Johnson Controls reports EPS in-line, beats on revs; announced intention to explore strategic options for automotive interiors business
Reports Q4 (Sep) earnings of $0.95 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.95; revenues rose 6.3% year/year to $11.05 bln vs the $10.93 bln consensus.
Orders in the quarter were two percent higher year-over-year, marking the second consecutive quarter of improvement. The backlog of projects at the end of the quarter, adjusted for divestitures and foreign exchange, declined five percent to $4.8 billion primarily due to lower activity in Europe and the Middle East.
Strategic Alternatives for Automotive Interiors Business: Johnson Controls announced its intention to explore strategic options to enhance the position and financial capacity of its Automotive Interiors business as part of the company's previously stated intention to build its multi-industry portfolio. Revenues from the Interiors business totaled $4.2 billion in fiscal 2013, with a loss of $13 million.
Johnson Controls noted that its Automotive Electronics segment results include the full-year profit contribution from the HomeLink business, which was sold on September 27, 2013. The company announced its intentions to sell its entire Automotive Electronics business earlier in 2013. An announcement regarding the sale of the remaining Electronics business is expected to be made by the end of the calendar year.
Outlook: Johnson Controls today gave a preliminary outlook of its market and financial expectations for fiscal 2014, saying it believes improving end markets will enable the company to modestly grow revenues in the upcoming year. For the first quarter of 2014, the company expects earnings to increase ~30 percent (35 percent adjusting for the impact of the HomeLink divestiture). ---- Capital IQ Consensus Calls for EPS to increase 36.5%) Johnson Controls will provide full fiscal year 2014 guidance at its annual New York analyst day on December 18, 2013. "We are at the beginning of the next era for Johnson Controls. We believe initiatives to improve the profitability of our businesses are gaining momentum and our markets are stabilizing...In the coming months, we will provide detail on how we plan to build on the strengths of Johnson Controls to improve our performance and drive higher levels of shareholder value. I believe our 2013 results shows that we have a strong foundation to build upon."