01—Abstract
Summary
Summary of the 10-K filed December 14, 2023. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI) reported its fiscal year 2023 results, highlighting a 6% increase in net sales to $26.8 billiona, driven by price increases and organic growth across its business segments, particularly in North America and Global Products.
The company demonstrated improved profitability with a 21% increase in net income attributable to Johnson Controls, reaching $1.85 billionb, and diluted earnings per share of $2.69. Despite a 32% rise in net financing charges and increased restructuring and impairment costs (primarily related to business and asset impairments), the company managed its operational expenses effectively, with SG&A as a percentage of sales improving. A significant event during the fiscal year was a cybersecurity incident in late September 2023, which caused disruptions and incurred costs, but the company stated that its digital products and services were unaffected and expects insurance recoveries to offset a substantial portion of the incident's impact.
JCI remains focused on its strategy to capitalize on growth vectors like sustainability and healthy buildings, accelerate digital services, and foster a high-performance culture, supported by a substantial backlog of $13.6 billionc in systems and services. The company's balance sheet shows total assets of $42.2 billion and total equity of $17.7 billion. Net debt increased by 16% to $8.0 billion, largely due to a decrease in cash and cash equivalents, though the company maintained compliance with its financial covenants and has significant liquidity available through its credit facilities.
JCI returned $2.17 billiond to shareholders through dividends and share repurchases in fiscal 2023, reflecting a continued commitment to capital return. The company's strategic focus on digital transformation and sustainable building solutions positions it to capitalize on evolving market trends.
02—Key points
Key Highlights
- Net sales increased by 6% to $26.8 billion in fiscal year 2023, driven by price increases and organic growth.
- Net income attributable to Johnson Controls rose by 21% to $1.85 billion, with diluted earnings per share of $2.69.
- The company experienced a cybersecurity incident in late September 2023, which caused operational disruptions and costs, but expects insurance recoveries to mitigate the financial impact.
- Restructuring and impairment costs increased significantly, largely due to business and asset impairments, including goodwill impairment for the Silent-Aire reporting unit.
- Backlog for systems and services stood at $13.6 billion at the end of fiscal year 2023.
- JCI returned $2.17 billion to shareholders through dividends and share repurchases in fiscal year 2023.
- The company's liquidity remains strong with $835 million in cash and cash equivalents and access to significant committed revolving credit facilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Johnson Controls International plc kept $0.08.
- Revenue$22.33B100.0%
- Cost of revenue−$14.53B65.1%
- Gross profit$7.80B34.9%
- Operating costs−$6.24B28.0%
- Operating income$1.56B7.0%
- Interest, other & tax$287.0M1.3%
- Net income$1.85B8.3%
Where FY2023 revenue went
$22.33B- Cost of revenue: $14.53B, 65% of revenue
- SG&A: $5.39B, 24% of revenue
- Operating income: $1.56B, 7.0% of revenue
- R&D: $251.0M, 1.1% of revenue
- Other operating costs: $604.0M, 2.7% of revenue
Kept 7.0% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed December 14, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $22.33B$20.64B | +8.2% |
| Cost of Revenue | $14.53B$13.55B | +7.2% |
| Gross Profit | $7.80B$7.09B | +10.1% |
| R&D Expenses | $251.00M$236.00M | +6.4% |
| SG&A Expenses | $5.39B$5.08B | +6.1% |
| Operating Income | $1.56B$1.28B | +22.1% |
| Net Income | $1.85B$1.53B | +20.7% |
| EPS (Basic) | $2.70$2.20 | +22.7% |
| EPS (Diluted) | $2.69$2.19 | +22.8% |
| Shares Outstanding (Basic) | 684.30M696.10M | −1.7% |
| Shares Outstanding (Diluted) | 687.40M699.60M | −1.7% |
05—Questions
Frequently Asked Questions
What was Johnson Controls' revenue performance in fiscal year 2023?
Johnson Controls reported a 6% increase in net sales for fiscal year 2023, reaching $26.8 billion. This growth was primarily driven by higher organic sales and increased pricing, offsetting the negative impact of foreign currency translation. The company saw sales growth across most of its segments, with Building Solutions North America and Global Products showing notable increases.
How did the cybersecurity incident impact the company?
During the fourth quarter of fiscal 2023, Johnson Controls experienced a cybersecurity incident involving unauthorized access, data exfiltration, and ransomware deployment, which disrupted internal IT infrastructure and applications. This incident led to approximately $30 million in lost and deferred revenue and associated expenses, impacting fiscal 2023 net income by about $0.04 per diluted share. The company expects to incur further expenses in fiscal 2024 but anticipates that insurance recoveries will cover a substantial portion of the costs. Importantly, the company stated that its digital products and services, including OpenBlue and Metasys, were not observed to be impacted.
What is the company's outlook and strategic focus for the coming year?
Johnson Controls is focused on capitalizing on key growth vectors such as sustainability and healthy buildings, accelerating its digital services, and fostering a high-performance culture. The company aims to leverage its OpenBlue digital platform to deliver outcome-based solutions and recurring revenue. Management expects continued softening in the China market in fiscal 2024. The company's substantial backlog provides a solid foundation for future revenue and continued focus on operational improvements and cost management.
How did the company manage its financial health and capital structure?
Johnson Controls maintained a solid financial position in fiscal year 2023, with $835 million in cash and cash equivalents and access to substantial revolving credit facilities. Net debt increased by 16% to $8.0 billion, primarily due to lower cash balances, but the company remained compliant with its financial covenants. JCI returned $2.17 billion to shareholders through dividends and share repurchases, demonstrating a commitment to capital allocation while continuing to invest in strategic growth initiatives.
06—Continue