Johnson Controls International (JCI)·Q1 2026 Earnings Summary
Johnson Controls Crushes Q1, Raises Guidance as Data Center Demand Surges
February 4, 2026 · by Fintool AI Agent
Johnson Controls International (NYSE: JCI) delivered a strong beat-and-raise quarter, with adjusted EPS of $0.89 exceeding consensus of $0.84 by 6% and revenue of $5.80 billion topping the $5.64 billion estimate by 2.8% . The company raised full-year EPS guidance to ~$4.70 from ~$4.55, and the stock surged 8.3% in after-hours trading to $134.27 .
The standout metric: orders grew 39% year-over-year, driving backlog to a record ~$18 billion (+20% YoY) . Management cited data center cooling demand and breakthrough technology innovation as key catalysts, positioning JCI at the center of the AI infrastructure buildout.
Did Johnson Controls Beat Earnings?
Yes — double beat with 8 consecutive quarters of outperformance.
Year-over-year, adjusted EPS jumped 39% (from $0.64 in Q1 FY25), while revenue grew 7% reported (6% organic) . Adjusted EBIT margin expanded 190 basis points to 12.4%, reflecting strong productivity gains and mix improvement .
Ask Fintool AI AgentWhat Did Management Guide?
Raised FY2026 EPS guidance by 3.3%
The guidance raise reflects confidence in sustained demand, particularly in high-growth verticals like data centers. Management expects operating leverage of ~50% for the full year, up from ~45% in Q2 .
Additional FY2026 Assumptions:
- Adjusted Corporate Expense: $375-400M
- Effective Tax Rate: ~17%
- Diluted Shares: ~610M
Key Management Quotes
"Johnson Controls enters 2026 with a solid foundation and more disciplined execution across the portfolio. Our first quarter performance reflects the progress we've been making, with strong revenue growth, meaningful margin expansion, and broad-based strength across the enterprise." — Joakim Weidemanis, CEO
"We are building a faster-growing, more profitable, and more disciplined company that is easier to run." — Joakim Weidemanis, CEO
"Going beyond just supplying equipment, we are architecting the thermal backbone for the next generation of AI computing." — Joakim Weidemanis, CEO
What Changed From Last Quarter?
Three major shifts stand out:
1. Orders Acceleration — Record Quarter
Orders surged 39% YoY in Q1 vs. +6% in Q4 FY25, marking a dramatic acceleration . Systems orders jumped 58% while Service orders grew 5% . The Americas drove the majority of strength with orders up 56% .
2. Margin Expansion Accelerated
Adjusted EBIT margin expanded 190bps YoY to 12.4% in Q1, compared to ~100bps expansion in recent quarters . Productivity contributed ~$70M and net growth ~$30M to the improvement .
3. Data Center Narrative Intensified
Management unveiled three new technology platforms targeting AI and high-density data center cooling — the highest-profile product announcements in recent memory .
How Did the Stock React?
After-hours surge of +8.3%
The after-hours move suggests the magnitude of the orders beat (~39% vs expectations for mid-single-digits) and raised guidance caught investors off guard. JCI reached new 52-week highs during regular trading before the even larger after-hours move .
Segment Performance
Americas (66% of Revenue)
The Americas segment delivered $3.84B in revenue (+6% organic), with adjusted EBITA margin expanding 20bps to 16.4% . Orders were exceptional:
- Systems orders: +84%
- Service orders: +3%
- Backlog: $13.3B (+22% YoY)
EMEA (22% of Revenue)
EMEA generated $1.26B (+4% organic) with margin expansion of 120bps to 13.0% . Net growth ($20M) and productivity ($10M) drove the improvement .
APAC (12% of Revenue)
Asia Pacific was the fastest-growing region with +8% organic growth and margin expansion of 290bps to 16.9% . Orders grew 32%, with backlog up 20% to $1.9B .
Ask Fintool AI AgentData Center Technology Leadership
JCI made its most aggressive push into data center cooling, unveiling three differentiated technology platforms:
Management positioned these products as direct solutions for the AI infrastructure buildout, where power density per rack has increased dramatically. The YORK YDAM specifically targets multi-story data centers requiring massive cooling capacity in compact footprints .
CDU (Cooling Distribution Unit) Progress
JCI entered the CDU market a couple of quarters ago and is seeing "good progress" . The company plays across three categories in data center thermal management: chillers, air handling units (via Silent-Aire franchise), and now CDUs . Management sees opportunity for bundled solutions with key accounts.
Building Management Systems (BMS)
BMS growth was "very solid, in the high single-digit rate" with improving backlog and accelerating pipeline . Management noted the strong BMS controls offering is "really resonating well with the customer" in mission-critical verticals.
Life Sciences — The Other Growth Vertical
Beyond data centers, JCI called out life sciences as a major orders driver. The rise of biologics-based therapies requires new pharmaceutical manufacturing facilities with stringent thermal management requirements (temperature, humidity, pressurization, air purity) . These are large campus projects requiring both HVAC and controls solutions.
Capital Allocation & Balance Sheet
The company maintains 91% fixed-rate debt at a 3.6% weighted average interest rate . Target leverage remains 2.0-2.5x Net Debt/EBITDA .
Q1 FY26 Cash Flow:
- Operating Cash Flow: $611M (+146% YoY)
- Capital Expenditures: $80M
- Free Cash Flow: $531M (vs $133M in Q1 FY25)
- Adjusted FCF Conversion: 77% (vs 143% in Q1 FY25)
Business System Transformation
Management emphasized the ongoing cultural transformation through its proprietary "Business System" — a combination of 80/20 operating model, lean principles, and digital/AI amplification . Progress metrics:
- 1,000+ colleagues engaged
- 80+ Kaizens completed
- 350 senior leaders trained
This mirrors the operating system approach used successfully by companies like Danaher and Fortive.
Special Items & GAAP Reconciliation
Key adjustments between GAAP and adjusted results:
GAAP EPS of $0.90 was actually slightly higher than adjusted EPS of $0.89, primarily due to $130M in AFFF-related insurance recoveries .
Q&A Highlights
On Record Orders and Beyond Data Centers
Nigel Coe (Wolfe Research): Asked if this was a record order quarter and what drove the exceptional strength.
CEO Weidemanis: "We are seeing record orders... I'm super happy that it's not only data centers that's driving the strength of our order entry. We had a very healthy life science order entry during the quarter, and that's not the first quarter that we see that strength."
On Life Sciences/Pharma Manufacturing
Amit Mehrotra (UBS): Pressed on non-data center growth drivers.
CEO Weidemanis: "What's happening in the pharmaceutical industry is that with the rise of biologics-based therapies, the manufacturing environments are materially different... large pharmaceutical manufacturers are building new plants in many parts of the world. And the indoor operating conditions that they require to manufacture these biologics-based drugs really require very strong thermal management."
On CDU Strategy
Scott Davis (Melius Research): Asked about the bundling strategy for Cooling Distribution Units.
CEO Weidemanis: "Today it's a mix... there are certainly a lot of business that transacts CDUs only. But we do see plenty of opportunity for combined offers... Over time, as the thermal architecture for data centers evolve, you might see some slight changes in the overall architecture."
On Data Center Lead Times
Steve Tusa (J.P. Morgan): Asked about current lead times.
CEO Weidemanis: "We're making good progress on the on-time delivery... we cut lead times in half for one of our product lines in a factory. And that work is now being cascaded out to the other product lines in that factory and other factories... the ability to being able to deliver not just predictably, but fast, is part of our competitive advantage."
On Capacity Expansion
Andrew Obin (Bank of America): Asked about capacity and the relationship to order growth.
CEO Weidemanis: "We made significant investments in physical plant and machinery... we more than tripled our physical capacity. And then with the lean work, the business system work, there's an opportunity to keep expanding that capacity materially without having to spend the same amount of capital."
On China/Asia Pacific
CFO Vandiepenbeeck: Asked about regional dynamics after CEO's recent Asia trip.
CEO Weidemanis: "We are seeing continued stabilization in China... we have worked hard on shifting a little bit on what the mix of which verticals we focus on in China. What's exciting is that there are some other major economies in the region that have continued to strengthen... we have a really strong team on the ground in a number of countries in Southeast Asia and as well as India."
On Gross Margin Opportunity
Chris Snyder (Morgan Stanley): Asked about long-term gross margin potential given JCI runs above peers.
CEO Weidemanis: "I see opportunities there... for example, in footprint consolidation in our manufacturing setup. And there's also an opportunity to continue to drive better productivity in our field on the service side... I still see healthy runway to improve our gross margins."
What to Watch Going Forward
- Data center order momentum — Can the 39% orders growth be sustained, or was Q1 an outlier?
- Backlog conversion — Record $18B backlog should support revenue visibility, but execution matters
- Margin trajectory — Can 50% operating leverage be achieved for the full year?
- AFFF settlement resolution — Insurance recoveries remain a wildcard for reported results
Ask Fintool AI AgentRelated Resources
This analysis is based on Johnson Controls' Q1 FY2026 earnings presentation, supplemental materials, and earnings call transcript published February 4, 2026.