Johnson Controls, Inc. F1Q09 (Qtr End 12/31/08) Earnings Call Transcript

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2009-01-16 12:55:29.0

Tags: Bank, Goldman Sachs & Co., Call Transcript, Johnson Controls Inc., Earnings, Financial Services, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Patrick Archambault - Goldman Sachs.

Patrick Archambault - Goldman Sachs

On the win in Power Solutions, which I think might have come from Exide, can you quantify what the size of that is in dollar terms, once it fully ramps up, and secondly, can you tell us what that one was based on? Was it price competition, service capability, or any other factors you can shed some color on.

Glen Ponczak

The volume of batteries or the size of the contract was not disclosed. And I guess I would tell you if you want to know what the decision was based on maybe call O’Reilly. That’s probably more appropriate.

Stephen A. Roell

We are not out lowering prices to take volume. I can at least make that comment to you. So I would like to think it was a combination of our technology, our cost position, as well as the fact that I think we’ve got a very good reputation in the industry relative to our service.

Patrick Archambault - Goldman Sachs

On the cash flow, it seems like debt increased by $670.0 million for the quarter. Did you draw on your revolver or any of your bank facilities? Where did the issuance come from?

R. Bruce McDonald

We financed our outflow here in the first quarter, which we expect to be seasonal, so we expect that to come down in the balance of the year, with commercial paper. We haven’t drawn on our bank line.

Patrick Archambault - Goldman Sachs

I know you don’t have guidance but can you give us a bit of a breakdown of the outlook for the components, non-res construction business, how you see it trending? I think if I remember, you had it flat in your previous guidance. Possibly that has come down. I think that was in North American. And then I would ask a similar question for Europe, just how you expect that to play out. And I understand that within that some of the markets are different. But a little more color on that would be great.

Stephen A. Roell

Probably the best way to describe it you is going back to my comments, if you look at the forecasting services, when they look at new construction, their view is that the softness is going to be pretty well concentrated in the lodging, manufacturing, retail arenas.

 

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