What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-02-05 compared with 2024-07-31 · 269 added, 384 removed, 747 unchanged (47% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Products and systems $ 3,685 $ 3,604

Services 1,741 1,605

7,231 7,133 20,024 19,887

Cost of sales

1 unchanged sentence

Services 1,044 941

4,743 4,702 13,363 13,124

Gross profit 1,926 1,778

2 unchanged sentences

Net financing charges 86 87

Equity income 58 78 176 190

Income before income taxes 1,279 793 1,321 1,186

Equity loss — ( 2 )

Income from continuing operations before income taxes 408 320

Income tax provision (benefit) 47 ( 20 )

Income from continuing operations 361 340

Income from discontinued operations, net of tax (Note 3) 90 64

Net income 451 404

Income attributable to noncontrolling interests 77 73 150 152

Income (loss) attributable to noncontrolling interests

Continuing operations ( 2 ) —

Discontinued operations 34 30

Net income attributable to Johnson Controls $ 419 $ 374

Earnings per share attributable to Johnson Controls

Basic $ 1.45 $ 1.54 $ 1.58 $ 1.90

Diluted 1.45 1.53 1.58 1.89

Income attributable to Johnson Controls

Continuing operations $ 363 $ 340

Discontinued operations 56 34

Total $ 419 $ 374

Basic earnings per share attributable to Johnson Controls

Continuing operations $ 0.55 $ 0.50

Discontinued operations 0.08 0.05

Total $ 0.63 $ 0.55

Diluted earnings per share attributable to Johnson Controls

Continuing operations $ 0.55 $ 0.50

Discontinued operations 0.08 0.05

Total $ 0.63 $ 0.55

The accompanying notes are an integral part of the consolidated financial statements.

3 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net income $ 451 $ 404

17 unchanged sentences

(in millions, except par value;

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Cash and cash equivalents $ 1,237 $ 606

8 unchanged sentences

Other intangible assets - net 3,963 4,130

Investments in partially-owned affiliates 1,054 1,056

Noncurrent assets held for sale 2,986 3,210

11 unchanged sentences

Long-term debt 8,589 8,004

Pension and postretirement benefits 225 278

Pension and postretirement benefit obligations 192 217

Noncurrent liabilities held for sale 407 405

Other noncurrent liabilities 4,697 4,753

Long-term liabilities 13,458 13,464

Noncurrent liabilities 13,885 13,379

Commitments and contingencies (Note 18)

14 unchanged sentences

(in millions;

Nine Months Ended June 30,

Operating Activities

Net income attributable to Johnson Controls $ 1,072 $ 1,300

Income attributable to noncontrolling interests 150 152

Net income 1,222 1,452

Three Months Ended December 31,

Operating Activities of Continuing Operations

Income from continuing operations attributable to Johnson Controls $ 363 $ 340

Loss from continuing operations attributable to noncontrolling interests ( 2 ) —

Income from continuing operations 361 340

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization 193 208

Pension and postretirement benefit income ( 30 ) ( 23 )

Pension and postretirement contributions ( 21 ) ( 38 )

Equity in (earnings) losses of partially-owned affiliates, net of dividends received 2 ( 27 )

Pension and postretirement income and contributions ( 16 ) ( 16 )

Deferred income taxes ( 54 ) ( 80 )

9 unchanged sentences

Accrued income taxes 28 11

Cash provided by operating activities 572 831

Investing Activities

Cash provided (used) by operating activities from continuing operations 249 ( 111 )

Investing Activities of Continuing Operations

Capital expenditures ( 116 ) ( 82 )

Acquisition of businesses, net of cash acquired 1 ( 260 )

Other - net 11 18

Cash used by investing activities ( 310 ) ( 576 )

Financing Activities

Net proceeds (payments) from borrowings with maturities less than three months 679 ( 248 )

Cash used by investing activities from continuing operations ( 105 ) ( 64 )

Financing Activities of Continuing Operations

Net proceeds from borrowings with maturities less than three months 12 1,116

Proceeds from debt 775 422

Repayments of debt ( 438 ) ( 536 )

Stock repurchases and retirements ( 330 ) —

1 unchanged sentence

Employee equity-based compensation withholding taxes ( 29 ) ( 23 )

Dividends paid to noncontrolling interests ( 121 ) ( 149 )

Other - net 18 ( 27 )

Cash provided by financing activities from continuing operations 201 1,236

Discontinued Operations

Cash used by operating activities ( 2 ) ( 135 )

Cash used by investing activities ( 10 ) ( 10 )

Cash used by financing activities — ( 8 )

Cash used by discontinued operations ( 12 ) ( 153 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 154 60

Decrease in cash, cash equivalents and restricted cash ( 31 ) ( 923 )

Change in cash, cash equivalents and restricted cash held for sale 4 5

Increase in cash, cash equivalents and restricted cash 491 973

Cash, cash equivalents and restricted cash at beginning of period 767 917

7 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Shareholders' Equity Attributable to Johnson Controls

23 unchanged sentences

Beginning Balance 1,263 1,149

Comprehensive income attributable to noncontrolling interests 61 28 132 144

Comprehensive income (loss) attributable to noncontrolling interests ( 23 ) 27

Dividends attributable to noncontrolling interests ( 13 ) —

6 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

BASIS OF PRESENTATION

3 unchanged sentences

GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC").

These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on December 14, 2023.

The results of operations for the three and nine month periods ended June 30, 2024 are not necessarily indicative of results for the Company’s 2024 fiscal year because of seasonal and other factors.

The results of operations for the three month period ended December 31, 2024 are not necessarily indicative of results for the Company’s 2025 fiscal year because of seasonal and other factors.

Nature of Operations

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers in more than 150 countries.

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers around the globe.

The Company’s products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet.

1 unchanged sentence

The Company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including residential and commercial heating, ventilating, air-conditioning ("HVAC") equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions.

The Company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, controls, security and fire-protection space), energy-management consulting and data-driven “smart building” services and solutions powered by its OpenBlue software platform and capabilities.

The Company partners with customers by leveraging its broad product portfolio and digital capabilities powered by OpenBlue, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency, enhance security, create healthy environments and reduce greenhouse gas emissions.

The Company's OpenBlue digital software platform enables enterprises to better manage their physical spaces by combining the Company's building products and services with cutting-edge technology and digital capabilities to enable data-driven “smart building” services and solutions.

The Company partners with customers by leveraging its broad product portfolio and digital capabilities, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency, enhance security, create healthy environments and reduce greenhouse gas emissions.

As discussed in more detail in Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations", the Company has entered into a definitive agreement to sell its Residential and Light Commercial (“R&LC") HVAC business, including the North America Ducted business and the global Residential joint venture with Hitachi Global Life Solutions, Inc.

(“Hitachi”), of which Johnson Controls owns 60 % and Hitachi owns 40 %.

The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the consolidated financial statements as a discontinued operation, and assets and liabilities are classified as held for sale for all periods presented.

Unless otherwise noted, all activities and amounts reported in the following footnotes relate to the continuing operations of the Company and exclude activities and amounts related to the R&LC HVAC business.

Principles of Consolidation

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc and its subsidiaries that are consolidated in conformity with U.S.

All significant intercompany transactions have been eliminated.

The results of companies acquired or disposed of during the reporting period are included in the consolidated financial statements from the effective date of acquisition or up to the date of disposal.

Investments in partially-owned affiliates are accounted for by the equity method when the Company exercises significant influence, which typically occurs when its ownership interest exceeds 20%, and the Company does not have a controlling interest.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The Company consolidates variable interest entities ("VIE") when it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant.

3 unchanged sentences

In September 2022, the FASB issued ASU 2022-04, "Disclosure of Supplier Finance Program Obligations," which is intended to enhance the transparency surrounding the use of supplier finance programs.

Supplier finance programs may

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

also be referred to as reverse factoring, payables finance, or structured payables arrangements.

Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements.

The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information.

1 unchanged sentence

The Company adopted the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024.

The rollforward disclosure will be adopted as required at the beginning of fiscal 2025.

The Company maintains agreements with third-party financial institutions who offer voluntary supply chain financing ("SCF") programs to its suppliers.

The SCF programs enable suppliers to sell their receivables to third-party financial institutions and receive payments earlier than the negotiated commercial terms between the suppliers and the Company, which generally range from 90 to 120 days.

Suppliers sell receivables to third-party financial institutions on terms negotiated between the supplier and the respective third-party financial institution.

The Company remains obligated to make payments under the terms of the original commercial arrangement regardless of whether the supplier receivable is sold, and does not pledge any assets as security or provide other forms of guarantees for the committed payment to the third-party financial institutions.

Amounts outstanding related to SCF programs are included in accounts payable in the consolidated statements of financial position.

Accounts payable included in the SCF programs were approximately $ 669 million and $ 566 million as of June 30, 2024, and September 30, 2023, respectively.

The rollforward disclosure will be adopted as required in fiscal 2025.

Amounts outstanding related to supply chain financing ("SCF") programs are included in accounts payable in the consolidated statements of financial position.

Accounts payable included in the SCF programs were approximately $ 733 million and $ 703 million as of December 31, 2024 and September 30, 2024, respectively.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses," which is intended to enhance transparency into the nature and function of expenses.

The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization and depletion.

The Company expects to adopt the new annual disclosures as required for fiscal 2028 and the interim disclosures as required beginning with the first quarter of fiscal 2029.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

8 unchanged sentences

Other recently issued accounting pronouncements are not expected to have a material impact on the Company's consolidated financial statements.

ACQUISITIONS AND DIVESTITURES

During the nine months ended June 30, 2023, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $ 306 million, of which $ 260 million was paid as of June 30, 2023.

In connection with the acquisitions, the Company recorded goodwill of $ 121 million within the Global Products segment, $ 51 million within the Building Solutions Asia Pacific segment and $ 12 million within the Building Solutions EMEA/LA segment.

ASSETS AND LIABILITIES HELD FOR SALE

During the third quarter of fiscal 2024, the Company entered into a definitive agreement to sell its Air Distribution Technologies ("ADTi") business included within the Global Products segment.

As of June 30, 2024, ADTi met the criteria

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

to be classified as held for sale and the assets and liabilities of this business are separately presented in the consolidated statements of financial position.

The following table summarizes the asset and liabilities associated with ADTi classified as held for sale (in millions):

June 30, 2024

Assets Held for Sale

December 31, 2024

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

In July 2024, the Company entered into a definitive agreement to sell its R&LC HVAC business, which includes the North America Ducted businesses and the global Residential joint venture with Hitachi, of which Johnson Controls owns 60 % and Hitachi owns 40 %, to Bosch Group for approximately $ 8.1 billion in cash with the Company’s portion of the aggregate consideration being approximately $ 6.7 billion, inclusive of an upfront royalty payment for the licensing of the York tradename.

The transaction is expected to close in the fourth quarter of fiscal 2025, subject to required regulatory approvals and other customary closing conditions.

The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as discontinued operations as it represents a strategic shift in the Company's operations and results in the exit of substantially all of its residential and light commercial HVAC businesses.

Results of the business are presented in discontinued operations for all periods presented.

The Company determined that the assets and liabilities for the R&LC HVAC business met the held for sale criteria during the fourth quarter of 2024.

Accordingly, the businesses' assets and liabilities were reclassified in the consolidated balance sheets at December 31, 2024 and September 30, 2024 to held for sale, and the Company ceased recording depreciation and amortization for the held for sale assets.

The following table summarizes the results of the R&LC HVAC business which are reported as discontinued operations (in millions):

Three Months Ended December 31,

Net sales $ 966 $ 885

Cost of goods sold 731 671

Gross profit 235 214

Selling, general and administrative expenses 183 180

Restructuring and impairment costs 4 4

Net financing charges ( 1 ) 11

Equity income 65 64

Income from discontinued operations before income taxes 114 83

Provision for income taxes on discontinued operations 24 19

Income from discontinued operations, net of tax 90 64

Income from discontinued operations attributable to noncontrolling interest, net of tax 34 30

Income from discontinued operations $ 56 $ 34

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The following table summarizes the assets and liabilities of the R&LC HVAC business which were classified as held for sale (in millions):

December 31, 2024 September 30, 2024

Accounts receivable - net 539 592

3 unchanged sentences

Property, plant and equipment - net 743 793

Goodwill 1,130 1,182

Other intangible assets - net 94 96

Investments in partially-owned affiliates 833 949

Other noncurrent assets 186 190

Impairment on assets held for sale ( 35 )

Noncurrent assets held for sale 2,986 3,210

Total Assets $ 692

Liabilities Held for Sale

Total assets classified as held for sale $ 4,644 $ 4,805

Accounts payable $ 887 $ 917

Accrued compensation and benefits 99 113

Deferred revenue 112 84

Other current liabilities 224 317

Current liabilities held for sale 1,322 1,431

Pension and postretirement benefits 5

Pension and postretirement benefit obligations 25 28

Other noncurrent liabilities 382 377

Noncurrent liabilities held for sale 407 405

Total Liabilities $ 352

Based on the total consideration expected from the sale, net of costs to sell, the Company recorded non-cash impairment charges on the allocated goodwill of $ 21 million and the held for sale disposal group of $ 35 million within restructuring and impairment costs in the consolidated statements of income during the three months ended June 30, 2024.

The business did not meet the criteria to be classified as a discontinued operation as the divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial results.

The transaction is expected to close in the fourth quarter of fiscal 2024.

No impairment charges were recorded during the three months ended June 30, 2023.

During the nine months ended June 30, 2023, the Company recorded impairment charges for the Global Retail business of $ 438 million and the Building Solutions Asia Pacific segment of $ 60 million.

The impairment charges were primarily due to reductions in the estimated fair values of the businesses to be disposed as a result of negotiations with potential buyers and were recorded within restructuring and impairment costs in the consolidated statements of income.

During the third quarter of fiscal 2023, the Company concluded that its Global Retail business no longer met the criteria to be classified as held for sale, as it was no longer probable that it would be sold in the next 12 months.

The net assets were reclassified to held and used at the lower of fair value or adjusted carrying value, and due to prior period impairment charges recorded, there was no impact to the consolidated statements of income as a result of this reclassification.

Total liabilities classified as held for sale $ 1,729 $ 1,836

Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell.

As of December 31, 2024, the estimated fair value less costs to sell of the held for sale businesses exceeded their carrying value, and therefore, no adjustment was necessary.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

REVENUE RECOGNITION

1 unchanged sentence

The following tables present the Company's revenues disaggregated by segment and by Products & Systems and Services revenue (in millions):

Three Months Ended June 30,

Products & Systems Services Total Products & Systems Services Total

Building Solutions North America $ 1,791 $ 1,108 $ 2,899 $ 1,636 $ 1,029 $ 2,665

Building Solutions EMEA/LA 574 507 1,081 571 474 1,045

Building Solutions Asia Pacific 381 194 575 537 199 736

Global Products 2,676 — 2,676 2,687 — 2,687

Total $ 5,422 $ 1,809 $ 7,231 $ 5,431 $ 1,702 $ 7,133

Nine Months Ended June 30,

Three Months Ended December 31,

Products & Systems Services Total Products & Systems Services Total

6 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

HVAC $ 468 $ 533

6 unchanged sentences

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):

Location of contract balances June 30, 2024 September 30, 2023

Location of contract balances December 31, 2024 September 30, 2024

Contract assets - current Accounts receivable - net $ 1,917 $ 1,931

2 unchanged sentences

Contract liabilities - noncurrent Other noncurrent liabilities 253 252

For the three months ended June 30, 2024 and 2023, the Company recognized revenue of $ 269 million and $ 222 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

For the nine months ended June 30, 2024 and 2023, the Company recognized revenue of $ 1,530 million and $ 1,387 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

For the three months ended December 31, 2024 and 2023, the Company recognized revenue of $ 878 million and $ 839 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

Performance Obligations

1 unchanged sentence

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

When contracts with customers require significant and complex integration, contain goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation.

When contracts with customers require significant and complex integration, contain

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation.

For any contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract.

2 unchanged sentences

The timing of satisfying the performance obligation is typically stipulated by the terms of the contract.

As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 21.4 billion, of which approximately 67 % is expected to be recognized as revenue over the next two years .

The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose contracts to construct hospitals, schools and other governmental buildings, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years.

As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $ 20.9 billion, of which approximately 64 % is expected to be recognized as revenue over the next two years .

The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose construction contracts, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years.

Future contract modifications could affect both the timing and the amount of the remaining performance obligations.

The Company excludes the value of remaining performance obligations for service contracts with an original expected duration of one year or less.

The Company excludes the value of remaining performance obligations for service contracts with an original expected duration of one year or less and contracts that are cancellable without substantial penalty.

Costs to Obtain or Fulfill a Contract

3 unchanged sentences

The following table presents the location and amount of costs to obtain or fulfill a contract recorded in the Company's consolidated statements of financial position (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Other current assets $ 276 $ 265

1 unchanged sentence

Total $ 560 $ 556

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

During the three months ended June 30, 2024 and 2023, the C ompany recognized amortizat ion expense of $ 84 million and $ 66 million, respectively, related to costs to obtain or fulfill a contract.

During the nine months ended June 30, 2024 and 2023, the Company recognized amortization expense of $ 218 million and $ 188 million, respectively, re late d to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three and nine months ended June 30, 2024 and 2023.

ACCOUNTS RECEIVABLE

The Company discontinued its receivable factoring program in March 2024.

Accounts receivable sold totaled $ 702 million during the nine months ended June 30, 2024, $ 425 million during the three months ended June 30, 2023 and $ 1.3 billion during the nine months ended June 30, 2023.

Previously sold receivables still outstanding were $ 31 million and $ 681 million as of June 30, 2024 and September 30, 2023, respectively.

During the three months ended December 31, 2024 and 2023, the C ompany recognized expense of $ 84 million and $ 57 million, respectively, related to costs to obtain or fulfill a contract.

There were no impairment losses recognized in the three months ended December 31, 2024 and 2023.

Inventories consisted of the following (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Raw materials and supplies $ 693 $ 765

2 unchanged sentences

Inventories $ 1,739 $ 1,774

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes changes in the carrying amount of goodwill in each of the Company’s reportable segments (in millions):

Three Months Ended December 31, 2024

Building Solutions North America Building Solutions EMEA/LA Building Solutions Asia Pacific Global Products Total

1 unchanged sentence

Accumulated impairment loss ( 659 ) ( 277 ) — ( 259 ) ( 1,195 )

Balance at September 30, 2023 9,381 1,885 1,179 5,491 17,936

Impairments — ( 230 ) — — ( 230 )

Foreign currency translation and other (1)

6 31 ( 2 ) ( 65 ) ( 30 )

Balance at June 30, 2024 $ 9,387 $ 1,686 $ 1,177 $ 5,426 $ 17,676

(1) Includes measurement period adjustments and the allocation of $ 21 million of goodwill from Global Products to the ADTi disposal group classified as held for sale.

Refer to Note 4, "Assets and Liabilities Held for Sale" of the notes to the consolidated financial statements for further information.

The Company tests goodwill for impairment annually as of July 31 or more frequently if events or changes in circumstances indicate the asset might be impaired.

During the second quarter of fiscal 2024, the Company determined a triggering event had occurred for one of its reporting units due to year-to-date results and projections for the remainder of fiscal 2024 being lower than the forecast used in the previous annual goodwill impairment test, and a quantitative test of goodwill for possible impairment was necessary.

As a result of the goodwill impairment test, the Company recorded a non-cash impairment charge of $ 230 million within restructuring and impairment costs in the consolidated statements of income, which was determined by comparing the carrying amount of the reporting unit to its fair value.

The Company used a discounted cash flow model to estimate the fair value of the reporting unit.

The primary assumptions used in the model were management's internal projections of future

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

cash flows, the weighted-average cost of capital and the long-term growth rate, which are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement." The reporting unit whose goodwill was impaired was previously disclosed as being at risk of impairment in the Company’s Annual Report on Form 10-K for the year-ended September 30, 2023.

It is possible that future changes in circumstances, including an increase in the discount rate or a decrease in the revenue growth rates, could result in an additional non-cash impairment charge of the remaining $ 212 million of goodwill for this reporting unit.

There were no other triggering events requiring an impairment assessment be conducted in the nine months ended June 30, 2024.

Balance at beginning of period 9,391 1,762 1,227 4,345 16,725

Foreign currency translation ( 41 ) ( 107 ) ( 84 ) ( 81 ) ( 313 )

Balance at end of period $ 9,350 $ 1,655 $ 1,143 $ 4,264 $ 16,412

Other intangible assets, primarily from business acquisitions, consisted of (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Amount Accumulated

10 unchanged sentences

Total intangible assets $ 6,949 $ ( 2,986 ) $ 3,963 $ 7,082 $ ( 2,952 ) $ 4,130

Amortization of other intangible assets for the three months ended June 30, 2024 and 2023 was $ 119 million and $ 111 million, respectively.

Amortization of other intangible assets for the nine months ended June 30, 2024 and 2023 was $ 366 million and $ 319 million, respectively.

Amortization of other intangible assets included within continuing operations for the three months ended December 31, 2024 and 2023 was $ 120 million and $ 119 million, respectively.

The following table presents supplemental consolidated statement of financial position information (in millions):

Location of lease balances June 30, 2024 September 30, 2023

Location of lease balances December 31, 2024 September 30, 2024

Operating lease right-of-use assets Other noncurrent assets

3 unchanged sentences

The following table presents supplemental noncash operating lease activity (in millions):

Nine Months Ended

Three Months Ended

Right-of-use assets obtained in exchange for operating lease liabilities $ 130 $ 76

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

DEBT AND FINANCING ARRANGEMENTS

Short-term debt consisted of the following (in millions):

June 30, September 30,

December 31, September 30,

Commercial paper $ 309 $ 350

1 unchanged sentence

Bank borrowings 4 —

$ 1,523 $ 385

Weighted average interest rate on short-term debt outstanding 3.7 % 4.8 %

As of June 30, 2024, the Company had syndicated committed revolving credit facilities of $ 2.5 billion which is scheduled to expire in December 2028 and $ 500 million which is scheduled to expire in December 2024.

There were no draws on the facilities as of June 30, 2024.

In June 2024, the Company completed the debt tender offer to purchase $ 119 million of its 5.125 % Notes due 2045.

In April 2024, the Company and its wholly-owned subsidiary, Tyco Fire & Security Finance S.C.A, co-issued $ 700 million unsecured, unsubordinated senior notes with an interest rate of 5.50 % which is due April 2029.

As of December 31, 2024, the Company had two syndicated committed revolving credit facilities, including $ 2.5 billion which is scheduled to expire in December 2028 and $ 500 million which is scheduled to expire in December 2025.

There were no draws on the facilities as of December 31, 2024.

In December 2024, the Company and its wholly-owned subsidiary, Tyco Fire & Security Finance S.C.A, co-issued the following unsecured, unsubordinated senior notes:

• $ 250 million 4.900 % Senior Notes due December 2032.

These notes are a further issuance of the $ 400 million, 4.900 % Senior Notes due 2032, which were originally issued in September 2022.

• € 500 million 3.125 % Senior Notes due December 2033.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company selectively uses derivative instruments to reduce market risk associated with changes in foreign currency, commodities and interest rates.

Under Company policy, the use of derivatives is restricted to those intended for hedging purposes;

the use of any derivative instrument for speculative purposes is strictly prohibited.

A description of each type of derivative utilized by the Company to manage risk is included in the following paragraphs.

In addition, refer to Note 12, "Fair Value Measurements," of the notes to the consolidated financial statements for information related to the fair value measurements and valuation methods utilized by the Company for each derivative type.

Cash Flow Hedges

2 unchanged sentences

The Company hedges 70 % to 90 % of the notional amount of each of its known foreign exchange transactional exposures.

The Company enters into forward-starting interest-rate swaps in conjunction with anticipated note issuances.

Forward-starting interest-rate swaps are terminated when the anticipated notes are issued.

Accumulated amounts recorded in accumulated other comprehensive income (loss) ("AOCI") as of the date of the note issuance are amortized to interest expense over the life of the related note to reflect the difference between the swap's reference rate and the fixed rate of the note.

During the second quarter of fiscal 2024, the Company terminated $ 600 million of forward-starting interest-rate swaps related to an anticipated note issuance that was no longer highly likely to occur.

Accumulated amounts previously recorded in AOCI were not material and were recognized as net financing charges in the consolidated statements of income when the swaps were terminated.

The Company selectively hedges anticipated transactions that are subject to commodity price risk, primarily using commodity hedge contracts, to minimize overall price risk associated with the Company’s purchases of copper and aluminum in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts.

1 unchanged sentence

The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

As cash flow hedges under ASC 815, "Derivatives and Hedging," the hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income ("AOCI") and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates and commodity prices during the three months ended December 31, 2024 and 2023.

The Company had the following outstanding contracts to hedge forecasted commodity purchases (in metric tons):

Volume Outstanding as of

Commodity June 30, 2024 September 30, 2023

Commodity December 31, 2024 September 30, 2024

Copper 2,880 2,676

Aluminum 2,471 2,450

Cash flow hedges under ASC 815, "Derivatives and Hedging," that hedge gains or losses due to changes in fair value are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings.

These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates and commodity prices during the three and nine months ended June 30, 2024 and 2023.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The Company may enter into forward-starting interest rate swaps in conjunction with anticipated note issuances to manage exposure to interest rate changes.

The forward-starting interest swaps are terminated when the anticipated notes are issued.

As of December 31, 2023, $ 600 million of forward-starting interest swaps were outstanding on an $ 800 million anticipated note issuance which was subsequently terminated in fiscal 2024 once the note issuance was no longer highly likely to occur.

Accumulated amounts previously recorded in AOCI were not material and were recognized as net financing charges in the consolidated statements of income when the swaps were terminated.

Net Investment Hedges

3 unchanged sentences

The following table summarizes net investment hedges (in billions):

June 30, September 30,

December 31, September 30,

Euro-denominated bonds designated as net investment hedges in Europe € 2.9 € 2.9

Yen-denominated debt designated as a net investment hedge in Japan ¥ 30 ¥ 30

US dollar vs.

Yen cross-currency interest rate swap designated as a net investment hedge in Japan ¥ 14 ¥ 14

Derivatives Not Designated as Hedging Instruments

3 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

Fair Value of Derivative Instruments

4 unchanged sentences

as Hedging Instruments

June 30, September 30, June 30, September 30,

December 31, September 30, December 31, September 30,

2024 2024 2024 2024

2 unchanged sentences

Interest rate swaps — 2 — —

Commodity derivatives 3 — — —

Other noncurrent assets

Cross-currency interest rate swap 13 5 — —

Total assets $ 42 $ 21 $ — $ 1

16 unchanged sentences

The Company does not anticipate any non-performance by any of its counterparties, and the concentration of risk with financial institutions does not present significant credit risk to the Company.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

The gross and net amounts of derivative assets and liabilities were as follows (in millions):

Fair Value of Assets Fair Value of Liabilities

June 30, September 30, June 30, September 30,

December 31, September 30, December 31, September 30,

2024 2024 2024 2024

2 unchanged sentences

Net amount $ 28 $ 10 $ 3,788 $ 3,438

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

Derivatives Impact on the Statements of Income and Statements of Comprehensive Income

1 unchanged sentence

Derivatives in Cash Flow

Hedging Relationships Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Hedging Relationships Three Months Ended December 31,

Foreign currency exchange derivatives $ 17 $ ( 13 )

4 unchanged sentences

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Reclassified from AOCI into Income Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Foreign currency exchange derivatives Cost of sales $ 1 $ ( 1 )

4 unchanged sentences

Recognized in Income on Derivative Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Foreign currency exchange derivatives Cost of sales $ ( 7 ) $ ( 5 )

2 unchanged sentences

Total $ ( 153 ) $ ( 48 )

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

The following table presents pre-tax gains (losses) on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) (in millions):

The following table presents pre-tax gains on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) (in millions):

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net investment hedges $ 238 $ 145

No gains or losses were reclassified from CTA into income during the three and nine months ended June 30, 2024 and 2023.

No gains or losses were reclassified from CTA into income during the three months ended December 31, 2024 and 2023.

FAIR VALUE MEASUREMENTS

2 unchanged sentences

Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs, other than quoted prices in active markets, that are observable either directly or indirectly;

2 unchanged sentences

When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Recurring Fair Value Measurements

1 unchanged sentence

Fair Value Measurements Using:

June 30, 2024 Quoted Prices

December 31, 2024 Quoted Prices

(Level 1) Significant

2 unchanged sentences

Foreign currency exchange derivatives $ 42 $ — $ 42 $ —

Commodity derivatives 3 — 3 —

Other noncurrent assets

Cross-currency interest rate swap 13 — 13 —

Deferred compensation plan assets 57 57 — —

13 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

Fair Value Measurements Using:

4 unchanged sentences

Foreign currency exchange derivatives $ 20 $ — $ 20 $ —

Interest rate swaps

Commodity derivatives

Other noncurrent assets

Cross-currency interest rate swap 5 — 5 —

Deferred compensation plan assets 56 56 — —

11 unchanged sentences

See Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.

The following table summarizes changes in contingent earn-out liabilities, which are valued using significant unobservable inputs (Level 3) (in millions):

Balance at September 30, 2023

Payments ( 20 )

Reduction for change in estimates ( 69 )

Balance at June 30, 2024

Valuation Methods

3 unchanged sentences

The contingent earn-out liabilities were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreements.

Cross-currency interest rate swaps:

The fair value of cross-currency interest rate swaps represents the difference between the swap's reference rate and exchange rate and the interest and exchange rates for a similar instrument as of the reporting period.

Cross-currency interest rate swaps are valued under a market approach using publicized prices.

Deferred compensation plan assets :

1 unchanged sentence

The investments primarily consist of mutual funds which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

4 unchanged sentences

The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices.

Interest rate swaps:

The fair value of interest rate swaps represent the difference between the swap's reference rate and the interest rate for a similar instrument as of the reporting period.

Interest rate swaps are valued under a market approach using publicized prices.

The following table presents the portion of unrealized gains recognized in the consolidated statements of income that relate to equity securities still held at June 30, 2024 and 2023 (in millions):

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The following table presents the portion of unrealized gains (losses) recognized in the consolidated statements of income that relate to equity securities still held at December 31, 2024 and 2023 (in millions):

Three Months Ended December 31,

Deferred compensation plan assets $ ( 1 ) $ 4

1 unchanged sentence

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

The fair value of long-term debt at June 30, 2024 and September 30, 2023 was as follows (in billions):

June 30, September 30,

The fair value of long-term debt at December 31, 2024 and September 30, 2024 was as follows (in billions):

December 31, September 30,

Public debt $ 8.4 $ 8.1

3 unchanged sentences

The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.

STOCK-BASED COMPENSATION

The Johnson Controls International plc 2021 Equity and Incentive Plan authorizes stock options, stock appreciation rights, restricted (non-vested) stock/units, performance share units and other stock-based awards.

The Compensation and Talent Development Committee of the Company's Board of Directors determines the types of awards to be granted to individual participants and the terms and conditions of the awards.

Awards are typically granted annually in the Company’s fiscal first quarter.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

A summary of the stock-based awards granted is presented below:

Nine Months Ended June 30,

Number Granted Weighted Average Grant Date Fair Value Number Granted Weighted Average Grant Date Fair Value

Restricted stock/units 1,874,606 $ 53.86 1,799,240 $ 66.28

Performance shares 370,307 54.13 339,191 79.54

Stock options 652,702 13.74 570,140 18.21

Performance Share Awards

The following table summarizes the assumptions used in determining the fair value of performance share units granted:

Nine Months Ended

Risk-free interest rate 4.21 % 4.04 %

Expected volatility of the Company’s stock 27.2 % 33.5 %

Stock Options

The following table summarizes the assumptions used in determining the fair value of stock options granted:

Nine Months Ended

Expected life of option (years) 5.7 5.8

Risk-free interest rate 3.86 % 3.59 %

Expected volatility of the Company’s stock 29.8 % 29.4 %

Expected dividend yield on the Company’s stock 2.77 % 2.10 %

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

EARNINGS PER SHARE

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Net income attributable to Johnson Controls $ 975 $ 1,049 $ 1,072 $ 1,300

Income Available to Ordinary Shareholders

Income from continuing operations $ 363 $ 340

Income from discontinued operations 56 34

Basic and diluted income available to shareholders $ 419 $ 374

Weighted Average Shares Outstanding

6 unchanged sentences

Stock options and unvested restricted stock — 0.6

Share repurchase program

During the three and nine months ended June 30, 2024, the Company repurchased and immediately retired $ 402 million and $ 876 million of its ordinary shares, respectively, on an open market.

During the three and nine months ended June 30, 2023, the Company repurchased and immediately retired $ 366 million and $ 613 million of its ordinary shares, respectively, on an open market.

As of June 30, 2024, approximately $ 2.1 billion re mains available under the Company's share repurchase program, which was approved by the Company's Board of Directors in March 2021.

The share repurchase program does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Foreign currency translation adjustments

11 unchanged sentences

Reclassification to income ( 1 ) ( 1 )

Net tax impact — — 1 1

Balance at end of period ( 5 ) ( 1 )

2 unchanged sentences

PENSION AND RETIREMENT PLANS

Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business.

See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional details regarding divestiture of the R&LC HVAC business.

The components of the Company’s net periodic benefit cost (credit) associated with its defined benefit pension and postretirement plans, which are primarily recorded in selling, general and administrative expenses in the consolidated statements of income, are shown in the tables below in accordance with ASC 715, "Compensation – Retirement Benefits" (in millions):

1 unchanged sentence

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Interest cost $ 16 $ 20

Expected return on plan assets ( 24 ) ( 30 )

Net actuarial loss (gain) — ( 6 ) — 17

Settlement loss — — — 1

Net periodic benefit credit $ ( 8 ) $ ( 10 )

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2024

December 31, 2024

Pension Plans

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Service cost $ 4 $ 4

4 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Interest cost $ 1 $ 1

2 unchanged sentences

Net periodic benefit credit $ ( 3 ) $ ( 2 )

Cumulative fiscal 2023 lump sum payouts triggered remeasurement events for certain pension plans in each quarter of fiscal 2023.

During the three months ended June 30, 2023, the Company recognized net actuarial gains of $ 6 million, primarily due to increases in discount rates, partially offset by unfavorable asset performance.

During the nine months ended June 30, 2023, the Company recognized net actuarial losses of $ 17 million, primarily due to net decreases in discount rates, partially offset by net favorable plan asset performance.

RESTRUCTURING AND RELATED COSTS

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to various restructuring activities as necessary.

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to restructuring plans as necessary.

Restructuring activities generally result in charges for workforce reductions, plant closures, asset impairments and other related costs which are reported as restructuring and impairment costs in the Company’s consolidated statements of income.

The Company expects the restructuring activities to reduce cost of sales and selling, general and administrative expenses ("SG&A") due to reduced employee-related costs, depreciation and amortization expense.

In the third and fourth quarters of fiscal 2023, the Company developed a restructuring plan which included workforce reductions and other actions focused on continued scaling of SG&A expenses to its planned growth.

Additional restructuring charges related to this plan were recorded in the three and nine months ended June 30, 2024 and are expected in subsequent quarters.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

The Company expects the restructuring actions to reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

During the fourth quarter of fiscal 2024, the Company completed its previous restructuring plan and committed to a new multi-year restructuring plan to address stranded costs and further right-size its global operations as a result of previously announced portfolio simplification actions.

It is expected that one-time restructuring costs, including severance and other employee termination benefits, contract termination costs, and certain other related cash and non-cash charges, of approximately $ 400 million will be incurred over the course of fiscal 2025, 2026 and 2027.

Restructuring costs will be incurred across all segments and Corporate functions.

The following table summarizes restructuring and related costs (in millions):

Three Months Ended June 30, 2024 Nine Months Ended June 30, 2024

Three Months Ended December 31, 2024

Building Solutions North America $ 6

2 unchanged sentences

Global Products 9

Corporate 7 14

Total $ 40 $ 103

The following table summarizes changes in the restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

Employee Severance and Termination Benefits Long-Lived Asset Impairments Other Total

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The following table summarizes changes in the current restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

Employee Severance and Termination Benefits Long-Lived Asset Impairments Total

Restructuring and related costs $ 25 $ 8 $ 33

1 unchanged sentence

Utilized—noncash — ( 8 ) ( 8 )

Balance at December 31, 2024

$ 21 $ — $ 21

The following table summarizes changes in the previous restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

Employee Severance and Termination Benefits Other Total

Balance at September 30, 2024 $ 58 $ 17 $ 75

Additional restructuring and related costs 50 36 17 103

Utilized—cash ( 27 ) — ( 27 )

Utilized—noncash — ( 36 ) ( 1 ) ( 37 )

Other 32 — 32

Balance at June 30, 2024

$ 54 $ — $ 16 $ 70

Balance at December 31, 2024 $ 31 $ 18 $ 49

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period.

1 unchanged sentence

The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland.

For the three months ended June 30, 2024, the Company's effective tax rate was 17.7 % and was higher than the statutory tax rate of 12.5 % primarily due to the tax impact of the water systems Aqueous Film Forming Foam ("AFFF") insurance proceeds and tax rate differentials, partially offset by the benefits of continuing global tax planning.

For the nine months ended June 30, 2024, the Company's effective tax rate was 7.5 % and was lower than the statutory tax rate of 12.5 % primarily due to the net tax impact of the water systems AFFF settlement costs and insurance proceeds, Swiss tax reform, and the benefits of continuing global tax planning, partially offset by the tax impact of an impairment charge, the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain consolidated subsidiaries and tax rate differentials.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

For the three months ended June 30, 2023, the Company's effective tax rate was ( 41.5 )% and was lower than the statutory tax rate of 12.5 % primarily due to reserve adjustments resulting from tax audit developments and the benefits of continuing global tax planning, partially offset by tax rate differentials.

For the nine months ended June 30, 2023, the Company's effective tax rate was ( 22.4 )% and was lower than the statutory tax rate of 12.5 % primarily due to reserve adjustments resulting from tax audit developments and the benefits of continuing global tax planning, partially offset by the tax impact of an impairment charge and tax rate differentials.

Refer to Note 21, "Commitments and Contingencies," of the notes to the consolidated financial statements for further disclosure related to the water systems AFFF settlement.

For the three months ended December 31, 2024, the Company's effective tax rate for continuing operations was 11.5 % and was lower than the statutory tax rate of 12.5 % primarily due to the benefits of continuing global tax planning, partially offset by tax rate differentials.

For the three months ended December 31, 2023, the Company's effective tax rate for continuing operations was ( 6.3 )% and was lower than the statutory tax rate of 12.5 % primarily due to Swiss tax reform and the benefits of continuing global tax planning, partially offset by the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain consolidated subsidiaries and tax rate differentials.

Uncertain Tax Positions

1 unchanged sentence

Accrued interest, net at September 30, 2024 was approximately $ 398 million (net of tax benefit).

Interest accrued during the nine months ended June 30, 2024 and 2023 was approximately $ 92 million and $ 33 million (both net of tax benefit), respectively.

Interest accrued during the three months ended December 31, 2024 and 2023 was approximately $ 28 million and $ 30 million (both net of tax benefit), respectively.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

In the U.S., fiscal years 2019 through 2020 are currently under audit and fiscal years 2017 through 2018 are currently under appeal with the Internal Revenue Service (“IRS”) for certain legal entities.

1 unchanged sentence

Additionally, the Company is currently under exam in the following major non-U.S.

jurisdictions:

jurisdictions for continuing operations:

Tax Jurisdiction Tax Years Covered

6 unchanged sentences

Impacts of Tax Legislation

On December 18, 2023, the president of Ireland signed into law the Finance (No.

2) Bill 2023, which included legislation regarding the implementation of the Pillar Two global minimum tax.

The Pillar Two legislation is effective for the Company’s fiscal year beginning October 1, 2024.

The impact in the current fiscal year is not expected to be material, however, the Company is continuing to assess the future impact of the new legislation.

On September 11, 2023, the Schaffhausen parliament approved a partial revision of the cantonal act on direct taxation:

Immediate Minimum Taxation Measure (“IMTM”).

On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and is effective starting January 1, 2024.

On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and was effective starting January 1, 2024.

The IMTM increased Switzerland's combined statutory income tax rate to approximately 15 %.

As a result, in the nine months ended June 30, 2024, the Company recorded a noncash discrete net tax benefit of $ 80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.

As a result, in the three months ended December 31, 2023, the Company recorded a noncash discrete net tax benefit of $ 80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.

SEGMENT INFORMATION

ASC 280, "Segment Reporting," establishes the standards for reporting information about segments in financial statements.

In applying the criteria set forth in ASC 280, the Company has determined that it has four reportable segments for financial reporting purposes.

The Company conducts its business through four operating segments, all of which are reportable segments:

2 unchanged sentences

• Building Solutions Asia Pacific which operates in Asia Pacific;

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

• Global Products which operates worldwide and includes the Johnson Controls-Hitachi joint venture.

• Global Products which operates worldwide.

The Building Solutions segments:

2 unchanged sentences

The Global Products segment designs, manufactures and sells:

• HVAC equipment, controls software and software services for residential and commercial applications;

• HVAC equipment, controls software and software services;

• Refrigeration equipment and controls;

1 unchanged sentence

• Security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems.

The Company’s segments provide products and services to commercial, institutional, industrial, data center, governmental and residential customers.

Management evaluates the performance of its segments primarily on segment earnings before interest, taxes and amortization ("EBITA"), which represents income before income taxes and noncontrolling interests, excluding corporate expenses, amortization of intangible assets, restructuring and impairment costs, the water systems AFFF settlement costs and insurance recoveries, net mark-to-market gains and losses related to pension and postretirement plans and restricted asbestos investments, and net financing charges.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The Company’s segments provide products and services primarily to commercial, institutional, industrial, data center, and governmental customers.

Management evaluates the performance of its segments primarily on segment earnings before interest, taxes and amortization ("EBITA"), which represents income from continuing operations before income taxes and noncontrolling interests, excluding corporate expenses, amortization of intangible assets, restructuring and impairment costs, the water systems AFFF settlement costs and insurance recoveries, net mark-to-market gains and losses related to pension and postretirement plans and restricted asbestos investments, and net financing charges.

Financial information relating to the Company’s reportable segments is as follows (in millions):

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Building Solutions North America $ 2,744 $ 2,487

3 unchanged sentences

Total net sales $ 5,426 $ 5,209

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Segment EBITA

Three Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Building Solutions North America $ 332 $ 285

6 unchanged sentences

Restructuring and impairment costs 33 35

Water systems AFFF settlement (1)

Water systems AFFF insurance recoveries (1)

( 351 ) — ( 351 ) —

Net mark-to-market gains ( 5 ) ( 17 ) ( 42 ) ( 16 )

Net mark-to-market losses (gains) 1 ( 22 )

Net financing charges 86 87

2 unchanged sentences

Certain of the Company's subsidiaries at the business segment level guarantee the performance of third parties and provide financial guarantees for uncompleted work and financial commitments.

The terms of these guarantees vary with end dates ranging from the current fiscal year through the completion of such transactions and would typically be triggered in the event of nonperformance.

The terms of these guarantees vary with end dates ranging from the current fiscal year through the completion of such transactions and would typically be triggered in the

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

event of nonperformance.

Performance under the guarantees, if required, would not have a material effect on the Company's financial position, results of operations or cash flows.

The Company offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement.

A typical warranty program requires that the Company repair or replace defective products within a specified time period from the date of sale.

Generally, the Company's warranties require the repair or replacement of defective products within a specified time period from the date of sale.

The Company records an estimate for future warranty-related costs based on actual historical costs to repair or replace products and other known factors.

4 unchanged sentences

Accruals for warranties issued during the period 16

Settlements made (in cash or in kind) during the period ( 101 )

Settlements made during the period ( 18 )

Changes in estimates to pre-existing warranties ( 2 )

Currency translation ( 3 )

Balance at June 30, 2024 $ 233

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Balance at December 31, 2024 $ 115

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

The following table presents the location and amount of reserves for environmental liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Other current liabilities $ 28 $ 32

8 unchanged sentences

Environmental Protection Agency ("EPA") and other environmental and health agencies and researchers.

In March 2021, EPA published its final determination to regulate PFOS and PFOA in drinking water.

In March 2021, EPA published its final determination to regulate

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

PFOS and PFOA in drinking water.

On April 10, 2024, EPA announced the final National Primary Drinking Water Regulation (“NPDWR”) for six PFAS compounds including PFOA and PFOS.

8 unchanged sentences

On April 17, 2024, the EPA Administrator signed the final rule designating PFOA and PFOS, along with their salts and structural isomers, as “hazardous substances.”

It is not possible to estimate the Company’s ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the financial viability of other potentially responsible parties and third-party indemnitors, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, changes in environmental regulations, changes in permissible levels of specific compounds in soil, groundwater and drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages, the uncertainty in the application of law and risk assessment, the

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur.

It is possible that technological, regulatory or enforcement developments, the results of additional environmental studies or other factors could change the Company's expectations with respect to future charges and cash outlays, and such changes could be material to the Company's future results of operations, financial condition or cash flows.

1 unchanged sentence

In addition, the Company has identified asset retirement obligations for environmental matters that are expected to be addressed at the retirement, disposal, removal or abandonment of existing owned facilities.

Conditional asset retirement obligations were $ 8 million and $ 13 million at June 30, 2024 and September 30, 2023, respectively.

Conditional asset retirement obligations were $ 7 million at both December 31, 2024 and September 30, 2024.

FTC-Related Matters

5 unchanged sentences

Its corporate predecessor, Ansul Incorporated (“Ansul”), manufactured arsenic-based agricultural herbicides at the Stanton Street Facility, which resulted in significant arsenic contamination of soil and groundwater on the site and in parts of the adjoining Menominee River.

In 2009, Ansul entered into an Administrative Consent Order (the "Consent Order") with EPA to address the presence of arsenic at the site.

In 2009, Ansul entered into an Administrative Consent Order (the "Consent Order") with the EPA to address the presence of arsenic at the site.

Under this agreement, Tyco Fire Products’ principal obligations are to contain the arsenic contamination on the site, pump and treat on-site groundwater, dredge, treat and properly dispose of contaminated sediments in the adjoining river areas, and monitor contamination levels on an ongoing basis.

Activities completed under the Consent Order since 2009 include the installation of a subsurface barrier wall around the facility to contain contaminated groundwater, the installation and ongoing operation and monitoring of a groundwater extraction and treatment system and the dredging and offsite disposal of treated river sediment.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

treatment system and the dredging and offsite disposal of treated river sediment.

In addition to ongoing remediation activities, the Company is also working with the Wisconsin Department of Natural Resources ("WDNR") to investigate and remediate the presence of PFAS at or near the Stanton Street Facility as part of the evaluation and remediation of PFAS in the Marinette region.

6 unchanged sentences

Although Wisconsin approved final regulatory standards for PFOA and PFOS in drinking water and surface water in February 2022, the Wisconsin Natural Resources Board did not approve WDNR's proposed standards for PFOA and PFOS in groundwater.

The WDNR initiated a rulemaking proceeding that would establish groundwater quality standards for PFOA, PFOS,

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

perfluorobutane sulfonic acid and its potassium salt (“PFBS”) and hexafluoropropylene oxide dimer acid and its ammonium salt (“HFPO-DA”).

In August 2024, WDNR issued a new proposed rule to adopt the EPA Maximum Contaminant Levels for PFAS in drinking water.

The WDNR initiated a rulemaking proceeding that would establish groundwater quality standards for PFOA, PFOS, perfluorobutane sulfonic acid and its potassium salt (“PFBS”) and hexafluoropropylene oxide dimer acid and its ammonium salt (“HFPO-DA”).

Pursuant to state law, the WDNR has stopped work on the proposed rule and notified the state legislature that, following economic analysis, the proposed costs would exceed statutory thresholds.

19 unchanged sentences

The WDOJ seeks monetary penalties and an injunction ordering these two subsidiaries to complete a site investigation and cleanup of PFAS contamination in accordance with the WDNR's requests.

The parties are engaged in summary judgment and pretrial motions and the court has set a trial date of December 3, 2024.

The parties are engaged in summary judgment and pretrial motions.

The Court has continued the trial previously scheduled for March 3, 2025 and has not yet set a new trial date.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

In October 2022, the Town of Peshtigo filed a tort action in Wisconsin state court against Tyco Fire Products, Johnson Controls Inc., Chemguard, Inc., and ChemDesign, Inc.

13 unchanged sentences

AFFF Litigation

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Chemguard and Tyco Fire Products, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S.

Two of the Company's subsidiaries, Chemguard and Tyco Fire Products, have been named, along with other defendant manufacturers, suppliers and distributors, and, in some cases, certain subsidiaries of the Company affiliated with Chemguard and Tyco Fire Products, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S.

Department of Defense (the "DOD") and others for fire suppression purposes and related training exercises.

9 unchanged sentences

Tyco Fire Products and Chemguard are also periodically notified by other municipal entities that those entities may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

Water Systems AFFF Settlement Agreement

2 unchanged sentences

The settlement releases these claims against Tyco Fire Products, Chemguard, and other related corporate entities.

In connection with the settlement, a charge for $ 750 million was recorded in selling, general and administrative expenses in the consolidated statements of income in the three months ended March 31, 2024.

Tyco Fire Products contributed an initial payment of $ 250 million in June 2024, with the remaining $ 500 million due by the first quarter of fiscal 2025.

Prior to the date of the final contribution, Tyco Fire Products has agreed to contribute any applicable insurance recoveries in excess of the initial $ 250 million payment, up to the remaining $ 500 million due, within a specified period following the receipt of such recovery.

During the three months ended June 30, 2024, the Company recorded expected insurance recoveries of $ 351 million in selling, general and administrative expenses in the consolidated statements of income, substantially all of the proceeds of which are expected to be received in the fourth quarter of fiscal 2024.

In accordance with its agreement and recent insurance recovery, Tyco Fire Products will make an additional payment during the fourth quarter of fiscal 2024 of approximately $ 90 million, reducing its final payment to approximately $ 410 million.

The amounts and timing of any additional insurance recoveries are uncertain.

There are still several procedural and legal steps that must occur before the settlement is final and the remaining payment is made.

The settlement is subject to final approval by the MDL court and other contingencies, and that process is expected to take several months.

On November 22, 2024, the Court entered final approval of the settlement agreement.

In accordance with the terms of the settlement agreement, Tyco Fire Products made its final required payment of $ 415 million in December 2024 and has now paid the full settlement amount.

The class of public water systems included in this settlement broadly includes any public water system (as defined in the settlement agreement) that has detected PFAS in its drinking water sources as of May 15, 2024.

1 unchanged sentence

water systems owned and operated by a State or the United States government;

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

that have not detected the presence of PFAS as of May 15, 2024;

systems that have not detected the presence of PFAS as of May 15, 2024;

small transient water systems;

6 unchanged sentences

The settlement does not constitute an admission of liability or wrongdoing by Tyco Fire Products or Chemguard.

If the MDL court does not approve the agreement or certain terms are not fulfilled, Tyco Fire Products and Chemguard will continue to defend themselves in the litigation.

AFFF Putative Class Actions

1 unchanged sentence

All of these cases have been direct-filed in or transferred to the MDL.

It is anticipated that the remaining state-court action will be similarly tagged and transferred.

Tyco Fire Products was also recently named in class actions in British Columbia and Quebec, Canada.

In addition, six proposed class actions were filed in Canada (British Columbia, Manitoba, Quebec and Ontario) in the past year, which name Tyco Fire Products and other manufacturers as defendants, on behalf of various classes of members (including individuals and government entities) who seek to recover for remediation (past and future) costs, claim property or other environmental damages, or claim personal injuries or other harms arising from alleged exposure to or contamination with PFAS or PFAS-containing products (including AFFF).

AFFF Individual or Mass Actions

2 unchanged sentences

The vast majority of these matters have been tagged for transfer to, transferred to, or directly-filed in the MDL, and it is anticipated that several newly-filed state court actions will be similarly tagged and transferred.

There are several matters that are proceeding in state courts, including actions in Arizona, Illinois and Virginia.

There are several matters that are proceeding in state courts, including actions in Arizona, Illinois and Wisconsin.

Tyco and Chemguard are also periodically notified by other individuals that they may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

AFFF State or U.S.

12 unchanged sentences

The 3M Company et al (N.Y.

Ct., Albany County)), against a number of manufacturers, including

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York.

Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York.

This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL.

16 unchanged sentences

Other AFFF Related Matters

In March 2020, the Kalispel Tribe of Indians (a federally recognized Tribe) and two tribal corporations filed a lawsuit in the United States District Court for the Eastern District of Washington against a number of manufacturers, including affiliates of the Company, and the United States with respect to PFAS contamination allegedly resulting from the use and disposal of AFFF by the United States Air Force at and around Fairchild Air Force Base in eastern Washington.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

disposal of AFFF by the United States Air Force at and around Fairchild Air Force Base in eastern Washington.

This case has been transferred to the MDL.

4 unchanged sentences

The Company has a historical general liability insurance program and is pursuing coverage under the program from various insurers through insurance claims discussions and litigation pending in a state court in Wisconsin and a federal district court in South Carolina.

The insurance litigation

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

involves numerous factual and legal issues.

The insurance litigation involves numerous factual and legal issues.

There are numerous factual and legal issues to be resolved in connection with these claims.

4 unchanged sentences

The following table presents the location and amount of asbestos-related assets and liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Other current liabilities $ 58 $ 58

5 unchanged sentences

Net asbestos-related liabilities $ 72 $ 74

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

The following table presents the components of asbestos-related assets (in millions):

June 30, 2024 September 30, 2023

Cash $ 10 $ 20

December 31, 2024 September 30, 2024

Investments 277 281

4 unchanged sentences

Key variables and assumptions include the number and type of new claims that are filed each year, the average cost of resolution of claims, the identity of defendants, the resolution of coverage issues with insurance carriers, amount of insurance, and the solvency risk with respect to the Company's insurance carriers.

Many of these factors are closely linked, such that a change in one variable or assumption may impact one or more of the others, and no single variable or assumption predominately influences the determination of the Company's asbestos-related liabilities and insurance-related assets.

Furthermore, predictions with respect to these variables are subject to greater uncertainty in the later portion of the projection period.

Other factors that may affect the Company's liability and cash payments for asbestos-related matters include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms of state or federal tort legislation and the applicability of insurance policies among subsidiaries.

As a result, actual liabilities or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Company's calculations vary significantly from actual results.

Johnson Controls International plc

Notes to Consolidated Financial Statements

June 30, 2024

Self-Insured Liabilities

4 unchanged sentences

The following table presents the location and amount of self-insured liabilities in the Company's consolidated statements of financial position (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Other current liabilities $ 98 $ 92

3 unchanged sentences

The following table presents the location and amount of insurance receivables in the Company's consolidated statements of financial position (in millions):

June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024

Other current assets $ 5 $ 5

1 unchanged sentence

Total insurance receivables $ 18 $ 18

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

Other Matters

2 unchanged sentences

Costs related to such matters were not material to the periods presented.

SUBSEQUENT EVENT

On July 23, 2024, the Company entered into a Stock and Asset Purchase Agreement (“Purchase Agreement”) with Bosch GmbH, a Gesellschaft mit beschränkter Haftung (“Purchaser”).

Pursuant to the Purchase Agreement, on the terms and subject to the conditions therein, the Company has agreed to sell, and Purchaser has agreed to acquire, the Company’s Residential and Light Commercial HVAC business (the “R&LC Business”), including the Company’s North America Ducted business and Johnson Controls-Hitachi Air Conditioning Holding (UK) Ltd., the Company’s global Residential joint venture with Hitachi Global Life Solutions, Inc.

(“Hitachi”), of which the Company owns 60 % and Hitachi owns 40 %.

The total consideration payable by Purchaser to the Company and Hitachi is approximately $ 8.1 billion in cash, and the Company’s portion of the aggregate consideration is approximately $ 6.7 billion in cash, in each case, subject to adjustment, plus the assumption by Purchaser or its affiliates of certain liabilities of the R&LC Business specified in the Purchase Agreement.

Net cash proceeds to the Company are expected to be approximately $ 5.0 billion after tax and transaction-related expenses.

The transaction is expected to close in the fourth quarter of fiscal 2025, subject to required regulatory approvals and other customary closing conditions.

The Company expects to report the operating results of the R&LC HVAC business, which is currently reported in the Global Products segment, in discontinued operations beginning in the fourth quarter of fiscal 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements