Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Investor Day (October 2007)
115 slides from Johnson Controls International's investor day presentation, Oct 9, 2007
Slide 1: Forward-looking statement
Exhibit 99.2 Johnson Controls, Inc. ("the Company") has made forward-looking statements in this document pertaining to its financial results for fiscal years 2007, 2008 and beyond that are based on preliminary data and are subject to risks and uncertainties. All statements other than statements of h
Slide 2: Agenda
Agenda 8:30 Opening comments Denise Zutz VP Strategy, IR and Communication 8:40 Transformation John Barth Chairman 8:55 Continuing our growth Steve Roell Chief Executive Officer 9:25 Delivering sustainable growth Keith Wandell President and Chief Operating Officer 9:55 Break 10:05 Automotive and Q/A
Slide 3: Johnson Controls
Johnson Wi Controls va on Cont
Slide 4: Creating a more comfortable, safe and sustainable world
Creating a more comfortable, safe and sustainable world
Slide 5: Welcome
Johnson Wi Controls INGENUITY WELCOME F regs Me
Slide 6: Transformation
Transformation October 2002 First meeting as CEO Profitable growth Diversify our businesses Special focus on accelerating growth in the controls business Better leverage our resources Diversity Shareholder value
Slide 7: Transformation: Profitable growth
Transformation Profitable growth Consecutive years of record sales and earnings 2002 2007 Earnings 2002 2007 Sales 13% CAGR 15% CAGR
Slide 8: Transformation: More diversified, balanced portfolio
Transformation More diversified, balanced portfolio 2007: Better able to withstand short-term downturns in any industry or region Sales and earnings diversification Power solutions Expansion to Europe, Asia Entered hybrid market Building efficiency Tripled available market -- more than doubled busin
Slide 9: Transformation: Benefiting from diversity
Transformation Benefiting from diversity Sustainable business advantage due to minority supplier commitment Billion Dollar Roundtable $1.5 billion in diverse purchasing in 2007 Successful in cultures all around the world 2002: 41 countries 2007: 75 countries Local leadership
Slide 10: Positioned for long-term global profitable growth
Transformation Positioned for long-term global profitable growth Diversification Balanced portfolio Leveraging our resources Diversity Customer focused Comfort Leadership Global Safety Sustainability
Slide 11: Consistent financial performance: Shareholder value
15 13 15 65 31 27 Consistent financial performance Shareholder value *as of 9/28/07 JCI S&P 500 (stock price appreciation + re-invested dividends)* Market Capitalization 2002 2007 $7B $23B 65% 31% 27% 16% 13% 15% Total shareholder return
Slide 12: 2007 Outlook
2007 Outlook* Record sales and earnings Consolidated net sales Earnings per share from continuing operations Q4 2007 earnings will be released October 23, 2007 $34.5B + 7% $2.08 - +19 - 20% $2.10 *Estimated; EPS reflects 3-for-1 stock split on October 2, 2007
Slide 13: Continuing our success
Continuing our success Steve Roell Chief Executive Officer Keith Wandell President and Chief Operating Officer
Slide 14: Stephen A. Roell, Chief Executive Officer
Stephen A. Roell Chief Executive Officer
Slide 15: Thanks for your leadership
Thanks for your leadership sohason J Controls
Slide 16: Looking to the future
Looking to the future A continued focus on profitable growth ......by creating a more comfortable, safe and sustainable world
Slide 17: Growth objective
Sales Growth* > 10% Earnings Growth* 10 - 15% Growth objective * Compounded annual growth rate
Slide 18: Track record of success
17th Consecutive Year of Earnings Increases 61st Consecutive Year of Sales Increases Track record of success CAGR 15% CAGR 13% Over the past decade we have achieved our goals FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07E FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07E
Slide 19: Johnson Controls growth
Johnson Controls growth Industry Growth Market Share Gains Acquisitions
Slide 20: We participate in growing markets
Johnson Controls growth Industry Growth Market Share Gains Acquisitions We participate in growing markets 5 year industry growth Automotive +3% Power +2% Building +5%
Slide 21: Industry growth: Automotive Experience
Industry growth Automotive Experience 65 million vehicles produced in 2007, growing to 76 million in 2012 Five-year average growth: 3% CAGR Mature markets North America 1.5% Japan 0.6% Western Europe 0.2% Faster growth in emerging markets, especially China, India, Southeast Asia, Eastern Europe, Rus
Slide 22: Industry growth: Power Solutions lead-acid batteries
2007 2017 SA 22 29 Japan 25 25 Asia (ex Japan) 75 125 Europe 90 111 NA 110 115 ROW 15 15 2007 2017 337m 420m Global industry unit volume 2% CAGR Note: "Market" includes automotive, commercial, golf car, marine and utility batteries.(excludes motorcycles) Industry growth Power Solutions: lead-acid ba
Slide 23: Industry growth: Power Solutions hybrid batteries
Industry growth Power Solutions: hybrid batteries Demand growth driven by Rising fuel costs Emission reduction / legislation Energy independence Improved technology 2005 2010 2015 2020 North America 207 1172 2205 4500 Western Europe 18 200 920 1620 Japan 55 145 400 690 China 2 199 735 1570 Other 0 9
Slide 24: Industry growth: Building Efficiency
Growth opportunities across all segments Non-residential HVAC services $105 billion Non-residential HVAC systems $35 billion Residential $35 billon Global Workplace Solutions $80 billion 4% annual growth NA market ($11b) "normal" growth 6-8% 4-8% annual growth Industry growth Building Efficiency 8-1
Slide 25: Industry growth: Building efficiency demand
Increased market demand for: Advanced integrated technologies to manage energy for a portfolio of buildings including alternative energy sources Advisory services to develop energy management & sustainability strategies for new and existing buildings Technical services that improve energy performanc
Slide 26: Growth in green demand
Growth in "green" demand 48% of survey participants feel environmental responsibility is at least as strong a motivator as cost reduction Industry growth Building efficiency 100% environmental responsibility Mostly for environmental responsibility Somewhat more for environment 50% cost savings/50% e
Slide 27: Growing at twice the rate of underlying industries
Johnson Controls growth Industry Growth Market Share Gains Acquisitions We expect to continue growing at twice the rate of our underlying industries Improving comfort, safety, sustainability Leveraging competitive advantages Innovation People 5 year industry growth Automotive +3% Power +2% Building
Slide 28: Growth driver: Creating smart environments
Growth driver: Creating a more comfortable, safe and sustainable world by creating smart environments Effective technology Customer- focused Market insight & leadership Creating Smart Environments Enable us to grow faster than our underlying businesses by: Integrating technologies, products and serv
Slide 29: Automotive experience: Market share gain drivers
Automotive experience Customer relationships and engagement Emerging market leadership; partnering Global program execution capabilities Product offering / level of vertical integration Complete interior capability Knowledge of consumer preferences Cost advantaged solutions Financial strength Outper
Slide 30: Power solutions: Market share gain drivers
Power solutions Product and process technology leadership Leading brands Preferred supplier status Operational excellence Quality/cost leadership Global presence Financial strength Outperforming our markets Market share gain drivers
Slide 31: Building efficiency: Market share gain drivers
Building efficiency Energy efficiency knowledge/expertise Branch network Emerging market leadership Targeted solutions offerings Systems integration Product technology Outperforming our markets Market share gain drivers
Slide 32: Leveraging our competitive advantages: Innovation
Outperforming our markets Leveraging our competitive advantages: Innovation Improving...... Sustainability Lithium Ion hybrid battery Comfort MicroChannel residential air conditioning Safety Mobile Device Gateway
Slide 33: Leveraging our competitive advantages: People
Recruit and retain ingenious people worldwide Outperforming our markets Leveraging our competitive advantages: people
Slide 34: Leveraging our competitive advantages: People
Recruit and retain ingenious people worldwide Outperforming our markets Leveraging our competitive advantages: people
Slide 35: Leveraging our competitive advantages: People
Recruit and retain ingenious people worldwide Outperforming our markets Leveraging our competitive advantages: people
Slide 36: Financial strength to invest in growth
Johnson Controls growth Industry Growth Market Share Gains Acquisitions Financial strength to invest in the growth of all of our businesses Improving comfort, safety, sustainability Leveraging competitive advantages Innovation People 5 year industry growth Automotive +3% Power +2% Building +5%
Slide 37: Acquisitions: a platform for growth
Johnson Controls growth Acquisitions Acquisitions are not considered growth, but rather a platform for growth Strategic rationale New technology/capabilities New customers New geographic markets Maintain ROIC discipline Areas of interest Building efficiency Power solutions Automotive experience Mech
Slide 38: Long-term global growth
Long-term global growth Sustained profitable growth of large companies is rare Growth more influenced by the controllable than uncontrollable Confident we can succeed Participate in growing markets Clear strategies to grow faster than underlying markets Global positioning Investments to sustain grow
Slide 39: Outperforming our markets: 2008 outlook
Outperforming our markets 2008 outlook* Consolidated net sales Earnings per share from continuing operations $38B +10% $2.45 - $2.50 +18% *Estimated; EPS reflects 3-for-1 stock split on October 2, 2007
Slide 40: Continued profitable growth
Strengthen customer relationships Expansions in emerging markets Broaden product scope and increase smart content Win share through innovation, brand, quality, cost Expand addressable markets Build on sustainability leadership Global leadership Johnson Controls Continued profitable growth Industry G
Slide 41: Keith Wandell, Chief Operating Officer
Keith Wandell Chief Operating Officer
Slide 42: Strategic focus
Strategic focus We have our vision ........growth through improving comfort, safety and sustainability We will make it happen
Slide 43: Delivering sustainable growth: Strategic markers
Delivering sustainable growth Strategic "markers" Integrity and ethics Global growth Global leadership and engaged employees Customer satisfaction Continuous improvement Innovation Sustainability Shareholder value
Slide 44: Delivering sustainable growth: Integrity
Delivering sustainable growth Integrity Fundamental definition: Honesty Fairness Respect Safety We go beyond the fundamental: Cultural respect Strength in relationships Global inclusion Ethics: more relevant and important than ever New geographies More people Greater cultural diversity
Slide 45: Global leadership and engaged employees
Delivering sustainable growth Global leadership and engaged employees Attracting, retaining and developing global employees and leaders to support our growth objectives may be the biggest challenge we face Our focus Leadership development Engagement Diversity Total employees 140,000 200,000 Leaders
Slide 46: Customer satisfaction
At the core of our success for many years We're raising the bar on our customer relationships Improved customer connection Listening, learning, problem solving, anticipating needs Knowledge and experience Understand customer needs / influencers / decision makers, to best deliver ingenious solutions
Slide 47: Innovation
Proven way to create value, sustainable growth and increased margins Key driver of customer satisfaction Greater discipline leading to increased number of commercialized products/services, brought to market faster Focus on innovation that improves comfort, safety, sustainability in all our businesse
Slide 48: Delivering sustainable growth: Sustainability
Delivering sustainable growth Sustainability Achieving competitive advantage Regulatory compliance NOVs, fines, permits Chess Safety system, auditing Work Council training Ethics training Sustainability Actions Value Cost reduction Waste management Energy management Design for environment Material l
Slide 49: Continuous improvement
Fundamental to all we do; part of our corporate DNA Be better than anyone else on quality and cost...and keep getting better Footprint optimization: manufacturing, engineering, shared services "Global" footprint increases focus on logistics/transportation costs Safety Standardized global product and
Slide 50: Shareholder value
Delivering sustainable growth Shareholder value Invest in sustainable growth in all three businesses We will capitalize on the benefits of being a global growth company, maximizing shareholder value by: Increasing return on invested capital Increasing our business diversification Leveraging company-
Slide 51: Achieving our goals
Achieving our goals Clear plan Clear expectations Clear accountability Aligned leadership Continuous improvement Global growth Global leadership and engaged employees Sustainability Innovation Customer satisfaction Shareholder value Integrity
Slide 52: Automotive Experience
Automotive Experience Beda Bolzenius President
Slide 53: Automotive experience
Automotive experience Creating more comfortable, safe and sustainability vehicle interiors Global provider of seating, overhead systems, door and cockpit systems Balanced business structure Product portfolio, customer, geography Increasing capability in electronics Supplying over 30 million cars per
Slide 54: Competitive advantages
Competitive advantages Strong track record for customer satisfaction Global capabilities Integrated low-cost country approach Innovation to improve comfort, safety and sustainability Expertise to understand and deliver optimal consumer value Superior products from component level through integrated
Slide 55: Diversified customer base
Automotive experience* Diversified customer base North America Europe Asia Asian OEs** 68% European & NA 32% Customer exposure approximately mirrors North American market Broad customer diversity across European, Asian and North American OEs Supplying all major OEs in China New relationships with em
Slide 56: Global automotive market environment
Global automotive market environment North America Cautious consumer behavior Increased focus on fuel efficiency Changing OE market shares Distressed suppliers Asia Booming market Significant growth for both OEMs and suppliers Main markets - China and India Europe Innovation Speed Model proliferatio
Slide 57: Strategies for profitable growth
Strategies for profitable growth Customer orientation / focus World-class products and technologies Components, systems, modules Increased electronics capabilities Systems integration Customer-oriented innovation Sustainability Regional strategies Emerging market expansion: integrated approach Best
Slide 58: Strategies for profitable growth: Customer orientation
Strategies for profitable growth Customer orientation / focus Organizational alignment Global customer business units Customer-tailored business approach Sourcing priorities Components, modules, systems, technology, price Regional or global sourcing demands Vehicle segment priorities Customer-driven
Slide 59: Strategies: World-class products and technologies
Strategies for profitable growth World-class products and technologies Electronics Strengthen capabilities & scale for current products Driver interaction, connectivity, body electronics, specialty products Build regional capabilities (Eastern Europe, Asia) Expand customer base for existing products
Slide 60: Strategies: Differentiated innovation
Strategies for profitable growth Differentiated innovation Leverage consumer research and market insight Continuously fill the pipeline with differentiated solutions that will increase consumer demand Accelerate commercialization of customer-driven innovation Co-innovation with OEs, suppliers and ot
Slide 61: Frankfurt auto show innovations
Frankfurt auto show innovations Strategies for profitable growth Differentiated innovation riACT Active safety headrest 2-color RIM Multi-color parts in a single processing step Voice-activated interface Mobile Device Gateway BlueConnect HomeLink PP thin film Variable surface finishes Scratch and ma
Slide 62: Strategies: Innovation for sustainability
Strategies for profitable growth Innovation for sustainability Products using environmentally friendly materials (e.g. Soy foam) I N N O V A T I O N Design for Recycling (products and processes) Environmental design guidelines (products and processes) Avoidance of hazardous materials (e.g. Lead, mer
Slide 63: Regional: North America
Strategies for profitable growth Regional: North America Sustainable turnaround Focus on core competencies and areas of greatest value as defined by customers Selective bidding Selective takeover of business from distressed suppliers Increased focus on electronics Low-cost country (Mexico) expansion
Slide 64: Regional: Europe
New electronics customers Winning business Seating: BMW, PSA, Fiat, VW Interiors: Ford, PSA, Audi/VW Geographic: Russian OEs Focus on customer-driven innovation (+60% increase in patents in 2007) Evaluate further low-cost country initiatives Strategies for profitable growth Regional: Europe CAGR 200
Slide 65: Regional: Asia
Strengthen market share positions in China Solidify leading share in seating Grow share in other interior zones, especially electronics, cockpit and overhead Localize R&D and component manufacturing to serve global markets Build total interior systems integration capability Johnson Controls China pr
Slide 66: Strategies: Operational excellence
Strategies for profitable growth Operational excellence Product & Process Technology Commodity Managemen t Supply Chain Management Manufacturing Operations Optimized Footprint Leverage Fixed Assets SG&A Best Business Practices and Six Sigma JW World-class cost & quality leadership Low cost countries
Slide 67: Incremental backlog of new business
Incremental backlog of new business $3.9 billion, up 11% from last year's level 2008-2010 net backlog* FY 2008 FY 2009 FY 2010 North America 0.3 0.5 0.225 Europe 0.2 0.45 0.675 Asia 0.4 0.55 0.6 $0.9B $1.5B $1.5B - - Fiat - - Peugeot - - Russian OEMs - - Chery North America • Dodge Ram pick-up; Jour
Slide 68: Automotive experience: Outpacing the market
Automotive experience Outpacing the market Increased focus on customer satisfaction Emerging market growth Customer-driven innovation Sustainability focus Operational excellence and continuous improvement
Slide 69: Power Solutions
Power Solutions Alex Molinaroli President
Slide 70: Power Solutions overview
Item 1 57.4 OE 22 Aftermarket 78 2007 sales (est.): $4.3 Billion Original Equipment Aftermarket Power Solutions Largest global provider of lead acid batteries Leading independent provider of hybrid automotive battery systems World-class customer base in stable aftermarket Original Equipment (OE) bat
Slide 71: Competitive advantages
Competitive advantages Unmatched knowledge of automotive applications 100 years of under-the-hood experience, more than 1.3 billion batteries produced Unmatched quality and cost leadership Solutions approach Cells, systems, distribution, value-added services Wide range of technologies: lead acid, ab
Slide 72: Strategies: Lead acid market growth
Strategies for profitable growth Lead acid market growth Targeted specific market segments in mature markets Geographic expansion: focus on Eastern Europe, Russia, and China Value added services: consumer research, category management Technology leadership: longer life, improved quality Operational
Slide 73: Lead acid: Americas
Strategies for profitable growth Lead acid: Americas U.S. / Canada Wholesale channel opportunity Focus on products, distribution, and cost Leverage 'Interstate Battery' distribution, branding, service and consignment capabilities Maintain share at key national retailers (examples: Advance Auto, Les
Slide 74: Lead acid: Europe
Leverage Varta and Bosch brand strength Leverage OEM program success and technology leadership into aftermarket Focus on the wholesale segment Optimize distribution by country Product redesign: reduce complexity Brand repositioning Technology differentiation: Powerframe(tm) implementation Enter East
Slide 75: Strategies: Asia
Strategies for profitable growth Asia Focus on China Market growing 8% annually 1,000 manufacturers today Strategic partnership with #1 automotive battery manufacturer and brand in China (Baoding Fengfan Co., Ltd.) Further develop Varta and BOSCH brands Global and OE technology leader, "Western" tec
Slide 76: Absorptive Glass Mat (AGM) technology
Strategies for profitable growth Absorptive Glass Mat (AGM) technology AGM technology advantages - - Deep cycle, increased power density, vibration resistance, zero leakage Leverage Optima U.S. brand loyalty (90%+) Retail price range $155 to $250 Expand Optima distribution in Europe, Asia, Latin Ame
Slide 77: Strategies: Operational excellence
Strategies for profitable growth Operational excellence Provide highest quality while driving lower cost through world-class leadership in product and process technology, quality, service, footprint, and increased vertical integration Product Engineering Optimized Material reduction Supply Chain Man
Slide 78: Lead economics
Strategies for profitable growth Lead economics Lead is more than 72% of a lead acid battery cost ... and increasing LME lead is at all-time high in real dollars Global lead supply is lagging demand China demand growing Increased hedge fund and mutual fund participation Critical success factors Mana
Slide 79: Environmental sustainability
Strategies for profitable growth Environmental sustainability Closed loop recycling provides both customers and Johnson Controls with significant benefits Added-value disposal service to our customers Linkage of pricing between new unit and spent cores Environmental stewardship Johnson Controls stra
Slide 80: Hybrid battery systems
Strategies for profitable growth Hybrid battery systems Industry winners must have Multiple cell chemistries for varying applications Battery system integration and vehicle system integration electronics High volume manufacturing expertise OE confidence Aftermarket support network Hybrid battery sys
Slide 81: Hybrid progress
Hybrid progress Executing Li-Ion (HEV) production programs for Mercedes S-Class, E-Class and C-Class .....additional yet-to-be announced European OE production contract underway 2008 and 2009 production Plug-in hybrid (PHEV) Li-Ion development contracts 12 active contracts Saturn Vue Green Line (plu
Slide 82: Power solutions summary
Power solutions summary Continue global lead acid market share growth in all regions Aggressively expand in emerging and adjacent markets Continued quality and cost leadership Further lead management capabilities Supporting multiple chemistries for hybrid applications Developing world-class lithium
Slide 83: Building Efficiency
Building Efficiency Dave Myers President
Slide 84: Building efficiency
Building efficiency Delivering improved energy efficiency, comfort and safety Non-residential buildings Diverse customers; huge global installed base Systems, products, services and solutions offerings Low cyclicality due to large service/renovation volume Benefits from high energy cost environment
Slide 85: Competitive advantages
Competitive advantages Leadership in energy management capability Demand and supply side energy solutions Systems, products Solutions / performance contracting Project management Technology and capabilities HVAC depth: unmatched equipment and controls offering Market-leading integration capabilities
Slide 86: Competitive advantages: Service depth
Competitive advantages Service depth 13,000 HVAC technicians and front-liners 12,000 global workplace solutions service delivery personnel Wide range of capabilities to service customer needs Strong brand Reliable products and services Deliver proven solutions Financial strength Manufacturing footpr
Slide 87: Building efficiency industry environment
Building efficiency Industry environment Rising demand for energy, resulting in increased prices and volatility Increased energy efficiency legislative requirements worldwide Increasing non-residential new construction levels globally Favorable HVAC equipment replacement cycle Fragmented technical s
Slide 88: Strategies for profitable growth
Strategies for profitable growth Grow the systems business globally Complex buildings: cross/joint sell, product bundling Mid market Expand global service leadership Technical services Solutions Global Workplace Solutions Focus on growth markets Energy efficiency Emerging markets Grow residential ma
Slide 89: Grow the systems business globally: complex buildings
FY07 equipment cross-sell wins Strategies for profitable growth Grow the systems business globally: complex buildings Participation across the globe Middle East 4% Asia 9% Latin America 9% Europe 16% North America 62% Cross-sell equipment and controls Opportunity continues for years to come 2007 cro
Slide 90: Grow the systems business globally: mid-market
Product development and acquisitions to meet customer requirements Heat pumps, VAV & fan coils, cooling towers, energy recovery units, fans, low- tier rooftop units Gaining share, increasing capabilities Cost competitive rooftop Self-installed control systems Enhance distribution through third party
Slide 91: Expand global service leadership
One equipment piece One Site Entire Portfolio Strategies for profitable growth Expand global service leadership
Slide 92: Expand global service leadership
Strategies for profitable growth Expand global service leadership Technical services Use scale to drive growth 10,000 front-liners; double the size of #2 competitor Cross-sell HVAC and controls service Global workplace solutions Expand global Fortune 1000 channel Expand penetration of high-value off
Slide 93: Energy demand management
Energy Demand Management How can I be sure that I am running my facilities in the most energy efficient manner possible? How do I build employee awareness around energy usage? What is the best way to finance new assets? Products Supply Side Advisory Utility Bill Management Energy Analytics & Optimiz
Slide 94: Focus on growth markets
Increase penetration of emerging geographic markets: China, Middle East, Latin America Growth rates at least 2x mature markets Filling gaps in existing offerings Building distribution / channel Strategies for profitable growth Focus on growth markets Sheraton Xiamen Hotel Guangzhou International Con
Slide 95: Grow residential HVAC market share
Strategies for profitable growth Grow residential HVAC market share Expand residential distribution network Residential systems sold primarily through local third-party HVAC contractors Increasing distribution density and taking share Dealers want to travel less than 30 minutes to distributor to pic
Slide 96: Strategies: Operational excellence
Strategies for profitable growth Operational excellence Manufacturing employees 2006 2008 Low-cost countries 38% 54% Combining and leveraging platforms Air cooled chillers: 15 to 9 platforms Water cooled chillers: 8 to 6 platforms Heat pump products: 10 to 7 platforms Redesigning equipment to reduce
Slide 97: Building efficiency summary
Building efficiency summary Significant competitive advantages Solutions for every type of business, opportunities available at any point in building lifecycle Leading positions in several key global markets Opportunity to create leadership position in many others Positioned to grow at twice the rat
Slide 98: Financial: Bruce McDonald, CFO
Financial 93 Bruce McDonald CFO
Slide 99: Fiscal 2007 outlook
Fiscal 2007 outlook October 2006 guidance Outlook vs. guidance Consolidated net sales Approx $34B (up 6%) Exceeded EPS from continuing operations (post 3-for-1 split) Approx $2.00 (Up 14%) Exceeded Capital expenditures 1.2:1 reinvestment ratio Improved Total debt-to-capitalization (at Sept. 30) Appr
Slide 100: Diverse business model
Diverse business model Diverse customer base Building Efficiency One million customers in 125 countries Power Solutions Thousands across all regions Automotive Experience Global customer base Two-thirds of sales to European and Asian OEMs 10% of total consolidated sales to "Detroit 3" in North Ameri
Slide 101: A diversified growth company: Financial strength
A diversified growth company Financial strength Long-standing "A" credit rating Dividends paid since 1887; dividend increased for 32 consecutive years Financial strength to reinvest in the business: New technology / capital expenditures Acquisitions / joint ventures 2008 margin expansion Building ef
Slide 102: Earnings visibility and stability
A diversified growth company Earnings visibility...and stability Automotive Experience $3.9 billion three-year backlog of net new incremental business Power Solutions Recurring aftermarket volume comprises 78% of sales Building Efficiency 55% recurring revenue $4.2 billion backlog at September 30 Ef
Slide 103: Financial targets
Financial targets Target 2008 Outlook Sales growth > 10% 10% Earnings growth 10 - 15 % 18% ROIC increasing to 15 - 16% 150 bp increase Debt/capitalization 35 - 40% Acquisition dependent
Slide 104: Fiscal 2008 key assumptions
Fiscal 2008 key assumptions Automotive production North America 14.8 - 15.0M (flat) Europe 21.0M (+2%) Construction spending Non-residential Domestic International +1% +7% U.S. Residential -4% Commodities outlook Steel Lead: • 25-year high • $3,000 per metric ton • Volatility continues Foam chemical
Slide 105: Fiscal 2008 outlook
Fiscal 2008 outlook Consolidated net sales Approx. $38B (up 10%) Growing faster than underlying markets Focus on growth in emerging markets Lead inflation in Power Solutions EPS Approx. $2.45 - $2.50 (up 18%) Double-digit earnings growth for the 6th consecutive year Segment income margin Higher Unde
Slide 106: Automotive Experience financial outlook
Automotive Experience Financial outlook 2008 projections Sales approximately level with 2007 Growth in emerging markets largely via unconsolidated joint ventures (China +30%) Higher backlog Unfavorable mix Segment income margin increase to 3.4 - 3.8% North American profitability: Approximately 3x 20
Slide 107: Power Solutions financial outlook: lead impact
Power Solutions Financial outlook Lead Impact Rapid escalation of lead prices increases both sales and cost levels Even though profitability is maintained via lead cost pass-throughs, significant reduction of margin as a percentage of sales Lead hedging program protects earnings as price adjustment
Slide 108: Power Solutions financial outlook
Power Solutions Financial outlook 2008 projections Sales up approximately 40% 10% increase excluding lead Strong worldwide volume growth New contract wins Growing customers Benefit of global capacity expansion Segment income margin 9.0 - 9.5%, level excluding lead impact Lead: pricing, recycling, he
Slide 109: Building Efficiency financial outlook
Building Efficiency Financial outlook 2008 projections Sales up approximately 15% Strong backlog; revenue synergies Non-residential domestic market solid; limited exposure to retail/lodging/manufacturing sectors Well positioned in faster growing non-residential emerging markets Growth in residential
Slide 110: Cash flow priorities
Cash flow priorities Cash flow deployment Reinvest in the businesses Increase payout ratio Acquisitions / joint ventures that provide access to new: Markets Customers Technology ....and meet our ROIC requirements 150 bp increase in ROIC in 2008 +100 bp +150 bp
Slide 111: State of the company
State of the company Profitable growth continues Power - Recurring revenue, profitable growth Automotive - Sustained recovery Favorable economic environment: Strong backlog; revenue synergies continue Cost structure optimization: manufacturing, purchasing, branch network, scale Energy Economic cycle
Slide 112: Stephen A. Roell, Chief Executive Officer
Stephen A. Roell Chief Executive Officer
Slide 113: Sustainable, profitable growth
Johnson Controls Sustainable, profitable growth Our culture is a key competitive advantage Results focused Customer focused Competitive Positioned to outperform our underlying industries Expand in emerging markets Win share through innovation, quality, cost Broaden product scope Expand addressable m
Slide 114: Diverse portfolio withstands short-term market disruptions
Diverse portfolio withstands short-term market disruptions Strong leadership Clear path to achieving our goals Integrity and ethics Global growth Global leadership and engaged employees Customer satisfaction Continuous improvement Innovation Sustainability Shareholder value Johnson Controls Sustaina
Slide 115: Johnson Controls
Johnson Wi Controls INGENUITY WELCOME controls.