(JCI) Johnson Controls Announces Aquisition of EnergyConnect

Johnson Controls Inc. (JCI) announced that it has completed the previously announced acquisition of California-based EnergyConnect Group Inc. on July 1. The company purchased the company for $32.3 million.

EnergyConnect Group Inc. provides demand-response services to the electricity grid. The demand-response programs offer incentives for curtailing consumption during periods of peak demand.

The acquisition will boost the company’s Building Efficiency business as EnergyConnect’s technologies provide real-time pricing information that is used by commercial, institutional and industrial customers to manage their electricity consumption more efficiently.

The blending of demand-response services with Johnson Controls’ building efficiency technologies will undoubtedly place the company among the market leaders.

Wisconsin-based Johnson Controls is a supplier of automotive interiors, batteries, and other control equipment. The company functions through three segments: Automotive Experience, Building Efficiency and Power Solutions. In the first quarter of 2011, the company completed 18 major launches for Ford Motor Co. (F), Kia, Volkswagen, Tata Motors (TTM), Daimler AG (DDAIF) and Honda Motor Co. (HMC).

Over the last 6 years, the company has acquired York International – the U.S.-based manufacturer of heating, ventilating, air-conditioning and refrigeration equipment and services; the global automotive battery business of U.S.-based auto parts manufacturer, Delphi Corporation; and Skymark International – a Canada-based manufacturer of indoor packaged HVAC products.

The Zacks #3 Rank (Hold) company reported a 31% increase in profit to $383 million (excluding non-recurring items) in the second quarter of fiscal 2011 from $292 million (excluding non-recurring items) in the same quarter of previous year. On earnings per share, profits improved 30% to 56 cents from 43 cents in the prior year, beating the Zacks Consensus Estimate by a penny.

The improvement in earnings during the quarter was attributable to higher sales on the back of the company’s strong position in the key geographic markets. Net sales in the quarter grew 22% to $10.14 billion, which was higher than the Zacks Consensus Estimate of $9.25 billion.

Revenues in the Building Efficiency segment escalated 18% to $3.52 billion led by a 31% rise in sales in Asia and a 27% increase in sales in Global Workplace Solutions. The segment had a backlog of $5.1 billion as of March 31, 2011, an increase of 18% over the prior year. The segment recorded a 27% rise in income to $132 million from $104 million driven by higher volumes.

The company anticipates revenues to increase 15% to $39.5 billion in fiscal 2011, up from the previous forecast of $38.5 billion. The increased guidance was driven by growth expectations for Building Efficiency and a stronger Euro. However, higher Building Efficiency revenues will be partially offset by a negative impact associated with automotive production disruptions in Japan in the third quarter.

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