Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Q2 FY2019 Earnings Presentation

32 slides from Johnson Controls International's earnings presentation, May 1, 2019

  1. Slide 1: Fiscal 2019 Second Quarter Results

    Fiscal 2019 Second Quarter Results May 1, 2019

  2. Slide 2: Forward Looking/Cautionary Statements & Non-GAAP Financial Information

    Forward Looking/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 risks

  3. Slide 3: Additional Information and Where to Find it

    Additional Information and Where to Find it This presentation is for informational purposes only, is not a recommendation to buy or sell any securities of Johnson Controls, and does not constitute an offer to buy or the solicitation to sell any securities of Johnson Controls. The equity tender offer

  4. Slide 4: Q2 Strategic Highlights

    Q2 Strategic Highlights  Underlying fundamentals continue to improve  Confident in second half outlook  Closed Power Solutions sale ahead of schedule  Accelerating return of capital to shareholders  Investing for growth across the Buildings portfolio Energy Efficiency Project Future Bee’ah HQ R

  5. Slide 5: Backlog Up 6% to $8.8B – Provides Visibility Through FY19 and Into FY20

    Buildings Field Order Growth Organic Field Orders 9% 8% 7% 7% 5% 3% 2% 0% 0% Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Strong Order Pipeline With Q3 Orders Tracking Mid-to-high Single Digits Backlog Up 6% to $8.8B – Provides Visibility Through FY19 and Into FY20 5 Johns

  6. Slide 6: Q2 FY19 Financial Summary (continuing operations)

    Q2 FY19 Financial Summary* (continuing operations) ADJUSTED NET SALES ADJUSTED EPS $0.32 $5,779M  +3% $0.26 $5,630M Reported  +23%  +6% Reported Organic Q2 FY18 Q2 FY19 Q2 FY18 Q2 FY19 ADJUSTED EBIT & MARGIN ADJUSTED FCF $469M $0.0B $425M  60bps $0.3B $0.2B Normal Reported ($0.2B) Seasonal 8.1%

  7. Slide 7: Q2 FY19 Results vs. Prior Year – EPS Bridge

    Q2 FY19 Results vs. Prior Year* (continuing operations) EPS BRIDGE $0.04 $0.06 $0.32 ($0.02) $0.26 ($0.02) Pension/ ($0.01) Amort FX ($0.02) NFC $0.01 Tax ($0.01) Shares $0.01 Q2 FY18 VOLUME/ SYNERGIES & INVESTMENTS/ OTHER Q2 FY19 ACTUAL MIX PRODUCTIVITY SALESFORCE ACTUAL ADDITIONS *Non-GAAP exclude

  8. Slide 8: Buildings

    Buildings* Sales Segment EBITA EBITA Margin +6% +11% +50bps Organic Organic Organic $671M 11.6% $5,779M $5,630M $630M 11.2% Q2 FY18 Q2 FY19 Q2 FY18 Q2 FY19 Q2 FY18 Q2 FY19 EBITA Margin +50bps +50bps 11.6% 11.2% 11.1% (30bps) (20bps) (10bps) Q2 FY18 FX Normalized Volume / Mix Synergies / Investments

  9. Slide 9: Segment Results: Building Solutions North America

    Segment Results: Building Solutions North America* Sales  Organic sales up 5% +5% - Install up 5% / Service up 4% Organic $2,187M - HVAC & Controls up mid-single digits $2,097M - Fire & Security up mid-single digits - Solutions down low-single digits Q2 FY18 Q2 FY19  EBITA margin up 20bps - Favora

  10. Slide 10: Segment Results: Building Solutions EMEA/LA

    Segment Results: Building Solutions EMEA/LA* Sales  Organic sales up 4% - Install up 4% / Service up 5% $907M +4% $878M Organic - Europe – up mid-single digits with solid growth across HVAC, Fire & Security and Industrial Refrigeration - Middle East & Africa – down low-single digits driven by weakn

  11. Slide 11: Segment Results: Building Solutions Asia Pacific

    Segment Results: Building Solutions Asia Pacific* Sales  Organic sales up 12% +12% Organic - Install up 15% / Service up 7% $628M - Strong growth in HVAC and Building $586M Management Systems - China up low-teens Q2 FY18 Q2 FY19  EBITA margin flat - Favorable volume Segment EBITA - Unfavorable mix

  12. Slide 12: Segment Results: Building Solutions Global Products

    Segment Results: Building Solutions Global Products* Sales  Organic sales up 7% - Building Management Systems up low- +7% $2,086M Organic double digits with strength across all $2,040M businesses - HVAC & Refrigeration Equipment up mid- single digits • Global Resi HVAC up low-single digits; NA Resi

  13. Slide 13: Corporate Expense (continuing operations)

    Corporate Expense* (continuing operations)   Ongoing realization of cost synergies and 8% productivity savings ($ in millions)  Expect Corporate expense for FY19 to be in the range of $380M to $395M $113 $104 Q2 FY18 Q2 FY19 *Non-GAAP excludes special items. See footnotes for reconciliation. 13 J

  14. Slide 14: Free Cash Flow (continuing operations)

    Free Cash Flow* (continuing operations) Q2 Q2 H1 H1  Q2 adjusted free cash flow from (in $ billions) FY18 FY19 FY18 FY19 continuing operations of $0.2 billion Cash provided by operating activities $0.3 $0.2 $0.1 $0.1  H1 adjusted free cash flow breakeven, in- Capital expenditures (0.2) (0.1) (0.3)

  15. Slide 15: Balance Sheet

    Balance Sheet Capital Structure Q1 FY19 Q2 FY19 Short-term debt and $2,320 $3,968 current portion of long-term debt Long-term debt 9,588 8,418 Total debt 11,908 12,386 Less: cash and cash 292 239 equivalents Net debt $11,616 $12,147 Net debt/cap ratio 36.6% 37.7% Share repurchases ~$467M ~$533M 15 J

  16. Slide 16: Power Solutions Transaction Complete

    Power Solutions Transaction Complete  Sale closed April 30th  Gross proceeds of $13.2B; Net proceeds of $11.6B  Use of proceeds ‒ $3.4B debt reduction (FY19 interest savings: ~$40M) ‒ Up to $8.2B share repurchase  Committed to $50M Corporate cost reduction by FY20 year-end 16 Johnson Controls In

  17. Slide 17: Fiscal 2019 Continuing Operations Guidance

    Fiscal 2019 Continuing Operations Guidance* (Includes Use of Proceeds with April 30, 2019 Power Solutions Close) FY19 EPS WALK $0.15 $0.19 $1.85 to ($0.07) $1.95 $0.20 ($0.06) ($0.10) $1.59 Pension ($0.02) Amort ($0.02) Tax ($0.03) Other ($0.03) FY18 VOLUME/ SYNERGIES / BENEFIT OF INVESTMENTS/ FX OT

  18. Slide 18: FY19 Guidance Update

    FY19 Guidance Update* Guidance (Feb) Guidance (May) (Includes Use of Proceeds with June 30th Power Solutions Close) (Includes Use of Proceeds with April 30th Power Solutions Close) Sales $23.8B to $24.2B $23.8B to $24.2B +2% to +4% Reported +2% to +4% Reported Mid-single Digit Organic Growth Mid-sin

  19. Slide 19: Appendix: Supplemental Information

    Appendix: Supplemental Information If you can read this Click If you can read this Click on the icon to choose a on the icon to choose a picture or picture or Reset the slide. Reset the slide. To Reset: Right click on the slide To Reset: Right click on the slide thumbnail and select ‘reset slide’ or

  20. Slide 20: FY19 Second Quarter Financial Results (continuing operations)

    FY19 Second Quarter Financial Results (continuing operations) ($ in millions, except earnings per share) Q2 FY18 Q2 FY19 Q2 FY18* Q2 FY19* % Change GAAP GAAP NON-GAAP NON-GAAP NON-GAAP Sales $5,630 $5,779 $5,630 $5,779 3% Gross profit 1,824 1,844 1,824 1,844 1% % of sales 32.4% 31.9% 32.4% 31.9% SG&

  21. Slide 21: Special Items (continuing operations)

    Special Items (continuing operations) $ In millions, except EPS Pre-tax Income Tax (Expense) NCI (Expense) After-tax Income Q2 FY19 (Expense) Benefit Income (Expense) EPS Impact Transaction costs $(2) $1 $- $(1) $- Integration costs (68) 7 - (61) (0.07) Net mark-to-market adjustments 20 (5) - 15 0.0

  22. Slide 22: Recasted Financial Information (continuing operations)

    Recasted Financial Information* (continuing operations) Q1FY18 Organic Q2FY18 Organic Q3FY18 Organic Q4FY18 Organic FY18 Organic BT&S - North America 2,012 3.1% 2,097 0.6% 2,246 4.8% 2,324 7.7% 8,679 4.1% BT&S - EMEA/LA 915 4.0% 907 -3.3% 926 0.4% 948 5.7% 3,696 1.8% BT&S - APAC 597 2.5% 586 -1.6% 6

  23. Slide 23: johnsoncontrols.com/investors

    johnsoncontrols.com/investors @JCI_IR If you can read this Click If you can read this Click on the icon to choose a on the icon to choose a picture or picture or Reset the slide. Reset the slide. To Reset: Right click on the slide To Reset: Right click on the slide thumbnail and select ‘reset slide’

  24. Slide 24: Condensed Consolidated Statements of Income – Three Months Ended March 31

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended March 31, 2019 2018 Net sales $ 5,779 $ 5,630 Cost of sales 3,935 3,806 Gross profit 1,844 1,824 Selling, general and administrative expenses (1,458) (1,4

  25. Slide 25: Condensed Consolidated Statements of Income – Six Months Ended March 31

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Six Months Ended March 31, 2019 2018 Net sales $ 11,243 $ 10,935 Cost of sales 7,674 7,413 Gross profit 3,569 3,522 Selling, general and administrative expenses (2,896) (2,8

  26. Slide 26: Condensed Consolidated Statements of Financial Position

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) March 31, September 30, 2019 2018 ASSETS Cash and cash equivalents $ 239 $ 185 Accounts receivable - net 5,707 5,622 Inventories 2,124 1,819 Assets held for sale 2,999 3,015 Other curr

  27. Slide 27: Condensed Consolidated Statements of Cash Flows – Three Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended March 31, 2019 2018 Operating Activities Net income attributable to JCI from continuing operations $ 240 $ 184 Income from continuing operations attributable to noncontrolli

  28. Slide 28: Condensed Consolidated Statements of Cash Flows – Six Months

    JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Six Months Ended March 31, 2019 2018 Operating Activities Net income attributable to JCI from continuing operations $ 347 $ 109 Income from continuing operations attributable to noncontrolling

  29. Slide 29: Footnotes: Financial Summary

    FOOTNOTES 1. Financial Summary The Company evaluates the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxes and noncontrolling interests, excluding general corporate e

  30. Slide 30: Footnotes: Adjusted Corporate Expenses

    (2) Adjusted Corporate expenses for the three months ended March 31, 2019 excludes $61 million of integration costs and $2 million of transaction costs. Adjusted Corporate expenses for the six months ended March 31, 2019 excludes $102 million of integration costs and $4 million of transaction costs.

  31. Slide 31: Organic Growth Reconciliation

    3. Organic Growth Reconciliation The components of the changes in net sales for the three months ended March 31, 2019 versus the three months ended March 31, 2018, including organic growth, is shown below (unaudited): Adjusted Base Net Net Sales for the Three Base Year Adjustments - Sales for the Th

  32. Slide 32: Adjusted Free Cash Flow Reconciliation

    4. Adjusted Free Cash Flow Reconciliation The Company's press release contains financial information regarding free cash flow, adjusted free cash flow and adjusted free cash flow conversion, which are non-GAAP performance measures. Free cash flow is defined as cash provided by operating activities l

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