Otis Worldwide Corporation (OTIS Quick QuoteOTIS - Free Report) reported mixed results in the first quarter of 2025, wherein adjusted earnings surpassed the Zacks Consensus Estimate while net sales missed the same. On a year-over-year basis, the top line declined, but the bottom line increased.

The quarterly results were impacted by a soft sales trend in the New Equipment segment, mainly due to a more than 20% decline in China and a high-single-digit decline in the Americas. On the other hand, year-over-year growth in contributions from the Service segment, driven by increased trends in organic maintenance and repair sales and organic modernization sales, supported overall performance.

Moreover, favorable pricing and productivity aided the bottom line in the quarter. Moving forward into 2025, OTIS aims to continue focusing on innovation and implementing other strategic initiatives to improve its growth momentum, along with ensuring shareholder value and operational efficiency. With this strong performance, confidence in the strategy and commitment to creating value for its shareholders, the company yesterday announced a dividend increase for the fifth consecutive year.

Following the results, OTIS stock lost 3% in today’s pre-market trading session.

Inside OTIS’ Headlines

The company reported adjusted earnings of 92 cents per share, which topped the Zacks Consensus Estimate of 91 cents by 1.1%. The reported figure increased 5% from the year-ago quarter’s earnings per share (EPS) of 88 cents. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)

Net sales of $3.35 billion missed the consensus mark of $3.41 billion by 1.7% and declined 3% on a year-over-year basis. Organically, net sales were flat year over year. Currency headwinds impacted sales by 3%.

Adjusted operating margin expanded 40 basis points (bps) year over year to 16.7%, attributable to favorable Service segment performance and mix. This was partially offset by an increase in corporate costs. Our model predicted the adjusted operating margin to expand 20 bps year over year to 16.5%.

Segment Details of OTIS

New Equipment: This segment’s net sales of $1.16 billion fell 9% from the prior-year period. Organic sales declined 7%, which was accompanied by a 3% headwind from foreign exchange. Our model predicted organic sales for the New Equipment segment to decline 7.2%.

New Equipment orders were down 1% at constant currency. The growth of more than a 20% rise in Asia Pacific and mid-teens improvement in the Americas was offset by more than a 20% decrease in China and a mid-single-digit decline in EMEA. The segment’s backlog decreased 4% at actual currency and 3% at constant currency.

Segment operating margin expanded 20 bps year over year to 5.7%. The downtrend was due to impacts of lower volume, relatively flat pricing and unfavorable mix, which was partially offset by price, productivity and commodity tailwinds.

Service: The net sales of this segment increased 1% year over year to $2.19 billion. A 4% rise in organic sales was partially offset by a 3% negative impact from foreign exchange. Organic maintenance and repair sales increased 3% and organic modernization sales rose 10% from the year-ago quarter. Our model estimated organic sales for the segment to grow 6%. Modernization backlog at constant currency increased 14% year over year.

Segment operating margin expanded 40 bps year over year to 24.6%, due to higher volume, favorable pricing and productivity, partially offset by inflationary pressures including higher labor and material costs, and mix.

Financial Position of OTIS

Otis Worldwide had cash and cash equivalents of $1.92 billion as of March 31, 2025, down from $2.3 billion reported in 2024-end. Long-term debt decreased to $6.92 billion as of the first-quarter end from $6.97 billion in 2024-end.

Net cash flows provided by operating activities were $190 million for the March quarter, up from $171 million a year ago.

Adjusted free cash flow (FCF) totaled $186 million for the quarter, up from $155 million a year ago.

OTIS Provides Updated 2025 Guidance

The company expects net sales to be between $14.6 billion and $14.8 billion, up from the prior expectation of $14.1-$14.4 billion. The new projection indicates approximately 3-4% growth. Organic sales growth is projected to be between 2% and 4%. Organic New Equipment sales are expected to be down between 1% and 4%. Organic Service sales are expected to be up in the range of 5-7% compared with the prior expected band of 6-7%.

Adjusted operating profit is expected to be between $2.4 billion and $2.5 billion, reflecting an increase of $105-$135 million at constant currency, excluding a tariff impact of ($75) million to ($45) million, and an increase of $55 million to $105 million at actual currency, including the tariff impact.

Adjusted EPS is anticipated between $4.00 and $4.10, indicating 4-7% year-over-year growth.

Adjusted FCF is expected to be approximately $1.6 billion. OTIS expects the adjusted effective tax rate to be approximately 24.8%.

OTIS' Zacks Rank & Recent Construction Releases

Otis Worldwide currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

D.R. Horton, Inc. (DHI Quick QuoteDHI - Free Report) reported dismal second-quarter fiscal 2025 (ended March 31, 2025) results, with earnings and total revenues missing Zacks Consensus Estimate and decreasing on a year-over-year basis.

D.R. Horton now expects consolidated revenues to be in the range of $33.3-$34.8 billion, down from the previously expected band of $36-$37.5 billion. This compares with $36.8 billion in fiscal 2024. Homes closed are anticipated to be within 85,000-87,000 units, down from the previously expected range of 90,000-92,000 units. This compares with 89,690 homes closed in fiscal 2024.

KB Home (KBH Quick QuoteKBH - Free Report) reported lackluster fiscal first-quarter 2025 results. The quarter’s earnings and total revenues missed the Zacks Consensus Estimate and tumbled year over year.

KB Home’s results reflect the softness in the housing market as homebuyers are still navigating through affordability concerns due to high mortgage rates. Besides, the ongoing macroeconomic uncertainties and other regulatory changes in the country are adding to the instability of the housing market. Owing to these market uncertainties and a lower net order level at the end of the quarter, KB Home lowered its fiscal 2025 guidance.

Lennar Corporation (LEN Quick QuoteLEN - Free Report) reported first-quarter fiscal 2025 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top line increased, but the bottom line declined.

Lennar’s performance was impacted by a challenging macroeconomic environment. Although demand remained strong, higher interest rates, inflation and weak consumer confidence made homeownership less accessible. A limited supply of affordable homes added to the difficulties, leading to a decline in the company's average sales price. Moving forward to fiscal 2025, to counter the market uncertainties, Lennar aims to focus on its volume-based strategy to drive sales and implement an asset-light, land-light business model.