Why did JCI's Q4 2024 earnings fall short of forecasts?

Johnson Controls International plc (JCI) reported fourth-quarter fiscal 2024 (ended September 2024) adjusted earnings of $1.28 per share, which beat the Zacks Consensus Estimate of $1.25. However, total revenues (continuing operations) were $6.25 billion, missing the consensus estimate of $7.26 billion. The top line increased 6.7% year over year, while organic revenues increased 10%.

The decline in revenues can be attributed to several factors:

1. **Revenue Shortfall in Specific Segments**: While certain segments performed well, others fell short of expectations. For instance, Building Solutions North America reported revenues of $3.2 billion, up 16% year-over-year, with organic sales jumping 16%, driven by strong performance in applied heating, ventilation, and air conditioning (HVAC) and controls businesses. However, Building Solutions Europe, Middle East, Africa/Latin America reported revenues of $1.1 billion, up only 7% year-over-year, with organic sales climbing 10% due to growth in controls, security, and industrial refrigeration businesses. Building Solutions Asia Pacific saw revenues decrease 5% to $664 million, with sales declining 5% organically due to weakness in the systems business in China. Global Products segment reported revenues of $2.4 billion, flat year-over-year, with organic sales up 8% due to increase in commercial and residential HVAC businesses.

2. **Organic Sales Growth**: Despite the revenue shortfall, the company achieved robust organic sales growth, which increased by 10% year-over-year. This growth was driven by investments in digital offerings, such as the OpenBlue digital platform, which played a crucial role in meeting customer needs.

In conclusion, while JCI's Q4 2024 earnings fell short of forecasts due to revenue shortfalls in specific segments, the company's overall performance showed resilience, with strong organic sales growth and solid margin expansion.