What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-05-06 · 81 added, 76 removed, 268 unchanged (37% of the section changed)

33 unchanged sentences

The forward-looking statements included in this document are made only as of the date of this document, unless otherwise specified, and, except as required by law, Johnson Controls assumes no obligation, and disclaims any obligation, to update such statements to reflect events or circumstances occurring after the date of this document.

Johnson Controls International plc, headquartered in Cork, Ireland, a global leader in thermal management, mission-critical building systems, energy efficiency, and decarbonization, helps customers use energy more productively, reduce carbon emissions, and operate with the precision and resilience required in rapidly expanding industries such as data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education.

The Company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including 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) and energy-management consulting.

The Company partners with customers by leveraging its broad product portfolio and digital capabilities, together with its direct channel capabilities, to deliver solutions and services addressing distinct and diverse operating environments and regulatory requirements that address customers’ needs in their core missions.

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in thermal management, mission-critical building systems, energy efficiency, and decarbonization.

The Company helps customers create, maintain, and optimize indoor operating environments that use energy more productively, reduce carbon emissions, and support the precise, reliable and

resilient operating conditions in rapidly expanding industries such as data centers, healthcare, pharmaceuticals, advanced manufacturing, and higher education.

The Company is a fully integrated industrial technology company that engineers, manufactures, commissions and retrofits building products and systems, including 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 through a large global field workforce and service network along with its system integration expertise and managing the full lifecycle of critical indoor environments — from design and commissioning through ongoing service and retrofit.

Combining its broad product portfolio, digital capabilities, direct channel and lifecycle service expertise, the Company partners with customers to address distinct and diverse operating environments, regulatory requirements, and the critical operational needs of their facilities.

The following information should be read in conjunction with the September 30, 2025 consolidated financial statements and notes thereto, along with management’s discussion and analysis of financial condition and results of operations included in the Company's Annual Report on Form 10-K for the year ended September 30, 2025 filed with the SEC on November 14, 2025.

References in the following discussion and analysis to "Three Months," "Second Quarter" or similar language refer to the three months ended March 31, 2026 compared to the three months ended March 31, 2025, while "Year-to-Date" refers to six months ended March 31, 2026 compared to the six months ended March 31, 2025.

References in the following discussion and analysis to "Three Months," "Third Quarter" or similar language refer to the three months ended June 30, 2026 compared to the three months ended June 30, 2025, while "Year-to-Date" refers to nine months ended June 30, 2026 compared to the nine months ended June 30, 2025.

Macroeconomic Trends

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However, the United States has since imposed new tariffs and duties in their place.

The Company is currently evaluating its options to mitigate the impact of prior IEEPA tariffs through participation in the IEEPA refund process.

To date, the tariffs enacted by the United States and other countries have not had a material impact on the Company's financial performance for the periods presented.

The Company is participating in the IEEPA refund process.

To date, the tariffs enacted by the United States and other countries and refunds claimed under the IEEPA refund process have not had a material impact on the Company's financial performance for the periods presented.

Geopolitical and economic tensions, including the ongoing conflicts in the Middle East, have the potential to cause disruptions in global supply chains, increase costs and create overall volatility.

The ongoing conflicts in the Middle East have disrupted energy supplies and supply chains, increased costs for energy and other supplies and created volatility in the capital markets, among other impacts.

The net effect of these events will continue to depend on the Company’s ability to successfully mitigate and offset their impacts.

The continued net effect of these events will continue to depend on the Company’s ability to successfully mitigate and offset their impacts.

The Company is taking actions to mitigate the actual and anticipated impact of ongoing trade restrictions and geopolitical conflict, including strengthening the Company's in region, for region manufacturing strategy, pivoting to local sourcing in its supply chain, accelerating pricing actions and asserting contractual rights through change orders.

The Company has historically taken a variety of actions to mitigate trade restrictions, supply chain disruptions and inflation, including through expanding and redistributing its supplier network, supplier financing, accelerated purchasing and productivity improvements.

These actions have largely been successful in mitigating the impacts of the current macroeconomic environment, however, it is uncertain as to whether the actions taken or contemplated to be taken by the Company will be effective in continuing to mitigate the impact of current and future trade restrictions and their related impacts.

current and future trade restrictions and their related impacts.

The Company continues to actively monitor and evaluate the development and potential impacts of tariffs, trade restrictions and geopolitical conflicts on its supply chain and results of operations.

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dollar could increase or reduce the Company’s profit margin, respectively, and impact the comparability of results from period to period.

The Company continues to observe trends demonstrating increased interest and demand for its products and services that enable smart, efficient and sustainable buildings, which are driven in part by government tax incentives, building performance standards and other regulations designed to limit emissions and combat climate change.

The Company continues to observe trends demonstrating increased interest and demand for its products and services that enable smart, efficient and sustainable buildings, which are driven in part by increased maturity and adoption of AI and high-performance computing is currently impacting the microchip and data center industry and driving technology innovation, which has led to increased demand for hyperscale and data center cooling solutions that deliver heat management and energy efficiency.

This trend has contributed to increases in the Company’s orders and backlog.

In addition, the Company continues to observe increased demand driven by government tax incentives, building performance standards and other regulations designed to limit emissions and combat climate change.

In particular, legislative and regulatory initiatives such as the EU Energy Efficiency Directive, EU Heat Transition, U.S.

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This demand is supplemented by commitments in both the public and private sectors to reduce emissions and/or achieve net zero emissions.

In addition, the increased maturity and adoption of AI and high-performance computing is currently impacting the microchip and data center industry and driving technology innovation, which has led to increased demand for hyperscale and data center cooling solutions that deliver heat management and energy efficiency.

The Company seeks to capitalize on these trends to enable delivery of sustainable, high-efficiency products and tailored services to empower customers to achieve their sustainability, heat management and energy efficiency goals.

The Company is leveraging its install base, together with data-driven products and services, to offer outcome-based solutions to customers with a focus on generating accelerated growth in services and recurring revenue.

Certain of our customers, including governmental and institutional customers, have exhibited increased uncertainty regarding future spending decisions due to various political and economic factors, including budget reductions, reprioritization of spending, interest rate fluctuation and economic uncertainty.

This uncertainty has and may in the future impact on the Company's ability to predict and forecast the revenue and backlog associated with these customers.

The extent to which the Company’s results of operations and financial condition are impacted by these and other factors in the future will depend on developments that are highly uncertain and cannot be predicted.

See the section entitled "Risk Factors" in Johnson Controls' Annual Report on Form 10-K for the year ended September 30, 2025 filed with the United States Securities and Exchange Commission ("SEC") on November 14, 2025.

Certain of these risk factors have been updated and supplemented in the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2025 filed on February 4, 2026 and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Three Months Ended March 31, Six Months Ended March 31,

Certain of these risk factors have been updated and supplemented in Part II, Item 1A of this Quarterly Report on Form 10-Q.

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

(in millions) 2026 2025 Change 2026 2025 Change

Net sales $ 6,614 $ 6,052 9 % $ 18,553 $ 17,154 8 %

The increase in net sales for the three months ended March 31, 2026 was due to higher organic sales ($360 million) and the favorable impact of foreign currency translation ($128 million), partially offset by the impact of divestitures ($22 million).

Excluding the impact of foreign currency translation and business divestitures, net sales increased 6% over the prior year, driven by growth across all segments, led by the Americas.

The increase in net sales for the six months ended March 31, 2026 was due to higher organic sales ($671 million) and the favorable impact of foreign currency translation ($200 million), partially offset by the net impact of acquisitions and divestitures ($34 million).

Excluding the impact of foreign currency translation and business acquisitions and divestitures, net sales increased 6% over the prior year, driven by growth across all segments, led by the Americas.

The increase in net sales for the three months ended June 30, 2026 was due to higher organic sales ($582 million) and the favorable impact of foreign currency translation ($26 million), partially offset by the impact of divestitures ($46 million).

Excluding the impact of foreign currency translation and business divestitures, net sales increased 10% over the prior year, driven by growth across all segments, led by strength in Applied HVAC and continued growth across both Products and Systems and Services.

Products and Systems sales increased 11% and Services increased 7%.

The increase in net sales for the nine months ended June 30, 2026 was due to higher organic sales ($1,253 million) and the favorable impact of foreign currency translation ($226 million), partially offset by the net impact of acquisitions and divestitures ($80 million).

Excluding the impact of foreign currency translation and business acquisitions and divestitures, net sales increased 7% over the prior year, driven by growth across all segments, led by strength in Applied HVAC and growth across both Products and Systems and Services.

Products and Systems and Services sales both increased 7%.

Refer to the "Segment Analysis" below within this Item 2 for a discussion of net sales by segment.

Cost of Sales / Gross Profit

Three Months Ended March 31, Six Months Ended March 31,

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

(in millions) 2026 2025 Change 2026 2025 Change

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% of sales 37.4 % 37.1 % 30 bp 36.7 % 36.4 % 30 bp

The increase in gross profit for the three and six months ended March 31, 2026 was primarily due to organic sales growth, productivity improvements and better operating leverage.

The increase in gross profit for the three and nine months ended June 30, 2026 was primarily due to organic sales growth, productivity improvements and better operating leverage.

Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment earnings.

Selling, General and Administrative Expenses ("SG&A")

Three Months Ended March 31, Six Months Ended March 31,

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

(in millions) 2026 2025 Change 2026 2025 Change

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% of sales 21.3 % 23.4 % (210) bp 21.7 % 24.7 % (300) bp

The decrease in SG&A for the three months ended March 31, 2026 was primarily due to benefits from ongoing cost reduction actions.

The decrease in SG&A for the six months ended March 31, 2026 was primarily due to AFFF insurance recoveries related to the previously disclosed water systems settlement ($119 million), the gain on the ADT Mexico business divestiture ($70 million) and benefits from ongoing cost actions.

The decrease in SG&A for the three months ended June 30, 2026 was primarily due to AFFF insurance recoveries related to the previously disclosed water systems settlement ($16 million).

The decrease in SG&A for the nine months ended June 30, 2026 was primarily due to AFFF insurance recoveries related to the previously disclosed water systems settlement ($135 million), the gain on the ADT Mexico business divestiture ($70 million) and benefits from ongoing cost actions.

Refer to the "Segment Analysis" below within this Item 2 for a discussion of segment earnings.

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

Three Months Ended March 31, Six Months Ended March 31,

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

(in millions) 2026 2025 2026 2025

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Restructuring and impairment costs $ 80 $ 51 $ 224 $ 146

Refer to No te 3, "Divestitures" and Note 14, "Restructuring and Related Costs," of the notes to the consolidated financial statements for further disclosure related to the Company's restructuring actions and impairment costs.

Refer to No te 3, "Acquisitions and Divestitures" and Note 14, "Restructuring and Related Costs," of the notes to the consolidated financial statements for further disclosure related to the Company's restructuring actions and impairment costs.

Net Financing Charges

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Income Tax Provision

Three Months Ended March 31, Six Months Ended March 31,

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

(in millions) 2026 2025 2026 2025

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Segment EBITA is not defined under GAAP and may not be comparable to similarly titled measures used by other companies.

Three Months Ended March 31, Six Months Ended March 31,

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

(in millions) 2026 2025 Change 2026 2025 Change

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Three Months:

• The increase in Americas was due to organic growth ($260 million) and foreign currency translation ($24 million).

• The increase in Americas was due to organic growth ($454 million) and the favorable impact of foreign currency translation ($8 million).

Excluding the impact of foreign currency translation, sales increased 11%, led by continued strength across Applied HVAC.

Products and Systems sales increased 12% and Services increased 10%.

• The increase in EMEA was due to the favorable impact of foreign currency translation ($89 million) and organic growth ($14 million), partially offset by the impact of divestitures ($22 million).

• The decrease in EMEA was due to the impact of divestitures ($41 million), partially offset by organic growth ($17 million) and the favorable impact of foreign currency translation ($15 million).

Excluding the impact of foreign

currency translation and divestitures, sales increased 1%, as Products and Systems growth offset disruptions caused by the Middle East conflicts and lower non-recurring Services volumes during the quarter.

• The increase in APAC was due to organic growth ($86 million) and foreign currency translation ($15 million) .

Excluding the impact of foreign currency translation, sales increased 13%, led by over 20% growth in Applied HVAC primarily due to data center application growth.

currency translation and divestitures, sales increased 1%, as growth was constrained by continued pressure in the region due to the conflicts in the Middle East.

Both Products and Systems sales and Services increased 1%.

• The increase in APAC was due to organic growth ($111 million) and the favorable impact of foreign currency translation ($3 million), partially offset by the impact of divestitures ($5 million).

Excluding the impact of foreign currency translation, sales increased 15%, led by 20% growth in Products and Systems and continued strength in Applied HVAC.

Year to Date:

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• The increase in EMEA was due to the favorable impact of foreign currency translation ($169 million) and organic growth ($82 million), partially offset by the net impact of business acquisitions and divestitures ($75 million).

Excluding the impact of foreign currency translation and business acquisitions and divestitures, sales increased 3%.

Excluding the impact of foreign currency translation and business acquisitions and divestitures, sales increased 2%, as growth was constrained by pressure in the region due to the conflicts in the Middle East.

Products and Systems sales increased 2% and Services increased 3%.

• The increase in APAC was due to organic growth ($136 million) and foreign currency translation ($16 million).

Excluding the impact of foreign currency translation, sales increased 10%, led by 14% growth in Products and Systems primarily due to data center application growth.

• The increase in APAC was due to organic growth ($247 million) and foreign currency translation ($19 million), partially offset by the impact of divestitures ($5 million).

Excluding the impact of foreign currency translation, sales increased 12%, led by 16% growth in Products and Systems continued strength in Applied HVAC.

Segment EBIT and Segment EBITA (non-GAAP)

Three Months Ended March 31,

Six Months Ended March 31,

Three Months Ended June 30,

Nine Months Ended June 30,

(in millions) 2026 2025 Change 2026 2025 Change

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Segment EBITA (non-GAAP)

Three Months Ended March 31,

Three Months Ended June 30,

Segment EBITA (non-GAAP)

Six Months Ended March 31,

Nine Months Ended June 30,

(in millions) 2026 2025 Change 2026 2025 Change

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Three Months:

• The increase in Americas was primarily driven by favorable pricing, productivity improvements and increased volumes.

• The increase in EMEA was primarily driven by productivity improvements and improved leverage on higher revenue.

• The increase in APAC was primarily driven by increased volumes and productivity improvements.

• The increase in Americas was primarily driven by strong operating leverage on higher revenue.

• The increase in EMEA was primarily driven by favorable pricing and productivity improvements, partially offset by the impact of business divestitures.

• The increase in APAC was primarily driven by productivity improvements, favorable business mix and higher revenues.

Year to Date:

• The increase in Americas was primarily driven by favorable pricing, productivity improvements and increased volumes.

• The increase in EMEA was primarily driven by productivity improvements and improved leverage on higher revenue.

• The increase in EMEA was primarily driven by productivity improvements and favorable pricing, partially offset by the impact of business divestitures.

• The increase in APAC was primarily driven by increased volumes and productivity improvements.

A reconciliation of income from continuing operations before income taxes to Segment EBIT and Segment EBITA (non-GAAP) is as follows (in millions):

Three Months Ended March 31, Six Months Ended March 31,

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

2026 2025 2026 2025

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Segment EBITA (non-GAAP) $ 1,280 $ 1,062 $ 3,289 $ 2,823

Backlog and Orders

Backlog and orders are additional metrics that are meant to provide management with a deeper level of insight into the progress of specific strategic and growth initiatives.

Orders and Backlog

Orders and backlog are additional metrics that are meant to provide management with a deeper level of insight into the progress of specific strategic and growth initiatives.

Orders provide management with a signal of customer demand for the Company's products and services, as well as an indication of future revenues and performance.

The Company believes backlog is a useful measure for evaluating its operational performance and relationship to total orders.

However, the timing and conversion of backlog and orders are subject to numerous uncertainties and risks and are not necessarily indicative of the amount of revenue to be earned in the upcoming fiscal year.

The following table summarizes backlog and orders by segment:

Backlog Orders

(in billions) March 31, 2026 Year-over-Year Change (1)

Three Months Ended March 31, 2026 Year-over-Year Change (1)

However, the timing and conversion of orders and backlog are subject to numerous uncertainties and risks and are not necessarily indicative of the amount of revenue to be earned in the upcoming fiscal year.

The following table summarizes orders and backlog by segment:

Orders Backlog

(in billions) Three Months Ended June 30, 2026 Year-over-Year Change (1)

June 30, 2026 Year-over-Year Change (1)

$ 4.8 37 % $ 15.9 40 %

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Total $ 6.8 27 % $ 21.0 32 %

(1) Change is compared to March 31, 2025 (backlog) and the three months ended March 31, 2025 (orders) and excludes the impact of acquisitions, divestitures and foreign currency.

Backlog increased 26%, led by growth in Products and Systems.

(1) Change is compared to the three months ended June 30, 2025 (orders) and June 30, 2025 (backlog) and excludes the impact of acquisitions, divestitures and foreign currency.

Orders increased 27%, reflecting sustained demand in large projects across the Company's core markets, including the Company's solutions for large-scale data center projects.

• The 37% increase in orders for Americas was led by 55% growth in Products and Systems and 4% growth in Services.

• The 6% increase in orders for EMEA was led by 7% growth in Products and Systems and 4% growth in Services.

• The 12% increase in orders for APAC was due to 17% growth in Products and Systems and 1% growth in Services.

Backlog increased 32%, reflecting sustained orders growth and led by growth in Products and Systems.

• The 40% increase in backlog for Americas was led by 47% growth in Products and Systems, partially offset by a 1% decrease in Services.

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• The 12% increase in backlog for APAC was due to 12% growth in Products and Systems and 9% growth in Services.

Orders increased 30%, reflecting sustained demand in large projects across our core markets, including our solutions for large-scale data center projects .

• The 40% increase in orders for Americas was led by 57% growth in Products and Systems and 4% growth in Services.

• The 11% increase in orders for EMEA was led by 26% growth in Products and Systems, partially offset by an 8% decrease in Services.

• The 4% increase in backlog for APAC was due to 6% growth in Products and Systems and 2% growth in Services.

Remaining performance obligations were $26.3 billion at March 31, 2026.

Remaining performance obligations were $27.1 billion at June 30, 2026.

Differences between the Company’s remaining performance obligations and backlog are primarily due to:

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Working Capital

(in millions) March 31, 2026 September 30, 2025 Change

(in millions) June 30, 2026 September 30, 2025 Change

Current assets $ 11,281 $ 10,162

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Accounts payable 3,917 3,614 8 %

The increase in working capital at March 31, 2026 as compared to September 30, 2025 was primarily due to increases in cash and accounts receivable and decreases in accrued compensation and the current portion of long-term debt, partially offset by an increase in deferred revenue and the net impact of other current assets and liabilities.

The increase in working capital at June 30, 2026 as compared to September 30, 2025 was primarily due to increases in cash and accounts receivable and decreases in accrued compensation and the current portion of long-term debt, partially offset by increases in deferred revenue and accounts payable.

Cash Flows From Continuing Operations

Six Months Ended March 31,

Nine Months Ended June 30,

(in millions) 2026 2025

Cash provided by operating activities $ 2,572 $ 1,586

Cash provided (used) by investing activities 41 (217)

Cash used by investing activities (235) (302)

Cash used by financing activities (1,946) (1,111)

The increase in cash provided by operating activities primarily reflects higher net income and favorable changes in accounts payable and accrued liabilities and other assets, partially offset by higher accounts receivable.

The change in investing activities was due to proceeds from the ADT Mexico divestiture.

The change in investing activities was primarily due to proceeds from the ADT Mexico and ADT Spain divestitures and a decrease in capital expenditures, partially offset by the acquisitions of Alloy Enterprises and Nantum AI.

The increase in cash used by financing activities was primarily due to changes in net debt activity, partially offset by lower stock repurchases.

Capitalization

(in millions) March 31, 2026 September 30, 2025

(in millions) June 30, 2026 September 30, 2025

Short-term debt $ 865 $ 723

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In total, the Company invested $5.0 billion to repurchase 43,693,817 shares at an average price of $114.43 per share.

As of March 31, 2026, approximately $4.5 billion remains available under the Company's share repurchase authorization, which does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

As of June 30, 2026, approximately $3.9 billion remains available under the Company's share repurchase authorization, which does not have an expiration date and may be amended or terminated by the Board of Directors at any time without prior notice.

The Company expects to repurchase outstanding shares from time to time depending on market conditions, alternate uses of capital, liquidity, and the economic environment.

• The Company declared a dividend of $0.40 per common share in the quarter ended March 31, 2026 and intends to continue paying dividends throughout fiscal 2026.

• The Company believes its capital resources and liquidity position, including cash and cash equivalents of $698 million at March 31, 2026, are adequate to fund operations and meet its cash obligations for the foreseeable future.

• The Company declared a dividend of $0.40 per common share in the quarter ended June 30, 2026 and intends to continue paying dividends throughout fiscal 2026.

• The Company believes its capital resources and liquidity position, including cash and cash equivalents of $641 million at June 30, 2026, are adequate to fund operations and meet its cash obligations for the foreseeable future.

– The Company manages its short-term debt position in the U.S.

and euro commercial paper and bank loan markets.

Commercial paper outstanding totaled $441 million as of March 31, 2026 and $400 million as of September 30, 2025.

Commercial paper outstanding totaled $200 million as of June 30, 2026 and $400 million as of September 30, 2025.

– The Company maintains a shelf registration statement with the SEC under which it may issue additional debt securities, ordinary shares, preferred shares, depository shares, warrants, purchase contracts and units that may be offered in one or more offerings on terms to be determined at the time of the offering.

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– The Company also has the ability to draw on its $2.5 billion revolving credit facility which is scheduled to expire in December 2028.

There were no draws on the revolving credit facility as of March 31, 2026 and September 30, 2025.

There were no draws on the revolving credit facility as of June 30, 2026 and September 30, 2025.

• The Company's ability to access the global capital markets and the related cost of financing is dependent upon, among other factors, the Company's credit ratings.

As of March 31, 2026, the Company's credit ratings and outlook were as follows:

As of June 30, 2026, the Company's credit ratings and outlook were as follows:

Rating Agency Short-Term Rating Long-Term Rating Outlook

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For purposes of calculating these covenants, consolidated shareholders’ equity attributable to Johnson Controls is calculated without giving effect to (i) the application of Accounting Standards Codification ("ASC") 715-60, "Defined Benefit Plans - Other Postretirement," or (ii) the cumulative foreign currency translation adjustment.

As of March 31, 2026, the Company was in compliance with all covenants and other requirements set forth in its credit agreements and the indentures governing its notes, and expects to remain in compliance for the foreseeable future.

As of June 30, 2026, the Company was in compliance with all covenants and other requirements set forth in its credit agreements and the indentures governing its notes, and expects to remain in compliance for the foreseeable future.

None of the Company’s debt agreements limit access to stated borrowing levels or require accelerated repayment in the event of a decrease in the Company's credit rating.

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The application of these laws, or any conflict among them, could adversely affect noteholders’ ability to enforce their rights under the Notes in those jurisdictions or limit any amounts that they may receive.

The following table presents the net loss attributable to the Parent Company and TFSCA (collectively, the "Obligor Group") and the net income (loss) attributable to intercompany transactions between the Obligor Group and subsidiaries of the Parent Company other than TFSCA (collectively, the "Non-Obligor Subsidiaries") which are excluded from the Net loss attributable to the Obligor Group (in millions):

Six Months Ended March 31, 2026 Year Ended September 30, 2025

The following table presents the net loss attributable to the Parent Company and TFSCA (collectively, the "Obligor Group") and the net loss attributable to intercompany transactions between the Obligor Group and subsidiaries of the Parent Company other than TFSCA (collectively, the "Non-Obligor Subsidiaries") which are excluded from the Net loss attributable to the Obligor Group (in millions):

Nine Months Ended June 30, 2026 Year Ended September 30, 2025

Net loss attributable to the Obligor Group $ 244 $ 844

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Obligor Group Intercompany Balances

March 31, 2026 September 30, 2025 March 31, 2026 September 30, 2025

June 30, 2026 September 30, 2025 June 30, 2026 September 30, 2025

Current assets $ 1,174 $ 2,748 $ 5,992 $ 6,161

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, 2026, the Company had not experienced any adverse changes in market risk exposures that materially affected the quantitative and qualitative disclosures presented in its Annual Report on Form 10-K for the year ended September 30, 2025.

As of June 30, 2026, the Company had not experienced any adverse changes in market risk exposures that materially affected the quantitative and qualitative disclosures presented in its Annual Report on Form 10-K for the year ended September 30, 2025.

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 2. Management’s Discussion and Analysis