- Honeywell International, Inc.
- Siemens Smart Infrastructure, an operating group of Siemens AG
- Schneider Electric SA
- Carrier Global Corporation
- Trane Technologies plc
- Daikin Industries, Ltd.
- Lennox International, Inc.
- GC Midea Holding Co, Ltd.
- Gree Electric Appliances, Inc. 

These companies are mentioned as competitors in the HVAC equipment, security, fire-detection, fire suppression, and controls markets in both residential and non-residential sectors  **[0000833444-24-000064_jci-20240930.htm:9]** .

5678f094da854eedd7426e6cea181e7dc2f1913c02de85ebad5c11c8f24ad54a

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (USD, millions)

Proceeds from Debt (USD, millions)

Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

1f75e4909f6ead5f4a88eb94abdc9ab7f71314e1bbc52b071930751a8de79fdd

ba1488fe1ee0b9c3b150cf624dc581e709e9783529684d2d566c5ee908d9fa4d

| Geographical Segment | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Building Solutions North America (USD Million) | **2,367**  **[0000833444-23-000003_exh991-johnsonctrlsq1fy23.htm:1]**  | **2,520**  **[0000833444-23-000011_exh991-johnsonctrlsq2fy23.htm:1]**  | **2,665**  **[0000833444-23-000030_jci-20230630.htm:11]**  | **2,800**  **[0000833444-23-000044_exh991-johnsonctrlsq4fy23.htm:1]**  | **2,487**  **[0000833444-24-000011_jci-20231231.htm:22]**  | **2,739**  **[0000833444-24-000029_jci-20240331.htm:10]**  | **2,899**  **[0000833444-24-000049_q3exh991xq3fy24earningsrel.htm:0]**  | **3,223**  **[0000833444-24-000060_q4exh991xq4fy24earningsrel.htm:0]**  |
| Building Solutions EMEA/LA (USD Million) | **975**  **[0000833444-23-000003_exh991-johnsonctrlsq1fy23.htm:2]**  | **1,031**  **[0000833444-23-000011_exh991-johnsonctrlsq2fy23.htm:2]**  | **1,045**  **[0000833444-23-000030_jci-20230630.htm:11]**  | **1,045**  **[0000833444-23-000044_exh991-johnsonctrlsq4fy23.htm:2]**  | **1,038**  **[0000833444-24-000011_jci-20231231.htm:22]**  | **1,064**  **[0000833444-24-000029_jci-20240331.htm:10]**  | **1,081**  **[0000833444-24-000049_q3exh991xq3fy24earningsrel.htm:1]**  | **1,113**  **[0000833444-24-000060_q4exh991xq4fy24earningsrel.htm:1]**  |
| Building Solutions Asia Pacific (USD Million) | **646**  **[0000833444-23-000003_exh991-johnsonctrlsq1fy23.htm:2]**  | **667**  **[0000833444-23-000011_exh991-johnsonctrlsq2fy23.htm:2]**  | **736**  **[0000833444-23-000030_jci-20230630.htm:11]**  | **697**  **[0000833444-23-000044_exh991-johnsonctrlsq4fy23.htm:2]**  | **507**  **[0000833444-24-000011_jci-20231231.htm:22]**  | **491**  **[0000833444-24-000029_jci-20240331.htm:10]**  | **575**  **[0000833444-24-000049_q3exh991xq3fy24earningsrel.htm:1]**  | **664**  **[0000833444-24-000060_q4exh991xq4fy24earningsrel.htm:1]**  |

b721cb8966b54c8fb48df7db3422bba92c8fd4780e2422403e0fdeacc02cab41

Total backlog for Building Solutions and Global Products (USD billions)

Backlog for Building Solutions North America (USD billions)

Year-over-Year Change in Backlog for Building Solutions North America (percentage)

Backlog for Building Solutions EMEA/LA (USD billions)

Year-over-Year Change in Backlog for Building Solutions EMEA/LA (percentage)

Backlog for Building Solutions Asia Pacific (USD billions)

Year-over-Year Change in Backlog for Building Solutions Asia Pacific (percentage)

Total Building Solutions backlog (USD billions)

Year-over-Year Change in Total Building Solutions backlog (percentage)

Orders for Building Solutions North America (USD billions)

Year-over-Year Change in Orders for Building Solutions North America (percentage)

Orders for Building Solutions EMEA/LA (USD billions)

Year-over-Year Change in Orders for Building Solutions EMEA/LA (percentage)

Orders for Building Solutions Asia Pacific (USD billions)

Year-over-Year Change in Orders for Building Solutions Asia Pacific (percentage)

Total orders for Building Solutions (USD billions)

Year-over-Year Change in Total orders for Building Solutions (percentage)

Remaining performance obligations (USD billions)

1e3a36b0ef24c8f856b7805150d0df505f0bf8545472ed855af357ac41f3ab35

Johnson Controls International plc (JCI) is a global leader in smart, healthy, and sustainable building solutions, serving customers in over 150 countries. The company operates through four business segments, providing a range of services including the design, sale, installation, and servicing of HVAC systems, controls, building management, refrigeration, integrated electronic security, and fire-detection and suppression systems **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:7]** **[0000833444-23-000048_jci-20230930.htm:139]**. JCI also offers energy-efficiency solutions and technical services, leveraging its extensive product portfolio and digital capabilities through its OpenBlue platform to deliver integrated and customizable solutions **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:8]**.

1. **Global Products** - Designs, manufactures, and sells HVAC equipment, controls software and services, refrigeration equipment and controls, fire protection and suppression systems, and security products such as intrusion security, anti-theft devices, access control, and video surveillance systems **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:139]**.
2. **Building Solutions North America** - Designs, sells, installs, and services HVAC systems, controls, building management, refrigeration, integrated electronic security, and integrated fire-detection and suppression systems **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:7]** **[0000833444-23-000048_jci-20230930.htm:139]**.
3. **Building Solutions EMEA/LA** - Provides similar offerings as the North America segment, focusing on the Europe, Middle East, Africa, and Latin America regions **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:7]** **[0000833444-23-000048_jci-20230930.htm:139]**.
4. **Building Solutions Asia Pacific** - Offers the same range of products and services as other regional segments, tailored for the Asia Pacific market **[0000833444-24-000064_jci-20240930.htm:8]** **[0000833444-23-000048_jci-20230930.htm:7]** **[0000833444-23-000048_jci-20230930.htm:139]**.

50d934922268e7639384b0bacffbbcbb17aed2caf513f675d7d7184fe6ee357b

1. The Global Products business reported an adjusted segment EBITDA margin expansion of **700 basis points to 28%** in Q4  **[JCI_3406032_2]** ; were there any one-time factors or mix effects contributing to this, and how sustainable are these margin levels going forward?
2. With the announced restructuring plan expected to deliver **$500 million of benefits over time**  **[JCI_3406032_21]** , can you provide more detail on the specific areas targeted for cost reductions, and explain how and when these benefits will be reflected in your financials?
3. You indicated that the effective tax rate is expected to increase by **400 to 500 basis points** in fiscal **2026** due to global tax reforms  **[JCI_3406032_13]** ; what specific changes are driving this increase, and what strategies are you considering to mitigate its impact on net earnings?
4. Given your record backlog of **$13.1 billion** at the end of fiscal 2024 driven by data center demand  **[JCI_3406032_1]** , do you expect backlog levels to remain consistent, decline, or grow in fiscal 2025, especially considering potential fluctuations in key verticals?
5. Aside from data centers, can you elaborate on the performance of applied sales in North America across other key verticals such as health care, manufacturing, and commercial real estate, and highlight any positive or negative trends affecting these sectors  **[JCI_3406032_14]** ?

2a68e904870bcf9932446b5488e390d5520a798fb4691cbdab0887f3bf93877e

### Q4 2024 Earnings Call
- **Issued Period:** Q4 2024
- **Guided Period:** FY 2025
- **Guidance:**
  - **Adjusted EPS:** $3.40 to $3.50 per share, growth of 6% to 9% from fiscal 2024  **[JCI_3406032_3]** .
  - **Organic Sales Growth:** Mid-single digits for both Q1 and the full year  **[JCI_3406032_3]** .
  - **Adjusted Segment Margins:** Expand over 50 basis points for the full year  **[JCI_3406032_3]** .
  - **Free Cash Flow Conversion:** 85% or greater  **[JCI_3406032_3]** .
  - **First Quarter Guidance:**
    - **Organic Sales Growth:** Mid-single digits  **[JCI_3406032_3]** .
    - **Adjusted Segment Margin Expansion:** Over 100 basis points to approximately 14.5%  **[JCI_3406032_3]** .
    - **Adjusted EPS:** $0.57 to $0.60, growth of 24% to 30%  **[JCI_3406032_3]** .
  - **Capital Deployment:** Excludes capital deployment from divestiture proceeds  **[JCI_3406032_3]** .
  - **Restructuring Plan:** $400 million in expenses over three years, $500 million in annual cost savings  **[JCI_3406032_3]** .

### Q3 2024 Earnings Call
- **Issued Period:** Q3 2024
- **Guided Period:** Q4 2024 and FY 2024
- **Guidance:**
  - **Fourth Quarter 2024:**
    - **Sales Growth:** Approximately 7%  **[JCI_3395281_5]** .
    - **Segment EBITA Margin:** Approximately 19%  **[JCI_3395281_5]** .
    - **Adjusted EPS:** $1.23 to $1.26  **[JCI_3395281_5]** .
  - **Full Year 2024:**
    - **Adjusted EPS:** $3.66 to $3.69  **[JCI_3395281_5]** .
    - **Organic Sales Growth:** Approximately 3%  **[JCI_3395281_5]** .
    - **Segment EBITA Margin Expansion:** Approximately 110 basis points  **[JCI_3395281_5]** .
    - **Adjusted Free Cash Flow Conversion:** Approximately 85% or better  **[JCI_3395281_5]** .

### Q2 2024 Earnings Call
- **Issued Period:** Q2 2024
- **Guided Period:** Q3 2024 and FY 2024
- **Guidance:**
  - **Third Quarter 2024:**
    - **Sales Growth:** Low single-digit growth  **[JCI_3381848_4]** .
    - **Segment EBITDA Margin:** Approximately 17%  **[JCI_3381848_4]** .
    - **Adjusted EPS:** $1.05 to $1.10  **[JCI_3381848_4]** .
  - **Full Year 2024:**
    - **Sales Growth:** Mid-single-digit growth  **[JCI_3381848_4]** .
    - **Segment Margins:** Expand by 50 to 75 basis points  **[JCI_3381848_4]** .
    - **Adjusted EPS:** $3.60 to $3.75  **[JCI_3381848_4]** .
    - **Adjusted Free Cash Flow Conversion:** Approximately 85%  **[JCI_3381848_4]** .

### Q1 2024 Earnings Call
- **Issued Period:** Q1 2024
- **Guided Period:** Q2 2024 and FY 2024
- **Guidance:**
  - **Second Quarter 2024:**
    - **Sales:** Approximately flat year-on-year  **[JCI_3371133_5]** .
    - **Segment EBITA Margin:** Approximately 14.5%  **[JCI_3371133_5]** .
    - **Adjusted EPS:** $0.74 to $0.78  **[JCI_3371133_5]** .
  - **Full Year 2024:**
    - **Top Line Growth:** Mid-single digit growth  **[JCI_3371133_5]** .
    - **Segment EBITA Margin Expansion:** 50 to 75 basis points  **[JCI_3371133_5]** .
    - **Adjusted EPS:** $3.60 to $3.75  **[JCI_3371133_5]** .
    - **Adjusted Free Cash Flow Conversion:** Approximately 85%  **[JCI_3371133_5]** .

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| Program Details          | Program 1          |
|--------------------------|--------------------|
| Approval Date            | March 2021  **[0000833444-24-000064_jci-20240930.htm:131]**      |
| End Date/Duration        | No expiration date  **[0000833444-24-000064_jci-20240930.htm:131]**  |
| Total additional amount  | N/A                |
| Remaining authorization amount | $1.7 billion  **[0000833444-24-000064_jci-20240930.htm:131]** **[0000833444-24-000064_jci-20240930.htm:63]**  |
| Details                  | May be amended or terminated by the Board of Directors at any time without prior notice  **[0000833444-24-000064_jci-20240930.htm:131]**  |

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2ed57b48bd4b799380db4a270cde060d33a11de2a5427dcb2ea533cb7b2b0acd

**Quarterly guidance for Q1 2025:**
- **Organic Sales Growth**: Mid-single digits  **[JCI_3406032_3]**  (no prior guidance)  
- **Adjusted Segment Margin Expansion**: Over 100 basis points to approximately 14.5%  **[JCI_3406032_3]**  (no prior guidance)  
- **Adjusted EPS**: $0.57 to $0.60  **[JCI_3406032_3]**  (no prior guidance)

**Annual guidance for FY 2025:**
- **Adjusted EPS**: $3.40 to $3.50  **[JCI_3406032_3]**  (no prior guidance)  
- **Organic Sales Growth**: Mid-single digits  **[JCI_3406032_3]**  (no prior guidance)  
- **Adjusted Segment Margins**: Expand over 50 basis points  **[JCI_3406032_3]**  (no prior guidance)  
- **Free Cash Flow Conversion**: 85% or greater  **[JCI_3406032_3]**  (no prior guidance)  
- **Capital Deployment**: Excludes capital deployment from divestiture proceeds  **[JCI_3406032_3]**  (no prior guidance)  
- **Restructuring Plan**: $400 million in expenses over three years, $500 million in annual cost savings  **[JCI_3406032_3]**  (no prior guidance)

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| Name                     | Position                                                                 | Start Date       | Short Bio                                                                                                                                                                                                 |
|--------------------------|--------------------------------------------------------------------------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| George R. Oliver         | Chairman and Chief Executive Officer                                     | September 2017   | George R. Oliver has been serving as the Chairman and CEO of JCI since September 2017. Previously, he was the President and COO following the merger of Johnson Controls and Tyco in September 2016  **[0001193125-24-011239_d554585ddef14a.htm:16]** **[0000833444-23-000048_jci-20230930.htm:57]** **[0000833444-24-000055_ex991.htm:1]** .                                  |
| Marc Vandiepenbeeck      | Executive Vice President and Chief Financial Officer                     | January 2024     | Marc Vandiepenbeeck has served as EVP and CFO of JCI since January 2024. He previously held the position of VP and President, Building Solutions, EMEA and Latin America from August 2023 until November 2024  **[0000833444-24-000064_jci-20240930.htm:62]** .                              |
| John Donofrio            | Executive Vice President and General Counsel                             | November 2017    | John Donofrio has served as EVP and General Counsel of JCI since November 2017. Before joining JCI, he was VP, General Counsel, and Secretary of Mars, Incorporated from October 2013 to November 2017  **[0000833444-23-000048_jci-20230930.htm:56]** **[0000833444-24-000064_jci-20240930.htm:60]** **[0000833444-22-000043_jci-20220930.htm:47]** .                                |
| Marlon Sullivan          | Executive Vice President and Chief Human Resources Officer               | September 2021   | Marlon Sullivan has served as EVP and CHRO at JCI since September 2021. Before joining JCI, he was the SVP of Human Resources at Delta Airlines from January 2021 to September 2021  **[0000833444-24-000064_jci-20240930.htm:62]** **[0000833444-23-000048_jci-20230930.htm:58]** **[0000833444-22-000043_jci-20220930.htm:49]** .                                                  |
| Lei Zhang Schlitz        | Vice President and President, Global Products                            | November 2022    | Lei Zhang Schlitz has served as VP and President, Global Products at JCI since November 2022. Before joining JCI, she was the EVP, Automotive OEM at Illinois Tool Works Inc. from 2019 until October 2022  **[0000833444-24-000064_jci-20240930.htm:62]** **[0000833444-23-000048_jci-20230930.htm:58]** **[0000833444-22-000043_jci-20220930.htm:49]** .                            |
| Julie Brandt             | Vice President and President, Building Solutions North America           | April 10, 2023   | Julie Brandt has served as VP and President, Building Solutions North America at JCI since April 10, 2023. Before joining JCI, she was the EVP and General Manager, North America Western Region at Otis Worldwide Corp  **[0000833444-24-000064_jci-20240930.htm:60]** **[0000833444-23-000048_jci-20230930.htm:56]** **[0001193125-24-011239_d554585ddef14a.htm:80]** .              |
| Richard Lek              | Vice President and President, Building Solutions, EMEA and Latin America | November 2024    | Richard Lek has served as VP and President, Building Solutions, EMEA and Latin America at JCI since November 2024. He has been with JCI since 2002, holding various roles of increasing responsibility  **[0000833444-24-000064_jci-20240930.htm:60]** .                                      |
| Nathan Manning           | Vice President and Chief Operations Officer, Global Field Operations     | December 2022    | Nathan Manning has served as VP and COO, Global Field Operations at JCI since December 2022. Prior to this role, he was the VP and President of Building Solutions, North America from October 2020 until March 2023  **[0000833444-24-000064_jci-20240930.htm:61]** .                      |
| Daniel C. "Skip" McConeghy | Vice President, Chief Accounting and Tax Officer                        | June 2022        | Daniel C. "Skip" McConeghy has served as VP, Chief Accounting and Tax Officer at JCI since June 2022. Prior to this role, he was VP, Global Tax from October 2020 until June 2022  **[0000833444-24-000064_jci-20240930.htm:61]** **[0000833444-23-000048_jci-20230930.htm:57]** **[0000833444-22-000043_jci-20220930.htm:48]** .                                                  |
| Anu Rathninde            | Vice President and President, Building Solutions, Asia Pacific           | May 2022         | Anu Rathninde has served as VP and President, Building Solutions, Asia Pacific at JCI since May 2022. Prior to joining JCI, he held various leadership roles at Aptiv plc  **[0000833444-24-000064_jci-20240930.htm:61]** **[0000833444-22-000043_jci-20220930.htm:49]** .                                                              |

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| Name                     | Start Date       | End Date       | Reason for Change                                                                 |
|--------------------------|------------------|----------------|----------------------------------------------------------------------------------|
| PricewaterhouseCoopers LLP (PwC) | September 2, 2016  **[0001104659-16-143835_a16-18104_18k.htm:2]**  | Present     | Current auditor.                                                            |
| Deloitte & Touche LLP    | N/A              | September 2, 2016  **[0001104659-16-143835_a16-18104_18k.htm:2]**  | The audit committee approved the dismissal. No disagreements or reportable events.  **[0001104659-16-143835_a16-18104_18k.htm:2]**  |

543f1c8f92b2a19d2746ce3a2481d254ee7bdc69f73ee397ba22c39a573b26e3

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- Total Revenue: $2,928 million (down **58%** YoY vs. $6,906)  **[0000833444-23-000048_jci-20230930.htm:90]** **[0000833444-23-000048_jci-20230930.htm:140]** **[0000833444-23-000048_jci-20230930.htm:91]** **[0000833444-23-000048_jci-20230930.htm:92]** **[0000833444-24-000064_jci-20240930.htm:93]**   
- Building Solutions North America: $3,223 million (+16% YoY vs. $2,778)  **[0000833444-23-000048_jci-20230930.htm:111]** **[0000833444-24-000064_jci-20240930.htm:117]**   
- Global Products: -$2,072 million (down **187%** YoY vs. $2,386)  **[0000833444-23-000048_jci-20230930.htm:111]** **[0000833444-24-000064_jci-20240930.htm:117]**   
- Operating Income (EBIT): $28 million (down **95%** YoY vs. $587)  **[0000833444-23-000048_jci-20230930.htm:90]** **[0000833444-23-000048_jci-20230930.htm:140]** **[0000833444-23-000048_jci-20230930.htm:91]** **[0000833444-23-000048_jci-20230930.htm:92]** **[0000833444-24-000064_jci-20240930.htm:93]**   
- Net Income: $633 million (+15% YoY vs. $549)  **[0000833444-23-000048_jci-20230930.htm:90]** **[0000833444-23-000048_jci-20230930.htm:140]** **[0000833444-23-000048_jci-20230930.htm:91]** **[0000833444-23-000048_jci-20230930.htm:92]** **[0000833444-24-000064_jci-20240930.htm:93]**   
- EPS (Basic): $0.95 (+19% YoY vs. $0.80)  **[0000833444-23-000048_jci-20230930.htm:90]** **[0000833444-23-000048_jci-20230930.htm:140]** **[0000833444-23-000048_jci-20230930.htm:91]** **[0000833444-23-000048_jci-20230930.htm:92]** **[0000833444-24-000064_jci-20240930.htm:93]**   

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bf4e90d85f23ffdea7b7c653f20a533c4e16f05fef348105467088f32989458d

- **Strong Data Center Demand Driving Growth:** Johnson Controls is experiencing significant growth in data center demand, with data center orders more than doubling the sales delivered. Key customers are placing multiyear orders in the hundreds of millions of dollars for cooling solutions, contributing to a record backlog of **$13.1 billion**.  **[JCI_3406032_1]**
- **Higher Service Attach Rates Enhancing Margins:** The service attach rate in the data center vertical is very strong and better than the rest of the portfolio. Customers are increasingly relying on Johnson Controls' capabilities, leading to higher recurring revenue and margin improvement.  **[JCI_3406032_8]**
- **Momentum in Key Verticals Beyond Data Centers:** Johnson Controls is seeing strong growth in other key verticals such as **health care, hospitals, manufacturing, and new energy sectors** like battery manufacturing, which are contributing positively to applied sales and supporting overall growth.  **[JCI_3406032_14]**

44fdb5c5118ff9d3ca09fcbd961640ed246fbe243569e0e3d05b75949ceac375

- **The company is experiencing growth challenges, with organic sales expected to grow only approximately 3% for the full year, which is lower than anticipated, partly due to softness in the Fire & Security business, which has had flat sales and represents about 45% of the go-forward revenue.**  **[JCI_3395281_9]**
- **There is uncertainty surrounding the CEO succession plan as the current CEO, George Oliver, is stepping down, and the company has initiated a search for a new CEO, which could lead to potential disruption or strategic shifts during the transition period.**  **[JCI_3395281_10]** ,  **[JCI_3395281_20]**
- **The company's Asia-Pacific business, particularly in China, continues to face headwinds, with a slower recovery than initially anticipated, leading to expectations of declining revenue in the region for the upcoming quarter, which could negatively impact overall growth prospects.**  **[JCI_3395281_17]**

568ca75a07b6390dd0d195e2d316bbadcd1487e57463bc189ca415d5a24f4e34

- **Accelerated weakness in China is impacting Johnson Controls' revenue growth, leading to a reduction in full-year adjusted EPS guidance by $0.05, with the expected recovery of backlog and projected revenue being delayed.**  **[JCI_3371133_16]**
- **There is uncertainty surrounding the strategic review of noncommercial product lines, which account for less than 25% of the company's portfolio, potentially leading to disruptions and challenges in operations and impacting margins and revenues.**  **[JCI_3371133_10]**
- **The Global Products business continues to face challenges, notably in the North American residential HVAC market, which is still down about 20%, and the company anticipates one more challenging quarter before stabilization occurs.**  **[JCI_3371133_26]**

5e54abb1298c54047789fecf6034330668a0d6da2398213ba0af330ebfa8917f

1. **Portfolio Review and Potential Divestitures**  
   **Q:** Can you provide details on the potential divestitures and their impact?  
   **A:** George Oliver stated that the noncommercial product lines under review represent less than **25% of the portfolio**.  **[JCI_3371133_10]**  While these are excellent businesses with margins in line with the overall company, they are not consistent with JCI's long-term strategy to become a comprehensive solutions provider for commercial buildings.  **[JCI_3371133_7]** **[JCI_3371133_10]**  The company is in early stages of pursuing strategic alternatives to simplify the portfolio and create more value for shareholders.  **[JCI_3371133_12]** **[JCI_3371133_15]** 

2. **Use of Proceeds from Potential Asset Sales**  
   **Q:** How would you deploy cash from potential asset sales?  
   **A:** George Oliver indicated that JCI plans to use proceeds from any divestitures to make accretive bolt-on acquisitions that support technology and go-to-market strategies.  **[JCI_3371133_13]**  Additionally, the company may return capital to shareholders to offset any dilution from the divestitures.  **[JCI_3371133_13]** 

3. **China Sales and Guidance Impact**  
   **Q:** How did China's market conditions affect your guidance?  
   **A:** Marc Vandiepenbeeck explained that the economic environment in China has deteriorated beyond initial cautious expectations, impacting the business.  **[JCI_3371133_8]** **[JCI_3371133_27]**  This has led to a guidance reduction of **$0.05** due to a slower recovery of backlog and projected revenue now pushed to the right.  **[JCI_3371133_27]** 

4. **Momentum Despite Negative Organic Growth**  
   **Q:** How do you reconcile momentum claims with negative organic growth?  
   **A:** George Oliver acknowledged that a significant disruption from a cyber incident impacted momentum in Q1, causing short-term challenges.  **[JCI_3371133_9]**  Despite this, he emphasized that the company's long-term strategy remains focused on leveraging combined strengths to deliver value to shareholders.  **[JCI_3371133_9]** 

5. **Orders and Backlog Recovery Post-Cyber Incident**  
   **Q:** How are orders and backlog recovering after the cyber incident?  
   **A:** George Oliver noted that the sales conversion cycle lengthened by about a week due to the cyber incident.  **[JCI_3371133_18]**  However, the expanding pipeline supports acceleration of orders in Q2 and the remainder of the year, returning to previous projections.  **[JCI_3371133_18]** 

6. **EMEALA Margins and Improvement Plans**  
   **Q:** What is being done to improve margins in EMEALA?  
   **A:** Marc Vandiepenbeeck is implementing an enterprise field operating model in EMEALA, focusing on market subsegments that offer the most value.  **[JCI_3371133_19]**  With actions taken to simplify and standardize the business, he expects EMEALA to return to profit levels comparable to other field segments.  **[JCI_3371133_19]** 

7. **Second Half Growth Expectations**  
   **Q:** What are your growth expectations for the second half?  
   **A:** The company expects second-half growth of around **8%**, with both Global Products and Building Solutions contributing similarly.  **[JCI_3371133_20]** **[JCI_3371133_21]**  Recovery in Asia Pacific and stabilization in Global Products support this outlook.  **[JCI_3371133_20]** **[JCI_3371133_21]** 

8. **Pricing Power Across Verticals**  
   **Q:** What are you seeing regarding pricing power?  
   **A:** Marc Vandiepenbeeck reported improved pricing due to simplification and focus on value in select market subsegments.  **[JCI_3371133_22]**  In Global Products, avoiding commoditized markets has led to strong margins, particularly in Applied HVAC.  **[JCI_3371133_22]**  George Oliver added that in the residential market, they continue to lead on pricing without significant pushback.  **[JCI_3371133_23]** 

9. **Free Cash Flow Potential Post-Divestitures**  
   **Q:** Will divestitures affect your free cash flow targets?  
   **A:** George Oliver affirmed that the commitment to achieving **100% free cash flow conversion** remains unchanged.  **[JCI_3371133_30]**  The company has improved fundamentals across Building Solutions and Global Products, enhancing billing practices and collections.  **[JCI_3371133_30]** 

10. **Service Order Trends by Region**  
    **Q:** How are service order trends across regions?  
    **A:** Service growth is strong globally. In North America, the service business is recovering from the cyber disruption.  **[JCI_3371133_29]**  EMEALA is driving long-term double-digit growth by focusing on high-value market segments.  **[JCI_3371133_29]**  In Asia Pacific, the focus is on subsegments with strong service profiles to maximize life cycle opportunities.  **[JCI_3371133_29]** 

9a00815d9a0eaad817c76f682c0ed8deb618842151c55cfe17ba3b7015df8c5b

1. **Growth Outlook and Guidance Amid Divestitures**  
   **Q:** Is the current 3% growth rate normal, and what's the growth outlook, especially amid divestitures?  
   **A:** The 3% growth this year is not our long-term expectation.  **[JCI_3395281_9]**  We faced cyber headwinds in Q1 affecting year-over-year growth.  **[JCI_3395281_9]**  Going forward, we expect **mid-single-digit growth**, driven by **mid- to high single-digit growth** in our service business and mid-single-digit growth in systems.  **[JCI_3395281_9]**  Despite divestitures, we're comfortable with our guidance and commitments for both the full portfolio and continued operations.  **[JCI_3395281_16]**  We'll provide guidance on continued operations next quarter.  **[JCI_3395281_12]** 

2. **PFAS Settlement and Insurance Recoveries**  
   **Q:** What's the expected cash outflow for the $750 million PFAS settlement now that insurance recoveries have begun?  
   **A:** We took a **$750 million** charge in Q2 for the settlement.  **[JCI_3395281_13]**  In Q3, we received **$351 million** from insurers, recovering almost half immediately.  **[JCI_3395281_13]**  More payments from insurers are expected over the next few quarters.  **[JCI_3395281_13]**  We believe we're well covered by insurance, and the net effect will be **de minimis**.  **[JCI_3395281_13]** 

3. **Data Center Growth and Backlog Impact**  
   **Q:** What's the impact of data centers on your backlog growth, and do you expect order acceleration?  
   **A:** Data centers now represent about **10% of sales**, up from **7%** a year ago.  **[JCI_3395281_7]**  The data center pipeline is building, with multiyear backlogs included in the almost **$13 billion** total backlog, which grew **10%**.  **[JCI_3395281_7]**  We expect **strong double-digit growth** in data centers in 2024.  **[JCI_3395281_7]**  While orders can be **lumpy** in this sector, the increased pipeline gives us confidence in large orders in upcoming quarters.  **[JCI_3395281_21]** 

4. **Free Cash Flow Conversion and Margins**  
   **Q:** How sustainable is the strong free cash flow conversion, and what's your visibility into achieving the 19% EBITA margin guidance for Q4?  
   **A:** We saw solid year-over-year improvement in free cash flow, driven by improving working capital and lower inventory due to better S&OP processes.  **[JCI_3395281_11]**  While we project an **85%+** conversion for the year, momentum may allow us to do better.  **[JCI_3395281_11]**  For Q4, we have strong visibility and confidence in achieving the **19% EBITA margin**, a sequential increase from almost **18%** in Q3.  **[JCI_3395281_22]**  Fundamentals like strong backlog and productivity gains contribute to this confidence.  **[JCI_3395281_22]** 

5. **Asia Pacific Recovery and China**  
   **Q:** Do you expect bookings to accelerate in Q4 in Asia Pacific, and will we see recovery in FY '25?  
   **A:** We continue to see sequential improvement in orders, but the recovery is **slower than anticipated**.  **[JCI_3395281_17]**  In Q3, order intake improved from Q2, and we expect this to continue in Q4.  **[JCI_3395281_17]**  We anticipate one more challenging quarter in Q4 with **low single-digit** year-over-year revenue decline.  **[JCI_3395281_17]**  However, we expect the business to recover in **FY '25**, with positive momentum as we enter the year.  **[JCI_3395281_17]** 

6. **Divestitures and Use of Proceeds**  
   **Q:** With portfolio changes, what's the reset 2024 base relative to the current guide? How will you manage leverage and use proceeds from divestitures?  
   **A:** Discontinued operations don't change our commitments; we're comfortable with our guidance for both the full portfolio and continued operations.  **[JCI_3395281_16]**  We expect the transaction to close in the next **12 months** and plan to return most of the net proceeds to shareholders via **share repurchases**, similar to past transactions.  **[JCI_3395281_16]**  Addressing leverage will depend on the timing; we aim to maintain our **investment-grade rating**.  **[JCI_3395281_16]** 

7. **CEO Succession and Attributes**  
   **Q:** What's the timeline for CEO succession, and what attributes are you seeking in your successor?  
   **A:** We've been building succession plans over time, looking at both internal and external candidates, engaging a nationally recognized search firm.  **[JCI_3395281_10]**  There's no set timeline, but we're moving forward and will keep you updated.  **[JCI_3395281_10]**  We seek someone with strong operating and domain expertise in our industry.  **[JCI_3395281_20]**  The successor should be able to build on our foundation and lead Johnson Controls to the next level.  **[JCI_3395281_20]** 

8. **Fire & Security Growth Prospects**  
   **Q:** Fire & Security sales are flat; what growth can we expect in the medium term?  
   **A:** We've seen some softness in the Fire & Security market this year.  **[JCI_3395281_9]**  However, we're seeing signs of recovery, particularly in our book-and-bill business.  **[JCI_3395281_9]**  We expect to maintain **mid-single-digit growth** over time, especially as the service and recurring components of the business grow.  **[JCI_3395281_9]** 

9. **Service Revenue Multipliers**  
   **Q:** Are the 10:1 service revenue multipliers achievable going forward?  
   **A:** Yes, we believe these multipliers are **real and achievable**.  **[JCI_3395281_8]**  The multiplier varies by product line; **HVAC** has a lower multiple, while **Security Controls and Fire** provide higher levels over the product life cycle.  **[JCI_3395281_8]**  This is based on real data from customers where we've added connectivity and additional services using **OpenBlue**, significantly reducing attrition and building our service base.  **[JCI_3395281_8]** 

10. **Disciplined Approach in EMEALA Systems**  
    **Q:** What is your more disciplined approach in EMEALA systems, and can it be applied elsewhere?  
    **A:** We've implemented an operating model focusing on centralized decision-making regarding which verticals and markets to approach.  **[JCI_3395281_18]**  We concentrate on markets with attractive margins and strong service attach rates.  **[JCI_3395281_18]**  This has driven modest growth in systems but larger growth in service.  **[JCI_3395281_18]**  This model has been fully deployed in North America and is being applied in EMEALA and Asia Pacific.  **[JCI_3395281_18]** 

209c80e62aef65d7731b4871aab2cc48cbebe634064862a3a0a6449912fa3421

- *1. Strong Growth in Data Center Segment**: Johnson Controls reported that orders in their data center business have significantly increased. For the fiscal first half, **data center orders have already surpassed the orders booked for all of fiscal 2023**, indicating robust demand in this high-growth vertical. The company is investing in capacity and innovation to meet the accelerating demand, positioning itself as a leader in providing comprehensive solutions for data centers.  **[JCI_3381848_11]** **[JCI_3381848_13]**
- *2. Recovery and Growth in China Market**: Despite previous challenges, Johnson Controls is confident about an **order and sales recovery in China by the end of the year**. They are rebuilding a strong pipeline, converting at historical rates, and are well-positioned to capture market opportunities across diverse end markets in the region.  **[JCI_3381848_17]**
- *3. Momentum in Service Business Driving Margin Expansion**: The company expects **services growth acceleration in the second half of the year**, regaining momentum after earlier disruptions. This growth, combined with positive mix from higher-margin services and conversion of a higher-margin backlog, is expected to drive margin expansion and meet their financial objectives for the year.  **[JCI_3381848_14]** **[JCI_3381848_21]**

26a83de772e3b9f4a821ee6f3f3c9c8309b012e0411e2289c08e85a5ce63a300

| Year | Amount Due (in millions) | Debt Type | Interest Rate | % of Total Debt |
|------|--------------------------|-----------|---------------|-----------------|
| 2024 | 953 **[0000833444-24-000064_jci-20240930.htm:123]** | Short-Term Debt | 4.8% **[0000833444-24-000064_jci-20240930.htm:123]** | 10.0% = (953 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| 2025 | 536 **[0000833444-24-000064_jci-20240930.htm:123]** | 1.375% Euro Notes | 1.375% **[0000833444-24-000064_jci-20240930.htm:123]** | 5.6% = (536 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| 2026 | 544 **[0000833444-24-000064_jci-20240930.htm:123]** | 3.900% USD Notes | 3.900% **[0000833444-24-000064_jci-20240930.htm:123]** | 5.7% = (544 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| 2027 | 776 **[0000833444-24-000064_jci-20240930.htm:123]** | 0.375% Euro Notes & TORF + 0.40% Japanese Yen Notes | 0.375% **[0000833444-24-000064_jci-20240930.htm:123]** | 8.2% = (776 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| 2028 | 676 **[0000833444-24-000064_jci-20240930.htm:123]** | 3.000% Euro Notes | 3.000% **[0000833444-24-000064_jci-20240930.htm:123]** | 7.1% = (676 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| 2029 | 707 **[0000833444-24-000064_jci-20240930.htm:123]** | 5.500% USD Notes | 5.500% **[0000833444-24-000064_jci-20240930.htm:123]** | 7.4% = (707 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |
| After 2029 | 5,329 **[0000833444-24-000064_jci-20240930.htm:123]** | Various Long-Term Notes | Various **[0000833444-24-000064_jci-20240930.htm:123]** | 56.1% = (5,329 / 9,493) * 100 **[0000833444-24-000064_jci-20240930.htm:123]** **[0000833444-24-000064_jci-20240930.htm:74]** |

f2e0682983765daeb43fa2af4a491aec8c936fded45f515416994179bab37528

- **Upcoming increase in effective tax rate from 12% in fiscal 2025 to potentially 16%-17% in fiscal 2026 due to global tax reforms**, leading to higher tax expenses and reduced net income.  **[JCI_3406032_13]**
- **Structural headwinds to free cash flow conversion**, including substantial **restructuring costs, increased capital expenditures**, and pressures from a higher effective tax rate, which may limit the company's ability to generate and convert free cash flow.  **[JCI_3406032_15]**
- **Stranded costs related to the divestiture of the residential and light commercial business**, along with significant investments in **cybersecurity and IT infrastructure**, may result in elevated corporate expenses and impact profitability.  **[JCI_3406032_13]**

125403cfcbfe8a5e8c53b2be7218927a57db792169dd369e9f8111a317705e3c

- Johnson Controls took a **goodwill impairment charge** on its subscriber business in the EMEA/LA segment due to currency impacts from the **Argentinian peso**, indicating challenges in that market.  **[JCI_3381848_21]**
- The company recorded a **$33 million product liability charge** related to failures in a legacy **fire detection product** within its fire detection business, potentially impacting margins.  **[JCI_3381848_18]**
- **Asia Pacific Building Solutions revenue** is expected to decline **mid-teens** for the full fiscal year 2024, highlighting ongoing weakness in the **China** systems business.  **[JCI_3381848_12]**

8200a75f63b794dffd572ebe7366330f46aee58a078528848ea07242b0d71a9c

1. **Global Products Margins Sustainability**  
   **Q:** Are high Global Products margins sustainable into FY2025?  
   **A:** Management affirms that the elevated margins in Global Products are sustainable, resulting from structural operational efficiencies achieved over the past year. They expect margins to be around **20%** in the first half of FY2025 and significantly higher in the second half, with continuous performance at this level or better. Importantly, there were no one-off items contributing to these margins.  **[JCI_3406032_12]** 

2. **Restructuring Costs and Savings Impact**  
   **Q:** How will restructuring costs and savings affect FY2025 results?  
   **A:** The company plans to incur **$400 million** in restructuring costs ahead of realizing **$500 million** in savings. Approximately half of these costs are included in the FY2025 free cash flow guidance, representing a structural headwind for the year. The timing of costs and benefits is linked to the divestiture of the residential and light commercial business, making precise predictions challenging.  **[JCI_3406032_10]** **[JCI_3406032_21]** 

3. **Tax Rate Outlook**  
   **Q:** What is driving changes in the effective tax rate?  
   **A:** The effective tax rate is increasing from about **11%** in FY2024 to **12%** in FY2025 due to strategic planning around the residential business divestiture, allowing better tax rate management. However, global tax reforms are expected to pressure the rate upward by **400 to 500 basis points** in FY2026 and beyond.  **[JCI_3406032_13]** 

4. **Data Center Growth and Margins**  
   **Q:** What is the outlook for data center business and its impact on margins?  
   **A:** Data centers constitute about **10%** of revenue and are experiencing solid double-digit growth. The service attach rate in this vertical is strong and improving, enhancing margins. Data center projects command slightly higher margins due to differentiated solutions and integrated engineering efforts with customers.  **[JCI_3406032_7]** **[JCI_3406032_8]** **[JCI_3406032_9]** **[JCI_3406032_11]** **[JCI_3406032_18]** 

5. **North America Building Solutions Margins**  
   **Q:** How will margins in North America Building Solutions evolve with changing mix?  
   **A:** The mix headwinds from large Systems projects, which have slightly lower margins than the Service business, are expected to diminish. As service revenues from these projects increase, margins should improve throughout FY2025.  **[JCI_3406032_11]** 

6. **Free Cash Flow Conversion Guidance**  
   **Q:** What supports the 85% free cash flow conversion guidance, and how will it improve?  
   **A:** The 85% conversion rate reflects headwinds from restructuring costs, increased CapEx investments in data center capacity, and the gap between effective and cash tax rates. Improvements are expected from better trade working capital management. Over time, the company aims to exceed the 85% conversion rate.  **[JCI_3406032_15]** **[JCI_3406032_17]** **[JCI_3406032_21]** 

7. **First Quarter Growth Expectations**  
   **Q:** Why is Q1 organic growth guided at mid-single digits despite strong orders?  
   **A:** Due to the timing of large orders and strong Q4 performance in data centers and decarbonization projects, Q1 growth is expected at mid-single digits. North America may perform slightly above this, while EMEA/LA, APAC, and Global Products will be in line or slightly lower.  **[JCI_3406032_7]** 

8. **CEO Succession Plan**  
   **Q:** What is the status of the CEO succession process?  
   **A:** The Board is actively considering an impressive list of internal and external candidates to succeed the CEO. An update is expected in the first half of calendar year 2025.  **[JCI_3406032_6]** 

9. **Applied Sales in Other Verticals**  
   **Q:** What trends are observed in applied sales beyond data centers?  
   **A:** Strong growth is seen in health care, hospitals, manufacturing, and new energy sectors like battery manufacturing. Opportunities also arise from repurposing commercial real estate spaces post-pandemic.  **[JCI_3406032_14]** 

10. **Corporate Expenses and Share Buybacks**  
    **Q:** How are corporate expenses and share repurchases expected to change?  
    **A:** Corporate expenses remain flat year-over-year at around **$430 million**, with investments in cybersecurity and IT offsetting cost reductions. Share buybacks will continue as usual, returning 100% of free cash flow to shareholders, without assuming deployment of proceeds from the residential business sale in the FY2025 guidance.  **[JCI_3406032_13]** 

11. **Indirect Revenue Mix and Market Exposure**  
    **Q:** What is the composition of indirect revenue and its market exposure?  
    **A:** The company utilizes indirect channels to address mid- to low-end market segments where direct value selling is less feasible. This approach complements their direct efforts, ensuring full market share entitlement across all segments.  **[JCI_3406032_20]** 

12. **Backlog Expectations and Order Growth**  
    **Q:** Will backlog levels decrease or remain consistent through FY2025?  
    **A:** Backlog is expected to continue growing, supported by a robust pipeline of opportunities, particularly in data centers. This underpins confidence in achieving mid-single-digit revenue growth, drawing revenue from this strong backlog.  **[JCI_3406032_19]** 

13. **Clarification on Global Products Revenues and Margins**  
    **Q:** What are the underlying revenues and margins for Global Products?  
    **A:** The Global Products segment has revenues slightly less than **$5 billion**, with margins in the high **20%** range on a pro forma basis. Management expects to leverage volume further to enhance margins.  **[JCI_3406032_18]** 

14. **Service Attachment Rate in Data Centers**  
    **Q:** How does the service attachment rate in data centers compare to traditional buildings?  
    **A:** The service attachment rate in data centers is strong and slightly better than in the overall portfolio. This improvement is due to increased complexity and customers recognizing the value of comprehensive service offerings, leading to better margins.  **[JCI_3406032_8]** **[JCI_3406032_9]** 

15. **Pricing Power in Data Centers**  
    **Q:** How does pricing power in data centers compare to traditional segments?  
    **A:** Pricing power in data centers is slightly higher owing to the complexity and engineered solutions required. By embedding their engineering teams with customers to address higher-value challenges, the company can command better pricing and margins than in traditional applied equipment.  **[JCI_3406032_9]** 

16. **Details on Free Cash Flow**  
    **Q:** Does the free cash flow guidance include tax payments on divestitures, and what changes are expected?  
    **A:** The free cash flow conversion guidance does not include tax payments on divestitures. The restructuring benefits are not expected to be material to the FY2025 guidance. The cost-out program focuses on simplifying operations and improving customer experience, with ongoing updates as changes are implemented.  **[JCI_3406032_21]** 

f92ff520f60e817e10a5d21981c26da908afc7197f2e2c1fa669080223524218

- *• Strong Confidence in Margin Expansion:** Johnson Controls expects to achieve an EBITA margin of **approximately 19% in Q4**, reflecting a sequential increase from almost 18% in Q3. The company has **strong visibility** into this target due to a solid backlog and continued productivity improvements.  **[JCI_3395281_22]**
- *• Robust Free Cash Flow and Working Capital Improvements:** The company has seen a **significant improvement in free cash flow generation year-over-year**, with working capital metrics continuously improving through actions like lowering inventory and enhancing S&OP processes. Johnson Controls is confident in achieving **adjusted free cash flow conversion of approximately 85% or better for the full year**.  **[JCI_3395281_11]**
- *• Strong Position and Growth Prospects in Data Center Market:** Johnson Controls has a solid pipeline and is **well-positioned in the fast-growing data center vertical**, expecting **large orders in the coming quarters**. The company's comprehensive value proposition and capacity expansion are leading to multi-year agreements with customers.  **[JCI_3395281_10]**

5ca76bbb3554605bb1f774abdde0a251a5c90bd4c7f19fe6296328860d1d5205

1. **Data Center Growth and Capabilities**  
   **Q:** What's driving the strong growth in your data center business?  
   **A:** We see significant demand in data centers, with first-half orders exceeding all of fiscal year 2023 orders.  **[JCI_3381848_7]**  Our investments in cooling technologies and partnerships with hyperscalers and colos position us well to capture this growth.  **[JCI_3381848_7]**  We're projecting potentially **50%+ growth over the next few years** in this sector.  **[JCI_3381848_7]**  Our pipeline continues to grow, and we're confident in sustaining this momentum.  **[JCI_3381848_7]** 

2. **Fourth Quarter Guidance and Growth Expectations**  
   **Q:** How confident are you in achieving your fourth-quarter guidance?  
   **A:** We expect strong sequential performance, anticipating high single-digit growth in Q4.  **[JCI_3381848_6]**  Our confidence is based on regaining momentum in Q2 and strong order trends in short-cycle businesses.  **[JCI_3381848_5]**  To achieve the high end of our guidance, we need accelerating momentum in China, sequential growth in our residential business, and improved service growth.  **[JCI_3381848_5]** 

3. **China Sales and Recovery**  
   **Q:** Can you elaborate on your expectations for China revenue recovery?  
   **A:** China is still facing revenue pressure in Q3, but order momentum remains very strong.  **[JCI_3381848_5]**  We're expecting positive revenue growth by the end of the year, with a focus on accelerating momentum in both orders and revenue.  **[JCI_3381848_5]** 

4. **Product Quality Issue Impact**  
   **Q:** What's the status of the quality issue in Global Products?  
   **A:** We identified a firmware issue in some legacy products, leading to a reserve for anticipated remediation actions.  **[JCI_3381848_6]**  This issue is unusual and not related to warranty.  **[JCI_3381848_6]**  We're early in the process but don't expect anything additional and aim to resolve it within a couple of quarters.  **[JCI_3381848_9]** 

5. **Divestments and Deal Timing**  
   **Q:** Any updates on the timing and process of your divestitures?  
   **A:** We're making good progress on divesting non-core businesses, which represent about **25% of our sales**.  **[JCI_3381848_5]**  While they are good businesses adding value, we remain focused on maximizing shareholder value.  **[JCI_3381848_5]**  We can't pin down exact timing or tax implications but are exploring different divestiture structures.  **[JCI_3381848_23]** 

6. **Margin Improvement in EMEA/LA**  
   **Q:** How is the margin improvement progressing in EMEA/LA?  
   **A:** We're pleased with the performance in EMEA/LA in Q2.  **[JCI_3381848_16]**  We've seen robust growth in service and improved order margins due to better commercial discipline.  **[JCI_3381848_16]**  With these factors and a right-sized cost structure, we have great visibility to achieve **double-digit segment margins** by the end of the year.  **[JCI_3381848_16]** 

7. **Factoring Change and Free Cash Flow**  
   **Q:** What impact does the factoring change have on free cash flow?  
   **A:** The unwind of factoring will benefit us in the balance of the year.  **[JCI_3381848_6]**  Despite investments and the PFAS settlement, we're maintaining our **85% free cash flow conversion** guidance.  **[JCI_3381848_6]**  We had a strong start to the year, improving our cash collection cycle by about **5 days**.  **[JCI_3381848_6]** 

8. **Service Growth Expectations**  
   **Q:** What acceleration is needed in service growth to meet guidance?  
   **A:** We need to return to high single-digit growth, recovering from lost momentum due to the cyber incident.  **[JCI_3381848_14]**  We're regaining momentum, especially in North America, and expect to achieve our targets.  **[JCI_3381848_14]**  Orders in EMEA/LA and APAC are already showing double-digit growth.  **[JCI_3381848_14]** 

9. **Global Products Mix and Margins**  
   **Q:** How do you see Global Products margins evolving?  
   **A:** With normal flow and stability restored, we're seeing significant productivity improvements.  **[JCI_3381848_18]**  The negative mix impact was due to volume challenges in APAC.  **[JCI_3381848_19]**  We expect better leverage and margin improvement in the second half, focusing on cost reduction and productivity.  **[JCI_3381848_18]** 

10. **PFAS Settlement and Cash Impact**  
    **Q:** How will the PFAS settlement affect cash flow and insurance recoveries?  
    **A:** The **$750 million** PFAS settlement will be in two tranches this year  **[JCI_3381848_6]** **[JCI_3381848_21]** . We have significant insurance coverage and are working to recover a material portion, but the timing is uncertain.  **[JCI_3381848_21]**  Despite this, we're maintaining our free cash flow conversion guidance.  **[JCI_3381848_6]** 

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Johnson Controls International PLC (JCI)

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