Johnson Controls(US:JCI)2026-02-04 15:34Financial Performance - Net sales for the three months ended December 31, 2025, increased by 7% to $5,797 million, driven by higher organic sales of $311 million and favorable foreign currency translation of $72 million [170]. - Gross profit for the same period rose by 8% to $2,074 million, with a gross profit margin of 35.8%, reflecting margin improvements from disciplined pricing and productivity execution [172]. - Selling, General and Administrative Expenses (SG&A) decreased by 13% to $1,221 million, primarily due to insurance recoveries and gains from divestitures, resulting in SG&A as a percentage of sales dropping to 21.1% [174]. - The income tax provision for the three months ended December 31, 2025, was $152 million, with an effective tax rate of 21.4%, significantly higher than the 11.5% rate in the prior year [178]. - The net loss attributable to the Obligor Group for the three months ended December 31, 2025, was $69 million, and for the year ended September 30, 2025, it was $844 million [197]. Restructuring and Costs - The Company expects to incur approximately $400 million in one-time restructuring costs as part of a multi-year restructuring plan, which is projected to yield annual cost savings of about $500 million upon completion in fiscal 2027 [169]. - Restructuring and impairment costs for the three months ended December 31, 2025, totaled $87 million, compared to $33 million in the prior year [176]. Sales and Orders - The Company reported a 6% increase in net sales when excluding the effects of foreign currency translation and business acquisitions/divestitures, with growth across all segments led by the Americas [170]. - Net sales for the three months ended December 31, 2025, reached $5,797 million, a 7% increase from $5,426 million in 2024, with growth driven by the Americas (6%), EMEA (9%), and APAC (8%) regions [180][182]. - Orders for the three months ended December 31, 2025, totaled $7.0 billion, a 39% increase compared to the same period in 2024, with the Americas segment leading at a 56% increase [185]. Backlog and EBITA - Backlog increased by 20% year-over-year to $18.2 billion, with the Americas segment showing a 22% increase, driven by customer demand for data center projects [185]. - Segment EBITA for the Americas increased by 5% to $620 million, while EMEA and APAC saw increases of 16% to $158 million and 30% to $117 million, respectively [183]. Financial Stability and Liquidity - Cash provided by operating activities for the three months ended December 31, 2025, was $611 million, significantly up from $249 million in 2024, reflecting higher net income [190]. - Total debt as a percentage of total capitalization decreased to 42.4% as of December 31, 2025, from 43.3% in September 2025, indicating improved financial stability [193]. - The company maintains a liquidity position with cash and cash equivalents of $552 million as of December 31, 2025, which is deemed adequate to fund operations and meet cash obligations [193]. - The Obligor Group's current assets as of December 31, 2025, were $1,513 million, while current liabilities were $1,320 million, resulting in a current ratio of approximately 1.14 [198]. - Noncurrent liabilities for the Obligor Group stood at $8,576 million as of December 31, 2025, compared to $8,473 million as of September 30, 2025 [198]. Debt and Credit Ratings - The company issued €500 million of 3.125% Senior Notes due December 2033 and €800 million of 4.250% Senior Notes due May 2035 [202]. - The company’s credit ratings as of December 31, 2025, were A-2 (short-term) and BBB+ (long-term) from S&P, with a stable outlook from both S&P and Moody's [194]. Market and Operational Strategies - The Company is focusing on expanding its product offerings in smart, efficient, and sustainable buildings, driven by regulatory initiatives and commitments to reduce emissions [165]. - The Company has implemented strategies to mitigate the impact of tariffs and supply chain disruptions, including local sourcing and strengthening regional manufacturing [163]. - The Company continues to face uncertainties in customer spending due to political and economic factors, which may impact revenue forecasting and backlog [166]. Performance Obligations and Accounting - Remaining performance obligations were reported at $24.5 billion as of December 31, 2025, reflecting long-term contracts for significant projects [187]. - There were no material changes in the company's critical accounting estimates or assumptions since the last Annual Report [203]. - As of December 31, 2025, the company had not experienced any adverse changes in market risk exposures that materially affected its disclosures [204].