Asked if applied HVAC growth could accelerate further given orders running ahead of current growth, and about the sustainability of operating leverage above the long-term 30% target.

Joakim confirmed no impediments to further acceleration in applied HVAC, citing a healthy pipeline (including non-data center) and successful physical plant investments. Marc added that operating leverage would remain above 30% for the next 12-24 months, driven by data center revenue mix, which is converting at a very healthy rate. “dynamically, you will see still higher than 30% operating leverage over the next 12 to 18, maybe 24 months.”

Asked how hyperscalers choose vendors (derisking vs. capabilities) and if JCI is gaining market share in data centers.

Joakim explained that hyperscalers design-in specific vendors collaboratively, often splitting purchases but rewarding better execution (e.g., lead times) with more volume. JCI's strong value proposition, execution, and comprehensive local service footprint help it win. He confirmed JCI is gaining share in its focus categories. “We think we are for the categories that we focus on. Absolutely.”

Inquired about customer interest, TAM, and margin accretion for the modular data center product with Armada, and an update on the strategic portfolio review.

Joakim sees significant potential for decentralized, edge data centers, with the Armada product (data centers in shipping containers) addressing this. He noted the TAM is significant but early stage, with meaningful opportunities being pursued. Marc added that the strategic review is progressing, with recent divestitures of residential subscriber businesses. “We believe that the future of data centers are not all going to be these mega data centers... there will be a decentralization.”

JCI

Johnson Controls (JCI) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Materials· Jul 29, 2026

Source: earnings call transcript

Executive summary

Johnson Controls Q3 FY26 — Record Backlog and Raised Full-Year Guidance

Johnson Controls delivered a strong Q3 FY26, driven by robust customer demand, particularly in data centers and mission-critical environments, leading to double-digit revenue growth and significant margin expansion. The company's strategic focus on thermal management innovation and its proprietary business system are translating into improved execution and record backlog. Management raised full-year guidance, confident in its long-term growth algorithm despite some regional headwinds and competitive pressures in specific business lines.

Highlights

Order momentum sustained above 25% in Q3 FY26.
Revenue grew 10% organically in Q3 FY26.
Adjusted EBIT margin expanded 260 basis points to 17% in Q3 FY26.
Adjusted EPS increased 35% to $1.42 in Q3 FY26, ahead of guidance.
Backlog grew more than 30% to a record $21 billion.
Full-year adjusted EPS guidance raised to approximately $5.05, representing roughly 35% growth and $0.50 higher than original guide.

Concerns

EMEA sales increased only 1% in Q3 FY26, with the Middle East conflict expected to pressure Q4 growth by a couple of points.
Americas service backlog in the security business experienced a decline due to competitive volume pressure.

Guidance & targets

Category	Target	Timeline	Confidence
Q4 FY26 Organic Revenue Growth	9% to 10% medium materiality	Q4 · FY26	High
Q4 FY26 Operating Leverage	45% to 50% medium materiality	Q4 · FY26	High
Q4 FY26 Adjusted EPS	approximately $1.55 high materiality	Q4 · FY26	High
FY26 Organic Revenue Growth	approximately 8% high materiality	FY26	High
FY26 Full Year Operating Leverage	45% to 50% medium materiality	FY26	High
FY26 Adjusted EPS	approximately $5.05 high materiality	FY26	High
FY26 Adjusted Free Cash Flow Conversion	approximately 100% medium materiality	FY26	High
Long-term Revenue Growth	high single-digit high materiality	long-term	High
Long-term Operating Leverage	more than 30% high materiality	long-term	High
Long-term Adjusted EPS Growth	double-digit high materiality	long-term	High
Long-term Adjusted Free Cash Flow Conversion	approximately 95% to 100% high materiality	long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Americas Led by sustained demand from data centers and other mission-critical environments. Strong operating leverage on higher revenue. Orders growth: 37%Applied HVAC growth: high teensService growth: solid double-digitAdjusted segment EBITDA margin expansion: 260 bps	—	11%	—	21%
EMEA Growth largely offset by the impact of a recent divestiture and ongoing conflict in the Middle East. Orders growth: 6%System growth: high single-digitAdjusted segment EBITDA margin expansion: 20 bps	—	1%	—	14%
APAC Led by growth across several regions including Northeast Asia and India, supported by productivity improvements, favorable business mix, and higher revenues. Orders growth: 12%System growth: 20%Adjusted segment EBITDA margin expansion: 180 bps	—	15%	—	21%

JCI operating KPIs by quarter

JCI operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q1 FY25	Mar 2025 Q2 FY25	Sep 2025 Q4 FY25	Dec 2025 Q1 FY26	Mar 2026 Q2 FY26	This call Jun 2026 Q3 FY26	Change vs prior quarter
Backlog Building Solutions	$13.2B Building Solutions backlog remains at record levels, growing 11% to $13.2 billion. Source: earnings call transcript	$14B Building Solutions backlog remains at record levels, growing 12% to $14 billion. Source: earnings call transcript	—	—	—	—	+6.1%
Employees	—	100K I'd like to start by thanking our 100,000 colleagues around the world for their dedication to our customers and the work they do every day. Source: earnings call transcript	90K As we close out our 140th year as a company, I want to begin by recognizing the extraordinary efforts of our 90,000 colleagues around the world. Source: earnings call transcript	90K I'd like to begin by recognizing our 90,000 colleagues around the world for their commitment to our customers and for the contributions they've made to a strong start to the year. Source: earnings call transcript	90K I want to thank our 90,000 colleagues for their commitment and passion in delivering a strong quarter and their energy and embracing our new way of working with our business system. Source: earnings call transcript	90K+ I want to thank our more than 90,000 colleagues around the world for their dedication to our customers and for embracing new ways of working that help us serve them better every day. Source: earnings call transcript	—
Backlog	—	$14B Overall, we grew our record backlog by 12% to $14 billion. Source: earnings call transcript	$15B Orders grew 7% for the year, and our backlog expanded 13%, ending at a record $15 billion. Source: earnings call transcript	$18B Our record backlog grew 20% to $18 billion, highlighting the continued strength of our pipeline as revenue conversion accelerated this quarter. Source: earnings call transcript	$20B Backlog grew 26% to a record $20 billion, providing an improved visibility and confidence in the trajectory of the business. Source: earnings call transcript	$21B Adjusted EPS increased 35% and backlog grew more than 30% to a record $21 billion. Source: earnings call transcript	+5%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Backlog $21 billion Q3 FY26 end

up 32% year-over-year

Record level. The strength in backlog supports confidence in both near-term outlook and ability to deliver against the long-term growth algorithm.

Product announcements

Product	Type	Timeline	Details
AI factory absorption chiller reference design guide	launch	Yesterday

Deals & partnerships

Armada Collaboration on modular data centers (data centers in a shipping container) for decentralized, edge applications. Johnson Controls also has an investment in Armada.

JCI builds data centers in shipping containers (couple of megawatts, increasing) in its factories, loaded with JCI products. These are deployed for remote locations, defense, and expected to grow in decentralized, edge applications.

Risks & headwinds

Middle East conflict impact on EMEA business Q3 FY26, Q4 FY26

EMEA sales increased only 1% in Q3 FY26; expected to pressure Q4 EMEA growth by a couple of points. Middle East business is ~10% of EMEA.

Mitigation:Assumed no material change in Q4; building pent-up demand for sure.

Competitive volume pressure in Security business Q3 FY26

Decline in Americas service backlog for the security business. Underlying market globally is flat.

Mitigation:Taking very targeted actions to drive greater consistency across the business, with an aim to lift growth to high single-digit to mid-single-digit over time.

What to watch in Q4 FY26

Applied HVAC growth acceleration

Next quarter

Current high-teen growth in Q3 FY26

Target Further acceleration

Why it matters

Indicates continued strong demand and successful capacity ramp-up in a key growth area, particularly data centers.

It doesn't seem like there's any impediment to sort of further accelerate growth in applied HVAC.

Find out whether JCI delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about JCI's supply chain resilience, potential bottlenecks, and confidence in delivery, especially given growing issues for other data center suppliers.

Joakim Weidemanis stated that JCI is more vertically integrated than some competitors, controlling manufacturing and COGS for key chiller subsystems, which helps manage supply chain in a high-growth environment. While some external vendor bottlenecks occur, JCI actively manages them.

“So we are more vertically integrated than some in our industry and in a high-growth environment. That, of course, means that we control more of our own supply chain.”

asked by Nigel Coe · answered by Joakim Weidemanis

2 min read 5 chapters

Detailed narrative

AI Factory Thermal Management Innovation

Johnson Controls introduced an AI factory absorption chiller reference design guide, demonstrating how advanced thermal management can reduce cooling electrical demand by approximately 44%. This innovation, building on 65 years of YORK absorption technology, enables additional AI computing capacity without increasing on-site power generation.

This creates the potential for billions of dollars of additional revenue over the life of a 1 gigawatt facility, expanding JCI's capabilities in next-generation AI facilities.

Competitive Advantages and Growth Accelerators

The company highlighted its two core competitive advantages: deep proprietary technology know-how and an unmatched global field presence, which is roughly twice the scale of its nearest competitor. These strengths are amplified by three growth accelerators: strategic pillars focused on high-performance, precision, and energy efficiency in AI, mission-critical environments, and decarbonization; a proprietary business system for continuous improvement; and a focus on accelerating speed and productivity to drive better outcomes for customers and shareholders.

Business System Execution and Impact

JCI showcased its 'Going to Gemba Day' examples, demonstrating the business system's impact on execution. At JADEC, product speed to market was accelerated by 40%. At the Airside Center of Excellence (ACE), capacity on the computer room air handler line quadrupled without significant capital investment, reducing customer lead times by half and cutting inventory by 50%.

In Baltimore, customer-facing selling time doubled, and service attachment rates improved, strengthening long-term customer relationships.

Data Center Strategy and Content Expansion

JCI sees continued strong demand from data centers, with its pipeline growing significantly, including non-data center segments. The company is actively expanding its content per megawatt in data centers, including air handling units, CDU liquid cooling, and controls. The recent NVIDIA certification for CDUs and the new absorption chiller solution further enhance its offerings, with the CDU pipeline now exceeding $1 billion, and shipments expected to start this quarter.

Portfolio Actions and Strategic Review Progress

JCI continues its strategic review of its portfolio, guided by the principle of creating shareholder value. The company successfully divested parts of its residential subscriber business around the world and is making progress on other portfolio adjustments. Management indicated that progress is good and they will keep stakeholders posted on further developments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.