This post was originally published on this site.
Johnson Controls International NYSE: JCI reported what executives called a strong start to fiscal 2026, citing record orders, accelerating momentum in data centers and life sciences, and continued progress on margin expansion and operating discipline. Management said results came in ahead of expectations and led the company to raise its full-year adjusted earnings guidance.
Quarterly performance: orders surge, margins expand
Chief Executive Officer Joakim Weidemanis said first-quarter performance reflected “more disciplined execution across the portfolio,” with broad-based strength across the enterprise. The company reported that orders increased nearly 40% year-over-year, following a 16% comparison in the prior-year quarter. Revenue grew 6% and adjusted EBIT margins expanded 190 basis points to 12.4%.
Chief Financial Officer Marc Vandiepenbeeck added that organic revenue rose 6% and segment margins increased 70 basis points to 15.7%. Adjusted EPS was $0.89, up nearly 40% year-over-year and above the company’s guidance. Management attributed margin improvement to productivity, price realization, and cost structure improvements.
Demand drivers: data centers and life sciences highlighted
Executives repeatedly pointed to data centers as a major catalyst for orders, describing accelerating investment tied to higher-density workloads and AI-driven growth. Weidemanis emphasized that the company’s data center exposure extends beyond chillers, also including CRAHs and air handling units through its Silent-Aire franchise, as well as recent progress in the CDU category.
During the Q&A, management stressed that the strong order performance was not limited to data centers. Weidemanis cited “very healthy” life science order entry, tying demand to changes in pharmaceutical manufacturing environments driven by biologics-based therapies, which require strict control of indoor operating conditions and, in turn, strong thermal management and controls.
By geography, Vandiepenbeeck said orders strength translated into growth across all three regions:
- Americas: orders up 56%, led by large-scale data center projects
- EMEA: orders up 8%, with high single-digit growth in both service and systems
- APAC: orders up 10%, driven by double-digit systems growth and high single-digit service growth
Sales mix, backlog growth, and conversion timing
At the enterprise level, management said organic sales growth was led by service, which grew 9% year-over-year. Regional organic sales growth was 6% in the Americas (with “solid double-digit” service growth), 4% in EMEA (high single-digit service growth), and 8% in APAC (strong systems performance and steady service demand).
Johnson Controls reported record backlog of $18 billion, up 20% year-over-year. Executives said the backlog provides strong visibility, but they also cautioned that some large orders—particularly in data centers and life sciences—may not be shippable within the next nine months. In response to questions about why backlog growth did not translate into higher near-term organic revenue guidance, Weidemanis and Vandiepenbeeck pointed to timing, customer readiness to accept deliveries, and the long-dated nature of some large projects.
Vandiepenbeeck said the company began the year at the lower end of its mid-single-digit organic sales growth range and expects to perform in the higher half of that range in the second half, while continuing to view the backlog as supportive of the full-year outlook.
Operating model and execution: business system rollout and capacity
Weidemanis discussed the company’s proprietary business system, organized around “Simplify,” “Accelerate” (Lean methodologies), and “Amplify” (digital and AI). He said early deployments are improving alignment, ownership, and consistency, citing examples including improved customer-facing time for HVAC sellers in a local market and on-time delivery performance at a key chiller manufacturing facility.
Management said more than 1,000 colleagues have engaged in priority efforts, over 80 kaizens have been completed, and 350 senior leaders have been trained. Weidemanis also noted the appointment of Susan Hughes as APAC president, citing her more than 20 years of regional experience.
On manufacturing and delivery, Weidemanis said the company had previously made significant investments that more than tripled physical capacity across chillers and air handling units, and said Lean efforts could materially expand capacity further without comparable capital spending. He also described improved predictability and faster delivery as a competitive advantage in the data center market, noting progress on lead times and sustained on-time delivery performance.
When asked about CDU strategy, Weidemanis said some business transacts as CDU-only, but the company also sees opportunities for combined offers over time as data center thermal architectures evolve.
Guidance raised: EPS outlook increases on strong start
For fiscal second quarter, management guided to organic sales growth of approximately 5%, operating leverage of approximately 45%, and adjusted EPS of approximately $1.11. For the full year, the company maintained its expectation for mid-single-digit organic sales growth and operating leverage of approximately 50%, which the CFO said is above the company’s long-term algorithm due to prior-year cost actions inflecting in the current year.
Johnson Controls raised its full-year adjusted EPS guidance to approximately $4.70 per share, which management said implies roughly 25% growth. The company also reiterated an expectation for approximately 100% free cash flow conversion for the year.
On the balance sheet, Vandiepenbeeck said the company ended the quarter with about $600 million in available cash, with total liquidity supported by credit facilities and working capital management. Net debt declined to 2.2x, which he said remains within the company’s long-term target range. Management reiterated capital allocation priorities of investing in the business, maintaining balance sheet strength, and returning capital to shareholders.
In closing remarks, Weidemanis said the quarter’s results reflect building momentum as teams operate “with greater clarity, discipline, and consistency,” and he thanked the company’s workforce for contributing to what management characterized as a strong start to the fiscal year.
About Johnson Controls International NYSE: JCI
Johnson Controls International plc is a global diversified technology and multi‑industrial company that develops products, services and solutions for buildings and energy storage. The company’s core focus is on improving building efficiency, safety and sustainability through a combination of HVAC equipment, building controls and automation, fire and security systems, and related services. Johnson Controls traces its roots to 1885, when inventor Warren S. Johnson developed an electric room thermostat; over its long history the company has expanded from controls into a broad set of building‑related technologies and, through corporate transactions, into a global provider of integrated building solutions.
Johnson Controls’ product and service portfolio includes heating, ventilation and air‑conditioning equipment, chillers, air handlers and related mechanical systems, together with building automation and control platforms that monitor and manage energy use, indoor environmental quality and security.
Read More
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Johnson Controls International, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Johnson Controls International wasn’t on the list.
While Johnson Controls International currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
Looking to profit from the electric vehicle mega-trend? Click the link to see our list of which EV stocks show the most long-term potential.