CORK, Ireland, July 31, 2018 /PRNewswire/ -- Johnson Controls
International plc (NYSE: JCI) today reported fiscal third quarter
2018 GAAP earnings per share ("EPS") from continuing operations,
including special items, of $0.78.
Excluding these items, adjusted EPS from continuing
operations was $0.81, up 14% versus
the prior year period (see attached footnotes for non-GAAP
reconciliation).
Sales of $8.1 billion increased 6%
compared to the prior year. Excluding the impacts of M&A,
foreign currency and lead prices, total sales also grew 6%
organically.
GAAP earnings before interest and taxes ("EBIT") was
$1,011 million and EBIT margin was
12.5%. Adjusted EBIT was $1,062
million and adjusted EBIT margin was 13.1%, up 10 basis
points over the prior year. Excluding the impact of the
Scott Safety divestiture, foreign currency and lead prices, the
underlying adjusted EBIT margin increased 70 basis points.
"We delivered another quarter of strong results, with our
commitment to execution driving continued operating momentum across
the organization. Organic sales growth accelerated to 6%,
with solid growth in both Buildings and Power Solutions. More
disciplined operating fundamentals and processes are driving
improved performance against all of our key initiatives, including
service, pricing, orders, underlying margins and free cash flow,"
said George Oliver, chairman and
chief executive officer.
Additionally, I am very pleased with the significant progress we
have made on the strategic review of our Power Solutions business,
across multiple alternatives. We expect to conclude the
review by the release of our fourth quarter earnings," Oliver
continued.
"Based on our year-to-date performance and continued momentum in
the businesses, we are tightening our full year guidance range for
adjusted EPS from continuing operations to $2.80 to $2.82."
Income and EPS amounts attributable to Johnson Controls
ordinary shareholders
($ millions, except per-share
amounts)
The financial highlights presented in the tables below are in
accordance with GAAP, unless otherwise indicated. All comparisons
are to the fiscal third quarter of 2017.
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$7,683
|
$8,120
|
|
$7,669
|
$8,120
|
+6%
|
Segment
EBITA
|
1,216
|
1,252
|
|
1,212
|
1,264
|
+4%
|
EBIT
|
842
|
1,011
|
|
1,000
|
1,062
|
+6%
|
Net income from
continuing operations
|
555
|
723
|
|
671
|
755
|
+13%
|
Diluted EPS from
continuing operations
|
$0.59
|
$0.78
|
|
$0.71
|
$0.81
|
+14%
|
Organic sales growth, adjusted segment EBITA, adjusted EBIT,
adjusted EPS from continuing operations and adjusted free cash flow
are non-GAAP financial measures. For a reconciliation of these
non-GAAP measures and detail of the special items, refer to the
attached footnotes. A slide presentation to accompany the
results can be found in the Investor Relations section of Johnson
Controls' website at http://investors.johnsoncontrols.com.
BUSINESS RESULTS
Building Solutions North America
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$2,142
|
$2,246
|
|
$2,135
|
$2,246
|
+5%
|
Segment
EBITA
|
$290
|
$314
|
|
$290
|
$318
|
+10%
|
Segment EBITA margin
%
|
13.5%
|
14.0%
|
|
13.6%
|
14.2%
|
+60bps
|
Sales in the quarter were $2.2
billion, an increase of 5% versus the prior year quarter.
Excluding M&A and foreign currency, organic sales also
increased 5% versus the prior year, driven primarily by strong
growth in Fire & Security and HVAC & Controls.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 8% year-over-year. Backlog at the
end of the quarter of $5.4 billion
increased 7% year-over-year, excluding M&A and adjusted for
foreign currency.
Adjusted segment EBITA was $318
million, up 10% versus the prior year. Adjusted segment
EBITA margin of 14.2% expanded 60 basis points driven by favorable
volume and mix as well as cost synergies and productivity savings,
partially offset by salesforce additions and, to a lesser extent,
lower margin backlog conversion.
Building Solutions EMEA/LA (Europe, Middle
East, Africa/Latin America)
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$896
|
$926
|
|
$889
|
$926
|
+4%
|
Segment
EBITA
|
$100
|
$96
|
|
$89
|
$98
|
+10%
|
Segment EBITA margin
%
|
11.2%
|
10.4%
|
|
10.0%
|
10.6%
|
+60bps
|
Sales in the quarter were $926
million, an increase of 4% versus the prior year
quarter. Excluding M&A and foreign currency, organic
sales were flat with the prior year as stronger service activity
was offset primarily by continued softness in project installations
in European HVAC and Industrial Refrigeration. By region, growth in
Latin America and the Middle East was offset by declines in
Europe.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 13% year-over-year. Backlog at
the end of the quarter of $1.6
billion increased 6% year-over-year, excluding M&A and
adjusted for foreign currency.
Adjusted segment EBITA was $98
million, up 10% versus the prior year quarter. Adjusted
segment EBITA margin of 10.6% expanded 60 basis points over the
prior year, including a 40 basis point headwind related to foreign
currency. Adjusting for foreign currency, the underlying
margin improved 100 basis points driven primarily by the benefit
from cost synergies and productivity savings.
Building Solutions Asia Pacific
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$630
|
$681
|
|
$630
|
$681
|
+8%
|
Segment
EBITA
|
$85
|
$97
|
|
$84
|
$97
|
+15%
|
Segment EBITA margin
%
|
13.5%
|
14.2%
|
|
13.3%
|
14.2%
|
+90bps
|
Sales in the quarter were $681
million, an increase of 8% versus the prior year
quarter. Excluding M&A and foreign currency, organic
sales increased 4% versus the prior year, with double-digit growth
in service and low-single digit growth in project
installations.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, declined 1% year-over-year. Backlog at the
end of the quarter of $1.5 billion
increased 9% year-over-year, excluding M&A and adjusted for
foreign currency.
Adjusted segment EBITA was $97
million, up 15% versus the prior year. Adjusted segment
EBITA margin of 14.2% expanded 90 basis points over the prior year,
including a 50 basis point headwind related to foreign
currency. Adjusting for foreign currency, the underlying
margin improved 140 basis points driven by the benefit of cost
synergies and productivity savings as well as favorable volume and
mix, partially offset by salesforce additions.
Global Products
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$2,406
|
$2,429
|
|
$2,406
|
$2,429
|
+1%
|
Segment
EBITA
|
$437
|
$435
|
|
$445
|
$441
|
(1%)
|
Segment EBITA margin
%
|
18.2%
|
17.9%
|
|
18.5%
|
18.2%
|
(30bps)
|
Sales in the quarter were $2.4
billion, an increase of 1% versus the prior year
quarter. Excluding M&A and foreign currency, organic
sales increased 7% versus the prior year led by high-single digit
growth in both HVAC & Refrigeration Equipment and Building
Management Systems, and mid-single digit growth in Specialty
Products.
Adjusted segment EBITA was $441
million, down 1% versus the prior year, primarily
attributable to the impact of the Scott Safety divestiture.
Adjusted segment EBITA margin of 18.2% declined 30 basis points
over the prior year including a 90 basis point headwind related to
the divestiture of the Scott Safety business. The underlying margin
expanded 60 basis points as favorable volume leverage and the
benefit of cost synergies and productivity savings was partially
offset by product and channel investments.
Power Solutions
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Sales
|
$1,609
|
$1,838
|
|
$1,609
|
$1,838
|
+14%
|
Segment
EBITA
|
$304
|
$310
|
|
$304
|
$310
|
+2%
|
Segment EBITA margin
%
|
18.9%
|
16.9%
|
|
18.9%
|
16.9%
|
(200bps)
|
Sales in the quarter were $1.8
billion, an increase of 14% versus the prior year
quarter. Excluding the impact of higher lead pass-through and
foreign currency, organic sales increased 10% driven by higher unit
volumes, as well as favorable price and technology mix. Global
original equipment battery shipments increased 6%, outpacing
overall market demand, benefitting from several recent business
wins. Aftermarket shipments also grew 6% driven by strong growth in
EMEA and China. Start-stop battery
shipments increased 30% year-over-year, led by strong growth in
China, EMEA and the Americas.
Power Solutions adjusted segment EBITA was $310 million, a 2% increase compared to the prior
year. Adjusted segment EBITA margin of 16.9% decreased 200
basis points compared with the prior year, including a 150 basis
point headwind related to the impact of higher lead prices and
foreign currency. Power Solution's underlying margin declined 50
basis points as favorable volume mix and productivity savings were
more than offset by higher transportation costs and planned
incremental investments.
Corporate
|
GAAP
|
GAAP
|
|
Adjusted
|
Adjusted
|
|
|
Q3
2017
|
Q3
2018
|
|
Q3
2017
|
Q3
2018
|
Change
|
Corporate
expense
|
($172)
|
($141)
|
|
($122)
|
($102)
|
(16%)
|
Adjusted Corporate expense was $102
million in the quarter, a decrease of 16% compared to the
prior year quarter driven primarily by cost synergies and
productivity savings.
OTHER ITEMS
- Cash from operating activities less capex was $0.4 billion for the quarter and $0.5 billion year-to- date. Adjusted free
cash flow was $0.6 billion for the
quarter and $1.0 billion
year-to-date. Adjusted free cash flow excludes net cash
outflows of $0.2 billion in the
quarter and $0.5 billion year-to-date
primarily related to restructuring and integration costs and
nonrecurring tax payments.
- During the quarter, the Company repurchased 1.6 million shares
for approximately $60 million;
year-to-date share repurchases totaled 6.5 million shares for
approximately $250 million.
About Johnson Controls:
Johnson Controls is a global diversified technology and multi
industrial leader serving a wide range of customers in more than
150 countries. Our 120,000 employees create intelligent buildings,
efficient energy solutions, integrated infrastructure and next
generation transportation systems that work seamlessly together to
deliver on the promise of smart cities and communities. Our
commitment to sustainability dates back to our roots in 1885, with
the invention of the first electric room thermostat. We are
committed to helping our customers win and creating greater value
for all of our stakeholders through strategic focus on our
buildings and energy growth platforms. For additional information,
please visit http://www.johnsoncontrols.com or follow us
@johnsoncontrols on Twitter.
Johnson Controls International plc
Cautionary Statement Regarding Forward-Looking
Statements
Johnson Controls International plc has made statements in this
communication that are forward-looking and therefore are
subject to risks and uncertainties. All statements in this document
other than statements of historical fact are, or could
be, "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. In this
communication, statements regarding
Johnson Controls' future financial position, sales,
costs, earnings, cash flows, other measures of results of
operations, synergies and integration opportunities,
capital expenditures and debt levels are
forward-looking statements. Words such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe," "should,"
"forecast," "project" or "plan" and terms of similar
meaning are also generally intended to identify forward-looking
statements. However, the absence of these words does not mean
that a statement is not forward-looking. Johnson Controls
cautions that these statements are subject to numerous important
risks, uncertainties, assumptions and other factors, some of which
are beyond Johnson Controls' control, that could cause
Johnson Controls' actual results to differ
materially from those expressed or implied by such forward-looking
statements, including, among others, risks related
to: any delay or inability of Johnson Controls to
realize the expected benefits and synergies of recent
portfolio transactions such as the merger with Tyco and the
spin-off of Adient, changes in tax laws (including but
not limited to the recently enacted Tax Cuts and Jobs Act),
regulations, rates, policies or interpretations, the loss of key
senior management, the tax treatment of recent portfolio
transactions, significant transaction costs and/or
unknown liabilities associated with such transactions, the
outcome of actual or potential litigation relating
to such transactions, the risk that disruptions
from recent transactions will harm Johnson Controls'
business, the strength of the U.S. or other economies,
changes to laws or policies governing foreign trade, including
increased tariffs or trade restrictions, automotive vehicle
production levels, mix and schedules, energy and commodity prices,
the availability of raw materials and component products, currency
rates, cancellation of or changes to commercial arrangements, and
with respect to the recently announced review of strategic
alternatives for the Power Solutions business, which review is
expected to conclude by the release of our fiscal 2018 fourth
quarter earnings, uncertainties as to the structure and timing of
any transaction and whether it will be completed, the possibility
that closing conditions for a transaction may not be satisfied or
waived, the impact of the strategic review and any transaction on
Johnson Controls and the Power Solutions business on a standalone
basis if a transaction is completed, and whether the strategic
benefits of any transaction can be achieved. A detailed discussion
of risks related to Johnson Controls' business is included in the
section entitled "Risk Factors" in Johnson Controls' Annual Report
on Form 10-K for the 2017 fiscal year filed with the SEC on
November 21, 2017, and its Quarterly
Reports on Form 10-Q for the quarterly periods ended December 31, 2017 and March 31, 2018 filed with the SEC on February 2, 2018 and May
3, 2018, respectively, which are and available at
www.sec.gov and www.johnsoncontrols.com under the "Investors" tab.
Shareholders, potential investors and others should consider these
factors in evaluating the forward-looking statements and should not
place undue reliance on such statements. The forward-looking
statements included in this communication are made only
as of the date of this document, unless otherwise specified, and,
except as required by law, Johnson Controls assumes no obligation,
and disclaims any obligation, to update such statements to reflect
events or circumstances occurring after the date of this
communication.
Non-GAAP Financial Information
The Company's press release contains financial information
regarding adjusted earnings per share, which is a non-GAAP
performance measure. The adjusting items include mark-to-market for
pension and postretirement plans,
transaction/integration/separation costs, restructuring and
impairment costs, nonrecurring purchase accounting impacts related
to the Tyco merger, Scott Safety gain on sale and discrete tax
items. Financial information regarding adjusted sales, organic
sales, adjusted segment EBITA, adjusted segment EBITA margin and
adjusted free cash flow are also presented, which are non-GAAP
performance measures. Adjusted segment EBITA excludes special items
such as transaction/integration/separation costs and nonrecurring
purchase accounting impacts because these costs are not considered
to be directly related to the underlying operating performance of
its business units. Management believes that, when considered
together with unadjusted amounts, these non-GAAP measures are
useful to investors in understanding period-over-period operating
results and business trends of the Company. Management may also use
these metrics as guides in forecasting, budgeting and long-term
planning processes and for compensation purposes. These metrics
should be considered in addition to, and not as replacements for,
the most comparable GAAP measure.
CONTACT:
|
Investors:
|
|
Antonella
Franzen
|
|
(609)
720-4665
|
|
|
|
Ryan
Edelman
|
|
(609)
720-4545
|
|
|
|
Media:
|
|
Fraser
Engerman
|
|
(414)
524-2733
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(in millions, except
per share data; unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
Net sales
|
$ 8,120
|
|
|
$ 7,683
|
Cost of
sales
|
5,648
|
|
|
5,252
|
|
Gross
profit
|
2,472
|
|
|
2,431
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(1,527)
|
|
|
(1,609)
|
Restructuring and
impairment costs
|
-
|
|
|
(49)
|
Net financing
charges
|
(101)
|
|
|
(124)
|
Equity
income
|
66
|
|
|
69
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
910
|
|
|
718
|
|
|
|
|
|
|
Income tax
provision
|
106
|
|
|
89
|
|
|
|
|
|
|
Income from
continuing operations
|
804
|
|
|
629
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
-
|
|
|
-
|
|
|
|
|
|
|
Net income
|
804
|
|
|
629
|
|
|
|
|
|
|
Less: Income from
continuing operations
|
|
|
|
|
|
attributable to
noncontrolling interests
|
81
|
|
|
74
|
|
|
|
|
|
|
Less: Income from
discontinued operations
|
|
|
|
|
|
attributable to
noncontrolling interests
|
-
|
|
|
-
|
|
|
|
|
|
|
Net income
attributable to JCI
|
$
723
|
|
|
$
555
|
|
|
|
|
|
|
Income from
continuing operations
|
$
723
|
|
|
$
555
|
Loss from
discontinued operations
|
-
|
|
|
-
|
|
|
|
|
|
|
Net income
attributable to JCI
|
$
723
|
|
|
$
555
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations
|
$
0.78
|
|
|
$
0.59
|
Diluted loss per
share from discontinued operations
|
-
|
|
|
-
|
Diluted earnings per
share
|
$
0.78
|
|
|
$
0.59
|
|
|
|
|
|
|
Diluted weighted
average shares
|
930.7
|
|
|
944.4
|
Shares outstanding at
period end
|
924.9
|
|
|
932.4
|
|
|
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(in millions, except
per share data; unaudited)
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30,
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
Net sales
|
$ 23,030
|
|
|
$ 22,036
|
Cost of
sales
|
16,169
|
|
|
15,210
|
|
Gross
profit
|
6,861
|
|
|
6,826
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
(4,532)
|
|
|
(4,905)
|
Restructuring and
impairment costs
|
(158)
|
|
|
(226)
|
Net financing
charges
|
(332)
|
|
|
(376)
|
Equity
income
|
170
|
|
|
177
|
|
|
|
|
|
|
Income from
continuing operations before income taxes
|
2,009
|
|
|
1,496
|
|
|
|
|
|
|
Income tax
provision
|
451
|
|
|
570
|
|
|
|
|
|
|
Income from
continuing operations
|
1,558
|
|
|
926
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
-
|
|
|
(34)
|
|
|
|
|
|
|
Net
income
|
1,558
|
|
|
892
|
|
|
|
|
|
|
Less: Income from
continuing operations
|
|
|
|
|
|
attributable to
noncontrolling interests
|
167
|
|
|
147
|
|
|
|
|
|
|
Less: Income from
discontinued operations
|
|
|
|
|
|
attributable to
noncontrolling interests
|
-
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to JCI
|
$
1,391
|
|
|
$
736
|
|
|
|
|
|
|
Income from
continuing operations
|
$
1,391
|
|
|
$
779
|
Loss from
discontinued operations
|
-
|
|
|
(43)
|
|
|
|
|
|
|
Net income
attributable to JCI
|
$
1,391
|
|
|
$
736
|
|
|
|
|
|
|
Diluted earnings per
share from continuing operations
|
$
1.49
|
|
|
$
0.82
|
Diluted loss per
share from discontinued operations
|
-
|
|
|
(0.05)
|
Diluted earnings per
share *
|
$
1.49
|
|
|
$
0.78
|
|
|
|
|
|
|
Diluted weighted
average shares
|
932.1
|
|
|
946.8
|
Shares outstanding at
period end
|
924.9
|
|
|
932.4
|
|
|
|
|
|
|
* May not sum due to
rounding.
|
|
|
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
September
30,
|
|
|
|
2018
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
Cash and cash
equivalents
|
$
283
|
|
$
321
|
|
Accounts receivable -
net
|
6,895
|
|
6,666
|
|
Inventories
|
3,509
|
|
3,209
|
|
Assets held for
sale
|
12
|
|
189
|
|
Other current
assets
|
1,766
|
|
1,907
|
|
|
Current
assets
|
12,465
|
|
12,292
|
|
|
|
|
|
|
|
Property, plant and
equipment - net
|
6,093
|
|
6,121
|
|
Goodwill
|
|
19,512
|
|
19,688
|
|
Other intangible
assets - net
|
6,424
|
|
6,741
|
|
Investments in
partially-owned affiliates
|
1,290
|
|
1,191
|
|
Noncurrent assets
held for sale
|
-
|
|
1,920
|
|
Other noncurrent
assets
|
3,622
|
|
3,931
|
|
|
Total
assets
|
$ 49,406
|
|
$
51,884
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
1,583
|
|
$
1,608
|
|
Accounts payable and
accrued expenses
|
5,394
|
|
5,342
|
|
Liabilities held for
sale
|
-
|
|
72
|
|
Other current
liabilities
|
4,324
|
|
4,832
|
|
|
Current
liabilities
|
11,301
|
|
11,854
|
|
|
|
|
|
|
|
Long-term
debt
|
10,373
|
|
11,964
|
|
Other noncurrent
liabilities
|
5,692
|
|
6,315
|
|
Noncurrent
liabilities held for sale
|
-
|
|
173
|
|
Redeemable
noncontrolling interests
|
231
|
|
211
|
|
Shareholders' equity
attributable to JCI
|
20,773
|
|
20,447
|
|
Noncontrolling
interests
|
1,036
|
|
920
|
|
|
Total liabilities and
equity
|
$ 49,406
|
|
$
51,884
|
|
|
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
Operating
Activities
|
|
|
|
|
Net income
attributable to JCI
|
$ 723
|
|
|
$ 555
|
Income from
continuing operations attributable to noncontrolling
interests
|
81
|
|
|
74
|
Income from
discontinued operations attributable to noncontrolling
interests
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net income
|
804
|
|
|
629
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
292
|
|
|
281
|
|
|
Pension and
postretirement benefit expense (income)
|
(36)
|
|
|
18
|
|
|
Pension and
postretirement contributions
|
(17)
|
|
|
(17)
|
|
|
Equity in earnings of
partially-owned affiliates, net of dividends received
|
(32)
|
|
|
(50)
|
|
|
Deferred income
taxes
|
2
|
|
|
(3)
|
|
|
Non-cash
restructuring and impairment costs
|
-
|
|
|
31
|
|
|
Other -
net
|
37
|
|
|
35
|
|
|
Changes in assets and
liabilities, excluding acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(390)
|
|
|
(298)
|
|
|
|
|
Inventories
|
(38)
|
|
|
(215)
|
|
|
|
|
Other
assets
|
(79)
|
|
|
(108)
|
|
|
|
|
Restructuring
reserves
|
(51)
|
|
|
(25)
|
|
|
|
|
Accounts payable and
accrued liabilities
|
323
|
|
|
9
|
|
|
|
|
Accrued income
taxes
|
(87)
|
|
|
(71)
|
|
|
|
|
|
Cash provided by
operating activities
|
728
|
|
|
216
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Capital
expenditures
|
(285)
|
|
|
(362)
|
Sale of property,
plant and equipment
|
13
|
|
|
5
|
Acquisition of
businesses, net of cash acquired
|
(9)
|
|
|
-
|
Business
divestitures, net of cash divested
|
(13)
|
|
|
-
|
Other -
net
|
-
|
|
|
(3)
|
|
|
|
|
|
Cash used by
investing activities
|
(294)
|
|
|
(360)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Increase in short and
long-term debt - net
|
18
|
|
|
692
|
Debt financing
costs
|
-
|
|
|
(1)
|
Stock
repurchases
|
(56)
|
|
|
(307)
|
Payment of cash
dividends
|
(241)
|
|
|
(234)
|
Proceeds from the
exercise of stock options
|
3
|
|
|
42
|
Dividends paid to
noncontrolling interests
|
-
|
|
|
-
|
Cash transferred to
Adient related to spin-off
|
-
|
|
|
-
|
Cash paid related to
prior acquisitions
|
-
|
|
|
(38)
|
Other -
net
|
2
|
|
|
(1)
|
|
|
|
|
|
Cash provided (used)
by financing activities
|
(274)
|
|
|
153
|
Effect of exchange
rate changes on cash and cash equivalents
|
(145)
|
|
|
37
|
Increase in cash
and cash equivalents
|
$
15
|
|
|
$
46
|
|
|
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June,
|
|
|
|
|
|
|
2018
|
|
|
2017
|
Operating
Activities
|
|
|
|
|
Net income
attributable to JCI
|
$ 1,391
|
|
|
$
736
|
Income from
continuing operations attributable to noncontrolling
interests
|
167
|
|
|
147
|
Income from
discontinued operations attributable to noncontrolling
interests
|
-
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Net income
|
1,558
|
|
|
892
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income to cash provided (used) by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
844
|
|
|
919
|
|
|
Pension and
postretirement benefit income
|
(108)
|
|
|
(184)
|
|
|
Pension and
postretirement contributions
|
(54)
|
|
|
(275)
|
|
|
Equity in earnings of
partially-owned affiliates, net of dividends received
|
(111)
|
|
|
(166)
|
|
|
Deferred income
taxes
|
(75)
|
|
|
1,056
|
|
|
Non-cash
restructuring and impairment costs
|
30
|
|
|
70
|
|
|
Gain on Scott Safety
business divestiture
|
(114)
|
|
|
-
|
|
|
Other -
net
|
69
|
|
|
117
|
|
|
Changes in assets and
liabilities, excluding acquisitions and divestitures:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(282)
|
|
|
(319)
|
|
|
|
|
Inventories
|
(338)
|
|
|
(585)
|
|
|
|
|
Other
assets
|
(64)
|
|
|
(258)
|
|
|
|
|
Restructuring
reserves
|
(63)
|
|
|
22
|
|
|
|
|
Accounts payable and
accrued liabilities
|
(198)
|
|
|
(590)
|
|
|
|
|
Accrued income
taxes
|
167
|
|
|
(2,002)
|
|
|
|
|
|
Cash provided (used)
by operating activities
|
1,261
|
|
|
(1,303)
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Capital
expenditures
|
(782)
|
|
|
(996)
|
Sale of property,
plant and equipment
|
23
|
|
|
23
|
Acquisition of
businesses, net of cash acquired
|
(24)
|
|
|
(6)
|
Business
divestitures, net of cash divested
|
2,101
|
|
|
180
|
Other -
net
|
(14)
|
|
|
(33)
|
|
|
|
|
|
Cash provided (used)
by investing activities
|
1,304
|
|
|
(832)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Increase (decrease)
in short and long-term debt - net
|
(1,524)
|
|
|
1,468
|
Debt financing
costs
|
(4)
|
|
|
(18)
|
Stock
repurchases
|
(255)
|
|
|
(426)
|
Payment of cash
dividends
|
(714)
|
|
|
(469)
|
Proceeds from the
exercise of stock options
|
39
|
|
|
130
|
Dividends paid to
noncontrolling interests
|
(46)
|
|
|
(78)
|
Dividend from Adient
spin-off
|
-
|
|
|
2,050
|
Cash transferred to
Adient related to spin-off
|
-
|
|
|
(665)
|
Cash paid related to
prior acquisitions
|
-
|
|
|
(75)
|
Other -
net
|
(24)
|
|
|
(20)
|
|
|
|
|
|
Cash provided (used)
by financing activities
|
(2,528)
|
|
|
1,897
|
Effect of exchange
rate changes on cash and cash equivalents
|
(84)
|
|
|
12
|
Change in cash held
for sale
|
9
|
|
|
105
|
Decrease in cash
and cash equivalents
|
$
(38)
|
|
|
$ (121)
|
|
|
|
FOOTNOTES
|
1.
Financial Summary
|
|
The Company evaluates
the performance of its business units primarily on segment earnings
before interest, taxes and amortization (EBITA), which represents
income from continuing operations before income taxes and
noncontrolling interests, excluding general corporate expenses,
intangible asset amortization, net financing charges, significant
restructuring and impairment costs, and the net mark-to-market
adjustments related to pension and postretirement plans.
|
|
(in millions;
unaudited)
|
Three Months Ended
June 30,
|
|
Nine Months Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
Net sales
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Solutions
North America
|
$
2,246
|
|
$
2,246
|
|
$
2,142
|
|
$
2,135
|
|
$
6,355
|
|
$
6,355
|
|
$
6,181
|
|
$
6,151
|
Building Solutions
EMEA/LA
|
926
|
|
926
|
|
896
|
|
889
|
|
2,748
|
|
2,748
|
|
2,669
|
|
2,658
|
Building Solutions
Asia Pacific
|
681
|
|
681
|
|
630
|
|
630
|
|
1,864
|
|
1,864
|
|
1,767
|
|
1,768
|
Global
Products
|
2,429
|
|
2,429
|
|
2,406
|
|
2,406
|
|
6,250
|
|
6,250
|
|
6,214
|
|
6,220
|
Total Building
Technologies & Solutions
|
6,282
|
|
6,282
|
|
6,074
|
|
6,060
|
|
17,217
|
|
17,217
|
|
16,831
|
|
16,797
|
Power
Solutions
|
1,838
|
|
1,838
|
|
1,609
|
|
1,609
|
|
5,813
|
|
5,813
|
|
5,205
|
|
5,205
|
Net sales
|
$
8,120
|
|
$
8,120
|
|
$
7,683
|
|
$
7,669
|
|
$ 23,030
|
|
$
23,030
|
|
$22,036
|
|
$
22,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Solutions
North America
|
$
314
|
|
$
318
|
|
$
290
|
|
$
290
|
|
$
780
|
|
$
798
|
|
$
741
|
|
$
755
|
Building Solutions
EMEA/LA
|
96
|
|
98
|
|
100
|
|
89
|
|
242
|
|
247
|
|
238
|
|
233
|
Building Solutions
Asia Pacific
|
97
|
|
97
|
|
85
|
|
84
|
|
242
|
|
242
|
|
215
|
|
223
|
Global
Products
|
435
|
|
441
|
|
437
|
|
445
|
|
949
|
|
856
|
|
806
|
|
903
|
Total Building
Technologies & Solutions
|
942
|
|
954
|
|
912
|
|
908
|
|
2,213
|
|
2,143
|
|
2,000
|
|
2,114
|
Power
Solutions
|
310
|
|
310
|
|
304
|
|
304
|
|
1,008
|
|
1,008
|
|
996
|
|
997
|
Segment
EBITA
|
1,252
|
|
1,264
|
|
1,216
|
|
1,212
|
|
3,221
|
|
3,151
|
|
2,996
|
|
3,111
|
Corporate expenses
(2)
|
(141)
|
|
(102)
|
|
(172)
|
|
(122)
|
|
(434)
|
|
(313)
|
|
(605)
|
|
(358)
|
Amortization of
intangible assets (3)
|
(100)
|
|
(100)
|
|
(108)
|
|
(90)
|
|
(288)
|
|
(288)
|
|
(383)
|
|
(285)
|
Mark-to-market gain
(loss) for pension plans (4)
|
-
|
|
-
|
|
(45)
|
|
-
|
|
-
|
|
-
|
|
90
|
|
-
|
Restructuring and
impairment costs (5)
|
-
|
|
-
|
|
(49)
|
|
-
|
|
(158)
|
|
-
|
|
(226)
|
|
-
|
EBIT (6)
|
1,011
|
|
1,062
|
|
842
|
|
1,000
|
|
2,341
|
|
2,550
|
|
1,872
|
|
2,468
|
EBIT margin
|
12.5%
|
|
13.1%
|
|
11.0%
|
|
13.0%
|
|
10.2%
|
|
11.1%
|
|
8.5%
|
|
11.2%
|
Net financing charges
(7)
|
(101)
|
|
(101)
|
|
(124)
|
|
(124)
|
|
(332)
|
|
(332)
|
|
(376)
|
|
(359)
|
Income from continuing
operations before income taxes
|
910
|
|
961
|
|
718
|
|
876
|
|
2,009
|
|
2,218
|
|
1,496
|
|
2,109
|
Income tax provision
(8)
|
(106)
|
|
(125)
|
|
(89)
|
|
(131)
|
|
(451)
|
|
(288)
|
|
(570)
|
|
(316)
|
Income from continuing
operations
|
804
|
|
836
|
|
629
|
|
745
|
|
1,558
|
|
1,930
|
|
926
|
|
1,793
|
Income from continuing
operations attributable to noncontrolling interests
|
(81)
|
|
(81)
|
|
(74)
|
|
(74)
|
|
(167)
|
|
(167)
|
|
(147)
|
|
(147)
|
Net income from
continuing operations attributable to JCI
|
$
723
|
|
$
755
|
|
$
555
|
|
$
671
|
|
$
1,391
|
|
$
1,763
|
|
$
779
|
|
$
1,646
|
|
Building
Technologies & Solutions- Provides facility systems and
services including comfort, energy and security management for the
non-residential buildings market, and provides heating,
ventilating, and air conditioning products and services, security
products and services, and fire detection and suppression products
and services.
|
|
Power
Solutions- Services both automotive original equipment
manufacturers and the battery aftermarket by providing advanced
battery technology, coupled with systems engineering, marketing and
service expertise.
|
|
(1) The Company's
press release contains financial information regarding adjusted net
sales, adjusted segment EBITA and adjusted segment EBITA margins,
which are non-GAAP performance measures. The Company's
definition of adjusted segment EBITA excludes special items because
these costs are not considered to be directly related to the
underlying operating performance of its business units.
Management believes these non-GAAP measures are useful to investors
in understanding the ongoing operations and business trends of the
Company.
|
|
|
|
The following is the
three months ended June 30, 2018 and 2017 reconciliation of net
sales, segment EBITA and segment EBITA margin as reported to
adjusted net sales, adjusted segment EBITA and adjusted segment
EBITA margin (unaudited):
|
|
(in
millions)
|
Building
Solutions
North America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Global
Products
|
|
Total
Building
Technologies & Solutions
|
|
Power
Solutions
|
|
Consolidated
JCI plc
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales as
reported
|
$
2,246
|
|
$
2,142
|
|
$
926
|
|
$
896
|
|
$
681
|
|
$
630
|
|
$
2,429
|
|
$
2,406
|
|
$
6,282
|
|
$
6,074
|
|
$
1,838
|
|
$
1,609
|
|
$
8,120
|
|
$
7,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecurring purchase accounting
impacts
|
-
|
|
(7)
|
|
-
|
|
(7)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(14)
|
|
-
|
|
-
|
|
-
|
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
sales
|
$
2,246
|
|
$
2,135
|
|
$
926
|
|
$
889
|
|
$
681
|
|
$
630
|
|
$
2,429
|
|
$
2,406
|
|
$
6,282
|
|
$
6,060
|
|
$
1,838
|
|
$
1,609
|
|
$
8,120
|
|
$
7,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA as
reported
|
$
314
|
|
$
290
|
|
$
96
|
|
$
100
|
|
$
97
|
|
$
85
|
|
$
435
|
|
$
437
|
|
$
942
|
|
$
912
|
|
$
310
|
|
$
304
|
|
$
1,252
|
|
$
1,216
|
Segment EBITA margin
as reported
|
14.0%
|
|
13.5%
|
|
10.4%
|
|
11.2%
|
|
14.2%
|
|
13.5%
|
|
17.9%
|
|
18.2%
|
|
15.0%
|
|
15.0%
|
|
16.9%
|
|
18.9%
|
|
15.4%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
-
|
|
2
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
-
|
|
6
|
|
-
|
|
-
|
|
-
|
|
6
|
Integration
costs
|
4
|
|
10
|
|
2
|
|
-
|
|
-
|
|
-
|
|
6
|
|
4
|
|
12
|
|
14
|
|
-
|
|
-
|
|
12
|
|
14
|
Nonrecurring
purchase accounting impacts
|
-
|
|
(12)
|
|
-
|
|
(11)
|
|
-
|
|
(1)
|
|
-
|
|
-
|
|
-
|
|
(24)
|
|
-
|
|
-
|
|
-
|
|
(24)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$
318
|
|
$
290
|
|
$
98
|
|
$
89
|
|
$
97
|
|
$
84
|
|
$
441
|
|
$
445
|
|
$
954
|
|
$
908
|
|
$
310
|
|
$
304
|
|
$
1,264
|
|
$
1,212
|
Adjusted segment EBITA
margin
|
14.2%
|
|
13.6%
|
|
10.6%
|
|
10.0%
|
|
14.2%
|
|
13.3%
|
|
18.2%
|
|
18.5%
|
|
15.2%
|
|
15.0%
|
|
16.9%
|
|
18.9%
|
|
15.6%
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is the
nine months ended June 30, 2018 and 2017 reconciliation of net
sales, segment EBITA and segment EBITA margin as reported to
adjusted net sales, adjusted segment EBITA and adjusted segment
EBITA margin (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Building
Solutions
North America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Global
Products
|
|
Total
Building
Technologies & Solutions
|
|
Power
Solutions
|
|
Consolidated
JCI plc
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net sales as
reported
|
$
6,355
|
|
$
6,181
|
|
$
2,748
|
|
$
2,669
|
|
$
1,864
|
|
$
1,767
|
|
$
6,250
|
|
$
6,214
|
|
$
17,217
|
|
$16,831
|
|
$
5,813
|
|
$
5,205
|
|
$23,030
|
|
$22,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonrecurring
purchase accounting impacts
|
-
|
|
(30)
|
|
-
|
|
(11)
|
|
-
|
|
1
|
|
-
|
|
6
|
|
-
|
|
(34)
|
|
-
|
|
-
|
|
-
|
|
(34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
sales
|
$
6,355
|
|
$
6,151
|
|
$
2,748
|
|
$
2,658
|
|
$
1,864
|
|
$
1,768
|
|
$
6,250
|
|
$
6,220
|
|
$
17,217
|
|
$16,797
|
|
$
5,813
|
|
$
5,205
|
|
$23,030
|
|
$22,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITA as
reported
|
$
780
|
|
$
741
|
|
$
242
|
|
$
238
|
|
$
242
|
|
$
215
|
|
$
949
|
|
$
806
|
|
$
2,213
|
|
$
2,000
|
|
$
1,008
|
|
$
996
|
|
$
3,221
|
|
$
2,996
|
Segment EBITA margin
as reported
|
12.3%
|
|
12.0%
|
|
8.8%
|
|
8.9%
|
|
13.0%
|
|
12.2%
|
|
15.2%
|
|
13.0%
|
|
12.9%
|
|
11.9%
|
|
17.3%
|
|
19.1%
|
|
14.0%
|
|
13.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
-
|
|
13
|
|
-
|
|
5
|
|
-
|
|
2
|
|
-
|
|
13
|
|
-
|
|
33
|
|
-
|
|
1
|
|
-
|
|
34
|
Integration
costs
|
18
|
|
24
|
|
5
|
|
4
|
|
-
|
|
3
|
|
21
|
|
13
|
|
44
|
|
44
|
|
-
|
|
-
|
|
44
|
|
44
|
Scott Safety
gain on sale
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(114)
|
|
-
|
|
(114)
|
|
-
|
|
-
|
|
-
|
|
(114)
|
|
-
|
Nonrecurring
purchase accounting impacts
|
-
|
|
(23)
|
|
-
|
|
(14)
|
|
-
|
|
3
|
|
-
|
|
71
|
|
-
|
|
37
|
|
-
|
|
-
|
|
-
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$
798
|
|
$
755
|
|
$
247
|
|
$
233
|
|
$
242
|
|
$
223
|
|
$
856
|
|
$
903
|
|
$
2,143
|
|
$
2,114
|
|
$
1,008
|
|
$
997
|
|
$
3,151
|
|
$
3,111
|
Adjusted segment EBITA
margin
|
12.6%
|
|
12.3%
|
|
9.0%
|
|
8.8%
|
|
13.0%
|
|
12.6%
|
|
13.7%
|
|
14.5%
|
|
12.4%
|
|
12.6%
|
|
17.3%
|
|
19.2%
|
|
13.7%
|
|
14.1%
|
|
(2) Adjusted Corporate
expenses for the three months ended June 30, 2018 excludes $37
million of integration costs and $2 million of transaction
costs. Adjusted Corporate expenses for the nine months ended
June 30, 2018 excludes $111 million of integration costs and $10
million of transaction costs. Adjusted Corporate expenses for
the three months ended June 30, 2017 excludes $40 million of
integration costs and $10 million of transaction costs.
Adjusted Corporate expenses for the nine months ended June 30, 2017
excludes $185 million of integration costs, $58 million of
transaction costs and $4 million of separation
costs.
|
|
(3) Adjusted
amortization of intangible assets for the three and nine months
ended June 30, 2017 excludes $18 million and $98 million,
respectively, of nonrecurring asset amortization related to Tyco
purchase accounting.
|
|
(4) The three months
ended June 30, 2017 pension mark-to-market loss of $45 million and
the nine months ended June 30, 2017 pension mark-to-market gain of
$90 million due to lump sum payouts for certain U.S. pension plans
are excluded from the adjusted non-GAAP results.
|
|
(5) Restructuring and
impairment costs for the nine months ended June 30, 2018 of $158
million are excluded from the adjusted non-GAAP results.
Restructuring and impairment costs for the three and nine months
ended June 30, 2017 of $49 million and $226 million, respectively,
are excluded from the adjusted non-GAAP results.
|
|
(6) Management defines
earnings before interest and taxes (EBIT) as income from continuing
operations before net financing charges, income taxes and
noncontrolling interests.
|
|
(7) Adjusted net
financing charges for the nine months ended June 30, 2017 exclude
$17 million of transaction costs related to the debt exchange
offers.
|
|
(8) Adjusted income
tax provision for the three months ended June 30, 2018 excludes the
tax benefits of the change in effective tax rate from 14% to 13% on
the first and second quarters of $13 million and integration costs
of $6 million. Adjusted income tax provision for the nine
months ended June 30, 2018 excludes the net tax provision related
to the U.S. Tax Reform legislation of $204 million and the Scott
Safety gain on sale of $30 million, partially offset by the tax
benefits for tax audit settlements of $25 million, restructuring
and impairment costs of $24 million, integration costs of $21
million and transaction costs of $1 million. Adjusted income
tax provision for the three months ended June 30, 2017 excludes the
tax benefits of the pension mark-to-market loss of $18 million,
restructuring and impairment costs of $15 million, integration
costs of $9 million and transaction costs of $2 million, partially
offset by the tax provision for Tyco nonrecurring purchase
accounting impacts of $2 million. Adjusted income tax
provision for the nine months ended June 30, 2017 excludes the
non-cash tax charge of $457 million related to establishment of a
deferred tax liability on the outside basis difference of the
Company's investment in certain subsidiaries of the Scott Safety
business and the tax provision for the pension mark-to-market net
gain of $36 million, partially offset by the tax benefits of
changes in entity tax status of $101 million, restructuring and
impairment costs of $49 million, integration costs of $41 million,
Tyco nonrecurring purchase accounting impacts of $36 million and
transaction costs of $12 million.
|
|
|
|
2.
Diluted Earnings Per Share Reconciliation
|
|
The Company's press
release contains financial information regarding adjusted earnings
per share, which is a non-GAAP performance measure. The
adjusting items include transaction/integration/separation costs,
nonrecurring purchase accounting impacts related to the Tyco
merger, mark-to-market gain or loss for pension and postretirement
plans, Scott Safety gain on sale, restructuring and impairment
costs and discrete tax items. The Company excludes these
items because they are not considered to be directly related to the
underlying operating performance of the Company. Management
believes these non-GAAP measures are useful to investors in
understanding the ongoing operations and business trends of the
Company.
|
|
A reconciliation of
diluted earnings per share as reported to diluted adjusted earnings
per share for the respective periods is shown below
(unaudited):
|
|
|
Net Income
Attributable
to JCI plc
|
|
Net Income
Attributable
to JCI plc from
Continuing Operations
|
|
Net Income
Attributable to JCI plc
|
|
Net Income
Attributable
to JCI plc from
Continuing Operations
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
Nine Months
Ended
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share as
reported for JCI plc
|
$
0.78
|
|
$
0.59
|
|
$
0.78
|
|
$
0.59
|
|
$
1.49
|
|
$
0.78
|
|
$
1.49
|
|
$
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
-
|
|
0.02
|
|
-
|
|
0.02
|
|
0.01
|
|
0.12
|
|
0.01
|
|
0.12
|
Related tax
impact
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(0.01)
|
|
-
|
|
(0.01)
|
Integration
costs
|
0.05
|
|
0.06
|
|
0.05
|
|
0.06
|
|
0.17
|
|
0.24
|
|
0.17
|
|
0.24
|
Related tax
impact
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
(0.02)
|
|
(0.04)
|
|
(0.02)
|
|
(0.04)
|
Separation
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
0.09
|
|
-
|
|
-
|
Nonrecurring
purchase accounting impacts
|
-
|
|
(0.01)
|
|
-
|
|
(0.01)
|
|
-
|
|
0.14
|
|
-
|
|
0.14
|
Related tax
impact
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(0.04)
|
|
-
|
|
(0.04)
|
Mark-to-market
loss (gain) for pension plans
|
-
|
|
0.05
|
|
-
|
|
0.05
|
|
-
|
|
(0.10)
|
|
-
|
|
(0.10)
|
Related tax
impact
|
-
|
|
(0.02)
|
|
-
|
|
(0.02)
|
|
-
|
|
0.04
|
|
-
|
|
0.04
|
Scott Safety
gain on sale
|
-
|
|
-
|
|
-
|
|
-
|
|
(0.12)
|
|
-
|
|
(0.12)
|
|
-
|
Related tax
impact
|
-
|
|
-
|
|
-
|
|
-
|
|
0.03
|
|
-
|
|
0.03
|
|
-
|
Restructuring
and impairment costs
|
-
|
|
0.05
|
|
-
|
|
0.05
|
|
0.17
|
|
0.24
|
|
0.17
|
|
0.24
|
Related tax
impact
|
-
|
|
(0.02)
|
|
-
|
|
(0.02)
|
|
(0.03)
|
|
(0.05)
|
|
(0.03)
|
|
(0.05)
|
Discrete tax
items
|
(0.01)
|
|
-
|
|
(0.01)
|
|
-
|
|
0.19
|
|
0.40
|
|
0.19
|
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share for JCI plc*
|
$
0.81
|
|
$
0.71
|
|
$
0.81
|
|
$
0.71
|
|
$
1.89
|
|
$
1.80
|
|
$
1.89
|
|
$
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* May not sum due to
rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
reconciles the denominators used to calculate basic and diluted
earnings per share for JCI plc (in millions;
unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding for JCI plc
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
925.6
|
|
935.4
|
|
926.0
|
|
937.2
|
|
|
|
|
|
|
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options, unvested
restricted stock and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
unvested
performance share awards
|
5.1
|
|
9.0
|
|
6.1
|
|
9.6
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
930.7
|
|
944.4
|
|
932.1
|
|
946.8
|
|
|
|
|
|
|
|
|
|
The Company has
presented forward-looking statements regarding adjusted EPS from
continuing operations, adjusted EBIT margin, organic adjusted net
sales growth and adjusted free cash flow conversion (defined as
adjusted free cash flow divided by adjusted net income from
continuing operations attributable to JCI) for the full fiscal year
of 2018, which are non-GAAP financial measures. These non-GAAP
financial measures are derived by excluding certain amounts,
expenses, income or cash flows from the corresponding financial
measures determined in accordance with GAAP. The determination of
the amounts that are excluded from these non-GAAP financial
measures are a matter of management judgment and depends upon,
among other factors, the nature of the underlying expense or income
amounts recognized in a given period, including but not limited to
the high variability of the net mark-to-market adjustments related
to pension and postretirement plans and the effect of foreign
currency exchange fluctuations. Our fiscal 2018 outlook for
organic adjusted net sales growth also excludes the effect of
acquisitions and divestitures, and for our Power Solutions
business, the impacts of lead price fluctuations. We are
unable to present a quantitative reconciliation of the
aforementioned forward-looking non-GAAP financial measures to their
most directly comparable forward-looking GAAP financial measures
because such information is not available and management cannot
reliably predict all of the necessary components of such GAAP
measures without unreasonable effort or expense. The unavailable
information could have a significant impact on the Company's full
year 2018 GAAP financial results.
|
|
|
|
3. Organic
Adjusted Net Sales Growth Reconciliation
|
|
The components of the
changes in adjusted net sales for the three months ended June 30,
2018 versus the three months ended June 30, 2017, including organic
net sales, is shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Adjusted Net
Sales
for the Three
Months Ended
June 30, 2017
|
|
Base Year Adjustments
-
Divestitures
|
|
Adjusted Base Net
Sales for the Three
Months Ended
June 30, 2017
|
|
Foreign
Currency
|
|
Lead
Impact
|
|
Organic Net
Sales
|
|
Adjusted Net
Sales
for the Three
Months Ended
June 30, 2018
|
Building Solutions
North America
|
$
2,135
|
|
$
-
|
|
0.0%
|
|
$
2,135
|
|
$
8
|
|
0.4%
|
|
$
-
|
|
0.0%
|
|
$
103
|
|
4.8%
|
|
$
2,246
|
|
5.2%
|
Building Solutions
EMEA/LA
|
889
|
|
-
|
|
0.0%
|
|
889
|
|
33
|
|
3.7%
|
|
-
|
|
0.0%
|
|
4
|
|
0.4%
|
|
926
|
|
4.2%
|
Building Solutions
Asia Pacific
|
630
|
|
(3)
|
|
-0.5%
|
|
627
|
|
26
|
|
4.1%
|
|
-
|
|
0.0%
|
|
28
|
|
4.5%
|
|
681
|
|
8.6%
|
Global
Products
|
2,406
|
|
(175)
|
|
-7.3%
|
|
2,231
|
|
35
|
|
1.6%
|
|
-
|
|
0.0%
|
|
163
|
|
7.3%
|
|
2,429
|
|
8.9%
|
Total Building
Technologies & Solutions
|
6,060
|
|
(178)
|
|
-2.9%
|
|
5,882
|
|
102
|
|
1.7%
|
|
-
|
|
0.0%
|
|
298
|
|
5.1%
|
|
6,282
|
|
6.8%
|
Power
Solutions
|
1,609
|
|
-
|
|
0.0%
|
|
1,609
|
|
37
|
|
2.3%
|
|
31
|
|
1.9%
|
|
161
|
|
10.0%
|
|
1,838
|
|
14.2%
|
Total net
sales
|
$
7,669
|
|
$
(178)
|
|
-2.3%
|
|
$
7,491
|
|
$
139
|
|
1.9%
|
|
$
31
|
|
0.4%
|
|
$
459
|
|
6.1%
|
|
$
8,120
|
|
8.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
changes in adjusted net sales for the nine months ended June 30,
2018 versus the nine months ended June 30, 2017, including organic
net sales, is shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Adjusted Net
Sales
for the Nine
Months Ended
June 30, 2017
|
|
Base Year Adjustments
-
Divestitures
|
|
Adjusted Base Net
Sales for the Nine
Months Ended
June 30, 2017
|
|
Foreign
Currency
|
|
Lead
Impact
|
|
Organic Net
Sales
|
|
Adjusted Net
Sales
for the Nine
Months Ended
June 30, 2018
|
Building Solutions
North America
|
$
6,151
|
|
$
-
|
|
0.0%
|
|
$
6,151
|
|
$
28
|
|
0.5%
|
|
$
-
|
|
0.0%
|
|
$
176
|
|
2.9%
|
|
$
6,355
|
|
3.3%
|
Building Solutions
EMEA/LA
|
2,658
|
|
(80)
|
|
-3.0%
|
|
2,578
|
|
160
|
|
6.2%
|
|
-
|
|
0.0%
|
|
10
|
|
0.4%
|
|
2,748
|
|
6.6%
|
Building Solutions
Asia Pacific
|
1,768
|
|
(12)
|
|
-0.7%
|
|
1,756
|
|
75
|
|
4.3%
|
|
-
|
|
0.0%
|
|
33
|
|
1.9%
|
|
1,864
|
|
6.2%
|
Global
Products
|
6,220
|
|
(474)
|
|
-7.6%
|
|
5,746
|
|
127
|
|
2.2%
|
|
-
|
|
0.0%
|
|
377
|
|
6.6%
|
|
6,250
|
|
8.8%
|
Total Building
Technologies & Solutions
|
16,797
|
|
(566)
|
|
-3.4%
|
|
16,231
|
|
390
|
|
2.4%
|
|
-
|
|
0.0%
|
|
596
|
|
3.7%
|
|
17,217
|
|
6.1%
|
Power
Solutions
|
5,205
|
|
-
|
|
0.0%
|
|
5,205
|
|
228
|
|
4.4%
|
|
230
|
|
4.4%
|
|
150
|
|
2.9%
|
|
5,813
|
|
11.7%
|
Total net
sales
|
$
22,002
|
|
$
(566)
|
|
-2.6%
|
|
$
21,436
|
|
$
618
|
|
2.9%
|
|
$
230
|
|
1.1%
|
|
$
746
|
|
3.5%
|
|
$23,030
|
|
7.4%
|
|
|
|
4. Adjusted
Free Cash Flow Reconciliation
|
|
The Company's press
release contains financial information regarding free cash flow and
adjusted free cash flow, which are non-GAAP performance
measures. Free cash flow is defined as cash used by operating
activities less capital expenditures. Adjusted free cash flow
excludes special items, as included in the table below, because
these cash flows are not considered to be directly related to its
underlying business. Management believes these non-GAAP
measures are useful to investors in understanding the strength of
the Company and its ability to generate cash.
|
|
The following is the
three and nine months ended June 30, 2018 and 2017 reconciliation
of free cash flow and adjusted free cash flow
(unaudited):
|
|
(in
billions)
|
Three Months
Ended
June 30, 2018
|
|
Three Months
Ended
June 30, 2017
|
|
Nine Months
Ended
June 30, 2018
|
|
Nine Months
Ended
June 30, 2017
|
Cash provided (used)
by operating activities
|
$
0.7
|
|
$
0.2
|
|
$
1.3
|
|
$
(1.3)
|
Capital
expenditures
|
(0.3)
|
|
(0.4)
|
|
(0.8)
|
|
(1.0)
|
Reported free cash
flow *
|
$
0.4
|
|
$
(0.1)
|
|
$
0.5
|
|
$
(2.3)
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction/integration/separation costs
|
-
|
|
0.1
|
|
0.2
|
|
0.4
|
Nonrecurring
tax payments
|
0.1
|
|
0.1
|
|
0.1
|
|
1.4
|
Adient cash
outflow
|
-
|
|
-
|
|
-
|
|
0.3
|
Change in
control pension payment
|
-
|
|
-
|
|
-
|
|
0.2
|
Restructuring
costs
|
0.1
|
|
0.1
|
|
0.2
|
|
0.2
|
Total adjusting
items
|
0.2
|
|
0.3
|
|
0.5
|
|
2.5
|
Adjusted free cash
flow
|
$
0.6
|
|
$
0.2
|
|
$
1.0
|
|
$
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* May not sum due to
rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
Net Debt to
Capitalization
|
|
The Company provides
financial information regarding net debt as a percentage of total
capitalization, which is a non-GAAP performance measure. The
Company believes the percentage of total net debt to total
capitalization is useful to understanding the Company's financial
condition as it provides a review of the extent to which the
Company relies on external debt financing for its funding and is a
measure of risk to its shareholders. The following is the
June 30, 2018 and September 30, 2017 calculation of net debt as a
percentage of total capitalization (unaudited):
|
|
|
(in
millions)
|
June 30,
2018
|
|
September 30,
2017
|
Short-term debt and
current portion of long-term debt
|
$
1,583
|
|
$
1,608
|
Long-term
debt
|
10,373
|
|
11,964
|
Total debt
|
11,956
|
|
13,572
|
Less: cash and cash
equivalents
|
283
|
|
321
|
Total net
debt
|
11,673
|
|
13,251
|
Shareholders' equity
attributable to JCI
|
20,773
|
|
20,447
|
Total
capitalization
|
$
32,446
|
|
$
33,698
|
|
|
|
|
|
|
|
|
Total net debt as a %
of total capitalization
|
36.0%
|
|
39.3%
|
|
|
6.
Mark-to-Market of Pension and Postretirement Plans
|
|
|
The pension and
postretirement mark-to-market gain or loss for each period is
excluded from adjusted diluted earnings per share. There was
no mark-to-market gain or loss for pension and postretirement plans
for the three and nine months ended June 30, 2018. The three
months ended June 30, 2017 includes a pension mark-to-market loss
of $45 million and the nine months ended June 30, 2017 includes a
pension mark-to-market gain of $90 million recorded due to lump sum
payouts for certain U.S. pension plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.
Divestitures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On March 16, 2017,
the Company announced that it signed a definitive agreement to sell
its Scott Safety business to 3M for approximately $2.0
billion. The transaction closed on October 4, 2017. Net
cash proceeds from the transaction approximated $1.9 billion and
the Company recorded a net gain of $114 million ($84 million after
tax). Scott Safety is a leader in the design, manufacture and
sale of high performance respiratory protection, gas and flame
detection, thermal imaging and other critical products for fire
services, law enforcement, industrial, oil and gas, chemical, armed
forces, and homeland defense end markets. The Scott Safety
business is included within assets held for sale and liabilities
held for sale in the accompanying condensed consolidated statement
of financial position as of September 30, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On October 31, 2017,
the Company completed the spin-off of its Automotive Experience
business by way of the transfer of the Automotive Experience
business from JCI plc to Adient plc and the issuance of ordinary
shares of Adient plc directly to holders of JCI plc ordinary shares
on a pro rata basis. Following the separation, Adient plc is
now an independent public company trading on the New York Stock
Exchange (NYSE) under the symbol "ADNT." The Company did not retain
any equity interest in Adient plc. Beginning in the first
quarter of fiscal 2017, Adient's historical financial results are
reflected in the Company's consolidated financial statements as a
discontinued operation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.
Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's
effective tax rate from continuing operations before consideration
of the transaction/integration/separation costs, nonrecurring
purchase accounting impacts related to the Tyco merger,
mark-to-market gains or losses for pension and postretirement
plans, Scott Safety gain on sale, restructuring and impairment
costs and discrete tax items for the nine months ending June 30,
2018 and June 30, 2017 is approximately 13 percent and 15 percent,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The nine months ended
June 30, 2018 include restructuring and impairment costs of $158
million related primarily to workforce reductions, plant closures
and asset impairments in the Building Technologies & Solutions
and Power Solutions businesses, and at Corporate. The three
and nine months ended June 30, 2017 restructuring and impairment
costs of $49 million and $226 million, respectively, related
primarily to workforce reductions, plant closures and asset
impairments in the Building Technologies & Solutions and Power
Solutions businesses, and at Corporate.
|
|
|
View original
content:http://www.prnewswire.com/news-releases/johnson-controls-reports-fiscal-q3-earnings-with-strong-organic-growth-and-underlying-margin-expansion-300689008.html
SOURCE Johnson Controls