10-QPeriod: Q3 FY2022

Johnson Controls International plc Quarterly Report for Q3 Ended Jun 30, 2022

Filed August 4, 2022For Securities:JCI

Summary

Johnson Controls International plc (JCI) reported its results for the third quarter and first nine months of fiscal year 2022, ending June 30, 2022. For the quarter, net sales increased by 4% to $6.614 billion, driven by higher organic sales and acquisitions, partially offset by foreign currency impacts. However, net income attributable to Johnson Controls saw a significant decrease of 34% to $379 million, or $0.55 per diluted share, compared to the prior year. This decline was attributed to increased Selling, General, and Administrative (SG&A) expenses, higher restructuring and impairment costs, and unfavorable foreign currency translation, despite a lower income tax provision. For the nine-month period, net sales rose by 8% to $18.574 billion, also benefiting from organic growth and acquisitions but impacted by foreign currency headwinds. Net income attributable to Johnson Controls declined 44% to $771 million, or $1.10 per diluted share. The company highlighted ongoing efforts to mitigate supply chain disruptions and cost inflation, which have impacted margins. Management believes the company's capital resources and liquidity are adequate to meet its projected needs.

Financial Highlights

52 data points
Beta

Revenue

$6.61B

33.3% Gross Margin

Net Income

$379.00M

5.7% Net Margin

EPS (Diluted)

$0.55

Total Assets

$42.32B

Cash & Equivalents

$1.51B

Free Cash Flow

$487.00M

Financial Statements
Beta
Revenue$6.61B
Cost of Revenue$4.41B
Gross Profit$2.20B
SG&A Expenses$1.59B
Operating Income$771.00M
Interest Expense$54.00M
Net Income$379.00M
EPS (Basic)$0.55
EPS (Diluted)$0.55
Shares Outstanding (Basic)692.20M
Shares Outstanding (Diluted)694.90M

Key Highlights

  • 1Net sales for the third quarter increased by 4% to $6.614 billion, driven by organic sales growth and acquisitions, despite unfavorable foreign currency translation.
  • 2Net income attributable to Johnson Controls decreased by 34% to $379 million for the quarter, impacted by higher SG&A expenses and restructuring costs.
  • 3Diluted EPS for the quarter was $0.55, down from $0.80 in the prior year's quarter.
  • 4For the nine-month period, net sales grew by 8% to $18.574 billion, with similar drivers as the quarterly results.
  • 5Nine-month net income attributable to Johnson Controls decreased by 44% to $771 million, with diluted EPS at $1.10.
  • 6The company is actively managing supply chain disruptions and cost inflation, which have impacted gross profit margins.
  • 7Johnson Controls has approximately $3.6 billion remaining under its share repurchase authorization as of June 30, 2022.

Frequently Asked Questions

The decrease in net income for the quarter was primarily driven by higher Selling, General, and Administrative (SG&A) expenses, increased restructuring and impairment costs, and unfavorable foreign currency translation. These factors outweighed the benefits of higher gross profit and a lower income tax provision.

Johnson Controls is implementing strategies to mitigate these challenges, including expanding and redistributing its supplier network, supplier financing, price increases, and productivity improvements. While these actions have helped offset some impacts, the company notes that supply chain inefficiencies and price/cost pressures continue to affect margins.

As of June 30, 2022, Johnson Controls had approximately $3.6 billion remaining under its share repurchase authorization. The company repurchased $392 million of its ordinary shares during the third quarter of fiscal year 2022.

Johnson Controls is involved in several significant legal and environmental matters. Notably, the company faces litigation related to PFAS contamination from firefighting foam (AFFF), environmental remediation at facilities in Wisconsin (including PFAS and arsenic), and asbestos claims. While the company is defending itself vigorously and believes it has meritorious defenses, the ultimate outcome and financial exposure for these matters remain uncertain and could potentially be material.