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Johnson Controls reports higher revenues, operational improvements in 2014 fiscal third quarter [Global Data Point](Global Data Point Via Acquire Media NewsEdge) Third quarter diluted earnings per share from continuing operations and excluding restructuring and non-recurring items was $0.84, up 17 percent versus $0.72 last year. As a result of the previously announced sale of its Automotive Electronics business, the company has classified Electronics results as discontinued operations and prior year financial statements have been revised accordingly. Excluding restructuring and non-recurring items in the third quarter, continuing operations highlights include: • Net revenues of $10.8 billion versus $10.5 billion in Q3 2013, up 3 percent • Income from business segment operations of $794 million compared with $690 million a year ago, up 15 percent • Diluted earnings per share of $0.84 versus $0.72 in the same quarter last year, up 17 percent • Non-recurring items that impacted reported third quarter earnings from continuing operations include: 2014 third quarter (primarily related to business portfolio changes) • Pre-tax restructuring charges of $162 million primarily related to the Automotive Interiors business ($151 million after-tax) • Pre-tax losses from divested businesses and other transaction-related costs of $140 million ($174 million after-tax) 2013 third quarter • $140 million in non-recurring tax benefits • Pre-tax restructuring charges of $143 million ($104 million after-tax) "Our performance was consistent with the expectations we disclosed in our second quarter earnings call, with strong overall performance by our automotive and power businesses and margin improvement in Building Efficiency," said Alex Molinaroli, Johnson Controls chairman and chief executive officer. "The overall non-residential HVAC markets remain challenged, but we are starting to see some increased demand in certain vertical markets. While orders are still lower than last year, the institutional building sector started showing some improvement as we exited the quarter." Business results (All results exclude non-recurring items) Automotive Experience revenues from continuing operations in the fiscal third quarter of 2014 were $5.7 billion, up 7 percent compared to the 2013 quarter, reflecting higher automotive production in all geographic regions. Automotive industry production in the quarter increased 4 percent in North America, 1 percent in Europe and 11 percent in China. Revenues in China, which are primarily related to Seating and generated through non-consolidated joint ventures, increased 28 percent to $1.8 billion. Automotive Experience segment income from continuing operations of $295 million was up 22% compared to $241 million in the third quarter of 2013. The increase reflects profitability improvements in the company's Seating and Interiors businesses. Operational performance improved in the company's metals and mechanisms business and in Europe, which benefitted from restructuring initiatives and higher revenues. In the third quarter, BMW Brilliance Automotive Ltd. awarded a luxury sedan complete seat program in China to the Shenyang Jinbei Johnson Controls Automotive joint venture. The program is expected to be worth approximately $2.1 billion in revenues over its lifetime, with production expected to launch in 2017. Building Efficiency sales in the fiscal third quarter of 2014 were $3.6 billion, 4 percent lower than the 2013 third quarter due to lower market demand in North America, Latin America and the Middle East. Excluding Global Workplace Solutions (GWS) and the impact of divestitures, revenues were 1 percent lower. Adjusted for divestitures and currency, backlog was $4.7 billion compared to the third quarter of last year at $5.0 billion. Third quarter orders were 8 percent lower than last year. Orders in the 2013 quarter were favorably impacted by a $70 million Veteran's Administration hospital contract. The company said that certain vertical markets showed higher demand in the 2014 quarter, though this growth was more than offset by lower demand in other key markets. New construction demand was stronger in the education, state/local government and industrial new construction buildings markets as well for retrofits of U.S. Federal government and healthcare facilities. Building Efficiency segment income of $306 million was down 3 percent compared with $314 million in the 2013 third quarter, due primarily to the lower volumes. Segment income profit margins were 8.6%, an increase of 10 basis points compared with the third quarter of last year. The company noted that its acquisition of Air Distribution Technologies Inc. (ADT) which was completed late in the 2014 third quarter, did not have a material impact on earnings. The transaction is expected to increase the company's exposure to the early cycle light commercial buildings market, significantly expand Johnson Controls' third party distribution channels and create cross-selling opportunities for existing and new products. As a result, the company said it expects its Building Efficiency business to report low single-digit revenue growth in the fiscal 2014 fourth quarter. Power Solutions sales in the fiscal third quarter of 2014 were $1.5 billion, up 6 percent versus the 2013 quarter. Excluding the impact of lead, sales increased 8 percent. Global unit shipments increased 5 percent, with global production of AGM batteries for start-stop vehicles increasing 17 percent compared with the prior year. Power Solutions segment income was $193 million, up 43 percent, versus $135 million in the third quarter of 2013 due to improved product mix, higher volumes and operational efficiencies. Johnson Controls said that in the 2014 third quarter, it was awarded new original equipment battery business in China for both traditional and AGM lead-acid batteries. Production is expected to launch in 2016. It also won new aftermarket business in the United States, Europe and Japan, totaling approximately three million units annually, with some of the incremental production to start later in the calendar year. For the fourth quarter of 2014, the company provided earnings guidance from continuing operations of $1.00 - $1.02 per share, up approximately 11 percent versus the 2013 fourth quarter, excluding any transaction-related costs. The company also reaffirmed its full fiscal year guidance for free cash flow of $1.6 billion and segment margin improvements in all three of its businesses. The updated guidance assumes that underlying earnings from the recently announced Air Distribution Technologies acquisition are not material in the fourth quarter. "We continue to execute well across all of our businesses, improving our operational performance while making significant changes to our businesses that we expect will drive future growth and increased shareholder value," said Molinaroli. "I thank our employees for their dedication and commitment during a period of significant change in our organization." (c) 2014 GlobalData Provided by SyndiGate Media Inc. (Syndigate.info). |