Good morning, and welcome to Otis' Second Quarter 2025 Earnings Conference Call. This call is being carried live on the internet and recorded for replay. Presentation materials are available for download from Otis' website at www.otis.com. I'll now turn the call over to Rob Quartaro, Vice President of Investor Relations. Thank you, Tina. Welcome to Otis' Second Quarter 2025 Earnings Conference Call. On the call with me today are Judy Marks, Chair, CEO, and President, and Cristina Méndez, Executive Vice President and CFO. Please note, except where otherwise noted, the company will speak to results from continuing operations, excluding restructuring and significant non-recurring items. A reconciliation of these measures can be found in the appendix of the webcast. We also remind listeners that the presentation contains forward-looking statements, which are subject to risks and uncertainties. Otis' SEC filings, including our Form 10-K and quarterly reports on Form 10-Q, provide details on important factors that could cause actual results to differ materially. Now I'll turn it over to Judy. Thank you, Rob. Good morning, afternoon, and evening, everyone. Thank you for joining us. We hope everyone listening is safe and well. Starting with Q2 highlights on slide three, Otis delivered solid second quarter and first half results as the service segment continued to drive strong performance with both a year-over-year and a sequential operating profit margin improvement. Organic service sales in the second quarter were up 4%, with growth across all business lines and in all regions. Our maintenance portfolio grew 4% again in the quarter, adding to our industry-leading 2.4 million unit portfolio under service. Modernization momentum continued as we accelerated orders to 22% and ended the quarter with the backlog up 16% at constant currency. New equipment orders decreased by 1% due to continued economic challenges in China, while orders in the rest of the world increased 11% versus the prior year. We continue to make progress with Uplift, and we remain on track to achieve $200 million in run-rate savings by year-end. Additionally, in response to continued weakness in China, we are executing additional actions to reduce costs as part of our China transformation. We now anticipate run-rate savings of approximately $40 million by year-end. Our 2025 in-year savings targets remain at $70 million and $20 million for Uplift and China transformation, respectively. Together, these initiatives are enabling us to deliver greater customer centricity and to invest in growth. In addition, we also now expect the impact of 2025 tariffs to be roughly half of our expectations in April, to a range of $25 million-$35 million, reflecting more favorable reciprocal tariff rates and our mitigation efforts. We completed approximately $300 million in share repurchases in the second quarter, taking year-to-date repurchases to approximately $550 million. During the quarter, we closed on our previously announced acquisition of eight urban elevator locations in the U.S. This deal further expands our maintenance portfolio and enhances our ability to serve customers. Adjusted EPS was $1.97 in the first half of the year, growing 2% versus the same period last year due to solid margin expansion and continued tax planning efforts. In June, we published our Connect and Thrive report that outlines our progress and commitments to four key areas: health and safety, governance and accountability, environment and impact, and people and communities. These areas are closely aligned with our strategic vision and the Otis absolutes of safety, ethics, and quality that we live by every day. During the quarter, we were honored to be recognized with several sustainability awards. USA Today, in collaboration with Statista, included Otis among America's climate leaders, and Forbes recognized Otis among 200 U.S. companies included on the net-zero leaders list for reduction of carbon emissions. Newsweek also recognized Otis among companies from 26 different countries for our environmental sustainability performance, and most recently, Time Magazine named Otis among the world's most sustainable companies for the second consecutive year. Turning to our orders performance on slide four. Combined new equipment and modernization orders grew 4% in the quarter, driven by continued strength in modernization. Excluding China, orders grew 14%, with notable strength in the Americas and Asia-Pacific. Our combined backlog remained relatively flat year-over-year. However, excluding China, it increased 10%. Our total backlog, including maintenance and repair, is at historically high levels, positioning us well for future quarters. New equipment orders declined 1% in the quarter. However, excluding China, we saw robust 11% growth. For the fourth straight quarter, the Americas orders were up in the low teens. Asia-Pacific also delivered strong results, with order growth exceeding 20% for the third consecutive quarter, led by Southeast Asia and India. This strength was offset by continued softness in China, where orders declined by more than 20%. Note, however, that our China new equipment orders were sequentially stable in the first half of 2025, and we anticipate year-over-year growth in the coming quarters. In EMEA, new equipment orders declined low single digits, as strength in the Middle East was offset by weaker demand in Europe. At constant currency, our new equipment backlog declined 3% year-over-year, but excluding China, it grew 8%. Modernization acceleration continued as orders grew 22%, leading to our quarter-end backlog up 16% at constant currency, with Americas, China, and Asia-Pacific each growing orders more than 20%. The modernization opportunity is compelling, driven by the aging of the 22 million unit installed base. We continue to expect these aging units to drive a multi-year growth cycle across our regions. Our service portfolio grew 4% in the quarter, with contributions from all regions. China's strong growth trajectory continued as the region grew its portfolio low teens. Asia-Pacific grew mid-single digit, and EMEA and Americas grew low single digits. As our global teams continue to deliver, we're proud to share second quarter customer highlights that reflect our success in winning strategic projects through innovation, execution, and trusted collaborations. In the Americas, Otis will modernize 21 elevators at the One America Tower in Indianapolis, expanding our long-term relationship with this customer. Otis provided the original elevators for the buildings in the 1980s, modernized them in 2009, and is the current maintenance provider. Otis will upgrade controls, doors, signals, and cab finishes on the elevators. In Dubai, we continue to strengthen and grow our relationship with Damac Properties, one of the leading luxury real estate developers. Our latest agreement to supply and install 20 SkyRise elevators at Damac Bay Two in Dubai Harbor brings our total orders with Damac to 88 elevators. This includes 72 SkyRise and 16 Gen Two systems across six high-rise projects in the city. These orders reflect the trust Damac places in our technology and service, and they underscore our growing footprint in the Middle East. In China, Otis recently entered into a contract for more than 400 escalators and connected elevators to support metro and infrastructure expansion projects in Hangzhou, Changchun, and Tianjin. These orders reflect our ongoing role in supporting urban mobility across key cities. In Ho Chi Minh City, Vietnam, Otis has been selected to install and maintain SkyRise and Gen Three elevator systems at The Cross, a 39-story premium mixed-use development in the city's central business district. These units will be supported by our Compass 360 and EMS Panorama 2.0 management system, delivering a modern, integrated solution for enhanced passenger experience. Turning to our second quarter results on slide five, Otis delivered net sales of $3.6 billion, flat on a year-over-year basis, with organic sales down 2%. Adjusted operating profit margin was flat versus the prior year at 17%. Excluding a $13 million foreign exchange tailwind, adjusted operating profit decreased 2%, with growth in service offset by a decline in new equipment. Adjusted EPS declined 1%, or 1 cent, in the quarter, driven by a tough year-over-year comparison from an operational and tax standpoint. As I previously mentioned, EPS grew 2% in the first half of the year. Adjusted free cash flow was $243 million in the quarter and $429 million year-to-date. With that, I'll turn it over to Cristina to walk through our results in more detail. Thank you, Judy. Starting with service on slide six. Service organic sales grew 4%, with growth in all lines of business. Maintenance and repair organic sales grew 4%, given by growth in our portfolio and positive price of 3% in maintenance, partially offset by mix and churn. Our repair business accelerated in the second quarter, as anticipated, growing 6% organically year-over-year compared to 1% in the first quarter. We are pleased with our progress, and with our backlog up 8% at quarter end, we are well-positioned heading into the second half. Modernization organic sales grew 5%, with notable growth in China, which increased over 20%. While modernization organic sales growth was muted, this was primarily driven by timing of several large projects, which can vary from quarter to quarter. Our modernization backlog remains strong, up 16% at constant currency at quarter end, and we expect approximately 10% growth in modernization sales for the full year. Service operating profit of $578 million increased $26 million at constant currency, with higher volume, favorable pricing, and productivity, including the benefits from Uplift, more than offsetting higher labor costs and mix and churn. Operating profit margins expanded 20 basis points to 24.9% in the quarter, making another record quarter in service margins since Spain. Turning to new equipment on slide seven. New equipment organic sales declined 11% in the quarter as a strength in EMEA was more than offset by declines in China, Americas, and Asia-Pacific. EMEA sales grew 7%, primarily due to a strength in the Middle East, which grew greater than 20%, while Europe was up low single digits. Asia-Pacific declined low single digits, with notable strength in Hong Kong and Taiwan, offset by weakness in Korea. Additionally, growth was negatively impacted by timing of project execution in India. However, the backlog in India remains strong. Americas declined high single digits as we worked through last year's backlog, but in addition, backlog execution has been slower due to market concerns around global trade policy. China remained weak, declining greater than 20%, as soft market conditions, strict credit control on shipments, and a declining backlog continue to impact our results. New equipment operating profit of $68 million declined $41 million at constant currency, driven by lower volumes and unfavorable price and mix. Operating profit margins declined 240 basis points to 5.3%, driven by the headwinds of lower volume and regional mix that were partially offset by productivity, including the benefits from Uplift and our China transformation. I will now turn it back to Judy to discuss our 2025 outlook. Starting on slide eight with the market outlook. Before discussing our updated 2025 outlook, I'd like to briefly discuss our global market expectations, which are largely unchanged. We continue to expect a low single-digit decline in the Americas. However, we are beginning to see trends improving sequentially. Our market outlook for EMEA is unchanged, with low single-digit growth. Asia is now anticipated to decline high single digits. This is driven by mid-single-digit growth in Asia-Pacific, offset by a low teens decline in China. Our outlook for China is now slightly lower than our beginning-of-year expectation due to continued softness in the market. While year-over-year comparisons are easier in the second half, we now believe the market will be down approximately 10% for the remainder of the year. Taken together, we expect the global new equipment market to decline mid-single digits in 2025. On the service side, we continue to expect the global install base to grow mid-single digits, driven by low single-digit growth in Americas and EMEA, and mid-single-digit growth in Asia. This growing install base should further support growth in our maintenance portfolio and expand our service flywheel. Turning to our financial outlook for 2025. We now expect net sales of $14.5 billion-$14.6 billion, a slight decline from our previous outlook, driven primarily by a lower outlook for new equipment sales. This is largely driven by the new equipment market environment in China and the US. In China, market conditions have remained soft as liquidity challenges are causing a slowdown in execution of our backlog. In the US, continued uncertainty over global trade policies is causing project delays. That said, we have driven low teens or greater order growth in the Americas for four consecutive quarters, and our backlog remains strong there, up 5% at the end of the quarter. This backlog positions us well as we head into 2026. As you know, our resilient service business is relatively insulated from tariffs. This resilient business is our core earnings driver, representing approximately 90% of our total operating profit. Looking ahead, we expect our service organic sales growth to continue to ramp up through the remainder of the year. Our outlook for adjusted operating profit is unchanged at $2.4 billion-$2.5 billion. Up $55 million-$105 million on an actual currency basis, including the impact of incremental US tariffs imposed in 2025. This is in line with our prior outlook, as reduced reciprocal tariff rates for China and favorable foreign exchange rates offset lower expectations for our new equipment profit this year. Service profitability should remain strong from growth in all three areas of the business: maintenance, repair, and modernization. Our outlook for adjusted EPS is unchanged at $4.00-$4.10 per share, representing an increase of 4%-7% compared to 2024. We expect adjusted free cash flow to be between $1.4 billion- $1.5 billion for the year, which we expect to largely return to our shareholders through our dividend and $800 million of share repurchases. Note, we are well on track to meet our share repurchase target, having bought back approximately $550 million year-to-date through June. I'll now pass it back to Cristina to review the 2025 outlook in more detail. Thank you, Judy. Moving to our organic sales outlook on slide nine. We now expect organic sales growth of approximately 1% for the year. This is driven by continued strength in service, with organic growth of approximately 5%, partially offset by a declining new equipment of approximately 7%. Within new equipment, we have lowered our outlook for Americas to down high single digits and Asia to down low teens due to the macroeconomic concerns Judy previously noted. Within Asia, we expect strong growth in Asia-Pacific, offset by a greater than 20% decline in China. We continue to expect EMEA to grow mid-single digits for the year. Within service, we continue to expect growth in all segments through the remainder of the year. Maintenance and repair is expected to grow approximately 5%, driven by portfolio growth and pricing, partially offset by mix and churn. We saw solid acceleration in our repair revenue in the second quarter, and we expect continued acceleration through the second half. In modernization, we are anticipating approximately 10% organic growth as we execute our strong backlog. Turning to slide 10 to provide an update on tariffs. While circumstances remain fluid, our anticipated tariff exposure has meaningfully declined from expectations in April. This is driven by more favorable reciprocal tariff rates, as well as our successful mitigation strategies. Given these changes, we now expect an approximately $25 million-$35 million negative impact to our 2025 earnings net of our mitigation efforts. Note that this impact is primarily expected in the second half, as the year-to-date impact has been minimal. As a reminder, our tariff exposure is primarily in our backlog, as we have adjusted contract terms and pricing for the current environment. Therefore, after execution of the backlog, the impact of the new tariffs on our results should be offset by pricing and contract language. Turning to our financial outlook at slide 11. We currently expect adjusted operating profit to grow $55 million-$105 million on an actual currency basis, including the impacts of tariffs. This growth is driven by the strength of our service segment, as well as cost savings from Uplift and our China transformation. Adjusted operating margin is expected to expand 30 basis points, driven by expanding service margins and mix, offset by declining new equipment margins from tariffs, as well as the flow-through of last year's backlog and regional mix. Adjusted free cash flow is now expected to be between $1.4 billion-$1.5 billion for the year. The decline from our previous forecast is primarily driven by our reduced outlook for new equipment sales, as well as the impact of the mix. As new equipment sales are more favorable to working capital, we continue to anticipate approximately $800 million of share repurchases for the year. Moving to the 2025 EPS breach on slide 12. Our adjusted EPS outlook for the year remains $4-$4.10 per share. This represents 4%-7% growth compared to the prior year, driven by strong operational growth from our service segment. The new equipment segment remains a headwind due to soft economic conditions in China and the impact of global trade policy in the U.S. Favorable foreign exchange rates and a lower share count are expected to offset the impact of tariffs and a higher interest expense. While conditions remain challenging for our new equipment business in the near term, our U.S. backlog is growing, and China orders are expected to stabilize in the coming quarters. Furthermore, the resiliency of our service business continues to drive earnings on the back of mid-single digit top-line growth and continued margin expansion. We are also continuing to execute our Uplift and China transformation initiatives, which will allow us to better serve our customers while driving $240 million of run-rate cost savings by year-end. We have a good line of sight to deliver our targeted savings, and as Uplift is approaching the end of the program in the second half of the year, we are making good progress with our China transformation, and as I previously mentioned, we are raising our cost savings target to $40 million due to additional restructuring actions underway. Looking at the third quarter, we expect new equipment organic sales growth roughly in line with our full-year guidance, with sequentially lower margins in the quarter. This margin pressure is due to lower volumes that will be more acute in the third quarter. This is due to the execution of cost mitigating actions, such as the temporary furlough of some of our production facilities. Service organic sales are expected to ramp to around 5%, and we anticipate solid year-over-year margin expansion with positive contribution from Uplift as we execute the last wave of the program. Taken together, we expect the third quarter adjusted EPS growth of around 5%, followed by a strong fourth quarter to deliver 6% full-year growth at the midpoint of our guide. With that, I will kindly ask Tina to please open the line for questions. Thank you. To ask a question at this time, simply press * followed by the number one on your telephone keypad. We respectfully ask that you limit your questions to one with one follow-up. We will now pause for just a moment to compile the Q&A roster. Our first question comes from the line of Jeffrey Sprague with Vertical Research. Please go ahead. Hey, Spragu here at Virtual. Good morning, everyone. Hi, Jeff. Hi, how you doing? Judy, I wonder if you could just maybe unpack service growth a little bit more for us. The spirit of my question is, I think we've got two quarters in a row here now where service revenue growth organically is equal to portfolio growth, where historically revenue has outperformed portfolio growth. You mentioned churn and mix. I guess I'm particularly interested in churn and this kind of economic period of uncertainty. Are you seeing leakage and retention, or really what's going on underneath the surface there? Yeah, thanks, Jeff, and good morning. Apologies about your name. So listen, the service is continuing to perform. We're going to be maintenance and organic sales. We're up 4%. It was driven by 4% growth in the portfolio. We did have positive service pricing. Like-for-like pricing increased three points in the quarter. That's a little lower than we had in previous years, but inflation is not as high in certain parts of the world. In the developed mature markets, the service pricing performance was really excellent. EMEA was up low single. Our Americas team drove mid-single digit pricing, so really pleased with that. The main changes, the two elements I'd call your attention to this quarter versus last quarter, repair sales snapped back. They were 1% in first quarter. This quarter, they're 6%. We anticipate incrementally that to increase in the third quarter and even more in the fourth quarter. Our repair backlog's up 8%, so we've got good backlog to work on as we look through the remainder of the year. Mod revenue was down to 5%, and that was a combination of a lot of major projects that we had won. You saw our mod orders are up 22%. Really phenomenal performance. Three of our four regions up 20%. The US-Canada team, our North America team, mod orders were up over 50% this quarter. They have continued to drive significant growth. Now we've got to convert it. It's a fair expectation, and we have the expectation that that will grow to 10% over the next two quarters for mod revenue because our backlog's at 16%. It was a combination of major projects and some other items, but it's not a resourcing issue with us. That's why we took the guide, the outlook down to 5% for year-end. We're at 4% through the first half. You're going to see an incremental step up as we go through third quarter, and you'll see even more in fourth quarter. I've got full confidence in the service flywheel. We're seeing it everywhere. We're seeing the portfolio growth sustain itself at 4% now for multiple years. I think you're going to see that. I know you're going to see that come through in the next two quarters. The operating profit shows that service impact. As Cristina mentioned, we had a record since spin, 24.9% operating margin in service, and that will continue to drive our growth in operating profit as we go through. We've had operating profit now in service. This is the 21st straight quarter. You're going to continue to see that. We know what the growth story on top line. We own that, and you will see that as we go through the second half of the year. Thanks for that. Just to be clear then, I mean, if units are up four and service prices up three, the fact that organic revenues are only up four is a function of new equipment mix, the project-related stuff you're talking about, or is it retention? No, the retention actually was slightly better in the second quarter than the first quarter. It is a mix and churn effect because as the portfolio grows, the mix is it is growing more in the less mature markets, which have lower contribution, especially in China where we are growing in the teens. It is really a mix and churn effect there. As you know, even with the units that when we lose them and we do not retain them and replace them with a recapture, that does come at a lower margin and a lower price. Right. Right. Okay, thanks. I'll leave it there. Good luck. Thanks. Our next question comes from the line of Nigel Coe with Wolfe Research. Please go ahead. Thanks. Got my name right. That's encouraging. Good morning. Thanks for the question. Just on the retention, Judy, I know you said it improves slightly Q to Q, and maybe you could just put a finer point and quantify that. I'm just curious really on. It sounds to me like you're pointing to new equipment orders inflecting in the Americas. Just given the continued drag in multifamily, it's surprising to see this. I'm curious what you're seeing in the pockets of growth in the Americas. And then maybe just touch on China as well. I think you said you expect year-over-year growth in the coming quarters. Just curious if that's just easier comps or are we seeing some benefit from the stimulus efforts in China? Yeah. So, Nigel, we'll provide all the retention data once a year. That part I won't elaborate on. In terms of the U.S., as I said, fourth strong quarter with teens growth. North America was up 15% new equipment orders. This quarter, we saw some contraction in Latin America, Brazil, Mexico, Chile, but North America is so much more of our business, as you know, in the Americas. Really strong performance in infrastructure. We saw Resi was flat this quarter. When we talk about multifamily, our orders were flat year-over-year. I view that actually as positive versus the kind of pullback we had seen in multifamily over the past few quarters. Commercial was down. Again, it was a strong infrastructure job, a lot of major projects, and a lot of volume business too. I couldn't be really more pleased with our performance in North America. Really strong four quarters in a row after almost six quarters where we had orders contraction, which is the backlog we're living through in new equipment in North America. That's strong. In China, listen, the new equipment market, it does remain weak. Down 15% first and second quarter, and we see it improving to 10% in the second half. The comps will help, but there was not a single vertical in the second quarter that grew, nor a single tier city that grew in the second quarter. Tier one did better than the others, but none of them grew. The best verticals in China for the second quarter for us were infrastructure and industrial buildings, which are becoming more stable. Both commercial and office were down double-digit, and Resi was down high teens to double-digit. That market is still stressed. Again, now it's about sequential and looking at how we can perform quarter over quarter. We focused in new equipment in China really on value, really two things. Value in terms of because it's very competitive and the prices are very, very, very low. We focus on value, and then we focus on our ability to retain it in our service portfolio. Where there were other opportunities for margin or for volume, where we weren't going to get any margin or get the service attachment rate, we walked away from those. I think our team's being very disciplined to be in a much better place in terms of our backlog. You look at our new equipment backlog for the company. Our new equipment orders decreased 1%, but if you take out China, the other three regions were up 11%. If you look at our backlog for new equipment, even though it declined 3%, if you take China out, we're up 8%. I'm actually very encouraged for rest of world ex-China. China stabilizes, and rest of world is growing now. Almost our backlog's up high single digit at 8%. Okay. That's great. Thanks, Judy. That's great color. My quick follow-on is, I think, for Cristina. It seems like your 3Q points like a dollar per share of earnings. I think the midpoint implies a step up in earnings from 3Q to 4Q. That would be quite unusual. Just wondering how we should be phasing or thinking about the second half and thinking about that step up in earnings in the fourth quarter. Yeah. No, Nigel, thank you very much for the question. Let me give you some color on Q3 outlook, but also the calendarization between Q3 and Q4. Starting with Q3 on the new equipment side, we expect revenues to be in line with the midpoint of the guide around the minus 7%. With margin sequentially down, margin will be around 3% for new equipment in the quarter. The reason being is because we are anticipating the volumes drop in the second half, and we are executing cost mitigating actions. Among others, we will implement furloughing some production facilities. That will mean that the volume shortfall will be more acute in Q3 and will come back to regular level in Q4. On the service side, however, as Judy said, we are accelerating execution both on repair and modernization. They are going to be around 8% growth in the quarter. We have a very good line of sight to execute repair because our ending backlog in Q2 was around 8%. It is the execution of the backlog. Margin is going to go up sequentially too. We also have an easier compare compared to Q3 last year. Total operating profit will be around 2% up, and EPS will be around 5% up. That means that for the calendarization of EPS growth in the year, it will be 3 cents first half, 5 cents Q3, and around 14 cents Q4. It is kind of a backloaded profile. The growth in Q4 is based upon three areas. One is on the new equipment side, we expect a better stabilization in China in terms of shipments coming from better liquidity conditions in the market, but we also have an easier compare in China versus Q4 last year. New equipment contribution in Q4 will be back to normal levels around $70 million in the quarter. On the service side, we expect an additional acceleration of repair and mod will be around low mid-teens in the quarter. That implies for repair, a ramp-up in orders, but also ramp-up in execution. We do have the resources. You may recall that last year we hired around 2,000 mechanics. Those mechanics are productive now. We are also this year selectively hiring in those countries where we see further growth potential of the backlog. On the mod side, it will be around 15%. This is based upon the acceleration of mod in China on what we call the bond projects. These are the governmental subsidies. You may recall that last year we had a similar acceleration because the subsidies come to an end at the end of the year. They need to be used. This year, we are planning to do the same with a bigger scale because the program this year is bigger. It is around 100,000 units versus 40,000 units last year. The acceleration in Q4 is based upon new equipment, repair, and mod. Great. Thanks, Cristina. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please go ahead. Yeah, thanks. Good morning. Good morning. Welcome, Nicole. Thank you so much. Maybe we could just start with the China transformation savings. You guys were very clear about what you're adding. What does that mean for carryover savings into 2026? Is there anything that we should be thinking about next year? Yeah. So the China transformation savings at the beginning of the year, we guided $20 million in year, $30 million run rate. We are executing according to the plan. We have $5 million in the first half of the year, and the remaining $15 million will come in the second half. Because of the more acute decline of volumes, we are taking additional cost reduction actions. That is why we have increased the run rate from $30 million to $40 million. This is going to be an incremental savings for 2026. When you step back and you look at our overall picture of new equipment in the year, new equipment sales are going to decline around $400 million versus $450 million last year. It is a very similar decline. In terms of contribution, last year the decline was $44 million. This year, excluding tariffs, that is an extraordinary effect, we are going to decline $60 million. It is an incremental decline of $15 million. We are facing new headwinds. One is the price because price in the backlog in China became negative last year as we deteriorated prices, the market deteriorated prices. This is a headwind of around $100 million basis points this year. The second one is commodities. Last year was $20 million positive. This year is flat. We are only deteriorating incremental $15 million. This shows you all the cost actions we are taking in new equipment that are the Uplift program, but also the transformation of China and the usual productivity, material productivity actions. There is a lot of cost mitigation in the new equipment side. Yeah. Nicole, let me put this in kind of the business perspective versus just the financials. We made a major organizational transformation change in China as we started the year. We went from basically two separate, almost wholly operating companies with very different brands to being more laser-focused on new equipment and modernization together in China for good rationale and service. We now offer both those brands and service, and we offer both those brands and new equipment and modernization. We have the ability to optimize, to have our agents and distributors and our direct sales folks make us more customer-centric. We are going through this transition. At the same time, obviously, market conditions are a headwind in new equipment, especially. Service is growing nicely. Modernization is growing very nicely in China. Over 20% mod growth in China, over mid-teens portfolio growth in service. We are preparing while we are taking this cost out, we are preparing for and implementing our new China approach to market, which will position us not just for the fourth quarter of this year to get to that stabilization point, but for 2026 and beyond to go to market in a different way than we have in the past 20 years. Okay. Thank you. That was a very comprehensive answer. Appreciate that. Just maybe a quick follow-up. The discussion around 3Q versus 4Q cadence was really helpful. Just one follow-up to that. What about the cadence of free cash flow? Does that look more akin to normal seasonality, or will it look similar to the earnings profile? Thank you. Yeah. Cash flow in the second half of the year is going to be at the level of the second half in 2024. We have a good line of sight to deliver as we delivered last year. Cash flow is weaker than what we expected, but it is primarily driven by the business mix. We have seen new equipment deteriorating further and service remaining strong. As you know, new equipment is favorable in working capital because of the advance payments, but also because of billing according to milestones. For example, in the case of China, we do not ship unless we collect. On the other side, in service, we bill after rendering the service. This is a headwind in working capital, but it is a temporary one as we stabilize new equipment. For the second half of the year, we have a good line of sight to deliver the cash flow. There is another component related to our uplift transformation. We are transforming our processes while outsourcing our collections areas to a third party. The transition is progressing very smoothly. We are collecting with no disruption in the business. We are positive that as we end up the transition towards the end of the year, the support of our new partner is going to help us accelerate and optimize collections even further. Thank you. I'll pass it on. Our next question comes from the line of Steve Tusa with J.P. Morgan. Hi. Good morning. Hey, Steve. Can you guys just talk about how you're set up into, just mechanically what the backlog would suggest for next year in China? I'm sorry, did you say that the orders there are looking to improve sequentially now? I didn't quite catch that in the beginning on any. Yeah. The orders will improve sequentially in China. Backlog for, is actually let me just take you through the whole world in terms of backlog and how they're doing. If you look at, let's start in the Americas, Steve, our backlog as we ended last year was minus 4, which is obviously where we saw some of the challenges in the revenue this year on new equipment, especially in North America. We're ending this quarter up 5 there. That plus the orders we anticipate through the rest of the year position us really well going into 2026. Asia-Pacific, really strong backlog, double-digit. We're really pleased there. EMEA will be fine as we enter, especially based on the Middle East and Spain and some other locations. It leaves us with China backlog. That's why we've been talking a lot ex- China today. China was about 12% of our global revenue this year, 10% this quarter, 10% last quarter. It's still now that smaller contribution. We're watching it closely. We're right-sizing our costs to the best of our ability. Even with that, the mod backlog will be up, the service backlog will be up going into next year at China, but the new equipment backlog will be down. Okay. So I mean, that just sounds like from a profile perspective, is China enough of a drag next year to completely offset what's happening in the other regions? Yeah. We're not going to guide for next year yet, Steve, but the other regions are really growing strongly. Okay. Great. Thanks a lot. Thanks. Our next question comes from the line of Rob Wertheimer with Melius Research. Thanks. Good morning. Just wanted to clarify, hey, demand in North America, I mean, you just referenced backlogs being strong. I think earlier in the call, you kind of talked about some project delays. You mentioned recovering multifamily. I wonder if you could just square that circle. Thank you. Sure. You may have seen the June ABI data that came out this morning, which was down a little for May, but inquiries being up, Dodge momentum is up in June. What we are seeing for the segment, we stayed at down low single, but I would tell you, as we kind of came through the end of the second quarter, we are starting to see some nice positive opportunities when we look at proposal activity and pending awards as well. In terms of North America, the uncertainty we talked about was for the current backlog we are executing at job sites. Our backlog, as I said, was down as we came in this year, minus 4 in North America on new equipment. We have been shipping from our Florence, South Carolina facility. We have been ready to install, but some of the job sites have slowed down a little. It is not our labor, but there is just some general unease with the tariffs and what has been going on on the more macro project level. We are not seeing that slowdown in our orders by any means with four consecutive orders in the teens in North America up 15% in new equipment orders this quarter. Everything we are seeing locally, we will look at the data, but what we are hearing, again, is as the tariffs are getting more defined and settled, there is more excitement. We all are waiting for interest rates and whatever will happen from the Fed to happen, obviously, in the second half of this year. There are a lot of jobs where the math works with that next small interest rate decline. We have bid them. We are waiting to hear. Our team is prepared not just to win them, but to perform. I think we have seen just really strong performance there. Very helpful. Thank you. Your next question comes from the line of Julian Mitchell with Barclays. Please go ahead. Hi. Good morning. Maybe just wanted to start with a broader question on free cash flow. I guess based on the updated dollar guide for this year, you've sort of got the same free cash flow, it looks like, in dollars for four years running now, despite over that period sort of mid-single digit sales growth, mid-single digit plus net income dollar growth. Just trying to understand. Not so much in Q2, but what's going on more broadly on free cash flow margins or conversion? Is something changing in industry dynamics around payment terms or something competitively? Anything you'd call out there? Yeah. No, thank you for the question, Julian. It is what I said before to Nicole. It is a matter of the business mix that is changing. The working capital of new equipment is more favorable than in service. In the last years, new equipment has been declining because of the situation in China. In 2025, the situation is a little bit more acute because on top of China, we have the decline of US in sales driven by the ending backlog last year that was negative, plus what Judy mentioned, the job sites are slightly delayed because of the uncertainty about tariffs. This is just a temporary effect. Service is growing strongly. Service collects, but we collect later. It is a matter of time. By when we stabilize new equipment, and we have line of sight because the US backlog is growing. It is growing 5% in Q2. US will stabilize, and China will bottom out. We also mentioned that orders in China are expected to stabilize towards the end of the year. On the other side, we will collect in service. Our business fundamentals remain unchanged. Our business models generate cash flow conversion of 100% plus because of our low capital intensity, because of our low R&D. It is just a matter of the temporary shift of the mix until we stabilize new equipment. Yeah. Julian, there's no structural change in payment terms across the industry. Everything remains strong. I just want to give a shout-out to our colleagues who do such a great job in execution and then collect that cash that allows us to be able to share that cash with our shareholders. You saw we're committed to the $800 million in share repurchase and to our dividend. I think we've been really good stewards of giving that capital back to our shareholders. That's helpful. Thank you. Then just a shorter-term question on the operating margin dynamics. Just to understand, in the first half of the year, the operating margin is up 20 basis points or so, and including the Q3 guide, not much. You have this step-up for the whole year guided of, including tariffs, sort of 30 basis points or so. That margin step-up is happening, I suppose, despite a bigger tariff headwind later in the year. Maybe just help us understand what's the puts and takes there around the degree of tariff margin headwind in the back half or Q4, and what all those countervailing factors are to offset that. Yeah. And Julian, you are right. The tariff impact is going to be in the second half of the year. We are guiding the midpoint of $30 million. Year to date, we have had $5-$6 million in the P&L. This is going to be a headwind that we have quantified in around 10 basis points, 20 basis points of margin. On the other side, the business mix improves in the second half of the year because we are accelerating very strongly repair and modernization, again, on the back of a strong quarter and backlog growth. As you know, service margins are higher. This is going to be a tailwind. In addition, we are finalizing the execution of our Uplift program. We have very good line of sight because most of the actions are now to be executed. They are progressing on plan. Also, China, as I mentioned before, the $20 million in year savings, we have captured $5 million in the first half. The remaining comes in the second half. Essentially, it is a combination of business mix, productivity, and the flow-through of the Uplift and China transformation savings. Yeah. Let me just reinforce our confidence in the service business in the second half of the year. We have the backlog. We have the resources, as Cristina said, and now we execute. You will see that make the difference and drive the guide and that'll take care of the tariff impact. It will get us, again, back to the outlook that now we've reconfirmed twice. Great. Thank you. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please go ahead. Thank you. I wanted to follow up on the prior commentary around margins into the back half. I guess, is service mix getting more favorable into the back half versus Q2? It seems like much of the uplift in growth from the 4 back to, I guess, something like 6 is driven by mod, which I thought would have been more dilutive to service margins. Thank you. Any color on that? Yeah. I mean, the simple answer and the candid answer is it's actually more driven by repair step-up, which, again, we have 8% backlog going into the third quarter. There will be additional repair orders added. The demand we're seeing there is strong everywhere in the world, all four regions: EMEA, Asia-Pacific, China, and the Americas. That mod will pick up too, but the relative contribution, both in sales and in profits, will come from repair. Thank you. Appreciate that. Maybe just on the Americas, obviously, orders have been pretty good, not converting at the rate expected. I guess, what do you think the market needs to see to start converting those orders? Is it visibility around tariffs? Is it interest rates? Any thoughts on that? Thank you. Yeah. No, it's a great question, Chris. We do convert well. The challenge, the Americas, especially North America, is our longest lead time from when we book an order to when we get to a job site. There's a combination of reasons from permitting to just general construction challenges in the U.S. We have been running through 18 months ago of backlog. Now we have four straight quarters of orders improvement, which you will see in 2026 really start stepping up the revenue for North America. That part is not an issue. What we are just seeing is a bit of uncertainty right now on current job sites from the backlog that we are literally not just delivering, but installing. As each job takes another week or two longer than anticipated, we are not seeing that impact on the margin side, on the labor side, because we can move our crews around, but we are seeing it on when we realize the revenue. Thank you. I appreciate that. You bet. Our final question comes from the line of Joseph O'Dea with Wells Fargo. Please go ahead. Hi. Good morning. Can you just expand a little on where the furloughs are occurring, how long you expect those to be in place at this point? Yeah. They're temporary. Let me be clear. I mean, measured in weeks. And you're mainly seeing them where we're seeing our new equipment challenges in terms of revenue: North America and China. Got it. Makes sense. And then just in terms of order expectations as we get into the back half of the year, because first half of the year is pretty stable with total orders down one organically, we do get comps that move around quite a bit. And so just any color on how you're thinking about order activity in the back half of the year, if you could revisit, I think you gave a little bit on China, that in particular, but then also Americas and EMEA, how you're looking at order trends there. Yeah. Let me start with modernization, and then I'll turn kind of new equipment over to Cristina, and we'll pair up on this one as partners. Listen, the modernization order strength will continue. You will see that continue globally. I think you'll actually see more strength coming out of EMEA relative to how they performed in the first half. They had a challenging second quarter, but it was due to a tough compare to a major modernization they were on second quarter last year. We expect to be talking about EMEA mod orders becoming far more positive. The other three are on good trajectories to continue at this rate. We've always believed that mod orders, because of the market demand we're seeing, China will be up far more than 20% because you'll see this, we call it this bond mod, this government stimulus mod at 100,000 units available that they have to spend the money by year-end. You'll see that pick up well beyond 20% that we saw last quarter. As I said, Americas had a phenomenal quarter with 50% plus in North America. I don't expect them to sustain that rate, but I do expect them to be in the teens plus for mod. APAC has strong mod growth as well. They were 20-plus percent, and they should be at least teens plus. Cristina, I'll let you talk to new equipment. Yeah. On the new equipment side, we have talked about China. China has been sequentially stable in the first half of the year. We expect a ramp-up in the second half, back to flat to even slightly positive in orders. The reason for that is, of course, the easier compare, but also the fact that we have been working on the transformation initiatives of new equipment in the first half of the year in consolidating the two brands, consolidating agents and distributors. We are now in very good shape to start getting the results in terms of orders. On the Americas side, Americas has had a super strong performance since the second half of last year. It has been growing mid-teens or above. For the second half of this year, we expect the growth to slow down a little bit, but it is just a matter of the compare because they started growing very strongly last year. We expect them to be sequentially stable, but the growth with a slowdown. On EMEA, EMEA is expected to be kind of low mid-single digit up for the year. The reason for that is we have very strong growth in the Middle East. There are certain markets in Europe that are more muted. I am talking about Central Europe, Western Europe, or the north of Europe. We are also taking selective investments in those markets where we see possibility to grow sales segment, but always with a prospect of converting into service afterwards. That's great color. Thank you. I will now turn the call back to Judy for closing remarks. Thank you, Tina. While we face near-term challenges in our new equipment business, we remain confident in our long-term outlook. The global install base continues to expand while the population of aged units presents an attractive and growing opportunity for modernization. Together, these strong fundamentals should continue to drive our service flywheel. As we look ahead, we're confident our service-driven business will continue to deliver attractive long-term shareholder returns. Thank you for joining us. Thanks to our Otis colleagues, and thank you to our investors. Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.