Johnson Controls International plc · NYSE:JCI
Johnson Controls International — Q3 2005 Earnings Presentation
22 slides from Johnson Controls International's earnings presentation, Jul 21, 2005
Slide 1: Third Quarter 2005 Conference Call
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-looking statements
Slide 2: Agenda
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 2
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 earning
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 dur
Slide 5: Strategic Acquisitions
Strategic Acquisitions At Johnson Controls.... United Systems Integrators Acquisitions are not considered growth, –Completed June 23 but rather as an accelerant to growth –Annual sales $60m Strategic rationale – New technology Delphi battery – New customers – New geographic markets –Completed
Slide 6: Delphi Battery
Delphi Battery Strategic acquisition Benefits Benefits//Synergies Synergies − Supports our plan to participate New in Asian growth market Newcustomers/volume customers/volume − Provides manufacturing footprint in Asia −−Multi-year Multi-yearGM GMOE OEand andOES OES for domestic and export marke
Slide 7: Johnson Controls Performance
Johnson Controls Performance Sales Year-to-Date Sales growth Diversification Controls 20% – Businesses Battery – Customers 10% Seating & – Geography Interiors 70% Disciplined approach – Innovation Op. Income Year-to-Date* – Cost reduction / productivity improvement – Continuous improvement Con
Slide 8: Disclosure and Accounting Changes
Third Quarter 2005 Disclosure and Accounting Changes Segment disclosure Previous Current Controls Controls Investor presentations: 3 businesses Automotive Seating & Interiors - North America SEC filings: 5 segments Seating & Interiors - Europe Prior year financial statements will be
Slide 9: Third Quarter 2005 Financial Highlights
Third Quarter 2005 Financial Highlights (in millions) 2005 2004 % Change Sales $ 7,062 $ 6,476 9% Gross profit 900 874 3% 12.7% 13.5% SG&A 532 531 0% 7.5% 8.2% Operating income $ 368 $ 343 7% 5.2% 5.3% FX impact on sales $200M (3%); Euro at $1.27 vs. $1.20 Includes deconsolidation impact Gross
Slide 10: Third Quarter 2005 Financial Highlights
Third Quarter 2005 Financial Highlights (in millions) 2005 2004 % Change Operating income $ 368 $ 343 7% Net interest expense (22) (21) Equity income 20 18 Miscellaneous - net (9) (21) Other expense (11) (24) Income before taxes/minority interests 357 319 Provision for income taxes 95 91 effective r
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
Slide 12: Seating and Interiors Sales
Third Quarter 2005 Seating and Interiors Sales 2005 2005 2004 2004 Change Change Change Change ex ex FX FX $5.0B $5.0B $4.6B $4.6B +8% +8% +4.5% +4.5% North America Sales down 5% due to deconsolidation; otherwise up − Industry production down 1% − Positive comparisons at Chrysler, GM, Nissan, VW −
Slide 13: Third Quarter: Key Platforms
Third Quarter: Key Platforms* Positives Negatives North America North America GM LaCrosse Ford Expedition Toyota Avalon Pontiac Grand Prix Jeep Grand Cherokee, Liberty Toyota Camry Chrysler 300/Magnum Nissan Altima, Pathfinder Mercedes M Class Lexus RX 330 Honda Pilot Europe Eu
Slide 14: Seating and Interiors Operating Income
Third Quarter 2005 Seating and Interiors Operating Income 2005 2005 2004 2004 Change Change $199M $199M $219M $219M -9% -9% North America Europe Income and margin decrease Income and margin up –JV deconsolidation − Volume increase –Price reductions − Operational improvement –Higher commodity costs
Slide 15: Battery
Third Quarter 2005 Battery 2005 2005 2004 2004 Change Change Change Change ex ex FX FX Sales Sales $665M $665M $535M $535M +24% +24% +22% +22% Op. Op. Inc. Inc. $76M $76M $56M $56M +35% +35% Sales Operating Income Mostof Most ofincrease increasedue duetotoconsolidation consolidationof of Increase
Slide 16: Controls
Third Quarter 2005 Controls 2005 2005 2004 2004 Change Change Change Change ex ex FX FX Sales Sales $1.4B $1.4B $1.3B $1.3B +6% +6% +4% +4% Op. Op. Inc. Inc. $93M $93M $68M $68M +37% +37% Sales Backlog (at June 30) Construction Construction+5 +5--10% 10% Renovation++15 Renovation 15--20% 20% $2
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 A
Slide 18: 2005 Guidance (Continuing Operations)
2005 Guidance (Continuing Operations) Fourth FourthQuarter Quarter Full FullYear Year 2005 2005 2004 2004 2005 2005 2004 2004 Sales Sales $7B $7B $6.4B $6.4B +8-9% +8-9% Sales Sales $28B $28B $25.4B $25.4B +10% +10% EPS EPS $1.48-$1.52 $1.48-$1.52 $1.22* $1.22* +21-25% +21-25% EPS $4.39-$4.43* EPS $
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
Slide 20: Appendix
Appendix 20
Slide 21: 2005 Nine-Month Reconciliation
2005 Nine-Month Reconciliation Nine Months Ended June 30, (unaudited) 2005 2004 Non-GAAP operating income $876 $833 Japanese pension gain - 84 Restructuring costs (210) (82) GAAP operating income $666 $835 21
Slide 22: 2005 EPS Guidance Reconciliation
2005 EPS Guidance Reconciliation Fourth Quarter Full Year 2005 2004 2005 2004 (estimate) (actual) % (estimate) (actual) % Non-GAAP EPS from continuing operations $1.48 to $1.52 $1.22 21-25% $4.39 to $4.43 $3.79 16-17% Japanese pension gain - - - 0.31 Restructuring costs - - (0.92) (0.30) One-time ta