Johnson Controls Reports Record Sales and Earnings in Q2 2008; Confirms Full-Year 2008 Outlook for Record Results

MILWAUKEE, April 16 -- Johnson Controls, Inc. (JCI) today reported record sales and income from continuing operations for the second quarter of fiscal 2008. Sales increased 11% reflecting growth in each of its businesses. Diluted earnings per share from continuing operations increased to $0.48 from $0.44 last year (adjusted for a 3-for-1 stock split effective October 2, 2007); excluding non-recurring tax benefits in the second quarter of fiscal 2007, diluted earnings per share from continuing operations increased 30%, from $0.37. The reported earnings per share are at the top of the range forecast by the company in January. Each of the company's businesses increased quarterly profits by more than 25% versus last year.

The company also confirmed its full-year 2008 earnings guidance of 18% year-over-year growth.

Chairman and Chief Executive Officer Stephen A. Roell said, "We continue to deliver strong sales and earnings growth in each of our businesses. We are executing on our growth strategies and improving our productivity and cost structure. Our focus on delivering greater value by improving comfort, safety and sustainability and our increasing presence in growing international markets will enable us to achieve a record performance in 2008."

Second-Quarter 2008 Results

Sales for the quarter ended March 31, 2008 rose 11% to a record $9.4 billion from $8.5 billion last year. Segment income was $453 million, up 29% from $351 million in the 2007 quarter. Income from continuing operations was $289 million, 28% higher than the prior year's $225 million (excluding the non-recurring tax benefits) due to the higher segment income.

Building efficiency sales increased 11% to $3.3 billion from $3.0 billion due to increased global demand for the company's offerings for nonresidential buildings that improve energy efficiency and reduce greenhouse gas emissions. The company reported strong revenue growth in systems and services as well as global workplace solutions. Segment income increased 29% to $177 million from $137 million in 2007, due to the higher global volumes and improved margins. The backlog of uncompleted contracts at March 31, 2008 was $4.5 billion, up 15% versus the previous year, reflecting strong demand in domestic and international markets. Johnson Controls said that in the second quarter it was selected to participate in a multi-billion dollar, multi-year infrastructure upgrade program with the U.S. Air Force. The company also released new Metasys facility management system technology that increases its wireless connectivity capabilities.

Power solutions sales were up 47% to $1.5 billion from $1.0 billion. The increase was primarily due to higher prices resulting from the pass-through of increased lead costs. Segment income increased 30% to $121 million from $93 million in the 2007 quarter due to operational efficiencies and improved performance of joint ventures in Asia. Excluding the impact of lead, power solutions margins in the 2008 quarter increased over the prior year. Johnson Controls said that it had successfully launched production of original equipment batteries for a new customer in the second quarter.

Automotive experience sales for the second quarter of 2008 totaled $4.6 billion, up 2% from $4.5 billion. Revenues in Europe increased 9% while North American sales were 7% lower. Asia/Pacific revenues increased 8%. Industry light vehicle production in North America was down 8%, while in Europe it increased 1%. Segment income increased 28% to $155 million versus $121 million for the prior year quarter. Reflecting the benefits of operational efficiencies and improved pricing, North America income increased to $25 million from a loss of $1 million a year ago despite the lower production volume in the 2008 quarter. Income in Asia increased to $10 million from $2 million last year. The company said that its backlog of new business continued to increase in the second quarter as it received new interiors orders from Dacia, First Auto Works, Ford, General Motors, Kia, Nissan and Volkswagen.

2008 Full Year and Third-Quarter Outlook

The fiscal 2008 full-year earnings outlook provided by the company on October 9, 2007 remains unchanged with diluted earnings per share from continuing operations increasing approximately 18% to $2.45 - $2.50 from $2.10 in 2007. The company increased its revenue forecast for the full year and now expects sales to grow 13% to $39 billion, versus the earlier guidance of $38 billion.

For the third quarter of fiscal 2008, the company forecasts diluted earnings per share from continuing operations to increase 12 to 15%, to $0.74 to $0.76. This forecast excludes the potential impact on vehicle production from a prolonged labor strike of a supplier to a North American automotive customer.

Mr. Roell said, "All three of our businesses participate in large, growing global markets. In addition, a significant portion of our revenues comes from recurring sources like commercial building services and aftermarket automotive batteries. Our business backlogs are strong and growing, giving us good visibility of our future earnings performance. We are focused on improving our cost structure, which will result in continued increases in the profitability of each of our businesses. With our diversified business portfolio, we are well positioned to achieve sustainable, profitable growth and are confident in our ability to achieve our financial targets."

Johnson Controls is the global leader that brings ingenuity to the places where people live, work and travel. By integrating technologies, products and services, we create smart environments that redefine the relationships between people and their surroundings. Our team of 140,000 employees creates a more comfortable, safe and sustainable world through our products and services for more than 200 million vehicles, 12 million homes and one million commercial buildings. Our commitment to sustainability drives our environmental stewardship, good corporate citizenship in our workplaces and communities, and the products and services we provide to customers. For additional information, please visit johnsoncontrols.com