Johnson Controls Delivers Record Backlog and Double-Digit EPS Growth; FY26 Guidance Signals Steady Momentum
Strong Earnings and Record Backlog Highlight Consistent Demand
Johnson Controls International plc (NYSE:JCI) capped off its fiscal year 2025 with a combination of steady top-line growth and notable improvements in profitability, reporting full-year adjusted EPS of $3.76 and a record backlog that underscores enduring customer demand for advanced building solutions.
For the quarter ended September 30, 2025, JCI reported sales of $6.44 billion, up 3% year-over-year, with organic sales rising 4%. For the full year, sales increased to $23.6 billion—driven by a 6% increase in organic sales. Adjusted net income for Q4 reached $798 million. The company’s backlog in its Systems and Services segment climbed to $14.9 billion, representing a 13% organic increase, while Q4 orders advanced 6% year-over-year. CEO Joakim Weidemanis cited JCI’s "technology leadership in advanced data center cooling and decarbonization solutions" as key differentiators fueling ongoing growth.
Americas and EMEA Deliver Gains; APAC Faces Volume Pressures
| Region | Q4 Sales ($M) | YoY Change | Segment EBITA Margin (%) | Backlog Growth YoY |
|---|---|---|---|---|
| Americas | 4,325 | +1% | 19.5 | +13% |
| EMEA | 1,337 | +13% | 15.0 | +14% |
| APAC | 780 | -3% | 17.8 | +15% |
The Americas region saw continued strength in Applied HVAC & Controls, with orders up 9% organically. Segment EBITA margin edged up to 19.5%. EMEA outperformed with 13% sales growth, reflecting broad demand and margin improvement (up 110 basis points), aided by positive operating leverage. In contrast, APAC posted a 3% sales decline as lower volumes in China impacted results. Still, backlog rose 15% year-over-year, pointing to future recovery opportunities.
Free Cash Flow Surges Amidst Portfolio Simplification
Johnson Controls completed the sale of its Residential and Light Commercial HVAC business to Bosch Group, bringing in approximately $6.9 billion in cash. This transaction contributed to the year’s significant liquidity, as adjusted free cash flow hit $2.5 billion and adjusted free cash flow conversion reached 102%.
| Metric | FY25 Value | FY24 Value | YoY Change |
|---|---|---|---|
| Adjusted Free Cash Flow ($B) | 2.50 | 1.84 | +36% |
| Adjusted EPS | 3.76 | 3.21 | +17% |
| Dividends Paid ($B) | 0.98 | 1.00 | -2% |
Alongside dividends of $243 million in Q4 and the initiation of a $5 billion accelerated share repurchase, the balance sheet showed discipline and commitment to shareholder returns. Net debt to adjusted EBITDA held steady at 2.4x.
FY26 Outlook Points to Sustained Growth and Operating Leverage
Looking forward, JCI’s guidance anticipates organic sales growth in the mid-single digits and continued margin expansion through operating leverage (~50% for the year). The company is targeting FY26 adjusted EPS of about $4.55, with adjusted free cash flow conversion expected at roughly 100%.
- Q1 FY26 Guidance: Organic sales growth ~3%; Adjusted EPS ~$0.83
- FY26 Full Year Guidance: Mid-single digit organic sales growth; Adjusted EPS ~$4.55; Operating leverage ~50%
JCI credits its technology innovation and portfolio streamlining for its resilience, especially as its order pipeline remains robust across critical verticals including data centers, healthcare, and sustainability-driven infrastructure.
Key Takeaway: Backlog and Cash Flow Underpin Steady Value Creation
Despite macroeconomic challenges and uneven performance in APAC, Johnson Controls exits FY25 in a position of strength. Investors may find the expanding backlog and free cash flow particularly encouraging, especially in an environment increasingly favoring decarbonization and digital building technologies. With portfolio actions complete and clear guidance for FY26, JCI’s execution around core markets and technology leadership sets up a narrative of consistency and resilience heading into the next fiscal year.
Contact Information:
If you have feedback or concerns about the content, please feel free to reach out to us via email at support@marketchameleon.com.
About the Publisher - Marketchameleon.com:
Marketchameleon is a comprehensive financial research and analysis website specializing in stock and options markets. We leverage extensive data, models, and analytics to provide valuable insights into these markets. Our primary goal is to assist traders in identifying potential market developments and assessing potential risks and rewards.
NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated and may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices and were not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.
The information is provided for informational purposes only and should not be construed as investment advice. All stock price information is provided and transmitted as received from independent third-party data sources. The Information should only be used as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments and trading strategies. The Company does not guarantee the accuracy, completeness or timeliness of the Information.
Disclosure: This article was generated with the assistance of AI