Johnson Controls Reports Record Sales and Earnings for Q1 2012; Company Full-Year Forecast Revised to 13-19% Growth
MILWAUKEE, Jan. 19, 2012 /PRNewswire/ -- For the first quarter of fiscal 2012, Johnson Controls (NYSE: JCI) reported record revenues and earnings. Highlights of the company's first quarter of 2012 include:
- Record net sales of $10.4 billion vs. $9.5 billion in Q1 2011, up 9%
- Record income from business segments of $598 million vs. $533 million, up 12%
- Record net income of $410 million or $0.60 per diluted share compared with net income of $375 million, or $0.55 per diluted share in the 2011 first quarter
"Our first quarter results were in line with the expectations we announced at the beginning of the year. The automotive and buildings markets were stable in the quarter and we benefitted from our record backlogs in both businesses," said Stephen A. Roell, Johnson Controls Chairman and Chief Executive Officer. "Automotive Experience revenues grew at a double-digit pace across all geographic regions and Building Efficiency commercial revenues and backlog were higher in a challenged global market. Power Solutions improved sales and income despite the soft demand for aftermarket batteries resulting from unseasonably warm winter temperatures globally."
Mr. Roell added, "Our growth in the first quarter is evidence of continued market share gains as we sustainably outperform our underlying industries. We took steps to improve our execution and added resources to improve quality and productivity. At the same time, we continued to invest in order to support our global growth and margin expansion opportunities."
Business results
Automotive Experience sales in the 2012 quarter increased 15% to $5.3 billion versus $4.6 billion last year due primarily to the incremental revenues associated with the 2011 acquisitions as well as launches of new automotive seating and interior programs. Revenues increased 15% in each geographic market. Automotive industry production in the quarter increased 16% in North America, declined 4% in Europe and was level with the 2011 period in Asia. Revenues in China, which are mostly generated through non-consolidated joint ventures, increased 10% to $1.1 billion. Johnson Controls has 28 joint ventures in China operating 47 manufacturing plants. It holds a 45% share of the Chinese auto seating market.
Automotive Experience reported segment income of $194 million in the current quarter, up 10% due to significant increases in Europe and Asia. European segment income benefitted from the positive impact of the 2011 acquisitions, improving to $21 million versus break-even performance last year. In Asia, the higher profitability of the company's joint ventures resulted in a segment income increase of 69%, to $103 million, compared to $61 million last year.
As previously indicated, North America first quarter earnings were negatively impacted by costs associated with a new metals plant as well as higher engineering and launch costs associated with new business wins.
The company has increased resources dedicated to improving its launch efficiencies and quality, including adding management capacity in its automotive metals business and the hiring of more than 300 Six Sigma Blackbelts and quality experts. Johnson Controls said it believes these actions will make an increasingly positive impact on earnings starting in the second half of fiscal 2012.
Building Efficiency sales in the 2012 first quarter were $3.5 billion, up 4% compared with last year, led by a 13% revenue increase in Asia and 10% increase in Global Workplace Solutions. Sales in Europe and residential HVAC declined in the quarter. First quarter backlog increased 8% to a record $5.3 billion versus $4.9 billion in the year-ago quarter, with gains in all geographic regions. Orders in the quarter were slightly up compared with last year.
Segment income of $133 million was down 4% compared with last year, consistent with the company's expectations. Higher income in North America Systems was offset by lower results in North America Service, Asia and Global Workplace Solutions. The company said the return on sales in the current quarter was depressed by unusually high profitability in Asia last year as well as increased investments in growth initiatives.
Johnson Controls said it has launched its new Panoptix offering. The Panoptix solution is an industry-first technology combining software, services and expertise to help customers optimize building performance.
Power Solutions sales in the first quarter of 2012 increased 4% to $1.6 billion due to a favorable product mix. Unit shipments were lower than expected. The company attributed the soft demand to unseasonably warm winter temperatures which negatively impacted shipments starting in December and are expected to further impact Q2 results.
Power Solutions segment income was $271 million, up 25% versus $217 million in the first quarter of 2011 as a result of a favorable product mix, the benefits of increased vertical integration and a non-recurring equity income benefit. The increases were partially offset by costs associated with the shutdown of the company's Shanghai battery plant and the incremental costs associated with the consolidation of its hybrid battery joint venture.
Johnson Controls said that the construction of its recycling facility in South Carolina and of its third Chinese battery plant are proceeding on schedule. Demand continues to grow as expected for the company's higher-margin AGM lead-acid batteries and plans to increase capacity are is progressing as expected.
Revised sales, earnings guidance for 2012
Johnson Controls today announced it was lowering its earnings expectations for fiscal 2012 to due to several factors:
- Euro assumption lowered to $1.30 from original forecast of $1.35
- Lower automotive production in Europe (now 19.6 million units, down 3.5% versus original assumption of 20.1 million, up 1.5%)
- Weather-related softness in Q2 aftermarket battery demand
- Assumes indefinite shut-down of Shanghai, China battery plant (discussions with the Chinese government are continuing)
- Automotive North America metals start-up costs impact extending into Q2
- Lower residential HVAC demand
As a result of these changes, the company said it believes its second quarter 2012 earnings will be approximately $0.52 - $0.54. For the full year, the earnings expectation is revised to a range of $2.70 - $2.85 (up 13% - 19%) versus earlier guidance of $2.85 - $3.00.
Johnson Controls said it was confident in its second half of 2012 outlook, noting that the 2011 second half earnings were significantly impacted by the Japan tsunami-related automotive disruption. In addition, the company's second half 2012 earnings will benefit from the full-year impact of the automotive acquisitions, cost reduction initiatives and investments in Power Solutions .
"While there are some short-term changes to our original 2012 expectations, our primary growth and profitability story is intact," said Mr. Roell. "We believe actions we have taken to improve our execution and profitability will provide momentum through the balance of the year and beyond. Despite the near-term challenges, we believe Johnson Controls will deliver double-digit earnings increases in 2012."
About Johnson Controls
Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 162,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. Through our growth strategies and by increasing market share we are committed to delivering value to shareholders and making our customers successful. In 2011, Corporate Responsibility Magazine recognized Johnson Controls as the #1 company in its annual "100 Best Corporate Citizens" list. For additional information, please visit http://www.johnsoncontrols.com.
Johnson Controls, Inc. has made forward-looking statements in this document pertaining to its financial results for fiscal 2012 and beyond that are based on preliminary data and are subject to risks and uncertainties. All statements, other than statements of historical fact, are statements that are, or could be, deemed "forward-looking" statements and include terms such as "outlook," "expectations," "estimates" or "forecasts." For those statements, the Company cautions that numerous important factors, such as automotive vehicle production levels, mix and schedules, energy and commodity prices, the strength of the U.S. or other economies, currency exchange rates, cancellation of or changes to commercial contracts, changes in the levels or timing of investments in commercial buildings as well as other factors discussed in Item 1A of Part I of the Company's most recent Form 10-k filing (filed November 22, 2011) could affect the Company's actual results and could cause its actual consolidated results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.
| JOHNSON CONTROLS, INC. |
||||
|
|
||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||
| (in millions, except per share data; unaudited) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|||
|
|
2011 |
|
2010 |
|
|
|
Actual |
|
Actual |
|
|
|
|
|
|
|
| Net sales |
$ 10,417 |
|
$ 9,537 |
|
| Cost of sales |
8,885 |
|
8,123 |
|
|
|
Gross profit |
1,532 |
|
1,414 |
|
|
|
|
|
|
| Selling, general and administrative expenses |
(1,054) |
|
(947) |
|
| Net financing charges |
(49) |
|
(35) |
|
| Equity income |
120 |
|
66 |
|
|
|
|
|
|
|
| Income before income taxes |
549 |
|
498 |
|
|
|
|
|
|
|
| Provision for income taxes |
104 |
|
95 |
|
|
|
|
|
|
|
| Net income |
445 |
|
403 |
|
|
|
|
|
|
|
| Less: income attributable to noncontrolling interests |
35 |
|
28 |
|
|
|
|
|
|
|
| Net income attributable to JCI |
$ 410 |
|
$ 375 |
|
|
|
|
|
|
|
| Diluted earnings per share |
$ 0.60 |
|
$ 0.55 |
|
|
|
|
|
|
|
| Diluted weighted average shares |
689 |
|
688 |
|
| Shares outstanding at period end |
680 |
|
677 |
|
| JOHNSON CONTROLS, INC. |
||||||
|
|
|
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
||||||
| (in millions; unaudited) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
2011 |
|
2011 |
|
2010 |
| ASSETS |
|
|
|
|
|
|
| Cash and cash equivalents |
$ 241 |
|
$ 257 |
|
$ 321 |
|
| Accounts receivable - net |
6,888 |
|
7,151 |
|
6,142 |
|
| Inventories |
2,283 |
|
2,316 |
|
1,939 |
|
| Other current assets |
2,425 |
|
2,291 |
|
2,313 |
|
|
|
Current assets |
11,837 |
|
12,015 |
|
10,715 |
|
|
|
|
|
|
|
|
| Property, plant and equipment - net |
5,743 |
|
5,616 |
|
4,215 |
|
| Goodwill |
|
6,955 |
|
7,016 |
|
6,523 |
| Other intangible assets - net |
941 |
|
945 |
|
751 |
|
| Investments in partially-owned affiliates |
896 |
|
811 |
|
766 |
|
| Other noncurrent assets |
3,311 |
|
3,273 |
|
3,023 |
|
|
|
Total assets |
$ 29,683 |
|
$ 29,676 |
|
$ 25,993 |
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
| Short-term debt and current portion of long-term debt |
$ 457 |
|
$ 613 |
|
$ 850 |
|
| Accounts payable and accrued expenses |
6,859 |
|
7,474 |
|
6,296 |
|
| Other current liabilities |
2,787 |
|
2,695 |
|
2,643 |
|
|
|
Current liabilities |
10,103 |
|
10,782 |
|
9,789 |
|
|
|
|
|
|
|
|
| Long-term debt |
5,526 |
|
4,533 |
|
2,684 |
|
| Other noncurrent liabilities |
2,494 |
|
2,921 |
|
2,768 |
|
| Redeemable noncontrolling interests |
282 |
|
260 |
|
204 |
|
| Shareholders' equity attributable to JCI |
11,137 |
|
11,042 |
|
10,431 |
|
| Noncontrolling interests |
141 |
|
138 |
|
117 |
|
|
|
Total liabilities and equity |
$ 29,683 |
|
$ 29,676 |
|
$ 25,993 |
| JOHNSON CONTROLS, INC. |
||||||||
|
|
|
|
|
|
|
|
|
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
| (in millions; unaudited) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
||
|
|
|
|
|
|
|
2011 |
|
2010 |
| Operating Activities |
|
|
|
|||||
| Net income attributable to JCI |
$ 410 |
|
$ 375 |
|||||
| Income attributable to noncontrolling interests |
35 |
|
28 |
|||||
|
|
|
|
|
|
|
|
|
|
| Net income |
445 |
|
403 |
|||||
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to cash provided (used) by operating activities: |
|
|
|
|||||
|
|
|
Depreciation and amortization |
196 |
|
169 |
|||
|
|
|
Equity in earnings of partially-owned affiliates, net of dividends received |
(102) |
|
(22) |
|||
|
|
|
Deferred income taxes |
60 |
|
- |
|||
|
|
|
Other |
37 |
|
18 |
|||
|
|
|
Changes in assets and liabilities, excluding acquisitions: |
|
|
|
|||
|
|
|
|
|
Accounts receivable |
206 |
|
47 |
|
|
|
|
|
|
Inventories |
5 |
|
(99) |
|
|
|
|
|
|
Restructuring reserves |
(10) |
|
(30) |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
(636) |
|
(280) |
|
|
|
|
|
|
Other assets and liabilities |
(298) |
|
(113) |
|
|
|
|
|
|
|
Cash provided (used) by operating activities |
(97) |
|
93 |
|
|
|
|
|
|
|
|
|
|
| Investing Activities |
|
|
|
|||||
| Capital expenditures |
(538) |
|
(260) |
|||||
| Sale of property, plant and equipment |
3 |
|
11 |
|||||
| Acquisition of businesses, net of cash acquired |
(11) |
|
(95) |
|||||
| Other - net |
(85) |
|
(12) |
|||||
|
|
|
|
|
|
Cash used by investing activities |
(631) |
|
(356) |
|
|
|
|
|
|
|
|
|
|
| Financing Activities |
|
|
|
|||||
| Increase in short and long-term debt - net |
808 |
|
13 |
|||||
| Payment of cash dividends |
(109) |
|
(87) |
|||||
| Other - net |
(18) |
|
80 |
|||||
|
|
|
|
|
|
Cash provided by financing activities |
681 |
|
6 |
| Effect of exchange rate changes on cash and cash equivalents |
31 |
|
18 |
|||||
| Decrease in cash and cash equivalents |
$ (16) |
|
$ (239) |
|||||
| FOOTNOTES |
|||||
|
|
|
|
|
|
|
| 1. Business Unit Summary |
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
December 31, |
||||
| (in millions) |
(unaudited) |
||||
|
|
2011 |
|
2010 |
|
% |
| Net Sales |
|
|
|
|
|
| Building efficiency |
$ 3,542 |
|
$3,397 |
|
4% |
| Automotive experience |
5,261 |
|
4,585 |
|
15% |
| Power solutions |
1,614 |
|
1,555 |
|
4% |
| Net Sales |
$10,417 |
|
$9,537 |
|
|
|
|
|
|
|
|
|
| Segment Income(1) |
|
|
|
|
|
| Building efficiency |
$ 133 |
|
$ 139 |
|
-4% |
| Automotive experience |
194 |
|
177 |
|
10% |
| Power solutions |
271 |
|
217 |
|
25% |
| Segment Income |
$ 598 |
|
$ 533 |
|
|
|
|
|
|
|
|
|
| Net financing charges |
(49) |
|
(35) |
|
|
| Restructuring costs |
- |
|
- |
|
|
| Income before income taxes |
$ 549 |
|
$ 498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Sales |
|
|
|
|
|
| Products and systems |
$ 8,334 |
|
$7,595 |
|
10% |
| Services |
2,083 |
|
1,942 |
|
7% |
|
|
$10,417 |
|
$9,537 |
|
|
|
|
|
|
|
|
|
| Cost of Sales |
|
|
|
|
|
| Products and systems |
$ 7,162 |
|
$6,528 |
|
10% |
| Services |
1,723 |
|
1,595 |
|
8% |
|
|
$ 8,885 |
|
$8,123 |
|
|
|
|
|
|
|
|
|
|
(1) Management evaluates the performance of the segments based primarily on segment income, which represents income from continuing operations before income taxes and noncontrolling interests, excluding net financing charges.
Building efficiency - Provides facility systems and services including comfort, energy and security management for the non-residential buildings market and provides heating, ventilating, and air conditioning products and services for the residential and non-residential building markets.
Automotive experience - Designs and manufactures interior systems and products for passenger cars and light trucks, including vans, pick-up trucks and sport/crossover utility vehicles.
Power solutions - Services both automotive original equipment manufacturers and the battery aftermarket by providing advanced battery technology, coupled with systems engineering, marketing and service expertise.
|
|||||
|
|
|
|
|
|
|
|
2. Income Taxes The effective tax rate for the first quarter of fiscal 2012 and fiscal 2011 is 19 percent.
|
|||||
|
|
|||||
|
3. Debt and Financing Arrangements In the first quarter of fiscal 2012, the Company issued $400 million aggregate principal amount of 2.6% senior unsecured fixed rate notes due in fiscal 2017, $450 million aggregate principal amount of 3.75% senior unsecured fixed rate notes due in fiscal 2022, and $250 million aggregate principal amount of 5.25% senior unsecured fixed rate notes due in fiscal 2042. Aggregate net proceeds of $1.1 billion from the issues were used for general corporate purposes including the retirement of short-term debt. |
|||||
|
|
|
|
|
|
|
|
4. Earnings per Share The following table reconciles the numerators and denominators used to calculate basic and diluted earning per share (in millions):
|
|||||
|
|
Three Months Ended |
|
|
||
|
|
December 31, |
|
|
||
|
|
2011 |
|
2010 |
|
|
|
|
(unaudited) |
|
|
||
| Income Available to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
| Basic income available to common |
|
|
|
|
|
| shareholders |
$ 410 |
|
$ 375 |
|
|
|
|
|
|
|
|
|
| Interest expense, net of tax |
1 |
|
1 |
|
|
|
|
|
|
|
|
|
| Diluted income available to common |
|
|
|
|
|
| shareholders |
$ 411 |
|
$ 376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted Average Shares Outstanding |
|
|
|
|
|
| Basic weighted average shares outstanding |
679.8 |
|
675.4 |
|
|
| Effect of dilutive securities: |
|
|
|
|
|
| Stock options |
5.6 |
|
7.9 |
|
|
| Convertible senior notes |
- |
|
- |
|
|
| Equity units |
3.7 |
|
4.5 |
|
|
| Diluted weighted average shares outstanding |
689.1 |
|
687.8 |
|
|
|
|
|
|
|
|
|
SOURCE Johnson Controls
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article