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Johnson Controls (JCI) Q3 Earnings Top, Revenues Lag Estimates

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Johnson Controls International plc (JCI - Free Report) reported third-quarter fiscal 2024 (ended June 2024) adjusted earnings of $1.14 per share, which beat the Zacks Consensus Estimate of $1.08. The bottom line increased 11% year over year.

Total revenues of $7.2 billion missed the consensus estimate of $7.4 billion. The top line increased 1% year over year while organic revenues inched up 3%.

Segmental Results

Building Solutions North America: Revenues were $2.9 billion, up 9% year over year. Our estimate was $2.9 billion. Organic sales jumped 8%, driven by the strong performance of applied heating, ventilation and air conditioning (“HVAC”) & controls business.  EBITA increased 35% year over year to $521 million.

Building Solutions Europe, Middle East, Africa/Latin America: Revenues totaled $1.08 billion, up 3% year over year. Our estimate was $1.1 billion. Organic sales climbed 8% due to growth in service business. EBITA was $111 million, up 23% year over year.

Building Solutions Asia Pacific: Revenues decreased 22% to $575 million. Our estimate was $690.7 million. Sales declined 19% organically due to weakness in the systems business in China. EBITA was $67 million, down 34% year over year.

Global Products: The segment reported revenues of $2.7 billion, flat year over year. Our estimate was $2.7 billion. Organic sales were up 3% due to an increase in the commercial and residential HVAC businesses. EBITA was $655 million, up 10% year over year.

Margin Profile

In the fiscal third quarter, Johnson Controls’ cost of sales increased approximately 1% year over year to $4.7 billion. Gross profit increased 2% year over year to $2.5 billion and the margin increased 30 basis points (bps) to 34.4%. Selling, general and administrative expenses were $1.5 billion, down 2% year over year.

Financial Position

Johnson Controls had cash and cash equivalents of $862 million as of Jun 30, 2024, compared with $835 million at the end of fiscal 2023. Long-term debt was $7.9 billion compared with $7.82 billion at the end of fiscal 2023.

In the first nine months of fiscal 2024, the company generated net cash of $572 million from operating activities compared with $831 million generated in the year-ago period. It reported a free cash flow of $248 million in the first nine months of the fiscal year compared with $465 million in the year-ago period.

The company repurchased 6 million shares for approximately $402 million in the fiscal third quarter.

Q4 Guidance

Johnson Controls anticipates organic revenue growth to be approximately 7% from the year-ago level. Adjusted segment EBITA margin is estimated to be approximately 19%. JCI expects adjusted earnings to be in the range of $1.23-$1.26 per share.

FY24 Guidance

Johnson Controls anticipates organic revenue growth to be approximately 3% from the prior-year level. Adjusted segment EBITA margin is expected to improve approximately 110 bps from the year-ago actual. JCI expects adjusted earnings to be in the range of $3.66-$3.69 per share. The Zacks Consensus Estimate for adjusted earnings is pegged at $3.58 per share.

Zacks Rank

The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Industrial Companies

Pentair plc (PNR - Free Report) reported second-quarter adjusted earnings per share of $1.22, which beat the Zacks Consensus Estimate of $1.15. The reported figure also improved 18% from the year-ago quarter.

Net sales rose 1.6% year over year to $1.1 billion. PNR’s top line outpaced the Zacks Consensus Estimate of $1.09 billion. 

Crown Holdings, Inc. (CCK - Free Report) reported second-quarter adjusted earnings per share of $1.81, which beat the Zacks Consensus Estimate of $1.59. The bottom line improved 8% year over year.

Net sales totaled $3.04 billion, down 2.2% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $3.06 billion.

A. O. Smith Corporation’s (AOS - Free Report) second-quarter adjusted earnings of $1.06 per share missed the Zacks Consensus Estimate of $1.07. However, the bottom line increased 5% on a year-over-year basis.

Net sales of $1.02 billion surpassed the consensus estimate of $992 million. The top line increased 7% year over year, driven by strong demand for residential and commercial water heaters in North America.

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