Johnson Controls International plc Ordinary Share
JCI · NYSE
Next quarter
Expected to report Nov 4, 2026 — estimated from last year’s reporting date.
Consensus is $1.58 EPS for Sep 2026 across 3 estimates, ranging $1.57 to $1.59.
JCI Jun 2026
- 7.58%
- +3.20%
- $1.32
- $1.42
- —
- —
Highlights
- Earnings beat: Q3 adjusted EPS was $1.42, $0.10 above the $1.32 consensus and up from $1.05 a year ago; GAAP EPS was $1.23 versus $0.94.
- Organic growth: Sales rose 9% to $6.61 billion, including 10% organic growth; revenue increased from $6.14 billion in Q2 FY2026 and $6.05 billion in Q3 FY2025.
- Demand momentum: Organic orders increased 27% year over year to $6.8 billion, while backlog rose 32% organically to $21.0 billion, led by data centers and other mission-critical environments.
- Margin expansion: Adjusted segment EBITA margin increased 220 basis points to 19.8%, with adjusted EBIT rising to $1.12 billion from $865 million a year earlier.
- Americas strength: Americas sales grew 11% to $4.50 billion, orders increased 37% organically and backlog rose 40% to $15.9 billion; adjusted EBITA margin expanded 260 basis points to 21.1%.
- Regional mix: APAC sales rose 15% organically to $846 million and adjusted EBITA increased 25% to $179 million, while EMEA organic sales grew 1% amid Middle East-related pressure.
- Cash generation: Operating cash flow was $1.29 billion and free cash flow was $1.19 billion, representing 159% conversion from continuing-operations net income; the company paid $245 million in dividends and repurchased $635 million of shares.
- Raised outlook: FY2026 organic growth guidance increased to approximately 8% from 6% and adjusted EPS guidance to approximately $5.05 from $4.85; Q4 guidance calls for about $1.55 of adjusted EPS.
Analysis
Johnson Controls delivered a broad-based Q3 FY2026 beat and raised its full-year outlook. Adjusted EPS of $1.42 exceeded the $1.32 consensus by 7.6% and rose 35% from $1.05 in Q3 FY2025. GAAP EPS was $1.23 versus $0.94 a year ago, while continuing-operations net income attributable to JCI increased to $749 million from $618 million. Revenue of $6.61 billion grew 9% year over year and 8% sequentially from $6.14 billion in Q2, with organic growth of 10%. The quarter was also stronger than the prior quarter on the reported EPS measure, which was $1.00 in Q2, although the comparison uses the company’s adjusted metric for the current-quarter earnings beat.
The defining feature was operating momentum rather than a single unusual item. Organic orders rose 27% and backlog reached $21.0 billion, supported by data-center demand, while adjusted segment EBITA margin expanded 220 basis points to 19.8%. Americas drove the result, with 11% sales growth and a 260-basis-point margin expansion; APAC added 15% organic growth, while EMEA remained constrained by regional conflict. Cash conversion was exceptionally strong, with $1.19 billion of free cash flow. Management lifted FY2026 organic growth and adjusted EPS guidance, despite lowering its operating-leverage assumption to 45%-50% from approximately 50%.
Revenue and earnings
The quarter combined strong top-line execution with operating leverage. Revenue increased $562 million year over year to $6.614 billion, as organic growth contributed $582 million and foreign exchange added $26 million, partly offset by $46 million from divestitures. Products and systems revenue rose 11% to $4.596 billion, while services increased 5% to $2.018 billion. Gross margin improved 30 basis points to 37.4%, and adjusted EBIT margin increased to 16.9% from 14.3%.
- Adjusted earnings: Adjusted net income increased to $868 million from $693 million, producing adjusted EPS of $1.42 versus $1.05.
- GAAP earnings: Income from continuing operations attributable to JCI was $749 million, up from $618 million; GAAP EPS was $1.23 versus $0.94.
- Cost discipline: SG&A declined 1% to $1.407 billion despite higher revenue, although the quarter included $80 million of restructuring and impairment costs and $80 million of transformation costs excluded from adjusted results.
Orders and backlog
Demand indicators were the clearest forward-looking strength in the print. Orders for the Solutions and Services businesses increased 27% organically to $6.8 billion, led by large projects in data centers and other mission-critical settings. Backlog rose 32% organically to $21.0 billion. The company also reported $27.1 billion of remaining performance obligations, with approximately 68% expected to convert to revenue over the next two years.
- Americas pipeline: Orders increased 37% organically, including 55% growth in products and systems, and backlog reached $15.9 billion, up 40%.
- EMEA pipeline: Orders rose 6% and backlog increased 14% to $3.1 billion despite regional pressure from conflicts in the Middle East.
- APAC pipeline: Orders increased 12% and backlog rose 12% to $2.0 billion, with products and systems orders up 17%.
Regional performance
Americas remained the engine of the quarter, while APAC delivered the fastest revenue growth. EMEA's reported decline reflected divestitures and geopolitical pressure rather than a broad deterioration in underlying demand.
- Americas: Sales increased 11% to $4.504 billion, segment EBIT rose 30% to $847 million and adjusted segment EBITA margin expanded to 21.1% from 18.5%, driven primarily by operating leverage on higher revenue.
- APAC: Sales rose 15% to $846 million, segment EBIT increased 23% to $171 million and adjusted EBITA margin improved 180 basis points to 21.2%, supported by productivity, mix and volume.
- EMEA: Sales declined 1% to $1.264 billion, but organic sales grew 1%; segment EBIT rose 8% to $172 million and adjusted EBITA margin increased 20 basis points to 14.3% through pricing and productivity.
Cash and capital allocation
Cash generation materially exceeded accounting earnings in the quarter. Operating cash flow from continuing operations was $1.289 billion, up from $787 million a year earlier, while free cash flow increased to $1.194 billion from $693 million. Adjusted free cash flow was $1.179 billion, equivalent to 132% conversion from adjusted net income.
- Balance sheet: Net debt was $8.834 billion at June 30, compared with $8.825 billion at March 31 and $9.562 billion a year earlier; net debt to adjusted EBITDA improved to 1.9x from 2.5x a year ago.
- Share repurchases: JCI repurchased $635 million of shares in Q3 and had approximately $3.9 billion remaining under its authorization after completing a $5.0 billion accelerated repurchase program.
- Investment and dividends: The company spent $291 million to acquire Alloy Enterprises and Nantum AI, paid $245 million in dividends and held $641 million of cash at quarter-end.
Raised fiscal outlook
Management raised its FY2026 growth and earnings targets after the quarter's order momentum and margin performance. The revised outlook assumes approximately 8% organic sales growth, up from approximately 6%, and adjusted EPS of approximately $5.05, up from $4.85. Full-year adjusted free cash flow conversion remains targeted at approximately 100%.
- Fourth quarter: JCI initiated guidance for 9%-10% organic sales growth, 45%-50% operating leverage and adjusted EPS of approximately $1.55.
- Operating leverage: The full-year assumption was reduced to 45%-50% from approximately 50%, even as the earnings target increased.
- Execution program: Management said its proprietary business system remains early in deployment, with continued productivity and execution improvements expected to support further margin expansion.
