Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q3 2020 Earnings Presentation

35 slides from Johnson Controls International's earnings presentation, Jul 31, 2020

  1. Slide 1: Fiscal 2020 Third Quarter Results

    Fiscal 2020 If you can read this Click If you can read this Click Third 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 To

  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: Strong Execution In An Unprecedented Time

    Strong Execution In An Unprecedented Time  Our employees and customers continue to remain our top priorities  Playing offense with reinvestment and innovation  Sales and order trends improving sequentially  Accelerating structural cost actions  Strong cash flow conversion  Share repurchase pro

  4. Slide 4: This is how value…keeps building.

    Blueprint of the Future for smart, sustainable buildings OpenBlue is an open system which features advanced technologies such as Artificial Intelligence (AI) and Digital Twin, JCI proprietary technology and an ecosystem of leading technology companies Includes service solutions such as remote diagno

  5. Slide 5: Platform

    Platform Intelligent Occupancy Health & Intelligent Smart Visitor Smart Cyber Converged Asset Third-party Customer Sustainability Workplace Management Wellness Security Meeting Mgmt Parking Security Management Applications Applications Rooms Experience Enablers Digital Twin Digital Twins (Locations,

  6. Slide 6: The Power of OpenBlue

    The Power of OpenBlue A Combination of Products, Applications, Technology & Services Serving a large customer base  2 million contract customers across all domains in HVAC, Fire & Security  16,000 field technicians globally  $6.3 billion in service revenues Our advantage  Fast response (evidence

  7. Slide 7: Trailing 3-month Field Orders Have Bottomed…Sequentially Improving

    Trailing 3-month Field Orders* Have Bottomed…Sequentially Improving 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0%  Forward order “pipeline” has pushed to the right, as anticipated  Backlog of $9.1B +3% YoY organic; +1% sequential *Excludes Global Products equipment distribution orders 7 Johnson

  8. Slide 8: Significant Mitigating Actions Executed…Benefiting Current & Future Cost Structure

    Significant Mitigating Actions Executed… FY20 Benefit Permanent Actions ~$100M $240-260M Tailwind in FY21 Temporary Actions: Compensation ~$245M $210-220M Headwind in FY21 Indirect Spend ~$125M $50-$100M of costs Facility Costs ~$30M return; timing dependent on top-line growth Total ~$500M …Benefiti

  9. Slide 9: Q3 FY20 Financial Summary (continuing operations)

    Q3 FY20 Financial Summary* (continuing operations) NET SALES EPS $6,451M $0.67  (17%) $0.65 $5,343M Reported  +3% (16%)  Reported Organic Q3 FY19 Q3 FY20 Q3 FY19 Q3 FY20 EBIT & MARGIN FCF $0.8B $0.9B $809M $0.6B $0.6B  $707M (13%) Reported 13.2% ($0.2B) 12.5%  (11%) Organic Q3 FY19 Q3 FY20 Q3 F

  10. Slide 10: Q3 FY20 EPS Bridge (continuing operations)

    Q3 FY20 EPS Bridge* (continuing operations) $0.65 $0.10 $0.01 $0.67 $0.03 $0.04 ($0.16) Volume - Mix + Price/cost + Actions + Q3 FY19 OPERATIONS, NET SYNERGIES / NCI SHARE OTHER Q3 FY20 ACTUAL OF MITIGATING PRODUCTIVITY COUNT ACTUAL ACTIONS *Non-GAAP EPS from continuing operations, excluding special

  11. Slide 11: Q3 FY20 Segment EBITA Margin Bridge

    Q3 FY20 Segment EBITA Margin Bridge* +50bps Organic 15.9% +50bps 15.4% +10bps (10bps) Q3 FY19 Operations, Net of Mitigating Synergies / Productivity Other Q3 FY20 Actions  Broad based volume declines related to COVID-19; price and mix positive  Gross margin +150bps vs. prior year; disciplined pric

  12. Slide 12: Segment Results

    Segment Results* Sales EBITA Margin Comments Organic % yoy Change yoy ($M)  Service (7%) / Install (16%) North America $2,020 15.4%  Significant cost actions; gross margin improving (13%) +210bps  Orders (16%); Backlog $5.8B, +2%  Service (6%) / Install (24%) EMEALA $756 8.2%  Region recovering

  13. Slide 13: Corporate Expense (continuing operations)

    Corporate Expense* (continuing operations) 250  Mitigating cost actions 400 $376  Realization of cost synergies and productivity 200 350 $300- savings 330  Ongoing cost reductions 150 300 related to Power Solutions $260- 270 sale $104 100 $93 $90 $89 $81 $82 FY21 Preliminary Corporate $48 $50-60

  14. Slide 14: Balance Sheet

    Balance Sheet Capital Structure Q2 FY20 Q3 FY20 Short-term debt and $1,430 $2,423 current portion of long-term debt Long-term debt 5,640 5,671 Total debt 7,070 8,094 Less: cash and cash 1,006 2,342 equivalents Net debt* $6,064 $5,752 Net debt / EBITDA* 1.8x 1.8x  Share repurchase program resumed Ju

  15. Slide 15: Free Cash Flow (continuing operations)

    Free Cash Flow* (continuing operations) Q3 Q3 YTD YTD  Q3 adjusted FCF from continuing (in $ billions) FY19 FY20 FY19 FY20 operations of ~$800 million Cash provided by operating activities $0.6 $0.8 $0.7 $1.5  YTD adjusted FCF of ~$900 million Capital expenditures (0.1) (0.1) (0.4) (0.3)  FY20 ad

  16. Slide 16: Other Items: Significant Q3 Special Items

    Other Items Significant Q3 Special Items Expected Impact Cash Non-Cash  Restructuring and impairment charges – $186M $144M $42M  Goodwill impairment charge (Retail) – $424M $ - $424M  Net mark-to-market adjustments – $132M $ - $132M 16 Johnson Controls International plc — July 31, 2020

  17. Slide 17: Q4 Guidance

    Q4 Guidance* Q4FY20 Sequential EPS* Bridge Organic Revenue Decline (9% – 11%) $0.12 Net EBIT Decrementals (low-teens) $0.02 $0.01 $0.70 (including synergies $0.67 & productivity) ($0.11) ($0.01) Weighted-Average Shares ~737M EPS* $0.68 - $0.72 Q3 FY20 REVENUE MITIGATING NFC NCI SHARE Q4 FY20 ACTUAL

  18. Slide 18: Appendix: Supplemental Information

    Appendix: Supplemental Information Click to edit text

  19. Slide 19: Q3 Segment End Market Performance

    Q3 Segment End Market Performance* Field North America EMEALA APAC Organic Revenue (13%) (15%) (12%) Service (7%) (6%) (6%) Install (16%) (24%) (16%) HVAC & Controls (HSD) (MT) (MSD) Fire & Security (HT); (MT ex. Retail) (HT); (LT ex. Retail) (Low-30s) Performance Contracting +MSD - - Industrial Ref

  20. Slide 20: 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 ▪

  21. Slide 21: 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

  22. Slide 22: FY20 Third Quarter Financial Results (continuing operations)

    FY20 Third Quarter Financial Results (continuing operations) ($ in millions, except earnings per share) Q3 FY19 Q3 FY20 Q3 FY19* Q3 FY20* % Change GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $6,451 $5,343 $6,451 $5,343 (17%) Gross profit 2,144 1,832 2,144 1,853 (14%) % of sales 33.2% 34.3% 33.2% 34.7

  23. Slide 23: FY20 Third Quarter Special Items (continuing operations)

    FY20 Third Quarter Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax/NCI Q3 FY20 (Expense) Benefit Income Income (Expense) EPS Impact Integration costs $(30) $4 $- $(26) $(0.03) Net mark-to-market adjustments (132) 34 - (98) (0.13) R

  24. Slide 24: johnsoncontrols.com/investors

    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’

  25. Slide 25: 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 June 30, 2020 2019 Net sales $ 5,343 $ 6,451 Cost of sales 3,511 4,307 Gross profit 1,832 2,144 Selling, general and administrative expenses (1,334) (1,38

  26. Slide 26: Condensed Consolidated Statements of Income - Nine Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Nine Months Ended June 30, 2020 2019 Net sales $ 16,363 $ 17,694 Cost of sales 10,927 11,981 Gross profit 5,436 5,713 Selling, general and administrative expenses (4,212) (4

  27. Slide 27: Condensed Consolidated Statements of Financial Position

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) June 30, September 30, 2020 2019 ASSETS Cash and cash equivalents $ 2,342 $ 2,805 Accounts receivable - net 5,344 5,770 Inventories 1,996 1,814 Assets held for sale 89 98 Other current

  28. Slide 28: Condensed Consolidated Statements of Cash Flows - Three Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended June 30, 2020 2019 Operating Activities Net income (loss) attributable to JCI from continuing operations $ (182) $ 141 Income from continuing operations attributable to nonc

  29. Slide 29: Condensed Consolidated Statements of Cash Flows - Nine Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Nine Months Ended June 30, 2020 2019 Operating Activities Net income attributable to JCI from continuing operations $ 190 $ 488 Income from continuing operations attributable to noncontrolling

  30. Slide 30: 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

  31. Slide 31: Nine Months Segment EBITA Reconciliation

    The following is the nine months ended June 30, 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

  32. Slide 32: Diluted Earnings Per Share Reconciliation

    2. 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 costs, net mark-to-market adjustments, restructuring and impairm

  33. Slide 33: Forward-Looking Non-GAAP Measures

    The Company has presented forward-looking statements regarding adjusted EPS, organic revenue decline, net EBIT decrementals, adjusted corporate expense and adjusted free cash flow conversion, which are non-GAAP financial measures. These non-GAAP financial measures are derived by excluding certain am

  34. Slide 34: Changes in Segment EBITA and EBIT for Nine Months

    The components of the changes in segment EBITA and EBIT for the nine months ended June 30, 2020 versus the nine months ended June 30, 2019, including organic growth, is shown below (unaudited): Adjusted Segment Adjusted Base Segment Adjusted Segment EBITA / EBIT for the EBITA / EBIT for the EBITA /

  35. Slide 35: 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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