23 slides from Johnson Controls International's earnings presentation, Jan 20, 2009
Slide 1: Quarterly update FY 2009 first quarter
Quarterly update FY 2009 first quarter January 16, 2009 Exhibit 99.2
Slide 2: Agenda
3 Agenda Introduction Glen Ponczak - Director, Investor Relations Overview Steve Roell - Chairman and Chief Executive Officer First quarter 2009 business results Keith Wandell - President and Chief Operating Officer Financial review Bruce McDonald - Executive Vice President and Chief Financial Offic
Slide 3: First quarter 2009
First quarter 2009 *Excluding Q1 non-recurring, non-cash charges Segment income adjustment excludes $262 million in impairment charges Net income adjustment excludes $262 million in impairment charges and $300 million tax valuation allowance charge Sales down 23% to $7.3 billion Segment income: loss
Slide 4: 9/1/2001 10/1/2001 11/1/2001 12/1/2001 1/1/2002 2/1/2002 3/1/2002 4/1/2002 5/1/2002 6/1/2002 7/1/2002 8/1/2002 9/1/20…
9/1/2001 10/1/2001 11/1/2001 12/1/2001 1/1/2002 2/1/2002 3/1/2002 4/1/2002 5/1/2002 6/1/2002 7/1/2002 8/1/2002 9/1/2002 10/1/2002 11/1/2002 12/1/2002 1/1/2003 2/1/2003 3/1/2003 4/1/2003 5/1/2003 6/1/2003 7/1/2003 8/1/2003 9/1/2003 10/1/2003 11/1/2003 12/1/2003 1/1/2004 2/1/2004 3/1/2004 4/1/2004 5/1
Slide 5: Economic environment: North American auto production trend
9 Economic environment North American Auto Production Trend: 1951 - 2009 Forecast 2009 estimated production forecast of 9.2m at lowest level since 1983 47% decline from the 2001 peak of 17.7 million units
Slide 6: Economic environment: Automotive markets
11 Economic environment Automotive markets Rapid deterioration; European markets were stable through August 2008 Western Europe car registrations down 26% y/y Worst quarter since 1993 Eastern Europe registrations down 23% China industry sales down 2% y/y European automotive production 5.6 5.8 5.6 5.
Slide 7: Economic environment: Building markets
13 Economic environment Building markets Began to see softness in commercial new construction markets in Q4 2008 Greatest weakness in office, retail, lodging; expected to continue through 2009 Institutional buildings (government, healthcare, education) remain the strongest new construction sectors N
Slide 8: Taking action
Taking action Aligning our cost structure with market environment $495 million restructuring announced in Q4 2008 Expected payback in less than 2.5 years Workforce reductions Plant consolidations 18 Automotive Experience 2 Power Solutions 1 Building Efficiency Additional actions General hiring freez
Slide 9: Johnson Controls positives despite the industry environment
Johnson Controls positives despite the industry environment Continuing to invest in innovation Gaining share New auto business awards Building Efficiency backlog continues to grow with good pipeline of new orders New contracts in Power Solutions Increased Building Efficiency sales force in governmen
Slide 10: Investing in innovation
Investing in innovation Automotive Experience - Detroit auto show Innovation demonstrations to more than 3,000 customer representatives Seating Interiors Electronics re3 concept vehicle
Slide 11: Market share gains: Power Solutions
Market share gains Power Solutions Major new customer wins in January Announced today: O'Reilly Auto Parts More than 1,000 Checker Auto Parts, Kragen Auto Parts, and Schuck's Auto Supply stores Full line of automotive Super Start batteries Optima(r) high performance automotive batteries Shipments to
Slide 12: Building Efficiency: Federal government opportunities
Building Efficiency Federal government opportunities December 2008: Named to U.S. Department of Energy's $80 billion energy efficiency program for federal buildings Strong existing contractor position with DOE / DOD Likely impact in 2010 and beyond Recent Federal government contract awards Lawrence
Slide 13: Potential Federal investments in energy efficiency
Potential Federal investments in energy efficiency Energy efficiency priorities Government buildings Schools Johnson Controls advantaged to win new business Government procurement processes in place Long history of successful projects Federal government business unit Expanded sales force Branch netw
Slide 14: Managing through the current environment to gain long-term advantage
Managing through the current environment to gain long-term advantage Maintain our long-term, sustainable growth philosophy Balance near term performance while ensuring robust long-term business success Invest in innovation Manage the short-term environment in concert with long-term goals Aligning ou
Slide 15: First quarter 2009: Building Efficiency
29 First quarter 2009 Building Efficiency 2009 2008 Net sales $3.1 B $3.2 B - 5% Adjusted for currency, sales up 1% N.A. systems up mid-single digits, ROW flat Technical services slightly down Strong solutions growth Depressed unitary (N.A. residential) demand Segment income* $131 M $163 M - 20% Dou
Slide 16: First quarter 2009: Power Solutions
31 First quarter 2009 Power Solutions 2009 2008 Net sales $1.1 B $1.7 B - 32% Impacts of lower lead prices, lower volume and currency Volume Lower OE production Destocking and deferred orders at aftermarket customers Segment income $40 M $133 M - 70% Lower volumes Lead volatility Non-recurring lead
Slide 17: First quarter 2009: Automotive Experience
33 First quarter 2009 Automotive Experience 2009 2008 Net sales $3.1 B $4.6 B -32% Sales down 25% excluding impact of currency Declines across all geographies, customers and product segments North America: down 23% (production down 26%) Europe: down 41% (production down 24%) Segment income* ($219 M)
Slide 18: First quarter 2009 Financial highlights
35 First quarter 2009 Financial highlights FX - Euro to U.S. Dollar average exchange rate at $1.32 in Q1 2009 vs. $1.45 in 2008 Sales - Excluding FX, sales down 17%; Building Efficiency up 1% Gross Profit - Adversely impacted by factory absorption SG&A - Reductions in all three businesses, maintaini
Slide 19: First quarter 2009 Financial highlights
37 First quarter 2009 Financial highlights Financing charges-net - Lower borrowing costs and net foreign exchange gains Income tax provision - Underlying 2009 tax rate revised to 24% Minority interests - Overall break-even position in consolidated joint ventures (in millions except per share data) 2
Slide 20: Summary of Q1 Non-recurring charges
Summary of Q1 Non-recurring charges ($ in millions, except per share data) 2009 As reported One-time Charges 2009 ex. one-timers Segment Income Building Efficiency (21) (152) 131 Automotive Experience (329) (110) (219) Power Solutions 40 40 Consolidated Total ($310) (262) ($48) Net Loss ($608) ($526
Slide 21: Income tax
Income tax In Q1, recorded a $300 million valuation allowance against deferred tax assets in several foreign tax jurisdictions, primarily Europe Future income in these jurisdictions will benefit our effective tax rate When a history of profitability can be demonstrated, these valuation allowances ma
Slide 22: Balance sheet
43 Balance sheet Net debt to capitalization ratio approximately 34.8% Seasonal increase in working capital Anticipate full-year source of cash Capital spending reductions underway 2009 capital expenditures skewed toward first half of year Liquidity 5 year $2.05B revolver expires December 2011 Minima
Slide 23: 2009 guidance
2009 guidance Withdrew quarterly and full year guidance December 16, 2008 Forecast a loss for Q1 2009 Rapidly deteriorating automotive production globally Worsening residential markets Uncertainties and industry volatility makes it difficult to provide meaningful guidance Remainder of 2009 Our indus