Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Johnson Controls, Inc. (JCI - Analyst Report) reported record adjusted earnings of 95 cents per share in fourth-quarter fiscal 2013 (ended Sep 30, 2013), up 23% from 77 cents in the comparable quarter  of the prior-year, excluding non-recurring items. With this, earnings per share surpassed the Zacks Consensus Estimate by a penny.

Earnings were at the upper end of the management guidance of 93–95 cents. Top-line growth in each of its businesses and rise in segment income are the main factors behind increased earnings in the quarter. On a reported basis, earnings were 15 cents a share against the loss of a penny in the year-ago quarter.

Operational Update

Revenues in the quarter went up 6% year over year to $11 billion in line with the Zacks Consensus Estimate. Revenue growth across all the segments led to the year over year increase.

Cost of sales increased 1.6% year over year to $8.9 billion from $8.8 billion. Gross profit improved 32% year over year to $2 billion. Consequently, gross margin expanded 400 basis points (bps) to 19% in the quarter.

Selling, general and administrative expenses in the fourth quarter went down to $802 million from $1.4 billion in the prior year quarter. The company reported segment income (excluding non-recurring items) of $920 million, up 27% year over year.

Segment Results

Automotive Experience: Revenues in this segment improved 9% year over year to $5.5 billion on higher production volumes in North America and Asia, but was partially offset by lower production volumes in Europe. Adjusted segment income surged 47% to $233 million mainly due to higher income from its Seating segment. Interiors business also performed well, benefiting from improved operational efficiencies as well as restructuring actions.

Building Efficiency: In this segment, revenues grew 2% year over year to $3.9 billion led by double-digit growth in North America Service and higher revenues in Asia, partially offset by lower sales in Global Workplace Solutions.  The quarter-end backlog stood at $4.8 billion, a 5% decrease from the prior year. Segment income rose 9% in the reported quarter to $357 million due to ongoing cost reduction initiatives and favorable mix.

Power Solutions: Revenues in the Power Solutions segment grew 9% to $1.7 billion due to increased global unit shipments from the last-year period, partially offset by soft aftermarket demand in North America. Segment income gained 38% to $330 million, driven by increased vertical integration, cost reduction actions and improved pricing.

Fiscal 2013 Performance

Johnson Controls posted adjusted earnings rise of 5% year over year to $2.66 per share for full-year 2013, a penny ahead of the Zacks Consensus Estimate. Revenues for the full-year increased 1.8% to roughly $42.7 billion from $41.9 billion in 2012, in line with the Zacks Consensus Estimate.

Financial Position

Johnson Controls had cash and cash equivalents of $1,055 million as of Sep 30, 2013, a significant increase from $265 million as of Sep 30, 2012. Total debt decreased to $5.5 billion as of Sep, 2013 from $6.0 billion as of Sep, 2012. Consequently, debt-to-capitalization ratio improved to 30.8% as of Sep 30, 2013 from 34% as of Sep 30, 2012.

In fiscal 2013, Johnson Controls’ operating cash flow increased to $2.6 billion from $1.6 billion in the prior year; mainly driven by lower accounts receivable and higher accounts payable as well as accrued liabilities. Meanwhile, capital expenditures decreased to $1.3 billion from $1.8 billion in the prior year.

Outlook

Johnson Controls anticipates earnings to increase around 30% in the first quarter of fiscal 2014 against 2013. The company believes improving end markets will enable modest growths in revenues in the upcoming year.

Johnson Controls is a supplier of automotive interiors, batteries, and other control equipment. It currently holds a Zacks Rank #2 (Buy).

Other stocks performing well in the same industry include Denso Corporation , Federal-Mogul Corporation (FDML - Snapshot Report) and Gentex Corp. (GNTX - Snapshot Report). All these hold a Zacks Rank #1 (Strong Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%