01—Abstract
Summary
Summary of the 10-Q filed April 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI) reported its fiscal second-quarter and year-to-date results for the period ending March 25, 2011.
The company experienced a slight decline in net revenue for the quarter, primarily due to the divestiture of its Electrical and Metal Products business. However, revenue saw an increase on a six-month basis, driven by growth in the Tyco Security Solutions and Tyco Fire Protection segments. Operating income showed improvement, particularly for the six-month period, benefiting from a significant gain on the divestiture of the Electrical and Metal Products business.
The company continues to focus on operational efficiency, cost savings through restructuring initiatives, and returning capital to shareholders via share repurchases and dividends. The balance sheet remains solid, with a strong cash position and manageable debt levels.
02—Key points
Key Highlights
- Net revenue for the quarter decreased by 2.5% year-over-year to $3.99 billion, impacted by divestitures, but increased 1.5% year-over-year to $8.37 billion for the six-month period.
- Operating income increased by 2.8% to $437 million for the quarter and significantly by 37.7% to $1.14 billion for the six-month period, the latter boosted by a $250 million gain from the sale of the Electrical and Metal Products business.
- Tyco Security Solutions demonstrated robust growth, with net revenue increasing by 12.3% for the quarter and 11.2% for the six-month period, largely driven by the acquisition of Broadview Security and organic growth in recurring revenue.
- Tyco Fire Protection reported modest net revenue growth of 2.5% for the quarter and 0.6% for the six-month period, with product sales and service revenue showing positive trends.
- Tyco Flow Control experienced a slight decrease in net revenue of 2.4% for the quarter and 1.6% for the six-month period, mainly due to a decline in the Water & Environmental Systems business.
- The company generated strong operating cash flow of $913 million for the six months ended March 25, 2011.
- Significant capital allocation activities included $1 billion in share repurchases and $224 million in dividend payments during the six months ended March 25, 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Johnson Controls International plc kept $0.08.
- Revenue$3.99B100.0%
- Cost of revenue−$2.44B61.2%
- Gross profit$1.55B38.8%
- Operating costs−$1.11B27.8%
- Operating income$437.0M10.9%
- Interest, other & tax−$122.0M3.1%
- Net income$315.0M7.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed April 28, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $3.99B$4.09B | −2.5% |
| Cost of Revenue | $2.44B$2.60B | −6.1% |
| Gross Profit | $1.55B$1.49B | +3.8% |
| SG&A Expenses | $1.08B$1.09B | −0.8% |
| Operating Income | $437.00M$425.00M | +2.8% |
| Interest Expense | $63.00M$75.00M | −16.0% |
| Net Income | $315.00M$310.00M | +1.6% |
| EPS (Basic) | $0.67$0.65 | +3.1% |
| EPS (Diluted) | $0.66$0.65 | +1.5% |
| Shares Outstanding (Basic) | 472.00M476.00M | −0.8% |
| Shares Outstanding (Diluted) | 477.00M478.00M | −0.2% |
05—Questions
Frequently Asked Questions
What was the primary driver for the change in Johnson Controls' net revenue in the current quarter?
The primary driver for the decrease in net revenue for the quarter ended March 25, 2011, was the sale of a majority interest in the Electrical and Metal Products business in December 2010. While this reduced overall revenue, the Tyco Security Solutions and Tyco Fire Protection segments showed growth.
How did the divestiture of the Electrical and Metal Products business impact the company's profitability?
The divestiture resulted in a significant gain of $250 million recorded in the first quarter of fiscal 2011, which boosted operating income for the six-month period. The company is also benefiting from a greater focus on its core businesses.
What is the outlook for the company's different business segments based on this report?
Tyco Security Solutions is showing strong growth, driven by acquisitions and organic customer acquisition. Tyco Fire Protection is experiencing modest growth, while Tyco Flow Control faces some headwinds, particularly in its Water & Environmental Systems business. The company is actively managing its portfolio through strategic divestitures and acquisitions.
What are the key uses of the company's cash flow?
The company is actively deploying cash towards share repurchases (approximately $1 billion in the six-month period) and dividend payments ($224 million in the six-month period). It also continues to invest in capital expenditures and strategic bolt-on acquisitions to fund internal growth and improve productivity.
06—Continue