Johnson Controls International plc
CEO : Mr. George R. Oliver
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q1 | 3.5% YoY | -0.4% | -68.5% | 2023-02-01 |
Olivier Leonetti says,
First Quarter Financial Results
- Total sales increased by 4% with organic sales growing at 9% due to a 10% price increase which offset a decline in volume.
- Adjusted segment EBITDA increased by 15% with margins expanding 140 basis points to 13.7% due to positive price costs and improved productivity.
- Adjusted EPS of $0.67 was at the high end of guidance and increased by 24% year-over-year.
Orders and Backlog
- Total orders for field businesses increased by 5%, while in-store business grew by only 1% in the quarter. However, service business grew by 10% driven by double-digit growth in EMEA/LA and APAC.
- Field backlog grew by 11% to $11.3 billion, which is an $800 million increase versus the prior year while growing $250 million sequentially.
- Global product third-party backlog grew by more than 30% over the prior year to $2.8 billion.
Segment Results
- Sales in North America were up 10% organically with broad-based growth across the portfolio.
- Sales in EMEA/LA grew 12% organically with strong performance in applied commercial HVAC and Fire & Security.
- Sales in Asia Pacific increased 7% driven by mid-single-digit growth in commercial HVAC & Controls platform.
- Sales in shorter cycle products business increased by 7% due to strong price realization of 11%.
Fiscal 2023 Guidance
- Q2 organic sales guidance of approximately 10% growth with price being the principal contributor.
- Segment EBITDA margin is expected to expand 100 to 110 basis points and adjusted EPS is an expected range of $0.72 to $0.74, which represents year-over-year growth of 15% to 18%.
- Full year adjusted EPS guidance range of $3.30 to $3.60 represent growth of 10% to 20%.
Balance Sheet and Cash Flow
- Ended Q1 with $1.5 billion in available cash and net debt at 2.2 times, which is within the target range of 2 to 2.5 times.
- Full year free cash flow conversion is expected to be between 80% to 90%.
George Oliver says,
Q1 2023 Earnings Report Highlights
- Organic revenue grew at a healthy pace with solid Q1 results.
- Service strength was resilient and remains a key competitive differentiator.
- $11.3 billion backlog remains resilient, growing 11% year-over-year.
- Delivered $90 million in productivity cost savings, and are on track to reach the $340 million savings target over the course of this fiscal year.
- Recently announced plans to enhance the industrial heat pump portfolio with the acquisition of Hybrid Energy, strengthening the global product portfolio and providing customers with efficient sustainable building solutions.
- Raising the lower bookend of the adjusted EPS guidance range for the year, despite global macroeconomic uncertainty.
OpenBlue Platform Expansion
- OpenBlue platform continued to expand, enhancing capabilities leveraging the power of AI.
- Enhanced existing connectivity of over 11,000 chillers through OpenBlue, representing a 79% increase year-over-year.
- OpenBlue companion installed at a facility to enhance employee productivity and space utilization.
Digital Service Journey Acceleration
- Entered the first phase of digital transformation in fiscal 2021, now positioned for the next phase as we standardize field operations globally.
- Linking the benefits of real-time monitoring of connected devices to our extensive service network.
- Service orders and revenue grew 10% year-over-year in Q1, on track to reach the goal to capture $2 billion in additional service revenue by 2024.
Sustainable Infrastructure Partnership Ecosystem
- Helping customers achieve decarbonization and efficiency goals through advisory services and goal-setting partnerships with KPMG and Accenture.
- Realized over $200 million in organic revenue, growing over 20% year-over-year with orders over the last 12 months growing at 6%.
Healthy Buildings Opportunity
- Indoor environmental quality improvements post-COVID driving compelling intersection of Healthy Buildings and sustainability strategic growth vectors.
- Leadership position in the Healthy Buildings business with trailing 12-month orders increasing 11% year-over-year.
- Expecting continued growth momentum thanks to OpenBlue indoor air quality as a service and leading IAQ and space management capabilities in OpenBlue Enterprise Manager.
Sustainability Efforts
- Continually recognized for dedicated sustainability efforts.
- Chief Sustainability Officer, Katie McGinty, named one of 2022’s most influential women executives for sustainability leadership by Women Inc. magazine.
- President of Asia-Pacific, Anu Rathninde, received the ESG Exploration Character Award of the Year from the 2022 ESG Pioneer 60 awards by Jiemian.
Q & A sessions,
Field Orders and Backlog
- Install up 1%, services up over 10% in Q1 2023
- China COVID lockdowns and unpredictable timing of larger sustainability projects impacted orders
- Backlog up over 11%, strong double-digit pipeline conversion expected in Q2 and beyond
North America Resi Business
- Market down in units in the teens, JCI down more than that due to supply chain disruptions and launch of new product
- Strong pricing and distributor support, field direct channel up 13%
- Market projected to be down high single digits in units for the rest of the year, JCI expects recovery of lost share due to improved supply chain
Margins and Value Proposition
- Expectation of higher margin due to value propositions through OpenBlue and outcome-focused solutions
- New product investment up 25-28% YoY, leading portfolio in heat pumps expected to reduce energy and enhance indoor air quality
- Fire and security systems integral part of smart building solutions in OpenBlue
Global Products
- Warehouse fire in fire suppression business and resi demand impacted growth rate in Q1 2023
- Expectation of recovery and ramp-up in unit growth in Q2, expanding in Q3 and Q4
Global Sustainability Trends
- Expectation of continued increase in IRA incentives and pipeline conversion
- Alignment with EU strategies and initiatives for net zero and energy performance of buildings
Backlog Margin Expectation
- Implemented strategic pricing and incorporation of future inflation in costing for longer-cycle projects
- Expectation of higher margin in turning projects due to backlog and improved supply chain
No bad stock 