Johnson Controls Reports Q4 and FY24 Results; Initiates FY25 Guidance
-- Q4 sales increased 7% and organic sales increased 10%(*)
-- Full year sales increased 2% and organic sales increased 4%(*)
-- Q4 GAAP EPS of $0.95; Q4 Adjusted EPS(*) of $1.28
-- Full year GAAP EPS of $2.52; full year Adjusted EPS of $3.71
-- Q4 Orders +8% organically year-over-year
-- Building Solutions backlog of $13.1 billion increased 7% organically
year-over-year
* This news release contains non-GAAP financial measures. Definitions and reconciliations of the non-GAAP financial measures can be found in the attached footnotes. Non-GAAP measures
should be considered in addition to, and not as replacements for, the most comparable GAAP measures. Unless otherwise indicated, historical results represent the consolidated results of
the Company, inclusive of the Residential & Light Commercial business, which was classified as discontinued operations during the fiscal fourth quarter of 2024. See footnote one for
additional details.
CORK, Ireland, Nov. 6, 2024 /PRNewswire/ -- Johnson Controls International plc (NYSE: JCI), a global leader for smart, healthy and sustainable buildings, today reported fiscal fourth quarter 2024 GAAP earnings per share ("EPS") of $0.95. Excluding special items, adjusted EPS was $1.28.
Q4 sales increased 7% to $7.4 billion and organic sales increased 10%. Full year sales from increased 2% to $27.4 billion and organic sales increased 4%.
For the quarter, GAAP net income was $633 million and adjusted net income was $858 million.
"We are very pleased with our strong end to the fiscal year and our fourth quarter results, which delivered double-digit organic sales growth and robust margin expansion," said George Oliver, Chairman and CEO. "Johnson Controls is entering fiscal 2025 with momentum. Backlog is at record levels and we are well positioned to deliver continued profitable top line growth. Importantly, the actions taken during the year to simplify our portfolio are allowing us to focus our resources on expanding Johnson Controls as a leading pure-play building solutions provider. We are driving greater outcomes for our customers globally across the building lifecycle while unlocking shareholder value."
FISCAL Q4 SEGMENT RESULTS
The financial highlights presented in the tables below include both continuing and discontinued operations and are in accordance with GAAP, unless otherwise indicated. All comparisons are to the fiscal fourth quarter of 2023.
A slide presentation to accompany the results can be found in the Investor Relations section of Johnson Controls' website at http://investors.johnsoncontrols.com.
Building Solutions North America
Fiscal Q4
(in millions) 2024 2023 Change
Sales $3,223 $2,778 16 %
Segment EBITA
GAAP 484 427 13 %
Adjusted (non-GAAP) 484 427 13 %
Segment EBITA Margin %
GAAP 15.0 % 15.4 % (40 bp)
Adjusted (non-GAAP) 15.0 % 15.4 % (40 bp)
Sales in the quarter of $3.2 billion increased 16% over the prior year. Organic sales also increased 16% led by growth greater than 20% in Applied HVAC & Controls.
Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 7% year-over-year. Backlog at the end of the quarter of $9.1 billion increased 10% compared to the prior year, excluding M&A and adjusted for foreign currency.
Segment EBITA margin of 15.0% declined 40 basis points versus the prior year primarily due to unfavorable mix, as Systems grew faster than Service.
Building Solutions EMEA/LA (Europe, Middle East, Africa/Latin America)
Fiscal Q4
(in millions) 2024 2023 Change
Sales $1,113 $1,045 7 %
Segment EBITA
GAAP 111 82 35 %
Adjusted (non-GAAP) 128 82 56 %
Segment EBITA Margin %
GAAP 10.0 % 7.8 % 220 bp
Adjusted (non-GAAP) 11.5 % 7.8 % 370 bp
Sales in the quarter of $1.1 billion increased 7% over the prior year. Organic sales grew 10% versus the prior year led by double-digit growth in Controls, Security, and Industrial Refrigeration.
Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 14% year-over-year. Backlog at the end of the quarter of $2.5 billion increased 10% year-over-year, excluding M&A and adjusted for foreign currency.
Segment EBITA margin of 10.0% expanded 220 basis points versus the prior year driven by improved productivity and by the positive mix from the growth in Service. Adjusted segment EBITA in Q4 2024 excludes a non-recurring loss associated with the equity method accounting for a joint venture.
Building Solutions Asia Pacific
Fiscal Q4
(in millions) 2024 2023 Change
Sales $664 $697 (5 %)
Segment EBITA
GAAP 94 94 - %
Adjusted (non-GAAP) 94 94 - %
Segment EBITA Margin %
GAAP 14.2 % 13.5 % 70 bp
Adjusted (non-GAAP) 14.2 % 13.5 % 70 bp
Sales in the quarter of $664 million declined 5% versus the prior year. Organic sales also declined 5% versus the prior year as mid single-digit Service growth was more than offset by continued weakness in the Systems business in China.
Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 6% year-over-year. Backlog at the end of the quarter of $1.5 billion decreased 10% year-over-year, excluding M&A and adjusted for foreign currency.
Segment EBITA margin of 14.2% improved 70 basis points versus the prior year as positive mix from our Service business offset a decline in our Systems business.
Global Products
Fiscal Q4*
(in millions) 2024 2023 Change
Sales $2,394 $2,386 - %
Segment EBITA
GAAP 670 502 33 %
Adjusted (non-GAAP) 670 502 33 %
Segment EBITA Margin %
GAAP 28.0 % 21.0 % 700 bp
Adjusted (non-GAAP) 28.0 % 21.0 % 700 bp
*Includes results for both continuing operations and discontinued operations related to the sale of the Residential and Light Commercial HVAC business. See footnote one for additional details.
Sales in the quarter of $2.4 billion were flat versus the prior year. Organic sales grew 8% versus the prior year as growth in Commercial and Residential HVAC were offset by declines in both Fire & Security and Industrial Refrigeration.
Segment EBITA margin of 28.0% expanded 700 basis points versus the prior year driven primarily by operational efficiencies leading to productivity improvements.
Corporate
Fiscal Q4
(in millions) 2024 2023 Change
Corporate Expense
GAAP $158 $70 126 %
Adjusted (non-GAAP) 114 49 133 %
Adjusted Corporate expense excludes certain transaction/separation costs.
OTHER Q4 ITEMS
-- Total cash provided by operating activities of $1,526 million included
cash from continuing operations of $1,352 million and cash from
discontinued operations of $174 million. Free cash flow was $1,318
million and adjusted free cash flow was $1,087 million.
-- The Company paid dividends of $247 million.
-- The Company repurchased 5.4 million shares of common stock for
approximately $370 million.
-- The Company recorded pre-tax restructuring and impairment costs for
continuing and discontinued operations of $145 million, comprised
primarily of severance and other charges related to ongoing
restructuring actions and certain asset impairments.
-- The Company signed a definitive agreement to sell its Residential and
Light Commercial HVAC business (the "R&LC Business"), which includes the
North America Ducted businesses and the global Residential joint venture
with Hitachi Global Life Solutions, Inc. ("Hitachi"), of which Johnson
Controls owns 60% and Hitachi owns 40%, to Bosch Group for approximately
$8.1 billion in cash with the Company's portion of the aggregate
consideration being approximately $6.7 billion. The transaction is
expected to close in the fourth quarter of fiscal 2025, subject to
required regulatory approvals and other customary closing conditions.
-- The Company announced a multi-year restructuring plan to address
stranded costs and further right-size its global operations following
its previously announced portfolio simplification actions. The Company
expects to incur approximately $400 million in restructuring costs over
the next three years, resulting in expected annual cost savings of
approximately $500 million.
GUIDANCE
The following forward-looking statements regarding organic sales growth, adjusted segment EBITA margin, adjusted segment EBITA margin improvement and adjusted EPS are non-GAAP financial measures and are presented on a continuing operations basis excluding the R&LC Business, which was classified as discontinued operations during the fiscal fourth quarter of 2024. These non-GAAP financial measures are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts excluded is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period and the high variability of certain amounts, such as mark-to-market adjustments. Organic revenue growth excludes the effect of acquisitions, divestitures and foreign currency. The Company is unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to its most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort or expense. The unavailable information could have a significant impact on the Company's fiscal 2025 first quarter and full year GAAP financial results from continuing operations.
The Company initiated fiscal 2025 first quarter continuing operations guidance:
-- Organic sales growth of mid-single digits
-- Adjusted segment EBITA margin of ~14.5%
-- Adjusted EPS before special items of ~$0.57 to $0.60
The Company initiated fiscal 2025 full year continuing operations guidance:
-- Organic sales growth of mid-single digits
-- Adjusted segment EBITA margin improvement of more than 50 basis points,
year-over-year
-- Adjusted EPS before special items of ~$3.40 to $3.50
CONFERENCE CALL & WEBCAST INFO
Johnson Controls will host a conference call to discuss this quarter's results at 8:30 a.m. ET today, which can be accessed by dialing 844-763-8274 (in the United States) or +1-412-717-9224 (outside the United States), or via webcast. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Johnson Controls website at https://investors.johnsoncontrols.com/news-and-events/events-and-presentations. A replay will be made available approximately two hours following the conclusion of the conference call.
ABOUT JOHNSON CONTROLS
At Johnson Controls (NYSE:JCI), we transform the environments where people live, work, learn and play. As the global leader in smart, healthy and sustainable buildings, our mission is to reimagine the performance of buildings to serve people, places and the planet.
Building on a proud history of nearly 140 years of innovation, we deliver the blueprint of the future for industries such as healthcare, schools, data centers, airports, stadiums, manufacturing and beyond through OpenBlue, our comprehensive digital offering.
Today, with a global team of almost 100,000 experts in more than 150 countries, Johnson Controls offers the world`s largest portfolio of building technology and software as well as service solutions from some of the most trusted names in the industry.
Visit www.johnsoncontrols.com for more information and follow @Johnson Controls on social platforms.
JOHNSON CONTROLS CONTACTS:
INVESTOR CONTACTS: MEDIA CONTACT:
Jim Lucas Danielle Canzanella
Direct: +1 414.340.1752 Direct: +1 203.499.8297
Email: jim.lucas@jci.com Email:
danielle.canzanella@jci.com
Michael Gates
Direct: +1 414.524.5785
Email: michael.j.gates@jci.com
JOHNSON CONTROLS INTERNATIONAL PLC CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Johnson Controls International plc has made statements in this communication that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. However, the absence of these words does not mean that a statement is not forward-looking. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond its control, that could cause its actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: Johnson Controls' ability to develop or acquire new products and technologies that achieve market acceptance and meet applicable quality and regulatory requirements; the ability of Johnson Controls to execute on its operating model and drive organizational improvement; Johnson Controls' ability to successfully execute and complete portfolio simplification, including the completion of the divestiture of the Residential and Light Commercial business, as well as the possibility that the expected benefits of such actions will not be realized or will not be realized within the expected time frame; the ability to hire and retain senior management and other key personnel, including successfully executing Johnson Controls' Chief Executive Officer succession plan; the ability to innovate and adapt to emerging technologies, ideas and trends in the marketplace, including the incorporation of technologies such as artificial intelligence; the ability to manage general economic, business and capital market conditions, including the impact of recessions, economic downturns and global price inflation; fluctuations in the cost and availability of public and private financing for Johnson Controls' customers; the ability to manage macroeconomic and geopolitical volatility, including supply chain shortages and the conflicts between Russia and Ukraine and Israel and Hamas; managing the risks and impacts of potential and actual security breaches, cyberattacks, privacy breaches or data breaches; maintaining and improving the capacity, reliability and security of Johnson Controls' enterprise information technology infrastructure; the ability to manage the lifecycle cybersecurity risk in the development, deployment and operation of Johnson Controls' digital platforms and services; changes to laws or policies governing foreign trade, including economic sanctions, tariffs, foreign exchange and capital controls, import/export controls or other trade restrictions; fluctuations in currency exchange rates; changes or uncertainty in laws, regulations, rates, policies, or interpretations that impact Johnson Controls' business operations or tax status; the ability to adapt to global climate change, climate change regulation and successfully meet Johnson Controls' public sustainability commitments; risks and uncertainties related to the settlement with a nationwide class of public water systems concerning the use of AFFF; the outcome of litigation and governmental proceedings; the risk of infringement or expiration of intellectual property rights; Johnson Controls' ability to manage disruptions caused by catastrophic or geopolitical events, such as natural disasters, armed conflict, political change, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions; the tax treatment of recent portfolio transactions; significant transaction costs and/or unknown liabilities associated with such transactions; labor shortages, work stoppages, union negotiations, labor disputes and other matters associated with the labor force; and the cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson Controls business is included in the section entitled "Risk Factors" in Johnson Controls Annual Report on Form 10-K for the fiscal year filed with the SEC, which is available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab, and such factors may be updated from time to time in Johnson Controls filings with the SEC, which are or will be accessible on the SEC's website at www.sec.gov. Shareholders, potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this communication are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this communication.
FINANCIAL STATEMENTS
Johnson Controls International plc
Consolidated Statements of Income
(in millions, except per share data; unaudited)
Three Months Ended Twelve Months Ended
September 30,
September 30,
2024 2023 2024 2023
Net sales
Products and systems $4,391 $4,128 $15,967 $15,789
Services 1,857 1,725 6,985 6,542
6,248 5,853 22,952 22,331
Cost of sales
Products and systems 2,872 2,877 10,677 10,736
Services 1,108 1,004 4,198 3,791
3,980 3,881 14,875 14,527
Gross profit 2,268 1,972 8,077 7,804
Selling, general and administrative expenses 1,368 1,309 5,661 5,387
Restructuring and impairment costs 133 212 510 1,049
Net financing charges 96 56 342 258
Equity income (loss) (23) 1 (42) 3
Income from continuing operations before income taxes 648 396 1,522 1,113
Income tax provision (benefit) 110 (92) 111 (468)
Income from continuing operations 538 488 1,411 1,581
Income from discontinued operations, net of tax 140 93 489 452
Net income 678 581 1,900 2,033
Income from continuing operations attributable to 2 7 4 19
noncontrolling interests
Income from discontinued operations attributable to 43 25 191 165
noncontrolling interests
Net income attributable to Johnson Controls $633 $549 $1,705 $1,849
Amounts attributable to Johnson Controls ordinary
shareholders:
Income from continuing operations $536 $481 $1,407 $1,562
Income from discontinued operations 97 68 298 287
Net income $633 $549 $1,705 $1,849
Basic earnings per share attributable to Johnson Controls
Continuing operations $0.80 $0.71 $2.09 $2.28
Discontinued operations 0.15 0.10 0.44 0.42
Total $0.95 $0.81 $2.53 $2.70
Diluted earnings per share attributable to Johnson Controls
Continuing operations $0.80 $0.70 $2.08 $2.27
Discontinued operations 0.15 0.10 0.44 0.42
Total $0.95 $0.80 $2.52 $2.69
Johnson Controls International plc
Condensed Consolidated Statements of Financial Position
(in millions; unaudited)
September 30, September 30,
2024 2023
Assets
Cash and cash equivalents $606 $828
Accounts receivable - net 6,051 5,494
Inventories 1,774 1,872
Current assets held for sale 1,595 1,552
Other current assets 1,153 991
Current assets 11,179 10,737
Property, plant and equipment - net 2,403 2,374
Goodwill 16,725 16,772
Other intangible assets - net 4,130 4,772
Noncurrent assets held for sale 3,210 3,105
Other noncurrent assets 5,048 4,482
Total assets $42,695 $42,242
Liabilities and Equity
Short-term debt $953 $361
Current portion of long-term debt 536 645
Accounts payable 3,389 3,498
Accrued compensation and benefits 1,048 847
Deferred revenue 2,160 1,923
Current liabilities held for sale 1,431 1,375
Other current liabilities 2,438 2,435
Current liabilities 11,955 11,084
Long-term debt 8,004 7,818
Pension and postretirement benefits 217 252
Noncurrent liabilities held for sale 405 407
Other noncurrent liabilities 4,753 4,987
Long-term liabilities 13,379 13,464
Shareholders' equity attributable to Johnson Controls 16,098 16,545
Noncontrolling interests 1,263 1,149
Total equity 17,361 17,694
Total liabilities and equity $42,695 $42,242
Johnson Controls International plc
Consolidated Statements of Cash Flows
(in millions; unaudited)
Three Months Ended Twelve Months Ended
September 30,
September 30,
2024 2023 2024 2023
Operating Activities of Continuing Operations
Income from continuing operations attributable to Johnson Controls $536 $481 $1,407 $1,562
Income from continuing operations attributable to noncontrolling interests 2 7 4 19
Net income 538 488 1,411 1,581
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization 192 202 816 745
Pension and postretirement benefit expense (income) (10) 83 (43) 58
Pension and postretirement contributions 10 (5) (6) (48)
Equity in earnings of partially-owned affiliates, net of dividends received 23 (2) 44 (3)
Deferred income taxes - (337) (403) (602)
Non-cash restructuring and impairment charges 78 126 411 827
Equity-based compensation expense 26 18 107 107
Other - net 15 (20) (112) (117)
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable (46) 240 (537) (259)
Inventories 168 141 (17) (58)
Other assets 78 31 (482) (187)
Restructuring reserves 5 25 (76) 57
Accounts payable and accrued liabilities 466 (17) 645 (85)
Accrued income taxes (191) 95 (190) (160)
Cash provided by operating activities from continuing operations 1,352 1,068 1,568 1,856
Investing Activities of Continuing Operations
Capital expenditures (195) (139) (494) (446)
Sale of property, plant and equipment 1 3 1 30
Acquisition of businesses, net of cash acquired (4) (466) (3) (726)
Business divestitures, net of cash divested 326 28 345 28
Other - net (26) (1) (33) 21
Cash used by investing activities from continuing operations 102 (575) (184) (1,093)
Financing Activities of Continuing Operations
Net proceeds (payments) from borrowings with maturities less than three months (655) 195 48 (75)
Proceeds from debt - 2 1,281 1,173
Repayments of debt (486) (1,019) (924) (1,555)
Stock repurchases and retirements (370) (12) (1,246) (625)
Payment of cash dividends (247) (251) (1,000) (980)
Other - net - 20 (107) 3
Cash used by financing activities from continuing operations (1,758) (1,065) (1,948) (2,059)
Discontinued Operations
Cash provided by operating activities 174 322 530 365
Cash used by investing activities (13) (33) (37) (91)
Cash provided (used) by financing activities - 2 (132) (115)
Cash provided by discontinued operations 161 291 361 159
Effect of exchange rate changes on cash, cash equivalents and restricted cash 30 62 59 (5)
Change in cash, cash equivalents and restricted cash held for sale (8) (4) (6) (5)
Decrease in cash, cash equivalents and restricted cash (121) (223) (150) (1,147)
Cash, cash equivalents and restricted cash at beginning of period 888 1,140 917 2,064
Cash, cash equivalents and restricted cash at end of period 767 917 767 917
Less: Restricted cash 161 89 161 89
Cash and cash equivalents at end of period $606 $828 $606 $828
FOOTNOTES
1. Sale of Residential and Light Commercial HVAC Business
The Company signed a definitive agreement in July 2024 to sell its Residential and Light Commercial HVAC business (the "R&LC Business"), which includes the North America Ducted businesses and the global Residential joint venture with Hitachi Global Life Solutions, Inc. ("Hitachi"), of which Johnson Controls owns 60% and Hitachi owns 40%. The R&LC Business, which was previously reported in the Global Products segment, meets the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the consolidated financial statements as a discontinued operation, and assets and liabilities were retrospectively reclassified as held for sale for all periods presented. Unless otherwise noted, all activities and amounts reported in the following footnotes include both the continuing operations of the Company and activities and amounts related to the R&LC business.
2. Non-GAAP Measures
The Company reports various non-GAAP measures in this earnings release and the related earnings presentation. Non-GAAP measures should be considered in addition to, and not as replacements for, the most comparable GAAP measures. Refer to footnotes three through eight for further information on the calculations of the non-GAAP measures and reconciliations of the non-GAAP measures to the most comparable GAAP measures.
Organic sales
Organic sales growth excludes the impact of acquisitions, divestitures and foreign currency. Management believes organic sales growth is useful to investors in understanding period-over-period sales results and trends.
Cash flow
Adjusted free cash flow and adjusted free cash flow conversion are non-GAAP measures which exclude the impacts of the following:
-- JC Capital cash flows primarily include activity associated with
finance/notes receivables and inventory and/or capital expenditures
related to lease arrangements. JC Capital net income is primarily
related to interest income on the finance/notes receivable and profit
recognized on arrangements with sales-type lease components.
-- Effective January 1, 2024, the Company has excluded the impact of
discontinuing its accounts receivables factoring programs from adjusted
free cash flow and adjusted free cash flow conversion. The Company has
also re-baselined the prior year adjusted free cash flow measures to
present a more comparative measure without the impact of factoring.
-- Cash payments related to the water systems AFFF settlement and cash
receipts for AFFF-related insurance recoveries.
Management believes free cash flow and adjusted free cash flow measures are useful to investors in understanding the strength of the Company and its ability to generate cash. These non-GAAP measures can also be used to evaluate the Company's ability to generate cash flow from operations and the impact that this cash flow has on its liquidity. Management also believes adjusted free cash flows are useful to investors in understanding period-over-period cash flows, cash trends and ongoing cash flows of the Company.
Adjusted financial measures
Adjusted financial measures include adjusted segment EBITA, adjusted net income, adjusted earnings per share, adjusted EBIT, adjusted EBITDA and adjusted corporate expenses. These non-GAAP measures are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the excluded amounts is a matter of management judgment and depends upon the nature and variability of the underlying expense or income amounts and other factors.
As detailed in the tables included in footnotes four through seven, the following items were excluded from certain financial measures:
-- Net mark-to-market adjustments are the result of adjusting restricted
asbestos investments and pension and postretirement plan assets to their
current market value. These adjustments may have a favorable or
unfavorable impact on results.
-- Restructuring and impairment costs, net of NCI represents restructuring
costs attributable to Johnson Controls including costs associated with
exit plans or other restructuring plans that will have a more
significant impact on the underlying cost structure of the organization.
Impairment costs primarily relate to write-downs of goodwill, intangible
assets and assets held for sale to their fair value.
-- Water systems AFFF settlement and insurance recoveries include amounts
related to a settlement with a nationwide class of public water systems
concerning the use of AFFF manufactured and sold by a subsidiary of the
Company, and AFFF-related insurance recoveries.
-- Transaction/separation costs include costs associated with significant
mergers and acquisitions.
-- Earn-out adjustments relate to earn-out liabilities associated with
certain significant acquisitions and may have a favorable or unfavorable
impact on results.
-- Warehouse fire loss relates to an uninsured loss attributable to a fire
at a warehouse in Menominee, Michigan.
-- Cyber incident costs primarily represent expenses, net of insurance
recoveries, associated with the response to, and remediation of, a
cybersecurity incident which occurred in September 2023.
-- Global products product quality issue are costs related to a product
quality issue within the Global Products segment that is unusual due to
the magnitude of the expected cost to remediate in comparison to typical
product quality issues experienced by the Company.
-- Loss on divestiture relates to the sale of the ADTi business.
-- EMEA/LA joint venture loss relates to certain non-recurring losses
associated with the equity method accounting of a joint venture company.
-- Discrete tax items, net includes the net impact of discrete tax items
within the period, including the following types of items: changes in
estimates associated with valuation allowances, changes in estimates
associated with reserves for uncertain tax positions, withholding taxes
recorded upon changes in indefinite re-investment assertions for
businesses to be disposed of, impacts from statutory rate changes, and
the recording of significant tax credits.
-- Related tax impact includes the tax impact of the various
adjusting/excluded items.
Management believes the exclusion of these items is useful to investors due to the unusual nature and/or magnitude of the amounts. When considered together with unadjusted amounts, adjusted financial measures are useful to investors in understanding period-over-period operating results, business trends and ongoing operations of the Company. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes.
Debt ratios
Management believes that net debt to adjusted EBITDA, a non-GAAP measure, is useful to understanding the Company's financial condition as the ratio provides an overview of the extent to which the Company relies on external debt financing for its funding and also is a measure of risk to its shareholders.
3. Sales
The following tables include sales from both continuing and discontinued operations and detail the changes in sales attributable to organic growth, foreign currency, acquisitions, divestitures and other (unaudited):
Three Months Ended September 30
Net sales
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Net sales - 2023 $2,778 $1,045 $697 $4,520 $2,386 $6,906
Base year adjustments
Divestitures and other (7) (7) (135) (142)
Foreign currency (2) (31) 6 (27) (26) (53)
Adjusted base net sales 2,776 1,014 696 4,486 2,225 6,711
Acquisitions 2 2 2
Organic growth 447 97 (32) 512 169 681
Net sales - 2024 $3,223 $1,113 $664 $5,000 $2,394 $7,394
Growth %:
Net sales 16 % 7 % (5 %) 11 % - % 7 %
Organic growth 16 % 10 % (5 %) 11 % 8 % 10 %
Twelve Months Ended September 30
Net sales
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Net sales - 2023 $10,330 $4,096 $2,746 $17,172 $9,621 $26,793
Base year adjustments
Divestitures and other (3) (58) (61) (147) (208)
Foreign currency 13 (39) (62) (88) (170) (258)
Adjusted base net sales 10,343 4,054 2,626 17,023 9,304 26,327
Acquisitions 48 9 51 108 29 137
Organic growth 957 233 (440) 750 204 954
Net sales - 2024 $11,348 $4,296 $2,237 $17,881 $9,537 $27,418
Growth %:
Net sales 10 % 5 % (19 %) 4 % (1 %) 2 %
Organic growth 9 % 6 % (17 %) 4 % 2 % 4 %
Three Months Ended September 30
Products and systems revenue
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Products and systems revenue - 2023 $1,727 $570 $498 $2,795 $2,386 $5,181
Base year adjustments
Divestitures and other (1) (1) (135) (136)
Foreign currency (1) 2 3 4 (26) (22)
Adjusted products and systems revenue 1,726 571 501 2,798 2,225 5,023
Acquisitions 1 1 1
Organic growth 364 24 (44) 344 169 513
Products and systems revenue - 2024 $2,090 $596 $457 $3,143 $2,394 $5,537
Growth %:
Products and systems revenue 21 % 5 % (8 %) 12 % - % 7 %
Organic growth 21 % 4 % (9 %) 12 % 8 % 10 %
Twelve Months Ended September 30
Products and systems revenue
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Products and systems revenue - 2023 $6,368 $2,275 $1,987 $10,630 $9,621 $20,251
Base year adjustments
Divestitures and other (2) (2) (147) (149)
Foreign currency 13 37 (48) 2 (170) (168)
Adjusted products and systems revenue 6,381 2,310 1,939 10,630 9,304 19,934
Acquisitions 5 5 30 40 29 69
Organic growth 713 (1) (486) 226 204 430
Products and systems revenue - 2024 $7,099 $2,314 $1,483 $10,896 $9,537 $20,433
Growth %:
Products and systems revenue 11 % 2 % (25 %) 3 % (1 %) 1 %
Organic growth 11 % - % (25 %) 2 % 2 % 2 %
Three Months Ended September 30
Service revenue
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Service revenue - 2023 $1,051 $475 $199 $1,725
$ - $1,725
Base year adjustments
Divestitures and other 1 (7) (6) (6)
Foreign currency (1) (33) 3 (31) (31)
Adjusted base service revenue 1,050 443 195 1,688 1,688
Acquisitions 1 1 1
Organic growth 83 73 12 168 168
Service revenue - 2024 $1,133 $517 $207 $1,857
$ - $1,857
Growth %:
Service revenue 8 % 9 % 4 % 8 % - % 8 %
Organic growth 8 % 16 % 6 % 10 % - % 10 %
Twelve Months Ended September 30
Service revenue
Building Solutions
(in millions) North EMEA/LA Asia Total Global Total JCI
America Pacific Products plc
Service revenue - 2023 $3,962 $1,821 $759 $6,542
$ - $6,542
Base year adjustments
Divestitures and other (1) (58) (59) (59)
Foreign currency (76) (14) (90) (90)
Adjusted base service revenue 3,962 1,744 687 6,393 6,393
Acquisitions 43 4 21 68 68
Organic growth 244 234 46 524 524
Service revenue - 2024 $4,249 $1,982 $754 $6,985
$ - $6,985
Growth %:
Service revenue 7 % 9 % (1 %) 7 % - % 7 %
Organic growth 6 % 13 % 7 % 8 % - % 8 %
4. Cash Flow, Free Cash Flow and Free Cash Flow Conversion
The following table includes free cash flow and free cash flow conversion attributable to both continuing and discontinued operations (unaudited):
Three Months Ended
Twelve Months Ended
September 30,
September 30,
(in millions) 2024 2023 2024 2023
Cash provided by operating activities $1,526 $1,390 $2,098 $2,221
Capital expenditures (208) (173) (532) (539)
Free cash flow (non-GAAP) $1,318 $1,217 $1,566 $1,682
Net income attributable to JCI $633 $549 $1,705 $1,849
Free cash flow conversion from net 208 % 222 % 92 % 91 %
income (non-GAAP)
The following table includes adjusted free cash flow and adjusted free cash flow conversion attributable to both continuing and discontinued operations (unaudited):
Three Months Ended Twelve Months Ended
September 30,
September 30,
(in millions) 2024 2023 2024 2023
Free cash flow (non-GAAP) $1,318 $1,217 $1,566 $1,682
Adjustments:
JC Capital cash used by operating activities 9 56 179 137
Water systems AFFF settlement cash payments and (257) (14)
insurance recoveries
Impact from discontinuation of factoring programs 17 665
Adjusted free cash flow (non-GAAP) 1,087 1,273 2,396 1,819
Prior year impact from factoring programs (284) (205)
Re-baselined adjusted free cash flow (non-GAAP) $1,087 $989 $2,396 $1,614
Adjusted net income attributable to JCI (non-GAAP) $858 $719 $2,510 $2,405
JC Capital net income (8) 1 (16) (11)
Adjusted net income attributable to JCI, excluding $850 $720 $2,494 $2,394
JC Capital (non-GAAP)
Adjusted free cash flow conversion (non-GAAP) 128 % 137 % 96 % 67 %
5. EBITA, EBIT and Corporate Expense
The Company evaluates the performance of its business units primarily on segment EBITA. The following table includes both continuing and discontinued operations (unaudited):
Three Months Ended September 30, Twelve Months Ended September 30,
Actual Adjusted
Actual Adjusted
(Non-GAAP) (Non-GAAP)
(in millions; unaudited) 2024 2023 2024 2023 2024 2023 2024 2023
Segment EBITA
---
Building Solutions North America $484 $427 $484 $427 1,663 $1,394 $1,602 $1,394
Building Solutions EMEA/LA 111 82 128 82 391 316 408 316
Building Solutions Asia Pacific 94 94 94 94 261 343 261 343
Global Products 670 502 670 502 2,123 1,965 2,149 1,975
EBIT (non-GAAP)
---
Net income attributable to JCI $633 $549 $858 $719 $1,705 $1,849 $2,510 $2,405
Income attributable to 45 32 46 36 195 184 202 188
noncontrolling interests (1)
Net income 678 581 904 755 1,900 2,033 2,712 2,593
Income tax provision (benefit)(2) 153 (57) 143 118 252 (323) 432 405
Income before income taxes 831 524 1,047 873 2,152 1,710 3,144 2,998
Net financing charges 96 63 96 63 359 281 359 281
EBIT (non-GAAP) $927 $587 $1,143 $936 $2,511 $1,991 $3,503 $3,279
(1) Adjusted income attributable to noncontrolling interests excludes the impact of restructuring
and impairment costs.
(2) Adjusted income tax provision (benefit) excludes the net tax impacts of pre-tax adjusting
items and discrete tax items.
The following tables reconcile segment EBITA to adjusted segment EBITA (unaudited) attributable to both continuing and discontinued operations:
Three Months Ended September 30,
(in millions) Building Solutions Building Solutions Building
Solutions Global Products
North America
EMEA/LA Asia Pacific
2024 2023 2024 2023 2024 2023 2024 2023
Segment EBITA $484 $427 $111 $82 $94 $94 $670 $502
Adjusting items:
EMEA/LA joint venture loss - 17
Adjusted segment EBITA $484 $427 $128 $82 $94 $94 $670 $502
(non-GAAP)
Twelve Months Ended September 30,
(in millions) Building Solutions Building Solutions Building
Solutions Global Products
North America
EMEA/LA Asia Pacific
2024 2023 2024 2023 2024 2023 2024 2023
Segment EBITA $1,663 $1,394 $391 $316 $261 $343 $2,123 $1,965
Adjusting items:
Earn-out adjustments (61) (7) (30)
Uninsured warehouse fire loss - 40
Global Products product quality - 33
costs
EMEA/LA joint venture loss - 17
Adjusted segment EBITA $1,602 $1,394 $408 $316 $261 $343 $2,149 $1,975
(non-GAAP)
The following table reconciles Corporate expense from both continuing and discontinued operations as reported to the comparable adjusted amounts (unaudited):
Three Months Ended Twelve Months Ended
September 30, September 30,
(in millions) 2024 2023 2024 2023
Corporate expense (GAAP) $158 $70 $531 $432
Adjusting items:
Transaction/separation costs (44) (21) (72) (122)
Cyber incident costs (27)
Adjusted corporate expense (non-GAAP) $114 $49 $432 $310
6. Net Income and Diluted Earnings Per Share
The following tables reconcile net income attributable to JCI and diluted earnings per share as reported to the comparable adjusted amounts (unaudited):
Three Months Ended September 30,
Net income attributable
to Diluted earnings
JCI
per share
(in millions, except per share) 2024 2023 2024 2023
As reported (GAAP) $633 $549 $0.95 $0.80
Adjusting items:
Net mark-to-market adjustments (16) 108 (0.02) 0.16
Restructuring and impairment costs, net of NCI 144 216 0.22 0.31
AFFF insurance recoveries (16) (0.02)
Transaction/separation costs 44 21 0.07 0.03
Loss on divestiture 42 0.06
EMEA/LA joint venture loss 17 0.03
Tax impact of adjusting items, net 10 (54) 0.01 (0.08)
Discrete tax items, net (121) (0.18)
Adjusted (non-GAAP)* $858 $719 $1.28 $1.05
* May not sum due to
rounding
Twelve Months Ended September 30,
Net income attributable
to Diluted earnings
JCI
per share
(in millions, except per share) 2024 2023 2024 2023
As reported (GAAP) $1,705 $1,849 $2.52 $2.69
Adjusting items:
Net mark-to-market adjustments (58) 92 (0.09) 0.13
Restructuring and impairment costs, net of NCI 537 1,060 0.79 1.54
Water systems AFFF settlement 750 1.11
AFFF insurance recoveries (367) (0.54)
Transaction/separation costs 72 122 0.11 0.18
Earn-out adjustments (68) (30) (0.10) (0.04)
Warehouse fire loss 40 0.06
Cyber incident costs 27 0.04
Global Products product quality issue 33 0.05
Loss on divestiture 42 0.06
EMEA/LA joint venture loss 17 0.03
Tax impact of adjusting items, net (123) (169) (0.18) (0.25)
Discrete tax items,net (57) (559) (0.08) (0.81)
Adjusted (non-GAAP)* $2,510 $2,405 $3.71 $3.50
* May not sum due to
rounding
The following table reconciles the denominators used to calculate basic and diluted earnings per share (in millions; unaudited):
Three Months Twelve Months
Ended Ended
September 30, September 30,
2024 2023 2024 2023
Weighted average shares outstanding
Basic weighted average shares outstanding 665.3 680.3 673.8 684.3
Effect of dilutive securities:
Stock options, unvested restricted stock and 2.8 3.0 2.2 3.1
unvested performance share awards
Diluted weighted average shares outstanding 668.1 683.3 676.0 687.4
7. Debt Ratios
The following table includes both continuing and discontinued operations and details net debt to income before income taxes and net debt to adjusted EBITDA (unaudited):
(in millions) September 30, June 30, 2024 September 30,
2024 2023
Short-term debt $953 $1,523 $385
Current portion of long-term debt 536 998 645
Long-term debt 8,004 7,867 7,818
Total debt 9,493 10,388 8,848
Less: cash and cash equivalents 611 862 835
Net debt $8,882 $9,526 $8,013
Last twelve months income before income $2,152 $1,845 $1,710
taxes
Net debt to income before income taxes 4.1x 5.2x 4.7x
Last twelve months adjusted EBITDA (non- $4,382 $4,210 $4,127
GAAP)
Net debt to adjusted EBITDA (non-GAAP)
2.0x
2.3x
1.9x
The following table reconciles net income to adjusted EBIT and adjusted EBITDA (unaudited):
Twelve Months Ended
(in millions) September 30, June 30, 2024 September 30,
2024 2023
Net income $1,900 $1,803 $2,033
Income tax provision (benefit) 252 42 (323)
Net financing charges 359 326 281
EBIT 2,511 2,171 1,991
Adjusting items:
Net mark-to-market adjustments (58) 66 92
Restructuring and impairment costs 544 619 1,064
Water systems AFFF settlement 750 750
AFFF insurance recoveries (367) (351)
Transaction/separation costs 72 49 122
Earn-out adjustments (68) (68) (30)
Warehouse fire loss 40
Cyber incident costs 27 27
Global Products product quality issue 33 33
Loss on divestiture 42
EMEA/LA joint venture loss 17
Adjusted EBIT (non-GAAP) 3,503 3,296 3,279
Depreciation and amortization 879 914 848
Adjusted EBITDA (non-GAAP) $4,382 $4,210 $4,127
8. Income Taxes
The Company's effective tax rate before consideration of certain excluded items was approximately 13.75% for the three and twelve months ending September 30, 2024 and approximately 13.5% for the three and twelve months ending September 30, 2023.
9. Statements of Income
The following tables include statements of income for both continuing and discontinued operations.
Three Months Ended
Three Months Ended
September 30, 2024
September 30, 2023
Continuing Discontinued Combined Continuing Discontinued Combined
Operations Operations Operations Operations
Net sales
Products and systems $4,391 $1,146 $5,537 $4,128 $1,053 $5,181
Services 1,857 1,857 1,725 1,725
6,248 1,146 7,394 5,853 1,053 6,906
Cost of sales
Products and systems 2,872 832 3,704 2,877 817 3,694
Services 1,108 1,108 1,004 1,004
3,980 832 4,812 3,881 817 4,698
Gross profit 2,268 314 2,582 1,972 236 2,208
Selling, general and 1,368 200 1,568 1,309 167 1,476
administrative expenses
Restructuring and impairment 133 12 145 212 8 220
costs
Net financing charges 96 96 56 7 63
Equity income (loss) (23) 81 58 1 74 75
Income before income taxes 648 183 831 396 128 524
Income tax provision (benefit) 110 43 153 (92) 35 (57)
Net income 538 140 678 488 93 581
Income attributable to 2 43 45 7 25 32
noncontrolling interests
Net income attributable to $536 $97 $633 $481 $68 $549
Johnson Controls
Earnings per share attributable to
Johnson Controls
Basic $0.80 $0.15 $0.95 $0.71 $0.10 0.81
Diluted 0.80 0.15 0.95 0.70 0.10 0.80
Twelve Months Ended
Twelve Months Ended
September 30, 2024
September 30, 2023
Continuing Discontinued Combined Continuing Discontinued Combined
Operations Operations Operations Operations
Net sales
Products and systems $15,967 $4,466 $20,433 $15,789 $4,462 $20,251
Services 6,985 6,985 6,542 6,542
22,952 4,466 27,418 22,331 4,462 26,793
Cost of sales
Products and systems 10,677 3,300 13,977 10,736 3,295 14,031
Services 4,198 4,198 3,791 3,791
14,875 3,300 18,175 14,527 3,295 17,822
Gross profit 8,077 1,166 9,243 7,804 1,167 8,971
Selling, general and 5,661 761 6,422 5,387 794 6,181
administrative expenses
Restructuring and impairment 510 34 544 1,049 15 1,064
costs
Net financing charges 342 17 359 258 23 281
Equity income (loss) (42) 276 234 3 262 265
Income before income taxes 1,522 630 2,152 1,113 597 1,710
Income tax provision (benefit) 111 141 252 (468) 145 (323)
Net income 1,411 489 1,900 1,581 452 2,033
Income attributable to 4 191 195 19 165 184
noncontrolling interests
Net income attributable to $1,407 $298 $1,705 $1,562 $287 $1,849
Johnson Controls
Earnings per share attributable to
Johnson Controls
Basic $2.09 $0.44 $2.53 $2.28 $0.42 $2.70
Diluted 2.08 0.44 2.52 2.27 0.42 2.69
10. Quarterly Results - Continuing Operations
The following tables include reconciliations of EBIT to adjusted EBIT, diluted EPS to adjusted diluted EPS, and Global Products segment EBITA to Global Products adjusted segment EBITA for continuing operations only.
Fiscal 2024
(in millions, except per share) Q1 Q2 Q3 Q4 Year
Net sales $5,209 $5,597 $5,898 $6,248 $22,952
Net income attributable to JCI $340 $(321) $852 $536 $1,407
Income attributable to NCI 3 (1) 2 4
Net income (loss) 340 (318) 851 538 1,411
Income tax provision (benefit) (20) (153) 174 110 111
Income (loss) before income taxes 320 (471) 1,025 648 1,522
Net financing charges 87 89 70 96 342
EBIT (Non-GAAP) 407 (382) 1,095 744 1,864
Adjusting items:
Net mark-to-market adjustments (22) (15) (5) (6) (48)
Restructuring and impairment costs, net of NCI 35 239 102 133 509
Water systems AFFF settlement 750 750
AFFF insurance recoveries (351) (16) (367)
Transaction/separation costs 5 10 17 32
Earn-out adjustments (7) (61) (68)
Uninsured warehouse fire loss
Cyber incident costs 23 4 27
Global Products product quality issue 33 33
Loss on divestiture 42 42
EMEA/LA joint venture loss 17 17
Adjusted EBIT (Non-GAAP) $443 $627 $790 $931 $2,791
Diluted EPS $0.50 $(0.47) $1.25 $0.80 $2.08
Adjusting items:
Net mark-to-market adjustments (0.03) (0.02) (0.01) (0.01) (0.07)
Restructuring and impairment costs, net of NCI 0.05 0.35 0.15 0.20 0.75
Water systems AFFF settlement 1.10 1.11
AFFF insurance recoveries (0.52) (0.02) (0.54)
Transaction/separation costs 0.01 0.01 0.03 0.05
Earn-out adjustments (0.01) (0.09) (0.10)
Cyber incident costs 0.03 0.01 0.04
Global Products product quality issue 0.05 0.05
Loss on divestiture 0.06 0.06
EMEA/LA joint venture loss 0.03 0.03
Tax impact of adjusting items (0.01) (0.32) 0.14 0.03 (0.16)
Discrete tax items (0.08) (0.08)
Adjusted diluted EPS (Non-GAAP)* $0.46 $0.69 $0.95 $1.11 $3.21
Weighted shares outstanding 682.4 679.0 672.8 668.1 676.0
* May not sum due to
rounding
Fiscal 2023
(in millions, except per share) Q1 Q2 Q3 Q4 Year
Net sales $5,155 $5,546 $5,777 $5,853 $22,331
Net income attributable to JCI $97 $44 $940 $481 $1,562
Income attributable to NCI 4 1 7 7 19
Net income 101 45 947 488 1,581
Income tax provision (benefit) (3) 8 (381) (92) (468)
Income before income taxes 98 53 566 396 1,113
Net financing charges 62 66 74 56 258
EBIT (Non-GAAP) 160 119 640 452 1,371
Adjusting items:
Net mark-to-market adjustments (3) 4 (17) 111 95
Restructuring and impairment costs, net of NCI 343 415 79 212 1,049
Transaction/separation costs 26 29 43 20 118
Earn-out adjustments (30) (30)
Uninsured warehouse fire loss 40 40
Adjusted EBIT (Non-GAAP) $566 $537 $745 $795 $2,643
Diluted EPS $0.14 $0.07 $1.36 $0.70 $2.27
Adjusting items:
Net mark-to-market adjustments 0.01 (0.02) 0.16 0.14
Restructuring and impairment costs, net of NCI 0.50 0.60 0.12 0.31 1.53
Transaction/separation costs 0.04 0.04 0.06 0.03 0.17
Earn-out adjustments (0.04) (0.04)
Uninsured warehouse fire loss 0.06 0.06
Tax impact of adjusting items (0.09) (0.06) (0.02) (0.08) (0.24)
Discrete tax items (0.64) (0.18) (0.81)
Adjusted diluted EPS (Non-GAAP)* $0.63 $0.62 $0.87 $0.95 $3.07
Weighted shares outstanding 690.3 689.7 686.2 683.3 687.4
* May not sum due to
rounding
Global Products
(in millions)
Fiscal 2024
Fiscal 2023
Q1 Q2 Q3 Q4 Year Q1 Q2 Q3 Q4 Year
Segment EBITA $267 $290 $387 $459 $1,403 $299 $305 $355 $358 $1,317
Adjusting items:
Earn-out adjustments (7) (7) (30) (30)
Uninsured warehouse fire 40 40
loss
Global Products product 33 33
quality costs
Adjusted segment EBITA $267 $316 $387 $459 $1,429 $339 $275 $355 $358 $1,327
(non-GAAP)
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SOURCE Johnson Controls International plc
