Johnson Controls (JCI) Q3 Earnings In Line, Revenues Rise Y/Y
Johnson Controls International plc JCI reported third-quarter fiscal 2023 (ended Jun 30, 2023) adjusted earnings (excluding 50 cents from non-recurring items) of $1.03 per share, in line with the Zacks Consensus Estimate. The bottom line increased 21.2% year over year.
Total revenues of $7,133 million missed the Zacks Consensus Estimate of $7,186.8 million. The top line increased 7.9% year over year.
Segmental Results
Building Solutions North America: The segment’s revenues came in at $2,665 million, up 10% year over year. Our estimate for Building Solutions North America revenues was $2,675.4 million. Organic sales jumped 10%, owing to growth in the Service and Install businesses due to strong performances in HVAC & Controls and Fire & Security. The segment’s EBITA increased 48% year over year to $385 million.
Johnson Controls International plc Price, Consensus and EPS Surprise
Johnson Controls International plc price-consensus-eps-surprise-chart | Johnson Controls International plc Quote
Building Solutions Europe, Middle East, Africa/Latin America: Revenues from this segment totaled $1,045 million, up 10% year over year. Our estimate for Building Solutions Europe, Middle East, Africa/Latin America revenues for the fiscal third quarter was $1,066.7 million. Organic sales climbed 9% due to mid-teens growth in Service and high single-digit growth in HVAC & Controls and Fire & Security businesses. The segment’s EBITA came in at $90 million, up 8% from the year-ago period.
Building Solutions Asia Pacific: Revenues increased 11% to $736 million in the reported quarter. Our estimate for Building Solutions Asia-Pacific revenues was $739.1 million. Sales climbed 16% organically due to continued demand for HVAC & Controls. The segment’s EBITA came in at $102 million, up 20% year over year.
Global Products: Revenues in this segment climbed 5% year over year to $2,687 million. Our estimate for Global Products revenues in the fiscal third quarter was $2,583.8 million. Organic sales rose 6% on the back of strong growth in Applied, Fire Detection, Industrial Refrigeration and Commercial Ducted HVAC products. The segment’s EBITA came in at $593 million, up 4% year over year. Residential market weakness partly offsets the performance.
Financial Position
Johnson Controls had cash and cash equivalents of $1,057 million as of Jun 30, 2023, compared with $2,031 million at the end of fiscal 2022. Long-term debt was $8,497 million compared with $7,426 million at the end of fiscal 2022.
The company reported free cash flow of $546 million in the first nine months of fiscal 2023 compared with $381 million in the year-ago period.
The company repurchased 10.3 million shares for approximately $613 million in the first nine months of fiscal 2023.
Fiscal Q4 Guidance
For the fiscal fourth quarter, Johnson Controls anticipates organic revenue growth of 4% year over year. The adjusted segment EBITA margin is estimated to improve 60 basis points (bps) year over year. The company expects adjusted earnings of $1.10 per share in the fiscal fourth quarter, indicating a year-over-year increase of 11%. The Zacks Consensus Estimate for the same stands at $1.14.
FY23 Guidance
Johnson Controls, carrying a Zacks Rank #3 (Hold), anticipates year-over-year organic revenue growth in the high-single digit in fiscal 2023 (10% year-over-year increase was anticipated earlier). The adjusted segment EBITA margin is expected to improve 110 bps year over year (100-120 bps improvement was expected earlier). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
JCI expects adjusted earnings of $3.55 per share in fiscal 2023, indicating an increase of 18% on a year-over-year basis. The Zacks Consensus Estimate for the same stands at $3.57. Previously, the company expected adjusted earnings to be in the band of $3.50-$3.60.
Performance of Other Industrial Companies
A. O. Smith Corporation’s AOS second-quarter 2023 adjusted earnings (excluding 3 cents from non-recurring items) of $1.01 per share surpassed the Zacks Consensus Estimate of adjusted earnings of 91 cents per share. The bottom line jumped 23.2% year over year.
A. O. Smith’s net sales of $960.8 million underperformed the consensus estimate of $971 million. The top line dipped 0.5% year over year.
Allegion plc’s ALLE second-quarter 2023 adjusted earnings of $1.76 per share surpassed the Zacks Consensus Estimate of $1.69. The bottom line increased 28.5% year over year.
Allegion’s revenues of $912.5 million missed the Zacks Consensus Estimate of $927 million. However, the top line jumped 18% from the year-ago quarter.
IDEX Corporation’s IEX second-quarter 2023 adjusted earnings of $2.18 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $2.12 per share. On a year-over-year basis, the bottom line increased 7.9%.
IDEX’s net sales of $846.2 million underperformed the Zacks Consensus Estimate of $847 million. However, the top line increased 6.3% year over year. Organic sales in the quarter increased 3% year over year.
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