19 slides from Johnson Controls International's earnings presentation, Apr 19, 2006
Slide 1: Agenda
Overview John Barth - Chairman and CEO Q2 Business Results Denise Zutz - Vice President, Strategy, Investor Relations and Communication Financial Review Bruce McDonald - Vice President and Chief Financial Officer Q&A (Conclude 11 a.m. eastern time) Agenda
Slide 2: Continuing Profitable Growth
Continuing Profitable Growth Creating new ways to help our customers succeed Interior experience: delivering world-class technologies that differentiate vehicle interiors and increase consumer demand Power solutions: providing the highest quality, lowest cost automotive batteries to help our custome
Slide 3: Success Factors: Innovation/Technology
Success Factors Innovation/Technology 50 innovations introduced at the Detroit auto show in January Positive response to integrated center stack and voice recognition offerings Standardized product architectures improving quality and performance CrafTec doors & instrument panels on 15 programs; Best
Slide 4: Success Factors: Customer Focus; Strong Relationships
Customer Focus; Strong Relationships Adding value to vehicle interiors Awarded BlueConnect hands-free cell phone system for 2007 Mazda CX-9 crossover Launched Mercedes GL-Class; JCI produces interiors for all Mercedes vehicles in U.S. Best quality batteries at lowest cost New OE and aftermarket cust
Slide 5: Success Factors: Market Leadership
Market Leadership Seating, electronics - and interior products (instrument panels, doors, overheads) Increasing battery manufacturing capacity in North America, Asia Responding to high demand for traditional lead-acid and Optima batteries Delivering expanded building efficiency solutions through lar
Slide 6: Success Factors: Disciplined Cost/Productivity/Quality Improvement
Success Factors Disciplined Cost/Productivity/Quality Improvement Processes Lowest global cost structure in interiors industry North America interiors adapting to tough environment Q2 margin slightly higher than Q1 Continuing to win new business Continued margin expansion in Europe interiors Expandi
Slide 7: Growth Strategies
Growth Strategies Building Efficiency Deliver world-class controls and mechanical equipment Expand range of services to a broader market $200 Billion Global Market Service 47% Fire/Security 27% Control systems and mechanical equipment 26% $9B Global Market (lead-acid) North America 32% Asia 31% Euro
Slide 8: Second Quarter 2006 Results in line with plan
Thanks to our employees for their dedication and support Second Quarter 2006 Results in-line with plan Positive factors European interior experience performance York performance, especially residential Tax rate reduction Negative factors North American auto mix Low exposure to higher passenger car s
Slide 9: Second Quarter 2006 Interior Experience
Second Quarter 2006 Interior Experience Q2 vehicle production N.A. +4% Cars +14%, light trucks -3% Unfavorable platform mix Europe +2% Annual outlook maintained N.A. 15.6M Europe 20.8M Commodities stabilizing but remain higher year-over-year Customer announcements GM: Oklahoma City Ford: Twin Cities
Slide 10: Second Quarter 2006 Power Solutions
Second Quarter 2006 Power Solutions Industry demand stable Continuing to increase global share Launched major new OE and aftermarket programs in North America Higher demand in China Evaluating global footprint, including capacity from Delphi Adding capacity in North America, China Continued volatili
Slide 11: Second Quarter 2006 Building Efficiency
Second Quarter 2006 Building Efficiency Continued high energy prices resulting in more attractive paybacks on JCI controls/ HVAC equipment Increasing customer demand for "green" buildings and energy efficiency solutions Chinese government building energy efficiency laws State of Wisconsin "green bui
Slide 12: Second Quarter 2006 Financial Highlights
(in millions, except per share data) Net interest expense: Increase reflects financing of the York acquisition Equity income: Strong recovery in Chinese automotive market, partially offset by advanced battery joint venture Provision for income taxes: Current quarter benefits from reduction in annual
Slide 13: Tax Changes
Tax Changes Fiscal 2006 Effective Tax Rate Reduction New lower annual base effective rate of 21.0% for 2006 vs. 24.3% Higher proportion of income in lower tax jurisdictions Q2 rate of 17.3% reflects cumulative reduction Deferred tax allowance change Total deferred tax valuation allowance of $573M at
Slide 14: Q2 Financial Highlights
Q2 Financial Highlights Working capital outflow of $66 million attributable to seasonal factors Capital expenditures $193 million. Full-year reinvestment ratio of 1.1 to 1 $150 million debt repayment in the quarter 0% 10% 20% 30% 40% 50% Q1:05 Q2:05 Q3:05 Q4:05 Q1:06 Q2:06 Q3:06 Q4:06 Q1 Q2 Q3 Q4 Q1
Slide 15: 2006 Second Half Earnings Growth Key Factors
2006 Second Half Earnings Growth Key Factors Dramatic upturn in building efficiency profitability Acquisition accounting complete York seasonality Acceleration of York synergies Improved margins in interior experience business Key launches: Toyota Tundra, Mercedes, Nissan Japan platforms Lower engin
Slide 16: Full-Year Fiscal 2006 Business Outlook
Building Power Interior Sales: approx. $32 B Operating Margin level Approx 4% lower Lower production on key platforms Negative impact of FX Approx. 25% higher Delphi acquisition Organic growth/New business Negative impact of FX Approx. 80% higher York acquisition (10 months) Organic growth Negative
Slide 17: Appendix
Appendix
Slide 18: GAAP Reconciliation
GAAP Reconciliation “Waroma7 2006 Maron 31,2008 unauded (naudies) Ine Non-GAAP operaingincome 5 2 F 2S SE Resructung cons au) GAAP operatnginoome mE 2 ‘Three Months Ended Waareh1, 2008 arch 3, 7008 (nauded) (unaudited Non-GAAP inoome fom continuing operations 3 ar 168 Resructung cons fc) Exropean ca
Slide 19: 2006 Q2: Key Platforms
Positives Negatives 2006 Q2: Key Platforms North America Europe Mercedes: M-, R- and GL-Class Honda Pilot Chevy Impala/Monte Carlo Volkswagen Jetta Hummer H3 Toyota Tacoma GM minivans Ford Expedition/Navigator Buick LaCrosse Ford F-Series Chevy TrailBlazer/Envoy Opel Zafira Volkswagen Passat BMW 1-S