Q2 reported sales were flat versus prior year and increased 1% organically Q2 GAAP EPS of $(0.41); Q2 Adjusted EPS of $0.78 Q2 Orders +12% organically year-over-year Building Solutions backlog of $12.6 billion increased 10% organically year-over-year Initiates fiscal Q3 and maintains full year fiscal 2024 guidance CORK, Ireland, May 1, 2024 /PRNewswire/ -- Johnson Controls International plc (NYSE:JCI), a global leader for smart, healthy and sustainable buildings, today reported fiscal second quarter 2024 GAAP earnings per share ("EPS") of $(0.41). Excluding special items, adjusted EPS was $0.78 (see attached footnotes for non-GAAP reconciliation). Sales in the quarter of $6.7 billion were flat compared to the prior year on an as reported basis and increased 1% organically. GAAP net loss was $(277) million. Adjusted net income was $533 million. "We are proud of the work underway at Johnson Controls as we delivered another successful quarter, underscored by accelerating sales growth and margin expansion," said George Oliver, Chairman and CEO. "We made great progress this quarter in further strengthening our balance sheet. Our record backlog provides visibility into the remainder of the fiscal year and we remain confident in our ability to deliver on our financial and operational commitments as we continue our transformation into a comprehensive solutions provider for commercial buildings." Income and EPS amounts attributable to Johnson Controls ordinary shareholders($ millions, except per-share amounts) The financial highlights presented in the tables below are in accordance with GAAP, unless otherwise indicated. All comparisons are to the fiscal second quarter of 2023. Organic sales growth, adjusted segment EBITA, adjusted segment EBITA margin, adjusted corporate expense, adjusted net income, adjusted EPS, and adjusted free cash flow are non-GAAP financial measures. For a reconciliation of non-GAAP measures and detail of the special items, refer to the attached footnotes. This press release includes forward-looking statements regarding organic revenue growth, adjusted segment EBITA margin improvement and adjusted EPS, which are non-GAAP financial measures. These non-GAAP financial measures are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts excluded is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period and the high variability of certain amounts, such as mark-to-market adjustments. Organic revenue growth excludes the effect of acquisitions, divestitures and foreign currency. We are unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort or expense. The unavailable information could have a significant impact on the Company's fiscal 2024 third quarter and full year GAAP financial results. A slide presentation to accompany the results can be found in the Investor Relations section of Johnson Controls' website at http://investors.johnsoncontrols.com. FISCAL Q2 SEGMENT RESULTS Building Solutions North America  Fiscal Q2 2024 2023 Change Sales $     2,739 $     2,520 9 % Segment EBITA GAAP 373 315 18 % Adjusted 373 315 18 % Segment EBITA Margin % GAAP 13.6 % 12.5 %         110 bp Adjusted 13.6 % 12.5 %         110 bp Sales in the quarter of $2.7 billion increased 9% over the prior year. Organic sales increased 8% over the prior year led by high-teens growth in Applied HVAC & Controls. Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 19% year-over-year. Backlog at the end of the quarter of $8.9 billion increased 15% compared to the prior year, excluding M&A and adjusted for foreign currency. Segment EBITA margin of 13.6% expanded 110 basis points versus the prior year led by higher margin backlog conversion and continued growth in Services. Building Solutions EMEA/LA (Europe, Middle East, Africa/Latin America) Fiscal Q2 2024 2023 Change Sales $     1,064 $     1,031 3 % Segment EBITA GAAP 89 69 29 % Adjusted 89 69 29 % Segment EBITA Margin % GAAP 8.4 % 6.7 %         170 bp Adjusted 8.4 % 6.7 %         170 bp Sales in the quarter of $1.1 billion increased 3% over the prior year. Organic sales grew 4% versus the prior year led by strong low-teen growth in Service. Orders in the quarter, excluding M&A and adjusted for foreign currency, increased 8% year-over-year. Backlog at the end of the quarter of $2.4 billion increased 10% year-over-year, excluding M&A and adjusted for foreign currency. Segment EBITA margin of 8.4% expanded 170 basis points versus the prior year led by productivity benefits and positive Service mix. Building Solutions Asia Pacific Fiscal Q2 2024 2023 Change Sales $        491 $        667 (26 %) Segment EBITA GAAP 54 79 (32 %) Adjusted 54 79 (32 %) Segment EBITA Margin % GAAP 11.0 % 11.8 %         (80 bp) Adjusted 11.0 % 11.8 %         (80 bp) Sales in the quarter of $491 million declined 26% versus the prior year. Organic sales declined 23% versus the prior year as high single-digit Service growth was more than offset by continued weakness in China.    Orders in the quarter, excluding M&A and adjusted for foreign currency, declined 9% year-over-year. Backlog at the end of the quarter of $1.3 billion decreased 18% year-over-year, excluding M&A and adjusted for foreign currency. Segment EBITA margin of 11.0% declined 80 basis points versus the prior year primarily related to continued declines in the Systems business in China.  Global Products Fiscal Q2 2024 2023 Change Sales $     2,405 $     2,468 (3 %) Segment EBITA GAAP 429 488 (12 %) Adjusted 455 458 (1 %) Segment EBITA Margin % GAAP 17.8 % 19.8 %        (200 bp) Adjusted 18.9 % 18.6 %           30 bp Sales in the quarter of $2.4 billion declined 3% versus the prior year. Organic sales were down 1% versus the prior year as growth in Commercial HVAC was offset by declines in global Residential HVAC and Fire & Security.  Segment EBITA margin of 17.8% declined 200 basis points versus the prior year primarily due to unfavorable mix, a charge related to a product quality issue, and the favorable prior year impact of an acquisition earn-out liability. Adjusted segment EBITA excludes costs for a product quality issue, partially offset by a favorable earn-out liability adjustment in Q2 2024. Adjusted segment EBITA excludes a favorable earn-out liability adjustment in Q2 2023. Corporate Fiscal Q2 2024 2023 Change Corporate Expense GAAP $99 $           131 (24 %) Adjusted $83 101 (18 %) Adjusted Corporate expense in Q2 2024 excluded certain one-time cyber incident-related costs. Both periods exclude certain transaction/separation costs. OTHER Q2 ITEMS The Company discontinued its receivables factoring programs. Cash used by operating activities was $(203) million. Free cash flow was $(336) million and adjusted free cash flow was $375 million for Q2 2024. The Company paid dividends of approximately $252 million during Q2 2024. The Company repurchased 8.0 million shares of common stock for approximately $474 million. The Company recorded pre-tax restructuring and impairment costs of $254 million, comprised of a goodwill impairment ($230 million) and severance charges related to ongoing restructuring actions ($24 million). The Company recorded a pre-tax charge of $750 million related to a settlement with a nationwide class of public water systems concerning the use of Aqueous Film Forming Foam ("AFFF") manufactured and sold by a subsidiary of the Company. THIRD QUARTER GUIDANCE The Company initiated fiscal 2024 third quarter guidance: Organic revenue up ~LSD year-over-year Adjusted segment EBITA margin of ~17.0% Adjusted EPS before special items of ~$1.05 to $1.10 FULL YEAR GUIDANCE  The Company maintains fiscal 2024 full year EPS guidance: Organic revenue growth up ~MSD year-over-year Adjusted segment EBITA margin improvement of ~50 to 75 basis points, year-over-year Adjusted EPS before special items of ~$3.60 to $3.75 CONFERENCE CALL & WEBCAST INFO Johnson Controls will host a conference call to discuss this quarter's results at 8:30 a.m. ET today, which can be accessed by dialing 844-763-8274 (in the United States) or +1-412-717-9224 (outside the United States), or via webcast. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Johnson Controls website at https://investors.johnsoncontrols.com/news-and-events/events-and-presentations. A replay will be made available approximately two hours following the conclusion of the conference call. About Johnson Controls At Johnson Controls (NYSE:JCI), we transform the environments where people live, work, learn and play. As the global leader in smart, healthy and sustainable buildings, our mission is to reimagine the performance of buildings to serve people, places and the planet.   Building on a proud history of nearly 140 years of innovation, we deliver the blueprint of the future for industries such as healthcare, schools, data centers, airports, stadiums, manufacturing and beyond through OpenBlue, our comprehensive digital offering. Today, with a global team of 100,000 experts in more than 150 countries, Johnson Controls offers the world`s largest portfolio of building technology and software as well as service solutions from some of the most trusted names in the industry. Visit www.johnsoncontrols.com for more information and follow @Johnson Controls on social platforms. JOHNSON CONTROLS CONTACTS:  INVESTOR CONTACTS: MEDIA CONTACT: Jim Lucas Danielle Canzanella Direct: +1 651.391.3182 Direct: +1 203.499.8297 Email: Email: Michael Gates Direct: +1 414.524.5785 Email: Johnson Controls International plc Cautionary Statement Regarding Forward-Looking Statements Johnson Controls International plc has made statements in this communication that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this communication, statements regarding Johnson Controls future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures, debt levels and market outlook are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" and terms of similar meaning are also generally intended to identify forward-looking statements.  However, the absence of these words does not mean that a statement is not forward-looking. Johnson Controls cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond its control, that could cause its actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: Johnson Controls ability to develop or acquire new products and technologies that achieve market acceptance and meet applicable quality and regulatory requirements; the ability to manage general economic, business and capital market conditions, including the impact of recessions, economic downturns and global price inflation; fluctuations in the cost and availability of public and private financing for its customers; the ability to innovate and adapt to emerging technologies, ideas and trends in the marketplace, including the incorporation of technologies such as artificial intelligence; the ability to manage macroeconomic and geopolitical volatility, including shortages impacting the availability of raw materials and component products and the conflicts between Russia and Ukraine and Israel and Hamas; managing the risks and impacts of potential and actual security breaches, cyberattacks, privacy breaches or data breaches, including business, service, or operational disruptions, the unauthorized access to or disclosure of data, financial loss, reputational damage, increased response and remediation costs, legal, and regulatory proceedings or other unfavorable outcomes; our ability to remediate our material weakness; maintaining and improving the capacity, reliability and security of Johnson Controls enterprise information technology infrastructure; the ability to manage the lifecycle cybersecurity risk in the development, deployment and operation of Johnson Controls digital platforms and services; changes to laws or policies governing foreign trade, including economic sanctions, tariffs, foreign exchange and capital controls, import/export controls or other trade restrictions; fluctuations in currency exchange rates; changes or uncertainty in laws, regulations, rates, policies, or interpretations that impact Johnson Controls business operations or tax status; the ability to adapt to global climate change, climate change regulation and successfully meet Johnson Controls public sustainability commitments; risks and uncertainties related to the settlement with a nationwide class of public water systems concerning the use of AFFF; the outcome of litigation and governmental proceedings; the risk of infringement or expiration of intellectual property rights; Johnson Controls ability to manage disruptions caused by catastrophic or geopolitical events, such as natural disasters, armed conflict, political change, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; the ability of Johnson Controls to drive organizational improvement;  any delay or inability of Johnson Controls to realize the expected benefits and synergies of recent portfolio transactions; the ability to hire and retain senior management and other key personnel; the tax treatment of recent portfolio transactions; significant transaction costs and/or unknown liabilities associated with such transactions; labor shortages, work stoppages, union negotiations, labor disputes and other matters associated with the labor force; and the cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson Controls business is included in the section entitled "Risk Factors" in Johnson Controls Annual Report on Form 10-K for the fiscal year filed with the SEC, which is available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab. The description of certain of these risks is supplemented in Item 1A of Part II of Johnson Controls subsequently filed Quarterly Reports on Form 10-Q. 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 communication are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this communication. Non-GAAP Financial Information This press release contains financial information regarding adjusted earnings per share, which is a non-GAAP performance measure. The adjusting items include net mark-to-market adjustments, restructuring and impairment costs, the water systems AFFF settlement, certain transaction/separation costs, Silent-Aire earn-out adjustment, warehouse fire loss, cyber incident costs, Global Products product quality issue costs, and discrete tax items. Financial information regarding organic sales growth, adjusted segment EBITA, adjusted segment EBITA margin, adjusted Corporate expense, adjusted free cash flow, and adjusted net income are also presented, which are non-GAAP performance measures. Management believes that, when considered together with unadjusted amounts, these non-GAAP measures are useful to investors in understanding period-over-period operating results and business trends of Johnson Controls. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes. These metrics should be considered in addition to, and not as replacements for, the most comparable GAAP measure.  For further information on the calculation of the non-GAAP measures and a reconciliation of these non-GAAP measures, refer to the attached footnotes. JOHNSON CONTROLS INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share data; unaudited) Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Net sales Products and systems $        4,985 $        5,083 $        9,474 $        9,639 Services 1,714 1,603 3,319 3,115 6,699 6,686 12,793 12,754 Cost of sales Products and systems 3,459 3,516 6,621 6,629 Services 1,059 929 1,999 1,793 4,518 4,445 8,620 8,422 Gross profit 2,181 2,241 4,173 4,332 Selling, general and administrative expenses 2,251 1,579 3,764 3,150 Restructuring and impairment costs 254 418 293 763 Net financing charges 93 71 192 138 Equity income 56 50 118 112 Income (loss) before income taxes (361) 223 42 393 Income tax (benefit) provision (127) 49 (128) 63 Net income (loss) (234) 174 170 330 Less: Income attributable to noncontrolling interests 43 41 73 79 Net income (loss) attributable to Johnson Controls $         (277) $          133 $            97 $          251 Earnings (loss) per share attributable to Johnson Controls Basic $        (0.41) $         0.19 $         0.14 $         0.37 Diluted (0.41) 0.19 0.14 0.36   JOHNSON CONTROLS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions; unaudited) March 31, 2024 September 30, 2023 Assets Cash and cash equivalents $                      843 $                      835 Accounts receivable - net 6,688 6,006 Inventories 2,991 2,776 Other current assets 1,355 1,120 Current assets 11,877 10,737 Property, plant and equipment - net 3,104 3,136 Goodwill 17,757 17,936 Other intangible assets - net 4,717 4,888 Investments in partially-owned affiliates 1,172 1,056 Other noncurrent assets 4,830 4,489 Total assets $                 43,457 $                 42,242 Liabilities and Equity Short-term debt $                   2,210 $                      385 Current portion of long-term debt 1,165 645 Accounts payable 4,019 4,268 Accrued compensation and benefits 779 958 Deferred revenue 2,331 1,996 Other current liabilities 3,095 2,832 Current liabilities 13,599 11,084 Long-term debt 7,348 7,818 Pension and postretirement benefits 251 278 Other noncurrent liabilities 5,418 5,368 Long-term liabilities 13,017 13,464 Shareholders' equity attributable to Johnson Controls 15,658 16,545 Noncontrolling interests 1,183 1,149 Total equity 16,841 17,694 Total liabilities and equity $                 43,457 $                 42,242   JOHNSON CONTROLS INTERNATIONAL PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; unaudited) Three Months Ended March 31, Six Months Ended March 31, 2024 2023 2024 2023 Operating Activities Net income (loss) attributable to Johnson Controls $        (277) $          133 $            97 $          251 Income attributable to noncontrolling interests 43 41 73 79 Net income (loss) (234) 174 170 330 Adjustments to reconcile net income (loss) to cash provided (used) by operating activities: Depreciation and amortization 236 206 467 409 Pension and postretirement benefit expense (income) (10) 3 (20) (3) Pension and postretirement contributions (7) (17) (13) (26) Equity in earnings of partially-owned affiliates, net of dividends received (46) 1 (102) (55) Deferred income taxes (330) (76) (400) (168) Noncash restructuring and impairment charges 244 397 253 691 Equity-based compensation 26 31 56 61 Other - net (16) (60) (38) (87) Changes in assets and liabilities, excluding acquisitions and divestitures: Accounts receivable (720) (272) (659) (360) Inventories (25) (145) (228) (493) Other assets (13) (101) (204) (169) Restructuring reserves (46) (31) (60) (17) Accounts payable and accrued liabilities 772 183 358 (155) Accrued income taxes (34) 21 (29) 60 Cash provided (used) by operating activities (203) 314 (449) 18 Investing Activities Capital expenditures (133) (121) (225) (255) Acquisition of businesses, net of cash acquired 3 (10) 1 (89) Other - net (7) 6 13 30 Cash used by investing activities (137) (125) (211) (314) Financing Activities