10-KPeriod: FY2016

Johnson Controls International plc Annual Report, Year Ended Sep 30, 2016

Filed November 23, 2016For Securities:JCI

Summary

Johnson Controls International plc (JCI) presents its 2016 10-K, detailing significant strategic transformations during the fiscal year. The company completed its substantial combination with Tyco International plc in September 2016, a move intended to enhance its position in the building technologies and services sector. Furthermore, JCI completed the spin-off of its Automotive Experience business into Adient plc in October 2016, sharpening its focus on building and energy solutions. The report highlights the operational and financial integration challenges and opportunities presented by these major transactions, with a strong emphasis on aligning its portfolio for future growth in intelligent buildings and efficient energy solutions. Investors should note the significant shift in the company's structure and strategic direction as it integrates Tyco and divests non-core assets.

Financial Highlights

54 data points
Beta

Revenue

$20.84B

27.1% Gross Margin

Net Income

-$868.00M

-4.2% Net Margin

EPS (Diluted)

$-1.29

Total Assets

$63.18B

Cash & Equivalents

$579.00M

Free Cash Flow

$1.91B

Financial Statements
Beta
Revenue$20.84B
Cost of Revenue$15.18B
Gross Profit$5.65B
R&D Expenses$158.00M
SG&A Expenses$4.19B
Operating Income$732.00M
Interest Expense$293.00M
Net Income-$868.00M
EPS (Basic)$-1.30
EPS (Diluted)$-1.29
Shares Outstanding (Basic)667.40M
Shares Outstanding (Diluted)672.60M

Key Highlights

  • 1Completed a significant combination with Tyco International plc on September 2, 2016, creating a more robust building solutions business.
  • 2Spun off its Automotive Experience business into Adient plc on October 31, 2016, to focus on core building technologies and services.
  • 3Reported a net loss attributable to Johnson Controls of $868 million for fiscal year 2016, impacted by significant merger, integration, and restructuring costs.
  • 4Net sales for fiscal year 2016 were $37.7 billion, a slight increase of 1% over the prior year, driven by the Buildings and Power Solutions segments, partially offset by the Automotive Experience business and foreign currency impacts.
  • 5Goodwill increased significantly to $23.4 billion, primarily due to the Tyco merger and the JCH joint venture.
  • 6The company ended the fiscal year with a substantial debt load of $16.4 billion, largely reflecting financing for the Tyco acquisition.
  • 7Restructuring and impairment costs totaled $620 million in fiscal year 2016, reflecting ongoing efforts to streamline operations.

Frequently Asked Questions

The most significant strategic events were the completion of the combination with Tyco International plc in September 2016 and the spin-off of the Automotive Experience business into Adient plc in October 2016. These actions fundamentally reshaped the company's structure and focus.

The Tyco merger was accounted for as a reverse acquisition, with JCI Inc. being the accounting acquirer. The company incurred substantial transaction and integration costs, which, along with other factors, contributed to a net loss attributable to Johnson Controls of $868 million for fiscal year 2016. The merger also significantly increased goodwill and long-term debt.

Following the Tyco merger and the spin-off of its automotive business, Johnson Controls is strategically focused on its Buildings business, which includes HVAC systems, controls, security, and fire detection products and services, as well as its Power Solutions business, which provides automotive batteries.

Key risks include the successful integration of the Tyco business, managing the increased debt load, realizing expected synergies, potential impact of global economic conditions on construction and automotive sectors, commodity price volatility, and the ongoing process of aligning its global operations for efficiency and growth.