JCI - Earnings call transcript Q4 2019 | Johnson Controls International plc

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Operator

Welcome to the Johnson Controls' Fourth Quarter 2019 Earnings Call.

Your lines have been placed on listen-only until the question-and-answer session. [Operator Instructions] This conference is being recorded.

If you have any objections, you may disconnect at this time.

I would now like to turn over the call over to Antonella Franzen, Vice President and Chief Investor Relations and Communications Officer.

begin. may You

Antonella Franzen

morning thank Investor discuss and The joining conference at be earlier our release call the Good presentation johnsoncontrols.com. portion slide Controls’ you of fourth to can this issued tables Johnson all on results. well quarter call as and conference the morning found related for as Relations fiscal press website XXXX our

Financial Officer, Officer, today Johnson Stief. President Controls’ George Executive Oliver; are Chief Vice and me With and and Chief Brian Executive our Chairman

Before will there. we the like through press would ask to remind course of today’s you the included read begin, I certain forward-looking We that cautionary today’s be information. review and during call, forward-looking informational you we statements that release we’ve providing that

non-GAAP press adjusted references release In special address these exclude as restructuring we our you discussing during and use well in integration our that costs ask of call, adjusted addition, discussions other that our through to we will the of results items. EBITA margins items. read as and certain measures EBIT the use sections and In the

to These presentation website. metrics and are appendix to our on reconciled posted measures press release are in the the schedules our and in non-GAAP attached the

are Additionally, results ops of comparisons on Power the all prior basis to year Solutions. continuing a excluding the

per to earnings $X.XX the quarter. $X.XX operations share Adjusting non-GAAP adjusted which continuing items comments. for a from special per per share and items, quarter prior-year in Controls’ in compared $X.XX the special share continuing $X.XX operations address from was included related earnings charge ordinary these GAAP attributable to diluted to Brian was shareholders Johnson for his net will of

to the turn call me George. let Now, over

George Oliver

us you and morning good today's call. Thanks Thank for Antonella joining everyone. on

our details with quick of the into would to initiatives things I back kick the and off I recap commitments. look at a some year strategic financial of get quarter, our thought I Before

successful the XXXX planned our from like Solutions take the significant longer execution usually the I execute. expected divestiture subsequent strategic start and achievements to actions. Large Slide as capital with was with most finish. X, one pleased of completely deployment and transactions of go to Starting in Power extremely than never this am

monetizing tax in effectively proceeds with navigated the leakage, $XX.X business the resulting billion. lower-than-expected of net transaction Our process, cash teams

As allocation the following and began we use we close discussed last quickly returning meet the we redeploying to to commitment, amount within quarter, capital balance proceeds, our were those transaction. deleveraging the shareholders. sheet, of aggressive proceeds a our able capital Including of an weeks of the significant

to completed more able billion of pay sale million in nearly down debt a completed shares repurchases, outstanding. important long-term shares to were the we of pure-play the buildings just to Perhaps the back even in our company, XXXX, strategy XX% and Solutions our XXX share $X over In buying transformation with Power of $X over billion company.

forward, growth to continue of move and core, will solutions company. strengthen our we we As aspects all in profitability digital the across increase accelerate

competitive advantage cloud-based capabilities and unique market-leading as seek Johnson Our equipment and broad smart outcome-based edge solutions. systems connected portfolio applications Controls devices, increasingly data and position, customers analytics provides and a of

their digital as The provides customers with with our for and the us for strength and untapped of combined installed large value industry expertise Johnson with and transformation. most our digital thought base trusted customer preferred unparalleled the capabilities our partner advanced positions captures relationships Controls That leadership innovation innovation.

customers. stadiums, world's in most patient experiences better advanced in in hospitals of From we exciting the outcomes unique learning or delivering and better position to environments missions the the have new defining power creating schools goals fan to our

brings Chief Customer pleased connected in an of newly in incredible into to role, addition to of Officer. created our and our I strategy, a further phase the move team expertise knowledge solutions. deep Mike and we Ellis a leadership announce with As amount as of software was the next and industry Mike Digital

our be digital execution our will and to all service across responsibility JCI primary to strategy offerings. Mike's and business and ultimately expand accelerate functions units, within regions

In executive leadership our quarter. addition made significant announcement, we two also changes Mike's other to the team to during

late In fundamentals to growth. improved will that would Global and well his new transition product innovation proven announced as we Jeff's Products. July, EMEA/LA role our operational Field Jeff expertise leading from abilities segment Williams and as drive lead leadership underlying

the end announced strategy operations project service joins brings background Tomas as businesses. appointment play increased forward. global of and he and their in from profitability us Xylem, a functions as who a in the driving of go well businesses At Brannemo, we will growth successor as Jeff's across European and Tomas led in and with September, EMEA/LA diverse where we key role critical oversaw

to search you external have Chief Brian begin may him for as have an this morning, Officer as JCI, his we orderly appointed transition. Also enters identify including Vice successor, year Brian's to process of and seen as Financial smooth an Chairman. The will last a allow Board as

over fundamentals, structure. have am new optimizing fiscal very innovation I the our while the drive teams the what Lastly, XXXX and proud the across organization, all product strength enhance development, to excellence and of accomplished talent course improve cost around management commercial in of globe further the underlying

of free a year conversion targets set financial or the the met just cash on solid to we orders of each exceeded top some in spend of of Now and of strong Slide growth lot the let's we flow expansion, revenue, ahead priorities guidance. year: financial beginning time line in But and our at I our discussed, margin turn won't scorecard and on we commitment addition the each these. the of for to strategic X. quickly

Slide mid-single for despite X. the comp quarter, starting with quarterly another of to We growth on difficult year highlights orders Turning the plus most of our of X%. order some at solid the had quarter digit

which organically quarter high ended visibility $X.X an Backlog Our order into profile with and service attractive XXXX. up mix year, a the pipeline at X% balanced remains robust large of prior the small of provides billion, projects. and versus

Field with to high now X growth solid a of increased of single-digit the for organic HVAC. growth on financial quick across Sales recap results. Commercial in led Slide by businesses basis an $X.X the billion X% Turning

$XXX adjusted Adjusted organic million reported basis as profit as EBIT corporate of grew the solid an $XX in expense. lower EBIT amortization basis, on including quarter. in a On from headwind grew segment XX%, million a X% growth FX driven X% by well and

Adjusted the utilization Solutions Overall Power solid the related actions XX% contribution year-over-year XX capital $X.XX year margins underlying reported from operational both a on increased points proceeds. expanded basis. EBIT over significant of the organic and sale deployment with prior a and EPS performance of to the basis

representing conversion. flow prior $X to year the adjusted cash over flow XX% $X.X just XX% Full the free Adjusted quarter. increased was cash over year billion billion in free

I that, our to over to will detail. With discuss in performance it Brian turn more

Brian Stief

George Thanks and morning good everyone.

on So, of X. let's get year-over-year started EPS Slide bridge with the

productivity see including synergies and this contributed partially operational our $X.XX you and As performance was can by save offset investments. $X.XX of

also XX% EPS the from items headwind Power both of financing benefited from to and was $X.XX We of proceeds up fourth year-on-year. quarter $X.XX which quarter the a resulted below-the-line added $X.XX net netted count redeployment the in in respectively. charge share Solutions $X.XX which And the which and perspective

consolidated segment So, let's a at look a move on and to results basis. X take Slide

led $X.X is some our businesses. in which partially And this You the sales by in on our in X% was can Product softness this an of increased organic offset by X% flat quarter. see billion Field was businesses basis and

comp. its I we with toughest in prior facing every would most QX; the facing aggregate our that comp in point segment year out X% were from difficult up

three Within businesses, across regions. which the Field total quarter growth revenues X% grew all in service the was consistent

growing years. know and a past offerings has of significant an and internal area cadence growth for mid-single-digit been now focus established two you our As of service expanding the we've consistent

look service continue augment growth digital solutions growth, we level to in forward our Going by driving similar service. enabled to

is just know in our us very $X base XX% forward. our you over revenue provides as field which represents and stream service this a about of profitable, As we move resilient with billion revenue business revenues,

X% EBITDA and We million price productivity all organically of revenue, QX this and project from was in synergy this the leverage ongoing products X% was $XXX volume our driving and cost solid field, save. realization grew as backlog by continue install well across the convert Segment regions. driven our to growth up and and strong

can And minor force this points. QX Lastly, basis to And you offset points as basis margin XX.X%. pension partially XX investments our in a waterfall, items. XXX and some margin see expanded rate EBITDA was well product segment sales as through other headwind contributed improvement run by operational underlying and as

segment each detail. review let's in more So

businesses, which in led X% QX. in X in North and against high organically continued America again Turning this single-digits strength by driven service an activity. prior both year and to The America. X% applied HVAC install Controls and by sales was grew was Slide compare growth in growth increased North

in single-digits the year. in I note to both Security install and the growth mid-teens quarter. due in comp was & with declined high primarily Fire teens This prior low grew Performance service. would a Solutions balanced that

increased by productivity leverage and North driven favorable as save. This EBITDA well volume EBITDA margin and to America XX XX.X%. was adjusted expanded points basis synergy X% as

And faced QX we as year expected in the mix headwinds this substantially. eased

mix outgrew QX, by Security this again putting in the pressure offset on was HVAC higher businesses, in Fire growth Although & service.

$X.X due some strong, project up up North Security, in large primarily timing increased the X% X% Performance of led mid-single-digits. awards. double-digits HVAC, up in very and Orders by billion of America X% & applied declined Orders were Backlog strong Fire Solutions year-over-year. to

led digits and Slide and Security So service East we let's Industrial X% grew regions on growth X%. X% in quarter both EMEA/LA mid-single in single-digits. continue to the across by see XX. except HVAC pressure. & to Fire grew and was organically Sales most for install move low Controls Europe EMEA/LA Middle low Refrigeration up and up with where positive grew the business our in Growth double-digit

In as In the service Fire strength declined increased America across by mid-teens than growth digits was continued mid-single Security. & more most with by in in project East, business Fire and softness solid revenues in & revenues installs growth offset Latin lines led of primarily activity Security. Middle our HVAC,

includes EBITDA expanded the point increased rate offset FX. as the more of and Underlying headwind basis EBITDA quarter margins additions. volume XX% and and than increased for margin our run XX points EMEA/LA's synergy basis strong impact save to in salesforce XX a XXX XX.X% adjusted points previous this and productivity basis a favorable

across America which backlog the in orders at quarter. Latin XX% in strength organically. ended both X% billion, led Europe continued low X.X install ended increased up EMEA/LA in in single-digits up grew And Orders Backlog $X.X service. and by -- was

on organically HVAC in higher and China which our X% the BMS continued up by APAC installs in X% to in XX. core quarter. strength led move grew project let's low APAC was sales demand So, double-digits. with Install activity for grew sales Slide platforms led by

EBITDA adjusted margins margins Sales for decline our well by was including expected quarter XX.X%. in core volume to X% higher service install offerings double-digit with did points X% pressure. APAC basis mix Favorable the offset in grew XXX margin as growth than low down leverage as more China.

as APAC APAC flat strong a this increased orders delays would unrest order due was in offset XX% just quarter ongoing result decline And Kong X% were to single-digit of was to our in China orders. growth in primarily note install the billion. high trade and the disputes. by I in $X.X service as year-over-year Hong of order Backlog

Overall, it's in and ability to in to actions and and uncertain. environment our execution, growth we fiscal the the conditions jobs installed profitability grow in improve our remain also and very XXXX. some the in topline our confident APAC quality are the clear base XXXX competitive project we've in Nonetheless that the fiscal taken of in economic improve drive given is areas service

compared was let's last organically quarter the growth move to Products XX. a So, Products year. Slide X% to flat strong versus on Global in Global

QX year on our as a decline end HVAC American QX discussed QX and QX levels. and in to strong XX%-plus did prior compare this a we our as quarter resulting As expect due channel North inventory year we call, Resi well performance

for which three softness Having points said Global a our percentage growth Products This quarter. APAC that a was resulted as revenue overall joint us the for in organic reminder headwind softness Hitachi the in venture. unexpected in to residential relates

Hitachi Taiwan. just a two-thirds And was both in in to these The base. we up and revenue which reminder over business conditions positions Hitachi's countries Japan of decline due together in our market primarily have as make market-leading

grow growth Fire the in within Security with Controls. saw single-digits and So, let's year-on-year. growth Detection BMS turn relatively flat We were Global to products individual double-digit platforms mid-single-digit in Products. low

grew with X%. America Equipment the HVAC Global double-digits declined mentioned Overall sales in by Refrigeration quarter, than high previously the & softness less quarter low driven unitary North HVAC mid-single-digits. the declined in and weakness APAC. expected commercial the single-digits businesses America, in in Residential Light in North up

high in tough was equipment with mid-single the high Parts year the our business single-digits in chillers quarter channels Asia. upper and quarter which grew applied double-digit our low a and a HVAC for business compare and and IR nice in VRF strength the continued growth had declined Equipment North digits teens. against indirect prior America reflecting

Products expanded Specialty more and in mid-single-digits the headwind. fire on lower XXX our suppression grew by as were finally, margin and demand offset than And increased also underabsorption strong Incremental investments volumes Product segment slight product sales cost force North products, the and price/cost for EBITDA America. and of points, was X% EBITDA and basis synergy positive save. benefit a productivity particularly

full for single-digit expect sales in fiscal the to Products in low be mid-single-digit the the range in low QX we range and Global Looking XXXX, for year. to to

I the cost very continue we be and make let's XX. move to progress overall on to corporate Slide with So pleased corporate reductions.

see X% and benefits the million this year-over-year a as primarily as down from and Solutions of save we're cost $XX Power synergy can to as of was the you result was expense to divestiture. well driven taking corporate ongoing productivity As reduce actions the

We cash $XXX ops reported flow XX, free Slide from flow. cash continuing On million. QX of

million $XXX above flow the one-time slightly for the outflows in exclude up to cash quarter, XX% billion free you QX. cash in If $X adjusted was

adjusted capital solid actions. flow conversion improvement trade XX%, our management For year, this around CapEx continued working delivered discipline the reflects cash free performance and we full of on

million and one-time flow As outflows XXXX. previous fiscal of to the cash quarters, excludes talked adjusted million tax we cash the XX% and first fiscal approximately to $XXX remaining expect you see of $XXX XXXX, refund we've this we look about we half free in of conversion in which

flow GAAP adjusted our cash exceed free result, will flow our XXXX. a As in cash free fiscal

Power the slightly redeployed debt cash was turn share quickly back was the balance some Solutions let's nearly we Slide million up $XXX can sheet see the on repurchase, which quarter. QX XX. So as to in you into in Net of as

Before back some provide George adjustments turning year-end of recorded and guidance, items are to discount fiscal a this commentary rates OPEB loss two outlined I on XX. related associated calculations. Slide with pension for to a $XXX to on from mark-to-market XXXX We want and non-cash it lower at pre-tax look our special million do results significant primarily that our our year-end

in million benefit that adjustments $XXX related non-cash to favorable the the audit quarter. a recorded we Additionally, tax tax we saw

to that So George. let me turn back over with it

George Oliver

Thanks Brian.

we questions, up the for to with outlook Before I want open you our line provide for XXXX.

expect walking growth through we chart XX. to waterfall Let's of revenue start the drive by on Slide will organic Overall, $X.XX earnings. which mid-single-digit low approximately

have will which Additionally, of we the earnings. contribute an course over and continued of benefit the savings will we $X.XX the additional and synergies realize will productivity of year

we plan are our with a Brian As last quarter, repurchasing moving mentioned to shares. forward continue

of course proceeds $X an to we continue Solutions of $X.XX. earnings about of billion We hold result remaining on expect benefit to during the to billion which assumes is expected the Power $X.X in to approximately Solutions deploy sale proceeds hand. fiscal of incremental sale Power XXXX This

other is before And guidance guidance items net $X.XX small These headwind. earnings details in special our This XX%. to Slide is $X.XX. the of range -- on of XXXX to items XX% XX. $X.XX our a in There EPS represents items included fiscal growth range the of full to result

performance EBIT underlying strong based synergy guidance benefits. growth top productivity to driven Our on XX%, and is of solid by line X% and

deployment we are Lastly, for wanted an XXXX, move the to progress our benefit to forward. I of updated Power will to related provide framework Solutions as how expected as sale proceeds benefit earnings portion a the the of fiscal

deployed growth as a contribute benefit cost XXXX. on expected be would of fiscal reduction remaining our billion proceeds $X.XX as corporate Power XX, you Slide the to range can additional is $X.XX of proceeds Solutions basis. any a $X.XX of the see XXXX rate deployment in This incremental well the prior sale to operational XXXX and This EPS in to from incremental capital of $X an run As deployment in run benefits rate on of or earnings. takes a to

made years, the in our progress two have significant businesses. last into we our reinvesting aligning fundamentals, portfolio, the improving back and underlying Over

what control. forward, our As about we is in controlling all is move it execution and

driving Although fiscal focused visibility as environment the and good our we and for are Field businesses, deployment. shareholders. about position provides our we watching our customers macroeconomic execution our in tends capital resilient, remain on our feel entering benefit closely, continue backlog service delivering business more us XXXX be our self-help and and we to from We to

to turn operator With it questions. our to for me that, the let line open over

Operator

The formal first & question-and-answer from our [Operator is Khanna, session. Gautam begin now question Cowen Instructions] Co. will We coming

open. is line Your

Gautam Khanna

morning Hey Good guys. thanks.

Antonella Franzen

Good morning Gautam.

George Oliver

Good morning.

Gautam Khanna

George wondering could will are in front to seeing if if applied talk What of So, RFPs, what you HVAC Any you that projects just have yet I the log terms you? pipeline? of was domain? in about you slowdown speak

George Oliver

No. continue and quarter products spread across revenues has look to up equipment a and well result I We've X% lot the been light you've as a America commercial you at up of was been When APAC. to for we've we in space. the growth that mean HVAC both service we're products. launching high had commercial single-digits. of the rooftop strong North with in execute our with and our applied seen unitary And new mid- that very

off X% X% you at plus look orders, orders last strong but quarter in year. If that's the the show a a

look occurring So broad-based. where at that's it's that's important you to note. And pretty when

here backlog the look strong globe pretty confidence and and XXXX we're we continued the our course growth that converting at a deliver on into of pipeline on that projects, going in us have has here I very believe through going pipeline single-digit on bit here that go gives commitments the progress to lower we a us and XXXX. that we given XXXX. working we we're with you the our be little see and rate mid- confidence that But continuing to across have to positioned if maybe much - then So continue made to the

Gautam Khanna

$X of a there? going us your think consolidation, follow-up. just update guys Any Thank thoughts kind consolidation, quick there's company moves I out might wondered earmarked thoughts billion do On just space? be an you shake And just your on how on And independent becoming CCS have pipeline that? with things could broader Okay. And climate any you any in M&A. the spinning. to you if bigger on for Ingersoll you. and

George Oliver

Gautam. Yes,

Let you give me just my perspective.

in I to always But making opportunity consolidation. I what work on we've been with think any able there's we're and that been doing strong that based for orders to executing. being the products of in industry out clear channels doing pipelines think to we've we're on our converting the ultimately reinvestments it's for continuing build potential customers, globally with our been execute focused build

we at about ourselves and very able to as see talked Digital the to an position to incredible outperform to future take Officer basis. the be lot portfolio we we've is strong think, opportunity And that of we added, tied I what a and look with a a Customer go-forward this Chief on

our so focus. And that's

When would do delivering we continuing bolt-ons we strong is at our opportunistic continuing product we and that us then regional looking as our and investments. strengthen needed. as And each for of to pipelines performance execute, footprint. working are look certainly at focus opportunities at our our the organic M&A, But to businesses look we're

Gautam Khanna

Thank you.

Operator

Wolfe question Research. is from Nigel Coe, coming next The

open. is line Your

Nigel Coe

good Thanks, morning.

Antonella Franzen

morning. Good

Nigel Coe

[indiscernible] you sounds bit like voice sounds it creaky. your George,

So here. hopefully to answer the questions

across maybe Obviously seeing starting to versus this board, quarter just and with how the costs then comment is talk materials challenging more broadly price especially to shaped bit raw on expectations? maybe just Pac how that up pricing speaking. a but pricing are So and you move about Asia

George Oliver

three it that contributed when was we of years headwind look that us back, if top And positive at And got price/cost where roughly at look the we in for the XXXX. began two had XXXX at in to that year. to points or we two late I'd a Nigel, in XXXX. -- our go top positioned growth last line headwind in that line you And a you XXXX. well overcome

topline, Now being standpoint. staying continue X% And topline. on from will we that said, XXXX, contribute it the up to set for we're about as that projecting sure that the we've a pricing disciplined that overall make to we're

positive like price So, XXXX. we'll will price note that through continue is as that productivity the It the important go and relatively to our we is continue to that the combined margin with XXXX. to in inflation with and rate offset impact be to neutral cost

Nigel Coe

Yes, to cash I Brian great. into next items Thanks dig year. And of some then flow George. wanted the for

So, $X.X item? that talk that outflows that. refunds just billion of about just And then the you're as-expected, tax one-time up obviously flagging but maybe does came

to I And then outflow then four There's on that you. final know just on large in income putting quarter question pressure ops, there's could year? conversion discuss what extent conversion pension this wondered is a And next the just disc Thank if points point here. that you the well. as

Brian Stief

payment So the Power the large with tax relates the was disc outflow year to ops sale. gain made the on this in that associated

had $XXX committee the we've it's that for But I to previously do about with it to tax size refund, flagging in We're the of now. relates we've as of We that talked quarters because of the expect through several go XXXX. of mean hopeful half first you. kind been timeframe. that December-January it As million

So, half the XXXX. first we do of in expect that in to come

that through well that $XXX that we're cash current And really to of we previously. to million flagging $XXX got charges outflow that ongoing or support prior million then activities target have talked of relates related as cash cost we've generate million fiscal we've -- prior XXXX synergies the the of the costs about as the to to we're $XXX going restructuring

So, there question one other was there?

Nigel Coe

extent To is income. pressure that pension on putting The some Sorry conversion? yes. what

Brian Stief

there's XX% some well. about target how look also less our when equity cash our than pension being as we at income, go-forward for that as improves at conversion to get venture think that equity on the does globe. joint working management annual us our Yes, two I around benefit say provides come to an a think office improvement mean as I the flow team secondly, in think be joint some between One would we efforts next trade income XXX%, our on capital that and get but would year I continued will our the areas. get there's still basis amortization through pressure to And gap we income free closer net-net, cash basis. I close of But dividends from I venture some dividends

Nigel Coe

Okay. Thank you much. very

Operator

The Jeff Vertical next from question is Research. Sprague, coming

Your line is open.

Jeff Sprague

everyone. morning Good you. Thank

Antonella Franzen

Hi Jeff.

George Oliver

morning Good Jeff.

Jeff Sprague

is in little of on morning. we productivity? And of game synergy bit Good productivity, kind a Could dig a blurry I'd more the and George into I'm getting this be synergy little at what's little just point a and sure but what's seeking you to on this still that to close it stop in productivity what to number? I'm sure that kind never program of explicit more but XXXX? going What capture? a And have yet you're in will embedded is bring

George Oliver

Yes.

cost go-forward here generate synergy a normal Brian our productivity still you and when base, to addition points ability XXXX. continuous productivity be expansion would cost to deliver here at as strong laid able our So out, of net get productivity margin on that to XX very On positioned in in about we base basis, basis look are to

business, continuous do whether keep goal improvements strong structural really operational going we or And businesses forward. to to that standpoint and driving continue of our service in with strong then cost. everything basis product our pipelines And opportunities is a within a from reduce our field on it be manufacturing to process installation so the

strong beyond expand we our XXXX, continue -- going we're And project to a to still for productivity to pipeline when margins. so very have

Jeff Sprague

look think they're And data right? of little Dodge the the it the what really hasn't in is questions, here. is wobbling George maybe your all insight any peers' earlier to I goes orders you and could a if there's it shown for starts of wonder, additional up put-in-place And XXXX? think backlog at just as worth, macro you Some yet. backlog you to there disconnect any ABI, one indicators share visibility looking convert just I orders your the of of your into whatever bit really the kind or right? on

George Oliver

institutional, suggest bit start forecast, by would when little they lower do indicators but ABI where some we areas of in they that you when driving still pipeline a that look that Dodge have or peak look pipeline. there. And you the Jeff we strength, order end at the lot obviously at we of stabilized. believe that's think and of of some I the macro has a support And So to are that the the conversion markets yet they have I

So projected we're that what I would nice tell a when you XXXX, year backlog. with starting in we the is

mid of are order will what able to the We see And rate slow us in the we to single-digit today. that the bit the digits have suggested a throughout confidence kind two that is on mid-single pipeline positioned to low growth based gives year. what deliver low we combined be to kind of

going rate progress And two from that I what up billion service And would than better us, that over do years, in growth globally. our business sure that adjust little able making is sustain is a and cost closely necessary been we've we're needed. if $X a this for about you've to standpoint X%. to what's watching our the we're as seen our Certainly to say last

that were of a years year believe short there's we So X% past this have we And of goal we've our that we to installed that two ago. that with is business. build the opportunity we're service built tremendous then base X%. north our And still

to with pipeline that that we to be we're make that So well if and going try to appropriately able we going strategy to service that soften that adjust hard plays it our watching able softness. in the to be our positioned much on making execute of that able believe the sure does some be to this to time same as to be service up to at we're franchise also big project out, we're are working

Jeff Sprague

Great. Thank you.

Operator

Steve from Tusa, coming JPMorgan. is question next The

is line open. Your

Steve Tusa

Hey, guys. Good morning.

Antonella Franzen

morning. Good

George Oliver

Good morning, Steve.

Steve Tusa

you talk to China you're for well. be seem equipment about larger up side? what just holding in Can the pretty there services and seeing Things everybody of specifically on kind

a degree to obviously on You pack continuing there guys to your are growth. lead the

in phasing So, there this any are any -- some down? months Is next is next things it XX the -- foreseeable slow here -- for pretty or project robust on timing to going are is Or there things think color the for the future? concerns?

George Oliver

about Products. our that we an business, you Asia-Pac frame-up X% million you Yes, company, is in region. $XXX for $XXX in is And XX% let us good -- go-forward seeing as Steve. our China And China by is is us are we million about and the me as HVAC of on driven look revenue had in important to Field backlog now double-digit are Asia-Pac. here able in It's about the be in well growth. the we market that the our China basis. expand at Global Field lapping organic total of XX% equipment overall for When ability of had the margins quarter. service to as we tough We believe I that said, a here are seeing growth low

doing, Shanghai, appropriately expansion, Now, that I teams we we're and And in progress. -- to week Chongqing. governments. said, meeting in over capabilities really feeling infrastructure, like. our working on with the Chengdou We're the to make admit I I and that was that was we're with meeting capitalize good a continuing I with in met customers just left positioning have the local being was the to and and work -- -- I spent just I I there, was the as

say -- I'd going don't grow. continue And it's so to to I

we what's China the have the temper wars growth and some like, we that's that with competitive a after, of but the standpoint, current It I sure go in projects here market. view create Steve. with to make to trade value stay happening overall, type how we going but good We're based on the not my from of cost about my say only the in feel I also bit a but

Steve Tusa

a detail Thanks Great. and for Thanks. all lot the comprehensive the answer.

Operator

The coming Julian Mitchell, from is Barclays. next question

Your line open. is

Julian Mitchell

morning on Vice good Hi Brian and Chairmanship. the congratulations

Brian Stief

you. Thank you. Thank

Julian Mitchell

up guide XX of within the corporate margin that. to XXXX, first terms reduction guess it's cost looking just I my with fiscal at some EBIT question In XX bps so

the and being right about other thinking when wondered say segments sort that across three in think segments, that the to Is in margins being bps? of APAC XXXX think do way Just up XX you're flattish the about four expansion XXXX? the we

George Oliver

Yes.

So, when level total high points to a get to going And Global and -- XX here well, across to positioned margins of as we've leverage that XX Board. at better we're be give the for to going obviously pretty much expand -- we'll let basis me that's look out our guided -- we're year. expansion we Products. It's you see the

we're closer at type we And a to XX-plus basis Products, so points. our as look Global to going be

that's And to we're Field-based bit seeing And And points. productivities. the we businesses a America going overall the points get the some XX total synergies we've on about portfolio. then basis bit a total XX EMEA/LA in of North XX a on leverage here to look where at the -- margin you pressured roughly The little points margin good look as is being APAC we work when up -- have be -- basis when be you we pressure that's year expansion, within other mix. is purely better. how done our and we XX or kind pick lower achieve with going basis one well then the as the at about volume about on are We

us So in total. that's what gets

you there HVAC serving. the said that we when the & in that more mix as because see Now a well into that as we've pressure of of of the that bit end America, retail pressure in the versus had headwind break business because the we're I as North Security, Fire out continuing there market little

so performance then EMEA/LA -- But the EMEA/LA Products board. across beginning of improvement to will the here Global in driven by well continued as see the overall, as be we're recover strength and going And APAC. to it's

Julian Mitchell

you my Thank very around second Products much. aspect. And then that revenue residential question just Global

down as in said you QX. you double-digits So Resi in HVAC Global had revenue low

market talked give wondered share-wise bit Just a in going have on think I around okay. Asian You the if Japan more Is numbers color culprits. Taiwan could Japan being there? been there you about piece? something and

piece So within was HVAC? that your on I just wondered Global what Resi Asian outlook

George Oliver

Sure.

here we it frame nine given up Resi, year. you plus that that So did off North growth. growth in in percent organic And a last was America look start let of when let's me at flat had QX, revenue year XX-plus a it we a Products expect Julian, being decline Global that ago

be be going knew the quarter to into we off. coming we're -- inventory was we when that that burnt to have there levels And distributed going to

strength Hitachi was softer and about and Now up that and what Taiwan. It's residential annual business. was the JV in as Brian the it's in we billion with revenue. APAC talked about position And that -- the Japan to have primarily that just $X.X the frame

of The three low-teen Brian overall decline, points a global as decline. it impacted our That was products growth. said

in break to cooling partly you season be the in if had at distributors Japan, see out September. Taiwan look And through end fourth We decline it -- to inventory burn into to Taiwan back had quarter. our it an to a of and the Now at their normal then the levels the as today, mild was to were summer. as coming we we end inventory due

Recognize in strong position that a that do we have about a market. very have we -- share

do we share. well continuing believe so basis maintain positioned and going go-forward on And be we're to to a

In Japan, in occur And first three to the strong very a we QX. in Japan. decline ourselves began had then market quarters

now And there. came is they be. I I levels with What to distributors to burning think spent back need our just I so say I our days few with from we where team And inventory. there. off would that back are saw the inventory a that right

about in continued bit little here concerned a are QX. We softness

the tell and these business we're dive in So good we're markets. investments the with I've to would really that I about my maintain being visit from a feel our deep you that investments, done watch the all very making able closely. position strong on I going of to and

kind see see bit way And going pressure we QX it of today of Japan so that's the a I little the but to market. of are here because in

Julian Mitchell

you. That’s great. Thank

Operator

question Andrew Citi. The of Kaplowitz from is coming next

line open. Your is

Andrew Kaplowitz

guys. morning, good Hey,

Antonella Franzen

Good morning.

George Oliver

Hi, Andrew.

Andrew Kaplowitz

issues last was in still improvement down America large EBITDA growth put basis points XX Security better. Building QX a HVAC. mentioned versus is as lower service Solutions QX despite North mix But really versus than you Fire think & George quarter, XX being which I

So really just better really it you better go sales I Did a was the give maybe at didn't said mix improvement? know abate just Or or more retail force it service can into pressure productivity? away. color that all? you

George Oliver

up, the were improvement. fourth lot -- basis and previous you of quarter a the points frame XX lot so the And can pieces now we of in the me mix this in try together. kind a quarter of Overall, put So let we to year-on-year like. pressure had with there's as said, you

the the There synergies, When that about breakdown almost very volume We're continued cost of which XX then with and little volume We're was And come mix a was points. is at basis of look on up we're savings good volume. sales seeing seeing points. investments. and basis you XX through that productivity in we've seen there's bit pension. done headwind -- a headwind strong

walk when points the that so year-on-year. which net basis XX ultimately And that's you where achieve through

get And so closely watching obviously it's this -- we're into as we QX.

expand. We making we're sure continued a basis positioned are looking -- on to a year-on-year and continue to that

retail. we're executing focus of going productivity of we're it's that be that and going somewhat to going mix believe because come strong flat the the But continue pressure to to in now on and while on to some cost the driving growth. seeing through we're right the I savings is way

Antonella Franzen

I And of the have in reminder to Andy, same we part really with business the had that a And quarter. here didn't America as that of QX for thing that decline had really North in would just in we only XXXX. in our add keep mind fourth QX dynamic performance America, retail is strong in the North do

Andrew Kaplowitz

about Security particular? And good. I markets think was the you then That's & helpful, guys. can mentioned in you growth & Security products Fire Fire George talk that

much is you has of being the Your Are strong? outperforming How over improving know the sort security sort the markets strong. of field self-help fire much like last the orders and pretty markets the have in I it business for generally hung years market? of versus of few in been there it digital detection reasonably well. you But market? how is guys

George Oliver

start So out products by field. and it let breaking into me Andy

products, prior compare. year so up were at you And we was Fire on X% if & but double-digit it look low a although Security prints that our

stack, well two-year a extremely with product doing still So, businesses. on our we're

was if convert flat. X% both new of backlog. and sales that that's able ultimately up the channel and to to force in Now you products, being continuing The expand security and dig our fire result into detection then a reinvestment was

tough was very also on that's believe a teens year-on-year. I Now it comp high

look ourselves and portfolio. of position to importance and products as in solutions, with mix it our we security that digital right when having overall at product we And compete are our to the the the continuing invest how we mix want relates -- to and within

pretty that's globe. at fire suppression to that and then perform to our up business businesses, pretty believe broad-based. X% well And our is service install much broad-based across last we're gain very as and that's -- the both mid-single and share. I Field as well. look we it's the We're continue When continues you up digits the

our about all spoke across focus like There's big building earlier -- been I It's a regions. three on services.

are product would -- we're But businesses with as as We executing both at performing well the continue and market capabilities. on and we we're I service to build say our focus service. overall projects out performing we that how our above how technology

Andrew Kaplowitz

Thanks guys.

Operator

Wells Deepa Raghavan, coming question from next The is Fargo.

Your line is open.

Deepa Raghavan

your this morning Or that's now backlog just least perhaps visibility quarters Hey you your color think how at is Would say across you XXXX, good into time your regions? out? all. given you fiscal your declining? Field -- any three that visibility And visibility and lower Field on splits backlog at

George Oliver

three It XXXX, pretty much a driven few was growth East the we in had healthy soft Board, if of what in Yes. all order pretty the rate demand, our at regions. a would our order is the throughout the I look right, -- pace pretty Middle year. some you overall, across across good softness and It's broad-based spots, by end-market pretty -- say of but

large-sized we're projects. salesforce and mix technicians, in With of of at if as now of mid, able that our the that. the we've been as you service expanding the a balanced projects, the mix I it's well our And to to look at small, convert be positioned doing think end day, work well

that which revenue And in backlog that there continued might to with order we upper how might order be I what that's we And year, is we're a then to earlier, we've we're much in here low that organic the to it's backlog pretty is to seen some low bit for growth growth the year. last do mid next much the our single-digit mid-single-digit ties growth be idea that the at to we that years, with putting look so the what of the -- mid and of our of into that -- suggesting convert two pressure maintain take to over more the of said going backlog. as little

starting that's we'll year backlog. closely, again And with so watch but the we healthy are something a

Deepa Raghavan

any My the you. follow-up about it. in your progressed? cadence you any Thank or of I on Got would quarter month. strengthen your talk geographies or did Products of weaken be how of mean or businesses? momentum Field Can

George Oliver

The just on that. -- a clarification

progressed quarters the how So, through XXXX? quarter the --

Deepa Raghavan

did -- certain in geographies? how certain QX month. your month the Did decreasing in or by you -- the verticals progressed fiscal No, and increasing QX in momentum as or momentum quarter see F

George Oliver

typically businesses differs a bit. quarter the close But third of is a lot lot projects and where it mean of month a of we the look when I made. and Yes. shipments the our at get

on here fourth was ultimately the in which there quarter. our a third is always basis the anomaly an So, a month of the strongest bit little is case quarterly where

of was expected. don't how any in with profile I believe the that out we change So, there played the quarter what

did we knew didn't the it expecting when we was were expected. we that quarter see quarter bit standpoint spot additional out, out we think the that play played of have quarter. residential was as a where from probably I only would little the as But normally we played from what that the as a we started saw as softness that out

Brian Stief

similar of QX in monthly the was the very the Yes, cadence to fiscal I cadence QX XXXX. think in in of XXXX

think So there I don't at anything unusual was all.

Deepa Raghavan

the Thank it. color. for you Got

Operator

The coming is next question Pokrzywinski, Stanley. Morgan from Josh

open. Your is line

Josh Pokrzywinski

Hi, good morning all.

Antonella Franzen

Good morning.

Brian Stief

morning. Good

Josh Pokrzywinski

That's for more This topical I efficiency, to maybe that decades refrigerant of wanted whole upgrades, something than recently, into efficiency George or come around something anything a space some energy like to the doing? it of about how really has more -- that's maybe of bit more of think could applied talking the become else. has and business of size on more these energy versus been whole industry something is Just break-fix follow-up really own. on for install that's end. us, concept upgrades new you been how seems much kind the its starting focused

George Oliver

Yes.

what there's So energy we they They're embedded in more an a are products new that the from there's while do different at question. we're questions, When I market a couple certainly you payback efficient. of in higher look guess today, bringing demand. to standpoint. as ultimately And

So ultimately We value. I for we paid do solutions, deliver efficiency. standpoint energy even when equipment. we from delivers a value It when a think BXB get consumers bring you're new that and -- performance and we our

Montreal lot there's going gives in of bipartisan protocol. legislation authority warming pending that very We're the Kangalee global the the a I HFC of that's -- role in legislation support amendment manner to anticipating the taking that refrigerants HFC down with us active consistent to a all introduced we and potential federal we And think being are mean? for phase EPA a refrigerants. high what's ultimately of around

targeting individual whole a state is being want date. work with rather That different consistent as the or transition we a to of sectors with different in approach said -- to than a patchwork industry having transition HFC the laws,

anticipation that develop example is investments these is to chillers new regulations. in our our in platforms. the we've is R&D of of GWP made low -- all A YZ product So good

as And what's the standpoint, our to benefit as very as we would And the well from as commitment efficiency environment. happen highest That's efficiency, able as in customer’s, that delivering well industry, that going drive we making our appropriately. the sure an that being to we're active here the what regulation that project making shareholders we're so is. sure believe

Josh Pokrzywinski

the were showed bit that And business. were cyclicality parts in follow-up. think and around products If there a and gas then the I remember to of early surprising that on the a of drag think I oil back integration business, I days the Tyco just a little

themselves. that just something relative portfolio? the I markets some a of that still are to think Scott? in today performing that's Is those little choppy with that that's of leave are Maybe us the how kind probably Did on update whole? some

George Oliver

Yeah.

our has So -- suppression what strong oil the high with fire in bring. gas they a is position hazard the space remains that and business technologies

our those look lot -- businesses, earlier and been play. where a and well. is where And careful at we of in don't we when we've field the capitalizing that restructured opportunities based very how basis, in go-forward obviously, And as And on we grow perform those we a continuing we so actually downturn. said to businesses the business believe businesses on are want ultimately very to we

back then that footprint the well we've Scott our without businesses over way business restructured our So, it much the time as that Safety was is field period. smaller than as

Josh Pokrzywinski

Got it. It’s helpful. Thanks the color. for

Antonella Franzen

like turn back I'd call operator some that With over to the to comments. George for closing

George Oliver

Yes.

I wrap to to morning. call for Just our today, thank this want joining up here everyone

tremendous We and And have of XXXX soon. build guidance year. forward seeing that in made I am we'll a momentum looking upon out to as many you laid this progress amount of our we

call. operator So our concludes that

Operator

That will at All today's may parties time. conference. conclude this disconnect

Johnson Controls International (JCI) 7 Nov 192019 Q4 Earnings call transcript