Johnson Controls International Plc · NYSE:JCI

Johnson Controls International — Tyco International — Q2 FY2015 Earnings Presentation

32 slides from Johnson Controls International's earnings presentation, Apr 24, 2015

  1. Slide 1: Second Quarter Review

    Second Quarter Review 24 / April / 2015

  2. Slide 2: Forward-Looking Statements / Safe Harbor

    Forward-Looking Statements / Safe Harbor This presentation contains a number of forward-looking statements. In many cases forward-looking statements are identified by words, and variations of words, such as "anticipate", "estimate", "believe", “commit”, "continue", "could", "intend", "may", "plan",

  3. Slide 3: Another Strong Quarter Of Operational Performance

    Another Strong Quarter Of Operational Performance $0.05 ($0.03) $0.05 $0.55 $0.47 ($0.04) $0.05 $0.43 Q2'14 EPS* Q2'14 $21M Normalized Operations Share Count Corporate & FX Headwind Reported Adj. for Discop Recovery Q2'14 EPS* Below-the-Line Q2'15 EPS* Earnings Per Share Increased 17% Over Prior Per

  4. Slide 4: Continued EPS Headwinds From Strong US Dollar

    Continued EPS Headwinds From Strong US Dollar Original FX Prior FX Current FX Guidance Guidance Guidance Q4’14 Q1’15 Q2’15 Earnings Call Earnings Call Earnings Call 2015 ($255M) ($585M) ($645M) Revenue (~4%) (~6%) (~6%) Headwind Top Foreign Currency Exposures 2015 EPS ($0.07) ($0.16) ($0.18) Headwin

  5. Slide 5: Oil & Gas Market Exposure

    Oil & Gas Market Exposure Region Exposure Commentary ($ of Annual Sales) North  Cancellation/delays to installation projects in Alberta America Canada ~$55M  High margin service work down I&S  Western Canada economy severely impacted  Discretionary service maintenance delays in North Sea Rest of

  6. Slide 6: Geographic & End Market Overview

    Geographic & End Market Overview North America  Commercial Industrial  Institutional  Retail Asia  POG  Commercial  POG  Hospitality Retail Infrastructure EMEA Latin America  Commercial Pacific  Retail Residential Govt / Institutional  Commercial  POG Commercial Industrial  Industrial 

  7. Slide 7: Q2 2015 Results – Financial Overview

    Q2 2015 Results – Financial Overview (EPS amounts are fully diluted and attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Q2FY15 Q2FY14 Change Revenue $2,430 $2,480 (2%) Segment Operating Income before special items* $331 $346** (4%)** Segment Operating Margin bef

  8. Slide 8: Second Quarter Highlights

    Second Quarter Highlights Revenue of $2.43 billion declined 2% year over year on a reported basis, including 6% headwind from foreign currency exchange rates • Revenue ex. FX grew +4% with organic growth +2% and acquisitions contributing 2% • Excluding FX service +2%, installation +5%, products +11%

  9. Slide 9: Second Quarter Highlights Continued

    Second Quarter Highlights Continued Orders growth of 1%, excluding impact of foreign currency • Products +9%, Service +2% and Installation (6%) Backlog of $4.7 billion was relatively flat on both a year over year and quarter sequential basis, excluding impact of foreign currency 9

  10. Slide 10: Second Quarter – NA Installation & Services

    Second Quarter – NA Installation & Services ($ in millions) Organic revenue* increased 2% Q2FY15 Q2FY14 Change • Installation increased 3% Revenue $944 $939 1% • Service relatively flat Operating Income* $125 $117 7% Foreign currency rates negatively Operating Margin* 13.2% 12.5% +70bps impacted rev

  11. Slide 11: Second Quarter – ROW Installation & Services

    Second Quarter – ROW Installation & Services ($ in millions) Organic revenue* relatively flat Q2FY15 Q2FY14 Change • Service increased 1% Revenue $847 $936 (10%) • Installation decreased 1% Operating Income* $90 $120 (25%) A 1% benefit from acquisitions was Operating Margin* 10.6% 12.8% (220bps) off

  12. Slide 12: Second Quarter – Global Products

    Second Quarter – Global Products Organic revenue* increased 7% ($ in millions) Q2FY15 Q2FY14 Change • Included a 3% benefit from increased shipments of Scott Revenue $639 $605 6% Safety Air-Pak X3 Operating Income* $116 $109 6% Acquisition growth of 4% was more Operating Margin* 18.2% 18.0% +20bps t

  13. Slide 13: Other Items

    Other Items Corporate expense before special items* was $51 million in the quarter • Outlook: Expect Q3 fiscal 2015 corporate expense before special items to be ~$55 million; expect full year corporate expense to be ~$220 million Incremental net interest expense expected to be approximately $4 milli

  14. Slide 14: Q3'15 Outlook

    Q3’15 Outlook (EPS amounts are fully diluted and attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Q3FY15 Guidance Commentary ~(5%)  Organic growth +1-2%: NA I&S: +2-3%; ROW I&S: flat to +1%; on a reported Global Products: flat Revenue  Prior year Life Safety be

  15. Slide 15: Q3'15 EPS Bridge

    Q3’15 EPS Bridge $0.55 - $0.05 ($0.06) $0.54 $0.05 $0.57 ($0.02) Q3'14 X3 Shift in Operations Share Count FX Headwind Q3'15 Reported EPS* Earnings EPS Guidance * Earnings per share before special items is a non-GAAP measures. For a reconciliation to the most comparable GAAP 15 measures, please see A

  16. Slide 16: Revised 2015 Full Year Outlook

    Revised 2015 Full Year Outlook (EPS amounts are fully diluted and attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Prior* Revised Guidance Guidance EPS Bridge ~$10.0B 2015 Revenue ~$10.3B (3%) on a reported basis ~$0.18 ~($0.18) vs. prior year $2.23 - ~$0.25 $2.2

  17. Slide 17: Full Year Guidance Revision - Bridge

    Full Year Guidance Revision - Bridge $2.30-$2.40 ($0.06) ($0.02) ($0.02) $2.23-$2.27 Prior FY15 Macro Headwind FX Headwind Divestiture / Revised FY15 EPS* Guidance Other EPS Guidance Represents 12% - 14% Increase In EPS Year Over Year * Prior 2015 guidance as stated in the company’s Q1 2015 earnings

  18. Slide 18: Updated 2015 Guidance

    Updated 2015 Guidance Prior* Guidance Current Guidance Revenue Operating Margin Revenue Operating Margin Organic: ~3% Organic: ~2% North Net M&A: ~$10M +110 – 150bps Net M&A: ~$10M +110 – 150bps America I&S FX: ($50M) FX: ($50M) Organic: 3-4% Organic: ~2% Rest of Net M&A: ~$40M ~11.5% Net M&A: ~($15

  19. Slide 19: Appendix

    Appendix

  20. Slide 20: Normalizing Q2 FY2014 For $21M Insurance Recovery

    Normalizing Q2 FY2014 For $21M Insurance Recovery (EPS amounts are fully diluted and As Reported Insurance Normalized As Reported attributable to Tyco ordinary shareholders) ($ in millions, except per-share amounts) Q2’14 Recovery Q2’14 Q2’15 Total Revenue $2,480 $2,480 $2,430 North America I&S $939

  21. Slide 21: Consolidated Statements of Operations

    TYCO INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (Unaudited) Quarters Ended Six Months Ended March 27, March 28, March 27, March 28, 2015 2014 2015 2014 Revenue from product sales $ 1,458 $ 1,464 $ 2,946 $ 2,930 Service revenue 972 1,016 1,962 2,039 N

  22. Slide 22: Results of Segments

    TYCO INTERNATIONAL PLC RESULTS OF SEGMENTS (in millions) (Unaudited) Quarters Ended Six Months Ended March 27, March 28, March 27, March 28, 2015 2014 2015 2014 Net Revenue NA Installation & Services $ 944 $ 939 $ 1,895 $ 1,896 ROW Installation & Services 847 936 1,763 1,903 Global Products 639 605

  23. Slide 23: Consolidated Balance Sheets

    TYCO INTERNATIONAL PLC CONSOLIDATED BALANCE SHEETS (in millions) (Unaudited) March 27, September 26, 2015 2014 Assets Current Assets: Cash and cash equivalents $ 432 $ 892 Accounts receivable, net 1,643 1,734 Inventories 677 625 Prepaid expenses and other current assets 867 1,051 Deferred income tax

  24. Slide 24: Consolidated Statements of Cash Flows

    TYCO INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (Unaudited) For the Quarters Ended For the Six Months Ended March 27, March 28, March 27, March 28, 2015 2014 2015 2014 Cash Flows From Operating Activities: Net income attributable to Tyco ordinary shareholders $ 167 $ 207 $

  25. Slide 25: Free Cash Flow Reconciliation

    Reconciliation to "Free Cash Flow": Net cash provided by operating activities $ 167 $ 270 $ 262 $ 366 Capital expenditures, net (55) (70) (120) (129) Acquisition of dealer generated customer accounts and bulk account purchases (4) (5) (8) (16) Payment of contingent consideration (1) — (24) — Free Ca

  26. Slide 26: Organic Growth Reconciliation - Revenue

    TYCO INTERNATIONAL PLC ORGANIC GROWTH RECONCILIATION - REVENUE (in millions) (Unaudited) Quarter Ended March 27, 2015 Base Year Adjustments Adjusted Net Revenue for the Fiscal Net Revenue for the Quarter Ended Divestitures / 2014 Base Quarter Ended (1) March 28, 2014 Other Revenue Foreign Currency A

  27. Slide 27: Earnings Per Share Summary

    Earnings Per Share Summary (Unaudited) Quarter Ended Quarter Ended March 27, 2015 March 28, 2014 Diluted EPS from Continuing Operations Attributable to Tyco Shareholders (GAAP) $ 0.43 $ 0.41 expense / (benefit) Restructuring and repositioning activities 0.05 0.02 Separation costs included in SG&A —

  28. Slide 28: Reconciliation For Quarter Ended March 27, 2015

    Tyco International plc For the Quarter Ended March 27, 2015 (in millions, except per share data) (Unaudited) expense / (benefit) Segments NA ROW Installation Installation Global Segment Corporate Total & Services & Services Products Revenue and Other Revenue Revenue (GAAP) $944 $847 $639 $2,430 $— $

  29. Slide 29: Reconciliation For Quarter Ended March 28, 2014

    Tyco International plc For the Quarter Ended March 28, 2014 (in millions, except per share data) (Unaudited) expense / (benefit) Segments NA ROW Installation Installation Global Segment Corporate Total & Services & Services Products Revenue and Other Revenue Revenue (GAAP) $939 $936 $605 $2,480 $— $

  30. Slide 30: Non-GAAP Measures

    Non-GAAP Measures Organic revenue, free cash flow (outflow) (FCF), and income from continuing operations, earnings per share (EPS) from continuing operations, operating income and segment operating income, in each case “before special items,” are non-GAAP measures and should not be considered replac

  31. Slide 31: Non-GAAP Measures Continued

    Non-GAAP Measures Continued The limitation associated with using these cash flow metrics is that they adjust for cash items that are ultimately within management's and the Board of Directors' discretion to direct and therefore may imply that there is less or more cash that is available for the compa

  32. Slide 32: Slide 32

Tyco International — Q2 FY2015 Earnings Presentation on 6ix