Why Are Johnson Controls Shares Trading Lower Today

Johnson Controls International PLC JCI reported second-quarter sales growth of 9% year-over-year to $6.1 billion, beating the consensus of $5.86 billion.
Sales by segments: Building Solutions North America $2.23 billion (+6% Y/Y), EMEA/LA $958 million (+3% Y/Y), Asia Pacific $623 million (+5% Y/Y).
Global Products sales increased 16% Y/Y to $2.29 billion, and Organic sales grew 14% Y/Y, driven by strong pricing and broad-based demand for Commercial and Residential HVAC and Fire & Security products.
Adjusted EPS was $0.63 (+21% Y/Y), beating the consensus of $0.60.
The company reported field orders increase of 11% YY, with broad-based strength across regions, and Service orders grew 8% Y/Y.
Backlog was $10.9 billion, an increase of 12% Y/Y organically.
The gross margin declined by 264 bps to 32.1%. Adjusted EBIT was $608 million, and adjusted EBIT margin was 10.0%, up 40 bps versus the prior year.
JCI cash used in operating activities from continuing operations was $(68) million for the quarter, and capital expenditures were $(125) million, resulting in a free cash outflow from continuing operations of $(193) million.
Cash provided by operating activities from continuing operations for six months was $324 million, compared to $1.16 billion a year ago.
Johnson Controls repurchased ~7.3 million shares for $509 million.
3Q22 Outlook: Johnson Controls expects Organic revenue up high-single digits year-over-year and adjusted segment EBITA margin to decline by 80 - 100 basis points.
FY22 Guidance: JCI expects Organic revenue growth of 8% - 10%, and Adjusted EPS of $2.95 - $3.05 (down from prior expectation of $3.22 - $3.32), vs. consensus of $3.11.
Price Action: JCI shares are trading lower by 11.8% at $54.58 during the premarket session on Wednesday.

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