Johnson Controls International plc

Hello everyone and welcome to the Johnson Controls Q3 2025 earnings conference call. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press star, fill it by one, or telephone keypad. I will now hand the call over to Jim Lucas, Vice President Investor Relations, to begin. Jim, please go ahead.

Good morning and thank you for joining our conference call to discuss Johnson Controls fiscal third quarter 2025 results. Joining me on the call today are Johnson Controls Chief Executive Officer Joachim White-Amenes and Mark Van Diepenbeck, our Chief Financial Officer. Before we begin, let me remind you that during our presentation today, we will make four looking statements that reflect our current views about our future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Please refer to our SEC filings for a list of these important risk factors that could cause actual results to differ from our predictions. We will also reference certain non-GAAP measures throughout today's presentation. Reconciliation of these non-GAAP measures are contained in the schedules attached to our press release and in the appendix to this presentation, both of which can be found on the Investor Relations section of Johnson Controls website. I will now turn the call over to Joachim.

Thanks Jim and good morning everyone. Thank you for joining us on today's call. This morning we announced strong third quarter results, continuing the momentum we've sustained throughout the year. Organic sales grew 6%, segment margins expanded 20 basis points to 17.6%, and adjusted EPS grew 11% and exceeded our guidance. Year to date, adjusted free cash flow has nearly doubled to $1.8 billion and we are on track to deliver over 100% free cash flow conversion for the year. Orders grew 2%, led by strength in the Americas and offset by ongoing softness in China. Our backlog grew 11% to $14.6 billion and remains at record levels. We continue to see strength in demand for both our systems and service solutions. We are now building an even stronger foundation for long-term success by developing a business system focused on simplifying operations, accelerating growth, and scaling our impact. This includes sharpening our focus on what matters most to customers and deploying lean principles to tackle barriers to growth. We're raising our full year guidance and Mark will give more details later in the call. I now have my first quarter under my belt and tomorrow is my 140th day at a company celebrating 140 years of leadership. That is 140 years of winning with customers, driving innovation and supporting the advancement of human society with solutions for smart, productive, safe, and sustainable buildings. After all, the advancement of science, education, healthcare, and manufacturing occur in buildings. As we celebrate and reflect upon our history, we believe our best days are still ahead of us. Unlocking our potential depends on placing even greater emphasis on the customer. Our goal is to deliver consistent, predictable results over time and outperform our competition, enabling strong capital allocation and enhancing value for shareholders. Since joining Johnson Controls, I've had the opportunity to travel the globe, visiting our largest factories and spending time in the field with our customers and teams. I have visited well over 100 customers, all of our major innovation centers, and walked more than 30 plants. I met with hundreds of our frontline colleagues in sales, service, R&D, and manufacturing. These travels produced insights that will inform our future success as a company. First, we need to sharpen our focus on our customers while also staying ahead of the competition. Customer centricity will fuel accelerated growth by enabling us to win and retain customers more effectively through differentiated offerings and how we serve them. Second, it's essential that we enhance our investment in R&D to accelerate innovation. Our IP portfolio is strong, with 8,200 patents and more on the way. Our products and solutions deliver results that resonate with our customers. While we possess considerable strengths, there remain opportunities to accelerate growth within our core domains by addressing gaps in our product portfolio. Third, our field position of 40,000 frontline colleagues has been and continues to be a competitive advantage. We see clear opportunities to better equip and support them, making it easier for them to deliver for our customers. By doing so, we can get more leverage from our team and expand capacity and productivity to drive stronger results. Given the importance of this effort, we recently appointed Chris Scalia as Executive Vice President and Chief Human Resources Officer. Chris brings a unique combination of people and culture strategy, operational excellence, and a deep commitment to building high-performing teams. We're excited for Chris to hit the ground running as we continue to transform Johnson Controls into a growth-focused, customer-centric powerhouse and a magnet for talent. As we look ahead to our ongoing transformation, developing a business system and embedding it in our cultural foundation is a critical step in driving long-term success, one that requires dedicated effort, discipline, and patience. My deep experience with proven business systems, combined with spending meaningful time at Gamba, has helped us shape a clear vision for what this could look like at Johnson Controls. This business system is how we will win and run the company. It will be anchored in proven methodologies like 80-20 and Lean and augmented by digitization and AI. First, 80-20 is a powerful operating model that sharpens our focus, cutting through complexity, so we can concentrate our energy on what matters most to our customers. We simplify. Then, adopting principles of Lean, we convert this focus into action with a strong orientation of what matters most to our customers. We eliminate waste, streamline workflows, and accelerate processes to drive speed and efficiency across the organization to better serve customers and increase our competitiveness. We accelerate. And throughout the process, we embed digitization and AI as core enablers in our process improvement. This augments our focus and speed with smarter systems and the ability to scale impact for our customers and our people. We scale. So, simplify, accelerate, scale. While we've made progress over the last several quarters, we know that with a strong business system in place, we can accelerate and improve our results over time. We will solve customer problems faster and more effectively by empowering our people. It will become our way of life at Johnson Controls. Our efforts are already underway. Since the last earnings call, we have identified a number of growth blockers, and we are actively addressing them. In general, the growth blockers center around the speed of execution and more effectively and efficiently leveraging our existing capabilities in the field and beyond. To ensure speed in decision making and implementation, it is important to identify the root cause of these growth blockers and develop countermeasures that we can then implement into consistent, repeatable processes. We have started with a narrow focus to deliver results quickly, and then we will scale more broadly. I can give you two early examples of progress. The first example is in our conventional HVAC business, where we're creating value for our customers and our frontline colleagues who serve them. Our objective is to substantially increase the amount of time our sales teams can dedicate to engaging with customers by streamlining internal processes and eliminating waste that does not contribute direct value to the customer experience. Over the last four weeks, this team has identified specific countermeasures to double time with customers for our sellers. This will unlock opportunities to better leverage our enviable field position. Another focus area is improving lead times for our key chillers in North America, where we continue to see dynamic growth in the fast expanding data center vertical. We have an opportunity to cut lead times in half, which will both improve our competitiveness and create additional manufacturing capacity. As we deliver substantial improvements around the growth blockers we have identified, we can replicate these successes and deploy across our global portfolio. With momentum building, our executive team has been trained on the core foundations of our future business system, and each of them have participated in at least one Kaizen. After countless Kaizens throughout my career, I participated in my first Johnson Controls Kaizen a couple of weeks ago. Over the next few months, we will train our top 200 leaders and ensure their participation in Kaizens and our program overall. As we begin to see tangible results from these early initiatives, we will expand engagement and training across the organization. While we have many opportunities to drive growth through operational improvement and ultimately more consistent predictable results, we're also continuously evaluating and refining our strategy. This has started with a fresh objective view of all our business lines and solutions. Looking ahead, we will evaluate our portfolio and make strategic decisions to ensure sustainable growth through targeted acquisitions or thoughtful exits. As we move forward, our focus will progress to a comprehensive review of our operations, including our manufacturing and back office networks, to further unlock productivity and capacity. In summary, we believe there are clear opportunities to optimize our portfolio, footprint, cost structure, and the way we work going forward. This is an ongoing process with continued focus on delivering shareholder value. It has been a productive four months since I started at Johnson Controls. My excitement continues to build as we become more intensely focused on the customer, the people on future business system. I look forward to the journey ahead as we work together to deliver even greater value for our customers, team members, and shareholders. With that, I will now turn it over to Marc.