Johnson Controls Q1 Profit Beats View, Reiterates Full-year Outlook

(RTTNews) - Auto parts supplier Johnson Controls, Inc., (JCI) on Thursday reported an 8 percent increase in profit for the first quarter from last year on higher revenues, particularly at its building efficiency segment. Adjusted earnings per share for the quarter beat analysts' estimates.

Looking ahead, the company forecast earnings for the second quarter mostly below Street estimates, but reiterated its guidance for fiscal 2015. The company also said it signed an agreement with Japan's Hitachi Ltd (HTHIF.PK, HTHIY.PK) to form a joint venture for variable refrigerant flow and air-conditioning.

Alex Molinaroli, CEO of Johnson Controls said, "Profitability improved significantly in the quarter, as we benefitted from higher volumes and our continuing focus on execution improvements. The results in the quarter are better than the expectations we provided at our analyst day in December."

The Milwaukee, Wisconsin-based company posted net income for the first quarter of $507 million or $0.76 per share, up from $469 million or $0.69 per share in the prior-year quarter.

Excluding transaction and integration-related costs, adjusted earnings from continuing operations for the latest quarter were $0.79 per share. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.77 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 1 percent to $10.67 billion from $10.57 billion last year. Excluding the effect of currency translation, sales increased 5 percent. Analysts had a consensus revenue estimate of $10.67 billion for the quarter.

Products and systems sales for the quarter grew 1 percent from last year to $8.72 billion, while services revenues declined 1 percent to $1.94 billion.

Building Efficiency segment sales rose 5 percent from last year to $3.54 billion, while segment income grew 28 percent to $187 million. Meanwhile, Automotive Experience segment revenues declined 3 percent to $5.28 billion, while segment income rose 23 percent to $243 million.

Sales for the Power Solutions segment grew 4 percent to $1.84 billion from last year, while segment profit rose 4 percent to $318 million.

Looking ahead to the second quarter, Johnson Controls forecast earnings per share of $0.74 to $0.76. Analysts expect the company to report earnings of $0.76 per share for the quarter.

For fiscal 2015, the company reaffirmed its outlook for earnings of $3.55 to $3.70 per share. Street expects the company to report earnings of $3.60 per share for the year.

The company noted that its guidance for the quarter and full year exclude transaction and integration costs.

Johnson Controls said it has signed a definitive agreement with Hitachi Ltd. and Hitachi Appliances Inc. to form a previously announced global joint venture that will bring customers variable refrigerant flow or VRF technology, as well as room air conditioners and absorption chillers to meet increasing demands for energy efficient air conditioning options.

The Johnson Controls-Hitachi joint venture is expected to have 2016 sales of about $3.0 billion. The formation of the joint venture is expected to close in the fourth quarter of fiscal 2015, pending regulatory approvals.

Through the agreement, Johnson Controls will obtain a 60 percent ownership stake in Hitachi Appliances' global air conditioning business, excluding sales and service operations in Japan.

JCI is trading at $47.07, up $1.22 or 2.66 percent on a volume of 837,806 shares.