Johnson Controls International plc Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>Johnson Controls International plc has filed its quarterly report (10-Q) for the period ending December 31, 2023, detailing its financial performance for the first quarter of fiscal year 2024.</b>

AI Summary

Johnson Controls International plc (JCI) filed a Quarterly Report (10-Q) with the SEC on January 30, 2024. Johnson Controls International plc filed a 10-Q report for the period ending December 31, 2023. The filing covers the first quarter of the fiscal year 2024. The company's fiscal year ends on September 30th. The report includes financial data for the periods October 1, 2023 to December 31, 2023, and October 1, 2022 to December 31, 2022. The company was formerly known as Tyco International plc.

Why It Matters

For investors and stakeholders tracking Johnson Controls International plc, this filing contains several important signals. This 10-Q filing provides investors with the latest financial performance data for Johnson Controls, crucial for assessing the company's current health and future prospects. Understanding the details within this report allows stakeholders to evaluate the company's operational efficiency, profitability, and financial stability in the most recent reporting period.

Risk Assessment

Risk Level: — Johnson Controls International plc shows moderate risk based on this filing. The filing is a standard 10-Q, which is a routine quarterly report. While it contains important financial information, it does not inherently signal a significant positive or negative shift without further analysis of the specific numbers and commentary.

Analyst Insight

Review the detailed financial statements and management discussion within the 10-Q to identify trends in revenue, profitability, and debt levels for Johnson Controls.

Key Numbers

• 2023-12-31 — Reporting Period End Date (10-Q filing)
• 2024-01-30 — Filing Date (10-Q filing)
• 2023-09-30 — Fiscal Year End (Company data)

Key Players & Entities

• Johnson Controls International plc (company) — Filer name
• Tyco International plc (company) — Former company name
• Tyco International Ltd (company) — Former company name
• 0000833444-24-000011 (other) — Accession Number

Forward-Looking Statements

• Johnson Controls will successfully refinance its 2024 notes. (Johnson Controls International plc) — medium confidence, target: 2024-12-31

FAQ

Industry Context

Johnson Controls operates in the building solutions industry, providing products and services for HVAC, fire, and security systems.

Regulatory Implications

The filing is a standard 10-Q, a quarterly report required by the SEC for publicly traded companies under the Securities Exchange Act of 1934.

What Investors Should Do

1. Analyze revenue and net income trends for the Products and Systems and Service segments.
2. Examine changes in cash, debt, and equity from the previous fiscal year.
3. Review any disclosed risk factors or significant events impacting the company's operations.

Key Dates

• 2024-01-30: Filing Date — Submission of the 10-Q report for the period ending December 31, 2023.
• 2023-12-31: Period End Date — The end of the reporting quarter for the 10-Q filing.
• 2023-09-30: Fiscal Year End — Defines the company's annual financial reporting cycle.

Year-Over-Year Comparison

This is the first 10-Q filing for the fiscal year 2024, providing an update on the company's financial position and performance compared to the prior fiscal year's first quarter.

Key Financial Figures

• $0.01 — Registered Ordinary Shares, Par Value $0.01 JCI New York Stock Exchange 3.625% Se

Filing Documents

• jci-20231231.htm (10-Q) — 1373KB
• q1ex101fy2410-q.htm (EX-10.1) — 71KB
• q1ex311fy2410-q.htm (EX-31.1) — 10KB
• q1ex312fy2410-q.htm (EX-31.2) — 9KB
• q1ex32fy2410-q.htm (EX-32.1) — 5KB
• image_0.jpg (GRAPHIC) — 379KB
• 0000833444-24-000011.txt (&nbsp;) — 9677KB
• jci-20231231.xsd (EX-101.SCH) — 61KB
• jci-20231231_cal.xml (EX-101.CAL) — 87KB
• jci-20231231_def.xml (EX-101.DEF) — 327KB
• jci-20231231_lab.xml (EX-101.LAB) — 796KB
• jci-20231231_pre.xml (EX-101.PRE) — 533KB
• jci-20231231_htm.xml (XML) — 1530KB

Financial Information

Part I. Financial Information

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) Consolidated Statements of Income for the Three Month Periods Ended December 31, 2023 and 2022 3 Consolidated Statements of Comprehensive Income for the Three Month Periods Ended December 31, 2023 and 2022 4 Consolidated Statements of Financial Position at December 31, 2023 and September 30, 2023 5 Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 2023 and 2022 6 Consolidated Statements of Shareholders' Equity for the Three Month Periods Ended December 31, 2023 and 2022 7

Notes to Consolidated Financial Statements 8

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36

Quantitative and Qualitative Disclosures About Market Risk 46

Item 3. Quantitative and Qualitative Disclosures About Market Risk 46

Controls and Procedures 46

Item 4. Controls and Procedures 46

Other Information

Part II. Other Information

Legal Proceedings 47

Item 1. Legal Proceedings 47

Risk Factors 48

Item 1A. Risk Factors 48

Unregistered Sales of Equity Securities and Use of Proceeds 48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48

Other Information 48

Item 5. Other Information 48

Exhibits 49

Item 6. Exhibits 49 Signatures 50

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Johnson Controls International plc Consolidated Statements of Income (in millions, except per share data; unaudited) Three Months Ended December 31, 2023 2022 Net sales Products and systems $ 4,489 $ 4,556 Services 1,605 1,512 6,094 6,068 Cost of sales Products and systems 3,162 3,113 Services 940 864 4,102 3,977 Gross profit 1,992 2,091 Selling, general and administrative expenses 1,513 1,571 Restructuring and impairment costs 39 345 Net financing charges 99 67 Equity income 62 62 Income before income taxes 403 170 Income tax (benefit) provision ( 1 ) 14 Net income 404 156 Less: Income attributable to noncontrolling interests 30 38 Net income attributable to Johnson Controls $ 374 $ 118 Earnings per share attributable to Johnson Controls Basic $ 0.55 $ 0.17 Diluted 0.55 0.17 The accompanying notes are an integral part of the consolidated financial statements. 3 Johnson Controls International plc Consolidated Statements of Comprehensive Income (in millions; unaudited) Three Months Ended December 31, 2023 2022 Net income $ 404 $ 156 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 62 90 Realized and unrealized losses on derivatives ( 42 ) ( 17 ) Pension and postretirement plans ( 1 ) ( 1 ) Other comprehensive income 19 72 Total comprehensive income 423 228 Comprehensive income attributable to noncontrolling interests: Net income 30 38 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 1 31 Realized and unrealized losses on derivatives ( 4 ) ( 6 ) Other comprehensive income (loss) ( 3 ) 25 Comprehensive income attributable to noncontrolling interests 27 63 Comprehensive income attributable to Johnson Controls $ 396 $ 165 The accompanying notes are an integral part of the consolidated financial statements. 4 Johnson Controls International plc Consolidated Statements of Financial Position (i

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) 1. BASIS OF PRESENTATION The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a public limited company organized under the laws of Ireland, and its subsidiaries (Johnson Controls International plc and all its subsidiaries, hereinafter collectively referred to as the "Company," or "Johnson Controls"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on December 14, 2023. The results of operations for the three-month period ended December 31, 2023 are not necessarily indicative of results for the Company's 2024 fiscal year because of seasonal and other factors. Nature of Operations Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers in more than 150 countries. The Company's products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on bui

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) The revision did not change cash provided by financing activities or the total decrease in cash, cash equivalents and restricted cash. The Company does not believe the impact of the incorrect presentation was material. 2. NEW ACCOUNTING STANDARDS Recently Adopted Accounting Pronouncements In September 2022, the FASB issued ASU 2022-04, "Disclosure of Supplier Finance Program Obligations," which is intended to enhance the transparency surrounding the use of supplier finance programs. Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements. The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program's key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The Company adopted the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024. The rollforward disclosure will be adopted as required at the beginning of fiscal 2025. The Company maintains agreements with third-party financial institutions who offer voluntary supply chain financing ("SCF") programs to its suppliers. The SCF programs enable suppliers to sell their receivables to third-party financial institutions and receive payments earlier than the negotiated commercial terms between the suppliers and the Company, which generally range from 90 to 120 days. Suppliers sell receivables to third-party financial institutions on terms negotiated between the supplier and the respective third-party financial institution. The Company remains obligated to make payments under the terms of the original commercial arrangement regardless of whether the supplier receivable is sold, and doe

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) 3. ACQUISITIONS AND DIVESTITURES During the three months ended December 31, 2022, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 105 million, of which $ 79 million was paid as of December 31, 2022. In connection with the acquisitions, the Company recorded goodwill of $ 53 million within the Global Products segment and $ 2 million within the Building Solutions EMEA/LA segment. 4. ASSETS AND LIABILITIES HELD FOR SALE During the three months ended December 31, 2022, the Company recorded impairment charges primarily due to reductions in the estimated fair values of its Global Retail business of $ 228 million and a business in the Building Solutions Asia Pacific segment of $ 60 million. Both businesses were classified as held for sale as of December 31, 2022. All of the impairments were recorded within restructuring and impairment costs in the consolidated statements of income. No assets and liabilities were classified as held for sale as of December 31, 2023 or September 30, 2023. 5. REVENUE RECOGNITION Disaggregated Revenue The following tables present the Company's revenues disaggregated by segment and by Products & Systems and Services revenue (in millions): Three Months Ended December 31, 2023 2022 Products & Systems Services Total Products & Systems Services Total Building Solutions North America $ 1,518 $ 969 $ 2,487 $ 1,451 $ 916 $ 2,367 Building Solutions EMEA/LA 572 466 1,038 552 423 975 Building Solutions Asia Pacific 337 170 507 473 173 646 Global Products 2,062 — 2,062 2,080 — 2,080 Total $ 4,489 $ 1,605 $ 6,094 $ 4,556 $ 1,512 $ 6,068 The following table presents further disaggregation of Global Products segment revenues by product type (in millions): Three Months Ended December 31, 2023 2022 HVAC $ 1,418 $ 1,440 Fire & Security 547 570 Industrial Refrigeration 97 70 Total $ 2,062 $ 2,080 Con

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions): Location of contract balances December 31, 2023 September 30, 2023 Contract assets - current Accounts receivable - net $ 2,170 $ 2,370 Contract assets - noncurrent Other noncurrent assets 4 12 Contract liabilities - current Deferred revenue 2,122 1,996 Contract liabilities - noncurrent Other noncurrent liabilities 306 297 For the three months ended December 31, 2023 and 2022, the Company recognized revenue of $ 889 million and $ 846 million, respectively, that was included in the beginning of period contract liability balance. Performance Obligations A performance obligation is a distinct good, service, or a bundle of goods and services promised in a contract. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When contracts with customers require significant and complex integration, contain goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation. For any contracts with multiple performance obligations, the contract's transaction price is allocated to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation. Performance obligations are satisfied at a point in time or over time. The timing of satisfying the performance obligation is typically stipulated by the terms of the contract. As of December 31, 2023, the aggregate a

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) 6. ACCOUNTS RECEIVABLE The Company sold $ 702 million and $ 409 million of accounts receivable under factoring agreements during the three months ended December 31, 2023 and 2022, respectively. Previously sold receivables still outstanding were $ 761 million and $ 681 million as of December 31, 2023 and September 30, 2023, respectively. 7. INVENTORIES Inventories consisted of the following (in millions): December 31, 2023 September 30, 2023 Raw materials and supplies $ 1,252 $ 1,203 Work-in-process 248 226 Finished goods 1,506 1,347 Inventories $ 3,006 $ 2,776 8. GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill in each of the Company's reportable segments were as follows (in millions): Three Months Ended December 31, 2023 Building Solutions North America Building Solutions EMEA/LA Building Solutions Asia Pacific Global Products Total Goodwill $ 10,040 $ 1,932 $ 1,179 $ 5,750 18,901 Accumulated impairment loss ( 659 ) ( 47 ) — ( 259 ) ( 965 ) Balance at beginning of period 9,381 1,885 1,179 5,491 17,936 Foreign currency translation and other 15 76 38 59 188 Balance at end of period $ 9,396 $ 1,961 $ 1,217 $ 5,550 $ 18,124 (1) Includes measurement period adjustments The Company's other intangible assets, primarily from business acquisitions, consisted of (in millions): December 31, 2023 September 30, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Definite-lived intangible assets Technology $ 1,587 $ ( 849 ) $ 738 $ 1,575 $ ( 806 ) $ 769 Customer relationships 3,076 ( 1,571 ) 1,505 3,047 ( 1,496 ) 1,551 Miscellaneous 921 ( 462 ) 459 889 ( 435 ) 454 5,584 ( 2,882 ) 2,702 5,511 ( 2,737 ) 2,774 Indefinite-lived intangible assets Trademarks/trade names 2,133 — 2,133 2,114 — 2,114 Total intangible assets $ 7,717 $ ( 2,882 ) $ 4,835 $ 7,625 $ ( 2,737 ) $ 4,888 Am

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2023 (unaudited) 9. LEASES The following table presents supplemental consolidat

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