Q1 2022 Johnson Controls International PLC Earnings Call

Welcome to Johnson controls first quarter 2022 earnings call. Your lines have been placed on a listen only until the question and answer session to ask a question. Please press star one on your telephone Keypad. This conference is being recorded if you have any objections. You may you may disconnect. At this time I will now turn the call over to you.

Speaker 1: Welcome to Johnson Control's first quarter 2022 earnings call. Your lines have been placed on a listen-only until the question and answer session. To ask a question, please press star 1 on your telephone keypad. This conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Antoinella Franzon, Vice President and Chief Investor Relations and Communications Officer.

And to an ela funds on <unk>.

Vice President and Chief Investor Relations and Communications Officer.

Good morning, and thank you for joining our conference call to discuss Johnson controls first quarter of fiscal 2022 results.

Speaker 2: Good morning and thank you for joining our conference call to discuss Johnson Control's first quarter fiscal 2022 results.

The press release and all related tables issued earlier this morning as well as the conference call Slide presentation can be found on the Investor relations portion of our website at Johnson controls dotcom.

Joining me on the call today are Johnson controls, Chairman and Chief Executive Officer, George Oliver and our Chief Financial Officer.

Speaker 2: Joining me on the call today are Johnson & Johnson's Chairman and Chief Executive Officer, George Oliver, and our Chief Financial Officer, Olivier Leonet.

Olivier Lionetti.

Before we begin I'd like to remind you that during the course of today's call, we will be providing certain forward looking information.

We ask that you review today's press release and read through the forward looking cautionary informational statements that we've included there.

In addition, we will use certain non-GAAP measures in our discussion and we ask that you read through the sections of our press release that address the use of these items.

In discussing our results during the call references to adjusted earnings per share EBITDA and.

Speaker 2: In discussing our results during the call, references to adjusted earnings per share, EBITA and EBIT exclude restructuring as well as other special items.

And EBIT exclude restructuring as well as other special items.

These metrics together with organic sales and free cash flow are non-GAAP measures and are reconciled in the schedules attached to our press release.

Speaker 2: These metrics, together with organic sales and free cash glow, are non-gat measures and are reconciled in the schedule of a catch-to-our-press release, and in the appendix to the presentation posted on our website.

In the appendix to the presentation posted on our website.

Additionally, all comparisons to the prior year are on a continuing ops basis.

Speaker 2: Additionally, all comparisons to the prior year are on a continuing off space. Now let me-

Now, let me turn the call over to George.

Thanks, Antonella and good morning, everyone. Thank you for joining us on the call today, let's get started on slide three we're off to a strong start in fiscal 2022 with solid Q1 results as our teams across the world continue to demonstrate best in class execution, delivering both strong financial performance for the enterprise.

Speaker 3: Thanks, Antonella, and good morning, everyone. Thank you for joining us on the call today. Let's get started on slide three. We are off to a strong start in fiscal 2022 with solid Q1 results. As our teams across the world continue to demonstrate best in class execution, delivering both strong financial performance for the enterprise and smart innovative solutions our customers demand to ensure a safe, healthy and sustainable space.

And smart innovative solutions, our customers demand to ensure a safe healthy and sustainable spaces.

Our service activity in the quarter accelerated from both in orders and revenue perspective, and we are making great strides across all of our vectors of growth de carbonization healthy buildings and smart buildings I'm incredibly proud of how the team is operating and what still remains an incredibly challenging environment as we continue to pay.

Speaker 3: Our service activity in the quarter accelerated from both in orders in revenue perspective, and we are making great strides across all of our vectors of growth. De-carbonization, healthy buildings, and smart buildings.

Speaker 3: I'm incredibly proud of how the team is operating and what still remains an incredibly challenging environment as we continue to face headwinds from supply chain and labor constraints in various dislocations caused by the latest variant of COVID-19.

Headwinds from supply chain and labor constraints and various dislocations caused by the latest variant of COVID-19.

As the recovery in our end markets expands I had been continuously encouraged by the underlying demand trends, we are witnessing as evidenced by high single digit order and revenue growth this quarter.

Speaker 3: As the recovery in our end markets expands, I have been continuously encouraged by the underlying demand trends we are witnessing, as evidenced by high single-digit order and revenue growth this quarter and the $10.5 billion backlog we have built, which increased 10 percent on a year-over-year basis.

And the 10 and a half billion dollar backlog, we have built which increased 10% on a year over year basis.

What has been equally as encouraging as the drivers of this demand had been the retrofit replacement of equipment and service offerings required to achieve higher indoor air quality cost and reduction in the energy efficiency goals, which perfectly aligns with our portfolio of end to end digital solutions and <unk>.

Speaker 3: What has been equally as encouraging is the drivers of this demand have been the retrofit replacement of equipment and service offerings required to achieve higher indoor air quality, reduction in the energy efficiency goals, which perfectly aligns with our portfolio of end to end digital solutions and services.

Services.

We continue to advance our initiatives to accelerate growth and transform our service business.

Speaker 3: We continue to advance our initiatives to accelerate growth and transform our service business.

One was another quarter of solid revenue and order growth and we continue to drive our attachment rate higher with a multifaceted approach, including a number of digitally enabled solutions.

Speaker 3: Q1 was another quarter of solid revenue and order growth, and we continue to drive our attachment rate higher with a multifaceted approach, including a number of digitally enabled solutions.

Additionally, there are significant actions underway across the organization to optimize the efficiency of our cost structure and we remain on track to deliver $230 million in productivity savings this year.

Speaker 3: Additionally, there are significant actions underway across the organization to optimize the efficiency of our cost structure. And we remain on track to deliver $230 million in productivity savings this year.

We had another quarter of strong free cash flow performance as Olivier will share with you. Later this has allowed us to continue to fund organic reinvestment in our business as well as share repurchase and M&A activity, all three of which remain top priorities.

Speaker 3: We had another quarter of strong free cash flow performance. As Olivier will share with you later, this has allowed us to continue to fund organic reinvestment in our business, as well as share repurchase in M&A activity, all three of which remain top priority.

Over the next several slides I will update you on some of the strategic growth vectors. We continue to highlight and all of these are supported by the global Mega trends that will drive demand within the building sector for the next decade plus.

Speaker 3: Over the next several slides, I will update you on some of the strategic growth vectors we continue to highlight. In all of these are supported by the global mega trends that will drive demand within the building sector for the next decade plus.

As we have said in the past we truly believe we are among the best in class when it comes to the ability to deliver a fully integrated solutions designed to address the challenges associated with these trends.

Speaker 3: As we have said in the past, we truly believe we are among the best in class when it comes to the ability to deliver fully integrated solutions designed to address the challenges associated with these trends.

Based on our performance in Q1, and our expectations for the remainder of the year, we are reaffirming our EPS guidance for the year.

Speaker 3: Based on our performance in Q1 in our expectations for the remainder of the year, we are reaffirming our EPS guidance for the year.

Please turn to slide four.

During the quarter, we were honored to be recognized for our leadership in sustainability and ESG as well as our innovations and smart building platforms.

Speaker 3: During the quarter, we were honored to be recognized for our leadership in sustainability and ESG, as well as our innovations in smart building platforms.

We received our eighth consecutive ranking in the corporate Knights Global 100, most sustainable corporations in the world.

Speaker 3: We received our eighth consecutive ranking in the Corporate Knight's Global 100 Most Sustainable Corporations in the World. We were recognized by Sustainalytics for managing material ESG issues, and we were one of 45 companies globally to receive His Royal Highness, the Prince of Wales, Inaugural Terracotta Seal.

We were recognized by sustained analytics for managing material ESG issues.

We were 145 companies globally to receive his Royal Highness, the Prince of Wales inaugural Terry Congress sale.

In terms of smart buildings I was humbled to receive on behalf of the company. The Iot companies CEO of the year Award from Iot breakthrough.

Speaker 3: In terms of smart buildings, I was humbled to receive, on behalf of the company, the IOT Company CEO of the Year Award from IOT Break.

This award is a reflection of the work of our entire digital and open Blue teams Engineering development sales service and marketing.

Speaker 3: This award is a reflection of the work of our entire digital and open blue teams, engineering, development, sales, service, and marketing.

Actually we were also recognized by <unk> for having the most prominent Iot platform for smart buildings in 2022.

Speaker 3: Lastly, we were also recognized by Verdantix for having the most prominent IoT platform for smart buildings in 2022, having achieved market leading scores in several key categories. Select your future roommate when you get all the updates provided by you at the Q- Past.

Having achieved market leading scores in several key categories.

Please turn to slide five.

Our service business continues to perform well we are seeing good traction on our initiatives to accelerate growth and increase recurring revenues.

Speaker 3: Our service business continues to perform well. We are seeing good traction on our initiative to accelerate growth and increase recurring revenue.

We are also seeing encouraging trends in the adoption of our open Blue digital service offerings.

Speaker 3: We are also seeing encouraging trends in the adoption of our Open Blue Digital Service Office.

Overall service revenues in the quarter were up 5% with broad based growth across all regions.

Speaker 3: Overall, service revenues in the quarter were up 5% with broad base growth across all regions.

Orders were up 7% led by low double digit growth in North America with strength across our applied commercial HVAC and fire and security platforms.

Speaker 3: Fortes were up 7% led by low double digit growth in North America, which strength across our applied commercial HVAC and fire and security party

We expect a four to 500 basis point improvement in our attach rate for the full year and ended Q1 at approximately 41%.

Speaker 3: We expect a 4 to 500 basis point improvement in our attach rate for the full year. It ended Q1 at approximately 41%.

Turning to slide six.

It goes without saying that sustainability is at the heart of everything we do.

Speaker 3: It goes without saying that sustainability is at the heart of everything we do.

There are tremendous efforts underway in all parts of the world to Decarbonize. It has become very clear that buildings play a pivotal role in these efforts.

Speaker 3: There are tremendous efforts underway in all parts of the world to decolonize. And it has become very clear that buildings play a pivotal role in these efforts.

We were pleased to see the recent announcement from the Biden administration, forming a new national building performance standards coalition, consisting of more than 30 state and local governments across the U S. Incentivizing the development of healthier lower carbon emitting buildings.

Speaker 3: We were pleased to see the recent announcement from the Biden administration forming a new national building performance standards coalition, consisting of more than 30 state and local governments across the U.S. incentivizing the development of healthier, lower carbon-emitting building.

Building performance standards are among the core policy initiatives, we have flagged as primary demand drivers for decarbonization and achieving net zero.

Speaker 3: Building performance standards are among the core policy initiatives we have flagged as primary demand drivers for decarbonization in achieving net zero.

This major announcement by the White House is the latest in a number of regulatory actions taken by the local and national governments globally in support of Decarbonising economies and more specifically in support of accelerating progress towards net zero buildings.

Speaker 3: This major announcement by the White House is the latest in a number of regulatory actions taken by the local and national governments globally in support of decarbonizing economies and more specifically in support of accelerating progress towards net-zero building.

These standards will mandate stringent carbon reduction requirements for new and existing buildings in the U S, including financial penalties for non compliance.

Speaker 3: These standards will mandate stringent carbon reduction requirements for new and existing buildings in the U.S., including financial penalties for non-compliance.

The official adoption of these standards would represent an important step towards the formation of the 240 billion dollar de carbonization industry, we expect through 2035.

Speaker 3: The official adoption of these standards would represent an important step towards the formation of the $240 billion de-carbonization industry we expect through 2035.

Moving to slide seven.

We recently launched our latest offering under under the open blue healthy buildings portfolio indoor air quality as a service.

Speaker 3: We recently launched our latest offering under the Open Blue Healthy Buildings portfolio, indoor air quality as a service.

This is the industry's first dedicated as a service model for delivering indoor air quality.

Speaker 3: This is the industry's first dedicated as a service model for delivering indoor air quality.

This offering allows us to combine our traditional holistic approach to delivering healthy indoor environments with the innovative financing models that eliminate the need for our customers to commit capital upfront lowering the risk and time to implement.

Speaker 3: This offering allows us to combine our traditional holistic approach to delivering healthy, indoor environments with innovative financing models that eliminate the need for our customers to commit capital up front, lowering the risk and time to implement.

This offering provides a turnkey solution that delivers clean air while simultaneously optimizing the energy efficiency of a building all while leveraging a subscription based model.

Speaker 3: This offering provides a turnkey solution that delivers clean air while simultaneously optimizing the energy efficiency of a building, all while leveraging a subscription-based model.

Solutions like these enabled by open blue are truly differentiating factors when it comes to our customers' decision making process.

Speaker 3: Solutions like these enabled by OpenBlue are truly differentiating factors when it comes to our customers decision-making process.

Importantly, we continue to expand our partner ecosystem not only to supplement our solution portfolio, but also to advance our research and development.

Speaker 3: Importantly, we continue to expand our partner ecosystem, not only to supplement our solution portfolio, but also to advance our research and development.

This quarter, we announced an important partnership with the asthma and allergy Foundation of America to advance our advocacy of indoor air quality.

Speaker 3: This quarter we announced an important partnership with the Asthma and Allergy Foundation of America to advance our advocacy of indoor air quality.

We also kicked off a collaboration with well living lab and the Mayo clinic to study the cognitive and productivity benefits associated with enhancements to ventilation and filtration, which will leverage the partnership established with Biogen last quarter.

Speaker 3: We also kicked off a collaboration with Well Living Lab in the Mayo Clinic to study the cognitive and productivity benefits associated with enhancements to ventilation and filtration, which will leverage the partnership established with Vylogen last quarter.

Next on slide eight.

We are very excited to welcome foghorn to the Johnson controls team.

Doug Horne is recognized as the industry's leading developer of edge AI software for industrial and commercial Iot solutions with the most advanced technology.

Their edge intelligence combined with cloud based model building enables secure real time machine learning to take place at the device level, which means easier access to actionable insights and increase flexibility for our customers.

Speaker 3: Their edge intelligence combined with cloud-based model building enables secure real-time machine learning to take place at the device level, which means easier access to actionable insights. It increases flexibility for our customers.

Boswell and software will be integrated throughout the entire open blue platform embedded within our open Blue Bridge data exchange, which will allow us an even better value proposition when it comes to applying intelligence at the edge device level faster more secure and at a lower cost relative to cloud based <unk>.

Speaker 3: Foghorn software will be integrated throughout the entire OpenBlue platform embedded within our OpenBlue bridge data exchange, which will allow us an even better value proposition when it comes to applying intelligence at the edge device level, faster, more secure, and at a lower cost relative to cloud-based applications.

Applications.

We view edge intelligence as a critical technology for the future of smart autonomous buildings and for Johnson controls.

Speaker 3: We view edge intelligence as a critical technology for the future of smart autonomous buildings and for Johnson Control.

Foghorn gives us and our open blue platform and immediate competitive advantage in the edge AI with a software platform that is widely recognized as best in class and avoids the time and cost to build out these capabilities organically.

Speaker 3: Boghorn gives us, in our open blue platform, an immediate competitive advantage in edge AI with a software platform that is widely recognized as best in class. It avoids the time and cost to build out these capabilities organically.

Please turn to slide nine.

Among the notable wins for these themes in Q1, we have a few examples across regions all centered around sustainability.

Speaker 3: Among the notable wins for these themes in Q1, we have a few examples across regions, all centered around sustainability.

In North America, we are partnering with the University of Windsor on their 2030 carbon reduction plan as well as their 2050 carbon neutrality objectives.

Speaker 3: In North America, we are partnering with the University of Windsor on their 2030 carbon reduction plan, as well as their 2050 carbon neutrality objective.

We will be installing a uniquely configured chiller on our AI enabled open blue connected chiller platform, which will ensure optimal chiller performance and enable digital service.

Speaker 3: We will be installing a uniquely configured chiller on our AI-enabled OpenBlue Connected Chiller platform, which will ensure optimal chiller performance and enable digital service.

We are excited to be partnering with Aldar properties, a prominent developer in the UAE as they begin a digital transformation to achieve their sustainability commitments.

Speaker 3: We are excited to be partnering with all-dare properties, a prominent developer in the UAE, as they begin a digital transformation to achieve their sustainability commitment.

We were awarded an energy performance contract to improve the energy efficiency across all doors network of schools in Abu Dhabi.

Speaker 3: We were awarded an energy performance contract to improve the energy efficiency across all Dars Network of Schools in Abu Dhabi.

In addition to replacing the HVAC equipment in other energy consuming assets. We will also be deploying our open blue net zero buildings portfolio of digital solutions.

Speaker 3: In addition to replacing the HVAC equipment and other energy-consuming assets, we will also be deploying our Open Blue Net Zero Buildings portfolio of digital solutions.

In China, we were selected to upgrade an existing customers medicines building automation system and controls system and integrate open blue on Prem to leverage key AI capabilities that will optimize the chiller performance to reduce energy consumption.

Speaker 3: In China, we were selected to upgrade in existing customers' medicines, building automation system and controls system, and integrate open blue on-prem to leverage key AI capabilities that will optimize the children performance to reduce energy consumption.

This includes a long term service agreements leveraging our digital capabilities.

Speaker 3: This includes a long-term service agreement leveraging our digital capability.

These are great examples of the power and breadth of our portfolio, where we deliver tailored sustainable outcomes for our customers, while expanding our install base and driving attractive recurring service growth.

Speaker 3: These are great examples of the power and breadth of our portfolio, where we deliver tailored, sustainable outcomes for our customers, while expanding our install base and driving attractive recurring service growth.

To wrap up my prepared remarks, I remain extremely excited about the continued advancements we have made relative to our key growth vectors and I couldnt be more pleased with the way our teams are executing in such a difficult environment.

Speaker 3: To wrap up my prepared remarks, I remain extremely excited about the continued advancements we have made relative to our key growth vectors. And I couldn't be more pleased with the way our teams are executing in such a difficult environment.

We remain laser focused on our strategic commitments and to delivering the outcomes our customers need on the path to a healthy and more sustainable future.

Speaker 3: We remain laser focused on our strategic commitments into delivering the outcomes our customers need on the path to a healthy and more sustainable future.

With that I'm going to turn the call over to Olivier to walk you through the financial details in the quarter and update you on our outlook for Q2 and for the full year Olivier.

Speaker 3: With that, I'm going to turn the call over to Olivier to walk you through the financial details in the quarter and update you on our outlook for Q2 and for the full year. Olivier.

Thanks, George and good morning, everyone. Let me start with December we onsite 10 status in the quarter were up 8% organically well above our original guidance fault meet single digit growth and led by strong outperformance across the global product portfolio.

Speaker 4: Thanks George and good morning everyone. Let me start with the summary on site 10. Let's see the quarter of 8% organically above our original guidance for meet single digit growth and led by strong art performance across the global product portfolio.

Our long gun sight column field businesses also performed well up 6% with solid growth in bulk savvy and install.

Speaker 4: Our longer site count, field businesses also perform well, up 6% with solid growth in both service and install. Price contributed to about 4.5 points of our total organic growth. About a point above...

<unk> contributed to about four and a half points of our total organic growth.

About a point above our expectation.

Segment, EBITDA increased 13% versus the prior year with margins expanding 30 basis points to 12, 3%, including a 100 basis points margin headwinds from price cost and significant operational inefficiencies related to ongoing supply chain district.

Speaker 4: A big A increased 13% versus the prior year with margins expanding 30 basis points to 12.3%. Including the 100 basis points margined at once from price cost and significant operational inefficiencies related to ongoing supply chain descriptions and worsening labor constraints.

<unk> and worsening labor constraints.

This was more than offset by strong leverage on higher volumes and the incremental benefits of our Cogs and SG&A actions.

Speaker 4: This was more than upset by strong leverage on higher volumes and the incremental benefit of our COGS and sDNA actions.

Just to comment on the impact of the operational efficiencies as I mentioned, we were able to yield four five points of price beyond raw materials inflation in most of the items freight logistics labor and components increased further and absorbed the benefit of the increase.

Speaker 4: Just to comment on the impact of the operational efficiencies, as I mentioned, we were able to yield 4.5 points of price.

Speaker 4: beyond raw materials, inflation on most other items, freight logistics, labor and components, increase further and absorb the benefit of the increased pricing. Additionally, ongoing supply chain disruptions and labor shortages impacted our field operations.

<unk> pricing Additionally, ongoing supply chain disruptions and labor shortages impacted our field operations.

When we were dealing with not only our own destructions, but those of our customers as well.

Speaker 4: where we were dealing with not only our own disruptions, but those of our customers as well.

Versus our guidance for Q1. This was an incremental headwind of 40 basis points alcohol, our underlying margin performance in the quarter was very strong.

Speaker 4: Versus our guidance for Q1, this was an incremental headwind of 40 basis points. Of the whole, our underlying margin performance in the quarter was very strong.

EPS of <unk> 54 cents was that I end of our guidance range and increased 26% year over year benefiting from higher profitability as well as low what share count free cash flow in the quarter, Washington to over $215 million, primarily the result of our continued focused on.

Speaker 4: In the years of 54 cents, what are the items of our guidance range and increased 26% the overyear, benefiting from higher profitability as well as lower share count.

Speaker 4: We cashed through in the quarter, Washington's over $250 million, primarily the result of a continued focus on working capital management.

On working capital management.

Turning to our EPS bridge on Slide 11, overall operations contributed 10 cents versus the prior year, including a 6% benefit from our Cogs and SG&A productivity programs.

Speaker 4: Turning to our EPS bridge on slide 11, overall operations contributed $0.10 versus the prior year, including a $0.06 benefit from our COGS and NGNA productivity program.

And the line segment earnings were a net four cents tailwind year over year, which we view as a significant achievement in the current environment.

Speaker 4: underlying segment earnings, where a net for cent tailwind year over year, which review are the significant achievement in the current environment.

Excluding the headwinds from price cost underlying incrementals in Q1 were approximately 40%.

Speaker 4: excluding the adwines from price cost and the line incremental into one where approximately 40%. Please.

Please turn to slide 12.

Thus far our field businesses increased 8% in aggregate with Fannie balanced growth between service and install activity.

Speaker 4: Orders for our field businesses increased 8% in aggregate with fairly balanced growth between service and install activity.

Growth in service orders is being led by a double digit increase in.

Speaker 4: growth in service orders is being led by a double digits increase in our short-term transactional business but also a mid-single digit increase in our contractual recurring revenue base.

Our short term transactional business, but also meet single digit increases in our contractual and recurring revenue base install demand continues to rebound primarily driven by a low double digit increase in head haul feet activity globally, including mid teens growth in North America.

Speaker 4: Install the man continues to rebound, primary driven by a load of a digit increase in retrofit activity globally, including mid-teens growth in North America.

Backlog grew 10% to nearly $10 $5 billion, we service backlog up 4% and install backlog up 11% the Yale, but yet increase was led by higher profit activity in North America and E. Miller.

Speaker 4: Backlog grew 10% to nearly 10.5 billion dollars. We service backlog up 4% and install backlog up 11%.

Speaker 4: The year before, increased was led by higher retrofict activity in North America and in Milan. And new construction activity in AIPA.

And new construction activity in APAC.

Let's discuss our segment results in more details on slide 13. My commentary was also refer to the segment and market performance, including on site for team.

Speaker 4: Let's discuss our segment results in more details on slide 13. My commentary was also referred to the segment and market performance including on slide 14.

That's the north Emory count were up 5% organically led by 7% growth incentives in.

Speaker 4: Sands in North America were a 5% organically but led by 7% growth in service Install cells in

In store sales increased 4% similar to last quarter supermarket chain descriptions and not to yard availability negatively impacted all the new conversion in our North America business.

Speaker 4: Similar to last quarter, supply chain descriptions and material availability negatively impacted revenue conversion in our North America.

Commercial applied HVAC, when you grow low double digits, including low double digit growth both in equipment and service.

Speaker 4: Commercial applied HVAC revenue grow low-dobadjids, including low-dobadjid-digit growth, both in equipment and service.

Fire <unk> security increased mid single digits in the quarter.

Speaker 4: Fire and security increased mid-single digits in the quarter.

Yeah, Sam Mostyn infrastructure declined high single digits, given the thought prior year comparison of plus 20%.

Speaker 4: Perseverance infrastructure declined high single digits given the total prior year comparison of plus 20%. Looking at the two-year stacks for performance infrastructure, we are up double digits with an exciting pipeline of opportunities ahead.

Looking at the two year stack full performance infrastructure we.

Up double digits with an exciting pipeline of opportunities ahead.

Segment margin decreased 90 basis points, Yale, but yet to 11, 6%, including an 80 basis point impact from lower absorption given the operational inefficiencies related to merger and labor availability.

Speaker 4: Eggman Mountain decreased 90 basis points year by year to 11.6%, including 80 basis point impact from lower absorption, given the operational inefficiencies related to material and labor availability.

We are also intentionally maintaining a higher level of sales investments given our order activity is up more than double our revenue growth in the quarter.

Speaker 4: We are also intentionally maintaining a higher level of sales investments given our order activity is up more than double our revenue growth in the quarter.

The combination of these factors, we remain a headwind in the second quarter and significantly improved from that.

Speaker 4: The combination of these factors will remain a headwind in the second quarter and significantly improve from there.

All of that in North America were up 11% versus the prior year with high teens growth in commercial applied including a significant increase in HVAC equipment orders driven by very strong demand in the data center and Essakane vehicles.

Speaker 4: Orders in North America were up 11% versus the prior year with high-teens growth in commercial applied, including a significant increase in HVAC equipment orders, driven by very strong demand in the data center and MK version.

And security orders were up low teens with shrinking both install and service backdrop of $6 $5 billion increased 12% year over year.

Speaker 4: Science that security orders were up low teams with ranking both install and service. Backdrag of $6.5 billion increased 12% year-over year.

You may not revenue increased 3% led by continued strength in the fire and security business, which grew at mid single digit rate. In Q1. This was primarily driven by a sharp rebound in our retail platform and more modest growth in our core offerings due to the material visibility conscious.

Speaker 4: In the last one, you increased 3% led by continuous strength in the fire and security business which grew at mid-sync budget rate in Q1. This was primarily driven by a sharp rebound in our retail platform and more modest growth in our core offerings due to the material of ability constraints. And the short-represervation grew low synagogies while commercial HVAC and controls was relatively flat.

James.

Industry type region Asia grew low single digits, while commercial HVAC and controls was what acuity perhaps.

Segment, EBITDA margin expanded 50 basis points and the line margin performance improve as positive price cost and the ministry of SG&A Cogs savings more than offset a modest mix Edwin.

Speaker 4: Segment EBITDA margin expanded 50 basic points and the line margin performance improved as positive price cost and the benefit of SG&A called savings more than offset a modest mix Edward.

Or does it email out went up 3% in the quarter with high single digit growth in fire and security and low single digit growth in commercial HVAC back.

Speaker 4: orders in Emeal are up 3% in the quarter with high single digit growth in fine security and low single digit growth in commercial age

Backlog ended the quarter at $2 $2 billion up 12%.

Speaker 4: back-grog ended the quarter at $2.2 billion up to 1%.

That is in Asia Pacific increased 12% organically led by mid teens growth in commercial HVAC and controls China continued to outperform with revenue up nearly 30%.

Speaker 4: Sales in Asia-Pacific increased 12% organically led by mid-teens growth in commercial hatchback and controls. China continued to outperform with provenew up nearly 30%.

EBITDA margin declined 260 basis points yoga, yet to 10, 1% driven by headwinds from price cost as well as unfavorable business and geographic mix.

Speaker 4: EBITDA margin declined 260 basis points year-over-year to 10.1 percent, driven by headwinds from price costs as well as unfavorable business and geographic mix.

We do believe Q1 represents peak margin pressure for APAC, and we would expect margins to significant key improvements as we as the year progresses.

Speaker 4: We do believe Q1 represents peak margin pressure for APAC, and we would expect margins to significantly improve as we, as the year progress.

APAC orders were up 5% with continued strength in commercial HVAC driven by a strong rebound within the industrial vertical in China as well as the benefit of a large infrastructure development projects currently underway in Japan, which would include a significant deployment of open blue and <unk>.

Speaker 4: APEC orders were up 5% with continued strength in commercial hatchback, driven by a strong rebound within the industrial vertical in China, as well as the benefit of a large infrastructure development project, currently underway in Japan, which will include a significant deployment of open blue and digitally enabled service.

Italy enabled services.

Backlog of $1 $8 billion was up 2% year over year.

Speaker 4: backlog of $1.8 billion was up 2% year over year.

Global product sales increased 14% organically in the quarter with broad based strength across the portfolio led by mid teens growth across our HVAC equipment platforms.

Speaker 4: Global product sales increased 14% organically in the quarter, with broad-based strength across the portfolio, led by mid-team growth across our HVAC equipment platform.

Global residential HVAC sales were up 11% onboard in Q1, North America HVAC grew 17% in the quarter benefiting from both higher growth in our pump business and strong price realization.

Speaker 4: Global residential age vacs have were up 11% of all in Q1. North America raised HVAC grew 17% in a quarter, benefiting from both high growth in our part business and strong price realization.

We have been very successful in ramping production of our new facility in Mexico. So far we have to about 70% capacity and still on track for full run rate later in the year.

Speaker 4: We have been very successful in ramping production of our new facility in Mexico. So far, we have about 30% capacity and still on track for full run rate later in the year.

In rest of the World Hazy Edge fact grew high single digits led by strong double digit growth in Europe as the adoption of our new Hitachi after water residential heat pump launched last quarter continues to improve.

Speaker 4: In rest of the world, Rezi H. Vagro, high-sengledigit, led by strong double-digit growth in Europe , as the adoption of our new, Itaqi air-to-water residential hit pump, launch last quarter, continues to improve.

In APAC <unk> or that you'd be flat as a result of softer industry demand in Japan.

Speaker 4: In APEC, Rezi HVAC was relatively flat. As a result of softer industry demand in Japan, related to more mild weather, offset by strong growth in Taiwan and India.

Two more mild weather offset by strong growth in Taiwan and India.

Although not reflected in our revenue growth says you know what I sense JV went up low teens, Yale, but yet in Q1, as we continued to expand our distribution footprint in China.

Speaker 4: Although non-reflected in our revenue growth sells in our I-SENS JV, we're up lotings year by year in Q1 as we continue to expand our distribution footprint in China.

Commercial HVAC ported SaaS were up high teens in aggregate with similar levels of growth in both applied and light commercial.

Speaker 4: Commercial HVAC products sales were up high teens in aggregate with similar levels of growth in both applied and light commercial.

Strength in applied was driven by increased demand within the data center end markets for our air cooled Chillers and impactful achieved cooling solutions as well as our initial origination platforms.

Speaker 4: Shrinking applied was driven by increased demand within the data center and markets for our air-cooled chillers and evaporative cooling solutions, as well as our industrial refrigeration platform.

Strength in light commercial was driven by strong performance at Hitachi, which was up over 50% as well as mid teens growth in North America unitary equipment and high single digit growth in Vrs.

Speaker 4: Strength in light commercial was driven by strong performance at Hitachi, which was up over 50% as well as meetings growth in North America, unitary equipment and high-send digit growth in VRF.

Fire and security products grew low double digits in aggregate led by a continued recovery in our commercial fire suppression business and mid teens growth in access control and video solutions.

Speaker 4: Fire and security products grew low-double-digit in aggregate, led by a continued recovery in our commercial fire and suppression business, and mid-teens growth in access control and video solution.

It would be a.

Margin expanded 240 basis points year over year to 14, 5% as volume leverage higher equity income and the benefit of productivity actions more than offset headwinds from price cost.

Speaker 4: It has been margin expanded 240 basis points year over year to 14.5% as volume leverage, higher equity income, and the benefit of productivity actions more than upset headwinds from price cuts.

Turning to slide 16, corporate expense was up slightly year over year to $17 million for modeling purposes. We have included some of our below the line items for FY 'twenty two.

Speaker 4: Turning to slide 15, corporate expense was up slightly over a year to $70 million. For modeling purposes, we have included some of our below-the-line items for FY22.

Turning to our balance sheet and cash flow and <unk> or balance sheet remains in great shape.

Speaker 4: Turning to obananshi tank ashcrow on slide 16. obananshi remains in great shape.

With no major changes to highlight in the quarter. We ended up Q1 with $1 $2 billion in available cash and net debt at one nine times, one tire verses, yet and they're still below our target range of two to two and a half times on cash which generated little over 260.

Speaker 4: with no major changes to highlight in the quarter. We ended up with $1.2 billion in available cash and let that at one point nine times, one tick higher versus year end, best still below our target range of two to two and a half times. On cash, we generated little of $260 million in free cash growth in the quarter, down year over year due to the absence of prior year tax credits and other COVID related benefits.

And free cash flow in the quarter down year over year due to the absence of prior year tax credits and other COVID-19 related benefits as well as nearly a 50% increase in capex spend year over year.

Speaker 4: as well as nearly a 50% increase in capital expand year over year.

We add another quarter of strong trade working capital management down 140 basis points as a percentage of sales.

Speaker 4: We add another quarter of strong trade work in capital management, down 140 basis points as a percentage of sales.

With a continued focus on working capital we remain confident that we would sustain 100% conversion over the next several years.

Speaker 4: With a continued focus on working capital, we remain confident that we will sustain 100% conversion over the next several years.

From a capital allocation standpoint, we are executing our game plan, we repurchased approximately 7 million shares for just over $500 million.

Speaker 4: From a capital allocation standpoint, we're executing our game plan. We were purchased approximately seven million shares for just over 500 million dollars. Deploy roughly one hundred million dollars towards bolt-on acquisitions and increased our quarterly cash dividend payment by 26%.

Deploy roughly 100 millions dollars towards bolt on acquisitions and increased our quarterly cash dividend payment by 26%.

Before we get into guidance I want to comment on two reporting changes that took cured in the first quarter.

Speaker 4: Before we get into guidance, I want to comment on two reporting changes that occurred in the first quarter. First, effective at the start of the fiscal year, our marine business, which was previously split across Asia-Pacific and global products, and Mila is now managed and reported under our E-Mila segment. History-Core segment results have been recast for comparability.

If they keep up the stop of the fiscal year, our marine business, which was previously split across Asia Pacific and grow by products and Miller is now managed and reported in our <unk> segment is to record segment results have been recast for comparability.

Second as part of the ongoing transformation of our service business beginning with first quarter reserves. We are aligning the way we report a whole value associated with certain types of retrofit activity we performed in.

Speaker 4: Second, as part of the ongoing transformation of our service business, beginning with first quarter results, we are aligning the way we report to revenue associated with certain types of retrofit activity we perform in Mila and APEX field businesses as they are evolved to be more aligned with similar offering in North America.

E Miller and APAC seed businesses as they have evolved to be more in line with similar offering in North America.

From a management perspective does provide better visibility to our initiatives aimed at accelerating our higher margin recurring revenue base. The changes are being made on a prospective basis.

Speaker 4: From a management perspective, this provide better visibility to our initiatives aimed at accelerating our higher margin recurring over new base.

Speaker 4: The changes are being made on a prospective basis.

Two adults with comparisons going forward. We have included recast that segment reserves and a table, which pro forma service revenue for FY 'twenty, one India Pandemics.

Speaker 4: To help with comparisons going forward, we have included recasted segment results and a table with performance service revenue for FY21 in the appendix.

Now, let me get into guidance on Slide 17, as George mentioned, we are reaffirming our full year adjusted EPS guidance range of $3 22 to $3 32, which represents year over year growth of 22% to 25%.

Speaker 4: Now let me get into guidance on site 17. As George mentioned, we are confirming our portfolio adjusted EPS guidance range of $3.22 to $3.32, which represents year-over-year growth of 22 to 25%.

Given the continued inflationary environment, we are increasing our organic revenue growth assumptions torrential 8% to 10%, mainly driven by our increased price expectation.

Speaker 4: Given the continued and price-on-ery environment, we are increasing our organic revenue growth assumptions to range of eight to 10 percent, mainly driven by your increased price expectations.

Additional point of price on the top line, we create an incremental margin headwind of approximately 20 basis points.

We continue to expect price cost, we remain positive on an EPS basis or whether the inflated level of pricing, we bring our four year price cost margin Edwin to approximately 60 basis points. Therefore, we now expect 50 to 60 basis points of segment EBITDA.

Margin expansion for the year.

There was no change to underlying margin expansion of one other than 10 to 120 basis points.

Let me specifically point out that there was no change to our expectation for segment $8. Additionally, the strengthening U S. Dollar has created an EPS headwind of <unk>. Since we first provided guidance back in November and we are absorbing.

This incremental headwind with our ASM to adjusted EPS guidance range.

Turning to the second quarter, we expect continued strong performance with high single digit organic revenue growth improved segment EBIT, a margin expansion and adjusted EPS of <unk> 62 to 64 cents, which represents a year over year increase of 19% to 23%.

Let me get back into cold to Josh for some additional comments.

Now before we move on to the Q&A portion of the call I wanted to announce a quick update to my leadership team.

Speaker 3: Before we move on to the Q&A portion of the call, I wanted to announce a quick update to my leadership team. This will be Antonella's final earnings call, and she will be pursuing a new role outside of Johnson Control.

This will be Antonella his final earnings call and she will be pursuing a new role outside of Johnson controls.

Antonella has been one of my constant really since I first joined back Tycho back in 2006.

Speaker 3: Internet has been one of my concerts, really, since I first joined back, Tyco back in 2006.

She has been an invaluable resource to me personally and I'm sure. She has been to many of you for more than a decade. She has been a fantastic leader a trusted adviser and a friend.

Speaker 3: She has been an invaluable resource to me personally, and I'm sure she has been to many of you for more than a decade. She's been a fantastic leader, a trusted advisor, and a friend.

Now I can't thank you enough for all that you've done for me for the Johnson controls team and for the company.

Speaker 3: And so now I can't thank you enough for all that you have done for me, for the Johnson-controlled team, and for the company. I couldn't be more happy for you. I know I speak for all of us when I say, we wish you all the best, and we look forward to hearing more about your success in your new role. With that operator, please open the line for questions.

Couldn't be more happy for you I know I speak for all of US when I say, we wish you all the best and we look forward to hearing more about your success in your new role with that operator. Please open the line for questions.

Thank you if you would like to ask a question. Please press star one on your telephone keypad in respect of time, we ask that you limit yourself to one question and one follow up question.

Speaker 1: Thank you. If you would like to ask a question, please press star one on your telephone keypad. In respect of time, we ask that you limit yourself to one question and one follow-up question to withdraw your question, press star two.

To withdraw your question press Star two.

One moment please for the first question.

Our first question comes from Andy Kaplowitz with Citigroup. Your line is open.

Speaker 1: Our first question comes from Andy Capowitz, with City Group Your Line is open.

Good morning, guys.

Well, then Andy Antonella, good luck and sorry to see though.

It looks like there seems to be more supply chain related pressure in the field, particularly in North America versus your global products business, which is performing well. So could you talk about what youre seeing in the field and then it seems like you're assuming incremental margin actually gets slightly better in fiscal Q2 versus Q1 is that a reflection that field conditions.

Speaker 5: Antinal, a good luck and sorry to see you go. So it looks like there seems to be more supply chain related pressure in the field, particularly in North America versus your global products business, which is performing well. You talk about what you're seeing in the field and then it seems like you're assuming incremental margin actually gets slightly better in fiscal Q2 versus Q1. Is that a reflection that field conditions are at least not getting worse in Q2 and maybe getting a little better?

Or at least not getting worse in Q2, and maybe getting a little better.

Andy Thank you for your question, so you're right D.

Speaker 4: And thank you for your question. So you're right. The environment is still challenging. We end this challenge is impacting the variability of parts, the availability of labor. And obviously we are facing a high level of inflation.

The environment is still challenging we are and and these challenges impacting availability of parts availability of labor and obviously.

We are facing a high level of inflation.

And the impact on our field business is in two aspects. One first of all our operation is impacted but also the one of our customers and as a result, we mentioned that in our prepared remark, we add price cost negative about $15 million in Q1, and a headwind also due to the <unk>.

Speaker 4: And the impact on our field business is in two aspects. One, first of all, our operation is impacted, but also.

Speaker 4: the one of our customers and as a result we mentioned that in our prepared remarks.

Speaker 4: We had price calls negative about 15 million in Q1 and a headwind also due to the description of our business of about $18 million. So the sum of the two is a margin headwind of about...

Description of our feed business of about $18 million. So the sum of the two is a margin headwind of about a 100 basis points now at.

Something I want to say is that despite this environment, we have been able to deliver the profit dollar we had committed to you and actually from an EPS standpoint, we are at the top end of our range a few reasons for that one pricing.

Speaker 4: 100 basis points. Now, something I want to say is that despite this environment, we have been able to deliver the profit dollar we had committed to you. And actually, from an EPS standpoint, we are the top end of our range. A few reasons for that. One pricing.

As we mentioned in our prepared remark we have included a four and a half points of price in Q1 second.

Speaker 4: As we mentioned in our prepared remark, we have included four and a half points of price in Q1, second, we are facing strong demand and the value proposition of Johnson Control is really resonating with our customers.

We have facing strong demand and the value proposition of Johnson controls is really recent originating with our customers.

Third.

We have also been very disciplined regarding diminishment of our P&L from a Cogs and SG&A standpoint, as a result, you saw the bottom line. We have mentioned so we believe that our.

Speaker 4: Third, we have also been very disciplined regarding the management of our PNL from a COG.

Speaker 4: And as you can see, standpoint as a result, you saw the bottom line we have mentioned. So we believe that the Edwins are going to start to be better as we go to the year. We're going to have a headwind in Q2, about 80 basis points.

The headwinds are going to start to be better as we go through the year, we'll get to a headwind in Q2 about 80 basis points.

And for the rest of the year as we all the new orders, which were booked at a much higher margin that we have strong visibility of this in the second half we will expect to have a tailwind regarding the our margin performance of our business.

Speaker 4: And for the rest of the year, as we rove anew orders which were booked at the much higher margin, and we have strong visibility of this, in the second half, we will expect to have tailwind regarding the margin performance of all.

That's very helpful. And then George I think you raised your attachment rate expectations slightly to four to 500 basis points. I think you were talking about three to 400. It isn't a huge change but is the change your reflection of GCI continue to penetrate the market faster drill times Lou in your digital offerings, and then does the higher rate of penetration when you might be able to outperform that.

Speaker 5: Olivia, that's very helpful. And then, George, I think you raised your attachment rate expectations slightly to four to 500 basis points. I think you're talking about three to 400. It is a huge change, but is the change or reflection of a GCI continue to penetrate the market faster, to open blue in your digital offerings, and then does the higher rate of penetration, meaning you might be able to outperform your markets, but more than that 200 to 300 basis points that you've talked about.

Markets, but more than that 200 to 300 basis points that you've talked about.

Yeah, Andy what I would say as a service is a significant area of focus in our key growth accelerated.

Speaker 3: Yeah, Andy, what I'd say is services a significant area of focus and our key growth accelerator. In addition to the traditional service business, digital now, the new open blue offerings, that has really helped us increase our attachments. And then not only would that attachment be able to now launch a lot of new digital offerings that then enables us to be able to get more revenue per customer and ultimately deliver a different out.

<unk> to the traditional service business, you know digital known the new opened blue offerings.

That has really helped us increase our attach rates and then not only would that attachment being able to now launch a lot of new digital offerings that then enables us to be able to get more revenue per customer and ultimately deliver a different outcomes and so as a result, you saw or service orders were up 7%.

Speaker 3: And so as a result, you saw our service orders were up 7% in the first quarter that was led by double digit growth in North America, although we did see growth across all regions and domains. And we're also seeing our L&M business come back with more access to our customers.

In the first quarter that was led by double digit growth in North America, Although we did see growth across all regions and domains and we're also seeing our O&M business come back with more access to our customers.

When we look on a go forward basis relative to your question on attach we do expect our service orders to continue to grow and so when you look at the attach rate. It is it is built on the digitization of our services.

Speaker 3: So we look on a go forward basis relative to your question on attach, we do expect our service orders to continue.

Speaker 3: So when you look at the attach rate, it is built on the digitization of our services.

We're planning to launch 20, new service products and offerings in 'twenty, two and this is where we've taken our open blue capabilities, and actually delivering and indoor air quality level or clean air delivery rate or sustainability solutions of energy reduction solutions all of the above on top of what R. R.

Speaker 3: You know, we're planning to launch 20 new service products and offerings in 22. And this is where we're taking our open blue capabilities and actually delivering an indoor air quality level or clean air delivery raid or...

Speaker 3: sustainability solutions, the energy reduction solutions, all of the above on top of what are attached and our core business.

Tach and our core business would be and so we're very excited about the progress we've made and more important now with the pipeline that we have on these new service offerings that gives us the opportunity to not only attach more but would that it would.

Speaker 3: So we're very excited about the progress we made and more important now with the pipeline that we have on these new service offerings that give us the opportunity to normally attach more.

Connect more attach more and then ultimately deliver additional services on top of that connectivity.

Speaker 3: But would that, you know, connect more, attach more, and then ultimately deliver additional services on top of that connectivity? Peace.

I appreciate it guys.

Thank you Indra Hugh.

Our next question comes from Jeff Sprague with vertical research partners. Your line is open.

Speaker 1: Our next question comes from Jeff Sprague with Vertical Research Partners. Your line is open.

Good morning, everyone.

And Ella Congrats I'll look forward to hearing what it's all about very soon.

Speaker 6: Thanks. Good morning, everyone. Anthony, I can grab. So I look forward to hearing what it's all about very soon.

I appreciate all the help over the years.

Two questions for me first just picking up on the last one.

Speaker 6: I appreciate all the help over the years. Two questions from me, first just picking up on the last one. George, can you give us any indication yet of how revenue per user is changing? I mean, we're kind of early days on this open blue journey, but I wonder if there's kind of a measurable and quantifiable change in revenue per user that you could share with us.

George can you give us any indication yet of how revenue per user is changing I mean, we're kind of early days on this open blue journey, but.

I wonder if there's kind of a measurable and quantifiable change on revenue per user that you could share with us.

And then secondly kind of tied to the service question. When you look at the strength now these install orders and the growth of the install backlog.

Speaker 6: And then and secondly kind of tied to the service question when you look at the strength now these install orders and the growth of the installed backlog Do you in fact see kind of you know higher than normal? Attachment and service tail on that install work than you did previously Maybe a little bit of color there would be interesting appreciate it. Thanks

Do you in fact see kind of higher than normal attachment and service tail on that install work than you did previously.

Maybe a little bit of color there would be interesting I appreciate it. Thanks.

Yeah. So let me start by just giving you the framework for service and the work that we've been doing over the last 18 months or more important how that's playing out. This year you know we've got about a $6 billion service business about 60% is recurring today and obviously very proud of the progress we've made in.

Speaker 3: Yeah, so let me start by just giving you the framework for service and the work that we've been doing over the last 18 months and more important how that's playing out this year. You know, we've got about a 6Billion dollar service business about 60% is recurring today and obviously very part of the progress we've made and it is, you know, the focus of our growth factor.

And it is the focus of our growth vectors and so when you look at the install base that we have you know historically its been underserved and and much much of that was served with mechanical services Jeff.

Speaker 3: And so when you look at the install base that we have historically been underserved and much of that was served with mechanical services, Jeff. And so what we've been doing is over the last, really 18 months is getting everything, really going after that install base to get it connected so that we can then attach. So we can take existing mechanical PSAs, the indoor new PSAs and attach it.

So what we've been doing is over the last really 18 months is getting everything really go going after that install base to get a connected.

We can then attach so we can take existing mechanical PSA <unk> and attach.

That connectivity and then with that connectivity be able to now begin to deploy some of the new services, whether it be <unk>.

Speaker 3: with that connectivity and then with that connectivity, be able to now begin to deploy some of the new services, whether it be.

<unk> chiller services and focusing on uptime of the chiller or reduce the energy of the chiller or indoor air quality solutions. We've got an array of solutions that we've now launched that with open blue gives us the opportunity to tailor indoor air quality solutions for the the verticals that we support so all of that has been going.

Speaker 3: connected chiller services and focusing on uptime of the chiller or reduced energy of the chiller or the indoor air quality solutions, you know, we've got an array of solutions that we've now launched that with Open Blue gives us the opportunity to tailor indoor air quality solutions for the verticals that we support. And so all of that has been going on. When you look at, you know, the current, our projection is that we'll grow our service business to a 300 basis points above the market.

When you look at the <unk>.

Current are our projection is that we'll grow our service business to a 300 basis points above the market.

And to your specifically to your point, it's all been about operationalize in service. So we've got a huge install base get connected and then attach when we're going after either renewing our existing PSA is indoor generating new PSA is we then get an attach connected PSA and then it's helpful.

Speaker 3: And specifically to your point, it's all been about operationalizing service. So we've got a huge install base, get it connected.

Speaker 3: And then attach when we're going after either renewing our existing PSA's and or generating new PSAs, we then get an attached connected PSA. And then it's up selling more and we've already launched 12 digital offerings. We've got a pipeline of, you know, it's probably three or four hundred million dollars of of opportunity that we have to go back into that install base and be able to bring these services to them. And so when you ask about, you know, what is...

Selling more than we've already launched <unk> digital offerings. We've got a pipeline of you know, it's probably three or $400 million of opportunity that we have to go back into that install base and be able to bring these services to them and so when you ask about what is.

The connectivity, we're at a very low level today based on you know, we have our security business, which 100% as attach but when you look at the other businesses, we have a much lower percentage when I say.

Speaker 3: you know, the connectivity, where it'll very low level today, based on, you know, we have our security business, which 100% is attached. When you look at the other businesses, we have a much lower percentage when I say, you know, connected and with an attached PSA. And so we're working through that to forecast what that's gonna mean not only through the year, but throughout years and what we can achieve, purely with what's connected that then has a PSA attached

<unk> and within attach PSA and so we're going to we're working through that too.

To forecast, what that's going to mean not only through the year, but throughout years and what we can achieve purely with what's connected but then has a PSA attached to it but that's fundamental jumped to our ability to be able to to improve our the way that we're measuring today. The four to 500 basis points of improvement and then our ability to be able.

Speaker 3: But that's fundamental, Jeff, to our ability to be able to improve the way that we're measuring today, the four to 500 basis points of improvement, and then our ability to be able to then generate more revenue per customer because of the new solutions that are being now offered to where we have a connected PSA.

To then generate more revenue per customer because of the the new solutions that are being now offered to where we have a connected Psa.

Great. Thank you.

Our next question comes from Scott Davis with Melius Research Your line is open.

Speaker 7: Our next question, Captain Scott Davis, with Amelia's research, your line is open. Hi, good morning.

Hi, Good morning, George eliminate Olivier and congrats Scott also.

Thank you.

The years of <unk>.

Help and support.

Anyway, I'm going to jump on.

The bandwagon here, because I'm kind of fascinated with this foghorn thing, but I don't understand it.

Speaker 8: bandwagon here because I'm kind of fascinated with this foghorn thing but I don't understand it. What does it give you?

What does it give you George that you didn't have before and it feels like it's fairly high level I mean, as a customer one something this advanced.

Speaker 8: have before and it feels like it's fairly high level. I mean, is the customer one?

Just kind of leave it there yes. So let me let me frame this up for you Scott number.

Number one is I couldn't be more excited about the capabilities that foghorn.

Speaker 3: Yeah, so let me frame this up for you, Scott. Number one, I couldn't be more excited about the capabilities that Foghorn, that the software that they have brings to our open blue platform. So, you need to think about this as the edge AI is going to become a critical technology to own when it comes to the future of smart autonomous buildings and, in many cases, across other industries. And there's more value...

Software that they have brings to our open loop platform.

So you need to think about this as the edge edge AI is going to become a critical technology to own when it comes to the future of smart autonomous buildings and in many cases across other other industries and there's more value to being to being created at the edge because it can be real time, it can be more dependable.

Speaker 3: to being created at the YETS because it can be real time, it can be more dependable, analytic.

Analytics.

It reduces the data being sent to the cloud, which is obviously lower caused more secure and it also improves the system resiliency. So it can operate whether it be offline or without.

Connectivity and so we see let me give you a number here, we see edge AI penetration increasing six fold through 2025. So when you think about autonomous building there'll be more sensors more AI deployed more analytics and by pushing that to the edge ultimately with the capabilities that I said earlier.

Speaker 3: through 2025. So when you think about an autonomous building, there'll be more sensors, more AI deployed, more analytics, and by pushing that to the edge.

Is what ultimately makes it really attractive and so for US this was a buy versus build decision.

Speaker 3: Ultimately, with the capabilities that I said earlier, is what ultimately makes it really attractive. And so for us, this was a bi-versus-

We would've caused almost as much and probably would have had lengthened our development cycle. Another two years to establish the same level of the commercial success that foghorn has today and so you need to think of this as supplementing our product development for a product that we would have actually accelerated on our own spend.

Speaker 3: You know, we would have cost almost as much and probably would have had lengthened our development cycle another, you know, two years to establish the same level of the commercial success that Poghone has today. And so you need to think of this as supplementing, you know, our product development for a product that we would have actually accelerated on our own spend. And then it catalyzes the creation what we'd call our JCII hub in Silicon Valley. That's where Poghone is based.

And then it catalyzes the creation, what we'd call our GCI AI hub in Silicon Valley, that's where longhorn is based.

And it's allowing us to maintain the key engineering talent and now take what we were doing previously within JCR and put that together within the Coa.

Speaker 3: And it's allowing us to maintain the key engineering talent and now take what we were doing previously within JCI and put that together within the COE.

If you look at their capabilities compared to what we've seen elsewhere across the industry. It is widely considered the best in class and I would say has the most advanced portfolio among their peers. So this thing of this Scott is this an accelerator of our ability to deploy our AI solutions with open blue specifically.

Speaker 3: And if you look at their capabilities compared to what we've seen elsewhere across the industry, it is widely considered best in class. And I would say has the most advanced portfolio among their peers. So this, think of this, God, is this an accelerator of our ability to deploy our AI solutions with open blue specifically to the verticals that we support that ultimately creates incredible value for our customers?

<unk> to the verticals that we support that ultimately creates incredible value for our customers.

Shinall point, Scott if I may we had worked with the team for about two yeah, and we're very pleased with the technology and they were so very pleased with the could show for one so we believe it's a great fit.

Speaker 4: The additional point, Scott, if I may, we had worked with the team for about a year and we're very pleased with the technology and also very pleased with the culture of our own. So we believe it's a great fit.

Yeah.

As foghorn.

Do they have a broad customer base already Georgia are you buying the technology it or they have an existing customer base that you're kind of that you can lever as well.

Speaker 8: do they have a broad customer base already? George, are you buying the technology? Do they have an existing customer base that you can...

David did they have an existing customer base, where there were developing and developing.

Speaker 3: They have an existing customer base where they were developing and developing vertical solutions. And so, we've been working with them, as Olivier said, over the last year. And so, as they were advancing with their capabilities with our channel and the work that we're doing with Open Blue just totally opened up the opportunity now to expand the market that they're serving.

Vertical solutions and so we've been working with them as Olivier said over the last year and so as they were advancing with their and their capabilities with our channel and the work that we're doing with open blue just totally opened up the opportunity to expand the market that they are serving.

It sounds really cool I'd like to say a demo someday I'll pass it on thank you guys. Good luck.

Speaker 8: Sounds really cool, I'd love to see a demo someday. I'll pass it on, thank you guys, good luck.

Thanks Scott.

Okay.

Our next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker 1: Our next question comes from Julian Mitchell with Barclays. Your line is open.

Hi, good morning, and I'll Echo the thanks, France, Netherlands wish you all the best maybe just starting with the topline outlook I'm just wanted to understand on fire and security. You know you had mid single digit growth I think sort of all in consolidated them in the quarter.

Speaker 9: hi good morning and i'll go to thanks um... france and other and wish you all the best uh... maybe uh... just starting with the the top line outlook just wanted to understand on fire and security you know you had mid-single digit growth i think sort of

Uh huh.

Speaker 9: all in consolidated in the quarter, organically, maybe help us understand sort of within that, you know, how much less than the firm-wide average was the pricing tailwinds. And also as you think about the balance of the year, do you see that mid-single digit fine security growth rate accelerate?

Organically, maybe help us understand sort of within that how.

How much less than the firm wide average was the pricing tailwind.

And also as you think about the balance of the year do you see that mid single digit foreign security growth rate accelerating.

So let me speak about.

The guy deny corrugate.

Speaker 4: So let me speak about the guide in aggregate.

If you look at I'm going to talk about Q2 quickly and then talk about the food yet for Q2, we expect <unk> to be high single digits. If I give it to you by by the key operation Desert and control, we expect services to grow mid to high single digits.

Speaker 4: If you look at, I'm going to talk about Q2 quickly and then talk about the full year. For Q2, we expect Hovernui to be high-sengedigit. If I give it to you by the key operations, as I said, on control, we expect services to grow, meet to high-sengedigit.

We expect install to grow at a mid to high single digits and we expect also our global product franchise to grow low double digits. So continued strong performance and we expect those trends to keep going for the full year.

Speaker 4: install, we expect install to grow at mid to high single digits, and we expect also our global product franchise to grow lower digits, so continue strong performance.

Speaker 4: And we expect those friends to keep going for the full year.

And find security is doing very well, but you see that the full portfolio is doing very well as well we have very pleased with the commercial HVAC are also applied shares we have at our new product portfolio driving sustainability for customers is resonating. So five security is doing well, but the full portfolio is doing well.

Speaker 4: Fine security is doing very well, but you see that the full portfolio is doing very well as well. We are very pleased with the commercial HVAC, also applied shares we have had, or a new product portfolio, driving sustainability for our customers is resonating. So fine security is doing well, but the full portfolio is doing well as well, Julian.

Well Julien.

Thank you and then maybe just following up on the margin outlook. So global products had very good operating leverage in the first quarter.

Speaker 9: Thank you. And then maybe just following up on the margin outlook. So global products had very good operating leverage in the first quarter, I think 30% or so year on year, even with inflation and supply chain issues. So I guess looking at the balance of the year, wondered how you see that operating leverage playing out. Because you might get less of a mixed tailwind from ReziHVAC slowing down, but maybe a help as inflation.

30% or so year on year, even with inflation and supply chain issues. So I guess looking at the balance of the year I'm wondering how you see that operating leverage playing out cause he might get less of a mix tailwind from resin <unk> slowing down, but maybe a help as inflation.

And shrinks as a headwind as well so how you're thinking about sort of global products operating leverage for the year as a whole.

Speaker 9: shrink as a headwind as well. So how are you thinking about sort of global products operating leverage for the year as a whole?

So in aggregate.

As you can see from our guide D and what we said earlier, our julienne you see that price cost is going to become more and more of a tailwind for the company. The reason for that is we are now.

Speaker 4: So, in aggregate, as you as you can see from from our guide and what we said earlier.

Speaker 4: Julian, you see that price court is going to become more and more of a of a tailwind for the company. The reason for that is we are now recording revenue for orders which were priced at a much higher margin.

According whole venue for orders, which were priced at a much higher margin.

And we see that playing or so for global quota, but also the entirety of the portfolio. So let me repeat some of the numbers Edwin Q1, one of the basis points Edwin in Q2, 80 basis points and for the second half.

Speaker 4: And we see that playing also for global product, but also the entirety of the portfolio. So let me repeat some of the numbers, Edwin Q1 100 basis points, Edwin and Q2 80 basis points.

A tailwind due to price cost of about 40, and a net for the year of about 60 basis point headwind and then important mention is that the underlying margin is very strong and for the year would be at about 110 to 120 basis point increase.

Speaker 4: And for the second half, a tailwind due to price costs of about 40 and a net for the year of about 60 basis point headwind. And an important mention is that the underlying margin is very strong and for the year would be at about 110 to 120 basis point increases.

Thanks, very much and there's no big mix headwind expected in global products as resi slows down.

Speaker 9: Thanks very much and there's no big mix headwind expected in global products as Resi slows down.

Not really I mean, if anything we see mix starting to be more positive as we sell more services more digital offering as George mentioned earlier and Julian I would just add that if you're talking about global product, specifically I mean, the leverage in that business for the year, it's going to be around 30%.

Speaker 2: Not really. I mean, if anything, we see mix starting to be more positive as we sell more services, more digital offering, as George mentioned earlier. Yeah, and Julian, I would just add that if you're talking about global products, specifically, I mean, the leverage in that business for the year is going to be around thirty percent. That's great. Thank.

That's great. Thank you.

Thank you Julien.

Our next question comes from Nigel Coe with Wolfe Research Your line is open.

Speaker 1: Our next question comes from Nigel Coe with Wolf Research, Rilena Zob...

Thanks, Good morning, and that's L. A.

Good luck and we'll Miss you Thanks, Phil will help.

Speaker 10: Thanks, good morning and Ansonella, congratulations, good luck and we'll miss you. Thanks for all the help.

Just on that last point, maybe Olivier just clarify.

Speaker 10: Just on the last point, maybe Olivia just clarify, I'm assuming that strong JV income would be helping with the pros leverage, so that's probably a fact as well. But I'm just curious on the North American Red Fid comments, you know, I think you call it mid teens or the growth there and sounds like that's strong. Would you clarify that as maybe just the third Red Fid activity or do you think there's something in a bit more secular happening here? you.

I'm, assuming that strong JV income would be helping with the park leverage so that's probably a factor as well, but I'm just curious on the North American retrofit comments I'm caught up mid teens order growth there.

It sounds like that's strongly would you clarify that is maybe just the third better productivity or what do you think there's something in a bit more secular.

And here.

No we are very pleased.

With our North America business.

As we have mentioned in our prepared remark the North America business as being highly impacted by disruptions for each operation, but also.

Speaker 4: with our North America business. As we have mentioned in our prepared remark, the North America business has been highly impacted by descriptions for its operation but also the operations of our customers. If you look at the underlying demand for North America, we have been green orders in the quarter twice.

Operations of our customers, but if you look at the underlying demand for North America.

We have been growing orders in the quarter twice.

Hoping you rate clearly the value proposition of Johnson controls in North America is at least.

Speaker 4: The revenue rate clearly, the value proposition of Johnson-controlled North America is, it is unating. As we mentioned, also, we are investing in Salesforce to satisfy the demand. Now, we're not able to realize it yet, but we will in the second part of the year. So we see the North America revenue to keep growing, and we see also the margin rate to keep improving as we go through the year.

As in <unk>, as we mentioned or so we are investing in sales force to satisfy the demand now we're not you know.

Able to realize it yet, but we will need a second part of the yes. So we see the North America.

Holding you to keep growing and we see also the margin rate to keep improving as we go through the year.

Yes, just a comment on that Nigel when you when you look at.

The backlog the backlog is up 12% year on year. When you look at HVAC controls were up about almost 20% and so you would attributed to all of this strategy is not only in the new product developments that are new product that's coming to market. The focus on de carbonization on energy safe.

Speaker 3: Yeah, just a comment on that Nigel. When you look at the backlog, the backlog is up 12% year on year. When you look at age back controls, we're up.

Speaker 3: about almost 20%. And so you would attribute it to all of the strategies, not only in the new product developments that are, the new product that's coming to market, the focus on decarbonization on energy savings, and now a significant lift on indoor air quality. And when you look at indoor air quality,

<unk> and now a significant lift on indoor air quality and when you look at indoor air quality.

No were up nicely year on year after delivering $400 million in total this would be across the globe last year. When we look at our orders here in Q2, we project those to be up about 45% and so it's a combination of not only good core growth, but now seeing the opportunity the way that we're executing on the <unk>.

Speaker 3: You know, we're up nicely year on year after delivering 400 million in total. This would be across the globe last year. When we look at our orders here in Q2, we project those to be up about 45%. And so it's a combination of not only good core growth, but now seeing the opportunity the way that we're executing on the growth vectors. And now when you look at even services being up nicely in North America, that is an output of the work that we've been doing strategic.

Growth vectors in and now when you look at even services being up nicely in North America that is an output of the work that we've been doing strategically.

Great. Thanks, George and then just a quick one on labor I know, we're hearing a lot of companies complaining about.

Speaker 10: Great, thanks George. And then just a quick one on Labour. You know, we're hearing a lot of companies complaining about mass resignations and an inability to hire. I'm just wondering if in your service business, if you've seen any kind of, you know, maybe amber flags or any red flags there and any kind of capacity concerns that might gate service growth due to labour constraints.

Master designations and an inability to high I'm just wondering if you know in your civil business. If you are seeing.

Any any kind of maybe I'm a flag so any red flags, there and any any kind of capacity concerns that might gate citrus growth due to labor constraints.

So when I look at.

The supply chain disruptions overall and it is weighted towards North America. It is driven by labor.

Speaker 3: So, when I look at, you know, the supply chain disruptions overall, and it is weighted towards North America, it is driven by labor, you know, a broad base. Now, what I would say inside our four walls. So, within our manufacturing facilities, and within our.

Broad base now what I would say inside our four walls, so within our manufacturing facilities and within R.

Our install and service business, we've been very effective in getting the ramp up of labor that ultimately is required to continue to accelerate our growth.

Speaker 3: Our install and service business, we've been very effective in getting the ramp up of labor that ultimately is required to continue to accelerate our growth.

So when you look at the disruption that literally I was talking about is really driven by our supply chain.

Speaker 3: And so when you look at, I mean, the disruption that Olivier was talking about is really driven by our supply chain, you know, chips and coils and other components that ultimately we've been adjusting to and making sure we're working around to mitigate the impact. And so we've been very proactive, not only on the labor front ourselves, but we've been also engaged with our suppliers.

Chips in coils and other components that ultimately we've been adjusting to and making sure were working around to mitigate the impact and so we've been very proactive not only on the labor front ourselves, but we have been also engage with our suppliers and so we've been very actively engaged with their labor situation at <unk>.

Sure that were utilizing our labor services to ultimately get the labor they need to be able to keep our manufacturing facilities operating and the like and so what I would say it certainly is you know what I would say the underlying challenge within the supply chain, but I would tell you based on what I've seen we track this on a weekly Bay.

Speaker 3: So we've been very actively engaged with their labor situation to make sure that we're utilizing our labor services to ultimately get the labor they need to be able to keep our manufacturing facilities operating and the like. And so what I would say, it certainly is, what I would say, the underlying challenge within the supply chain, but I would tell you, based on what I see, we track this on a weekly basis, we're making good progress, and then we're working with our suppliers to do the same.

<unk>, we're making good progress.

And then we're working with our suppliers to do the same.

That's great to hear thanks very much.

Okay.

Our next question comes from Steve Tusa with Jpmorgan. Your line is open.

Speaker 1: Our next question comes from Steve Tussett with JP Morgan. Your line is open.

Oh, Hey, guys good morning.

Good morning morning, Steve morning.

Congrats <unk> and best of luck in whatever.

Speaker 11: Good morning, Steve. Morning. I congrats to now and best of luck in whatever the new gig is. Thanks for all the help over the years.

The new the new gig is thanks for all the help over the years.

Thank you.

What do I think the market is growing in the kind of global applied equipment.

Speaker 11: What do you guys think the market is growing in kind of global applied equipment and how you guys perform against that?

Have you guys perform against that.

Yeah, I mean, when we look at our applied business, Steven and the work that we've done making sure that we've got a full lineup and we've been reinvesting in new product and and the like so I think we're seeing some some upside from that I think overall, we've seen a nice recovery and we've capitalized on that with some of the new products.

Speaker 3: Yeah, I mean, we look at our applied business statement and the work that we've done making sure that we've got a full lineup and we've been reinvesting a new product and the like. So I think we're seeing some some upside from that. I think overall, we've seen a nice recovery and we've capitalized on that with some of the new products.

I would say the focus for US has been on GWB refrigerant technologies next Gen Air cooled technologies, a lot of electrification with heat pumps and heat transfer units and then in our J C. H business via RF technology. So I think a lot of these are aligned to where we see the <unk>.

Speaker 3: I would say the focus for us has been on low GWP refrigerant technologies, next-gen air cool technologies.

Speaker 3: a lot of electrification with heat pumps and heat transfer units and and then in our JSH business the VRF technology. So I think a lot of these are aligned to where we see the market going and ultimately now capitalizing on those trends around sustainability and energy efficiency.

Market going and ultimately now capitalizing on those trends around sustainability and energy efficiency and so that's the underlying what we see to be the driving the underlying demand you know when you look at our performance in applied both sales and orders were up low double digits in Q1 and a lot of this was there's a few verticals driving this week.

Speaker 3: And for that's the underlying, what we see to be the drive and the underlying demand. When you look at our performance and applied, both sales and orders were up low double digits in Q1.

Speaker 3: And now a lot of this was, there's a few verticals driving this. You know, we see strong demand and data centers and healthcare. I mean, that's globally and that's driving a lot of demand for our air cooled chillers, specifically North America.

Strong demand in data centers and health care I mean, that's that's globally and that's driving a lot of demand for our air cooled Chillers.

Specifically in North America, and then the other I think what's helping this demand also is this the retrofit projects that are focused on sustainability de carbonization healthy buildings of which ultimately brings together our combined capabilities beyond just just the equipment and so I think that.

Speaker 3: And then the other, I think, what's helping this demand also is this the retrofit projects that are focused on, you know, sustainability, decarbonization, healthy buildings, which ultimately brings together our combined capabilities beyond just.

What's driving it to your question of how does that play out over the rest of the year. We believe as Olivier said not only with the underlying demand and now with the the strong pricing activity that were overall I think it's following the demand for the overall company, which is high single digits and we see our backlog.

Speaker 3: just the equipment. And so I think that was driving to your question of how does that play out over the rest of the year. We believe, as Olivier said, not only with the underlying demand and now with the strong pricing activity that were overall, I think it's following the demand for the overall company, which is high single digits.

Not only are our order pipeline, but then our our backlog that we're developing continues to grow and we have backlog today that now was up up over 10%. So.

Speaker 3: And we see, you know, our backlog, not only our order pipeline, but then our backlog that we're developing continues to grow. And, you know, we have backlog today that now is up over 10%. So, you know, I think it's a lot of these demand streams converging that is ultimately playing out for us as we had planned with our strategy.

I think it's it's a lot of these demand streams converging that is ultimately playing out for us as we had planned with our strategy.

And then just on to open blue and eat any tangible kpis that you could provide to kind of give us an idea of what.

Speaker 11: And then just on Open Blue, any tangible KPIs that you could provide to kind of give us an idea of what the trajectory of that is. I mean, I know you've talked about a few wins here and there, but anything tangible early on, I don't know, installations, accounts that you can give us to kind of track the progress there.

What the trajectory of that is I mean, I know you've talked about a few wins here and there but anything tangible early on.

I dunno installations counts.

You can give us to kind of track the progress there.

So let me just frame up open blue because I think this is a very important fundamental.

Speaker 3: So let me just frame up open blue because I think this is a very important fundamental. So it's really at the center of everything we're doing. So as we talked about today, not only how we're pushing intelligence to the edge at our products and driving that, not with boghorn in our digital capabilities.

So it's really at the center of everything we're doing so as we talked about today not only how we're pushing intelligence to the edge at our products and driving that now with POG hone in our digital capabilities, but through all of this whether it be.

Open Blue Bridge opened Blue twin active responder performance adviser cloud location. All of these capabilities then play out not only enhancing our ability to go to get more install base, but then differentiating that base with services. So we've launched.

Speaker 3: But for all of this, whether it be open blue bridge, open blue twin, active responder, performance advisor, cloud, location, all of these capabilities then play out.

Speaker 3: Not only enhancing our ability to get more installed base, but then differentiating that base with services. So we've launched

These eight major offerings, we've now incorporated those into our digital digital services and when you look at our digital products and service revenue were.

Speaker 3: You know, these eight major offerings, we've now incorporated those into our digital services. And when you look at our...

We're up high single digits, so that is tracking with the investments we've made.

Speaker 3: digital products and service revenue. We're up high single digits, so that is tracking with the investments we made.

No, it's really no embedded in selling it as a solution so whether it be a project, where we deliver energy savings or de carbonization or indoor air quality as a solution that's embedded in the solution and then within that solution, we get higher margin and then we get.

Speaker 3: And now it's really now embedded in selling it as a solution. So whether it

Speaker 3: project where we deliver energy savings or deconfernization or indoor air quality as a solution, it's embedded in the solution. And then within that solution we get higher margin and then we get a connection that gives us the ability to now add additional digital services.

Our connection that gives us the ability to now add additional digital services and so the benefit for the customers improved uptime like by 66%.

Speaker 3: And so the benefit for the customer is improved up time, like by 66%, higher efficiency, smart buildings, impact, we can impact energy by 50%.

Higher efficiency smart buildings impact, we can impact energy by 50% and so all of our solutions are based on creating these outcomes that ultimately generate a return for our customers and we see this over time as we've said before up to 10 times the value creation with how it differentiates.

Speaker 3: And so all of our solutions are based on creating these outcomes that ultimately generate a return for our customers.

Speaker 3: And we see this over time, as we've said before, up to 10 times the value creation with how it differentiates our equipment, the solutions that we install, and then the base we build to allow us to be able to deliver additional services on top of that connection. That is the framework of Open Blue.

Our equipment the solutions that we install and then the base, we build to allow us to be able to deliver additional services on top of that connection that is the framework of opened blue.

Great. Thanks, a lot.

Thanks, Steve.

Our next question comes from Josh <unk> with Morgan Stanley . Your line is open.

Speaker 1: Our next question comes from Drosh Pokowinsky with Morgan Stanley . Your line is open.

Good morning, all and best of luck to acknowledge you'll be missed.

Thanks.

So a lot of questions trying to tease out the outgrowth here from a few different angles, I guess I want to approach it all different as well so field orders up 8%, probably a few points of price in there.

Speaker 12: So a lot of questions trying to tease out the outgrowth here from a few different angles. I guess I want to approach it a little different as well. So field orders up 8%, probably a few points of price in there. If I take off kind of the two points of outgrowth that you guys talked about at the analyst day, we're at kind of low single digits, which sort of feels low to call that the market since we're still comping negative. And have things like stimulus helping and education. Is that the right way to look at it? Where?

I take off Canada, the two points of outgrowth that you guys talked about at the analyst day.

We're at kind of low single digits with sort of feels low to call that the market since we're still comping negative and have things like stimulus helping in education.

Is that the right way to look at it whereas the week.

And I guess when do you expect to see more separation I guess on the field orders front.

So if you look at.

The field orders today, they are growing at 8% we mentioned that if you look at two two year stack.

Speaker 4: So if you look at the field orders today, they are going at 8%, we mentioned that. If you look at two, three a stack.

The increase is steady and we believe that from a volume standpoint.

Speaker 4: the increased study, we believe that from a volume standpoint, the growth is really attractive. And as we deploy more of our capabilities around open blue, around digital services, around indoor quality, and the like, we believe that the growth in the field would keep growing. So so far, it's performing largely as per our expectation, Georges, and more to come.

The growth is.

Is really attractive.

And as we deploy more fault what capabilities around open blue around digital services around end of quality and the like we believe that the growth in the field would keep growing so so far it's performing largely aspect our expectation, Josh and more to come.

And Josh just to add when we look at are these new solutions that we've launched around net zero buildings in and know the indoor air quality as a service.

Speaker 3: And Josh just said when we look at our these new solutions that we've launched around net zero buildings and and now the indoor air quality is a service.

We've got a significant pipeline that we're now in the early stages of developing and beginning to convert and that does begin to change not only the solutions in the install base that is created with those solutions, but that gives us the install base to ultimately get connected and then ultimately build.

Speaker 3: We've got a significant pipeline that we're now in the early stages of developing and beginning to convert. And that does begin to change, not only the solutions in the install base that is created with those solutions, but that gives us the install base to ultimately get connected and then ultimately build, continue to build out the services. So.

Continuing to build out the services. So I believe when you look at the full cycle, where we're seeing that with the projects that are in our pipeline and how we're beginning to convert and that's why as Olivier said, we've been we've been increasing our sales force because we believe that with all of the pluses and minuses that we're positioning.

Speaker 3: I believe when you look at the full cycle, we're seeing that with the projects that are in our pipeline and how we're beginning to convert. And that's why, as Olivier said,

Speaker 3: You know, we've been increasing our sales force because we believe that with all of the pluses and minuses that we're positioned for a nice steady stream of growth here that we're positioned to be able to deliver on.

For a nice steady stream of growth here that we're positioned to be able to deliver on.

And the only thing I would add is we're clearly seeing share gains, which clearly shows that we are outperforming the market and that has been I would say pretty steady across the board. We gained some significant share in applied particularly in Chillers in North America over the last 12 months and we're also seeing gains in share in the fire and security portfolio as well.

Speaker 2: And the only thing I would add is we're clearly seeing the shared gains, which clearly shows that we are outperforming the market. And that has been, I would say, pretty steady across the board. We gained some significant share and applied, particularly in chillers in North America over the last 12 months. And we're also seeing gains in share in the Fire and Security portfolio as well. Got it, that's helpful.

Got it that's helpful. And then just a follow up on Nigel question about labor.

Obviously, you guys aren't the only folks at a job site, especially in kind of these bigger retrofits or new construction, how much of what youre doing could be held up by other folks having.

Speaker 12: Obviously you guys aren't the only folks at a job site, especially in these bigger retrofits or new construction. How much of what you're doing could be held up by other folks having...

Sufficient access to labor or kind of site delays like is that something that's happening now or is that something that could player up as a risk or can you guys kind of control your own destiny. If you are able to attract and retain people inside of GCI.

Speaker 12: insufficient access to labor or kind of site delays. Like is that something that's happening now, or is that something that could flare up as a risk, or can you just kind of control your own destiny if you're able to attract and retain people inside of JCI?

Yes. So if you look at our you know when we talked about labor at our facilities that are manufacturing facilities, we've been managing around shortages and we're getting some disruption there because you have to run small lots through the manufacturing process and you have to do more changeovers per shift and the like and so.

Speaker 3: Yeah, so if you look at our, you know, when we talk about labor at our facilities, at our manufacturing facilities, we've been managing around shortages and we're getting, you know, some disruption there because you have to run small lots through the manufacturing process and you have to do more change over his per shift and the like.

That's why we saw some disruption there the Y O Y. The field is greater is because when you look at North America. For instance, we have 18000 people in the field every day on jobs.

Speaker 3: That's why we saw some disruption there. The why the field is greater is because when you look at North America, for instance, we have 18,000 people in the field every day on jobs. And

And so it's really based on schedules and making sure that we're deploying that labor efficiently.

Speaker 3: And so it's really based on, you know, schedules and making sure that we're deploying that labor efficiently.

Theyre going to be able to perform their work on when they go on site and so you can imagine in this environment with all of the changes that are happening daily we're operating at an incredible lever level to maintain you know not only the full employment, but ultimately supporting our customers. During this period of time.

Speaker 3: on their work when they go on site. And so you can imagine in this environment, with all of the changes that are happening daily, we're operating at an incredible level to maintain, you know, not only the full employment, but ultimately supporting our customers during this period of time. And so I think the value proposition, as we've been able to...

So I think the value proposition as we've been able to.

I just looked at our January numbers as far as our hiring and we're spot on what we need to hire to ultimately support the growth the rest of the year and as we work with our recruiters in the way that we're presenting ourselves in the market. You know there is a very attractive value proposition with the work we're doing with ultimately the growth.

Speaker 3: I just looked at our January numbers, as far as our hiring, and we're spot on. What we need to hire to ultimately support the growth of the rest of the year.

Speaker 3: As we work with our recruiters and the way that we're presenting ourselves in the market, there's a very attractive value proposition with the work we're doing with ultimately the growth that we're positioned to achieve and then ultimately the problems that now we're positioned to solve for our customers. So when you put all that together, those are some of the drivers with driving our success, but to your point.

We are positioned to achieve and then ultimately the problems that now we're positioned to solve for our customers. So when you put all that together those are some of the drivers what's driving our success, but to your point.

It is anyone that's within the supply chain today, because there is a level of frustration.

Speaker 3: You know, it is anyone that's within the supply chain today, there is a level of frustration.

Because you every day you get a curve ball and you have to work around because of the shortage or or the like and to your point about our customers. We certainly are governed by the projects that we're supporting and ultimately their schedules.

Speaker 3: you know, because you, every day you get a curve ball and you have to work around because it's a shortage or what to like. And to your point about our customers, we certainly are governed by the projects that we're supporting and ultimately their sketch.

Onsite and we're trying to work that proactively so we don't get many surprises, but you can imagine when things don't show up then you've got a pivot and redeploy and that's we've been doing that extremely well, while we've been navigating through this period of time.

Speaker 3: you know, on site and we're trying to work that proactively so we don't get many surprises, but you can imagine when things, you know, don't show up, then you've got to pivot and redeploy and that's, we've been doing that extremely well while we've been navigating through this period of time.

Great I appreciate the detail best of luck.

So let me, let me wrap up and I'll. Thank everyone again for joining our call. This morning as.

Speaker 3: So let me wrap up and I'll thank everyone again for joining our call this morning. As we've discussed here, you know, we've had a very strong start to the fiscal year. And the underlying momentum we are seeing in our business and the recovery within our verticals is very encouraging. And although the environment will continue to be challenging, you know, as you've seen here, our teams across the board are executing extremely well, ultimately delivering for our customers and for our shareholders.

As we've discussed here, we've had a very strong start to the fiscal year and the underlying momentum we are seeing in our business and the recovery within our verticals.

It is very encouraging and although the environment will continue to be challenging.

As you've seen here our teams across the board are executing extremely well.

Ultimately delivering for our customers and for our shareholders. So I'd just like to end the call and thank and Intel are again for just an incredible run in for your for your leadership your friendship and the the impact you've had on all of US on the company has been phenomenal. So again, thank you for that and I do look forward to.

Speaker 3: So I just like to end the call and thank Antonella again for just an incredible run and for your leadership, your friendship and the impact that you've had on all of us and on the company has been phenomenal. So again, thank you for that. And I do look forward to speaking with many of you soon. There's a lot of conferences coming up and we're looking forward to further engagement. So on that operator, that concludes our call.

Speaking with many of you soon and there's a lot of conferences coming up and we're looking forward to further engagement. So on that operator that concludes our call.

Thank you for your participation.

Participants you may disconnect at this time.

Speaker 1: Thank you for your participation. All participants, you may disconnect.