Johnson Controls Reports Strong Q1 Results; Raises FY26 Guidance | JCI Stock News

Q1 sales increased 7% and organic sales increased 6%*Q1 GAAP EPS of $0.90; Q1 Adjusted EPS* of $0.89Q1 Orders +39% organically year-over-yearBacklog of $18.2 billion increased 20% organically year-over-year* This earnings release contains non-GAAP financial measures. Definitions and reconciliations of the non-GAAP financial measures can be found in the attached footnotes. Non-GAAP measures should be considered in addition to, and not as replacements for, the most comparable GAAP measures. , /PRNewswire/ -- Johnson Controls International plc (NYSE: JCI), a global technology leader in energy efficiency, decarbonization, thermal management and mission-critical performance, is proud to announce fiscal first quarter 2026 GAAP earnings per share ("EPS") of $0.90. Adjusted EPS was $0.89.Q1 sales increased 7% to $5.8 billion and organic sales increased 6%.For the quarter, GAAP net income from continuing operations attributable to JCI was $555 million and adjusted net income was $547 million."Johnson Controls delivered a strong start to the year, with solid revenue growth, meaningful margin expansion, and adjusted EPS up nearly 40%, reflecting improving execution across the enterprise," said Joakim Weidemanis, CEO. "Our nearly 40% order growth highlights strong customer demand in our core end markets, where our technology leadership and enviable field presence continues to differentiate us. As we deploy our proprietary business system more broadly, we're operating with greater speed and consistency, strengthening our ability to deliver sustained, predictable value for our customers and shareholders."FISCAL Q1 SEGMENT RESULTSThe financial highlights presented in the tables below exclude discontinued operations and are in accordance with GAAP, unless otherwise indicated. All comparisons are to the first quarter of fiscal 2025. Orders and backlog metrics included in the release relate to the Company's Solutions and Services businesses. Orders prior to Q1 2026 exclude certain equipment-only sales for longer cycle projects. Backlog has been restated to include this new category.A slide presentation to accompany the results can be found in the Investor Relations section of Johnson Controls' website at http://investors.johnsoncontrols.com.AmericasFiscal Q1(in millions)20262025ChangeSales$ 3,843$ 3,6276 %Gross Margin1,3751,2936 %Segment EBITA6205895 %Adjusted Segment EBITA (non-GAAP)6325897 %Segment EBITA Margin %16.1 %16.2 % (10 bp)Adjusted Segment EBITA Margin % (non-GAAP)16.4 %16.2 % 20 bp Segment EBIT$ 544$ 49410 %Sales in the quarter of $3.8 billion increased 6% over the prior year. Organic sales also increased 6% led by continued strength across Applied HVAC and Controls.Excluding M&A and adjusted for foreign currency, orders increased 56% year-over-year and backlog of $13.3 billion increased 22% year-over-year. The increase in backlog and orders was primarily due to demand led by customers' accelerated investments in data center projects.Segment EBITA margin of 16.1% was approximately flat compared to the prior year. Adjusted segment EBITA in Q1 2026 excludes transformation costs.EMEA (Europe, Middle East, Africa)Fiscal Q1(in millions)20262025ChangeSales$ 1,261$ 1,1579 %Gross Margin44839713 %Segment EBITA15813616 %Adjusted Segment EBITA (non-GAAP)16413621 %Segment EBITA Margin %12.5 %11.8 % 70 bp Adjusted Segment EBITA Margin % (non-GAAP)13.0 %11.8 % 120 bp Segment EBIT$ 151$ 11630 %Sales in the quarter of $1.3 billion increased 9% over the prior year. Organic sales grew 4% versus the prior year quarter led by 8% growth in Services.Excluding M&A and adjusted for foreign currency, orders increased 8% year-over-year and backlog of $3.0 billion increased 11% year-over-year. Segment EBITA margin of 12.5% expanded 70 basis points versus the prior year driven by favorable pricing and productivity improvements. Adjusted segment EBITA in Q1 2026 excludes transformation costs.APAC (Asia Pacific)Fiscal Q1(in millions)20262025ChangeSales$ 693$ 6428 %Gross Margin2512366 %Segment EBITA1179030 %Adjusted Segment EBITA (non-GAAP)1179030 %Segment EBITA Margin %16.9 %14.0 % 290 bp Adjusted Segment EBITA Margin % (non-GAAP)16.9 %14.0 % 290 bp Segment EBIT$ 113$ 8533 %Sales in the quarter of $693 million increased 8% versus the prior year. Organic sales increased 8% versus the prior year led by 9% growth in Products and Systems.Excluding M&A and adjusted for foreign currency, orders increased 10% and backlog of $1.9 billion increased 20% year-over-year.Segment EBITA margin of 16.9% increased 290 basis points versus the prior year driven by increased volumes and productivity improvements.CorporateFiscal Q1(in millions)20262025ChangeCorporate ExpenseGAAP$ 156$ 171(9 %)Adjusted (non-GAAP)107127(16 %)Adjusted Corporate expense in both Q1 2026 and Q1 2025 excludes certain transaction/separation costs and transformation costs.OTHER Q1 ITEMSCash provided by operating activities was $611 million. Free cash flow was $531 million and adjusted free cash flow was $428 million.The Company paid dividends of $245 million.The Company completed the sale of its ADT Mexico Security business for net proceeds of $207 million. In connection with the sale, the Company recognized a pre-tax gain of $70 million.GUIDANCEThe following forward-looking statements are non-GAAP financial measures. These non-GAAP financial measures are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the amounts excluded is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period and the high variability of certain amounts, such as mark-to-market adjustments. Organic revenue growth excludes the effect of acquisitions, divestitures and foreign currency. The Company is unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to its most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort or expense. The unavailable information could have a significant impact on the Company's fiscal 2026 second quarter and full year GAAP financial results.The Company initiated fiscal 2026 second quarter continuing operations guidance:Organic sales growth of ~5%Operating leverage of ~45%Adjusted EPS of ~$1.11The Company's fiscal 2026 full year continuing operations guidance is as follows:Organic sales growth of mid-single digits (unchanged)Operating leverage of ~50% (unchanged)Adjusted EPS of ~$4.70 (previously ~$4.55)Adjusted free cash flow conversion of ~100% (unchanged)CONFERENCE CALL & WEBCAST INFO Johnson Controls will host a conference call to discuss this quarter's results at 8:30 a.m. ET today, which can be accessed by dialing 855-979-6654 (in the United States) or +1-646-233-4753 (outside the United States) along with passcode 927389, or via webcast. A slide presentation will accompany the prepared remarks and has been posted on the investor relations section of the Johnson Controls website at https://investors.johnsoncontrols.com/news-and-events/events-and-presentations. A replay will be made available approximately two hours following the conclusion of the conference call.ABOUT JOHNSON CONTROLSJohnson Controls (NYSE:JCI), a global technology leader in energy efficiency, decarbonization, thermal management and mission-critical performance, helps customers use energy more productively, reduce carbon emissions, and operate with the precision and resilience required in rapidly expanding industries such as data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education.For more than 140 years, Johnson Controls has delivered performance where it really matters. Backed by advanced technology, lifecycle services and an industry-leading field organization, we elevate customer performance, turn goals into real-world results and help move society forward.Visit johnsoncontrols.com for more information and follow @Johnsoncontrols on social platforms.JOHNSON CONTROLS CONTACTS: INVESTOR CONTACTS:MEDIA CONTACT:Michael GatesDanielle CanzanellaDirect: +1 414.524.5785Direct: +1 203.499.8297Email: michael.j.gates@jci.com Email: danielle.canzanella@jci.comJOHNSON CONTROLS INTERNATIONAL PLC CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSJOHNSON CONTROLS INTERNATIONAL PLC (the "Company") has made statements in this document that are forward-looking and therefore are subject to risks and uncertainties. All statements in this document other than statements of historical fact are, or could be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In this document, statements regarding the Company's future financial position, sales, costs, earnings, cash flows, other measures of results of operations, synergies and integration opportunities, capital expenditures, debt levels and market outlook are forward-looking statements. Words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "forecast," "project" or "plan" and terms of similar meaning are also generally intended to identify forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. The Company cautions that these statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those expressed or implied by such forward-looking statements, including, among others, risks related to: the ability to develop or acquire new products and technologies that achieve market acceptance and meet applicable quality and regulatory requirements; the ability to manage general economic, business and capital market conditions, including the impacts of trade restrictions, recessions, economic downturns and global price inflation; the ability to manage macroeconomic and geopolitical volatility, including changes to laws or policies governing foreign trade, including tariffs, economic sanctions, foreign exchange and capital controls, import/export controls or other trade restrictions as well as any associated supply chain disruptions; the ability to execute on the Company's operating model and drive organizational improvement; the ability to innovate and adapt to emerging technologies, ideas and trends in the marketplace, including the incorporation of technologies such as artificial intelligence; fluctuations in the cost and availability of public and private financing for customers; the ability to manage disruptions caused by international conflicts, including Russia and Ukraine and the ongoing conflicts in the Middle East; the ability to successfully execute and complete portfolio simplification actions, as well as the possibility that the expected benefits of such actions will not be realized or will not be realized within the expected time frame; managing the risks and impacts of potential and actual security breaches, cyberattacks, privacy breaches or data breaches, maintaining and improving the capacity, reliability and security of the Company's enterprise information technology infrastructure; the ability to manage the lifecycle cybersecurity risk in the development, deployment and operation of the Company's digital platforms and services; fluctuations in currency exchange rates; the ability to hire and retain senior management and other key personnel; changes or uncertainty in laws, regulations, rates, policies, or interpretations that impact business operations or tax status; the ability to adapt to global climate change, climate change regulation and successfully meet the Company's public sustainability commitments; the outcome of litigation and governmental proceedings; the risk of infringement or expiration of intellectual property rights; the ability to manage disruptions caused by catastrophic or geopolitical events, such as natural disasters, armed conflict, political change, climate change, pandemics and outbreaks of contagious diseases and other adverse public health developments; any delay or inability of the Company to realize the expected benefits and synergies of recent portfolio transactions; the tax treatment of recent portfolio transactions; significant transaction costs and/or unknown liabilities associated with such transactions; labor shortages, work stoppages, union negotiations, labor disputes and other matters associated with the labor force; and the cancellation of or changes to commercial arrangements. A detailed discussion of risks related to Johnson Controls' business is included in the section entitled "Risk Factors" in Johnson Controls' Annual Report on Form 10-K for the year ended September 30, 2025 filed with the United States Securities and Exchange Commission ("SEC") on November 14, 2025, which is available at www.sec.gov and www.johnsoncontrols.com under the "Investors" tab. The description of certain of these risks is supplemented in Item 1A of Part II of Johnson Controls subsequently filed Quarterly Reports on Form 10-Q. The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document.FINANCIAL STATEMENTSJohnson Controls International plcConsolidated Statements of Income(in millions, except per share data; unaudited)Three Months Ended December 31,20252024Net salesProducts and systems$ 3,892$ 3,685Services1,9051,7415,7975,426Cost of salesProducts and systems2,6482,456Services1,0751,0443,7233,500Gross profit2,0741,926Selling, general and administrative expenses1,2211,399Restructuring and impairment costs8733Net financing charges5986Equity income1—Income from continuing operations before income taxes708408Income tax provision15247Income from continuing operations556361Income (loss) from discontinued operations, net of tax(31)90Net income525451Income (loss) attributable to noncontrolling interestsContinuing operations1(2)Discontinued operations—34Net income attributable to Johnson Controls$ 524$ 419Income (loss) attributable to Johnson ControlsContinuing operations$ 555$ 363Discontinued operations(31)56Total$ 524$ 419Basic earnings (loss) per share attributable to Johnson ControlsContinuing operations$ 0.91$ 0.55Discontinued operations(0.05)0.08Total$ 0.86$ 0.63Diluted earnings (loss) per share attributable to Johnson ControlsContinuing operations$ 0.90$ 0.55Discontinued operations(0.05)0.08Total$ 0.85$ 0.63Johnson Controls International plcCondensed Consolidated Statements of Financial Position(in millions; unaudited)December 31, 2025September 30, 2025AssetsCash and cash equivalents$ 552$ 379Accounts receivable - net6,1906,269Inventories1,9321,820Current assets held for sale 2014Other current assets1,7471,680Current assets10,44110,162Property, plant and equipment - net2,1302,193Goodwill16,61016,633Other intangible assets - net3,5503,613Noncurrent assets held for sale 109140Other noncurrent assets5,1435,198Total assets$ 37,983$ 37,939Liabilities and EquityShort-term debt$ 436$ 723Current portion of long-term debt568566Accounts payable3,6143,614Accrued compensation and benefits8911,268Deferred revenue2,5422,470Current liabilities held for sale1312Other current liabilities2,4372,288Current liabilities10,50110,941Long-term debt8,7018,591Pension and postretirement benefit obligations201211Noncurrent liabilities held for sale149Other noncurrent liabilities5,3335,233Noncurrent liabilities14,24914,044Shareholders' equity attributable to Johnson Controls13,20412,927Noncontrolling interests2927Total equity13,23312,954Total liabilities and equity$ 37,983$ 37,939Consolidated Statements of Cash Flows(in millions; unaudited)Three Months Ended December 31,20252024Operating Activities of Continuing OperationsIncome (loss) from continuing operations:Attributable to Johnson Controls$ 555$ 363Attributable to noncontrolling interests1(2)Total556361Adjustments to reconcile net income to cash provided by operating activities of continuing operations:Depreciation and amortization164193Pension and postretirement benefits(12)(16)Deferred income taxes21(54)Noncash restructuring and impairment charges608Equity-based compensation3428Gain on business divestiture(70)—Other - net18Changes in assets and liabilities:Accounts receivable71284Inventories(112)(15)Other assets88(171)Restructuring reserves(3)2Accounts payable and accrued liabilities(175)(407)Accrued income taxes(12)28Cash provided by operating activities from continuing operations611249Investing Activities of Continuing OperationsCapital expenditures(80)(116)Divestiture of businesses, net of cash divested207—Other - net(37)11Cash provided (used) by investing activities from continuing operations90(105)Financing Activities of Continuing OperationsNet proceeds (payments) from borrowings with maturities less than three months(186)12Proceeds from debt1161,369Repayments of debt(101)(594)Stock repurchases and retirements—(330)Payment of cash dividends(245)(245)Employee equity-based compensation withholding taxes(49)(29)Other - net118Cash provided (used) by financing activities from continuing operations(464)201Discontinued OperationsCash used by operating activities(67)(2)Cash used by investing activities—(10)Cash used by discontinued operations(67)(12)Effect of exchange rate changes on cash, cash equivalents and restricted cash5154Change in cash, cash equivalents and restricted cash held for sale—4Increase in cash, cash equivalents and restricted cash175491Cash, cash equivalents and restricted cash at beginning of period398767Cash, cash equivalents and restricted cash at end of period5731,258Less: Restricted cash2121Cash and cash equivalents at end of period$ 552$ 1,237FOOTNOTES1. Sale of Residential and Light Commercial HVAC BusinessIn July 2025, the Company sold its Residential and Light Commercial ("R&LC") HVAC business, including the North America Ducted business and the global Residential joint venture with Hitachi Global Life Solutions, Inc. ("Hitachi"), of which Johnson Controls owned 60% and Hitachi owned 40%. The R&LC HVAC business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the consolidated financial statements as a discontinued operation.2. Non-GAAP MeasuresThe Company reports various non-GAAP measures in this earnings release and the related earnings presentation. Non-GAAP measures should be considered in addition to, and not as replacements for, the most comparable GAAP measures. Refer to the following footnotes for further information on the calculations of the non-GAAP measures and reconciliations of the non-GAAP measures to the most comparable GAAP measures.Organic salesOrganic sales growth excludes the impact of acquisitions, divestitures and foreign currency. Management believes organic sales growth is useful to investors in understanding period-over-period sales results and trends.Cash flowManagement believes free cash flow and adjusted free cash flow measures are useful to investors in understanding the strength of the Company and its ability to generate cash. These non-GAAP measures can also be used to evaluate the Company's ability to generate cash flow from operations and the impact that this cash flow has on its liquidity. Management also believes adjusted free cash flows are useful to investors in understanding period-over-period cash flows, cash trends and ongoing cash flows of the Company.Adjusted free cash flow and adjusted free cash flow conversion are non-GAAP measures which exclude the impacts of the following:JC Capital cash flows primarily include activity associated with finance/notes receivables and inventory and/or capital expenditures related to lease arrangements. JC Capital net income is primarily related to interest income on the finance/notes receivable and profit recognized on arrangements with sales-type lease components.The impact of the accounts receivables factoring program which was discontinued in March 2024.Cash payments related to the water systems AFFF settlement and cash receipts for AFFF-related insurance recoveries.Prepayment of royalty fees associated with certain IP licensed to divested businesses.Discrete tax payments are non-recurring tax settlements for certain non-US jurisdictionsAdjusted financial measuresAdjusted financial measures are non-GAAP measures that are derived by excluding certain amounts from the corresponding financial measures determined in accordance with GAAP. The determination of the excluded amounts is a matter of management judgment and depends upon the nature and variability of the underlying expense or income amounts and other factors.As detailed in the tables included in footnotes four through seven, the following items were excluded from certain financial measures:Net mark-to-market adjustments are the result of adjusting restricted asbestos investments and pension and postretirement plan assets to their current market value. These adjustments may have a favorable or unfavorable impact on results.Restructuring and impairment costs represents restructuring costs attributable to Johnson Controls including costs associated with exit plans or other restructuring plans that will have a more significant impact on the underlying cost structure of the organization. Impairment costs primarily relate to write-downs of goodwill, intangible assets and assets held for sale to their fair value.Water systems AFFF settlement and insurance recoveries include amounts related to a settlement with a nationwide class of public water systems concerning the use of AFFF manufactured and sold by a subsidiary of the Company, and AFFF-related insurance recoveries.Transaction/separation costs include costs associated with significant mergers and acquisitions.Transformation costs represent incremental expenses incurred in association with strategic growth initiatives and cost saving opportunities in order to realize the benefits of portfolio simplification and the Company's lifecycle solutions strategy.ERP asset - accelerated depreciation represents a change in ERP strategy within the EMEA segment, which led to certain assets being abandoned and the useful lives reduced.Earn-out adjustments relate to earn-out liabilities associated with certain significant acquisitions and may have a favorable or unfavorable impact on results.Cyber incident costs primarily represent expenses, net of insurance recoveries, associated with the response to, and remediation of, a cybersecurity incident which occurred in September 2023.Product quality costs are costs related to a product quality issue that is unusual due to the magnitude of the expected cost to remediate in comparison to typical product quality issues experienced by the Company.Loss (gain) on divestiture relates to the sale of the ADT Mexico Security and ADTi businesses.EMEA joint venture loss relates to certain non-recurring losses associated with the equity method accounting of a joint venture company.Discrete tax items, net includes the net impact of discrete tax items within the period, including the following types of items: changes in estimates associated with valuation allowances, changes in estimates associated with reserves for uncertain tax positions, withholding taxes recorded upon changes in indefinite re-investment assertions for businesses to be disposed of and impacts from statutory rate changes.Related tax impact includes the tax impact of the various excluded items.Management believes the exclusion of these items is useful to investors due to the unusual nature and/or magnitude of the amounts. When considered together with unadjusted amounts, adjusted financial measures are useful to investors in understanding period-over-period operating results, business trends and ongoing operations of the Company. Management may also use these metrics as guides in forecasting, budgeting and long-term planning processes and for compensation purposes.Operating leverageOperating leverage is defined as the ratio of the change in adjusted EBIT for the period, divided by the corresponding change in net revenues. Management believes operating leverage is a useful metric to reflect enterprise value creation, capturing the impact of scale and cost discipline across the organization.Debt ratiosManagement believes that net debt to adjusted EBITDA, a non-GAAP measure, is useful to understanding the Company's financial condition as the ratio provides an overview of the extent to which the Company relies on external debt financing for its funding and also is a measure of risk to its shareholders.3. SalesThe following tables detail the changes in sales from continuing operations attributable to organic growth, foreign currency, acquisitions, divestitures and other (unaudited):Net salesThree Months Ended December 31(in millions)AmericasEMEAAPACTotalNet sales - 2024$ 3,627$ 1,157$ 642$ 5,426Base year adjustments Divestitures and other—(15)—(15)Foreign currency665172Adjusted base net sales3,6331,2076435,483Acquisitions—3—3Organic growth2105150311Net sales - 2025$ 3,843$ 1,261$ 693$ 5,797Growth %:Net sales6 %9 %8 %7 %Organic growth6 %4 %8 %6 %Products and systems revenueThree Months Ended December 31(in millions)AmericasEMEAAPACTotalProducts and systems revenue - 2024$ 2,536$ 700$ 449$ 3,685Base year adjustments Foreign currency745153Adjusted products and systems revenue2,5437454503,738Acquisitions—3—3Organic growth971440151Products and systems revenue - 2025$ 2,640$ 762$ 490$ 3,892Growth %:Products and systems revenue4 %9 %9 %6 %Organic growth4 %2 %9 %4 %Service revenueThree Months Ended December 31(in millions)AmericasEMEAAPACTotalService revenue - 2024$ 1,091$ 457$ 193$ 1,741Base year adjustments Divestitures and other—(15)—(15)Foreign currency(1)20—19Adjusted base service revenue1,0904621931,745Organic growth1133710160Service revenue - 2025$ 1,203$ 499$ 203$ 1,905Growth %:Service revenue10 %9 %5 %9 %Organic growth10 %8 %5 %9 %4. Cash Flow, Free Cash Flow and Free Cash Flow ConversionThe following table includes operating cash flow conversion, free cash flow and free cash flow conversion (unaudited):Three Months Ended December 31,(in millions)20252024Cash provided by operating activities from continuing operations$ 611$ 249Income from continuing operations attributable to Johnson Controls555363Operating cash flow conversion 110 %69 %Cash provided by operating activities from continuing operations$ 611$ 249Capital expenditures(80)(116)Free cash flow (non-GAAP)531133Income from continuing operations attributable to Johnson Controls555363Free cash flow conversion from net income (non-GAAP)96 %37 %The following table includes adjusted free cash flow and adjusted free cash flow conversion (unaudited):Three Months Ended December 31,(in millions)20252024Free cash flow (non-GAAP)$ 531$ 133Adjustments:JC Capital cash used by operating activities(31)66Water systems AFFF settlement cash payments and insurance recoveries(74)397Prepaid IP royalties for divested businesses(29)—Impact from discontinued factoring program—7Discrete tax payments31—Adjusted free cash flow (non-GAAP)$ 428$ 603Adjusted net income attributable to JCI (non-GAAP)$ 547$ 426JC Capital net (income) loss7(5)Adjusted net income attributable to JCI, excluding JC Capital (non-GAAP)$ 554$ 421Adjusted free cash flow conversion (non-GAAP)77 %143 %5. Segment Profitability and Corporate ExpenseThe Company evaluates the performance of its business units primarily on segment EBITA and segment EBIT. The following tables reconcile segment EBITA to EBIT and Income (loss) from continuing operations (the most comparable GAAP measure) to EBIT.Three Months Ended December 31,ActualAdjusted(Non-GAAP)(in millions; unaudited)2025202420252024Segment EBITA Americas$ 620$ 589$ 632$ 589EMEA158136164136APAC1179011790Corporate expenses(156)(171)(107)(127)Amortization(87)(120)(87)(120)Restructuring and impairment costs(87)(33)——Water systems AFFF insurance recoveries1304——Gain on divestiture70———Other2(1)——EBIT$ 767$ 494$ 719$ 568EBIT Margin13.2 %9.1 %12.4 %10.5 %Segment EBITA Margin15.4 %15.0 %15.7 %15.0 %Income (loss) from continuing operations:Attributable to Johnson Controls$ 555$ 363$ 547$ 426Attributable to noncontrolling interests1(2)1(2)Income from continuing operations556361548424Less: Income tax provision (1)1524711258Income before income taxes708408660482Net financing charges59865986EBIT$ 767$ 494$ 719$ 568(1) Adjusted income tax provision excludes the related tax impacts of pre-tax adjusting items.The following tables include the reconciliations of segment EBITA and EBIT as reported to adjusted segment EBITA and EBIT and adjusted segment EBITA and EBIT margin (unaudited):Three Months Ended December 31,(in millions)AmericasEMEAAPAC202520242025202420252024Sales$ 3,843$ 3,627$ 1,261$ 1,157$ 693$ 642Segment EBITA62058915813611790Amortization769572045Segment EBIT54449415111611385Adjusting items:Transformation costs12—6———Adjusted segment EBITA (non-GAAP)63258916413611790Adjusted EBIT (non-GAAP)55649415711611385Segment EBITA Margin %16.1 %16.2 %12.5 %11.8 %16.9 %14.0 %Adjusted segment EBITA Margin % (non-GAAP)16.4 %16.2 %13.0 %11.8 %16.9 %14.0 %EBIT Margin %14.2 %13.6 %12.0 %10.0 %16.3 %13.2 %Adjusted EBIT Margin % (non-GAAP)14.5 %13.6 %12.5 %10.0 %16.3 %13.2 %The following table reconciles Corporate expense from continuing operations as reported to the comparable adjusted amounts (unaudited):Three Months Ended December 31,(in millions)20252024Corporate expense (GAAP)$ 156$ 171Adjusting items:Transaction/separation costs(12)(11)Transformation costs(37)(33)Adjusted corporate expense (non-GAAP)$ 107$ 1276. Net Income and Diluted Earnings Per Share The following tables reconcile net income from continuing operations attributable to JCI and diluted earnings per share from continuing operations as reported to the comparable adjusted amounts (unaudited):Three Months Ended December 31,Income from continuing operations attributable to JCIDiluted earnings per share(in millions, except per share)2025202420252024As reported (GAAP)$ 555$ 363$ 0.90$ 0.55Adjusting items:Net mark-to-market adjustments(2)1——Restructuring and impairment costs87330.140.05Water systems AFFF insurance recoveries(130)(4)(0.21)(0.01)Transaction/separation costs12110.020.02Transformation costs55330.090.05Gain on divestiture(70)—(0.11)—Discrete tax items11—0.02—Related tax impact29(11)0.05(0.02)Adjusted (non-GAAP)*$ 547$ 426$ 0.89$ 0.64* May not sum due to roundingThe following table reconciles the denominators used to calculate basic and diluted earnings per share (in millions; unaudited):Three Months Ended December 31,20252024Weighted average shares outstandingBasic weighted average shares outstanding611662Effect of dilutive securities:Stock options, unvested restricted stock and unvested performance share awards33Diluted weighted average shares outstanding6146657. Debt RatiosThe following table includes continuing operations and details net debt to income before income taxes and net debt to adjusted EBITDA (unaudited):(in millions)December 31, 2025September 30, 2025December 31, 2024Short-term debt$ 436$ 723$ 882Current portion of long-term debt568566522Long-term debt8,7018,5918,589Total debt9,7059,8809,993Less: cash and cash equivalents5523791,237Net debt$ 9,153$ 9,501$ 8,756Last twelve months income before income taxes$ 2,269$ 1,969$ 1,610Net debt to income before income taxes 4.0x 4.8x 5.4x Last twelve months adjusted EBITDA (non-GAAP)$ 4,109$ 3,987$ 3,733Net debt to adjusted EBITDA (non-GAAP)2.2x2.4x2.3xThe following table reconciles income from continuing operations to adjusted EBIT and adjusted EBITDA (unaudited):Twelve Months Ended(in millions)December 31, 2025September 30, 2025December 31, 2024Income from continuing operations$ 1,919$ 1,724$ 1,432Income tax provision350245178Income before income taxes2,2691,9691,610Net financing charges292319341EBIT2,5612,2881,951Adjusting items:Net mark-to-market adjustments36(24)Restructuring and impairment costs600546507Water systems AFFF settlement——750Water systems AFFF insurance recoveries(165)(39)(371)Earn-out adjustments——(68)Transaction/separation costs403943Transformation costs20218033Cyber incident costs——4Product quality costs——33ERP asset - accelerated depreciation102102—Loss (gain) on divestiture(70)—42EMEA joint venture loss——17Adjusted EBIT (non-GAAP)3,2733,1222,917Depreciation and amortization836865816Adjusted EBITDA (non-GAAP)$ 4,109$ 3,987$ 3,7338. Income TaxesAfter adjusting for certain non-recurring items, the Company's effective tax rate for continuing operations was approximately 17% for the three months ending December 31, 2025 and approximately 12% for the three months ending December 31, 2024.SOURCE Johnson Controls International plc