Johnson Controls(JCI) - 2025 Q2 - Quarterly Results

Financial Performance - Q2 2025 GAAP earnings per share (EPS) was $0.71, with adjusted EPS at $0.82[1] - Net income attributable to Johnson Controls for Q2 2025 was $478 million, a significant recovery from a net loss of $277 million in Q2 2024[27] - Basic earnings per share for continuing operations in Q2 2025 was $0.72, compared to a loss of $0.47 in Q2 2024[27] - The company achieved a net income attributable to Johnson Controls of $545 million in Q1 2025, compared to a loss of $471 million in Q1 2024[48] - Net income attributable to JCI for the six months ended March 31, 2025, was $836 million, up from $19 million in 2024[50] - Diluted earnings per share increased to $1.26 in 2025 from $0.03 in 2024[50] Sales and Revenue Growth - Sales for the quarter reached $5.7 billion, a 1% increase year-over-year, with organic sales growth of 7%[2] - Net sales for Q2 2025 reached $5,676 million, a 1.4% increase from $5,597 million in Q2 2024[27] - Building Solutions backlog increased to $14.0 billion, reflecting a 12% organic growth year-over-year[5] - Orders in Q2 increased 5% organically compared to the previous year[5] - Building Solutions North America sales were $2.9 billion, up 6% year-over-year, with organic sales growth of 7%[6] - Building Solutions EMEA/LA sales increased 2% to $1.1 billion, with organic sales growth of 5%[8] - Building Solutions Asia Pacific sales rose 10% to $542 million, with organic sales growth of 13%[10] - Global Products segment sales declined 13% to $1.1 billion, but organic sales grew 8%[12] - Future net sales for 2025 are projected to reach $11,102 million, with a growth rate of 7% anticipated[42] Cash Flow and Financial Position - Cash provided by operating activities was $550 million, with free cash flow at $456 million[17] - Cash provided by operating activities from continuing operations for Q2 2025 was $550 million, a turnaround from cash used of $326 million in Q2 2024[31] - The company reported a decrease in cash and cash equivalents to $795 million as of March 31, 2025, down from $838 million at the end of Q2 2024[31] - Free cash flow for Q1 2025 was $456 million, a significant improvement from a negative $454 million in Q1 2024[46] - Adjusted free cash flow for the first half of 2025 was $1,066 million, compared to $7 million in the same period of 2024[47] Debt and Assets - Total assets as of March 31, 2025, were $42,367 million, slightly down from $42,695 million as of September 30, 2024[29] - Short-term debt increased to $1,261 million as of March 31, 2025, compared to $953 million as of September 30, 2024[29] - Total debt as of March 31, 2025, was $9,986 million, slightly down from $9,993 million at the end of 2024[52] - Net debt to income before income taxes improved to 3.6x in March 2025 from 5.4x in December 2024[52] Operational Metrics - Gross profit for Q2 2025 was $2,069 million, compared to $1,922 million in Q2 2024, reflecting a 7.7% increase[27] - Segment EBITA for Building Solutions North America increased to $390 million in Q1 2025, up from $373 million in Q1 2024[48] - Adjusted segment EBITA margin for Global Products was 30.3% in Q1 2025, up from 24.3% in Q1 2024[48] - Adjusted segment EBITA margin for Global Products improved to 30.2% in 2025 compared to 23.5% in 2024[49] - The company reported an operating cash flow conversion rate of 116% for Q1 2025, compared to 96% for the same period last year[46] Strategic Initiatives - The company is focusing on strategic growth initiatives and cost-saving opportunities as part of its transformation strategy[41] - Management emphasizes the importance of organic sales growth, which excludes the impact of acquisitions and divestitures, for understanding sales trends[35] - Johnson Controls signed an agreement in July 2024 to sell its Residential and Light Commercial HVAC business, which is classified as a discontinued operation[33] Restructuring and Costs - The company incurred restructuring and impairment costs, primarily related to goodwill and intangible asset write-downs[41] - Transformation costs for the six months ended March 31, 2025, totaled $79 million, compared to $0 in 2024[50] - Cash payments related to the water systems AFFF settlement and insurance recoveries were noted, impacting cash flow[38] Tax and Corporate Expenses - The effective tax rate for the six months ending March 31, 2025, was approximately 12.0%, slightly higher than 11.7% for the same period in 2024[54] - Corporate expenses (GAAP) for the six months ended March 31, 2025, were $357 million, up from $231 million in 2024[49]