Will Johnson Controls Miss Estimates Again?

Key Trends In The Quarter:

1) Possible Growth Slowdown In The Building Efficiency Segment

• In Q1, net sales grew at a high rate of 18% over the previous year.
• Fewer secured federal jobs, and weakness in China and the Middle East may hamper earnings.
• 30 basis points improvement in margins expected for the year.

2) Contraction In Margins In The Power Solutions Segment

• In Q1, Power Solutions segment boasted a 260 basis points margin improvement.
• This was due to a favorable currency impact and a 16% fall in lead prices over Q1 2015.
• In comparison to this strong improvement in the previous quarter, a margin contraction may occur.

3) Effects Of M&A Activity

• JCI is expecting market share gain in Asia as a consequence of its partnership with Hitachi.
• Spin-off of its automotive seating and interiors business into Adient is expected to be completed in October.
• Merger with Tyco, to close before end of its fiscal year, will result in $500M in operational synergies and $150M in tax synergies.

Have more questions on Johnson Controls? See the links below:

• How Has Johnson Controls’ Net Sales Changed By Geographic Areas?
• How Does The Adient Spin-Off And Tyco Merger Create Value For Johnson Controls’ and Tyco’s Shareholders?
• What Costs Did Johnson Controls’ 2015 Restructuring Plan Entail?
• Johnson Controls: Year 2015 In Review
• How Will Johnson Controls’ Revenue And EBITDA Composition Change In The Next 3 Years?
• How Has Johnson Controls’ Revenue And EBITDA Composition Changed In The Last 5 Years?
• What’s Johnson Controls’ Fundamental Value Based On Expected 2016 Results?
• By What Percentage Did Johnson Controls’ Revenue & EBITDA Grow In The Last 5 Years?
• What’s Johnson Controls’ Revenue And EBITDA Breakdown?

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