01—Abstract
Summary
Summary of the 10-K filed November 16, 2020. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc's (JCI) 2020 10-K filing reflects a year of significant strategic transformation and adaptation, notably impacted by the COVID-19 pandemic.
The company completed its pivot to a pure-play building technologies and solutions provider with the divestiture of its Power Solutions business. Despite a reported net sales decrease of 7% to $22.3 billiona, largely attributed to COVID-19 related demand decline and foreign currency translation, the company demonstrated resilience with an 89% decrease in net income to $631 million, significantly influenced by the prior year's large gain from discontinued operations and higher restructuring/impairment charges in the current year. JCI's strategic priorities focus on leading positions in commercial HVAC and building management systems, enhanced by digital capabilities.
The company launched its OpenBlue digital platform, aimed at delivering smarter, safer, and more sustainable buildings. Management highlights cost mitigation actions and operational improvements as key to navigating the challenging economic environment.
The company maintained a solid liquidity position, ending the year with $2.0 billionb in cash and cash equivalents, and continued its share repurchase program after a temporary suspension. Looking ahead, JCI faces ongoing risks related to economic uncertainty, global supply chain disruptions, and evolving regulatory landscapes, but remains focused on leveraging its installed base and technological advancements for future growth.
02—Key points
Key Highlights
- Net sales decreased by 7% to $22.3 billion in fiscal year 2020, primarily due to COVID-19 impacts and foreign currency translation.
- Net income attributable to Johnson Controls decreased by 89% to $631 million, heavily influenced by the prior year's gain from discontinued operations ($4.6 billion) and increased restructuring/impairment costs ($783 million in FY20 vs. $235 million in FY19).
- The company completed its transformation into a pure-play building technologies and solutions provider following the divestiture of its Power Solutions business in April 2019.
- Launched OpenBlue, a digital suite of connected solutions for smart buildings, emphasizing sustainability, occupant experience, and safety.
- Ending cash balance of $2.0 billion, demonstrating a solid liquidity position, with $2.4 billion remaining under the share repurchase program.
- Restructuring and impairment costs significantly increased to $783 million in FY2020, primarily due to goodwill and intangible asset impairments totaling $486 million, largely driven by the impact of COVID-19 on the North America Retail segment.
- Segment EBITA for the full year was $2.95 billion, a 3% decrease, with all segments experiencing sales declines except for Building Solutions North America which remained flat in EBITA.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Johnson Controls International plc kept $0.03.
- Revenue$22.32B100.0%
- Cost of revenue−$14.91B66.8%
- Gross profit$7.41B33.2%
- Operating costs−$6.78B30.4%
- Operating income$631.0M2.8%
- Interest, other & tax$-00.0%
- Net income$631.0M2.8%
Where FY2020 revenue went
$22.32B- Cost of revenue: $14.91B, 67% of revenue
- SG&A: $5.67B, 25% of revenue
- Net income: $631.0M, 2.8% of revenue
- R&D: $274.0M, 1.2% of revenue
- Other operating costs: $841.0M, 3.8% of revenue
Kept 2.8% as net incomeNet income $631.0M · 2.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed November 16, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $22.32B$23.97B | −6.9% |
| Cost of Revenue | $14.91B$16.27B | −8.4% |
| Gross Profit | $7.41B$7.69B | −3.7% |
| R&D Expenses | $274.00M$319.00M | −14.1% |
| SG&A Expenses | $5.67B$6.24B | −9.3% |
| Operating Income | $631.00M$1.10B | −42.6% |
| Interest Expense | $240.00M$335.00M | −28.4% |
| Net Income | $631.00M$5.67B | −88.9% |
| EPS (Basic) | $0.84$6.52 | −87.1% |
| EPS (Diluted) | $0.84$6.49 | −87.1% |
| Shares Outstanding (Basic) | 751.00M870.20M | −13.7% |
| Shares Outstanding (Diluted) | 753.60M874.30M | −13.8% |
05—Questions
Frequently Asked Questions
What was Johnson Controls' financial performance in fiscal year 2020?
In fiscal year 2020, Johnson Controls reported a net sales decrease of 7% to $22.3 billion. Net income attributable to the company decreased by 89% to $631 million. This significant drop in net income was largely due to a substantial gain from discontinued operations in the prior year and a significant increase in restructuring and impairment costs in fiscal year 2020, which included goodwill and intangible asset impairments.
What is the impact of COVID-19 on Johnson Controls' business?
The COVID-19 pandemic had a significant impact on Johnson Controls' business, leading to a decline in demand and sales volumes across its global segments. The company experienced disruptions in manufacturing and supply chains and modified its business practices to ensure employee safety. However, the pandemic also created opportunities, with increased demand for products and solutions that enhance building health and operational efficiency, such as thermal cameras and indoor air quality monitoring.
What are Johnson Controls' key strategic initiatives?
Johnson Controls' strategic priorities include achieving leading positions in commercial HVAC and building management systems, and driving growth through digital integration. A key initiative is the launch of its OpenBlue digital platform, designed to create smarter, safer, and more sustainable buildings by leveraging building expertise with cutting-edge technology like AI-powered services.
How has the company's business portfolio changed?
Johnson Controls has substantially transformed its business portfolio, completing its shift to a pure-play building technologies and solutions provider. This was largely achieved through the divestiture of its automotive business in 2016 and its Power Solutions business in April 2019, allowing the company to focus entirely on the building sector.
06—Continue