01—Abstract
Summary
Summary of the 10-Q filed July 31, 2015. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI), operating as Tyco International plc in this filing, reported a 6.4% decrease in net revenue for the third quarter of fiscal year 2015, reaching $2.5 billion compared to $2.7 billiona in the prior year period.
This decline was primarily driven by unfavorable foreign currency exchange rates, which had a 6.9% negative impact, and a 1.1% organic revenue decrease, primarily in the Global Products and ROW Installation & Services segments. Operating income also saw a significant decrease of 14.8% to $253 millionb, largely due to a $35 million increase in restructuring and repositioning charges.
Despite revenue headwinds, the company continued strategic initiatives, including acquisitions that contributed positively to revenue and ongoing efforts in cost savings and productivity improvements. Investors should note the ongoing restructuring efforts and the impact of currency fluctuations as key factors influencing recent performance.
02—Key points
Key Highlights
- Net revenue for the quarter decreased by 6.4% to $2.5 billion, impacted by a 6.9% unfavorable foreign currency exchange rate effect.
- Organic revenue declined by 1.1%, primarily in the Global Products and ROW Installation & Services segments.
- Operating income decreased by 14.8% to $253 million, largely due to a $35 million increase in restructuring and repositioning charges.
- NA Installation & Services segment showed modest net revenue growth of 0.4%, with operating income increasing by 36.8%.
- ROW Installation & Services segment experienced a significant revenue decline of 15.7%, with operating income down 44.1%, impacted by currency and industry pressures.
- Global Products segment saw a 2.6% revenue decrease, though organic revenue for the nine-month period grew by 4.3%, supported by acquisitions.
- The company repurchased approximately 10 million shares for $417 million in the nine months ended June 26, 2015, as part of its share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Johnson Controls International plc kept $0.06.
- Revenue$2.49B100.0%
- Cost of revenue−$1.02B41.2%
- Gross profit$1.46B58.8%
- Operating costs−$1.21B48.7%
- Operating income$253.0M10.2%
- Interest, other & tax−$97.0M3.9%
- Net income$156.0M6.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed July 31, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $2.49B$2.66B | −6.4% |
| Cost of Revenue | $1.02B$1.10B | −7.2% |
| Gross Profit | $1.46B$1.56B | −5.9% |
| SG&A Expenses | $625.00M$671.00M | −6.9% |
| Operating Income | $253.00M$297.00M | −14.8% |
| Interest Expense | $26.00M$24.00M | +8.3% |
| Net Income | $156.00M$1.45B | −89.2% |
| EPS (Basic) | $0.37$3.17 | −88.3% |
| EPS (Diluted) | $0.37$3.11 | −88.1% |
| Shares Outstanding (Basic) | 421.00M458.00M | −8.1% |
| Shares Outstanding (Diluted) | 427.00M466.00M | −8.4% |
05—Questions
Frequently Asked Questions
What was the primary driver behind the decrease in net revenue?
The primary driver for the decrease in net revenue was the unfavorable impact of foreign currency exchange rates, which negatively affected revenue by 6.9%. Additionally, organic revenue saw a slight decline of 1.1%.
What is the company doing to address the decline in operating income?
The company is actively pursuing restructuring and repositioning actions to improve operating efficiencies and reduce costs. These initiatives, along with ongoing productivity and cost-containment efforts, are intended to mitigate the impact of revenue headwinds and improve profitability.
How did the different business segments perform?
The NA Installation & Services segment showed stable revenue and significant operating income growth. The ROW Installation & Services segment experienced a notable decline in revenue and operating income, affected by currency and industry pressures. The Global Products segment saw a slight revenue decrease in the quarter, but showed positive organic growth over the nine-month period, bolstered by acquisitions.
What is the company's stance on capital allocation and shareholder returns?
The company continues to return capital to shareholders through dividends and share repurchases. In the nine months ended June 26, 2015, the company repurchased approximately 10 million shares for $417 million and paid dividends totaling $237 million. Management believes its available cash and credit facilities are sufficient to cover operational and capital needs.
06—Continue