Johnson Controls (JCI) Q1 Earnings Top Estimates, Rise Y/Y

Johnson Controls International plcJCI posted adjusted earnings of 53 cents per share in first-quarter fiscal 2017 (ended Dec 31, 2016) that surpassed the Zacks Consensus Estimate of 52 cents. Moreover, earnings increased 10% from 48 cents earned in the first quarter of fiscal 2016.

Operational Update

Johnson Controls reported revenues of $7,086 billion, up from $7,066 million. Revenues missed the Zacks Consensus Estimate of $7,093 million. Revenues benefitted from organic sales growth offset by the negative impact of foreign currency translation, net acquisition and divestiture activity.

Cost of sales increased to $4.97 billion from $3.44 billion in the year-ago quarter. Gross profit rose to $2.1 billion from $1.3 billion a year ago.

Selling, general and administrative expenses in the first quarter totaled $1.57 billion, up from the prior-year quarter figure of $847 million.

Johnson Controls International PLC Price, Consensus and EPS Surprise

Johnson Controls International PLC Price, Consensus and EPS Surprise | Johnson Controls International PLC Quote

Segment Results

Building Efficiency: In this segment, revenues came in at $5.2 billion, down 2% from the year-ago level. Excluding incremental revenue associated with M&A and foreign currency impact, organic sales declined 1% due to lower product revenues.

The quarter-end backlog increased 5% year over year. Orders, excluding M&A and adjusted for foreign exchange, were up 2% year over year, led by an increase in field orders partially offset by decline in product orders.

Segment EBITA climbed 3% to $578 million in the reported quarter from $559 million in the prior-year quarter.

Power Solutions: Revenues at the Power Solutions segment improved 9% to $1.9 billion. Excluding the impact of foreign exchange and higher lead pass-through costs, organic sales increased 7%. Segment EBITA was $390 million, up 8% from the year-ago quarter on higher volumes and mix.

Financial Position

Johnson Controls had cash and cash equivalents of $377 million as of Dec 31, 2016, indicating an decrease from $579 million as of Sep 30, 2016. Total debt rose to $13.3 billion as of Dec 31, 2016, from $12.8 billion as of Sep 30, 2016.

In the first quarter of fiscal 2017, Johnson Controls' operating cash outflow was $1.9 billion compared with $13 million in the year-ago quarter. Meanwhile, capital expenditures increased to $371 million from $282 million in the prior-year quarter.


The board at Johnson Controls approved a quarterly dividend of 25 cents per share. The dividend was paid on Jan 6, 2017, to shareholders of record as of Dec 14, 2016.


Johnson Controls expects adjusted earnings per share in the band of $2.60-$2.75 for fiscal 2017, compared with $2.31 earned in fiscal 2016. This represents a year-over-year increase of 13-19%.

Earnings per share are projected in the range of 48 cents to 50 cents, up 7% to 11%, for the second quarter of fiscal 2017.

Price Performance

Johnson Controls underperformed the Zacks categorized Industrial Products-Services industry in the last three months. During this period, the company's share price rallied 6.6%, while the industry saw a 12.5% increase. The company completed the spin-off of its Automotive Interiors business into an independent company, Adient. Deconsolidation of the business and negative currency translation have been hurting sales.

Zacks Rank & Key Picks

Johnson Controls currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the auto space include Penske Automotive Group, Inc. PAG , Fox Factory Holding Corp FOXF and GKN plc GKNLY .

Fox Factory sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth rate of around 16.6% for the current year. You can see the complete list of today's Zacks #1 Rank stocks here.

Meanwhile, Penske Automotive and GKN carry a Zacks Rank #2 (Buy). Penske Automotive has an expected long-term growth rate of 8.2% while the same for GKN is pegged at 6.3%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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