01—Abstract
Summary
Summary of the 10-Q filed February 3, 2009. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI) reported its first quarter results for fiscal year 2009, ending December 26, 2008.
Net revenue for the quarter was $4.43 billiona, a decrease of 8.5% compared to the prior year's $4.84 billion. This decline was primarily attributed to the unfavorable impact of foreign currency exchange rates, which reduced revenue by $424 million. Operating income also saw a decrease, falling to $413 million from $493 million in the prior year's quarter, with foreign currency headwinds contributing $48 million to this decline.
The company is navigating a challenging economic environment, with slowing commercial markets impacting various segments. Despite these headwinds, JCI is actively pursuing cost-saving initiatives, including restructuring programs, and prudently managing its capital.
The company also announced its intention to move its jurisdiction of incorporation from Bermuda to Switzerland, a move expected to provide economic and operational benefits. While the company faces ongoing legal proceedings and investigations, it believes these will not have a material adverse effect on its financial position.
02—Key points
Key Highlights
- Net revenue decreased by 8.5% to $4.43 billion, largely due to a significant negative impact from foreign currency fluctuations ($424 million).
- Operating income declined by 16.2% to $413 million, also affected by currency headwinds ($48 million) and lower volumes in key segments.
- The company is actively managing costs through ongoing restructuring programs, expecting to incur $100-$150 million in charges in fiscal year 2009.
- A plan to change the company's jurisdiction of incorporation from Bermuda to Switzerland was announced, anticipating economic and operational benefits.
- Safety Products segment acquired Vue Technology, Inc. for $43 million to enhance its RFID capabilities.
- Cash and cash equivalents decreased to $1.19 billion from $1.52 billion in the prior quarter.
- Attrition rates in ADT Worldwide business increased to 13.2% on a trailing 12-month basis, attributed to adverse macroeconomic factors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2009, Johnson Controls International plc kept $0.06.
- Revenue$4.34B100.0%
- Cost of revenue−$2.80B64.5%
- Gross profit$1.54B35.5%
- Operating costs−$1.13B25.9%
- Operating income$413.0M9.5%
- Interest, other & tax−$136.0M3.1%
- Net income$277.0M6.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2009filed February 3, 2009Financial Statements
| Revenue | $4.34B |
| Cost of Revenue | $1.98B |
| Gross Profit | $1.54B |
| SG&A Expenses | $1.14B |
| Operating Income | $413.00M |
| Interest Expense | $73.00M |
| Net Income | $277.00M |
| EPS (Basic) | $0.59 |
| EPS (Diluted) | $0.58 |
| Shares Outstanding (Basic) | 473.00M |
| Shares Outstanding (Diluted) | 475.00M |
05—Questions
Frequently Asked Questions
What were the primary drivers for the decrease in net revenue?
The primary driver for the decrease in net revenue was the unfavorable impact of foreign currency exchange rates, which reduced revenue by approximately $424 million. Additionally, lower volumes in key segments like Electrical and Metal Products, ADT Worldwide, and Fire Protection Services, along with fewer water projects in Flow Control, also contributed to the decline.
How is the company managing its costs and financial position in the current economic climate?
The company is focused on improving operational efficiency and managing working capital. They are continuing restructuring initiatives, expecting to incur $100-$150 million in charges in fiscal year 2009. Capital is being allocated prudently, prioritizing internal investments for growth and productivity, and considering bolt-on acquisitions.
What is the significance of the proposed change in jurisdiction of incorporation?
Johnson Controls International plc announced plans to move its jurisdiction of incorporation from Bermuda to Switzerland. The company believes this move will provide economic and operational benefits, enhance global competitiveness, and potentially allow for a more competitive worldwide effective corporate tax rate. The change is subject to shareholder approval.
What is the company's outlook regarding its businesses given the current economic conditions?
The company anticipates continued weakness in the commercial market, which is expected to negatively impact results, particularly in the ADT Worldwide segment. They also note volatility in commodity prices like copper and steel could affect operating margins. Despite these challenges, JCI plans to continue investing in its core businesses and exploring strategic acquisitions.
06—Continue