So just first of all on the kind of new equipment guide for the year, it just looks like you kind of took up the high end of the range for some of those or at least move those higher at the high end. That's who are going to get share from to grow our service portfolio above our leading service portfolio of over 2 million units already. New equipment backlog continued to grow up 3% versus the prior year at constant currency. Our first question comes from Carter Copeland of Melius Research. 99 to this Report, and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended … We started 2020 with about $1.4 billion of cash and now expect to generate approximately $1.15 billion of free cash flow in 2020, an improvement of $100 million versus the prior midpoint from higher net income and an improved working capital performance. The Service segment performs maintenance and repair services, as well as modernization services to upgrade elevators and escalators. So it's a pretty all out the front on making sure that we continue to gain share.
The pillar scores are Audit: N/A; Board: N/A; Shareholder Rights: N/A; Compensation: N/A. Your line is now open. China orders were up high single-digits as the business continued its rapid recovery from the impacts of COVID-19. After we complete the previously disclosed $500 million of debt repayment. We provide the destination dispatch. So that's going to -- that's a good thing. The New Equipment segment designs, manufactures, sells, and installs a range of passenger and freight elevators, as well as escalators and moving walkways for residential and commercial buildings, and infrastructure projects. Thank you. And really, it's the discretionary repair and modernization where we've had any of the decline in sales as people are making discretionary choices. And our next question comes from Julian Mitchell with Barclays. I'll let somebody else ask. The pillar scores are Audit: N/A; Board: N/A; Shareholder Rights: N/A; Compensation: N/A. We now expect new equipment sales to be down mid-single-digits and service sales to be flat to down slightly. And but we are seeing -- we had low single-digit gains in terms of EMEA and Asia, high single-digit gains in China, and low single-digit we were down in the Americas. So if we are seeing things go in the wrong direction, we are providing adequate reserves for that. Great, thank you for the color. And we've looked -- we gained the same access to the Dodge and the ABI information and Dodge has marginal improvement but up for next year. I mean, outside of these temporary price concessions and these are temporary because they are for a limited period of time, outside of these temporary price concessions the overall service market is holding. With that, I'll turn it over to Rahul to walk through our results and outlook in more detail.
In terms of Otis ONE, we are ramping up and accelerating our deployment. So I was just curious if that's some conservatism because we're still in COVID or once again, I think to an earlier question that, you know, something's actually going to hit in Q4, so it's just a timing related issue? Your line is now open.
We -- Steve, you're right. Every now and then a job does cancel but on the new equipment side or even on the service side, we've not seen extreme cancellations happening. These actions will allow us to maintain sufficient liquidity and position us to increase cash on the balance sheet by the end of the year, giving us optionality depending on the overall liquidity conditions to start share buyback in 2021. Innovation is core to Otis. So our backlog margins, which would drive revenue for next year those margins are flat. So that has been our primary focus but over time, we do expect revenue. We're delighted to have the Bay State colleagues join the Otis team, and we remain focused on accelerating growth of the service portfolio, both organically and inorganically. We are raising the modernization outlook to be about flat for the year, driven by better than expected performance in Asia Pacific from an effective go to market strategy to tap into the demand created by regulatory requirements. We did well in the Tier One and Tier Two cities, and especially in some of our strategic verticals like infrastructure, where we've been spending a lot of time and investment. So Julian, it's hard to comment, right, I mean it's hard to comment on the orders but we are pleased with the performance we have year-to-date. Thank you. We're all trying to kind of learn how to compare all these companies over time. And we do feel that we should be in a position to accelerate our share buyback from 2022 into 2021. And I guess you guys defined share gain differently. We are attacking the volume business in certain markets that we didn't play. I'm pleased to share that we had a very strong quarter. So that's what we would have typically seen. And as we've shared with our end market exposure, that's a little under 10% for us globally. Thank you, Sonia and good morning, everyone. We now expect the adjusted tax rate for the year to be about 30.5% down one point versus the prior outlook. In terms of liquidity we ended Q3 with $1.7 billion of cash and continue to maintain a revolving credit facility which serves as a backstop for our commercial paper issuances and an additional source of liquidity if needed. Otis Worldwide Corporation (NYSE:OTIS) Q3 2020 Earnings Conference Call October 26, 2020 10:00 A.M. And we think we'll get there barring some really, really unforeseen events. And then maybe my second question around the cost and profit outlook. Our bolt on M&A strategy is working and serves as an accretive source of growth. We've added more than 100 salespeople. Thank you. Are you seeing any kind of cooling down measures that maybe might impinge on 2021, I mean, are we seeing any RP activity started down a little bit, any concerns on China as it goes into 2021? And we have said that right since Q1 and obviously driving the $60 million reduction year-over-year is fantastic. Good morning, and welcome to Otis' Third Quarter 2020 Earnings Conference Call. This year it has been a little bit lower just given all the disruptions that we've had, both in the field and in the factories. Europe was a little bit -- Europe was up, North America was up -- pressure in Asia you would expect but so this pricing looks okay as well. We tend to renew our service contracts in Europe early in the year and we do have price escalators there that are indexed to inflation.
So while we're seeing -- the market's competitive, pricing was competitive in the third quarter, we would tell you the place it was most competitive was in North America. So on the new equipment side, we think we're seeing new starts in Europe, including in South Europe, and we're seeing it really across the board. Thank you. What are you looking for, can you hold that backlog margin in the fourth quarter? I would now like to turn the call back over to Judy Marks for any closing remarks. So it will help over time but our first focus has been productivity on Otis ONE as we previously stated.
And Denise, our conversion rates and our retention rates on connected elevators beats our industry leading retention rates across the globe. Later during the quarter, we launched Made to Move Communities, a CSR program focused on advancing youth STEM education and providing inclusive mobility solutions for communities in need. But I think the way as I understand it, there's kind of like rolling waves and would only be a portion that might even be impacted. Access to job sites and buildings has largely returned to normal outside of India and Southeast Asia, and the service call volume is back to 2019 levels in China and Asia-Pacific. I mean, if you look at our coverage in certain markets, whether it's China, whether it's the rest of the Asia-Pacific, whether it's markets in Europe, I mean our sales coverage in the markets that we have targeted are up anywhere between 7 to 10 points. Denise Molina from Morningstar.
Otis Worldwide Corp (Spin-Off 1) Otis Elevator Company is the world’s leading manufacturer of people-moving products, including elevators, escalators, and … And we have put some of those sales investments in place there to deal with both the new regulations in Korea, but also just to get more share on the new equipment side. Otis Worldwide Corporation’s ISS Governance QualityScore as of N/A is N/A. We grew share in Brazil and we are continuing to perform well in Latin America. I'm pleased with our year-to-date performance navigating continued COVID challenges while continuing to drive our long-term strategy all in our first year as a standalone company. New equipment backlog was up 3% at constant currency driven by growth in the Americas, with overall backlog margin improving slightly from Q2 and remaining stable versus the prior year. However, we expect Asia to be down in the fourth quarter due to continuing challenges in India and Southeast Asia. And what we want to -- to take it a step further, our next step obviously is the fact that we want to accelerate the backlog conversion for 2021 and that gives us confidence to grow our new equipment business and not have the volume related headwinds that we've had this year.
And, the projections are a little bit harder based on the data we are seeing, there's a little bit of a snap back in Asia and in China and then -- and Europe looks okay as well. At the same time, we continued to invest in the business and R&D expense as a percentage of sales was about flat versus the prior year. With that, I'd like to turn the call over to Judy. So that makes it a little bit harder to figure out exactly what that right number is. I mean, a lot of the cash is offshore. Your line is now open. As these come up for renewal, every one of them we discuss with the customers exactly what types of services they need to receive, and then we adjust our costs accordingly. To start, I want to thank each of our colleagues around the world for their unwavering dedication as we continue to deliver on our commitments to passengers, customers, and shareholders. And then is that level of revenue that's expected to carry across to a wider customer base because if you've got a budget for these kind of yearly contracts, just wondering if you're expecting that to be widely adopted for everyone to kind of have another 30% to 40% in their budgets for these services or do you think they're sort of going to be for a certain high tier of your segment, maybe high population building? Your line is now open.
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