Johnson Controls International (JCI) Q3 2026 earnings summary

Executive summary

• Q3 sales rose 9% year-over-year to $6.6 billion, with organic sales up 10% and strong performance in Applied HVAC and Americas.

• Adjusted EPS grew 35% year-over-year to $1.42, with GAAP EPS at $1.23; net income from continuing operations was $749 million.

• Orders increased 27% and backlog reached a record $21B, up 32% year-over-year, driven by robust demand in data centers and mission-critical sectors.

• Technology innovation, manufacturing improvements, and strategic focus on AI, decarbonization, and advanced manufacturing supported growth.

• Completed acquisitions of Alloy Enterprises and Nantum AI, and divested ADT Spain and Mexico Security businesses; ADT UK Residential Security business held for sale.

Financial highlights

• Gross profit margin improved to 37.4% for the quarter, up 30 bps year-over-year; adjusted EBIT margin expanded to 16.9% (up 260 bps), and adjusted segment EBITDA margin reached 20%.

• Adjusted EBIT rose 30% to $1.12B; adjusted net income from continuing operations was $871M, up 26%.

• Adjusted free cash flow for Q3 was $1.2B, with year-to-date adjusted free cash flow at $2.1B; adjusted free cash flow conversion was 132% for the quarter.

• Net debt to adjusted EBITDA improved to 1.9x, with net debt at $8.8B and $2.5B undrawn credit facilities.

• Dividends paid totaled $245 million in the quarter.

Outlook and guidance

• FY26 organic sales growth guidance raised to ~8% (from ~6%), with adjusted EPS guidance increased to ~$5.05 (from ~$4.85).

• Q4 organic sales growth expected at 9–10%, with adjusted EPS of ~$1.55 and operating leverage 45–50%.

• Adjusted free cash flow conversion for FY26 expected at ~100%; long-term targets include high single-digit revenue growth and double-digit EPS growth.

• The restructuring plan is expected to be completed in fiscal 2027, with anticipated annual cost savings of $500 million.

• $3.9 billion remains under share repurchase authorization.