Johnson Controls and Tyco International are moving up the anticipated closing date of their merger to Sept. 2 after receiving anti-trust approvals and setting a date for shareholder votes.
The deal was previously expected to close on or around Oct. 1.
Johnson Controls chief executive officer Alex Molinaroli said planning for the integration of the two companies is going well.
“We feel good about the progress we’re making around synergies,” Molinaroli said, adding the companies are “committed and optimistic” about achieving the $1 billion in cost and productivity savings he projected in May.
Adient address change
Johnson Controls is still planning to spin its automotive seating business off as a standalone company to be known as Adient on Oct. 31. The new company began operating independently within Johnson Controls on July 1.
Incoming Adient chairman and chief executive officer Bruce McDonald said the new company will now be officially based in Ireland instead of London, as was previously disclosed.
“It was just more tax efficient and a less complex transaction structure,” McDonald said, noting it made sense with Johnson Controls having an Irish domicile after its merger with Tyco.
McDonald said the company will still have a tax rate around 10 to 12 percent, which was the expectation when the address was in London.
Johnson Controls reported its automotive experience business, which will become Adient, has secured $4.3 billion in new business through the end of the third quarter. The segment secured $3.6 billion in all of fiscal 2015.
“The team is excited, working hard and really looking forward to legal day one,” McDonald said.
Third quarter earnings
Johnson Controls reported revenue of $9.5 billion during the third quarter of fiscal 2016, down 1 percent from the same time last year. The company attributed the drop to the de-consolidation of its automotive interiors joint venture and foreign currency exchange. Organic revenue was up 1 percent, the company reported.
The top line revenue figure was $90 million off from analyst expectations, according to Seeking Alpha.
The company reported adjusted diluted earnings per share of $1.07, up 18 percent from last year and 4 cents ahead of analyst expectations.
Diluted earnings per share for the quarter were 59 cents, up from 27 cents the previous year after excluding 49 cents in earnings from now discontinued operations.
Net income attributable to Johnson Controls was $383 million, up from $178 million last year after excluding $325 million in discontinued operations.
“The company delivered another excellent quarter continuing our momentum as we progress toward separation into two world-class companies,” Molinaroli said. “We experienced solid organic growth in both Building Efficiency and Power Solutions and delivered significant margin expansion across all our businesses.”
Johnson Controls building efficiency segment reported revenue of $3.6 billion in revenue, a 33 percent increase. Excluding revenue from the Hitachi joint venture and the impact of foreign currency, revenues were up 4 percent, with stronger sales in North America and Asia.
Power solutions, the company’s battery business, reported revenue of $1.5 billion in the quarter. Global original equipment battery shipments were up 5 percent and aftermarket shipments were up 1 percent.
Even as it booked new business at a record pace, the automotive experience segment reported revenue down 19 percent to $4.4 billion. The company attributed the drop to the de-consolidation of its interiors joint venture. Excluding the former joint venture and foreign currency, revenue was down 1 percent.