Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - JOHNSON CONTROLS INC | c57705e8vk.htm |
| EX-99.2 - EX-99.2 - JOHNSON CONTROLS INC | c57705exv99w2.htm |
Exhibit 99.1
| News release |  |
FOR IMMEDIATE RELEASE
CONTACT:
|
Glen L. Ponczak (Investors) | April 23, 2010 | ||
| (414) 524-2375 | ||||
| Jacqueline F. Strayer (Media) | ||||
| (414) 524-3876 |
Johnson Controls Q2 2010 Revenues Increase 32% with Improved Profitability in All Three Businesses; Company Raises Earnings Forecast
MILWAUKEE, April 23, 2010 . . . For the second quarter of fiscal 2010, Johnson Controls reported a
double-digit increase in sales with each of the company’s businesses reporting higher
profitability. The company also increased its estimate for 2010 earnings.
“We are pleased with our second quarter results. Our automotive and power solutions businesses are
executing very well on the higher production levels in North America and Europe. The Building
Efficiency business has started to see signs of recovery with global orders increasing by 5% on a
year-over-year basis,” said Stephen A. Roell, Johnson Controls Chairman and Chief Executive
Officer. “Globally our markets are improving, and each of the businesses generated significant
margin improvements through our focus on cost and quality. I want to thank our employees for their
dedication and commitment to our customers.”
Highlights for the company’s second quarter of 2010 include:
| n | Net sales of $8.3 billion vs. $6.3 billion in Q2 2009, up 32% | |
| n | Income from business segments of $427 million compared with a Q2 2009 loss of $119 million | |
| n | Net income of $274 million vs. a Q2 2009 loss of $193 million | |
| n | Earnings per share of $0.40 vs. a Q2 2009 loss of $0.33 |
The 2010 quarter includes a non-cash tax charge of $18 million, or $0.03 per diluted share,
associated with the recent U.S. health care reform legislation. The 2009 quarter included
restructuring charges and other non-recurring items which negatively impacted earnings per diluted
share by $0.17.
Page 1
| News release | |
Adjusting for the non-recurring items in both periods, the company’s results were as follows:
| n | Income from business segments of $427 million compared with a Q2 2009 loss of $113 million | |
| n | Net income of $292 million vs. a Q2 2009 loss of $97 million | |
| n | Earnings per share of $0.43 vs. a Q2 2009 loss of $0.16 |
The company said it believes that using the adjusted numbers provides a more meaningful comparison
of its underlying operating performance.
Automotive Experience sales in the quarter increased 70% to $4.2 billion versus $2.4 billion last
year due primarily to higher production volumes and new program launches in all geographic regions.
North American revenues increased 85% to $1.6 billion from $0.9 billion last year, while European
sales were up 57% to $2.1 billion from $1.3 billion in the 2009 quarter. Sales in Asia increased to
$430 million from $224 million in 2009 while China revenues, which are mostly generated through
unconsolidated joint ventures, rose 91%. Johnson Controls has a 45% share of the Chinese automotive
seating market.
Automotive Experience reported segment income of $189 million in the current quarter, compared with
a loss of $269 million (excluding non-recurring items) last year due to higher volumes, operational
efficiencies and significantly higher profitability of its automotive joint ventures. The North
America segment margin of 6.7% reflects the benefits of our restructuring activities and increased
production volumes. Asia segment margin, including the non-consolidated joint ventures in China,
was also 6.7%. European segment margin was 2.4%, lower than other geographic regions due to the
magnitude of new product launches.
Automotive production levels continue to recover in both North America and Europe due to the
continued replenishment of auto dealer inventories as well as increasing consumer demand. As a
result, Johnson Controls increased its forecasts for North American and European auto production in
its 2010 fiscal year to 10.9 million units and 16.7 million units, respectively.
Power Solutions sales in the second quarter of 2010 increased 30% to $1.2 billion from $0.9 billion
last year reflecting higher aftermarket and original equipment unit shipments. Aftermarket unit
sales increased 9% due to new customers and improved markets. The company noted that incremental
volume associated with the award of all of WalMart’s automotive battery business is expected to
commence in the company’s fourth fiscal quarter. Higher global automotive production and
incremental volume from new customers resulted in a 44% increase in original equipment battery
sales.
Power Solutions segment income was $134 million versus $66 million in the second quarter of 2009.
The higher 2010 income is the result of the higher volumes as well as improved capacity utilization
associated with the completion of restructuring activities.
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| News release | |
The company is accelerating investments to expand lead acid battery production capacity in China.
Due to rapid market expansion and share gains in the aftermarket sector, the company’s power
business in China has the potential to be the size of its current European business within five
years. Additionally, the construction of a new lead recycling facility in Mexico is proceeding as
expected. The company also received one of the necessary permits related to construction of a lead
recycling center in South Carolina. Increasing the in-house recycling of lead is expected to have a
positive impact on margins over the next two years.
Building Efficiency sales in the 2010 second quarter were $3.0 billion, level with last year.
Double-digit increases in Global Workplace Solutions sales and residential HVAC offset declines in
Western Europe and North America. Johnson Controls reported that its second quarter orders
increased by 5% globally and that its backlog of uncompleted contracts in the second quarter was
$4.4 billion. The backlog was down 4% versus the previous year but improved versus the 2010 first
quarter. In addition, the pipeline of potential new business was higher in the second quarter. The
company saw increased demand in the educational, U.S. Federal government and energy efficiency
solutions markets. Second quarter orders associated with the America Reinvestment and Recovery Act
(ARRA) were $143 million. Johnson Controls noted that second quarter ARRA bookings were larger than
the 2010 first quarter and fiscal 2009 bookings combined.
The Building Efficiency segment reported segment income of $104 million, up 16% compared to $90
million in 2009 with higher margins in all parts of the business except North American Service and
Europe. Non-recurring charges in the 2010 quarter were comparable to those in the year-ago period.
Johnson Controls increased its earnings guidance for 2010:
| n | Net sales expectation increased to $33.5 billion (up 18%) versus previous guidance of $33 billion (up 16%), with the impact of higher automotive production partially offset by a revised Euro assumption of $1.35 | |
| n | Segment margins for Automotive Experience increased to 3.1% — 3.3% from 2.0% — 2.2%. Power Solutions margins increased to 12.6% — 12.8%, previously 11.8% — 12.0% | |
| n | Earnings per share for the 2010 fiscal year are now expected to total $1.90 — $1.95 per diluted share compared to earlier guidance of $1.70 — $1.75 per diluted share | |
| n | Capital expenditures increased to $750 — $800 million from $700 - $750 million related to accelerated growth investments in Power Solutions | |
| n | Free cash flow increased by $100 million to $1.3 billion |
Page 3
| News release | |
“We continue to be encouraged by the steady improvement in the automotive industry and therefore
have increased our earnings outlook for 2010,” Mr. Roell said. “In the first half of our fiscal
year we have demonstrated the ability to capitalize on the higher production levels with strong
execution occurring in all geographic regions. Strong cash flow from our operations has allowed us
to accelerate our investments in growth initiatives across all of our businesses.”
###
Johnson Controls (NYSE: JCI) is the global leader that brings ingenuity to the places where people
live, work and travel. By integrating technologies, products and services, we create smart
environments that redefine the relationships between people and their surroundings. Our team of
130,000 employees creates a more comfortable, safe and sustainable world through our products and
services for more than 200 million vehicles, 12 million homes and one million commercial buildings.
Our commitment to sustainability drives our environmental stewardship, good corporate citizenship
in our workplaces and communities, and the products and services we provide to customers. For
additional information, please visit http://www.johnsoncontrols.com/.
###
Johnson Controls, Inc. (“the Company”) has made forward-looking statements in this presentation
pertaining to its financial results for fiscal 2010 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 included 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,
financial distress of key customers, energy prices, the strength of the U.S. or other economies,
currency exchange rates, cancellation of or changes to commercial contracts, liquidity, changes in
the levels or timing of investments in commercial buildings, the ability to execute on
restructuring actions according to anticipated timelines and costs as well as other factors
discussed in Item 1A of Part I of the Company’s most recent Form 10-k filing (filed November 24,
2009) 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.
###
Page 4
April 23, 2010
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
(in millions, except per share data; unaudited)
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
Net sales |
$ | 8,317 | $ | 6,315 | ||||
Cost of sales |
7,094 | 5,633 | ||||||
Gross profit |
1,223 | 682 | ||||||
Selling, general and administrative expenses |
(847 | ) | (803 | ) | ||||
Restructuring costs |
— | (230 | ) | |||||
Net financing charges |
(43 | ) | (46 | ) | ||||
Equity income |
51 | 2 | ||||||
Income (loss) from continuing operations before income taxes |
384 | (395 | ) | |||||
Provision (benefit) for income taxes |
87 | (183 | ) | |||||
Net income (loss) |
297 | (212 | ) | |||||
Less: income (loss) attributable to noncontrolling interests |
23 | (19 | ) | |||||
Net income (loss) attributable to JCI |
$ | 274 | $ | (193 | ) | |||
Diluted earnings (loss) per share |
$ | 0.40 | $ | (0.33 | ) | |||
Diluted weighted average shares |
683 | 594 | ||||||
Shares outstanding at period end |
673 | 594 | ||||||
April 23, 2010
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
(in millions, except per share data; unaudited)
| Six Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
Net sales |
$ | 16,725 | $ | 13,651 | ||||
Cost of sales |
14,266 | 12,284 | ||||||
Gross profit |
2,459 | 1,367 | ||||||
Selling, general and administrative expenses |
(1,730 | ) | (1,662 | ) | ||||
Restructuring costs |
— | (230 | ) | |||||
Net financing charges |
(78 | ) | (102 | ) | ||||
Equity income (loss) |
104 | (134 | ) | |||||
Income (loss) from continuing operations before income taxes |
755 | (761 | ) | |||||
Provision for income taxes |
92 | 59 | ||||||
Net income (loss) |
663 | (820 | ) | |||||
Less: income (loss) attributable to noncontrolling interests |
39 | (19 | ) | |||||
Net income (loss) attributable to JCI |
$ | 624 | $ | (801 | ) | |||
Diluted earnings (loss) per share |
$ | 0.92 | $ | (1.35 | ) | |||
Diluted weighted average shares |
682 | 594 | ||||||
Shares outstanding at period end |
673 | 594 | ||||||
April 23, 2010
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
(in millions; unaudited)
| March 31, | September 30, | March 31, | ||||||||||
| 2010 | 2009 | 2009 | ||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents |
$ | 770 | $ | 761 | $ | 311 | ||||||
Accounts receivable — net |
5,431 | 5,528 | 4,745 | |||||||||
Inventories |
1,579 | 1,521 | 1,648 | |||||||||
Other current assets |
2,124 | 2,016 | 1,748 | |||||||||
Current assets |
9,904 | 9,826 | 8,452 | |||||||||
Property, plant and equipment — net |
3,779 | 3,986 | 3,949 | |||||||||
Goodwill |
6,377 | 6,542 | 6,320 | |||||||||
Other intangible assets — net |
709 | 746 | 749 | |||||||||
Investments in partially-owned affiliates |
770 | 718 | 668 | |||||||||
Other noncurrent assets |
2,270 | 2,270 | 1,586 | |||||||||
Total assets |
$ | 23,809 | $ | 24,088 | $ | 21,724 | ||||||
LIABILITIES AND EQUITY |
||||||||||||
Short-term debt and current portion of long-term debt |
$ | 743 | $ | 798 | $ | 797 | ||||||
Accounts payable and accrued expenses |
5,758 | 5,306 | 4,370 | |||||||||
Other current liabilities |
2,314 | 2,612 | 2,520 | |||||||||
Current liabilities |
8,815 | 8,716 | 7,687 | |||||||||
Long-term debt |
2,636 | 3,168 | 3,994 | |||||||||
Other noncurrent liabilities |
2,732 | 2,865 | 1,944 | |||||||||
Total equity attributable to JCI |
9,407 | 9,138 | 7,900 | |||||||||
Equity attributable to noncontrolling interests |
219 | 201 | 199 | |||||||||
Total liabilities and equity |
$ | 23,809 | $ | 24,088 | $ | 21,724 | ||||||
April 23, 2010
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
(in millions; unaudited)
| Three Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
Operating Activities |
||||||||
Net income (loss) attributable to JCI |
$ | 274 | $ | (193 | ) | |||
Income (loss) attributable to noncontrolling interests |
23 | (19 | ) | |||||
Net income (loss) |
297 | (212 | ) | |||||
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
||||||||
Depreciation and amortization |
176 | 191 | ||||||
Equity in earnings of partially-owned affiliates, net of dividends received |
(32 | ) | 27 | |||||
Deferred income taxes |
18 | (78 | ) | |||||
Non-cash impairment of long-lived assets |
19 | 46 | ||||||
Other — net |
33 | 7 | ||||||
Changes in working capital, excluding acquisition of businesses: |
||||||||
Receivables |
(388 | ) | 196 | |||||
Inventories |
(41 | ) | 263 | |||||
Restructuring reserves |
(66 | ) | 83 | |||||
Accounts payable and accrued liabilities |
233 | (97 | ) | |||||
Change in other assets and liabilities |
(36 | ) | (244 | ) | ||||
Cash provided by operating activities |
213 | 182 | ||||||
Investing Activities |
||||||||
Capital expenditures |
(134 | ) | (158 | ) | ||||
Sale of property, plant and equipment |
5 | — | ||||||
Acquisition of businesses, net of cash acquired |
(15 | ) | (10 | ) | ||||
Other — net |
(41 | ) | (10 | ) | ||||
Cash used in investing activities |
(185 | ) | (178 | ) | ||||
Financing Activities |
||||||||
Increase (decrease) in short and long-term debt — net |
(45 | ) | 194 | |||||
Payment of cash dividends |
(87 | ) | (77 | ) | ||||
Other — net |
83 | (12 | ) | |||||
Cash provided (used) by financing activities |
(49 | ) | 105 | |||||
Increase (decrease) in cash and cash equivalents |
$ | (21 | ) | $ | 109 | |||
April 23, 2010
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
(in millions; unaudited)
| Six Months Ended March 31, | ||||||||
| 2010 | 2009 | |||||||
Operating Activities |
||||||||
Net income (loss) attributable to JCI |
$ | 624 | $ | (801 | ) | |||
Income (loss) attributable to noncontrolling interests |
39 | (19 | ) | |||||
Net income (loss) |
663 | (820 | ) | |||||
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: |
||||||||
Depreciation and amortization |
356 | 381 | ||||||
Equity in earnings of partially-owned affiliates, net of dividends received |
(44 | ) | 59 | |||||
Deferred income taxes |
(44 | ) | 222 | |||||
Non-cash impairment of long-lived assets |
19 | 156 | ||||||
Non-cash impairment of equity investment |
— | 152 | ||||||
Other — net |
62 | 42 | ||||||
Changes in working capital, excluding acquisition of businesses: |
||||||||
Receivables |
(36 | ) | 1,324 | |||||
Inventories |
(97 | ) | 341 | |||||
Restructuring reserves |
(124 | ) | 31 | |||||
Accounts payable and accrued liabilities |
376 | (1,753 | ) | |||||
Change in other assets and liabilities |
(110 | ) | (270 | ) | ||||
Cash provided (used) by operating activities |
1,021 | (135 | ) | |||||
Investing Activities |
||||||||
Capital expenditures |
(311 | ) | (426 | ) | ||||
Sale of property, plant and equipment |
24 | 3 | ||||||
Acquisition of businesses, net of cash acquired |
(15 | ) | (32 | ) | ||||
Other — net |
(68 | ) | (80 | ) | ||||
Cash used by investing activities |
(370 | ) | (535 | ) | ||||
Financing Activities |
||||||||
Increase (decrease) in short and long-term debt — net |
(569 | ) | 734 | |||||
Payment of cash dividends |
(164 | ) | (154 | ) | ||||
Other — net |
91 | 17 | ||||||
Cash provided (used) by financing activities |
(642 | ) | 597 | |||||
Increase (decrease) in cash and cash equivalents |
$ | 9 | $ | (73 | ) | |||
April 23, 2010
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FOOTNOTES
1. Business Unit Summary
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| March 31, | March 31, | |||||||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||||||
| (in millions) | 2010 | 2009 | % | 2010 | 2009 | % | ||||||||||||||||||
Net Sales |
||||||||||||||||||||||||
Building efficiency |
$ | 2,973 | $ | 2,965 | 0 | % | $ | 5,991 | $ | 6,052 | -1 | % | ||||||||||||
Automotive experience |
4,166 | 2,445 | 70 | % | 8,269 | 5,576 | 48 | % | ||||||||||||||||
Power solutions |
1,178 | 905 | 30 | % | 2,465 | 2,023 | 22 | % | ||||||||||||||||
Net Sales |
$ | 8,317 | $ | 6,315 | $ | 16,725 | $ | 13,651 | ||||||||||||||||
Segment Income (1) |
||||||||||||||||||||||||
Building efficiency |
$ | 104 | $ | 90 | 16 | % | $ | 208 | $ | 69 | * | |||||||||||||
Automotive experience |
189 | (275 | ) | * | 310 | (604 | ) | * | ||||||||||||||||
Power solutions |
134 | 66 | * | 315 | 106 | * | ||||||||||||||||||
Segment Income |
$ | 427 | $ | (119 | ) | $ | 833 | $ | (429 | ) | ||||||||||||||
Financing charges — net |
(43 | ) | (46 | ) | (78 | ) | (102 | ) | ||||||||||||||||
Restructuring costs |
— | (230 | ) | — | (230 | ) | ||||||||||||||||||
Income from continuing operations before
income taxes and noncontrolling interests |
$ | 384 | $ | (395 | ) | $ | 755 | $ | (761 | ) | ||||||||||||||
Net Sales |
||||||||||||||||||||||||
Products and systems |
$ | 6,642 | $ | 4,717 | 41 | % | $ | 13,318 | $ | 10,364 | 29 | % | ||||||||||||
Services |
1,675 | 1,598 | 5 | % | 3,407 | 3,287 | 4 | % | ||||||||||||||||
| $ | 8,317 | $ | 6,315 | $ | 16,725 | $ | 13,651 | |||||||||||||||||
Cost of Sales |
||||||||||||||||||||||||
Products and systems |
$ | 5,715 | $ | 4,362 | 31 | % | $ | 11,471 | $ | 9,635 | 19 | % | ||||||||||||
Services |
1,379 | 1,271 | 8 | % | 2,795 | 2,649 | 6 | % | ||||||||||||||||
| $ | 7,094 | $ | 5,633 | $ | 14,266 | $ | 12,284 | |||||||||||||||||
| * | Metric not meaningful | |
| (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 and restructuring costs. |
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. Restructuring Costs
As part of its continuing efforts to reduce costs and improve the efficiency of its global
operations, the Company announced a restructuring plan in the second quarter of fiscal year 2009
and recorded a $230 million restructuring charge. This restructuring charge included a $46 million
impairment charge of which $25 million related to the North America automotive experience segment,
$16 million related to the Asia automotive experience segment and $5 million related to the Europe
automotive experience segment.
The restructuring charge relates to cost reduction initiatives in its automotive experience,
building efficiency and power solutions businesses and includes workforce reductions and plant
consolidations. The Company expects to substantially complete the initiatives in 2010. The
automotive-related restructuring is in response to the fundamentals of the European, North American
and Japanese automotive markets. The actions target reductions in the company’s cost base by
decreasing excess manufacturing capacity due to lower industry production and the continued
movement of vehicle production to low-cost countries, especially in Europe. Power solutions’
actions are focused on optimizing its regional manufacturing capacity to reflect lower overall
demand for original equipment batteries resulting from lower vehicle production levels.
3. Impairment Charges
The Company reviews long-lived assets, including property, plant and equipment and other intangible
assets with definite lives, for impairment whenever events or changes in circumstances indicate
that its carrying amounts may not be recoverable.
At March 31, 2010, the Company recorded a $19 million impairment charge related to property, plant
and equipment in the North America automotive experience segment as part of the Company’s revised
restructuring actions. This impairment charge was offset by a decrease in the Company’s
restructuring reserve for $19 million due to lower employee severance and termination benefit cash
payouts than previously calculated.
At December 31, 2008, the Company recorded a $77 million and $33 million impairment charge related
to property, plant and equipment in the automotive experience business in North America and Europe,
respectively. The impairment charges are included in cost of sales in the accompanying Condensed
Consolidated Statements of Income. At December 31, 2008, the Company also recorded a $152 million
charge related to an impairment of an equity investment in a 48%-owned joint venture with US
Airconditioning Distributors, Inc. in the Company’s building efficiency business. This impairment
charge is included in equity loss in the accompanying Condensed Consolidated Statements of Income.
April 23, 2010
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4. Income Taxes
The Company’s annual estimated effective tax rate before consideration of discrete tax items for
the year ending September 30, 2010 is 18 percent. The effective tax rate inclusive of discrete tax
items for the second quarter of fiscal 2010 is 22.7 percent, as compared to 46.3 percent for the
second quarter of fiscal 2009.
5. 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 | Six Months Ended | |||||||||||||||
| March 31 | March 31 | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
Income Available to Common Shareholders |
||||||||||||||||
Basic income (loss) available to common
shareholders |
$ | 274 | $ | (193 | ) | $ | 624 | $ | (801 | ) | ||||||
Financing costs related to the convertible
senior notes and Equity Units, net of tax |
1 | — | 4 | — | ||||||||||||
Diluted income (loss) available to common
shareholders |
$ | 275 | $ | (193 | ) | $ | 628 | $ | (801 | ) | ||||||
Weighted Average Shares Outstanding |
||||||||||||||||
Basic weighted average shares outstanding |
671.7 | 593.6 | 671.1 | 593.5 | ||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Stock options |
6.3 | — | 6.1 | — | ||||||||||||
Convertible senior notes |
0.1 | — | 0.1 | — | ||||||||||||
Equity units |
4.5 | — | 4.5 | — | ||||||||||||
Diluted weighted average shares outstanding |
682.6 | 593.6 | 681.8 | 593.5 | ||||||||||||