Johnson Controls(JCI) - 2024 Q3 - Quarterly Results

Sales Performance - Q3 reported sales increased 1% and 3% organically, with sales of $7.2 billion[2] - Building Solutions North America sales increased 9% to $2.9 billion, with organic sales up 8%[4] - Building Solutions EMEA/LA sales increased 3% to $1.1 billion, with organic sales up 8%[6] - Building Solutions Asia Pacific sales declined 22% to $575 million, with organic sales down 19%[8] - Global Products sales were flat at $2.7 billion, with organic sales up 3%[10] - Net sales for products and systems in the three months ended June 30, 2024, were $5,422 million, compared to $5,431 million in the same period in 2023[24] - Services revenue for the three months ended June 30, 2024, increased to $1,809 million from $1,702 million in the same period in 2023[24] - Net sales for Q2 2024 were $7,231 million, up 1% from $7,133 million in Q2 2023[40] - Organic sales growth for Q2 2024 was 3%, with North America growing 8% and EMEA/LA growing 8%, while Asia Pacific declined 19%[40] - Net sales for 2024 reached $20,024 million, with a growth of 1% compared to the previous year[42] - North America net sales grew by 8% to $8,125 million, while Asia Pacific net sales declined by 23% to $1,573 million[42] - Products and systems revenue for 2024 totaled $5,422 million, with a slight decline of 1% in Asia Pacific[44] - Service revenue for 2024 increased by 6% to $1,809 million, driven by strong growth in North America and EMEA/LA[47] - Adjusted base net sales for 2024 were $19,616 million, reflecting organic growth of 1%[42] - Global Products revenue for 2024 was $7,143 million, showing a slight decline of 1%[42] - Acquisitions contributed $135 million to net sales in 2024[42] - Organic growth in service revenue was 9%, reaching $1,809 million in 2024[47] Earnings and Profitability - Q3 GAAP EPS of $1.45; Q3 Adjusted EPS of $1.14[1] - Gross profit for the three months ended June 30, 2024, was $2,488 million, up from $2,431 million in the same period in 2023[24] - Net income attributable to Johnson Controls for the three months ended June 30, 2024, was $975 million, compared to $1,049 million in the same period in 2023[24] - Earnings per share (diluted) for the three months ended June 30, 2024, were $1.45, compared to $1.53 in the same period in 2023[24] - Net income attributable to Johnson Controls for Q2 2024 was $975 million, compared to $1,049 million in Q2 2023, a decrease of 7.1%[28] - Adjusted net income attributable to JCI (non-GAAP) for Q2 2024 was $769 million, a 8.9% increase from $706 million in Q2 2023[52] - Net income attributable to JCI for Q2 2024 was $975 million, a 7.1% decrease from $1,049 million in Q2 2023[55] - Diluted earnings per share (non-GAAP) for Q2 2024 was $1.14, compared to $1.03 in Q2 2023, representing a 10.7% increase[63] Cash Flow and Financial Position - Free cash flow was $922 million, and adjusted free cash flow was $1.3 billion[13] - Cash and cash equivalents as of September 30, 2023, were $835 million[26] - Cash provided by operating activities for Q2 2024 was $1,021 million, up 25.6% from $813 million in Q2 2023[28] - Capital expenditures for Q2 2024 were $99 million, down 10.8% from $111 million in Q2 2023[28] - Free cash flow for the three months ended June 30, 2024, was $922 million, with a free cash flow conversion rate of 95%[51] - Free cash flow for the nine months ended June 30, 2024, was $248 million, with a conversion rate of 23%[51] - Free cash flow (non-GAAP) for Q2 2024 was $922 million, compared to $702 million in Q2 2023, representing a 31.3% increase[52] - Adjusted free cash flow (non-GAAP) for Q2 2024 was $1,263 million, up 70.4% from $741 million in Q2 2023[52] - Total assets as of June 30, 2024, were $43,325 million, up from $42,242 million as of September 30, 2023[26] - Short-term debt increased to $1,523 million as of June 30, 2024, from $385 million as of September 30, 2023[26] - Long-term debt as of June 30, 2024, was $7,867 million, compared to $7,818 million as of September 30, 2023[26] - Shareholders' equity attributable to Johnson Controls decreased to $15,968 million as of June 30, 2024, from $16,545 million as of September 30, 2023[26] - Total debt increased to $10,388 million in June 2024 from $9,764 million in June 2023[69] - Net debt increased to $9,526 million in June 2024 from $8,707 million in June 2023[69] - Net debt to income before income taxes ratio increased to 5.2x in June 2024 from 4.9x in June 2023[69] - Net debt to adjusted EBITDA ratio increased to 2.4x in June 2024 from 2.1x in June 2023[69] - Adjusted EBITDA (non-GAAP) increased to $4,210 million in June 2024 from $4,078 million in June 2023[72] Segment Performance - Building Solutions backlog of $12.9 billion increased 10% organically year-over-year[1] - Building Solutions North America segment EBITA for Q2 2024 was $521 million, up 35.3% from $385 million in Q2 2023[55] - Global Products segment EBITA for Q2 2024 was $655 million, a 10.5% increase from $593 million in Q2 2023[55] - Building Solutions North America segment EBITA for the nine months ended June 30, 2024 was $1,179 million, up 21.9% from $967 million in the same period of 2023[59] - Global Products segment EBITA for the nine months ended June 30, 2024 was $1,453 million, a 0.7% decrease from $1,463 million in the same period of 2023[59] Guidance and Forecast - Q4 guidance: Organic sales expected to increase ~7% year-over-year, adjusted EPS of ~$1.23 to $1.26[16] - Full-year 2024 guidance tightened: Organic sales growth up ~3%, adjusted EPS of ~$3.66 to $3.69[16] Adjusted Financial Measures - Adjusted free cash flow excludes impacts of discontinued accounts receivables factoring programs and JC Capital cash flows[32] - Adjusted financial measures exclude items like restructuring costs, impairment costs, and cyber incident costs[34][36] - Net debt to adjusted EBITDA is used as a measure of the company's financial condition and reliance on external debt financing[38] - Adjusted corporate expense (non-GAAP) for Q2 2024 was $119 million, up 52.6% from $78 million in Q2 2023[60] Other Financial Metrics - The company incurred costs related to a cybersecurity incident in September 2023, net of insurance recoveries[36] - A product quality issue in the Global Products segment resulted in significant remediation costs[37] - Basic weighted average shares outstanding decreased to 670.3 million in Q3 2024 from 683.3 million in Q3 2023[67] - Diluted weighted average shares outstanding decreased to 672.8 million in Q3 2024 from 686.2 million in Q3 2023[67] - Effective tax rate was approximately 13.75% for the three and nine months ending June 30, 2024[73]