Johnson Controls Q3 2024 10-Q Filing

TL;DR

JCI filed its Q3 10-Q, showing debt notes maturing through 2030. Check financials.

AI Summary

Johnson Controls International plc filed its 10-Q for the period ending June 30, 2024. The company reported its financial performance and operational details. Key financial instruments mentioned include various notes with different maturity dates and interest rates, such as the 3.750% notes due 2027 and 5.500% notes due 2029.

Why It Matters

This filing provides investors with an update on Johnson Controls' financial health and operational status, including details on its debt instruments, which are crucial for understanding its financial obligations and risk profile.

Risk Assessment

Risk Level: medium — The filing details various debt instruments, indicating financial leverage and associated interest rate risks.

Key Numbers

• 0930 — Fiscal Year End (Indicates the end of the company's fiscal year for reporting purposes.)
• 20240630 — Quarter End Date (Specifies the end date of the reporting period for this 10-Q filing.)
• 20240731 — Filing Date (The date the 10-Q report was officially submitted to the SEC.)

Key Players & Entities

• Johnson Controls International plc (company) — Filer
• 0000833444 (company) — Central Index Key
• 20240630 (date) — Period of Report
• 20240731 (date) — Filed as of Date
• 3.750% Notes Due 2027 (dollar_amount) — Debt Instrument
• 5.500% Notes Due 2029 (dollar_amount) — Debt Instrument

FAQ

Key Financial Figures

• $0.01 — Registered Ordinary Shares, Par Value $0.01 JCI New York Stock Exchange 1.375% No

Filing Documents

• jci-20240630.htm (10-Q) — 1744KB
• q3ex311fy2410-q.htm (EX-31.1) — 10KB
• q3ex312fy2410-q.htm (EX-31.2) — 9KB
• q3ex321fy2410-q.htm (EX-32.1) — 5KB
• 0000833444-24-000052.txt ( ) — 10743KB
• jci-20240630.xsd (EX-101.SCH) — 65KB
• jci-20240630_cal.xml (EX-101.CAL) — 103KB
• jci-20240630_def.xml (EX-101.DEF) — 378KB
• jci-20240630_lab.xml (EX-101.LAB) — 808KB
• jci-20240630_pre.xml (EX-101.PRE) — 599KB
• jci-20240630_htm.xml (XML) — 1942KB

Financial Information

Part I. Financial Information

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) Consolidated Statements of Income for the Three and Nine Month Periods Ended June 30, 2024 and 2023 3 Consolidated Statements of Comprehensive Income for the Three and Nine Month Periods Ended June 30, 2024 and 2023 4 Consolidated Statements of Financial Position at June 30, 2024 and September 30, 2023 5 Consolidated Statements of Cash Flows for the Nine Month Periods Ended June 30, 2024 and 2023 6 Consolidated Statements of Shareholders' Equity for the Three and Nine Month Periods Ended June 30, 2024 and 2023 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 39

Quantitative and Qualitative Disclosures About Market Risk 50

Item 3. Quantitative and Qualitative Disclosures About Market Risk 50

Controls and Procedures 51

Item 4. Controls and Procedures 51

Other Information

Part II. Other Information

Legal Proceedings 51

Item 1. Legal Proceedings 51

Risk Factors 52

Item 1A. Risk Factors 52

Unregistered Sales of Equity Securities and Use of Proceeds 52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 52

Other Information 53

Item 5. Other Information 53

Exhibits 54

Item 6. Exhibits 54 Signatures 55

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 June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Net sales Products and systems $ 5,422 $ 5,431 $ 14,896 $ 15,070 Services 1,809 1,702 5,128 4,817 7,231 7,133 20,024 19,887 Cost of sales Products and systems 3,652 3,708 10,273 10,337 Services 1,091 994 3,090 2,787 4,743 4,702 13,363 13,124 Gross profit 2,488 2,431 6,661 6,763 Selling, general and administrative expenses 1,090 1,555 4,854 4,705 Restructuring and impairment costs 106 81 399 844 Net financing charges 71 80 263 218 Equity income 58 78 176 190 Income before income taxes 1,279 793 1,321 1,186 Income tax provision (benefit) 227 ( 329 ) 99 ( 266 ) Net income 1,052 1,122 1,222 1,452 Less: Income attributable to noncontrolling interests 77 73 150 152 Net income attributable to Johnson Controls $ 975 $ 1,049 $ 1,072 $ 1,300 Earnings per share attributable to Johnson Controls Basic $ 1.45 $ 1.54 $ 1.58 $ 1.90 Diluted 1.45 1.53 1.58 1.89 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 June 30, Nine Months Ended June 30, 2024 2023 2024 2023 Net income $ 1,052 $ 1,122 $ 1,222 $ 1,452 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 67 ) ( 72 ) ( 100 ) 28 Realized and unrealized gains (losses) on derivatives 4 4 ( 11 ) 7 Pension and postretirement plans ( 1 ) ( 1 ) ( 3 ) ( 2 ) Other comprehensive income (loss) ( 64 ) ( 69 ) ( 114 ) 33 Total comprehensive income 988 1,053 1,108 1,485 Comprehensive income attributable to noncontrolling interests: Net income 77 73 150 152 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 16 ) ( 47 ) ( 18 )

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 (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 and nine month periods ended June 30, 2024 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 bu

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 (unaudited) 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 does not pledge any assets as security or provide other forms of guarantees for the committed payment to the third-party financial institutions. Amounts outstanding related to SCF programs are included in accounts payable in the consolidated statements of financial position. Accounts payable included in the SCF programs were approximately $ 669 million and $ 566 million as of June 30, 2024, and September 30, 2023, respectively. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, "Inc

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 (unaudited) to be classified as held for sale and the assets and liabilities of this business are separately presented in the consolidated statements of financial position. The following table summarizes the asset and liabilities associated with ADTi classified as held for sale (in millions): June 30, 2024 Assets Held for Sale Accounts receivable - net $ 91 Inventories 93 Other current assets 21 Current assets held for sale 205 Property, plant and equipment - net 83 Other intangible assets - net 308 Other noncurrent assets 131 Impairment on assets held for sale ( 35 ) Noncurrent assets held for sale 487 Total Assets $ 692 Liabilities Held for Sale Accounts payable $ 113 Accrued compensation and benefits 13 Other current liabilities 23 Current liabilities held for sale 149 Pension and postretirement benefits 5 Other noncurrent liabilities 198 Noncurrent liabilities held for sale 203 Total Liabilities $ 352 Based on the total consideration expected from the sale, net of costs to sell, the Company recorded non-cash impairment charges on the allocated goodwill of $ 21 million and the held for sale disposal group of $ 35 million within restructuring and impairment costs in the consolidated statements of income during the three months ended June 30, 2024. The business did not meet the criteria to be classified as a discontinued operation as the divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial results. The transaction is expected to close in the fourth quarter of fiscal 2024. No impairment charges were recorded during the three months ended June 30, 2023. During the nine months ended June 30, 2023, the Company recorded impairment charges for the Global Retail business of $ 438 million and the Building Solutions Asia Pacific segment of $ 60 million. The impairment charges were primarily due to reductions in

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 (unaudited) 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 June 30, 2024 2023 Products & Systems Services Total Products & Systems Services Total Building Solutions North America $ 1,791 $ 1,108 $ 2,899 $ 1,636 $ 1,029 $ 2,665 Building Solutions EMEA/LA 574 507 1,081 571 474 1,045 Building Solutions Asia Pacific 381 194 575 537 199 736 Global Products 2,676 — 2,676 2,687 — 2,687 Total $ 5,422 $ 1,809 $ 7,231 $ 5,431 $ 1,702 $ 7,133 Nine Months Ended June 30, 2024 2023 Products & Systems Services Total Products & Systems Services Total Building Solutions North America $ 5,009 $ 3,116 $ 8,125 $ 4,641 $ 2,911 $ 7,552 Building Solutions EMEA/LA 1,718 1,465 3,183 1,705 1,346 3,051 Building Solutions Asia Pacific 1,026 547 1,573 1,489 560 2,049 Global Products 7,143 — 7,143 7,235 — 7,235 Total $ 14,896 $ 5,128 $ 20,024 $ 15,070 $ 4,817 $ 19,887 The following table presents further disaggregation of Global Products segment revenues by product type (in millions): Three Months Ended June 30, Nine Months Ended June 30, 2024 2023 2024 2023 HVAC $ 1,971 $ 1,973 $ 5,072 $ 5,170 Fire & Security 601 626 1,755 1,819 Industrial Refrigeration 104 88 316 246 Total $ 2,676 $ 2,687 $ 7,143 $ 7,235 Contract Balances Contract assets relate to the Company's right to consideration for performance obligations satisfied but not billed. Contract liabilities relate to customer payments received in advance of satisfaction of performance obligations under the contract. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. 11 Johnson Controls International plc

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements June 30, 2024 (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 June 30, 2024 September 30, 2023 Contract assets - current Accounts receivable - net $ 1,961 $ 2,370 Contract assets - noncurrent Other noncurrent assets 9 12 Contract liabilities - current Deferred revenue 2,143 1,996 Contract liabilities - noncurrent Other noncurrent liabilities 314 297 For the three months ended June 30, 2024 and 2023, the Company recognized revenue of $ 269 million and $ 222 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year. For the nine months ended June 30, 2024 and 2023, the Company recognized revenue of $ 1,530 million and $ 1,387 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year. 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 obl

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