Summary
Johnson Controls International plc's (JCI) fiscal second-quarter 2017 results show a significant increase in net sales primarily driven by the recent merger with Tyco. While net sales saw a substantial rise, the company reported a net loss attributable to shareholders. This loss appears to be influenced by substantial merger-related costs, restructuring charges, and a notable increase in interest expenses. However, the company also generated positive cash flow from financing activities, indicating active management of its capital structure, including debt exchanges and new issuances. The company is actively managing its portfolio, as evidenced by the divestiture of the Scott Safety business and the ongoing integration of the Tyco merger. Investors should monitor the successful integration of Tyco and the impact of restructuring initiatives on future profitability and cash flows. The significant increase in goodwill from the Tyco merger also warrants attention regarding future impairment risks.
Financial Highlights
52 data points| Revenue | $5.77B |
| Cost of Revenue | $4.99B |
| Gross Profit | $2.28B |
| SG&A Expenses | $1.73B |
| Operating Income | $224.00M |
| Interest Expense | $118.00M |
| Net Income | -$148.00M |
| EPS (Basic) | $-0.16 |
| EPS (Diluted) | $-0.16 |
| Shares Outstanding (Basic) | 939.20M |
| Shares Outstanding (Diluted) | 939.20M |
Key Highlights
- 1Net sales for the three months ended March 31, 2017, increased by 54% to $7.27 billion, largely driven by the Tyco merger and increased volumes in Building Technologies & Solutions and Power Solutions.
- 2The company reported a net loss attributable to Johnson Controls of $148 million for the three months ended March 31, 2017, compared to a net loss of $530 million in the prior year period. Diluted loss per share was $(0.16) for the quarter.
- 3Operating cash flow for the six months ended March 31, 2017, was negative at $(1.54) billion, a significant decrease from the prior year's positive $621 million, impacted by higher income tax payments related to the Adient spin-off and unfavorable working capital changes.
- 4Financing activities provided $1.76 billion in cash for the six months ended March 31, 2017, driven by a dividend from the Adient spin-off and an increase in long-term debt, which helped offset the negative operating cash flow.
- 5The company recorded $177 million in restructuring and impairment costs for fiscal 2017, primarily related to workforce reductions and plant closures aimed at reducing the cost structure.
- 6Goodwill increased significantly to $19.64 billion as of March 31, 2017, from $21.02 billion as of September 30, 2016, largely due to purchase accounting for the Tyco merger.
- 7The company is proceeding with strategic divestitures, including the announced sale of its Scott Safety business to 3M for approximately $2.0 billion.