Financial Data and Key Metrics Changes - Fiscal 2025 saw a 6% increase in sales, with segment margins expanding by 100 basis points and adjusted EPS rising by 17% [8][24] - Free cash flow conversion reached 102%, reflecting disciplined execution and financial strength [8][24] - The company ended the quarter with approximately $400 million in available cash and net debt declined to 2.4 times compared to the prior year [24] Business Line Data and Key Metrics Changes - Organic revenue grew 4% in Q4, with segment margin expanding 20 basis points to 18.8% [23] - Orders grew 6% in the quarter, with 9% growth in the Americas, supported by strength in data centers [24] - EMEA orders increased 3%, while APAC orders saw a small decline of 1% [24] Market Data and Key Metrics Changes - In the Americas, sales were up 3% organically, while EMEA delivered 9% organic growth [25] - APAC sales declined 3% organically, primarily due to lower volumes in China [25] - The backlog grew 13% to a record $15 billion, with system backlog growing 14% and service backlog growing 9% [26] Company Strategy and Development Direction - The company is updating its long-term growth algorithm to reflect improved mid-single-digit top-line growth and double-digit adjusted EPS growth [8][27] - The proprietary business system is being developed as a growth engine, focusing on customer-centric and continuous improvement [7][9] - The company aims to leverage strengths in HVAC controls and digital solutions to capture significant opportunities in decarbonization and mission-critical systems [21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate evolving market conditions and maintain strong operational discipline [30] - The guidance for fiscal 2026 includes expectations for mid-single-digit organic revenue growth and approximately 100% free cash flow conversion [29][30] - Management highlighted the importance of technological innovation and sustainability in driving future growth [15][21] Other Important Information - The company is focused on strengthening leadership capabilities and aligning talent with strategic priorities [10] - Recent initiatives include a major announcement to provide green heat to Zurich through a waste incineration project, showcasing leadership in decarbonization [18][19] Q&A Session Summary Question: Can you walk through the 50% operating leverage target for 2026? - Management indicated that EMEA and APAC will be the main drivers of margin improvement, with overall operating leverage expected to be in the 50s or above [33] Question: Can you rank the opportunities going forward, including cost and portfolio opportunities? - Management emphasized ongoing efforts to reduce G&A costs and improve productivity, with a vibrant acquisition pipeline being pursued [34][38] Question: What are the drivers behind the decline in amortization? - The decline is attributed to impairments and portfolio actions, with further reductions possible through contemplated divestitures [49][50] Question: What is the outlook for orders in the first quarter? - Management expressed confidence in the health of the pipeline and the potential for order growth despite tough comparisons [51][52] Question: Can you elaborate on the margin improvement opportunities in EMEA and APAC? - Management noted that improvements will come from a combination of pricing discipline and ongoing deployment of the business system [62] Question: How does the transition from air cooling to liquid cooling affect content opportunities? - Management stated that the need for more cooling due to newer chips will increase the demand for chillers, maintaining strong opportunities in both air and liquid cooling solutions [66][67] Question: What is the strategic investment in Excelsius and its complementarity with the CDU? - The CDU launch is aimed at capturing significant market opportunities, while Excelsius anticipates future cooling needs for upcoming chip launches [94][95] Question: How is the company addressing accountability and KPIs? - Management is in the process of establishing enterprise KPIs to enhance accountability, with some tweaks to compensation structures being considered [84][85]

Financial Data and Key Metrics Changes - Fiscal 2025 saw a sales growth of 6%, with segment margins expanding by 100 basis points and adjusted EPS increasing by 17% [6][20] - Free cash flow conversion reached 102%, reflecting disciplined execution and financial strength [6][21] - The company ended the quarter with approximately $400 million in available cash, and net debt declined to 2.4 times compared to the prior year [21] Business Line Data and Key Metrics Changes - Organic revenue grew 4% in the fourth quarter, with segment margin expanding by 20 basis points to 18.8% [20] - Orders grew 6% in the quarter, with a notable 9% growth in the Americas, supported by strength in data centers [21] - In EMEA, orders increased by 3%, while APAC saw a small decline of 1% due to decreasing systems [22] Market Data and Key Metrics Changes - The backlog expanded by 13% to a record $15 billion, with system backlog growing by 14% and service backlog by 9% [21][24] - In the Americas, sales were up 3% organically, while EMEA delivered 9% organic growth [22] - APAC experienced a 3% organic sales decline, primarily due to lower volumes in China [22] Company Strategy and Development Direction - The company is updating its long-term growth algorithm to reflect improved mid-single-digit top-line growth and double-digit adjusted EPS growth [6][24] - The proprietary business system is being developed as a growth engine, focusing on customer-centric and continuous improvement [5][8] - The company aims to leverage strengths in HVAC controls and digital solutions to capture significant opportunities in decarbonization and mission-critical systems [19][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate evolving market conditions and achieve long-term growth commitments [26] - The guidance for fiscal 2026 includes expectations for mid-single-digit organic revenue growth and approximately 100% free cash flow conversion [25][26] - Management highlighted the importance of operational efficiencies and a record backlog in supporting future growth [25][26] Other Important Information - The company is focusing on investments in organic growth, returning capital to shareholders, and pursuing selective acquisitions [24] - Recent leadership changes include the appointment of a new leader for the Americas segment to sharpen customer focus [10] Q&A Session Summary Question: Can you walk through the 50% operating leverage target for 2026? - Management indicated that EMEA and APAC will be the main drivers of margin improvement, with a comfortable outlook for operating leverage in the 50s or above [28][29] Question: What are the opportunities for cost and portfolio improvements? - Management emphasized ongoing efforts to reduce G&A costs and improve productivity through the proprietary business system, with a vibrant acquisition pipeline [31][32] Question: Can you provide more detail on the $250 million benefits from operating leverage? - Management confirmed that the operating leverage will continue to improve over time, driven by productivity and responsible cost reductions [32][34] Question: What is the outlook for orders in the first quarter? - Management noted that the health of the pipeline continues to improve, with expectations for order growth despite tough comparisons [36] Question: How will the company achieve 100% cash flow conversion? - Management highlighted strong improvements in receivable management and inventory management as key drivers for free cash flow conversion [38][39] Question: What are the targeted actions for margin improvement in EMEA and APAC? - Management stated that margin improvement will come from a combination of pricing discipline, operational efficiency, and ongoing deployment of the business system [40] Question: How does the company view the content opportunity in data centers? - Management expressed confidence in the continued demand for both air and liquid cooling solutions, emphasizing the strength of their chiller offerings [41] Question: What is the impact of technology investments on aftermarket services? - Management indicated that technology investments are driving both share gain and margin improvement by lowering costs to serve [43] Question: Can you discuss the order growth from specific verticals? - Management noted strong growth in data centers, pharmaceuticals, and advanced manufacturing as key verticals driving backlog growth [45]

Financial Performance - The company achieved organic sales growth of 6% for the full year 2025[9], and 4% for Q4 2025[22], demonstrating broad-based strength across its operations[9] - Adjusted Segment EBITA margin expanded by 100 basis points to 171% for the full year 2025[9], and 20 basis points to 188% for Q4 2025[22] - Adjusted EPS increased by 17% year-over-year[9] from $321 in FY24 to $376 in FY25[39], successfully offsetting dilution from the R&LC divestiture[9] - Adjusted free cash flow conversion was strong at 102% for the full year 2025[9], validating disciplined capital allocation[9] - Q4 2025 adjusted EPS increased 14% year-over-year, from $111 to $126[24] Orders and Backlog - Orders grew by 7% for the full year 2025, with strong performance in the Americas offsetting softness in China[9] - Backlog grew by 13% to approximately $15 billion, providing visibility into future growth[9] Future Outlook - The company initiated FY26 adjusted EPS guidance of approximately $455, representing over 20% growth[9] - The company expects adjusted free cash flow conversion of approximately 100% for FY26[9] - For Q1 2026, the company anticipates organic revenue to be up approximately 3% and adjusted EPS to be approximately $083[43]

Corporate Earnings Drive Pre-Market Activity - Amgen Inc. reported a 12% increase in total revenues to $9.6 billion and non-GAAP EPS of $5.64, exceeding forecasts and leading to a 3% rise in stock [3] - Lumentum Holdings Inc. saw a 17% stock increase after reporting Q3 2025 EPS of $0.57 on revenues of $425.2 million, driven by growth in its Cloud and Networking segment [4] - Rivian Automotive, Inc. reported Q3 2025 revenues of $1.56 billion, surpassing estimates, with a narrower loss per share of -$0.65 and a 47% year-over-year increase in automotive sales [5] - Johnson Controls International plc reported an adjusted EPS of $1.05 and sales of $6.1 billion, representing a 6% organic increase year-over-year, with an 11% growth in backlog [6] - The New York Times Company added 460,000 digital-only subscribers, boosting total revenue by 9.5% year-over-year to $700.8 million [7] Media and Global Trade Developments - China's Foreign Minister announced willingness to negotiate a free trade agreement with the European Union, emphasizing cooperation over rivalry [9] - The New York Times Company demonstrated strength in digital transformation, contributing to its revenue growth [7] Crude Oil Markets Face Headwinds - WTI crude oil prices are trading near $60.59, facing downward pressure from a stronger U.S. dollar and increased U.S. crude inventories [10] - OPEC+ has paused output hikes for Q1 2026, agreeing to a modest increase in December, but market sentiment remains cautiously bearish [10]

Johnson Controls International shares rise after forecasting its strongest earnings growth in over five years, signaling persistent demand for data center cooling and decarbonization solutions. https://t.co/sPPPJQP4bI ...

Sales Performance - Q4 sales increased 3% to $6.4 billion, with organic sales up 4%[3] - Full year sales rose 3% to $23.6 billion, and organic sales increased 6%[3] - EMEA segment sales grew 13% to $1.3 billion, with organic sales up 9%[9] - APAC segment sales declined 3% to $780 million, with organic sales also down 3% due to lower volumes in China[11] - For the three months ended September 30, 2025, net sales reached $6,442 million, a 3.1% increase from $6,248 million in the same period of 2024[28] - The company achieved a total net sales of $23,596 million for the twelve months ended September 30, 2025, representing a 3% growth[44] - Net sales for Q3 2024 reached $6,248 million, a 3% increase compared to the previous year, driven by organic growth of $225 million[44] Earnings and Profitability - Q4 GAAP EPS was $0.42, while adjusted EPS was $1.26; full year GAAP EPS was $2.63, and adjusted EPS was $3.76[6] - Gross profit for the twelve months ended September 30, 2025, was $8,592 million, up from $8,077 million in 2024, reflecting a year-over-year increase of 6.4%[28] - Net income attributable to Johnson Controls for the three months ended September 30, 2025, was $1,693 million, compared to $633 million in the same period of 2024, representing a significant increase of 167.5%[28] - The company reported a total of $1,724 million in net income for the twelve months ended September 30, compared to $1,411 million for the previous year, indicating a year-over-year increase of 22%[32] - The net income attributable to Johnson Controls for the twelve months ended September 30, 2025, was $1,721 million, an increase from $1,407 million in 2024, representing a growth of 22.3%[52] - Diluted earnings per share from continuing operations for Q3 2025 was $1.26, compared to $1.11 in Q3 2024, marking an increase of 13.5%[51] Cash Flow and Liquidity - Total cash provided by operating activities was $968 million, with free cash flow of $838 million[14] - Cash provided by operating activities from continuing operations was $968 million for the three months ended September 30, down from $1,352 million year-over-year[32] - Free cash flow for Q3 2025 was reported at $838 million, reflecting a conversion rate of 314% from net income[46] - Operating cash flow conversion for Q3 2025 was 363%, significantly higher than the 252% reported in Q3 2024[46] - Adjusted free cash flow for the twelve months ended September 30, 2025, was $2,501 million, with a conversion rate of 102%[46] - The company experienced a cash decrease of $358 million in cash, cash equivalents, and restricted cash during the quarter[32] - The company reported a significant cash inflow of $6,598 million from discontinued operations, primarily from the sale of its Residential and Light Commercial HVAC business[34] Debt and Equity - Long-term debt increased to $8,591 million as of September 30, 2025, from $8,004 million in 2024, reflecting a rise of 7.3%[30] - Total debt decreased to $9,880 million as of September 30, 2025, from $10,293 million on June 30, 2025, representing a reduction of approximately 4%[53] - Net debt as of September 30, 2025, was $9,501 million, slightly down from $9,562 million on June 30, 2025[53] - Total equity attributable to Johnson Controls decreased to $12,927 million as of September 30, 2025, from $16,098 million in 2024, a decline of 19.5%[30] Restructuring and Impairment - The company reported restructuring and impairment costs of $400 million for the three months ended September 30, 2025, compared to $133 million in the same period of 2024, an increase of 200%[28] - Non-cash restructuring and impairment charges amounted to $371 million for the three months ended September 30, compared to $78 million in the same period last year[32] - The restructuring and impairment costs for the three months ended September 30, 2025, amounted to $400 million, compared to $133 million in the same period of 2024, highlighting significant restructuring efforts[48] Segment Performance - Orders in Q4 increased 6% organically year-over-year, with a systems and services backlog of $14.9 billion[6] - For the three months ended September 30, 2025, the Americas segment EBITA was $844 million, up from $826 million in the same period of 2024, while the EMEA segment EBITA increased to $201 million from $164 million[48] - The total sales for the Americas segment reached $4,325 million in Q3 2025, compared to $4,265 million in Q3 2024, reflecting a growth of approximately 1.4%[49] - Adjusted segment EBITA for the Americas was $862 million, with an adjusted EBITA margin of 19.9% for Q3 2025, compared to 19.4% in Q3 2024[49] - The EMEA segment EBITA margin for Q3 2025 was 15.0%, up from 13.9% in Q3 2024, indicating improved operational efficiency[49] Guidance and Future Outlook - Fiscal 2026 guidance includes organic sales growth of mid-single digits and adjusted EPS of approximately $4.55[19] - The company reported a net debt to adjusted EBITDA ratio, indicating reliance on external debt financing, which is a measure of risk to shareholders[43] - Effective tax rate for continuing operations was approximately 12% for the twelve months ended September 30, 2025, compared to 11% for the same period in 2024[54] - Income from continuing operations was $1,724 million for the twelve months ended September 30, 2025, down from $1,992 million in the previous quarter[53]

Core Insights - Johnson Controls International plc reported fiscal Q4 2025 GAAP earnings per share (EPS) of $0.42 and adjusted EPS of $1.26, with Q4 sales increasing by 3% to $6.4 billion and organic sales rising by 4% [2][11] - The company achieved a record backlog of $15 billion, reflecting a 13% increase year-over-year, driven by sustained demand in core verticals [4][11] - Full year sales reached $23.6 billion, marking a 3% increase, while organic sales grew by 6% [2][11] Financial Performance - Q4 net income from continuing operations attributable to Johnson Controls was $267 million, with adjusted net income at $798 million [3] - Total cash provided by operating activities was $968 million, with free cash flow at $838 million and adjusted free cash flow at $710 million [19] - The company paid dividends totaling $243 million and initiated accelerated share repurchase transactions amounting to $5.0 billion [19] Segment Results Americas - Q4 sales in the Americas segment were $4.3 billion, a 1% increase from the previous year, with organic sales up by 3% [6] - Segment EBITA margin improved to 19.5%, reflecting productivity gains despite transformation costs [7] EMEA (Europe, Middle East, Africa) - EMEA segment sales increased by 13% to $1.3 billion, with organic sales growing by 9% [8] - Segment EBITA margin expanded to 15.0%, benefiting from positive operating leverage [9] APAC (Asia Pacific) - APAC segment sales declined by 3% to $780 million, with organic sales also down by 3% due to lower volumes in China [10][12] - Segment EBITA margin decreased to 17.8%, reflecting pressures on factory absorption [12] Corporate Developments - The company completed the sale of its Residential and Light Commercial HVAC business to Bosch Group for $8.3 billion, with Johnson Controls receiving approximately $6.9 billion [19][25] - Corporate expenses increased significantly, with GAAP expenses at $269 million, a 105% rise compared to the previous year [13] Guidance and Future Outlook - The company initiated guidance for fiscal 2026, projecting organic sales growth in mid-single digits and adjusted EPS of approximately $4.55 [20] - The deployment of proprietary business systems is expected to enhance the company's ability to deliver consistent results and long-term value [4]

Earnings Results - Johnson Controls International plc is set to release its fourth-quarter earnings results on November 5, with analysts expecting earnings of $1.20 per share, a decrease from $1.28 per share in the same period last year [1] - The consensus estimate for quarterly revenue is $6.33 billion, down from $7.39 billion a year earlier [1] Recent Developments - On September 24, Johnson Controls announced the appointment of Todd Grabowski as vice president and president for the Americas [2] - The company's shares fell by 1.9%, closing at $111.04 on Tuesday [2] Analyst Ratings - JP Morgan analyst Stephen Tusa maintained an Overweight rating and raised the price target from $105 to $125 [4] - Citigroup analyst Andrew Kaplowitz maintained a Neutral rating and increased the price target from $112 to $119 [4] - Morgan Stanley analyst Chris Snyder maintained an Overweight rating and raised the price target from $115 to $125 [4] - RBC Capital analyst Deane Dray maintained a Sector Perform rating and increased the price target from $112 to $114 [4] - Barclays analyst Julian Mitchell maintained an Equal-Weight rating and raised the price target from $100 to $101 [4]

Core Insights - Johnson Controls International plc is set to release its fourth-quarter earnings results on November 5, with expected earnings of $1.20 per share, a decrease from $1.28 per share in the same quarter last year [1] - The anticipated quarterly revenue for Johnson Controls is $6.33 billion, down from $7.39 billion a year earlier [1] Company Developments - On September 24, Johnson Controls appointed Todd Grabowski as vice president and president for the Americas [2] - The company's shares fell by 1.9%, closing at $111.04 on Tuesday [2] Analyst Ratings - JP Morgan analyst Stephen Tusa maintained an Overweight rating and raised the price target from $105 to $125 [4] - Citigroup analyst Andrew Kaplowitz maintained a Neutral rating and increased the price target from $112 to $119 [4] - Morgan Stanley analyst Chris Snyder maintained an Overweight rating and raised the price target from $115 to $125 [4] - RBC Capital analyst Deane Dray maintained a Sector Perform rating and increased the price target from $112 to $114 [4] - Barclays analyst Julian Mitchell maintained an Equal-Weight rating and raised the price target from $100 to $101 [4]

Core Insights - Johnson Controls International plc (JCI) has demonstrated strong performance in 2025, significantly outperforming the broader market and the S&P 500 Index [2][3]. Financial Performance - JCI's Q3 results exceeded expectations, with a 2.6% year-over-year revenue growth to $6.1 billion, surpassing analyst estimates by 1.1% [4]. - The adjusted EPS for Q3 rose 10.5% year-over-year to $1.05, exceeding consensus estimates by 5% [4]. - For fiscal 2025, analysts project an adjusted EPS of $3.70, slightly down from $3.71 in 2024, but JCI has a history of surpassing earnings estimates [5]. Market Position - JCI's systems and services backlog increased by 11% organically to $14.6 billion, which has positively influenced investor confidence [4]. - The stock has a consensus "Moderate Buy" rating, with 12 "Strong Buy" and nine "Hold" recommendations from analysts [5]. Analyst Ratings and Price Targets - JP Morgan analyst Stephen Tusa has reiterated an "Overweight" rating on JCI, raising the price target from $105 to $125, indicating a potential upside [7]. - The mean price target for JCI is $118.61, suggesting a modest 3.9% upside, while the highest target of $133 represents a 16.5% premium [7].