JCI

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Johnson Controls

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2010–2025(18yr)

Revenue

Net Income

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Metric	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2014	FY 2015	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$17.0B	$17.4B	$10.4B	$10.6B	$10.3B	$38.7B	$9.9B	$37.2B	$37.7B	$22.8B	$23.4B	$24.0B	$22.3B	$23.7B	$25.3B	$26.8B	$23.0B	$23.6B	+2.8%
Gross Profit	$6.3B	$6.6B	$3.8B	$3.9B	$6.1B	$6.3B	$5.8B	$6.4B	$7.3B	$9.3B	$9.4B	$7.7B	$7.4B	$8.1B	$8.3B	$9.0B	$8.1B	$8.6B	+6.4%
Gross Margin	36.9%	38.1%	36.3%	36.5%	58.9%	16.3%	58.9%	17.3%	19.4%	40.9%	40.1%	32.1%	33.2%	34.1%	33.0%	33.5%	35.2%	36.4%	+1.2pp
Operating Income	$1.6B	$2.1B	$685.0M	$809.0M	$697.0M	—	$884.0M	—	—	—	—	—	—	—	—	—	—	—	—
Operating Margin	9.4%	12.2%	6.6%	7.6%	6.7%	—	8.9%	—	—	—	—	—	—	—	—	—	—	—	—
Net Income	$1.1B	$1.7B	$472.0M	$536.0M	$1.8B	$1.2B	$551.0M	$1.6B	-$868.0M	$1.6B	$2.2B	$5.7B	$631.0M	$1.6B	$1.5B	$1.8B	$1.7B	$3.3B	+93.0%
Net Margin	6.7%	10.0%	4.5%	5.0%	17.8%	3.1%	5.6%	4.2%	-2.3%	7.1%	9.2%	23.7%	2.8%	6.9%	6.1%	6.9%	7.4%	13.9%	+6.5pp
Free Cash Flow	—	—	—	—	—	$1.2B	—	$465.0M	$646.0M	-$1.3B	$1.5B	$1.2B	$2.0B	$2.0B	—	—	—	—	—
FCF Margin	—	—	—	—	—	3.1%	—	1.3%	1.7%	-5.8%	6.3%	4.8%	9.1%	8.4%	—	—	—	—	—
EPS (Diluted)	$2.32	$3.62	$1.02	$1.14	$3.97	$1.80	$1.29	$2.36	$-1.30	$1.71	$2.32	$6.49	$0.84	$2.27	$2.19	$2.69	$2.52	$5.03	+99.6%

Total Debt$9.2B

Cash & Equiv.$379.0M

Net Debt$8.8B

4 min read

1. THE BIG PICTURE

Johnson Controls is currently a company in the middle of a high-stakes identity shift, attempting to leverage its massive installed base of HVAC and security systems into a high-margin, AI-driven service business via its OpenBlue platform. While management points to record order growth as evidence of success, the business remains tethered to a complex multi-year restructuring plan and the volatile costs of raw materials like copper and semiconductors.

2. WHERE THE RISKS HIT HARDEST

Johnson Controls’s "most diverse portfolio in the building technology industry" (10-K Item 1) is currently a source of execution risk; the complexity of managing such a broad range of brands—from YORK to Simplex—threatens the success of the 2025 organizational realignment. If the restructuring leads to "unexpected costs" or "loss of customer relationships" (Risks), the very scale that Johnson Controls cites as a competitive advantage could become a drag on productivity.

Furthermore, the strategic priority to "capitalize on key growth vectors" like data centers is directly threatened by technological disruption. Johnson Controls must rapidly develop or acquire "liquid cooling" and "artificial intelligence" capabilities (Risks) to remain relevant in mission-critical environments. Failure to do so would render its "portfolio breadth" obsolete in the fastest-growing segments of the market.

3. WHAT THE NUMBERS SAY TOGETHER

While management highlights "meaningful margin expansion" (8-K), the data shows Johnson Controls is currently a middle-of-the-pack performer. Its 14.7% operating margin ranks 5th of 6 among its peers, trailing leaders like Emerson (24.6%) and Eaton (20.0%) (Peer Benchmarking). This suggests that while Johnson Controls has a hardware-heavy business mix similar to Carrier, it has not yet achieved the operational efficiency of its more specialized competitors.

The recent 7% revenue growth in the first quarter of 2025 represents a significant acceleration over its trailing twelve-month (TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter) growth of 2.8%. This divergence is likely driven by the "40% order growth" cited by management, specifically within the Applied HVAC and data center verticals (8-K). However, with net debt at $8.6 billion—more than triple its annual free cash flow—Johnson Controls has limited room for error if supply chain disruptions or price inflation prevent it from converting that backlog into profitable revenue.

4. IS IT WORTH IT AT THIS PRICE?

At 24.4x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, the market is pricing in ~8.0% long-term growth (CAPM analysis). This is "at fair value" relative to the peer median of 23.6x, but it requires investors to believe that Johnson Controls can nearly triple its recent TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth rate of 2.8% on a sustained basis.

Johnson Controls’s actual fundamentals provide a mixed outlook for this valuation. While the 12.0% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin is healthy, it ranks only 4th among peers. If growth were to slow to a more modest 5.0% rate, the justified multiple would fall to 14.0x, representing roughly 43% downside from current levels (CAPM analysis). The current price is only justified if the "proprietary business system" management mentions can successfully drive the 50% operating leverage targeted for fiscal 2026.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if adjusted free cash flow conversion falls below the 100% target, which would indicate that restructuring costs or supply chain inefficiencies are consuming the cash needed for tech acquisitions.
Constructive if organic sales growth stays consistently above 7% for multiple quarters, proving that the OpenBlue platform is successfully "driving attachment" and recurring service revenue.
Cautious if the "organizational realignment" results in a second consecutive year of restructuring charges that exceed management's initial estimates.

6. BOTTOM LINE

Structural Advantage: A massive global installed base and a direct sales channel that create high switching costs and a captive audience for its OpenBlue digital service ecosystem. Bottom Line: Johnson Controls is a turnaround story priced for perfection, requiring flawless execution of its restructuring plan to justify its current valuation.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Technological Disruption: Johnson Controls must invest significant resources to develop or acquire capabilities in energy efficiency, liquid cooling, artificial intelligence, and machine learning. Failure to remain agile against competitors or regulatory changes could adversely affect Johnson Controls's financial condition and cash flows.
Operating Model Execution: Johnson Controls is currently implementing a multi-year restructuring plan and a 2025 organizational realignment into three regional segments. Risks include unexpected costs, loss of customer relationships, and the failure to realize estimated productivity improvements.
Product Quality and Liability: Quality issues or safety standard failures can lead to lost sales, increased costs, and significant legal or reputational damage. Johnson Controls has previously conducted product recalls and field corrective actions, and future warranty or product liability claims could exceed available insurance.
Supply Chain and Inflation: Johnson Controls relies on global suppliers for steel, copper, aluminum, and semiconductors. Disruptions or cost inflation can impact Johnson Controls's ability to convert its backlog into revenue, particularly when customer contracts do not allow for timely price adjustments.
Cybersecurity and Data Privacy: Johnson Controls faces threats to its IT infrastructure and digital products, such as the OpenBlue platform. A cybersecurity event in September 2023 impacted employee and applicant data, highlighting the risk of regulatory fines, litigation, and reputational harm.

2. Company-Specific Risks

Direct Installation Channel Dependency: Unlike many competitors, Johnson Controls relies on a direct sales channel for a substantial portion of its revenue. A decline in this installation business could reduce product pull-through and limit long-term service and retrofit revenue.
Sustainability Commitments: Johnson Controls has committed to net-zero carbon emissions for Scope 1 and 2 by 2040. Failure to meet these targets or the need to prioritize other investments could result in adverse publicity and negative reactions from investors and activist groups.
Labor Force Composition: Approximately 87,000 people are employed worldwide, with 21% covered by collective bargaining agreements. Potential work stoppages or labor shortages in skilled trades could limit Johnson Controls's ability to scale operations and convert backlog.
Jurisdictional Legal Protections: As an Irish-incorporated company, Johnson Controls is governed by the Irish Companies Act. Shareholders may have more difficulty protecting their interests compared to U.S. corporations, as Irish law generally limits personal rights of action against directors.

3. Regulatory/Legal Risks

Environmental Remediation: Johnson Controls faces potential liability for environmental contamination at current and former sites, including the Fire Technology Center and Stanton Street facility in Marinette, Wisconsin. This includes cleanup of PFAS, arsenic, and solvents.
Asbestos Litigation: Johnson Controls and certain subsidiaries are defendants in personal injury lawsuits alleging exposure to asbestos-containing materials. Unfavorable rulings or settlements could have a material adverse impact on financial condition.
Global Tax Reform: The OECD’s Pillar Two Global Minimum Tax (15%) is applicable to Johnson Controls in fiscal 2025. Changes in tax laws in Ireland, the U.S., or other jurisdictions could increase Johnson Controls's effective tax rate.
Anti-Bribery Compliance: Johnson Controls operates in regions with high risks of governmental corruption. Violations of the U.S. Foreign Corrupt Practices Act or the U.K. Bribery Act could result in criminal or civil sanctions and lost revenue.

4. Financial Impact Map

Technological Disruption → Results of Operations → Significant resource investment required for R&DR&DResearch & Development — spending on creating new products or technologies and acquisitions. Operating Model Execution → Profitability → Restructuring charges and potential failure to realize productivity improvements. Product Quality and Liability → Operating Costs → Expenses related to recalls, field corrective actions, and legal defense costs exceeding insurance. Supply Chain and Inflation → Revenue / Profit Margins → Inability to convert backlog into revenue and margin compression due to unrecoverable cost inflation. Cybersecurity and Data Privacy → Results of Operations → Costs associated with incident response, regulatory fines, and potential loss of sales due to reputational damage.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-Q	Feb 2026	Dec 2025
14A	Jan 2026	—
10-K	Nov 2025	Sep 2025