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Johnson Controls (JCI) Q1 Earnings Surpass, Surge 24% Y/Y

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Johnson Controls International plc (JCI - Free Report) reported first-quarter fiscal 2023 (ended Dec 31, 2022) adjusted earnings of 67 cents per share, which surpassed the Zacks Consensus Estimate of 66 cents. The bottom line increased 24.1% year over year. Our estimate for earnings in the fiscal first quarter was 65 cents.

Total revenues of $6,068 million missed the Zacks Consensus Estimate of $6,263.8 million. The top line increased 3.5% year over year. Our estimate for total revenues in the fiscal first quarter was $6,176.8 million.

Segmental Results

Building Solutions North America: The segment’s revenues came in at $2,367 million, up 10% year over year. Our estimate for Building Solutions North America revenues stood at $2,285.5 million. Organic sales also jumped 10%, owing to growth in the Install business. The segment’s EBITA increased 7% year over year to $267 million.


Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $975 million, up 2% year over year. Our estimate for Building Solutions Europe, Middle East, Africa/Latin America revenues for the fiscal fourth quarter was $941.6 million. Organic sales climbed 12% due to mid-teens growth in a service-based business and low double-digit growth in Fire & Security. The segment’s EBITA came in at $75 million, down 28% from the year-ago period. Performance was hurt by dilutive price/cost and unfavorable mix.

Building Solutions Asia Pacific: Revenues decreased 4% to $646 million in the reported quarter. Our estimate for Building Solutions Asia-Pacific revenues was $663.3 million. Sales climbed 7% organically due to continued demand for HVAC & Controls. The segment’s adjusted EBITA came in at $68 million, flat year over year.

Global Products: Revenues in this segment were flat year over year at $2,080 million. Our estimate for Global Products revenues in the fiscal fourth quarter was $2,286.4 million. Organic sales rose 7% on the back of strong price realization and continued growth in Commercial HVAC and Fire Detection products. The segment’s adjusted EBITA came in at $382 million, up 27% year over year, aided by pricing actions.

Financial Position

Johnson Controls had cash and cash equivalents of $1,509 million as of Dec 31, 2022, compared with $2,031 million at the end of fiscal 2022. Long-term debt was $7,784 million compared with $7,426 million at the end of fiscal 2022. Free cash flow was negative $430 million during the first quarter of fiscal 2023 compared with positive $257 million in the year-ago period. The company repurchased and retired $154 million worth of shares in the fiscal first quarter.

Q2 Guidance

Johnson Controls anticipates organic revenue growth of approximately 10% year over year in the fiscal second quarter. Adjusted segment EBITDA margin is expected to improve 100 to 110 basis points year over year. The company expects adjusted earnings of 72-74 cents per share, indicating a 15-18% rise year over year. The Zacks Consensus Estimate for the same stands at 74 cents.

Fiscal 2023 Guidance

Johnson Controls anticipates organic revenue growth between high single digits and low double digits year over year. Adjusted segment EBITDA margin is expected to improve 90-120 basis points, year over year, in fiscal 2023. JCI predicts adjusted earnings of $3.30-$3.60 for fiscal 2023, reflecting an increase of 10-20% year over year. The mid-point of the guided range — $3.45 — lies below the Zacks Consensus Estimate of $3.48.

Zacks Rank & Key Picks

Johnson Controls presently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks within the broader Industrial Products sector are as follows:

Allegion plc (ALLE - Free Report) presently carries a Zacks Rank #2 (Buy). ALLE pulled off a trailing four-quarter earnings surprise of 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.

The Zacks Consensus Estimate for Allegion’s fourth-quarter earnings has been revised downward by 2.8% in the past 60 days.  The stock has gained 14.4% in the past six months.

Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI delivered a trailing four-quarter earnings surprise of 12.5%, on average.
 
The Zacks Consensus Estimate for Valmont’s 2022 earnings estimate has been revised upward by a penny in the past 60 days.  The stock has rallied 22.4% in the past six months.
 


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