In 2024, Johnson Controls heat pumps cut customers' annual heating costs 53% while reducing emissions by 60%MILWAUKEE, June 10, 2025 /PRNewswire/ -- Johnson Controls commercial heat pumps are delivering competitive advantage to customers and partners across all industries – from global industrial and manufacturing organizations to hospitals, local municipalities, and utilities – while having a positive impact on the environment. The results are significant: In 2024, Johnson Controls helped cut customers' ex ...

Summary of Johnson Controls International (JCI) FY Conference Company Overview - **Company**: Johnson Controls International (JCI) - **Event**: FY Conference held on May 21, 2025 Key Industry Insights - **Market Demand**: There is no significant decline in demand observed, with indications of stable pricing despite tariff pullbacks in China [2][3] - **Stock Performance**: JCI is among the top-performing stocks year-to-date, alongside GivaNova and 3M, highlighting the effectiveness of self-help strategies in the multi-industrial sector [4] Core Company Insights - **Leadership Transition**: The new CEO, Jochen Weidermannus, emphasizes the importance of customer and competitor orientation over internal focus, aiming to enhance operational efficiency [15][18] - **Technological Capabilities**: JCI possesses unique skills in HVAC product lines, particularly in high-performance chillers, which are seen as a competitive advantage [19][20] - **Customer Orientation**: The company aims to optimize internal processes to free up time for field teams, enhancing their capacity to serve customers effectively [18] Pricing Strategy - **Solutions Pricing**: The pricing dynamics in the Solutions business are complex, but JCI is improving its pricing processes to command better prices and sell more value [33][34] - **Market Focus**: JCI is shifting its commercial teams to focus on more attractive market segments, which allows for better pricing on differentiated products [34][35] Organizational Changes - **Reorganization**: JCI is moving from four segments to three, aiming for a more streamlined and efficient decision-making process that enhances customer experience [37][39] - **Holistic Market Approach**: The new structure encourages teams to view the market comprehensively, leading to better alignment with customer buying journeys [40][41] Installation and Labor Optimization - **Installation Practices**: JCI is evaluating its installation practices to determine their impact on win rates and margins, with a focus on optimizing where installation is necessary [47][50] - **Gross Margins**: JCI's gross margins are reportedly better than many peers, and the company is exploring ways to further enhance margins through operational efficiencies [52][77] Market Outlook - **Pipeline Health**: The company maintains a healthy pipeline and does not foresee significant softness in the market for the remainder of 2025, despite macroeconomic concerns [67][70] - **Vertical Market Performance**: Key verticals such as data centers, manufacturing, and healthcare are performing well, while Class A commercial real estate remains a strong market [70] Margin Improvement Strategies - **Lean Principles**: JCI plans to apply lean principles across its factories and field operations to eliminate waste and improve efficiency, which is expected to enhance margins over time [76][78] - **Long-term Goals**: The CEO expresses confidence in JCI's ability to catch up to competitors in terms of margins, with a focus on continuous improvement and strategic capital allocation [77][78] Conclusion - JCI is positioned to leverage its technological strengths and operational efficiencies to enhance customer service and improve financial performance. The company is actively working on strategic initiatives to optimize pricing, streamline operations, and focus on high-growth verticals, setting a positive outlook for future growth and profitability.

Johnson Controls International (JCI) 2025 Conference Summary Company Overview - **Company**: Johnson Controls International (JCI) - **Event**: 2025 Conference - **Date**: May 14, 2025 Key Points Industry and Company Restructuring - **Resegmentation**: JCI is restructuring its operating model by combining its building solutions and global products divisions to eliminate inefficiencies and better serve customer needs [3][4][5] - **Market Focus**: The new model aims to be more market-focused, addressing specific customer requirements across different verticals such as healthcare and higher education [5] Financial Performance and Cash Conversion - **Cash Conversion**: JCI is approaching a cash conversion rate of 100%, driven by improvements in cash management, supply chain simplification, and procurement processes [6][7] - **Inventory Management**: Future improvements in cash conversion will depend on better inventory management and lean manufacturing practices [8][9] Strategic Review and M&A Outlook - **Portfolio Review**: The CEO is conducting a comprehensive review of the company's portfolio to optimize operations and identify underperforming assets [15][16][18] - **M&A Strategy**: JCI has a healthy pipeline of M&A targets, focusing on acquiring complementary technologies rather than transformative deals [20][21] Data Center Market Insights - **Data Center Growth**: JCI's data center business is experiencing high double-digit growth, with a significant portion of revenue coming from this segment [23][25] - **Customer Base**: The company has strong relationships with hyperscalers and colocation providers, with North America being the most successful region [26][27] - **Market Challenges**: Regulatory complexities in Europe and power availability issues are impacting growth in that region [28] Vertical Market Performance - **Healthcare**: The healthcare sector is shifting towards smaller facilities, with JCI focusing on servicing multiple smaller hospitals rather than large mega-hospitals [60][61] - **Commercial Real Estate**: The Class A office market is performing well, while Class B and C offices are struggling with high vacancy rates [57][58] - **Fire and Security**: The fire and security market in Europe is strong, while North America is experiencing low single-digit growth due to reliance on new construction [64][65] Operational Improvements - **Lean Management**: JCI is implementing lean management practices to improve operational efficiency and reduce waste, aiming for significant margin improvements [48][67] Future Outlook - **Market Indicators**: JCI is monitoring quoting activity in biopharma and warehousing as indicators of future demand, though conversion to orders remains a challenge [49][54] - **Geopolitical Factors**: The company is cautious about the impact of geopolitical dynamics on market conditions and demand [52] Additional Insights - **Customer-Centric Approach**: JCI emphasizes a customer needs-based segmentation strategy to enhance service and product delivery [66] - **Technological Differentiation**: The company is focused on developing differentiated solutions in the data center market, particularly in thermal management [32][33] This summary encapsulates the key insights and strategic directions discussed during the Johnson Controls International conference, highlighting the company's focus on operational efficiency, market responsiveness, and growth opportunities in various sectors.

Group 1: Honeywell International - Honeywell has been added to UBS analyst Amit Mehrotra's list of "top picks" alongside Johnson Controls and 3M, indicating strong potential for outperformance [1] - The company raised the midpoint of its full-year guidance following excellent first-quarter results, with an organic sales growth outlook of 2% to 5% [2][4] - Honeywell's aerospace business is benefiting from increased aircraft production and growth in flight departures, with notable double-digit growth in Building Solutions [3] - Long-term potential exists from the planned breakup into three divisions, allowing for a more focused investment proposition and capital raising opportunities [6][7] Group 2: Johnson Controls - Johnson Controls reported a 7% organic sales growth in its fiscal second-quarter 2025, raising its full-year earnings guidance to $3.60 [9] - The company achieved a 5% order growth, increasing its backlog to $14 billion, driven by digital technology deployment [10] - Long-term growth catalysts include the adoption of the OpenBlue suite, which optimizes building efficiency and supports net-zero emissions goals [12] - The company's HVAC systems present growth opportunities in data centers, aligning with the AI/data center spending boom [13] Group 3: 3M - 3M's new CEO, Bill Brown, is implementing improvements after a period of underperformance, particularly in addressing legal issues and restructuring [14][15] - The company is tracking toward the low end of its guidance for full-year organic sales growth of 2% to 3%, but operational improvements have increased its operating margin to 23.5% [16] - If the tariff environment improves, 3M could benefit from enhanced earnings due to improved end markets and reduced cost headwinds [17]

Summary of Johnson Controls Conference Call Company Overview - **Company**: Johnson Controls - **Event**: Oppenheimer's 20th Annual Industrial Growth Conference Key Points Leadership Transition and Strategy - New CEO Joaquin has been proactive in his first two months, visiting eight countries and engaging with customers and factory operations [3][4] - Focus on lean initiatives and value creation opportunities, emphasizing a long-term journey rather than immediate results [4][6] - The company is redefining its strategy and portfolio, identifying areas for growth and potential divestitures [5][6] Operational Changes - Revised reporting structure aligns with industry peers, aiming for cost reduction and improved accountability [8][10] - The new structure aims to eliminate redundancy and improve customer focus, transitioning from a dual operating model to a unified approach [11][12] - Anticipated reduction in corporate costs, with guidance for Q3 at approximately $80 million, down from $130 million in Q2 [15][16] Financial Performance and Growth Targets - Long-term goal of double-digit earnings growth, leveraging existing cost structures and improving operational efficiency [21][25] - Gross margins are strong, but SG&A costs have historically been higher than competitors, indicating room for improvement [22][20] - Lean management initiatives expected to enhance gross margins and operational performance over the next few years [24][25] Service Revenue and Resilience - Service revenue is characterized as true recurring income, with multiyear contracts linked to sold systems [29][30] - Historical resilience during economic downturns, with a potential increase in service demand as maintenance is deferred [30][31] OpenBlue Technology Platform - OpenBlue is a differentiated offering with significant growth potential, currently under 1% penetration of the installed base [33][40] - The platform provides operational insights and efficiency improvements, with a compelling ROI of up to 55% over three years [32][33] Market Demand and Pipeline - Observed softness in certain verticals, but overall health in core markets remains strong [44][46] - Data centers and complex manufacturing are experiencing robust growth, while commercial real estate shows mixed signals [50][51] - Tariff impacts expected to affect revenues by about 2%, but the company has strategies in place to mitigate these effects [58][60] Cash Flow and Capital Structure - Achieved 100% free cash flow conversion, driven by improved supply chain and procurement practices [64][65] - Lean management expected to enhance inventory management and reduce capital intensity over time [66][67] Conclusion - Johnson Controls is undergoing significant transformation under new leadership, focusing on operational efficiency, customer-centric strategies, and leveraging technology for growth. The company is well-positioned to navigate market challenges while pursuing long-term financial goals.

Core Insights - Johnson Controls International plc (JCI) reported adjusted earnings of 82 cents per share for Q2 fiscal 2025, exceeding the Zacks Consensus Estimate of 79 cents, marking a 19% year-over-year increase [1] - Total revenues for continuing operations reached $5.68 billion, surpassing the consensus estimate of $5.64 billion, with a year-over-year increase of 1.4% and organic revenue growth of 7% [1] Segment Performance - **Building Solutions North America**: Revenues were $2.92 billion, up 6% year over year, with organic sales increasing 7%, driven by strong HVAC and controls performance. Adjusted EBITA rose 5% to $390 million [2] - **Building Solutions Europe, Middle East, Africa/Latin America**: Revenues totaled $1.09 billion, a 2% year-over-year increase, with organic sales climbing 5%. Adjusted EBITA surged 53% to $136 million [3] - **Building Solutions Asia Pacific**: Revenues increased 10% to $542 million, with organic sales growing 13%. Adjusted EBITA was $79 million, up 46% year over year [4] - **Global Products**: Revenues were $1.13 billion, down 13% year over year, but organic sales increased 8%. Adjusted EBITA rose 9% to $343 million [5] Financial Metrics - JCI's cost of sales decreased 1.9% year over year to approximately $3.6 billion, while gross profit increased 7.5% to $2.1 billion, resulting in a margin increase of 220 basis points to 36.5%. Selling, general and administrative expenses were $1.4 billion, down 30.9% year over year [6] - As of March 31, 2025, JCI had cash and cash equivalents of $795 million, up from $606 million at the end of fiscal 2024. Long-term debt increased to $8.2 billion from $8 billion [7] - In the first half of fiscal 2025, the company generated net cash of $799 million from operating activities, compared to a cash outflow of $437 million in the prior year. Free cash flow was $589 million, a significant improvement from a cash outflow of $647 million in the previous year [8] Future Guidance - For Q3, JCI anticipates mid-single-digit organic revenue growth and an adjusted segment EBITA margin of approximately 17.5%. Adjusted earnings are expected to be in the range of $0.97-$1.00 per share [9] - For the full fiscal year 2025, JCI expects organic revenue growth in the mid-single-digit range, an adjusted segment EBITA margin improvement of 90 basis points, and adjusted earnings of about $3.60 per share, with free cash flow conversion expected to be approximately 100% [11]

Financial Performance - Net sales for the three months ended March 31, 2025, were $5,597 million, a 1% decrease compared to $5,676 million in the same period of 2024[195]. - For the six months ended March 31, 2025, net sales increased by 3% to $11,102 million from $10,806 million in 2024[195]. - The increase in net sales for Q2 2025 was driven by higher organic sales of $381 million, offset by a net impact of acquisitions and divestitures of $233 million and unfavorable foreign currency translation of $69 million[195]. - Excluding foreign currency translation and business acquisitions/divestitures, net sales increased by 7% year-over-year, supported by strong growth in Products and Systems across various segments[195]. - Net sales for the six months ended March 31, 2025, increased by $861 million due to higher organic sales, with an 8% increase excluding foreign currency translation and acquisitions/divestitures[196]. Profitability and Expenses - Gross profit for the three months ended March 31, 2025, was $2,069 million, an 8% increase from $1,922 million in 2024, driven by margin improvements in Building Solutions segments[198]. - Selling, General and Administrative (SG&A) expenses decreased by 31% to $1,427 million for the three months ended March 31, 2025, primarily due to the prior year water systems AFFF settlement agreement costs[200]. - The effective tax rate for the six months ended March 31, 2025, was 8.0%, compared to 114.6% in the prior year, indicating a significant improvement[205]. - Net financing charges for the six months ended March 31, 2025, were $166 million, a decrease from $176 million in 2024[204]. Backlog and Segment Performance - The total backlog as of March 31, 2025, was $16.0 billion, with Building Solutions North America contributing $9.8 billion, reflecting an 11% year-over-year increase[215]. - Segment EBITA for Building Solutions North America increased by 10% to $722 million for the six months ended March 31, 2025, compared to $658 million in 2024[210]. - Global Products segment EBITA increased by 20% to $667 million for the six months ended March 31, 2025, compared to $557 million in 2024[210]. - The increase in Building Solutions Asia Pacific sales was primarily due to organic growth of $85 million, with a 21% increase in backlog year-over-year[213][216]. Cash Flow and Capital Structure - Cash provided by operating activities increased to $799 million for the six months ended March 31, 2025, compared to a cash used of $(437) million in the same period of 2024[219]. - The company reported a working capital of $(467) million as of March 31, 2025, a 40% improvement from $(776) million in September 2024[217]. - Total debt increased to $9.986 billion as of March 31, 2025, up from $9.493 billion as of September 30, 2024, with total debt as a percentage of total capitalization rising to 38.7%[220]. - The company maintains a $2.5 billion revolving credit facility expiring in December 2028, with no draws as of March 31, 2025[224]. Dividends and Shareholder Returns - The company declared a dividend of $0.37 per common share for the quarter ended March 31, 2025, and plans to continue paying dividends throughout fiscal 2025[222]. - The company has approximately $1.1 billion available under its share repurchase authorization, which may be utilized depending on market conditions[222]. Strategic Initiatives - The Company is undergoing a portfolio simplification, including the sale of its Residential and Light Commercial HVAC business to Bosch for approximately $8.1 billion, expected to close in the second half of fiscal 2025[189]. - A multi-year restructuring plan has been initiated, with expected one-time costs of approximately $400 million and anticipated annual savings of about $500 million upon completion[190]. - The company expects to receive approximately $5.0 billion in net cash proceeds from the sale of its R&LC HVAC business, anticipated to close in the second half of fiscal 2025[222]. Market Challenges - The Company is experiencing increased demand for products and services that promote smart, safe, and sustainable buildings, driven by government incentives and regulations[186]. - The Company has faced challenges due to geopolitical tensions and tariffs, which are expected to negatively impact revenue growth and margins[183]. - Currency exchange rate fluctuations have negatively impacted revenue and profits during the three and six months ended March 31, 2025[185]. Cybersecurity Incident - A cybersecurity incident occurred in September 2023, impacting internal IT infrastructure, but no evidence of impact on digital products and services has been observed[192][194]. Current Liabilities and Losses - Current liabilities for the Obligor Group increased to $8.379 billion as of March 31, 2025, from $6.726 billion as of September 30, 2024[229]. - The net loss attributable to the Obligor Group for the six months ended March 31, 2025, was $(374) million, compared to a net loss of $(609) million for the year ended September 30, 2024[227]. Credit Ratings - The company's credit ratings as of March 31, 2025, are S&P: A-2 (Short-Term), BBB+ (Long-Term) with a Stable outlook, and Moody's: P-2 (Short-Term), Baa2 (Long-Term) with a Positive outlook[223].

Core Insights - Johnson Controls reported revenue of $5.68 billion for the quarter ended March 2025, a decrease of 15.3% year-over-year, but exceeded the Zacks Consensus Estimate of $5.64 billion by 0.61% [1] - The company's EPS was $0.82, up from $0.78 in the same quarter last year, representing a surprise of 3.80% against the consensus estimate of $0.79 [1] Financial Performance - Net Sales for Building Solutions North America reached $2.92 billion, surpassing the average estimate of $2.84 billion, with a year-over-year increase of 6.5% [4] - Net Sales for Building Solutions Asia Pacific were $542 million, exceeding the average estimate of $514.05 million, reflecting a year-over-year growth of 10.4% [4] - Net Sales for Building Solutions EMEA/LA totaled $1.09 billion, slightly above the average estimate of $1.08 billion, with a year-over-year change of 2% [4] - Global Products reported Net Sales of $1.13 billion, below the average estimate of $1.25 billion, indicating a significant year-over-year decline of 52.9% [4] - Total Segment Adjusted EBITA for Global Products was $343 million, slightly below the average estimate of $348.77 million [4] - Total Segment Adjusted EBITA for Corporate Expense was -$135 million, worse than the average estimate of -$125 million [4] Stock Performance - Johnson Controls' shares have returned +24.8% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Organic sales grew 7%, segment margins expanded 180 basis points to 16.7%, and adjusted EPS increased 19% [4][16] - Adjusted EPS of $0.82 exceeded the high end of guidance [16] - Net debt decreased to 2.4 times, within the long-term target range of 2 to 2.5 times [16] - Adjusted free cash flow for the quarter was strong, resulting in an increase of approximately $1,100,000,000 year to date [16][23] Business Line Data and Key Metrics Changes - Building Solutions region saw orders grow 5%, with North America orders up 4%, EMEA orders up 10%, and Asia Pacific orders flat [17][18] - Organic sales in Building Solutions increased 7%, with high single-digit growth in both systems and service [19] - Global Products reported organic sales growth of 8%, with Applied HVAC growing more than 20% [21] Market Data and Key Metrics Changes - Orders in North America increased 4%, EMEA orders were up 10%, and Asia Pacific orders were flat [18] - Service orders in Asia Pacific grew nearly 20% [18] - Building Solutions backlog grew 12% to $14,000,000,000 [20] Company Strategy and Development Direction - The company is focusing on a new organizational model to enhance customer centricity and operational performance [10][11] - The strategy includes prioritizing customer needs and simplifying product offerings to improve operational efficiency [12][13] - The company aims to redefine building performance and drive the next era of smart, safe, sustainable, and autonomous buildings [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth due to strong performance in recent quarters and a record backlog [4][24] - The company is raising full-year guidance for margins, adjusted EPS, and free cash flow conversion [22][23] - Management acknowledged the impact of tariffs but emphasized strategies to mitigate risks [24] Other Important Information - The company is undergoing a pending sale of its residential and light commercial HVAC business [10] - The organizational model aims to improve customer intimacy and market reach while delivering profitable growth [11] Q&A Session Summary Question: How does the company plan to implement lean in such a large organization? - Management acknowledged that there are remnants of lean in some areas and expressed excitement about the opportunities for improvement [34][35] Question: What is the margin entitlement of the business? - Management believes there are significant opportunities for margin expansion and does not see a ceiling on margin growth compared to peers [44][45] Question: What is the outlook for free cash flow? - Management raised guidance to approximately 100% for the year and sees good signs for maintaining strong free cash flow conversion [50][51] Question: How does the company manage pricing in contracts amid inflation? - Management has implemented strong contractual terms to manage pricing and recover costs due to inflation [61][62] Question: What are the growth drivers in the Applied segment? - Management noted broad-based good growth across most verticals and does not see any slowdown in leading indicators [112]

FISCAL Q2 2025 Earnings Conference Call May 7, 2025 FORWARD-LOOKING AND CAUTIONARY STATEMENTS/NON-GAAP FINANCIAL INFORMATION 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 ...