Company says Q1 reported sales are flat compared to the previous year and declined 1% organicallyCORK, Ireland, 30 January 2024: Johnson Controls International (JCI) announced the reported fiscal first quarter 2024 GAAP earnings per share (“EPS”) from continuing operations of USD 0.55. Making the announcement through a Press release, JCI said, excluding special items, adjusted EPS from continuing operations was USD 0.51.

JCI said sales in the quarter of USD 6.1 billion were flat compared to the prior year on an as-reported basis and declined one per cent organically, and added that GAAP net income from continuing operations was USD 374 million. Furthermore, JCI said the adjusted net income from continuing operations was USD 350 million.

George Oliver, Chairman and CEO, JCI, said: “We continued to position Johnson Controls for the future, delivering solid first quarter results and appointing Marc Vandiepenbeeck as CFO. Our value proposition of making buildings smarter, healthier and more sustainable resonates with our customers and translates into record backlog. After managing through a temporary cyber disruption and the seasonality of the first quarter, we are entering the new calendar year with accelerating momentum.”

Oliver further said: “The management team continues to simplify and transform the company into a comprehensive solutions provider for commercial buildings. As part of the continuous evaluation of our portfolio, we are in the early stages of pursuing strategic alternatives for our non-commercial businesses, in line with our objective to maximise value to our shareholders.”

JCI said the financial highlights presented in the tables below are in accordance with GAAP unless otherwise indicated, and all comparisons are to the fiscal first quarter of 2023.

JCI said that organic sales growth, adjusted segment EBITA, adjusted corporate expense, adjusted net income from continuing operations, adjusted EPS from continuing operations, cash provided by operating activities from continuing operations, excluding JC Capital, and adjusted free cash flow are non-GAAP financial measures. For a reconciliation of non-GAAP measures and details of the special items, JCI said, to refer to the attached footnotes. Furthermore, JCI said 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, JCI said, are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. JCI said 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 recognised in a given period and the high variability of certain amounts, such as mark-to-market adjustments. Organic revenue growth, JCI said, excludes the effect of acquisitions, divestitures and foreign currency. JCI also said that it is 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, JCI added, could significantly impact the company’s fiscal 2024 second quarter and full-year GAAP financial results.

SEGMENT RESULTS

Building Solutions North America

Fiscal Q1
GAAP Adjusted
2023 2024 2023 2024
Sales USD 2,367 $
USD 2,487

USD 2,367 USD 2,487
Segment EBITA 267 285 267 285
Segment EBITA Margin % 11.3 % 11.5 % 11.3% 11.5 %
According to JCI, sales in the quarter of USD 2.5 billion increased 5 per cent more than the prior year. JCI said organic sales increased by four per cent over the previous year, led by double-digit growth in Applied HVAC & Controls. Orders in the quarter, JCI said, excluding M&A and adjusted for foreign currency, increased six per cent year-over-year and added that backlog at the end of the quarter of USD 8.4 billion increased 11% compared to the prior year.

JCI said segment EBITA was USD 285 million, which increased by 7 per cent from the previous year. Segment EBITA margin of 11.5% expanded by 20 basis points than the previous year, led by higher margin backlog conversion and continued growth in services, JCI further said.

Building Solutions EMEA/LA (Europe, Middle East, Africa/Latin America)

Fiscal Q1
GAAP Adjusted
2023 2024 2023 2024
Sales USD 975 USD 1,038 USD 975 USD 1,038
Segment EBITA 75 80 75 80
Segment EBITA Margin % 7.7 % 7.7 % 7.7 % 7.7 %
According to JCI, sales in the quarter of USD 1.0 billion increased 6 per cent more than the prior year. JCI said organic sales increased by two per cent over the previous year, led by strength in Applied HVAC & Controls, Fire & Security and high-single-digit growth in service. Orders in the quarter, JCI said, excluding M&A and adjusted for foreign currency, increased five per cent year-over-year and added that backlog at the end of the quarter of USD 2.4 billion increased ten per cent compared to the prior year.

JCI said segment EBITA was USD 80 million, which increased by 7 per cent from the previous year. Segment EBITA margin of 7.7% was flat versus the prior year as the growth in service was offset by the conversion of lower margin install backlog, JCI further said.

Building Solutions Asia Pacific

Fiscal Q1
GAAP Adjusted
2023 2024 2023 2024
Sales USD 646 USD 507 USD 646 USD 507
Segment EBITA 68 46 68 46
Segment EBITA Margin % 10.5 % 9.1 % 10.5 % 9.1 %

According to JCI, sales in the quarter of USD 507 million, marking a decline of 22% from the previous year. Organic sales declined 21% compared to the previous year as mid-single-digit service growth was more than offset by accelerating weakness in China, JCI further said.

Orders in the quarter, JCI said, excluding M&A and adjusted for foreign currency, declined 31% year-over-year, and added that backlog at the end of the quarter of USD 1.3 billion decreased 21% year-over-year, excluding M&A and adjusted for foreign currency.

JCI said that segment EBITA was USD 46 million, marked a decrease of 32% from the previous year, and added that segment EBITA margin of 9.1% declined 140 basis points versus the prior year, primarily related to declines in the install business in China.

Global Products

Fiscal Q1
GAAP Adjusted
2023 2024 2023 2024
Sales USD 2,080 USD 2,062 USD 2,080 USD 2,062
Segment EBITA 382 369 422 369
Segment EBITA Margin % 18.4 % 17.9 % 20.3 % 17.9 %

According to JCI, sales in the quarter of USD 2.1 billion declined one per cent compared to the prior year. Organic sales were down one per cent versus the previous year as growth in Applied and Light Commercial HVAC was offset by declines in global residential HVAC, JCI further said.

Segment EBITA was USD 369 million, down three per cent versus the prior year, and Segment EBITA margin of 17.9% declined 50 basis points versus the previous year due to unfavourable manufacturing absorption and mix, JCI further said. JCI also said that adjusted segment EBITA in Q1 2023 excluded the impact of an uninsured loss associated with a fire at a leased warehouse facility.

Corporate

Fiscal Q1
GAAP Adjusted
2023 2024 2023 2024
Corporate Expense USD (109) USD (139) USD (82) USD (116)
According to JCI, Corporate expense was USD 139 million in the quarter, an increase of 28% compared to the previous year. Adjusted Corporate expense in Q1 2024 excluded certain one-time cyber incident-related costs, and in Q1 2023 excluded certain transaction/separation costs, JCI further said.

According to JCI, other Q1 items are:

Cash used by operating activities from continuing operations was USD 246 million, while cash used by operating activities from continuing operations, excluding JC Capital, was USD 158 million. Capital expenditures were USD 92 million, resulting in adjusted free cash flow from continuing operations of USD (250) million. This was favorable by USD 180 million compared to Q1 2023.
The company paid dividends of approximately USD 252 million during Q1 2024.
The company recorded pre-tax restructuring and impairment costs of USD 39 million, primarily comprised of severance charges related to ongoing restructuring actions.
The company recorded a net discrete period tax benefit ofUSD 57 million related to benefits from Swiss cantonal tax reform partially offset by a provision related to a change in indefinite reinvestment assertion for certain subsidiaries.
According to JCI, the company initiated fiscal 2024 second quarter guidance, and are as follows:

Organic revenue ~flat year-over-year
Adjusted segment EBITA margin of ~14.5%
Adjusted EPS before special items of ~USD 0.74 to USD 0.78
According to JCI, the company updated fiscal 2024 full year EPS guidance, and are as follows:

Organic revenue growth up ~MSD year-over year
Adjusted segment EBITA margin improvement of ~50 to 75 basis points, year-over-year (previously guided to ~25+ basis points improvement)
Adjusted EPS before special items of ~USD 3.60 to USD 3.75 from prior range of ~USD 3.65 to USD 3.80