22 slides from Johnson Controls International's earnings presentation, Jul 21, 2005
Slide 1: Third Quarter 2005 Conference Call
Exhibit 99.2 Third Quarter 2005 Conference Call July 21, 2005 Safe Harbor statement: Johnson Controls has made forward-looking statements in this document pertaining to its financial results for fiscal 2005 that are based on preliminary data and are subject to risks and uncertainties. Forward-lookin
Slide 2: Agenda
Overview Steve Roell - Vice Chairman and Executive VP Financial Review Bruce McDonald - VP and Chief Financial Officer Business Results Denise Zutz - VP Strategy, Investor Relations and Communication 2005 Fourth Quarter and Full-Year Guidance Bruce McDonald Q&A Agenda
Slide 3: Third Quarter 2005
Third Quarter 2005 Record sales, up 9% to $7.1 billion Growth in all businesses Interiors sales grew faster than industry build Higher battery shipments Higher controls revenues Diluted earnings per share from continuing operations of $1.31, up 21% In line with guidance, strong earnings comparisons
Slide 4: External Environment
External Environment Seating and Interiors North America and European production both down 1% in June quarter North America production schedule for September quarter should be firm Slow recovery in China Commodity pressures continue Battery Flat global demand Lead costs remained high during June qua
Slide 5: Strategic Acquisitions
Strategic Acquisitions At Johnson Controls.... Acquisitions are not considered growth, but rather as an accelerant to growth Strategic rationale New technology New customers New geographic markets Achieve ROIC objectives by the third year Acquisition integration.... Sales synergies to accelerate gro
Slide 6: Delphi Battery
Delphi Battery Strategic acquisition Supports our plan to participate in Asian growth market Provides manufacturing footprint in Asia for domestic and export markets New customers provide opportunity to grow globally Annual sales of approximately $725M Purchase price of $202.5M Expected to be slight
Slide 7: Johnson Controls Performance
Johnson Controls Performance Sales growth Diversification Businesses Customers Geography Disciplined approach Innovation Cost reduction / productivity improvement Continuous improvement Strong customer relationships Sales Year-to-Date Op. Income Year-to-Date* Seating & Interiors 70% Controls 20% Bat
Slide 8: Disclosure and Accounting Changes
Third Quarter 2005 Disclosure and Accounting Changes Segment disclosure Investor presentations: 3 businesses SEC filings: 5 segments Prior year financial statements will be restated to reflect new segments. No impact on previously-reported financial results. Controls Automotive Controls Seating & In
Slide 9: Financial Highlights
Third Quarter 2005 Financial Highlights (in millions) FX impact on sales $200M (3%); Euro at $1.27 vs. $1.20 Includes deconsolidation impact Gross margin pressured by commodity cost increases SG&A flat despite increased sales Modest operating margin expansion excluding deconsolidation impact
Slide 10: Financial Highlights
Third Quarter 2005 Financial Highlights (in millions) Equity income: Reflects deconsolidation of automotive joint venture; China lower Miscellaneous - net: Lower foreign currency losses; prior year bond redemption Tax rate: Lower base rate in 2005 Minority interests: Reflects deconsolidation of auto
Slide 11: Financial Highlights: Balance Sheet/Cash Flow
Third Quarter 2005 Financial Highlights Balance Sheet/Cash Flow Debt-to-capitalization improves to 28.0% at June 30th Leverage ratio down from 28.5% at end of second quarter and 33.9% at fiscal year-end Ratio includes acquisition of USI and debt associated with July 1st acquisition of Delphi's batte
Slide 12: Seating and Interiors Sales
Third Quarter 2005 Seating and Interiors Sales North America Sales down 5% due to deconsolidation; otherwise up Industry production down 1% Positive comparisons at Chrysler, GM, Nissan, VW Negative comparisons at Ford, Mercedes 2005 2004 Change Change ex FX $5.0B $4.6B +8% +4.5% Europe Sales up 20%
Slide 13: Key Platforms
Third Quarter: Key Platforms* North America Europe North America Europe Positives Negatives GM LaCrosse Toyota Avalon Jeep Grand Cherokee, Liberty Chrysler 300/Magnum Nissan Altima, Pathfinder Lexus RX 330 Honda Pilot Ford Expedition Pontiac Grand Prix Toyota Camry Mercedes M Class Opel Zafira VW To
Slide 14: Seating and Interiors Operating Income
Third Quarter 2005 Seating and Interiors Operating Income 2005 2004 Change $199M $219M -9% North America Income and margin decrease JV deconsolidation Price reductions Higher commodity costs Europe Income and margin up Volume increase Operational improvement ......more than offsetting price and comm
Slide 15: Battery
Third Quarter 2005 Battery Most of increase due to consolidation of Latin American joint venture Unit shipments up approximately 20% No impact of Delphi automotive battery acquisition Sales Increased volumes Operating improvements, including acquisition integration (Latin America and Europe) Operati
Slide 16: Controls
Third Quarter 2005 Controls Construction +5 - 10% Renovation + 15 - 20% Technical Services +10 -15% Facility management flat Benefits of branch redesign to improve operational efficiencies Increased volume of higher margin business Improved margins in facility mgmt. Sales Operating Income 2005 2004
Slide 17: Summary
Third Quarter 2005 Summary Earnings per share up 21% Seating and interiors growth despite relatively flat production environment Gross margin comparisons improving sequentially during 2005 SG&A held constant Customer diversity and business mix key factors in our financial success North American seat
Slide 18: 2005 Guidance (Continuing Operations)
2005 Guidance (Continuing Operations) Fourth Quarter 2005 2004 Sales $7B $6.4B +8-9% EPS $1.48-$1.52 $1.22* +21-25% Full Year 2005 2004 Sales $28B $25.4B +10% EPS $4.39-$4.43* $3.79* +16-17% *See GAAP reconciliation in appendix
Slide 19: 2005 Full-Year Summary
2005 Full-Year Summary On track to achieve our 59th consecutive year of sales growth and 15th consecutive year of earnings growth Given industry environment, an outstanding performance Will end on a positive note; projecting fourth quarter EPS up 21-25% Consolidated guidance consistent with October
Slide 20: Appendix
Appendix
Slide 21: 2005 Nine-Month Reconciliation
2005 Nine-Month Reconciliation
Slide 22: 2005 EPS Guidance Reconciliation
2005 EPS Guidance Reconciliation