Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q1 FY2019 Earnings Presentation

31 slides from Johnson Controls International's earnings presentation, Feb 1, 2019

  1. Slide 1: Fiscal 2019 First Quarter Results

    Fiscal 2019 First Quarter Results February 1, 2019

  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: As We Look Ahead: Continuing To Execute On Our Commitments

    As We Look Ahead Continuing To Execute On Our Commitments  Continued momentum in FY19 across all key metrics  Focused on execution  Seeing top and bottom line growth from the significant investments we have made  Improving returns in addition to top-line growth  As a pure-play buildings technol

  4. Slide 4: Backlog Up 7% to $8.5B – Provides Visibility Through FY19

    Buildings Field Order Growth Organic Field Orders 9% 8% 7% 7% 5% 3% 3% 0% 0% Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Backlog Up 7% to $8.5B – Provides Visibility Through FY19 4 Johnson Controls International plc — February 1, 2019

  5. Slide 5: Q1 FY19 Financial Summary

    Q1 FY19 Financial Summary* (continuing operations) ADJUSTED NET SALES ADJUSTED EPS $0.26 $5,464M $5,305M  +3% Reported $0.21  +24%  +6% Reported Organic Q1 FY18 Q1 FY19 Q1 FY18 Q1 FY19 ADJUSTED EBIT & MARGIN ADJUSTED FCF $400M $362M  50bps Reported Normal Q1 seasonal 7.3%  60bps outflow 6.8% Or

  6. Slide 6: Q1 FY19 Results vs. Prior Year: EPS Bridge

    Q1 FY19 Results vs. Prior Year* (continuing operations) EPS BRIDGE $0.04 $0.26 $0.04 ($0.02) $0.21 ($0.01) Pension/ ($0.01) Amort FX ($0.01) NFC $0.02 Tax ($0.01) Q1 FY18 SYNERGIES & VOLUME/ INVESTMENTS/ OTHER Q1 FY19 ACTUAL PRODUCTIVITY MIX SALESFORCE ACTUAL ADDITIONS *Non-GAAP excludes special ite

  7. Slide 7: Buildings

    Buildings* Sales Segment EBITA EBITA Margin +6% +9% +30 Organic Organic bps $5,464M $590M 10.8% $5,305M 10.5% $559M Q1 FY18 Q1 FY19 Q1 FY18 Q1 FY19 Q1 FY18 Q1 FY19 EBITA Margin +40bps +50bps 10.8% 10.5% 10.4% (30bps) (20bps) (10bps) Q1 FY18 FX Normalized Synergies / Volume/Mix Investments / Pension

  8. Slide 8: Segment Results: Building Solutions North America

    Segment Results: Building Solutions North America* Sales  Organic sales up 6% +6% - Install up 6% / Service up 5% Organic $2,116M - HVAC & Controls up mid-single digits $2,012M - Fire & Security up mid-single digits - Solutions up strong double digits Q1 FY18 Q1 FY19  EBITA margin up 30bps - Favor

  9. Slide 9: Segment Results: Building Solutions EMEA/LA

    Segment Results: Building Solutions EMEA/LA* Sales  Organic sales up 4% - Install down 3% / Service up 10% +4% Organic - Europe – up mid-single digits with solid $915M growth across HVAC, Fire & Security and $907M Industrial Refrigeration - Middle East & Africa – down low-double digits driven by HV

  10. Slide 10: Segment Results: Building Solutions Asia Pacific

    Segment Results: Building Solutions Asia Pacific* Sales  Organic sales up 6% +6% $613M Organic - Install up 8% - Service up 3% $597M  EBITA margin down 160bps - Favorable volume Q1 FY18 Q1 FY19 - Unfavorable mix - Run-rate salesforce additions Segment EBITA - Expected underlying margin pressure $7

  11. 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% Organic double-digits with strength across all $1,828M businesses $1,781M - HVAC & Refrigeration Equipment up high- single digits • Residential up mid-single digits; NA Resi up h

  12. Slide 12: Corporate Expense (continuing operations)

    Corporate Expense* (continuing operations)   Ongoing realization of cost synergies and 11% productivity savings ($ in millions)  Expect Corporate expense for FY19 to be in the range of $380M to $395M $105 $93 Q1 FY18 Q1 FY19 *Non-GAAP excludes special items. See footnotes for reconciliation. 12 J

  13. Slide 13: Free Cash Flow (continuing operations)

    Free Cash Flow* (continuing operations) (in $ billions) Q1 FY18 Q1 FY19  Q1 adjusted free cash outflow from continuing operations of $0.2 billion Cash used by $(0.1) $(0.1) operating activities  Expect FY19 adjusted free cash flow Capital expenditures (0.1) (0.2) conversion of ~95% Reported free c

  14. Slide 14: Balance Sheet

    Balance Sheet Capital Structure Q4 FY18 Q1 FY19 Short-term debt and $1,307 $2,320 current portion of long-term debt Long-term debt 9,623 9,588 Total debt 10,930 11,908 Less: cash and cash 185 292 equivalents Net debt $10,745 $11,616 Net debt/cap ratio* 33.7% 36.6% Share repurchases ~$45M ~$465M * In

  15. Slide 15: Other Items: Effective Tax Rate / Disc Ops Reporting / Guidance

    Other Items Effective Tax Rate / Disc Ops Reporting / Guidance  Based on additional tax planning, expect effective tax rate for continuing operations to be 13.5% for fiscal 2019  Results of Power Solutions are reported as discontinued operations - Historical financial information has been revised

  16. Slide 16: Fiscal 2019 Continuing Operations Guidance: EPS Walk

    Fiscal 2019 Continuing Operations Guidance* (Includes Use of Proceeds with June 30, 2019 Power Solutions Close) FY19 EPS WALK $0.05 $0.19 $1.75 to $0.20 ($0.07) $1.85 ($0.06) ($0.10) $1.59 Pension ($0.02) Amort ($0.02) Tax ($0.03) Other ($0.03) FY18 VOLUME/ SYNERGIES / Q4 BENEFIT OF INVESTMENTS/ FX

  17. Slide 17: Fiscal 2019 Continuing Operations Guidance

    Fiscal 2019 Continuing Operations Guidance* (Includes Use of Proceeds with June 30, 2019 Power Solutions Close) Consolidated Adjusted Free Cash Flow Conversion Sales ~95% $23.8 - $24.2B +2% to +4% reported Buildings Sales & EBITA Margin Mid-single Digit Organic Growth Up 4% - 6% organic Sales Headwi

  18. Slide 18: FY20 EPS Framework

    FY20 EPS Framework* (continuing operations) $2.25 to $2.45 $0.50 to $0.60 Operational Growth & $1.75 to $1.85 Capital Deployment Interest savings from debt pay-down in Q4 Lower share count Reduced Corporate costs FY19 FY20 BENEFIT FY20 BEFORE FY20 GUIDANCE OF POWER SALE OPERATIONAL FRAMEWORK PROCEED

  19. Slide 19: 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

  20. Slide 20: 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

  21. Slide 21: FY19 First Quarter Financial Results (continuing operations)

    FY19 First Quarter Financial Results (continuing operations) ($ in millions, except earnings per share) Q1 FY18 Q1 FY19 Q1 FY18* Q1 FY19* % Change GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $5,305 $5,464 $5,305 $5,464 3% Gross profit 1,698 1,725 1,698 1,725 2% % of sales 32.0% 31.6% 32.0% 31.6% SG&A

  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 Q1 FY19 (Expense) Benefit Income (Expense) EPS Impact Transaction costs $(2) $- $- $(2) $- Integration costs (48) 6 - (42) (0.05) Net mark-to-market adjustments (21) 5 - (16) (

  23. Slide 23: First Quarter Restructuring and Impairment Costs

    First Quarter Restructuring and Impairment Costs (continuing operations) $ In millions Business Unit Cash Non-cash Total Q1 FY18 Q1FY19 Q1 FY18 Q1 FY19 Q1 FY18 Q1 FY19 Buildings $107 $- $23 $- $130 $- Corporate 19 - 5 - 24 - Total pre-tax charge $126 $- $28 $- $154 $- Tax benefit (23) - Total after-

  24. 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’

  25. Slide 25: Condensed Consolidated Statements of Income

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended December 31, 2018 2017 Net sales $ 5,464 $ 5,305 Cost of sales 3,739 3,607 Gross profit 1,725 1,698 Selling, general and administrative expenses (1,438) (

  26. Slide 26: Condensed Consolidated Statements of Financial Position

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) December 31, September 30, 2018 2018 ASSETS Cash and cash equivalents $ 292 $ 185 Accounts receivable - net 5,442 5,622 Inventories 2,027 1,819 Assets held for sale 3,042 3,015 Other c

  27. Slide 27: Condensed Consolidated Statements of Cash Flows

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended December 31, 2018 2017 Operating Activities Net income (loss) attributable to JCI from continuing operations $ 107 $ (75) Income from continuing operations attributable to n

  28. Slide 28: 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

  29. Slide 29: Footnotes: Diluted Earnings Per Share Reconciliation

    (6) Adjusted income tax provision for the three months ended December 31, 2018 excludes the tax provision for valuation allowance adjustments of $76 million as a result of changes in U.S. tax law, partially offset by the tax benefits for integration costs of $6 million and net mark-to-market adjustm

  30. Slide 30: Organic Growth Reconciliation

    3. Organic Growth Reconciliation The components of the changes in net sales for the three months ended December 31, 2018 versus the three months ended December 31, 2017, including organic growth, is shown below (unaudited): Adjusted Base Net Net Sales for the Three Base Year Adjustments - Sales for

  31. Slide 31: Net Debt to Capitalization

    5. Net Debt to Capitalization The Company provides financial information regarding net debt as a percentage of total capitalization, which is a non-GAAP performance measure. The Company believes the percentage of total net debt to total capitalization is useful to understanding the Company's financi

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