Johnson Controls Q2 Results Miss Estimates; Trims 2014 Outlook

(RTTNews) - Auto parts supplier Johnson Controls, Inc. (JCI) reported Wednesday a profit for the second quarter that increased from last year, reflecting higher revenues and improved profitability. However, both adjusted earnings per share and quarterly revenues missed analysts' expectations.

The company also provided earnings guidance for the second quarter, below Street view, while trimming its earnings forecast for the full-year 2014.

The company noted that the automotive electronics business results have been reclassified to discontinued operations as a result of its previously announced sale.

"While the economic environment continues to challenge top line growth in some of our businesses, I am pleased with the profitability improvements in all businesses. These results are consistent with the expectations we disclosed during our first quarter earnings call," Chairman and CEO Alex Molinaroli said in a statement.

The Milwaukee, Wisconsin-based company posted net income of $261 million or $0.39 per share for the second quarter, sharply higher than $164 million or $0.24 per share in the prior-year quarter.

Income from continuing operations surged to $433 million or $0.64 per share from $150 million or $0.22 per share in the year-ago quarter.

Excluding restructuring and non-recurring items, adjusted income from continuing operations was $0.64 per share, compared to last year's $0.42 per share. On average, 19 analysts polled by Thomson Reuters expected the company to report earnings of $0.65 per share in the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 4 percent to $10.46 billion from $10.10 billion in the same quarter last year, and missed seventeen Wall Street analysts' consensus estimate of $10.68 billion.

Products and systems sales grew 6 percent to $8.56 billion, while services revenues declined 6 percent to $1.91 billion from last year.

Building efficiency sales declined 5 percent from last year to $3.3 billion, with segment profit growing 9 percent, while automotive experience sales increased 11 percent to $5.6 billion, with segment profit surging 54 percent from the prior-year quarter. Meanwhile, sales for power solutions remained flat with last year at $1.6 billion, with its segment profit declining 5 percent.

Income from business segment operations for the quarter increased 36 percent to $629 million from $461 million in the prior-year quarter.

Looking ahead to the third quarter, the company expects earnings from continuing operations in a range of $0.81 to $0.84 per share, while analysts project earnings of $0.86 per share.

For fiscal 2014, Johnson Controls trimmed its guidance for earnings from continuing operations to a range of $3.10 to $3.15 per share and adjusted earnings from continuing operations to a range of $3.05 to $3.18 per share from the prior forecast range of $3.15 to $3.30 per share, citing the impact of automotive electronics being reported as a discontinued operation.

Street is currently looking for full-year 2014 earnings of $3.24 per share.

Johnson Controls agreed in mid-April to acquire Air Distribution Technologies, Inc. from its owner Canada Pension Plan Investment Board or CPPIB, for about $1.6 billion in a bid to expand its buildings business. The deal is forecast to close in July 2014.

Further, the company said it believes it is on target to close the sale of its Automotive Electronics business by the end of fiscal 2014 and that the review of strategic options for its Automotive Interiors business is continuing.

In January 2014, Johnson Controls agreed to sell its Automotive Experience Electronics business to Visteon Corp. (VC) for $265 million. Johnson Controls had then also launched a strategic review of its Automotive Interiors business.

In Wednesday's regular trading session, JCI is currently trading at $47.08, down $1.17 or 2.42% on a volume of 1.34 million shares.