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Johnson Controls (JCI) Q2 Earnings Top, Revenues Lag Estimates
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Johnson Controls International plc (JCI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of 78 cents per share, which beat the Zacks Consensus Estimate of 75 cents. The bottom line increased 4% year over year.
Total revenues of $6.70 billion missed the consensus estimate of $6.75 billion. While the top line was relatively flat year over year, organic revenues inched up 1%.
Johnson Controls International plc Price, Consensus and EPS Surprise
Building Solutions North America: Revenues were $2.74 billion, up 9% year over year. Our estimate was $2.58 billion. Organic sales jumped 8%, driven by the strong performance of applied heating, ventilation and air conditioning (HVAC) & controls business. EBITA increased 18% year over year to $373 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues totaled $1.06 billion, up 3% year over year. Our estimate was $1.03 billion. Organic sales climbed 4% due to growth in service business. EBITA was $89 million, up 29% year over year.
Building Solutions Asia Pacific: Revenues decreased 26% to $491 million. Sales declined 23% organically due to weakness in the China region. EBITA was $54 million, down 32% year over year.
Global Products: Revenues declined 3% year over year to $2.40 billion. Our estimate was $2.48 billion. Organic sales were down 1% due to a decline in the global Residential HVAC business. EBITA was $429 million, down 12% year over year.
Margin Profile
In the fiscal second quarter, Johnson Controls’ cost of sales increased 1.6% year over year to $4.52 billion. Gross profit decreased 2.7% year over year to $2.18 billion and the margin decreased 90 basis points (bps) to 32.6%. Selling, general and administrative expenses were $2.25 billion, up 42.6% year over year.
Financial Position
Johnson Controls had cash and cash equivalents of $843 million as of Mar 31, 2024, compared with $835 million at the end of fiscal 2023. Long-term debt was $7.35 billion compared with $7.82 billion at the end of fiscal 2023.
In the first six months of fiscal 2024, the company used net cash of $449 million from operating activities against $18 million generated in the year-ago period. It reported free cash outflow of $674 million in the first six months of fiscal 2024 compared with $237 million in the year-ago period.
The company repurchased 8 million shares for $474 million in the second quarter of fiscal 2024.
Fiscal Q3 Guidance
Johnson Controls anticipates organic revenue growth to be in low-single digits from the year-ago levels. Adjusted segment EBITA margin is estimated to be approximately 17%. JCI expects adjusted earnings in the range of $1.05-$1.10 per share.
FY24 Guidance
Johnson Controls anticipates organic revenue growth to be in the mid-single digits from the prior-year levels. Adjusted segment EBITA margin is expected to improve 50-75 bps from the year-ago actuals. JCI expects adjusted earnings in the range of $3.60-$3.75 per share.
Zacks Rank
JCI currently carries Zacks Rank #4 (Sell).
Key Picks
Some better-ranked stocks from the Industrial Products sector are discussed below.
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Johnson Controls (JCI) Q2 Earnings Top, Revenues Lag Estimates
Johnson Controls International plc (JCI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of 78 cents per share, which beat the Zacks Consensus Estimate of 75 cents. The bottom line increased 4% year over year.
Total revenues of $6.70 billion missed the consensus estimate of $6.75 billion. While the top line was relatively flat year over year, organic revenues inched up 1%.
Johnson Controls International plc Price, Consensus and EPS Surprise
Johnson Controls International plc price-consensus-eps-surprise-chart | Johnson Controls International plc Quote
Segmental Results
Building Solutions North America: Revenues were $2.74 billion, up 9% year over year. Our estimate was $2.58 billion. Organic sales jumped 8%, driven by the strong performance of applied heating, ventilation and air conditioning (HVAC) & controls business. EBITA increased 18% year over year to $373 million.
Building Solutions Europe, Middle East, Africa/Latin America: Revenues totaled $1.06 billion, up 3% year over year. Our estimate was $1.03 billion. Organic sales climbed 4% due to growth in service business. EBITA was $89 million, up 29% year over year.
Building Solutions Asia Pacific: Revenues decreased 26% to $491 million. Sales declined 23% organically due to weakness in the China region. EBITA was $54 million, down 32% year over year.
Global Products: Revenues declined 3% year over year to $2.40 billion. Our estimate was $2.48 billion. Organic sales were down 1% due to a decline in the global Residential HVAC business. EBITA was $429 million, down 12% year over year.
Margin Profile
In the fiscal second quarter, Johnson Controls’ cost of sales increased 1.6% year over year to $4.52 billion. Gross profit decreased 2.7% year over year to $2.18 billion and the margin decreased 90 basis points (bps) to 32.6%. Selling, general and administrative expenses were $2.25 billion, up 42.6% year over year.
Financial Position
Johnson Controls had cash and cash equivalents of $843 million as of Mar 31, 2024, compared with $835 million at the end of fiscal 2023. Long-term debt was $7.35 billion compared with $7.82 billion at the end of fiscal 2023.
In the first six months of fiscal 2024, the company used net cash of $449 million from operating activities against $18 million generated in the year-ago period. It reported free cash outflow of $674 million in the first six months of fiscal 2024 compared with $237 million in the year-ago period.
The company repurchased 8 million shares for $474 million in the second quarter of fiscal 2024.
Fiscal Q3 Guidance
Johnson Controls anticipates organic revenue growth to be in low-single digits from the year-ago levels. Adjusted segment EBITA margin is estimated to be approximately 17%. JCI expects adjusted earnings in the range of $1.05-$1.10 per share.
FY24 Guidance
Johnson Controls anticipates organic revenue growth to be in the mid-single digits from the prior-year levels. Adjusted segment EBITA margin is expected to improve 50-75 bps from the year-ago actuals. JCI expects adjusted earnings in the range of $3.60-$3.75 per share.
Zacks Rank
JCI currently carries Zacks Rank #4 (Sell).
Key Picks
Some better-ranked stocks from the Industrial Products sector are discussed below.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings has increased 1.2% in the past 60 days.
Crane Company (CR - Free Report) presently flaunts a Zacks Rank of 1. It delivered a trailing four-quarter average earnings surprise of 15.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 4.9%.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.