Item 1. FINANCIAL STATEMENTS

Johnson Controls International plc

Consolidated Statements of Income

(in millions, except per share data; unaudited)

			Three Months Ended December 31,
			2024						2023
Net sales
Products and systems			$	3,685					$	3,604
Services			1,741						1,605
			5,426						5,209
Cost of sales
Products and systems			2,456						2,490
Services			1,044						941
			3,500						3,431
Gross profit			1,926						1,778
Selling, general and administrative expenses			1,399						1,334
Restructuring and impairment costs			33						35
Net financing charges			86						87
Equity loss			—						(2)
Income from continuing operations before income taxes			408						320
Income tax provision (benefit)			47						(20)
Income from continuing operations			361						340
Income from discontinued operations, net of tax (Note 3)			90						64
Net income			451						404
Income (loss) attributable to noncontrolling interests
Continuing operations			(2)						—
Discontinued operations			34						30
Net income attributable to Johnson Controls			$	419					$	374
Income attributable to Johnson Controls
Continuing operations			$	363					$	340
Discontinued operations			56						34
Total			$	419					$	374
Basic earnings per share attributable to Johnson Controls
Continuing operations			$	0.55					$	0.50
Discontinued operations			0.08						0.05
Total			$	0.63					$	0.55
Diluted earnings per share attributable to Johnson Controls
Continuing operations			$	0.55					$	0.50
Discontinued operations			0.08						0.05
Total			$	0.63					$	0.55

The accompanying notes are an integral part of the consolidated financial statements.

Johnson Controls International plc

Consolidated Statements of Comprehensive Income

(in millions; unaudited)

			Three Months Ended December 31,
			2024						2023
Net income			$	451					$	404
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			(146)						62
Realized and unrealized gains (losses) on derivatives			12						(42)
Pension and postretirement plans			(1)						(1)
Other comprehensive income (loss)			(135)						19
Total comprehensive income			316						423
Comprehensive income attributable to noncontrolling interests:
Net income			32						30
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			(61)						1
Realized and unrealized gains (losses) on derivatives			6						(4)
Other comprehensive loss			(55)						(3)
Comprehensive income attributable to noncontrolling interests			(23)						27
Comprehensive income attributable to Johnson Controls			$	339					$	396

The accompanying notes are an integral part of the consolidated financial statements.

Johnson Controls International plc

Consolidated Statements of Financial Position

(in millions, except par value; unaudited)

			December 31, 2024						September 30, 2024
Assets
Cash and cash equivalents			$	1,237					$	606
Accounts receivable, less allowance for expected credit losses of $236 and $210, respectively			5,614						6,051
Inventories			1,739						1,774
Current assets held for sale			1,658						1,595
Other current assets			1,041						1,153
Current assets			11,289						11,179
Property, plant and equipment - net			2,418						2,403
Goodwill			16,412						16,725
Other intangible assets - net			3,963						4,130
Noncurrent assets held for sale			2,986						3,210
Other noncurrent assets			5,030						5,048
Total assets			$	42,098					$	42,695
Liabilities and Equity
Short-term debt			$	882					$	953
Current portion of long-term debt			522						536
Accounts payable			3,214						3,389
Accrued compensation and benefits			917						1,048
Deferred revenue			2,211						2,160
Current liabilities held for sale			1,322						1,431
Other current liabilities			2,015						2,438
Current liabilities			11,083						11,955
Long-term debt			8,589						8,004
Pension and postretirement benefit obligations			192						217
Noncurrent liabilities held for sale			407						405
Other noncurrent liabilities			4,697						4,753
Noncurrent liabilities			13,885						13,379
Commitments and contingencies (Note 18)
Ordinary shares, $0.01 par value			7						7
Ordinary A shares, €1.00 par value			—						—
Preferred shares, $0.01 par value			—						—
Ordinary shares held in treasury, at cost			(1,297)						(1,268)
Capital in excess of par value			17,543						17,475
Retained earnings			691						848
Accumulated other comprehensive loss			(1,044)						(964)
Shareholders’ equity attributable to Johnson Controls			15,900						16,098
Noncontrolling interests			1,230						1,263
Total equity			17,130						17,361
Total liabilities and equity			$	42,098					$	42,695

The accompanying notes are an integral part of the consolidated financial statements.

Johnson Controls International plc

Consolidated Statements of Cash Flows

(in millions; unaudited)

			Three Months Ended December 31,
			2024						2023
Operating Activities of Continuing Operations
Income from continuing operations attributable to Johnson Controls			$	363					$	340
Loss from continuing operations attributable to noncontrolling interests			(2)						—
Income from continuing operations			361						340
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization			193						208
Pension and postretirement income and contributions			(16)						(16)
Deferred income taxes			(54)						(80)
Noncash restructuring and impairment charges			8						9
Equity-based compensation			28						29
Other - net			8						(22)
Changes in assets and liabilities, excluding acquisitions and divestitures:
Accounts receivable			284						40
Inventories			(15)						(106)
Other assets			(171)						(195)
Restructuring reserves			2						(14)
Accounts payable and accrued liabilities			(407)						(315)
Accrued income taxes			28						11
Cash provided (used) by operating activities from continuing operations			249						(111)
Investing Activities of Continuing Operations
Capital expenditures			(116)						(82)
Other - net			11						18
Cash used by investing activities from continuing operations			(105)						(64)
Financing Activities of Continuing Operations
Net proceeds from borrowings with maturities less than three months			12						1,116
Proceeds from debt			775						422
Stock repurchases and retirements			(330)						—
Payment of cash dividends			(245)						(252)
Employee equity-based compensation withholding taxes			(29)						(23)
Other - net			18						(27)
Cash provided by financing activities from continuing operations			201						1,236
Discontinued Operations
Cash used by operating activities			(2)						(135)
Cash used by investing activities			(10)						(10)
Cash used by financing activities			—						(8)
Cash used by discontinued operations			(12)						(153)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			154						60
Change in cash, cash equivalents and restricted cash held for sale			4						5
Increase in cash, cash equivalents and restricted cash			491						973
Cash, cash equivalents and restricted cash at beginning of period			767						917
Cash, cash equivalents and restricted cash at end of period			1,258						1,890
Less: Restricted cash			21						91
Cash and cash equivalents at end of period			$	1,237					$	1,799

The accompanying notes are an integral part of the consolidated financial statements.

Johnson Controls International plc

Consolidated Statements of Shareholders' Equity

(in millions, except per share data; unaudited)

			Three Months Ended December 31,
			2024						2023
Shareholders' Equity Attributable to Johnson Controls
Beginning Balance			$	16,098					$	16,545
Ordinary Shares - Beginning and ending balance			7						7
Ordinary Shares Held in Treasury, at Cost
Beginning balance			(1,268)						(1,240)
Employee equity-based compensation withholding taxes			(29)						(23)
Ending balance			(1,297)						(1,263)
Capital in Excess of Par Value
Beginning balance			17,475						17,349
Share-based compensation expense			24						20
Other, including options exercised			44						12
Ending balance			17,543						17,381
Retained Earnings
Beginning balance			848						1,384
Net income attributable to Johnson Controls			419						374
Cash dividends declared			(246)						(252)
Repurchases and retirements of ordinary shares			(330)						—
Ending balance			691						1,506
Accumulated Other Comprehensive Income (Loss)
Beginning balance			(964)						(955)
Other comprehensive income (loss)			(80)						22
Ending balance			(1,044)						(933)
Ending Balance			15,900						16,698
Shareholders' Equity Attributable to Noncontrolling Interests
Beginning Balance			1,263						1,149
Comprehensive income (loss) attributable to noncontrolling interests			(23)						27
Dividends attributable to noncontrolling interests			(13)						—
Other, including options exercised			3						—
Ending Balance			1,230						1,176
Total Shareholders' Equity			$	17,130					$	17,874
Cash Dividends Declared per Ordinary Share			$	0.37					$	0.37

The accompanying notes are an integral part of the consolidated financial statements.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

**1.**BASIS OF PRESENTATION

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc, a public limited company organized under the laws of Ireland, and its subsidiaries (Johnson Controls International plc and all its subsidiaries, hereinafter collectively referred to as the "Company" or "Johnson Controls"). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to state fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2024 filed with the SEC on November 19, 2024. The results of operations for the three month period ended December 31, 2024 are not necessarily indicative of results for the Company’s 2025 fiscal year because of seasonal and other factors.

Nature of Operations

Johnson Controls International plc, headquartered in Cork, Ireland, is a global leader in smart, healthy and sustainable buildings, serving a wide range of customers around the globe. The Company’s products, services, systems and solutions advance the safety, comfort and intelligence of spaces to serve people, places and the planet. The Company is committed to helping its customers win and creating greater value for all of its stakeholders through its strategic focus on buildings.

The Company is a global leader in engineering, manufacturing, commissioning and retrofitting building products and systems, including residential and commercial heating, ventilating, air-conditioning ("HVAC") equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions. The Company further serves customers by providing technical services, including maintenance, management, repair, retrofit and replacement of equipment (in the HVAC, industrial refrigeration, controls, security and fire-protection space) and energy-management consulting. The Company's OpenBlue digital software platform enables enterprises to better manage their physical spaces by combining the Company's building products and services with cutting-edge technology and digital capabilities to enable data-driven “smart building” services and solutions. The Company partners with customers by leveraging its broad product portfolio and digital capabilities, together with its direct channel service and solutions capabilities, to deliver outcome-based solutions across the lifecycle of a building that address customers’ needs to improve energy efficiency, enhance security, create healthy environments and reduce greenhouse gas emissions.

As discussed in more detail in Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations", the Company has entered into a definitive agreement to sell its Residential and Light Commercial (“R&LC") HVAC business, including the North America Ducted business and the global Residential joint venture with Hitachi Global Life Solutions, Inc. (“Hitachi”), of which Johnson Controls owns 60% and Hitachi owns 40%. The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the consolidated financial statements as a discontinued operation, and assets and liabilities are classified as held for sale for all periods presented. Unless otherwise noted, all activities and amounts reported in the following footnotes relate to the continuing operations of the Company and exclude activities and amounts related to the R&LC HVAC business.

Principles of Consolidation

The consolidated financial statements include the consolidated accounts of Johnson Controls International plc and its subsidiaries that are consolidated in conformity with U.S. GAAP. The results of companies acquired or disposed of during the reporting period are included in the consolidated financial statements from the effective date of acquisition or up to the date of disposal. Investments in partially-owned affiliates are accounted for by the equity method when the Company exercises significant influence, which typically occurs when its ownership interest exceeds 20%, and the Company does not have a controlling interest.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The Company consolidates variable interest entities ("VIE") when it has the power to direct the significant activities of the entity and the obligation to absorb losses or receive benefits from the entity that may be significant. The Company did not have any material consolidated or nonconsolidated VIE's for the presented reporting periods.

2. NEW ACCOUNTING STANDARDS

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04, "Disclosure of Supplier Finance Program Obligations," which is intended to enhance the transparency surrounding the use of supplier finance programs. Supplier finance programs may also be referred to as reverse factoring, payables finance, or structured payables arrangements. The amendments require a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated rollforward information. Only the amount outstanding at the end of the period must be disclosed in interim periods. The Company adopted the new disclosures, other than the rollforward disclosure, as required at the beginning of fiscal 2024. The rollforward disclosure will be adopted as required in fiscal 2025.

Amounts outstanding related to supply chain financing ("SCF") programs are included in accounts payable in the consolidated statements of financial position. Accounts payable included in the SCF programs were approximately $733 million and $703 million as of December 31, 2024 and September 30, 2024, respectively.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," which is intended to enhance transparency into the nature and function of expenses. The amendments require that on an annual and interim basis, entities disclose disaggregated operating expense information about specific categories, including purchases of inventory, employee compensation, depreciation, amortization and depletion. The Company expects to adopt the new annual disclosures as required for fiscal 2028 and the interim disclosures as required beginning with the first quarter of fiscal 2029.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments require that on an annual basis, entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, the amendments require that entities disclose additional information about income taxes paid as well as additional disclosures of pretax income and income tax expense, and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant. The Company expects to adopt the new annual disclosures as required for fiscal 2026.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. The Company expects to adopt the new annual disclosures as required for fiscal 2025 and the interim disclosures as required beginning with the first quarter of fiscal 2026.

Other recently issued accounting pronouncements are not expected to have a material impact on the Company's consolidated financial statements.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

3. ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

In July 2024, the Company entered into a definitive agreement to sell its R&LC HVAC business, which includes the North America Ducted businesses and the global Residential joint venture with Hitachi, of which Johnson Controls owns 60% and Hitachi owns 40%, to Bosch Group for approximately $8.1 billion in cash with the Company’s portion of the aggregate consideration being approximately $6.7 billion, inclusive of an upfront royalty payment for the licensing of the York tradename. The transaction is expected to close in the fourth quarter of fiscal 2025, subject to required regulatory approvals and other customary closing conditions. The R&LC HVAC business, which was previously reported in the Global Products segment, meets the criteria to be classified as discontinued operations as it represents a strategic shift in the Company's operations and results in the exit of substantially all of its residential and light commercial HVAC businesses. Results of the business are presented in discontinued operations for all periods presented.

The Company determined that the assets and liabilities for the R&LC HVAC business met the held for sale criteria during the fourth quarter of 2024. Accordingly, the businesses' assets and liabilities were reclassified in the consolidated balance sheets at December 31, 2024 and September 30, 2024 to held for sale, and the Company ceased recording depreciation and amortization for the held for sale assets.

The following table summarizes the results of the R&LC HVAC business which are reported as discontinued operations (in millions):

						Three Months Ended December 31,
						2024						2023
Net sales						$	966					$	885
Cost of goods sold						731						671
Gross profit						235						214
Selling, general and administrative expenses						183						180
Restructuring and impairment costs						4						4
Net financing charges						(1)						11
Equity income						65						64
Income from discontinued operations before income taxes						114						83
Provision for income taxes on discontinued operations						24						19
Income from discontinued operations, net of tax						90						64
Income from discontinued operations attributable to noncontrolling interest, net of tax						34						30
Income from discontinued operations						$	56					$	34

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The following table summarizes the assets and liabilities of the R&LC HVAC business which were classified as held for sale (in millions):

						December 31, 2024						September 30, 2024
Cash						$	2					$	5
Accounts receivable - net						539						592
Inventories						979						876
Other current assets						138						122
Current assets held for sale						1,658						1,595
Property, plant and equipment - net						743						793
Goodwill						1,130						1,182
Other intangible assets - net						94						96
Investments in partially-owned affiliates						833						949
Other noncurrent assets						186						190
Noncurrent assets held for sale						2,986						3,210
Total assets classified as held for sale						$	4,644					$	4,805
Accounts payable						$	887					$	917
Accrued compensation and benefits						99						113
Deferred revenue						112						84
Other current liabilities						224						317
Current liabilities held for sale						1,322						1,431
Pension and postretirement benefit obligations						25						28
Other noncurrent liabilities						382						377
Noncurrent liabilities held for sale						407						405
Total liabilities classified as held for sale						$	1,729					$	1,836

Assets and liabilities classified as held for sale are required to be recorded at the lower of carrying value or fair value less costs to sell. As of December 31, 2024, the estimated fair value less costs to sell of the held for sale businesses exceeded their carrying value, and therefore, no adjustment was necessary.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

4. REVENUE RECOGNITION

Disaggregated Revenue

The following tables present the Company's revenues disaggregated by segment and by Products & Systems and Services revenue (in millions):

						Three Months Ended December 31,
						2024																		2023
						Products & Systems						Services						Total						Products & Systems						Services						Total
Building Solutions North America						$	1,695					$	1,049					$	2,744					$	1,518					$	969					$	2,487
Building Solutions EMEA/LA						574						499						1,073						572						466						1,038
Building Solutions Asia Pacific						334						193						527						337						170						507
Global Products						1,082						—						1,082						1,177						—						1,177
Total						$	3,685					$	1,741					$	5,426					$	3,604					$	1,605					$	5,209

The following table presents further disaggregation of Global Products segment revenues by product type (in millions):

						Three Months Ended December 31,
						2024						2023
HVAC						$	468					$	533
Fire & Security						522						547
Industrial Refrigeration						92						97
Total						$	1,082					$	1,177

Contract Balances

Contract assets relate to the Company’s right to consideration for performance obligations satisfied but not billed. Contract liabilities relate to customer payments received in advance of satisfaction of performance obligations under the contract. Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period.

The following table presents the location and amount of contract balances in the Company's consolidated statements of financial position (in millions):

						Location of contract balances						December 31, 2024						September 30, 2024
Contract assets - current						Accounts receivable - net						$	1,917					$	1,931
Contract assets - noncurrent						Other noncurrent assets						6						11
Contract liabilities - current						Deferred revenue						2,211						2,160
Contract liabilities - noncurrent						Other noncurrent liabilities						253						252

For the three months ended December 31, 2024 and 2023, the Company recognized revenue of $878 million and $839 million, respectively, that was included in the contract liability balance at the end of the prior fiscal year.

Performance Obligations

A performance obligation is a distinct good, service, or a bundle of goods and services promised in a contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When contracts with customers require significant and complex integration, contain

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

goods or services which are highly interdependent or interrelated, or are goods or services which significantly modify or customize other promises in the contracts and, therefore, are not distinct, then the entire contract is accounted for as a single performance obligation. For any contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated relative standalone selling price of each distinct good or service in the contract. For product sales, each product sold to a customer typically represents a distinct performance obligation.

Performance obligations are satisfied at a point in time or over time. The timing of satisfying the performance obligation is typically stipulated by the terms of the contract. As of December 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $20.9 billion, of which approximately 64% is expected to be recognized as revenue over the next two years. The remaining performance obligations expected to be recognized in revenue beyond two years primarily relate to large, multi-purpose construction contracts, which include services to be performed over the building's lifetime, with initial contract terms of 25 to 35 years. Future contract modifications could affect both the timing and the amount of the remaining performance obligations. The Company excludes the value of remaining performance obligations for service contracts with an original expected duration of one year or less and contracts that are cancellable without substantial penalty.

Costs to Obtain or Fulfill a Contract

The Company recognizes the incremental costs incurred to obtain or fulfill a contract with a customer as an asset when these costs are recoverable. These costs consist primarily of sales commissions and design costs that relate to a contract or an anticipated contract that the Company expects to recover. Costs to obtain or fulfill a contract are capitalized and amortized over the period of contract performance.

The following table presents the location and amount of costs to obtain or fulfill a contract recorded in the Company's consolidated statements of financial position (in millions):

						December 31, 2024						September 30, 2024
Other current assets						$	276					$	265
Other noncurrent assets						284						291
Total						$	560					$	556

During the three months ended December 31, 2024 and 2023, the Company recognized expense of $84 million and $57 million, respectively, related to costs to obtain or fulfill a contract. There were no impairment losses recognized in the three months ended December 31, 2024 and 2023.

5. INVENTORIES

Inventories consisted of the following (in millions):

			December 31, 2024						September 30, 2024
Raw materials and supplies			$	693					$	765
Work-in-process			140						130
Finished goods			906						879
Inventories			$	1,739					$	1,774

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

6. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes changes in the carrying amount of goodwill in each of the Company’s reportable segments (in millions):

						Three Months Ended December 31, 2024
						Building Solutions North America						Building Solutions EMEA/LA						Building Solutions Asia Pacific						Global Products						Total
Goodwill						$	10,050					$	2,039					$	1,227					$	4,604					17,920
Accumulated impairment loss						(659)						(277)						—						(259)						(1,195)
Balance at beginning of period						9,391						1,762						1,227						4,345						16,725
Foreign currency translation						(41)						(107)						(84)						(81)						(313)
Balance at end of period						$	9,350					$	1,655					$	1,143					$	4,264					$	16,412

Other intangible assets, primarily from business acquisitions, consisted of (in millions):

			December 31, 2024																		September 30, 2024
			Gross Carrying Amount						Accumulated Amortization						Net						Gross Carrying Amount						Accumulated Amortization						Net
Definite-lived intangible assets
Technology			$	1,570					$	(973)					$	597					$	1,592					$	(955)					$	637
Customer relationships			2,571						(1,534)						1,037						2,632						(1,517)						1,115
Miscellaneous			877						(479)						398						886						(480)						406
			5,018						(2,986)						2,032						5,110						(2,952)						2,158
Indefinite-lived intangible assets
Trademarks/trade names			1,931						—						1,931						1,972						—						1,972
Total intangible assets			$	6,949					$	(2,986)					$	3,963					$	7,082					$	(2,952)					$	4,130

Amortization of other intangible assets included within continuing operations for the three months ended December 31, 2024 and 2023 was $120 million and $119 million, respectively.

7. LEASES

The following table presents supplemental consolidated statement of financial position information (in millions):

			Location of lease balances						December 31, 2024						September 30, 2024
Operating lease right-of-use assets			Other noncurrent assets						$	1,164					$	1,170
Operating lease liabilities - current			Other current liabilities						265						289
Operating lease liabilities - noncurrent			Other noncurrent liabilities						932						921

The following table presents supplemental noncash operating lease activity (in millions):

												Three Months Ended December 31,
																		2024						2023
Right-of-use assets obtained in exchange for operating lease liabilities																		$	130					$	76

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

8. DEBT AND FINANCING ARRANGEMENTS

Short-term debt consisted of the following (in millions):

			December 31,						September 30,
			2024						2024
Commercial paper			$	309					$	350
Term loans			569						603
Bank borrowings			4						—
			$	882					$	953
Weighted average interest rate on short-term debt outstanding			3.7		%				4.8		%

As of December 31, 2024, the Company had two syndicated committed revolving credit facilities, including $2.5 billion which is scheduled to expire in December 2028 and $500 million which is scheduled to expire in December 2025. There were no draws on the facilities as of December 31, 2024.

In December 2024, the Company and its wholly-owned subsidiary, Tyco Fire & Security Finance S.C.A, co-issued the following unsecured, unsubordinated senior notes:

• $250 million 4.900% Senior Notes due December 2032. These notes are a further issuance of the $400 million, 4.900% Senior Notes due 2032, which were originally issued in September 2022.

• €500 million 3.125% Senior Notes due December 2033.

9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Cash Flow Hedges

The Company has global operations and participates in foreign exchange markets to minimize its risk of loss from fluctuations in foreign currency exchange rates. The Company selectively hedges anticipated transactions that are subject to foreign exchange rate risk primarily using foreign currency exchange forward contracts. The Company hedges 70% to 90% of the notional amount of each of its known foreign exchange transactional exposures.

The Company selectively hedges anticipated transactions that are subject to commodity price risk, primarily using commodity hedge contracts, to minimize overall price risk associated with the Company’s purchases of copper and aluminum in cases where commodity price risk cannot be naturally offset or hedged through supply base fixed price contracts. Commodity risks are systematically managed pursuant to policy guidelines. The maturities of the commodity hedge contracts coincide with the expected purchase of the commodities.

As cash flow hedges under ASC 815, "Derivatives and Hedging," the hedge gains or losses due to changes in fair value are initially recorded as a component of accumulated other comprehensive income ("AOCI") and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates and commodity prices during the three months ended December 31, 2024 and 2023.

The Company had the following outstanding contracts to hedge forecasted commodity purchases (in metric tons):

						Volume Outstanding as of
Commodity						December 31, 2024						September 30, 2024
Copper						2,880						2,676
Aluminum						2,471						2,450

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The Company may enter into forward-starting interest rate swaps in conjunction with anticipated note issuances to manage exposure to interest rate changes. The forward-starting interest swaps are terminated when the anticipated notes are issued.

As of December 31, 2023, $600 million of forward-starting interest swaps were outstanding on an $800 million anticipated note issuance which was subsequently terminated in fiscal 2024 once the note issuance was no longer highly likely to occur. Accumulated amounts previously recorded in AOCI were not material and were recognized as net financing charges in the consolidated statements of income when the swaps were terminated.

Net Investment Hedges

The Company enters into cross-currency interest rate swaps and foreign currency denominated debt obligations to selectively hedge portions of its net investment in non-U.S. subsidiaries. The currency effects of the cross-currency interest rate swaps and debt obligations are reflected in the AOCI account within shareholders’ equity attributable to Johnson Controls ordinary shareholders where they offset gains and losses recorded on the Company’s net investments globally.

The following table summarizes net investment hedges (in billions):

						December 31,						September 30,
			2024						2024
Euro-denominated bonds designated as net investment hedges in Europe						€	2.9					€	2.9
Yen-denominated debt designated as a net investment hedge in Japan						¥	30					¥	30

Derivatives Not Designated as Hedging Instruments

The Company holds certain foreign currency forward contracts not designated as hedging instruments under ASC 815 to hedge foreign currency exposure resulting from monetary assets and liabilities denominated in nonfunctional currencies. The changes in fair value of these foreign currency forward exchange derivatives are recorded in the consolidated statements of income where they offset foreign currency transactional gains and losses on the nonfunctional currency denominated assets and liabilities being hedged.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

Fair Value of Derivative Instruments

The following table presents the location and fair values of derivative instruments and hedging activities included in the Company’s consolidated statements of financial position (in millions):

			Derivatives and Hedging Activities Designated as Hedging Instruments												Derivatives and Hedging Activities Not Designated as Hedging Instruments
			December 31,						September 30,						December 31,						September 30,
			2024						2024						2024						2024
Other current assets
Foreign currency exchange derivatives			$	42					$	19					$	—					$	1
Interest rate swaps			—						2						—						—
Total assets			$	42					$	21					$	—					$	1
Other current liabilities
Foreign currency exchange derivatives			$	26					$	24					$	66					$	1
Commodity derivatives			3						1						—						—
Long-term debt
Foreign currency denominated debt			3,186						3,424						521						—
Total liabilities			$	3,215					$	3,449					$	587					$	1

Counterparty Credit Risk

The use of derivative financial instruments exposes the Company to counterparty credit risk. The Company has established policies and procedures to limit the potential for counterparty credit risk, including establishing limits for credit exposure and continually assessing the creditworthiness of counterparties. As a matter of practice, the Company deals with major banks worldwide having strong investment grade long-term credit ratings. To further reduce the risk of loss, the Company generally enters into International Swaps and Derivatives Association ("ISDA") master netting agreements with substantially all of its counterparties. The Company enters into ISDA master netting agreements with counterparties that permit the net settlement of amounts owed under the derivative contracts. The master netting agreements generally provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. The Company has not elected to offset the fair value positions of the derivative contracts recorded in the consolidated statements of financial position.

The Company's derivative contracts do not contain any credit risk related contingent features and do not require collateral or other security to be furnished by the Company or the counterparties. The Company's exposure to credit risk associated with its derivative instruments is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. The Company does not anticipate any non-performance by any of its counterparties, and the concentration of risk with financial institutions does not present significant credit risk to the Company.

The gross and net amounts of derivative assets and liabilities were as follows (in millions):

						Fair Value of Assets																		Fair Value of Liabilities
						December 31,						September 30,												December 31,						September 30,
						2024						2024												2024						2024
Gross amount recognized						$	42					$	22											$	3,802					$	3,450
Gross amount eligible for offsetting						(14)						(12)												(14)						(12)
Net amount						$	28					$	10											$	3,788					$	3,438

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

Derivatives Impact on the Statements of Income and Statements of Comprehensive Income

The following table presents the pre-tax gains (losses) recorded in other comprehensive income (loss) related to cash flow hedges (in millions):

Derivatives in Cash Flow Hedging Relationships						Three Months Ended December 31,
			2024						2023
Foreign currency exchange derivatives						$	17					$	(13)
Commodity derivatives						(3)						1
Interest rate swaps						—						(35)
Total						$	14					$	(47)

The following table presents the location and amount of the pre-tax gains (losses) on cash flow hedges reclassified from AOCI into the Company’s consolidated statements of income (in millions):

Derivatives in Cash Flow Hedging Relationships						Location of Gain (Loss) Reclassified from AOCI into Income						Three Months Ended December 31,
			2024						2023
Foreign currency exchange derivatives						Cost of sales						$	1					$	(1)
Commodity derivatives						Cost of sales						—						(3)
Total												$	1					$	(4)

The following table presents the location and amount of pre-tax gains (losses) on derivatives not designated as hedging instruments recognized in the Company’s consolidated statements of income (in millions):

Derivatives Not Designated as Hedging Instruments						Location of Gain (Loss) Recognized in Income on Derivative						Three Months Ended December 31,
			2024						2023
Foreign currency exchange derivatives						Cost of sales						$	(7)					$	(5)
Foreign currency exchange derivatives						SG&A						(2)						—
Foreign currency exchange derivatives						Net financing charges						(144)						(43)
Total												$	(153)					$	(48)

The following table presents pre-tax gains on net investment hedges recorded as foreign currency translation adjustments ("CTA") within other comprehensive income (loss) (in millions):

			Three Months Ended December 31,
2024						2023
Net investment hedges			$	238					$	145

No gains or losses were reclassified from CTA into income during the three months ended December 31, 2024 and 2023.

10. FAIR VALUE MEASUREMENTS

ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:

Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities;

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

Level 2: Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions.

ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The following tables present the Company’s fair value hierarchy for those assets and liabilities measured at fair value (in millions):

			Fair Value Measurements Using:
			Total as of December 31, 2024						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives			$	42					$	—					$	42					$	—
Other noncurrent assets
Deferred compensation plan assets			57						57						—						—
Exchange traded funds (fixed income)(1)			76						76						—						—
Exchange traded funds (equity)(1)			201						201						—						—
Total assets			$	376					$	334					$	42					$	—
Other current liabilities
Foreign currency exchange derivatives			$	92					$	—					$	92					$	—
Commodity derivatives			3						—						3						—
Contingent earn-out liabilities			13						—						—						13
Other noncurrent liabilities
Contingent earn-out liabilities			14						—						—						14
Total liabilities			$	122					$	—					$	95					$	27

(1) Classified as restricted investments for payment of asbestos liabilities. See Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

			Fair Value Measurements Using:
			Total as of September 30, 2024						Quoted Prices in Active Markets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
Other current assets
Foreign currency exchange derivatives			$	20					$	—					$	20					$	—
Commodity derivatives			2						—						2						—
Other noncurrent assets
Deferred compensation plan assets			56						56						—						—
Exchange traded funds (fixed income)(1)			81						81						—						—
Exchange traded funds (equity)(1)			200						200						—						—
Total assets			$	359					$	337					$	22					$	—
Other current liabilities
Foreign currency exchange derivatives			$	25					$	—					$	25					$	—
Commodity derivatives			1						—						1						—
Contingent earn-out liabilities			14						—						—						14
Other noncurrent liabilities
Contingent earn-out liabilities			14						—												14
Total liabilities			$	54					$	—					$	26					$	28

(1) Classified as restricted investments for payment of asbestos liabilities. See Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further details.

Valuation Methods

Commodity derivatives: The commodity derivatives are valued under a market approach using publicized prices, where available, or dealer quotes.

Contingent earn-out liabilities: The contingent earn-out liabilities were established using a Monte Carlo simulation based on the forecasted operating results and the earn-out formula specified in the purchase agreements.

Deferred compensation plan assets: Assets held in the deferred compensation plans will be used to pay benefits under certain of the Company's non-qualified deferred compensation plans. The investments primarily consist of mutual funds which are publicly traded on stock exchanges and are valued using a market approach based on the quoted market prices. Unrealized gains (losses) on the deferred compensation plan assets are recognized in the consolidated statements of income where they offset unrealized gains and losses on the related deferred compensation plan liability.

Exchange traded funds: Investments in exchange traded funds are valued using a market approach based on quoted market prices, where available, or broker/dealer quotes of identical or comparable instruments. Refer to Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further information.

Foreign currency exchange derivatives: The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The following table presents the portion of unrealized gains (losses) recognized in the consolidated statements of income that relate to equity securities still held at December 31, 2024 and 2023 (in millions):

						Three Months Ended December 31,
			2024						2023
Deferred compensation plan assets						$	(1)					$	4
Investments in exchange traded funds						(1)						22

The fair values of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values.

The fair value of long-term debt at December 31, 2024 and September 30, 2024 was as follows (in billions):

						December 31,						September 30,
			2024						2024
Public debt						$	8.4					$	8.1
Other long-term debt						0.2						0.2
Total fair value of long-term debt						$	8.6					$	8.3

The fair value of public debt was determined primarily using market quotes which are classified as Level 1 inputs within the ASC 820 fair value hierarchy. The fair value of other long-term debt was determined using quoted market prices for similar instruments and are classified as Level 2 inputs within the ASC 820 fair value hierarchy.

11. EARNINGS PER SHARE

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share (in millions):

			Three Months Ended December 31,
			2024						2023
Income Available to Ordinary Shareholders
Income from continuing operations			$	363					$	340
Income from discontinued operations			56						34
Basic and diluted income available to shareholders			$	419					$	374
Weighted Average Shares Outstanding
Basic weighted average shares outstanding			662.0						680.7
Effect of dilutive securities:
Stock options, unvested restricted stock and unvested performance share awards			3.0						1.7
Diluted weighted average shares outstanding			665.0						682.4
Antidilutive Securities
Stock options and unvested restricted stock			—						0.6

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following schedules present changes in AOCI attributable to Johnson Controls (in millions):

			Three Months Ended December 31,
			2024						2023
Foreign currency translation adjustments
Balance at beginning of period			$	(956)					$	(970)
Aggregate adjustment for the period			(85)						61
Balance at end of period			(1,041)						(909)
Realized and unrealized gains (losses) on derivatives
Balance at beginning of period			(4)						15
Current period changes in fair value			8						(43)
Reclassification to income (1)			(1)						4
Net tax impact			(1)						1
Balance at end of period			2						(23)
Pension and postretirement plans
Balance at beginning of period			(4)						—
Reclassification to income			(1)						(1)
Balance at end of period			(5)						(1)
Accumulated other comprehensive loss, end of period			$	(1,044)					$	(933)

(1) Refer to Note 9, "Derivative Instruments and Hedging Activities," of the notes to the consolidated financial statements for disclosure of the line items in the consolidated statements of income affected by reclassifications from AOCI into income related to derivatives.

13. PENSION AND RETIREMENT PLANS

Unless otherwise noted, all activities and amounts reported in this footnote include both continuing operations of the Company and activities and amounts related to the R&LC HVAC business. See Note 3, "Assets and Liabilities Held for Sale and Discontinued Operations" for additional details regarding divestiture of the R&LC HVAC business.

The components of the Company’s net periodic benefit cost (credit) associated with its defined benefit pension and postretirement plans, which are primarily recorded in selling, general and administrative expenses in the consolidated statements of income, are shown in the tables below in accordance with ASC 715, "Compensation – Retirement Benefits" (in millions):

			U.S. Pension Plans
			Three Months Ended December 31,
			2024						2023
Interest cost			$	16					$	20
Expected return on plan assets			(24)						(30)
Net periodic benefit credit			$	(8)					$	(10)

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

			Non-U.S. Pension Plans
			Three Months Ended December 31,
			2024						2023
Service cost			$	4					$	4
Interest cost			16						17
Expected return on plan assets			(19)						(18)
Net periodic benefit cost			$	1					$	3

			Postretirement Benefits
			Three Months Ended December 31,
			2024						2023
Interest cost			$	1					$	1
Expected return on plan assets			(3)						(2)
Amortization of prior service credit			(1)						(1)
Net periodic benefit credit			$	(3)					$	(2)

14. RESTRUCTURING AND RELATED COSTS

To better align its resources with its growth strategies and reduce the cost structure of its global operations in certain underlying markets, the Company commits to restructuring plans as necessary. Restructuring activities generally result in charges for workforce reductions, plant closures, asset impairments and other related costs which are reported as restructuring and impairment costs in the Company’s consolidated statements of income. The Company expects the restructuring actions to reduce cost of sales and SG&A due to reduced employee-related costs, depreciation and amortization expense.

During the fourth quarter of fiscal 2024, the Company completed its previous restructuring plan and committed to a new multi-year restructuring plan to address stranded costs and further right-size its global operations as a result of previously announced portfolio simplification actions. It is expected that one-time restructuring costs, including severance and other employee termination benefits, contract termination costs, and certain other related cash and non-cash charges, of approximately $400 million will be incurred over the course of fiscal 2025, 2026 and 2027. Restructuring costs will be incurred across all segments and Corporate functions.

The following table summarizes restructuring and related costs (in millions):

			Three Months Ended December 31, 2024
Building Solutions North America			$	6
Building Solutions EMEA/LA			11
Building Solutions Asia Pacific			2
Global Products			9
Corporate			5
Total			$	33

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The following table summarizes changes in the current restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

			Employee Severance and Termination Benefits						Long-Lived Asset Impairments																		Total
Restructuring and related costs			$	25					$	8																	$	33
Utilized—cash			(4)						—																		(4)
Utilized—noncash			—						(8)																		(8)
Balance at December 31, 2024			$	21					$	—																	$	21

The following table summarizes changes in the previous restructuring reserve, which is included within other current liabilities in the consolidated statements of financial position (in millions):

			Employee Severance and Termination Benefits												Other												Total
Balance at September 30, 2024			$	58											$	17											$	75
Utilized—cash			(27)												—												(27)
Other			—												1												1
Balance at December 31, 2024			$	31											$	18											$	49

15. INCOME TAXES

In calculating the provision for income taxes, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. On a quarterly basis, the actual effective tax rate is adjusted, as appropriate, based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal year and each interim period thereafter.

The statutory tax rate in Ireland is being used as a comparison since the Company is domiciled in Ireland.

For the three months ended December 31, 2024, the Company's effective tax rate for continuing operations was 11.5% and was lower than the statutory tax rate of 12.5% primarily due to the benefits of continuing global tax planning, partially offset by tax rate differentials.

For the three months ended December 31, 2023, the Company's effective tax rate for continuing operations was (6.3)% and was lower than the statutory tax rate of 12.5% primarily due to Swiss tax reform and the benefits of continuing global tax planning, partially offset by the establishment of a deferred tax liability on the outside basis difference of the Company's investment in certain consolidated subsidiaries and tax rate differentials.

Uncertain Tax Positions

At September 30, 2024, the Company had gross tax-effected unrecognized tax benefits of $2.1 billion, of which $1.5 billion, if recognized, would impact the effective tax rate. Accrued interest, net at September 30, 2024 was approximately $398 million (net of tax benefit). Interest accrued during the three months ended December 31, 2024 and 2023 was approximately $28 million and $30 million (both net of tax benefit), respectively. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

In the U.S., fiscal years 2019 through 2020 are currently under audit and fiscal years 2017 through 2018 are currently under appeal with the Internal Revenue Service (“IRS”) for certain legal entities. In addition, fiscal years 2016 through 2019 are also under exam by the IRS in relation to a separate consolidated filing group. Additionally, the Company is currently under exam in the following major non-U.S. jurisdictions for continuing operations:

Tax Jurisdiction						Tax Years Covered
Belgium						2016 - 2017; 2019 - 2020; 2022
Germany						2007 - 2021
Mexico						2016 - 2019
United Kingdom						2014 - 2015; 2018; 2020 - 2021

It is reasonably possible that tax examinations and/or tax litigation will conclude within the next twelve months, which could have a material impact on tax expense. Based upon the circumstances surrounding these examinations, the impact is not currently quantifiable.

Impacts of Tax Legislation

On December 18, 2023, the president of Ireland signed into law the Finance (No. 2) Bill 2023, which included legislation regarding the implementation of the Pillar Two global minimum tax. The Pillar Two legislation is effective for the Company’s fiscal year beginning October 1, 2024. The impact in the current fiscal year is not expected to be material, however, the Company is continuing to assess the future impact of the new legislation.

On September 11, 2023, the Schaffhausen parliament approved a partial revision of the cantonal act on direct taxation: Immediate Minimum Taxation Measure (“IMTM”). On November 19, 2023, IMTM was approved in a public referendum in the canton of Schaffhausen, was published in the cantonal official gazette on December 8, 2023, and was effective starting January 1, 2024. The IMTM increased Switzerland's combined statutory income tax rate to approximately 15%. As a result, in the three months ended December 31, 2023, the Company recorded a noncash discrete net tax benefit of $80 million due to the remeasurement of deferred tax assets and liabilities related to Switzerland and the canton of Schaffhausen.

16. SEGMENT INFORMATION

The Company conducts its business through four operating segments, all of which are reportable segments:

• Building Solutions North America which operates in the United States and Canada;

• Building Solutions EMEA/LA which operates in Europe, the Middle East, Africa and Latin America;

• Building Solutions Asia Pacific which operates in Asia Pacific; and

• Global Products which operates worldwide.

The Building Solutions segments:

• Design, sell, install and service HVAC, controls, building management, refrigeration, integrated electronic security and integrated fire-detection and suppression systems; and

• Provide energy-efficiency solutions and technical services, including data-driven "smart building" solutions as well as inspection, scheduled maintenance, and repair and replacement of mechanical and controls systems.

The Global Products segment designs, manufactures and sells:

• HVAC equipment, controls software and software services;

• Refrigeration equipment and controls;

• Fire protection and suppression; and

• Security products, including intrusion security, anti-theft devices, access control, and video surveillance and management systems.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The Company’s segments provide products and services primarily to commercial, institutional, industrial, data center, and governmental customers.

Management evaluates the performance of its segments primarily on segment earnings before interest, taxes and amortization ("EBITA"), which represents income from continuing operations before income taxes and noncontrolling interests, excluding corporate expenses, amortization of intangible assets, restructuring and impairment costs, the water systems AFFF settlement costs and insurance recoveries, net mark-to-market gains and losses related to pension and postretirement plans and restricted asbestos investments, and net financing charges.

Financial information relating to the Company’s reportable segments is as follows (in millions):

			Net Sales
			Three Months Ended December 31,
			2024						2023
Building Solutions North America			$	2,744					$	2,487
Building Solutions EMEA/LA			1,073						1,038
Building Solutions Asia Pacific			527						507
Global Products			1,082						1,177
Total net sales			$	5,426					$	5,209

			Segment EBITA
			Three Months Ended December 31,
			2024						2023
Building Solutions North America			$	332					$	285
Building Solutions EMEA/LA			108						80
Building Solutions Asia Pacific			49						46
Global Products			326						267
Total segment EBITA			815						678
Corporate expenses			171						139
Amortization of intangible assets			120						119
Restructuring and impairment costs			33						35
Water systems AFFF insurance recoveries (1)			(4)						—
Net mark-to-market losses (gains)			1						(22)
Net financing charges			86						87
Income before income taxes			$	408					$	320

(1) Refer to Note 18, "Commitments and Contingencies," of the notes to the consolidated financial statements for further disclosure related to the water systems AFFF settlement.

17. GUARANTEES

Certain of the Company's subsidiaries at the business segment level guarantee the performance of third parties and provide financial guarantees for uncompleted work and financial commitments. The terms of these guarantees vary with end dates ranging from the current fiscal year through the completion of such transactions and would typically be triggered in the

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

event of nonperformance. Performance under the guarantees, if required, would not have a material effect on the Company's financial position, results of operations or cash flows.

The Company offers warranties to its customers depending upon the specific product and terms of the customer purchase agreement. Generally, the Company's warranties require the repair or replacement of defective products within a specified time period from the date of sale. The Company records an estimate for future warranty-related costs based on actual historical costs to repair or replace products and other known factors. The Company monitors its warranty activity and adjusts its reserve estimates when it is probable that future warranty costs will be different than those estimates.

The Company’s product warranty liability is recorded in the consolidated statements of financial position in other current liabilities for estimated costs to be incurred within 12 months and in other non-current liabilities for estimated costs to be incurred in more than one year.

The following table summarizes changes in the total product warranty liability (in millions):

Balance at September 30, 2024			$	122
Accruals for warranties issued during the period			16
Settlements made during the period			(18)
Changes in estimates to pre-existing warranties			(2)
Currency translation			(3)
Balance at December 31, 2024			$	115

18. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company accrues for potential environmental liabilities when it is probable a liability has been incurred and the amount of the liability is reasonably estimable. The following table presents the location and amount of reserves for environmental liabilities in the Company's consolidated statements of financial position (in millions):

			December 31, 2024						September 30, 2024
Other current liabilities			$	28					$	32
Other noncurrent liabilities			175						179
Total reserves for environmental liabilities			$	203					$	211

The Company periodically examines whether the contingent liabilities related to the environmental matters described below are probable and reasonably estimable based on experience and ongoing developments in those matters, including continued study and analysis of ongoing remediation obligations. The Company expects that it will pay the amounts recorded over an estimated period of up to 20 years. The Company is not able to estimate a possible loss or range of loss, if any, in excess of the established accruals for environmental liabilities at this time.

A substantial portion of the Company's environmental reserves relates to ongoing long-term remediation efforts to address contamination relating to Aqueous Film Forming Foam ("AFFF") containing perfluorooctane sulfonate ("PFOS"), perfluorooctanoic acid ("PFOA"), and/or other per- and poly-fluoroalkyl substances ("PFAS") at or near the Tyco Fire Products L.P. (“Tyco Fire Products”) Fire Technology Center ("FTC") located in Marinette, Wisconsin and surrounding areas in the City of Marinette and Town of Peshtigo, Wisconsin, as well as the continued remediation of PFAS, arsenic and other contaminants at the Tyco Fire Products Stanton Street manufacturing facility also located in Marinette, Wisconsin (the “Stanton Street Facility”).

PFOA, PFOS, and other PFAS compounds are being studied by the U.S. Environmental Protection Agency ("EPA") and other environmental and health agencies and researchers. In March 2021, EPA published its final determination to regulate

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

PFOS and PFOA in drinking water. On April 10, 2024, EPA announced the final National Primary Drinking Water Regulation (“NPDWR”) for six PFAS compounds including PFOA and PFOS. The NPDWR established legally enforceable levels, called Maximum Contaminant Levels, of 4.0 parts per trillion ("ppt") for each of PFOA and PFOS, 10 ppt for each of PFHxS, PFNA, and HFPO-DA (commonly known as GenX Chemicals), and a Hazard Index of one for mixtures containing two or more of PFHxS, PFNA, HFPO-DA, and PFBA. In February 2024, EPA released two proposed rules relating to PFAS under the Resource Conservation and Recovery Act (“RCRA”): one rule proposes to list nine PFAS (including PFOA and PFOS) as “hazardous constituents,” and a second rule proposes to clarify that hazardous waste regulated under the rule includes not only substances listed or identified as hazardous waste in the regulations, but also any substances that meet the statutory definition of hazardous waste.

In August 2022, EPA published a proposed rule that would designate PFOA and PFOS as “hazardous substances” under Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). In April 2023, EPA issued an Advanced Notice of Proposed Rulemaking ("ANPR") seeking input on whether it should expand the proposed rule to designate as "hazardous substances" under CERCLA: (1) seven additional PFAS; (2) the precursors to PFOA, PFOS, and the seven additional PFAS; or (3) entire categories of PFAS. On April 17, 2024, the EPA Administrator signed the final rule designating PFOA and PFOS, along with their salts and structural isomers, as “hazardous substances.”

It is not possible to estimate the Company’s ultimate level of liability at many remediation sites due to the large number of other parties that may be involved, the complexity of determining the relative liability among those parties, the financial viability of other potentially responsible parties and third-party indemnitors, the uncertainty as to the nature and scope of the investigations and remediation to be conducted, changes in environmental regulations, changes in permissible levels of specific compounds in soil, groundwater and drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages, the uncertainty in the application of law and risk assessment, the various choices and costs associated with diverse technologies that may be used in corrective actions at the sites, and the often quite lengthy periods over which eventual remediation may occur. It is possible that technological, regulatory or enforcement developments, the results of additional environmental studies or other factors could change the Company's expectations with respect to future charges and cash outlays, and such changes could be material to the Company's future results of operations, financial condition or cash flows. Nevertheless, the Company does not currently believe that any claims, penalties or costs in addition to the amounts accrued will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

In addition, the Company has identified asset retirement obligations for environmental matters that are expected to be addressed at the retirement, disposal, removal or abandonment of existing owned facilities. Conditional asset retirement obligations were $7 million at both December 31, 2024 and September 30, 2024.

FTC-Related Matters

FTC Remediation

The use of fire-fighting foams at the FTC was primarily for training and testing purposes to ensure that such products sold by the Company’s affiliates, Chemguard, Inc. ("Chemguard") and Tyco Fire Products, were effective at suppressing high intensity fires that may occur at military installations, airports or elsewhere. During the three months ended June 30, 2024, Tyco Fire Products completed its previously announced plan to discontinue the production and sale of fluorinated firefighting foams, including AFFF products, and has transitioned to non-fluorinated foam alternatives.

Tyco Fire Products has been engaged in remediation activities at the Stanton Street Facility since 1990. Its corporate predecessor, Ansul Incorporated (“Ansul”), manufactured arsenic-based agricultural herbicides at the Stanton Street Facility, which resulted in significant arsenic contamination of soil and groundwater on the site and in parts of the adjoining Menominee River. In 2009, Ansul entered into an Administrative Consent Order (the "Consent Order") with the EPA to address the presence of arsenic at the site. Under this agreement, Tyco Fire Products’ principal obligations are to contain the arsenic contamination on the site, pump and treat on-site groundwater, dredge, treat and properly dispose of contaminated sediments in the adjoining river areas, and monitor contamination levels on an ongoing basis. Activities completed under the Consent Order since 2009 include the installation of a subsurface barrier wall around the facility to contain contaminated groundwater, the installation and ongoing operation and monitoring of a groundwater extraction and

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

treatment system and the dredging and offsite disposal of treated river sediment. In addition to ongoing remediation activities, the Company is also working with the Wisconsin Department of Natural Resources ("WDNR") to investigate and remediate the presence of PFAS at or near the Stanton Street Facility as part of the evaluation and remediation of PFAS in the Marinette region.

Tyco Fire Products is operating and monitoring at the FTC a Groundwater Extraction and Treatment System ("GETS"), a permanent groundwater remediation system that extracts groundwater containing PFAS, treats it using advanced filtration systems, and returns the treated water to the environment. Tyco Fire Products has also completed the removal and disposal of PFAS-affected soil from the FTC. The Company's reserves for continued remediation of the FTC, the Stanton Street Facility and surrounding areas in Marinette and Peshtigo are based on estimates of costs associated with the long-term remediation actions, including the continued operation of the GETS, the implementation of long-term drinking water solutions for the area impacted by groundwater migrating from the FTC, continued monitoring and testing of groundwater monitoring wells, the operation and wind-down of other legacy remediation and treatment systems and the completion of ongoing investigation obligations.

FTC-Related Litigation

On June 21, 2019, the WDNR announced that it had received from the Wisconsin Department of Health Services (“WDHS”) a recommendation for groundwater quality standards as to, among other compounds, PFOA and PFOS. The WDHS recommended a groundwater enforcement standard for PFOA and PFOS of 20 parts per trillion. Although Wisconsin approved final regulatory standards for PFOA and PFOS in drinking water and surface water in February 2022, the Wisconsin Natural Resources Board did not approve WDNR's proposed standards for PFOA and PFOS in groundwater. In August 2024, WDNR issued a new proposed rule to adopt the EPA Maximum Contaminant Levels for PFAS in drinking water. The WDNR initiated a rulemaking proceeding that would establish groundwater quality standards for PFOA, PFOS, perfluorobutane sulfonic acid and its potassium salt (“PFBS”) and hexafluoropropylene oxide dimer acid and its ammonium salt (“HFPO-DA”). Pursuant to state law, the WDNR has stopped work on the proposed rule and notified the state legislature that, following economic analysis, the proposed costs would exceed statutory thresholds. As a result, the state legislature is required to authorize the WDNR to allow the rulemaking to continue.

In July 2019, the Company received a letter from the WDNR directing the expansion of the evaluation of PFAS in the Marinette region to include (1) biosolids sludge produced by the City of Marinette Waste Water Treatment Plant and spread on certain fields in the area and (2) the Menominee and Peshtigo Rivers. On October 16, 2019, the WDNR issued a “Notice of Noncompliance” to Tyco Fire Products and Johnson Controls, Inc. regarding the WDNR’s July 2019 letter. The WDNR issued a further letter regarding the issue on November 4, 2019. In February 2020, the WDNR sent a letter to Tyco Fire Products and Johnson Controls, Inc. further directing the expansion of the evaluation of PFAS in the Marinette region to include investigation activities south and west of the previously defined FTC study area. In September 2021, the WDNR sent an additional “Notice of Noncompliance” to Tyco Fire Products and Johnson Controls, Inc. concerning land-applied biosolids, which reviewed and responded to the Company’s biosolids investigation conducted to that date. On April 10, 2023, the WDNR issued a third “Notice of Noncompliance” to Tyco Fire Products and Johnson Controls, Inc. concerning land-applied biosolids in the Marinette region. Tyco Fire Products and Johnson Controls, Inc. believe that they have complied with all applicable environmental laws and regulations. The Company cannot predict what regulatory or enforcement actions, if any, might result from the WDNR’s actions, or the consequences of any such actions, including the potential assessment of penalties.

In March 2022, the Wisconsin Department of Justice (“WDOJ”) filed a civil enforcement action against Johnson Controls Inc. and Tyco Fire Products in Wisconsin state court relating to environmental matters at the FTC (State of Wisconsin v. Tyco Fire Products, LP and Johnson Controls, Inc., Case No. 22-CX-1 (filed March 14, 2022 in Circuit Court in Marinette County, Wisconsin)). The WDOJ alleges that the Company failed to timely report the presence of PFAS chemicals at the FTC, and that the Company has not sufficiently investigated or remediated PFAS at or near the FTC. The WDOJ seeks monetary penalties and an injunction ordering these two subsidiaries to complete a site investigation and cleanup of PFAS contamination in accordance with the WDNR's requests. The parties are engaged in summary judgment and pretrial motions. The Court has continued the trial previously scheduled for March 3, 2025 and has not yet set a new trial date.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

In October 2022, the Town of Peshtigo filed a tort action in Wisconsin state court against Tyco Fire Products, Johnson Controls Inc., Chemguard, Inc., and ChemDesign, Inc. relating to environmental matters at the FTC (Town of Peshtigo v. Tyco Fire Products L.P. et al., Case No. 2022CV000234 (filed October 18, 2022 in Circuit Court in Marinette County, Wisconsin)). The Town alleges that use of AFFF products at the FTC caused contamination of water supplies in Peshtigo. The Town seeks monetary penalties and an injunction ordering abatement of PFAS contamination in Peshtigo. The case has been removed to federal court and transferred to a multi-district litigation ("MDL") before the United States District Court for the District of South Carolina.

In November 2022, individuals filed six actions in Dane County, Wisconsin alleging personal injury and/or property damage against Tyco Fire Products, Johnson Controls Inc., Chemguard, and other unaffiliated defendants related to environmental matters at the FTC. Plaintiffs allege that use of AFFF products at the FTC and activities by third parties unrelated to the Company contaminated nearby drinking water sources, surface waters, and other natural resources and properties, including their personal properties. The individuals seek monetary damages for their personal injury and/or property damage. These lawsuits have been transferred to the MDL. Subsequently, several additional plaintiffs have direct-filed in the MDL complaints with similar allegations.

The Company is vigorously defending each of these cases and believes that it has meritorious defenses, but it is presently unable to predict the duration, scope, or outcome of these actions.

Aqueous Film-Forming Foam ("AFFF") Matters

AFFF Litigation

Two of the Company's subsidiaries, Chemguard and Tyco Fire Products, have been named, along with other defendant manufacturers, suppliers and distributors, and, in some cases, certain subsidiaries of the Company affiliated with Chemguard and Tyco Fire Products, in a number of class action and other lawsuits relating to the use of fire-fighting foam products by the U.S. Department of Defense (the "DOD") and others for fire suppression purposes and related training exercises. Plaintiffs generally allege that the firefighting foam products contain or break down into the chemicals PFOS and PFOA and/or other PFAS compounds and that the use of these products by others at various airbases, airports and other sites resulted in the release of these chemicals into the environment and ultimately into communities’ drinking water supplies neighboring those airports, airbases and other sites. Plaintiffs generally seek compensatory damages, including damages for alleged personal injuries, medical monitoring, diminution in property values, investigation and remediation costs, and natural resources damages, and also seek punitive damages and injunctive relief to address remediation of the alleged contamination.

In September 2018, Tyco Fire Products and Chemguard filed a Petition for Multidistrict Litigation with the United States Judicial Panel on Multidistrict Litigation (“JPML”) seeking to consolidate all existing and future federal cases into one jurisdiction. On December 7, 2018, the JPML issued an order transferring various AFFF cases to the MDL. Additional cases have been identified for transfer to or are being directly filed in the MDL.

AFFF Municipal and Water Provider Cases

Chemguard and Tyco Fire Products have been named as defendants in more than 980 cases in federal and state courts involving municipal or water provider plaintiffs that were filed in state or federal courts originating from 35 states and territories. The vast majority of these cases have been transferred to or were directly filed in the MDL, and it is anticipated that the remaining cases will be transferred to the MDL. These municipal and water provider plaintiffs generally allege that the use of the defendants’ fire-fighting foam products at fire training academies, municipal airports, Air National Guard bases, or Navy or Air Force bases released PFOS and PFOA into public water supply wells and/or other public property, allegedly requiring remediation.

Tyco Fire Products and Chemguard are also periodically notified by other municipal entities that those entities may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

Water Systems AFFF Settlement Agreement

On April 12, 2024, Tyco Fire Products agreed to a settlement with a nationwide class of public water systems that detected PFAS in their drinking water systems that they allege to be associated with the use of AFFF. Under the terms of the agreement, Tyco Fire Products agreed to contribute $750 million to resolve these PFAS claims. The settlement releases these claims against Tyco Fire Products, Chemguard, and other related corporate entities. On November 22, 2024, the Court entered final approval of the settlement agreement. In accordance with the terms of the settlement agreement, Tyco Fire Products made its final required payment of $415 million in December 2024 and has now paid the full settlement amount.

The class of public water systems included in this settlement broadly includes any public water system (as defined in the settlement agreement) that has detected PFAS in its drinking water sources as of May 15, 2024. The following systems are excluded from the settlement class: water systems owned and operated by a State or the United States government; systems that have not detected the presence of PFAS as of May 15, 2024; small transient water systems; privately-owned drinking water wells; and the water system in the city of Marinette, Wisconsin (which is included only if it so requests). The settlement does not resolve claims of public water systems that request exclusion from the class (“opt out”) pursuant to the process to be established by the MDL court. It also does not resolve potential future claims of public water systems that detect PFAS in their water systems for the first time after May 15, 2024, or certain claims not related to drinking water, such as separate alleged claims relating to real property damage or stormwater or wastewater treatment. Finally, this settlement does not affect the other categories of cases that remain at issue in the MDL, such as personal injury cases, property damage cases, other types of class actions, claims brought by state or territory attorneys general, or other types of damages alleged to be related to the historic use of AFFF manufactured and sold by Tyco Fire Products and Chemguard. While it is reasonably possible that the excluded systems or claims could result in additional future lawsuits, claims, assessments or proceedings, it is not possible to predict the outcome of any such matters, and as such, the Company is unable to develop an estimate of a possible loss or range of losses, if any, at this time.

The settlement does not constitute an admission of liability or wrongdoing by Tyco Fire Products or Chemguard.

AFFF Putative Class Actions

Chemguard and Tyco Fire Products are named in 45 pending putative class actions in federal courts originating from 18 states and territories. All of these cases have been direct-filed in or transferred to the MDL. In addition, six proposed class actions were filed in Canada (British Columbia, Manitoba, Quebec and Ontario) in the past year, which name Tyco Fire Products and other manufacturers as defendants, on behalf of various classes of members (including individuals and government entities) who seek to recover for remediation (past and future) costs, claim property or other environmental damages, or claim personal injuries or other harms arising from alleged exposure to or contamination with PFAS or PFAS-containing products (including AFFF).

AFFF Individual or Mass Actions

There are more than 8,800 individual or “mass” actions pending that were filed in state or federal courts originating from 52 states and territories against Chemguard and Tyco Fire Products and other defendants in which the plaintiffs generally seek compensatory damages, including damages for alleged personal injuries, medical monitoring, and alleged diminution in property values. The cases involve plaintiffs from various states including approximately 7,000 plaintiffs in Colorado and more than 8,800 other plaintiffs. The vast majority of these matters have been tagged for transfer to, transferred to, or directly-filed in the MDL, and it is anticipated that several newly-filed state court actions will be similarly tagged and transferred. There are several matters that are proceeding in state courts, including actions in Arizona, Illinois and Wisconsin.

Tyco and Chemguard are also periodically notified by other individuals that they may assert claims regarding PFOS and/or PFOA contamination allegedly resulting from the use of AFFF.

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

AFFF State or U.S. Territory Attorneys General Litigation

In June 2018, the State of New York filed a lawsuit in New York state court (State of New York v. The 3M Company et al No. 904029-18 (N.Y. Sup. Ct., Albany County)) against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at locations across New York, including Stewart Air National Guard Base in Newburgh and Gabreski Air National Guard Base in Southampton, Plattsburgh Air Force Base in Plattsburgh, Griffiss Air Force Base in Rome, and unspecified “other” sites throughout the State. The lawsuit seeks to recover costs and natural resource damages associated with contamination at these sites. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL.

In February 2019, the State of New York filed a second lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at additional locations across New York. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL. In July 2019, the State of New York filed a third lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York. This suit has been removed to the United States District Court for the Northern District of New York and transferred to the MDL. In November 2019, the State of New York filed a fourth lawsuit in New York state court (State of New York v. The 3M Company et al (N.Y. Sup. Ct., Albany County)), against a number of manufacturers, including affiliates of the Company, with respect to alleged PFOS and PFOA contamination purportedly resulting from firefighting foams used at further additional locations across New York. This suit has been removed to federal court and transferred to the MDL.

In April 2021, the State of Alaska filed a lawsuit in the superior court of the State of Alaska against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land and natural resources allegedly resulting from the use of firefighting foams at various locations throughout the State. The State’s case has been removed to federal court and transferred to the MDL. The State of Alaska has also named a number of manufacturers and other defendants, including affiliates of the Company, as third-party defendants in two cases brought by individuals against the State. These two cases have also been transferred to the MDL.

In early November 2021, the Attorney General of the State of North Carolina filed four individual lawsuits in the superior courts of the State of North Carolina against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFOS and PFOA damage of the State’s land, natural resources, and property allegedly resulting from the use of firefighting foams at four separate locations throughout the State. These four cases have been removed to federal court and transferred to the MDL. In October 2022, the Attorney General filed two similar lawsuits in the superior courts of the State of North Carolina regarding alleged PFAS damages at two additional locations. These two cases have also been removed to federal court and transferred to the MDL.

In addition, 33 other states and territories have filed 35 lawsuits against a number of manufacturers and other defendants, including affiliates of the Company, with respect to PFAS damage of each of those State's environmental and natural resources allegedly resulting from the manufacture, storage, sale, distribution, marketing, and use of PFAS-containing AFFF within each respective State. The states and territories are: Arkansas, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, Kentucky, Massachusetts, Maryland, Maine, Michigan, Mississippi, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, Wisconsin, Guam, the Northern Mariana Islands, and Puerto Rico. All of these complaints, if not filed directly in the MDL, have been removed to federal court and transferred to the MDL.

Other AFFF Related Matters

In March 2020, the Kalispel Tribe of Indians (a federally recognized Tribe) and two tribal corporations filed a lawsuit in the United States District Court for the Eastern District of Washington against a number of manufacturers, including affiliates of the Company, and the United States with respect to PFAS contamination allegedly resulting from the use and

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

disposal of AFFF by the United States Air Force at and around Fairchild Air Force Base in eastern Washington. This case has been transferred to the MDL.

In October 2022, the Red Cliff Band of Lake Superior Chippewa Indians (a federally recognized tribe) filed a lawsuit in the United States District Court for the Western District of Wisconsin against a number of manufacturers, including affiliates of the Company, with respect to PFAS contamination allegedly resulting from the use and disposal of AFFF at Duluth Air National Guard Base in Duluth, Minnesota. This complaint has been transferred to the MDL.

In July 2023, the Fond du Lac Band of Lake Superior Chippewa (a federally recognized tribe) direct-filed a lawsuit in the MDL against a number of manufacturers, including affiliates of the Company, with respect to PFAS contamination allegedly resulting from the use and disposal of AFFF at Duluth Air National Guard Base in Duluth, Minnesota.

The Company is vigorously defending all of the above AFFF matters and believes that it has meritorious defenses to class certification and the claims asserted, including statutes of limitations, the government contractor defense, various medical and scientific defenses, and other factual and legal defenses. The Company has a historical general liability insurance program and is pursuing coverage under the program from various insurers through insurance claims discussions and litigation pending in a state court in Wisconsin and a federal district court in South Carolina. The insurance litigation involves numerous factual and legal issues. There are numerous factual and legal issues to be resolved in connection with these claims. The Company is presently unable to predict the outcome or ultimate financial exposure beyond the water systems AFFF settlement discussed above, if any, represented by these matters, and there can be no assurance that any such exposure will not be material.

Asbestos Matters

The Company and certain of its subsidiaries, along with numerous other third parties, are named as defendants in personal injury lawsuits based on alleged exposure to asbestos containing materials. These cases have typically involved product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were used with asbestos containing components.

The following table presents the location and amount of asbestos-related assets and liabilities in the Company's consolidated statements of financial position (in millions):

			December 31, 2024						September 30, 2024
Other current liabilities			$	58					$	58
Other noncurrent liabilities			344						350
Total asbestos-related liabilities			402						408
Other current assets			15						14
Other noncurrent assets			315						320
Total asbestos-related assets			330						334
Net asbestos-related liabilities			$	72					$	74

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

The following table presents the components of asbestos-related assets (in millions):

			December 31, 2024						September 30, 2024
Restricted
Cash			$	7					$	6
Investments			277						281
Total restricted assets			284						287
Insurance receivables for asbestos-related liabilities			46						47
Total asbestos-related assets			$	330					$	334

The amounts recorded for asbestos-related liabilities and insurance-related assets are based on the Company's strategies for resolving its asbestos claims, currently available information, and a number of estimates and assumptions. Key variables and assumptions include the number and type of new claims that are filed each year, the average cost of resolution of claims, the identity of defendants, the resolution of coverage issues with insurance carriers, amount of insurance, and the solvency risk with respect to the Company's insurance carriers. Other factors that may affect the Company's liability and cash payments for asbestos-related matters include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, reforms of state or federal tort legislation and the applicability of insurance policies among subsidiaries. As a result, actual liabilities or insurance recoveries could be significantly higher or lower than those recorded if assumptions used in the Company's calculations vary significantly from actual results.

Self-Insured Liabilities

The Company records liabilities for its workers' compensation, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated by utilizing actuarial valuations based upon historical claims experience. The Company maintains captive insurance companies to manage a portion of its insurable liabilities.

The following table presents the location and amount of self-insured liabilities in the Company's consolidated statements of financial position (in millions):

			December 31, 2024						September 30, 2024
Other current liabilities			$	98					$	92
Accrued compensation and benefits			20						20
Other noncurrent liabilities			247						239
Total self-insured liabilities			$	365					$	351

The following table presents the location and amount of insurance receivables in the Company's consolidated statements of financial position (in millions):

			December 31, 2024						September 30, 2024
Other current assets			$	5					$	5
Other noncurrent assets			13						13
Total insurance receivables			$	18					$	18

Johnson Controls International plc

Notes to Consolidated Financial Statements

December 31, 2024

(unaudited)

Other Matters

The Company is involved in various lawsuits, claims and proceedings incident to the operation of its businesses, including those pertaining to product liability, environmental, safety and health, intellectual property, employment, commercial and contractual matters, and various other casualty matters. Although the outcome of litigation cannot be predicted with certainty and some lawsuits, claims or proceedings may be disposed of unfavorably to the Company, it is management’s opinion that none of these will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Costs related to such matters were not material to the periods presented.