01—Abstract
Summary
Summary of the 10-Q filed January 29, 2021. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 billionb provide a foundation for continued performance and value creation for shareholders.
02—Key points
Key Highlights
- Net income attributable to Johnson Controls increased significantly by 184% to $451 million, compared to $159 million in the prior year quarter.
- Diluted earnings per share (EPS) rose to $0.62 from $0.21 in the year-ago period.
- Total net sales decreased by 4% to $5.34 billion, primarily attributed to lower organic sales and divestitures, largely impacted by the COVID-19 pandemic.
- Selling, 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.
- The company recorded income from discontinued operations of $124 million, a significant positive contributor compared to no income from discontinued operations in the prior year.
- Cash provided by operating activities from continuing operations remained strong at $515 million, slightly up from $511 million in the prior year.
- The company's backlog was $9.8 billion at December 31, 2020, indicating a solid pipeline of future revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2021, Johnson Controls International plc kept $0.08.
- Revenue$5.34B100.0%
- Cost of revenue−$3.61B67.6%
- Gross profit$1.73B32.4%
- Operating costs−$1.40B26.2%
- Operating income$327.0M6.1%
- Interest, other & tax$124.0M2.3%
- Net income$451.0M8.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2021filed January 29, 2021Financial Statements
Q1 FY2021 against Q1 FY2020
| Line item | Q1 FY2021Q1 FY2020 | Change |
|---|---|---|
| Revenue | $5.34B$5.58B | −4.2% |
| Cost of Revenue | $3.61B$3.77B | −4.2% |
| Gross Profit | $1.73B$1.80B | −4.2% |
| SG&A Expenses | $1.29B$1.43B | −9.3% |
| Operating Income | $327.00M$159.00M | +105.7% |
| Interest Expense | $59.00M$62.00M | −4.8% |
| Net Income | $451.00M$159.00M | +183.6% |
| EPS (Basic) | $0.62$0.21 | +195.2% |
| EPS (Diluted) | $0.62$0.21 | +195.2% |
| Shares Outstanding (Basic) | 723.10M769.90M | −6.1% |
| Shares Outstanding (Diluted) | 726.50M774.00M | −6.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of the significant increase in net income for Johnson Controls in this quarter?
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.
How did the COVID-19 pandemic affect Johnson Controls' financial performance in this quarter?
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.
What is the outlook for Johnson Controls given its current backlog and remaining performance obligations?
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.
How is Johnson Controls managing its debt and liquidity?
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.
06—Continue