JCI - Earnings call transcript Q1 2025 | Johnson Controls International plc

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Operator

Good morning, and welcome to the Johnson Controls First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jim Lucas, Vice President, Investor Relations. Please go ahead.

Jim Lucas

Good morning, and thank you for joining our conference call to discuss Johnson Controls' Fiscal First Quarter 2025 Results. Relations related as were presentation the found the and morning earlier can release website on well our as conference Investor press tables issued that this be at The johnsoncontrols.com. of portion call slide

Johnson the Officer, Chief and Financial are Oliver; Vandiepenbeeck. Chairman Officer, and Joining me Marc today Controls' on Chief call Executive George

statements results SEC we uncertainties inherent limitations due the refer indicated will make we forward-looking begin, presentation our today, those of variety let such Before a a risks to to of from statements. to me discussion may Actual risks during by Please and materially remind these addition of forward-looking filings you that uncertainties. detailed differ forward-looking in and for our statements.

non-GAAP to on be non-GAAP certain of the measures Johnson Controls' of will this to website. schedules GAAP comparable in both also the can Relations directly contained press of measures. measures found in are the appendix the of presentation, our Investor attached reference these section Reconciliations and most release We which

I over to call will turn George. now the

George Oliver

Thank hard and contributions helping taking for thank the to Jim, us strong results. Johnson to our an a quarterly everyone. for start call you like tremendous morning, good the moment joining us by employees Controls excellent start all work today. I'd and Thanks, their on to achieve in year with

details we into our I briefly results, the get of today. announced transition Before the we CEO want to address

adviser August an Johnson of lead end support retire the the incredible to officially remain of in team seamless It have career a will you've merger to alongside X part at X that. me the Johnson As March. Board to I my December. been the of before years, been of working JCI-Tyco for until and through company the remain and has I will a the Joakim Controls honor likely seen, Controls to Board an transition on succeed selected to and as CEO have Weidemanis I

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future company's building we lies have momentum in underway. The the on

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quarter will turn discussion that, our With of in-depth performance. more I a to first

growth of success margin through value to and for XXXX shareholder momentum our core our Johnson of we initiatives, made is Controls and offerings. considerable strategic our the quarter X. service robust contributed our demand driven [ for demonstrate have expansion and systems results. significant focus begin results the first a starting with revenue Slide with by validated clear increased reinforce each as positioned Let's great our Importantly, progress have and which and These creation. ongoing transformation remain efforts businesses

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on deliver operational and predictable driving fostering results. excellence consistent, performance our on is building focus to our innovation enabling Our and capability

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confident momentum are long-term shareholder ability our value in to maintain deliver and We our creation.

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turn With over I'll that, Marc. to it

Marc Vandiepenbeeck

Thanks, George.

you our the have appreciated you years Before I of all and the results, coming months partnership over best your your and seamless over forward Joakim working like to retirement. I for to ensure leadership thank I want review to transition. your Controls. Johnson the your in would look to a I well-deserved deeply you wish with

Please turn to X. Slide

by of led guidance by Products. EPS Our and to $X.XX. XXX in to revenue value. year-over-year basis deliver points produce segment and commitment and improvement first enhanced results EMEA/LA $X.XX and margin of both nearly to our XX%, long-cycle expanded XX% enables backlog exceeded and range us quarter substantial operational strong robust shareholder end a high excellence XX% grew was up Organic unwavering Adjusted Global the

strong to We strategy. the are that with year our pleased reinforce and effective start our strength operational

ended first with which is X.Xx. sheet, the to in and $X.X net target quarter we X On cash to the decreased billion range long-term of available within balance X.Xx, debt our

This million nearly leading improved adjusted flow year-over-year. in million improvements demonstrates efficiency $XXX capital enhance of customer fundamentals, our Our satisfaction. the and trend reduce cost working to significant approximately increased cash $XXX free

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broader strong Turning to consistent all Solutions both Slide strong delivered growth quarter the performance quarter Building regions. grew in our across X and performance. Orders with with strong in Systems increased X by service. Building double-digit XX% quarter Solutions data to a discuss in in systems growth America in health to continue care, and for the industrial and demand manufacturing. see led centers, XX% XX% North Orders over we as

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in XX by mix positive to margin from XX basis XX.X%, higher-margin North Our the execution margin points by margin driven observed expanded consistent basis adjusted quarters. the and to productivity growth story EBITDA positive the this basis mix in margin adjusted backlog. X.X%, service By quarter, adjusted of our from In expanded region, points previous driven a expanded service. improved segment APAC, EMEA/LA XXX remained America, trends XX.X%, to In mirroring reflecting positive points business.

backlog Solutions at and grew year-over-year. Building XX% X% Service backlog $XX.X growing system levels, billion. remains grew record backlog XX% to

Our allows record revenue, This continued the backlog meet provides results. foundation consistent growth. strategically plan solutions, drive financial us us to visibility enabling predictable and into ensuring demand to our sustained for future and strong

full the visibility first remainder exited Let's executed success discuss strategic our Slide XX. quarter with well as backlog. continued our and sustained fiscal second solid fiscal on expanded momentum great on We record position and we growth. year us our offer and for of quarter initiatives XXXX into and the and This guidance foundation strength

growth XX% range of points growth. XX.X% in second to anticipate representing sales EBITDA the approximately to mid-single For margin of expansion EPS of we $X.XX, to Adjusted the $X.XX digits. adjusted organic XX% and basis XXX quarter,

year, of our long-term full which to continue growth consistent with remains growth the organic digits, For algorithm. we expect mid-single sales

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cash capital of continue fundamentals start to flow positive our The at the year improve. the demonstrates working

conversion As a of anticipate flow result, we free greater XX% year. for the now full achieving or cash a

and through We continue share to returning flow XXX% to free our repurchase. cash dividend target shareholders of

throughout initiatives the strong start effort, focus tone positive momentum for us look for rest solid fiscal to continued year. early foundation precise have Streamlining our year transformation and execution. key to ongoing and leveraging the our of was a successes, by and processes strong driven growth forward to Our achievement. XXXX. well enhanced prioritizing operational the This setting year We position led

for operator, lines With questions. the that, please open

Operator

Coe our from first comes question Research. Nigel And Instructions] from Wolfe [Operator

Nigel Coe

details. for Thanks the all

George, of Joakim's you you're with could mandates the just So free Board, what delivering of Joakim as sort wondering, I'm comes appointments. in talk as hand. maybe congratulations on he a Chairman about to

sort Just wondering of around his guardrails mandate? any

George Oliver

Yes. -- through customer global planning a I scaling with a was mean, experience It Danaher, our rigorous we've with, process. discussed He we named comes foundation succession March Joakim XX-year and Danaher XX. and companies on on of thoughtful as experience extensive orientation, efficiency. innovation effective

think you businesses, financial where uniquely of his its to in look able deliver Johnson I leveraging record Controls at be best-in-class is as performance service-oriented technology his value track to suited background, journey. is leading creation for

with we've about, talked strategy. with strategy as you that the built think that see I we've developed, can momentum the that we've

operational work a background. of seamless to strategy be that And a more to capitalize brings we Couldn't board, take working the going have I to and company. around forward, going potential to through incredible think full be him we're positioned as ultimately with him on on comes the be that of coming he lot growth transition. able in, foundation excited

Nigel Coe

Okay.

then sound any Okay. -- doesn't okay, Marc. for just there's maybe a question great. And It like

of the just include just consistent to changes does cash with and On that's ongoing the deliver kind remind just some of better XX% on just that making free more cash free And maybe flow? the payments year. sort program? process the conversion, Maybe you're restructuring for how maybe us, plus the much to touch full cash of

Marc Vandiepenbeeck

Yes.

we So structural that cash what seen. other that's would we've $XXX conversion. obviously the our a in XX% And headwind around XXX%. see to you million include restructuring talked of our about challenges against to expect at We've

the It's inventory to about do work been team far on back able As progress products of how payment. And we and collecting to a it's our what type also done operating jobs fundamental customer drive growth. the lot accept, system. of volume are on we as and on that changes better global on making made, leveraging the our billing we've within the we less all that has in be and relying plan going to

products the the to global in businesses about saw about they grew last of You level quarter had with same in hold those inventory versus XX% year.

to and also we're change allows free very seeing from standpoint. operational an So convert a pleased flow and we what are that with cash fundamental standpoint us better from

Operator

from The next JPMorgan. Tusa question comes from Steve

C. Stephen Tusa

outcome. on seems search. the appointment. And like Congrats seems it a was it nice exhaustive It like a good

So are just mean, orders the guidance of calibrating I kind XX. up your comping here,

pretty quarter mid-single-digit quarter you in guide concerned pretty of this organic next Your the as yet you quarters, well. was kind about second strong, did although Anything guide. you're held few the well

of anything back half. about the to a in anything you're the back worried in tougher, Obviously, comps but that the half drive type So get bit slowing?

Marc Vandiepenbeeck

Steve. Yes, you're I right, But it wouldn't yes, call slowing.

year math, compare half higher revenue in there QX is our the the of growth growth had half has heavy. little second the quarter, The our tougher. difficult, of and comp also make QX is And course, we total last pretty more from solid arithmetic a where fourth become a very standpoint, particularly second year-on-year

think you little than I digit that will may about think level. all the the be to that APAC our of higher is a grow need way rest. in mid-single bit mid-single-digit businesses

of level we level, years you bottoming that we're tariff start to given rebounds. seeing little us actually overall comfortable APAC Right of kind to end above we're have North particularly growth, markets think for would going or more think if some not of we to our in to I expect challenging on raising bit markets markets, be a out growth do clarity but seen. the need these what America. and seeing the them starting then couple now, it's And is

C. Stephen Tusa

year, 'XX? times then still the rates accelerated Are pretty data And growth I are you 'XX orders strong. an seeing a just center in of lastly assume longer. the bit a Okay. booked from -- last acceleration you expect versus on for in perspective lead data center-related business. a still lot sales orders are Do you

Marc Vandiepenbeeck

couple here And demand country next to over is the to for the January. some whatsoever. slowing for on of change ahead this in do solid down are center that our But of get in those leadership that of acceleration people in both Yes, have the large and it particularly years. some first momentum orders that What America, trying then is who of that now with visibility North had of with orders saw you their we further yes, cooling don't order, see some some quarter revenue had do accelerating. in to the that of data customers

Operator

The from Davis Melius Scott from comes next Research. question

Scott Davis

Joakim, And I'll going know comments a on echo you fit to and he's we my for be guys. colleague's him great well,

order starts to So just going and bit at recent type the congrats. given center, large meaning least longer it not book larger about data seen he about his to get to projects how used changed so book, be we've the many ask than change orders of ask duration lead perhaps It's they center and to trying I you wait that in little the history. meaningfully see but thing? what are queue But projects obviously, just a of stuff. people a now the bit I'll the Do these data to mandates the be? over time, has questions want Are overall. -- duration, until in are, that times, do little in your order than a

Marc Vandiepenbeeck

more where we see in market saw a earlier organization towards most in cycle bit the of value Naturally, cycle. of in little sale the margin, a address can a but how the opportunity actually order grow. long build toward longer businesses, parts little comes little reactive and sell than also shift market. later see of market order the stronger customer and attach the little to and to to And that bit a means we not And focus but comes the We the bit back, opportunities just market were commercial that we that look do at. we probably as historically we also of see a we a opportunity where the we attractive continue service that we are we our pipeline bit transactional take we therefore, With intimacy. kind

So yes, they orders care bit tendency then I did. revenue core than to ability health would pushing multiyear growing, and have That planning. now more, tail data naturally, holders that And timeline. center, have the a complex the our to little longer a a verticals and are further say, includes elaborate that customer little do manufacturing, down

Scott Davis

I then is And not a to a love than maybe on one quarter higher to there's mix little That's service Okay. have and there's takes and on backlog, incrementals though I'll price just I be always have the that. lots we bit color incremental guessed and would in this a helpful. some Maybe When think puts color then of the margins. this get just about can little would XX%. -- that if I that just it know to criticism, on. But pass

Marc Vandiepenbeeck

still. real say, aspect, There's I absolutely. No, conservatism two would

on rate but tell fluid know, can tariff little you price thing it about one to have to not will that it that more We I'd pressure and how and exchange, around from price first we have And from the is do of the a tariff is drive coming puts what from The second clarity a also just the nickel big, strengthening. standpoint, really bit And a will as landscape purely very we on margin rapidly. of It's dollar the And to comes pass need we pressure. a changing right? customer? be you ultimately? little able margin bit and foreign

in And second will is ability little what margin half. the so our expansion it bit to our clarity risk a to muted predict do

Operator

from from Mitchell comes next Barclays. The Julian question

Julian Mitchell

more think of which on with production just post and about those fundamental detail Maybe costs share then you to of you'd tariff areas terms if some the give with or wanted affected perspective the from in that? follow any higher effects up, and the speed we'd how of prices could anything offset more

Marc Vandiepenbeeck

things. precision to hard it's tell going with you tell three or Yes. be you exactly how I'll It's two affecting. to

for The we what's is the the of manufacture protecting and been helped us first some one has part manufacturing strategy evolved our that have announced. region, to in region

mentioned earlier, But that landscape are manufacturing uncertain As have tariff I every in New U.S., America it we that North not in right changing. of the some now, of Canada. day based do it just and capabilities Continental in very around some is Mexico, is in is almost,

have tariffs passing the those we past will by And of so you'll we for a see pressure. also enacted, been be depending tariffs some offset of on able in naturally, I'll our one that currencies we've the pressure to either some tell through some with from impact. particular you, pass directly on successfully suppliers, customer, of one. will the or just on the sometimes of either on chain, it will concessions have dealt sometimes price margins, And the with the supply how that have tariff, on to effect

very working drive supply enacted. a network that little allow effect kind be ultimately diligently to to to on should minimize to that of continue resilience supply regionalization. the We of better in chain working that us tariffs We're bit chain supply chain drive and our levers our are

Julian Mitchell

great. then just cost. corporate around my That's follow-up And would be the

then decent to the spirit reduction of in a sort the implies understand stranded exit your half second number. of it's $XXX-ish the down of XXXX sort of step that think really from the Because the trying corporate I this that into question million line? cost pace year rate the first half. cost the guide for in and Just and

steady year state medium out of thinking when the the about this sort is with stranded a So of costs kind exit from we're term? leaned rate good

Marc Vandiepenbeeck

No, for sure.

we that kind that that mentioned. is and seen of So of maybe the as that part And sitting segments in as divested of corporate you cost the we've benefit that historically at some at now stranded restructuring, the sitting timing corporate. and of have obviously the look of restructuring cost would at moving is you

of that going be out the the as to lot to enact You're able to of coming 'XX in see a second half, but particularly we a corporate fully the of are a activities our to going expense into lot drive leverage current corporate looking lot really us quite allowing of on cost from taking restructuring, and this transformation it and year. down beyond fiscal a materially,

Operator

next Mehrotra UBS. question Amit Our comes from from

Amit Mehrotra

George, wanted There's as to back come to the been -- obviously just CEO the you strategic I side. question, a maybe progress time. one on more of lot

So of in I the productivity margin we today, assume much an of the opportunities. portfolio shouldn't product, of change expect terms is where acceleration maybe businesses

guys attractive So found particularly talk you for maybe Board to bringing that the found would what you the can and you be Joakim table just about company? the

George Oliver

then we've ultimately core journey It's at technology of we've on digital up the products. the they're strategy, and the services building it gain use solutions -- to built connectivity that it's deploy The our data. with and Yes. set building -- of and in platform Johnson is the really the be been our we with Controls on that the we really leader commercial the

be more step the the residential complete commercial about And might we've of portfolio remaining of solutions. so to a XX% commercial a the portfolio, big pure being roughly not core towards divestiture -- play. of the There's by that building end we are light year. the looked we'll That's as and at the

building ongoing But predictable the to now pipeline we're And positioned we our we feel differentiation operating customers, an on we're really and how with bring update we're and so services. right how good how basis. the ultimately, attaching model address as converting we're those pipeline, in that customers in you to working we'll is that market, very the we about operating how that delivering from we're we're with how results continue

create as significant the said able to be look coming the experience ability Certainly, see well operational experience experience. portfolio the we I we to opportunity. as in his and as strategic at earlier, so And with and growth, as Joakim's

the building And that really capitalizing fair so secular be capitalize are that built, share. the we strong and the lot uniquely on trends with more a our believe now than going opportunity of commercial positioned on now focus we're will system that in that operating the we've to underway understanding to be segment,

Amit Mehrotra

maybe Okay. That's fiscal one about about 'XX. follow-up benchmark we where the do productivity margins maybe think look just the With the cadence Marc. as And think where you question, biggest progress very can helpful. as and And today margin to just for from respect business? outlook, more longer-term you here through related the maybe of business opportunity that, to opportunities for at then the the exists are, margin you talk

Marc Vandiepenbeeck

Yes.

and Looking returning first closer opportunity the historical at EMEA/LA to you'll in product come second improvement, Pacific, as levels. the more in will see how as global we margin but volume we the quarter, across you'll margin lift from see obviously, look at well board, Asia biggest as see that

applies if will that see other think the not second of businesses the where margin set the same America the same lot North the for Longer probably level That's for see consistently opportunity. as but second here you So we and lift. three quarter, see half same opportunity term, the for to improvement, opportunity for not is a at about twofold. really segments.

that think franchise our one of resource first manufacture, we've it's product fix we manufacture, card against fair how continue we our our how market lift the growth establish about effort continue margin our we've great support the I than the back, drive in is that's share market amount to restructuring a commercial line of drive cost in but because cost. The deploy focus will is the level to We right our growth, and in we well better product base around of market better where we to to all we the and from set And have deliver see operating in standpoint. kind an we all established. our foundation of the it's really customer you're leverage intimacy continued and simplification performance, model to to growth to doing improvement works that more are that the here, really customer provide where starting around place and in going that and continue to of around trying

Operator

Our from Chris comes next question Snyder Morgan from Stanley.

Christopher Snyder

Maybe wanted here. questions kind ask longer-term of I to two about

is incredibly The growth to the seem mid-single-digit tough longer down much. orders profile. this first when don't of mid-single-digit some year. how is year, exit kind do talking this comps to to stepping in growth down you is think organic Obviously, so be half, the The you runway back company slowing the term, to think the company maintain here there on but of maybe high, is growth? backlog still much for kind Obviously,

any duration views just behind this? So on the

Marc Vandiepenbeeck

Yes.

So term, if get really service change to our around the growth. That long by first digit, model. continued is business at run coming in the probably digits, it's mid-single I operating mid-single single you high to fundamental supported going look service from that two

we as also every That can First, focusing but associated service vertical get much time our continuously means as that. the from system, to increasing about right to new we entitlement on customer try think a we a intimacy.

evolve or it's talking continue in that health well That market. market tell suited to products a it thinking growing actually of as on pace base a capabilities about well the at the businesses. I'm care I'd applicable segments what continue is of I think manufacturing -- our majority -- but capabilities to have are will than geographies. And our Those obviously, as are that center, the data and second of comment is for The we outpace that about, the way. or see vast generally here expectation we subsegments to three would also keep And of the you you market thing higher created we growth. fundamentally GDP have

can market capabilities So will continue to serve drive support continuously that that long-term we and that where over value well that and mid-single product digit help more algorithm. generate hopefully than the

Christopher Snyder

to I starting commentary then some want P&L. through to I And realizing company earlier the of the the better follow kind on flow about backlog appreciate margin up that. into of

-- that couple higher imagine continue? steadily over pushed guess prices years. last of I I is will that here So of kind the --

continually able a of it. you already in There's tariffs or Are we on that the a offset getting margin backlog. get then through with better? very coming And long backlog? behind is price in -- the that is duration piece protectionism obviously kind the in So what's have guys the the event the there second backlog here? of guys Is you to price expectation big more that,

Marc Vandiepenbeeck

Great question.

see So the the far improve value that customer. continue margins an we're to time sell at way be we some inflection in to to to the because backlog to we be from able going point in future. obviously simply There's it. inflection point But the continue

on a tariffs, has part of for abilities price. as far our us to backlog that As pass contractual large

to of Some margin. the those maintain contracts allows us pass and probably price

we with of the can one-to-one then going tariff And are maybe the those of Some for portion holder, protection. we largest I those that it's not negotiate be maybe with recuperate and more top. have leverage, how word we have, could margin applicable we for will products. on those, customer to customers not our is potential tariff, there's customers associated you that little with a those of would where therefore, to headwind bit the more that backlog I'll majority full vast say, the a the deal with that tell but of for a and have larger word,

partnership We to that have real created and critical have success, with great products them. their are we

with that feel it to a so for find comfortable we'll very create And make customers. way I and those side a successful both economical relationship

Operator

O'Dea Our Wells from next question Joe with comes Fargo.

Goldman Ritchie with from Our next Joe is question Sachs.

Joseph Ritchie

year. the to start Nice

of Let I focus, kind me just on margins. my questions guess,

I Products, lot They in quarter, think, expectation, an margins that like towards mid-XXs. better. came the if Global the I talking last were low be to recall closer going to were there we kind of a So about when was

surprised first is Global on so margins? to upside what And really the my question this quarter Products

Marc Vandiepenbeeck

than short-cycle quarter. I It's revenue elements tenability a surprised, drove level. Products from We put first first standpoint guidance that wouldn't a that too what to say to excellent job book business was little was much. bill very unit growth. high higher nice business, has XX% to and a team mid-XXs low done at driving That Global to some There's really first two make the and third-party of conservatism in the we surprise don't right? margin negative our our the original unit a to sure always try that half contemplating. drive an growth That outsized

some positioning from Some better January, to is but some were accelerating fundamentally from in prior of came orders taking really new of people it from inventory a very as control the it administration tackling transparently and some blocking standpoint. commercial

a way, as margin building of business helped particularly nice The goes lot that our external segment. that growth factory, really and margin long vertical on volume in and business through the saw other and business those both bit better of productivity a other a our growth saw great product absorb business HVAC and to you And part in accelerate, sales in equipment get our volume, is we better field-based know, data saw board, units, that solutions center we the the margin really our business across as lift. as the little internal see or continues benefit a that

Joseph Ritchie

Marc. guess, follow-up that. helpful, I super That's maybe to a quick just

tariff there sure quantify as a the margins. it Is that that was the of comment not flattish think about because then are how the the floating to play first maybe tariffs some you're looks of conservatism about So just half embedding for kind And like going quarter? you're really out? you to second year, way

Marc Vandiepenbeeck

what half word, put answer rate. look and the as I'll we second on at The conservative yes. us some to forced with the to uncertainty on going margin one tariffs to do say, to later it's how

point in what as to I'll more orders far that than quarter, the revenue. you As did first

say to orders was the the landscape, about accelerating quarter just associated in political just If because first you the would not uncertainty were saw but that about of XX%, or customers have ahead they orders of it. of macroeconomic that would wanted I with overall, where look order wanted the get that at we tariff, normally get and to they of second probably X/X quarter really strong

of there's at look bit orders in quarter-over-quarter. know, volatility orders, you a you our if as So little

in as we reflected probably normally will that had will orders year this solidify the and probably benefit in in think be would seen some second I the QX, so QX that in And have quarter. orders we our we start really of strongly, but

Operator

question Our Oppenheimer. comes with from next Noah Kaye

Noah Kaye

how -- that about for can you goalposts I provide would that and the growth to think But we at color think would offerings, of growth leading you really a give applied be helpful. for kind the some sales continue among here. can organic here. Marc, applied mix we the When leader us organic mid-single-digit looking the group about different you be year, any of assume offerings. Just the

Marc Vandiepenbeeck

do manufacturing those in vertical. year, also on second great in within and see standpoint Both in still half honest center grow continued also business are that subparts those Europe strong, more I'm been our growth drive Controls this of super to driving as about thinking very more We our globally and HVAC from that ability construction a or really market the with well diligent Has the the electronics to market the heat and Or well Security. in service. indicator a is applied you. our for commercial flattish, industrial businesses bit a Fire focus be data businesses dampens super, as We've little with not team The applied business. & of challenging conversion they're to refrigeration. as a that the business pump transactional tailwind the business, as from

we little provide our will from not the to term. of read in second being year they to great for grow a half ability at double challenged digits, those least lines think so service product base a that while particular in And bit a the may able long be standpoint, growth the

Noah Kaye

of on year it you next new just service two? helpful. where the Maybe related mentioned see today refresh on then business. entitlement, Very to you going over or attachment rate us the where And for real entitlements earlier, focus that the and kind

Marc Vandiepenbeeck

able over changes to model, is right rate manufacturing attachment business XXs industry 'XXs. certain XX, the oil end term. address absolutely we our XXs, the we line We now and on XX, where between than attainable that where think for entitlement elevator high in sometimes businesses best And the that, to the entitlement think term. attach drive myself but about feel change higher low is obviously, gas how want that's to are for exact operating example, a long depending I'm the 'XXs Our the is, that always I drive than long while market, some drive to our our and to means an making higher point industry, mid- high is to and maybe demonstrated don't to an thinking service the more is rate. few very, to industries ability entitlement to that box It is very I a have that. ultimately number, we

Operator

Obin from next America. Andrew Bank Our from comes question of

Andrew Obin

successful succession. on Congratulations CEO

$XX North apologize Just drag. a was question. it productivity I asked, a America if Building in was negative Solutions, million

think said, the I I think I if should for apologize As year? rest somewhat how we of explained you the and it, but unusual it it's about

Marc Vandiepenbeeck

short-term a thing. It's Yes.

docket continue incremental continue well as and support in team drive in support go to one short incremental to through the and that little very technician growth. America, self able happening ends you and service bit North in to a it's we've of and productivity productivity sales people onboard to as growth. invested you drive to have up So you make rest for drive our be ability as as that, hiring the commercial against see opportunity those as And more like of best the and we a to resources Whether enterprise. term, that hire them the the large growth more sellers possible

to uptick to we -- made So that really growth. as small quarter I wouldn't fuel It's headwind business. million that normal an of more in for as really take $XX continue investments new has the that the

Andrew Obin

Products Security, the And into you. half? of just talk digit, what's how mid-single driving Global mid-single A, second these about Fire And digits? could you sort to & Got digits, nice are single acceleration trends on growth. high mid sustainable

Marc Vandiepenbeeck

with digit team, to on mid-single-digit Fire but strong which the high over & Security single they little we Yes. say performance the believe mid- last and EMEA/LA to been the continue The Global intensity. going basic repivoted quarter you have is you commercial the more look compare going is at that look railing easy in challenges about quarter talking completely out the were first year We're part of Very that that We cyber is of drive control in backlog in we've the to accelerated commercial to saw just commercially, saw for I'd if and evolve. incident. continue that we last twofold. organization taken to the growth year business bit kind what almost associated Products and that around a of at really where the we that an still

team And very by of were so they had that they an a incident. because impacted that compare bit easier

Operator

Sahil Manocha Our Capital. comes from from RBC next question

Unknown Analyst

Dray. on Sahil is for Deane This

quick cash one priorities me. are you to a debt and billion. thinking deployment X.Xx of position net of for $X.X How the capital EBITDA question With Just in environment? current about

Marc Vandiepenbeeck

capital not changed. have Our priorities

share XXX% divestiture, XXX% flow The in to there's free standpoint cash return our returned the material an of be So the fourth between back we'll and shareholder M&A shareholders year. quarter from will via that assuming proceeds to nothing now of this comes repurchases.

X% operations take the to closer our allocation flow our support of end not and X.X%. business lower have to to has anytime the the capital and to it it's cash bring soon. bit diligence we will discontinued little there of that Board, and full But use We cash to reduce the a and leverage going flow our change

Operator

Steve from Volkmann comes question next our And Jefferies. Instructions] from [Operator

Stephen Volkmann

capacity. A on sort you guess, couple I of to are relative where of questions,

and some some us are be Is fairly point? I'm give color you additions expecting I tight. guessing large guess then applied some should there So specifically, on capacity can at And chiller things that? we

Marc Vandiepenbeeck

capacity, little strong at capacity. a backlog be close a I little are backlog. answer to a of and we North bit America, continued In would obviously, regionalize to that bit. we We very see, very a have but

probably Pacific, EMEA/LA, because be capacity as And to pump. Asia heat it to we yet. market In expand in bit able So have out, rebounded quite still there. then transparent you hasn't data as in a need to trend well capacity a bottomed center with we bit but the great to we be of capacity, has have are we visibility the follow little we at see

more growth the the so whole in factories a And have Asia in lot future. ability our drive to

Stephen Volkmann

Okay. same thread All right. Great. here. And then maybe the on also

in guess, you Is order upside that just in that? to think, field where said to Do But there really business still you more? Marc, utilizing on something and sort about adding are engineers, folks? people additional more systems grow I of these some need service. I you

Marc Vandiepenbeeck

operating field productivity technician. our drives model So really high within a of level very

line keeping what much about out We from is are problem therefore, field deliver growth it productive more us in but out the tools facilities is a more when We day much it for George the that customer to make to opening figuring standing need with technician on -- standpoint, a as faster make continuously working cooling comments. services top making and we talked our opportunity the or AI they comes and particular that helping ready of incredible having productive. more those and his in a opportunity quicker. them them come their it's just kind that more great system them of productive. a or of also also enjoyable, happy to particular not little it's to an day type Either products

element a it's to continue because labor critical service our invest We of growth. our in field

to we talent labor, Our labor are rely to a see great high drive will you as less continuously there's but continuously next services searching productivity digit, still be single be on the critical. and growing is ability help to And us to service for us mid- there. component, going going

Operator

Kaplowitz comes question next from Citigroup. from Andy Our

Andrew Kaplowitz

growth, calling can all that environment definitive given tariff the order call understanding said, But clear it's there. that the quite with in as was bit about you market still a you APAC situation? the cautious probably turn strong. a know I actually you're a fluid So still

George Oliver

increased we took with market line we've Andy, saw months, found quarter. Yes, pipeline, XX in is rate, last we with lower rebound of risk. the that as at steps to in now as we the current here a the the bottom strong this demand. run XX% counterparty the ultimately, the the which back And with believe the region, the very orders We over seeing rebuild goes signs the lower proactively softness early adapt And in demand. we to

we've only based on convert And way building the but we've to think really stabilization seen growth, forward. going in now business, real we're seen, to we're so returning the and that not going I backlog, what in the

margin important a what's way some systems continue business. we're EBITDA build maintain most to healthy Services spite I we continues to continuing new the of in think, that to continue the strong. is services the help continuing of rebuild while segment -- to We'll as the Andy, well as systems. pressure on be

Pac, we'll I but in across continued Asia not So Pac think growth recovery region. within overall Asia the China, only see

Andrew Kaplowitz

across health questions it which a you care a centers. there's like of getting data seems maybe education, applied of the on leadership out of still visibility obviously, have on verticals. And can some for example, these office, of lot And makes or you that verticals seeing in But have, obviously improvement you you but like the opine seeing you what verticals? lot and are sense. you're

Marc Vandiepenbeeck

Yes, great question.

call we other continue into vertical. and on I some double-digit which center mix offices to care as We see don't buildings data would core that estate, still see as that, is real and well would fall any for So in what category us. strong health acceleration

growing some not out not to in figure at you that's owners certain the still that investments. to trying see their other. market the hesitation are It's a asset. what just It's still of You they're do making going have current declining. with pace And

not still great room, seeing we some going I a from rebounds, great still don't standpoint. to construction is some as have think from products clean that where that seeing trend sign stop there. a and are good and still soon. sees it solutions tailwind everything a are then anytime from the us but We tailwind, And commitment address biomed then higher manufacturing to positive vertical growth. Infrastructure it's or we're most particular semiconductor manufacturing globally And see to we

Operator

from next Fargo. The Joe O'Dea from Wells comes question

Joseph O'Dea

kind over about or the just earlier. trending that progress whether wanted behind revisit the anything 'XX, cost restructuring quarter, just the to and in the there? of I plans about impact, of Sorry course you're impact the ahead savings is start on how of kind thinking

Marc Vandiepenbeeck

Yes.

costs you saw progress the cost our I'll We our of of from it. expectation guide embedded started we've we addressing is on So What or tell in of the changed stranded the early signs as second timing early benefits. in a very hasn't closing half transaction earlier us we the cost a residential of were getting light some leg a of the up ADTI out on. on to bit as our of as And the commercial. of business a close gave little that drive well divestiture seen to ability and

vast the I in 'XX good in think second will you're really standpoint. of going a year benefit cost be majority to as from see some yielded of The year fiscal sign the the -- the close half fourth address 'XX the to an first will in stranded of quarter It transaction we vast of the opportunity quarter the really cost into year majority fiscal that us 'XX. QX. give in

Joseph O'Dea

to customer the And Great. and talking to pricing and to comment then backlog That's sort just of the wanted just value your earlier evaluation and helpful to into color. selling opportunities. the about back today come pricing pricing going understand an of about

evaluating value you and what being compensated goes appropriately so degree to of into do for And the you're you're delivering kind what that? think

Marc Vandiepenbeeck

present us that the as only but sometimes through customer a that to cost, contracts have to to of address things actually margin tell we within Well, application an And ability different full solution, maintain through drive as of JCI. and our to even varies play. deep out. the is it actually into to detail you not us into the the the outcome value process otherwise, it's change well very to actual them. it's at pricing ways most to of ability tariff contractual for address implement a margin the time, best and Obviously, and package. And have is drive vertical component allows have change customers drive those and on us costing orders our and most offering we for It's each the But we allows recover varies we what is what defined go for all or to better it go us whether of with our allows I'll and organization customers not systems, that our

Operator

closing our would concludes George Oliver This to any over session. like back conference remarks. question-and-answer for turn I to the

George Oliver

up strength record-setting Yes. Thanks. and today, portfolio. growth quarter, achieved wrap broad-based backlog, Johnson To call double-digit this the our across Controls sales organic

we as to commitment Johnson that enhanced confident and build strong value well well to next XXXX fiscal Joakim Controls' suited I hard-working talented, is that And chapter momentum excellence. our am testament our unlock With start Our a our concludes as team operational is unwavering innovation Johnson to operator, to of Controls call growth for as strong on lead today. underway that, stakeholders. the that

Operator

conference presentation. for today's now The concluded. attending Thank has you

may You disconnect. now

Johnson Controls International (JCI) 5 Feb 252025 Q1 Earnings call transcript