Johnson Controls International plc · NYSE:JCI
Johnson Controls International — Q3 2004 Earnings Presentation
19 slides from Johnson Controls International's earnings presentation, Jul 20, 2004
Slide 1: 3rd Quarter 2004 Financial Results
3rd Quarter 2004 Financial Results July 20, 2004 Safe Harbor Statement: Johnson Controls has made forward-looking statements in this presentation pertaining to its financial results for fiscal 2004 that are based on preliminary data and are subject to risks and uncertainties. Forward-looking stateme
Slide 2: Agenda
Agenda Overview and Battery Investment John Barth - Chairman and CEO Q3 Business Results Denise Zutz - VP Communication Q3 Financial Review/Full-Year Outlook Steve Roell - Sr. VP and CFO Q&A 2
Slide 3: Third-Quarter Overview
Third-Quarter Overview • Record sales and earnings • Sales growth of 14% -- excluding foreign exchange, up 11% • Increased penetration of both automotive and controls markets • Operating income up 15% • Diluted earnings per share growth of 15% -- $1.15 versus $1.00 • Strengthened financial position
Slide 4: Third-Quarter Business Performance
Third-Quarter Business Performance Automotive • Continue to outperform vehicle production rates due to new seating and interiors business and customer diversity • Performing in line with our expectations in all world regions • European margin improvement continues -- year over year and Q3 over Q2 •
Slide 5: 2004 Overview
2004 Overview • Pleased with achievements through first nine months – Sales up 19% -- strong 13% increase even without FX benefit – Operating income up 11% – Net income up 18% – Pricing and raw material environment more difficult than anticipated at start of year – Johnson Controls people, as always
Slide 6: Acquire Balance of Mexican/SA Battery JV
Acquire Balance of Mexican/SA Battery JV • Purchase Grupo Imsa’s 51% interest • JCI is its major customer Joint JointVenture Venture •• 1998 1998partnership partnershipwith withGrupo GrupoIMSA IMSA • Key to our continued growth in North •• Leading Leadingbattery batterysupplier suppliertotoMexico Me
Slide 7: Third Quarter 2004 Automotive Group Sales
Third Quarter 2004 Automotive Group Sales (in millions) 2004 2004 2003 2003 Change Change Change Changeex exFX FX $5,272 $5,272 $4,545 $4,545 +16% +16% +13% +13% North America Europe Interiors sales up 7% Interiors sales up 28% • Industry production up 0.5% • Sales up 21% excluding FX • JCI vehicles
Slide 8: Third Quarter 2004 Automotive Group Operating Income
Third Quarter 2004 Automotive Group Operating Income ($s in millions) 2004 2004 2003 2003 Change Change $286.4 $286.4 $243.7 $243.7 +18% +18% North America Europe Comparable interiors margin Interiors margin up • Lower margins on new business • Operational efficiencies deliver 3% ROS • Lower volumes
Slide 9: Third Quarter 2004 Controls Group Sales
Third Quarter 2004 Controls Group Sales ($s in millions) 2004 2004 2003 2003 Change Change Change Changeex exFX FX $1,520 $1,520 $1,415 $1,415 +7% +7% +5% +5% North America Europe Sales +5% Sales +11% • New construction up 15% • Revenues up 5% ex FX reflecting strong order growth in • Increased sale
Slide 10: Third Quarter 2004 Controls Group Operating Income
Third Quarter 2004 Controls Group Operating Income 2004 2003 Change ($s in millions) 2004 2003 Change $78.3 $78.3 $72.6 $72.6 +8% +8% North America Europe Margin slightly lower than Margin increase prior year • Improved performance, • Strength of construction sales at particularly France lower margi
Slide 11: Controls Group Backlog
Controls Group Backlog* (at June 30,) (at June 30,) 2004 2004 2003 2003 Change Change $1.843B $1.843B $1.779B $1.779B +4% +4% • Strong NA systems orders from education, OrderHighlights Order Highlights health care, pharmaceuticals and airports • Overall construction markets remain weak ••Northwest N
Slide 12: Investment in Battery JV
Investment in Battery JV • $525M purchase price including debt CurrentJV Current JVaccounting accountingtreatment treatment • Expect incremental 2005 sales of ••Not Notconsolidated consolidated approximately $250M ••Reflect ReflectJCI JCIpurchases purchasesininJCI JCIsales sales • Accretive to resul
Slide 13: Third Quarter 2004 Financial Highlights
Third Quarter 2004 Financial Highlights (in millions) 2004 2003 Change Sales $ 6,792 $ 5,960 14% Gross profit 908 835 9% 13.4% 14.0% SG&A 543 519 5% 8.0% 8.7% Operating income $ 365 $ 316 15% 5.4% 5.3% 13
Slide 14: Third Quarter 2004 Financial Highlights
Third Quarter 2004 Financial Highlights (in millions) 2004 2003 Change % Change Operating income $ 365 $ 316 $ 49 15% Net interest expense (21) (23) 2 Equity income 18 15 3 Miscellaneous - net (22) (12) (10) Other expense (25) (20) (5) Income before taxes/minority interests 340 296 44 15% Provision
Slide 15: YTD 2004 Cash Flow
YTD 2004 Cash Flow ($s in millions) June 30, 2004 Net income $545 Depreciation/amortization $451 Capital expenditures ($623) Change in working capital $29 Total debt-to-total capitalization 31.6% vs.35.6% vs. 35.6%at at September30, September 30,2003 2003 15
Slide 16: 2004 Fourth-Quarter Expectations
2004 Fourth-Quarter Expectations Automotive Group Controls Group Vehicle Production 4th Quarter • Good revenue growth, especially in North America facilities management +1% to 2% Europe • Continue Europe’s improved performance • Modest NA interiors sales growth • Strong European interiors revenue Or
Slide 17: 2004 Full Year Guidance
2004 Full Year Guidance April 2004 Guidance Current Guidance Sales +13 - 15% + 14-16% Automotive +13 - 18% Unchanged Controls +10 - 12% Unchanged Operating margin Automotive Level to slightly below prior year Unchanged Controls Slightly below prior year Unchanged Operating income Double-digit increa
Slide 18: 2004 Guidance
2004 Guidance (in millions) April Guidance Current Guidance Net interest expense $105-110 Unchanged Effective income tax rate 29% (a) Unchanged Minority interests $75-80 Unchanged Depreciation $600-620 Unchanged Capital expenditures $750 $800 Total debt-to-total capitalization Below 30% Unchanged (b
Slide 19: Fiscal 2004
Fiscal 2004 Achieve Financial Expectations • Sales: +14% to 16% • Double-digit increases – Operating income – EPS • Strengthened financial position Focal Points • European interiors profitability improvement Provide fiscal 2005 • European battery integration guidance on October 8, 2004 • Offset auto