Johnson Controls International Plc (JCI) had a volatile Wednesday after the building solutions company reported fiscal third-quarter results that topped Wall Street estimates and raised its full-year outlook. The stock was down about 1.8% in afternoon trading, but the numbers themselves were strong.
Adjusted earnings came in at $1.42 per share, beating the analyst consensus of $1.30. Revenue rose to $6.61 billion from a year earlier, exceeding the $6.47 billion estimate. The company's backlog hit $21 billion, up 32% organically from last year.
Quarterly Performance
Orders increased 27% year over year, excluding acquisitions and currency impacts. Sales rose 9%, while organic sales were up 10%. Gross profit increased 10.2% to $2.47 billion, and gross margin expanded to 37.4% from 37.1%.
Regional Breakdown
Americas: Sales grew 11% to $4.50 billion, with organic sales also up 11%, driven by strength in Applied HVAC and double-digit growth in Products and Systems and Services. Orders jumped 37%, and backlog rose 40% to $15.9 billion, supported by sustained demand from data centers and other mission-critical facilities. Segment EBITA margin expanded 260 basis points to 21.1%.
Europe, Middle East and Africa (EMEA): Sales dipped 1% to $1.26 billion, but organic sales edged up 1%, constrained by ongoing conflict in the Middle East. Orders rose 6%, and backlog increased 14% to $3.1 billion. Segment EBITA margin improved 20 basis points to 14.3%, aided by pricing and productivity gains.
Asia-Pacific: Sales increased 15% to $846 million, with organic sales also up 15%, led by 20% growth in Products and Systems and continued strength in Applied HVAC. Orders rose 12%, and backlog grew 12% to $2.0 billion. Segment EBITA margin expanded 180 basis points to 21.2% on productivity improvements and favorable mix.
Cash Flow and Outlook
Johnson Controls ended the quarter with $641 million in cash. Operating cash flow surged to $1.29 billion from $787 million a year earlier, and free cash flow rose to $1.19 billion from $693 million.
CEO Joakim Weidemanis said demand for AI data centers, biopharma manufacturing, hospitals, and universities continued to support growth. He noted the company introduced an AI factory absorption chiller reference design that can reduce cooling electricity demand by about 44% by converting waste heat into cooling.
Weidemanis also highlighted the company's investment in Armada for modular data centers and progress with its Alloy investment in cooling distribution units, including recent certification from NVIDIA Corp. (NVDA).
Johnson Controls raised its full-year guidance and now expects organic sales growth of about 8%, up from its previous outlook of about 6%. For the fourth quarter, the company expects organic sales growth of 9% to 10% and adjusted earnings of about $1.55 per share, compared with the analyst consensus of $1.53.
Perhaps the most striking number: Johnson Controls said data centers are expected to account for about one-third of its revenue over the next three to five years, up from the high teens as a percentage of fiscal 2026 sales. That's a huge shift for a company that makes everything from HVAC systems to building controls, and it underscores how AI and cloud computing are reshaping industrial demand.
