Johnson Controls Up 8% As Q3 Adj Profit Tops View; Narrows 2013 Outlook Range

(RTTNews) - Shares of Johnson Controls, Inc. (JCI) surged nearly 8 percent in early trades on Thursday after the auto parts supplier's adjusted earnings per share topped analysts' expectations, but quarterly revenues missed their estimates.

Johnson Controls posted a profit for the quarter that increase 32 percent from last year, reflecting sales growth and double-digit improvements in segment income at all three businesses. The company also provides earnings guidance for the fourth quarter, above Street view, while narrowing earnings forecast range for the full-year 2013.

"We are pleased with the significant improvement in profitability of all three businesses in the third quarter. Our initiatives to reduce costs and improve operational efficiencies continue to gather momentum and deliver margin expansion," Chairman and CEO Steve Roell said in a statement.

The Milwaukee, Wisconsin-based company posted net income of $571 million or $0.83 per share for the third quarter, higher than $431 million or $0.63 per share in the prior-year quarter. Excluding items, adjusted net income for the latest quarter was $535 million or $0.78 per share.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.75 per share in the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 2 percent to $10.83 billion from $10.58 billion in the same quarter last year, but missed nineteen Wall Street analysts' consensus estimate of $11.00 billion.

Building efficiency sales declined 2 percent to $3.71 billion, but segment income margins improved 120 basis points, while automotive experience sales increased 4 percent to $5.69 billion, with segment profit growing 33 percent from the prior-year quarter. Sales for power solutions were up 8 percent to $1.43 billion from a year ago, with segment profit also growing 12 percent.

Further, Johnson Controls agreed to sell its Automotive Electronics' HomeLink product line to Gentex Corp. of Zeeland, MI for about $700 million. The deal is expected to close by late fourth-quarter or early fiscal 2014. The company said it is continuing the process to sell the remainder of its Electronics business, and is targeting an announcement of a definitive agreement on or before its fourth-quarter earnings release date.

Looking ahead to the fourth quarter, the company expects earnings in a range of $0.93 to $0.95 per share, while analysts are looking for earnings of $0.92 per share.

For fiscal 2013, Johnson Controls narrowed raised its earnings guidance range to $2.64 to $2.66 per share from the prior forecast in the range of $2.60 to $2.70 per share. Street is currently looking for full-year 2013 earnings of $2.61 per share.

"Earlier this fiscal year, we said that our second half performance would be positively impacted by our restructuring initiatives, sequential improvements in Automotive Experience European and South American businesses, and profitability initiatives in Building Efficiency. We expect the benefits of these actions to deliver further improvements in our fourth fiscal quarter," Roell added.

In Thursday's regular trading session, JCI is currently trading at $40.20, up $2.86 or 7.66% on a volume of 7.39 million shares.