10-QPeriod: Q3 FY2015

Johnson Controls International plc Quarterly Report for Q3 Ended Jun 26, 2015

Filed July 31, 2015For Securities:JCI

Summary

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 billion 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 million, 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.

Financial Highlights

52 data points
Beta

Revenue

$2.49B

58.8% Gross Margin

Net Income

$156.00M

6.3% Net Margin

EPS (Diluted)

$0.37

Total Assets

$11.72B

Cash & Equivalents

$531.00M

Free Cash Flow

$249.00M

Financial Statements
Beta
Revenue$2.49B
Cost of Revenue$1.02B
Gross Profit$1.46B
SG&A Expenses$625.00M
Operating Income$253.00M
Interest Expense$26.00M
Net Income$156.00M
EPS (Basic)$0.37
EPS (Diluted)$0.37
Shares Outstanding (Basic)421.00M
Shares Outstanding (Diluted)427.00M

Key Highlights

  • 1Net revenue for the quarter decreased by 6.4% to $2.5 billion, impacted by a 6.9% unfavorable foreign currency exchange rate effect.
  • 2Organic revenue declined by 1.1%, primarily in the Global Products and ROW Installation & Services segments.
  • 3Operating income decreased by 14.8% to $253 million, largely due to a $35 million increase in restructuring and repositioning charges.
  • 4NA Installation & Services segment showed modest net revenue growth of 0.4%, with operating income increasing by 36.8%.
  • 5ROW Installation & Services segment experienced a significant revenue decline of 15.7%, with operating income down 44.1%, impacted by currency and industry pressures.
  • 6Global Products segment saw a 2.6% revenue decrease, though organic revenue for the nine-month period grew by 4.3%, supported by acquisitions.
  • 7The company repurchased approximately 10 million shares for $417 million in the nine months ended June 26, 2015, as part of its share repurchase program.

Frequently Asked Questions

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%.

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.

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.

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.