By Johnson Controls International plc
Cision PR Newswire
CORK, Ireland — Johnson Controls, the global leader for smart, healthy and sustainable buildings, today details multi-year SG&A actions designed to further optimize the overall cost structure, enhance operational efficiency and deliver meaningful margin expansion. These actions will deliver annualized savings of $300 million by fiscal year-end 2023 and are incremental to ongoing improvements in underlying fundamentals.
The one-time pretax costs associated with these actions are estimated at $240 million, a majority of which is expected to be recorded in fiscal 2021. These costs will be excluded from the Company’s non-GAAP (adjusted) financial results. The cash impact associated with these costs is estimated to be $200 million and will be absorbed as part of reported free cash flow conversion.
As a result of these actions, the Company is raising its outlook for fiscal 2021 adjusted EPS, to a range of $2.50 to $2.60, compared to the prior range of $2.45 to $2.55. Adjusted Segment EBITA margin is now expected to expand by 60 to 90 basis points, versus an expansion of 40 to 60 basis points previously. Full year organic revenue growth of up low-to-mid single digits, and FCF conversion of 100% remain unchanged. Fiscal Q2 guidance is also unchanged.
“After four years of significant integration and transformation-related activities, today’s announcement builds upon the success of those actions and represents a critical step forward in further enhancing profitability at Johnson Controls,” said George Oliver, Chairman and CEO. “We have a number of attractive growth opportunities in front of us, and these actions will ensure that our cost structure is effectively optimized to deliver strong operating margin expansion as we continue to execute on our strategic growth priorities.”
As previously announced, Johnson Controls Chairman and Chief Executive Officer, George Oliver and Chief Financial Officer, Olivier Leonetti are scheduled to participate in both the Barclays Industrial Select Conference and Citi 2021 Global Industrials Conference today. Messrs. Oliver and Leonetti will comment on the cost actions and the impact to Fiscal 2021 guidance during these presentations. A slide presentation with additional details, as well as a link to the live webcast for each conference, is available on the “Events” section of the company’s website at: http://investors.johnsoncontrols.com/news-and-events/events-and-presentations.
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