Johnson Controls Agreed to Expand Orders and Backlog Disclosure
The SEC pressed for fuller discussion of demand metrics and clearer treatment of segment profit measures, extending a dialogue that had already prompted repeated disclosure corrections.
Johnson Controls International (JCI) agreed to expand its discussion of orders and backlog after the SEC pressed for numerical and narrative explanations of metrics management used to monitor the business. The March 2026 commitment would bring future periodic reports closer to the detail in the company's earnings presentations, giving readers more information about changes in demand across its operations.
The SEC asked for discussion covering each period presented, pointing to earnings slides that addressed changes by segment and solution. Johnson Controls promised disclosure similar in scope to its fiscal fourth-quarter 2025 presentation. That commitment addressed the staff's concern that readers needed a fuller explanation of measures the company itself described as useful for assessing performance and progress on strategic initiatives.
The request extended an earlier discussion about which operating measures belonged in management's financial commentary. In February 2024, Johnson Controls said it principally managed the business using revenue, profit, cash flow and earnings. Measures such as sites under long-term service agreements helped explain particular strategies, it said, and were not used to manage segment performance or predict future results. The company nevertheless agreed to add orders information for its Building Solutions segments to future annual and quarterly reports. The March 2026 response broadened that commitment to qualitative and quantitative discussion of both orders and backlog.
The SEC also pressed Johnson Controls to identify Segment EBITA as a non-GAAP measure and provide the accompanying disclosures required for such measures. The company agreed to revise its presentation of Segment EBIT and Segment EBITA in future periodic reports and disclosures, with corresponding changes to earnings releases. In March, it described those revisions as work for future reporting periods.
An earlier challenge had concerned the aggregate measure, total segment EBITA. In 2024, the SEC questioned its exclusion of corporate expenses, which appeared to remove normal, recurring cash operating costs. Johnson Controls said it had removed the measure from its first-quarter reporting and earnings materials and promised to stop presenting it. The staff returned to the issue in February 2025 after the measure appeared in the fiscal 2024 annual report.
Johnson Controls attributed that recurrence to an inadvertent omission of revisions. It gave the same explanation for its working-capital calculation, which the SEC said departed from the accounting-standard definition. The company said it had made both changes in its quarterly reports and renewed its commitments to remove total segment EBITA and use the standard working-capital calculation in future periodic reports. The staff's liquidity concern was concrete: non-GAAP liquidity measures could not exclude charges or liabilities requiring cash settlement.
The 2025 exchange also changed how Johnson Controls promised to describe the business remaining after a discontinued operation. The SEC challenged presentations that combined continuing operations with the R&LC HVAC business, whose historical results had been classified as discontinued operations. Staff said combining them changed the accounting principles required under GAAP and produced individually tailored measures. Johnson Controls agreed to remove those combined presentations, including combined revenue.
Cash-flow presentation drew further corrections. Johnson Controls had renamed a measure “adjusted free cash flow” in 2024 because its calculation differed from operating cash flow less capital expenditures. In 2025, it agreed to give operating cash flow conversion equal or greater prominence when presenting free cash flow and adjusted free cash flow conversion. Those changes addressed both the description of the adjusted measure and readers' access to its GAAP comparison.
A separate March 2026 question concerned geographic detail: approximately 44% of revenue came from foreign jurisdictions. Johnson Controls said no individual country outside the United States contributed material revenue for fiscal 2025, citing the 10% tests it used in its assessment. It offered that explanation without promising additional country-level disclosure.
The latest response committed Johnson Controls to fuller demand reporting and clearer identification of adjusted segment profit. It did not confirm that those changes had been implemented. The distinction mattered after the company's earlier acknowledgment that agreed corrections had missed an annual report.
Source: SEC correspondence dated March 18, 2026; February 26, 2025; and February 16, 2024.