Johnson Controls (JCI) Beats on Q4 Earnings, Lags Sales Mark

Johnson Controls International plc JCI reported adjusted fourth-quarter fiscal 2021 earnings per share of 88 cents, up 16% year over year. The bottom line marginally topped the Zacks Consensus Estimate of 87 cents. This outperformance stemmed from higher-than-expected contributions from Building Solutions Asia Pacific and Global Products segments.

Johnson Controls reported fiscal fourth-quarter adjusted revenues of $6,395 million, up 7% year over year. The revenue figure, however, fell short of the Zacks Consensus Estimate of $6,419 million.

Johnson Controls — which shares space with Allegion PLC ALLE, Lakeland Industries Inc. LAKE and Alarm.com Holdings, Inc. ALRM — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segmental Results

Building Solutions North America: This segment’s adjusted revenues came in at $2,347 million, up from the year-ago quarter’s $2,243 million on growth in HVAC & Controls, and Fire & Security and Performance Infrastructure. The segment’s EBITA increased to $357 million from the $345 million reported in fourth-quarter fiscal 2020 but lagged the consensus mark of $371 million.

Building Solutions Europe, Middle East, Africa/Latin America: Revenues in this segment came in at $962 million, up 6% year over year on a rebound in project installations. The segment’s EBITA came in at $107 million, up 4% year over year. The metric, however, missed the consensus mark of $112 million.

Building Solutions Asia Pacific: Revenues grew to $724 million from the year-ago quarter’s $661 million on higher project installations and services, driven by strong growth in Applied HVAC & Controls. The segment’s EBITA came in at $112 million, up from the fourth-quarter fiscal 2020 level of $97 million driven by favorable reserve adjustment. The reported EBITDA also surpassed the consensus mark of $109 million.

Global Products: Revenues in this segment climbed to $2,362 million from the prior year’s $2,144 million, mainly on higher sales in commercial and residential HVAC, and Fire & Security. This segment’s EBITA came in at $442 million, up 16% year over year aided by operational efficiency, favorable product mix and higher sales. The metric also beat the Zacks Consensus Estimate of $437 million.

Financial Position

Johnson Controls had cash and cash equivalents of $1,336 million as of Sep 30, 2021, down from $1,951 million on Sep 30, 2020. Long-term debt decreased to $7,506 million as of Sep 30, 2021 from $7,526 million as of Sep 30, 2020. Free cash flow for fourth-quarter fiscal 2021 came in at $301 million. During the reported quarter, Johnson Controls bought back 4.2 million shares for $306 million.

Guidance

For first-quarter fiscal 2022, Johnson Controls expects adjusted EPS in the range of 52-54 cents per share. For fiscal 2022, adjusted EPS is expected in the band of $3.22-$3.32, implying a 22-25% increase on a year-over-year basis. Organic revenues are expected to scale up in mid-to-high single digits year over year.

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