19 slides from Johnson Controls International's earnings presentation, Apr 22, 2009
Slide 1: Agenda and forward-looking statement
2 2 Agenda Introduction Glen Ponczak - Director, Investor Relations Overview and Economic Environment / Outlook Steve Roell - Chairman and Chief Executive Officer Business Results and Financial Review Bruce McDonald - Executive Vice President and Chief Financial Officer Q&A FORWARD-LOOKING STATEMENT
Slide 2: 2009 second quarter
3 2009 second quarter* *Excluding Q2 items $230 million restructuring announced March 2009 $81 million non-recurring tax benefit $7 million tax rate benefit related to Q1 $6 million restructuring charges at equity affiliates Sales: $6.3 billion vs. $9.4 billion in 2008 Segment income: loss of $113 m
Slide 3: Economic environment and outlook: Automotive markets
4 4 2009 second quarter Economic environment and outlook Automotive markets Prolonged production shut-downs in North America and Europe, particularly in January North American production (FY 2009) forecast of 8.8 million vehicles Compared with 9.3 million forecast in December 2009 "Wealth effect" ne
Slide 4: Economic environment and outlook: Building markets
5 5 2009 second quarter Economic environment and outlook Building markets Our primary vertical market -- institutional buildings (government, healthcare, education) -- remains the most resilient new construction sector Weakness in office, retail, lodging where JCI has low presence; expected to conti
Slide 5: Some encouraging signs: Automotive markets
6 Some encouraging signs Automotive markets Government support European incentive programs having a positive impact on new vehicle sales Auto scrappage programs driving increased "A" and "B" segment car purchases Managed government-backed process for OE long-term viability U.S. Treasury program for
Slide 6: Some encouraging signs: Other news
7 Some encouraging signs Other news Toyota "Global Contribution Award" Three companies selected in 2009 JCI is only supplier of vehicle interior products, and the only U.S. company, to gain top recognition New business awards in Asia GM, Kia, Nissan Intend to participate in U.S. Treasury supplier cr
Slide 7: Some encouraging signs: Power Solutions and Building Efficiency
8 Some encouraging signs Power Solutions Auto battery destocking in retail / wholesale channels stabilizing U.S. Federal and State funding for domestic hybrid battery capacity Building Efficiency Stimulus funding for investing in energy efficiency, infrastructure JCI pipeline of ARRA projects: $535
Slide 8: Federal Opportunities and Economic Stimulus (ARRA)
9 Federal Opportunities Well positioned as a preferred or pre- qualified supplier to many federal entities Strong presence on over 50% of the top 85 military installations world-wide Installed systems at the White House, U.S. Capitol and Pentagon 2008 market share of Department of Energy's performan
Slide 9: Improving our cost structure and liquidity
10 2009 second quarter actions Improving our cost structure and liquidity $230 million restructuring 80% focused on Automotive Experience; remainder is primarily Power Solutions Approximately $185 million in cash 10 plant consolidations / closings Slightly accretive in 2009; incremental $0.15 per di
Slide 10: Building Efficiency: net sales
11 11 2009 second quarter Building Efficiency 2009 2008 Net sales $3.0 B $3.3 B - 10% Adjusted for currency, sales down 2% N.A. systems up slightly Solutions growth of 16% Temporary contract delays due to potential of stimulus funding Europe, ROW comparable with last year, excluding currency Technic
Slide 11: Building Efficiency: segment income
12 12 2009 second quarter Building Efficiency 2009 2008 Segment income $90 M $177 M - 49% All non-residential businesses solidly profitable Good progress in European restructuring (segment income up 7%, excluding currency) 40% of overall decline attributable to residential HVAC (unitary products) bu
Slide 12: Power Solutions
13 13 2009 second quarter Power Solutions 2009 2008 Net sales $905 M $1.5 B - 38% Unit volumes down 9% Aftermarket unit volume comparable with last year OE unit volume down 38% in Americas; 39% in Europe Segment income $66 M $121 M - 46% Lower unit volumes Increased investment in Asia lead-acid expa
Slide 13: Power Solutions: lead-acid and hybrid batteries
14 Lead-acid batteries Genuine Parts/ NAPA (western region) New customer for Johnson Controls Initial shipments begin in Q3 2009 Commenced battery shipments to O'Reilly's / CSK Named Wal-Mart "Vendor of the Year" in the automotive category Hybrid batteries U.S. Lithium-Ion hybrid battery plant Exist
Slide 14: Automotive Experience
15 15 2009 second quarter Automotive Experience 2009 2008 Net sales $2.4 B $4.7 B - 47% Sales down 40% excluding impact of currency Declines across all geographies, customers and product segments North America: down 48% (production down 51%) Europe: down 48% (production down 41%) Down 35% excluding
Slide 15: Financial highlights
16 16 2009 second quarter Financial highlights (in millions) 2009 (excl. items) 2008 %change Sales $6,315 $9,406 - 33% Gross profit % of sales 682 10.8% 1,310 13.9% - 48% SG&A expenses 803 888 - 10% Equity income 8 31 - 74% Segment income ($113) $453 2009 (reported) $6,315 682 10.8% 803 2 ($119) FX
Slide 16: Financial highlights: net income and EPS
17 17 2009 second quarter Financial highlights Net financing charges - Lower short-term rates, impact of FX Income tax provision - Underlying 2009 tax rate revised to 31% (in millions except per share data) 2009 2009 2008 Segment income ($119) ($113) $453 Net financing charges (46) (46) (66) Income
Slide 17: Tax rate change
18 2009 second quarter Tax rate change Q2 tax benefit at 31% $(50) Tax on restructuring ($230M at 19%) (45) Adjustment to Q1 effective tax rate (31% vs. 24%) (7) Non-recurring tax benefit (81) Q2 tax benefit reported ($183) 18 18 2009 effective tax rate increases to 31% Geographic shift in income Lo
Slide 18: Balance sheet
19 2009 second quarter Balance sheet Net debt to capitalization ratio approximately 36% Improvement in working capital by all three businesses Anticipate working capital improvements will offset cash costs of restructuring initiatives Sequential improvement in cash flow from operating and investing
Slide 19: 2009 guidance
20 2009 guidance Return to profitability in Q3 Significant improvements in Automotive Experience performance Expected segment income loss of less than $50m Building Efficiency seasonality Increasing benefit from restructuring initiatives and lower commodity costs Uncertainties remain in our industri