Core Viewpoint - Johnson Controls International plc (JCI) has underperformed in operational performance, particularly in its Building Solutions Asia Pacific segment, compounded by foreign currency challenges [1][3]. Group 1: Operational Performance - JCI is facing ongoing weakness in its Building Solutions Asia Pacific segment, especially in system sales in China, with expectations of continued economic softness in the region throughout fiscal 2024 [3]. - The company reported a 5.1% year-over-year increase in selling, general and administrative (SG&A) expenses, totaling $5.7 billion during fiscal 2024 [4]. - SG&A expenses as a percentage of total revenues increased by 60 basis points to 24.7%, indicating rising corporate costs related to IT investments and cybersecurity enhancements [5]. Group 2: Financial Impact - Adverse foreign currency translations negatively impacted JCI's sales by $53 million in the fiscal fourth quarter, highlighting the risks associated with its global market exposure [6]. - The strengthening U.S. dollar poses a risk to profit margins, as the company may need to raise prices in international markets [6].

Financial Performance and Challenges - The Company experienced material cost increases during fiscal 2022 and portions of fiscal 2023 due to global inflation and supply chain disruptions, negatively impacting margins but leading to improved margins in fiscal 2023 and 2024 as supply chain issues eased [37]. - The Company anticipates fluctuations in commodity prices and availability in fiscal 2025, which could significantly affect its results of operations [37]. Health and Safety - In fiscal 2024, the Company reported a Total Recordable Incident Rate (TRIR) of 0.34 and a Lost Time Incident Rate (LTIR) of 0.13, reflecting its commitment to health and safety [54]. Talent Development and Diversity - The Company filled more than half of open management positions internally during fiscal 2024, indicating a strong focus on talent development [62]. - The Women in Leadership program saw a 162% increase in participation since its inception in 2022, with 28% of original cohort participants being promoted post-completion [66]. - The Company is actively engaged in diversity, equity, and inclusion initiatives, with Business Resource Groups (BRGs) supporting the attraction and development of diverse talent [60]. - The employee diversity statistics show that 77% of total employees are male and 23% are female, with 31% of U.S. employees identifying as minorities [70]. Learning and Development - In fiscal 2024, the Company offered nearly 225,000 learning activities, with over 1.17 million activities completed by more than 81,000 employees, averaging almost 20 hours of learning per employee [67]. Environmental Commitment - The Company continues to invest in its product portfolio to meet or exceed emerging emissions regulations and standards, reflecting its commitment to environmental compliance [44]. - The Company has made substantial investments in compliance with environmental laws, which are integrated into its capital expenditure decisions [48]. - The Company is committed to investing a substantial portion of its research and development expenditures in climate and efficiency-related innovations [72]. - Investments are being made in the development of the Company's OpenBlue platform and related service offerings, as well as energy-efficient products and low GWP refrigerants [72]. Product and Market Strategy - The Company is enhancing its product lines and services to support its strategy, meet consumer preferences, and achieve regulatory compliance [72]. - Seasonal factors affect sales, particularly for residential air conditioning equipment, which sees increased demand during summer months [71]. - The Company’s sales are mitigated by other products and services that do not have a material seasonal effect [71]. Labor Relations - The Company maintains positive relations with labor unions, with approximately 22,000 employees covered by collective bargaining agreements [69]. Corporate Governance - The Company provides access to its SEC filings and other corporate governance materials through its Investor Relations website [73]. Workforce Overview - As of September 30, 2024, the Company employed approximately 94,000 people worldwide, with 35,000 in the United States and 59,000 outside the United States [69]. Risk Management - The Company’s risk management strategies are discussed in Item 7 of the Management's Discussion and Analysis of Financial Condition and Results of Operations [74].

Core Insights - Johnson Controls is expanding its workforce development initiative, the Johnson Controls Academy, to address the national shortage of skilled technicians in building systems [1][2] - The program aims to train over 300 technicians annually, providing six weeks of intensive training for roles in security and fire installation and service [4][5] - The expansion includes a new training facility at Lincoln Tech's Denver campus, doubling the number of technicians trained [2][4] Industry Context - The building systems industry is facing a critical shortage of skilled technicians, with 46% of HR professionals indicating that skilled trades positions are "very difficult" to fill [2] - As businesses and municipalities prioritize upgrading facilities for efficiency and safety, the demand for skilled workers to manage complex building systems is increasing [3] Program Details - The Johnson Controls Academy offers hands-on training that complements Lincoln Tech's Electrical programs, preparing participants for real-life experiences [4] - Graduates receive support from a retention coach for one year post-graduation to ensure smooth onboarding into their roles [4] - Johnson Controls provides on-site housing and relocation expenses for participants during the program [4] Partnership and Commitment - The collaboration between Johnson Controls and Lincoln Tech began in 2018, enhancing training with advanced equipment and technology [5] - Johnson Controls is committed to workforce development from K-12 education through to career advancement, contributing to a future-ready talent pool [5]

Group 1: AI Capabilities and OpenBlue Ecosystem - Johnson Controls International plc (JCI) has upgraded the AI capabilities in its OpenBlue Enterprise Manager suite, introducing the first generative AI applications for customers, improved building controls, and a better user experience [1] - The OpenBlue digital ecosystem consists of interconnected smart building solutions aimed at enhancing performance, efficiency, and sustainability, utilizing technologies such as IoT, AI, data analytics, and cloud computing [2] Group 2: New AI Features and Benefits - The new AI features include energy-saving tools, personalized user experiences, enhanced data insights for managing building visitors, improved monitoring of indoor air quality, and automatic adjustments based on system issues [3] - With OpenBlue Enterprise Manager, businesses can save up to 30% on energy costs, 20% on maintenance, and optimize space by 10%, leading to improved efficiency and reduced costs [4] Group 3: Financial Performance and Market Position - JCI currently holds a Zacks Rank 4 (Sell), with shares gaining 65.3% over the past year compared to the industry's 29.8% growth [5] - The company is facing challenges in its Building Solutions Asia Pacific segment, with rising material cost inflation impacting its cost of sales [5]

Core Insights - The expansion of AI features in Johnson Controls' OpenBlue platform enhances building management technology, improving operational efficiency and sustainability while providing building owners with greater insights and control [2][9] AI Features and Benefits - OpenBlue now includes integrated generative AI tools that recommend impactful energy savings projects, reducing the need for extensive data analysis and helping customers achieve energy savings and lower carbon emissions [3][4] - The platform tracks energy conservation projects across over 130 categories, improving data management and supporting decarbonization strategies [4] User Experience Enhancements - Major upgrades to the user experience focus on design, navigation, and accessibility, providing clearer insights into space utilization and visitor analytics across building portfolios [7][8] - The system allows operators to schedule services based on occupancy insights, optimizing resource use and reducing costs [7] Autonomous Building Features - New features in OpenBlue facilitate the operation of autonomous buildings, allowing for less manual intervention and improved productivity through automation [5] - The system can adjust setpoints based on fault diagnostics, leading to energy and cost savings [5] Digitalization and Workflow Improvements - OpenBlue supports the digitalization of Standard Operating Procedures, enhancing workflow efficiency triggered by various events [6] Performance Monitoring and Data Insights - OpenBlue Enterprise Manager provides real-time data visibility and advanced analytics, helping customers unlock building performance and meet compliance needs [8]

More than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specializing in niche markets, with strong growth potential, a solid management team, a sound capital allocation policy, and, most importantly, reasonable valuation. I do not chase quarterly results, nor do I follow the herd mentality. I do not use short-term stock performance as the measure of a company' ...

Johnson Controls International plc (JCI) reported fourth-quarter fiscal 2024 (ended September 2024) adjusted earnings of $1.28 per share, which beat the Zacks Consensus Estimate of $1.25. The bottom line increased 21.9% year over year.Total revenues (continuing operations) of $6.25 billion missed the consensus estimate of $7.26 billion. The top line increased 6.7% year over year, while organic revenues increased 10%.For fiscal 2024, the company’s adjusted earnings were $3.71 per share, up 6% year over year. ...

Core Insights - Johnson Controls exceeded analyst projections for both revenue and adjusted earnings per share in its fiscal fourth quarter of 2024, leading to a significant stock price increase of nearly 9% [2][3] Financial Performance - The company reported a 7% year-over-year increase in sales, reaching $7.4 billion, while non-GAAP net income rose by 19% to $858 million, or $1.28 per share [3] - The consensus estimates were slightly lower, with revenue expected to be just over $7.3 billion and adjusted earnings per share at $1.24 [3] Strategic Outlook - CEO George Oliver indicated that Johnson Controls is entering fiscal 2025 with strong momentum, citing record backlog levels and a focus on expanding as a leading pure-play building solutions provider [4] - Management expects mid-single-digit percentage organic sales growth for the first quarter of fiscal 2025, with adjusted earnings per share projected between $0.57 and $0.60 [5] Long-term Growth Potential - For the full fiscal year 2025, the company anticipates similar organic sales growth and adjusted earnings per share in the range of $3.40 to $3.50 [6] - Johnson Controls is positioned as a key player in the growing data center market, which requires reliable HVAC solutions [6]

Financial Data and Key Metrics Changes - The company achieved double-digit organic revenue growth of 10% in Q4 2024, with adjusted EPS of $1.28, up 22% year-over-year [14][15] - Adjusted free cash flow conversion reached 96%, with adjusted free cash flow of $2.4 billion, an increase of nearly $800 million year-over-year [17] - The company ended the quarter with approximately $600 million in available cash and net debt decreased to 2 times, at the lower end of the long-term target of 2 to 2.5 times [17] Business Line Data and Key Metrics Changes - Global Products segment saw organic sales grow by 8%, with adjusted segment EBITDA margin expanding by 700 basis points to 28% [18][19] - Building Solutions segment delivered double-digit revenue growth, with organic sales increasing by 11%, and a record backlog of $13.1 billion [20][23] - Orders in Building Solutions grew by 8% in the quarter, with North America orders increasing by 7% and EMEALA orders up 14% [21][22] Market Data and Key Metrics Changes - In North America, organic sales for Building Solutions were up 16%, while EMEALA saw a 10% increase [24] - Asia Pacific experienced a 6% growth in orders, rebounding from previous declines [22] - The company reported strong growth in key verticals such as data centers, government, healthcare, and higher education [20] Company Strategy and Development Direction - The company is focused on becoming a pure-play provider of comprehensive solutions for commercial buildings, emphasizing energy efficiency and clean electrification [10][11] - A multi-year restructuring plan is in place to address stranded costs and right-size global operations, with expected annual cost savings of approximately $500 million [32][54] - The company aims to return 100% of free cash flow to shareholders through dividends and share repurchases [31][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for long-term shareholder value, supported by a record backlog and strong order growth [9][13] - The company anticipates mid-single-digit organic sales growth for fiscal 2025, with adjusted EPS guidance of $3.40 to $3.50 per share [30][28] - Management noted that the first quarter of fiscal 2025 is expected to see organic sales growth of mid-single digits, with adjusted segment EBITDA margin expansion [29][44] Other Important Information - The pending sale of the Residential & Light Commercial business to Bosch is progressing, with an expected close in the fiscal fourth quarter [8] - The company is committed to a simplified operating model that leverages digital expertise to enhance productivity and customer outcomes [12][10] Q&A Session Summary Question: How do you see mid-single digits across the segments? - Management indicated that APAC is expected to be slightly above the mid-single-digit growth, while North America, EMEALA, and Global Products will be at or slightly below that overall guide [36] Question: What is the reason for the first quarter's organic growth being only mid-single digits? - Management explained that the timing of larger orders and quarter-to-quarter volatility in service business performance contribute to this guidance [43][44] Question: Can you provide details on the restructuring announcement? - Management clarified that restructuring costs will precede benefits, with $400 million in costs expected ahead of $500 million in savings [54][55] Question: What is the outlook for North America Building Solutions margins? - Management noted that margin pressure from system mix is expected to normalize, leading to improved margins as service projects come online [58] Question: What is the expected impact of the divestiture on free cash flow? - Management stated that the divestiture will allow for 100% free cash flow from the discontinued operation, with structural headwinds affecting overall conversion [76][79]

Johnson Controls (JCI) reported $6.25 billion in revenue for the quarter ended September 2024, representing a year-over-year decline of 9.5%. EPS of $1.28 for the same period compares to $1.05 a year ago.The reported revenue represents a surprise of -13.96% over the Zacks Consensus Estimate of $7.26 billion. With the consensus EPS estimate being $1.25, the EPS surprise was +2.40%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall ...