Last updated on April 23, 2014 at 21:24 EDT

Johnson Controls Reports First Quarter Fiscal 2013 Financial Results

January 18, 2013

MILWAUKEE, Jan. 18, 2013 /PRNewswire/ — Johnson Controls (NYSE: JCI) today reported its financial results for the first quarter of fiscal 2013. Highlights include:

  • Net sales of $10.4 billion, level with the 2012 first quarter.
  • Income from business segments of $541 million vs. $621 million, down 13 percent.
  • Net income of $354 million, or $0.52 per diluted share, compared with net income of $424 million, or $0.62 per diluted share in the 2012 first quarter.

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“Our first quarter results were in-line with the expectations we announced during our earnings release last October. Global demand in our markets was softer than a year ago, but we benefitted from the strong backlog of business we had entering the fiscal year,” said Stephen A. Roell, chairman and chief executive officer of Johnson Controls. “European demand continued to soften and we began restructuring initiatives in the third and fourth quarters of fiscal 2012 to improve our performance in the region. We expect to realize the benefits of those actions in the second half of the year.”

Business results

Building Efficiency sales in the fiscal first quarter of 2013 were $3.5 billion, comparable to the 2012 first quarter as higher sales in Asia and Global Workplace Solutions were offset by lower demand in Europe and North America. Backlog was level compared to the first quarter of last year at $5.1 billion, with higher demand in Asia offset by softness in North America. Orders were lower, with a double-digit increase in China more than offset by other geographic regions.

Segment income of $172 million was up 19 percent compared with last year, consistent with the company’s expectations, as the company continued to implement cost reduction and pricing initiatives.

Automotive Experience revenues in the fiscal first quarter of 2013 were $5.2 billion, comparable to the 2012 quarter, as higher automotive production in North America and Asia was offset by lower production in Europe. Automotive industry production in the quarter increased 11 percent in North America and 3 percent in Asia versus a decline of 9 percent in Europe. Seating and Interiors sales were equal to last year while Electronics revenues declined due to lower auto production rates in Europe where the company has a higher level of electronics content. Revenues in China, which are primarily related to seating and generated through non-consolidated joint ventures, increased 21 percent to $1.4 billion. Johnson Controls has 29 joint ventures in China operating 56 manufacturing plants and expects to open 10 additional facilities in the next 18 months.

Automotive Experience segment income was $101 million, 50 percent lower than in the first quarter of 2012. The decrease was a result of improvements in North America being more than offset by higher engineering and product development costs, the impact of lower volumes in Europe, as well as operational inefficiencies the company is taking steps to address. Profitability improved in the Interiors segment as a result of the company’s cost reduction initiatives.

At its North American auto show exhibit in Detroit this week, Johnson Controls showcased more than 30 innovative seating, interior and electronics technologies designed to help automakers differentiate future vehicle models.

Power Solutions sales in the first quarter of 2013 increased 4 percent to $1.7 billion led by a double-digit increase in unit shipments in Asia as well as higher demand in Europe. Original equipment battery shipments in North America were higher year-over-year, while aftermarket unit shipments were lower. Power Solutions segment income was $268 million, down 3 percent versus $275 million in the first quarter of 2012.

The company said that the ramp up of its recycling facility in South Carolina and construction of its second Chinese battery plant are proceeding on schedule. At the North American auto show, Johnson Controls introduced a unique lithium ion / lead acid battery module for the micro-hybrid vehicles that automakers are expected to launch later in the decade.

2013 Outlook

“Uncertainties remain in our global markets, and we expect earnings in the first half of fiscal 2013 to be significantly lower than 2012, consistent with our earlier forecast. We continue to have confidence in our full-year guidance for higher revenues and earnings in fiscal 2013,” said Mr. Roell. “The long-term growth opportunities for our businesses are intact. We believe we have the right strategies and investments in place to outperform in our industries as the markets improve.”

Johnson Controls expects earnings per share of $0.40 – $0.42 in the second quarter of fiscal 2013. The forecast reflects the current European automotive production environment and short-term delays in flexing labor in the region as well as a high level of launch activity. The company also reaffirmed its guidance for the full fiscal year.

Johnson Controls, Inc. has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “forecast,” “project” or “plan” or terms of similar meaning are also generally intended to identify forward-looking statements. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Johnson Controls’ control, that could cause Johnson Controls’ actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, availability of raw materials and component products, currency exchange rates, and cancellation of or changes to commercial contracts, as well as other factors discussed in Item 1A of Part I of Johnson Controls’ most recent Annual Report on Form 10-K for the year ended September 30, 2012 and Johnson Controls’ subsequent Quarterly Reports on Form 10-Q. Shareholders, potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are only made as of the date of this document, and Johnson Controls assumes no obligation, and disclaims any obligation, to update forward-looking statements to reflect events or circumstances occurring after the date of this document.

About Johnson Controls

Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 170,000 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 2012, Corporate Responsibility Magazine recognized Johnson Controls as the #5 company in its annual “100 Best Corporate Citizens” list. For additional information, please visit http://www.johnsoncontrols.com.

                                                        JOHNSON CONTROLS, INC.

                                              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                            (in millions, except per share data; unaudited)

                                                                     Three Months Ended
                                                                     December 31,
                                                                                     2012   2011 (Revised)
                                                                                     ----    -------------

    Net sales                                                                     $10,422                $10,417
    Cost of sales                                                                   8,914                  8,881
                                                                                    -----                  -----
                                                                                    1,508                  1,536
                                             Gross profit

    Selling, general and administrative expenses                                   (1,052)                (1,035)
    Net financing charges                                                             (61)                   (49)
    Equity income                                                                      85                    120
                                                                                      ---                    ---

    Income before income taxes                                                        480                    572

    Provision for income taxes                                                         96                    113
                                                                                      ---                    ---

    Net income                                                                        384                    459

    Less: income attributable to noncontrolling interests                              30                     35
                                                                                      ---                    ---

    Net income attributable to JCI                                                   $354                   $424
                                                                                     ====                   ====

    Diluted earnings per share                                                      $0.52                  $0.62
                                                                                    =====                  =====

    Diluted weighted average shares                                                   687                    689
                                                                                      ===                    ===
    Shares outstanding at period end                                                  684                    680
                                                                                      ===                    ===

                                                                            JOHNSON CONTROLS, INC.

                                                            CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                                           (in millions; unaudited)

                                                  December 31,                                           September 30,         December 31,
                                                                                2012                                      2012                 2011
                                                                                ----                                      ----                 ----
    Cash and cash equivalents                                                   $314                                      $265                 $241
    Accounts receivable - net                                                  7,090                                     7,308                6,888
    Inventories                                                                2,260                                     2,227                2,283
    Other current assets                                                       3,164                                     2,873                2,425
                                                                               -----                                     -----                -----
                                                                              12,828                                    12,673               11,837
                     Current assets

    Property, plant and equipment -
     net                                                                       6,553                                     6,440                5,743
    Goodwill                                                                   7,016                                     6,982                6,955
    Other intangible assets - net                                              1,031                                       947                  941
    Investments in partially-owned
     affiliates                                                                1,015                                       948                  896
    Other noncurrent assets                                                    2,809                                     2,894                3,311
                                                                               -----                                     -----                -----
                                                                             $31,252                                   $30,884              $29,683
                    Total assets

    Short-term debt and current
     portion of long-term debt                                                $1,035                                      $747                 $457
    Accounts payable and accrued
     expenses                                                                  6,811                                     7,204                6,859
    Other current liabilities                                                  2,922                                     2,904                2,787
                                                                               -----                                     -----                -----
                                                                              10,768                                    10,855               10,103
                     Current liabilities

    Long-term debt                                                             5,413                                     5,321                5,526
    Other noncurrent liabilities                                               2,776                                     2,752                2,494
    Redeemable noncontrolling
     interests                                                                   270                                       253                  282
    Shareholders' equity attributable
     to JCI                                                                   11,870                                    11,555               11,137
    Noncontrolling interests                                                     155                                       148                  141
                                                                                 ---                                       ---                  ---
                                                                             $31,252                                   $30,884              $29,683
                     Total liabilities and equity
                                                                            JOHNSON CONTROLS, INC.

                                                                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                           (in millions; unaudited)

                                                                                 Three Months Ended December 31,
                                                                                                                 2012              2011 (Revised)
                                                                                                                 ----              -------------
    Operating Activities
    Net income attributable to JCI                                                                               $354                             $424
    Income attributable to noncontrolling interests                                                                30                               35
                                                                                                                  ---                              ---

    Net income                                                                                                    384                              459

    Adjustments to reconcile net income to cash
     provided (used) by operating activities:
                      Depreciation and
                      amortization               223                                                                    196
                      health and other
                      benefit expense             (16)                                                                     7
                      health and other
                      contributions              (16)                                                                  (342)
                      Equity in earnings
                      of partially-
                      owned affiliates,
                      net of dividends
                      received                   (48)                                                                  (102)
                      Deferred income
                      taxes                       (8)                                                                    69
                     Other                        13                                                                     18
                      Changes in assets
                      and liabilities,
                      acquisitions and
                                        receivable                          241                                               206
                                       Inventories                          (20)                                                5
                                        reserves                            (34)                                              (10)
                                        payable and
                                        liabilities                        (167)                                             (305)
                                        Change in
                                        other assets
                                        liabilities                        (254)                                             (298)
                                                                           ----                                              ----
                                                       Cash provided (used) by
                                                       operating activities                                       298                              (97)
                                                                                                                  ---                              ---

    Investing Activities
    Capital expenditures                                                                                         (371)                            (538)
    Sale of property, plant and equipment                                                                          17                                3
    Acquisition of businesses, net of cash acquired                                                                 -                              (11)
    Other                                                                                                         (11)                             (85)
                                                       Cash used by investing
                                                       activities                                                (365)                            (631)
                                                                                                                 ----                             ----

    Financing Activities
    Increase in short and long-term debt - net                                                                    373                              808
    Payment of cash dividends                                                                                    (253)                            (109)
    Other                                                                                                          35                              (18)
                                                                                                                  ---                              ---
                                                       Cash provided by
                                                       financing activities                                       155                              681
                                                                                                                  ---                              ---
    Effect of exchange rate changes on cash and cash
     equivalents                                                                                                  (39)                              31
                                                                                                                  ---                              ---
    Increase (decrease) in cash and cash equivalents                                                              $49                             $(16)
                                                                                                                  ===                             ====
    1. Business Unit Summary

    In the fourth quarter of fiscal 2012, the Company changed its method of accounting for pension and
     postretirement benefits which required retrospective application to prior year financial statements. As a
     result of this accounting change, the segment income amounts shown below reflect a pension and
     postretirement expense reduction of $23 million ($0.03) for the fiscal 2012 first quarter.

                                            Three Months Ended
                                               December 31,
    (in millions)                               (unaudited)
                                                 2012                    2011 (Revised)                         %
                                                 ----                     -------------                        ---
    Net Sales
    Building Efficiency                        $3,532                                  $3,542                        0%
     Experience                                 5,214                                   5,261                       -1%
    Power Solutions                             1,676                                   1,614                        4%
                   Net Sales                  $10,422                                 $10,417
                                              =======                                 =======

    Segment Income(1)
    Building Efficiency                          $172                                    $145                       19%
     Experience                                   101                                     201                      -50%
    Power Solutions                               268                                     275                       -3%
                   Segment Income                $541                                    $621
                                                 ====                                    ====

    Restructuring costs                  $          -                   $                   -
     charge for pension
     and postretirement
     plans                                          -                                       -
    Net financing
     charges                                      (61)                                    (49)
    Income before income
     taxes                                       $480                                    $572
                                                 ====                                    ====

    Net Sales
    Products and systems                       $8,357                                  $8,334                        0%
    Services                                    2,065                                   2,083                       -1%
                                              $10,422                                 $10,417
                                              =======                                 =======

    Cost of Sales
    Products and systems                       $7,215                                  $7,159                        1%
    Services                                    1,699                                   1,722                       -1%
                                               $8,914                                  $8,881
                                               ======                                  ======

    (1) Management evaluates the performance of the business units based
     primarily on segment income, which represents income from continuing
     operations before income taxes and noncontrolling interests,
     excluding net financing charges, significant restructuring costs,
     and the net mark-to-market adjustments related to pension and
     postretirement plans.

    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 2013 and
     fiscal 2012 is 20 percent.

    3. Earnings Per Share

                                           Three Months Ended
                                             December 31,
                                                2012                     2011 (Revised)
                                                ----                     -------------
    Income Available to Common

    Basic income available to
    shareholders                                $354                                     $424

     tax                                           -                                        1

    Diluted income available to
    shareholders                                $354                                     $425
                                                ====                                     ====

    Weighted Average Shares
     outstanding                               683.1                                    679.8
    Effect of dilutive
          options                                3.6                                      5.6
          units                                    -                                      3.7
     outstanding                               686.7                                    689.1
                                               =====                                    =====


Glen L. Ponczak (Investors)
(414) 524-2375

David L. Urban (Investors)
(414) 524-2838

Fraser Engerman (Media)
(414) 524-2733

SOURCE Johnson Controls, Inc.

Source: PR Newswire