10-QPeriod: Q1 FY2021

Johnson Controls International plc Quarterly Report for Q1 Ended Dec 31, 2020

Filed January 29, 2021For Securities:JCI

Summary

Johnson Controls International plc (JCI) reported its fiscal first-quarter 2021 results, ending December 31, 2020. The company demonstrated a notable increase in net income attributable to shareholders, reaching $451 million, a significant jump from $159 million in the prior year period. This improvement was driven by a combination of factors, including reduced selling, general, and administrative (SG&A) expenses, a positive contribution from discontinued operations, and effective cost mitigation actions. Despite a slight decline in net sales, down 4% to $5.34 billion, primarily due to ongoing impacts of the COVID-19 pandemic on demand, the company managed to improve its profitability and operational efficiency. The company's strategic focus on buildings and its diverse portfolio of products and services, including HVAC, security, and fire systems, positions it to benefit from trends towards smarter, more energy-efficient buildings. The launch of its OpenBlue digital solutions suite further underscores its commitment to innovation and customer value. While the pandemic continues to present challenges, JCI's solid liquidity position, effective cost management, and a robust backlog of $9.8 billion provide a foundation for continued performance and value creation for shareholders.

Financial Highlights

50 data points
Beta

Revenue

$5.34B

32.4% Gross Margin

Net Income

$451.00M

8.4% Net Margin

EPS (Diluted)

$0.62

Total Assets

$41.42B

Cash & Equivalents

$1.84B

Free Cash Flow

$515.00M

Financial Statements
Beta
Revenue$5.34B
Cost of Revenue$3.61B
Gross Profit$1.73B
SG&A Expenses$1.29B
Operating Income$327.00M
Interest Expense$59.00M
Net Income$451.00M
EPS (Basic)$0.62
EPS (Diluted)$0.62
Shares Outstanding (Basic)723.10M
Shares Outstanding (Diluted)726.50M

Key Highlights

  • 1Net income attributable to Johnson Controls increased significantly by 184% to $451 million, compared to $159 million in the prior year quarter.
  • 2Diluted earnings per share (EPS) rose to $0.62 from $0.21 in the year-ago period.
  • 3Total net sales decreased by 4% to $5.34 billion, primarily attributed to lower organic sales and divestitures, largely impacted by the COVID-19 pandemic.
  • 4Selling, General, and Administrative (SG&A) expenses decreased by 9% to $1.29 billion, with SG&A as a percentage of sales improving by 140 basis points.
  • 5The company recorded income from discontinued operations of $124 million, a significant positive contributor compared to no income from discontinued operations in the prior year.
  • 6Cash provided by operating activities from continuing operations remained strong at $515 million, slightly up from $511 million in the prior year.
  • 7The company's backlog was $9.8 billion at December 31, 2020, indicating a solid pipeline of future revenue.

Frequently Asked Questions

The significant increase in net income was primarily driven by a reduction in Selling, General, and Administrative (SG&A) expenses, the inclusion of income from discontinued operations, and effective cost mitigation actions, which more than offset the impact of lower net sales.

The COVID-19 pandemic negatively impacted net sales, primarily through reduced organic sales due to lower demand and volumes. However, the company also saw opportunities to assist customers in re-opening facilities and observed increased demand for products promoting building health and efficiency. The company also implemented cost mitigation actions to offset pandemic-related impacts.

The company ended the quarter with a backlog of $9.8 billion and remaining performance obligations of $14.9 billion. This indicates a strong pipeline of future revenue, with a significant portion expected to be recognized over the next two years. This provides a degree of revenue visibility and suggests a stable outlook, though subject to broader economic conditions and ongoing pandemic impacts.

Johnson Controls maintained a solid liquidity position with $1.8 billion in cash and cash equivalents and had no draws on its $2.5 billion revolving credit facility at quarter-end. The company's net debt as a percentage of total capitalization was approximately 25.7%. Management believes its capital resources and liquidity are adequate to meet projected needs for working capital, capital expenditures, dividends, and debt maturities.