Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q4 2017 Earnings Presentation

39 slides from Johnson Controls International's earnings presentation, Nov 9, 2017

  1. Slide 1: Quarterly Update FY17 Fourth Quarter

    Quarterly Update FY17 Fourth Quarter November 9, 2017 1 Johnson Controls plc. – November 9, 2017

  2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

    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 statemen

  3. Slide 3: Non GAAP Financial Information

    Non GAAP Financial Information This presentation contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include mark-to-market for pension and postretirement plans, transaction/integration/separation costs, restructuring and

  4. Slide 4: Agenda

    Agenda Introduction 1 Antonella Franzen, Vice President, Investor Relations Fourth Quarter Highlights 2 George Oliver, Chairman and Chief Executive Officer Business Results & Financial Review 3 Brian Stief, Executive Vice President and Chief Financial Officer 2018 Guidance 4 George Oliver, Chairman

  5. Slide 5: A Year in Review

    A Year in Review What Went Well What Needs to Improve  Significant progress related to merger  Organic growth and orders in integration Buildings - Reorganization complete  Gross margins in Buildings - Merger / Productivity cost savings  EBIT margin expansion of 90 bps  Free cash flow conversio

  6. Slide 6: What Is Changing As We Move Forward

    What Is Changing As We Move Forward  Senior leadership team fully aligned to driving execution  Compensation incentives directly linked to organic sales growth, EBIT growth, and free cash flow conversion  Increasing sales capacity and execution  Establishment of cash management office to drive f

  7. Slide 7: FY17 Fourth Quarter Earnings from Continuing Operations

    FY17 Fourth Quarter Earnings from Continuing Operations* NET SALES DILUTED EPS $8.1 B $0.87 $7.8 B +4% Reported $0.76 +14% +2% Organic FY17 Q4 FY16 Q4 COMBINED FY17 Q4 FY16 Q4 COMBINED EBIT EBIT Margin $1,131 M $1,025 M +10% Reported +80bps Reported +10% Excluding FX +110bps Excluding FX and Lead an

  8. Slide 8: FY17 Q4 Results vs. Prior Year

    FY17 Q4 Results vs. Prior Year* EPS BRIDGE $0.01 $0.02 $0.87 $0.09 $0.76 ($0.01) FY16 SYNERGIES & VOLUME/ TAX INVESTMENTS FY17 Q4 PRODUCTIVITY MIX RATE Q4 COMBINED* ACTUAL* EPS* Growth of 14% year-over-year *Non-GAAP excludes special items. 2016 results combine legacy Johnson Controls and legacy Tyc

  9. Slide 9: Integration Update

    Integration Update  Solid progress in quarter with cost synergies / productivity savings; high-end of range for the year  Expect continued benefits; incremental synergy / productivity savings of $250 million in FY18 FY17 Synergies/Productivity Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 FY17 Grow, Integrate,

  10. Slide 10: Building Technologies & Solutions Segment Structure

    Building Technologies & Solutions Segment Structure  Controls  Fire Detection Building  Security Global Solutions Products Field / Direct Channel Indirect Channel ~$15B Europe Building Management ~$8B FY17 Sales ME& HVAC/R FY17 Sales Africa Equipment Latin  Chillers America  Unitary  Hitachi 

  11. Slide 11: Building Technologies & Solutions

    Building Technologies & Solutions* Strong Margin Expansion NET SALES  Organic sales growth +1% $6.0B $6.0B  Building Solutions down 1% (1)% - North America down low-single digits - EMEA /LA up low-single digits Reported - Asia Pacific flat +1%  -Global Products +3% Building Management up low sing

  12. Slide 12: Building Technologies & Solutions Orders & Backlog

    Building Technologies & Solutions Orders & Backlog  Orders secured +2% vs prior year (ex. FX and M&A) - Building Solutions: Flat - North America down low-single digits - EMEA / LA down low-single digits - APAC up high-single digits - Global Products: +5%  Backlog $8.5B, +4% vs prior year (ex. FX a

  13. Slide 13: Power Solutions

    Power Solutions* Strong Top-line Growth NET SALES  Aftermarket shipments +8%; strong growth $2.1 B across all regions $1.8 B +18%Reported  OE shipments down 5%; in-line with lower production in US and EMEA  Global shipments of start-stop +30% +9% Organic - China +72% - Americas +64% FY17 Q4 FY16

  14. Slide 14: Corporate Expense

    Corporate Expense* CORPORATE EXPENSE  Ongoing realization of synergy and $143 M productivity savings $107 M  Full year corporate expense of $465M vs. guidance of $480M to $500M (25%) (~14% improvement vs prior year) FY17 Q4 FY16 Q4 COMBINED *Non-GAAP excludes special items. 2016 results combine le

  15. Slide 15: Free Cash Flow

    Free Cash Flow $ In billions FY17  Adjusted free cash flow of $1.1 Q4 YTD billion in the quarter Cash provided by operating activities $1.3 $ - - Inventory and accounts receivable improvement of $200 million in Q4 Capital expenditures (0.3) (1.3) Reported free cash flow 1.0 (1.3)  Capex in-line wi

  16. Slide 16: Balance Sheet

    Balance Sheet  Net debt to capital: 39.3% at 9/30/17 vs. 41.2% as of 6/30/17  Q4 debt issuances / repayments Issuances Interest Rate and Maturity ¥35 billion (~$310M) 0.40%; 5 year term €150 million (~$175M) 0.775%; 1 year term Repayments  ~$1 billion commercial paper  ~$165 million TSarl debt 

  17. Slide 17: Other Items

    Other Items  Q4 Special items - Restructuring and impairment costs - Transaction / integration costs - Unfavorable arbitration award - Pension / OPEB mark-to-market - Discrete income tax items  Buildings segment change  Evaluation of US Tax Reform 17 Johnson Controls plc. – November 9, 2017

  18. Slide 18: FY18 Guidance

    FY18 Guidance Consolidated Segment Details Sales $30.1 - $30.7B Buildings Power Flat to +2% Reported Low-single Digit Organic Growth Low-single Digits Low to Mid-single Digits Organic Growth Organic Growth EBIT Margin +10 to +30 bps down 10 to +10 bps 12.2% - 12.4% EBITA Margin Expansion EBITA Margi

  19. Slide 19: Appendix

    Appendix 19 Johnson Controls plc. – November 9, 2017

  20. Slide 20: FY17 Fourth Quarter Financial Highlights (continuing operations)

    FY17 Fourth Quarter Financial Highlights (continuing operations) COMBINED % 2017 2017 * 2016 * (in millions) GAAP NON-GAAP NON-GAAP Change Sales $8,136 $8,136 $7,848 4% Gross profit 2,513 2,453 2,490 (1%) % of sales 30.9% 30.1% 31.7% SG&A expenses 1,253 1,385 1,518 (9%) Restructuring & 141 - - impai

  21. Slide 21: FY17 Fourth Quarter Financial Highlights (continuing operations)

    FY17 Fourth Quarter Financial Highlights (continuing operations) COMBINED 2017 2017 * 2016 * (in millions, except earnings per share) GAAP NON-GAAP NON-GAAP EBIT $1,182 $1,131 $1,025 Net financing charges 120 120 114 Income before income taxes 1,062 1,011 911 Income tax provision 135 152 155 Net inc

  22. Slide 22: Special Items (continuing operations)

    Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax Income Q4 (Expense) Benefit Benefit (Expense) EPS Impact Integration Costs ($90) $16 $- ($74) ($0.08) Restructuring & Impairment Costs (141) 14 - (127) (0.14) Nonrecurring Purchase Ac

  23. Slide 23: Fourth Quarter and YTD FY17 Restructuring and Impairment Costs

    Fourth Quarter and YTD FY17 Restructuring and Impairment Costs $ In millions Business Unit Cash Non-cash Total Q4 YTD Q4 YTD Q4 YTD Building Technologies & Solutions $35 $129 $3 $52 $38 $181 Power Solutions 13 13 3 7 16 20 Corporate 85 147 2 19 87 166 Total pre-tax charge $133 $289 $8 $78 $141 $367

  24. Slide 24: 2017 Full Year Foreign Exchange Impact

    2017 Full Year Foreign Exchange Impact Q4 FX Impact Full Year FX Impact 2017 Sales $49M ($114M) 2017 EPS $0.00 ($0.03) Top Foreign Currency Exposures Q4 Fiscal Year Average Rates Average Rates EUR/USD 1.18 1.11 USD/JPY 110.91 111.26 USD/CNY 6.67 6.81 USD/CAD 1.25 1.31 GBP/USD 1.31 1.27 USD/MXN 17.81

  25. Slide 25: 2018 Full Year Foreign Exchange Impact

    2018 Full Year Foreign Exchange Impact Full Year FX Impact 2018 Sales $265M 2018 EPS $0.04 Top Foreign Currency Exposures FX Rates* EUR/USD 1.16 USD/JPY 113.37 USD/CNY 6.63 USD/CAD 1.29 GBP/USD 1.32 USD/MXN 19.20 *As of 10/31/17 25 Johnson Controls plc. – November 9, 2017

  26. Slide 26: Reorganized Segment Financial Information

    Reorganized Segment Financial Information* Q1FY17 Q2FY17 Q3FY17 Q4FY17 FY17 Building Solutions North America $ 1,942 $ 2,074 $ 2,135 $ 2,165 $ 8,316 Building Solutions EMEA / LA 878 891 889 921 3,579 Building Solutions Asia Pacific 576 562 630 677 2,445 Global Products 1,800 2,014 2,406 2,241 8,461

  27. Slide 27: johnsoncontrols.com/investors

    johnsoncontrols.com/investors @JCI_IR 27 Johnson Controls plc. – November 9, 2017

  28. Slide 28: Condensed Consolidated Statements of Income (Three Months)

    November 9, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended September 30, 2017 2016 Net sales $ 8,136 $ 6,254 Cost of sales 5,623 4,566 Gross profit 2,513 1,688 Selling, general and administrative

  29. Slide 29: Condensed Consolidated Statements of Income (Twelve Months)

    November 9, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Twelve Months Ended September 30, 2017 2016 Net sales $ 30,172 $ 20,837 Cost of sales 20,833 15,183 Gross profit 9,339 5,654 Selling, general and administra

  30. Slide 30: Condensed Consolidated Statements of Financial Position

    November 9, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) September 30, September 30, 2017 2016 ASSETS Cash and cash equivalents $ 321 $ 579 Accounts receivable - net 6,666 6,394 Inventories 3,209 2,888 Assets held for sale 1

  31. Slide 31: Condensed Consolidated Statements of Cash Flows (Three Months)

    November 9, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended September 30, 2017 2016 Operating Activities Net income (loss) attributable to JCI $ 875 $ (1,171) Income from continuing operations attributable to noncont

  32. Slide 32: Condensed Consolidated Statements of Cash Flows (Twelve Months)

    November 9, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Twelve Months Ended September 30, 2017 2016 Operating Activities Net income (loss) attributable to JCI $ 1,611 $ (868) Income from continuing operations attributable to noncon

  33. Slide 33: Footnotes: Financial Summary

    November 9, 2017 FOOTNOTES 1. Financial Summary In the first quarter of fiscal 2017, the Company began evaluating the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxe

  34. Slide 34: Footnotes: Adjusted Segment EBITA Reconciliation

    November 9, 2017 (1) The Company's press release contains financial information regarding adjusted net sales, adjusted segment EBITA and adjusted segment EBITA margins, which are non-GAAP performance measures. The Company's definition of adjusted segment EBITA excludes special items because these co

  35. Slide 35: Footnotes: Pension, Restructuring and EBIT Definitions

    November 9, 2017 (4) The three months ended September 30, 2017 pension and postretirement mark-to-market gain of $330 million and the twelve months ended September 30, 2017 pension and postretirement mark-to-market gain of $420 million are excluded from the adjusted non-GAAP results. The three and t

  36. Slide 36: Amounts Adjusted for Certain Special Items

    November 9, 2017 Amounts Adjusted for Certain Special Items The supplemental combined information includes line items, such as net sales, income from continuing operations before income taxes, income tax provision, noncontrolling interest, net income and diluted EPS, that have been adjusted for the

  37. Slide 37: Organic Adjusted Net Sales Growth Reconciliation

    November 9, 2017 3. Organic Adjusted Net Sales Growth Reconciliation The components of the changes in adjusted net sales for the three months ended September 30, 2017 versus the three months ended September 30, 2016, including organic net sales, is shown below (unaudited): Combined Adjusted Net Sale

  38. Slide 38: Diluted Earnings Per Share Reconciliation

    November 9, 2017 5. Diluted Earnings Per Share Reconciliation The Company's press release contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include transaction/integration/separation costs, nonrecurring purchase account

  39. Slide 39: Mark-to-Market of Pension Plans; Acquisitions and Divestitures

    November 9, 2017 6. Mark-to-Market of Pension and Postretirement Plans The pension and postretirement mark-to-market gain or loss for each period is excluded from adjusted diluted earnings per share. The three and twelve months ended September 30, 2017 include a mark-to-market gain for pension and p

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