Analyst Note| Brian Bernard, CFA, CPA |
Narrow-moat-rated Johnson Controls raised its 2021 financial guidance after delivering a solid fiscal second-quarter performance that was in line with our expectations. Reported revenue increased about 3% year over year (1% organic) to $5.6 billion (in line with FactSet consensus) as strong organic growth from the global products and Asia-Pacific installation and services (field) businesses was partially offset by weaker field revenue across the firm's other regions, including North America. That said, field orders increased 5% year over year in North America and across Europe, the Middle East, Africa, and Latin America, so we expect revenue growth will follow. Adjusted segment margin (excluding amortization and corporate expenses) expanded 130 basis points year over year to 12.7% and adjusted EPS increased 24% to $0.52 (versus the $0.49 FactSet consensus).