- Q2 reported sales +10% versus prior year; +13% organically
- Q2 GAAP EPS of $0.19; Adjusted
EPS of $0.75, up 19% versus prior
year
- Q2 Orders +8% organically year-over year
- Record backlog of $11.7 billion,
increased 9% organically year-over-year
- Initiates fiscal Q3 and updates fiscal 2023 full year
guidance
CORK,
Ireland, May 5, 2023 /PRNewswire/ -- Johnson
Controls International plc (NYSE: JCI), a
global leader for smart, healthy and sustainable buildings, today
reported fiscal second quarter 2023 GAAP earnings per share ("EPS")
from continuing operations of $0.19.
Excluding special items, adjusted EPS from continuing operations
was $0.75, up 19% versus the prior
year period (see attached footnotes for non-GAAP
reconciliation).
Sales in the quarter of $6.7
billion increased 10% compared to the prior year on an as
reported basis and grew 13% organically. GAAP net income from
continuing operations was $133
million. Adjusted net income from continuing operations of
$517 million was up 17% versus the
prior year. Earnings before interest and taxes ("EBIT") was
$294 million and EBIT margin was
4.4%. Adjusted EBIT was $716 million
and adjusted EBIT margin was 10.7%, improving 70 basis points
versus the prior year.
"Johnson Controls delivered strong second quarter results led by
double-digit growth in sales and high single digit order growth,"
said George Oliver, Chairman and
CEO. "Our order pipeline remains healthy across all our vectors of
growth and we are encouraged by the continued momentum within our
Service business. Our leading technologies position us well in
making buildings smarter, healthier, and more sustainable."
"Our second quarter results exceeded the high end of our
guidance as healthy margin expansion contributed to strong double
digit adjusted EPS growth," said Olivier
Leonetti, Chief Financial Officer. "Our backlog remains
resilient and the pace of converting higher margin business gives
us confidence in our ability to deliver on our full year
expectations."
Income and EPS amounts attributable to Johnson Controls
ordinary shareholders
($ 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 second quarter of 2022.
Organic sales growth, adjusted sales, organic segment EBITA
growth, total segment EBITA, adjusted segment EBITA, adjusted
corporate expense, EBIT, adjusted EBIT, adjusted net income from
continuing operations, adjusted EPS from continuing operations, and
free cash flow are non-GAAP financial measures. For a
reconciliation of non-GAAP measures and detail of the special
items, refer to the attached footnotes.
This press release includes forward-looking statements regarding
organic revenue growth, adjusted segment EBITA margin improvement
and adjusted EPS, which are non-GAAP financial measures. These
non-GAAP financial measures are derived by excluding certain
amounts from the corresponding financial measures determined in
accordance with GAAP. The determination of the amounts excluded is
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 and the high variability of certain
amounts, such as mark-to-market adjustments. Organic revenue growth
excludes the effect of acquisitions, divestitures and foreign
currency. 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 the necessary components of such GAAP
measures without unreasonable effort or expense. The unavailable
information could have a significant impact on the Company's fiscal
2023 third quarter and full year GAAP financial results.
A slide presentation to accompany the results can be found in
the Investor Relations section of Johnson Controls' website at
http://investors.johnsoncontrols.com.
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Sales
|
$6,098
|
$6,686
|
$6,098
|
$6,686
|
Segment
EBITA
|
800
|
951
|
768
|
921
|
EBIT
|
161
|
294
|
608
|
716
|
Net income from
continuing operations
|
11
|
133
|
441
|
517
|
|
|
|
|
|
Diluted EPS from
continuing operations
|
$0.02
|
$0.19
|
$0.63
|
$0.75
|
|
|
|
|
|
SEGMENT RESULTS
Building Solutions North America
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Sales
|
$2,227
|
$2,520
|
$2,227
|
$2,520
|
Segment
EBITA
|
235
|
315
|
235
|
315
|
Segment EBITA Margin
%
|
10.6 %
|
12.5 %
|
10.6 %
|
12.5 %
|
Sales in the quarter of $2.5
billion increased 13% versus the prior year. Organic sales
increased 14% over the prior year with growth in both Service and
Install, led by strong performances in HVAC & Controls and Fire
& Security.
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 $7.7 billion
increased 13% compared to the prior year, excluding M&A and
adjusted for foreign currency.
Segment EBITA was $315 million, up
34% versus the prior year. Segment EBITA margin of 12.5% expanded
190 basis points versus the prior year as higher margin backlog
converted at a faster rate and productivity further
accelerated.
Building Solutions EMEA/LA (Europe, Middle
East, Africa/Latin America)
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Sales
|
$958
|
$1,031
|
$958
|
$1,031
|
Segment
EBITA
|
79
|
69
|
90
|
69
|
Segment EBITA Margin
%
|
8.2 %
|
6.7 %
|
9.4 %
|
6.7 %
|
Sales in the quarter of $1.0
billion increased 8% versus the prior year. Organic sales
grew 12% versus the prior year, with low double-digit growth in
Service and Install. Strength was broad based across our
businesses, led by Fire & Security and HVAC & Controls. By
region, Europe and Latin America experienced strong organic
growth, while growth in the Middle
East was more modest.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 7% year-over-year. Backlog at the end
of the quarter of $2.3 billion
increased 5% year-over-year, excluding M&A and adjusted for
foreign currency.
Segment EBITA was $69 million,
down 13% versus the prior year. Segment EBITA margin of 6.7%
declined 150 basis points versus the prior year as volume leverage
was offset by FX headwinds and one-time nonrecurring items.
Adjusted segment EBITA in Q2 2022 excludes a charge taken related
to suspended Russian operations.
Building Solutions Asia Pacific
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Sales
|
$623
|
$667
|
$623
|
$667
|
Segment
EBITA
|
74
|
79
|
74
|
79
|
Segment EBITA Margin
%
|
11.9 %
|
11.8 %
|
11.9 %
|
11.8 %
|
Sales in the quarter of $667
million increased 7% versus the prior year. Sales increased
15% organically versus the prior year led by continued demand for
HVAC & Controls. Organic Sales in China rebounded in the quarter, with strong
double-digit growth in Service and Install.
Orders in the quarter, excluding M&A and adjusted for
foreign currency, increased 9% year-over-year, led by demand for
Commercial HVAC in China and
Controls in Japan. Backlog at the
end of the quarter of $1.7 billion
declined 3% year-over-year, excluding M&A and adjusted for
foreign currency.
Segment EBITA was $79 million, up
7% versus the prior year. Segment EBITA margin of 11.8% declined 10
basis points versus the prior year as higher margin backlog
conversion was offset by FX headwinds.
Global Products
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Sales
|
$2,290
|
$2,468
|
$2,290
|
$2,468
|
Segment
EBITA
|
412
|
488
|
369
|
458
|
Segment EBITA Margin
%
|
18.0 %
|
19.8 %
|
16.1 %
|
18.6 %
|
Sales in the quarter of $2.5
billion increased 8% versus the prior year. Organic sales
grew 12% versus the prior year driven by strong growth in Applied,
Fire Detection, Industrial Refrigeration, and Commercial Ducted
HVAC products.
Segment EBITA was $488 million, up
18% versus the prior year. Segment EBITA margin of 19.8% expanded
180 basis points versus the prior year driven by strong price
realization and improved productivity. Adjusted segment EBITA in Q2
2022 and Q2 2023 excludes the favorable impact of reductions to the
Silent-Aire earnout liability.
Corporate
|
Fiscal
Q2
|
|
GAAP
|
Adjusted
|
|
2022
|
2023
|
2022
|
2023
|
Corporate
Expense
|
($60)
|
($131)
|
($60)
|
($101)
|
Corporate expense was $131 million
in the quarter, an increase of 118% compared to the prior year.
Adjusted Corporate expense in Q2 2023 excludes
transaction/separation costs.
OTHER Q2 ITEMS
- Cash provided by operating activities from continuing
operations was $314 million, while
cash provided by operating activities from continuing operations,
excluding JC Capital, was $356
million. Capital expenditures were $121 million, resulting in a free cash flow from
continuing operations of $235
million.
- The Company repurchased 1.5 million shares for approximately
$93 million. Year-to-date through
March, the Company repurchased 4.3 million shares for approximately
$247 million
- The Company recorded net pre-tax mark-to-market losses of
$4 million related primarily to the
remeasurement of the Company's pension and postretirement benefit
plans and restricted asbestos investments.
- The Company recorded pre-tax restructuring and impairment costs
of $418 million, including
$24 million of restructuring charges,
a $184 million goodwill impairment
charge and a $210 million impairment
related to a business classified as held for sale.
THIRD QUARTER GUIDANCE
The Company initiated fiscal 2023 third quarter guidance:
- Organic revenue growth of ~10% year-over-year
- Adjusted segment EBITA margin improvement of 120 to 130 basis
points year-over-year
- Adjusted EPS before special items of $1.01 to $1.03;
representing 19% to 21% growth
year-over-year
FULL YEAR GUIDANCE
The Company updated its fiscal 2023 full year EPS guidance:
- Organic revenue growth ~10% year-over year (previously guided
at a range from high single-digits to low double-digits
growth)
- Adjusted segment EBITA margin improvement of 100 to 120 basis
points, year-over-year (previously guided to 90 to 120 basis point
improvement)
- Adjusted EPS before special items of $3.50 to $3.60;
representing 17% to 20% growth
year-over-year (previously guided to $3.30 to $3.60)
CONFERENCE CALL & WEBCAST INFO
Johnson Controls will host a conference call to discuss this
quarter's results at 8:30 a.m. ET
today, which can be accessed by dialing 844-763-8274 (in
the United States) or
+1-412-717-9224 (outside the United
States), or via webcast. A slide presentation will accompany
the prepared remarks and has been posted on the investor relations
section of the Johnson Controls website at
https://investors.johnsoncontrols.com/news-and-events/events-and-presentations.
A replay will be made available approximately two hours following
the conclusion of the conference call.
About Johnson Controls
At Johnson Controls (NYSE:JCI), we transform the environments
where people live, work, learn and play. As the global leader in
smart, healthy and sustainable buildings, our mission is to
reimagine the performance of buildings to serve people, places and
the planet.
Building on a proud history of nearly 140 years of innovation,
we deliver the blueprint of the future for industries such as
healthcare, schools, data centers, airports, stadiums,
manufacturing and beyond through OpenBlue, our comprehensive
digital offering.
Today, with a global team of 100,000 experts in more than 150
countries, Johnson Controls offers the world`s largest portfolio of
building technology and software as well as service solutions from
some of the most trusted names in the industry.
Visit www.johnsoncontrols.com for more information and follow
@Johnson Controls on social platforms.
JOHNSON CONTROLS CONTACTS:
INVESTOR
CONTACTS:
|
MEDIA
CONTACT:
|
|
|
|
|
Jim Lucas
|
Danielle
Canzanella
|
|
Direct: +1
651.391.3182
|
Direct: +1
203.499.8297
|
|
Email:
jim.lucas@jci.com
|
Email:
danielle.canzanella@jci.com
|
|
|
|
|
Michael Gates
|
|
|
Direct: +1
414.524.5785
|
|
|
Email:
michael.j.gates@jci.com
|
|
|
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, debt levels and market outlook
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 its control, that could cause its actual results to differ
materially from those expressed or implied by such forward-looking
statements, including, among others, risks related to: Johnson
Controls ability to manage general economic, business and capital
market conditions, including recessions and other economic
downturns, the ability to manage macroeconomic and geopolitical
volatility, including global price inflation, shortages impacting
the availability of raw materials and component products and the
conflict between Russia and
Ukraine; the ability to develop or
acquire new products and technologies that achieve market
acceptance and meet applicable regulatory requirements; the
strength of the U.S. or other economies; fluctuations in currency
exchange rates; changes or uncertainty in laws, regulations, rates,
policies or interpretations that impact Johnson Controls business
operations or tax status; changes to laws or policies governing
foreign trade, including economic sanctions, increased tariffs or
trade restrictions; maintaining the capacity, reliability and
security of Johnson Controls enterprise information technology
infrastructure; the ability to manage the lifecycle cybersecurity
risk in the development, deployment and operation of Johnson
Controls digital platforms and services; the risk of infringement
or expiration of intellectual property rights; Johnson Controls
ability to manage the impacts of natural disasters, climate change,
pandemics and outbreaks of contagious diseases and other adverse
public health developments, such as the COVID-19 pandemic; the
ability of Johnson Controls to drive organizational improvement;
any delay or inability of Johnson Controls to
realize the expected benefits and synergies of recent
portfolio transactions; the outcome of litigation and governmental
proceedings; the ability to hire and retain senior management and
other key personnel; the tax treatment of recent portfolio
transactions; significant transaction costs and/or
unknown liabilities associated with such transactions; labor
shortages, work stoppages, union negotiations, labor disputes and
other matters associated with the labor force; and the cancellation
of or changes to commercial arrangements. 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 2022 fiscal year filed with the SEC on
November 15, 2022, which is available
at www.sec.gov and www.johnsoncontrols.com under the "Investors"
tab. The description of certain of these risks is supplemented in
Item 1A of Part II of Johnson Controls subsequently filed Quarterly
Reports on Form 10-Q. 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
This press release
contains financial information regarding adjusted earnings per
share, which is a non-GAAP performance measure. The adjusting items
include restructuring and impairment costs, net mark-to-market
adjustments, Silent-Aire other nonrecurring items, certain
transaction/separation costs, Silent-Aire earn-out adjustment,
charges attributable to the suspension of operations in
Russia, and warehouse fire loss.
Financial information regarding organic sales growth, adjusted
sales, EBIT, EBIT margin, adjusted EBIT, adjusted EBIT margin,
organic segment EBITA growth, total segment EBITA, adjusted segment
EBITA, adjusted segment EBITA margin, adjusted Corporate expense,
free cash flow, free cash flow conversion and adjusted net income
from continuing operations are also presented, which are non-GAAP
performance measures. 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 Johnson Controls. 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. For
further information on the calculation of the non-GAAP measures and
a reconciliation of these non-GAAP measures, refer to the attached
footnotes.
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(in millions, except
per share data; unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
Net sales
|
|
$
6,686
|
|
|
$
6,098
|
Cost of
sales
|
|
4,445
|
|
|
4,141
|
Gross profit
|
|
2,241
|
|
|
1,957
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(1,579)
|
|
|
(1,454)
|
Restructuring and
impairment costs
|
|
(418)
|
|
|
(384)
|
Net financing
charges
|
|
(71)
|
|
|
(51)
|
Equity
income
|
|
50
|
|
|
42
|
|
|
|
|
|
|
Income before income
taxes
|
|
223
|
|
|
110
|
|
|
|
|
|
|
Income tax
provision
|
|
49
|
|
|
58
|
|
|
|
|
|
|
Net income
|
|
174
|
|
|
52
|
|
|
|
|
|
|
Income attributable to
noncontrolling interests
|
|
41
|
|
|
41
|
|
|
|
|
|
|
Net income attributable
to JCI
|
|
$ 133
|
|
|
$ 11
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$
0.19
|
|
|
$
0.02
|
|
|
|
|
|
|
Diluted weighted
average shares
|
|
689.7
|
|
|
702.7
|
|
|
|
|
|
|
Shares outstanding at
period end
|
|
686.1
|
|
|
695.7
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(in millions, except
per share data; unaudited)
|
|
|
|
|
|
|
|
|
Six Months Ended March
31,
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
Net sales
|
|
$ 12,754
|
|
|
$ 11,960
|
Cost of
sales
|
|
8,422
|
|
|
8,112
|
Gross profit
|
|
4,332
|
|
|
3,848
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
(3,150)
|
|
|
(2,823)
|
Restructuring and
impairment costs
|
|
(763)
|
|
|
(433)
|
Net financing
charges
|
|
(138)
|
|
|
(104)
|
Equity
income
|
|
112
|
|
|
112
|
|
|
|
|
|
|
Income before income
taxes
|
|
393
|
|
|
600
|
|
|
|
|
|
|
Income tax
provision
|
|
63
|
|
|
129
|
|
|
|
|
|
|
Net income
|
|
330
|
|
|
471
|
|
|
|
|
|
|
Income attributable to
noncontrolling interests
|
|
79
|
|
|
79
|
|
|
|
|
|
|
Net income attributable
to JCI
|
|
$ 251
|
|
|
$ 392
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
$ 0.36
|
|
|
$ 0.56
|
|
|
|
|
|
|
Diluted weighted
average shares
|
|
690.0
|
|
|
706.2
|
|
|
|
|
|
|
Shares outstanding at
period end
|
|
686.1
|
|
|
695.7
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
September
30,
|
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,975
|
|
$
2,031
|
Accounts receivable -
net
|
|
6,002
|
|
5,528
|
Inventories
|
|
3,048
|
|
2,510
|
Assets held for
sale
|
|
446
|
|
387
|
Other current
assets
|
|
1,285
|
|
1,229
|
Current assets
|
|
12,756
|
|
11,685
|
|
|
|
|
|
Property, plant and
equipment - net
|
|
3,094
|
|
3,042
|
Goodwill
|
|
17,559
|
|
17,328
|
Other intangible assets
- net
|
|
4,633
|
|
4,641
|
Investments in
partially-owned affiliates
|
|
1,065
|
|
963
|
Noncurrent assets held
for sale
|
|
378
|
|
751
|
Other noncurrent
assets
|
|
3,935
|
|
3,748
|
Total assets
|
|
$ 43,420
|
|
$
42,158
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
|
$
2,659
|
|
$
1,534
|
Accounts payable and
accrued expenses
|
|
5,095
|
|
5,219
|
Liabilities held for
sale
|
|
316
|
|
236
|
Other current
liabilities
|
|
4,333
|
|
4,250
|
Current liabilities
|
|
12,403
|
|
11,239
|
|
|
|
|
|
Long-term
debt
|
|
7,832
|
|
7,426
|
Other noncurrent
liabilities
|
|
6,048
|
|
6,029
|
Noncurrent liabilities
held for sale
|
|
59
|
|
62
|
Shareholders' equity
attributable to JCI
|
|
15,890
|
|
16,268
|
Noncontrolling
interests
|
|
1,188
|
|
1,134
|
Total liabilities and
equity
|
|
$ 43,420
|
|
$
42,158
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
|
2023
|
|
|
2022
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
Net income attributable
to JCI
|
|
|
|
|
|
$ 133
|
|
|
$
11
|
Income attributable to
noncontrolling interests
|
|
|
|
|
|
41
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
174
|
|
|
52
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income to cash provided (used) by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
206
|
|
|
208
|
Pension and postretirement benefit expense
|
|
|
|
|
|
3
|
|
|
31
|
Pension and postretirement contributions
|
|
|
|
|
|
(17)
|
|
|
(35)
|
Equity in earnings of partially-owned affiliates, net of
dividends received
|
|
|
|
|
|
1
|
|
|
38
|
Deferred income taxes
|
|
|
|
|
|
(76)
|
|
|
(65)
|
Non-cash restructuring and impairment costs
|
|
|
|
|
|
397
|
|
|
361
|
Other - net
|
|
|
|
|
|
(29)
|
|
|
(8)
|
Changes in assets and liabilities, excluding acquisitions and
divestitures:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
(272)
|
|
|
(231)
|
Inventories
|
|
|
|
|
|
(145)
|
|
|
(243)
|
Other assets
|
|
|
|
|
|
(101)
|
|
|
(143)
|
Restructuring
reserves
|
|
|
|
|
|
(31)
|
|
|
(38)
|
Accounts payable and accrued
liabilities
|
|
|
|
|
|
183
|
|
|
156
|
Accrued income taxes
|
|
|
|
|
|
21
|
|
|
(151)
|
Cash provided (used) by operating activities
from continuing operations
|
|
|
|
|
|
314
|
|
|
(68)
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
(121)
|
|
|
(125)
|
Acquisition of
businesses, net of cash acquired
|
|
|
|
|
|
(10)
|
|
|
(16)
|
Other - net
|
|
|
|
|
|
6
|
|
|
27
|
Cash used by investing activities from
continuing operations
|
|
|
|
|
|
(125)
|
|
|
(114)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
Increase in short and
long-term debt - net
|
|
|
|
|
|
648
|
|
|
1,666
|
Stock repurchases and
retirements
|
|
|
|
|
|
(93)
|
|
|
(509)
|
Payment of cash
dividends
|
|
|
|
|
|
(240)
|
|
|
(239)
|
Dividends paid to
noncontrolling interests
|
|
|
|
|
|
(62)
|
|
|
(118)
|
Employee equity-based
compensation withholding taxes
|
|
|
|
|
|
(2)
|
|
|
(2)
|
Other - net
|
|
|
|
|
|
2
|
|
|
3
|
Cash provided by financing activities from
continuing operations
|
|
|
|
|
|
253
|
|
|
801
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
Net cash used by
operating activities
|
|
|
|
|
|
-
|
|
|
-
|
Net cash used by
investing activities
|
|
|
|
|
|
-
|
|
|
-
|
Net cash used by
financing activities
|
|
|
|
|
|
-
|
|
|
-
|
Net cash flows used by discontinued
operations
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
|
|
|
|
|
22
|
|
|
(21)
|
Increase in cash,
cash equivalents and restricted cash
|
|
|
|
|
|
$ 464
|
|
|
$ 598
|
JOHNSON CONTROLS
INTERNATIONAL PLC
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in millions;
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended March
31,
|
|
|
|
|
|
|
2023
|
|
|
2022
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
Net income attributable
to JCI
|
|
|
|
|
|
$ 251
|
|
|
$
392
|
Income attributable to
noncontrolling interests
|
|
|
|
|
|
79
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
330
|
|
|
471
|
|
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income to cash provided (used) by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
409
|
|
|
432
|
Pension and postretirement benefit income
|
|
|
|
|
|
(3)
|
|
|
(51)
|
Pension and postretirement contributions
|
|
|
|
|
|
(26)
|
|
|
(76)
|
Equity in earnings of partially-owned affiliates, net of
dividends received
|
|
|
|
|
|
(55)
|
|
|
20
|
Deferred income taxes
|
|
|
|
|
|
(168)
|
|
|
(97)
|
Non-cash restructuring and impairment costs
|
|
|
|
|
|
691
|
|
|
361
|
Other - net
|
|
|
|
|
|
(26)
|
|
|
(7)
|
Changes in assets and liabilities, excluding acquisitions and
divestitures:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
(360)
|
|
|
(306)
|
Inventories
|
|
|
|
|
|
(493)
|
|
|
(619)
|
Other assets
|
|
|
|
|
|
(169)
|
|
|
(206)
|
Restructuring
reserves
|
|
|
|
|
|
(18)
|
|
|
(19)
|
Accounts payable and accrued
liabilities
|
|
|
|
|
|
(154)
|
|
|
489
|
Accrued income taxes
|
|
|
|
|
|
60
|
|
|
(68)
|
Cash provided by operating activities from
continuing operations
|
|
|
|
|
|
18
|
|
|
324
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
|
|
|
(255)
|
|
|
(260)
|
Acquisition of
businesses, net of cash acquired
|
|
|
|
|
|
(89)
|
|
|
(124)
|
Other - net
|
|
|
|
|
|
30
|
|
|
52
|
Cash used by investing activities from
continuing operations
|
|
|
|
|
|
(314)
|
|
|
(332)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
Increase in short and
long-term debt - net
|
|
|
|
|
|
1,068
|
|
|
2,059
|
Stock repurchases and
retirements
|
|
|
|
|
|
(247)
|
|
|
(1,035)
|
Payment of cash
dividends
|
|
|
|
|
|
(481)
|
|
|
(430)
|
Dividends paid to
noncontrolling interests
|
|
|
|
|
|
(72)
|
|
|
(118)
|
Employee equity-based
compensation withholding taxes
|
|
|
|
|
|
(32)
|
|
|
(49)
|
Other - net
|
|
|
|
|
|
26
|
|
|
17
|
Cash provided by financing activities from
continuing operations
|
|
|
|
|
|
262
|
|
|
444
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
Net cash used by
operating activities
|
|
|
|
|
|
-
|
|
|
(4)
|
Net cash used by
investing activities
|
|
|
|
|
|
-
|
|
|
-
|
Net cash used by
financing activities
|
|
|
|
|
|
-
|
|
|
-
|
Net cash flows used by discontinued
operations
|
|
|
|
|
|
-
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
|
|
|
|
|
8
|
|
|
46
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
|
|
|
|
|
$ (26)
|
|
|
$
478
|
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 before income taxes and noncontrolling interests, excluding
general corporate expenses, intangible asset amortization, net
mark-to-market adjustments related to restricted asbestos
investments and pension and postretirement plans, restructuring and
impairment costs and net financing charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions;
unaudited)
|
|
|
Three Months Ended
March 31,
|
|
Six Months Ended March
31,
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
Actual
|
|
Adjusted
Non-GAAP
|
|
|
|
|
|
|
|
|
Segment EBITA
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Solutions
North America
|
|
|
$ 315
|
|
$ 315
|
|
$ 235
|
|
$ 235
|
|
$ 582
|
|
$ 582
|
|
$ 485
|
|
$ 485
|
|
|
|
|
|
|
|
|
Building Solutions
EMEA/LA
|
|
|
69
|
|
69
|
|
79
|
|
90
|
|
144
|
|
144
|
|
183
|
|
194
|
|
|
|
|
|
|
|
|
Building Solutions Asia
Pacific
|
|
|
79
|
|
79
|
|
74
|
|
74
|
|
147
|
|
147
|
|
142
|
|
142
|
|
|
|
|
|
|
|
|
Global
Products
|
|
|
488
|
|
458
|
|
412
|
|
369
|
|
870
|
|
880
|
|
713
|
|
670
|
|
|
|
|
|
|
|
|
Segment EBITA
|
|
|
951
|
|
921
|
|
800
|
|
768
|
|
1,743
|
|
1,753
|
|
1,523
|
|
1,491
|
|
|
|
|
|
|
|
|
Corporate expenses
(2)
|
|
|
(131)
|
|
(101)
|
|
(60)
|
|
(60)
|
|
(240)
|
|
(183)
|
|
(130)
|
|
(130)
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets (3)
|
|
|
(104)
|
|
(104)
|
|
(106)
|
|
(100)
|
|
(208)
|
|
(208)
|
|
(224)
|
|
(211)
|
|
|
|
|
|
|
|
|
Net mark-to-market
losses (4)
|
|
|
(4)
|
|
-
|
|
(89)
|
|
-
|
|
(1)
|
|
-
|
|
(32)
|
|
-
|
|
|
|
|
|
|
|
|
Restructuring and
impairment costs (5)
|
|
|
(418)
|
|
-
|
|
(384)
|
|
-
|
|
(763)
|
|
-
|
|
(433)
|
|
-
|
|
|
|
|
|
|
|
|
EBIT (6)
|
|
|
294
|
|
716
|
|
161
|
|
608
|
|
531
|
|
1,362
|
|
704
|
|
1,150
|
|
|
|
|
|
|
|
|
EBIT margin (6)
|
|
|
4.4 %
|
|
10.7 %
|
|
2.6 %
|
|
10.0 %
|
|
4.2 %
|
|
10.7 %
|
|
5.9 %
|
|
9.6 %
|
|
|
|
|
|
|
|
|
Net financing
charges
|
|
|
(71)
|
|
(71)
|
|
(51)
|
|
(51)
|
|
(138)
|
|
(138)
|
|
(104)
|
|
(104)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
223
|
|
645
|
|
110
|
|
557
|
|
393
|
|
1,224
|
|
600
|
|
1,046
|
|
|
|
|
|
|
|
|
Income tax provision
(7)
|
|
|
(49)
|
|
(87)
|
|
(58)
|
|
(75)
|
|
(63)
|
|
(165)
|
|
(129)
|
|
(141)
|
|
|
|
|
|
|
|
|
Net income
|
|
|
174
|
|
558
|
|
52
|
|
482
|
|
330
|
|
1,059
|
|
471
|
|
905
|
|
|
|
|
|
|
|
|
Income attributable to
noncontrolling interests (8)
|
|
|
(41)
|
|
(41)
|
|
(41)
|
|
(41)
|
|
(79)
|
|
(79)
|
|
(79)
|
|
(84)
|
|
|
|
|
|
|
|
|
Net income attributable
to JCI
|
|
|
$ 133
|
|
$ 517
|
|
$
11
|
|
$ 441
|
|
$ 251
|
|
$ 980
|
|
$ 392
|
|
$ 821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's press
release contains financial information regarding total segment
EBITA, adjusted segment EBITA and adjusted segment EBITA margins,
which are non-GAAP performance measures. The Company's definition
of adjusted segment EBITA excludes other non-recurring items that
are not considered to be directly related to the underlying
operating performance of its businesses. Management believes these
non-GAAP measures are useful to investors in understanding the
ongoing operations and business trends of the
Company.
|
|
A reconciliation of
segment EBITA to net income is shown earlier within this footnote.
The following is the three months ended March 31, 2023 and 2022
reconciliation of segment EBITA and segment EBITA margin as
reported to adjusted segment EBITA and adjusted segment EBITA
margin (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Building
Solutions
North America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Total
Field
|
|
Global
Products
|
|
Consolidated
JCI plc
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Segment EBITA as
reported
|
$ 315
|
|
$ 235
|
|
$
69
|
|
$
79
|
|
$
79
|
|
$
74
|
|
$ 463
|
|
$ 388
|
|
$ 488
|
|
$412
|
|
$
951
|
|
$
800
|
|
|
Segment EBITA margin as
reported (9)
|
12.5 %
|
|
10.6 %
|
|
6.7 %
|
|
8.2 %
|
|
11.8 %
|
|
11.9 %
|
|
11.0 %
|
|
10.2 %
|
|
19.8 %
|
|
18.0 %
|
|
14.2 %
|
|
13.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silent-Aire earn-out
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(30)
|
|
(43)
|
|
(30)
|
|
(43)
|
|
|
Charges attributable to
the suspension of operations in Russia
|
-
|
|
-
|
|
-
|
|
11
|
|
-
|
|
-
|
|
-
|
|
11
|
|
-
|
|
-
|
|
-
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$ 315
|
|
$ 235
|
|
$
69
|
|
$
90
|
|
$
79
|
|
$
74
|
|
$ 463
|
|
$ 399
|
|
$ 458
|
|
$369
|
|
$
921
|
|
$
768
|
|
|
Adjusted segment EBITA
margin (9)
|
12.5 %
|
|
10.6 %
|
|
6.7 %
|
|
9.4 %
|
|
11.8 %
|
|
11.9 %
|
|
11.0 %
|
|
10.5 %
|
|
18.6 %
|
|
16.1 %
|
|
13.8 %
|
|
12.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is the
six months ended March 31, 2023 and 2022 reconciliation of segment
EBITA and segment EBITA margin as reported to adjusted segment
EBITA and adjusted segment EBITA margin (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Building
Solutions
North America
|
|
Building
Solutions
EMEA/LA
|
|
Building
Solutions
Asia Pacific
|
|
Total
Field
|
|
Global
Products
|
|
Consolidated
JCI plc
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Segment EBITA as
reported
|
$ 582
|
|
$ 485
|
|
$ 144
|
|
$ 183
|
|
$ 147
|
|
$ 142
|
|
$ 873
|
|
$ 810
|
|
$ 870
|
|
$713
|
|
$1,743
|
|
$1,523
|
|
|
Segment EBITA margin as
reported
|
11.9 %
|
|
11.1 %
|
|
7.2 %
|
|
9.5 %
|
|
11.2 %
|
|
10.9 %
|
|
10.6 %
|
|
10.7 %
|
|
19.1 %
|
|
16.3 %
|
|
13.7 %
|
|
12.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silent-Aire earn-out
adjustment
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(30)
|
|
(43)
|
|
(30)
|
|
(43)
|
|
|
Warehouse fire
loss
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
40
|
|
-
|
|
40
|
|
-
|
|
|
Charges attributable to
the suspension of operations in Russia
|
-
|
|
-
|
|
-
|
|
11
|
|
-
|
|
-
|
|
-
|
|
11
|
|
-
|
|
-
|
|
-
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
EBITA
|
$ 582
|
|
$ 485
|
|
$ 144
|
|
$ 194
|
|
$ 147
|
|
$ 142
|
|
$ 873
|
|
$ 821
|
|
$ 880
|
|
$670
|
|
$1,753
|
|
$1,491
|
|
|
Adjusted segment EBITA
margin
|
11.9 %
|
|
11.1 %
|
|
7.2 %
|
|
10.1 %
|
|
11.2 %
|
|
10.9 %
|
|
10.6 %
|
|
10.8 %
|
|
19.3 %
|
|
15.3 %
|
|
13.7 %
|
|
12.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Adjusted Corporate
expenses for the three and six months ended March 31, 2023 excludes
certain transaction/separation costs of $30 million and $57
million, respectively.
|
|
(3) Adjusted
amortization of intangible assets for the three and six months
ended March 31, 2022 excludes nonrecurring intangible asset
amortization related to Silent-Aire purchase accounting of $6
million and $13 million, respectively.
|
|
(4) Adjusted results
for the three and six months ended March 31, 2023 exclude net
mark-to-market losses on restricted asbestos investments and
pension and postretirement plans of $4 million and $1 million,
respectively. The three and six months ended March 31, 2022 exclude
net mark-to-market losses on restricted asbestos investments and
pension and postretirement plans of $89 million and $32 million,
respectively.
|
|
(5) Adjusted results
for the three and six months ended March 31, 2023 exclude
restructuring and impairment costs of $418 million and $763
million, respectively. The restructuring actions and impairment
costs for the three and six months ended March 31, 2023 are related
primarily to workforce reductions, impairment of goodwill
attributable to the Company's Silent-Aire reporting unit,
impairment of assets associated with businesses classified as held
for sale and other asset impairments. Adjusted results for the
three and six months ended March 31, 2022 exclude restructuring and
impairment costs of $384 million and $433 million, respectively.
The restructuring actions and impairment costs for the three and
six months ended March 31, 2022 are related primarily to the
impairment of assets associated with a business classified as held
for sale, workforce reductions and other asset
impairments.
|
|
(6) Management defines
earnings before interest and taxes (EBIT) as income before net
financing charges, income taxes and noncontrolling interests. EBIT
margin is defined as EBIT divided by net sales. EBIT and EBIT
margin are non-GAAP performance measures. Management believes these
non-GAAP measures are useful to investors in understanding the
ongoing operations and business trends of the Company. A
reconciliation of EBIT to net income is shown earlier within this
footnote.
|
|
(7) Adjusted income tax
provision for the three and six months ended March 31, 2023
excludes the net tax benefit of pre-tax adjusting items of $38
million and $102 million, respectively. Adjusted income tax
provision for the three months ended March 31, 2022 excludes the
net tax benefit of pre-tax adjusting items of $30 million,
partially offset by tax provisions related to APB23 adjustments
attributable to a business classified as held for sale of $13
million. Adjusted income tax provision for the six months ended
March 31, 2022 excludes the net tax benefit of pre-tax adjusting
items of $25 million, partially offset by tax provisions related to
APB23 adjustments attributable to a business classified as held for
sale of $13 million.
|
|
(8) Adjusted income
from continuing operations attributable to noncontrolling interests
for the six months ended March 31, 2022 excludes $5 million impact
from restructuring and impairment costs.
|
|
(9) Segment EBITA
margin is defined as segment EBITA divided by segment net sales, as
disclosed in the Company's press release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's press
release and earnings presentation include forward-looking
statements regarding organic revenue growth, adjusted segment EBITA
margin improvement, free cash flow and adjusted EPS, which are
non-GAAP financial measures. These non-GAAP financial measures are
derived by excluding certain amounts from the corresponding
financial measures determined in accordance with GAAP. The
determination of the amounts excluded is 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
and the high variability of certain amounts, such as mark-to-market
adjustments. Organic revenue growth excludes the effect of
acquisitions, divestitures and foreign currency. 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 the necessary components of such GAAP measures without
unreasonable effort or expense. The unavailable information could
have a significant impact on the Company's fiscal 2023 third
quarter and full year GAAP financial results.
|
|
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 shown in the table below are excluded because these items are
not considered to be directly related to the underlying operating
performance of the Company. Management believes this non-GAAP
measure is useful to investors in understanding the ongoing
operations and business trends of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of
diluted earnings per share as reported to adjusted diluted earnings
per share for the respective periods is shown below
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable
to JCI plc
|
|
Net Income
Attributable
to JCI plc
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share as
reported for JCI plc
|
$0.19
|
|
$0.02
|
|
$ 0.36
|
|
$0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
|
|
Net
mark-to-market adjustments
|
0.01
|
|
0.13
|
|
-
|
|
0.05
|
|
|
Related tax
impact
|
-
|
|
(0.03)
|
|
-
|
|
(0.01)
|
|
|
Restructuring
and impairment costs
|
0.61
|
|
0.55
|
|
1.11
|
|
0.61
|
|
|
Related tax
impact
|
(0.05)
|
|
(0.01)
|
|
(0.13)
|
|
(0.02)
|
|
|
NCI impact of
restructuring and impairment costs
|
-
|
|
-
|
|
-
|
|
(0.01)
|
|
|
Silent-Aire
other nonrecurring costs
|
-
|
|
0.01
|
|
-
|
|
0.02
|
|
|
Transaction/separation costs
|
0.04
|
|
-
|
|
0.08
|
|
-
|
|
|
Related tax
impact
|
-
|
|
-
|
|
(0.01)
|
|
-
|
|
|
Silent-Aire
earn-out adjustment
|
(0.04)
|
|
(0.06)
|
|
(0.04)
|
|
(0.06)
|
|
|
Warehouse fire
loss
|
-
|
|
-
|
|
0.06
|
|
-
|
|
|
Related tax
impact
|
-
|
|
-
|
|
(0.01)
|
|
-
|
|
|
Charges
attributable to the suspension of operations in Russia
|
-
|
|
0.01
|
|
-
|
|
0.01
|
|
|
Discrete tax
items
|
-
|
|
0.02
|
|
-
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share for JCI plc*
|
$0.75
|
|
$0.63
|
|
$ 1.42
|
|
$1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
* 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
|
|
Six Months
Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
Weighted average shares
outstanding for JCI plc
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
686.8
|
|
699.1
|
|
686.9
|
|
701.8
|
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
|
Stock options,
unvested restricted stock
|
|
|
|
|
|
|
|
|
|
and
unvested performance share awards
|
2.9
|
|
3.6
|
|
3.1
|
|
4.4
|
|
|
Diluted weighted
average shares outstanding
|
689.7
|
|
702.7
|
|
690.0
|
|
706.2
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
Organic Growth Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
change in net sales for the three months ended March 31, 2023
versus the three months ended March 31, 2022, including organic
growth, are shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Net Sales for the
Three Months Ended
March 31, 2022
|
|
Base Year Adjustments
-
Divestitures and Other
|
|
Base Year Adjustments
-
Foreign Currency
|
|
Adjusted Base Net
Sales for the
Three Months Ended
March 31, 2022
|
|
Acquisitions
|
|
Organic
Growth
|
|
Net Sales for the
Three Months Ended
March 31, 2023
|
|
|
Building Solutions
North America
|
$
2,227
|
|
$
-
|
|
-
|
|
$
(14)
|
|
-1 %
|
|
$
2,213
|
|
$
5
|
|
-
|
|
$
302
|
|
14 %
|
|
$
2,520
|
|
13 %
|
|
|
Building Solutions
EMEA/LA
|
958
|
|
(4)
|
|
-
|
|
(50)
|
|
-5 %
|
|
904
|
|
23
|
|
3 %
|
|
104
|
|
12 %
|
|
1,031
|
|
8 %
|
|
|
Building Solutions Asia
Pacific
|
623
|
|
-
|
|
-
|
|
(41)
|
|
-7 %
|
|
582
|
|
-
|
|
-
|
|
85
|
|
15 %
|
|
667
|
|
7 %
|
|
|
Total field
|
3,808
|
|
(4)
|
|
-
|
|
(105)
|
|
-3 %
|
|
3,699
|
|
28
|
|
1 %
|
|
491
|
|
13 %
|
|
4,218
|
|
11 %
|
|
|
Global
Products
|
2,290
|
|
-
|
|
-
|
|
(93)
|
|
-4 %
|
|
2,197
|
|
-
|
|
-
|
|
271
|
|
12 %
|
|
2,468
|
|
8 %
|
|
|
Total net sales
|
$
6,098
|
|
$
(4)
|
|
-
|
|
$ (198)
|
|
-3 %
|
|
$
5,896
|
|
$
28
|
|
-
|
|
$
762
|
|
13 %
|
|
$
6,686
|
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
change in net sales for the six months ended March 31, 2023 versus
the six months ended March 31, 2022, including organic growth, are
shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Net Sales for the
Six Months Ended
March 31, 2022
|
|
Base Year Adjustments
-
Divestitures and Other
|
|
Base Year Adjustments
-
Foreign Currency
|
|
Adjusted Base Net
Sales for the
Six Months Ended
March 31, 2022
|
|
Acquisitions
|
|
Organic
Growth
|
|
Net Sales for the
Six Months Ended
March 31, 2023
|
|
|
Building Solutions
North America
|
$
4,379
|
|
$
-
|
|
-
|
|
$
(29)
|
|
-1 %
|
|
$
4,350
|
|
$
12
|
|
-
|
|
$
525
|
|
12 %
|
|
$
4,887
|
|
12 %
|
|
|
Building Solutions
EMEA/LA
|
1,917
|
|
(22)
|
|
-1 %
|
|
(139)
|
|
-7 %
|
|
1,756
|
|
43
|
|
2 %
|
|
207
|
|
12 %
|
|
2,006
|
|
5 %
|
|
|
Building Solutions Asia
Pacific
|
1,298
|
|
-
|
|
-
|
|
(112)
|
|
-9 %
|
|
1,186
|
|
-
|
|
-
|
|
127
|
|
11 %
|
|
1,313
|
|
1 %
|
|
|
Total field
|
7,594
|
|
(22)
|
|
-
|
|
(280)
|
|
-4 %
|
|
7,292
|
|
55
|
|
1 %
|
|
859
|
|
12 %
|
|
8,206
|
|
8 %
|
|
|
Global
Products
|
4,366
|
|
-
|
|
-
|
|
(218)
|
|
-5 %
|
|
4,148
|
|
-
|
|
-
|
|
400
|
|
10 %
|
|
4,548
|
|
4 %
|
|
|
Total net sales
|
$
11,960
|
|
$
(22)
|
|
-
|
|
$ (498)
|
|
-4 %
|
|
$
11,440
|
|
$
55
|
|
-
|
|
$1,259
|
|
11 %
|
|
$12,754
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
change in total service revenue for the three months ended March
31, 2023 versus the three months ended March 31, 2022, including
organic growth, are shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Service Revenue
for the
Three Months Ended
March 31, 2022
|
|
Base Year Adjustments
-
Divestitures and Other
|
|
Base Year Adjustments
-
Foreign Currency
|
|
Adjusted Base
Service
Revenue for the
Three Months Ended
March 31, 2022
|
|
Acquisitions
|
|
Organic
Growth
|
|
Service Revenue
for the
Three Months Ended
March 31, 2023
|
|
|
Building Solutions
North America
|
$
884
|
|
$
-
|
|
-
|
|
$
(5)
|
|
-1 %
|
|
$
879
|
|
$
6
|
|
1 %
|
|
$ 81
|
|
9 %
|
|
$ 966
|
|
9 %
|
|
|
Building Solutions
EMEA/LA
|
422
|
|
(1)
|
|
-
|
|
(24)
|
|
-6 %
|
|
397
|
|
3
|
|
1 %
|
|
49
|
|
12 %
|
|
449
|
|
6 %
|
|
|
Building Solutions Asia
Pacific
|
175
|
|
-
|
|
-
|
|
(11)
|
|
-6 %
|
|
164
|
|
-
|
|
-
|
|
24
|
|
15 %
|
|
188
|
|
7 %
|
|
|
Total field
|
1,481
|
|
(1)
|
|
-
|
|
(40)
|
|
-3 %
|
|
1,440
|
|
9
|
|
1 %
|
|
154
|
|
11 %
|
|
1,603
|
|
8 %
|
|
|
Global
Products
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Total service revenue
|
$
1,481
|
|
$
(1)
|
|
-
|
|
$
(40)
|
|
-3 %
|
|
$
1,440
|
|
$
9
|
|
1 %
|
|
$
154
|
|
11 %
|
|
$
1,603
|
|
8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The components of the
change in total service revenue for the six months ended March 31,
2023 versus the six months ended March 31, 2022, including organic
growth, are shown below (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Service Revenue
for the
Six Months Ended
March 31, 2022
|
|
Base Year Adjustments
-
Divestitures and Other
|
|
Base Year Adjustments
-
Foreign Currency
|
|
Adjusted Base
Service
Revenue for the
Six Months Ended
March 31, 2022
|
|
Acquisitions
|
|
Organic
Growth
|
|
Service Revenue
for the
Six Months Ended
March 31, 2023
|
|
|
Building Solutions
North America
|
$
1,737
|
|
$
-
|
|
-
|
|
$
(11)
|
|
-1 %
|
|
$
1,726
|
|
$
12
|
|
1 %
|
|
$
144
|
|
8 %
|
|
$
1,882
|
|
8 %
|
|
|
Building Solutions
EMEA/LA
|
837
|
|
(12)
|
|
-1 %
|
|
(65)
|
|
-8 %
|
|
760
|
|
7
|
|
1 %
|
|
105
|
|
14 %
|
|
872
|
|
4 %
|
|
|
Building Solutions Asia
Pacific
|
349
|
|
-
|
|
-
|
|
(29)
|
|
-8 %
|
|
320
|
|
-
|
|
-
|
|
41
|
|
13 %
|
|
361
|
|
3 %
|
|
|
Total field
|
2,923
|
|
(12)
|
|
-
|
|
(105)
|
|
-4 %
|
|
2,806
|
|
19
|
|
1 %
|
|
290
|
|
10 %
|
|
3,115
|
|
7 %
|
|
|
Global
Products
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Total service revenue
|
$
2,923
|
|
$
(12)
|
|
-
|
|
$ (105)
|
|
-4 %
|
|
$
2,806
|
|
$
19
|
|
1 %
|
|
$
290
|
|
10 %
|
|
$
3,115
|
|
7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Free Cash Flow
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's press
release contains financial information regarding free cash flow and
free cash flow conversion, which are non-GAAP performance measures.
We also present below free cash flow conversion from the GAAP
measure of net income attributable to JCI. Effective January 1,
2023, the Company has excluded the impact of its financing entity,
JC Capital, from the calculation of free cash flow. Management
believes this provides a more true representation of the Company's
operational ability to convert cash, without the contrary impact
from financing activities. The impact on interim and annual periods
prior to January 1, 2023 was not material. JC Capital cash flows
that are excluded from the calculation of free cash flow primarily
include activity associated with finance/notes receivables and
inventory and/or capital expenditures related to lease
arrangements. JC Capital net income that is excluded is primarily
related to interest income on the finance/notes receivable and
profit recognized on arrangements with sales-type lease
components.
Free cash flow is defined as cash provided (used) by operating
activities, excluding JC Capital, less capital expenditures,
excluding JC Capital. Free cash flow conversion from net income is
defined as free cash flow divided by net income attributable to
JCI. Free cash flow conversion is defined as free cash flow divided
by adjusted net income attributable to JCI, excluding JC Capital.
Management believes these non-GAAP measures are useful to investors
in understanding the strength of the Company and its ability to
generate cash. These non-GAAP measures can also be used to evaluate
our ability to generate cash flow from operations and the impact
that this cash flow has on our liquidity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is the
three and six months ended March 31, 2023 and 2022 calculation of
free cash flow (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
(in
millions)
|
March 31,
2023
|
|
March 31,
2022
|
|
March 31,
2023
|
|
March 31,
2022
|
|
|
Cash provided (used) by
operating activities from continuing
operations
|
$
314
|
|
$
(68)
|
|
$
18
|
|
$
324
|
|
|
Less: JC Capital cash
used by operating activities
from continuing operations
|
(42)
|
|
-
|
|
(42)
|
|
-
|
|
|
Cash provided (used) by
operating activities from continuing
operations, excluding JC Capital
|
$
356
|
|
$
(68)
|
|
$
60
|
|
$
324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
(121)
|
|
$
(125)
|
|
$
(255)
|
|
$
(260)
|
|
|
Less: JC Capital
capital expenditures
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Capital expenditures,
excluding JC Capital
|
$
(121)
|
|
$
(125)
|
|
$
(255)
|
|
$
(260)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
235
|
|
$
(193)
|
|
$
(195)
|
|
$
64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is the
six months ended March 31, 2023 and 2022 calculation of free cash
flow conversion from net income and free cash flow conversion
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
(in
millions)
|
March 31,
2023
|
|
March 31,
2022
|
|
|
|
|
|
|
Net income attributable
to JCI
|
$
251
|
|
$
392
|
|
|
|
|
|
|
Free cash flow
conversion from net income
|
-78 %
|
|
16 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to JCI
|
$
980
|
|
$
821
|
|
|
|
|
|
|
|
|
|
|
Less: JC Capital net
income
|
8
|
|
-
|
|
|
|
|
|
|
Adjusted net income
attributable to JCI, excluding JC Capital
|
$
972
|
|
$
821
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
conversion
|
-20 %
|
|
8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Debt
Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's earnings
presentation provides financial information regarding net debt to
adjusted EBITDA, which is a non-GAAP performance measure. We also
present below net debt to income before income taxes. The Company
believes these ratios are useful to understanding the Company's
financial condition as they provide an overview of the extent to
which the Company relies on external debt financing for its funding
and are a measure of risk to its shareholders. The following is the
March 31, 2023, December 31, 2022, and March 31, 2022 calculation
of net debt to income before income taxes and net debt to adjusted
EBITDA (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
March 31,
2023
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
Short-term debt and
current portion of long-term debt
|
$
2,659
|
|
$
1,963
|
|
$
2,284
|
|
|
Long-term
debt
|
7,832
|
|
7,784
|
|
7,366
|
|
|
Total debt
|
10,491
|
|
9,747
|
|
9,650
|
|
|
Less: cash and cash
equivalents
|
1,975
|
|
1,509
|
|
1,787
|
|
|
Total net
debt
|
$
8,516
|
|
$
8,238
|
|
$
7,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last twelve months
income before income taxes
|
$
1,503
|
|
$
1,390
|
|
$
2,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net debt to
income before income taxes
|
5.7x
|
|
5.9x
|
|
3.6x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Last twelve months
adjusted EBITDA
|
$
3,895
|
|
$
3,783
|
|
$
3,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net debt to
adjusted EBITDA
|
2.2x
|
|
2.2x
|
|
2.1x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is the
last twelve months ended March 31, 2023, December 31, 2022, and
March 31, 2022 reconciliation of income from continuing operations
to adjusted EBIT and adjusted EBITDA, which are non-GAAP
performance measures (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Last Twelve
Months
Ended
March 31, 2023
|
|
Last Twelve
Months
Ended
December 31, 2022
|
|
Last Twelve
Months
Ended
March 31, 2022
|
|
|
Income from continuing
operations
|
$
1,582
|
|
$
1,460
|
|
$
1,448
|
|
|
Income tax provision
(benefit)
|
(79)
|
|
(70)
|
|
727
|
|
|
Net financing
charges
|
247
|
|
227
|
|
207
|
|
|
EBIT
|
1,750
|
|
1,617
|
|
2,382
|
|
|
Adjusting
items:
|
|
|
|
|
|
|
|
Net
mark-to-market adjustments
|
(65)
|
|
20
|
|
(140)
|
|
|
Restructuring and impairment costs
|
1,051
|
|
1,017
|
|
579
|
|
|
Environmental remediation and related reserves
adjustment
|
255
|
|
255
|
|
|
|
-
|
|
|
Silent-Aire other nonrecurring costs
|
|
|
-
|
|
|
|
6
|
|
|
|
36
|
|
|
Silent-Aire earn-out adjustment
|
|
|
(30)
|
|
|
|
(43)
|
|
|
|
(43)
|
|
|
Charges
attributable to the suspension of operations in Russia
|
-
|
|
11
|
|
11
|
|
|
Warehouse
fire loss
|
|
|
40
|
|
|
|
40
|
|
|
|
-
|
|
|
Transaction/separation costs
|
|
|
87
|
|
|
|
57
|
|
|
|
-
|
|
|
Adjusted EBIT
(1)
|
3,088
|
|
2,980
|
|
2,825
|
|
|
Depreciation and
amortization
|
807
|
|
803
|
|
835
|
|
|
Adjusted EBITDA
(1)
|
$
3,895
|
|
$
3,783
|
|
$
3,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company's
definition of adjusted EBIT and adjusted EBITDA excludes special
items that are not considered to be directly related to the
underlying operating performance of its businesses. Management
believes this non-GAAP measure is useful to investors in
understanding the ongoing operations and business trends of the
Company.
|
|
6. Income
Taxes
|
|
|
|
The Company's effective
tax rate from continuing operations before consideration of net
mark-to-market adjustments, restructuring and impairment costs,
Silent-Aire nonrecurring intangible asset amortization and purchase
accounting, charges attributable to the suspension of operations in
Russia, discrete tax items, certain transaction/separation costs
and warehouse fire loss for the three and six months ending March
31, 2023 and March 31, 2022 is approximately 13.5%.
|
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SOURCE Johnson Controls International plc