CORK, Ireland, Feb. 1, 2017 /PRNewswire/ --
- Adjusted EPS from continuing operations of $0.53, up 10 percent versus prior year
- Sales of $7.1 billion, reflecting organic growth of 1 percent versus prior year
- Adjusted EBIT margin expansion of 90 basis points year-over-year, to 10.7 percent
- Second quarter adjusted EPS from continuing operations guidance of $0.48 to $0.50, an increase of 7 percent to 11 percent year-over-year
- Reaffirming 2017 adjusted EPS from continuing operations guidance of $2.60 to $2.75, a 13 percent to 19 percent increase year-over-year
Johnson Controls International, plc (NYSE: JCI) today reported first quarter 2017 GAAP earnings per share ("EPS") from continuing operations of $0.39. Adjusted EPS from continuing operations were $0.53, up 10 percent versus the prior year period.
Reported sales of $7.1 billion were up slightly compared to the prior year. Organic sales growth of 1 percent and higher lead pass-through was mostly offset by the negative impact of foreign currency translation and net acquisition and divestiture activity.
Earnings before interest and taxes ("EBIT") was $521 million and the EBIT margin was 7.4 percent. Adjusted EBIT was $757 million, up 10 percent over last year (up 13 percent excluding foreign exchange and lead cost increases) with adjusted EBIT margin expansion of 90 basis points, to 10.7 percent.
"First quarter results represent a solid start to the year as we begin executing against our 2017 priorities as a combined company," said Alex Molinaroli, Johnson Controls chairman & CEO. "Synergy and productivity benefits, along with strong growth in our global battery aftermarket business contributed to the 10 percent earnings growth in the first quarter," said Molinaroli. "Integration activities are well underway and we expect the benefits of the combination will continue to ramp as the year progresses. Our strong first quarter performance, growing backlog in Buildings and continued favorable mix in Power, make us confident in our adjusted EPS guidance range of $2.60 to $2.75 for the year," Molinaroli continued.
Income and EPS amounts are attributable to Johnson Controls ordinary shareholders
($ millions, except per-share amounts)
The financial highlights presented in the tables below are in accordance with GAAP, unless otherwise indicated. All comparisons are to the first quarter of 2016, which are adjusted to reflect the combination of Johnson Controls' historical Building Efficiency business with historical Tyco results of operations as if these businesses had been operated together during the periods presented, along with certain other adjustments. For additional information, see the unaudited supplemental financial information included in the Current Report on Form 8-K filed by Johnson Controls with the SEC on Nov. 8, 2016 as well as the attached footnotes. The spin-off of Adient plc occurred on Oct. 31, 2016 and the results of this business are reported in discontinued operations for all periods presented.
Organic adjusted sales growth, adjusted segment EBITA, adjusted EBIT, and adjusted EPS from continuing operations are non-GAAP financial measures. For a reconciliation of these non-GAAP measures and detail of the special items, refer to the attached footnotes. First quarter review slides can be found in the Investor Relations section of Johnson Controls' website at http://investors.johnsoncontrols.com.
Buildings sales in the first quarter of 2017 were $5.2 billion, down 2 percent versus the prior year quarter. Excluding the net impact of acquisition and divestiture activity, as well as foreign exchange, organic sales declined 1 percent versus the prior year, driven by a decline in product revenue.
Orders in the quarter, excluding M&A and adjusted for foreign exchange, increased 2 percent year-over-year, as 3 percent growth in field orders was partially offset by a 3 percent decline in product orders. Backlog at the end of the quarter of $8.1 billion, increased 6 percent year-over-year, excluding M&A and adjusted for foreign exchange.
Buildings adjusted segment EBITA was $578 million, up 3 percent versus the prior year (up 6 percent excluding foreign exchange). Adjusted segment EBITA margin of 11.1 percent increased 60 basis points compared with the prior year quarter as benefits from productivity and cost synergies more than offset incremental product and channel investments.
Power Solutions sales in the first quarter of 2017 were $1.9 billion, an increase of 9 percent versus the prior year quarter. Excluding the impact of higher lead pass-through and foreign exchange, organic sales increased 7 percent versus the prior year, with higher volumes in all regions. Global original equipment battery shipments were consistent with the prior year and aftermarket shipments increased 7 percent in the quarter.
Power Solutions adjusted segment EBITA was $390 million, up 8 percent from the prior year quarter, due to higher volumes and favorable mix, partially offset by the impact of lead. Adjusted segment EBITA increased 12 percent excluding the impact of foreign exchange and lead. Adjusted segment EBITA margin of 20.5 percent decreased 20 basis points compared with the prior year quarter, including a 110 basis point headwind related to the impact of lead. Excluding the impact of lead, segment EBITA margin increased 90 basis points year-over-year.
Adjusted corporate expense was $108 million in the first quarter of 2017, a decrease of 12 percent compared to the prior year quarter driven primarily by productivity initiatives and cost synergies.
OTHER ITEMS
- On Dec. 5, 2016, the board of directors approved a quarterly cash dividend of $0.25 per share payable on Jan. 6, 2017, to shareholders of record as of the close of business on Dec. 14, 2016.
- On Dec. 28, 2016, the Company completed its previously announced offers to exchange all validly tendered and accepted notes of certain series (the "existing notes") issued by Johnson Controls, Inc. or Tyco International Finance S.A., as applicable, each of which is a wholly-owned subsidiary of the Company, for new notes issued by the Company and the related solicitation of consents to amend the indentures governing the existing notes. Pursuant to the exchange offers, the Company exchanged approximately $5.6 billion of $6.0 billion in aggregate principal amount of U.S. dollar denominated notes and approximately €423 million of €500 million in aggregate principal amount of Euro denominated notes.
- The spin-off of Adient plc was completed on Oct. 31, 2016. The results of this business are reported in discontinued operations for all periods presented.
About Johnson Controls:
Johnson Controls is a global diversified technology and multi industrial leader serving a wide range of customers in more than 150 countries. Our 130,000 employees create intelligent buildings, efficient energy solutions, integrated infrastructure and next generation transportation systems that work seamlessly together to deliver on the promise of smart cities and communities. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. We are committed to helping our customers win and creating greater value for all of our stakeholders through strategic focus on our buildings and energy growth platforms. For additional information, please visit http://www.johnsoncontrols.com or follow us @johnsoncontrols on Twitter.
Johnson Controls International plc Cautionary Statement Regarding Forward-Looking Statements
Johnson Controls International plc has made statements in this communication that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this communication, statements regarding Johnson Controls' future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures and debt levels are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" and terms of similar meaning are also generally intended to identify forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Johnson Controls' control, that could cause Johnson Controls' actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions such as the merger with Tyco and the spin-off of Adient, changes in tax laws, regulations, rates, policies or interpretations, the loss of key senior management, the tax treatment of recent portfolio transactions, significant transaction costs and/or unknown liabilities associated with such transactions, the outcome of actual or potential litigation relating to such transactions, the risk that disruptions from recent transactions will harm Johnson Controls' business, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, the availability of raw materials and component products, currency exchange rates, and cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson Controls' business is included in the section entitled "Risk Factors" in Johnson Controls' Annual Report on Form 10-K for the 2016 year filed with the SEC on November 23, 2016, and in the quarterly reports on Form 10-Q filed with the SEC after such date, and available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab. Shareholders, potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this communication are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this communication.
Non GAAP Financial Information
The Company's press release contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include mark-to-market for pension plans, transaction/integration/separation costs, restructuring and impairment costs, nonrecurring purchase accounting impacts related to the Tyco merger and discrete tax items. Financial information regarding adjusted sales, adjusted segment EBITA and adjusted segment EBITA margin are also presented, which are non-GAAP performance measures. Adjusted segment EBITA excludes special items such as transaction/integration/separation costs and nonrecurring purchase accounting impacts because these costs are not considered to be directly related to the underlying operating performance of its business units. Management believes that, when considered together with unadjusted amounts, these non-GAAP measures are useful to investors in understanding period-over-period operating results and business trends of the Company. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure.
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SOURCE Johnson Controls