Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Investor Day (October 2008)
139 slides from Johnson Controls International's investor day presentation, Oct 17, 2008
Slide 1: Johnson Controls Ingenuity Welcome
Johnson Y) Controls INGENUITY WELCOME Johnson Controls
Slide 2: Forward-looking statement
Forward-looking statement Johnson Controls, Inc. ("the Company") has made forward-looking statements in this presentation pertaining to its financial results for fiscal 2008, 2009 and beyond that are based on preliminary data and are subject to risks and uncertainties. All statements other than stat
Slide 3: Steve Roell, Chairman and Chief Executive Officer
Steve Roell Chairman and Chief Executive Officer
Slide 4: Agenda
Steve Roell, Chairman and Chief Executive Officer Keith Wandell, President and Chief Operating Officer Beda Bolzenius, President, Automotive Experience (Q&A) Alex Molinaroli, President, Power Solutions (Q & A) - -Break- Dave Myers, President, Building Efficiency (Q&A) -Iain Campbell, VP & General Ma
Slide 5: Historic and rapid changes in our markets
Johnson Controls Historic and rapid changes in our markets We're not immune Short-term vs. long-term The markets will recover We'll be in a stronger competitive position when they do
Slide 6: Our core value proposition is unchanged
Johnson Controls Our core value proposition is unchanged A focus on profitable growth ....by creating a more comfortable, safe and sustainable world
Slide 7: Our growth objectives are unchanged
Sales Growth* > 10% Earnings Growth* 10 - 15% ROIC 15 - 16% Our growth objectives are unchanged * Compounded annual growth rate
Slide 8: Exciting long-term growth opportunities
Exciting long-term growth opportunities Well-positioned to take advantage of global mega-trends Energy efficiency Sustainability Emerging markets Investing in innovation Increasing competitive advantage Continued global diversification
Slide 9: Consistent growth across business and economic cycles
Consistent growth across business and economic cycles Global market leadership in all three businesses Ability to create new value for customers Strategies for continued growth - in both mature and emerging markets Market insight and customer relationships to adapt and lead industry change Efficient
Slide 10: A lot has changed since last year
A lot has changed since last year What we didn't anticipate on October 9, 2007 General economic slowdown U.S. housing and automotive markets in deeper recessions N.A. vehicle mix changes Dramatically higher energy and commodity costs
Slide 11: Key 2008 accomplishments
Key 2008 accomplishments Building Efficiency Double-digit top line growth Expanded energy efficiency capabilities: alternative energy, advisory services Grew backlog Launched new products Margin expansion Power Solutions Increased market share New customer wins, geographic expansion Additional hybri
Slide 12: 2008: A successful year
2008: A successful year 2007 2008(e) Consolidated net sales $35B $38B +10% Earnings per share $2.16 $2.33 +11% 2008 62nd consecutive year of sales growth 18th consecutive year of earnings growth
Slide 13: Heading into 2009
Heading into 2009 New uncertainties.... Impact of liquidity tightness on businesses and consumer Depth and duration of U.S. economic slowdown Softening European and Asian economies Financial health of automotive OEs and suppliers ....adding to those we've already encountered in 2008 U.S. housing and
Slide 14: Sustainable, profitable growth
Sustainable, profitable growth Johnson Controls strength heading into 2009 Record backlogs Geographic diversity Low cyclicality of some of our businesses Actions to improve cost structure Access to capital / credit ratings
Slide 15: Strength heading into 2009 - Building Efficiency
Strength heading into 2009 - Building Efficiency Record backlog Benefiting from energy efficiency, sustainability mega-trends, exposure to high-growth emerging markets High concentration of service business Improving residential performance Margins improving
Slide 16: Strength heading into 2009 - Power Solutions
Strength heading into 2009 - Power Solutions #1 global market share Winning new customers Lowest cost, highest quality provider Increasing exposure to emerging markets Growing AGM demand for micro-hybrids Hybrid battery launch in 2009
Slide 17: Strength heading into 2009 - Automotive Experience
Strength heading into 2009 - Automotive Experience Record backlog Winning new business, increasing market share Expanding leading market position in China and Eastern Europe Strong partner in a weak supply base
Slide 18: 2009 Outlook
Unprecedented uncertainties Outlook is based on assumptions as outlined today 2009 Outlook
Slide 19: 2009 Outlook
2009 Outlook ....based on key assumptions as outlined today Consolidated net sales $37B down 3% (up 2-3% excluding lead and f/x) Earnings per share $1.95 - $2.10 down 10 - 16%
Slide 20: A long-term, sustainable growth philosophy
Johnson Controls A long-term, sustainable growth philosophy Balancing near-term performance while ensuring robust long-term business success Aligning our automotive cost structure with realities of the market Investing for the future Sales force Innovation Emerging markets Vertical integration Infor
Slide 21: Today's presentations
Today's presentations Driving our growth strategies Improving our cost structure
Slide 22: Keith Wandell, President and Chief Operating Officer
Keith Wandell President and Chief Operating Officer
Slide 23: The good news
The good news Cost improvement via operational excellence is a core competency at Johnson Controls We do not have to make radical adjustments to how we operate because of these turbulent times Focusing on the customer has been a key core value for many years We have had consistency of purpose in the
Slide 24: Focus on the fundamentals
Focus on the fundamentals Agree as a team where we want to go and methodically move toward it day after day We hold ourselves responsible and accountable Performance is the priority and is non-negotiable but profoundly hard to do Simple concepts,
Slide 25: Improved operational performance in 2008
Johnson Controls delivered improved operational performance in 2008 Secured more than $500+ million in savings through continuous improvement initiatives Improved Automotive Experience global engineering costs Full launch of best business practices in Building Efficiency Mitigated significant commod
Slide 26: Q4 2008 restructuring actions
Q4 2008 restructuring actions Automotive Experience North America Plant and SG&A reductions; align with lower production volumes Improved cost position to adapt to industry downturn Europe Plant and SG&A reductions; align with lower production volumes Europe Plant consolidations to reduce excess cap
Slide 27: Improving operational performance
Improving operational performance Delivering sustainable, profitable growth
Slide 28: A metric-driven global organization
Improving operational performance Delivering sustainable, profitable growth Johnson Controls: a metric-driven global organization achieving excellence by Sharing best practices Identifying roadmaps for improvement Leveraging worldwide capabilities 2009: Nearly $3 billion in identified cost savings F
Slide 29: Best business practices: Power Solutions
Improving operational performance Best business practices: Power Solutions BBP has driven step function change in financial performance in every region Europe Operations $150m savings Latin America $90m savings Powerframe provides a long-term competitive advantage Pasting productivity doubled Less l
Slide 30: Best business practices: Automotive Experience
Improving operational performance Best business practices: Automotive Experience Helping us win new global platforms Design for manufacturability & commonality Creates cost-competitive designs Program management - Improving execution on global programs "0-0-100-30" Product development - Engineering
Slide 31: Best business practices: Building Efficiency
Improving operational performance Best business practices: Building Efficiency Driving improvements in sales, service delivery and manufacturing Systems pull through of product sales to increase installed base Service pull through on installed product Increased service penetration on installed base
Slide 32: Focus on the customer
Value creating discipline Focus on the customer Disciplined customer relationship processes; a hallmark of our success Key to retention and growth with existing customers, as well as capturing new customers and entering new markets Focal point for leadership at all levels of the organization Goal is
Slide 33: Strategies for creating new value
Focus on the customer - Strategies for creating new value Align strategic plans to support customer strategies Establish metrics for customer satisfaction Increase capabilities/resources in emerging markets Align product strategies, resources, and engineering globally
Slide 34: Strategies for creating new value
Focus on the customer - Strategies for creating new value Make global customer program execution a differentiator Ensure depth and continuity of customer relationships Increase innovation delivered to the customer Success will be measured by share expansion and customer recognition
Slide 35: Summary
Summary We can control key drivers of long term sustainable growth, helping to offset the impact of market conditions Our value-creating disciplines are global, robust and proven Improved performance will enable us to continue to invest in our growth initiatives Everyone understands they have a role
Slide 36: Beda Bolzenius, President, Automotive Experience
Beda Bolzenius President, Automotive Experience
Slide 37: Automotive Experience
Automotive Experience Leading global provider of systems and components for seats, overheads, doors, cockpits and electronics Supplying over 30 million cars per year from 250 locations in 30 countries (thereof 1/3 in low-cost countries) Over 60% of revenues generated outside of North America Diversi
Slide 38: Automotive Experience backlog and outlook
Automotive Experience Incremental Backlog $3.9B Automotive Experience Outlook Record profitable backlog Leading technical solutions Customer oriented organization Competitive footprint Leading cost and quality performance Global reach
Slide 39: Market environment: challenges and opportunities
Market environment Challenges and opportunities Production volumes are declining Raw material cost increases drive cost pressure on OEMs and suppliers Financially distressed customers Financially distressed supply base Mix shift towards smaller more fuel efficient vehicles Challenges OEM quality exp
Slide 40: Market environment: production outlook
Market environment Production outlook Production volumes are declining in mature markets Impact in Europe is weaker than in North America Production In Mio Vehicles - - 19% Production In Mio Vehicles 15.1 12.3 13.9 - - 1 % 21.4 21.2 22.3 - - 12% - - 5% 22.5 - - 6% North America Europe
Slide 41: Market environment: impact of gasoline prices
Market environment Impact of gasoline prices Gasoline price increases are moderate in Europe compared to North America Impact on European consumer demand is limited Data sources: US Government Energy Information Administration , European Commission Directorate-General for Energy & Transport 2002 200
Slide 42: Market environment: North America segment sales
Market environment North America segment sales Supplier revenues are impacted by the lower content per vehicle in the smaller segments Source: Ward's Automotive, Department of Energy Segment Breakdown vs Fuel Costs 40% 42% 44% 46% 48% 50% 52% 54% 56% 58% 60% 7/2007 7/2008 2.75 2.95 3.15 3.35 3.55 3.
Slide 43: Mid- to long-term global market outlook
Market environment Mid- to long-term global market outlook Key Opportunities Volumes in North America and Europe expected to recover in 2010 Global vehicle production between 2009 and 2013 will grow 4.7%/yr Largest growth opportunity is emerging markets Global platforms/ programs and sourcing patter
Slide 44: Market environment: raw material prices
Market environment Raw material prices Raw material cost increases are projected to continue in 2009 Majority of buy: Steel, resin, chemicals OEMs are pushing increased cost to the market - price pressure is transferred to the consumer as well as to the supply base Johnson Controls has detailed road
Slide 45: Short-term focus
Automotive Experience Short-term focus Execution of material economics recovery plan Execution of restructuring program Closing the best business practice gap / achieving the continuous improvement goals Supply base restructuring Short-term focus
Slide 46: Execution of our restructuring program
Short-term focus Execution of our restructuring program Targets: Volume adjustments and sustainable cost improvements Progress to Plan Plant consolidations and global capacity alignment SG&A cost management Supply base restructuring & LCC sourcing Reorganization for improved efficiency Lean engineer
Slide 47: Achieving best business practice savings
30% Gap Savings Targeted Annually Preferred Process Technology Complexity Reduction (DFM) Supply Chain Management In-Plant Best Practices Optimized Footprint Capacity Utilization Overhead Spending Best Business Practices and Six Sigma Global Opportunity $1.3B Short-term focus Achieving our best busi
Slide 48: Supply base restructuring and development
Short-term focus Supply base restructuring and development Restructuring of supply base North America: 25% by 2010 Europe: 40% by 2010 Global: 50% by 2013 Increasing low-cost country sourcing 54% by 2013 Supplier development Strategic alliances with benchmark suppliers to share know how Develop core
Slide 49: Mid- to long-term focus
Automotive Experience Mid- to long-term focus Continued execution of the short-term action plan Organizational improvements and people development Innovation and sustainability Focus on emerging markets Mid to long-term focus
Slide 50: Organizational improvements and people development
Mid to long-term focus Organizational improvements and people development Global customer business units Key priority: customer facing organization with a global reach Clear ownership for customer satisfaction scorecards Global Product Center organization Strengthened product excellence Globally ali
Slide 51: Sustainable differentiating innovation
7 Strategic Domains Step Change Cost More for less Emerging market products A&B segment Overall interior experience Comfort Craftsmanship Ambiance Safety and security Child safety New safety regulations Electronifi- cation and actuation Sensing Mechatronics Shape memory alloys Hi Perfor- mance smart
Slide 52: Emerging market growth strategies
IN Russia / Turkey 2010 sales: $ 600 M Russia - Footprint for complete seats and components Turkey - Joint Venture with local partner serving global OEM Mid to long-term focus Emerging market growth strategies China 2010 sales: $ 3 B 29 manufacturing locations with 20 joint ventures Plans for over 4
Slide 53: Backlog and business development: North America
Backlog and business development North America North America sales diversification Asian & European North American Ford Fiesta Complete seat Recent program wins Mitsubishi Lancer/Outlander Mobile Device Gateway BMW X3 ICS/display GM Lambda Platform Floor console Continued revenue diversification wit
Slide 54: Backlog and business development: Europe
Recent program wins Backlog and business development Europe Focus on flawless launch execution Focus on full recovery of material economics and engineering expenditures Low cost manufacturing footprint to prepare for future growth in emerging markets Vertical integration to drive component excellenc
Slide 55: Backlog and business development: Asia
Recent program wins Backlog and business development Asia Asia Emerging Markets Seating Market share China 45% India / SEA 10% 2009 - 2011 Backlog in Asia $2B 2009 SGM E11 Complete seats (China) 2009 SVW Skoda Superb Complete seats (China) 2010 FAW-VW Audi Q5 Complete seats (China) 2009 Mercedes E-c
Slide 56: Automotive Experience Summary
Automotive Experience Summary Automotive Experience is well prepared for sustainable growth Status and Outlook: From the leading supplier for seating, interior and electronics systems to future profitable growth Challenges & opportunities: Overcome volume drops, material cost increases and distresse
Slide 57: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 58: Alex Molinaroli, President, Power Solutions
Alex Molinaroli President, Power Solutions
Slide 59: Dependable starting for today's cars and powering tomorrow's electric vehicles
Dependable starting for today cars and powering tomorrow's electric vehicles Largest global provider of automotive batteries Leader in lead acid batteries Largest share of aftermarkets in N America, Europe and S America Original equipment (OE) batteries for the top automakers worldwide First-to-mark
Slide 60: Power Solutions market overview
Power Solutions Market overview Flat to declining demand for lead acid batteries in mature markets Extended product life and lower OE production Aftermarket has inelastic attributes Asia market demand growing Market consolidation continues New vehicle applications creating demand for advanced batter
Slide 61: Strategies for sustainable growth
Lead acid market growth North American and European growth: Targeted efforts in underserved channels Geographic expansion: China, Eastern Europe, Russia Technology leadership: Invest in advanced applications (ex: AGM) Sustainability: Enhance customer value with innovative products and services Opera
Slide 62: Americas markets
Americas markets Johnson Controls share 55% Low single-digit unit growth Continuing to gain share Wholesale market continues to be key opportunity Key areas of focus Customer satisfaction and retention Focused wholesale channel penetration with existing and new customers Broaden low cost position th
Slide 63: Europe market
Lead acid market growth Europe market Johnson Controls share 35% Market share gains continue OE's transition to AGM batteries Focusing on emerging markets - - Eastern Europe (5yr. CAGR: 4.5%) Hypermarkets 6% Tyre Specialists 3% WD's, importers, & battery specialists 40% 6% 16% 7% Key areas of focus
Slide 64: Asia market
Lead acid market growth Asia China is largest and fastest-growing market Install capacity to capture market share Spur market transition toward maintenance-free technologies Build aftermarket distribution and brands Continue developing strong China partnership to increase reach Varta brand well-suit
Slide 65: Hybridization & Powertrain Electrification
Hybridization & Powertrain Electrification Delivering innovative technology to meet evolving customer needs OE's need solutions to deal with changing requirements Vehicle electrical content increasing... Johnson Controls offering innovative products European auto manufacturers are under increased pr
Slide 66: Advanced battery technology: continuing leadership position
Advanced battery technology Continuing leadership position Hybrid First-to-market lithium-ion Daimler and BMW programs on track for 2009 delivery Multiple development contracts for mild, full, plug-in and full electric vehicles Systems integration: cell chemistry, electronics, systems capability and
Slide 67: Advanced battery technology: hybrid market development
Advanced battery technology Hybrid Market development Growth opportunities in Europe, China, N.A. Partnered with.. Ford, Southern CA Edison and EPRI to develop and demonstrate vehicle and utility applications SAIC on PHEV fuel cell demonstration fleet Daimler on Sprinter PHEV demonstration fleet Sup
Slide 68: Sustainability
Sustainability Maintaining operations focus and delivering value to our customers Adding value through sustainability Create customer value and build Johnson Controls' brand through a 'green' suite of products and services Implementing manufacturing standards eliminating waste, reducing emissions an
Slide 69: Operational excellence is our competitive advantage
Consistent capital reinvestment improving battery quality and increasing manufacturing productivity Continued improvement of operations: Productivity improvement of 20% from 2005 to 2009 N.America warranty reduction of 38% since FY05 Service levels maintained consistently at over 95% Globalizing bus
Slide 70: Margin improvement: vertical integration
Margin improvement Vertical integration Lead Continued volatility with downward trend Develop in-house North America smelting capacity Goal: 50% of lead requirements Improve European spent battery collection Selected components Secure source of supply Lower overall battery cost Allow for enhanced pr
Slide 71: Power Solutions Summary
Power Solutions Summary Continuing global lead acid market share growth in all regions Aggressively expand in emerging markets Extending market leadership position in advanced lead acid (AGM) technology Continued quality and cost leadership & service Establish a leadership position in lithium ion te
Slide 72: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 73: Break
Break sonnson Controls
Slide 74: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 75: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 76: Dave Myers, President, Building Efficiency
Dave Myers President, Building Efficiency
Slide 77: Building Efficiency
Building Efficiency The global leader in creating and managing building solutions to improve energy efficiency, comfort and safety A growth business that will continue to outpace the underlying industry Highly diversified: 1 million customers in 125 countries Leading positions in key global markets
Slide 78: Sustainable, double-digit growth
Building Efficiency Sustainable, double-digit growth The market for energy efficiency and sustainability continues to expand We have an industry leading HVAC service business We are well positioned in growing emerging markets The HVAC mid market is very large and growing Increased integration of bui
Slide 79: Building Efficiency offerings and capabilities
Building Efficiency Offerings Commercial HVAC equipment Light commercial and residential HVAC equipment Control systems Security and fire systems Services for non-residential buildings Energy efficiency solutions Global Workplace Solutions Capabilities Expertise and capability across the entire buil
Slide 80: Market leadership
Building Efficiency Market leadership Largest provider of energy solutions for buildings #1 market share for complex HVAC controls and large chillers Largest service organization, more than double size of #2 competitor More than 1 billion square feet of customers' facilities under management through
Slide 81: Non-residential buildings: complex and mid-market
Non-residential buildings Definitions Attributes Non-standard applications Highly networked Mission-critical applications Johnson Controls has high market share Attributes 2 - 5 stories Simple systems, may or may not be networked Fewer than 50 controllers Johnson Controls has relatively low market s
Slide 82: Non-residential buildings industry environment
Architectural Billing Index Non-residential buildings Industry environment Softening new construction in N.A. and Europe Uncertain economic impact depending on credit availability Sustained growth in China, Middle East and Latin America Uncertain commodity outlook Rising demand for energy, resulting
Slide 83: High level of visibility and recurring revenues
Non-residential buildings High level of visibility and recurring revenues Visibility of future performance $4.7 billion backlog (+12%) at September 30, 2008 "Pipeline" tracking provides further future look Historically low backlog cancellation rate, but tighter credit environment could have an impac
Slide 84: Global HVAC systems and services market
Non-residential buildings 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 37 11 26 110 Non - Residential HVAC Systems $37B HVAC Services $110B North America Residential$11B Global Residential $26B Global HVAC Systems and Services Market $184B 4-6% 7-9% 5-8% 7-9% Near-term challenges in some regions, but long-t
Slide 85: Attractive growth opportunities beyond core HVAC
Non-residential buildings Japan U.S. UK France Italy Other East 0.17 0.33 0.08 0.08 0.06 0.33 1st Qtr East 30 8 $30B $6B Commercial Industrial Refrigeration = $36B 5% growth 10% growth Japan U.S. Other Italy France UK 17% 33% 8% 8% 6% 28% CAGR '08F-'13F Alarm Monitoring Systems Integration 8% 17% Fi
Slide 86: Our customers are under pressure to lower cost
Our customers are under pressure to lower cost Improving energy efficiency in buildings is the first and most important way to relieve the pressures our customers face cost of energy demand for clean, secure, reliable energy concern for climate change & disruption operational challenges globalizatio
Slide 87: Global growth mega-trend: energy efficiency
Global growth mega-trend Energy efficiency Current Conditions Energy efficiency and sustainability is a key growth opportunity that is embedded across all our businesses and all of our strategies Customers are ill-equipped to deal with the growing complexities Must contract with a number of speciali
Slide 88: Global growth mega-trend: energy efficiency market
Global growth mega-trend: energy efficiency 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 37 11 26 110 Non - Residential HVAC Systems HVAC Services North America Residential Global Residential Global HVAC Systems and Services Market $184B $184B $227B Traditional Business Expansion (HVAC) Adjacent Markets (Li
Slide 89: Building Efficiency leadership
Building Efficiency Iain Campbell Vice President and General Manager N.A. Service & Global Workplace Solutions Energy Efficiency Global Services Allen Martin Vice President and General Manager N.A. Systems, Latin America, & Middle East HVAC Systems Security Emerging Markets Dave Myers VP & President
Slide 90: Our energy efficiency capabilities
Our energy efficiency capabilities TECHNOLOGY PROJECTS SERVICES ENERGY EFFICIENCY RETROFITS ON-SITE RENEWABLE ENERGY GREEN BUILDING DESIGN & CERTIFICATION EQUIPMENT MAINTENANCE REPAIR & REPLACE FACILITY MANAGEMENT INTEGRATED ENERGY SERVICES LEADERSHIP & POLICY ENERGY & GHG DATA MANAGEMENT WORKSPACE
Slide 91: Energy Efficiency: expanding our leadership position
Energy Efficiency Expanding our leadership position Leaders in policy and implementation Led creation of performance contracting Have won 74% of DOE 2008 projects (by dollar value) Key contributor in Clinton Climate Initiative Have won 65% of projects awarded to date Helped establish LEED building d
Slide 92: Energy & GHG data management
Utilities Consumption GHG Emissions Efficiency Projects Energy & GHG data management Rising energy costs and environmental (GHG) commitments Driving demand for information. The market is looking for comprehensive global information & advisory services in utility bill and Greenhouse Gas (GHG) managem
Slide 93: Cumulative lifetime savings from efficiency projects
http://www.johnsoncontrols.com/publish/us/en/sustainability/environmental_stewardship.html Cumulative total lifetime savings from Johnson Controls efficiency projects in U.S. alone between 1990 and 2010: $18 billion in energy savings 270,000 Gigawatt hours in electricity savings 3,425 Megawatts (MW)
Slide 94: Energy efficiency projects - global expansion
Energy efficiency projects - global expansion Clinton Climate Initiative Helping large cities around the world reduce their greenhouse gas emissions Using performance contracting to implement large scale energy efficiency retrofit projects for both public and private sector buildings Provides access
Slide 95: Clinton Climate Initiative key global project wins
Clinton Climate Initiative Key global project wins Lee College - Houston, Texas $10M energy retrofit includes Lighting retrofit HVAC replacement and controls upgrade Solar windows Water conservation Boiler system improvements 30% annual savings First higher ed project awarded under CCI Inorbit Mall
Slide 96: Energy efficiency projects: US Federal Government
Energy efficiency projects US Federal Government Major Department of Energy and Department of Defense programs to increase energy efficiency Covers research labs & military bases globally Water conservation Renewables Sustainable building standards 40 major DOE sites Wins in early projects will crea
Slide 97: Global Services: maintain, repair & replace
Global Services Maintain, repair & replace Market Overview $110 billion global market (growing 4-8% annually) Highly fragmented market - highly variable service levels Market Drivers Large, aging installed base in mature markets Additions to the building stock Customers outsourcing building-related
Slide 98: Customer experience and JCI benefits
Customer Experience Work & Information Process JCI Benefits To Drive Growth Responsiveness to customer need Receives consistent service Serviceperson always knows how to interact with customer Offers customized ideas on how to improve facility performance Customer gets what they paid for Accurate an
Slide 99: Global Services: integrated energy services
Global Services Integrated energy services Energy Services Benchmark Basic condition assessment Re-Commissioning & Tune-up Access utility subsidies Maintain, Retrofit & Replace Building controls Mechanical HVAC systems Renewable Solar PV & Thermal Installation kit Power Purchase Agreements (PPAs) &
Slide 100: Integrated energy services
Integrated energy services Global corporations are looking for practical solutions to reduce energy usage and improve sustainability We take a holistic, portfolio-based view to understand how we can drive improvement, leveraging our energy expertise and global service network Application Examples: R
Slide 101: Global Workplace Solutions
Global Workplace Solutions Global 1000 focus Multi-year contracts Negative working capital High ROIC Pull-through opportunity for Energy Services & Projects Facility Management + WorkSpace & Portfolio Management + Energy & GHG Management Largest facilities management contract to date Covers producti
Slide 102: Energy & Global Services offerings
Energy & Global Services Supplementing traditional offerings with a broad array of Energy & Sustainability Services One equipment piece One site Entire portfolio GHG Emissions Renewables Solar Landfill Gas Wind Benchmark & Tune Efficiency Projects
Slide 103: Building Efficiency leadership
Building Efficiency Iain Campbell Vice President and General Manager N.A. Service & Global Workplace Solutions Energy Efficiency Global Services Allen Martin Vice President and General Manager N.A. Systems, Latin America, & Middle East HVAC Systems Security Emerging Markets Dave Myers VP & President
Slide 104: HVAC Systems - market overview
HVAC Systems - market overview $37B global market growing at: North America: 5% Europe: 6% Asia: 11% Middle East: 13% Key competitors: HVAC manufacturers: Carrier, Trane, Daikin, Mitsubishi Electric Controls manufacturers: Trane, Siemens, Honeywell, Schneider, Local independents Slow-down in '08-'09
Slide 105: HVAC Systems - path to sustainability
HVAC Systems - path to sustainability Chiller products Meet federal requirements for energy conservation Zero-ozone refrigerant options Silent night feature reduces compressor speed to limit chiller noise Air Handling Units Smart design mixes in outdoor air to cool building Utilize otherwise wasted
Slide 106: HVAC Systems - expanding technology leadership
HVAC Systems - expanding technology leadership Equipment Innovation Next generation compressor / drivelines Variable frequency drives, frictionless bearings Embedded controls and use of low-cost end devices to improve total system installed cost New refrigerants Leader in natural and alternative ref
Slide 107: Complex market growth
Complex market growth Key trends Open architecture & IT integration Energy efficient & sustainability focus, but balanced with cost Larger bundles with fewer suppliers to manage risk and improve performance Strategic actions Reinforce the strength of existing offering Optimize bundled controls and t
Slide 108: Mid market growth
Mid market growth Filling offering gaps VAV & Fan Coils (ETI) Water Source Heat Pumps & Floor-by- Floor units (Skymark) Light Commercial Control System Increased cost competitiveness Reduced cost by 13% on average across product lines Strategic actions Continue to fill product gaps to create full HV
Slide 109: Improving performance: North American residential
Improving performance North American residential New technology focused on efficiency MicroChannel gaining share Strong market demand for new 33-inch furnace Improved cost structure & distribution Plant reductions Inventory chain improvements US Air joint venture Energy efficiency driving demand 90%
Slide 110: Security business and market overview
Security business and market overview Attractive global security market Total security market is $104B; 10% growth Systems integration market is most attractive for Johnson Controls Due to size ($24B), growth (17%), margins (10%+ EBIT) Aligns with complex market strategy Fragmented, immature market;
Slide 111: Security key initiatives
Security key initiatives Target heavy security technology users that perform complex integration activities for growth / investment Migrate to multi-system integration (IT, HVAC, other business systems) High level of annual spending (~$500K+) Non-discretionary spend mandated by government Expand sal
Slide 112: Emerging markets
Success factors Local availability / local relationships Products that meet local needs Competitive prices (HVAC & Controls) Emerging markets Growing market share in fast-growing emerging markets China - Russia - Middle East - India Energy efficiency and sustainability a key demand driver Emerging m
Slide 113: Emerging markets: India and China
Emerging markets India $75M in revenue 8 sales offices 5 more planned Market growth is very high 25% in mid market 33% in complex Initiatives Expand mid market presence by introducing direct sales force in Tier 1&2 cities Local manufacturing Leverage district cooling expertise for partnering with ut
Slide 114: Emerging markets: Russia and Brazil
Emerging markets Russia $100M+ in revenue 10 sales offices Systems and Service growth rate of 12% Hosting Winter Olympics in Sochi in 2014 Initiatives Dedicated management Aggressive plan for opening offices - 5 branches in 2008 and 25 more through 2012 Expanding presence in CIS regions Brazil $250M
Slide 115: Emerging markets - Middle East
Emerging markets - Middle East $1 trillion of new construction planned in the Middle East 850,000 tons of district cooling planned/under construction Over 2,000 Johnson Controls employees in the Middle East Bahrain Bay, Manama Bahrain $2.5B mixed use waterfront development project $20M contract: 18
Slide 116: Building Efficiency leadership
Building Efficiency Iain Campbell Vice President and General Manager N.A. Service & Global Workplace Solutions Energy Efficiency Global Services Allen Martin Vice President and General Manager N.A. Systems, Latin America, & Middle East HVAC Systems Security Emerging Markets Dave Myers VP & President
Slide 117: Margin improvement: operational excellence
Margin improvement Operational excellence Identified over $1B incremental EBIT opportunity from GAP analysis Manufacturing continuous improvement consistently achieved Branch participation expanded Local metrics established for all businesses BBP scorecards and metrics to manage the business
Slide 118: Optimize global manufacturing footprint
Operational excellence Optimize global manufacturing footprint Migrated from high cost to low cost countries Full Time Employees 2006 2008 High Cost Countries 62% 42% Low Cost Countries 38% 58% Optimize manufacturing footprint for cost, lead times, and environmental footprint Nantes, France Americas
Slide 119: Innovation
Natural refrigerants (CO2 & Ammonia) Alternatives partnering with DuPont Variable speed drives Energy Efficiency Services Renewables applications Micro- channel Adoption Unit Size Reduction Sensors Sub-system kits Optimized Central Plant Combined HVAC salesforce Metro-by -metro distribution selectio
Slide 120: Summary
Summary North American and European markets: uncertain economic impact Tightening credit in mature markets a concern Asia, Middle East and Latin America markets still showing growth We have a strong global backlog providing visibility Majority of revenues are recurring/service-oriented Presence in H
Slide 121: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 122: R. Bruce McDonald, Executive Vice President & Chief Financial Officer
R. Bruce McDonald Executive Vice President & Chief Financial Officer
Slide 123: Fiscal 2008 outlook
Fiscal 2008 outlook Consolidated net sales Approx $38B (up 10%) Approx $38B (up 10%) EPS from continuing operations $2.33, excluding restructuring (up 11%) $2.33, excluding restructuring (up 11%) Capital expenditures 1:1 reinvestment ratio 1:1 reinvestment ratio Net debt-to-capitalization Approx 28%
Slide 124: 2008 Review - sustained, profitable growth
2008 Review - sustained, profitable growth Sales growth Double-digit growth in Building Efficiency Power Solutions higher shipments Margin expansion Building Efficiency operational improvements Automotive turnaround in North America Power Solutions up excluding lead impact Cost focus Realized signif
Slide 125: Q4 2008 restructuring charges
Q4 2008 restructuring charges Q4 restructuring charge (pre-tax) of approximately $500 million Expected payback in less than 2.5 years Expected 2-year payback on cash portion Cost reduction initiatives Workforce reductions Plant consolidations Timeline Substantially complete by early 2010 Impact on e
Slide 126: 2009 backdrop
2009 backdrop Visibility to future performance Building Efficiency High percentage of recurring revenues Backlog, orders, pipeline visibility Power Solutions Aftermarket (75% of sales) is not as economically sensitive Automotive Experience Business is well positioned to continue to increase market s
Slide 127: Fiscal 2009 key assumptions
Fiscal 2009 key assumptions Automotive Build 2008 2009e North America 13.9m 12.3m Europe (Western Europe down 10%) 22.5m 21.2m China +19% +0 to 5% Construction Spending Residential - U.S. -13% 0% Non-residential - U.S. -2% -5% - Institutional Sector +4% +3% Non-residential - International +7% +5%
Slide 128: Fiscal 2009 key assumptions: currency, tax, pension
Fiscal 2009 key assumptions Euro $1.40 in 2009 vs. $1.50 average in FY08 $0.01 Euro change = $0.01 EPS Other currencies Global slowdown will lead to weaker foreign currencies against USD Tax rate Level at 21.0% Pension Discretionary funding of $300 million Financing costs Slightly lower than 2008 Vo
Slide 129: Fiscal 2009 key assumptions: commodities
Commodity Lead Resin Steel Chemicals Diesel Fuel Copper Global Pricing FY 09 vs FY 08 Fiscal 2009 key assumptions Johnson Controls commodity buy (excluding lead) Fully recovered in Power Solutions and Building Efficiency Automotive Experience net impact of $50 - 75 million Steel Resin Foam Chemicals
Slide 130: Fiscal 2009 outlook
Fiscal 2009 outlook Consolidated net sales Approx $37B (down 3%) Up 2-3% excluding FX and lead Maintaining top-line sales despite contraction in mature markets Growth in Building Efficiency Growth in emerging markets Capturing market share in Automotive and Power Solutions Lead and currency negative
Slide 131: Automotive Experience 2009 financial outlook
Automotive Experience 2009 Financial outlook Sales down 6% Record backlog ($1.5 billion launching in 2009) Impact of Plastech: $400 million Growth in emerging markets Largely via unconsolidated joint ventures Double-digit decline in mature markets Segment margin 2.0% - 2.3% Volume declines in mature
Slide 132: Beyond 2009: market outlook
Beyond 2009: market outlook '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 NA Production 14 13.5 12.9 13.7 13.5 12.5 11.2 12.3 13.4 15 15.1 15.1 15.4 15.9 16.9 17.5 15.6 16.3 15.9 15.9 15.6 15.6 14.5 13.6 12.3 0 Units (in millions) CSM Project
Slide 133: Power Solutions 2009 financial outlook: lead impact
Power Solutions 2009 Financial outlook Lead Impact Lead prices expected to be lower in 2009 vs. 2008 Negative revenue impact of approximately $700 million Neutral to earnings Improves reported margins Pro Forma Impact 2008 estimate 2008 estimate 2008 estimate 2009 estimate @ $2,200/MT @ $2,600/MT @
Slide 134: Power Solutions 2009 financial outlook
Power Solutions 2009 Financial outlook Sales down 8% (up 3% excluding lead) Market share growth New contract wins Benefit of global capacity expansion AGM lead acid for micro-hybrids Segment margin 10.9% - 11.1% Vertical integration / product mix Manufacturing process efficiency improvements Higher
Slide 135: Building Efficiency 2009 financial outlook
Building Efficiency 2009 Financial outlook Sales up approximately 7% (9% ex-FX) Record backlog ($4.7 billion at end of Q4 2008) Increased demand for energy efficiency, GHG reduction solutions Continued growth in U.S. institutional construction market Emerging market growth Relatively stable service
Slide 136: Cash flow
Cash flow Strong, consistent cash flows Long-standing "A" credit rating Dividends paid since 1887; dividend increased for 33 years Strong balance sheet Cash flow deployment Reinvest in the businesses Organic and acquisition Increased dividend Pension funding Liquidity 5 year $2.05B revolver expires
Slide 137: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls
Slide 138: Summary
Summary North American and European markets: uncertain economic impact Tightening credit in mature markets a concern Asia, Middle East and Latin America markets still showing growth We have a strong global backlog providing visibility Majority of revenues are recurring/service-oriented Presence in H
Slide 139: Johnson Controls Ingenuity Welcome
Johnson WK Controls INGENUITY WELCOME Controls