Johnson Controls: $750 Million PFAS Settlement Doesn’t Change Our $72 Fair Value Estimate

On April 12, narrow-moat-rated Johnson Controls announced it will pay $750 million to resolve PFAS-related litigation involving wholly owned subsidiary Tyco Fire Products’ aqueous film-forming foam product. Tyco previously announced it would discontinue the production and sale of this product and other fluorinated firefighting foams by June. Johnson Controls will record a $750 million charge on its fiscal second-quarter income statement. Management expects to pay $250 million in late May and $500 million six months after the court approves the settlement. The company has insurance policies that should allow it to recover a portion of the settlement, but management cautioned that the amount and timing of such recoveries are uncertain.