10-QPeriod: Q1 FY2010

Johnson Controls International plc Quarterly Report for Q1 Ended Dec 25, 2009

Filed January 28, 2010For Securities:JCI

Summary

Johnson Controls International plc (JCI) reported its financial results for the quarter ending December 25, 2009. The company saw a slight decrease in net revenue, down 4.1% year-over-year to $4.25 billion. This was primarily attributed to lower product sales, impacted by declining steel prices and weaker commercial market conditions, partially offset by favorable foreign currency movements. Operating income remained stable at $414 million, benefiting from cost containment measures and previous restructuring efforts, despite lower volumes in several segments. Key strategic developments include the agreement to acquire Brink's Home Security Holdings, Inc. for approximately $2.0 billion, which is expected to significantly bolster the ADT Worldwide segment. The company also continues to refine its portfolio by exiting non-core businesses and pursuing restructuring opportunities to drive future cost savings. While facing ongoing litigation and investigations, JCI's liquidity remains strong with a cash balance of $2.5 billion and available credit facilities, positioning it to fund growth initiatives and return capital to shareholders.

Financial Highlights

51 data points
Beta

Revenue

$4.16B

37.0% Gross Margin

Net Income

$302.00M

7.3% Net Margin

EPS (Diluted)

$0.63

Total Assets

$25.60B

Cash & Equivalents

$2.47B

Free Cash Flow

$375.00M

Financial Statements
Beta
Revenue$4.16B
Cost of Revenue$2.62B
Gross Profit$1.54B
SG&A Expenses$1.12B
Operating Income$405.00M
Interest Expense$75.00M
Net Income$302.00M
EPS (Basic)$0.64
EPS (Diluted)$0.63
Shares Outstanding (Basic)476.00M
Shares Outstanding (Diluted)479.00M

Key Highlights

  • 1Net revenue for the quarter decreased by 4.1% to $4.25 billion, influenced by reduced product sales and market weakness, although offset by favorable foreign currency exchange rates.
  • 2Operating income remained stable at $414 million, demonstrating resilience through cost management and restructuring efforts despite revenue pressures.
  • 3The company announced a significant agreement to acquire Brink's Home Security Holdings, Inc. for approximately $2.0 billion, a strategic move to strengthen its ADT Worldwide segment.
  • 4ADT Worldwide saw a 1.3% increase in net revenue, driven by a 9.4% rise in recurring service revenue and growth in customer accounts.
  • 5Flow Control and Safety Products segments experienced revenue declines due to reduced volumes and market conditions.
  • 6Electrical and Metal Products faced a significant revenue drop of 28.6% due to lower steel prices and reduced volumes.
  • 7The company ended the quarter with a strong cash position of $2.5 billion and substantial available credit facilities, supporting operational needs and strategic investments.

Frequently Asked Questions

The primary drivers of the revenue decline were lower selling prices for steel products in the Electrical and Metal Products segment, reduced volume in the Flow Control segment, and continued weakness in commercial markets affecting ADT Worldwide and Safety Products. These factors were partially offset by favorable foreign currency exchange rate movements.

The planned acquisition of Brink's Home Security Holdings, Inc. (Broadview Security) for approximately $2.0 billion is a significant strategic move expected to enhance the ADT Worldwide segment. This acquisition aims to expand the company's footprint in the security services market.

The company is focusing on cost containment actions taken in previous fiscal years and ongoing restructuring initiatives. These efforts have helped maintain operating income at stable levels despite revenue challenges. Savings from previous restructuring and cost containment actions, along with lower intangible asset amortization, contributed to stable operating income.

The company maintains a strong liquidity position with $2.5 billion in cash and substantial available credit facilities. It plans to use cash flow to fund internal growth, strategic acquisitions like Brink's Home Security, and return capital to shareholders. The company expects to fund the Brink's acquisition with cash and the issuance of Tyco common shares.