Johnson Controls International Plc · NYSE:JCI
Johnson Controls International — Q3 2024 Earnings Presentation
34 slides from Johnson Controls International's earnings presentation, Jul 31, 2024
Slide 1: Fiscal Q3 2024 Earnings Conference Call
FISCAL Q3 2024 Earnings Conference Call July 31, 2024
Slide 2: Forward-Looking and Cautionary Statements/Non-GAAP Financial Information
FORWARD-LOOKING AND 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 ris
Slide 3: Fiscal Q3: CEO Summary
Fiscal Q3: CEO Summary Delivering Results and Simplifying Our Portfolio Exceeded expectations with robust margin expansion, strong free cash flow generation, and continued Service demand Grew backlog to record levels, offering visibility into next fiscal year Announced divestitures representing ~20%
Slide 4: Advancing Transformation Through Divestiture of ~20% of Sales
Portfolio Simplification Advancing Transformation Through Divestiture of ~20% of Sales On July 23, Johnson Controls reached an agreement to sell the Residential and Light Commercial (R&LC) HVAC business to the Bosch Group ▪ R&LC HVAC Business comprised of 100% of our NA Ducted Business and 60% inter
Slide 5: A Comprehensive Solutions Provider for Commercial Buildings
Portfolio Transformation A Comprehensive Solutions Provider for Commercial Buildings Present State Future State 75% ~90% Light Commercial HVAC 6% Non-Core ~10% Fire & Security (Indirect) 9% $27B ~20% Portfolio Simplification $22B FY23 Revenue FY23 Revenue (Proforma) Residential HVAC 10% Engineered S
Slide 6: Solutions to Bring Value Across the Building Lifecycle
Building Lifecycle Solutions to Bring Value Across the Building Lifecycle 1. Product & Technology Leadership 2. New Construction Systems ▪ Sales support and project engineering ▪ Focus on systems margin expansion IN ST ▪ World class estimating tools ▪ Local execution matched with centralized AL a
Slide 7: Strong Operational Performance Led by Service
Fiscal Q3 Results Strong Operational Performance Led by Service JCI Sales - Organic % Growth Balance Sheet and Reported Adjusted Free Cash Flow* ($ in Millions) ($ in Millions) $240 $7 +3% Balance Sheet YoY Organic Growth ▪ 84% fixed rate debt $1,309 ($149) $7,231 ▪ ~$0.9B cash position $7,133 ▪ 2.3
Slide 8: Margin Expansion Building Momentum
Fiscal Q3 Results Margin Expansion Building Momentum Global Products Sales ($ in Millions) 3% $76 Organic Sales ▪ Price +4% / Volume (1%) Growth* ($7) ▪ Commercial HVAC1 +MSD $2,687 ($80) $2,676 ▪ Residential HVAC +MSD ▪ NA Residential +HSD ▪ Fire and Security (LSD) ▪ Industrial Refrigeration +20% S
Slide 9: Building a Model of Consistency
Fiscal Q3 Results Building a Model of Consistency Building Solutions Orders - Organic % Growth Building Solutions Backlog ($ in Billions) 12% Service Install +5% $12.6 $12.9 +10% 9% YoY Organic Growth $12.0 $12.1 $12.1 YoY Organic Growth 8% $2.3 $2.4 $2.4 $2.2 $2.3 5% Service +12% Service +7% $9.6 $
Slide 10: Building Solutions Performance by Segment
Fiscal Q3 Results Building Solutions Performance by Segment Adj. Segment Orders Orders / Backlog Sales Sales Adj. Segment EBITA/Margin* Organic % Growth Comments Organic % YoY* Comments EBITA Comments Change YoY +5% ▪ Orders +8% ▪ Service +6% +150bps $2.9B ▪ Growth: ~$60M ̵ Service +6% ▪ Systems +9%
Slide 11: Introducing Q4 and Tightening Full Year Guidance
Outlook Summary Introducing Q4 and Tightening Full Year Guidance Q4’24 FY’24 FY’24 Comments Organic Revenue* Up ~7% Up ~3% (previous: Up ~MSD) ▪ Strong backlog conversion ▪ Service up HSD Adjusted Segment Up ~110bps ▪ Global Products improvement ~19% EBITA Margin* (previous: Up ~50 to 75bps) ▪ Slow
Slide 12: R&LC HVAC Transaction Details: Expected to Close in ~12 Months
Portfolio Simplification R&LC HVAC Transaction Details … Expected to Close in ~12 Months ▪ $6.7bn total consideration ($8.1bn transaction value) ▪ North America Ducted: $4.6bn Transaction – 16.7x Fiscal 2023 EBITDA Terms ▪ 60% interest in Johnson Controls-Hitachi Air Conditioning JV: $2.1bn – 7.5x F
Slide 13: A Faster Growing, More Profitable, and Less Complex Company
The New Johnson Controls A Faster Growing, More Profitable, and Less Complex Company Simplified, higher-growth business model Increased exposure to robust data center demand Greater revenue visibility underpinned by long-cycle backlog Higher profit margins with further margin expansion driven by ope
Slide 14: Delivering Results
Fiscal Q3 Highlights Delivering Results Exceeded expectations Grew record backlog Announced divestitures representing ~20% of sales Initiated CEO succession plan and continued Board refreshment Tightened full year guidance 14
Slide 15: Appendix
City graphic Appendix
Slide 16: Broad-Based Global Reach
Fiscal Q3 Results Broad-Based Global Reach % of Organic Sales Growth* % FY23 North America EMEALA Asia Pac Global Products Consolidated JCI Sales Applied1 40% +>20% +HSD (>20%) +MSD2 +HSD Light Commercial3 6% +LSD +LSD Commercial HVAC 46% +MSD +HSD NA Residential 3% +HSD +HSD ROW Residential 7% +LSD
Slide 17: Disciplined Capital Allocation
Balance Sheet and Adjusted Free Cash Flow Disciplined Capital Allocation Capital Structure ($ billions) Q3 FY23 Q2 FY24 Q3 FY24 Short-term debt and current portion $1.3 $3.4 $2.5 Net Debt / EBITDA* of long-term debt Debt and liquidity ▪ 84% fixed rate debt Long-term debt $8.5 $7.3 $7.9 ▪ 3.6% weight
Slide 18: Consolidated Financial Results
Fiscal Q3 2024 Consolidated Financial Results Q3 FY23 Q3 FY24 Q3 FY23* Q3 FY24* % Change ($ in Millions, except earnings per share) GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $7,133 $7,231 $7,133 $7,231 1% Gross profit $2,431 $2,488 $2,430 $2,488 2% (% of sales) 34.1% 34.4% 34.1% 34.4% SG&A expenses
Slide 19: Special Items
Fiscal Q3 2024 Special Items ($ in Millions, except EPS) Three Months Ended June 30 Net income (Expense) EPS impact 2023 2024 2023 2024 Mark-to-market adjustments $(17) $(5) $(0.02) $(0.01) Restructuring and impairment costs $81 $106 $0.12 $0.16 NCI impact of restructuring and impairment costs - $(2
Slide 20: IR Contacts
IR Contacts Jim Lucas Vice President, Investor Relations jim.lucas@jci.com Michael Gates Senior Director, Investor Relations michael.j.gates@jci.com www.johnsoncontrols.com © 2024 Johnson Controls. All rights reserved.
Slide 21: Consolidated Statements of Income
FINANCIAL STATEMENTS Johnson Controls International plc Consolidated Statements of Income (in millions, except per share data; unaudited) Three Months Ended Nine Months Ended June 30, June 30, 2024 2023 2024 2023 Net sales Products and systems $ 5,422 $ 5,431 $ 14,896 $ 15,070 Services 1,809 1,702 5
Slide 22: Condensed Consolidated Statements of Financial Position
Johnson Controls International plc Condensed Consolidated Statements of Financial Position (in millions; unaudited) June 30, 2024 September 30, 2023 Assets Cash and cash equivalents $ 862 $ 835 Accounts receivable - net 6,667 6,006 Inventories 2,863 2,776 Current assets held for sale 205 — Other cur
Slide 23: Consolidated Statements of Cash Flows
Johnson Controls International plc Consolidated Statements of Cash Flows (in millions; unaudited) Three Months Ended Nine Months Ended June 30, June 30, 2024 2023 2024 2023 Operating Activities Net income attributable to Johnson Controls $ 975 $ 1,049 $ 1,072 $ 1,300 Income attributable to noncontro
Slide 24: Footnotes
FOOTNOTES 1. Non-GAAP Measures The Company reports various non-GAAP measures in this earnings release and the related earnings presentation. Non-GAAP measures should be considered in addition to, and not as replacements for, the most comparable GAAP measures. Refer to footnotes two through seven for
Slide 25: Footnotes: Special Item Definitions
• Water systems AFFF settlement and insurance recoveries include amounts related to a settlement with a nationwide class of public water systems concerning the use of AFFF manufactured and sold by a subsidiary of the Company. • Transaction/separation costs include costs associated with significant m
Slide 26: Sales
2. Sales The following tables detail the changes in sales attributable to organic growth, foreign currency, acquisitions, divestitures and other (unaudited): Three Months Ended June 30 Net sales Building Solutions North Asia Global Total JCI (in millions) America EMEA/LA Pacific Total Products plc N
Slide 27: Products and Systems Revenue
Three Months Ended June 30 Products and systems revenue Building Solutions North Asia Global Total JCI (in millions) America EMEA/LA Pacific Total Products plc Products and systems revenue - 2023 $ 1,636 $ 571 $ 537 $2,744 $ 2,687 $ 5,431 Base year adjustments Divestitures and other — — — — (7) (7)
Slide 28: Service Revenue
Three Months Ended June 30 Service revenue Building Solutions North Asia Global Total JCI (in millions) America EMEA/LA Pacific Total Products plc Service revenue - 2023 $ 1,029 $ 474 $ 199 $1,702 $ — $ 1,702 Base year adjustments Divestitures and other — (1) (17) (18) — (18) Foreign currency — (34)
Slide 29: Cash Flow, Free Cash Flow and Free Cash Flow Conversion
3. Cash Flow, Free Cash Flow and Free Cash Flow Conversion The following table includes free cash flow and free cash flow conversion (unaudited): Three Months Ended June 30, Nine Months Ended June 30, (in millions) 2024 2023 2024 2023 Cash provided by operating activities $ 1,021 $ 813 $ 572 $ 831 C
Slide 30: EBITA, EBIT and Corporate Expense
4. EBITA, EBIT and Corporate Expense The Company evaluates the performance of its business units primarily on segment EBITA. Three Months Ended June 30, Nine Months Ended June 30, Adjusted Adjusted Actual (Non-GAAP) Actual (Non-GAAP) (in millions; unaudited) 2024 2023 2024 2023 2024 2023 2024 2023 S
Slide 31: Segment EBITA Reconciliation, Nine Months Ended June 30
Nine Months Ended June 30, Building Solutions Building Solutions Building Solutions (in millions) North America EMEA/LA Asia Pacific Global Products 2024 2023 2024 2023 2024 2023 2024 2023 Segment EBITA $ 1,179 $ 967 $ 280 $ 234 $ 167 $ 249 $1,453 $1,463 Adjusting items: Earn-out adjustments (61) —
Slide 32: Net Income and Diluted Earnings Per Share
5. Net Income and Diluted Earnings Per Share The following tables reconcile net income attributable to JCI and diluted earnings per share as reported to the comparable adjusted amounts (unaudited): Three Months Ended June 30, Net income attributable to Diluted earnings JCI per share (in millions, ex
Slide 33: Share Count Reconciliation and Debt Ratios
The following table reconciles the denominators used to calculate basic and diluted earnings per share (in millions; unaudited): Three Months Ended Nine Months Ended June 30, June 30, 2024 2023 2024 2023 Weighted average shares outstanding Basic weighted average shares outstanding 670.3 683.3 676.7
Slide 34: Adjusted EBIT and Adjusted EBITDA Reconciliation
The following table reconciles net income to adjusted EBIT and adjusted EBITDA (unaudited): Twelve Months Ended (in millions) June 30, 2024 March 31, 2024 June 30, 2023 Net income $ 1,803 $ 1,873 $ 2,261 Income tax provision (benefit) 42 (514) (469) Net financing charges 326 335 278 EBIT 2,171 1,694
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