Johnson Controls International (JCI) Barclays 43rd Annual Industrial Select Conference summary

Acquisition and technology strategy

• Announced acquisition of Alloy, a Boston-based engineering firm, to enhance differentiated technology for data centers and mission-critical environments.

• Alloy's technology will initially be integrated into the CDU product line, with potential applications in chillers and cold plates.

• The acquisition aims to create a unique CDU offering and capitalize on Alloy's significant opportunity pipeline.

• Investments in liquid cooling and system integration are designed to expand the addressable market per megawatt in data centers.

• Focus remains on developing proprietary solutions and selectively partnering in areas like cold plates where differentiation is key.

Market trends and growth drivers

• Strong order growth in commercial HVAC, driven by hyperscaler and colocation data center demand, with double-digit pipeline expansion.

• Data center construction and customer intimacy are fueling sustained momentum and high share of wallet.

• Most data center-related orders are expected to convert to revenue within 12 months, though some deliveries extend to 2027.

• Electrical infrastructure delays are currently the main bottleneck for order conversion.

• Americas segment is expected to see high single- to double-digit organic sales growth as backlog converts.

Operational capacity and efficiency

• North American manufacturing capacity was nearly tripled two years ago to meet rising demand.

• Efforts are underway to further increase output through process improvements and automation.

• The business system transformation is driving clarity, efficiency, and cost reduction across functions.

• Ongoing restructuring and factory consolidation are expected to reduce fixed overhead and improve supply chain management.

• Service business faces growth ceiling due to contract attrition, but productization and operational improvements are being pursued.