01—Abstract
Summary
Summary of the 10-Q filed January 27, 2011. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), operating as Tyco International Ltd. during this reporting period, reported a significant increase in net revenue for the quarter ended December 24, 2010, reaching $4.38 billiona, a 5.4% rise compared to the same period in the prior year.
This growth was primarily fueled by the Tyco Security Solutions segment, which benefited from acquisitions and organic growth, alongside a notable contribution from the Electrical and Metal Products business due to improved selling prices. The company also achieved a substantial increase in operating income, rising to $706 millionb from $405 million year-over-year.
This improvement was significantly bolstered by a one-time gain from the divestiture of a majority interest in the Electrical and Metal Products business, alongside strong performance in the Tyco Security Solutions segment. The company's balance sheet remains robust, with over $2 billionc in cash and cash equivalents, and a manageable debt-to-capital ratio, underscoring its financial stability.
02—Key points
Key Highlights
- Net revenue increased by 5.4% to $4.38 billion for the quarter ended December 24, 2010, driven by growth in Tyco Security Solutions and improved pricing in Electrical and Metal Products.
- Operating income significantly increased by 74.3% to $706 million, largely due to a $259 million gain from the sale of a majority interest in the Electrical and Metal Products business and solid performance in the security segment.
- Tyco Security Solutions demonstrated strong growth with a 10.1% increase in net revenue, driven by acquisitions and an expanding customer base.
- The company reported $2.1 billion in cash and cash equivalents as of December 24, 2010, indicating a healthy liquidity position.
- Significant portfolio reshaping activities are underway, including the sale of a majority interest in the Electrical and Metal Products business and the European water business, with further strategic refinements anticipated.
- Restructuring charges were incurred ($32 million in the current quarter) as the company pursues efficiency improvements, with an expectation of approximately $200 million in fiscal year 2011.
- Tyco repurchased approximately $500 million of its common shares during the quarter, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2011, Johnson Controls International plc kept $0.15.
- Revenue$4.38B100.0%
- Cost of revenue−$2.75B62.8%
- Gross profit$1.63B37.2%
- Operating costs−$923.0M21.1%
- Operating income$706.0M16.1%
- Interest, other & tax−$47.0M1.1%
- Net income$659.0M15.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2011filed January 27, 2011Financial Statements
Q1 FY2011 against Q1 FY2010
| Line item | Q1 FY2011Q1 FY2010 | Change |
|---|---|---|
| Revenue | $4.38B$4.16B | +5.4% |
| Cost of Revenue | $2.75B$2.62B | +5.1% |
| Gross Profit | $1.63B$1.54B | +5.8% |
| SG&A Expenses | $1.14B$1.12B | +1.2% |
| Operating Income | $706.00M$405.00M | +74.3% |
| Interest Expense | $62.00M$75.00M | −17.3% |
| Net Income | $659.00M$302.00M | +118.2% |
| EPS (Basic) | $1.35$0.64 | +110.9% |
| EPS (Diluted) | $1.34$0.63 | +112.7% |
| Shares Outstanding (Basic) | 488.00M476.00M | +2.5% |
| Shares Outstanding (Diluted) | 492.00M479.00M | +2.7% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue growth in the quarter?
The primary driver of revenue growth was the Tyco Security Solutions segment, which saw a 10.1% increase due to acquisitions, particularly the Broadview Security acquisition, and organic growth in customer accounts. The Electrical and Metal Products business also contributed positively due to higher selling prices for steel products.
How did the divestiture of the Electrical and Metal Products business impact the company's financial results?
The divestiture of a majority interest in the Electrical and Metal Products business resulted in a significant gain of $259 million, which substantially boosted the company's operating income for the quarter. This aligns with the company's strategy of refining its business portfolio.
What is the company's liquidity position and how is it managing its cash?
The company maintains a strong liquidity position with $2.1 billion in cash and cash equivalents as of December 24, 2010. Cash generated from operations, along with access to credit facilities, is used to fund operations, capital expenditures, strategic acquisitions, and return capital to shareholders through dividends and share repurchases, with $500 million spent on share repurchases during the quarter.
Are there any significant legal or regulatory matters that investors should be aware of?
The company is involved in ongoing legal and regulatory matters, including investigations related to alleged improper payments (FCPA), legacy securities matters, environmental remediation, and asbestos claims. While the company believes its reserves are adequate for these matters, some could have a material impact depending on their ultimate resolution. Additionally, there are ongoing tax audits and a Tax Sharing Agreement with former subsidiaries, Covidien and Tyco Electronics, which involves shared tax liabilities.
06—Continue