Johnson Controls reported a strong start to the fiscal year’s second half, underpinned by broad-based demand for differentiated building solutions and ongoing operational improvements. In Q2 2025, organic revenue rose 7% year over year, segment margins expanded 180 basis points to 16.7%, and adjusted EPS advanced 19% to $0.82, beating the high end of guidance. The company also grew backlog to a record $14 billion, up 12% year over year, and orders were up 5% as recurring service and installed-base activity remained resilient. Management signaled confidence to raise full-year guidance, reflecting momentum in recurring revenue and the efficiency gains from lean initiatives.
Management outlined a three-geography, customer-oriented operating model supplemented by two global centers of excellence (Products & Solutions and Commercial/Field Operations) to accelerate growth, simplify execution, and improve operating leverage. CEO Joakim Weidemanis emphasized a lean-driven, customer-first culture and a deliberate portfolio/strategy review to optimize growth opportunities and capital allocation. CFO Marc Vandiepenbeeck highlighted margin expansion across regions (Building Solutions) and strong margin gains in Global Products, along with a robust balance sheet and free cash flow generation. The near-term path includes tariff mitigation actions, localizing supply chains, and pricing discipline to preserve cash flow and protect customer value.
Looking ahead, the company raised its full-year guidance: mid-single-digit organic sales growth, approximately $3.60 in adjusted EPS (roughly 12% year-over-year), and roughly 100% free cash flow (FCF) conversion for the full year. While tariff headwinds exist (estimated at about 2% of sales pre-mitigation), JCI has activated multiple levers to mitigate impact and sustain earnings visibility, including in-region manufacturing, local sourcing, faster pricing actions, and change-order rights. Investors should monitor backlog progression, execution of lean initiatives, tariff dynamics, and the portfolio strategy as the company transitions toward a more focused, service-enabled, higher-return model.