Johnson Controls International (JCI) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales rose 4% to $5.43B, with organic sales up 10% year-over-year; adjusted EPS increased 39% to $0.64, and GAAP EPS was $0.55.

• Orders grew 16% organically, with backlog reaching a record $13.2B, supporting sustained growth across all business segments.

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

• Launched a multi-year restructuring plan targeting $400M in costs and $500M in annual savings, with most stranded cost benefits expected in FY26.

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

Financial highlights

• Gross profit increased 8% year-over-year to $1.93B, with gross margin improving to 35.5%.

• Adjusted EBIT rose 28% to $568M; adjusted net income from continuing operations increased 35% to $424M.

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

• Adjusted free cash flow was ~$600M, improving nearly $800M year-over-year; adjusted free cash flow conversion at 143%.

• Ended Q1 with $1.2B in available cash; net debt at $8.76B and net debt/EBITDA at 2.3x, within target range.

Outlook and guidance

• Raised full-year FY25 guidance: organic sales growth in mid-single digits, adjusted segment EBITA margin to expand over 80 bps, and adjusted EPS of $3.50–$3.60 (9–12% growth).

• Q2 2025: Organic sales growth expected in mid-single digits, adjusted segment EBITA margin ~16.5%, and adjusted EPS $0.77–$0.79.

• Free cash flow conversion targeted at 90%+ for FY25.

• Proceeds from R&LC HVAC sale expected to be $5B after-tax, to be used for debt reduction and share repurchases.

• Company expects to maintain investment grade rating and continue dividend payments through FY25.