Research Update: Johnson Controls International PLC Outlook To Negative On Lower Growth Prospects; 'BBB+/A-2' Ratings Affirmed

Ireland-headquartered building components and services provider Johnson Controls International PLC reported weaker results for its fiscal second quarter ended March 31, 2020, and withdrew its earnings guidance for the remainder of fiscal 2020. We anticipate that the company's adjusted leverage could rise to 3.0x this year; at March 31, 2020, the adjusted debt figure was over $8.5 billion. We are therefore revising our outlook to negative from stable; we are also affirming our ratings, including our 'BBB+' corporate credit rating and 'A-2' short-term rating. The negative outlook reflects the potential for lower ratings during the next two years if adverse industry conditions and insufficient cost mitigation actions result in the company's credit measures becoming inappropriate for the existing ratings; this

... services provider Johnson Controls International PLC reported weaker results for its fiscal second quarter ended March 31, 2020, and withdrew its earnings guidance for the remainder of fiscal 2020. - We anticipate that the company's adjusted leverage could rise to 3.0x this year; at March 31, 2020, the adjusted debt figure was over $8.5 billion. - We are therefore revising our outlook to negative from stable; we are also affirming our ratings, including our '###+' corporate credit rating and 'A-2' short-term rating. - The negative outlook reflects the potential for lower ratings during the next two years if adverse industry conditions and insufficient cost mitigation actions result in the company's credit measures becoming inappropriate for the existing ratings; this would be indicated by adjusted leverage that is continually near 3.0x and free operating cash flow to debt that is barely above 15%....

Research Update