Johnson Controls International plc expects to deliver $300 million in savings through decreased operating expenses over the next three years, the building technology company announced today.
The company says it will realize annualized pre-tax savings by fiscal year-end 2023, with $210 million in savings occurring in fiscal year 2022, $60 million in savings throughout this year and $30 million in 2023.
JCI expects to achieve the bulk of its savings through shared services and footprint rationalization efforts, which include consolidating centers for excellence to low-cost regions while also looking for offshoring opportunities.
The company also plans to leverage centers for excellence, streamline engineering and software development efforts while centralizing product development.
Johnson Controls' savings plan also includes multiple efforts to minimize external expenditures, including centralizing and optimizing functions, indirect spend rationalization and reducing travel costs.
As a result of these actions, the company is raising its outlook for fiscal 2021 adjusted earnings per share, to a range of $2.50 to $2.60, compared to the prior range of $2.45 to $2.55.
"After four years of significant integration and transformation-related activities, today's announcement builds upon the success of those actions and represents a critical step forward in further enhancing profitability at Johnson Controls," George Oliver, JCI chairman and chief executive officer, said in a statement.
JCI most recently began its consolidation efforts after the company announcedit would move its employees from its downtown Milwaukee offices to it campus in Glendale over the next two years. The downtown campus houses 1,300 employees and covers 420,000 square feet of office space across seven buildings.
The company also plans to lay off 151 employees at its Ruskin Rooftop System plant in Carrollton, Texas, according to a WARN notice filed with the Texas Workforce Commission.
A JCI spokesperson said the plant would close in September due to a changing business climate.
"Recent business conditions have changed production demand for Carrollton’s products, resulting in the decision to consolidate its operations and maximize our current equipment capacity elsewhere, including other Ruskin facilities," a spokesperson said.
In a call with analysts today, both Oliver and chief financial officer Olivier Leonetti noted that JCI is now in recovery and growth mode. Oliver also identified health care and education as growing verticals that JCI will continue to pursue.
“Certainly with the decline that we saw in 2020 on new orders, there’s been a big focus on health and safety and some of this indoor air quality and the like,” Oliver said. "We’ve seen a lot of new demand coming in for retrofit upgrade and some of these new challenges, which has been offsetting some of what we projected as an install decline.”