						—						(2)						(2)						—
Acquisitions, disposals and other changes																		—						—						1						—						1						(1)						—						3
Balance as of March 31, 2025																		$	278					$	(3,646)					$	(889)					$	(871)					$	(5,128)					$	75					$	(5,053)					$	62
Quarter Ended March 31, 2024
Balance as of December 31, 2023																		$	213					$	(2,382)					$	(2,005)					$	(750)					$	(4,924)					$	69					$	(4,855)					$	135
Net income																		—						—						353						—						353						18						371						3
Other comprehensive income (loss), net of tax																		—						—						—						(6)						(6)						(2)						(8)						(5)
Stock-based compensation and Common Stock issued under employee plans																		(2)						—						(1)						—						(3)						—						(3)						—
Cash dividends declared ($0.34 per common share)																		—						—						(138)						—						(138)						—						(138)						—
Repurchase of Common Shares																		—						(302)						—						—						(302)						—						(302)						—
Dividends attributable to noncontrolling interest																		—						—						—						—						—						(1)						(1)						(8)
Acquisitions, disposals and other changes																		(1)						—						(3)						—						(4)						—						(4)						(1)
Balance as of March 31, 2024																		$	210					$	(2,684)					$	(1,794)					$	(756)					$	(5,024)					$	84					$	(4,940)					$	124

See accompanying Notes to Condensed Consolidated Financial Statements.

OTIS WORLDWIDE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Operating Activities:
Net income						$	256					$	374
Adjustments to reconcile net income to net cash flows provided by operating activities, net of acquisitions and dispositions:
Depreciation and amortization						42						44
Deferred income tax expense (benefit)						—						16
Stock compensation cost						21						16
Change in operating assets and liabilities:
Accounts receivable, net						(104)						(162)
Contract assets and liabilities, current						260						275
Inventories						(18)						9
Other current assets						(2)						(24)
Accounts payable						(281)						(217)
Accrued liabilities						12						(142)
Pension contributions						(18)						(12)
Other operating activities, net						22						(6)
Net cash flows provided by (used in) operating activities						190						171
Investing Activities:
Capital expenditures						(34)						(31)
Acquisitions of businesses and intangible assets, net of cash (Note 6)						(36)						(30)
Receipts (payments) on settlements of derivative contracts						(93)						(21)
Other investing activities, net						2						3
Net cash flows provided by (used in) investing activities						(161)						(79)
Financing Activities:
Net proceeds from (repayments of) borrowings (maturities of 90 days or less)						(11)						3
Dividends paid on Common Stock						(155)						(138)
Repurchases of Common Stock						(253)						(300)
Acquisition of noncontrolling interest shares						—						(4)
Dividends paid to noncontrolling interest						(2)						(9)
Other financing activities, net						(7)						(19)
Net cash flows provided by (used in) financing activities						(428)						(467)
Effect of exchange rate changes on cash and cash equivalents						7						(18)
Net increase (decrease) in cash, cash equivalents and restricted cash						(392)						(393)
Cash, cash equivalents and restricted cash, beginning of year						2,321						1,280
Cash, cash equivalents and restricted cash, end of period						1,929						887
Less: Restricted cash						11						3
Cash and cash equivalents, end of period						$	1,918					$	884

See accompanying Notes to Condensed Consolidated Financial Statements.

OTIS WORLDWIDE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1: General

The Condensed Consolidated Financial Statements as of March 31, 2025 and for the quarters ended March 31, 2025 and 2024 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The Condensed Consolidated Balance Sheet as of December 31, 2024 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States ("U.S."). The results reported in these Condensed Consolidated Financial Statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the Company's annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for fiscal year 2024 ("2024 Form 10-K" or "Form 10-K").

Unless the context otherwise requires, references to "Otis," "we," "us," "our" and "the Company" refer to Otis Worldwide Corporation and its subsidiaries.

There have been no changes to the Company's significant accounting policies described in the Company's 2024 Form 10-K that have a material impact on the Company's Condensed Consolidated Financial Statements and the related notes.

Use of Estimates. The preparation of these Condensed Consolidated Financial Statements and accompanying notes in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates.

We assessed certain accounting matters that generally require consideration of forecasted financial information in the context of the information reasonably available to us and the unknown future impacts of macroeconomic developments, including inflationary pressures, higher interest rates, tighter credit conditions and changes in global trade policies including higher tariffs in the U.S. and other countries, as of March 31, 2025 and through the date of this report. The accounting matters assessed included, but were not limited to, our allowance for credit losses, the carrying value of our goodwill and other long-lived assets, financial assets and revenue recognition. While there was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2025 and for the quarters ended March 31, 2025 and 2024 resulting from our assessments of these matters, future assessment of our expectations of the magnitude and duration of these macroeconomic developments, as well as other factors, could result in material impacts to our Condensed Consolidated Financial Statements in future reporting periods.

New import tariffs implemented by the U.S. and other countries, as currently in effect, could have a material impact on our results for the remainder of 2025 and in the future. The impact of tariffs is dependent upon negotiations with customers and suppliers and other mitigation efforts and potential further changes in global trade policies, including higher tariffs in the U.S. or other countries.

We also assessed certain accounting matters as they relate to the ongoing conflict between Russia and Ukraine and the conflicts in the Middle East, including, but not limited to, our allowance for credit losses, the carrying value of long-lived assets, revenue recognition and the classification of assets. There was not a material impact to our Condensed Consolidated Financial Statements as of March 31, 2025 and for the quarters ended March 31, 2025 and 2024 resulting from our assessment of these matters. We continue to assess the impact on our results of operations, financial position and overall performance as the situations develop and any broader implications they may have on the global economy.

German Tax Litigation. In August 2024, we received a favorable ruling regarding a tax litigation in Germany. As a result, our Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 include an income tax receivable of approximately $180 million and $175 million, respectively, and an interest receivable of approximately $150 million and $140 million, respectively.

Pursuant to the Tax Matters Agreement ("TMA") with RTX Corporation ("RTX", our former parent), and based on the facts and contractual provisions at the time, the Company estimated the amount payable to RTX as a result of the outcome of the German tax litigation to be $194 million as of December 31, 2024. Based on additional information received from RTX in the quarter ended March 31, 2025, the Company now estimates the amount payable to RTX to be $246 million, resulting in indemnification expense of $52 million in the quarter ended March 31, 2025. This indemnification expense is included in Other (expense) income, net in the Condensed Consolidated Statements of Operations for the quarter ended March 31, 2025. This estimate could further change due to the Company's limited access to information held by RTX and the parties' continuing discussion to resolve the scope of the indemnity obligation and the final indemnity amount.

See Note 11, "Income Taxes" and Note 16, "Contingent Liabilities" for additional information.

Supplier Finance Programs. Certain Otis subsidiaries participate in supplier finance programs, under which we agree to pay third-party financial institutions the stated amounts of confirmed invoices from suppliers on the original due dates of the invoices, while the participating suppliers generally have the ability to sell, or otherwise pledge as collateral, their receivables from the Company to the participating financial institutions. The outstanding obligations confirmed by the Company as valid to the financial institutions under our supplier finance programs were $555 million and $714 million as of March 31, 2025 and December 31, 2024, respectively, including $110 million and $67 million as of March 31, 2025 and December 31, 2024, respectively, related to programs with payment terms of 240 days from the invoice date. These obligations are included in Accounts payable in the Condensed Consolidated Balance Sheets, and all activity related to the obligations is presented within operating activities in the Condensed Consolidated Statements of Cash Flows.

Refer to Note 2 of the Company's audited consolidated financial statements and notes thereto included in our 2024 Form 10-K for additional details regarding the Company's supplier financing programs.

Note 2: Earnings per Share

						Quarter Ended March 31,
(dollars in millions, except per share amounts; shares in millions)						2025						2024
Net income attributable to common shareholders						$	243					$	353
Basic weighted average number of shares outstanding						396.6						405.2
Stock awards and equity units (share equivalent)						2.5						2.9
Diluted weighted average number of shares outstanding						399.1						408.1
Earnings Per Share of Common Stock:
Basic						$	0.61					$	0.87
Diluted						$	0.61					$	0.86

The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of Otis' common stock ("Common Stock") is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards' assumed proceeds exceed the average market price of the common shares during the period. Lastly, the computations of diluted earnings per share include outstanding awards granted prior to the separation and distribution ("Separation") of each of Otis and Carrier Global Corporation from United Technologies Corporation ("UTC"), subsequently renamed RTX Corporation, and converted upon the Separation, in accordance with the Employee Matters Agreement, dated as of April 2, 2020, by the among UTC, Otis and Carrier Global Corporation. There were 0.5 million of anti-dilutive stock awards excluded from the computation for the quarter ended March 31, 2025, compared to 1.4 million for the same period in 2024.

The impact of redeemable noncontrolling interest to Net income attributable to common shareholders was immaterial in the quarters ended March 31, 2025 and 2024.

Note 3: Revenue Recognition

We account for revenue in accordance with Accounting Standards Codification ("ASC") Topic 606: Revenue from Contracts with Customers.

Contract Assets and Liabilities. Contract assets reflect revenue recognized in advance of customer billing. Contract liabilities are recognized when a customer pays consideration, or we have an unconditional right to receive consideration, in advance of the satisfaction of performance obligations under the contract. We receive payments from customers based on the terms established in our contracts, which are payments in advance of performing work, progress payments as we perform contract work over time, or in some cases, payments upon completion of work.

Total Contract assets and Contract liabilities as of March 31, 2025 and December 31, 2024 are as follows:

(dollars in millions)						March 31, 2025						December 31, 2024
Contract assets, current						$	690					$	706
Total contract assets						690						706
Contract liabilities, current						2,870						2,598
Contract liabilities, non-current (included within Other long-term liabilities)						38						38
Total contract liabilities						2,908						2,636
Net contract liabilities						$	2,218					$	1,930

Contract assets decreased by $16 million during the quarter ended March 31, 2025 as a result of the progression of current contracts and timing of billing on customer contracts. Contract liabilities increased by $272 million during the quarter ended March 31, 2025 primarily due to billings on contracts in excess of revenue earned.

In the quarters ended March 31, 2025 and 2024, we recognized revenue of approximately $1.0 billion each quarter related to contract liabilities as of January 1, 2025 and 2024.

Remaining Performance Obligations ("RPO"). RPO represents the aggregate amount of total contract transaction price that is unsatisfied or partially unsatisfied. As of March 31, 2025, our total RPO was approximately $18.6 billion. Of the total RPO as of March 31, 2025, we expect approximately 90% will be recognized as sales over the following 24 months.

Note 4: Accounts Receivable, Net

Accounts receivable, net consisted of the following as of March 31, 2025 and December 31, 2024:

(dollars in millions)						March 31, 2025						December 31, 2024
Accounts receivable						$	3,689					$	3,553
Allowance for expected credit losses						(119)						(125)
Accounts receivable, net						$	3,570					$	3,428

Note 5: Inventories

Inventories consisted of the following as of March 31, 2025 and December 31, 2024:

(dollars in millions)						March 31, 2025						December 31, 2024
Raw materials and work-in-process						$	127					$	134
Finished goods						459						423
Total						$	586					$	557

Raw materials, work-in-process and finished goods are net of valuation write-downs of $85 million and $82 million as of March 31, 2025 and December 31, 2024, respectively.

Note 6: Business Acquisitions, Dispositions, Goodwill and Intangible Assets

Business Acquisitions. Our acquisitions of businesses and intangible assets, net of cash, totaled $36 million and $30 million in the quarters ended March 31, 2025 and 2024, respectively, and were primarily in our Service segment. Transaction costs incurred were not considered significant.

Goodwill. Changes in our Goodwill balance during the quarter ended March 31, 2025 were as follows:

(dollars in millions)						Balance as of December 31, 2024						Goodwill Resulting from Business Combinations												Foreign Currency Translation and Other						Balance as of March 31, 2025
New Equipment						$	277					$	—											$	5					$	282
Service						1,271						18												17						1,306
Total						$	1,548					$	18											$	22					$	1,588

Intangible Assets. Intangible assets cost and accumulated amortization were $2,082 million and $1,756 million, respectively, as of March 31, 2025, and $2,006 million and $1,695 million, respectively, as of December 31, 2024.

Amortization of intangible assets was $15 million for the quarters ended March 31, 2025 and 2024. Excluding the impact of acquisitions and currency translation adjustments, there were no other significant changes in our Intangible assets during the quarters ended March 31, 2025 and 2024.

Held For Sale Assets and Liabilities. Assets and liabilities held for sale were $20 million and $11 million, respectively, as of March 31, 2025, and $38 million and $9 million, respectively, as of December 31, 2024, and are included in Other current assets and Accrued liabilities, respectively, in the Condensed Consolidated Balance Sheets.

As of March 31, 2025, the assets and liabilities of one of our non-U.S. subsidiaries, primarily in the Service segment, are classified as assets and liabilities held for sale. It is the Company's intention to complete the sale of these assets and liabilities within the next 12 months. These assets and liabilities held for sale were $8 million and $11 million, respectively, as of March 31, 2025, and $25 million and $9 million, respectively, as of December 31, 2024. The Company recorded an impairment loss of $10 million related to the net assets held for sale in Other income (expense), net in the Condensed Consolidated Statements of Operations in the quarter ended March 31, 2025.

Note 7: Borrowings and Lines of Credit

(dollars in millions)						March 31, 2025						December 31, 2024
Commercial paper						$	—					$	—
Other borrowings						40						51
Total short-term borrowings						$	40					$	51

Commercial Paper. As of March 31, 2025, there were no borrowings outstanding under the Company's $1.5 billion commercial paper programs. We use our commercial paper borrowings for general corporate purposes including to finance acquisitions, pay dividends, repurchase shares and for debt refinancing. The need for commercial paper borrowings may arise if the use of domestic cash for general corporate purposes exceeds the sum of domestic cash generation and foreign cash repatriated to the U.S.

For details regarding the Company's short-term borrowing activity in 2024, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2024 Form 10-K.

Long-term debt.

As of March 31, 2025, we had a revolving credit agreement with various banks providing for a $1.5 billion unsecured, unsubordinated five-year revolving credit facility, maturing March 10, 2028. As of March 31, 2025, there were no borrowings under the revolving credit agreement. As of March 31, 2025, the Company is in compliance with all covenants in the revolving credit agreement and the indentures governing all outstanding long-term debt. Long-term debt consisted of the following:

(dollars in millions)						March 31, 2025						December 31, 2024
2.056% notes due 2025						$	1,300					$	1,300
0.370% notes due 2026 (¥21.5 billion principal value)						143						137
0.318% notes due 2026 (€600 million principal value)						650						624
2.293% notes due 2027						500						500
2.875% notes due 2027 (€850 million principal value)						920						885
5.250% notes due 2028						750						750
2.565% notes due 2030						1,500						1,500
5.125% notes due 2031						600						600
0.934% notes due 2031 (€500 million principal value)						541						520
3.112% notes due 2040						750						750
3.362% notes due 2050						750						750
Other (including finance leases)						8						6
Total principal long-term debt						8,412						8,322
Other (discounts and debt issuance costs)						(46)						(49)
Total long-term debt						8,366						8,273
Less: current portion						1,443						1,300
Long-term debt, net of current portion						$	6,923					$	6,973

We may redeem any series of notes at our option pursuant to certain terms. For additional details regarding the Company's debt activity in 2024, refer to Note 9 of the Company's audited consolidated financial statements and notes thereto included in our 2024 Form 10-K.

Debt discounts and debt issuance costs are presented as a reduction of debt on the Condensed Consolidated Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Condensed Consolidated Statements of Operations for the quarters ended March 31, 2025 and 2024 reflects the following:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Debt issuance costs amortization						$	3					$	2
Total interest expense on external debt						57						43

The unamortized debt issuance costs as of March 31, 2025 and December 31, 2024 were $42 million and $45 million, respectively.

The weighted average maturity of our long-term debt as of March 31, 2025 is approximately 6.2 years. The weighted average interest expense rate on our borrowings outstanding as of March 31, 2025 and December 31, 2024 was as follows:

						March 31, 2025						December 31, 2024
Short-term commercial paper						—%						—%
Total long-term debt						2.7%						2.7%

The weighted average interest expense rate on our borrowings during the quarters ended March 31, 2025 and 2024 was as follows:

						Quarter Ended March 31,
						2025						2024
Short-term commercial paper						—%						5.5%
Total long-term debt						2.7%						2.5%

Note 8: Employee Benefit Plans

Pension and Postretirement Plans. The Company sponsors both funded and unfunded domestic and foreign defined benefit pension and other postretirement benefit plans, and defined contribution plans. Contributions to our plans were as follows:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Defined benefit plans						$	18					$	12
Defined contribution plans						21						20
Multi-employer pension and postretirement plans						39						40

The following table illustrates the components of net periodic benefit cost for the Company's defined benefit pension plans:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Service cost						$	8					$	8
Interest cost						8						8
Expected return on plan assets						(9)						(8)
Recognized actuarial net loss						1						—
Total net periodic benefit cost						$	8					$	8

Postretirement Benefit Plans. The Company sponsors postretirement benefit plans that provide health benefits to eligible retirees. The postretirement plans are unfunded. The net periodic benefit cost was less than $1 million for the quarters ended March 31, 2025 and 2024.

Stock-based Compensation. The Company adopted the 2020 Long-Term Incentive Plan (the "Plan") effective April 3, 2020. As of March 31, 2025, approximately 18 million shares remain available for awards under the Plan.

The Company measures the cost of all share-based payments, including stock options, at fair value on the grant date and recognizes this cost in the Condensed Consolidated Statements of Operations over the award's applicable vesting period. A forfeiture rate assumption is applied on grant date to adjust the expense recognition for awards that are not expected to vest.

Stock-based compensation expense and the resulting tax benefits were as follows:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Stock-based compensation expense (Share Based)						$	21					$	16
Less: future tax benefit						(2)						(2)
Stock-based compensation expense, net of tax						$	19					$	14

As of March 31, 2025, following our annual grant issuance on February 4, 2025, there was approximately $148 million of total unrecognized compensation cost related to non-vested equity awards granted under the Plan. This cost is expected to be recognized ratably over a weighted-average period of 2.1 years.

Note 9: Stock

Preferred Stock. There are 125 million shares of $0.01 par value Preferred Stock authorized, of which none were issued as of March 31, 2025 and December 31, 2024.

Common Stock. There are 2.0 billion shares of $0.01 par value Common Stock authorized. As of March 31, 2025 and December 31, 2024, 439.1 million and 438.6 million shares of Common Stock were issued, respectively, which includes 43.6 million and 41.0 million shares of treasury stock, respectively.

Treasury Stock. As of December 31, 2024, the Company was authorized by the Board of Directors to purchase up to $2.0 billion of Common Stock under a share repurchase program, of which $200 million was remaining at such time.

On January 16, 2025, our Board of Directors revoked any remaining share repurchase authority under the prior share repurchase program and approved a new share repurchase program for up to $2.0 billion of Common Stock, of which $153 million had been utilized as of March 31, 2025.

During the quarters ended March 31, 2025 and 2024, the Company repurchased 2.6 million and 3.4 million shares, respectively, for $253 million and $300 million, respectively. Share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired in Treasury Stock on the Condensed Consolidated Balance Sheets, as well as within financing activities in the Condensed Consolidated Statements of Cash Flows when paid.

The Company's share repurchase program does not obligate it to acquire any specific number of shares. Under this program, shares may be purchased in the open market, in privately negotiated transactions, under accelerated share repurchase programs or under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Note 10: Accumulated Other Comprehensive Income (Loss)

A summary of the changes in each component of Accumulated other comprehensive income (loss), net of tax, for the quarters ended March 31, 2025 and 2024 is provided below:

(dollars in millions)						Foreign Currency Translation						Defined Benefit Pension and Postretirement Plans												Unrealized Hedging Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Quarter Ended March 31, 2025
Balance as of December 31, 2024						$	(672)					$	(76)											$	3					$	(745)
Other comprehensive income (loss) before reclassifications, net						(127)						—												(1)						(128)
Amounts reclassified, pre-tax						—						1												1						2
Tax benefit reclassified						—						—												—						—
Balance as of March 31, 2025						$	(799)					$	(75)											$	3					$	(871)

(dollars in millions)						Foreign Currency Translation						Defined Benefit Pension and Postretirement Plans												Unrealized Hedging Gains (Losses)						Accumulated Other Comprehensive Income (Loss)
Quarter Ended March 31, 2024
Balance as of December 31, 2023						$	(673)					$	(78)											$	1					$	(750)
Other comprehensive income (loss) before reclassifications, net						(18)						9												2						(7)
Amounts reclassified, pre-tax						—						—												1						1
Tax benefit reclassified						—						—												—						—
Balance as of March 31, 2024						$	(691)					$	(69)											$	4					$	(756)

Amounts reclassified that relate to defined benefit pension and postretirement plans include amortization of prior service costs and actuarial net losses recognized during each period presented. These costs are recorded as components of net periodic pension cost for each period presented. See Note 8, "Employee Benefit Plans" for additional information.

Note 11: Income Taxes

The increase in the effective tax rate for the quarter ended March 31, 2025, is primarily the result of the tax effect of the increase in our estimated nondeductible TMA indemnity obligation payable to RTX, partially offset by a foreign valuation allowance release.

Otis conducts business globally and, as a result, Otis or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the ordinary course of business, Otis could be subject to examination by taxing authorities throughout the world, including such major jurisdictions as Austria, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Netherlands, Portugal, South Korea, Spain, Switzerland, the United Kingdom and the U.S. With a few exceptions, Otis is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2015.

A subsidiary of Otis lost a tax litigation case in Belgium in 2023 and decided not to appeal. Otis expects to receive the assessment for tax and interest in 2025. The associated tax and interest have been fully reserved.

See Note 16, "Contingent Liabilities" for discussion regarding the German tax litigation.

Note 12: Restructuring and Transformation Costs

We initiate restructuring actions to keep our cost structure competitive. Charges generally arise from severance related to workforce reductions, and to a lesser degree, facility exit and lease termination costs associated with the consolidation of office and manufacturing operations. Due to the size, nature and frequency of these discrete actions, they are fundamentally different from the Company's ongoing productivity initiatives.

During the quarters ended March 31, 2025 and 2024, we recorded restructuring costs for new and ongoing restructuring actions, including UpLift actions, as follows:

						Quarter Ended March 31, 2025																		Quarter Ended March 31, 2024
(dollars in millions)						UpLift						Other						Total						UpLift						Other						Total
Cost of products and services sold						$	9					$	15					$	24					$	—					$	5					$	5
Selling, general and administrative						11						8						19						1						14						15
Total						$	20					$	23					$	43					$	1					$	19					$	20

Restructuring costs incurred and expected, unless otherwise indicated, are related approximately 30% to New Equipment and 70% to Service.

UpLift Restructuring Actions and Transformation Costs. In 2023, we announced UpLift to transform our operating model. UpLift includes, among other aspects, the standardization of our processes and improvement of our supply chain procurement, as well as organizational changes which result in restructuring actions.

UpLift restructuring actions were approved in the years ended December 31, 2023 and 2024, as well as in the quarter ended March 31, 2025, with further actions expected through the year ending December 31, 2025. These costs are primarily severance related costs. We expect these actions initiated to be substantially completed and cash to be paid by the end of 2025. Expected total costs and remaining costs to incur for the actions initiated are approximately $110 million and $34 million, respectively.

In the quarters ended March 31, 2025 and 2024, we incurred $23 million and $12 million, respectively, of incremental, non-restructuring costs associated with transforming our operating model as a part of UpLift ("UpLift transformation costs"), which are recorded in Other income (expense), net in the Condensed Consolidated Statements of Operations. The UpLift transformation costs are primarily for consultants, third-party service providers and personnel focused on designing and implementing a centralized service delivery model that supports our new organizational structure, including the standardization of our supply chain and digital technology procurement.

Other Restructuring Actions. The other restructuring expenses incurred during the quarters ended March 31, 2025 and 2024, were primarily the result of restructuring programs initiated during 2025 and 2024 related to severance and facility exit costs. We are targeting to complete in 2025 the majority of the remaining restructuring actions initiated in the quarter ended March 31, 2025 and the full year 2024, with certain utilization beyond 2025 due to contractual obligations or legal requirements in the applicable jurisdictions. Expected total costs and remaining costs to incur for the other restructuring actions initiated are $81 million and $46 million, respectively. Expected total and remaining costs are related approximately 60% to New Equipment and 40% to Service.

Reorganization of Operations in China

In January 2025, we announced the reorganization of our operations in China. Among other aspects, this reorganization will result in restructuring actions of approximately $40 million. These actions include severance related costs, and we expect these actions to be mostly completed and any cash to be paid by the end of 2025. Amounts related to the reorganization of operations in China are included within Other restructuring.

Restructuring Accruals. The following table summarizes the accrual balance and utilization for restructuring actions, which are primarily for severance costs:

(dollars in millions)						UpLift Actions						Other Actions						Total Restructuring Actions
Restructuring accruals as of December 31, 2024						$	13					$	24					$	37
Net restructuring costs						20						23						43
Utilization, foreign exchange and other costs						(11)						(14)						(25)
Restructuring accruals as of March 31, 2025						$	22					$	33					$	55

Note 13: Financial Instruments

We enter into derivative instruments primarily for risk management purposes, including derivatives designated as hedging instruments under ASC 815, Derivatives and Hedging. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, commodity prices and foreign exchange rates. These fluctuations can increase the costs of financing, investing in and operating the business. We may use derivative instruments, including swaps, forward contracts and options, to manage certain foreign currency, commodity price and interest rate exposures.

The four-quarter average of the notional amount of foreign exchange contracts hedging foreign currency transactions was approximately $5.3 billion as of March 31, 2025 and December 31, 2024. The four-quarter average of the notional amount of contracts hedging commodity purchases was $14 million as of March 31, 2025 and December 31, 2024.

The following table summarizes the fair value and presentation on the Condensed Consolidated Balance Sheets for derivative instruments as of March 31, 2025 and December 31, 2024:

(dollars in millions)						Balance Sheet Classification						March 31, 2025						December 31, 2024
Derivatives designated as Cash flow hedging instruments:
						Asset Derivatives:
Foreign exchange contracts						Other current assets						$	5					$	5
Foreign exchange contracts						Other assets						3						4
						Total asset derivatives						$	8					$	9
						Liability Derivatives:
Foreign exchange contracts						Accrued liabilities						$	(3)					$	(4)
Foreign exchange contracts						Other long-term liabilities						(1)						(1)
						Total liability derivatives						$	(4)					$	(5)
Derivatives not designated as Cash flow hedging instruments:
						Asset Derivatives:
Foreign exchange contracts						Other current assets						$	33					$	53
Commodity contracts						Other current assets						1						—
Foreign exchange contracts						Other assets						4						6
						Total asset derivatives						$	38					$	59
						Liability Derivatives:
Foreign exchange contracts						Accrued liabilities						$	(14)					$	(39)
Foreign exchange contracts						Other long-term liabilities						(4)						(6)
						Total liability derivatives						$	(18)					$	(45)

Derivatives designated as Cash flow hedging instruments*.* The amount of gain or (loss) attributable to foreign exchange and commodity contract activity reclassified from Accumulated other comprehensive income (loss) for the quarters ended March 31, 2025 and 2024 was immaterial, and is presented in Note 10, "Accumulated Other Comprehensive Income (Loss)".

The effect of cash flow hedging relationships on Accumulated other comprehensive income (loss) as of March 31, 2025 and December 31, 2024 are presented in the table below:

(dollars in millions)						March 31, 2025						December 31, 2024
Gain (loss) recorded in Accumulated other comprehensive income (loss)						$	3					$	3

The Company utilizes the critical terms match method in assessing firm commitment derivatives and regression testing in assessing commodity derivatives for hedge effectiveness. Accordingly, the hedged items and derivatives designated as hedging instruments are highly effective.

Assuming current market conditions continue, pre-tax gains of less than $1 million are expected to be reclassified from Accumulated other comprehensive income (loss) into Cost of products sold to reflect the fixed prices obtained from foreign exchange and commodity hedging within the next 12 months. All derivative contracts accounted for as cash flow hedges as of March 31, 2025 will mature by December 2028.

Net Investment Hedges. We may use non-derivative instruments (foreign currency denominated borrowings) and derivative instruments (foreign exchange forward contracts) to hedge portions of the Company's investments in foreign subsidiaries and manage foreign exchange risk. For instruments that are designated and qualify as a hedge of net investment in foreign operations and that meet the effectiveness requirements, the net gains or losses attributable to changes in spot exchange rates are recorded in foreign currency translation within Other comprehensive income (loss) on the Condensed Consolidated Statements of Comprehensive Income, and will remain in Accumulated other comprehensive income (loss) until the hedged investment is sold or substantially liquidated. The remainder of the change in value of such instruments is recorded in earnings, including to the extent foreign currency denominated borrowings are not designated in, or are de-designated from, a net investment hedge relationship.

Our use of derivative instruments designated as hedges of the Company's net investment in foreign subsidiaries can vary depending on the Company's desired foreign exchange risk coverage.

We have ¥21.5 billion of Japanese Yen denominated long-term debt that qualifies as a net investment hedge against our investments in Japanese businesses, as well as derivative instruments that qualify as net investment hedges against our investments in certain European businesses (notional amount of €164 million) and Asian businesses (notional amount of HK$1.8 billion). The net investment hedges are deemed to be effective. The maturity dates of the current non-derivative and derivative instruments designated in net investment hedges range from 2025 to 2026.

During the quarter ended March 31, 2025, we de-designated two derivative instruments that qualified as net investment hedges in certain European and Asian businesses with notional amounts of €120 million and ¥2.1 billion respectively, which were deemed to be effective until de-designation.

The following table summarizes the amounts of gains (losses) recognized in other comprehensive income (loss) related to non-derivative and derivative instruments designated as net investment hedges:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Foreign currency denominated long-term debt						$	(6)					$	8
Foreign currency forward contracts						5						—
Total						$	(1)					$	8

Derivatives not designated as Cash flow hedging instruments. The net effect of derivatives not designated as Cash flow hedging instruments within Other income (expense) net, on the Condensed Consolidated Statements of Operations was as follows:

						Quarter Ended March 31,
(dollars in millions)						2025						2024
Foreign exchange contracts						$	6					$	(1)

The effects of derivatives not designated as Cash flow hedge instruments within Cost of products sold on the Condensed Consolidated Statements of Operations were gains of $2 million and losses of less than $1 million in the quarters ended March 31, 2025 and 2024, respectively.

Note 14: Fair Value Measurements

Valuation Techniques. Our marketable securities include investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. The fair value gains or losses related to our marketable securities are recorded through net income. Our derivative assets and liabilities include foreign exchange and commodity contracts that are measured at fair value using internal and third party models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks.

As of March 31, 2025, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks.

Due to their short-term nature, the carrying value approximated fair value for the current portion of the Company’s financial instruments not carried at fair value. The fair value of receivables, including customer financing notes receivable, net, that were issued long-term are based on the discounted values of their related cash flows at interest rates reflecting the attributes of the counterparties, including geographic location. Customer-specific risk, including credit risk, is already considered in the carrying value of those receivables. Our long-term debt, as described in Note 7, "Borrowings and Lines of Credit", is measured at fair value using closing bond prices from active markets.

Recurring Fair Value Measurements. In accordance with the provisions of ASC 820: Fair Value Measurements, the following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and non-recurring basis in our Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024:

						March 31, 2025
(dollars in millions)						Total						Level 1						Level 2						Level 3
Recurring fair value measurements:
Marketable securities						$	45					$	45					$	—					$	—
Derivative assets						46						—						46						—
Derivative liabilities						(22)						—						(22)						—

						December 31, 2024
(dollars in millions)						Total						Level 1						Level 2						Level 3
Recurring fair value measurements:
Marketable securities						$	44					$	44					$	—					$	—
Derivative assets						68						—						68						—
Derivative liabilities						(50)						—						(50)						—

Fair Value of Financial Instruments. The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value as of March 31, 2025 and December 31, 2024:

						March 31, 2025												December 31, 2024
(dollars in millions)						Carrying Amount						Fair Value						Carrying Amount						Fair Value
Long-term receivables, net						$	50					$	49					$	47					$	46
Customer financing notes receivable, net						22						20						21						19
Short-term borrowings						(40)						(40)						(51)						(51)
Long-term debt, including current portion (excluding leases and other)						(8,404)						(7,752)						(8,316)						(7,600)
Long-term liabilities, including current portion						(132)						(125)						(132)						(123)

The following tables provide the valuation hierarchy classification of assets and liabilities that are not carried at fair value in the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024:

						March 31, 2025
(dollars in millions)						Total						Level 1						Level 2						Level 3
Long-term receivables, net						$	49					$	—					$	49					$	—
Customer financing notes receivable, net						20						—						20						—
Short-term borrowings						(40)						—						(40)						—
Long-term debt, including current portion (excluding leases and other)						(7,752)						—						(7,752)						—
Long-term liabilities, including current portion						(125)						—						(125)						—

						December 31, 2024
(dollars in millions)						Total						Level 1						Level 2						Level 3
Long-term receivables, net						$	46					$	—					$	46					$	—
Customer financing notes receivable, net						19						—						19						—
Short-term borrowings						(51)						—						(51)						—
Long-term debt, including current portion (excluding leases and other)						(7,600)						—						(7,600)						—
Long-term liabilities, including current portion						(123)						—						(123)						—

Note 15: Guarantees

The Company provides service and warranty on its products beyond normal service and warranty policies. The carrying amount of service and product guarantees were $15 million and $16 million as of March 31, 2025 and December 31, 2024, respectively.

The Company provides certain financial guarantees to third parties. As of March 31, 2025, Otis has stand-by letters of credit with maximum potential payment totaling $145 million. We accrue costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with ASC Topic 460: Guarantees, we record these liabilities at fair value. As of March 31, 2025, Otis has determined there are no estimated costs probable under these guarantees.

Note 16: Contingent Liabilities

Except as otherwise noted, while we are unable to predict the final outcome, based on information currently available, we do not believe that resolution of any of the following matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition. In addition to the specific amounts noted below, where we have recorded loss contingency accruals for the below and other matters, the amounts in aggregate are not material. Legal costs generally are expensed when incurred.

For details regarding the Company's outstanding liability for environmental obligations, refer to Note 21 of the Company's audited consolidated financial statements and notes thereto included in our 2024 Form 10-K.

Legal Proceedings.

German Tax Litigation

In the third quarter of 2024, Otis prevailed in a German tax litigation case stemming from the 1998 reorganization of the Company's operations in Germany. As a result of winning the case, the Company expects to receive a refund of prepaid tax, prepaid interest, overpayment interest, and court fees of approximately €306 million net of tax (approximately $330 million as of March 31, 2025). The refund will be paid to the Company over several quarters, anticipated to start in 2025.

The recoveries related to this matter are allocated between RTX and the Company pursuant to the terms of the TMA with our former parent, UTC, by way of indemnification payments. As of December 31, 2024, the Company estimated the tax and interest to be paid to RTX as a result of this recovery to be $194 million and recorded this amount in its financial statements for the year ended December 31, 2024. Based on additional information received from RTX in the quarter ended March 31, 2025, the Company now estimates the tax and interest to be paid to RTX to be $246 million and has recorded the additional $52 million in its Condensed Consolidated Financial Statements. This estimate could further change due to the Company's limited access to information held by RTX and the parties' continuing discussion to resolve the scope of the indemnity obligation and the final indemnity amount.

See Note 1, "General" for additional information on the impacts of the TMA activity to the Condensed Consolidated Financial Statements as of and for the quarter ended March 31, 2025.

Asbestos Matters

We have been named as defendants in lawsuits alleging personal injury as a result of exposure to asbestos. While we have never manufactured any asbestos-containing component parts, and no longer incorporate asbestos in any current products, certain of our historical products have contained components manufactured by third parties incorporating asbestos. A substantial majority of these asbestos-related claims have been dismissed without payment or were covered in full or in part by insurance or other forms of indemnity. Additional cases were litigated and settled without any insurance reimbursement. The amounts involved in asbestos-related claims were not material individually or in the aggregate as of and for the periods ended March 31, 2025 and December 31, 2024.

The estimated range of total liabilities to resolve all pending and unasserted potential future asbestos claims through 2059 is approximately $11 million to $21 million as of March 31, 2025 and December 31, 2024. Since no amount within the range of estimates is more likely to occur than any other, we have recorded the minimum amount of $10 million (including $1 million of payments made in the quarter ended March 31, 2025) and $11 million as of March 31, 2025 and December 31, 2024, respectively, which is principally recorded in Other long-term liabilities on our Condensed Consolidated Balance Sheets. Amounts are on a pre-tax basis, not discounted, and exclude the Company's legal fees to defend the asbestos claims (which will continue to be expensed as they are incurred). In addition, the Company has an insurance recovery receivable for probable asbestos-related recoveries of approximately $3 million as of March 31, 2025 and December 31, 2024, which is principally included in Other assets on our Condensed Consolidated Balance Sheets.

Other. We have commitments and contingent liabilities related to legal proceedings, self-insurance programs and matters arising out of the normal course of business. We accrue contingencies based on a range of possible outcomes. If no amount within this range is a better estimate than any other, we accrue the minimum amount. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, we expect that the outcome of such claims, individually or in the aggregate, will not have a material adverse effect on our business, financial condition, cash flows or results of operations.

In certain European countries, claims for overcharges on elevators and escalators related to civil cartel cases have been made, which we have accrued for based on our evaluation of the claims. While it is not possible to determine the ultimate disposition of each of these claims and whether they will be resolved consistent with our beliefs, we do not believe these matters will have a material impact on our business, financial condition, cash flows or results of operations due to our historical settlement experience and the limited number of remaining claims.

In the ordinary course of business, the Company is also routinely a defendant in, party to or otherwise subject to many pending and threatened legal actions, claims, disputes and proceedings. These matters are often based on alleged violations of contract, product liability, warranty, regulatory, environmental, health and safety, employment, intellectual property, tax and other laws. In some of these proceedings, claims for substantial monetary damages are asserted against the Company and its subsidiaries and could result in fines, penalties, compensatory or treble damages or non-monetary relief. We do not believe that these matters will have a material adverse effect upon our competitive position, results of operations, cash flows or financial condition.

Refer to Note 17 for information about litigation-related settlement costs recognized in the quarter ended March 31, 2025 for certain legal matters that are outside of the ordinary course of business.

Note 17: 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.

Note 18: Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04*,* Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"), which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. Additionally, in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which allows ASU 2020-04 to be adopted and applied prospectively to contract modifications made on or before December 31, 2024. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations, which requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a rollforward of those obligations. The guidance does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements, as disclosed in Note 1, "General".

In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Ventures Formations (Subtopic 805-60): Recognition and initial measurement ("ASU 2023-05"), which requires that joint ventures, upon formation, apply a new basis of accounting by initially measuring assets and liabilities at fair value. The amendments in ASU 2023-05 are effective for joint ventures that are formed on or after January 1, 2025. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023. We adopted this standard effective for the reporting period December 31, 2024. The adoption of this standard resulted in additional disclosure. See Note 17, "Segment Financial Data" for further details.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The adoption of this ASU results in additional annual disclosure, but did not impact our condensed consolidated financial position, results of operations, or cash flows.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this update require disclosure, in the notes to financial statements, on disaggregated information about specific categories underlying certain income statement expense line items that are considered relevant which among other items include items such as the purchase of inventory, employee compensation, depreciation, and intangible asset amortization. The amendments in ASU 2024-03 are effective for fiscal years beginning after December 15, 2026. Early adoption is permitted. Adoption of this ASU will result in additional disclosure, but will not impact our consolidated financial position, results of operations, or cash flows.

Other new accounting pronouncements issued but not effective until after March 31, 2025 did not and are not expected to have a material impact on our financial position, results of operations or liquidity.

Note 19: Subsequent Events

On April 7, 2025, the Company redeemed its $1.3 billion principal amount of 2.056% notes due in 2025, at par, using cash on hand and commercial paper borrowings. See Note 7, "Borrowings and Line of Credit" for details of the long-term debt.

With respect to the unaudited condensed consolidated financial information of Otis Worldwide Corporation for the quarters ended March 31, 2025 and 2024, PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") reported that it has applied limited procedures in accordance with professional standards for a review of such information. However, its report dated April 24, 2025, appearing below, states that the firm did not audit and does not express an opinion on that unaudited condensed consolidated financial information. PricewaterhouseCoopers has not carried out any significant or additional review procedures beyond those that would have been necessary if their report had not been included. Accordingly, the degree of reliance on its report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended ("the Act") for its report on the unaudited condensed consolidated financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers within the meaning of Sections 7 and 11 of the Act.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Otis Worldwide Corporation

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of Otis Worldwide Corporation and its subsidiaries (the "Company") as of March 31, 2025, and the related condensed consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for the three-month periods ended March 31, 2025 and 2024, including the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2024, and the related consolidated statements of operations, of comprehensive income, of changes in equity and of cash flows for the year then ended (not presented herein), and in our report dated February 4, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2024, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut

April 24, 2025