Johnson Controls(JCI) - 2025 Q3 - Quarterly Results

Q3 2025 Earnings Release Johnson Controls reports strong Q3 2025 results with increased sales, robust backlog, and raised full-year guidance Financial Highlights Johnson Controls reported $6.1 billion sales with 6% organic growth, $0.94 GAAP EPS, and a record $14.6 billion Systems and Services backlog Q3 2025 Key Financial Metrics | Metric | Q3 2025 Value | YoY Change (as reported) | YoY Change (organic) | | :--- | :--- | :--- | :--- | | Sales | $6.1B | +3% | +6% | | GAAP EPS | $0.94 | - | - | | Adjusted EPS | $1.05 | - | - | | Orders | - | - | +2% | | Systems & Services Backlog | $14.6B | - | +11% | - CEO Joakim Weidemanis highlighted the company's 140-year history, attributing strong results to customer prioritization, employee empowerment, and R&D investment, emphasizing a new business system for accelerated performance and long-term shareholder value[3] Segment Performance Americas and APAC segments led organic growth, with mixed margins reflecting productivity and regional adjustments Americas Americas sales were flat reported but 7% organic growth to $4.0 billion, with GAAP EBITA margin down and adjusted margin up Americas Q3 Performance (vs. Q3 2024) | Metric | Q3 2025 (million) | Q3 2024 (million) | Change | | :--- | :--- | :--- | :--- | | Sales | $4,042 | $4,035 | 0% | | GAAP Segment EBITA | $742 | $804 | -8% | | Adjusted Segment EBITA | $746 | $743 | 0% | | GAAP Segment EBITA Margin | 18.4% | 19.9% | -150 bp | | Adjusted Segment EBITA Margin | 18.5% | 18.4% | +10 bp | - Organic orders increased by 5% year-over-year, and the backlog grew by 10% to $10.3 billion, indicating continued demand in the region[7] EMEA (Europe, Middle East, Africa) EMEA sales grew 8% to $1.3 billion with 4% organic growth, driven by Service, expanding GAAP and adjusted EBITA margins EMEA Q3 Performance (vs. Q3 2024) | Metric | Q3 2025 (million) | Q3 2024 (million) | Change | | :--- | :--- | :--- | :--- | | Sales | $1,273 | $1,177 | +8% | | GAAP Segment EBITA | $177 | $154 | +15% | | Adjusted Segment EBITA | $179 | $154 | +16% | | GAAP Segment EBITA Margin | 13.9% | 13.1% | +80 bp | | Adjusted Segment EBITA Margin | 14.1% | 13.1% | +100 bp | - Organic orders saw a modest increase of 2% year-over-year, while the backlog grew by 9% to $2.6 billion[9] APAC (Asia Pacific) APAC sales increased 7% to $737 million with 6% organic growth and improved EBITA margin, despite 8% lower organic orders APAC Q3 Performance (vs. Q3 2024) | Metric | Q3 2025 (million) | Q3 2024 (million) | Change | | :--- | :--- | :--- | :--- | | Sales | $737 | $686 | +7% | | GAAP & Adjusted Segment EBITA | $143 | $128 | +12% | | GAAP & Adjusted Segment EBITA Margin | 19.4% | 18.7% | +70 bp | - While sales and backlog ($1.7B, +14% YoY) were strong, organic orders declined by 8% compared to the prior year[11] Corporate GAAP corporate expenses increased 10% to $141 million, while adjusted expenses decreased 22% to $93 million after exclusions Corporate Expense Q3 (vs. Q3 2024) | Metric | Q3 2025 (million) | Q3 2024 (million) | Change | | :--- | :--- | :--- | :--- | | GAAP Corporate Expense | $141 | $128 | +10% | | Adjusted Corporate Expense | $93 | $119 | -22% | Other Q3 Financial Items Johnson Controls generated $787 million operating cash flow and $693 million free cash flow, returning capital via dividends and share repurchases - Cash Flow: Generated $787 million in cash from operating activities and $693 million in free cash flow ($725 million adjusted)[13] - Dividends: Paid $243 million to shareholders[13] - Share Repurchases: Bought back 3.8 million shares for $310 million[13] Fiscal 2025 Guidance Johnson Controls initiated Q4 2025 guidance, raising full-year adjusted EPS to $3.65-$3.68 and free cash flow conversion to >100% Q4 Fiscal 2025 Guidance | Metric | Guidance | | :--- | :--- | | Organic Sales Growth | Low single digits | | Adjusted Segment EBITA Margin | ~18.6% | | Adjusted EPS | $1.14 to $1.17 | Full Year Fiscal 2025 Guidance (Raised) | Metric | Guidance | Previous Guidance | | :--- | :--- | :--- | | Organic Sales Growth | Mid-single digits | Unchanged | | Adjusted Segment EBITA Margin Improvement | ~90 bps YoY | Unchanged | | Adjusted EPS | $3.65 to $3.68 | ~$3.60 | | Adjusted Free Cash Flow Conversion | >100% | ~100% | Consolidated Financial Statements Consolidated financial statements show 3% net sales growth, stable balance sheet, and significant operating cash flow increase from continuing operations Consolidated Statements of Income Net sales increased to $6.05 billion, but income from continuing operations decreased to $618 million, resulting in $0.94 diluted EPS Q3 Income Statement Highlights (in millions, except EPS) | Metric | Three Months Ended June 30, 2025 (million) | Three Months Ended June 30, 2024 (million) | | :--- | :--- | :--- | | Net Sales | $6,052 | $5,898 | | Gross Profit | $2,246 | $2,109 | | Income from continuing operations | $618 | $851 | | Net Income attributable to JCI | $701 | $975 | | Diluted EPS (Continuing ops) | $0.94 | $1.27 | Condensed Consolidated Statements of Financial Position Total assets increased to $43.4 billion and liabilities to $26.3 billion as of June 30, 2025, with minor equity decrease Balance Sheet Summary (in millions) | Metric | June 30, 2025 (million) | September 30, 2024 (million) | | :--- | :--- | :--- | | Total Assets | $43,393 | $42,695 | | Total Liabilities | $26,348 | $25,334 | | Total Equity | $17,045 | $17,361 | Consolidated Statements of Cash Flows Cash from operating activities (continuing operations) increased to $787 million, with $637 million used in financing for repurchases and dividends Q3 Cash Flow Highlights (in millions) | Metric | Three Months Ended June 30, 2025 (million) | Three Months Ended June 30, 2024 (million) | | :--- | :--- | :--- | | Cash from Operating Activities (Continuing ops) | $787 | $653 | | Cash used by Investing Activities (Continuing ops) | ($85) | ($90) | | Cash used by Financing Activities (Continuing ops) | ($637) | ($930) | Footnotes and Non-GAAP Reconciliations Footnotes clarify financial reporting basis, discontinued operations, and provide non-GAAP reconciliations, outlining key adjustments from GAAP - The company uses non-GAAP measures like organic sales (excluding M&A and currency impacts) and adjusted free cash flow to help investors understand underlying business trends and cash generation capabilities[31][32][33] - Significant items excluded from GAAP results to arrive at adjusted figures include: - Restructuring and impairment costs - Transaction/separation costs - Transformation costs - Earn-out adjustments - Water systems AFFF settlement and insurance recoveries - Net mark-to-market adjustments[36][38] - The sale of the Residential and Light Commercial (R&LC) HVAC business is treated as a discontinued operation, with its historical financial results removed from continuing operations and its assets/liabilities classified as held for sale[30]