Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q2 2020 Earnings Presentation

33 slides from Johnson Controls International's earnings presentation, May 1, 2020

  1. Slide 1: Fiscal 2020 Second Quarter Results

    Fiscal 2020 If you can read this Click If you can read this Click Second Quarter on the icon to choose a picture or Reset the slide. on the icon to choose a picture or Reset the slide. Results To Reset: Right click on the slide thumbnail and select ‘reset slide’ or choose the ‘Reset’ button on the T

  2. Slide 2: Forward Looking/Cautionary Statements & Non-GAAP Financial Information

    Forward Looking/Cautionary Statements & Non-GAAP Financial Information 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

  3. Slide 3: Navigating Unprecedented Times

    Navigating Unprecedented Times  Our employees and customers remain our first priority  Macro economic uncertainty related to COVID-19  On the front lines executing essential services  Taking decisive actions to mitigate; contingency/scenario planning  Strong Balance Sheet and liquidity  Quarte

  4. Slide 4: COVID-19 Crisis Response With Essential Services

    COVID-19 Crisis Response With Essential Services Providing Urgent COVID-19 Healthcare Solutions Johnson Controls is committed to serving the healthcare community  Expanding hospital capacity to serve more during the COVID-19 crisis. patients We have the global experience, national workforce and hea

  5. Slide 5: Essential Products With Enhanced Innovation

    Essential Products With Enhanced Innovation Applied Products Ducted Systems Controls Products Pre-Configured Air “Limited Touch” Room Pressure Monitoring Handling Units Residential Replacement System Systems Security Products Air Distribution Frictionless Access Control Thermal Detection & Scanning

  6. Slide 6: COVID-19 Mitigating Actions

    COVID-19 Mitigating Actions Complete In Process  Immediate flexing of Mfg and  Executing permanent cost Field Ops to new demand structure changes  Implemented unpaid time-off /  Additional working capital furloughs; hiring freeze actions  Decreased contactor spend  Deferring/reducing capital a

  7. Slide 7: Emerging From COVID-19 With A Stronger Supply & Mfg Network

    Emerging From COVID-19 With A Stronger Supply & Mfg Network China & Rest of APAC United States & Canada Europe & Middle East ▪ Employees: >10k ▪ Employees: >10k ▪ Employees: >4k ▪ # Plants & DC’s: 14/7 ▪ # Plants & DC’s: 37/16 ▪ # Plants & DC’s: 15/12 ▪ Plant Revenue: $1.9B ▪ Plant Revenue: $2.1B ▪

  8. Slide 8: Estimated Q2 COVID-19 Financial Impact (continuing operations)

    Estimated Q2 COVID-19 Financial Impact (continuing operations) COVID-19 Q2 Actuals* Net Impact Sales $5,444M ($350 - 390M) (6 to 7 pts of organic Organic Growth (5%) growth headwind) Segment EBITA $619M ($90 - 110M) EBIT $440M ($80 - 100M) Noncontrolling ($12M) $20 - 25M Interest Net income $317M ($

  9. Slide 9: Q2 FY20 Financial Summary (continuing operations)

    Estimated COVID-19 Q2 FY20 Financial Summary* (continuing operations) Net Impact NET SALES ($350 - 390M) EPS ($0.05 - 0.07) $5,779M $5,444M  (6%) $0.42 Reported $0.32  +31% (5%)  Reported Organic Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 EBIT & MARGIN ($80 - 100M) FCF $469M $440M ↔ FLAT $0.2B $0.2B Normal

  10. Slide 10: Q2 FY20 Results vs. Prior Year: EPS Bridge

    Q2 FY20 Results vs. Prior Year* (continuing operations) EPS BRIDGE Estimated COVID-19 Net Impact ($0.05 - 0.07) $0.07 $0.42 $0.02 ($0.01) $0.04 $0.32 $0.04 $0.04 ($0.10) Q2 FY19 VOLUME / SYNERGIES / COVID-19 NFC NCI SHARE OTHER Q2 FY20 ACTUAL MIX PRODUCTIVITY ACTIONS COUNT ACTUAL *Non-GAAP excludes

  11. Slide 11: Balance Sheet

    Balance Sheet Capital Structure Q1 FY20 Q2 FY20 Short-term debt and $1,362 $1,430 current portion of long-term debt Long-term debt 5,920 5,640 Total debt 7,282 7,070 Less: cash and cash 2,160 1,006 equivalents Net debt* $5,122 $6,064 Net debt / EBITDA* 1.5x 1.8x *Non-GAAP measure. See footnotes for

  12. Slide 12: Capital Structure: Strong Liquidity Position

    Capital Structure: Strong Liquidity Position Recent Debt Repayment and Issuances  In March, repaid $500 million bond maturity with existing cash (5.0% interest rate)  In April, raised $675 million via European financing arrangements (average interest rate of 1.0%, 6-month term)  In April, raised

  13. Slide 13: Free Cash Flow (continuing operations)

    Free Cash Flow* (continuing operations) Q2 Q2 H1 H1  Q2 adjusted FCF from continuing (in $ billions) FY19 FY20 FY19 FY20 operations of $0.2 billion Cash provided by operating activities $0.2 $0.2 $0.1 $0.7  YTD adjusted FCF of $0.1 billion Capital expenditures (0.1) (0.1) (0.3) (0.3)  Expect FY20

  14. Slide 14: Segment Results

    Estimated COVID-19 Segment Results* Net Impact Sales Segment EBITA Segment EBITA Margin (5%) (7%) (20) Organic ($350 - 390M) Organic ($90 - 110M) bps Organic $5,779M 11.6% $671M 11.4% $5,444M $619M Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 EBITA Margin 11.6% +50bps 11.4% +60bps (10bps) (120bps

  15. Slide 15: Segment Results

    Segment Results* Sales EBITA Margin Comments Organic % yoy Change yoy ($M) $2,175 11.6% Service +2% / Install (2%) North America FLAT -20bps Orders (7%); Backlog $5.8B +4% $850 10.0% Service +2% / Install (4%) EMEALA (1%) +80bps Orders (4%); Backlog $1.7B +6% $525 12.4% Service (7%) / Install (20%)

  16. Slide 16: Corporate Expense (continuing operations)

    Corporate Expense* (continuing operations)   Realization of cost synergies and 21% productivity savings ($ in millions)  COVID-19 cost actions  Ongoing cost reductions related to Power $104M Solutions sale $82M Q2 FY19 Q2 FY20 *Non-GAAP excludes special items. See footnotes for reconciliation. 1

  17. Slide 17: 2nd Half Fiscal 2020 Framework

    2nd Half Fiscal 2020 Framework* 2nd Half FY20 Mitigating Actions Organic Revenue Decline (15 – 20%)  Comp & Benefits ~60%  Indirect Spend ~30% Mitigating Cost Actions  Facilities ~10% (including Corporate) $400 - 450M Net Decrementals on Revenue Decline (Low 20s) Previous FY20 Guidance Withdrawn

  18. Slide 18: Appendix: Supplemental Information

    Appendix: Supplemental Information Click to edit text

  19. Slide 19: Direct Material Supply Base

    Direct Material Supply Base Americas EMEALA APAC United States Europe China  # of Suppliers ~1,100  # of Suppliers ~700  # of Suppliers ~400  Supply Chain Spend $2.2B  Supply Chain Spend $420M  Supply Chain Spend $1.0B Mexico Middle East India  # of Suppliers ~100  # of Suppliers ~100  # of

  20. Slide 20: Segment End Market Performance

    Segment End Market Performance* Field North America EMEALA APAC Organic Revenue FLAT (1%) (14%) Service +2% +2% (7%) Install (2%) (4%) (20%) HVAC & Controls +LSD (MSD) (HT) Fire & Security (LSD) (LSD) (LSD) Performance Contracting +MSD - - Industrial Refrigeration - +MSD - Global Products Building M

  21. Slide 21: FY20 Second Quarter Financial Results (continuing operations)

    FY20 Second Quarter Financial Results (continuing operations) ($ in millions, except earnings per share) Q2 FY19 Q2 FY20 Q2 FY19* Q2 FY20* % Change GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $5,779 $5,444 $5,779 $5,444 (6%) Gross profit 1,844 1,801 1,844 1,801 (2%) % of sales 31.9% 33.1% 31.9% 33.1%

  22. Slide 22: FY20 Second Quarter Special Items (continuing operations)

    FY20 Second Quarter Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax/NCI Q2 FY20 (Expense) Benefit Income Income (Expense) EPS Impact Integration costs $(38) $6 $- $(32) $(0.04) Net mark-to-market adjustments (32) 7 - (25) (0.03) Im

  23. Slide 23: johnsoncontrols.com/investors @JCI_IR

    johnsoncontrols.com/investors If you can read this Click on the icon to choose a @JCI_IR If you can read this Click on the icon to choose a picture or picture or Reset the slide. Reset the slide. To Reset: Right click on the slide To Reset: Right click on the slide thumbnail and select ‘reset slide’

  24. Slide 24: Condensed Consolidated Statements of Income, Three Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended March 31, 2020 2019 Net sales $ 5,444 $ 5,779 Cost of sales 3,643 3,935 Gross profit 1,801 1,844 Selling, general and administrative expenses (1,451) (1,4

  25. Slide 25: Condensed Consolidated Statements of Income, Six Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Six Months Ended March 31, 2020 2019 Net sales $ 11,020 $ 11,243 Cost of sales 7,416 7,674 Gross profit 3,604 3,569 Selling, general and administrative expenses (2,878) (2,8

  26. Slide 26: Condensed Consolidated Statements of Financial Position

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) March 31, September 30, 2020 2019 ASSETS Cash and cash equivalents $ 1,006 $ 2,805 Accounts receivable - net 5,492 5,770 Inventories 2,030 1,814 Assets held for sale 91 98 Other curren

  27. Slide 27: Condensed Consolidated Statements of Cash Flows, Three Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended March 31, 2020 2019 Operating Activities Net income attributable to JCI from continuing operations $ 213 $ 240 Income from continuing operations attributable to noncontrolli

  28. Slide 28: Condensed Consolidated Statements of Cash Flows, Six Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Six Months Ended March 31, 2020 2019 Operating Activities Net income attributable to JCI from continuing operations $ 372 $ 347 Income from continuing operations attributable to noncontrolling

  29. Slide 29: Footnotes: Financial Summary

    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 from continuing operations before income taxes and noncontrolling interests, excluding general corporate e

  30. Slide 30: Six Months Segment EBITA Reconciliation

    The following is the six months ended March 31, 2020 and 2019 reconciliation of segment EBITA and segment EBITA margin as reported to adjusted segment EBITA and adjusted segment EBITA margin (unaudited): Building Solutions Building Solutions Building Solutions Consolidated (in millions) North Americ

  31. Slide 31: Earnings Per Share Denominator Reconciliation

    The following table reconciles the denominators used to calculate basic and diluted earnings per share for JCI plc (in millions; unaudited): Three Months Ended Six Months Ended March 31, March 31, 2020 2019 2020 2019 Weighted average shares outstanding for JCI plc Basic weighted average shares outst

  32. Slide 32: Changes in Segment EBITA and EBIT, Organic Growth

    The components of the changes in segment EBITA and EBIT for the three months ended March 31, 2020 versus the three months ended March 31, 2019, including organic growth, is shown below (unaudited): Adjusted Segment Adjusted Segment Adjusted Base Segment EBITA / EBIT for EBITA / EBIT for the EBITA /

  33. Slide 33: Net Debt to EBITDA

    5. Net Debt to EBITDA The Company provides financial information regarding net debt to adjusted EBITDA, which is a non-GAAP performance measure. The Company believes the total net debt to adjusted EBITDA ratio is useful to understanding the Company's financial condition as it provides a review of th

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