23 slides from Johnson Controls International's earnings presentation, Apr 20, 2005
Slide 1: Second Quarter 2005 Conference Call
Exhibit 99.2 Second Quarter 2005 Conference Call April 19, 2005 Safe Harbor statement: Johnson Controls has made forward-looking statements in this document pertaining to its financial results for fiscal 2005 that are based on preliminary data and are subject to risks and uncertainties. Forward-look
Slide 2: Agenda
Overview John Barth - Chairman and CEO Business Results Denise Zutz - VP Strategy, Investor Relations and Communication Financial Review Steve Roell - Executive VP and CFO Q&A Agenda
Slide 3: Second Quarter 2005
Second Quarter 2005 Record quarter for sales and earnings Consistent with March 8, 2005 guidance Growth in both businesses New interiors launches and higher battery shipments Higher controls revenues Record operating income Higher volume Improved cost structure (including prior restructuring benefit
Slide 4: Business Environment / JCI Strategies
Business Environment / JCI Strategies Lower pricing - higher commodity costs - vehicle production uncertainty Automotive Controls Domestic construction market improving - higher energy costs a positive Branch office redesign producing anticipated results Technical services growing with added mechani
Slide 5: Continued Focus on Profitable Growth
Continued Focus on Profitable Growth Significant growth opportunities remain in each business Customer focus enables us to continuously find new ways to add value: Innovation, technology, systems integration, expanded markets Financial strength to continue making significant investments in all busin
Slide 6: Results
Second Quarter 2005 Results Sales up 13% to $7.1 billion Strong growth in both businesses Presentation on GAAP and non-GAAP basis GAAP Income from continuing operations of $54 million, or $0.28/share Net income, including discontinued operations, of $203 million or $1.04/share Non-GAAP Before specia
Slide 7: Automotive Group Sales
Second Quarter 2005 Automotive Group Sales North America Interiors sales up 6% Industry production down 4% Positive comparisons with Chrysler, GM, Nissan, Toyota Negative comparison at Ford Incremental backlog + mix, net of pricing = 10% Battery sales up 39% Most of increase due to consolidation of
Slide 8: Key Platforms
Second Quarter: Key Platforms North America Europe North America Europe Positives Negatives GM Uplander/Montana/Terraza/Relay, LaCrosse Ford F-Series DCX 300/Magnum, Grand Cherokee Toyota Camry, Corolla, Matrix, Lexus RX330 Nissan Pathfinder, Altima VW Jetta GM TrailBlazer/Envoy, Grand Prix, Rendezv
Slide 9: Automotive Group Operating Income (Non-GAAP)
Second Quarter 2005 Automotive Group Operating Income (Non-GAAP*) 2005 2004 Change $219 $199 +10% North America Interiors margin decrease Price reductions Higher commodity costs .....More than offsetting lower engineering and launch costs Battery slight margin increase Increased quality, cost reduct
Slide 10: Controls Group Sales
Second Quarter 2005 Controls Group Sales 2005 2004 Change Change ex FX $1.4 $1.3 +9% +6% (Continuing operations, in billions) North America Sales up 10% -Construction up 15 - 20% -Systems renovation up 15 - 20% -Technical services up 10 -15% -Facility management up 0 - 5% Europe Sales up 8% (3% ex F
Slide 11: Controls Group Operating Income (Non-GAAP)
Second Quarter 2005 Controls Group Operating Income (Non-GAAP*) 2005 2004 Change $51 $43 +18% North America Margin higher Strong growth in systems and services; lesser growth in lower margin facility management Benefit of changes to improve operational and process efficiencies within branch network
Slide 12: Controls Group Backlog
Controls Group Backlog (at March 31) 2005 2004 Change $2.0B $1.8B +7% Orders North America orders up 11% Strength in healthcare, industrial and office sectors for construction Growth in systems renovation in education and industrial sectors Double-digit increase in technical services Europe orders u
Slide 13: Financial Highlights (GAAP)
Second Quarter 2005 Financial Highlights (GAAP) (in millions) Segments Automotive Group $159 m Controls Group $ 51 m Financial Impact Payback through the end of calendar 2006 Benefits offsetting commodity cost increases for the balance of 2005 2005 Restructuring Actions Workforce reduction Plant con
Slide 14: Second Quarter Special Items
Gain on Sale of Discontinued Operations Tax Benefit Related to Taxable Gain Restructuring Taxable gain on sale of discontinued operations allows the company to recognize capital losses ... which results in a tax benefit in continuing operations Majority of restructuring does not create a tax benefit
Slide 15: Financial Highlights (GAAP): Q2 2005 tax rate
Second Quarter 2005 Financial Highlights (GAAP) (in millions) Q2 2005 tax rate Pre-tax Income Related Taxes GAAP income from continuing operations before income taxes and minority interests $34 $32 Deduct tax benefit associated with a European capital loss transaction - - (69) Add restructuring expe
Slide 16: Financial Highlights (Non-GAAP)
Second Quarter 2005 Financial Highlights (Non-GAAP*) (in millions) *see GAAP reconciliation in appendix
Slide 17: Financial Highlights (Non-GAAP)
Second Quarter 2005 Financial Highlights (Non-GAAP*) (in millions) Equity income: Automotive results in China lower Miscellaneous - net: Foreign currency losses vs gains last year Tax rate: Lower base rate in 2005 Minority interests: Lower results from automotive JVs in NA *see GAAP reconciliation i
Slide 18: Cash Flow
Second Quarter 2005 Cash Flow ($ in millions) Adjusted free cash flow* of $179 million vs $82 million in the prior year period Quarter-ended March 31, 2005 (*Adjusted income from continuing operations, plus depreciation/amortization, less capital expenditures) Includes the impact of reduced factorin
Slide 19: 2005 Full-Year Estimates (Non-GAAP)
2005 Full-Year Estimates (Non-GAAP*) Sales +8 - 10% +10 - 12% Op. margin Old Automotive +8 - 10% +10 - 12% Controls +8 - 10% +10 - 12% Op. Income +10 - 12% Unchanged Income from Up more than Unchanged Cont. Ops. Operating income Automotive Slight improvement Flat Controls Moderate decline Flat Key F
Slide 20: 2005 Achievements
2005 Achievements Organic growth in all businesses Intensified focus on cost and quality Process improvement across all functions Benefits of diversification Strengthened financial position Sustain leadership and #1 global market positions
Slide 21: Appendix
Appendix
Slide 22: GAAP Reconciliations
Second Quarter 2005 GAAP Reconciliations * In billions ** Actual 2004 and 2005 results in millions * ** ** **
Slide 23: GAAP Segment Information
Second Quarter 2005 GAAP Segment Information (1) Automotive Group operating income excludes $158.7 and $69.1 million of restructuring costs for the three and six months ended March 31, 2005 and 2004, respectively. In addition, the three and six months ended March 31, 2004 excludes a pension gain of