01—Abstract
Summary
Summary of the 10-Q filed August 6, 2025. Cited figures are marked; the original filing is the authoritative source.
Johnson Controls International plc (JCI) reported its third-quarter fiscal year 2025 results, demonstrating a 3% increase in net sales to $6.1 billiona year-over-year, driven by organic growth and favorable foreign currency translation.
The company successfully completed the divestiture of its Residential and Light Commercial (R&LC) HVAC business for approximately $5.0 billionb, a strategic move intended to focus on its core building solutions. Despite a year-over-year decrease in net income attributable to Johnson Controls to $701 million from $975 million, primarily impacted by the prior year's water systems AFFF insurance recoveries and earn-out adjustments, the company maintained a strong gross profit margin of 37.1%, up from 35.8% in the prior year quarter.
Management highlighted improved backlog and order trends, particularly in the Americas segment, and reaffirmed its commitment to capital return to shareholders through an accelerated share repurchase program funded by the recent divestiture. The company's liquidity remains robust, and it is in compliance with its financial covenants, positioning it to navigate ongoing macroeconomic uncertainties and pursue its strategic growth initiatives in smart, safe, healthy, and sustainable buildings.
02—Key points
Key Highlights
- Net sales increased by 3% to $6.1 billion for the three months ended June 30, 2025, compared to the prior year quarter, driven by organic growth and favorable foreign currency translation.
- The company completed the divestiture of its Residential and Light Commercial (R&LC) HVAC business on July 31, 2025, for net cash proceeds of approximately $5.0 billion, a strategic step to focus on core commercial building solutions.
- Gross profit margin improved to 37.1% from 35.8% in the prior year quarter, reflecting margin improvements from higher-margin backlog conversion and optimized service mix.
- Net income attributable to Johnson Controls decreased to $701 million from $975 million year-over-year, largely due to the absence of prior year benefits related to water systems AFFF insurance recoveries and earn-out adjustments.
- The company announced a $9.0 billion increase to its share repurchase authorization and plans to initiate a $5.0 billion accelerated share repurchase program funded by the R&LC HVAC divestiture proceeds.
- Backlog and orders showed positive trends, with total backlog at $16.2 billion and orders up 2% year-over-year, excluding divestitures and foreign currency impacts, indicating strong future demand, especially in the Americas.
- The company reaffirmed its commitment to sustainability and growth in smart, safe, healthy, and sustainable building solutions, leveraging its digital capabilities and outcome-based service offerings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Johnson Controls International plc kept $0.12.
- Revenue$6.05B100.0%
- Cost of revenue−$3.81B62.9%
- Gross profit$2.25B37.1%
- Operating costs−$792.0M13.1%
- Operating income$1.45B24.0%
- Interest, other & tax−$753.0M12.4%
- Net income$701.0M11.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed August 6, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $6.05B$5.90B | +2.6% |
| Cost of Revenue | $3.81B$3.79B | +0.4% |
| Gross Profit | $2.25B$2.11B | +6.5% |
| SG&A Expenses | $1.42B$895.00M | +58.3% |
| Operating Income | $1.45B$871.00M | +66.9% |
| Net Income | $701.00M$975.00M | −28.1% |
| EPS (Basic) | $1.07$1.45 | −26.2% |
| EPS (Diluted) | $1.07$1.45 | −26.2% |
| Shares Outstanding (Basic) | 655.40M670.30M | −2.2% |
| Shares Outstanding (Diluted) | 657.40M672.80M | −2.3% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net income attributable to Johnson Controls this quarter?
The primary driver for the decrease in net income attributable to Johnson Controls to $701 million from $975 million in the prior year quarter was the absence of significant one-time benefits experienced in the prior year, specifically from water systems AFFF insurance recoveries and earn-out adjustments. Excluding these items, the operational performance remained strong.
How will the proceeds from the R&LC HVAC divestiture be utilized?
Johnson Controls completed the divestiture of its R&LC HVAC business for approximately $5.0 billion. The company plans to return a significant portion of these proceeds to shareholders through a $5.0 billion accelerated share repurchase program, reflecting its commitment to capital allocation and shareholder returns.
What is the outlook for future sales based on the company's backlog and orders?
The company reported a strong backlog of $16.2 billion and a 2% year-over-year increase in orders (excluding divestitures and foreign currency impacts) as of June 30, 2025. This indicates robust customer demand and provides a positive outlook for future revenue conversion, particularly in the Americas segment, which showed strong growth in backlog.
What strategic impact does the divestiture of the R&LC HVAC business have on Johnson Controls?
The divestiture of the R&LC HVAC business is a strategic move to focus Johnson Controls on its core commercial building solutions. This allows the company to streamline its operations, accelerate growth in its target markets, and enhance its position as a pure-play provider of comprehensive solutions for smart, safe, healthy, and sustainable buildings.
06—Continue