For the third quarter of fiscal 2015, Johnson Controls Inc. reported net income from continuing operations of $503 million, or 76 cents per share, on $9.6 billion in revenues. Adjusted non-GAAP diluted earnings per share from continuing operations for the quarter were 91 cents. As a result of the previously announced sale of its Global Workplace Solutions (GWS) business, the company has reclassified GWS results to discontinued operations.
Excluding transaction/integration costs and non-recurring items in the third quarter, continuing operations highlights included net revenues of $9.6 billion versus $9.8 billion in Q3 2014. Excluding the impact of foreign exchange, sales increased 5 percent; and diluted earnings per share were 91 cents versus 79 cents in the same quarter last year, up 15 percent.
“Our Automotive and Power businesses delivered significant margin improvements, while Building Efficiency saw higher revenues, backlog and orders. The Building Efficiency backlog increase was the biggest quarterly year on year improvement since 2012,” said Alex Molinaroli, Johnson Controls chairman and CEO. “We continued to see growing demand across our global markets and are realizing the benefits from our Johnson Controls Operating System efforts.”
Automotive Experience revenues from continuing operations in the fiscal third quarter of 2015 were $5.4 billion, down 6 percent compared to the 2014 quarter, as slightly higher global automotive production was more than offset by the impact of foreign currency. Excluding foreign currency, revenues increased 3 percent. Automotive industry production in the quarter increased 2 percent in North America and China and was level versus last year in Europe. Revenues in China, which are primarily related to Seating and generated through non-consolidated joint ventures, increased 10 percent to $1.9 billion, reflecting market share gains.
Automotive Experience segment income from continuing operations of $342 million was up 19 percent (25 percent excluding currency) compared to $288 million in the third quarter of 2014. The increase reflects profitability improvements in both the company’s Seating and Interiors businesses due to the higher volumes and the benefits of restructuring initiatives.
Johnson Controls announced today that it plans to pursue a tax-free spin-off of its Automotive Experience business. Following the separation, which is expected to close in approximately 12 months, the Automotive Experience business will operate as an independent, publicly traded company.
Once the transaction is completed, Bruce McDonald, Johnson Controls vice chairman and executive vice president, will serve as the chairman and CEO of the new company. Beda Bolzenius will serve as president and chief operating officer.
The new automotive company will benefit from strong existing relationships with customers, well-established positions in growth markets including China, and will generate strong cash flow. Automotive Experience reported $22 billion in revenue in 2014.
As part of the spin-off preparation, Johnson Controls is initiating a comprehensive cost savings program. The company said additional details of the transaction will be provided as the separation process develops.
“This is a great opportunity for our Automotive Experience business to further its position as the global leader in automotive seating and interiors,” said Alex Molinaroli, chairman and CEO of Johnson Controls. “At the same time, Johnson Controls will move forward with our multi-industrial strategies and make investments in our core growth platforms around buildings and energy storage.”
