01—Abstract
Summary
Summary of the 10-Q filed April 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), operating as Tyco International Ltd. during this period, reported its quarterly results for the period ending March 29, 2013.
The company saw a modest increase in net revenue for both the quarter and year-to-date periods, driven primarily by growth in the Global Products segment and strategic acquisitions. However, operating income experienced a significant decline, largely due to a substantial charge of $94 milliona for additional environmental remediation activities at a Wisconsin facility. This, combined with other one-time charges and a net benefit reversal from prior year legacy litigation, impacted profitability.
Financially, Tyco International continues to manage its debt effectively, with interest expenses decreasing due to prior debt redemptions. The company also highlighted its ongoing commitment to returning capital to shareholders through dividends and share repurchases, demonstrating confidence in its liquidity and future cash flows. Investors should note the significant environmental remediation charge and its impact on current period earnings, while also observing the underlying revenue growth in key segments and proactive capital allocation strategies.
02—Key points
Key Highlights
- Net revenue increased by 2.6% to $2.6 billion for the quarter and 3.7% to $5.2 billion for the six months ended March 29, 2013, driven by organic growth and acquisitions.
- Operating income decreased significantly by 46.1% to $123 million for the quarter, primarily due to a $94 million charge for environmental remediation.
- Interest expense decreased due to prior debt redemptions, reflecting effective debt management.
- The company repurchased approximately 7 million shares for $200 million during the six months ended March 29, 2013.
- The Global Products segment showed strong organic revenue growth of 6.6% for the quarter and 6.1% for the six months.
- Significant charges related to environmental remediation ($94 million in the quarter, $100 million year-to-date) and separation costs impacted profitability.
- The company maintains a substantial backlog of unfilled orders, totaling $5.3 billion as of March 29, 2013, indicating future revenue potential.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Johnson Controls International plc kept $0.03.
- Revenue$2.47B100.0%
- Cost of revenue−$983.0M39.7%
- Gross profit$1.49B60.3%
- Operating costs−$1.40B56.4%
- Operating income$95.0M3.8%
- Interest, other & tax−$23.0M0.9%
- Net income$72.0M2.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed April 26, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $2.47B$2.54B | −2.7% |
| Cost of Revenue | $983.00M$1.63B | −39.8% |
| Gross Profit | $1.49B$908.00M | +64.2% |
| SG&A Expenses | $766.00M$660.00M | +16.1% |
| Operating Income | $95.00M$228.00M | −58.3% |
| Interest Expense | $25.00M$59.00M | −57.6% |
| Net Income | $72.00M$323.00M | −77.7% |
| EPS (Basic) | $0.16$0.70 | −77.1% |
| EPS (Diluted) | $0.16$0.69 | −76.8% |
| Shares Outstanding (Basic) | 466.00M463.00M | +0.6% |
| Shares Outstanding (Diluted) | 474.00M469.00M | +1.1% |
05—Questions
Frequently Asked Questions
What led to the significant decrease in operating income for the quarter?
The operating income decreased significantly primarily due to a $94 million charge for additional environmental remediation activities at a Global Products facility in Marinette, Wisconsin. This was also impacted by other charges and a favorable net benefit reversal from legacy litigation in the prior year's comparable quarter.
How is the company managing its debt and liquidity?
Interest expense decreased due to savings from the redemption of $2.6 billion of debt securities in connection with the 2012 Separation. The company has access to a committed revolving credit facility, a commercial paper program, and generates cash from operations, which management believes is sufficient to cover operational and business needs.
What is the impact of the 2012 Separation on the company's reporting?
The 2012 Separation, which involved the spin-offs of ADT and Tyco Flow Control, resulted in these former businesses being classified as discontinued operations in all periods presented. The company now operates and reports in three segments: NA Installation & Services, ROW Installation & Services, and Global Products, with Corporate and Other as a fourth non-operating segment.
What are the company's plans for returning capital to shareholders?
Tyco International approved a new $600 million share repurchase program in January 2013 and continued its dividend payments, demonstrating a commitment to returning capital to shareholders. During the six months ended March 29, 2013, the company repurchased approximately 7 million shares for $200 million.
06—Continue