Johnson Controls Reports 2013 Second Quarter Earnings; Re-Affirms Previous Full-Year Guidance

  Johnson Controls Reports 2013 Second Quarter Earnings; Re-Affirms Previous
                              Full-Year Guidance

PR Newswire

MILWAUKEE, April 23, 2013

MILWAUKEE, April 23, 2013 /PRNewswire-FirstCall/ --For the fiscal 2013 second
quarter, Johnson Controls (NYSE: JCI) reported net income of $148 million, or
$0.21 per share, on $10.4 billion in sales. The results were in-line with
expectations. Excluding restructuring and non-recurring items in the 2013 and
2012 fiscal second quarters, highlights include:

  oNet sales of $10.4 billion versus $10.6 billion in Q2 2012, down 1
    percent.
  oIncome from business segments of $463 million compared with $581 million a
    year ago, down 20 percent.
  oNet income of $287 million versus $378 million in Q2 2012.
  oDiluted earnings per share of $0.42 versus $0.55 in the same quarter last
    year.

Johnson Controls said it believes that using the adjusted numbers provides a
more meaningful comparison of its underlying operating performance.

A number of non-recurring items impacted Q2 2013 earnings and related earnings
per share. They include:

  o$82 million pre-tax gain from acquiring the remaining 50% equity interest
    in an Automotive Experience joint venture in India ($0.07 per diluted
    share).
  o$111 million of non-cash tax charges related primarily to valuation
    allowances in Germany and Brazil ($0.16 per diluted share).
  o$84 million restructuring charge at Automotive Experience related
    primarily to Interiors-Europe and South America ($0.12 per diluted share).

The company noted that there were non-recurring items as well in Q2 2012, but
that there was no net impact on earnings per share.

"Our second quarter results were at the high end of our previous guidance.
Building Efficiency posted earnings level with last year despite soft
institutional and construction markets which negatively impacted revenues.
Automotive Experience benefited from higher auto production in North America
and Asia, but these improvements were more than offset by the low production
levels as well as operational and restructuring-related costs in Europe," said
Stephen A. Roell, chairman and chief executive officer of Johnson Controls.
"We remain committed to improving profitability despite soft global demand in
our markets. Our restructuring initiatives are gaining momentum and proceeding
as planned. We expect to see significant benefits in the second half of the
fiscal year."

Business Results (excluding restructuring & one-time items)

Building Efficiency continued to experience soft global demand that is
impacting sales and orders secured. Sales were $3.5 billion, down 3 percent
versus the second quarter of 2012. Higher sales in North America Systems were
offset by lower revenues in Europe, Asia and North America Service.

Backlog declined 6 percent, with higher demand in Asia more than offset by
softness in energy solutions, the Middle East and Europe. Orders secured
dropped 10 percent versus the same quarter last year, with general softness
across all major geographic regions. The company noted, however, that it has
started to see year-over-year improvement in bidding activity in certain
markets, including U.S federal and state government and energy solutions.

Building Efficiency profitability increased in the 2013 quarter as earnings of
$139 million were approximately level with the prior year despite the lower
revenue. The business benefited from initiatives to improve labor productivity
and to reduce costs. In addition, new pricing programs continue to be
implemented across service offerings. Building Efficiency expects higher
revenue in the second half of fiscal 2013, led by seasonal growth in North
America Service and Unitary Products Group (UPG) and a favorable backlog in
Asia. Segment income will increasingly benefit from productivity and
restructuring programs initiated over the past year.

Automotive Experience sales in the 2013 second quarter were $5.4 billion, down
3 percent compared to the 2012 second quarter, as higher revenue in North
America was more than offset by lower sales in Europe. Automotive industry
production in the quarter increased 1 percent in North America and declined 8
percent in Europe. Seating and Interiors sales were down modestly, while
Electronics revenue dropped 13 percent. The Electronics revenue decline was
primarily the result of lower auto production rates in Europe where the
company has a higher level of electronics content.

Revenues in China, which are primarily related to Seating and generated
through non-consolidated joint ventures, increased 31 percent to $1.3 billion.

Automotive Experience segment income was $103 million, significantly lower
than the same quarter last year. The profitability of all three automotive
segments was impacted by the low level of European production. The company
said the performance of its European and South American businesses improved
sequentially. Seating segment income in the quarter was $98 million, down
significantly versus last year, primarily due to operational costs and lower
European volumes. Electronics segment income was $24 million, down 35 percent
due to European volumes and higher research and development costs. The
Interiors business reported a $19 million loss in the quarter mainly due to
lower volumes in Europe. Automotive Experience anticipates improved
profitability in the second half of fiscal 2013, led by better operational
performance in its European and South American businesses, as well as the
benefits of its restructuring program in Europe.

Power Solutions saw strong growth in revenue and earnings versus the second
quarter of 2012. Sales increased 10 percent to $1.6 billion versus the same
quarter last year. Stronger unit shipments in Asia and North America were
partially offset by lower volumes in Europe. Power Solutions segment income
was $221 million, 11 percent higher than the same quarter last year.

The Company also completed the ramp-up of its recycling facility in South
Carolina and the construction of its second Chinese battery plant is
proceeding on schedule.

Sale of Automotive Electronics Business

On March 6, Johnson Controls announced it had retained JPMorgan to explore a
potential sale of the electronics business to maximize shareholder value. The
Company said the process is in its early stages and it expects to provide an
update within the next three to four months.

2013 Outlook

Johnson Controls reaffirmed its previous earnings guidance for the 2013 fiscal
year of $2.60 - $2.70 per diluted share.

Factors driving improved second half performance include:

  oRealization of benefits from restructuring initiatives
  oSeasonality of Building Efficiency profitability with increasing benefits
    of improved cost and pricing initiatives
  oContinued sequential improvements in Automotive Experience European and
    South American businesses
  oImproved Power Solutions profitability associated with vertical
    integration and favorable year-over-year net lead costs
  oImproved North America and Europe production comparables

The Company said it is comfortable with analyst consensus of $0.75 per share
for third quarter 2013 earnings.

"Despite a challenging global market, we anticipate stronger profitability in
the second half of fiscal 2013 consistent with market expectations," said Mr.
Roell. "Our second half results will reflect restructuring benefits and
improved operating performance. We feel confident with our previously issued
guidance for higher Johnson Controls earnings in 2013."

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, 2012 and Johnson Controls' subsequent Quarterly
Reports on Form 10-Q. 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.

About Johnson Controls

Johnson Controls is a global diversified technology and industrial leader
serving customers in more than 150 countries. Our 168,000 employees create
quality products, services and solutions to optimize energy and operational
efficiencies of buildings; lead-acid automotive batteries and advanced
batteries for hybrid and electric vehicles; and interior systems for
automobiles. Our commitment to sustainability dates back to our roots in 1885,
with the invention of the first electric room thermostat. Through our growth
strategies and by increasing market share we are committed to delivering value
to shareholders and making our customers successful. In 2013, Corporate
Responsibility Magazine recognized Johnson Controls as the #14 company in its
annual "100 Best Corporate Citizens" list. For additional information, please
visit http://www.johnsoncontrols.com. Johnson Controls also uses Twitter for
disclosure of already publically available information on the Company. Follow
us at http://www.twitter.com/JCI_IR.

CONTACT: Glen L. Ponczak (Investors)
         (414) 524-2375
         David L. Urban (Investors)
         (414) 524-2838
         Fraser Engerman (Media)
         (414) 524-2733



JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
                                           Three Months Ended March 31,
                                           2013             2012 (Revised)
Net sales                                  $   10,430    $     10,565
Cost of sales                              8,942            9,012
Gross profit                         1,488            1,553
Selling, general and administrative        (1,091)          (1,050)
expenses
Restructuring costs                        (84)             -
Net financing charges                      (66)             (63)
Equity income                              148              79
Income before income taxes                 395              519
Provision for income taxes                 217              102
Net income                                 178              417
Less: income attributable to               30               38
noncontrolling interests
Net income attributable to JCI             $           $       
                                           148              379
Diluted earnings per share                $            $      
                                           0.21            0.55
Diluted weighted average shares            689              690
Shares outstanding at period end           685              680



JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
                                           Six Months Ended March 31,
                                           2013             2012 (Revised)
Net sales                                  $    20,852   $     20,982
Cost of sales                              17,856           17,893
  Gross profit                         2,996            3,089
Selling, general and administrative        (2,143)          (2,085)
expenses
Restructuring costs                        (84)             -
Net financing charges                      (127)            (112)
Equity income                              233              199
Income before income taxes                 875              1,091
Provision for income taxes                 313              215
Net income                                 562              876
Less: income attributable to               60               73
noncontrolling interests
Net income attributable to JCI             $           $       
                                           502              803
Diluted earnings per share                $            $      
                                           0.73            1.17
Diluted weighted average shares            688              690
Shares outstanding at period end           685              680



JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
                                    March 31,     September 30,  March 31,
                                    2013          2012           2012
ASSETS
Cash and cash equivalents           $    481  $        $      
                                                  265            240
Accounts receivable - net           7,317         7,308          7,402
Inventories                         2,298         2,227          2,374
Other current assets                2,730         2,873          2,346
       Current assets               12,826        12,673         12,362
Property, plant and equipment - net 6,525         6,440          6,086
Goodwill                            7,097         6,982          7,040
Other intangible assets - net       1,126         947            966
Investments in partially-owned      1,059         948            961
affiliates
Other noncurrent assets             3,224         2,894          3,558
       Total assets                 $  31,857    $          $    
                                                  30,884         30,973
LIABILITIES AND EQUITY
Short-term debt and current portion $   2,080   $        $      
of long-term debt                                 747            678
Accounts payable and accrued        7,125         7,204          7,269
expenses
Other current liabilities           2,896         2,904          2,608
       Current liabilities          12,101        10,855         10,555
Long-term debt                      4,590         5,321          5,645
Other noncurrent liabilities        2,929         2,752          2,710
Redeemable noncontrolling interests 205           253            318
Shareholders' equity attributable   11,798        11,555         11,595
to JCI
Noncontrolling interests            234           148            150
       Total liabilities and equity $  31,857    $          $    
                                                  30,884         30,973

JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
                                                 Three Months Ended March
                                                 31,
                                                 2013         2012 (Revised)
Operating Activities
Net income attributable to JCI                   $  148      $  379
Income attributable to noncontrolling interests  30           38
Net income                                       178          417
Adjustments to reconcile net income to cash
provided by operating activities:
    Depreciation and amortization                234          200
    Pension and postretirement benefit cost      3            6
    Pension and postretirement contributions     (29)         (22)
    Equity in earnings of partially-owned        (51)         (59)
    affiliates, net of dividends received
    Deferred income taxes                        129          (26)
    Impairment charges                           13           14
    Gain on divestitures - net                   -            (35)
    Fair value adjustment of equity investment   (82)         (12)
    Other                                       14           18
    Changes in assets and liabilities, excluding
    acquisitions and divestitures:
          Accounts receivable                    (316)        (277)
          Inventories                            (64)         (74)
          Restructuring reserves                 35           (5)
          Accounts payable and accrued           248          186
          liabilities
          Change in other assets and liabilities (95)         (88)
            Cash provided by operating           217          243
            activities
Investing Activities
Capital expenditures                             (293)        (448)
Sale of property, plant and equipment           29           3
Acquisition of businesses, net of cash acquired  (113)        (19)
Business divestitures                            -            91
Other                                           47           (7)
            Cash used by investing activities    (330)        (380)
Financing Activities
Increase in short and long-term debt - net       241          313
Stock repurchases                                (50)         (33)
Payment of cash dividends                        -            (123)
Other                                           78           (1)
            Cash provided by financing           269          156
            activities
Effect of exchange rate changes on cash and cash 11           (20)
equivalents
Increase (decrease) in cash and cash equivalents $ 167       $    (1)



JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
                                                    Six Months Ended March 31,
                                                    2013       2012 (Revised)
Operating Activities
Net income attributable to JCI                      $ 502      $  803
Income attributable to noncontrolling interests     60         73
Net income                                          562        876
Adjustments to reconcile net income to cash
provided by operating activities:
  Depreciation and amortization                     457        396
  Pension and postretirement benefit cost (credit)  (13)       13
  Pension and postretirement contributions          (45)       (364)
  Equity in earnings of partially-owned affiliates, (99)       (161)
  net of dividends received
  Deferred income taxes                             121        43
  Impairment charges                                13         14
  Gain on divestitures - net                        -          (35)
  Fair value adjustment of equity investment        (82)       (12)
  Other                                            27         36
  Changes in assets and liabilities, excluding
  acquisitions and divestitures:
               Accounts receivable                  (75)       (71)
               Inventories                          (84)       (69)
               Restructuring reserves               1          (15)
               Accounts payable and accrued         81         (119)
               liabilities
               Change in other assets and           (349)      (386)
               liabilities
                       Cash provided by operating   515        146
                       activities
Investing Activities
Capital expenditures                                (664)      (986)
Sale of property, plant and equipment              46         6
Acquisition of businesses, net of cash acquired     (113)      (30)
Business divestitures                               -          91
Other                                              36         (92)
                       Cash used by investing       (695)      (1,011)
                       activities
Financing Activities
Increase in short and long-term debt - net          614        1,121
Stock repurchases                                   (50)       (33)
Payment of cash dividends                           (253)      (232)
Other                                              113        (19)
                       Cash provided by financing   424        837
                       activities
Effect of exchange rate changes on cash and cash    (28)       11
equivalents
Increase (decrease) in cash and cash equivalents    $ 216      $  (17)



FOOTNOTES
1. Business Unit Summary
In the fourth quarter of fiscal 2012, the Company changed its method of
accounting for pension and postretirement benefits which required
retrospective application to prior year financial statements. As a result of
this accounting change, the segment income amounts shown below reflect pension
and postretirement expense reductions of $23 million ($0.02) for the fiscal
2012 second quarter and $46 million ($0.05) for fiscal 2012 year-to-date.
                 Three Months Ended               Six Months Ended
                 March 31,                        March 31,
(in millions)    (unaudited)                      (unaudited)
                 2013        2012         %       2013       2012         %
                             (Revised)                       (Revised)
Net Sales
Building         $ 3,456     $ 3,556      -3%     $ 6,988    $ 7,098      -2%
Efficiency
Automotive       5,414       5,596        -3%     10,628     10,857       -2%
Experience
Power Solutions  1,560       1,413        10%     3,236      3,027        7%
Net Sales     $ 10,430    $ 10,565             $ 20,852   $ 20,982
Segment
Income(1) (2)
Building         $  139     $  162     -14%    $  311    $  307     1%
Efficiency
Automotive       185         234          -21%    286        435          -34%
Experience
Power Solutions  221         186          19%     489        461          6%
Segment       $  545     $  582             $ 1,086    $ 1,203
Income
Restructuring    $  (84)    $   -             $  (84)   $  -
costs
Net financing    (66)        (63)                 (127)      (112)
charges
Income before    $  395     $  519             $  875    $ 1,091
income taxes
Net Sales
Products and     $ 8,407     $ 8,495      -1%     $ 16,764   $ 16,829     0%
systems
Services         2,023       2,070        -2%     4,088      4,153        -2%
                 $ 10,430    $ 10,565             $ 20,852   $ 20,982
Cost of Sales
Products and     $ 7,263    $ 7,299      0%      $ 14,478   $ 14,458     0%
systems
Services         1,679       1,713        -2%     3,378      3,435        -2%
                 $ 8,942     $ 9,012              $ 17,856   $ 17,893

(1) Management evaluates the performance of the business units based primarily
on segment income, which represents income from continuing operations before
income taxes and noncontrolling interests, excluding net financing charges,
significant restructuring costs, and the net mark-to-market adjustments
related to pension and postretirement plans.
Building Efficiency - Provides facility systems and services including
comfort, energy and security management for the non-residential buildings
market and provides heating, ventilating, and air conditioning products and
services for the residential and non-residential building markets.
Automotive Experience - Designs and manufactures interior systems and products
for passenger cars and light trucks, including vans, pick-up trucks and
sport/crossover utility vehicles.
Power Solutions - Services both automotive original equipment manufacturers
and the battery aftermarket by providing advanced battery technology, coupled
with systems engineering, marketing and service expertise.

(2) These second quarter reported numbers include certain non-recurring
items. The pre-tax non-recurring items are reported in the segments as
follows:
                                                                 
                        Automotive    Building
                        Experience    Efficiency    Power         Consolidated
                                                    Solutions     JCI
                        2013   2012   2013   2012   2013   2012   2013    2012
Segment income, as      $ 185  $ 234  $ 139  $ 162  $ 221  $ 186  $ 545   $
reported                                                                 582
Non-recurring items:
 Equity affiliate      (82)   -      -      -      -      -      (82)    -
gain
 Impairment charges   -      -      -      -      -      14     -       14
 Restructuring         -      9      -      11     -      -      -       20
charges
 Divestiture net       -      -      -      (35)   -      -      -       (35)
gains
Segment income,
excluding
 non-recurring items  $ 103  $ 243  $ 139  $ 138  $ 221  $ 200  $ 463   $
                                                                          581

2. Acquisitions
In the second quarter of fiscal 2013, the Company acquired the remaining 50
percent of its equity interest in an Automotive Experience joint venture in
India resulting in a gain of $82 million. The Company paid approximately
$88million (net of cash acquired of $4million) for the remaining ownership
percentage.
3. Income Taxes
The Company's effective tax rate before consideration of non-cash tax charges,
restructuring costs, and other non-recurring items for the second quarter of
fiscal 2013 and fiscal 2012 is 20 percent. The fiscal 2013 second quarter
includes $111 million ($0.16) of non-cash tax charges related primarily to
valuation allowances in Germany and Brazil.
4. Restructuring
The fiscal 2013 second quarter includes restructuring costs of $84 million
related primarily to Automotive Interiors Europe and South America.
5. Earnings Per Share
The following table reconciles the numerators and denominators used to
calculate basic and diluted earning per share (in millions):

                            Three Months Ended         Six Months Ended
                            March 31,                  March 31,
                            2013     2012 (Revised)    2013     2012 (Revised)
                            (unaudited)                (unaudited)
Income Available to Common
Shareholders
Basic income available to
common
shareholders                $  148  $  379           $  502  $  803
Interest expense, net of    -        -                 -        1
tax
Diluted income available to
common
shareholders                $  148  $  379           $  502  $  804
Weighted Average Shares
Outstanding
Basic weighted average      684.0    680.0             683.6    679.9
shares outstanding
Effect of dilutive
securities:
 Stock options and      5.4      6.2               4.4      5.9
unvested restricted stock
 Equity units           -        3.7               -        3.7
Diluted weighted average    689.4    689.9             688.0    689.5
shares outstanding



SOURCE Johnson Controls, Inc.

Website: http://www.johnsoncontrols.com
 
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