Johnson Controls International plc 10-Q for FY2023 Q1

Johnson Controls International plc (JCI)

10-Q 2023-02-01 For: 2022-12-31

Added on April 03, 2026

About this 10-Q

Johnson Controls International plc filed this 10-Q on February 1, 2023, covering the quarter ended December 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.07B; up 3.5% from $5.86B a year earlier
Net income: $118M; down 69.0% from net income of $381M a year earlier
Diluted EPS: $0.17; down 68.5% from $0.54 a year earlier

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Ireland	98-0390500
(Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)
One Albert Quay, Cork, Ireland, T12 X8N6		(353) 21-423-5000
(Address of Principal Executive Offices and Postal Code)		(Registrant's Telephone Number)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Ordinary Shares, Par Value $0.01	JCI	New York Stock Exchange

1.000% Senior Notes due 2023	JCI23A	New York Stock Exchange
3.625% Senior Notes due 2024	JCI24A	New York Stock Exchange
1.375% Notes due 2025	JCI25A	New York Stock Exchange
3.900% Notes due 2026	JCI26A	New York Stock Exchange
0.375% Senior Notes due 2027	JCI27	New York Stock Exchange
3.000% Senior Notes due 2028	JCI28	New York Stock Exchange
1.750% Senior Notes due 2030	JCI30	New York Stock Exchange
2.000% Sustainability-Linked Senior Notes due 2031	JCI31	New York Stock Exchange
1.000% Senior Notes due 2032	JCI32	New York Stock Exchange
4.900% Senior Notes due 2032	JCI32A	New York Stock Exchange
6.000% Notes due 2036	JCI36A	New York Stock Exchange
5.70% Senior Notes due 2041	JCI41B	New York Stock Exchange
5.250% Senior Notes due 2041	JCI41C	New York Stock Exchange
4.625% Senior Notes due 2044	JCI44A	New York Stock Exchange
5.125% Notes due 2045	JCI45B	New York Stock Exchange
6.950% Debentures due December 1, 2045	JCI45A	New York Stock Exchange
4.500% Senior Notes due 2047	JCI47	New York Stock Exchange
4.950% Senior Notes due 2064	JCI64A	New York Stock Exchange


Class						Ordinary Shares Outstanding at December 31, 2022
Ordinary Shares, $0.01 par value per share						687,231,016


			Page
Part I. Financial Information

Item 1. Financial Statements (unaudited)

Consolidated Statements of Income for the Three Month Periods Ended December 31, 2022 and 2021			3

Consolidated Statements of Comprehensive Income for the Three Month Periods Ended December 31, 2022 and 2021			4

Consolidated Statements of Financial Position at December 31, 2022 and September 30, 2022			5

Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 2022 and 2021			6

Consolidated Statements of Shareholders' Equity for the Three Month Periods Ended December 31, 2022 and 2021			7

Notes to Consolidated Financial Statements			8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			37

Item 3. Quantitative and Qualitative Disclosures About Market Risk			49

Item 4. Controls and Procedures			49

Part II. Other Information

Item 1. Legal Proceedings			49

Item 1A. Risk Factors			50

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			50

Item 6. Exhibits			51

Signatures			52



	Three Months Ended December 31,
	2022		2021
Net sales
Products and systems	$	4,556	$	4,420
Services	1,512		1,442
	6,068		5,862
Cost of sales
Products and systems	3,113		3,153
Services	864		818
	3,977		3,971

Gross profit	2,091		1,891

Selling, general and administrative expenses	(1,571)		(1,369)
Restructuring and impairment costs	(345)		(49)
Net financing charges	(67)		(53)
Equity income	62		70

Income before income taxes	170		490

Income tax provision	14		71





Net income	156		419

Income attributable to noncontrolling interests	38		38



Net income attributable to Johnson Controls	$	118	$	381






Earnings per share attributable to Johnson Controls
Basic	$	0.17	$	0.54



Diluted	$	0.17	$	0.54


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	December 31, 2022		September 30, 2022
Assets

Cash and cash equivalents	$	1,509	$	2,031
Accounts receivable, less allowance for expected credit losses of $74 and $62, respectively	5,722		5,528
Inventories	2,895		2,510
Current assets held for sale	418		387
Other current assets	1,293		1,229
Current assets	11,837		11,685

Property, plant and equipment - net	3,098		3,042
Goodwill	17,684		17,328
Other intangible assets - net	4,673		4,641
Investments in partially-owned affiliates	1,053		963
Noncurrent assets held for sale	588		751
Other noncurrent assets	3,864		3,748
Total assets	$	42,797	$	42,158

Liabilities and Equity

Short-term debt	$	1,026	$	669
Current portion of long-term debt	937		865
Accounts payable	4,138		4,241
Accrued compensation and benefits	912		978
Deferred revenue	1,774		1,768
Current liabilities held for sale	310		236
Other current liabilities	2,466		2,482
Current liabilities	11,563		11,239

Long-term debt	7,784		7,426
Pension and postretirement benefits	354		358
Noncurrent liabilities held for sale	62		62
Other noncurrent liabilities	5,791		5,671
Long-term liabilities	13,991		13,517

Commitments and contingencies (Note 21)



Ordinary shares, $0.01 par value	7		7
Ordinary A shares, €1.00 par value	—		—
Preferred shares, $0.01 par value	—		—
Ordinary shares held in treasury, at cost	(1,233)		(1,203)
Capital in excess of par value	17,262		17,224
Retained earnings	874		1,151
Accumulated other comprehensive loss	(864)		(911)
Shareholders’ equity attributable to Johnson Controls	16,046		16,268
Noncontrolling interests	1,197		1,134
Total equity	17,243		17,402
Total liabilities and equity	$	42,797	$	42,158


	Three Months Ended December 31,
	2022		2021
Operating Activities of Continuing Operations
Net income attributable to Johnson Controls	$	118	$	381
Income attributable to noncontrolling interests	38		38

Net income	156		419
Adjustments to reconcile net income to cash provided (used) by operating activities:
Depreciation and amortization	203		224
Pension and postretirement benefit income	(6)		(82)
Pension and postretirement contributions	(9)		(41)
Equity in earnings of partially-owned affiliates, net of dividends received	(56)		(18)
Deferred income taxes	(92)		(32)
Noncash restructuring and impairment charges	294		—
Equity-based compensation	30		29
Other - net	(27)		(28)
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable	(88)		(75)
Inventories	(348)		(376)
Other assets	(68)		(63)
Restructuring reserves	14		19
Accounts payable and accrued liabilities	(338)		333
Accrued income taxes	39		83
Cash provided (used) by operating activities from continuing operations	(296)		392

Investing Activities of Continuing Operations
Capital expenditures	(134)		(135)
Sale of property, plant and equipment	27		7
Acquisition of businesses, net of cash acquired	(79)		(108)
Business divestitures, net of cash divested	—		16

Changes in long-term investments	(3)		2

Cash used by investing activities from continuing operations	(189)		(218)

Financing Activities of Continuing Operations
Increase in short-term debt - net	267		394
Increase in long-term debt	154		—


Stock repurchases and retirements	(154)		(526)
Payment of cash dividends	(241)		(191)

Employee equity-based compensation withholding taxes	(30)		(47)


Other - net	13		13

Cash provided (used) by financing activities from continuing operations	9		(357)

Discontinued Operations
Cash used by operating activities	—		(4)


Cash used by discontinued operations	—		(4)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(14)		67

Decrease in cash, cash equivalents and restricted cash	(490)		(120)
Cash, cash equivalents and restricted cash at beginning of period	2,066		1,342
Cash, cash equivalents and restricted cash at end of period	1,576		1,222
Less: Restricted cash	67		15
Cash and cash equivalents at end of period	$	1,509	$	1,207



	December 31, 2022		September 30, 2022


Accounts receivable - net	$	220	$	199
Inventories	157		155
Other current assets	28		21
Current assets held for sale	$	405	$	375

Property, plant and equipment - net	$	191	$	89
Goodwill	—		22
Other intangible assets - net	322		514

Other noncurrent assets	72		72
Noncurrent assets held for sale	$	585	$	697



Accounts payable	$	129	$	127
Accrued compensation and benefits	16		25
Deferred revenue	38		36
Other current liabilities	116		33
Current liabilities held for sale	$	299	$	221



Other noncurrent liabilities	$	61	$	61
Noncurrent liabilities held for sale	$	61	$	61


	Location of contract balances	December 31, 2022		September 30, 2022
Contract assets - current	Accounts receivable - net	$	2,019	$	2,020
Contract assets - noncurrent	Other noncurrent assets	83		79
Contract liabilities - current	Deferred revenue	(1,774)		(1,768)
Contract liabilities - noncurrent	Other noncurrent liabilities	(293)		(282)


	December 31, 2022		September 30, 2022

Raw materials and supplies	$	1,162	$	1,009
Work-in-process	215		196
Finished goods	1,518		1,305
Inventories	$	2,895	$	2,510


	Three Months Ended December 31, 2022
	Building Solutions North America		Building Solutions EMEA/LA		Building Solutions Asia Pacific		Global Products		Total
Goodwill	$	9,630	$	1,772	$	1,116	$	5,591	18,109
Accumulated impairment loss	(659)		(47)		—		(75)		(781)
Balance at beginning of period	8,971		1,725		1,116		5,516		17,328
Acquisitions	—		2		—		53		55

Foreign currency translation and other	8		139		62		92		301
Balance at end of period	$	8,979	$	1,866	$	1,178	$	5,661	$	17,684


	December 31, 2022						September 30, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Definite-lived intangible assets
Technology	$	1,415	$	(699)	$	716	$	1,353	$	(658)	$	695
Customer relationships	2,793		(1,330)		1,463		2,742		(1,254)		1,488
Miscellaneous	780		(407)		373		756		(386)		370
	4,988		(2,436)		2,552		4,851		(2,298)		2,553
Indefinite-lived intangible assets
Trademarks/trade names	2,121		—		2,121		2,088		—		2,088

	2,121		—		2,121		2,088		—		2,088
Total intangible assets	$	7,109	$	(2,436)	$	4,673	$	6,939	$	(2,298)	$	4,641


	Location of lease balances	December 31, 2022		September 30, 2022
Operating lease right-of-use assets	Other noncurrent assets	$	1,311	$	1,271
Operating lease liabilities - current	Other current liabilities	290		280
Operating lease liabilities - noncurrent	Other noncurrent liabilities	1,018		987


	Three Months Ended December 31,
	2022		2021
HVAC	$	1,440	$	1,483
Fire & Security	570		544
Industrial Refrigeration	70		49
Total	$	2,080	$	2,076


	Volume Outstanding as of
Commodity	December 31, 2022	September 30, 2022

Copper	4,218	3,629
Aluminum	10,362	6,758


	December 31,		September 30,
	2022		2022
Euro-denominated bonds designated as net investment hedges in Europe	€	2.9	€	2.9
Yen-denominated debt designated as a net investment hedge in Japan	¥	30	¥	30


Derivatives in ASC 815 Cash Flow Hedging Relationships	Three Months Ended December 31,
	2022		2021
Foreign currency exchange derivatives	$	(21)	$	13
Commodity derivatives	4		(2)

Total	$	(17)	$	11


	Derivatives and Hedging Activities Designated as Hedging Instruments under ASC 815				Derivatives and Hedging Activities Not Designated as Hedging Instruments under ASC 815
	December 31,		September 30,		December 31,		September 30,
	2022		2022		2022		2022
Other current assets
Foreign currency exchange derivatives	$	26	$	30	$	—	$	24
Commodity derivatives	2		—		—		—






Total assets	$	28	$	30	$	—	$	24

Other current liabilities
Foreign currency exchange derivatives	$	50	$	24	$	14	$	27


Commodity derivatives	2		10		—		—
Long-term debt
Foreign currency denominated debt	3,346		3,077		—		—
Total liabilities	$	3,398	$	3,111	$	14	$	27


	Fair Value of Assets				Fair Value of Liabilities
	December 31,		September 30,		December 31,		September 30,
	2022		2022		2022		2022
Gross amount recognized	$	28	$	54	$	3,412	$	3,138
Gross amount eligible for offsetting	(17)		(42)		(17)		(42)
Net amount	$	11	$	12	$	3,395	$	3,096


Derivatives in ASC 815 Cash Flow Hedging Relationships	Location of Gain (Loss) Reclassified from AOCI into Income	Three Months Ended December 31,
		2022		2021
Foreign currency exchange derivatives	Cost of sales	$	9	$	5
Commodity derivatives	Cost of sales	(6)		(4)
Interest rate swaps	Net financing charges	—		(1)
Total		$	3	$	—



Derivatives Not Designated as Hedging Instruments under ASC 815	Location of Gain Recognized in Income on Derivative	Three Months Ended December 31,
		2022		2021
Foreign currency exchange derivatives	Cost of sales	$	2	$	10

Foreign currency exchange derivatives	Net financing charges	79		87


Equity swap	Selling, general and administrative	—		5
Total		$	81	$	102


	Fair Value Measurements Using:
	Total as of December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	26	$	—	$	26	$	—
Exchange traded funds (fixed income)1	23		23		—		—

Commodity derivatives	2		—		2		—


Other noncurrent assets

Deferred compensation plan assets	49		49		—		—
Exchange traded funds (fixed income)1	82		82		—		—
Exchange traded funds (equity)1	139		139		—		—



Total assets	$	321	$	293	$	28	$	—
Other current liabilities
Foreign currency exchange derivatives	$	64	$	—	$	64	$	—

Commodity derivatives	2		—		2		—
Contingent earn-out liabilities	49		—		—		49
Other noncurrent liabilities
Contingent earn-out liabilities	34		—		—		34
Total liabilities	$	149	$	—	$	66	$	83


	Fair Value Measurements Using:
	Total as of September 30, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives	$	54	$	—	$	54	$	—

Exchange traded funds (fixed income)1	22		22		—		—


Other noncurrent assets

Deferred compensation plan assets	46		46		—		—
Exchange traded funds (fixed income)1	86		86		—		—
Exchange traded funds (equity)1	131		131		—		—



Total assets	$	339	$	285	$	54	$	—
Other current liabilities
Foreign currency exchange derivatives	$	51	$	—	$	51	$	—
Commodity derivatives	10		—		10		—
Contingent earn-out liabilities	30		—		—		30
Other noncurrent liabilities
Contingent earn-out liabilities	30		—		—		30
Total liabilities	$	121	$	—	$	61	$	60



Balance at September 30, 2022	$	60
Acquisitions	25
Payments	(3)

Currency translation	1
Balance at December 31, 2022	$	83


	U.S. Pension Plans
	Three Months Ended December 31,
	2022		2021


Interest cost	$	21	$	10
Expected return on plan assets	(34)		(41)
Net actuarial loss (gain)	8		(42)
Settlement gain	—		(1)
Net periodic benefit credit	$	(5)	$	(74)


	Non-U.S. Pension Plans
	Three Months Ended December 31,
	2022		2021

Service cost	$	3	$	6
Interest cost	16		10
Expected return on plan assets	(18)		(21)



Net periodic benefit cost (credit)	$	1	$	(5)


	Postretirement Benefits
	Three Months Ended December 31,
	2022		2021


Interest cost	$	1	$	—
Expected return on plan assets	(2)		(2)
Amortization of prior service credit	(1)		(1)
Net periodic benefit credit	$	(2)	$	(3)


	Employee Severance and Termination Benefits		Long-Lived Asset Impairments		Other		Total

Original reserve	$	30	$	6	$	21	$	57
Utilized—cash	(3)		—		(5)		(8)
Utilized—noncash	—		(6)		—		(6)

Balance at December 31, 2022	$	27	$	—	$	16	$	43


Tax Jurisdiction						Tax Years Covered

Belgium						2015 - 2021

Germany						2007 - 2018
Luxembourg						2017 - 2018
Mexico						2015 - 2017

United Kingdom						2014 - 2015, 2017 - 2018; 2020


	Segment EBITA
	Three Months Ended December 31,
	2022		2021

Building Solutions North America	$	267	$	250
Building Solutions EMEA/LA	75		104
Building Solutions Asia Pacific	68		68
Global Products	382		301
Total segment EBITA	792		723

Corporate expenses	(109)		(70)
Amortization of intangible assets	(104)		(118)
Restructuring and impairment costs	(345)		(49)
Net mark-to-market adjustments	3		57
Net financing charges	(67)		(53)
Income from continuing operations before income taxes	$	170	$	490


	December 31, 2022		September 30, 2022

Restricted
Cash	$	8	$	6
Investments	244		239
Total restricted assets	252		245
Insurance receivables for asbestos-related liabilities	54		55
Total asbestos-related assets	$	306	$	300


	Three Months Ended December 31,
(in millions)	2022		2021		Change

Net sales	$	6,068	$	5,862	4	%


	Three Months Ended December 31, 2022		Year Ended September 30, 2022
Net sales	$	—	$	—
Gross profit	—		—
Loss from continuing operations	(94)		(268)
Net loss	(94)		(268)
Income attributable to noncontrolling interests	—		—
Net loss attributable to the entity	(94)		(268)


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of the Publicly Announced Program	Approximate Dollar Value of Shares that May Yet be Purchased under the Programs
10/1/22 - 10/31/22
Purchases by Company	2,242,486	$	52.68	2,242,486	$	3,496,266,553
11/1/22 - 11/30/22
Purchases by Company	601,650	59.32		601,650	3,460,577,478
12/1/22 - 12/31/22
Purchases by Company	—	—		—	—


Exhibit No.			Description

10.1			Form of terms and conditions for Option / SAR Awards, Restricted Stock / Unit Awards, Performance Share Awards under the Johnson Controls International plc 2021 Equity and Incentive Plan for fiscal 2023 (filed herewith) *



31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed he rew ith)

31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1			Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

101			The following materials from Johnson Controls International plc's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Position, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity and (vi) Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)

*			Management contract or compensatory plan


	JOHNSON CONTROLS INTERNATIONAL PLC

Date: February 1, 2023	By:	/s/ Olivier Leonetti
		Olivier Leonetti
		Executive Vice President and Chief Financial Officer



/s/ George R. Oliver
George R. Oliver Chairman and Chief Executive Officer