10-QPeriod: Q2 FY2012

Johnson Controls International plc Quarterly Report for Q2 Ended Mar 30, 2012

Filed April 26, 2012For Securities:JCI

Summary

Johnson Controls International plc (JCI), operating as Tyco International Ltd. during this period, reported a net revenue of $4.35 billion for the third quarter of fiscal year 2012, a 9.1% increase year-over-year. This growth was driven by strong performance across all segments, particularly Commercial Fire and Security, ADT North American Residential, and Flow Control. The company generated $1.05 billion in operating cash flow for the first six months of the fiscal year. A significant strategic development during this quarter was the announcement of a plan to separate the company into three distinct publicly traded entities: one for North American residential security, one for flow control, and one for commercial fire and security. The flow control business is planned to merge with Pentair, Inc. Significant costs related to these separation activities were incurred during the quarter. Despite increased revenues, operating income saw a modest increase of 8.3% year-over-year for the quarter due to these separation costs and other restructuring charges. The company maintained a strong balance sheet with $1.1 billion in cash and cash equivalents and a debt-to-capital ratio of 22% as of March 30, 2012.

Financial Highlights

51 data points
Beta

Revenue

$2.54B

35.7% Gross Margin

Net Income

$323.00M

12.7% Net Margin

EPS (Diluted)

$0.69

Total Assets

$27.06B

Cash & Equivalents

$834.00M

Free Cash Flow

$282.00M

Financial Statements
Beta
Revenue$2.54B
Cost of Revenue$1.63B
Gross Profit$908.00M
SG&A Expenses$660.00M
Operating Income$228.00M
Interest Expense$59.00M
Net Income$323.00M
EPS (Basic)$0.70
EPS (Diluted)$0.69
Shares Outstanding (Basic)463.00M
Shares Outstanding (Diluted)469.00M

Key Highlights

  • 1Net revenue for the quarter increased 9.1% year-over-year to $4.35 billion, driven by broad-based segment growth.
  • 2Operating income grew 8.3% to $484 million for the quarter, though impacted by $66 million in separation costs.
  • 3The company announced a significant plan to separate into three independent companies, including a merger of its flow control business with Pentair.
  • 4Operating cash flow for the first six months was robust at $1.05 billion.
  • 5ADT North American Residential saw a 5.1% increase in net revenue, driven by recurring customer revenue growth and higher average revenue per customer.
  • 6The company maintained substantial goodwill and intangible assets on its balance sheet, totaling approximately $10.1 billion and $3.7 billion respectively.
  • 7Total debt remained stable at approximately $4.1 billion, with a healthy debt-to-capital ratio of 22%.

Frequently Asked Questions

Revenue growth was primarily driven by increased volume in product sales across all segments, improved demand in end markets, an increase in average revenue per customer in ADT North American Residential, and contributions from recent acquisitions. The Flow Control segment also benefited from strength in its Valves and Controls and Thermal Controls businesses.

The company announced a strategic plan to separate into three independent, publicly traded companies: North American residential security, flow control, and commercial fire and security. The flow control business is set to combine with Pentair, Inc. This move aims to unlock shareholder value by creating more focused businesses.

The company incurred $66 million in separation costs during the quarter, which impacted operating income. These costs, primarily related to professional fees and merger-related expenses, offset some of the otherwise positive impact of revenue growth on operating income.

The company maintains a strong financial position with $1.1 billion in cash and cash equivalents as of March 30, 2012. Total debt remained around $4.1 billion, resulting in a debt-to-capital ratio of 22%, indicating good financial flexibility. The company also had access to undrawn revolving credit facilities.