Johnson Controls International Plc Q4 FY2024 earnings call

• Acknowledged employee contributions and transformation to a pure-play commercial buildings provider. • Fiscal 2024 results: double-digit organic revenue growth, robust margin expansion, 96% adjusted free cash flow conversion, order growth 7% led by data center demand, record backlog at $13.1 billion. • Deployed end-to-end operating model, leveraging digital expertise to serve key verticals like data centers, higher education, healthcare. • Fourth quarter: organic revenue grew 10%, segment margin up 260 basis points to 18.6%, adjusted EPS $1.28 up 22%, net debt decreased to 2 times.

Global Product: Organic sales grew 8%, adjusted segment EBITDA margin expanded 700 basis points to 28%. Building Solutions: Organic sales increased 11%, EMEALA adjusted segment EBITDA margin expanded 370 basis points to 11.5%, APAC up 70 basis points to 14.2%, North America down 40 basis points to 15%. Backlog at $13.1 billion, 7% growth. Global Product organic sales grew 8% with broad-based strength, while Building Solutions had double-digit growth in systems and service across regions.

• Fiscal 2025 continuing operations adjusted EPS range $3.40 to $3.50. • First quarter: organic sales mid-single digits growth, adjusted segment EBITA margin over 100 basis points to ~14.5%, adjusted EPS $0.57-$0.60. • Full-year: organic sales mid-single digits growth, adjusted segment EBITA margin over 50 basis points expansion, free cash flow conversion 85% or greater. • Pending sale of Residential & Light Commercial to close in fiscal fourth quarter, no capital deployment from sale proceeds in 2025 outlook. • Multi-year restructuring plan with ~$400 million expenses over 3 years, ~$500 million annual cost savings.

• Forward-looking statements may differ due to various risks and uncertainties. • Restructuring plan timing dependent on Residential & Light Commercial divestiture close. • Certain non-GAAP measures; refer to SEC filings for detailed risks.

Q: Nigel Coe asks about mid-single digit growth and Global Products margins.

A: Marc responds about timing of orders, segment growth breakdown, and Global Product margin trends.

Q: Steve Tusa asks about first quarter organic growth.

A: Marc explains timing of large orders and service business volatility affecting first quarter growth.

Q: Scott Davis asks about data center service attachment and pricing.

A: Marc and George discuss service attach rate in data centers and pricing power in the data center vertical compared to traditional building segments.

Q: Julian Mitchell asks about restructuring costs and operating margin guide.

A: Marc talks about restructuring cost timing, phasing of savings, and inclusion in the 2025 outlook.

Q: Chris Snyder asks about North America Building Solutions margins outlook.

A: Marc discusses mix effects in North America and how the margin headwind will tail out.

Q: Joe Ritchie asks about Global Products margins and 2025 outlook.

A: Marc explains no one-off effects on Global Products margins and pro forma margin expectations for 2025.

Q: Jeffrey Sprague asks about corporate expenses, tax rate, and share count.

A: Marc addresses corporate expense flatness, tax rate trends, and share buyback as pay-as-you-go.

Q: Andrew Obin asks about North America Building Solutions key verticals.

A: Marc mentions supportive verticals like healthcare, manufacturing, and commercial real estate repurposing.

Q: Deane Dray asks about free cash flow guide and conversion.

A: Marc explains free cash flow return to shareholders, structural headwinds, and trade working capital impact on conversion.

Q: Steve Tusa follows up on Global Products margin and data center exposure.

A: Marc clarifies Global Products revenue size and data center exposure at ~10% of revenue.

Q: Nicole DeBlase asks about backlog outlook.

A: Marc states backlog expected to continue growing based on pipeline and market opportunities.

Q: Joe O'Dea asks about revenue mix and restructuring proceeds.

A: Marc discusses operating model and distribution channel strategy, and restructuring proceeds timing and deployment.

Q: Noah Kaye asks about free cash flow taxes and restructuring program.

A: Marc confirms free cash flow guide not including divestiture tax payments and outlines broad strokes of the restructuring program.