Monday, October 13, 2014

Johnson Controls Conference Call Review

It's been a confusing year for investors in Johnson Controls  (NYSE: JCI  ) . The company is best known for its automotive products (mainly batteries and car interiors), and the automotive industry has been an outperformer recently within the industrial sector. In turn, the company has outperformed its peers, and its own expectations, with its automotive experience (car interiors and seating) segment. However, the stock is down nearly 7.5% year to date. Clearly, management needed to explain a few things during its third-quarter conference call, and here is what they said.

Cautiously optimistic on building efficiency


Before diving into the conference call, let's take a look at this chart, which depicts Johnson Controls' three segments by income for the first three quarters of its fiscal year.


Source: Johnson Controls company presentations.



Automotive experience (seats and interiors) and power solutions (automotive batteries, of which roughly three-quarters go to the aftermarket) make up the bulk of profit, but the company is investing in its building efficiency (heating, ventilation, and air conditioning, or HVAC) segment in order to diversify its income stream. More on that later.


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