Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Investor Day (October 2009)
108 slides from Johnson Controls International's investor day presentation, Oct 13, 2009
Slide 1: Strategic Review and 2010 Outlook
Strategic Review and 2010 Outlook October 13, 2009 Stephen A. Roell Chairman and Chief Executive Officer Exhibit 99.2
Slide 2: A return to profitable growth
Johnson Controls Johnson Controls 2 A return to profitable growth
Slide 3: A return to profitable growth
Johnson Controls A return to profitable growth Johnson Controls 3 Market insight and customer relationships to adapt to and lead industry change Strategies and offerings aligned with global growth megatrends - Energy efficiency - Sustainability - Emerging markets Management expertise in effectively
Slide 4: 2009: A challenging environment
2009: A challenging environment Historic and rapid changes in our markets The breadth and depth of the downturn, combined with the freezing of the credit market, negatively impacted all our industries and markets Entered 2009 with existing softness in North American automotive and residential HVAC m
Slide 5: Decisive, but difficult actions
Decisive, but difficult actions Aligned our cost structure with market environment Restructuring actions in Q4 2008 and Q2 2009 Workforce reductions Plant consolidations Liquidity enhancements Prioritized capital spending Working capital improvements Discretionary pension funding Convertible debt of
Slide 6: 2009: Historic and rapid changes in our markets - Power Solutions
2009: Historic and rapid changes in our markets Power Solutions First half Historic decline in LME lead prices Destocking by aftermarket battery retailers OE demand down more than 30% Second half Lead prices steadily increasing Normal aftermarket ordering patterns Johnson Controls 6 6
Slide 7: 2009: Historic and rapid changes in our markets - Automotive Experience
2009: Historic and rapid changes in our markets Automotive Experience First half Lowest production in U.S. since 1961 Decline in OE inventories OE platform deferrals/cancellations European production down 40% China production slowdown Growing financial distress of OEs and suppliers Second half US go
Slide 8: 2009: Historic and rapid changes in our markets - Building Efficiency
2009: Historic and rapid changes in our markets Building Efficiency First half Beginning of broad-based downturn in construction spending Unprecedented deferrals of routine service work Emerging market growth stalls Residential HVAC demand down 80% from 2006 peak U.S. stimulus causing project delays
Slide 9: 2009 key accomplishments
2009 key accomplishments Significantly improved cost structure Automotive Experience break-even level now at 8.3 million production in North America and 14.3 million production in Europe Power Solutions 2009 Q4 results will exceed 2008 despite lower volume Established new business disciplines for au
Slide 10: 2009 key accomplishments
2009 key accomplishments Increased market share New business awards in North America, Europe and Asia Also awarded new "conquest" business in Europe Launched six new automotive joint ventures in China New battery customers = added 6 million units/year Increased number of Building Efficiency planned
Slide 11: Beyond 2010: market outlook
Beyond 2010: market outlook North American production 50-Year trend Johnson Controls 11 Units (in millions) 2009 Production at lowest level since 1961 2010 Production forecast shows modest recovery
Slide 12: 2009 awards and recognition
2009 awards and recognition Toyota Global Contribution Award Toyota Superior Award - Supplier Diversity Toyota Achievement Award - Program Management GM Supplier of the Year (Power Solutions) Ford World Excellence Award Beijing Hyundai Supplier of the Year Award Honda Supplier Award - Delivery WalMa
Slide 13: Beyond 2010: market outlook
Beyond 2010: market outlook U.S. construction by commercial vertical Johnson Controls 13 $ billions Recessions "Institutional" buildings-our primary focus Source: Global Insight
Slide 14: Profitable growth initiatives
Profitable growth initiatives Broad-based strategies Take advantage of global growth mega-trends Energy efficiency Greenhouse gas emissions / sustainability Emerging markets Leverage government stimulus opportunities Win share through innovation, quality, cost Improve cost structure Continuous impro
Slide 15: 2010-2014 growth (est.)
2010-2014 growth (est.) Johnson Controls 15 5 Year Industry growth JCI 2010 Automotive +7.8% +13% Power +3.0% +6% (excl. lead)* Building +3.6% +3% Industry Growth Market Share Gain Acquisitions JCI Organic growth +7.1% *+17% including impact of higher lead prices
Slide 16: 2010 Outlook
2010 Outlook Johnson Controls 16 ....based on key assumptions you will hear in detail later today $1.35 - 1.45 Consolidated net sales Earnings per share $31B +9%
Slide 17: 2010 outlook and strategies: Power Solutions
2010 outlook and strategies What you'll hear today Power Solutions Outlook Aftermarket returning to normal ordering patterns, OE business recovering with overall production Strategies Further commercialize hybrid business Expand in China Increase vertical integration to stabilize supply base and imp
Slide 18: 2010 outlook and strategies: Automotive Experience
2010 outlook and strategies What you'll hear today Automotive Experience Outlook Higher production in North America, China Winning new and conquest business Strategies Grow in emerging markets Product and process excellence Drive higher returns De-risking the business Johnson Controls 18 Key take-aw
Slide 19: 2010 outlook and strategies: Building Efficiency
2010 outlook and strategies What you'll hear today Building Efficiency Outlook Late cycle industry; trends we've seen in late 2009 likely to continue into first half of 2010 Institutional vertical market down, but performing better than overall industry U.S. stimulus program to become a benefit in 2
Slide 20: Power Solutions
Power Solutions Alex A. Molinaroli Vice President and President, Power Solutions
Slide 21: Overview of Power Solutions
Overview of Power Solutions Largest global provider of automotive batteries #1 global market share Largest provider to the automotive aftermarket Original equipment (OE) batteries for the top automakers worldwide First-to-market provider of Li-ion batteries for hybrid applications Quality and cost l
Slide 22: Overview of the Power Solutions market
Overview of the Power Solutions market Stable demand for lead acid batteries in mature markets Decline in miles driven Deferred maintenance Slowly recovering OE production Reduced inventory Aftermarket destocking of early FY2009 not expected to repeat in 2010 Asia market demand growing New vehicle a
Slide 23: Power Solutions 2010 highlights
Power Solutions 2010 highlights Winning new OE and aftermarket customers globally Lowest cost, highest quality provider World-class manufacturing processes and technologies (PowerFrame) Best Business Practices Aftermarket less economically sensitive Financial stability vs. economically distressed co
Slide 24: Strategic priorities in 2010
Strategic priorities in 2010 Advanced battery leadership and growth Technology leadership through investment in differentiated products & services Vertical integration to drive improved margins Grow Americas and European share via the wholesale channel Asia strategy Johnson Controls 5 5
Slide 25: Global wholesale market opportunity
Global wholesale market opportunity Keys to success Market coverage Strong product brands Lowest delivered cost formula Quality channel partners Flat channels with minimal steps Retail presence - flagship shops Closed loop recycling system Johnson Controls 6
Slide 26: Growing the wholesale market in the Americas
Growing the wholesale market in the Americas Growth with our strategic partner Interstate Batteries Acquiring new customers serving the wholesale market Pursuing targeted growth in under-served segments Expanding product line to better serve existing channels Market growth and share gains in South A
Slide 27: Growing the wholesale channel in Europe
Growing the wholesale channel in Europe Strategy Tailor channel strategy to each market Establish strategic relationships with key channel partners Build JCI brands Create shorter routes to market Capitalize on closed loop recycling model Develop advanced lead-acid (AGM) aftermarket Johnson Controls
Slide 28: Growth in emerging markets: China
Growth in emerging markets China China is the fastest growing market in Asia 5Yr CAGR: 7% (China 10%, Japan 2%, ASEAN 5%) Highly fragmented; more than 1,000 battery manufacturers Higher percentage of OE batteries than mature markets Market in midst of multiple technology transitions Strategies Expan
Slide 29: Increase vertical integration to optimize supply chain
Increase vertical integration to optimize supply chain Lead management JCI is the largest consumer of lead in the world - 1.5m MT annually Lead is most significant and volatile component of cost structure Manufacturers' recovery of spent batteries most highly developed in North America Johnson Contr
Slide 30: Increase vertical integration: lead management
Increase vertical integration to optimize supply chain Lead management Strategies Increase N.A. in-house lead recycling capacity to 50% of requirements (current in-house capacity approx. 15%) Constructing recycling facility in Mexico (2010 completion) Build recycling facility in U.S (permit negotiat
Slide 31: Innovation & technology
Innovation &technology Developing Power Solutions that are flexible by customer and application Johnson Controls 12 Lead Acid Conventional Vehicle Advanced Lead Acid Micro hybrid Lithium Ion Plug-in hybrid & electric vehicle Hybrid electric vehicle
Slide 32: Advanced energy storage solutions
Johnson Controls Mary Ann Wright Vice President and Managing Director Business Accelerator for Advanced Energy Storage Solutions Advanced energy storage solutions
Slide 33: Johnson Controls-Saft
Johnson Controls-Saft A global footprint to serve our global customers Johnson Controls 14 Bordeaux, France Li-Ion Pilot Line & Research Lab Milwaukee, USA Electrochemistry R&D, Systems Development, and testing Hannover, Germany Systems Integration, Development and Testing Nersac, France NiMH & Li-I
Slide 34: Leveraging government stimulus to drive growth
15 Leveraging government stimulus to drive growth Global Automotive OE experience Operations excellence across the battery lifecycle - from manufacturing to recycling Built the first Li-ion automotive battery plant in the world First to market with automotive Li-ion batteries being delivered today B
Slide 35: Competitive advantage through complete vertical integration
Competitive advantage through complete vertical integration Johnson Controls 16 Technology driven by application requirements: proven safety, reliability and performance
Slide 36: Technology advantage through proven chemistry
Technology advantage through proven chemistry Johnson Controls 17 REQUIREMENT NCA SYSTEM LFP SYSTEM NMC SYSTEM Peak power Meets Meets Meets Continuous power Meets Meets Meets Specific energy Meets Does Not Meet Under development Energy density Meets Does Not Meet Under development Cycle life Meets M
Slide 37: World-class partners to deliver advanced technology and products
World-class partners to deliver advanced technology and products Johnson Controls 18
Slide 38: Cost reduction to drive commercialization
Cost reduction to drive commercialization Current barriers exist to achieving parity without tax credits Supply base constraints Regulatory issues Environment Transportation Regulations are likely to drive change Energy Bill CAFE update CO2 emissions alignment with fuel economy ratings Tax incentive
Slide 39: Cost reduction to drive commercialization
Cost reduction to drive commercialization Our roadmap will reduce battery cost 50% in the next 5 years Drivers: Scale Improved materials efficiencies Best Business Practices Product and process innovation Johnson Controls 20 Cost curve: Materials Capital Labor/OH/SG&A Transportation and other $1000/
Slide 40: Profitability through market growth
Profitability through market growth Johnson Controls 21 $35B - $70B global advanced automotive battery market Globally, HEVs/EVs are projected to represent 6% of total vehicle volume by 2020 Energy Policy making will drive sustained growth and market penetration Revised CAFE CO2 emissions policy
Slide 41: Strategic advantage through customer relationships
Strategic advantage through customer relationships Established customer relationships Mercedes-Benz S-Class hybrid in European/U.S. showrooms now BMW 7 Series ActiveHybrid will be in production later this year Azure Dynamics BalanceTM Hybrid Electric launches summer of 2010 Exclusive supplier of PHE
Slide 42: Business accelerator for advanced energy storage
Business accelerator for advanced energy storage We will accelerate the commercialization of the advanced battery industry Areas of focus: Product and process innovations Market development and demand creation World class manufacturing capabilities Supply chain development Advanced long term researc
Slide 43: Power Solutions Summary
Power Solutions Summary Leader in lithium ion technology and manufacturing Leader in advanced lead acid technology Aggressively expanding in emerging markets Investing in vertical integration Continued quality and cost leadership & service Continued global lead acid market share growth in all region
Slide 44: Automotive Experience
Automotive Experience Beda Bolzenius Vice President and President, Automotive Experience
Slide 45: Automotive Experience
Automotive Experience Leading global provider of systems and components for seats, overhead systems, doors, cockpits, electronics and complete interiors Global capability, supplying more than 30 million cars per year 250 locations in 33 countries More than 1/3 in low-cost countries Diversified custo
Slide 46: Market environment: global vehicle production 2008-2014
Market environment Global vehicle production 2008 - 2014 Mature markets will recover volume through 2014. North America and Eastern Europe will be the first regions to be back on 2008 volume level in 2012 Johnson Controls 3 CAGR 12.0% - -37% 14 15.1 09 8.6 08 13.6 North America Europe 09 15.8 08 20.
Slide 47: 2009: Successful right-sizing of our business
2009: Successful right-sizing of our business Successfully realigned cost structure, achieving break-even at approximately 8.3M units in North America and 14.3M units in Europe: Structural footprint optimization (26 plant closures) Global capacity alignment anticipating demands in future growth mark
Slide 48: 2009: Risk mitigation of our business
2009: Risk mitigation of our business Applying risk mitigation strategy to our business via new financial hurdle rates and a more selective approach to target business Driven by: Lower commodity risk via indexing of material economics Lower capital investment requirements via reutilization of existi
Slide 49: Incremental sales backlog
Automomotive Experience Incremental sales backlog* Incremental sales backlog contraction mainly driven by global down-turn effects Lower forecasted production volume assumptions OEMs delayed SOP of new programs or cancelled successor vehicles JCI withdraws from programs not meeting new commercial cr
Slide 50: Automotive Experience Top wins FY09
Automotive Experience Top wins FY09 Johnson Controls 7 7
Slide 51: Automotive Experience Top launches FY09
Automotive Experience Top launches FY09 Johnson Controls 8 8
Slide 52: Market environment: global vehicle production 2008-2014
Market environment Global vehicle production 2008 - 2014 Johnson Controls 9 CAGR 12.0% - -37% 14 15.1 09 8.6 08 13.6 North America Europe 09 15.8 08 20.6 - -23% CAGR 6.4% 14 21.6 Asia 14.1580793258443 4.89210932584325 2.650599325843 CAGR 8.0% - -8% 14 36.1 09 24.6 08 26.9 BRIC In Million units per C
Slide 53: Market environment: from challenges and changes to opportunities
Market environment From challenges and changes to opportunities From challenges and changes to opportunities From challenges and changes to opportunities Johnson Controls 10
Slide 54: Profitable growth and differentiation
Automotive Experience Profitable growth and differentiation Product & Process Excellence Leverage global capabilities Being selective and focused through core, key and standard capability analysis Drive core business processes to a differentiating excellence Global complexity reduction (supply base,
Slide 55: Competitive advantage - product excellence
Automotive Experience Competitive advantage - product excellence Vertical integration Expand global expertise in metal and mechanisms Instrument panel surfaces Printed circuit board Standardization Airbag hinge Seat trim retention Cluster platform Sustainability Natural fiber Synergy seats (lightwei
Slide 56: Competitive advantage - innovation
Automotive Experience Competitive advantage - innovation Johnson Controls 13 Rethink - Renew - Respond Plug in hybrid - fit for five! Slim seat & conversational seating Integrated seat wing EcoSpace modular cockpit structure Exposed natural material EcoBond headliner Extended instrument cluster
Slide 57: Competitive advantage - process excellence
Automotive Experience Competitive advantage - process excellence Identify best-in-class processes and roll- out to global manufacturing sites Examples: Fiber laser welding - replaces current carbon dioxide laser, by offering higher speed and reutilized investment Roll forming - allows a more efficie
Slide 58: Competitive advantage - best business practices
Automotive Experience Competitive advantage - following our consistent path in BBP Best business practices and continuous improvement Preferred process technology Supply chain management Complexity reduction In-plant best practices Optimized footprint Capacity utilization Overhead spending External
Slide 59: Competitive advantage - global leverage
Automotive Experience Competitive advantage - global leverage We have taken globalization to the next level ensuring global availability of resources, footprint, engineering and functional capabilities for our customers worldwide 47 JIT plants in LCC 49 components plants in LCC Global engineering fo
Slide 60: Emerging markets growth opportunity: China
Emerging markets Growth opportunity: China Background Leader in seating with more than 40% market share #2 market share in interiors - opportunity to further accelerate growth in interiors and electronics 2009 China revenues: $1.9 billion (mostly unconsolidated) Competitive advantages Cost advantage
Slide 61: Automotive Experience Summary
Automotive Experience Summary Positioned to be profitable at reduced production levels due to significant cost structure improvements De-risking the business for improved and more stable margins Fast execution of the structural optimization (future growth; capacity adjustment; LCC) Global product fo
Slide 62: Building Efficiency
Building Efficiency Dave Myers Vice President and President, Building Efficiency
Slide 63: Johnson Controls Building Efficiency
Johnson Controls Building Efficiency Johnson Controls makes buildings in 125 countries more comfortable, productive and safe Our offerings are necessary to provide a comfortable indoor environment at the lowest operating cost Working with Johnson Controls delivers a payback: reduced energy and impro
Slide 64: Operating in large global markets
Building Efficiency Operating in large global markets Johnson Controls 3 North America residential $9B Non - residential HVAC systems $35B Non-addressable HVAC services $67B Global residential $25B Global HVAC systems & services market Total: $184B Addressable: $117B Addressable HVAC services $48B N
Slide 65: Non-residential buildings: high level of recurring revenues
Building Efficiency: Non-residential buildings High level of recurring revenues Service markets The global HVAC service market remains a significant opportunity Highly fragmented Market trends for energy efficiency, climate change legislation and outsourcing will drive increasing demand JCI service
Slide 66: Non-residential buildings near term industry environment
Non-residential buildings Near term industry environment Softening new construction continuing in mature markets North American "institutional" market, which represents more than half our new construction sales, has largely outperformed the overall market Capital constraints resulting in atypical cu
Slide 67: Key growth opportunities
Key growth opportunities Energy & sustainability Energy technology meets information technology Increased role of government Emerging markets Johnson Controls 6 6
Slide 68: Energy and sustainability
Johnson Controls Iain Campbell Energy and sustainability
Slide 69: Growth opportunity: energy efficiency and sustainability
Approximately 40% of the worlds energy is consumed by buildings making them the largest single targeted category for energy efficiency and GHG abatement Growth opportunity Energy efficiency and sustainability Market drivers The global market opportunity for energy efficiency and sustainability is la
Slide 70: Energy efficiency and sustainability: Why Johnson Controls?
Growth opportunity Energy efficiency and sustainability Why Johnson Controls? No one can match our consulting, design, operation and measurement capabilities Global execution Real, tangible, measurable and guaranteed savings Differentiated advisory capabilities Enterprise-wide visibility to GHG foot
Slide 71: Energy efficiency and sustainability: growing market opportunity
Growth opportunity Energy efficiency and sustainability The growing market opportunity for global energy and sustainability expands our core HVAC market Sized based on a 1% rate of improvement in the fossil fuel energy consumption of existing commercial, industrial and institutional building stock J
Slide 72: Energy Solutions
Growth opportunity Energy efficiency and sustainability Energy Solutions When energy is the driver for building retrofit, the market needs integrated solutions We have built an energy solutions business able to deliver both energy advisory services and large scale energy solutions - it is now approa
Slide 73: Energy Solutions - Whole building retrofits
Growth opportunity Energy efficiency and sustainability Energy Solutions - Whole building retrofits Bundled product and service solution that uses energy and operational savings to pay the cost of the project over time Blended paybacks advantageous for renewable energy projects Integrated design and
Slide 74: Empire State building
Empire State building A replicable model in the private sector JCI offering Refurbish windows to improve energy efficiency Improve the insulation New energy management control system High efficiency HVAC equipment Web-based tenant energy management system Outcome Reducing energy usage by 38% Energy
Slide 75: German Army base adds renewables to total solution
Expanding beyond North America and efficiency German Army base adds renewables to total solution Goal Reduce energy cost and carbon emissions across 100 buildings 2008 energy cost of €1,050k CO2 emissions 4,500 tons Johnson Controls offering Performance contract with guaranteed savings Antiquated BM
Slide 76: Linking efficiency to the smart grid
Linking efficiency to the smart grid Georgia Tech uses existing technology to cut energy use Goal Real time pricing program to reduce peak load and energy costs Johnson Controls offering Metasys central server continuously reads and records hourly prices from utility's web service feed Whenever elec
Slide 77: Energy technology meets information technology
Johnson Controls Key growth opportunities Energy technology meets information technology
Slide 78: Expanding our energy management and sustainability capabilities
Expanding our energy management and sustainability capabilities Technology platform for energy and greenhouse gas measurement Rising energy costs and environmental (GHG) commitments driving demand for comprehensive global information & advisory services in utility bill and GHG management New informa
Slide 79: Integrated building systems and services
Growth opportunity Integrated building systems and services Over 50% of the S&P 100 companies report on their sustainability efforts 86% have corporate sustainability websites 41% of the Global 500 disclose emissions reduction targets Integrated systems to identify future savings across portfolio Vi
Slide 80: Increased role of government
Johnson Controls Key growth opportunities Increased role of government
Slide 81: Increased role of government
Growth opportunities Increased role of government Significant near-term opportunity to capitalize on recently announced government stimulus packages We see significant long-term opportunity by expanding our relationships with global governments We are working to effect favorable energy legislation a
Slide 82: Short-term: stimulus spending
Increased role of government Short-term: stimulus spending Johnson Controls 21 Total global stimulus is over $2 trillion with 65% from the U.S. and China Federal buildings $3 Education modernization $5 Grid/ renewables $2 State and local $2 United States - $12 B target JCI addressable market opportu
Slide 83: Long-term: energy efficiency and climate change legislation
Increasing role of government Long-term: Energy efficiency and climate change legislation Europe Net-zero energy use buildings starting in 2019 Energy Performance of Buildings Directive (EPBD) Implementation in UK (EU to follow) Energy Performance Certificate (EPC) required on the sale or rent of al
Slide 84: Emerging markets
Johnson Controls Key growth opportunities Emerging markets
Slide 85: Emerging markets: large and growing opportunity
Growth opportunities Emerging markets Large and growing opportunity 28% of current revenue comes from Asia, Latin America and Middle East That mix will continue to increase as construction outpaces developed markets Six key targeted markets: China, India, Brazil, Saudi Arabia, Russia, and Mexico Exp
Slide 86: Emerging markets growth over the long-term
Growth opportunities Emerging markets Over the long-term, emerging markets will grow 4x as fast as the developed markets Energy efficiency and sustainability is a key demand driver Hot temperatures, a growing middle class, a lack of skilled locals, and energy constraints will drive demand for JCI of
Slide 87: Increase service capabilities in all emerging markets
Increase service capabilities in all emerging markets Example: Middle East Market Conditions With increasing equipment penetration, a growing need for service expertise Attracting and retaining key operations and maintenance employees is challenging Few "local" trained resources Initiatives Strategi
Slide 88: Emerging markets growth initiatives: China
Emerging markets growth initiatives Example: China China Largest HVAC market outside of the U.S. $700M+ in JCI 2009(e) revenue 43 sales offices 2 factories Initiatives Teaming with 7 university campuses to aid in recruitment Implement bundled central plant solution sales to expand already strong pre
Slide 89: Residential HVAC
Johnson Controls Residential HVAC
Slide 90: Residential HVAC: depressed market with long-term growth drivers
Residential HVAC Currently a depressed market, but with long-term growth drivers Johnson Controls 29 1.2 million new household formations annually Household formations Home ownership Second home demand Aging housing stock Increases in income and age of home-owning population are growing demand for s
Slide 91: Residential / Light commercial HVAC
Residential / Light commercial HVAC Johnson Controls 30 NORTH AMERICAN A/C & HEAT PUMP INDUSTRY SHIPMENTS Source: AHRI Note: Data based on calendar years and includes air conditioners, heat pumps and unitary commercial 4% CAGR 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 75 76 77 78 79 80 81 82 83 84 85 86 87 88
Slide 92: Residential performance improvement initiatives
Residential Performance improvement initiatives Goals Cost reduction Operational excellence Improve customer access Quality improvement Expedite product development Initiatives Profitability-oriented Plant closure Cost reduction initiatives/ BBP / Supply chain SKU reductions Production scheduling /
Slide 93: Building Efficiency Summary
Building Efficiency Summary Large and growing global markets Multiple paths to growth Energy and sustainability Energy technology meets information technology Increased role of government Emerging markets Residential HVAC turnaround Markets will recover; pent-up demand Significant action taken to im
Slide 94: Financial outlook
Financial outlook R. Bruce McDonald Executive Vice President and Chief Financial Officer
Slide 95: 2009: A difficult year, but an improved second half
2009: A difficult year, but an improved second half Johnson Controls 2 Quarterly earnings per share Q1 Q2 Q3 Q4 $0
Slide 96: Fiscal 2009 fourth quarter outlook
Fiscal 2009 fourth quarter outlook Consolidated net sales Approx. $7.9B EPS $0.40 - $0.42 Includes $0.12 warranty/quality charge in NA residential business Excludes: Exchange offer costs Non-recurring tax benefits Net debt-to-capitalization Approximately 23% Strong Q4 operating cash flow Exchange of
Slide 97: Fiscal 2010 key assumptions
Fiscal 2010 key assumptions Automotive build North America Europe China (passenger vehicles) 2009 8.6m 15.8m 7.0m 2010e 9.8m 15.8m 8.3m Construction spending Residential - U.S. Non-residential - U.S. Non-residential - Western Europe Non-residential - Asia / Middle East / Non-residential - Latin Amer
Slide 98: Global Insight non-residential construction forecast - all regions
Global Insight non-residential construction forecast - all regions Developing regions still posting strong growth Developed regions expect construction to decline through 2011 before turning upward Johnson Controls 5 W. Europe N.A. Middle East Latin America Asia '08-'09 CAGR '09-'10 CAGR '10-'11 CAG
Slide 99: Global Insight non-residential construction forecast - U.S.
Global Insight non-residential construction forecast - U.S. Healthcare and education expected to weather commercial construction downturn better than other vertical markets Approximately two-thirds of BE revenue tied to institutional market Johnson Controls 6 Commercial Manufacturing Institutional H
Slide 100: U.S. residential construction
U.S. residential construction Large pent-up demand expected to drive growth Johnson Controls 7 Source: Global Insight '08-'09 CAGR '09-'10 CAGR '10-'11 CAGR '11-'12 CAGR '12-'13 CAGR North America -30% 18% 31% 19% 9% Source: U.S. Census Bureau
Slide 101: Fiscal 2010 key assumptions
Fiscal 2010 key assumptions Euro $1.45 in 2010 vs. $1.35 in 2009 Tax rate 20% in 2010 Foreign tax credits Improved profitability overseas 20%-25% range in 2011 and 2012 Pension contribution $100 - $125 million US pension funding for the next 3 years Financing costs Successful early exchange offer fo
Slide 102: Investing to accelerate our growth
Investing to accelerate our growth Power Solutions Vertical integration Hybrid commercialization China expansion Automotive Experience Engineering and launch costs to build our backlog Product innovation Building Efficiency Energy and sustainability initiatives Technology platforms NextGen service i
Slide 103: Fiscal 2010 outlook
Fiscal 2010 outlook Johnson Controls 10 Consolidated net sales Approx $31B (up 9%) Building Efficiency flat, second half growth anticipated Higher vehicle production Growth in emerging markets across all three businesses EPS Approx $1.35 - $1.45 Improvements in all businesses as volumes / markets re
Slide 104: Automotive Experience 2010 Financial outlook
Automotive Experience 2010 Financial outlook Sales up 13% Volume recovery in North America Growth in emerging markets Largely via unconsolidated joint ventures Takeover business re-sourced from distressed competitors Significant number of launches in Europe Segment margin 1.3% - 1.6% Benefits of res
Slide 105: Power Solutions 2010 Financial outlook
Power Solutions 2010 Financial outlook Sales up 17% (up 6% excluding lead) Volume gains across all regions Market share growth New contract wins Benefit of global capacity expansion Segment margin 11% - 11.2% Manufacturing process efficiency improvements Restructuring savings / higher utilization ra
Slide 106: Power Solutions 2010 Financial outlook - Lead Impact
Power Solutions 2010 Financial outlook Lead Impact Lead prices expected to be approximately 44% higher in 2010 vs. 2009 Lead cost pass-through will increase unit prices, lowering reported segment margin Johnson Controls 13 Pro forma impact Pro forma impact Pro forma impact Pro forma impact Pro forma
Slide 107: Building Efficiency 2010 Financial outlook
Building Efficiency 2010 Financial outlook Sales up 3% Emerging market growth, partially offset by mature market declines Strong solutions pipeline due to order deferrals Slow maturation of ARRA related orders Relatively stable service demand Second half recovery anticipated Segment margin of 5.6% -
Slide 108: Cash flow
Cash flow Cash flow deployment Reinvest in the businesses Organic growth Acquisitions Improve credit metrics Dividend payments Liquidity $2.05B revolver (expires December 2011) Liquidity cushion in excess of $2.5 billion Minimal debt maturities next year; $1 billion in FY11 Johnson Controls 15 Stron