For the fiscal 2013 second quarter, Johnson Controls reported net income of $148 million, or $0.21 per share, on $10.4 billion in sales. The results were in-line with expectations. Excluding restructuring and non-recurring items in the 2013 and 2012 fiscal second quarters
For the fiscal 2013 second quarter, Johnson Controls reported net income of $148 million, or $0.21 per share, on $10.4 billion in sales. The results were in-line with expectations. Excluding restructuring and non-recurring items in the 2013 and 2012 fiscal second quarters, highlights include:
- Net sales of $10.4 billion versus $10.6 billion in Q2 2012, down 1 percent.
- Income from business segments of $463 million compared with $581 million a year ago, down 20 percent.
- Net income of $287 million versus $378 million in Q2 2012.
- Diluted earnings per share of $0.42 versus $0.55 in the same quarter last year.
Johnson Controls said it believes that using the adjusted numbers provides a more meaningful comparison of its underlying operating performance.
A number of non-recurring items impacted Q2 2013 earnings and related earnings per share. They include:
- $82 million pre-tax gain from acquiring the remaining 50% equity interest in an Automotive Experience joint venture in India ($0.07 per diluted share).
- $111 million of non-cash tax charges related primarily to valuation allowances in Germany and Brazil ($0.16 per diluted share).
- $84 million restructuring charge at Automotive Experience related primarily to Interiors-Europe and South America ($0.12 per diluted share).
The company noted that there were non-recurring items as well in Q2 2012, but that there was no net impact on earnings per share.
"Our second quarter results were at the high end of our previous guidance. Building Efficiency posted earnings level with last year despite soft institutional and construction markets which negatively impacted revenues. Automotive Experience benefited from higher auto production in North America and Asia, but these improvements were more than offset by the low production levels as well as operational and restructuring-related costs in Europe," said Stephen A. Roell, Chairman and CEO of Johnson Controls. "We remain committed to improving profitability despite soft global demand in our markets. Our restructuring initiatives are gaining momentum and proceeding as planned. We expect to see significant benefits in the second half of the fiscal year."
Building Efficiency continued to experience soft global demand that is impacting sales and orders secured. Sales were $3.5 billion, down 3 percent versus the second quarter of 2012. Higher sales in North America Systems were offset by lower revenues in Europe, Asia and North America Service.
Backlog declined 6 percent, with higher demand in Asia more than offset by softness in energy solutions, the Middle East and Europe. Orders secured dropped 10 percent versus the same quarter last year, with general softness across all major geographic regions. The company noted, however, that it has started to see year-over-year improvement in bidding activity in certain markets, including U.S federal and state government and energy solutions.
Building Efficiency profitability increased in the 2013 quarter as earnings of $139 million were approximately level with the prior year despite the lower revenue. The business benefited from initiatives to improve labor productivity and to reduce costs. In addition, new pricing programs continue to be implemented across service offerings. Building Efficiency expects higher revenue in the second half of fiscal 2013, led by seasonal growth in North America Service and Unitary Products Group and a favorable backlog in Asia. Segment income will increasingly benefit from productivity and restructuring programs initiated over the past year.