Johnson Controls (JCI) Reports In-Line Q3 EPS; Will Spin Automotive Experience Business

Johnson Controls (NYSE: JCI) reported Q3 EPS of $0.91, in-line with the analyst estimate of $0.91. Revenue for the quarter came in at $9.61 billion versus the consensus estimate of $9.58 billion.

Johnson Controls announced today that it plans to pursue a tax-free spin-off of its Automotive Experience business. Following the separation, which is expected to close in approximately 12 months, the Automotive Experience business will operate as an independent, publicly traded company.

Once the transaction is completed, Bruce McDonald, Johnson Controls vice chairman and executive vice president, will serve as the chairman and CEO of the new company. Beda Bolzenius will serve as president and chief operating officer.

The new automotive company will benefit from strong existing relationships with customers, well established positions in growth markets including China, and will generate strong cash flow. Automotive Experience reported $22 billion in revenue in 2014.

As part of the spin-off preparation, Johnson Controls is initiating a comprehensive cost savings program. Additional details of the transaction will be provided as the separation process develops.

"This is a great opportunity for our Automotive Experience business to further its position as the global leader in automotive seating and interiors," said Alex Molinaroli, chairman and CEO of Johnson Controls. "At the same time, Johnson Controls will move forward with our multi-industrial strategies and make investments in our core growth platforms around buildings and energy storage."

Johnson Controls noted that on July 2, 2015, it completed the transaction to form a joint venture related to its automotive interiors business. The Yanfeng Automotive Interiors joint venture is the largest automotive interiors company in the world with annual revenues of approximately $8.5 billion. Beginning in the fiscal 2015 fourth quarter, the company will no longer consolidate the majority of the Automotive Interiors business and will report its share of the profits from the new joint venture as equity income.

The company also said it continues to expect the sale of its GWS business to CBRE to close in the fiscal 2015 fourth quarter, subject to final regulatory approvals. Completion of the HVAC joint venture with Hitachi is now expected in the fiscal 2016 first quarter.

For earnings history and earnings-related data on Johnson Controls (JCI) click here.

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