- Q2 reported sales were flat versus prior year and increased 1%
organically
- Q2 GAAP EPS of $(0.41); Q2
Adjusted EPS of $0.78
- Q2 Orders +12% organically year-over-year
- Building Solutions backlog of $12.6
billion increased 10% organically year-over-year
- Initiates fiscal Q3 and maintains full year fiscal 2024
guidance
CORK,
Ireland, May 1, 2024 /PRNewswire/ -- Johnson
Controls International plc (NYSE: JCI), a global leader for
smart, healthy and sustainable buildings, today reported fiscal
second quarter 2024 GAAP earnings per share ("EPS") of $(0.41). Excluding special items, adjusted EPS
was $0.78 (see attached footnotes for
non-GAAP reconciliation).
Sales in the quarter of $6.7
billion were flat compared to the prior year on an as
reported basis and increased 1% organically. GAAP net loss was
$(277) million. Adjusted net income
was $533 million.
"We are proud of the work underway at Johnson Controls as we
delivered another successful quarter, underscored by accelerating
sales growth and margin expansion," said George Oliver, Chairman and CEO. "We made great
progress this quarter in further strengthening our balance sheet.
Our record backlog provides visibility into the remainder of the
fiscal year and we remain confident in our ability to deliver on
our financial and operational commitments as we continue our
transformation into a comprehensive solutions provider for
commercial buildings."
Income and EPS amounts attributable to Johnson Controls
ordinary shareholders
($ millions, except per-share
amounts)
The financial highlights presented in the tables below are in
accordance with GAAP, unless otherwise indicated. All comparisons
are to the fiscal second quarter of 2023.
Organic sales growth, adjusted segment EBITA, adjusted segment
EBITA margin, adjusted corporate expense, adjusted net income,
adjusted EPS, and adjusted free cash flow are non-GAAP financial
measures. For a reconciliation of non-GAAP measures and detail of
the special items, refer to the attached footnotes.
This press release includes forward-looking statements regarding
organic revenue growth, adjusted segment EBITA margin improvement
and adjusted EPS, which are non-GAAP financial measures. 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. We are unable to present a quantitative reconciliation of
the aforementioned forward-looking non-GAAP financial measures to
their 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
2024 third quarter and full year GAAP financial results.
A slide presentation to accompany the results can be found in
the Investor Relations section of Johnson Controls' website at
http://investors.johnsoncontrols.com.
FISCAL Q2 SEGMENT RESULTS
Building Solutions North America
|
|
Fiscal
Q2
|
|
|
2024
|
|
2023
|
|
Change
|
Sales
|
|
$ 2,739
|
|
$ 2,520
|
|
9 %
|
Segment
EBITA
|
|
|
|
|
|
|
GAAP
|
|
373
|
|
315
|
|
18 %
|
Adjusted
|
|
373
|
|
315
|
|
18 %
|
Segment EBITA Margin
%
|
|
|
|
|
|
|
GAAP
|
|
13.6 %
|
|
12.5 %
|
|
110
bp
|
Adjusted
|
|
13.6 %
|
|
12.5 %
|
|
110
bp
|
Sales in the quarter of $2.7
billion increased 9% over the prior year. Organic sales
increased 8% over the prior year led by high-teens growth in
Applied HVAC & Controls.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 19% year-over-year. Backlog at the
end of the quarter of $8.9 billion
increased 15% compared to the prior year, excluding M&A and
adjusted for foreign currency.
Segment EBITA margin of 13.6% expanded 110 basis points versus
the prior year led by higher margin backlog conversion and
continued growth in Services.
Building Solutions EMEA/LA (Europe, Middle
East, Africa/Latin America)
|
|
Fiscal
Q2
|
|
|
2024
|
|
2023
|
|
Change
|
Sales
|
|
$ 1,064
|
|
$ 1,031
|
|
3 %
|
Segment
EBITA
|
|
|
|
|
|
|
GAAP
|
|
89
|
|
69
|
|
29 %
|
Adjusted
|
|
89
|
|
69
|
|
29 %
|
Segment EBITA Margin
%
|
|
|
|
|
|
|
GAAP
|
|
8.4 %
|
|
6.7 %
|
|
170
bp
|
Adjusted
|
|
8.4 %
|
|
6.7 %
|
|
170
bp
|
Sales in the quarter of $1.1
billion increased 3% over the prior year. Organic sales grew
4% versus the prior year led by strong low-teen growth in
Service.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 8% year-over-year. Backlog at the end
of the quarter of $2.4 billion
increased 10% year-over-year, excluding M&A and adjusted for
foreign currency.
Segment EBITA margin of 8.4% expanded 170 basis points versus
the prior year led by productivity benefits and positive Service
mix.
Building Solutions Asia Pacific
|
|
Fiscal
Q2
|
|
|
2024
|
|
2023
|
|
Change
|
Sales
|
|
$
491
|
|
$
667
|
|
(26 %)
|
Segment
EBITA
|
|
|
|
|
|
|
GAAP
|
|
54
|
|
79
|
|
(32 %)
|
Adjusted
|
|
54
|
|
79
|
|
(32 %)
|
Segment EBITA Margin
%
|
|
|
|
|
|
|
GAAP
|
|
11.0 %
|
|
11.8 %
|
|
(80
bp)
|
Adjusted
|
|
11.0 %
|
|
11.8 %
|
|
(80
bp)
|
Sales in the quarter of $491
million declined 26% versus the prior year. Organic sales
declined 23% versus the prior year as high single-digit
Service growth was more than offset by continued weakness in
China.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, declined 9% year-over-year. Backlog at the end of
the quarter of $1.3 billion decreased
18% year-over-year, excluding M&A and adjusted for foreign
currency.
Segment EBITA margin of 11.0% declined 80 basis points versus
the prior year primarily related to continued declines in the
Systems business in China.
Global Products
|
|
Fiscal
Q2
|
|
|
2024
|
|
2023
|
|
Change
|
Sales
|
|
$ 2,405
|
|
$ 2,468
|
|
(3 %)
|
Segment
EBITA
|
|
|
|
|
|
|
GAAP
|
|
429
|
|
488
|
|
(12 %)
|
Adjusted
|
|
455
|
|
458
|
|
(1 %)
|
Segment EBITA Margin
%
|
|
|
|
|
|
|
GAAP
|
|
17.8 %
|
|
19.8 %
|
|
(200
bp)
|
Adjusted
|
|
18.9 %
|
|
18.6 %
|
|
30 bp
|
Sales in the quarter of $2.4
billion declined 3% versus the prior year. Organic sales
were down 1% versus the prior year as growth in Commercial
HVAC was offset by declines in global Residential HVAC and Fire
& Security.
Segment EBITA margin of 17.8% declined 200 basis points versus
the prior year primarily due to unfavorable mix, a charge
related to a product quality issue, and the favorable prior year
impact of an acquisition earn-out liability. Adjusted segment EBITA
excludes costs for a product quality issue, partially offset by a
favorable earn-out liability adjustment in Q2 2024. Adjusted
segment EBITA excludes a favorable earn-out liability adjustment in
Q2 2023.
Corporate
|
|
Fiscal
Q2
|
|
|
2024
|
|
2023
|
|
Change
|
Corporate
Expense
|
|
|
|
|
|
|
GAAP
|
|
$99
|
|
$
131
|
|
(24 %)
|
Adjusted
|
|
$83
|
|
101
|
|
(18 %)
|
Adjusted Corporate expense in Q2 2024 excluded certain one-time
cyber incident-related costs. Both periods exclude certain
transaction/separation costs.
OTHER Q2 ITEMS
- The Company discontinued its receivables factoring programs.
Cash used by operating activities was $(203)
million. Free cash flow was $(336)
million and adjusted free cash flow was $375 million for Q2 2024.
- The Company paid dividends of approximately $252 million during Q2 2024.
- The Company repurchased 8.0 million shares of common stock for
approximately $474 million.
- The Company recorded pre-tax restructuring and impairment costs
of $254 million, comprised of a
goodwill impairment ($230 million)
and severance charges related to ongoing restructuring actions
($24 million).
- The Company recorded a pre-tax charge of $750 million related to a settlement with a
nationwide class of public water systems concerning the use of
Aqueous Film Forming Foam ("AFFF") manufactured and sold by a
subsidiary of the Company.
THIRD QUARTER GUIDANCE
The Company initiated fiscal 2024 third quarter guidance:
- Organic revenue up ~LSD year-over-year
- Adjusted segment EBITA margin of ~17.0%
- Adjusted EPS before special items of ~$1.05 to $1.10
FULL YEAR GUIDANCE
The Company maintains fiscal 2024 full year EPS guidance:
- Organic revenue growth up ~MSD year-over-year
- Adjusted segment EBITA margin improvement of ~50 to 75 basis
points, year-over-year
- Adjusted EPS before special items of ~$3.60 to $3.75
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 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
651.391.3182
|
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 this communication, statements regarding
Johnson Controls future financial position, sales, costs, earnings,
cash flows, other measures of results of operations, synergies and
integration opportunities, capital expenditures, debt levels and
market outlook are forward-looking statements. Words such as "may,"
"will," "expect," "intend," "estimate," "anticipate," "believe,"
"should," "forecast," "project" or "plan" and terms of similar
meaning are also generally intended to identify forward-looking
statements. 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 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 its customers; 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 macroeconomic and
geopolitical volatility, including shortages impacting the
availability of raw materials and component products 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, including business, service, or
operational disruptions, the unauthorized access to or disclosure
of data, financial loss, reputational damage, increased response
and remediation costs, legal, and regulatory proceedings or other
unfavorable outcomes; our ability to remediate our material
weakness; 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; the ability of Johnson Controls
to drive organizational improvement; any delay or inability
of Johnson Controls to realize the expected benefits and synergies
of recent portfolio transactions; the ability to hire and retain
senior management and other key personnel; 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. The description of certain of these risks is
supplemented in Item 1A of Part II of Johnson Controls subsequently
filed Quarterly Reports on Form 10-Q. 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.
Non-GAAP Financial Information
This press release contains financial information regarding
adjusted earnings per share, which is a non-GAAP performance
measure. The adjusting items include net mark-to-market
adjustments, restructuring and impairment costs, the water systems
AFFF settlement, certain transaction/separation costs, Silent-Aire
earn-out adjustment, warehouse fire loss, cyber incident costs,
Global Products product quality issue costs, and discrete tax
items. Financial information regarding organic sales growth,
adjusted segment EBITA, adjusted segment EBITA margin, adjusted
Corporate expense, adjusted free cash flow, and adjusted net income
are also presented, which are non-GAAP performance measures.
Management believes that, when considered together with unadjusted
amounts, these non-GAAP measures are useful to investors in
understanding period-over-period operating results and business
trends of Johnson Controls. Management may also use these metrics
as guides in forecasting, budgeting and long-term planning
processes and for compensation purposes. These metrics should be
considered in addition to, and not as replacements for, the most
comparable GAAP measure. For further information on the
calculation of the non-GAAP measures and a reconciliation of these
non-GAAP measures, refer to the attached footnotes.
JOHNSON CONTROLS
INTERNATIONAL PLC
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(in millions, except
per share data; unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
Six Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Net sales
|
|
|
|
|
|
|
|
Products and
systems
|
$
4,985
|
|
$
5,083
|
|
$
9,474
|
|
$
9,639
|
Services
|
1,714
|
|
1,603
|
|
3,319
|
|
3,115
|
|
6,699
|
|
6,686
|
|
12,793
|
|
12,754
|
Cost of
sales
|
|
|
|
|
|
|
|
Products and
systems
|
3,459
|
|
3,516
|
|
6,621
|
|
6,629
|
Services
|
1,059
|
|
929
|
|
1,999
|
|
1,793
|
|
4,518
|
|
4,445
|
|
8,620
|
|
8,422
|
|
|
|
|
|
|
|
|
Gross
profit
|
2,181
|
|
2,241
|
|
4,173
|
|
4,332
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
2,251
|
|
1,579
|
|
3,764
|
|
3,150
|
Restructuring and
impairment costs
|
254
|
|
418
|
|
293
|
|
763
|
Net financing
charges
|
93
|
|
71
|
|
192
|
|
138
|
Equity
income
|
56
|
|
50
|
|
118
|
|
112
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(361)
|
|
223
|
|
42
|
|
393
|
|
|
|
|
|
|
|
|
Income tax (benefit)
provision
|
(127)
|
|
49
|
|
(128)
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(234)
|
|
174
|
|
170
|
|
330
|
|
|
|
|
|
|
|
|
Less: Income
attributable to noncontrolling interests
|
43
|
|
41
|
|
73
|
|
79
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Johnson Controls
|
$
(277)
|
|
$
133
|
|
$
97
|
|
$
251
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share attributable to Johnson Controls
|
|
|
|
|
|
|
|
Basic
|
$
(0.41)
|
|
$
0.19
|
|
$
0.14
|
|
$
0.37
|
Diluted
|
(0.41)
|
|
0.19
|
|
0.14
|
|
0.36
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
(in millions;
unaudited)
|
|
|
March 31,
2024
|
|
September 30,
2023
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
843
|
|
$
835
|
Accounts receivable -
net
|
6,688
|
|
6,006
|
Inventories
|
2,991
|
|
2,776
|
Other current
assets
|
1,355
|
|
1,120
|
Current
assets
|
11,877
|
|
10,737
|
|
|
|
|
Property, plant and
equipment - net
|
3,104
|
|
3,136
|
Goodwill
|
17,757
|
|
17,936
|
Other intangible assets
- net
|
4,717
|
|
4,888
|
Investments in
partially-owned affiliates
|
1,172
|
|
1,056
|
Other noncurrent
assets
|
4,830
|
|
4,489
|
Total assets
|
$
43,457
|
|
$
42,242
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
Short-term
debt
|
$
2,210
|
|
$
385
|
Current portion of
long-term debt
|
1,165
|
|
645
|
Accounts
payable
|
4,019
|
|
4,268
|
Accrued compensation
and benefits
|
779
|
|
958
|
Deferred
revenue
|
2,331
|
|
1,996
|
Other current
liabilities
|
3,095
|
|
2,832
|
Current
liabilities
|
13,599
|
|
11,084
|
|
|
|
|
Long-term
debt
|
7,348
|
|
7,818
|
Pension and
postretirement benefits
|
251
|
|
278
|
Other noncurrent
liabilities
|
5,418
|
|
5,368
|
Long-term
liabilities
|
13,017
|
|
13,464
|
|
|
|
|
Shareholders' equity
attributable to Johnson Controls
|
15,658
|
|
16,545
|
Noncontrolling
interests
|
1,183
|
|
1,149
|
Total
equity
|
16,841
|
|
17,694
|
Total liabilities and
equity
|
$
43,457
|
|
$
42,242
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(in millions;
unaudited)
|
|
|
Three Months Ended
March 31,
|
|
Six Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Operating
Activities
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Johnson Controls
|
$
(277)
|
|
$
133
|
|
$
97
|
|
$
251
|
Income attributable to
noncontrolling interests
|
43
|
|
41
|
|
73
|
|
79
|
Net income
(loss)
|
(234)
|
|
174
|
|
170
|
|
330
|
Adjustments to
reconcile net income (loss) to cash provided (used) by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
236
|
|
206
|
|
467
|
|
409
|
Pension and
postretirement benefit expense (income)
|
(10)
|
|
3
|
|
(20)
|
|
(3)
|
Pension and
postretirement contributions
|
(7)
|
|
(17)
|
|
(13)
|
|
(26)
|
Equity in earnings of
partially-owned affiliates, net of dividends received
|
(46)
|
|
1
|
|
(102)
|
|
(55)
|
Deferred income
taxes
|
(330)
|
|
(76)
|
|
(400)
|
|
(168)
|
Noncash restructuring
and impairment charges
|
244
|
|
397
|
|
253
|
|
691
|
Equity-based
compensation
|
26
|
|
31
|
|
56
|
|
61
|
Other - net
|
(16)
|
|
(60)
|
|
(38)
|
|
(87)
|
Changes in assets and
liabilities, excluding acquisitions and divestitures:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(720)
|
|
(272)
|
|
(659)
|
|
(360)
|
Inventories
|
(25)
|
|
(145)
|
|
(228)
|
|
(493)
|
Other
assets
|
(13)
|
|
(101)
|
|
(204)
|
|
(169)
|
Restructuring
reserves
|
(46)
|
|
(31)
|
|
(60)
|
|
(17)
|
Accounts payable and
accrued liabilities
|
772
|
|
183
|
|
358
|
|
(155)
|
Accrued income
taxes
|
(34)
|
|
21
|
|
(29)
|
|
60
|
Cash provided (used)
by operating activities
|
(203)
|
|
314
|
|
(449)
|
|
18
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
(133)
|
|
(121)
|
|
(225)
|
|
(255)
|
Acquisition of
businesses, net of cash acquired
|
3
|
|
(10)
|
|
1
|
|
(89)
|
Other - net
|
(7)
|
|
6
|
|
13
|
|
30
|
Cash used by investing
activities
|
(137)
|
|
(125)
|
|
(211)
|
|
(314)
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Net proceeds from
borrowings with maturities less than three months
|
411
|
|
821
|
|
1,519
|
|
1,288
|
Proceeds from
debt
|
—
|
|
162
|
|
422
|
|
316
|
Repayments of
debt
|
(163)
|
|
(335)
|
|
(163)
|
|
(536)
|
Stock repurchases and
retirements
|
(474)
|
|
(93)
|
|
(474)
|
|
(247)
|
Payment of cash
dividends
|
(252)
|
|
(240)
|
|
(504)
|
|
(481)
|
Employee equity-based
compensation withholding taxes
|
(1)
|
|
(2)
|
|
(24)
|
|
(32)
|
Dividends paid to
noncontrolling interests
|
(39)
|
|
(62)
|
|
(51)
|
|
(72)
|
Other - net
|
(33)
|
|
2
|
|
(48)
|
|
26
|
Cash provided (used)
by financing activities
|
(551)
|
|
253
|
|
677
|
|
262
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(41)
|
|
22
|
|
19
|
|
8
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
(932)
|
|
464
|
|
36
|
|
(26)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
1,892
|
|
1,576
|
|
924
|
|
2,066
|
Cash, cash equivalents
and restricted cash at end of period
|
960
|
|
2,040
|
|
960
|
|
2,040
|
Less: Restricted
cash
|
117
|
|
65
|
|
117
|
|
65
|
Cash and cash
equivalents at end of period
|
$
843
|
|
$
1,975
|
|
$
843
|
|
$
1,975
|
FOOTNOTES
|
|
1. Financial
Summary
|
|
The Company evaluates
the performance of its business units primarily on segment earnings
before interest, taxes and amortization (EBITA), which represents
income before income taxes and noncontrolling interests, excluding
general corporate expenses, intangible asset amortization, net
mark-to-market adjustments related to restricted asbestos
investments and pension and postretirement plans, restructuring and
impairment costs and net financing charges.
|
|
(in millions;
unaudited)
|
Three Months Ended
March 31,
|
|
Six Months Ended March
31,
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Solutions
North America
|
$ 373
|
|
$ 315
|
|
$ 373
|
|
$ 315
|
|
$ 658
|
|
$ 582
|
|
$ 658
|
|
$ 582
|
Building Solutions
EMEA/LA
|
89
|
|
69
|
|
89
|
|
69
|
|
169
|
|
144
|
|
169
|
|
144
|
Building Solutions Asia
Pacific
|
54
|
|
79
|
|
54
|
|
79
|
|
100
|
|
147
|
|
100
|
|
147
|
Global
Products
|
429
|
|
488
|
|
455
|
|
458
|
|
798
|
|
870
|
|
824
|
|
880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to JCI
|
$
(277)
|
|
$ 133
|
|
$ 533
|
|
$ 517
|
|
$ 97
|
|
$ 251
|
|
$ 883
|
|
$ 980
|
Income attributable
to
noncontrolling
interests (2)
|
43
|
|
41
|
|
45
|
|
41
|
|
73
|
|
79
|
|
77
|
|
79
|
Net income
(loss)
|
(234)
|
|
174
|
|
578
|
|
558
|
|
170
|
|
330
|
|
960
|
|
1,059
|
Less: Income tax
benefit
(provision)
(3)
|
127
|
|
(49)
|
|
(92)
|
|
(87)
|
|
128
|
|
(63)
|
|
(153)
|
|
(165)
|
Income (loss) before
income taxes
|
(361)
|
|
223
|
|
670
|
|
645
|
|
42
|
|
393
|
|
1,113
|
|
1,224
|
Net financing
charges
|
93
|
|
71
|
|
93
|
|
71
|
|
192
|
|
138
|
|
192
|
|
138
|
EBIT (4)
|
$
(268)
|
|
$ 294
|
|
$ 763
|
|
$ 716
|
|
$ 234
|
|
$ 531
|
|
$
1,305
|
|
$
1,362
|
|
(1) The Company's press
release contains financial information regarding adjusted segment
EBITA, which is a non-GAAP performance measure. The Company's
definition of adjusted segment EBITA excludes other non-recurring
items that are not considered to be directly related to the
underlying operating performance of its businesses. Management
believes these non-GAAP measures are useful to investors in
understanding the ongoing operations and business trends of the
Company.
|
|
(2) Adjusted income
attributable to noncontrolling interests for the three and six
months ended March 31, 2024 excludes impact from restructuring and
impairment costs of $2 million and $4 million,
respectively.
|
|
(3) Adjusted income tax
provision for the three and six months ended March 31, 2024
excludes the net tax benefit and other impacts of pre-tax adjusting
items of $219 million and $281 million, respectively. Adjusted
income tax provision for the three and six months ended March 31,
2023 excludes the net tax benefit of pre-tax adjusting items of $38
million and $102 million, respectively.
|
|
(4) Management defines
earnings before interest and taxes (EBIT) as income before net
financing charges, income taxes and noncontrolling interests. EBIT
is a non-GAAP performance measure. Management believes this
non-GAAP measure is useful to investors in understanding the
ongoing operations and business trends of the Company.
|
The following is the
three months ended March 31, 2024 and 2023 reconciliation of
segment EBITA as reported to adjusted segment EBITA
(unaudited):
|
|
(in
millions)
|
Building
Solutions
North
America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Global
Products
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA as
reported
|
$ 373
|
|
$ 315
|
|
$ 89
|
|
$ 69
|
|
$ 54
|
|
$ 79
|
|
$
429
|
|
$
488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silent-Aire earn-out
adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7)
|
|
(30)
|
Global Products
product quality issue (5)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$ 373
|
|
$ 315
|
|
$ 89
|
|
$ 69
|
|
$ 54
|
|
$ 79
|
|
$
455
|
|
$
458
|
|
(5) Adjusted segment
EBITA excludes costs related to a product quality issue within the
Company's Global Products business for the three and six months
ended March 31, 2024. Management believes the exclusion of these
costs is useful to investors due to the unusual nature and
magnitude of the expected related costs.
|
The following is the
six months ended March 31, 2024 and 2023 reconciliation of
segment EBITA as reported to adjusted
segment EBITA (unaudited):
|
|
(in
millions)
|
Building
Solutions
North
America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Global
Products
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA as
reported
|
$ 658
|
|
$ 582
|
|
$ 169
|
|
$ 144
|
|
$ 100
|
|
$
147
|
|
$
798
|
|
$
870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silent-Aire earn-out
adjustment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7)
|
|
(30)
|
Warehouse fire loss
(6)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40
|
Global Products
product quality issue
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$ 658
|
|
$ 582
|
|
$ 169
|
|
$ 144
|
|
$ 100
|
|
$
147
|
|
$
824
|
|
$
880
|
|
(6) Adjusted segment
EBITA excludes a $40 million uninsured loss attributable to a fire
at a warehouse in Menominee, Michigan.
|
|
The Company's press
release and earnings presentation include forward-looking
statements regarding organic revenue growth, adjusted free cash
flow and adjusted EPS, which are non-GAAP financial measures. 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. We are unable to present a quantitative reconciliation of
the aforementioned forward-looking non-GAAP financial measures to
their 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
2024 third quarter and full year GAAP financial results.
|
2. Net Income
and Diluted Earnings Per Share Reconciliations
|
|
The Company's press
release contains financial information regarding adjusted earnings
per share and adjusted net income (loss) attributable to
JCI, which are non-GAAP
performance measures. The adjusting items shown in the table below
are excluded because these items are not considered to be directly
related to the underlying operating performance of the Company.
Management believes these non-GAAP measures are useful to investors
in understanding the ongoing operations and business trends of the
Company.
|
|
A reconciliation of
diluted earnings per share as reported to adjusted diluted earnings
per share and net income (loss) attributable to JCI
to adjusted net income (loss)
attributable to JCI for the three
months ended March 31, 2024 and 2023 is shown below
(unaudited):
|
|
|
|
Three Months Ended
March 31,
|
|
Net income (loss)
attributable to JCI
|
|
Earnings per
share
|
(in millions, except
per share)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported for JCI
plc
|
$
(277)
|
|
$
133
|
|
$
(0.41)
|
|
$
0.19
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
Net
mark-to-market adjustments
|
(15)
|
|
4
|
|
(0.02)
|
|
0.01
|
Restructuring
and impairment costs
|
254
|
|
418
|
|
0.37
|
|
0.61
|
NCI impact of
restructuring and impairment costs
|
(2)
|
|
—
|
|
—
|
|
—
|
Water systems
AFFF settlement (1)
|
750
|
|
—
|
|
1.10
|
|
—
|
Transaction/separation costs
|
12
|
|
30
|
|
0.02
|
|
0.04
|
Silent-Aire
earn-out adjustment
|
(7)
|
|
(30)
|
|
(0.01)
|
|
(0.04)
|
Cyber incident
costs
|
4
|
|
—
|
|
0.01
|
|
—
|
Global Products
product quality issue
|
33
|
|
—
|
|
0.05
|
|
—
|
Related tax
impact
|
(219)
|
|
(38)
|
|
(0.32)
|
|
(0.05)
|
Adjusted JCI
plc*
|
$
533
|
|
$
517
|
|
$
0.78
|
|
$
0.75
|
|
* May not sum due to
rounding
|
|
(1) The Company
recorded a pre-tax charge of $750 million 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.
|
A reconciliation of
diluted earnings per share as reported to adjusted diluted earnings
per share and net income (loss) attributable to JCI
to adjusted net income (loss)
attributable to JCI for the six
months ended March 31, 2024 and 2023 is shown below
(unaudited):
|
|
|
Six Months Ended March
31,
|
|
Net income (loss)
attributable to JCI
|
|
Earnings per
share
|
(in millions, except
per share)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported for JCI
plc
|
$
97
|
|
$
251
|
|
$
0.14
|
|
$
0.36
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
Net
mark-to-market adjustments
|
(37)
|
|
1
|
|
(0.05)
|
|
—
|
Restructuring
and impairment costs
|
293
|
|
763
|
|
0.43
|
|
1.11
|
NCI impact of
restructuring and impairment costs
|
(4)
|
|
—
|
|
(0.01)
|
|
—
|
Water systems
AFFF settlement
|
750
|
|
—
|
|
1.10
|
|
—
|
Transaction/separation costs
|
12
|
|
57
|
|
0.02
|
|
0.08
|
Silent-Aire
earn-out adjustment
|
(7)
|
|
(30)
|
|
(0.01)
|
|
(0.04)
|
Warehouse fire
loss
|
—
|
|
40
|
|
—
|
|
0.06
|
Cyber incident
costs
|
27
|
|
—
|
|
0.04
|
|
—
|
Global Products
product quality issue
|
33
|
|
—
|
|
0.05
|
|
—
|
Related tax
impact
|
(281)
|
|
(102)
|
|
(0.41)
|
|
(0.15)
|
Adjusted JCI
plc*
|
$
883
|
|
$
980
|
|
$
1.30
|
|
$
1.42
|
|
* May not sum due to
rounding
|
The following table
reconciles the denominators used to calculate basic and diluted
earnings per share for JCI plc (in
millions; unaudited):
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended
March 31,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
Weighted average
shares outstanding for JCI plc
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
679.0
|
|
686.8
|
|
679.9
|
|
686.9
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
Stock options,
unvested restricted stock and
unvested performance share awards
|
—
|
|
2.9
|
|
1.6
|
|
3.1
|
Diluted weighted
average shares outstanding
|
679.0
|
|
689.7
|
|
681.5
|
|
690.0
|
For the three months
ended March 31, 2024, the total number of potential dilutive shares
due to stock options, unvested restricted stock and unvested
performance share awards was 1.6 million. However, these items were
not included in the computation of diluted loss per share for the
three months ended March 31, 2024, since to do so would decrease
the loss per share. On an adjusted diluted outstanding share basis,
inclusion of the effect of dilutive securities results in diluted
weighted average shares outstanding of 680.7 million for the three
months ended March 31, 2024.
|
|
3. Organic Growth
Reconciliation
|
|
The components of the
change in net sales for the three months ended March 31, 2024
versus the three months ended March 31, 2023, including
organic growth, are shown below (unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Three months ended
March 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
2,520
|
|
$
1,031
|
|
$
667
|
|
$
4,218
|
|
$
2,468
|
|
$
6,686
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
(2)
|
|
(17)
|
|
(19)
|
|
(3)
|
|
(22)
|
Foreign
currency
|
7
|
|
(4)
|
|
(33)
|
|
(30)
|
|
(54)
|
|
(84)
|
Adjusted base net
sales
|
2,527
|
|
1,025
|
|
617
|
|
4,169
|
|
2,411
|
|
6,580
|
Acquisitions
|
16
|
|
3
|
|
17
|
|
36
|
|
7
|
|
43
|
Organic
Growth
|
196
|
|
36
|
|
(143)
|
|
89
|
|
(13)
|
|
76
|
Net sales for the three
months ended March 31, 2024
|
$
2,739
|
|
$
1,064
|
|
$
491
|
|
$
4,294
|
|
$
2,405
|
|
$
6,699
|
Change in net sales
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
8 %
|
|
4 %
|
|
(23) %
|
|
2 %
|
|
(1) %
|
|
1 %
|
Foreign
currency
|
—
|
|
—
|
|
(5)
|
|
(1)
|
|
(2)
|
|
(1)
|
Acquisitions
|
1
|
|
—
|
|
3
|
|
1
|
|
—
|
|
1
|
Divestitures and
other
|
—
|
|
—
|
|
(3)
|
|
—
|
|
—
|
|
—
|
Total change in net
sales
|
9 %
|
|
3 %
|
|
(26) %
|
|
2 %
|
|
(3) %
|
|
— %
|
|
The components of the
change in net sales for the six months ended March 31, 2024
versus the six months ended March 31, 2023, including organic
growth, are shown below (unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Six months ended March
31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
4,887
|
|
$
2,006
|
|
$
1,313
|
|
$
8,206
|
|
$
4,548
|
|
$ 12,754
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
(2)
|
|
(34)
|
|
(36)
|
|
(5)
|
|
(41)
|
Foreign
currency
|
13
|
|
38
|
|
(43)
|
|
8
|
|
(64)
|
|
(56)
|
Adjusted base net
sales
|
4,900
|
|
2,042
|
|
1,236
|
|
8,178
|
|
4,479
|
|
12,657
|
Acquisitions
|
32
|
|
6
|
|
36
|
|
74
|
|
29
|
|
103
|
Organic
growth
|
294
|
|
54
|
|
(274)
|
|
74
|
|
(41)
|
|
33
|
Net sales for the six
months ended
March 31,
2024
|
$
5,226
|
|
$
2,102
|
|
$
998
|
|
$
8,326
|
|
$
4,467
|
|
$ 12,793
|
Change in net sales
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
6 %
|
|
3 %
|
|
(22) %
|
|
1 %
|
|
(1) %
|
|
— %
|
Foreign
currency
|
—
|
|
2
|
|
(3)
|
|
—
|
|
(1)
|
|
—
|
Acquisitions
|
1
|
|
—
|
|
3
|
|
1
|
|
1
|
|
1
|
Divestitures and
other
|
—
|
|
—
|
|
(3)
|
|
—
|
|
—
|
|
—
|
Total change in net
sales
|
7 %
|
|
5 %
|
|
(24) %
|
|
1 %
|
|
(2) %
|
|
— %
|
|
The components of the
change in total service revenue for the three months ended
March 31, 2024 versus the three months ended March 31,
2023, including organic growth, is shown below
(unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Three months ended
March 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
$
966
|
|
$
449
|
|
$
188
|
|
$ 1,603
|
|
$ —
|
|
$
1,603
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
—
|
|
(17)
|
|
(17)
|
|
—
|
|
(17)
|
Foreign
currency
|
—
|
|
(17)
|
|
(8)
|
|
(25)
|
|
—
|
|
(25)
|
Adjusted base service
revenue
|
966
|
|
432
|
|
163
|
|
1,561
|
|
—
|
|
1,561
|
Acquisitions
|
15
|
|
1
|
|
8
|
|
24
|
|
—
|
|
24
|
Organic
growth
|
57
|
|
60
|
|
12
|
|
129
|
|
—
|
|
129
|
Service revenue for the
three months
ended
March 31, 2024
|
$
1,038
|
|
$
493
|
|
$
183
|
|
$ 1,714
|
|
$ —
|
|
$
1,714
|
Change in service
revenue attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
6 %
|
|
14 %
|
|
7 %
|
|
8 %
|
|
— %
|
|
8 %
|
Foreign
currency
|
—
|
|
(4)
|
|
(4)
|
|
(2)
|
|
—
|
|
(2)
|
Acquisitions
|
2
|
|
—
|
|
5
|
|
2
|
|
—
|
|
2
|
Divestitures and
other
|
—
|
|
—
|
|
(9)
|
|
(1)
|
|
—
|
|
(1)
|
Total change in service
revenue
|
7 %
|
|
10 %
|
|
(3) %
|
|
7 %
|
|
— %
|
|
7 %
|
|
The components of the
change in total service revenue for the six months ended
March 31, 2024 versus the six months ended March 31,
2023, including organic growth, is shown below
(unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Six months ended March
31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
$
1,882
|
|
$
872
|
|
$
361
|
|
$ 3,115
|
|
$ —
|
|
$
3,115
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
(1)
|
|
(34)
|
|
(35)
|
|
—
|
|
(35)
|
Foreign
currency
|
1
|
|
(9)
|
|
(10)
|
|
(18)
|
|
—
|
|
(18)
|
Adjusted base service
revenue
|
1,883
|
|
862
|
|
317
|
|
3,062
|
|
—
|
|
3,062
|
Acquisitions
|
29
|
|
3
|
|
16
|
|
48
|
|
—
|
|
48
|
Organic
growth
|
95
|
|
94
|
|
20
|
|
209
|
|
—
|
|
209
|
Service revenue for the
six months ended
March 31,
2024
|
$
2,007
|
|
$
959
|
|
$
353
|
|
$ 3,319
|
|
$ —
|
|
$
3,319
|
Change in service
revenue attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
5 %
|
|
11 %
|
|
6 %
|
|
7 %
|
|
— %
|
|
7 %
|
Foreign
currency
|
—
|
|
(1)
|
|
(3)
|
|
(1)
|
|
—
|
|
(1)
|
Acquisitions
|
2
|
|
—
|
|
5
|
|
2
|
|
—
|
|
2
|
Divestitures and
other
|
—
|
|
—
|
|
(9)
|
|
(1)
|
|
—
|
|
(1)
|
Total change in service
revenue
|
7 %
|
|
10 %
|
|
(2) %
|
|
7 %
|
|
— %
|
|
7 %
|
|
The components of the
change in total systems/install revenue for the three months ended
March 31, 2024 versus the three months ended March 31,
2023, including organic growth, is shown below
(unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Three months ended
March 31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Systems/install
revenue
|
$
1,554
|
|
$
582
|
|
$
479
|
|
$ 2,615
|
|
$
2,468
|
|
$
5,083
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(3)
|
|
(5)
|
Foreign
currency
|
7
|
|
13
|
|
(25)
|
|
(5)
|
|
(54)
|
|
(59)
|
Adjusted base
systems/install revenue
|
1,561
|
|
593
|
|
454
|
|
2,608
|
|
2,411
|
|
5,019
|
Acquisitions
|
1
|
|
2
|
|
9
|
|
12
|
|
7
|
|
19
|
Organic
growth
|
139
|
|
(24)
|
|
(155)
|
|
(40)
|
|
(13)
|
|
(53)
|
Systems/install revenue
for the three
months
ended March 31, 2024
|
$
1,701
|
|
$
571
|
|
$
308
|
|
$ 2,580
|
|
$
2,405
|
|
$
4,985
|
Change in
systems/install revenue
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
9 %
|
|
(4) %
|
|
(34) %
|
|
(2) %
|
|
(1) %
|
|
(1) %
|
Foreign
currency
|
—
|
|
2
|
|
(5)
|
|
—
|
|
(2)
|
|
(1)
|
Acquisitions
|
—
|
|
—
|
|
2
|
|
—
|
|
—
|
|
—
|
Total change in
systems/install revenue
|
9 %
|
|
(2) %
|
|
(36) %
|
|
(1) %
|
|
(3) %
|
|
(2) %
|
|
The components of the
change in total systems/install revenue for the six months ended
March 31, 2024 versus the six months ended March 31,
2023, including organic growth, is shown below
(unaudited):
|
|
|
Building
Solutions
|
|
|
|
|
(in
millions)
|
North
America
|
|
EMEA/LA
|
|
Asia
Pacific
|
|
Total
|
|
Global
Products
|
|
Total JCI
plc
|
Six months ended March
31, 2023
|
|
|
|
|
|
|
|
|
|
|
|
Systems/install
revenue
|
$
3,005
|
|
$
1,134
|
|
$
952
|
|
$ 5,091
|
|
$
4,548
|
|
$
9,639
|
Base year
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
Divestitures and
other
|
—
|
|
(1)
|
|
—
|
|
(1)
|
|
(5)
|
|
(6)
|
Foreign
currency
|
12
|
|
47
|
|
(33)
|
|
26
|
|
(64)
|
|
(38)
|
Adjusted base
systems/install revenue
|
3,017
|
|
1,180
|
|
919
|
|
5,116
|
|
4,479
|
|
9,595
|
Acquisitions
|
3
|
|
3
|
|
20
|
|
26
|
|
29
|
|
55
|
Organic
growth
|
199
|
|
(40)
|
|
(294)
|
|
(135)
|
|
(41)
|
|
(176)
|
Systems/install revenue
for the six
months
ended March 31, 2024
|
$
3,219
|
|
$
1,143
|
|
$
645
|
|
$ 5,007
|
|
$
4,467
|
|
$
9,474
|
Change in
systems/install revenue
attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
Organic
growth
|
7 %
|
|
(3) %
|
|
(32) %
|
|
(3) %
|
|
(1) %
|
|
(2) %
|
Foreign
currency
|
—
|
|
4
|
|
(3)
|
|
1
|
|
(1)
|
|
—
|
Acquisitions
|
—
|
|
—
|
|
2
|
|
1
|
|
—
|
|
1
|
Total change in
systems/install revenue
|
7 %
|
|
1 %
|
|
(32) %
|
|
(2) %
|
|
(2) %
|
|
(2) %
|
4.
Adjusted Free Cash Flow Conversion
|
|
The Company's press
release contains financial information regarding adjusted cash
flows from operating activities, adjusted free cash flow and
adjusted free cash flow conversion, which are non-GAAP performance
measures. We also present below free cash flow conversion from the
GAAP measure of net income attributable to JCI.
|
|
Effective January 1,
2023, the Company has excluded the impact of its financing entity,
JC Capital, from the calculation of adjusted free cash flow.
Management believes this provides a more true representation of the
Company's operational ability to convert cash, without the contrary
impact from financing activities. The impact on interim and annual
periods prior to January 1, 2023 was not material. JC Capital cash
flows that are excluded from the calculation of adjusted free cash
flow primarily include activity associated with finance/notes
receivables and inventory and/or capital expenditures related to
lease arrangements. JC Capital net income that is excluded is
primarily related to interest income on the finance/notes
receivable and profit recognized on arrangements with sales-type
lease components.
|
|
During the three months
ended March 31, 2024, the Company discontinued its receivables
factoring program. Effective January 1, 2024, the Company has
excluded the impact of the discontinuation of its accounts
receivables factoring programs from the calculation of adjusted
free cash flow. Management believes this provides a more accurate
representation of the Company's current period operating cash flows
compared to the prior year. The Company has
also re-baselined the prior year adjusted free cash flow
measure to present a more comparative measure without the impact of
factoring.
|
Adjusted free cash flow
is defined as cash provided (used) by operating activities, less
capital expenditures, excluding the impacts
from JC Capital and the discontinuation of the factoring
programs. Free cash flow conversion from net income is defined as
free cash flow divided by net income attributable to JCI.
Adjusted free cash flow conversion is defined as adjusted free cash
flow divided by adjusted net income attributable to JCI,
excluding JC Capital. Management believes these non-GAAP
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 our ability to generate cash
flow from operations and the impact that this cash flow has on our
liquidity.
|
|
The following is the
three and six months ended March 31, 2024 and 2023 calculation of
free cash flow and free cash flow conversion from net income
(unaudited):
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
millions)
|
March 31,
2024
|
|
March 31,
2023
|
|
March 31,
2024
|
|
March 31,
2023
|
Cash provided (used) by
operating activities
|
$
(203)
|
|
$
314
|
|
|
$
(449)
|
|
$
18
|
Capital
expenditures
|
(133)
|
|
(121)
|
|
|
(225)
|
|
(255)
|
Free cash
flow
|
$
(336)
|
|
$
193
|
|
|
$
(674)
|
|
$
(237)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to JCI
|
$
(277)
|
|
$
133
|
|
|
$
97
|
|
$
251
|
Free cash flow
conversion from net income (loss)
|
*
|
|
145 %
|
|
|
(695) %
|
|
(94) %
|
|
* Metric not
meaningful
|
The following is the
three and six months ended March 31, 2024 and 2023 calculation
of adjusted free cash flow and adjusted free cash flow conversion
(unaudited):
|
|
|
Three Months
Ended
|
Six Months
Ended
|
(in
millions)
|
March 31,
2024
|
|
March 31,
2023
|
March 31,
2024
|
|
March 31,
2023
|
Free cash
flow
|
$
(336)
|
|
$
193
|
|
$
(674)
|
|
$
(237)
|
Less: JC Capital cash
used by operating activities
|
(32)
|
|
(42)
|
|
(120)
|
|
(42)
|
Less: Impact from
discontinuation of factoring programs
|
(679)
|
|
—
|
|
(599)
|
|
—
|
Adjusted free cash
flow
|
375
|
|
235
|
|
45
|
|
(195)
|
Less: Prior year impact
from factoring programs
|
—
|
|
18
|
|
—
|
|
(74)
|
Re-baselined adjusted
free cash flow
|
$
375
|
|
$
217
|
|
$
45
|
|
$
(121)
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to JCI
|
$
533
|
|
$
517
|
|
$
883
|
|
$
980
|
Less: JC Capital net
income
|
3
|
|
8
|
|
5
|
|
8
|
Adjusted net income
attributable to JCI, excluding JC Capital
|
$
530
|
|
$
509
|
|
$
878
|
|
$
972
|
Adjusted free cash flow
conversion
|
71 %
|
|
43 %
|
|
5 %
|
|
(12) %
|
5. Debt
Ratios
|
|
The Company's earnings
presentation provides financial information regarding net debt to
adjusted EBITDA, which is a non-GAAP performance measure. We also
present below net debt to income before income taxes. The Company
believes these ratios are useful to understanding the Company's
financial condition as they provide an overview of the extent to
which the Company relies on external debt financing for its funding
and are a measure of risk to its shareholders. The following is the
March 31, 2024, December 31, 2023, and March 31, 2023 calculation
of net debt to income before income taxes and net debt to adjusted
EBITDA (unaudited):
|
|
(in
millions)
|
March 31,
2024
|
|
December 31,
2023
|
|
March 31,
2023
|
Short-term debt and
current portion of long-term debt
|
$
3,375
|
|
$
2,650
|
|
$
2,659
|
Long-term
debt
|
7,348
|
|
7,959
|
|
7,832
|
Total debt
|
10,723
|
|
10,609
|
|
10,491
|
Less: cash and cash
equivalents
|
843
|
|
1,801
|
|
1,975
|
Total net
debt
|
$
9,880
|
|
$
8,808
|
|
$
8,516
|
|
|
|
|
|
|
Last twelve months
income before income taxes
|
$
1,359
|
|
$
1,943
|
|
$
1,503
|
|
|
|
|
|
|
Total net debt to
income before income taxes
|
7.3x
|
|
4.5x
|
|
5.7x
|
|
|
|
|
|
|
Last twelve months
adjusted EBITDA
|
$
4,128
|
|
$
4,051
|
|
$
3,895
|
|
|
|
|
|
|
Total net debt to
adjusted EBITDA
|
2.4x
|
|
2.2x
|
|
2.2x
|
The following is the
twelve months ended March 31, 2024, December 31, 2023, and March
31, 2023 reconciliation of income from continuing operations to
adjusted EBIT and adjusted EBITDA, which are non-GAAP
performance measures (unaudited):
|
|
(in
millions)
|
Last Twelve
Months
Ended
March 31, 2024
|
|
Last Twelve
Months
Ended
December 31, 2023
|
|
Last Twelve
Months
Ended
March 31, 2023
|
Net income
|
$
1,873
|
|
$
2,281
|
|
$
1,582
|
Income tax
benefit
|
(514)
|
|
(338)
|
|
(79)
|
Net financing
charges
|
335
|
|
313
|
|
247
|
EBIT
|
1,694
|
|
2,256
|
|
1,750
|
Adjusting
items:
|
|
|
|
|
|
Net
mark-to-market adjustments
|
54
|
|
73
|
|
(65)
|
Restructuring and impairment costs
|
594
|
|
758
|
|
1,051
|
Environmental remediation and related
reserves
adjustment
|
—
|
|
—
|
|
255
|
Water
systems AFFF settlement
|
750
|
|
—
|
|
—
|
Silent-Aire earn-out adjustment
|
(7)
|
|
(30)
|
|
(30)
|
Global
Products product quality issue
|
33
|
|
—
|
|
—
|
Warehouse
fire loss
|
—
|
|
—
|
|
40
|
Cyber
incident costs
|
27
|
|
23
|
|
—
|
Transaction/separation costs
|
77
|
|
95
|
|
87
|
Adjusted EBIT
(1)
|
3,222
|
|
3,175
|
|
3,088
|
Depreciation and
amortization
|
906
|
|
876
|
|
807
|
Adjusted EBITDA
(1)
|
$
4,128
|
|
$
4,051
|
|
$
3,895
|
|
(1) The Company's
definition of adjusted EBIT and adjusted EBITDA excludes special
items that are not considered to be directly related to the
underlying operating performance of its businesses. Management
believes this non-GAAP measure is useful to investors in
understanding the ongoing operations and business trends of the
Company.
|
6. Income
Taxes
|
|
The Company's effective
tax rate before consideration of net mark-to-market adjustments,
restructuring and impairment costs, discrete tax items, Silent-Aire
earn-out adjustments, certain transaction/separation costs, cyber
incident costs, Global Products product quality issue costs and the
water systems AFFF settlement for the three and six months ending
March 31, 2024 is approximately 13.75%. The Company's effective tax
rate before consideration of net mark-to-market adjustments,
restructuring and impairment costs, discrete tax items, certain
transaction/separation costs and warehouse fire loss for the three
and six months ending March 31, 2023 is approximately
13.5%.
|
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SOURCE Johnson Controls International plc