Johnson Controls 10-Q: Debt Details & Former Tyco Ties

TL;DR

JCI 10-Q out: Debt maturities detailed, former Tyco name mentioned. All good.

AI Summary

Johnson Controls International plc filed its 10-Q for the period ending December 31, 2024. The company reported on its financial performance and operations, including details on various debt instruments such as the 3.75% Notes due 2027 and 5.500% Notes due 2029. The filing also references its former name, Tyco International plc, and its incorporation in L2.

Why It Matters

This filing provides investors with a quarterly update on Johnson Controls' financial health, including its debt obligations, which are crucial for assessing the company's stability and future investment potential.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report and does not indicate any immediate or significant new risks.

Key Numbers

• 2024-12-31 — Reporting Period End (Quarterly financial update)
• 2025-02-05 — Filing Date (Date the report was submitted)

Key Players & Entities

• Johnson Controls International plc (company) — Filer
• Tyco International plc (company) — Former company name
• 2024-12-31 (date) — Reporting period end date
• 3.75% 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-20241231.htm (10-Q) — 1422KB
• q1ex311fy2510-q.htm (EX-31.1) — 10KB
• q1ex312fy2510-q.htm (EX-31.2) — 9KB
• q1ex321fy2510-q.htm (EX-32.1) — 5KB
• 0000833444-25-000011.txt ( ) — 9489KB
• jci-20241231.xsd (EX-101.SCH) — 62KB
• jci-20241231_cal.xml (EX-101.CAL) — 120KB
• jci-20241231_def.xml (EX-101.DEF) — 345KB
• jci-20241231_lab.xml (EX-101.LAB) — 778KB
• jci-20241231_pre.xml (EX-101.PRE) — 560KB
• jci-20241231_htm.xml (XML) — 1576KB

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, 2024 and 2023 3 Consolidated Statements of Comprehensive Income for the Three Month Periods Ended December 31, 2024 and 2023 4 Consolidated Statements of Financial Position at December 31, 2024 and September 30, 2024 5 Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 2024 and 2023 6 Consolidated Statements of Shareholders' Equity for the Three Month Periods Ended December 31, 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 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 47

Item 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds 49

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49

Other Information 49

Item 5. Other Information 49

Exhibits 50

Item 6. Exhibits 50 Signatures 51

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, 2024 2023 Net sales Products and systems $ 3,685 $ 3,604 Services 1,741 1,605 5,426 5,209 Cost of sales Products and systems 2,456 2,490 Services 1,044 941 3,500 3,431 Gross profit 1,926 1,778 Selling, general and administrative expenses 1,399 1,334 Restructuring and impairment costs 33 35 Net financing charges 86 87 Equity loss — ( 2 ) Income from continuing operations before income taxes 408 320 Income tax provision (benefit) 47 ( 20 ) Income from continuing operations 361 340 Income from discontinued operations, net of tax (Note 3) 90 64 Net income 451 404 Income (loss) attributable to noncontrolling interests Continuing operations ( 2 ) — Discontinued operations 34 30 Net income attributable to Johnson Controls $ 419 $ 374 Income attributable to Johnson Controls Continuing operations $ 363 $ 340 Discontinued operations 56 34 Total $ 419 $ 374 Basic earnings per share attributable to Johnson Controls Continuing operations $ 0.55 $ 0.50 Discontinued operations 0.08 0.05 Total $ 0.63 $ 0.55 Diluted earnings per share attributable to Johnson Controls Continuing operations $ 0.55 $ 0.50 Discontinued operations 0.08 0.05 Total $ 0.63 $ 0.55 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, 2024 2023 Net income $ 451 $ 404 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 146 ) 62 Realized and unrealized gains (losses) on derivatives 12 ( 42 ) Pension and postretirement plans ( 1 ) ( 1 ) Other comprehensive income (loss) ( 135 ) 19 Total comprehensive income 316 423 Comprehensive income attributable to n

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 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, 2024 filed with the SEC on November 19, 2024. The results of operations for the three month period ended December 31, 2024 are not necessarily indicative of results for the Company's 2025 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 around the globe. 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 buildings. T

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2024 (unaudited) The Company consolidates variable interest entities ("VIE") when it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant. The Company did not have any material consolidated or nonconsolidated VIE's for the presented reporting periods. 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 in fiscal 2025. Amounts outstanding related to supply chain financing ("SCF") programs are included in accounts payable in the consolidated statements of financial position. Accounts payable included in the SCF programs were approximately $ 733 million and $ 703 million as of December 31, 2024 and September 30, 2024, respectively. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," which is intended to enhance transparency into the

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2024 (unaudited) 3. ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS In July 2024, the Company entered into a definitive agreement to sell its R&LC HVAC business, which includes the North America Ducted businesses and the global Residential joint venture with Hitachi, of which Johnson Controls owns 60 % and Hitachi owns 40 %, to Bosch Group for approximately $ 8.1 billion in cash with the Company's portion of the aggregate consideration being approximately $ 6.7 billion, inclusive of an upfront royalty payment for the licensing of the York tradename. The transaction is expected to close in the fourth quarter of fiscal 2025, subject to required regulatory approvals and other customary closing conditions. The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as discontinued operations as it represents a strategic shift in the Company's operations and results in the exit of substantially all of its residential and light commercial HVAC businesses. Results of the business are presented in discontinued operations for all periods presented. The Company determined that the assets and liabilities for the R&LC HVAC business met the held for sale criteria during the fourth quarter of 2024. Accordingly, the businesses' assets and liabilities were reclassified in the consolidated balance sheets at December 31, 2024 and September 30, 2024 to held for sale, and the Company ceased recording depreciation and amortization for the held for sale assets. The following table summarizes the results of the R&LC HVAC business which are reported as discontinued operations (in millions): Three Months Ended December 31, 2024 2023 Net sales $ 966 $ 885 Cost of goods sold 731 671 Gross profit 235 214 Selling, general and administrative expenses 183 180 Restructuring and impairment costs 4 4 Net financing charges ( 1 ) 11 Equity income 65

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2024 (unaudited) The following table summarizes the assets and liabilities of the R&LC HVAC business which were classified as held for sale (in millions): December 31, 2024 September 30, 2024 Cash $ 2 $ 5 Accounts receivable - net 539 592 Inventories 979 876 Other current assets 138 122 Current assets held for sale 1,658 1,595 Property, plant and equipment - net 743 793 Goodwill 1,130 1,182 Other intangible assets - net 94 96 Investments in partially-owned affiliates 833 949 Other noncurrent assets 186 190 Noncurrent assets held for sale 2,986 3,210 Total assets classified as held for sale $ 4,644 $ 4,805 Accounts payable $ 887 $ 917 Accrued compensation and benefits 99 113 Deferred revenue 112 84 Other current liabilities 224 317 Current liabilities held for sale 1,322 1,431 Pension and postretirement benefit obligations 25 28 Other noncurrent liabilities 382 377 Noncurrent liabilities held for sale 407 405 Total liabilities classified as held for sale $ 1,729 $ 1,836 Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell. As of December 31, 2024, the estimated fair value less costs to sell of the held for sale businesses exceeded their carrying value, and therefore, no adjustment was necessary. 11 Johnson Controls International plc

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2024 (unaudited) 4. 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, 2024 2023 Products & Systems Services Total Products & Systems Services Total Building Solutions North America $ 1,695 $ 1,049 $ 2,744 $ 1,518 $ 969 $ 2,487 Building Solutions EMEA/LA 574 499 1,073 572 466 1,038 Building Solutions Asia Pacific 334 193 527 337 170 507 Global Products 1,082 — 1,082 1,177 — 1,177 Total $ 3,685 $ 1,741 $ 5,426 $ 3,604 $ 1,605 $ 5,209 The following table presents further disaggregation of Global Products segment revenues by product type (in millions): Three Months Ended December 31, 2024 2023 HVAC $ 468 $ 533 Fire & Security 522 547 Industrial Refrigeration 92 97 Total $ 1,082 $ 1,177 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. 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, 2024 September 30, 2024 Contract assets - current Accounts receivable - net $ 1,917 $ 1,931 Contract assets - noncurrent Other noncurrent assets 6 11 Contract liabilities - current Deferred revenue 2,211 2,160 Contract liabilities - noncurrent Other noncurrent liabilities 253 252 For the three months ended December 31, 2024 and 2023, the Company recognized revenue of $ 878 million and $ 839 million, respectively, that was included in the contract liabili

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements December 31, 2024 (unaudited) 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, 2024, the aggregate amount of t

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