Johnson Controls Inc.
) reported adjusted earnings per share of 77 cents for the fourth
quarter of its fiscal year ended September 30, 2012, ahead of the
Zacks Consensus Estimate of 75 cents and up 1.3% from 76 cents a
year ago. Earnings were in line with the management expectation
of 0% to 5% growth in the quarter.
In absolute terms, profits went up marginally to $526.0 million
from $523.0 million in the year-ago quarter. Meanwhile, on a
reported basis, the company saw a loss of $8.0 million or a penny
per share, compared with a profit of $234.0 million or 34 cents
in the fourth quarter of fiscal 2011.
Management believes earnings had favorable impacts from the
improved profitability in Building Efficiency, Power Solutions
and North America Automotive Experience businesses. However,
these were offset by weak performance in automotive and building
markets in Europe.
The company's revenues for the quarter decreased 3.6% to $10.4
billion. It was marginally lower than the Zacks Consensus
Estimate of $10.8 billion. However, excluding the impact of
foreign exchange, revenues grew by 1% in the quarter.
The company recorded a pre-tax loss of $28.0 million in the
quarter versus a pre-tax income of $206.0 million a year ago.
Income from business segments went down 2% to $726.0 million from
$741.0 million in the prior-year quarter.
Revenues in the segment declined 2% to $5.0 billion, due to lower
production volumes in Europe and a weaker Euro, which offset the
higher production volumes in North America and Asia, as well as
the positive impact from new program launches. Segment income
slashed 33% to $159.0 million from $237.0 million a year ago.
Revenues in the segment slipped 7% to $3.8 billion, driven by
lower sales volume in North America, Europe and Middle East,
partially offset by higher sales in Asia. Residential Heating,
Ventilating and Air Conditioning (HVAC) sales grew 9% due to
strong demand on the back of higher temperatures in North
America. Segment income appreciated 33.5% to $327.0 million from
$245.0 million in the 2011 quarter. The increase was due to
reduction in selling, general and administrative (SG&A)
Excluding the impact of foreign exchange, the backlog of projects
at the end of the quarter rose 3% to $5.2 billion, driven by
strong growth in North American Systems and in Asia. Orders in
the quarter went down
Revenues in the segment remained flat at $1.56. Revenues were
favorably impacted by the growth in North American OEMs,
increased share in European aftermarket, and strength in Asia.
However, this was partially offset by sluggish demand in North
America and lower shipments to European OEMs. Segment income
decreased 5% to $240.0 million from $253.0 million in the fourth
quarter of fiscal 2011.
Johnson Controls reported fiscal 2012 adjusted earnings per share
of $2.59, up 5.3% from $2.46 a year ago. However, reported
earnings decreased to $1.2 billion or $1.78 per share from $1.4
billion or $2.06 in fiscal 2011.The company's revenues for the
year increased 2.7% to $41.9 billion from $40.8 billion in fiscal
Johnson Controls had cash and cash equivalents of $265.0 million
as of September 30, 2012 compared with $257.0 million as of
September 30, 2011. Total debt increased to $6.1 billion as of
September 30, 2012 from $5.1 billion as of September 30, 2011.
In fiscal 2012, Johnson Controls' operating cash flow improved
significantly by 44.9% to $1.6 billion from $1.1 billion in the
year-ago period. Meanwhile, capital expenditures increased to
$1.8 billion from $1.3 million in the prior year.
The company has not provided any specific guidance for fiscal
2013. It expects that earnings in the first half of fiscal 2013
will be lower than the year ago period due to weak end markets
and adverse effects of foreign currency.
However, it anticipates earnings will be higher in the second
half of fiscal 2013 compared to the year-ago period, driven by
positive impact from restructuring activities. Meanwhile,
earnings in fiscal 2013 are expected to be flat or a bit higher
than fiscal 2012.
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Johnson Controls is a supplier of automotive interiors,
batteries, and other control equipment. Its main competitors
Magna International Inc.
) in the Automotive Experience segment,
Honeywell International Inc.
) in the Building Efficiency segment and
) in the Power Solutions segment.
The company currently retains a Zacks #4 Rank on its stock, which
translates to a short-term rating (1-3 months) of Sell and we
reiterate our Underperform recommendation on its shares for the
long-term (more than 6 months).