Marc Vandiepenbeeck
Executive Vice President ANAD Chief Financial Officer and President at Johnson Controls International
Thanks, George, and good morning, everyone. Let me start with a summary on Slide seven. Total revenue of $7.2 billion grew 3% organically, as strong high single-digit service growth more than offset continued weakness in China system business. Segment margin expanded a robust 150 basis points to 17.9%, as we delivered another strong quarter of productivity and converted our higher-margin backlog. Adjusted EPS of $1.14 was up 11% year-over-year and exceeded the high end of our guidance range by $0.04. Operations contributed $0.18 of the growth in the quarter, as improved productivity and the conversion of higher margin backlog more than offset higher corporate costs related to additional IT investments, cybersecurity enhancement costs and increased centralization of functional costs. Below the line, we saw favorability from a lower share count.
As we continue to build a more consistent and predictable business, are pleased with the strong adjusted EPS performance in quarter. On the balance sheet, we ended up the third quarter with approximately $900 million in available cash and net debt decreased to 2.3 times, which is within our long-term target range of 2 to 2.5 times. Year-to-date, adjusted free cash flow improved approximately $700 million year-over-year to $1.3 billion. We remain on the path to driving higher free cash flow conversion more consistently.
Let's now discuss our segment results in more detail on Slide eight through 10. Beginning Slide eight. Organic sales in our Global Products business grew 3% year-over-year, with price offsetting a modest volume decline. Commercial HVAC remained a bright spot for the business, growing mid-single digits against a tough comp of mid-teens growth a year ago. Fire & Security declined low single-digit, as a decline in fire suppression more than offset growth fire detection and security video surveillance. Industrial Refrigeration grew approximately 20%, with strong double-digit growth in both North America and EMEA.
Overall, Global Residential grew mid-single digits in the quarter. Global Ductless Residential grew low single-digits as strong double-digit growth in APAC more than offset continued declines in Europe. In conjunction with improvement in North America residential market, our Global Ductless Residential business grew 10%, with strong double-digit growth in both North America and EMEA Adjusted segment EBITDA margin expanded 240 basis points to 24.5%, as positive price cost and improved productivity more than offset mix headwinds from ongoing weakness in China.
Now moving to Slide nine to discuss our Building Solutions performance. Order momentum remained healthy with 5% growth in the quarter. Overall, service order grew 12%, with a broad-based growth across the region. Systems order grew 2%. North America offset decline in APAC. Organic sales increased 4% in the quarter, led by service growth of 9%. Systems revenue grew 1% as decline in APAC more than offset growth in North America and EMEA/LA. Building Solutions backlog continues to remain at record levels, growing 10% to $12.9 billion. Service backlog grew 7% and system backlog grew 10% year-over-year.
Let's discuss the Building Solutions performance by region on Slide 10. Orders in North America increased 5% in the quarter, with mid-single-digit growth in both systems and services. As a reminder, our quarterly order growth can fluctuate based on the timing of certain large projects, particularly in the data center vertical. We remain confident in our competitive position in the data center and our pipeline remains quite robust. Sales in North America were up 8% organically, with continued strength across HVAC & Controls, up over 20% year-over-year. Overall, our system business grew 9%, while service grew 6%.
Segment margin expanded 150 basis points year-over-year to 15.9%, driven by the continued execution of higher-margin backlog, improved productivity and solid service contribution. Total backlog ended the quarter at $9 billion, up 14% year-over-year. In EMEA/LA, orders were up 11%, with over 25% growth in service. Systems, although were flat as we continue to remain focused on driving higher quality growth with higher margin and improved cash flow conversion. Across the portfolio, we saw strong double-digit growth in controls, fire and security.
Sales in EMEALA grew 8% organically, with broad-based growth across the portfolio, Momentum continues to build within our service business, up 15% year-over-year, driven by strong double-digit growth from both our recurring and shorter cycle transactional businesses. Our system business grew low single digits, led by strength in controls. Segment EBITDA margin expanded 170 basis points to 10.3%, driven by the positive mix from the growth in service and the conversion of higher-margin system backlog. We've made tremendous progress in improving the profitability in EMEA/LA as well as mix of higher-margin service. A more disciplined funnel in systems gives us further confidence in continued momentum in margin improvement. Backlog was up 12% year-over-year to $2.5 billion.
In Asia Pacific, orders declined 2%, as we have focused on deploying resources to the most attractive part of the market and remain selective on the jobs we court and ultimately, book. Given our strong installed base in the region and our continued focus, we saw high single-digit growth in service. Sales in Asia Pacific declined 19% as the systems business continue to be impacted by ongoing weaknesses in China. Our service business grew 8% in the quarter, with strong double-digit growth in our recurring revenue contracts. Segment EBITA margin declined 220 basis points to 11.7%, as weakness in China offset positive mix from our service business. Backlog of $1.4 billion declined 12% year-over-year.
Now let's discuss our fourth quarter and fiscal year 2024 guidance on Slide 11. We entered the fourth quarter with solid momentum, led by our resilient service business and continued demand in our North America system business. Our margin reach backlog remains at a historical level, and our Global Products book-to-bill business have stabilized and returned to growth. We are introducing fourth quarter sales guidance of approximately 7% growth, as strong demand in North America and EMEA/LA is somewhat muted by one more quarter of slower recovery in the system business in China. Global Products momentum is expected to continue as our book-to-bill orders remain positive throughout the third quarter and the tough comparison in China base. For the fourth quarter, we expect segment EBITA margin to be approximately 19% and adjusted EPS to be in the range of $1.23 to $1.26.
For the full year, we are tightening adjusted EPS guidance to a range of $3.66 and $3.69. We now expect organic sales to grow approximately 3% and segment EBITA margin to expand approximately 110 basis points. Our working capital metrics continue to improve, and our free cash flow performance year-to-date has been strong. We continue to invest capital in attractive areas, including data center manufacturing expansion and ongoing ERP consolidation. While this will be a slight headwind, we expect adjusted free cash flow conversion of approximately 85% or better for the full year.
With our recent announced planned divestiture, I want to highlight some financial details and future reporting on Slide 12. As George mentioned at the beginning of the call, we were extremely pleased with our announced sale of the Residential and Light Commercial HVAC business. This came just a few weeks after we announced that we tend to sell Air Distribution Technologies business. Together, these two transactions represent hopefully, 20% of the sale and the majority of portfolio we have previously highlighted as non-core.
We expect to report the Residential and Light Commercial business as discontinued operation with our fiscal fourth quarter results and will provide our official fiscal year 2025 guidance on a continuing operation basis. While the two transaction would be dilutive to EPS prior to any cost offset, we have actions in place to address the stranded cost and we are working on accelerating some of these actions prior to closing. Through the combination of share repurchase, debt pay down and restructuring, we have a plan in place to fully offset the stranded costs. We will provide more details when we report our fiscal fourth quarter results.
Before we open up the lines for questions, I want to conclude with a summary of our recent transformation on Slide 13. We have spent the last few years transforming the company into a comprehensive solution provider for commercial buildings, and this continues to be a differentiator for Johnson Controls. We took a major step in simplifying the portfolio with our two recently announced divestiture, and we believe one operating model will enable us to deliver more consistent, predictable results.
We operate in many attractive markets, which allows us to build our backlog with margin rate jobs that have a service still throughout the lifecycle of building. Our systems backlog, coupled with our resilient business, positions us for sustainable and continued margin expansion. As our margins continue to improve, coupled with our commitment to disciplined capital allocation, we would expect double-digit EPS growth. As George mentioned earlier, the result of our portfolio transformation is now a faster-growing, more profitable, less complex and more operationally focused Johnson Controls, and we are excited for the next chapter.
With that, operator, please open the lines for questions.
