01—Abstract
Summary
Summary of the 10-Q filed February 2, 2022. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc reported its financial results for the first quarter of fiscal year 2022, ending December 31, 2021.
Net sales increased by 10% year-over-year to $5.9 billiona, driven by higher organic sales and acquisitions. Despite a revenue increase, net income attributable to Johnson Controls decreased by 16% to $381 million compared to the prior year quarter, largely due to the absence of a significant one-time gain from discontinued operations in the prior year and increased restructuring costs. Diluted earnings per share also declined to $0.54 from $0.62.
The company highlighted strong performance in its Global Products segment, which saw an 18%b increase in net sales, and continued growth in Building Solutions Asia Pacific and North America. However, the company is experiencing ongoing headwinds from supply chain disruptions and material cost inflation, which impacted gross profit margins. Management is implementing strategies to mitigate these challenges and remains focused on its strategic priorities, including digital transformation with its OpenBlue platform and driving growth in services and recurring revenue.
02—Key points
Key Highlights
- Net sales increased 10% to $5.9 billion, driven by organic growth and acquisitions, signaling continued top-line momentum.
- Net income attributable to Johnson Controls decreased 16% to $381 million, primarily due to the absence of a significant gain from discontinued operations in the prior year and increased restructuring costs.
- Diluted EPS decreased to $0.54 from $0.62 year-over-year, reflecting the lower net income.
- The Global Products segment showed robust growth with an 18% increase in net sales, indicating strong demand for its diverse product offerings.
- Gross profit margin slightly decreased by 10 basis points to 32.3% due to supply chain inefficiencies and price/cost pressures, despite higher sales volumes.
- The company continues to experience supply chain disruptions and input cost inflation, which management is actively working to mitigate.
- Johnson Controls announced a $4 billion increase to its share repurchase authorization, underscoring its commitment to returning capital to shareholders, with approximately $4.5 billion remaining as of December 31, 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2022, Johnson Controls International plc kept $0.06.
- Revenue$5.86B100.0%
- Cost of revenue−$3.97B67.7%
- Gross profit$1.89B32.3%
- Operating costs−$1.51B25.8%
- Operating income$381.0M6.5%
- Interest, other & tax$-00.0%
- Net income$381.0M6.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2022filed February 2, 2022Financial Statements
Q1 FY2022 against Q1 FY2021
| Line item | Q1 FY2022Q1 FY2021 | Change |
|---|---|---|
| Revenue | $5.86B$5.34B | +9.8% |
| Cost of Revenue | $3.97B$3.61B | +9.9% |
| Gross Profit | $1.89B$1.73B | +9.4% |
| SG&A Expenses | $1.37B$1.29B | +5.8% |
| Operating Income | $381.00M$327.00M | +16.5% |
| Interest Expense | $55.00M$59.00M | −6.8% |
| Net Income | $381.00M$451.00M | −15.5% |
| EPS (Basic) | $0.54$0.62 | −12.9% |
| EPS (Diluted) | $0.54$0.62 | −12.9% |
| Shares Outstanding (Basic) | 704.30M723.10M | −2.6% |
| Shares Outstanding (Diluted) | 709.50M726.50M | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver for the year-over-year decrease in net income?
The primary driver for the decrease in net income attributable to Johnson Controls was the absence of a $124 million gain from discontinued operations recorded in the prior year's quarter. Additionally, increased restructuring and impairment costs in the current quarter also contributed to the decline.
How is the company managing supply chain disruptions and inflation?
Johnson Controls is employing strategies such as expanding and redistributing its supplier network, supplier financing, implementing price increases, and focusing on productivity improvements to mitigate the impact of supply chain disruptions and material cost inflation. Despite these efforts, these trends continue to be a headwind.
What is the outlook for share repurchases?
The company has a significant share repurchase program in place. In March 2021, the Board approved a $4 billion increase to the authorization. As of December 31, 2021, approximately $4.5 billion remained available under this authorization, and the company intends to repurchase shares opportunistically based on market conditions and its capital needs.
How did the different business segments perform in terms of sales?
All segments reported sales growth. Global Products saw the strongest growth at 18%, followed by Building Solutions Asia Pacific (12%) and Building Solutions North America (6%). Building Solutions EMEA/LA increased by 1%.
06—Continue