Johnson Controls International (JCI) Q1 2025 earnings summary

Executive summary

• Achieved 10% organic sales growth year-over-year in Q1 FY25, with broad-based strength across all segments and geographies.

• Adjusted EPS increased 39% year-over-year to $0.64, reflecting strong operational execution and margin expansion.

• Record backlog of $13.2B, with orders up 16% and double-digit growth in Systems and Service.

• Announced CEO succession, with Joakim Weidemanis to succeed George Oliver in March, and continued transformation to a pure-play commercial building solutions provider.

• Entered a definitive agreement to sell the Residential and Light Commercial HVAC business for $8.1 billion, with closing expected in Q4 FY25.

Financial highlights

• Q1 FY25 sales rose to $5.43B, up 4% year-over-year; organic revenue grew 10% year-over-year.

• Adjusted EBITA margin expanded 200 bps to 15.0%; Global Products segment EBITA margin rose 740 bps to 30.1%.

• Adjusted EPS of $0.64, up nearly 40% year-over-year, exceeding guidance by $0.04.

• Adjusted free cash flow reached $603M, a significant YoY improvement; adjusted free cash flow conversion at 143%.

• Ended Q1 with $1.2B in available cash; net debt at 2.3x adjusted EBITDA, within target range.

Outlook and guidance

• Raised full-year FY25 guidance for margin and adjusted EPS to $3.50–$3.60, with mid-single-digit organic sales growth and >80 bps margin expansion.

• Q2: Anticipate mid-single-digit organic sales growth, ~16.5% adjusted segment margin, and adjusted EPS of $0.77–$0.79.

• Free cash flow conversion expected at 90%+ for the year.

• Proceeds from R&LC HVAC sale to be used for debt reduction and share repurchases.

• Multi-year restructuring program underway, targeting $400M in costs and $500M in annual savings.