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FY2026 Q2
Improving
Johnson Controls International plc earnings call
Buzzberg read
Orders up 30% with record backlog of $20 billion
Johnson Controls reported a robust Q2 FY2026 with 30% order growth, 6% organic revenue growth, and record backlog of $20B, leading to a 45% EPS increase and a raised full-year EPS guidance to $4.85. The company highlighted strong data center demand, particularly in the Americas, and progress in its business system transformation. Orders increased 30% YoY, building on ~40% growth in the prior quarter, driven by large-scale data center projects in the Americas (orders up 40% YoY).
Buzzberg read Orders up 30% with record backlog of $20 billion Johnson Controls reported a robust Q2 FY2026 with 30% order growth, 6% organic revenue growth, and record backlog of $20B, leading to a 45% EPS increase and a raised full-year EPS guidance to $4.85. The company highlighted strong data center demand, particularly in the Americas, and progress in its business system transformation. Orders increased 30% YoY, building on ~40% growth in the prior quarter, driven by large-scale data center projects in the Americas (orders up 40% YoY). Read full analysisCollapse analysis
Johnson Controls reported a robust Q2 FY2026 with 30% order growth, 6% organic revenue growth, and record backlog of $20B, leading to a 45% EPS increase and a raised full-year EPS guidance to $4.85. The company highlighted strong data center demand, particularly in the Americas, and progress in its business system transformation. Orders increased 30% YoY, building on ~40% growth in the prior quarter, driven by large-scale data center projects in the Americas (orders up 40% YoY).
- Record backlog grew 26% to $20B, providing strong visibility; ~70% expected to convert to revenue over next 12 months, constrained by power availability for data centers.
- Full-year EPS guidance raised to ~$4.85 (30% growth), reflecting confidence in sustained demand and margin expansion from operational leverage.
- EMEA and APAC margins expanded significantly (up 370 bps and 350 bps, respectively), aided by productivity gains and higher volumes.
Revenue$6.142B+6% QoQ
EPS$1.19+34% QoQ
Gross margin36.83%Reported
Operating margin13.09%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
AI
AI factory design guides expand for cooling gigawatt-scale data centers
Guidance
Company raising full year adjusted EPS guidance to $4.85
Show 3 more callouts
Margins
Security service business rebalancing price and volume
AI
CDU business expects about $100 million revenue this year
Demand
Backlog conversion to revenue at about 70% over next year
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $6.142B | +6% QoQ |
| EPS | $1.19 | +34% QoQ |
| Gross margin | 36.83% | Reported |
| Operating margin | 13.09% | Reported |
| Free cash flow | $0.604B | +30% QoQ |
| Capex | $0.068B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| EPS | FY2026 | $4.85 | $4.85 | Raised |
| EPS | FY2026 Q3 | $1.28 | $1.28 | Guided |
| Revenue | FY2026 Q3 | 6% | 6% | Guided |
AI, capex & demand read
Management read
Confident
Management expressed strong confidence in demand, backlog, and business system execution, while acknowledging challenges in specific areas like security service and Middle East disruptions.
Management AI read
Management is leveraging AI capabilities through OpenBlue digital platform and releasing AI factory reference design guides for data center cooling, indicating a focus on capturing AI-driven demand for thermal management.
Investment and capacity
Management discussed ongoing capacity investments in North American factories, funded by previous investments, to meet strong demand. They anticipate continued productivity headwinds from ramping capacity but plan to add more footprint as needed, staying 12-18 months ahead of demand.
all 4 named companies below
Companiesreturns since call
Partners
CANVA
Partners
Joachim Wittimenis
JCI mentions Canva as a site for its upcoming investor event, implying a partnership or customer relationship but with no material detail on the business relationship itself.
Evidence
“This is also what many of you will see at our upcoming investor event in real operating environments at Canva where the value is created.”
Supply chain
Supply chain
Mark van Diepenbeek
Data center customers are placing orders earlier due to power/electric infrastructure constraints, pushing execution of some orders beyond a 12-month window. — Suggests grid interconnection and power availability, not just cooling technology, are the primary bottleneck for data center buildouts, implying that companies with transformer/power equipment exposure may benefit from extended demand pull-forward.
Evidence
“The main driver for that is power, electrical infrastructure for some of our data center customers that continues to kind of put a damper on their ability to commit on deliveries within the next 12, 18 months.”
Supply chain
Joachim Wittimenis
The release of an air-cooled chiller AI factory reference design guide signals a shift toward standardized, scalable air-cooled architectures for gigawatt-scale AI factories. — Standardization could accelerate the rollout of air-cooled designs, potentially impacting demand for modular cooling solutions and related infrastructure.
Evidence
“Yesterday we announced the release of our second AI factory reference design guide focused on air-cooled chiller architectures and providing customers with globally repeatable blueprints for cooling gigawatt scale AI factories.”
External signals
Supply-chain alpha · 4returns since call
Data center customers are placing orders earlier due to power/electric infrastructure constraints, pushing execution of some orders beyond a 12-month window.
The release of an air-cooled chiller AI factory reference design guide signals a shift toward standardized, scalable air-cooled architectures for gigawatt-scale AI factories.
Security service order weakness is attributed to a strategic rebalancing between price and volume, impacting short-term revenue growth but improving margins.
Evidence
“We're rebalancing... in the security service business between price and volume. So as a result of that, um, we were down in, in security service, uh, in the quarter, um, margin wise, we were up.”
New York Air Brake (NYAB) is investing in capacity expansion, causing short-term productivity headwinds but positioning for future growth as production ramps.
Evidence
“We are likely going to continue making investment in capacity, but as that capacity continues to accelerate and ramp, you have the natural production ramping inefficiency that comes with that... That ramp and productivity opportunity will…”
Methodology & coverage
Management-only analysis. All 4 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.