Key Highlights

  • Sales rose 10% to USD 7.1 billion, organic sales rose 12%, and adjusted EPS was USD 1.66.
  • Orders rose 44% organically and backlog reached USD 23.0 billion, up 43%, supported by data center demand.
  • Americas adjusted segment EBITA margin rose 210 basis points to 22.0% on organic sales growth of 14%.
  • Fiscal 2027 guidance calls for organic sales growth of 11% to 12% and adjusted EPS of USD 6.15 to 6.30.

Data Centers Lift Orders and Backlog

Johnson Controls (NYSE:JCI) reported fiscal fourth-quarter sales of USD 7.1 billion on Tuesday, up 10%, with organic sales up 12%. GAAP EPS was USD 1.60 and adjusted EPS USD 1.66, which management put at 32% growth. GAAP net income from continuing operations attributable to the company was USD 967 million, operating cash flow was USD 1.3 billion and free cash flow was USD 1.1 billion. The company paid USD 242 million in dividends.

Orders rose 44% organically and backlog rose 43% organically to USD 23.0 billion. Chief Executive Joakim Weidemanis said the company finished fiscal 2026 with more than 8% organic revenue growth, double-digit adjusted EPS growth and strong free cash flow conversion, and enters fiscal 2027 with record backlog.

Systems revenue rose 13% and services rose 8% organically, with demand centered on data centers and cooling distribution technology.

Segment Results

Americas sales rose 14% to USD 4.93 billion, all of it organic, led by Applied HVAC and Controls. Orders rose 58% and backlog rose 54% to USD 17.8 billion. Segment EBIT was USD 992 million, a 20.1% margin, and adjusted segment EBITA margin rose 210 basis points to 22.0% on operating leverage and mix.

EMEA sales fell 2% to USD 1.31 billion, though organic sales grew 3% despite pressure from Middle East conflicts. Orders rose 12%, backlog rose 18% to USD 3.1 billion, and adjusted segment EBITA margin rose 80 basis points to 16.4%. Asia Pacific sales rose 12% to USD 871 million, with organic growth of 13%. Orders rose 11%, backlog rose 12% to USD 2.1 billion and adjusted margin rose 110 basis points to 18.9%. Adjusted corporate expense fell to USD 80 million from USD 124 million.

Cash, Restructuring and Divestiture

Full-year adjusted free cash flow was USD 3.2 billion, a 103% conversion of adjusted net income, and the company returned USD 2.5 billion through dividends and buybacks. Net debt was 1.8 times adjusted EBITDA, below the long-term target range. Capital expenditures of about USD 900 million are planned for fiscal 2027 to expand manufacturing capacity.

Management outlined a restructuring program of about USD 400 million over fiscal 2027 and 2028, targeting USD 600 million of gross annualized savings by fiscal 2029. The company also agreed to divest its global intrusion business, which has about USD 500 million of annual revenue, with closing targeted by the end of the second quarter of fiscal 2027 and about USD 0.15 of annualized dilution. A collaboration with Armada covers 500 megawatts of planned distributed edge compute capacity in 2027.

Guidance

For the first quarter of fiscal 2027, management guided to organic sales growth of 12% to 14%, operating leverage of 30% to 35% and adjusted EPS of USD 1.15 to USD 1.20. For the full year it guided to organic growth of 11% to 12%, operating leverage above 30%, adjusted EPS of USD 6.15 to USD 6.30 and adjusted free cash flow conversion of about 95%.

Building Systems Markers to Follow

Tracking points include orders and backlog against 44% and 43% growth, EMEA organic growth relative to 3%, and project timing, which management said can be constrained by customer power and electrical infrastructure.

Further items are the intrusion divestiture closing, restructuring savings against the USD 600 million target, and security service growth, which management described as subdued.