Johnson Controls International plc (NYSE:JCI)

Current Income Tax Expense

The current income tax expense exhibited significant volatility over the analyzed periods. Starting at a positive 1,154 million USD in 2018, it sharply reversed to a negative 845 million USD in 2019, indicating a tax benefit or refund during that year. Subsequently, the current tax expense returned to positive values from 2020 to 2023, though the amounts fluctuated: 645 million USD in 2020, 832 million USD in 2021, a notable decrease to 128 million USD in 2022, and an increase again to 353 million USD in 2023. This pattern suggests variability in taxable income or tax payment timing impacting current tax liabilities.

Deferred Income Tax Expense

The deferred income tax expense followed an inverse pattern relative to the current tax expense in several years. It began with a negative value of 636 million USD in 2018, indicating a deferred tax benefit. In 2019, this reversed to a 612 million USD expense. The deferred tax values continued oscillating, with negative and positive values alternating: -537 million USD in 2020, a small positive 36 million USD in 2021, returning negative at -141 million USD in 2022, and sharply decreasing further to -676 million USD in 2023. These swings reflect adjustments in deferred tax assets and liabilities potentially related to temporary differences between accounting and tax treatments over time.

Total Income Tax Provision (Benefit)

The total income tax provision, combining current and deferred components, demonstrated a fluctuating trend with positive and negative values across the periods. It started at a 518 million USD expense in 2018, turned into a benefit of 233 million USD in 2019, then shifted back to a modest expense of 108 million USD in 2020. The largest expense was noted in 2021 at 868 million USD, followed by a slight benefit of 13 million USD in 2022 and a more substantial benefit of 323 million USD in 2023. This variability indicates that overall tax burden has been unpredictable, affected by the interplay between current and deferred tax changes.

Summary

The analysis reveals considerable fluctuations in both current and deferred income tax expenses over the six-year period. The pattern of alternating tax expenses and benefits suggests changes in profitability, tax strategies, or shifts in tax regulations and provisions. Notably, the years 2019 and 2023 saw significant tax benefits, driven predominantly by current and deferred tax reversals, respectively. The substantial income tax provision in 2021 stands out as an outlier with a notably high tax expense. Understanding the underlying causes for these fluctuations would require further review of the company's taxable income, tax planning decisions, and potential one-time tax events during these years.

The analysis of the tax rate data over the covered periods reveals notable volatility in the company's effective tax rate, contrasting with the stable statutory rate in Ireland.

Statutory Tax Rate

The statutory tax rate remained constant at 12.5% throughout all periods from 2018 to 2023, indicating no changes in the statutory tax framework applied in Ireland.

Effective Tax Rate

In contrast, the effective tax rate demonstrated significant fluctuations during the period. It started at 18% in 2018, experienced a sharp decline to -22% in 2019, increased to 12% in 2020, then rose further to 33% in 2021. Subsequently, it dropped to -1% in 2022 and declined even more to -19% in 2023.

Interpretation of Trends

The wide swings in the effective tax rate, including negative rates in certain years, suggest the presence of various tax credits, adjustments, or one-time tax benefits and expenses impacting the tax expenses differently than the statutory rate would imply. Periods with negative effective tax rates indicate that the company likely recognized tax benefits or refunds exceeding its tax liabilities. The peak in 2021 at 33%, significantly above the statutory rate, points to potential non-recurring tax pressures or adjustments.

Conclusion

The disparity between a stable statutory rate and volatile effective tax rates highlights that the company's actual tax expenses are subject to considerable fluctuations, likely influenced by complex factors such as tax planning strategies, deferred taxes, or extraordinary items rather than changes in statutory tax legislation.

Accrued expenses and reserves

The accrued expenses and reserves decreased from 490 million USD in 2018 to a low of 376 million USD in 2022, indicating a reduction in short-term liabilities or reserved amounts over this period. However, a notable increase to 507 million USD was observed in 2023, suggesting a reversal or buildup of these obligations in the most recent year.

Employee and retiree benefits

There was a significant increase from 193 million USD in 2018 to a peak of 286 million USD in 2020. Subsequently, the liabilities decreased sharply, reaching 71 million USD in 2023, representing a consistent downward trend over the last three years.

Property, plant and equipment (PPE)

PPE data were unavailable for 2018 and 2019. From 2020 onwards, a steady increase was evident, rising from 182 million USD to 629 million USD in 2023. This indicates ongoing investment in tangible assets. A negative adjustment appeared in 2018 and 2019 figures (-172 million and -139 million USD, respectively), but no negative values were reported in the later period.

Net operating loss and other credit carryforwards

This item showed some fluctuations but overall increased from 6,510 million USD in 2018 to 6,748 million USD in 2023, with a slight dip in 2019 before gradually rising again, reflecting the persistence and possibly the growth of deferred tax assets associated with operating losses.

Research and development (R&D)

R&D expenses increased steadily from 93 million USD in 2018 to a peak of 112 million USD in 2020, then dropped sharply in 2021 to 42 million USD. In 2023, there was a significant rebound to 171 million USD, indicating a recent strong emphasis on innovation or new product development.

Operating lease liabilities and right-of-use assets

Both operating lease liabilities and right-of-use assets first appeared in reporting in 2021. Lease liabilities decreased from 334 million USD in 2021 to 309 million USD in 2022 but climbed back to 348 million USD in 2023, while right-of-use assets mirrored this trend with corresponding negative values, reflecting changes in lease accounting recognition.

Other, net

Unclassified "Other, net" assets and liabilities showed variability. Available figures indicate a spike to 99 million USD in assets in 2020, dropping in subsequent years. The related negative values from earlier years (-72 million and -43 million USD) suggest fluctuating miscellaneous adjustments.

Deferred tax assets

Deferred tax assets declined from 7,286 million USD in 2018 to 6,472 million USD in 2019 but subsequently increased steadily, reaching 8,512 million USD in 2023, which shows strengthening of deferred tax benefits or timing differences.

Valuation allowances

Valuation allowances, which offset deferred tax assets, increased in magnitude from -5,195 million USD in 2018 to -6,378 million USD in 2023, suggesting a cautious approach regarding realization of certain deferred tax assets.

Deferred tax assets less valuation allowances

The net deferred tax assets, after adjusting for valuation allowances, declined from 2,091 million USD in 2018 to a low of 1,404 million USD in 2019, then fluctuated and generally increased, reaching 2,134 million USD in 2023. This indicates an overall improvement in the quality or realizability of deferred tax assets over the recent years.

Subsidiaries, joint ventures and partnerships

Negative balances related to subsidiaries, joint ventures, and partnerships increased in magnitude from -306 million USD in 2018 to -730 million USD in 2020, then decreased back to around -446 million USD by 2023, suggesting changes in investments or intercompany eliminations.

Intangible assets

Intangible assets showed increasing positive adjustments against them over the six years, from -713 million USD in 2018 to a much smaller negative figure of -252 million USD in 2023, indicating possible amortization or impairment reductions.

Deferred tax liabilities

Deferred tax liabilities grew in magnitude from -1,263 million USD in 2018 to a peak at around -1,464 million USD in 2020, then decreased steadily to -1,046 million USD in 2023, suggesting reduction in taxable temporary differences or realization of deferred tax obligations.

Net deferred tax asset (liability)

This metric exhibited large variability, turning from a positive 828 million USD in 2018 to a negative net liability of 36 million USD in 2019, and then returned to positive territory by 2020. Since then, it has shown an upward trend to 1,088 million USD in 2023, indicating an improving net deferred tax position.

Deferred Tax Assets

The deferred tax assets showed a significant decline from 1,591 million USD in 2018 to 552 million USD in 2019. Following this drop, there was a recovery in 2020 to 862 million USD, with a slight decrease again in 2021 to 755 million USD. The asset value then increased to 944 million USD in 2022 and experienced a substantial rise to 1,499 million USD in 2023, nearing the level recorded in 2018. This pattern indicates some volatility with an overall recovery and growth trend in deferred tax assets toward the end of the period.

Deferred Tax Liabilities

Deferred tax liabilities demonstrated a more stable but generally declining trend over the six-year period. Starting from 763 million USD in 2018, the liabilities decreased to 588 million USD in 2019 and further declined to 385 million USD in 2020. A slight increase followed in 2021 to 443 million USD and further to 500 million USD in 2022. However, in 2023, the liabilities decreased again to 411 million USD. The overall trend reveals a reduction in deferred tax liabilities, despite some minor fluctuations.

Summary of Trends

The data presents an inverse relationship trend between deferred tax assets and liabilities over the years. While deferred tax assets initially fell sharply and later recovered significantly, deferred tax liabilities generally decreased with minor reversals. The recovery and eventual increase in deferred tax assets coupled with a declining trend in deferred tax liabilities may suggest improved tax positioning or changes in tax regulations or accounting estimates affecting these balances. The fluctuation in values highlights the dynamic nature of the company’s deferred tax positions over the examined period.

The financial data reveals several notable trends in the company's assets, liabilities, equity, and net income over the six-year period ending in 2023. Both the reported and adjusted figures exhibit consistent patterns that highlight changes in the company's financial position and profitability.

Total Assets

Reported total assets displayed a declining trend from US$48.8 billion in 2018 to US$42.2 billion in 2023, with the most significant decrease occurring between 2018 and 2020. Adjusted total assets followed a similar but slightly more pronounced downward trajectory, dropping from US$47.2 billion to US$40.7 billion over the same period. There was moderate stability from 2021 to 2023, indicating a plateau after the initial decline.

Total Liabilities

Reported total liabilities decreased sharply from US$26.3 billion in 2018 to US$21.5 billion in 2019, then gradually increased through 2022 to reach US$24.8 billion before slightly declining to US$24.5 billion in 2023. Adjusted liabilities mirrored this trend, starting at US$25.6 billion and dipping to US$20.9 billion in 2019, then steadily rising thereafter. This pattern suggests a temporary reduction in obligations followed by a period of incremental liability growth.

Shareholders' Equity

The reported shareholders’ equity attributable to the company decreased consistently from US$21.2 billion in 2018 to US$16.5 billion in 2023, with a steady drop each year, highlighting erosion in the company's net worth. Adjusted equity values displayed a similar declining trend but with slightly lower values by 2023, indicating that adjustments for deferred income taxes and other factors somewhat affected the equity base.

Net Income

Reported net income showed considerable volatility. The income surged from US$2.2 billion in 2018 to a peak of US$5.7 billion in 2019, then plunged sharply to US$631 million in 2020. Thereafter, a partial recovery occurred, with net income rising to US$1.8 billion by 2023. Adjusted net income, however, presented a more pronounced variability, with an increase to US$6.3 billion in 2019 followed by a steep drop to US$94 million in 2020. Subsequent years showed an erratic recovery, reaching only US$1.2 billion by 2023, which is below the reported figure.

Overall Insights

The consistent decline in both reported and adjusted total assets and shareholders’ equity suggests some contraction or asset revaluation impact on the company's financial strength. The temporary reduction in liabilities in 2019 followed by gradual increases points to changes in debt management or operational financing strategies. The wide fluctuations in net income, particularly the sharp drop in 2020, may relate to extraordinary events or economic conditions affecting profitability. Adjusted figures often reflect more conservative estimates, especially evident in net income and equity, indicating that deferred income tax adjustments and other accounting treatments have notable effects on perceived financial performance.

Net Profit Margin

The reported net profit margin shows considerable volatility over the analyzed period, peaking at 23.67% in 2019 and dropping sharply to 2.83% in 2020. After partial recovery to about 6.9% by 2023, the overall trend exhibits instability. The adjusted net profit margin follows a somewhat similar pattern but with lower values in most years, reaching its highest point at 26.23% in 2019 and falling to a low of 0.42% in 2020, then declining further to 4.38% in 2023, indicating a less optimistic profitability outlook when adjusted for tax effects.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios remain relatively stable, with slight fluctuations. The reported ratio starts at 0.64 in 2018, dips gradually to 0.55 in 2020, then recovers to 0.63 by 2023. The adjusted ratio mirrors this trend closely but consistently shows marginally higher values in the latter years, ending at 0.66 in 2023. This suggests a stable asset utilization efficiency, with minor improvements in recent years.

Financial Leverage

Financial leverage ratios demonstrate moderate variability. Reported leverage decreases from 2.31 in 2018 to a low of 2.14 in 2019, before rising steadily to 2.59 by 2022 and slightly decreasing to 2.55 in 2023. Adjusted leverage follows a very similar pattern but reaches its highest point at 2.64 in 2023. The increasing leverage from 2020 onward could imply a growing reliance on borrowed funds or higher financial risk during that period.

Return on Equity (ROE)

The reported ROE reflects strong fluctuations, peaking at 28.71% in 2019 and plunging to 3.62% in 2020. It then recovers to 11.18% in 2023, indicating partial restoration of shareholder returns. Adjusted ROE follows a similar trajectory but with lower values in general, topping at 31.74% in 2019 and falling sharply to 0.55% in 2020, then recovering to 7.59% in 2023. This pattern underlines significant operational impacts and tax adjustments affecting profitability from shareholders’ perspective.

Return on Assets (ROA)

The reported ROA shows a peak at 13.42% in 2019 followed by a decline to 1.55% in 2020, and a gradual recovery to 4.38% in 2023. Adjusted ROA is consistently lower, with a similar trajectory, peaking at 15.06% in 2019 but falling steeply to 0.24% in 2020 and remaining subdued, ending at 2.88% in 2023. This indicates that asset profitability was severely impacted in 2020, with only a slow improvement occurring in subsequent years, particularly when considering tax adjustments.

Overall Trends and Insights

The data reveals a pronounced disruption in 2020 across all profitability metrics, likely reflecting significant operational or market challenges during that period. Subsequent years show signs of recovery, although adjusted profitability measures remain considerably lower than reported figures, highlighting the material effects of deferred income tax and other adjustments on financial performance. Asset turnover remains relatively stable, suggesting consistent operational efficiency despite fluctuations in profitability. Financial leverage has increased moderately since 2020, which may indicate a shift in capital structure strategy or increased financial risk. The combination of moderate asset utilization, increasing leverage, and volatile profitability metrics suggests that while operational efficiency is steady, external factors and financial policies materially influence shareholder returns and overall profitability.

The financial data reveals fluctuations in both reported and adjusted net income attributable to the company over the six-year period ending September 30, 2023. Notably, reported net income peaked in 2019 at 5,674 million US dollars, followed by a sharp decline in 2020 to 631 million US dollars. A moderate recovery occurred in 2021 with an increase to 1,637 million US dollars, though figures slightly declined in 2022 and then increased again in 2023, reaching 1,849 million US dollars.

Adjusted net income also experienced significant volatility. The highest adjusted net income was recorded in 2019 at 6,286 million US dollars. Subsequently, there was a dramatic drop in 2020 to 94 million US dollars, representing a severe contraction in profitability. Recovery followed in the next two years, with adjusted net income rising to 1,673 million in 2021 and 1,391 million in 2022, before decreasing to 1,173 million in 2023.

Examining the net profit margins, the reported net profit margin reached its highest level in 2019 at 23.67%, which aligns with the peak in reported net income. However, it sharply dropped to 2.83% in 2020, reflecting the major income decline. The margin gradually improved in the subsequent years, ending at 6.9% in 2023, which is close to the margin observed in 2018.

The adjusted net profit margin exhibited similar trends, peaking in 2019 at 26.23%, indicating strong operational profitability before adjustments. The margin plummeted to 0.42% in 2020, mirroring the steep drop in adjusted net income. Following this low, there was an improvement through 2021, reaching 7.07%, before margins declined steadily to 5.5% in 2022 and then 4.38% in 2023.

Overall, the data shows a considerable disruption in both reported and adjusted net income and corresponding margins in 2020, followed by partial recovery in the subsequent years. The company's profitability, whether reported or adjusted, remains below the peak levels seen in 2019. The adjusted figures, which likely exclude certain non-recurring items, present a more pronounced decline and slower recovery in profitability compared to reported figures, suggesting significant adjustments impacting net income during this period.

The analysis of the financial data over the period from September 2018 to September 2023 reveals notable trends in both asset values and asset turnover ratios, considering reported and adjusted figures.

Total Assets

The reported total assets display a declining trend from 48,797 million US dollars in 2018 to 42,242 million US dollars in 2023. The most significant decrease occurred between 2018 and 2019, followed by a gradual stabilization around the 42,000 million mark in subsequent years.

Adjusted total assets, which may exclude deferred income tax effects, follow a similar pattern but show slightly lower values throughout the years. The adjusted assets decrease from 47,206 million US dollars in 2018 to 40,743 million US dollars in 2023. The decline is consistent and somewhat more pronounced than reported assets, particularly from 2019 to 2023, reflecting a steady contraction in asset base when considering these adjustments.

Total Asset Turnover Ratios

The reported total asset turnover ratio demonstrates a declining trend from 0.64 in 2018 to a low of 0.55 in 2020, followed by a gradual recovery to 0.63 by 2023. This pattern suggests reduced efficiency in generating revenue from assets during the mid-period, with improvements in the later years.

Adjusted total asset turnover ratios mirror this trend but present slightly higher values in most years, especially in 2023 where the ratio reaches 0.66 compared to reported 0.63. The adjusted turnover ratio also hits its lowest point in 2020 at 0.56 and then steadily inclines, indicating improved operational efficiency when deferred tax adjustments are considered.

Overall, the data indicates a contraction in asset base over the six-year period, accompanied by a dip in asset turnover efficiency around 2020. However, there is a positive rebound in turnover ratios in the subsequent years, reflecting enhanced asset utilization. The adjusted figures suggest that the company's operational efficiency might be slightly better than reported numbers alone indicate, highlighting the impact of deferred income tax adjustments on asset valuation and performance metrics.

Assets

The reported total assets show an initial decline from US$48,797 million in 2018 to US$40,815 million by 2020, followed by a moderate recovery to US$42,242 million in 2023. The adjusted total assets follow a similar pattern, decreasing from US$47,206 million in 2018 to US$39,953 million in 2020, then rising slightly to US$40,743 million in 2023. Overall, both reported and adjusted assets indicate a contraction during the first three years with modest stabilization thereafter.

Shareholders’ Equity

Reported shareholders’ equity attributable to the company consistently declined from US$21,164 million in 2018 to US$16,268 million in 2022, with a slight increase to US$16,545 million in 2023. Similarly, the adjusted shareholders’ equity decreased from US$20,336 million in 2018 to US$15,824 million in 2022, then declined further to US$15,457 million in 2023. The general trend reflects a weakening in equity values over the period, with the adjusted equity showing a somewhat greater reduction relative to reported equity towards the end of the timeline.

Financial Leverage

Reported financial leverage exhibited fluctuations, initially decreasing from 2.31 in 2018 to 2.14 in 2019, then increasing steadily to peak at 2.59 in 2022 before a minor decrease to 2.55 in 2023. The adjusted financial leverage mirrors this trend, moving from 2.32 in 2018 down to 2.11 in 2019, then rising to 2.64 in 2023. These leverage ratios suggest an increase in reliance on debt financing over the recent years, particularly after 2019, with leverage levels reaching their highest in the 2022-2023 period.

Summary

The overall financial condition as reflected in the adjusted data shows a contraction in total assets and equity during the initial years, stabilizing later with slight asset recovery but continued pressures on equity. The increase in leverage ratios across the period indicates a growing use of debt relative to equity, potentially pointing to heightened financial risk. The trends observed from adjusted measures are consistent with reported figures, though the adjusted data tend to show marginally lower asset and equity values and slightly higher leverage towards the end of the period.

Net Income Trends

The reported net income attributable to the entity exhibited significant volatility over the examined period. It peaked in the year ending September 30, 2019, at 5,674 million US dollars, followed by a sharp decline in 2020 to 631 million US dollars. Subsequently, reported net income recovered moderately, reaching 1,849 million US dollars by 2023. Adjusted net income followed a broadly similar pattern but with even greater fluctuation, hitting a high of 6,286 million US dollars in 2019, plummeting to a very low 94 million US dollars in 2020, before improving to 1,173 million US dollars by 2023. The adjusted figures indicate more pronounced impacts from adjustments particularly in the 2020 fiscal year.

Shareholders’ Equity Development

Reported shareholders’ equity showed a downward trajectory across the period, declining from 21,164 million US dollars in 2018 to 16,545 million US dollars in 2023. The adjusted shareholders’ equity mirrored this trend, starting at 20,336 million US dollars in 2018 and falling to 15,457 million US dollars in 2023. This consistent decrease in equity suggests sustained pressures on the company’s net asset base, possibly due to expenditures, dividends, or valuation adjustments affecting equity holders over time.

Return on Equity (ROE) Analysis

The reported ROE fluctuated markedly, with a notable high of 28.71% in 2019, followed by a steep decline to 3.62% in 2020. Thereafter, it gradually recovered to 11.18% by 2023. The adjusted ROE displayed even greater variability, peaking at 31.74% in 2019 but dropping dramatically to just 0.55% in 2020 before modestly improving to 7.59% in 2023. This pattern reflects significant earnings volatility relative to equity, especially when considering adjustments, which may relate to extraordinary items or tax effects during these years.

Overall Financial Insights

The data reveals a business experiencing considerable income volatility and a contracting equity base over the analyzed years. The pronounced swings in adjusted net income and ROE suggest the presence of notable non-recurring or deferred items impacting profitability and returns. Despite these fluctuations, the company has shown gradual improvement in profitability metrics post-2020, although not returning to the peaks of 2019. The decline in shareholders’ equity points to ongoing challenges in sustaining capital base strength, which could warrant further examination of capital management strategies and operational performance in subsequent periods.

Net Income Trends

The reported net income attributable to Johnson Controls showed significant volatility over the observed periods. After a high of 5,674 million US dollars in 2019, it dropped sharply to 631 million in 2020, followed by a recovery in subsequent years reaching 1,849 million by 2023. The adjusted net income exhibited even more pronounced fluctuations, peaking at 6,286 million in 2019 but plunging to 94 million in 2020, before partially rebounding to 1,173 million in 2023. This suggests considerable adjustments impacting net income, with 2020 being a particularly weak year, possibly due to extraordinary or non-recurring factors.

Total Assets Analysis

Total assets, both reported and adjusted, decreased from 2018 through 2020, with reported assets falling from 48,797 million in 2018 to 40,815 million in 2020, and adjusted assets declining from 47,206 million to 39,953 million during the same period. From 2021 onwards, a slight stabilization is observed, with totals hovering around the 41,000 million mark and a minor decrease in adjusted assets in 2023 to 40,743 million. Overall, asset levels have declined and then stabilized, indicating potential asset disposals or strategic restructuring.

Return on Assets (ROA)

Reported ROA mirrored the net income trends, rising sharply in 2019 to 13.42% followed by a steep fall to 1.55% in 2020. Gradual improvements occurred afterward, reaching 4.38% in 2023. Adjusted ROA, however, showed a more volatile pattern with a peak of 15.06% in 2019, then a dramatic drop to 0.24% in 2020, recovering slightly but declining again the last two years to 2.88% in 2023. The disparity between reported and adjusted ROA indicates that adjustments substantially affect asset efficiency metrics, and 2020 was notably an anomalous year with very low returns.

Overall Insights

The data depicts a company experiencing significant fluctuations in profitability and asset performance around 2020, a year that severely impacted both reported and adjusted earnings and returns. Although some recovery is evident post-2020, adjusted net income and adjusted ROA remain below their 2019 peaks, suggesting ongoing challenges or the impact of adjustment items. Asset bases have moderately declined and then stabilized, reflecting a possible shift in operational scale or asset management strategy. The comparison of reported versus adjusted figures highlights the importance of considering non-operational factors when evaluating financial performance.