Johnson Controls International plc · NYSE:JCI

Johnson Controls International — Tyco International — Q3 2015 Earnings Presentation

27 slides from Johnson Controls International's earnings presentation, Jul 31, 2015

  1. Slide 1: Third Quarter Review

    Third Quarter Review 31 / July / 2015

  2. Slide 2: Forward-Looking Statements / Safe Harbor

    Forward-Looking Statements / Safe Harbor This presentation contains a number of forward-looking statements. In many cases forward-looking statements are identified by words, and variations of words, such as "anticipate", "estimate", "believe", “commit”, "continue", "could", "intend", "may", "plan",

  3. Slide 3: Productivity Initiatives Driving Strong Operational Results

    Productivity Initiatives Driving Strong Operational Results Operations at high end of guidance for the third quarter • Segment margin* expansion improved 30bps year over year, or 90bps adjusted for Air-Pak impact and non-cash purchase accounting • Operations contributed $0.05 of earnings normalized

  4. Slide 4: New Leadership Joins Installation & Services Segments

    New Leadership Joins Installation & Services Segments 4

  5. Slide 5: Mixed Macro-Economic Environment

    Mixed Macro-Economic Environment Regional Impact of ~5% of total Outlook Oil & Gas revenue North  Decline related to Western Canada region North America  Significant decline in new O&G installation America projects I&S  High margin service work down year over year  Decline related to UK’s North

  6. Slide 6: Q3 2015 Results – Financial Overview

    Q3 2015 Results – Financial Overview (EPS amounts are fully diluted and attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Q3FY15 Q3FY14 Change Revenue $2,489 $2,660 (6%) Segment Operating Income before special items* $369 $387 (5%) Segment Operating Margin before

  7. Slide 7: Third Quarter Highlights

    Third Quarter Highlights Revenue of $2.5 billion declined 6% year over year on a reported basis, including 7% headwind from foreign currency exchange rates • Acquisitions contributed 2%, partially offset by 1% organic revenue decline and divestiture • Excluding FX service +1%, installation relativel

  8. Slide 8: Third Quarter Highlights Continued

    Third Quarter Highlights Continued Orders growth of 5%, excluding impact of foreign currency and divestiture • Products +16%, Installation +3% and Service +1% YoY Total Orders Growth 7% 6% 5% 4% 3% 3% 1% Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Backlog of $4.7 billion increased 2% on both a year ov

  9. Slide 9: Third Quarter – NA Installation & Services

    Third Quarter – NA Installation & Services ($ in millions) Organic revenue* increased 1% Q3FY15 Q3FY14 Change • Installation increased 3% Revenue $972 $968 - • Service relatively flat Operating Income* $157 $134 17% Foreign currency rates negatively Operating Margin* 16.2% 13.8% +240bps impacted rev

  10. Slide 10: Third Quarter – ROW Installation & Services

    Third Quarter – ROW Installation & Services Organic revenue* decreased 2% ($ in millions) Q3FY15 Q3FY14 Change • Service decreased 1% Revenue $842 $999 (16%) • Installation decreased 3% Operating Income* $93 $113 (18%) Foreign currency exchange rates Operating Margin* 11.0% 11.3% (30bps) negatively

  11. Slide 11: Third Quarter – Global Products

    Third Quarter – Global Products Organic revenue* decreased 3% ($ in millions) Q3FY15 Q3FY14 Change • Included a 5% headwind from increased shipments of Air-Paks in Revenue $675 $693 (3%) the prior year $119 $140 (15%) • Adjusted for Air-Pak organic Operating Income* revenue +2% Operating Margin* 17.

  12. Slide 12: Other Items

    Other Items Corporate expense before special items* was $50 million in the quarter • Outlook: Expect Q4 fiscal 2015 corporate expense before special items to be ~$55 million; expect full year corporate expense to be ~$210 million Tax rate excluding special items was 17.2% for the quarter • Outlook:

  13. Slide 13: Guidance

    Guidance Q4 2015 Outlook Revenue ~$2.5 billion ~6% decline YoY on reported basis Organic Growth Flat to (1%) FX Headwind ~$195 million or (7%) headwind Net M&A Activity ~$40 million or +1% benefit Incl. Divestiture Segment Margin ~15.4% / +~120bps Before Special Items EPS $0.60-$0.62 Before Special

  14. Slide 14: Appendix

    Appendix

  15. Slide 15: Foreign Exchange Rates

    Foreign Exchange Rates Top Foreign Currency Exposures Prior Current FX Variance FX Rates* Rates* EUR/USD 1.06 1.09 +3% GBP/USD 1.48 1.56 +5% USD/CAD 1.25 1.30 (4%) AUD/USD 0.76 0.74 (3%) * Prior foreign exchange rates quoted from April 16, 2015. Current foreign exchange rates quoted as of July 22, 2

  16. Slide 16: Consolidated Statements of Operations

    TYCO INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) Quarters Ended Nine Months Ended June 26, 2015 June 27, 2014 June 26, 2015 June 27, 2014 Revenue from product sales $ 1,511 $ 1,620 $ 4,457 $ 4,550 Service revenue 978 1,040 2,940 3,079 Net

  17. Slide 17: Results of Segments

    TYCO INTERNATIONAL PLC RESULTS OF SEGMENTS (in millions) (Unaudited) Quarters Ended Nine Months Ended June 26, June 27, June 26, June 27, 2015 2014 2015 2014 Net Revenue NA Installation & Services $ 972 $ 968 $ 2,867 $ 2,864 ROW Installation & Services 842 999 2,605 2,902 Global Products 675 693 1,9

  18. Slide 18: Consolidated Balance Sheets

    TYCO INTERNATIONAL PLC CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) June 26, 2015 September 26, 2014 Assets Current Assets: Cash and cash equivalents $ 531 $ 892 Accounts receivable, net 1,775 1,734 Inventories 690 625 Prepaid expenses and other current assets 820 1,051 Deferred income taxe

  19. Slide 19: Consolidated Statements of Cash Flows

    TYCO INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) For the Quarters Ended For the Nine Months Ended June 26, June 27, June 26, June 27, 2015 2014 2015 2014 Cash Flows From Operating Activities: Net income attributable to Tyco ordinary shareholders $ 156 $ 1,450 $

  20. Slide 20: Free Cash Flow Reconciliation

    Reconciliation to "Free Cash Flow": Net cash provided by operating activities $ 249 $ 152 $ 511 $ 518 Capital expenditures, net (59) (74) (179) (203) Acquisition of dealer generated customer accounts and bulk account purchases (5) (4) (13) (20) Payment of contingent consideration 1 — (23) — Free Cas

  21. Slide 21: Organic Growth Reconciliation - Revenue

    TYCO INTERNATIONAL PLC ORGANIC GROWTH RECONCILIATION - REVENUE (in millions) (Unaudited) Quarter Ended June 26, 2015 Base Year Adjustments Adjusted Net Revenue for the Fiscal Net Revenue for the Quarter Ended Divestitures / 2014 Base Quarter Ended (1) June 27, 2014 Other Revenue Foreign Currency Acq

  22. Slide 22: Earnings Per Share Summary

    Earnings Per Share Summary (Unaudited) Quarter Ended Quarter Ended June 26, 2015 June 27, 2014 Diluted EPS from Continuing Operations Attributable to Tyco Shareholders (GAAP) $ 0.44 $ 0.93 expense / (benefit) Restructuring and repositioning activities 0.14 0.05 Separation costs included in SG&A — 0.

  23. Slide 23: Quarter Ended June 26, 2015 Reconciliation

    Tyco International plc For the Quarter Ended June 26, 2015 (in millions, except per share data) (Unaudited) expense / (benefit) Segments NA ROW Installation Installation Global Segment Corporate Total & Services & Services Products Revenue and Other Revenue Revenue (GAAP) $972 $842 $675 $2,489 $— $2

  24. Slide 24: Quarter Ended June 27, 2014 Reconciliation

    Tyco International plc For the Quarter Ended June 27, 2014 (in millions, except per share data) (Unaudited) expense / (benefit) Segments NA ROW Installation Installation Global Segment Corporate Total & Services & Services Products Revenue and Other Revenue Revenue (GAAP) $968 $999 $693 $2,660 $— $2

  25. Slide 25: Non-GAAP Measures

    Non-GAAP Measures Organic revenue, free cash flow (outflow) (FCF), and income from continuing operations, earnings per share (EPS) from continuing operations, operating income and segment operating income, in each case “before special items,” are non-GAAP measures and should not be considered replac

  26. Slide 26: Non-GAAP Measures Continued

    Non-GAAP Measures Continued The limitation associated with using these cash flow metrics is that they adjust for cash items that are ultimately within management's and the Board of Directors' discretion to direct and therefore may imply that there is less or more cash that is available for the compa

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Tyco International — Q3 2015 Earnings Presentation on 6ix