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8-K - FORM 8-K - JOHNSON CONTROLS INC | c64298e8vk.htm |
EX-99.2 - EX-99.2 - JOHNSON CONTROLS INC | c64298exv99w2.htm |
Exhibit 99.1
News release |
FOR IMMEDIATE RELEASE
CONTACT:
|
Glen L. Ponczak (Investors) | April 25, 2011 | ||
(414) 524-2375 | ||||
Paul Mason (Media) | ||||
(414) 524-6114 |
Johnson Controls Reports Record Results for Q2 2011;
Double-Digit Sales and Income Increases in all Businesses
Double-Digit Sales and Income Increases in all Businesses
MILWAUKEE, April 25, 2011 . . . For the second quarter of fiscal 2011, Johnson Controls reported
record sales and earnings with double-digit improvements by all three business segments. The
company also increased its estimate for full fiscal year 2011 revenues.
Highlights of the companys record second quarter include:
n | Net sales of $10.1 billion vs. $8.3 billion in Q2 2010, up 22%. | |
n | Income from business segments of $521 million. Excluding non-recurring costs associated with Automotive Experience acquisitions, income from business segments was $557 million, up 30% compared with the prior year. | |
n | Net income was $354 million or $0.51 per diluted share. Net income excluding non-recurring items was $383 million, or $0.56 per diluted share, versus net income of $292 million, or $0.43 per diluted share, in the 2010 second quarter. |
The second quarter results show solid momentum across all three of our businesses, with each
achieving significantly higher revenues and profitability, said Stephen A. Roell, Johnson Controls
Chairman and Chief Executive Officer. The backlog in Building Efficiency grew to record levels as
a result of continued market share gains and our strong position in the emerging markets. Power
Solutions benefitted from aftermarket battery demand that exceeded our expectations and Automotive
Experience revenues outpaced industry production with the launch of 18 major new programs.
Business results
Automotive Experience sales in the quarter increased 25% to $5.2 billion versus $4.2 billion last
year due to higher production levels and launches of new automotive seating and interior programs.
Revenues increased 22% in North America while European sales were up 26%. Asia sales increased
37%, while revenues in China, which are mostly generated through non-consolidated joint ventures,
increased 31% to $979 million. Johnson Controls completed 18 major launches in the quarter for
Ford, Kia, VW, Tata, Daimler and Honda. Seven of the launches were new seating programs, seven
were interior programs and four were global electronics programs.
Page 1 of 4
News release |
Automotive Experience reported segment income of $247 million in the current quarter excluding
acquisition-related costs, an increase of 31% compared with $189 million last year. The increase
is due to higher volumes and improved operational efficiencies.
Segment income margin in Europe increased to 2.0% from break-even in the first fiscal quarter.
European margins have been negatively impacted by containment costs associated with some of its
recent new program launches. Margins in the region also reflect engineering costs associated with
the multi-billion dollar backlog of new business that will launch in the region over the next three
years.
The acquisition of CR Hammerstein closed on February 1, 2011. Non-recurring acquisition and
integration costs for acquisitions in the quarter totaled $0.05 per share.
Power Solutions sales in the second quarter of 2011 increased 19% to $1.4 billion from $1.2 billion
last year reflecting higher shipments of both aftermarket and original equipment batteries.
Aftermarket demand in the Americas was stronger than expected, increasing 17%. Original equipment
and aftermarket unit sales in Asia increased 163% reflecting the volume associated with the
consolidation of a Korean joint venture, market share gains and incremental production from the
companys second manufacturing plant in China.
Johnson Controls said it expects to expand its battery manufacturing capacity in China from four
million units today to 30 million units by 2015. The company commenced construction of its third
Chinese plant, in Chongqing, in January 2011.
Power Solutions segment income increased 33% to $178 million versus $134 million last year. The
increase is primarily the result of the higher volumes and strong operational performance.
The companys new lead recycling facility in Mexico also contributed to the segment income growth
in the quarter. The company said construction was progressing as expected on its recycling
facility in South Carolina, with completion scheduled for mid-2012. Upon the completion of the
South Carolina plant, Johnson Controls expects to be able to internally recycle approximately 50%
of its North American lead requirements.
The company announced it will be adding capacity to produce 6.8 million AGM lead-acid batteries in
the United States by 2013. Johnson Controls said that it had already received multi-year customer
commitments for a substantial portion of U.S. AGM capacity. Johnson Controls previously announced
investments to significantly expand AGM battery manufacturing capacity in Europe.
Building Efficiency sales in the 2011 second quarter were $3.5 billion, up 18% from $3.0 billion
last year. Sales were higher across all segments, led by a 31% increase in Asia and a 27% increase
in Global Workplace Solutions.
Page 2 of 4
News release |
Johnson Controls reported that its backlog at March 31, 2011 was a record $5.1 billion, an increase
of 18% over the prior year. The company noted that the backlog reflected double-digit increases
across all regions of the world. Orders received in the current quarter increased 21% versus last
year. In North America, there was particularly strong demand in the education, healthcare and
local/state government vertical markets.
Building Efficiency segment income was $132 million, up 27% compared to $104 million in 2010 as a
result of the higher volumes.
FY2011 guidance update
Johnson Controls updated its assumptions and earnings guidance for 2011:
n | 2011 revenues are now forecast to increase 15% over 2010 to $39.5 billion versus the previous forecast of $38.5 billion. The increased guidance is due to higher growth expectations for Building Efficiency (now forecast to be 15% versus the earlier guidance of 8-10%) and a stronger Euro. Higher Building Efficiency revenues will be partially offset by a negative third quarter impact associated with Japan-related automotive production disruptions. | |
n | Revenue and earnings are expected to be affected by automotive production disruptions in Japan and at Japanese OE customers in North America and Europe. Based on the latest forecasts from customers, the company anticipates the third quarter fiscal 2011 revenue impact will be approximately $500 million, which will lower earnings per share by approximately $0.16 $0.18. The company said, including this impact, it expects to earn $0.51 $0.53 per share in the third fiscal quarter. | |
The company expects the impact in its fourth fiscal quarter to be neutral and estimates it will recover the third quarter lost revenues and earnings in the first half of fiscal 2012. |
We are on track for a record year for sales and earnings in 2011, outpacing the growth rates of
our key markets by gaining share and improving profitability in each of our businesses, said Mr.
Roell. While there are some uncertainties ahead regarding auto production levels due to
disruptions in the automotive supply chain, we expect the impact will be short-lived and
recoverable. Looking beyond the current year, we have solid strategies in place to take advantage
of the growing market opportunities and to drive higher profitability. We will continue to make
significant investments in organic growth and strategic acquisitions to achieve long-term
profitable growth for our shareholders.
###
FORWARD-LOOKING STATEMENT
Page 3 of 4
News release |
Johnson Controls, Inc. has made forward-looking statements in this document pertaining to its
financial results for fiscal 2011 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,
customer or supplier disruptions, energy and commodity prices, the strength of the U.S. or other
economies, currency exchange rates, cancellation of or changes to commercial contracts as well as
other factors discussed in Item 1A of Part I of the Companys most recent Form 10-k filing (filed
November 23, 2010) could affect the Companys 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
Johnson Controls is a global diversified technology and industrial leader serving customers in more
than 150 countries. The companys 142,000 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. Johnson
Controls commitment to sustainability dates back to its roots in 1885, with the invention of the
first electric room thermostat. Through its growth strategies and by increasing market share,
Johnson Controls is committed to delivering value to shareholders and making its 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.
Page 4 of 4
April 25, 2011
Page 5
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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, | ||||||||
2011 | 2010 | |||||||
Net sales |
$ | 10,144 | $ | 8,317 | ||||
Cost of sales |
8,670 | 7,094 | ||||||
Gross profit |
1,474 | 1,223 | ||||||
Selling, general and administrative expenses |
(1,014 | ) | (847 | ) | ||||
Net financing charges |
(46 | ) | (43 | ) | ||||
Equity income |
61 | 51 | ||||||
Income before income taxes |
475 | 384 | ||||||
Provision for income taxes |
90 | 87 | ||||||
Net income |
385 | 297 | ||||||
Less: income attributable to noncontrolling interests |
31 | 23 | ||||||
Net income attributable to JCI |
$ | 354 | $ | 274 | ||||
Diluted earnings per share |
$ | 0.51 | $ | 0.40 | ||||
Diluted weighted average shares |
691 | 683 | ||||||
Shares outstanding at period end |
678 | 673 | ||||||
April 25, 2011
Page 6
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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, | ||||||||
2011 | 2010 | |||||||
Net sales |
$ | 19,681 | $ | 16,725 | ||||
Cost of sales |
16,793 | 14,266 | ||||||
Gross profit |
2,888 | 2,459 | ||||||
Selling, general and administrative expenses |
(1,961 | ) | (1,730 | ) | ||||
Net financing charges |
(81 | ) | (78 | ) | ||||
Equity income |
127 | 104 | ||||||
Income before income taxes |
973 | 755 | ||||||
Provision for income taxes |
185 | 92 | ||||||
Net income |
788 | 663 | ||||||
Less: income attributable to noncontrolling interests |
59 | 39 | ||||||
Net income attributable to JCI |
$ | 729 | $ | 624 | ||||
Diluted earnings per share |
$ | 1.06 | $ | 0.92 | ||||
Diluted weighted average shares |
689 | 682 | ||||||
Shares outstanding at period end |
678 | 673 | ||||||
April 25, 2011
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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, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
ASSETS |
||||||||||||
Cash and cash equivalents |
$ | 401 | $ | 560 | $ | 770 | ||||||
Accounts receivable net |
6,946 | 6,095 | 5,431 | |||||||||
Inventories |
2,239 | 1,786 | 1,579 | |||||||||
Other current assets |
2,705 | 2,211 | 2,124 | |||||||||
Current assets |
12,291 | 10,652 | 9,904 | |||||||||
Property, plant and equipment net |
4,761 | 4,096 | 3,779 | |||||||||
Goodwill |
6,807 | 6,501 | 6,377 | |||||||||
Other intangible assets net |
832 | 741 | 709 | |||||||||
Investments in partially-owned affiliates |
864 | 728 | 770 | |||||||||
Other noncurrent assets |
3,198 | 3,025 | 2,270 | |||||||||
Total assets |
$ | 28,753 | $ | 25,743 | $ | 23,809 | ||||||
LIABILITIES AND EQUITY |
||||||||||||
Short-term debt and current portion of long-term debt |
$ | 159 | $ | 737 | $ | 743 | ||||||
Accounts payable and accrued expenses |
7,237 | 6,548 | 5,758 | |||||||||
Other current liabilities |
2,861 | 2,625 | 2,314 | |||||||||
Current liabilities |
10,257 | 9,910 | 8,815 | |||||||||
Long-term debt |
4,382 | 2,652 | 2,636 | |||||||||
Other noncurrent liabilities |
2,785 | 2,808 | 2,732 | |||||||||
Redeemable noncontrolling interests |
223 | 196 | 153 | |||||||||
Shareholders equity attributable to JCI |
10,976 | 10,071 | 9,377 | |||||||||
Noncontrolling interests |
130 | 106 | 96 | |||||||||
Total liabilities and equity |
$ | 28,753 | $ | 25,743 | $ | 23,809 | ||||||
April 25, 2011
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
(in millions; unaudited)
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Operating Activities |
||||||||
Net income attributable to JCI |
$ | 354 | $ | 274 | ||||
Income attributable to noncontrolling interests |
31 | 23 | ||||||
Net income |
385 | 297 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
Depreciation and amortization |
185 | 176 | ||||||
Equity in earnings of partially-owned affiliates, net of dividends received |
(51 | ) | (32 | ) | ||||
Deferred income taxes |
| 18 | ||||||
Impairment charges |
| 19 | ||||||
Other |
28 | 33 | ||||||
Changes in working capital, excluding acquisitions: |
||||||||
Accounts receivable |
(562 | ) | (388 | ) | ||||
Inventories |
(200 | ) | (41 | ) | ||||
Restructuring reserves |
(39 | ) | (66 | ) | ||||
Accounts payable and accrued liabilities |
308 | 233 | ||||||
Change in other assets and liabilities |
8 | (36 | ) | |||||
Cash provided by operating activities |
62 | 213 | ||||||
Investing Activities |
||||||||
Capital expenditures |
(275 | ) | (134 | ) | ||||
Sale of property, plant and equipment |
7 | 5 | ||||||
Acquisition of businesses, net of cash acquired |
(534 | ) | (15 | ) | ||||
Other net |
(64 | ) | (41 | ) | ||||
Cash used by investing activities |
(866 | ) | (185 | ) | ||||
Financing Activities |
||||||||
Increase (decrease) in short and long-term debt net |
976 | (45 | ) | |||||
Payment of cash dividends |
(109 | ) | (87 | ) | ||||
Other net |
21 | 15 | ||||||
Cash provided (used) by financing activities |
888 | (117 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(4 | ) | 68 | |||||
Increase (decrease) in cash and cash equivalents |
$ | 80 | $ | (21 | ) | |||
April 25, 2011
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JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
(in millions; unaudited)
Six Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Operating Activities |
||||||||
Net income attributable to JCI |
$ | 729 | $ | 624 | ||||
Income attributable to noncontrolling interests |
59 | 39 | ||||||
Net income |
788 | 663 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
Depreciation and amortization |
354 | 356 | ||||||
Equity in earnings of partially-owned affiliates, net of dividends received |
(73 | ) | (44 | ) | ||||
Deferred income taxes |
| (44 | ) | |||||
Impairment charges |
| 19 | ||||||
Other |
57 | 62 | ||||||
Changes in working capital, excluding acquisitions: |
||||||||
Accounts receivable |
(515 | ) | (36 | ) | ||||
Inventories |
(299 | ) | (97 | ) | ||||
Restructuring reserves |
(69 | ) | (124 | ) | ||||
Accounts payable and accrued liabilities |
28 | 376 | ||||||
Change in other assets and liabilities |
(103 | ) | (110 | ) | ||||
Cash provided by operating activities |
168 | 1,021 | ||||||
Investing Activities |
||||||||
Capital expenditures |
(535 | ) | (311 | ) | ||||
Sale of property, plant and equipment |
18 | 24 | ||||||
Acquisition of businesses, net of cash acquired |
(629 | ) | (15 | ) | ||||
Other net |
(89 | ) | (68 | ) | ||||
Cash used by investing activities |
(1,235 | ) | (370 | ) | ||||
Financing Activities |
||||||||
Increase (decrease) in short and long-term debt net |
989 | (569 | ) | |||||
Payment of cash dividends |
(196 | ) | (164 | ) | ||||
Other net |
101 | 15 | ||||||
Cash provided (used) by financing activities |
894 | (718 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
14 | 76 | ||||||
Increase (decrease) in cash and cash equivalents |
$ | (159 | ) | $ | 9 | |||
April 25, 2011
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FOOTNOTES
1. Business Unit Summary
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||
(in millions) | 2011 | 2010 | % | 2011 | 2010 | % | ||||||||||||||||||
Net Sales |
||||||||||||||||||||||||
Building efficiency |
$ | 3,515 | $ | 2,973 | 18 | % | $ | 6,912 | $ | 5,991 | 15 | % | ||||||||||||
Automotive experience |
5,224 | 4,166 | 25 | % | 9,809 | 8,269 | 19 | % | ||||||||||||||||
Power solutions |
1,405 | 1,178 | 19 | % | 2,960 | 2,465 | 20 | % | ||||||||||||||||
Net Sales |
$ | 10,144 | $ | 8,317 | $ | 19,681 | $ | 16,725 | ||||||||||||||||
Segment Income (1) |
||||||||||||||||||||||||
Building efficiency |
$ | 132 | $ | 104 | 27 | % | $ | 271 | $ | 208 | 30 | % | ||||||||||||
Automotive experience |
211 | 189 | 12 | % | 388 | 310 | 25 | % | ||||||||||||||||
Power solutions |
178 | 134 | 33 | % | 395 | 315 | 25 | % | ||||||||||||||||
Segment
Income |
$ | 521 | $ | 427 | $ | 1,054 | $ | 833 | ||||||||||||||||
Net financing charges |
(46 | ) | (43 | ) | (81 | ) | (78 | ) | ||||||||||||||||
Income before income
taxes |
$ | 475 | $ | 384 | $ | 973 | $ | 755 | ||||||||||||||||
Net Sales |
||||||||||||||||||||||||
Products and systems |
$ | 8,107 | $ | 6,642 | 22 | % | $ | 15,702 | $ | 13,318 | 18 | % | ||||||||||||
Services |
2,037 | 1,675 | 22 | % | 3,979 | 3,407 | 17 | % | ||||||||||||||||
$ | 10,144 | $ | 8,317 | $ | 19,681 | $ | 16,725 | |||||||||||||||||
Cost of Sales |
||||||||||||||||||||||||
Products and systems |
$ | 6,973 | $ | 5,715 | 22 | % | $ | 13,501 | $ | 11,471 | 18 | % | ||||||||||||
Services |
1,697 | 1,379 | 23 | % | 3,292 | 2,795 | 18 | % | ||||||||||||||||
$ | 8,670 | $ | 7,094 | $ | 16,793 | $ | 14,266 | |||||||||||||||||
(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. Acquisitions
In the second quarter of fiscal 2011, the Company acquired the C. Rob. Hammerstein Group, a leading
global supplier of high-quality metal seat structures, components and mechanisms based in Solingen,
Germany. The Company paid approximately $581 million (excluding cash acquired of $60 million). The
Company recorded restructuring charges and other acquistion related costs of $36 million
($.05/share).
3. Debt and Financing Arrangements
In the second quarter of fiscal 2011, the Company replaced its $2.05 billion committed five-year
credit facility, scheduled to mature in December 2011, with a $2.50 billion committed four-year
credit facility scheduled to mature in February 2015. The facility is used to support the Companys
outstanding commercial paper.
Also in the second quarter of fiscal 2011, the Company issued $350 million aggregate principal
amount of floating rate senior unsecured notes due in fiscal 2014, $450 million aggregate principal
amount of 1.75% senior unsecured fixed rate notes due in fiscal 2014, $500 million aggregate
principal amount of 4.25% senior unsecured fixed rate notes due in fiscal 2021 and $300 million
aggregate principal amount of 5.70% senior unsecured fixed rate notes due in fiscal 2041. Net
proceeds of $1.6 billion from the issue were used for general corporate purposes including the
retirement of short-term debt.
April 25, 2011
Page 11
Page 11
4. Income Taxes
The Companys annual estimated effective tax rate for the year ending September 30, 2011 is 19.0
percent. There have been no discrete tax items recorded during fiscal 2011. The Companys effective
tax rate before consideration of discrete tax items for the second quarter ending March 31, 2010
was 18.0 percent. The effective tax rate inclusive of discrete tax items for the second quarter
ending March 31, 2010 was 22.7 percent.
5. Earnings per Share
Three Months Ended | Six Months Ended | |||||||||||||||
March 31 | March 31 | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Income Available to Common Shareholders |
||||||||||||||||
Basic income available to common
shareholders |
$ | 354 | $ | 274 | $ | 729 | $ | 624 | ||||||||
Interest expense, net of tax |
1 | 1 | 2 | 4 | ||||||||||||
Diluted income available to common
shareholders |
$ | 355 | $ | 275 | $ | 731 | $ | 628 | ||||||||
Weighted Average Shares Outstanding |
||||||||||||||||
Basic weighted average shares outstanding |
677.3 | 671.7 | 676.3 | 671.1 | ||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Stock options |
9.2 | 6.3 | 8.6 | 6.1 | ||||||||||||
Convertible senior notes |
| 0.1 | | 0.1 | ||||||||||||
Equity units |
4.5 | 4.5 | 4.5 | 4.5 | ||||||||||||
Diluted weighted average shares outstanding |
691.0 | 682.6 | 689.4 | 681.8 | ||||||||||||