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Johnson Controls (JCI) Tops Q2 Earnings Mark, Ups FY21 View

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Johnson Controls International plc (JCI - Free Report) reported adjusted second-quarter fiscal 2021 earnings per share of 52 cents, outpacing the Zacks Consensus Estimate of 49 cents. The outperformance stemmed from higher-than-expected contribution from Global Products and Building Solutions North America segments. The bottom line also rose 23.8% year over year. Johnson Controls reported fiscal second-quarter revenues of $5,594 million, up 2.7% year over year. The revenue figure, however, narrowly missed the Zacks Consensus Estimate of $5,598.5 million.

Johnson Controls — which shares space with Allegion PLC (ALLE - Free Report) , Lakeland Industries Inc. (LAKE - Free Report) and Assa Abloy AB (ASAZY - Free Report) — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segmental Results

Building Solutions North America: This segment’s adjusted revenues came in at $2,092 million, down from the year-ago quarter’s $2,175 million on a decline in HVAC & Controls and Fire & Security. The segment’s EBITA increased to $266 million from $253 million reported in second-quarter fiscal 2020, thanks to cost-containment efforts and restructuring benefits. The metric also topped the consensus mark of $263 million.

Building Solutions Europe, Middle East, Africa/Latin America: Revenues in this segment came in at $897 million, up 6% year over year due to moderate increase in project installations. The segment’s EBITA inched up 1% year over year to $86 million on cost-containment efforts and higher revenues.

Building Solutions Asia Pacific: Revenues grew to $603 million from the year-ago quarter’s $525 million on higher project installations and services, driven by strong growth in Applied HVAC & Controls. The segment’s EBITA came in at $74 million, up from the second-quarter fiscal 2020 level of $65 million on favorable mix and cost-cut efforts.

Global Products: Revenues in this segment climbed to $2,002 million from the prior year’s $1,894 million, mainly due to higher sales in residential HVAC and Fire & Security. This segment’s EBITA was $285 million, up 32% year over year, thanks to operational efficiency and higher sales. The metric topped the Zacks Consensus Estimate of $244 million.

Financial Position

Johnson Controls had cash and cash equivalents of $1,883 million as of Mar 31, 2021, down from $1,951 million on Sep 30, 2020. Long-term debt decreased to $7,323 million for the reported quarter from $7,526 million as of Sep 30, 2020. Free cash flow for second-quarter fiscal 2021 came in at $539 million, jumping from $31 million in the corresponding period of 2020. During the quarter under review, Johnson Controls bought back 6 million shares for $315 million. It raised its regular annual cash dividend to $1.08 per share and share repurchase authorization by $4 billion.

Guidance

The company projects mid-teens sales growth and EBITDA to rise marginally on a year-over-year basis for third-quarter fiscal 2021. It also expects adjusted EPS in the range of 80-82 cents per share, indicating 19-22% year-over-year growth.

For fiscal 2021, adjusted EPS is expected in the band of $2.58-2.65 a share versus the prior guided range of $2.45-$2.55. The revised forecast implies 15-18% increase on a year-over-year basis. Organic revenues are expected to scale up in mid-single digits year over year.

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