Johnson Controls International plc - Registered Shares

Strong Q3 results; major momentum in orders/backlog (good) - Organic sales +10% YoY; Systems +11%, Service +7%, Applied HVAC high-teens growth driven by data center demand. - Profitability expanded: Adjusted EBIT margin +260 bps to 17%; Adjusted EPS $1.42 (+35% YoY). - Orders +27%; backlog +32% YoY to a record $21B (management views this as supporting both near-term confidence and the long-term “algorithm”).

Guidance raised for FY26 (forecast/upside) - Q4 expectations: organic revenue growth +9% to +10%, operating leverage 45% to 50%, Adjusted EPS ~ $1.55. - Full-year FY26 raised: organic revenue growth ~8% (from ~6% prior), operating leverage 45% to 50%, Adjusted EPS ~ $5.05 (about +35% growth; +$0.50 vs original guide). - Free cash flow conversion remains expected at ~100% for the full year (strength indicates earnings are translating to cash).

AI/data-center thermal management remains the central opportunity (opportunity/surprise) - Management argues the industry bottleneck is power availability—thermal management that reduces cooling electrical demand is increasingly valuable. - A key “surprising” datapoint: a referenced AI factory absorption chiller concept suggests ~44% reduction in cooling electrical demand by converting waste heat into productive cooling. - They believe AI-driven demand is not just for mega data centers; there will be decentralization / edge deployments, expanding the market addressable for scalable thermal solutions.