U.S. Markets open in 2 hrs 10 mins

Johnson Controls reports strong organic revenue and earnings growth in fiscal Q3; Tightens fiscal 2019 EPS guidance to high end of previous range

- GAAP EPS from continuing operations of $0.16 per share, including special items

- Adjusted EPS from continuing operations of $0.65, up 20% versus prior year

- Sales of $6.5 billion, up 3%, reflecting organic growth of 6%; Field up 2% with organic growth of 5%; Products up 3% with organic growth of 7%

- Field orders up 6% organically versus prior year; Backlog up 7% organically versus prior year

- Cash provided by operating activities from continuing operations of $0.6 billion; Adjusted free cash flow of $0.6 billion

- Completed the sale of the Power Solutions business with net cash proceeds of $11.6 billion; equity tender approximated 102 million shares for $4.0 billion and repaid $3.4 billion of debt

- Tightens fiscal 2019 adjusted EPS from continuing operations guidance range to $1.93 to $1.95, representing a year-over-year increase of 21% to 23%

CORK, Ireland, July 31, 2019 /PRNewswire/ -- Johnson Controls International plc (JCI) today reported fiscal third quarter 2019 GAAP earnings per share ("EPS") from continuing operations, including special items, of $0.16.  Excluding special items, adjusted EPS from continuing operations was $0.65, up 20% versus the prior year period (see attached footnotes for non-GAAP reconciliation).

Sales of $6.5 billion increased 3% compared to the prior year.  Excluding the impacts of M&A and foreign currency, sales grew 6% organically.     

GAAP earnings before interest and taxes ("EBIT") was $583 million and EBIT margin was 9.0%. Adjusted EBIT was $809 million and adjusted EBIT margin was 12.5%, up 50 basis points over the prior year.  Excluding the impact of M&A and foreign currency, underlying adjusted EBIT grew 11% versus the prior year and margin increased 60 basis points.

"We delivered another strong quarter of organic revenue, order and backlog growth as well as solid free cash flow.  These results reflect the continued emphasis on driving underlying fundamentals with a focus on new product development, talent management and enhanced commercial excellence across the organization," said George Oliver, chairman and CEO.  "We are pleased with the execution of our capital deployment actions related to the proceeds from the Power Solutions sale, which has positioned us to tighten our EPS guidance to the high end of the previous range," Oliver added.   

Income and EPS amounts attributable to Johnson Controls ordinary shareholders
($ millions, except per-share amounts)

The financial highlights presented in the tables below are in accordance with GAAP, unless otherwise indicated. All comparisons are to the fiscal third quarter of 2018.  The results of Power Solutions are reported as discontinued operations in all periods presented.

Organic sales growth, organic EBITA growth, adjusted segment EBITA, adjusted EBIT, adjusted EPS from continuing operations and adjusted free cash flow are non-GAAP financial measures. For a reconciliation of these non-GAAP measures and detail of the special items, refer to the attached footnotes.  A slide presentation to accompany the results can be found in the Investor Relations section of Johnson Controls' website at http://investors.johnsoncontrols.com.



GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Sales

$6,282

$6,451


$6,282

$6,451

+3%

Segment EBITA

942

832


954

992

+4%

EBIT

702

583


753

809

+7%

Net income from

continuing operations

474

141


506

565

+12%

Diluted EPS from continuing operations

$0.51

$0.16


$0.54

$0.65

+20%

BUSINESS RESULTS

Building Solutions North America


GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Sales

$2,246

$2,327


$2,246

$2,327

4%

Segment EBITA

$314

$300


$318

$310

(3%)

Segment EBITA margin %

14.0%

12.9%


14.2%

13.3%

(90bps)

Sales in the quarter of $2.3 billion increased 4% versus the prior year.  Excluding M&A and foreign currency, organic sales also increased 4% versus the prior year driven by strong growth in HVAC & Controls and, to a lesser extent, growth in Fire & Security. This was partially offset by a decline in Performance Solutions due to the timing of projects.        

Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 6% year-over-year.  Backlog at the end of the quarter of $5.7 billion increased 6% year-over-year, excluding M&A and adjusted for foreign currency.

Adjusted segment EBITA was $310 million, down 3% versus the prior year. Adjusted segment EBITA margin of 13.3% declined 90 basis points versus the prior year as favorable volume leverage as well as cost synergies and productivity savings, were more than offset by unfavorable mix and run-rate salesforce additions. 

Building Solutions EMEA/LA (Europe, Middle East, Africa/Latin America)


GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Sales

$926

$922


$926

$922

(0%)

Segment EBITA

$96

$101


$98

$103

5%

Segment EBITA margin %

10.4%

11.0%


10.6%

11.2%

60bps

Sales in the quarter of $922 million declined slightly versus the prior year.  Excluding M&A and foreign currency, organic sales grew 6% versus the prior year driven by strong growth in project installations. Growth was positive across most regions, led by strength in HVAC, Fire & Security and Industrial Refrigeration in Europe and Latin America.        

Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 8% year-over-year.  Backlog at the end of the quarter of $1.7 billion increased 11% year-over-year, excluding M&A and adjusted for foreign currency.

Adjusted segment EBITA was $103 million, up 5% versus the prior year. Adjusted segment EBITA margin of 11.2% expanded 60 basis points over the prior year, including a 30 basis point headwind related to foreign currency.  Adjusting for foreign currency, the underlying margin improved 90 basis points driven by favorable volume as well as the benefit from cost synergies and productivity savings, partially offset by run-rate salesforce additions. 

Building Solutions Asia Pacific


GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Sales

$681

$691


$681

$691

1%

Segment EBITA

$97

$98


$97

$98

1%

Segment EBITA margin %

14.2%

14.2%


14.2%

14.2%

Flat

Sales in the quarter of $691 million increased 1% versus the prior year.  Excluding M&A and foreign currency, organic sales increased 6% versus the prior year driven primarily by strong growth in project installations and solid growth in China.        

Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 1% year-over-year.  Backlog at the end of the quarter of $1.6 billion increased 7% year-over-year, excluding M&A and adjusted for foreign currency.

Adjusted segment EBITA was $98 million, up 1% versus the prior year. Adjusted segment EBITA margin of 14.2% was flat versus the prior year as favorable volume was offset by unfavorable mix, run-rate salesforce additions and expected underlying margin pressure.    

Global Products


GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Sales

$2,429

$2,511


$2,429

$2,511

3%

Segment EBITA

$435

$333


$441

$481

9%

Segment EBITA margin %

17.9%

13.3%


18.2%

19.2%

100bps

Sales in the quarter of $2.5 billion increased 3% versus the prior year. Excluding M&A and foreign currency, organic sales increased 7% versus the prior year with solid growth across Building Management Systems, HVAC & Refrigeration Equipment, and Specialty Products.   

Adjusted segment EBITA was $481 million, up 9% versus the prior year. Adjusted segment EBITA margin of 19.2% expanded 100 basis points over the prior year. This increase was driven by favorable volume and mix, positive price/cost as well as the benefit of cost synergies and productivity savings, partially offset by ongoing product investments. 

Corporate


GAAP

GAAP


Adjusted

Adjusted



Q3 2018

Q3 2019


Q3 2018

Q3 2019

Change

Corporate expense

($142)

$70


($103)

($90)

(13%)

Adjusted Corporate expense was $90 million in the quarter, a decrease of 13% compared to the prior year, driven primarily by continued cost synergies and productivity savings.                                                                

OTHER ITEMS

  • For the quarter, cash provided by operating activities from continuing operations was $0.6 billion and capital expenditures were $0.1 billion, resulting in free cash flow from continuing operations of $0.5 billion. Adjusted free cash flow was $0.6 billion, which excludes net cash outflows of $0.1 billion primarily related to integration costs.
  • Year-to-date, cash provided by operating activities from continuing operations was $0.7 billion and capital expenditures were $0.4 billion, resulting in a free cash flow from continuing operations of $0.3 billion. Adjusted free cash flow was $0.6 billion, which excludes net cash outflows of $0.3 billion primarily related to restructuring and integration costs.
  • During the quarter, the Company repurchased approximately 105 million shares for $4.1 billion, including the completion of the share tender on June 5, 2019. Year-to-date, the Company repurchased approximately 135 million shares for $5.1 billion, representing ~14% of shares outstanding.
  • During the quarter, the Company repaid $5.1 billion of short and long-term debt, including the completion of the $1.5 billion debt tender on May 30, 2019. As a result of the tender, the Company recorded a net pre-tax charge of $60 million as a loss on the early extinguishment of debt. During the quarter, the Company also repaid all outstanding financial obligations under the Tyco International Holding S.à.r.l (TSarl) term loan, revolving credit facility and TSarl other indebtedness.
  • Due to favorable resolution in the quarter, the Company released an indemnification reserve of $226 million related to a post-sale tax contingency for a previously divested Tyco business.
  • The Company recorded a $235 million non-cash asset impairment charge in the quarter related to the disposition of a non-core business now reported as held for sale.
  • The Company recorded a charge in the amount of $140 million related to environmental remediation costs associated with its facilities in Marinette, Wisconsin.
  • The Company recorded a discrete period tax charge of $226 million related primarily to newly enacted regulations related to U.S. Tax Reform in the quarter.
  • In connection with the sale of Power Solutions, the Company recorded a pre-tax gain of $5.2 billion which is reported in discontinued operations.

About Johnson Controls:

Johnson Controls is a global leader creating a safe, comfortable and sustainable world. Our 105,000 employees create intelligent buildings, efficient energy solutions and integrated infrastructure that work seamlessly together to deliver on the promise of smart cities and communities in 150 countries. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. We are committed to helping our customers win everywhere, every day and creating greater value for all of our stakeholders through our strategic focus on buildings. For additional information, please visit http://www.johnsoncontrols.com or follow us @johnsoncontrols on Twitter.

Johnson Controls International plc Cautionary Statement Regarding Forward-Looking Statements

Johnson Controls International plc has made statements in this communication that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this communication, statements regarding Johnson Controls' future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures and debt levels are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" and terms of similar meaning are also generally intended to identify forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. 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, including, among others, risks related to: any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions such as the merger with Tyco and the spin-off of Adient, changes in tax laws (including but not limited to the recently enacted Tax Cuts and Jobs Act), regulations, rates, policies or interpretations, the loss of key senior management, the tax treatment of recent portfolio transactions, significant transaction costs and/or unknown liabilities associated with such transactions, the outcome of actual or potential litigation relating to such transactions, the risk that disruptions from recent transactions will harm Johnson Controls' business, the strength of the U.S. or other economies, changes to laws or policies governing foreign trade, including increased tariffs or trade restrictions, mix and schedules, energy and commodity prices, the availability of raw materials and component products, currency rates and cancellation of or changes to commercial arrangements, and with respect to the disposition of the Power Solutions business, whether the strategic benefits of the Power Solutions transaction can be achieved. A detailed discussion of risks related to Johnson Controls' business is included in the section entitled "Risk Factors" in Johnson Controls' Annual Report on Form 10-K for the 2018 fiscal year filed with the SEC on November 20, 2018, and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 filed with the SEC on May 3, 2019, which are available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab. 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 communication are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this communication.

Non-GAAP Financial Information

The Company's press release contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include net mark-to-market adjustments, transaction/integration costs, restructuring and impairment costs, Scott Safety gain on sale, tax indemnification reserve release, environmental reserve, loss on extinguishment of debt, Power Solutions gain on sale (net of transaction and other costs), the impact of ceasing the depreciation/amortization expense for the Power Solutions business as the business is held for sale and discrete tax items. Financial information regarding organic sales, adjusted segment EBITA, adjusted organic segment EBITA, adjusted segment EBITA margin, adjusted free cash flow, adjusted free cash flow conversion and net debt are also presented, which are non-GAAP performance measures. Adjusted segment EBITA excludes special items such as transaction/integration costs, environmental reserve and Scott Safety gain on sale because these costs are not considered to be directly related to the underlying operating performance of its business units.  Management believes that, when considered together with unadjusted amounts, these non-GAAP measures are useful to investors in understanding period-over-period operating results and business trends of the Company. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure.

CONTACT:

Investors:


Antonella Franzen


(609) 720-4665




Ryan Edelman


(609) 720-4545




Media:


Fraser Engerman


(414) 524-2733

 

JOHNSON CONTROLS INTERNATIONAL PLC







CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data; unaudited)















Three Months Ended June 30,



2019



2018







Net sales


$ 6,451



$ 6,282

Cost of sales


4,307



4,194

        Gross profit


2,144



2,088







Selling, general and administrative expenses

(1,388)



(1,441)

Restructuring and impairment costs

(235)



-

Net financing charges

(119)



(95)

Equity income

62



55







Income from continuing operations before income taxes

464



607







Income tax provision

239



61







Income from continuing operations

225



546







Income from discontinued operations, net of tax

4,051



258







Net income


4,276



804







Less: Income from continuing operations attributable to noncontrolling interests

84



72







Less: Income from discontinued operations attributable to noncontrolling interests

-



9







Net income attributable to JCI

$ 4,192



$    723







Income from continuing operations

$    141



$    474

Income from discontinued operations

4,051



249







Net income attributable to JCI

$ 4,192



$    723







Diluted earnings per share from continuing operations

$   0.16



$   0.51

Diluted earnings per share from discontinued operations

4.63



0.27

Diluted earnings per share 

$   4.79



$   0.78







Diluted weighted average shares

875.2



930.7

Shares outstanding at period end

795.7



924.9







 

JOHNSON CONTROLS INTERNATIONAL PLC







CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data; unaudited)















Nine Months Ended June 30,



2019



2018







Net sales

$            17,694



$            17,217

Cost of sales

11,981



11,607

       Gross profit


5,713



5,610







Selling, general and administrative expenses

(4,284)



(4,250)

Restructuring and impairment costs

(235)



(154)

Net financing charges

(302)



(304)

Equity income

137



129







Income from continuing operations before income taxes

1,029



1,031







Income tax provision

394



314







Income from continuing operations

635



717







Income from discontinued operations, net of tax

4,598



841







Net income 

5,233



1,558







Less: Income from continuing operations attributable to noncontrolling interests

147



134








Less: Income from discontinued operations attributable to noncontrolling interests

24



33













Net income attributable to JCI

$              5,062



$              1,391







Income from continuing operations

$                 488



$                 583

Income from discontinued operations

4,574



808







Net income attributable to JCI

$              5,062



$              1,391







Diluted earnings per share from continuing operations

$                0.54



$                0.63

Diluted earnings per share from discontinued operations

5.07



0.87

Diluted earnings per share *

$                5.61



$                1.49







Diluted weighted average shares

902.2



932.1

Shares outstanding at period end

795.7



924.9







* May not sum due to rounding.





 

JOHNSON CONTROLS INTERNATIONAL PLC


CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in millions; unaudited)













June 30,


September 30,



2019


2018

ASSETS





Cash and cash equivalents

$           3,685


$               185

Accounts receivable - net

6,033


5,622

Inventories

2,050


1,819

Assets held for sale

95


3,015

Other current assets

1,179


1,182


Current assets

13,042


11,823






Property, plant and equipment - net

3,282


3,300

Goodwill


18,312


18,381

Other intangible assets - net

5,739


6,187

Investments in partially-owned affiliates

848


848

Noncurrent assets held for sale

59


5,188

Other noncurrent assets

1,787


3,070


Total assets

$         43,069


$          48,797






LIABILITIES AND EQUITY




Short-term debt and current portion of long-term debt

$              521


$            1,307

Accounts payable and accrued expenses

4,452


4,428

Liabilities held for sale

46


1,791

Other current liabilities

4,223


3,724


Current liabilities

9,242


11,250






Long-term debt

6,804


9,623

Other noncurrent liabilities

5,614


5,259

Noncurrent liabilities held for sale

-


207

Shareholders' equity attributable to JCI

20,363


21,164

Noncontrolling interests

1,046


1,294


Total liabilities and equity

$         43,069


$          48,797

 

JOHNSON CONTROLS INTERNATIONAL PLC











CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)



























Three Months Ended June 30,







2019



2018

Operating Activities





Net income attributable to JCI from continuing operations

$                141



$                474

Income from continuing operations attributable to noncontrolling interests

84



72











Net income from continuing operations

225



546











Adjustments to reconcile net income from continuing operations to cash provided by operating activities:







Depreciation and amortization

203



227



Pension and postretirement benefit income

(28)



(36)



Pension and postretirement contributions

(14)



(17)



Equity in earnings of partially-owned affiliates, net of dividends received

73



(25)



Deferred income taxes

(121)



1



Non-cash restructuring and impairment costs

235



-



Other - net

75



33



Changes in assets and liabilities, excluding acquisitions and divestitures:









Accounts receivable

(355)



(347)





Inventories

32



(2)





Other assets

(33)



(71)





Restructuring reserves

(25)



(49)





Accounts payable and accrued liabilities

(19)



321





Accrued income taxes

360



(24)






Cash provided by operating activities from continuing operations

608



557











Investing Activities





Capital expenditures

(123)



(201)

Acquisition of businesses, net of cash acquired

(3)



(9)

Business divestitures, net of cash divested

6



(13)

Other - net

16



13






Cash used in investing activities from continuing operations

(104)



(210)











Financing Activities





Increase (decrease) in short and long-term debt - net

(5,163)



34

Stock repurchases

(4,122)



(56)

Payment of cash dividends

(233)



(241)

Proceeds from the exercise of stock options

60



3

Employee equity-based compensation withholdings

(3)



(2)






Cash used in financing activities from continuing operations

(9,461)



(262)











Discontinued Operations





Net cash provided by (used in) operating activities

(385)



170

Net cash provided by (used in) investing activities

12,733



(84)

Net cash used in financing activities

(7)



(12)






Net cash flows provided by discontinued operations

12,341



74











Effect of exchange rate changes on cash, cash equivalents and restricted cash

14



(145)

Changes in cash held for sale

45



8

Increase in cash, cash equivalents and restricted cash

$             3,443



$                  22











 

JOHNSON CONTROLS INTERNATIONAL PLC











CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions; unaudited)



























Nine Months Ended June 30,







2019



2018

Operating Activities





Net income attributable to JCI from continuing operations

$                488



$                583

Income from continuing operations attributable to noncontrolling interests

147



134











Net income from continuing operations

635



717











Adjustments to reconcile net income from continuing operations to cash provided by operating activities:







Depreciation and amortization

625



649



Pension and postretirement benefit income

(85)



(108)



Pension and postretirement contributions

(51)



(53)



Equity in earnings of partially-owned affiliates, net of dividends received

6



(84)



Deferred income taxes

382



(78)



Non-cash restructuring and impairment costs

235



28



Gain on Scott Safety business divestiture

-



(114)



Other - net

108



71



Changes in assets and liabilities, excluding acquisitions and divestitures:









Accounts receivable

(494)



(454)





Inventories

(289)



(211)





Other assets

(62)



(245)





Restructuring reserves

(84)



(55)





Accounts payable and accrued liabilities

(36)



268





Accrued income taxes

(179)



366






Cash provided by operating activities from continuing operations

711



697











Investing Activities





Capital expenditures

(401)



(481)

Acquisition of businesses, net of cash acquired

(16)



(24)

Business divestitures, net of cash divested

12



2,101

Other - net

42



5






Cash provided by (used in) investing activities from continuing operations

(363)



1,601











Financing Activities





Increase (decrease) in short and long-term debt - net

(3,619)



(1,510)

Debt financing costs

-



(4)

Stock repurchases

(5,122)



(255)

Payment of cash dividends

(712)



(714)

Dividends paid to noncontrolling interests

(132)



(43)

Proceeds from the exercise of stock options

111



39

Employee equity-based compensation withholdings

(26)



(38)






Cash used in financing activities from continuing operations

(9,500)



(2,525)











Discontinued Operations





Net cash provided by operating activities

117



567

Net cash provided by (used in) investing activities

12,580



(312)

Net cash (used in) financing activities

(35)



(3)






Net cash flows provided by discontinued operations

12,662



252











Effect of exchange rate changes on cash, cash equivalents and restricted cash

(24)



(84)

Changes in cash held for sale

15



13

Increase (decrease) in cash, cash equivalents and restricted cash

$             3,501



$                 (46)

 

FOOTNOTES

 1.  Financial Summary


































































The Company evaluates the performance of its business units primarily on segment earnings before interest, taxes and amortization (EBITA), which represents income from continuing operations before income taxes and noncontrolling interests, excluding general corporate expenses, intangible asset amortization, net financing charges, restructuring and impairment costs, and the net mark-to-market adjustments related to restricted asbestos investments and pension and postretirement plans. In the first quarter of fiscal 2019, the Company began reporting the Power Solutions business as a discontinued operation, which required retrospective application to previously reported financial information. As a result, the financial results shown below are for continuing operations and exclude the Power Solutions business.



































(in millions; unaudited)



Three Months Ended June 30,


Nine Months Ended June 30,



















2019


2018


2019


2018



















Actual


Adjusted
Non-GAAP


Actual


Adjusted

Non-GAAP


Actual


Adjusted

Non-GAAP


Actual


Adjusted

Non-GAAP
















Net sales

































Building Solutions North America



$   2,327


$   2,327


$   2,246


$   2,246


$   6,630


$   6,630


$   6,355


$   6,355
















Building Solutions EMEA/LA



922


922


926


926


2,707


2,707


2,748


2,748
















Building Solutions Asia Pacific



691


691


681


681


1,932


1,932


1,864


1,864
















Global Products



2,511


2,511


2,429


2,429


6,425


6,425


6,250


6,250
















               Net sales



$   6,451


$   6,451


$   6,282


$   6,282


$ 17,694


$ 17,694


$ 17,217


$ 17,217

















































Segment EBITA (1)

































Building Solutions North America



$      300


$      310


$      314


$      318


$      807


$      822


$      780


$      798
















Building Solutions EMEA/LA



101


103


96


98


258


261


242


247
















Building Solutions Asia Pacific



98


98


97


97


240


240


242


242
















Global Products



333


481


435


441


774


930


949


856
















               Segment EBITA



832


992


942


954


2,079


2,253


2,213


2,143
















Corporate expenses (2)



70


(90)


(142)


(103)


(233)


(287)


(442)


(321)
















Amortization of intangible assets



(93)


(93)


(98)


(98)


(288)


(288)


(282)


(282)
















Net mark-to-market adjustments (3)



9


-


-


-


8


-


-


-
















Restructuring and impairment costs (4)



(235)


-


-


-


(235)


-


(154)


-
















               EBIT (5)



583


809


702


753


1,331


1,678


1,335


1,540
















               EBIT margin



9.0%


12.5%


11.2%


12.0%


7.5%


9.5%


7.8%


8.9%
















Net financing charges (6)



(119)


(59)


(95)


(95)


(302)


(242)


(304)


(304)
















Income from continuing operations before income taxes


464


750


607


658


1,029


1,436


1,031


1,236
















Income tax provision (7)



(239)


(101)


(61)


(80)


(394)


(194)


(314)


(150)
















Income from continuing operations



225


649


546


578


635


1,242


717


1,086
















Income from continuing operations attributable to 

































     noncontrolling interests



(84)


(84)


(72)


(72)


(147)


(147)


(134)


(134)
















Net income from continuing operations attributable to JCI


$      141


$      565


$      474


$      506


$      488


$   1,095


$      583


$      952

















































(1) The Company's press release contains financial information regarding adjusted segment EBITA and adjusted segment EBITA margins, which are non-GAAP performance measures. The Company's definition of adjusted segment EBITA excludes special items because these costs are not considered to be directly related to the underlying operating performance of its businesses. Management believes these non-GAAP measures are useful to investors in understanding the ongoing operations and business trends of the Company. 



































The following is the three months ended June 30, 2019 and 2018 reconciliation of segment EBITA and segment EBITA margin as reported to adjusted segment EBITA and adjusted segment EBITA margin (unaudited):



































(in millions)

 Building Solutions
North America 


 Building Solutions
EMEA/LA 


 Building Solutions
Asia Pacific 


 Global Products 


 Consolidated
JCI plc 











2019


2018


2019


2018


2019


2018


2019


2018


2019


2018














Segment EBITA as reported

$     300


$      314


$      101


$        96


$        98


$        97


$      333


$      435


$      832


$      942














Segment EBITA margin as reported

12.9%


14.0%


11.0%


10.4%


14.2%


14.2%


13.3%


17.9%


12.9%


15.0%















































Adjusting items:

































  Integration costs

10


4


2


2


-


-


8


6


20


12














  Environmental reserve (8)

-


-


-


-


-


-


140


-


140


-















































Adjusted segment EBITA

$     310


$      318


$      103


$        98


$        98


$        97


$      481


$      441


$      992


$      954














Adjusted segment EBITA margin

13.3%


14.2%


11.2%


10.6%


14.2%


14.2%


19.2%


18.2%


15.4%


15.2%















































The following is the nine months ended June 30, 2019 and 2018 reconciliation of segment EBITA and segment EBITA margin as reported to adjusted segment EBITA and adjusted segment EBITA margin (unaudited):



































(in millions)

 Building Solutions
North America 


 Building Solutions
EMEA/LA 


 Building Solutions
Asia Pacific 


 Global Products 


 Consolidated
JCI plc 















2019


2018


2019


2018


2019


2018


2019


2018


2019


2018














Segment EBITA as reported

$     807


$      780


$      258


$      242


$      240


$      242


$      774


$      949


$   2,079


$   2,213














Segment EBITA margin as reported

12.2%


12.3%


9.5%


8.8%


12.4%


13.0%


12.0%


15.2%


11.7%


12.9%















































Adjusting items:

































  Integration costs

15


18


3


5


-


-


16


21


34


44














  Scott Safety gain on sale

-


-


-


-


-


-


-


(114)


-


(114)














  Environmental reserve (8)

-


-


-


-


-


-


140


-


140


-















































Adjusted segment EBITA

$     822


$      798


$      261


$      247


$      240


$      242


$      930


$      856


$   2,253


$   2,143














Adjusted segment EBITA margin

12.4%


12.6%


9.6%


9.0%


12.4%


13.0%


14.5%


13.7%


12.7%


12.4%















































(2) Adjusted Corporate expenses for the three months ended June 30, 2019 excludes $226 million of income as a result of a tax indemnification reserve release, partially offset by $63 million of integration costs and $3 million of transaction costs. Adjusted Corporate expenses for the nine months ended June 30, 2019 excludes $226 million of income as a result of a tax indemnification reserve release, $165 million of integration costs and $7 million of transaction costs. Adjusted Corporate expenses for the three months ended June 30, 201null