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Johnson Controls Third Quarter Earnings
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JCI
Johnson Controls (NYSE:JCI) announced its results for the most recent quarter on July 19, 2012. Johnson Controls is a technology and industrial company focused on building efficiency, automotive experience and power solutions.
Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: How To Decode A Company's Earnings Reports
The Numbers: Both EPS and revenues failed to meet expectations as Johnson Controls posted 61 cents per share and revenues of $10.58 billion. Analysts were expecting 67 cents per share and revenues of $10.82 billion. EPS rose 17.3% while revenue climbed 2.1% from the same period last year. Johnson Controls' revenue has grown during each of the past four quarters on a year-over-year basis. Johnson Controls' profit rose 16.8% from last year's figures to $417 million during the third quarter. Last quarter marked the third in a row of rising net income.
Management Quote: "While we saw a significant improvement in profitability in the third quarter, sluggish demand in some of our key markets along with a much weaker Euro resulted in lower top line growth than we expected," said Stephen A. Roell, Johnson Controls chairman and chief executive officer. "Despite challenging markets, Building Efficiency segment income improved by 28 percent over last year as the business continues to gain market share. General weak demand in the automotive aftermarket was a negative for battery shipments in the quarter. At the same time, the prices for the spent battery cores we use in recycling lead hit an all-time high in the quarter, negatively impacting profitability. We do not expect this unusual combination of soft demand and higher input costs to continue past the fourth fiscal quarter. Automotive Experience benefitted from the higher auto production levels in North America, but the downturn in Europe slowed progress in our efforts to reduce operational inefficiencies."
A Look Back: Gross margin shrank 0.4 percentage point to 14.5%. The contraction appeared to be driven by increased costs, which rose 2.6% from the year earlier quarter while revenue rose 2.1%.
Net income has increased 6.8% year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 19.8% from the year-earlier quarter.
Looking Ahead: Over the past 60 days, the outlook for the company's performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 90 cents per share, a drop from 92 cents. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. At $2.70 per share, the average estimate for the fiscal year has fallen from $2.76 90 days ago.
Investors should care about a company's quarterly earnings because it shows the state of the business over the past 90 days and provides guidance for the following 90 days. SEE: How To Decode A Company's Earnings Reports
The Numbers: Both EPS and revenues failed to meet expectations as Johnson Controls posted 61 cents per share and revenues of $10.58 billion. Analysts were expecting 67 cents per share and revenues of $10.82 billion. EPS rose 17.3% while revenue climbed 2.1% from the same period last year. Johnson Controls' revenue has grown during each of the past four quarters on a year-over-year basis. Johnson Controls' profit rose 16.8% from last year's figures to $417 million during the third quarter. Last quarter marked the third in a row of rising net income.
Management Quote: "While we saw a significant improvement in profitability in the third quarter, sluggish demand in some of our key markets along with a much weaker Euro resulted in lower top line growth than we expected," said Stephen A. Roell, Johnson Controls chairman and chief executive officer. "Despite challenging markets, Building Efficiency segment income improved by 28 percent over last year as the business continues to gain market share. General weak demand in the automotive aftermarket was a negative for battery shipments in the quarter. At the same time, the prices for the spent battery cores we use in recycling lead hit an all-time high in the quarter, negatively impacting profitability. We do not expect this unusual combination of soft demand and higher input costs to continue past the fourth fiscal quarter. Automotive Experience benefitted from the higher auto production levels in North America, but the downturn in Europe slowed progress in our efforts to reduce operational inefficiencies."
A Look Back: Gross margin shrank 0.4 percentage point to 14.5%. The contraction appeared to be driven by increased costs, which rose 2.6% from the year earlier quarter while revenue rose 2.1%.
Net income has increased 6.8% year-over-year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 19.8% from the year-earlier quarter.
Looking Ahead: Over the past 60 days, the outlook for the company's performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 90 cents per share, a drop from 92 cents. Increasing earnings estimate is a positive sign about the company and it typically leads a increase in the stock price. A decreasing earning estimate is a negative sign and usually leads to a drop in the stock price. At $2.70 per share, the average estimate for the fiscal year has fallen from $2.76 90 days ago.
by
Investopedia Staff
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