10-QPeriod: Q3 FY2021

Johnson Controls International plc Quarterly Report for Q3 Ended Jun 30, 2021

Filed July 30, 2021For Securities:JCI

Summary

Johnson Controls International plc reported a strong third quarter for fiscal year 2021, with net sales increasing by 19% to $6.3 billion compared to the prior year. This growth was driven by higher organic sales across all segments, particularly in Global Products and Building Solutions EMEA/LA, reflecting a recovery in demand post-COVID-19. Net income attributable to Johnson Controls significantly improved, reaching $574 million, a substantial turnaround from a net loss of $182 million in the same period last year. This improvement was largely due to lower restructuring and impairment costs, coupled with robust gross profit growth. Operationally, the company demonstrated solid execution, with segment EBITA increasing by 22% year-over-year. Cash flow from operating activities of continuing operations for the nine-month period saw a healthy increase, reflecting effective working capital management. The company also continued its strategic capital allocation by repurchasing shares, demonstrating confidence in its financial position and future prospects. However, investors should note the ongoing risks related to supply chain disruptions, input cost inflation, and potential environmental liabilities, particularly concerning PFAS, which require ongoing monitoring.

Financial Highlights

51 data points
Beta

Revenue

$6.34B

34.6% Gross Margin

Net Income

$574.00M

9.1% Net Margin

EPS (Diluted)

$0.80

Total Assets

$42.13B

Cash & Equivalents

$1.45B

Free Cash Flow

$862.00M

Financial Statements
Beta
Revenue$6.34B
Cost of Revenue$4.14B
Gross Profit$2.20B
SG&A Expenses$1.37B
Operating Income$1.24B
Interest Expense$55.00M
Net Income$574.00M
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)714.50M
Shares Outstanding (Diluted)719.70M

Key Highlights

  • 1Net sales increased 19% to $6.3 billion in Q3 FY2021 compared to Q3 FY2020, driven by strong organic sales growth and recovery post-COVID-19.
  • 2Net income attributable to Johnson Controls swung to a profit of $574 million from a loss of $182 million in the prior year's quarter.
  • 3Segment EBITA increased by 22% to $1.02 billion, showcasing improved profitability across all business segments.
  • 4Cash provided by operating activities from continuing operations for the nine months ended June 30, 2021, was $2.02 billion, up from $1.50 billion in the prior year.
  • 5The company acquired Silent-Aire for approximately $751 million in May 2021, adding goodwill of $235 million to the Global Products segment.
  • 6Effective tax rate for continuing operations for the nine months ended June 30, 2021, was 21%, impacted by valuation allowance adjustments and mark-to-market effects.
  • 7The company maintained a strong liquidity position with $1.5 billion in cash and cash equivalents as of June 30, 2021.

Frequently Asked Questions

The primary driver of Johnson Controls' revenue growth in the third quarter of fiscal year 2021 was higher organic sales, which increased by $803 million compared to the prior year. This growth was attributed to increased demand as markets recovered from the COVID-19 pandemic, particularly in the Global Products and Building Solutions segments.

Profitability significantly improved. Net income attributable to Johnson Controls turned positive, reaching $574 million, a substantial increase from the net loss of $182 million reported in the same period of the prior year. This improvement was mainly due to a significant reduction in restructuring and impairment costs and higher gross profits.

Johnson Controls continues to make strategic acquisitions and divestitures. Notably, they acquired Silent-Aire for approximately $751 million in May 2021 to bolster their data center cooling solutions. During the first nine months of fiscal 2021, the company also completed other smaller acquisitions and divestitures, primarily within the Building Solutions Asia Pacific segment.

Johnson Controls faces several ongoing risks and contingencies. These include potential environmental liabilities, particularly related to PFAS contamination from firefighting foams at the Tyco Fire Products facility, and numerous lawsuits concerning AFFF (Aqueous Film-Forming Foam) products. The company also notes potential risks related to supply chain disruptions, input cost inflation, and the ongoing impact of the COVID-19 pandemic.