Johnson Controls delivers on 2014 second quarter earnings projections with higher revenues and improved profitability

Johnson Controls Press Release:

Johnson Controls delivers on 2014 second quarter earnings projections with higher revenues and improved profitability

MILWAUKEE, April 23, 2014 /PRNewswire/ -- For the second quarter of fiscal 2014, Johnson Controls, Inc. (NYSE: JCI), a global multi-industrial company, reported net income of $261 million, or $0.39 per share, on$10.5 billion in revenues. Second quarter earnings per share (including discontinued operations and excluding non-recurring items) was $0.66, which is at the high end of the company's previously issued guidance and up 50 percent versus $0.44 last year. As a result of the previously announced sale of its Automotive Electronics business, the Company has reclassified Electronics' results to discontinued operations and prior year financial statements have been revised accordingly.

Excluding restructuring and non-recurring items in the second quarter, continuing operations highlights include:

• Net revenues of $10.5 billion vs. $10.1 billion in Q2 2013, up 4 percent
• Income from business segment operations of $629 million compared with$461 million a year ago, up 36 percent
• Diluted earnings per share from continuing operations of $0.64 versus$0.42 in the same quarter last year, up 52 percent

Non-recurring items that impacted reported second quarter earnings include:

2014 second quarter (net charge of $0.27 per share)

• Non-cash tax charge of $180 million related to the repatriation of foreign cash associated with the Electronics divestiture

2013 second quarter (net charge of $0.20 per share)

• $82 million pre-tax equity interest gain ($0.07 per diluted share)
• $111 million of non-cash tax charges ($0.16 per diluted share)
• $84 million pre-tax restructuring charge ($0.11 per diluted share)

"While the economic environment continues to challenge top line growth in some of our businesses, I am pleased with the profitability improvements in all businesses" said Alex Molinaroli, Johnson Controls chairman and chief executive officer. "These results are consistent with the expectations we disclosed during our first quarter earnings call."

Business resultsAutomotive Experience revenues (excluding discontinued operations) in the fiscal second quarter of 2014 were $5.6 billion, up 11 percent compared to the 2013 quarter, reflecting higher automotive production in all geographic regions. Automotive industry production in the quarter increased 5 percent in North America, 5 percent in Europe and 9 percent in China. Revenues in China, which are primarily related to Seating and generated through non-consolidated joint ventures, increased 25 percent to $1.6 billion.

Automotive Experience segment income (excluding discontinued operations) of $241 million was up 226% compared to $74 million in the second quarter of 2013. The 2013 results exclude an $82 million non-recurring equity income gain. The increase was primarily led by improvements in the company's Seating business, with segment income of$236 million in the current quarter, compared with $94 million last year. The Interiors business showed a profit of $5 million this year compared with a $20 million loss last year. Automotive Experience improvement was a result of improved operational performance in the Company's metals and mechanisms business and Europe, benefits from restructuring initiatives and higher revenues.

Building Efficiency sales in the fiscal second quarter of 2014 were $3.3 billion, 5 percent lower than the 2013 second quarter, as higher revenues in Asia were more than offset by lower market demand in North America,Europe and the Middle East. Excluding Global Workplace Solutions (GWS) and divestitures, revenues were 2 percent lower. Adjusted for divestitures and currency, backlog was flat compared to the second quarter of last year at $4.8 billion. Second quarter orders were 2 percent lower than last year.

Building Efficiency segment income of $152 million was up 9 percent compared with $139 million the 2013 second quarter, due to cost reduction initiatives and improved margins in North America, Asia and GWS.

Power Solutions sales in the fiscal second quarter of 2014 were flat at$1.6 billion versus the 2013 quarter. Excluding the impact of lead, sales increased 4 percent. Global original equipment battery shipments increased 9 percent, while aftermarket unit shipments were up 1 percent. Power Solutions segment income was $236 million, down 5 percent, compared with $248 million in the second quarter of 2013. The 2013 quarter benefited from a $24 million legal settlement; adjusted for this item, segment income was up 5 percent and margins were up 70 basis points.

The Company is providing updated guidance now that Electronics is reported as a discontinued operation. Previously, the Company provided full year earnings guidance including Electronics of $3.15 - $3.30 per diluted share. Excluding Electronics earnings of approximately $0.10 - $0.12 per share, the adjusted range for continuing operations would be$3.05 to $3.18 per share.

The Company's updated guidance for earnings from continuing operations is now $3.10 to $3.15 per share. For the third quarter of 2014, the Company provided earnings guidance from continuing operations of$0.81 to $0.84 per share, up 13% to 17%. 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 neutral in 2014.

Portfolio updateOn April 16, 2014, Johnson Controls announced a definitive agreement to purchase Air Distribution Technologies, one of the strongest and largest independent providers of air distribution and ventilation products in North America, for $1.6 billion. The transaction, which is forecast to close in July 2014 subject to required regulatory approvals, is expected to significantly expand Johnson Controls' third party distribution channels and create cross-selling opportunities for existing and new products.

The Company said it believes it is on target to close the sale of its Automotive Electronics business by the end of its 2014 fiscal year and that the review of strategic options for its Automotive Interiors business is continuing.

"While we have made significant progress on the changes to our portfolio, our priority remains operational excellence to drive continued increases in profitability and shareholder value. Our first half results demonstrate the success of our employees' efforts and I thank them for their dedication to our customers and shareholders," said Molinaroli.

FORWARD-LOOKING STATEMENTS Johnson Controls, Inc. has made statements in this document that are forward-looking and, therefore, are subject to risks and uncertainties. All statements in this document other than statements of historical fact are statements that are, or could be, deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding future financial position, sales, costs, earnings, cash flows, other measures of results of operations, capital expenditures or debt levels and plans, objectives, outlook, targets, guidance or goals are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" or terms of similar meaning are also generally intended to identify forward-looking statements. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond Johnson Controls' control, that could cause Johnson Controls' actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include required regulatory approvals that are material conditions for proposed transactions to close, the strength of the U.S. or other economies, automotive vehicle production levels, mix and schedules, energy and commodity prices, availability of raw materials and component products, currency exchange rates, and cancellation of or changes to commercial contracts, as well as other factors discussed in Item 1A of Part I of Johnson Controls' most recent Annual Report on Form 10-K for the year ended September 30, 2013. Shareholders, potential investors and others should consider these factors in evaluating the forward-looking statements and should not place undue reliance on such statements. The forward-looking statements included in this document are only made as of the date of this document, and Johnson Controls assumes no obligation, and disclaims any obligation, to update forward-looking statements to reflect events or circumstances occurring after the date of this document.

ABOUT JOHNSON CONTROLSJohnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 170,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles. Our commitment to sustainability dates back to our roots in 1885, with the invention of the first electric room thermostat. Through our growth strategies and by increasing market share we are committed to delivering value to shareholders and making our customers successful. In 2013, Corporate Responsibility Magazine recognized Johnson Controls as the #14 company in its annual "100 Best Corporate Citizens" list. For additional information, please visit http://www.johnsoncontrols.com. Follow Johnson Controls Investor Relations on Twitter atwww.twitter.com/JCI_IR.