OTIS · 10-Q · 2026Q3 · Full report

Gross Margin Drivers

Otis Worldwide Corp · 2026-10-29 · Importance 31 · Surprise 32

Gross margin was $1,155 million for the quarter and $3,373 million for the nine months ended September 30, 2026. Gross margin percentage declined 120 basis points year over year for the quarter to 29.5% and 60 basis points for the nine months to 29.7%. Higher labor and material costs, including commodity costs, drove pressure, partly offset by Service sales growing faster than New Equipment sales.

Key facts

• Otis's New Equipment operating profit decreased $73 million in the nine months ended September 30, 2026; lower volume, unfavorable price and mix, and organizational initiative costs were partly offset by productivity, and operating margin fell 200 basis points. source
• Otis's Service operating profit increased $52 million in the nine months ended September 30, 2026, including $26 million of foreign-exchange tailwinds; higher volume, improved pricing and lower other employment-related costs were partly offset by organizational initiative, labor, material and mix costs, and operating margin fell 150 basis points. source
• Otis's gross margin percentage was 29.5% in the quarter and 29.7% in the nine months ended September 30, 2026, down 120 and 60 basis points, respectively, from the same 2025 periods. source
• Otis's New Equipment operating profit decreased $17 million in the quarter ended September 30, 2026; unfavorable price, regional and product mix and organizational initiative costs were partly offset by productivity and higher volumes, and operating margin fell 150 basis points. source
• Otis's Service operating profit increased $12 million in the quarter ended September 30, 2026, including $8 million of foreign-exchange headwinds; higher volume, improved pricing and lower other employment-related costs were partly offset by organizational initiative costs, labor costs, productivity and mix, and operating margin fell 130 basis points. source
• Otis attributed higher costs of products and services in 2026 to higher labor costs, including ongoing operational execution and productivity costs, and higher material costs, including commodity costs. source