33 slides from Johnson Controls International's earnings presentation, Jul 31, 2019
Slide 1: Fiscal 2019 Third Quarter Results
Fiscal 2019 Third Quarter Results July 31, 2019
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
Slide 3: Q3 Strategic Highlights
Q3 Strategic Highlights Continued top-line momentum across the businesses Driving underlying fundamentals Investing for growth across the portfolio Portfolio transformation ‒ Closed sale of Power Solutions ‒ Non-core business held for sale Successfully completed debt and equity tenders 3 J
Slide 4: Order Pipeline Remains Strong… Backlog Up 7% to $9.0B
Buildings Field Order Growth Organic Field Orders 9% 8% 7% 7% 6% 5% 2% 0% 0% Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Order Pipeline Remains Strong… Backlog Up 7% to $9.0B – Provides Visibility In Q4 and Into FY20 4 Johnson Controls International plc — July 31, 2019
Slide 5: Q3 FY19 Financial Summary (continuing operations)
Q3 FY19 Financial Summary* (continuing operations) ADJUSTED NET SALES ADJUSTED EPS $6,451M $0.65 $6,282M +3% $0.54 Reported +20% +6% Reported Organic Q3 FY18 Q3 FY19 Q3 FY18 Q3 FY19 ADJUSTED EBIT & MARGIN ADJUSTED FCF $809M $753M 50bps $0.6B $0.6B Reported $0.5B 12.5% $0.5B 12.0% 60bps Org
Slide 6: Q3 FY19 Results vs. Prior Year: EPS Bridge
Q3 FY19 Results vs. Prior Year* (continuing operations) EPS BRIDGE $0.05 $0.03 $0.65 $0.05 $0.54 ($0.02) FX ($0.02) Tax ($0.01) NCI ($0.01) NFC $0.03 Shares $0.04 Q3 FY18 VOLUME/ SYNERGIES & INVESTMENTS/ OTHER Q3 FY19 ACTUAL MIX PRODUCTIVITY SALESFORCE ACTUAL ADDITIONS *Non-GAAP excludes special ite
Slide 7: Buildings
Buildings* Sales Segment EBITA EBITA Margin +6% +7% +20bps Organic Organic Organic 15.4% $6,451M $992M 15.2% $6,282M $954M Q3 FY18 Q3 FY19 Q3 FY18 Q3 FY19 Q3 FY18 Q3 FY19 EBITA Margin +50bps 15.4% 15.2% +10bps (20bps) (20bps) Q3 FY18 Volume / Mix Synergies / Investments / Pension / Other Q3 FY19 Pro
Slide 8: Segment Results: Building Solutions North America
Segment Results: Building Solutions North America* Sales Organic sales up 4% +4% - Install up 4% / Service up 3% Organic $2,327M - HVAC & Controls up high-single digits $2,246M - Fire & Security up low-single digits - Performance Solutions down high-single digits Q3 FY18 Q3 FY19 EBITA margin dow
Slide 9: Segment Results: Building Solutions EMEA/LA
Segment Results: Building Solutions EMEA/LA* Sales Organic sales up 6% - Install up 10% / Service up 2% +6% Organic - Europe – up high-single digits with solid $926M $922M growth across HVAC, Fire & Security and Industrial Refrigeration - Middle East & Africa – down mid-single digits driven by wea
Slide 10: Segment Results: Building Solutions Asia Pacific
Segment Results: Building Solutions Asia Pacific* Sales Organic sales up 6% +6% Organic - Install up 9% / Service up 1% $691M - Strong growth in HVAC and Building $681M Management Systems - China up mid-single digits Q3 FY18 Q3 FY19 EBITA margin flat - Favorable volume leverage Segment EBITA - U
Slide 11: Segment Results: Building Solutions Global Products
Segment Results: Building Solutions Global Products* Sales Organic sales up 7% - Building Management Systems up low- +7% $2,511M Organic double digits with strength across all $2,429M businesses - HVAC & Refrigeration Equipment up mid- single digits • Global Resi HVAC up mid-single digits; NA Resi
Slide 12: Corporate Expense (continuing operations)
Corporate Expense* (continuing operations) Ongoing realization of cost synergies and 13% productivity savings ($ in millions) Cost reductions related to Power Solutions sale Expect Corporate expense for FY19 to be in the range of $370M to $380M $103M $90M Q3 FY18 Q3 FY19 *Non-GAAP excludes s
Slide 13: Free Cash Flow (continuing operations)
Free Cash Flow* (continuing operations) Q3 Q3 YTD YTD Q3 adjusted free cash flow from (in $ billions) FY18 FY19 FY18 FY19 continuing operations of $0.6 billion Cash provided by operating activities $0.6 $0.6 $0.7 $0.7 YTD adjusted free cash flow $0.6 billion, Capital expenditures (0.2) (0.1) (0.
Slide 14: Balance Sheet
Balance Sheet Capital Structure Q2 FY19 Q3 FY19 Short-term debt and $3,968 $521 current portion of long-term debt Long-term debt 8,418 6,804 Total debt 12,386 7,325 Less: cash and cash 239 3,685 equivalents Net debt $12,147 $3,640 Share repurchases ~$533M ~$4,122M* *Includes equity tender of 102.4M
Slide 15: Significant Debt Pay Down
Significant Debt Pay Down Debt Pay Framework Down $3.4B PS Net Proceeds $11.6B Share Repurchase $8.2B $12.4B $0.3B $1.5B $10.9B ($1.5B) ($1.9B) $7.3B ($0.75B) ($1.25B) $3.4B Power Proceeds $3.6B $3.7B Gross Debt 1H FY19 Gross Debt Short-Term Bond Short-Term Term Loan TSarl Debt Gross Debt Ending Net
Slide 16: Deployment of Power Solutions Proceeds – Share Repurchase
Deployment of Power Solutions Proceeds – Share Repurchase Debt Pay Framework Down $3.4B PS Net Proceeds $11.6B June FY19 Share Repurchase $8.2B May FY19 June FY19 July FY19 Sept. FY20 $8.2B $4.0B tender Current ~$3.1B open market repurchase (OMR) ~102M shares ~$100M OMR ~2M shares $4.1B of the $11.6
Slide 17: Other Items: Significant Q3 Special Items
Other Items Significant Q3 Special Items Continuing Operations Cash Impact Tax indemnification reserve release - $226M Non-cash Non-core business divestiture impairment charge - ($235M) Non-cash Environmental reserve - ($140M) Cash - funded multi-year Discrete tax charges - ($226M) Substanti
Slide 18: Fiscal 2019 Continuing Operations Guidance
Fiscal 2019 Continuing Operations Guidance* FY19 EPS WALK $0.12 $0.09 $1.93 to $0.19 $1.95 ($0.07) $0.20 ($0.05) ($0.13) $1.59 Pension ($0.02) Tax ($0.04) NCI ($0.03) Other ($0.04) FY18 VOLUME/ SYNERGIES/ NET SHARE INVESTMENTS/ FX OTHER FY19 CONTINUING MIX PRODUCTIVITY FINANCING REPURCHASES SALESFOR
Slide 19: FY19 Guidance Update
FY19 Guidance Update* Guidance (May) Guidance (July) Sales $23.8B to $24.2B ~$24.2B +2% to +4% Reported ~+3% Buildings Organic Growth Organic Growth 4% to 6% 5% to 6% EBITA Margin EBITA Margin +40 to +60bps ~30bps EBIT Margin 10.3% - 10.5% ~10.3% Expansion +50 to +70bps ~+50bps Other Corporate Expen
Slide 20: Appendix: Supplemental Information
Appendix: Supplemental Information If you can read this Click If you can read this Click on the icon to choose a on the icon to choose a picture or picture or Reset the slide. Reset the slide. To Reset: Right click on the slide To Reset: Right click on the slide thumbnail and select ‘reset slide’ or
Slide 21: FY19 Third Quarter Financial Results (continuing operations)
FY19 Third Quarter Financial Results (continuing operations) ($ in millions, except earnings per share) Q3 FY18 Q3 FY19 Q3 FY18* Q3 FY19* % Change GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $6,282 $6,451 $6,282 $6,451 3% Gross profit 2,088 2,144 2,088 2,144 3% % of sales 33.2% 33.2% 33.2% 33.2% SG&A
Slide 22: Special Items (continuing operations)
Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax Income Q3 FY19 (Expense) Benefit Income (Expense) EPS Impact Transaction costs $(3) $- $- $(3) $ (0.00) Integration costs (83) 9 - (74) (0.08) Net mark-to-market adjustments 9 (2) - 7
Slide 23: Recasted Financial Information (continuing operations)
Recasted Financial Information* (continuing operations) Q1FY18 Organic Q2FY18 Organic Q3FY18 Organic Q4FY18 Organic FY18 Organic BT&S - North America 2,012 3.1% 2,097 0.6% 2,246 4.8% 2,324 7.7% 8,679 4.1% BT&S - EMEA/LA 915 4.0% 907 -3.3% 926 0.4% 948 5.7% 3,696 1.8% BT&S - APAC 597 2.5% 586 -1.6% 6
Slide 24: johnsoncontrols.com/investors
johnsoncontrols.com/investors @JCI_IR If you can read this Click If you can read this Click on the icon to choose a 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’
Slide 25: Condensed Consolidated Statements of Income – Three Months Ended June 30
JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended June 30, 2019 2018 Net sales $ 6,451 $ 6,282 Cost of sales 4,307 4,194 Gross profit 2,144 2,088 Selling, general and administrative expenses (1,388) (1,44
Slide 26: Condensed Consolidated Statements of Income – Nine Months Ended June 30
JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Nine Months Ended June 30, 2019 2018 Net sales $ 17,694 $ 17,217 Cost of sales 11,981 11,607 Gross profit 5,713 5,610 Selling, general and administrative expenses (4,284) (4
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, 2019 2018 ASSETS Cash and cash equivalents $ 3,685 $ 185 Accounts receivable - net 6,033 5,622 Inventories 2,050 1,819 Assets held for sale 95 3,015 Other curren
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, 2019 2018 Operating Activities Net income attributable to JCI from continuing operations $ 141 $ 474 Income from continuing operations attributable to noncontrollin
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, 2019 2018 Operating Activities Net income attributable to JCI from continuing operations $ 488 $ 583 Income from continuing operations attributable to noncontrolling
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
Slide 31: Footnotes: Adjusted Corporate Expenses
(2) Adjusted Corporate expenses for the three months ended June 30, 2019 excludes $226 million of income as a result of a tax indemnification reserve release, partially offset by $63 million of integration costs and $3 million of transaction costs. Adjusted Corporate expenses for the nine months end
Slide 32: Reconciliation of Basic and Diluted Share Counts
The following table reconciles the denominators used to calculate basic and diluted earnings per share for JCI plc (in millions; unaudited): Three Months Ended Nine Months Ended June 30, June 30, 2019 2018 2019 2018 Weighted average shares outstanding for JCI plc Basic weighted average shares outsta
Slide 33: Changes in Segment EBITA and EBIT, Nine Months
The components of the changes in segment EBITA and EBIT for the nine months ended June 30, 2019 versus the nine months ended June 30, 2018, including organic growth, is shown below (unaudited): Adjusted Segment Adjusted Segment Adjusted Base Segment EBITA / EBIT for EBITA / EBIT for the Base Year Ad