Johnson Controls Reports First Quarter Fiscal 2013 Financial Results
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.
FORWARD-LOOKING STATEMENTS
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
---- ---- ----
ASSETS
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
LIABILITIES AND EQUITY
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
Pension,
postretirement
health and other
benefit expense (16) 7
Pension,
postretirement
health and other
benefit
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,
excluding
acquisitions and
divestitures:
Accounts
receivable 241 206
Inventories (20) 5
Restructuring
reserves (34) (10)
Accounts
payable and
accrued
liabilities (167) (305)
Change in
other assets
and
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)
=== ====
FOOTNOTES
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%
Automotive
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%
Automotive
Experience 101 201 -50%
Power Solutions 268 275 -3%
Segment Income $541 $621
==== ====
Restructuring costs $ - $ -
Mark-to-market
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)
---- -------------
(unaudited)
Income Available to Common
Shareholders
Basic income available to
common
shareholders $354 $424
Interest
expense,
net
of
tax - 1
Diluted income available to
common
shareholders $354 $425
==== ====
Weighted Average Shares
Outstanding
Basic
weighted
average
shares
outstanding 683.1 679.8
Effect of dilutive
securities:
Stock
options 3.6 5.6
Equity
units - 3.7
Diluted
weighted
average
shares
outstanding 686.7 689.1
===== =====
CONTACT:
Glen L. Ponczak (Investors)
(414) 524-2375
David L. Urban (Investors)
(414) 524-2838
Fraser Engerman (Media)
(414) 524-2733
SOURCE Johnson Controls, Inc.
