johnson controls 02/11/2009 barclays capital industrial select conference

Barclays Industrial Goods ConferenceBarclays Industrial Goods Conference

February 2008

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Forward-looking statement

Johnson Controls, Inc. ("the Company") has made forward-looking statements in this presentation pertaining to its financial results for fiscal 2009 and beyond that are based on preliminary data and are subject to risks and uncertainties. All statements other than statements of historical fact are statements that are or could be deemed forward-looking statements and include terms such as "outlook," "expectations," "estimates," or "forecasts." For those statements, the Company cautions that numerous important factors, such as automotive vehicle production levels, mix and schedules, financial distress of key customers, energy prices, the strength of the U.S. or other economies, currency exchange rates, cancellation of or changes to commercial contracts, liquidity, the ability to execute on restructuring actions according to anticipated timelines and costs as well as other factors discussed in Item 1A of Part II of the Company's most recent Form 10-k filing (filed November 25, 2008) could affect the Company's actual results and could cause its actual consolidated results to differ materially from those expressed in

f d l ki t t t d b b h lf f th Cany forward- looking statement made by, or on behalf of, the Company.

Contact: Glen L. PonczakDirector, Investor [email protected]

Contact: Glen L. PonczakDirector, Investor [email protected]

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@j@j

K ith W d llKeith WandellPresident and Chief Operating Officer

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Johnson ControlsJohnson Controls

Three world-class businesses

Building efficiency

Creating quality indoor environments that are

Power solutionsProviding the highest quality, lowest cost

Interior experience

Delivering world-class technologies thatenvironments that are

energy efficient, comfortable and safe

automotive batteries to help customers grow their market shares and to power the vehicles of

technologies that differentiate vehicle interiors and increase consumer demand

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tomorrow

Johnson Controls Inc.2008 financial results

Sales$

Earnings$

Power

$38.1 B $1.4 B

Buildings37%

o e15%

Buildings46%

Power26%

Automotive48% Automotive

28%

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Automotive Experience

Leading global provider: systems and components for seats, overheads, d k it d l t i

2008 sales

$18 1 Billiondoors, cockpits and electronics

– Supplying over 30 million cars per year from 250 locations in 30 countries (1/3 in low cost countries)

Europel

North

$18.1 Billion

low-cost countries)

– Over 60% of revenues generated outside of North America

Asia9%

54% Detroit 348%

TransplantsAmerica37%

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*Excludes $1.5B unconsolidated revenue in China

2009: Automotive Experience strengths

Record backlog of new seating and interior programs

$4 5 billion to launch between

Backlog of new business*

– $4.5 billion to launch between 2009 and 2011

– 85% outside North America

– Reflects increasing market share in Europe, Asia

– Primarily cars, CUVs

Winning new business, increasing market share

Expanding leading market position inExpanding leading market position in China and Eastern Europe

Strong partner in a weakening supply base *Announced 10/08. Net of discontinued programs, includes

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supply base Announced 10/08. Net of discontinued programs, includes unconsolidated sales, assumes stable production levels.

Historic changes in our marketsNorth American auto production

2009 estimated production forecast of 9.2million vehicles; lowest level since 1983Down 34% in one year vs. 13.2 million vehicles in 200847% decline from the 2001 peak of 17.7 million units

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Historic changes in our marketsEuropean automotive production

Rapid deterioration; European markets were stable through August 2008 European automotive production

Western Europe car registrations down 26% vs. last year

– December: Worst quarter since 19931015

2025

Eastern Europe registrations down 23% in December quarter

Production still heading lower05

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2005 2006 2007 2008 2009 (e)

5.65.8

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5.15.25.45.65.86.06.2

ion

units

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3.84.04.24.44.64.85.05.2

Q1 Q2 Q3 Q4 Q1

In m

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Q Q Q Q QFY 2008 FY 2009

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Power Solutions

Largest global provider of automotive batteries

Lead acid batteriesLead acid batteries– #1 global market share of 36%

• Americas (50%)

• Europe (35%)

– Largest provider to the automotive aftermarket

– Original equipment (OE) batteries for the top automakers worldwide

– New entrants into Asia

• “China First” strategy

Lithium-ion batteries for hybrid vehicle applications

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vehicle applications

2009: Power Solutions strengths

Winning new OE and aftermarket customers globally

Lowest cost, highest quality provider

– World-class manufacturing processes and technologies (PowerFrame)g ( )

– Best Business Practices

Aftermarket (76% of sales) less economicallysensiti esensitive

Growing demand for AGM demand for micro-hybrid vehicles

Financial strength vs. economically distressed competitorsg y

Lithium-ion hybrid battery launch in 2009 (Nersac, France)

– First in the industry

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2009: Power solution strengthsIncreasing market share

O’Reilly Auto PartsMore than 1,000 Checker Auto Parts, Kragen A t P t d S h k’ A t S l tAuto Parts, and Schuck’s Auto Supply stores

Full line of automotive Super Start batteries

Optima® high performance automotive batteriesbatteries

Shipments to commence in February

Lithium-Ion production contracts

Azure DynamicsCommercial delivery vehicles for FedEx, Purolator, AT+T, Con Edison, etc.

Production to begin in 2010

Ford Plug-In contract announced 2/4/09Production to begin in 2012

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R. Bruce McDonaldExecutive Vice President and Chief Financial Officer

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Building Efficiency

Largest global supplier of commercial building services, HVAC equipment, building control

2008 Sales: $14.1 Billion

systemsHighly diversified: 1 million customersin 125 countries Non-

ResidentialA huge installed base leading to repeat business

Moderate cyclicality due to large service/renovation volume

94% Residential

EuropeNorth America

Asia19%

Europe29%

America53%

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Building Efficiency

A growth industryDemand for energy efficiency and sustainability continues to expand globally p g y

Increased integration of building, business, security and IT systems continues

Our competitive advantagesIndustry-leading HVAC service business

– 13,000 service providers, twice the size of #2 competitor

Well positioned in growing emerging markets

Unique product and service offerings

Expertise and capability across the entire building lif llifecycle

Strength in “institutional” vertical market

Renewable energy participation

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– More than 400 active projects

Historic changes in our marketsBuilding Efficiency

Began to see softness in U.S. commercial new construction markets in Q4 2008

New construction slow-downs and deferrals in Middle East due to low oil prices and high vacancy rates

U.S. housing starts and existing-home sales continue to declinesales continue to decline

– U.S. housing starts dropped by 47% year over year and 19% in the month fof December

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Building EfficiencyHigh level of recurring revenues

Building Efficiency commercial building sales

R i d i b d d

Service and recurring

Recurring revenues driven by demand for increased energy efficiency, greenhouse gas reductions, occupant comfortrecurring

revenues75%

comfort

Low overall economic sensitivity

New Construction

GlobalWorkplace

SolutionsTechnicalServices

Retrofit

Less MoreEconomic sensitivity

Construction25%

pSolutions

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Technical services


Technical services– Van-based repair, maintain services via local

Johnson Controls branch offices– Typically contracts: one or more years– Not highly economically sensitive; deferredrecurring

revenues75%

Not highly economically sensitive; deferred maintenance leads to higher energy costs, equipment failure

– High renewal rates– Highest service penetration in N. America

New Construction

Highest service penetration in N. America– Service culture developing in China, Middle

East

Construction25%

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Global Workplace Solutions


Global Workplace Solutions– On-site management and operation of facilities

– Primary customers: Global 1000

Multi year contractsrecurring revenues

75%

– Multi-year contracts

– Counter-cyclical: companies looking to cut

costs turn to outsourcing

New ConstructionConstruction

25%

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Solutions


– Bundled offerings, driven by energy

efficiency improvements / alt. energy

– HVAC equipment and controls installations, recurring revenues

75%

C equ p e a d co o s s a a o s,

coupled with multi-year service contracts

– Popular in government and education

buildings as it requires no capital outlay and

New Construction

buildings as it requires no capital outlay and

provides positive cash flow; offsets bonding,

tax revenue issues

Primarily North AmericaConstruction25%

– Primarily North America

– Clinton Climate Initiative bringing

performance contracting to new markets

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Retrofit– Primarily replacement of HVAC

equipment and controls at end of life or recurring revenues

75%failure

– Not generally deferrable for prolonged periodsIncludes engineering and installation

New Construction

– Includes engineering and installation services

Construction25%

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North AmericaNorth America– High concentration in "institutional"

buildings

Government healthcare educationService and

recurring -Government, healthcare, education

-Institutional sector historically performs significantly better than overall construction market; true this

recurring revenues

75%

overall construction market; true this cycle as well

-Slowing, but no radical decline

I t ti lNew

Construction International– Europe down mid-single digits– Middle East significantly lower

China up low double digit

Construction25%

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– China up low double-digit

Non-residential buildingsHigh level of visibility

BacklogUpdated quarterly

Si d k l d

Visibility of future performance

$4.7 B backlog (+8%) atSigned contract; work not yet completed

Converts to revenue in 6-9 months

Not included: Workplace Solutions or Unitary (residential) Products businesses

$4.7 B backlog ( 8%) at December 31, 2008

Pipeline stable-New construction down

(residential) Products businesses

Historically low backlog cancellation rate

– Contracts typically awarded after financing is in place & work has begun

-Existing buildings up single digits

-Strength in federal, healthcare and higher education

p g

– Tighter credit could have impact, but no atypical cancellations to date

Pipeline“Pipeline” tracking of bid activity

Precursor to backlog. 6-9 months of additional visibility

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Building Efficiency positivesFederal investments in energy efficiency

American Recovery and Reinvestment Bill (ARRP) of 2009

“We would prefer spending money on things

like making sure all Federal buildings are energy

ffi i t th t t i Significant funds for government and

school building energy efficiency

Johnson Controls advantaged to win

efficient so that taxpayers are saving money over

the long term.

“We will modernize more than 75% of federal

buildings and improve the energy efficiency of Johnson Controls advantaged to win

new business

– Government procurement processes

buildings and improve the energy efficiency of

two million American homes.

“In the process, we will put Americans to work

in new jobs—jobs constructing fuel efficient cars in place

– Long history of successful projects

j j g

and buildings.”

-President Barack ObamaJanuary 8 2009 Positive impact likely not until FY 2010January 8, 2009

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Building Efficiency positivesFederal investments in energy efficiency

Prepared to take advantage of the new opportunities

Existing Federal government business unit

– Expanded sales force

Enhanced vertical segment teams

– Expertise and focus around State government higher educationExpertise and focus around State government, higher education, K-12 schools and hospitals; all are slated to receive funding through the ARRP

Unmatched sales/service branch office network

Renewable Energy Center of Excellence

– Positions Johnson Controls to capture integrated renewables opportunities contemplated under the ARRP

Structure in place to support government accountability, transparency and assured outcomes

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2009: uncertainties continue

Withdrew quarterly and full year guidance December 16, 2008 Remainder of 2009

O i d t i i l tilForecast a loss for Q1 2009

Rapidly deteriorating automotive production globally

Our industries remain volatile

Uncertainties remain

Expecting a 2009 Q2 loss ofp g y

Financial viability of North American automotive customers uncertain

W i id ti l k t

Expecting a 2009 Q2 loss of similar scale to Q1 operating loss

Worsening residential markets

Uncertainties and industry volatility makes it difficult to provide meaningful

– Improved performance by Building Efficiency and Power Solutions b iguidance businesses

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Taking actionAligning our cost structure with the market environment

$495 million restructuring announced in Q4 2008

Additional actions

General hiring freezeExpected payback in less than 2.5 years

Workforce reductions

Plant consolidations

g

Wage freeze/reductions

Elimination of annual bonuses for corporate executivesPlant consolidations

– 18 Automotive Experience

– 2 Power Solutions

corporate executives

Investigating alternative work schedules (4-day weeks, etc)

– 1 Building Efficiency

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Taking actionProtecting liquidity

Liquidity5 year $2.05B revolver expires December 2011

Protection actions

Capital spending outlook reduced from

Minimal debt maturities in next 2 years

$1B of additional committed / uncommitted bank lines

$900 million to approximately $600-

$650 million

Held dividend payout steady

Debt covenant– Minimum shareholder equity of $1.3 billion

– Shareholder equity at 12/31/08: $8 3 billion

Held dividend payout steady

– Uncertainties around financial viability of

U.S. auto manufacturersShareholder equity at 12/31/08: $8.3 billion

Halted acquisition activity

Reduced voluntary pension contribution

$100 illi t ib ti i Q1 ill d f

Conservative financial management to ensure we – $100 million contribution in Q1; will defer

further payments while uncertainties

remain

management to ensure we manage the short-term environment while assuring long-term success

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Managing through the current environment

Maintain our long-term, sustainable growth philosophy

Balance near term performance while ensuring

Taking advantage of the opportunities created by this economic cycle to– Balance near term performance while ensuring

robust long-term business success

– Invest in innovation

M th h t t i t i t

this economic cycle to

Gain share

Improve – Manage the short-term environment in concert

with long-term goals

Aligning our cost structure with the realities of the market

pcompetitiveness

Enhance our leadership positionmarket

Benefit from global mega-trends

– Energy efficiency

leadership position

– Sustainability / Greenhouse gas reduction

– Emerging markets

Protect liquidity

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Protect liquidity

johnson controls 02/11/2009 barclays capital industrial select conference

Economy & Finance