Johnson Controls Reports Double-Digit Increase in Q3 2013 Earnings with Significant Improvements in its European Automotive

   Johnson Controls Reports Double-Digit Increase in Q3 2013 Earnings with
         Significant Improvements in its European Automotive Business

Sale of Automotive Electronics' HomeLink® Product Line Announced

PR Newswire

MILWAUKEE, July 18, 2013

MILWAUKEE, July 18, 2013 /PRNewswire/ -- For the third quarter of fiscal 2013,
Johnson Controls reported net income of $571 million, up 32 percent over last
year. Revenues increased by two percent, to $10.8 billion. Diluted earnings
per share were $0.83 compared with $0.63 per share in the third quarter of
fiscal 2012.

The 2013 quarter includes non-recurring tax benefits of $140 million which
were partially offset by pre-tax restructuring charges of $143 million ($104
million after-tax) related primarily to severance costs and asset impairments,
resulting in a net benefit of $0.05 per diluted share. The 2012 third quarter
included pre-tax restructuring charges of $52 million, partially offset by
non-recurring tax benefits of $22 million, resulting in a net charge of $0.03
per diluted share.

Excluding these non-recurring items, highlights for the company's third
quarter of 2013 include:

  oIncome from business segments of $764 million compared with $638 million a
    year ago, up 20 percent
  oNet income of $535 million vs. $455 million in Q3 2012, up 18 percent
  oDiluted earnings per share of $0.78 vs. $0.66 last year, up 18 percent

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

Other highlights include:

  oDouble-digit improvements in segment income in all three businesses
  oCash provided by operating activities of approximately $1.0 billion; net
    debt reduction of $556 million
  oEuropean automotive business profitable; continued improvements in
    automotive Metals performance
  oBuilding Efficiency third quarter orders up two percent versus the 2012
    quarter
  oNew Power Solutions business awards in North America

"We are pleased with the significant improvement in profitability of all three
businesses in the third quarter. Our initiatives to reduce costs and improve
operational efficiencies continue to gather momentum and deliver margin
expansion," said Stephen A. Roell, Johnson Controls chairman and chief
executive officer. "Despite a challenging production environment, our European
automotive business generated a profit in the quarter and profitability
improved in our automotive Metals business. Cash flow in the quarter was very
strong, enabling us to reduce net debt by more than $550 million. I'd like to
recognize the support of our 168,000 employees and thank them for a very good
quarter."

Business segments, excluding non-recurring items

Building Efficiency continued to experience soft demand in its North American
and European markets, impacting revenues in the third quarter. Sales were $3.7
billion, down two percent versus the third quarter of 2012. Revenues were
lower across all Building Efficiency segments except Asia, which was slightly
higher.

The company noted that third quarter orders increased two percent with slight
improvements in all geographies while its pipeline of bidding activity
continued to improve. The quarter-end backlog of unexecuted orders was $5.1
billion, five percent lower than last year.

Johnson Controls said that in the third quarter it was awarded a $70 million
building technology contract for the new one-million-square-foot Veteran's
Administration Hospital under construction in Denver, Colorado. The contract
is in addition to a previous $5 million award to Johnson Controls for York®
HVAC equipment and includes a Metasys® control system, fire alarm system,
security system, advanced utility metering, nurse call and IT systems. The
project is the largest single Systems contract ever won by Johnson Controls.

Despite the slightly lower revenue, Building Efficiency segment income margins
were 8.5 percent, a 120 basis point improvement versus last year. Segment
income was $314 million, 14% higher than $276 million in the 2012 quarter. The
business continued to benefit from strong performance by its Service business,
as well as pricing initiatives and cost reduction programs.

Power Solutions revenue rose eight percent, to $1.4 billion, compared to $1.3
billion last year. While the Company's global unit shipments were higher than
the last-year period, Johnson Controls said that industry-wide aftermarket
battery demand was weaker than expected in both North America and Europe.
Power Solutions segment income was $171 million, 12 percent higher than $153
million in the same quarter last year due to the higher volumes, an improved
product mix and the incremental contribution from the Company's battery
recycling facility in South Carolina.

The Company said that in the third quarter, it was awarded new battery
business in North America totaling approximately one million incremental units
per year. Additionally, it also announced that on July 1, 2013, it implemented
a 3 to 4 percent price increase on aftermarket batteries in North America to
offset higher acquisition costs for spent battery cores, which are the key
source of lead for recycling within its material supply chain.

Automotive Experience sales in the 2013 third quarter were $5.7 billion, up
four percent compared to the 2012 third quarter, as higher auto production in
North America and Asia was partially offset by lower volumes in Europe.
Automotive industry production in the quarter increased six percent in North
America and declined one percent in Europe. Revenues in China, which are
primarily related to Seating and generated through non-consolidated joint
ventures, increased 23 percent to $1.4 billion.

Automotive Experience segment income was $279 million, 33 percent higher than
the same quarter last year with higher profitability in all three automotive
segments. The company said third quarter income from its European automotive
business was $11 million, a significant sequential quarterly improvement from
the loss by the business in the second quarter of the year. The improved
performance in Europe was attributable to its Metals operations and the
benefit of restructuring actions. The Company noted that its third quarter
segment income was positively impacted by a gain on sale of an asset, but that
the benefit was substantially offset by other charges.

Johnson Controls said it believes the automotive production environment for
the remainder of the year is positive with the Chinese market remaining
strong, North American continuing to improve and Europe showing signs of
stabilization.

Status of Automotive Electronics divestiture

Today the Company announced that it has signed a definitive agreement to sell
its Automotive Electronics' HomeLink product line to Gentex Corporation of
Zeeland, MI for approximately $700 million. The transaction is expected to
close in late Q4 to early fiscal 2014. Johnson Controls said that the
continuing process to sell the remainder of its Electronics business is
progressing as planned and that it is targeting an announcement of a
definitive agreement on or before its 2013 Q4 earnings release date. The
Company said that separating HomeLink from the rest of the Electronics
business is expected to maximize value as the individual businesses offer
distinct advantages and synergies for different sets of strategic buyers.

Q4 and 2013 update

Johnson Controls said that it expects fiscal fourth quarter 2013 earnings to
be $0.93 to $0.95, resulting in full fiscal year earnings of $2.64 to $2.66
per share.

The Company also said it expects strong free cash flow generation from
operations to continue and anticipates that its fourth quarter net debt
reduction will be approximately $600 to $650 million, excluding divestiture
proceeds.

"Earlier this fiscal year, we said that our second half performance would be
positively impacted by our restructuring initiatives, sequential improvements
in Automotive Experience European and South American businesses, and
profitability initiatives in Building Efficiency. We expect the benefits of
these actions to deliver further improvements in our fourth fiscal quarter,"
said Mr. Roell. "We are confident in our ability to increase our earnings,
strengthen our balance sheet and deliver shareholder value."

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. Follow Johnson Controls Investor
Relations on Twitter at www.twitter.com/JCI_IR.

         Glen L. Ponczak (Investors)

         (414) 524-2375

CONTACT: 

         Fraser Engerman (Media)

         (414) 524-2733

JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
                                       Three Months Ended June 30,
                                       2013              2012 (Revised)
Net sales                              $    10,831    $      10,581
Cost of sales                          9,151             9,040
 Gross profit                      1,680             1,541
Selling, general and administrative    (991)             (973)
expenses
Restructuring costs                    (143)             (52)
Net financing charges                  (67)              (59)
Equity income                          75                70
Income before income taxes             554               527
Income tax provision (benefit)         (40)              71
Net income                             594               456
Less: income attributable to           23                25
noncontrolling interests
Net income attributable to JCI         $      571  $         431
Diluted earnings per share             $      0.83  $        0.63
Diluted weighted average shares        690               689
Shares outstanding at period end       684               684

JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data; unaudited)
                                     Nine Months Ended June 30,
                                     2013                2012 (Revised)
Net sales                            $     31,683   $      31,563
Cost of sales                        27,007              26,933
 Gross profit                      4,676               4,630
Selling, general and administrative  (3,134)             (3,058)
expenses
Restructuring costs                  (227)               (52)
Net financing charges                (194)               (171)
Equity income                        308                 269
Income before income taxes           1,429               1,618
Income tax provision                 273                 286
Net income                           1,156               1,332
Less: income attributable to         83                  98
noncontrolling interests
Net income attributable to JCI       $      1,073  $       1,234
Diluted earnings per share          $             $       
                                     1.56               1.79
Diluted weighted average shares      689                 689
Shares outstanding at period end     684                 684

JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions; unaudited)
                                   June 30,    September 30,     June 30,
                                   2013        2012              2012
ASSETS
Cash and cash equivalents          $   391  $           $      
                                               265              602
Accounts receivable - net          7,259       7,308             7,155
Inventories                        2,354       2,227             2,362
Other current assets               2,665       2,873             2,447
       Current assets              12,669      12,673            12,566
Property, plant and equipment -    6,569       6,440             6,116
net
Goodwill                           7,135       6,982             6,953
Other intangible assets - net      1,055       947               949
Investments in partially-owned     1,022       948               1,007
affiliates
Other noncurrent assets            3,300       2,894             3,411
       Total assets                $ 31,750    $     30,884  $    
                                                                 31,002
LIABILITIES AND EQUITY
Short-term debt and current        $  1,431   $           $     
portion of long-term debt                      747              1,035
Accounts payable and accrued       7,323       7,204             7,062
expenses
Other current liabilities          3,030       2,904             2,714
       Current liabilities         11,784      10,855            10,811
Long-term debt                     4,593       5,321             5,624
Other noncurrent liabilities       2,807       2,752             2,610
Redeemable noncontrolling          205         253               214
interests
Shareholders' equity attributable  12,118      11,555            11,596
to JCI
Noncontrolling interests           243         148               147
       Total liabilities and       $ 31,750    $     30,884  $    
       equity                                                    31,002



JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
                                                   Three Months Ended June 30,
                                                   2013        2012 (Revised)
Operating Activities
Net income attributable to JCI                     $       $       
                                                   571         431
Income attributable to noncontrolling interests    23          25
Net income                                         594         456
Adjustments to reconcile net income to cash
provided by operating activities:
 Depreciation and amortization                     239         207
 Pension and postretirement benefit cost           8           6
 Pension and postretirement contributions          (16)        (24)
 Equity in earnings of partially-owned affiliates, 50          (45)
 net of dividends received
 Deferred income taxes                             (130)       42
 Impairment charges                                36          -
 Gain on divestitures - net                        (29)        -
 Other                                            10          7
 Changes in assets and liabilities, excluding
 acquisitions and divestitures:
         Accounts receivable                       60          16
         Inventories                               (67)        (61)
         Restructuring reserves                    66          39
         Accounts payable and accrued liabilities  234         90
         Change in other assets and liabilities    (21)        (114)
               Cash provided by operating          1,034       619
               activities
Investing Activities
Capital expenditures                               (265)       (447)
Sale of property, plant and equipment             7           6
Other                                             (10)        (6)
               Cash used by investing activities   (268)       (447)
Financing Activities
Increase (decrease) in short and long-term debt -  (646)       407
net
Stock repurchases                                  (175)       (9)
Payment of cash dividends                          (130)       (122)
Other                                             95          (118)
               Cash provided (used) by financing   (856)       158
               activities
Effect of exchange rate changes on cash and cash   -           32
equivalents
Increase (decrease) in cash and cash equivalents   $       $       
                                                   (90)        362

JOHNSON CONTROLS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
                                                Nine Months Ended June 30,
                                                2013           2012 (Revised)
Operating Activities
Net income attributable to JCI                  $   1,073    $     
                                                               1,234
Income attributable to noncontrolling interests 83             98
Net income                                      1,156          1,332
Adjustments to reconcile net income to cash
provided by operating activities:
 Depreciation and amortization                  696            603
 Pension and postretirement benefit cost        (5)            19
 (credit)
 Pension and postretirement contributions       (61)           (388)
 Equity in earnings of partially-owned          (49)           (206)
 affiliates, net of dividends received
 Deferred income taxes                          (9)            85
 Impairment charges                             49             14
 Gain on divestitures - net                     (29)           (35)
 Fair value adjustment of equity investment     (82)           (12)
 Other                                         37             43
 Changes in assets and liabilities, excluding
 acquisitions and divestitures:
        Accounts receivable                     6              (55)
        Inventories                             (151)          (130)
        Restructuring reserves                  67             24
        Accounts payable and accrued            314            (29)
        liabilities
        Change in other assets and liabilities  (390)          (500)
              Cash provided by operating        1,549          765
              activities
Investing Activities
Capital expenditures                            (929)          (1,433)
Sale of property, plant and equipment          53             12
Acquisition of businesses, net of cash acquired (113)          (30)
Business divestitures                           -              91
Other                                          26             (98)
              Cash used by investing activities (963)          (1,458)
Financing Activities
Increase (decrease) in short and long-term debt (32)           1,528
- net
Stock repurchases                               (225)          (42)
Payment of cash dividends                       (383)          (354)
Other                                          208            (137)
              Cash provided (used) by financing (432)          995
              activities
Effect of exchange rate changes on cash and     (28)           43
cash equivalents
Increase in cash and cash equivalents           $    126   $       
                                                               345

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 third quarter and $69 million ($0.06) for fiscal 2012 year-to-date.
                  Three Months Ended             Nine Months Ended
                  June 30,                       June 30,
(in millions)     (unaudited)                    (unaudited)
                  2013       2012         %      2013       2012         %
                             (Revised)                      (Revised)
Net Sales
Building          $ 3,712    $ 3,800      -2%    $10,700    $ 10,898     -2%
Efficiency
Automotive        5,694      5,465        4%     16,322     16,322       0%
Experience
Power Solutions   1,425      1,316        8%     4,661      4,343        7%
Net Sales         $10,831    $ 10,581            $31,683    $ 31,563
Segment Income
(1)
Building          $ 314      $ 276        14%    $ 625      $ 583        7%
Efficiency
Automotive        279        209          33%    565        644          -12%
Experience
Power Solutions   171        153          12%    660        614          7%
Segment Income    $ 764      $ 638               $ 1,850    $ 1,841
Restructuring     $ (143)    $ (52)              $ (227)    $ (52)
costs
Net financing     (67)       (59)                (194)      (171)
charges
Income before     $ 554      $ 527               $ 1,429    $ 1,618
income taxes
Net Sales
Products and      $ 8,779    $ 8,464      4%     $25,543    $ 25,293     1%
systems
Services          2,052      2,117        -3%    6,140      6,270        -2%
                  $10,831    $ 10,581            $31,683    $ 31,563
Cost of Sales
Products and      $ 7,481    $ 7,286      3%     $21,959    $ 21,744     1%
systems
Services          1,670      1,754        -5%    5,048      5,189        -3%
                  $ 9,151    $ 9,040             $27,007    $ 26,933

(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 on
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. Income Taxes



The Company's effective tax rate before consideration of non-cash
tax charges, significant restructuring costs, and other
non-recurring items for the third quarter of fiscal 2013 and fiscal
2012 is 20 percent. The fiscal 2013 third quarter includes $140
million ($0.20) of net non-cash tax benefits, related primarily to
a net tax reserve adjustment of $79 million in the U.S. and $61
million in Mexico.
3. Restructuring



The fiscal 2013 third quarter includes restructuring costs of $143
million related to cost reduction initiatives in the Automotive
Experience, Building Efficiency and Power Solutions businesses.
The restructuring costs consist of workforce reductions and
impairment costs.

4. 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         Nine Months Ended
                            June 30,                   June 30,
                            2013     2012              2013      2012
                                     (Revised)                   (Revised)
                            (unaudited)                (unaudited)
Income Available to Common
Shareholders
Basic income available to   $      $            $ 1,073  $     
common shareholders         571        431                    1,234
Interest expense, net of    -        -                 -         1
tax
Diluted income available to $      $            $ 1,073  $     
common shareholders         571        431                    1,235
Weighted Average Shares
Outstanding
Basic weighted average      683.9    683.4             683.7     681.1
shares outstanding
Effect of dilutive
securities:
 Stock options and      6.2      5.3               5.0       5.7
unvested restricted stock
 Equity units           -        0.1               -         2.5
Diluted weighted average    690.1    688.8             688.7     689.3
shares outstanding



SOURCE Johnson Controls, Inc.

Website: http://www.johnsoncontrols.com
 
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