Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q1 2017 Earnings Presentation

34 slides from Johnson Controls International's earnings presentation, Feb 1, 2017

1. Slide 1: Quarterly Update FY17 First Quarter

   Quarterly Update FY17 First Quarter February 1, 2017

2. Slide 2: Cautionary Statement Regarding Forward-Looking Statements

   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 risks and uncertainties. All statements in this document other than statemen

3. Slide 3: Non GAAP Financial Information

   Non GAAP Financial Information This presentation contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include mark-to-market for pension plans, transaction/integration/separation costs, restructuring and impairment costs,

4. Slide 4: Agenda

   Agenda Introduction 1 Antonella Franzen, Vice President, Investor Relations FY17 priorities & first quarter highlights 2 Alex Molinaroli, Chairman and Chief Executive Officer Integration update & business results 3 George Oliver, President and Chief Operating Officer Financial review & guidance 4 Br

5. Slide 5: FY17 Priorities

   FY17 Priorities  Bring together culture of both companies - Vision / mission / values  Deliver on operating and financial plans - Growth / execution / shareholder value  Advance integrated strategic plan - Combined portfolio / customer insights  Continuous evaluation of portfolio - Non-core / un

6. Slide 6: FY17 First Quarter Highlights

   FY17 First Quarter Highlights  Better than expected profitability across all businesses  Solid start to the year as a combined company  Continued focus on productivity and “self-help” initiatives  Integration well underway and cost synergies being realized  Order growth in Institutional vertica

7. Slide 7: Strong Growth and Operational Performance: Asia Pacific

   Strong Growth and Operational Performance Asia Pacific  Strong performance across all businesses A SYMBOL OF OUR COMMITMENT AND FUTURE IN ASIA  Accelerating organic growth GRAND OPENING SUMMER 2017 - Demographics / infrastructure / operating scale  Power Solution’s China investments delivering st

8. Slide 8: FY17 First Quarter Earnings from Continuing Operations

   FY17 First Quarter Earnings from Continuing Operations* NET SALES DILUTED EPS $7.1 B $7.1 B $0.53 FLAT Reported $0.48 +10% +1%Organic FY17 Q1 FY16 Q1 COMBINED FY17 Q1 FY16 Q1 COMBINED EBIT $757 M $690 M +10% EBIT margin Reported +13% +90 bps Excluding FX and Lead FY17 Q1 FY16 Q1 COMBINED *Non-GAAP e

9. Slide 9: Integration Update

   Integration Update  Strong governance structure in place to track costs and related synergies  Energy level high across regional sales teams with some early wins  Cost synergies / productivity savings expected to ramp-up throughout course of year FY17 Expected Synergies/Productivity Grow, Integra

10. Slide 10: Building Technologies & Solutions

    Building Technologies & Solutions* Strong margin expansion NET SALES  Organic sales - Field consistent with prior year $5.2 B $5.3 B • Applied HVAC up mid-single digits (2%) • Fire & Security up low-single digits • Performance contracting and Industrial refrigeration Reported down ~20% - Products d

11. Slide 11: Power Solutions

    Power Solutions* Higher volumes and increased profitability NET SALES  Higher volumes in all regions $1.9B  Global shipments of start-stop +27% $1.7 B +9%Reported - - China +124% Americas +87% - EMEA down 2% +7% Organic  Growth in aftermarket shipments (+7%); OE FY17 Q1 FY16 Q1 (flat) SEGMENT EBI

12. Slide 12: Corporate Expense

    Corporate Expense* Declining year over year costs CORPORATE EXPENSE  Corporate expense now reported as separate segment outside of business $123 M operations $108 M  Includes executive management, public (12%) company costs and functional administrative costs that support the enterprise FY17 Q1 FY

13. Slide 13: FY17 First Quarter Financial Highlights (continuing operations)

    FY17 First Quarter Financial Highlights (continuing operations) COMBINED % 2017 2017 * 2016 * (in millions) GAAP NON-GAAP NON-GAAP Change Sales $7,086 $7,096 $7,066 ̶ Gross profit 2,114 2,216 2,207 ̶ % of sales 29.8% 31.2% 31.2% SG&A expenses 1,570 1,514 1,563 (3%) Restructuring & 78 - - impairment

14. Slide 14: FY17 First Quarter Financial Highlights (continuing operations)

    FY17 First Quarter Financial Highlights (continuing operations) COMBINED 2017 2017 * 2016 * (in millions, except earnings per share) GAAP NON-GAAP NON-GAAP EBIT $521 $757 $690 Net financing charges 136 119 111 Income before income taxes 385 638 579 Income tax provision (benefit) (27) 96 98 Net incom

15. Slide 15: Free Cash Flow

    Free Cash Flow $ In billions FY17  Adjusted free cash outflow of $0.3 Q1 Actual FY Guidance billion in the quarter Cash used by operating activities $(1.9)  Capex of $0.4 billion ($0.3 billion Capital expenditures (0.4) ex-Adient) in the quarter Reported free cash outflow (2.3)  As expected, sign

16. Slide 16: Balance Sheet

    Balance Sheet  Net debt to capital increase from 33.6% as of 9/30/16 to 39.7% at 12/31/16 primarily due to Adient spin-off  Debt exchange offers completed  Term debt repayments  Share repurchases - Commenced in Q2 - $200M to $250M expected for the year Note: Net debt = Total debt less cash 16 Jo

17. Slide 17: Other Items

    Other Items  Adient reflected as discontinued operation; prior periods reclassified for comparative purposes  Buildings reportable segment change expected in third quarter  Special items - Restructuring and impairment costs - Transaction / integration / separation costs - Pension / OPEB mark-to-m

18. Slide 18: FY17 Q1 Results vs. Prior Year

    FY17 Q1 Results vs. Prior Year*  Solid cost synergies & productivity EPS BRIDGE savings $0.02 $0.01 $0.05 $0.53  Volume / mix as $0.48 ($0.02) ($0.01) expected - Net impact of lead unfavorable $0.01 - Offset by volume and positive mix  Continued investments in FY16 SYNERGIES & VOLUME/ TAX INVESTM

19. Slide 19: FY17 Q2 Guidance vs. Prior Year

    FY17 Q2 Guidance vs. Prior Year* FY17 Q2 OUTLOOK EPS BRIDGE Sales ~$7.1B $0.02 $0.01 $0.48 - Organic Growth ~2.0% $0.05 $0.50 $0.45 ($0.02) ($0.02) FX Headwind ~($145M) Net M&A Activity ~($40M) Incl. Divestiture EBIT Margin Expansion +20 to +30 bps Diluted Shares 947M FY16 SYNERGIES & VOLUME/ TAX RA

20. Slide 20: EPS Phasing

    EPS Phasing* 1st Half 2nd Half Combined FY16 Normal ~40% ~60% Seasonality 2017 Cost Synergies / Productivity $0.10 $0.15 Savings 2017 EPS ~38% ~62% $0.05 $0.03 $0.02 $1.58 – $1.73 $0.55 ($0.02) $1.02 1st HALF FY17 NORMAL SYNERGIES / MIX TIMING OF FX HEADWIND 2nd HALF FY17 MIDPOINT SEASONALITY PRODUC

21. Slide 21: Appendix

    hated y) : Controls

22. Slide 22: Building Technologies & Solutions Segment Detail

    Building Technologies & Solutions Segment Detail Sales Growth Orders Growth (Ex FX and M&A) (Ex FX and M&A) FY17 Q1 FY17 Q1 Building Efficiency Systems & Services North America (4%) +2% Products North America (2%) +12% Asia +3% (3%) Rest of World (3%) +5% (1%) +3% Tyco Flat Flat Buildings (1%) +2% 2

23. Slide 23: First Quarter Special Items (continuing operations)

    First Quarter Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax Income 2017 (Expense) Benefit Benefit (Expense) EPS Impact Transaction, Integration & Separation Costs ($134) $11 $- ($123) ($0.13) Restructuring & Impairment Costs (78)

24. Slide 24: First Quarter FY17 Restructuring and Impairment Costs

    First Quarter FY17 Restructuring and Impairment Costs $ In millions Business Unit Cash Non-cash Total Corporate $47 $15 $62 Building Technologies & Solutions 15 1 16 Total pre-tax charge $62 $16 $78 Tax impact (14) Total after-tax charge $64 Restructuring and Non-cash Impairment Charges Primarily Re

25. Slide 25: 2017 Full Year Foreign Exchange Impact

    2017 Full Year Foreign Exchange Impact Original FX Guidance Current FX Guidance December Investor Day FY17 Q1 Earnings Call 2017 Sales ($430M) ($680M) Headwind (~2%) (~2%) 2017 EPS ($0.07) ($0.08) Headwind Top Foreign Currency Exposures Original FX Rates December FX Rates December Investor Day FY17

26. Slide 26: johnsoncontrols.com/investors

    johnsoncontrols.com/investors @JCI_IR

27. Slide 27: Condensed Consolidated Statements of Income

    February 1, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended December 31, 2016 2015 Net sales $ 7,086 $ 4,696 Cost of sales 4,972 3,439 Gross profit 2,114 1,257 Selling, general and administrative e

28. Slide 28: Condensed Consolidated Statements of Financial Position

    February 1, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) December 31, September 30, 2016 2016 ASSETS Cash and cash equivalents $ 377 $ 579 Accounts receivable - net 6,057 6,394 Inventories 2,943 2,888 Assets held for sale 17

29. Slide 29: Condensed Consolidated Statements of Cash Flows

    February 1, 2017 JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended December 31, 2016 2015 Operating Activities Net income attributable to JCI $ 329 $ 450 Income from continuing operations attributable to noncontrolling inte

30. Slide 30: Footnotes: Financial Summary

    February 1, 2017 FOOTNOTES 1. Financial Summary In the first quarter of fiscal 2017, the Company began evaluating the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxe

31. Slide 31: Segment EBITA Reconciliation

    February 1, 2017 (1) The Company's press release contains financial information regarding adjusted net sales, adjusted segment EBITA and adjusted segment EBITA margins, which are non-GAAP performance measures. The Company's definition of adjusted segment EBITA excludes special items because these co

32. Slide 32: Supplemental Combined Information Notes

    February 1, 2017 For the avoidance of doubt, this supplemental combined information is not intended to be, and was not, prepared on a basis consistent with the unaudited pro forma condensed combined financial information in Exhibit 99.3 to the Company’s Current Report on Form 8-K/A filed October 3,

33. Slide 33: Organic Adjusted Net Sales Growth Reconciliation

    February 1, 2017 3. Organic Adjusted Net Sales Growth Reconciliation The components of the changes in adjusted net sales for the three months ended December 31, 2016 versus the three months ended December 31, 2015, including organic net sales, is shown below (unaudited): Combined Adjusted Net Sales

34. Slide 34: Diluted Earnings Per Share Reconciliation

    February 1, 2017 The following table reconciles the denominators used to calculate basic and diluted earnings per share for JCI plc (in millions): Three Months Ended December 31, 2016 2015 (unaudited) Weighted Average Shares Outstanding for JCI plc Basic weighted average shares outstanding 937.2 647

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