Johnson Controls Gives Merger Update Along With Solid Earnings

Johnson Controls Inc. (NYSE: JCI) reported its fiscal second-quarter financial results before the markets opened on Thursday. The company said it had $0.86 in earnings per share (EPS) on $9.0 billion in revenue, compared to consensus estimates from Thomson Reuters of $0.82 in EPS on revenue of $9.0 billion. In the same period of last year, the company posted EPS of $0.73 and $9.2 billion in revenue.

The revenue drop from last year was primarily due to the deconsolidation of the company’s Automotive Interiors business and foreign exchange rates, although this was partially offset by higher organic volumes across the business and incremental revenues from its Johnson Controls-Hitachi joint venture.

In terms of guidance, the company expects to have third-quarter EPS in the range of $1.01 to $1.04. Consensus estimates call for $0.98 in EPS on $9.61 billion in revenue.

Also the merger between Johnson Controls and Tyco is expected to close October 1, 2016. Management expects that this will be a powerful combination that will create a world leader in buildings and energy technologies with significant strategic value for its customers, employees and shareholders.
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Alex Molinaroli, Johnson Controls chairman, president and CEO, commented:

I could not be more proud of the continued execution by our team. This quarter we drove organic growth in each of our businesses while delivering significant margin expansion. Automotive Experience generated record profitability while our China investments in Power Solutions resulted in record battery shipments in the region. In Building Efficiency, the Johnson Controls-Hitachi joint venture is exceeding our expectations and we continue to see positive momentum in our Systems and Services North America business with 9 percent organic revenue growth in the quarter. As we continue through this historic transformation, we are serving our customers and consistently delivering long-term shareholder value.

Shares of Johnson Controls traded up 4.5% to $41.50 on Thursday, with a consensus analyst price target of $46.38 and a 52-week trading range of $33.62 to $54.52.