01—Abstract
Summary
Summary of the 10-K filed November 15, 2022. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI) reported its annual results for the fiscal year ending September 29, 2022.
The company, a global leader in smart, healthy, and sustainable building solutions, experienced a 7% increase in net sales, reaching $25.3 billiona. This growth was driven by higher organic sales and strategic acquisitions, although it was partially offset by unfavorable foreign currency translation. The company faced challenges including increased input material costs, supply chain disruptions, and labor shortages, which impacted gross margins.
Despite these headwinds, JCI demonstrated resilience through pricing actions and productivity improvements, aiming to mitigate inflationary pressures. The company's strategic focus remains on capitalizing on key growth vectors like sustainability and healthy buildings, supported by its OpenBlue software platform, which aims to deliver outcome-based solutions and recurring revenue streams. Financially, JCI managed its working capital effectively and maintained compliance with its debt covenants.
The company continues to invest in digital capabilities and strategic growth areas, while also navigating macroeconomic uncertainties. Investors will be keen to monitor the company's ability to manage ongoing supply chain issues and translate its backlog into profitable revenue in the coming fiscal year.
02—Key points
Key Highlights
- Net sales increased by 7% to $25.3 billion for fiscal year 2022, driven by organic growth and acquisitions.
- Gross profit increased by 4%, but gross profit margin decreased by 110 basis points to 33.0% due to supply chain inefficiencies and price/cost pressures.
- Selling, general, and administrative (SG&A) expenses increased by 13%, with SG&A as a percentage of sales rising to 23.5%, partly due to environmental remediation charges and business acquisitions.
- The company reported a goodwill impairment of $75 million for its Silent-Aire reporting unit and significant impairment charges of $235 million related to its Global Retail business held for sale.
- Net income attributable to Johnson Controls decreased by 6% to $1.53 billion, with diluted EPS at $2.19, down from $2.27 in the prior year.
- The company maintained a strong backlog of $11.7 billion at September 30, 2022.
- Johnson Controls continues to invest in its OpenBlue software platform to drive digital services and sustainable building solutions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Johnson Controls International plc kept $0.07.
- Revenue$20.64B100.0%
- Cost of revenue−$13.55B65.6%
- Gross profit$7.09B34.4%
- Operating costs−$5.81B28.2%
- Operating income$1.28B6.2%
- Interest, other & tax$253.0M1.2%
- Net income$1.53B7.4%
Where FY2022 revenue went
$20.64B- Cost of revenue: $13.55B, 66% of revenue
- SG&A: $5.08B, 25% of revenue
- Operating income: $1.28B, 6.2% of revenue
- R&D: $236.0M, 1.1% of revenue
- Other operating costs: $497.0M, 2.4% of revenue
Kept 6.2% as operating incomeOperating income $1.28B · 6.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed November 15, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $20.64B$23.67B | −12.8% |
| Cost of Revenue | $13.55B$15.61B | −13.2% |
| Gross Profit | $7.09B$8.06B | −12.0% |
| R&D Expenses | $236.00M$275.00M | −14.2% |
| SG&A Expenses | $5.08B$5.26B | −3.4% |
| Operating Income | $1.28B$1.51B | −15.5% |
| Interest Expense | $225.00M$219.00M | +2.7% |
| Net Income | $1.53B$1.64B | −6.4% |
| EPS (Basic) | $2.20$2.28 | −3.5% |
| EPS (Diluted) | $2.19$2.27 | −3.5% |
| Shares Outstanding (Basic) | 696.10M716.60M | −2.9% |
| Shares Outstanding (Diluted) | 699.60M721.10M | −3.0% |
05—Questions
Frequently Asked Questions
What was Johnson Controls' revenue performance in fiscal year 2022?
Johnson Controls reported a 7% increase in net sales for fiscal year 2022, reaching $25.3 billion. This growth was primarily driven by higher organic sales and incremental contributions from acquisitions, partially offset by the unfavorable impact of foreign currency translation.
What were the key challenges faced by Johnson Controls in fiscal year 2022?
The company faced significant challenges including increased input material costs, component shortages, supply chain disruptions, and labor shortages. These factors, coupled with global macroeconomic trends and geopolitical instability (like the Russia-Ukraine conflict), negatively impacted gross margins despite pricing actions and productivity improvements.
How is Johnson Controls addressing supply chain issues and inflation?
Johnson Controls is implementing strategies to mitigate supply chain disruptions and inflation, such as expanding and redistributing its supplier network, supplier financing, implementing price increases, and driving productivity improvements. While these actions have helped offset some impacts, the company expects these trends to continue influencing results into fiscal year 2023.
What is the significance of the OpenBlue platform for Johnson Controls?
The OpenBlue platform is central to Johnson Controls' strategy to deliver smart, healthy, and sustainable building solutions. It enables data-driven services and outcome-based solutions across the building lifecycle, aiming to improve energy efficiency, enhance security, and reduce greenhouse gas emissions. The company is investing in its digital capabilities, powered by OpenBlue, to drive growth, particularly in services and recurring revenue.
What is the company's financial health and outlook based on the 10-K filing?
Johnson Controls maintained a strong backlog and managed its working capital effectively, remaining in compliance with debt covenants. Despite impacts from inflation and supply chain issues on margins, the company's liquidity and capital resources are considered adequate. The outlook involves continued focus on strategic growth areas, digital transformation, and managing operational challenges.
06—Continue