Second-Quarter Highlights:
- Aearo Technologies takes action to efficiently and equitably
resolve litigation related to Combat Arms Earplugs resulting in a
pre-tax charge of $1.2 billion, or
$1.66 per share; Company reports GAAP
earnings per share of $0.14,
including impact of Special Items.
- Adjusted earnings per share of $2.48 in midst of continued uncertain
macroeconomic environment.
|
|
Q2
2022
|
|
Q2
2021
|
GAAP EPS
|
|
$
0.14
|
|
$
2.59
|
Special
Items:
|
|
|
|
|
Aearo Technologies
actions - Combat Arms Earplugs
|
|
1.66
|
|
—
|
Zwijndrecht-related
(PFAS-related environmental
commitments as previously announced on July 6, 2022)
|
|
0.51
|
|
—
|
Other net costs for significant litigation
|
|
0.17
|
|
0.16
|
Adjusted EPS
|
|
$
2.48
|
|
$
2.75
|
|
|
|
|
|
Memo:
|
|
|
|
|
GAAP operating income
margin
|
|
1.3 %
|
|
22.0 %
|
Adjusted operating
income margin
|
|
21.0 %
|
|
23.4 %
|
See the "Supplemental
Financial Information Non-GAAP Measures" section for applicable
information.
|
- Sales of $8.7 billion, down 3
percent year-on-year, which included a negative 4 percentage point
impact from foreign currency translation due to strength of U.S.
dollar.
- Organic sales growth of 1 percent year-on-year which included a
4 percentage point headwind from the combined impact of China
COVID-related lockdowns and decline in disposable respirator
demand.
- Operating cash flow was $1.1
billion, down 40 percent year-on-year, while adjusted free
cash flow was $1.0 billion, down 41
percent year-on-year.
- 3M returned $0.8 billion to shareholders via dividends.
ST.
PAUL, Minn., July 26,
2022 /PRNewswire/ -- 3M
(NYSE: MMM) today reported second-quarter 2022 results.
"In a challenging macroeconomic environment, 3M executed well and delivered solid earnings,
while continuing to drive growth through investments in large,
fast-growing areas," said 3M chairman
and CEO Mike Roman. "Looking ahead,
we updated our adjusted full-year expectations largely due to the
strength of the U.S. dollar and uncertain macroeconomic
environment. We remain focused on innovating for customers, driving
operational improvements and advancing our environmental
stewardship – while positioning 3M
for the future through our plan to spin off our Health Care
business and resolve Combat Arms litigation in a manner that is
efficient and equitable."
Full-Year 2022 Outlook
3M updated its full-year sales and
earnings expectations to reflect the impact of the strong U.S.
dollar along with the current uncertain macroeconomic
environment.
- Total sales growth: -2.5 to -0.5 percent vs. 1 to 4 percent
prior
- Organic sales growth: 1.5 to 3.5 percent vs. 2 to 5 percent
prior
- Foreign currency translation: -4 percent vs. -1 percent
prior
- GAAP earnings per share: $7.32 to
$7.82 vs. $9.89 to 10.39 prior
- Adjusted earnings per share: $10.30 to $10.80
vs. $10.75 to $11.25 prior
- Operating cash flow of $6.6 to
$7.2 billion contributing to 90% to
100% adjusted free cash flow conversion
See the "Supplemental Financial Information Non-GAAP Measures"
section for applicable information.
Taking Steps to Equitably Resolve Litigation Related to
Combat Arms Earplugs
In a separate press release issued today, 3M announced it is taking steps to resolve
litigation related to Combat Arms Earplugs Version 2 ("Combat Arms
Earplugs"). Aearo Technologies and related entities ("Aearo
Technologies"), all of which are wholly-owned 3M subsidiaries, have voluntarily initiated
chapter 11 proceedings. With this change in strategy, this process
is intended to resolve claims related to Combat Arms Earplugs in a
manner that is equitable to all parties, including plaintiffs with
claims that are determined to be entitled to compensation.
3M and all other associated
businesses have not filed for chapter 11 and will continue to
operate as usual. Aearo Technologies' will also continue to operate
in the ordinary course. To access the press release, please
visit our press release page here.
Planned Spin Off of Health Care Business
In a separate press release issued today, 3M announced its intent to spin off its Health
Care business, resulting in two world-class, public companies well
positioned to pursue their respective growth plans. To access
the press release, please visit our press release page
here.
Update on Pending Food Safety Transaction with Neogen
3M has now indicated it intends to
complete the transaction through a split-off with a targeted
closing date of September 1, 2022,
subject to approval by Neogen shareholders, receipt of required
regulatory approvals and the satisfaction of other customary
closing conditions.
Zwijndrecht, Belgium Facility Received Approval to Restart
Idled Manufacturing
As previously reported on July 6,
2022, 3M received approval
from the Flemish authorities to restart certain operations at its
Zwijndrecht, Belgium manufacturing
facility that have been idled in recent months, including
production of electronic heat transfer fluids and others. This
approval has been granted following 3M's investment in new and
additional technologies to significantly reduce PFAS discharges and
emissions from its facility, as well as our submission of testing
data that indicates the effectiveness of these technologies. The
restart process for these operations is on track with the company's
expectations.
Conference Call
3M will conduct an investor
teleconference at 9 a.m. EDT (8 a.m. CDT) today.
Investors can access this conference via the following:
- Live webcast at http://investors.3M.com.
- Live telephone:
Call 800-762-2596 within the U.S. or +1 212-231-2916 outside the
U.S. Please join the call at least 10 minutes before the start
time.
- Webcast replay:
Go to 3M's Investor Relations website at http://investors.3M.com
and click on "Quarterly Earnings."
- Telephone replay:
Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the
U.S. (for both U.S. and outside the U.S., the access code is
21999290). The telephone replay will be available until
11:30 a.m. EDT (10:30 a.m. CDT) on August
1, 2022.
Consolidated Financial Statements and Supplemental Financial
Information Non-GAAP Measures
View the Consolidated
Financial Statements and Supplemental Financial Information
Non-GAAP Measures on 3M's website:
https://investors.3m.com/Financial-Statements-Q222
Forward-Looking Statements
This news release contains forward-looking information about
3M's financial results and estimates and business prospects that
involve substantial risks and uncertainties. You can identify these
statements by the use of words such as "anticipate," "estimate,"
"expect," "aim," "project," "intend," "plan," "believe," "will,"
"should," "could," "target," "forecast" and other words and terms
of similar meaning in connection with any discussion of future
operating or financial performance or business plans or prospects.
Among the factors that could cause actual results to differ
materially are the following: (1) worldwide economic, political,
regulatory, capital markets and other external conditions and other
factors beyond the Company's control, including natural and other
disasters or climate change affecting the operations of the Company
or its customers and suppliers; (2) risks related to public health
crises such as the global pandemic associated with the coronavirus
(COVID-19); (3) foreign currency exchange rates and fluctuations in
those rates; (4) liabilities related to certain fluorochemicals,
including lawsuits concerning various PFAS-related products and
chemistries, and claims and governmental regulatory proceedings and
inquiries related to PFAS in a variety of jurisdictions; (5) legal
proceedings, including significant developments that could occur in
the legal and regulatory proceedings described in the Company's
Annual Report on Form 10-K for the year ended Dec. 31, 2021, as updated by the Company's
Current Report on Form 8-K dated April 26,
2022, and any subsequent quarterly reports on Form 10-Q (the
"Reports"); (6) competitive conditions and customer preferences;
(7) the timing and market acceptance of new product offerings; (8)
the availability and cost of purchased components, compounds, raw
materials and energy (including oil and natural gas and their
derivatives) due to shortages, increased demand or supply
interruptions (including those caused by natural and other
disasters and other events); (9) unanticipated problems or delays
with the phased implementation of a global enterprise resource
planning (ERP) system, or security breaches and other disruptions
to the Company's information technology infrastructure; (10) the
impact of acquisitions, strategic alliances, divestitures, and
other unusual events resulting from portfolio management actions
and other evolving business strategies, and possible organizational
restructuring; (11) operational execution, including scenarios
where the Company generates fewer productivity improvements than
estimated; (12) financial market risks that may affect the
Company's funding obligations under defined benefit pension and
postretirement plans; (13) the Company's credit ratings and its
cost of capital; (14) tax-related external conditions, including
changes in tax rates, laws or regulations; (15) matters relating to
the proposed spin off of the Company's Health Care business,
including whether the transaction will be completed, or if
completed, will be on the expected terms; the risk that the
expected benefits will not be realized; the risk that the costs or
dis-synergies will exceed the anticipated amounts; the ability to
satisfy the various closing conditions; potential business
disruption; the diversion of management time; the impact of the
transaction (or its pendency) on the Company's ability to retain
talent; potential impacts on the Company's relationships with its
customers, suppliers, employees, regulators and other
counterparties; the ability to realize the desired tax treatment
(including whether an Internal Revenue Service private letter
ruling will be sought or obtained); the risk that any consents or
approvals required will not be obtained; risks associated with
financings that may be undertaken and indebtedness that may be
incurred in connection with the transaction; and (16) matters
relating to the voluntary chapter 11 proceedings of the Company's
subsidiary Aearo Technologies and certain of its affiliates (the
"Aearo Entities"), including legal risks related to the chapter 11
proceedings; potential impacts to the Company's reputation and its
relationships with customers, suppliers, employees, regulators and
other counterparties and community members; potential impacts to
the Company's liquidity or results of operations, including risks
related to the amount that will be necessary to fully and finally
resolve all of the Company's obligations to make payments to
resolve such claims under the terms of its funding and
indemnification agreement with the Aearo Entities; and the Aearo
Entities' ability to navigate the chapter 11 proceedings to obtain
approval and consummation of a plan of reorganization. Changes in
such assumptions or factors could produce significantly different
results. A further description of these factors is located in the
Reports under "Cautionary Note Concerning Factors That May Affect
Future Results" and "Risk Factors" in Part I, Items 1 and 1A
(Annual Report) and in Part I, Item 2 and Part II, Item 1A
(Quarterly Reports). The Company assumes no obligation to update
any forward-looking statements discussed herein as a result of new
information or future events or developments.
About 3M
At 3M, we apply science in
collaborative ways to improve lives daily as our employees connect
with customers all around the world. Learn more about 3M's creative
solutions to the world's problems at www.3M.com or on Twitter @3M
or @3MNews.
Please note that the company announces material financial,
business and operational information using the 3M investor relations website, SEC filings, press
releases, public conference calls and webcasts. The company also
uses the 3M news center and social
media to communicate with our customers and the public about the
company, products and services and other matters. It is possible
that the information 3M posts on the
news center and social media could be deemed to be material
information. Therefore, the company encourages investors, the media
and others interested in 3M to review
the information posted on 3M's news center and the social media
channels such as Twitter@3M or @3MNews.
Contacts
3M
Investor
Contacts:
Bruce Jermeland,
651-733-1807
or
Diane Farrow, 612-202-2449
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SOURCE 3M