10-QPeriod: Q1 FY2012

Johnson Controls International plc Quarterly Report for Q1 Ended Dec 30, 2011

Filed January 31, 2012For Securities:JCI

Summary

Tyco International Ltd. reported net revenue of $4.2 billion for the quarter ended December 30, 2011, a decrease of 3.9% compared to the prior year's quarter. This decline was primarily driven by the divestiture of a majority interest in its Electrical and Metal Products business. Despite the revenue decrease, the company saw positive trends in its service revenue, which constituted 45% of total revenue, and experienced growth in product sales within the Tyco Flow Control segment, attributed to strong end-market performance. Operating income saw a significant decrease to $472 million from $706 million in the prior year. This was largely due to a $246 million gain on divestitures in the prior year's quarter, compared to no such gain in the current quarter. The company incurred $32 million in separation costs related to its planned 2012 separation into three independent companies. Tyco's cash position decreased to $1.0 billion, with cash generated from operations at $338 million, while investing activities used $441 million and financing activities used $271 million, including $200 million for share repurchases.

Financial Highlights

51 data points
Beta

Revenue

$2.48B

36.3% Gross Margin

Net Income

$322.00M

13.0% Net Margin

EPS (Diluted)

$0.69

Total Assets

$26.50B

Cash & Equivalents

$799.00M

Free Cash Flow

-$76.00M

Financial Statements
Beta
Revenue$2.48B
Cost of Revenue$1.58B
Gross Profit$899.00M
SG&A Expenses$677.00M
Operating Income$186.00M
Interest Expense$58.00M
Net Income$322.00M
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)464.00M
Shares Outstanding (Diluted)469.00M

Key Highlights

  • 1Net revenue decreased by 3.9% to $4.2 billion, primarily due to the sale of the Electrical and Metal Products business.
  • 2Service revenue represented 45% of total revenue, indicating a continued shift towards recurring revenue streams.
  • 3Operating income decreased significantly to $472 million, impacted by a large gain on divestitures in the prior year's comparable quarter.
  • 4The company incurred $32 million in separation costs as it proceeds with its plan to split into three separate entities.
  • 5Cash and cash equivalents decreased to $1.0 billion, with operating cash flow of $338 million.
  • 6Tyco Security Solutions' recurring revenue grew by 3.6% year-over-year, driven by an increase in customer accounts.
  • 7Tyco Flow Control showed strong performance with an 11.7% increase in net revenue, driven by its Valves and Controls and Thermal Controls businesses.

Frequently Asked Questions

The primary reason for the decrease in net revenue is the divestiture of a majority interest in Tyco's Electrical and Metal Products business, which occurred in the prior year's comparable quarter. This significantly reduced the revenue contribution from that segment.

The planned separation is incurring separation costs, with $32 million recorded in the current quarter primarily for professional fees. While this impacts operating income, the strategic rationale is to create more focused, independent entities.

Recurring revenue is a key focus, representing 45% of total revenue. Tyco Security Solutions showed strong recurring revenue growth of 3.6% year-over-year, driven by an increasing customer account base and higher average revenue per customer.

Tyco generated $338 million in cash from operating activities. Cash was utilized for capital expenditures ($207 million), acquisitions ($95 million), customer contract purchases ($170 million), share repurchases ($200 million), and dividends ($116 million). The company ended the quarter with $1.0 billion in cash and cash equivalents.