Johnson Controls(JCI)2025-05-07 15:28Financial 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].