Company Reports

Johnson Controls offers a variety of HVAC solutions serving global residential, light commercial, and more complex, applied commercial markets. Owing to the high quality of its products and the significant efficiency gains achieved by its customers, the company is estimated to be the number-one or -two player in commercial HVAC alongside Trane and to have approximately 30% market share. The company sold its residential and light commercial HVAC business to Bosch in 2025. It maintains a direct salesforce as it offers bespoke commercial solutions and has a significant office footprint to remain close to customers. The company operates an asset-light model, so it is a highly cash-generative business that can fund its product development, growth initiatives, and shareholder remuneration policies.

Johnson Controls reported 9% sales growth to $6.6 billion and EPS growth of 15% to $1.23 per share. More impressively, orders grew 27%, and the backlog grew 32% to $21 billion, which bodes well for future growth.

Johnson Controls reported 8% revenue growth (6% organic) to $6.1 billion. Adjusted EPS of $1.91 grew 45% along with 30% order growth and a record backlog of $20 billion. The company bumped up fiscal 2026 EPS guidance 3% to $4.85.

Johnson Controls offers a variety of HVAC solutions serving global residential, light commercial, and more complex, applied commercial markets. Owing to the high quality of its products and the significant efficiency gains achieved by its customers, the company is estimated to be the number-one or -two player in commercial HVAC alongside Trane and to have approximately 30% market share. The company sold its residential and light commercial HVAC business to Bosch in 2025. It maintains a direct salesforce as it offers bespoke commercial solutions and has a significant office footprint to remain close to customers. The company operates an asset-light model, so it is a highly cash-generative business that can fund its product development, growth initiatives, and shareholder remuneration policies.

We are relaunching coverage of Johnson Controls. The company is a top-two player in global commercial HVAC (60% of sales) and has a market leadership position in building automation solutions such as fire and security systems (40% of sales).

Johnson Controls offers a variety of HVAC solutions serving global residential, light commercial, and more complex, applied commercial markets. Owing to the high quality of its products and the significant efficiency gains achieved by its customers, the company is estimated to be the number-one or -two player in commercial HVAC alongside Trane and to have approximately 30% market share. The company sold its residential and light commercial HVAC business to Bosch in 2025. It maintains a direct salesforce as it offers bespoke commercial solutions and has a significant office footprint to remain close to customers. The company operates an asset-light model, so it is a highly cash-generative business that can fund its product development, growth initiatives, and shareholder remuneration policies.

We will discontinue analyst coverage of Johnson Controls on or about Nov. 7.

Johnson Controls' fiscal third-quarter organic revenue increased 6% year over year, and adjusted segment EBITA margin grew 20 basis points to 17.6%. Management now expects full-year adjusted EPS to be between $3.65-$3.68, with an adjusted free cash flow conversion rate of greater than 100%.

Before 2016, the market had mostly viewed Johnson Controls as an automotive-parts company because about two thirds of its sales came from automakers. However, after merging with Tyco and spinning off its automotive seating business, now known as Adient, in late 2016, Johnson Controls has become a more profitable and less cyclical pure-play building technology firm that manufactures HVAC systems and controls, fire and security products, and building automation solutions.

Before 2016, the market had mostly viewed Johnson Controls as an automotive-parts company because about two thirds of its sales came from automakers. However, after merging with Tyco and spinning off its automotive seating business, now known as Adient, in late 2016, Johnson Controls has become a more profitable and less cyclical pure-play building technology firm that manufactures HVAC systems and controls, fire and security products, and building automation solutions.

Johnson Controls' fiscal second-quarter organic revenue increased 7% year on year, and adjusted segment EBITA margin expanded 180 basis points to 16.7%. Management now expects full-year adjusted earnings per share of $3.60, the high end of guidance, due to slightly higher profit margin expectations.

On April 2, President Trump announced sweeping tariffs, featuring a minimum 10% tariff on all US imports and higher tariff rates for select countries. Goods imported from Canada and Mexico that comply with the United States-Mexico-Canada Agreement remain exempt from tariffs.

Shares of Johnson Controls surged higher on Feb. 5 after the firm released strong fiscal first -quarter results and concluded its CEO search, hiring Danaher alum Joakim Weidemanis. Organic revenue grew a robust 10% year over year and adjusted segment EBITA margin expanded 200 basis points to 15%.

Before 2016, the market had mostly viewed Johnson Controls as an automotive-parts company because about two thirds of its sales came from automakers. However, after merging with Tyco and spinning off its automotive seating business, now known as Adient, in late 2016, Johnson Controls has become a more profitable and less cyclical pure-play building technology firm that manufactures HVAC systems and controls, fire and security products, and building automation solutions.

We have consolidated our recent DeepSeek-related coverage in this note. Artificial intelligence affects companies across much of our coverage, including semiconductors, cloud infrastructure, software, utilities, and energy.

Shares of heating, ventilation, and air-conditioning manufacturers Carrier, Johnson Controls, and Trane Technologies sold off on Jan. 27 in reaction to the release of new artificial intelligence technology from China's DeepSeek, which could redefine long-term growth expectations for data centers.

Johnson Controls' fiscal fourth-quarter organic revenue increased 10% year over year, adjusted segment EBITA margin expanded 260 basis points to 18.6%, and adjusted EPS of $1.28 grew 22%. Management expects mid-single-digit organic revenue growth in fiscal 2025 with 6%-9% adjusted EPS growth.

Before 2016, the market had mostly viewed Johnson Controls as an automotive-parts company because about two thirds of its sales came from automakers. However, after merging with Tyco and spinning off its automotive seating business, now known as Adient, in late 2016, Johnson Controls has become a more profitable and less cyclical pure-play building technology firm that manufactures HVAC systems and controls, fire and security products, and building automation solutions.

Before 2016, the market had mostly viewed Johnson Controls as an automotive-parts company because about two thirds of its sales came from automakers. However, after merging with Tyco and spinning off its automotive seating business, now known as Adient, in late 2016, Johnson Controls has become a more profitable and less cyclical pure-play building technology firm that manufactures HVAC systems and controls, fire and security products, and building automation solutions.

Shares of Johnson Controls moved higher on July 31 after the firm released its fiscal third-quarter earnings and announced that CEO George Oliver will retire. Oliver came to Johnson Controls with the 2016 Tyco merger and has seen the firm through significant change, including most recently the announced sale of the residential and light commercial heating, ventilation, and air-conditioning businesses (see our July 24 analyst note). Considering that, in our view, Johnson Controls’ transformation will mostly be over with this divestiture, and the involvement of an activist investor (Elliot Investment Management), we weren’t overly surprised that Oliver decided to step down. With Johnson Controls’ transformation mostly behind it, we think strong execution and a continued focus on delivering differentiated service and product offerings will be key for the company’s next phase of growth. We’ve maintained our $72 per share fair value estimate as we don’t expect to materially change our near- or long-term forecasts.