Johnson Controls caps transformational year by beating guidance

Adjusted full year revenue down slightly

Johnson Controls Inc. headquarters
The Johnson Controls Inc. operational headquarters in Glendale.

If you’re wondering why Johnson Controls won’t be making a decision on a possible downtown office tower for at least a year, one look at the company’s most recent earnings release would give you an idea of just how much the now Ireland-based company already has going on.

Johnson Controls Inc. headquarters
The Johnson Controls Inc. headquarters in Glendale.

The company reported a net loss of $1.2 billion for the fourth quarter and an $868 million loss for the full fiscal year. Last year’s fourth quarter was a $349 million profit and fiscal 2015 ended with a $1.6 billion in net income. But the bottom line results are more the result of a transformational year for the company than poor performance.

Johnson Controls highlighted a number of special items that impacted fourth quarter results including $72 million in adjusted income from its merger with Tyco International in September, a larger non-cash mark-to-market pension/postretirement and settlement loss because of lower interest rates, $293 million in transaction, integration and separation costs, $296 million in restructuring and impairment charges, $74 million accounting expenses and a $1.1 billion tax expense, primarily from the spin-off of Adient, the company’s former automotive seating business.

All told, those adjustments accounted for a net charge of $2.82 per share. With them removed, Johnson Controls goes from a $1.61 loss per diluted share to adjusted earnings of $1.21 per share, slightly ahead of guidance that called for a range of $1.17 to $1.20.  The company reported adjusted earnings of $1.04 per share in 2015.

Chief executive officer Alex Molinaroli said the result was “another strong quarter” and added during the company conference call that the transformation of the business was complete.

“I can say now we truly are a multi-industrial,” he said.

But when asked by analysts if the comment meant the company was done making changes to its portfolio, Molinaroli was quick to say completing the transformation was just the start.

“We’ve got ourselves positioned now where we need to be,” he said. “I think now we have a platform to optimize.”

The company reported revenue of $10.2 billion for the quarter, up from $8.8 billion last year. Adjusting to remove the benefit of the month of Tyco results, revenue was up about 8 percent to $9.4 billion. For the year, adjusted revenue was down $37.2 billion to $36.9 billion.

“We have significantly transformed our portfolio of businesses while at the same time exceeding our external commitments. This is a true testament to the dedication and leadership of all of our employees around the globe,” Molinaroli said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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