Core Insights - Johnson Controls (JCI) reported revenue of $5.8 billion for the quarter ended December 2025, marking a year-over-year increase of 6.8% and exceeding the Zacks Consensus Estimate of $5.66 billion by 2.39% [1] - The company achieved an EPS of $0.89, up from $0.64 a year ago, with a surprise of 5.49% compared to the consensus estimate of $0.84 [1] Revenue Performance - Net Sales in the Americas reached $3.84 billion, surpassing the three-analyst average estimate of $3.73 billion, reflecting a year-over-year change of 40.1% [4] - Net Sales in the APAC region were reported at $693 million, exceeding the average estimate of $661.28 million, with a year-over-year increase of 31.5% [4] - Net Sales in the EMEA region totaled $1.26 billion, slightly below the estimated $1.27 billion, but still showing a year-over-year growth of 17.5% [4] Stock Performance - Shares of Johnson Controls have returned +8.8% over the past month, outperforming the Zacks S&P 500 composite, which saw a change of +0.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Orders increased nearly 40%, building on a strong 16% growth from the previous year [6][23] - Revenue grew 6%, with adjusted EBIT margins expanding 190 basis points to 12.4% [6][22] - Adjusted EPS rose nearly 40%, exceeding guidance [6][23] - Record backlog increased by 20% to $18 billion, indicating strong demand visibility [25] Business Line Data and Key Metrics Changes - Organic revenue growth was 6%, with service growth at 9% year-over-year [22][24] - Segment margins increased, with Americas at 16.4%, EMEA at 13%, and APAC at 16.9% [25] - Demand was led by data center projects, with significant contributions from life sciences [23][31] Market Data and Key Metrics Changes - The Americas saw a 56% growth in orders, driven by large-scale data center projects [23] - EMEA grew 8%, with balanced growth in service and systems [24] - APAC orders increased 10%, with double-digit growth in systems [24] Company Strategy and Development Direction - The company is focusing on energy efficiency and decarbonization, particularly in data centers and advanced manufacturing [9][12] - A proprietary business system is being deployed to enhance operational efficiency and alignment across teams [15][16] - The strategy includes investing in technology and service-based solutions to meet customer needs in mission-critical environments [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to support customers and capitalize on market opportunities, particularly in data centers and life sciences [31][40] - The company anticipates continued organic growth and is raising full-year EPS guidance to approximately $4.70 per share, reflecting a 25% increase [27] Other Important Information - The company is actively working on portfolio optimization and has closed the disposition of a residential monitoring security system [90] - There is a focus on improving gross margins and reducing SG&A costs through operational efficiencies [96][97] Q&A Session Summary Question: Order strength and duration - Management confirmed record orders, with significant contributions from life sciences and data centers, indicating a healthy pipeline [31][32] Question: Backlog and organic growth - Management noted that while backlog is strong, not all larger orders are shippable within the next nine months, but organic growth is expected to strengthen over time [34] Question: Market evolution and order growth - Management highlighted broad-based growth in data centers and life sciences, with significant investments in new manufacturing environments [39][40] Question: North America margin trends - Management acknowledged a slight headwind in North America margins but expects improvement in the coming quarters [52][53] Question: Data center lead times - Management reported good progress in reducing lead times and emphasized the importance of predictable delivery in maintaining competitive advantage [76] Question: BMS growth and opportunities - Management characterized BMS growth as solid, with a strong backlog and pipeline of opportunities aligning with mission-critical strategies [80] Question: New product development and market sensitivity - Management discussed ongoing collaboration with major customers to innovate and prepare for future market demands [84][86] Question: Portfolio review and retail business - Management confirmed ongoing strategic review of the portfolio, focusing on creating shareholder value [88][90] Question: Long-term margin opportunities - Management sees potential for gross margin improvement through operational efficiencies and cost reductions [96][97] Question: Labor availability and service business - Management acknowledged tight labor markets but emphasized efforts to enhance productivity and leverage a larger technician base [99][100]

Financial Data and Key Metrics Changes - Orders increased nearly 40%, building on a strong 16% growth from the previous year [6][23] - Revenue grew 6%, with adjusted EBIT margins expanding 190 basis points to 12.4% [6][22] - Adjusted EPS rose nearly 40% year-over-year, exceeding guidance [6][22] - Record backlog increased by 20% to $18 billion, indicating strong demand visibility [25] Business Line Data and Key Metrics Changes - Organic revenue growth was 6%, with service growth at 9% year-over-year [22][24] - Segment margins increased, with Americas at 16.4%, EMEA at 13%, and APAC at 16.9% [25] - Data center projects led demand, with significant contributions from life sciences and other mission-critical sectors [23][40] Market Data and Key Metrics Changes - Americas orders grew 56%, driven by large-scale data center projects [23] - EMEA orders increased by 8%, with balanced growth in service and systems [23] - APAC orders rose 10%, supported by double-digit growth in systems [23] Company Strategy and Development Direction - The company is focusing on energy efficiency and decarbonization, particularly in data centers and advanced manufacturing [9][12] - A proprietary business system is being deployed to enhance operational efficiency and align goals across the organization [15][16] - The strategy includes investing in technology and innovation to meet customer needs in mission-critical environments [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to support customers through innovation and operational improvements [14][19] - The company anticipates continued organic growth and is raising full-year EPS guidance to approximately $4.70 per share, reflecting a 25% increase [27] - Management noted stabilization in China and growth opportunities in other major economies in the APAC region [70] Other Important Information - The company is actively working on portfolio optimization and has completed the disposition of certain non-core segments [90][88] - There is a strong focus on improving service labor productivity and leveraging a larger technician base compared to competitors [100][99] Q&A Session Summary Question: Order strength and duration - Management confirmed record orders, with significant contributions from life sciences and data centers, and noted that not all large orders are shippable within the next nine months [31][34] Question: Market evolution and order growth - Management indicated that order strength is broad-based, with growth in various applications, particularly in data centers and life sciences [39][40] Question: North America margin trends - Management acknowledged a slight headwind in North America margins but expressed confidence in future improvements [52][53] Question: Data center lead times - Management reported good progress on lead times and emphasized the importance of predictable delivery in maintaining competitive advantage [76][77] Question: BMS growth and backlog - Management characterized BMS growth as solid, with a strong backlog and pipeline of opportunities [80] Question: New product development and market sensitivity - Management discussed ongoing collaboration with customers to innovate and prepare for future market needs, particularly in data centers [84][86] Question: Labor availability and service business - Management acknowledged ongoing challenges in labor availability but emphasized efforts to enhance productivity and leverage existing workforce advantages [99][100]

Financial Data and Key Metrics Changes - Orders increased nearly 40%, building on a strong 16% growth from the previous year [5][21] - Revenue grew by 6%, with adjusted EBIT margins expanding by 190 basis points to 12.4% [5][20] - Adjusted EPS rose nearly 40%, exceeding guidance [5][21] - Record backlog increased by 20% to $18 billion, indicating strong demand visibility [20][24] Business Line Data and Key Metrics Changes - Organic revenue growth was led by service, which grew 9% year-over-year [23] - In the Americas, sales were up 6% organically, with solid double-digit growth in service [23] - EMEA grew 4%, driven by high single-digit growth in service [23] - APAC delivered 8% growth, led by strong system performance and steady demand in service [23] Market Data and Key Metrics Changes - The Americas segment saw a 56% growth, primarily from large-scale data center projects [21] - EMEA experienced an 8% growth, with balanced high single-digit growth in both service and system [21] - APAC orders increased by 10%, driven by double-digit growth in systems and high single-digit growth in service [21] Company Strategy and Development Direction - The company is focusing on energy efficiency and decarbonization, particularly in data centers and advanced manufacturing [7][11] - A proprietary business system is being deployed to enhance operational efficiency and align goals across the organization [6][13] - The strategy emphasizes innovation in technology and service-based solutions to meet customer needs [12][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to the year and raised full-year guidance due to positive momentum [5][26] - The operating environment remains challenging, but the company is well-positioned to deliver on its commitments [20][25] - Management highlighted the importance of operational discipline and the ability to respond to customer needs quickly [74][107] Other Important Information - The company is investing in R&D to support future growth while maintaining cost control [92][93] - There is a focus on improving gross margins and reducing SG&A costs through operational efficiencies [89][90] Q&A Session Summary Question: Order strength and duration - Management confirmed record orders and highlighted strong demand not only from data centers but also from life sciences [28][30] Question: Backlog and organic growth - Management indicated that while backlog is strong, not all orders are shippable within the next nine months, affecting organic growth projections [32][33] Question: Market evolution and order growth - Management noted broad-based growth across different applications in the data center market and emphasized the importance of thermal management for life sciences [36][38] Question: North America margin trends - Management acknowledged a slight headwind in North America margins but expressed confidence in future improvements [50][51] Question: Data center lead times - Management reported good progress on lead times and emphasized the importance of reliable delivery for competitive advantage [72][74] Question: BMS growth and opportunities - Management characterized BMS growth as solid and highlighted the alignment with mission-critical solutions [78] Question: New product development and market readiness - Management discussed ongoing collaboration with customers to innovate and prepare for future market needs [81][82] Question: Portfolio review and strategic moves - Management confirmed ongoing strategic review of the portfolio to enhance shareholder value [85][87]

FISCAL Q1 2026 Earnings Conference Call February 4, 2026 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 me ...

Core Insights - Johnson Controls is experiencing significant growth in orders and revenue, particularly in the Americas region, driven by strong demand in technology-intensive sectors like data centers and life sciences [1][3][9] Group 1: Financial Performance - Systems orders in the Americas grew by 84% year over year, contributing to a 26% increase in the systems backlog [1] - Sales revenue in the Americas increased by 6% year over year to $3.8 billion, with a 22% rise in order backlog to $13.3 billion [2] - Service sales revenue in the Americas grew by 10% year over year, while systems revenue rose by 4% [2][3] Group 2: Product Development and Innovation - Johnson Controls is collaborating with NVIDIA to enhance thermal management for next-generation AI compute environments, resulting in a reference guide for scalable cooling architectures [4] - The company launched two new chillers aimed at the high-density data center cooling market, including the YORK YK-HT and YORK YDAM chillers [5][7] - The YORK YK-HT chiller can offset over 35 MMBtu per hour, equivalent to the heating demand of approximately 350 single-family homes, while reducing carbon emissions [6] Group 3: Market Trends and Customer Needs - The rise of multistory data centers and AI factories is increasing the demand for higher density thermal management solutions [8] - The life sciences sector is seeing strong order growth, driven by the need for robust thermal management in biologics-based drug manufacturing [10]

Financial Performance - Q1 sales increased 7% to $5.8 billion, with organic sales growth of 6%[2] - GAAP EPS for Q1 was $0.90, while adjusted EPS was $0.89, reflecting a nearly 40% increase year-over-year[1][3] - Orders grew 39% organically year-over-year, with a backlog of $18.2 billion, up 20% organically[6] - Net sales for the three months ended December 31, 2025, reached $5,797 million, a 6.8% increase from $5,426 million in the same period of 2024[27] - Gross profit for the same period was $2,074 million, up from $1,926 million, reflecting a gross margin improvement[27] - The company reported a net income of $525 million for the quarter, compared to $451 million in the same quarter of the previous year[27] - Income from continuing operations attributable to Johnson Controls was $555 million, compared to $363 million in the prior year, representing a 52.9% increase[31] - Basic earnings per share attributable to Johnson Controls for continuing operations was $0.91, an increase from $0.55 in the previous year[27] Segment Performance - In the Americas, Q1 sales reached $3.8 billion, a 6% increase, with segment EBITA margin at 16.1%[7][8] - EMEA segment sales increased 9% to $1.3 billion, with adjusted segment EBITA margin expanding to 13.0%[9][10] - APAC segment sales rose 8% to $693 million, with segment EBITA margin increasing by 290 basis points to 16.9%[11][12] - Segment EBITA for the Americas in 2025 was $620 million, compared to $589 million in 2024, with an EBIT margin of 14.2%[48] - The company reported a segment EBITA margin of 16.4% for 2025, compared to 16.2% in 2024, indicating improved profitability[49] Cash Flow and Guidance - Cash provided by operating activities was $611 million, with free cash flow at $531 million[14] - The company raised its fiscal 2026 full-year adjusted EPS guidance to approximately $4.70, up from $4.55[17] - The company anticipates organic revenue growth of approximately 5% for the second quarter of fiscal 2026[17] - Free cash flow for 2025 is reported at $531 million, significantly up from $133 million in 2024, showing a conversion rate of 96%[45] - Adjusted free cash flow for 2025 stands at $428 million, down from $603 million in 2024, with a conversion rate of 77%[46] Assets and Equity - Total assets as of December 31, 2025, were $37,983 million, slightly up from $37,939 million at the end of September 2025[29] - Shareholders' equity attributable to Johnson Controls increased to $13,204 million from $12,927 million[29] - Cash and cash equivalents at the end of the period were $552 million, down from $1,237 million at the end of the previous year[31] Debt and Financial Ratios - Total debt decreased to $9,705 million as of December 31, 2025, down from $9,880 million on September 30, 2025, and $9,993 million on December 31, 2024[51] - Net debt to income before income taxes improved to 4.0x for the twelve months ended December 31, 2025, compared to 4.8x for September 30, 2025, and 5.4x for December 31, 2024[51] - Net debt to adjusted EBITDA improved to 2.2x for the twelve months ended December 31, 2025, from 2.4x for September 30, 2025, and 2.3x for December 31, 2024[51] - Current portion of long-term debt remained stable at $568 million for December 31, 2025, compared to $566 million for September 30, 2025, and increased from $522 million for December 31, 2024[51] - Short-term debt decreased significantly to $436 million as of December 31, 2025, from $723 million on September 30, 2025, and $882 million on December 31, 2024[51] Corporate Actions - The company completed the sale of its ADT Mexico Security business for net proceeds of $207 million, recognizing a pre-tax gain of $70 million[14] - The company completed the divestiture of its Residential and Light Commercial HVAC business in July 2025, which is classified as a discontinued operation[33]

Core Insights - Johnson Controls International plc reported fiscal Q1 2026 GAAP earnings per share (EPS) of $0.90, with adjusted EPS at $0.89, reflecting a strong start to the year with solid revenue growth and margin expansion [2][4][9] - Total sales for Q1 increased by 7% to $5.8 billion, with organic sales growth of 6% [2][9] - The company experienced a significant order growth of nearly 40%, indicating strong customer demand in core markets [4][9] Financial Performance - GAAP net income from continuing operations attributable to Johnson Controls was $555 million, while adjusted net income was $547 million [3][9] - Cash provided by operating activities was $611 million, with free cash flow at $531 million and adjusted free cash flow at $428 million [19][42] - The company paid dividends totaling $245 million and completed the sale of its ADT Mexico Security business for net proceeds of $207 million, recognizing a pre-tax gain of $70 million [19] Segment Results - **Americas**: Sales reached $3.8 billion, a 6% increase year-over-year, with a gross margin of $1.375 billion [7][10] - **EMEA**: Sales increased by 9% to $1.3 billion, with a gross margin of $448 million and a segment EBITA margin of 12.5% [10][11] - **APAC**: Sales grew by 8% to $693 million, with a segment EBITA margin of 16.9%, reflecting strong performance in products and systems [12] Orders and Backlog - Excluding M&A and adjusted for foreign currency, orders increased by 56% year-over-year, with a backlog of $13.3 billion, up 22% year-over-year [8][9] - The overall backlog increased to $18.2 billion, reflecting a 20% organic growth year-over-year [9] Corporate Expenses - Corporate expenses decreased to $156 million from $171 million year-over-year, with adjusted corporate expenses at $107 million [13][19] Guidance and Future Outlook - The company provided guidance for fiscal 2026, indicating expectations for continued organic revenue growth and operating leverage improvements [20][15]

Core Insights - Johnson Controls has launched the YORK YDAM air-cooled magnetic bearing centrifugal chiller, designed specifically for high-density, multistory data centers, addressing the challenges of space and site constraints [1][2] Product Features - The YORK YDAM chiller provides up to 3.5MW of cooling capacity, achieving a 20% increase in capacity density compared to competing solutions, while maintaining a compact design suitable for multistory data centers [2][6] - Built on the award-winning YORK YVAM platform, the YDAM chiller is recognized for its efficiency and zero water consumption, making it an environmentally friendly option [6] - The chiller utilizes YORK magnetic bearing compressors, allowing for high chilled-fluid setpoints to support modern GPUs, and operates efficiently with wide temperature differences, leading to reduced energy consumption and cost savings [3][6] Market Context - The demand for high-density thermal management solutions is driven by the increasing prevalence of multistory data centers and AI factories, which can increase the density of operational space by up to 10 times [2] - The compact design of the YDAM chiller allows for easier shipping and reduced transportation costs, fitting on a standard 53-foot flatbed trailer [2] Development and Support - The YORK YDAM chillers are developed at the Johnson Controls Advanced Development and Engineering Center (JADEC) and are tested under extreme conditions to ensure reliability and performance [4] - Johnson Controls offers a robust support network for the YDAM chillers, including dedicated support teams and efficient service and parts delivery [4]

Core Insights - Johnson Controls International plc (JCI) is set to release its first-quarter fiscal 2026 financial results on February 4, 2026, before market open [1] - The company has consistently surpassed earnings estimates in the past four quarters, with an average surprise of 5.6% [1] - In the last reported quarter, JCI's earnings were $1.26 per share, exceeding the consensus estimate of $1.20 by 5% [1] Revenue Estimates - The consensus estimate for JCI's revenues is $5.7 billion, reflecting a 4.3% increase from the same quarter last year [2] - Adjusted earnings are estimated at 84 cents per share, indicating a significant increase of 31.3% year over year [2] Segment Performance - The Americas segment is projected to generate revenues of $3.73 billion, marking a 35.9% increase from the previous year, driven by HVAC platforms in data centers and strong controls businesses [3] - The EMEA segment is expected to report revenues of $1.27 billion, an 18.2% increase year over year, supported by service, fire and security, and applied HVAC businesses [4] - The Asia Pacific segment is anticipated to see revenues rise by 25.4% year over year to $661 million, bolstered by solid momentum in the service and products and systems business [5] Cost and Margin Pressures - Rising selling, general and administrative (SG&A) expenses are expected to negatively impact JCI's bottom line, attributed to high organizational realignment and separation costs [6] - The company's significant international operations may face profitability challenges due to foreign currency headwinds [6] Earnings Prediction - JCI has an Earnings ESP of -0.35%, with the Most Accurate Estimate at 83 cents per share, which is below the Zacks Consensus Estimate of 84 cents [8] - The company currently holds a Zacks Rank of 3, indicating a neutral outlook for earnings performance [8]