Johnson Controls, Inc., a global multi-industrial company with established core businesses in the automotive, building and energy storage industries, today reported record financial results for the first quarter of fiscal 2014. Highlights include:
- Net sales of $10.9 billion, up 5 percent from $10.4 billion in the 2013 first quarter.
- Income from business segments of $686 million vs. $549 million, up 25 percent versus the 2013 first quarter.
- Net income of $469 million, or $0.69 per diluted share, compared with net income of $359 million, or $0.52 per diluted share in the 2013 first quarter.
“The significant improvement in profitability resulted from our focus on execution and cost discipline. We also benefitted from the higher levels of global automotive production,” said Alex Molinaroli, Johnson Controls chairman and chief executive officer. “While Building Efficiency revenues were lower than last year, there are early indications of improving global commercial buildings markets, which should positively impact the business later in the year. The results in the quarter are consistent with the expectations we disclosed at our analyst day in December.”
The company noted that there were several significant events in the 2014 first quarter:
- A 16 percent increase in its quarterly dividend and the completion of$1.2 billion in share repurchases as part of an overall $3.6 billion, three-year program
- Business portfolio activities including:
- An agreement to sell its remaining Electronics business.
- A memorandum of understanding to create a joint venture with Hitachi to expand its Building Efficiency product offerings.
- Launch of a strategic review of its Automotive Interiors business.
- Awarded the largest Building Efficiency contract in company history:State of Hawaii energy savings project
Business results
Automotive Experience revenues in the fiscal first quarter of 2014 were$5.8 billion, up 10 percent compared to the 2013 quarter, reflecting higher automotive production in all geographic regions. Automotive industry production in the quarter increased 5 percent in North America, 2 percent in Europe and 14 percent in China. Seating and Interiors sales increased at a double digit rate, while Electronics sales were up 7 percent. Revenues in China, which are primarily related to Seating and generated through non-consolidated joint ventures, increased 33 percent to $1.9 billion.
Automotive Experience segment income was $232 million, more than double the $101 million reported in the first quarter of 2013. The increase was primarily led by improvements in the company’s Seating business, with segment income of $176 million in the current quarter, compared with$85 million last year. The Automotive Experience improvement was a result of the higher global production levels, benefits from cost reduction initiatives and improved operational performance in the company’s metals and mechanisms business.
Building Efficiency sales in the fiscal first quarter of 2014 were $3.4 billion, 4 percent lower than in the 2013 first quarter as higher revenues in Asiawere more than offset by lower demand in Europe, the Middle East andLatin America as well as Global Workplace Solutions. Adjusted for divestitures and currency, backlog was down 1 percent compared to the first quarter of last year at $5.0 billion. Orders were 5 percent higher than last year representing the third consecutive quarter of year-over-year improvement.
Segment income of $146 million was down 15 percent compared with$172 million the 2013 first quarter. The 2013 first quarter benefitted from non-recurring contract settlements while the current quarter includes contract-related charges of approximately $20 million. Excluding these items, underlying Building Efficiency earnings increased 6 percent.
Power Solutions sales in the first quarter of 2014 increased 6 percent to$1.8 billion versus $1.7 billion in the 2013 quarter. Global original equipment battery shipments increased 12 percent, while aftermarket unit shipments were up 1 percent. In the quarter, the company increased its ownership in a South American battery joint venture, resulting in a $19 million non-recurring gain. Power Solutions segment income was $308 million, up 12 percent, compared with $276 million in the first quarter of 2013, as a result of the higher volumes, improved mix of products, vertical integration and the joint venture gain.
Johnson Controls said it expects earnings per share of $0.64 – $0.66 in the second quarter of fiscal 2014. The company also reaffirmed its guidance for earnings of $3.15 – $3.30 per share, free cash flow of $1.6 billion and segment margin improvements in all three of its businesses for the full 2014 fiscal year.
“Much of the improvement we have forecast for fiscal 2014 is based on activities within our control. Our first quarter results demonstrate that we are on track to deliver on the expectations we have set,” said Molinaroli. “We remain focused on operational improvements to drive continued increases in profitability and shareholder value and expect 2014 to be a year of record sales and earnings for Johnson Controls.”
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, 2013. 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.
