MILWAUKEE, Oct. 25 /PRNewswire-FirstCall/ — Johnson Controls, Inc. (JCI) today reported that its fourth-quarter 2006 diluted earnings per share from continuing operations increased 24% to $1.86, compared with $1.50 for the fourth quarter of 2005.
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“We are pleased to report record sales and earnings for the quarter and the 2006 fiscal year. The steps we have taken during the past year have transformed Johnson Controls into a diversified industrial growth company,” said John M. Barth, Chairman and Chief Executive Officer. “In 2006, we managed through market challenges while strengthening our leadership positions. Our employees have done an outstanding job serving the needs of our customers, and I thank them.”
Company sales for the 2006 fourth quarter totaled $8.2 billion, up 18% from $6.9 billion in 2005. Operating income was $505 million, up 16% from last year’s $436 million. Income from continuing operations was $368 million versus $292 million, an increase of 26%.
Building efficiency sales were up 108%, and operating income increased 118% in the quarter, primarily due to the December 2005 acquisition of York International. Sales totaled $3.1 billion compared with $1.5 billion in the prior year. On a pro-forma basis, North America achieved double-digit growth in commercial systems and services, and residential products. Sales in other world regions and in facility management also increased. Operating income increased to $253 million from $116 million due primarily to the higher volume, expanded margins and realization of cost synergies. The backlog of uncompleted contracts was $3.7 billion, 17% higher than the prior year (pro- forma, including York).
Power solutions sales increased 14%, to $981 million from $863 million last year. The increase reflects higher unit shipments in all geographic regions as well as higher unit prices resulting from the pass-through of increased lead costs. Operating income for the quarter was $140 million, up 23% from $114 million as a result of the higher volume and increased quality and productivity.
Interior experience sales were $4.0 billion, 11% below last year’s $4.5 billion due primarily to lower North American vehicle production volume. North America sales were 19% lower reflecting the overall market and unfavorable light truck exposure. European interiors sales were down 3% in the quarter, in-line with overall production levels. Operating income declined 46% to $112 million from $206 million. Higher margins in Europe resulting from improvements in operational efficiencies were more than offset by the effects of lower volumes in North America and Japan.
Full-year results
For the 2006 fiscal year, Johnson Controls sales totaled $32.2 billion compared to $27.5 billion for 2005, an increase of 17%. Income from continuing operations increased 36% to $1.0 billion from $757 million due to higher operating income, a lower 2006 tax rate and non-recurring tax benefits. Diluted earnings per share from continuing operations in 2006 were $5.25 versus $3.90.
At September 30, 2006, the company’s total debt to total capitalization was approximately 39%, down from 42% at June 30, 2006.
2007 Outlook
On October 9, 2006, the company issued guidance on its expected financial performance in 2007. Johnson Controls anticipates a sales increase of approximately 6%, to $34 billion. Earnings from continuing operations are estimated to increase 14%, to about $6.00 per diluted share. For the first quarter of 2007, the company expects earnings from continuing operations of $0.80 – $0.85 cents per diluted share.
“We will continue to increase our competitive advantage globally by leveraging the technology, people and resources of Johnson Controls to better serve our customers. In addition, our financial strength will enable us to take advantage of multiple growth opportunities throughout the company. We expect that 2007 will be our 61st consecutive year of sales increases and 17th straight year of earnings increases,” Mr. Barth said.
Johnson Controls is a global leader in interior experience, building efficiency and power solutions. The company provides innovative automotive interiors that help make driving more comfortable, safe and enjoyable. For buildings, it offers products and services that optimize energy use and improve comfort and security. Johnson Controls also provides batteries for automobiles and hybrid electric vehicles, along with systems engineering and service expertise. Johnson Controls (NYSE:JCI) , founded in 1885, is headquartered in Milwaukee, Wisconsin. For additional information, visit http://www.johnsoncontrols.com/ .
Johnson Controls, Inc. (“the Company”) has made forward-looking statements in this document pertaining to its financial results for fiscal year 2007 that are based on preliminary data and are subject to risks and uncertainties. All statements other than statements of historical fact are statements that are or could be deemed forward-looking statements, including information concerning possible or assumed future risks. For those statements, the Company cautions that numerous important factors, such as automotive vehicle production levels and schedules, the ability to mitigate the impact of higher raw material and energy costs, the strength of the U.S. or other economies, currency exchange rates, cancellation of commercial contracts, labor interruptions, the ability to realize acquisition related integration benefits, and the ability to execute on restructuring actions according to anticipated timelines and costs, as well as those factors discussed in the company’s Form 8-K filing (dated October 6, 2006) and the risk factors as filed with the SEC January 9, 2006, could affect the Company’s actual results and could cause its actual consolidated results to differ materially from those expressed in any forward- looking statement made by, or on behalf of, the Company.
