- Results reflect strong operational execution, progress on
restructuring, and spending discipline
- Well-positioned to continue improving performance, including
continued expansion of adjusted operating margins3
in 2024
- Health Care spin remains on track for first half of
2024
ST.
PAUL, Minn., Jan. 23,
2024 /PRNewswire/ -- 3M
(NYSE: MMM) today reported fourth-quarter and full-year 2023
results and provided its 2024 financial outlook.
"The fourth quarter capped a strong year for 3M," said 3M
chairman and CEO Mike Roman.
"Throughout 2023, we executed our priorities and delivered on our
commitments – including expanding underlying operating margins and
cash flow. We initiated actions to restructure our organization and
simplify our supply chain, while progressing our Health Care spin
and addressing legal matters."
"Our team remains focused on further improving our operational
performance, optimizing our portfolio, and reducing risk," Roman
continued. "We will continue to invest in high-growth markets where
3M's unique capabilities can make a difference, including
automotive electrification, climate technology, and industrial
automation. I am confident we will deliver a successful 2024."
Fourth-Quarter Highlights:
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Q4 2023
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Q4 2022
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GAAP earnings per
share
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$
1.70
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$
0.98
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Special items:
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Net costs for significant litigation
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0.36
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0.07
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Other special items, net
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0.36
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1.13
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Adjusted earnings per
share (EPS)
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$
2.42
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$
2.18
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Memo:
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GAAP operating income margin
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15.5 %
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7.8 %
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Adjusted operating income margin1
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20.9 %
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19.1 %
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1Above
adjusted operating income margin for Q4 2023 includes a 1.4
percentage point headwind
from restructuring related net charges.
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- GAAP earnings per share of $1.70
and operating margin of 15.5%.
- Adjusted EPS of $2.42 includes
pre-tax restructuring related net charges of $109 million, or negative $0.17 per share.
- Adjusted EPS up 11 percent year-on-year.
- Adjusted operating income margin of 20.9% includes a 1.4
percentage point headwind from restructuring related net charges.
- Adjusted operating income margin expanded 1.8 percentage points
year-on-year.
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GAAP
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Adjusted (Non-
GAAP)
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Net sales
(Millions)
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$8,013
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$7,693
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Sales
change
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Total sales
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(0.8) %
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(0.3) %
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Components of sales change:
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Organic sales2
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(1.9) %
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(1.4) %
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Acquisitions/divestitures
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0.2 %
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0.2 %
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Translation
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0.9 %
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0.9 %
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Adjusted sales excludes
manufactured PFAS products.
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2Above
adjusted organic sales decline includes a 60 basis point headwind
from the decline in
disposable respirator demand.
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- Sales of $8.0 billion, down 0.8
percent year-on-year, with organic sales decline of 1.9 percent
year-on-year.
- Adjusted sales of $7.7 billion,
down 0.3 percent year-on-year with adjusted organic sales decline
of 1.4 percent year-on-year.
- Operating cash flow of $2.0
billion, up 3 percent year-on-year; adjusted free cash flow
of $2.0 billion, up 18 percent
year-on-year.
- 3M returned $828 million to shareholders via dividends.
The above includes reference to certain non-GAAP measures. See
the "Supplemental Financial Information Non-GAAP Measures" section
for applicable information.
Full-Year Highlights:
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Full Year
2023
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Full Year
2022
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GAAP earnings (loss)
per share
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$ (12.63)
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$
10.18
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Special items:
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Impact of Combat Arms Earplug (CAE)
settlement
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5.94
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—
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Impact of public water systems (PWS)
settlement
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14.45
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—
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Other net costs for significant
litigation
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0.61
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3.20
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Other special items, net
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0.87
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(3.50)
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Adjusted earnings per
share (EPS)
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$
9.24
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$
9.88
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Memo:
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GAAP operating income (loss) margin
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(27.9) %
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19.1 %
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Adjusted operating income margin1
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20.3 %
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21.1 %
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1Above
adjusted operating income margin for full year 2023 includes a 1.4
percentage point
headwind from restructuring related net charges.
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- GAAP loss per share of $12.63 and
operating margin of minus 27.9% includes the previously announced
settlements for CAE and PWS in the United
States regarding PFAS, resulting in a pre-tax charges of
$4.3 billion and $10.5 billion, respectively, negatively impacting
EPS by a total of $20.39.
- Adjusted EPS of $9.24 includes
pre-tax restructuring related net charges of $441 million, or negative $0.65 per share.
- Adjusted operating income margin of 20.3% includes a 1.4
percentage point headwind from restructuring related net
charges.
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GAAP
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Adjusted (Non-
GAAP)
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Net sales
(Millions)
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$32,681
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$31,392
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Sales
change
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Total sales
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(4.5) %
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(4.5) %
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Components of sales change:
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Organic
sales2
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(3.2) %
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(3.2) %
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Acquisitions/divestitures
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(0.7) %
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(0.8) %
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Translation
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(0.6) %
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(0.5) %
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Adjusted sales excludes
manufactured PFAS products.
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2Above
adjusted organic sales decline includes a 1.9 percentage point
headwind from the decline in
disposable respirator demand, along with the 2022 exit of
Russia.
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- Sales of $32.7 billion, down 4.5
percent year-on-year, with organic sales decline of 3.2 percent
year-on-year.
- Adjusted sales of $31.4 billion,
down 4.5 percent year-on-year with adjusted organic sales decline
of 3.2 percent year-on-year.
- Operating cash flow of $6.7
billion, up 19 percent year-on-year; adjusted free cash flow
of $6.3 billion, up 30 percent
year-on-year. Year-on-year improvement driven by ongoing focus on
working capital management, especially inventory.
- 3M returned $3.3 billion to shareholders via dividends.
The above includes reference to certain non-GAAP measures. See
the "Supplemental Financial Information Non-GAAP Measures" section
for applicable information.
Full-Year 2024 Outlook
3M provided the following
full-year 2024 expectations. This 2024 outlook continues to reflect
the Health Care business as part of the company for the full year,
but does not reflect the potential impact of funding amounts due
under the PWS and CAE legal settlements absent receipt of cash
payments in the Health Care business spin.
- Adjusted total sales growth3 in the range of 0.25 to
2.25 percent, reflecting adjusted organic sales3 growth
of flat to up 2 percent.
- Adjusted EPS3 in the range of $9.35 to $9.75.
- Adjusted operating cash flow3 of $6.5 to $7.1
billion, contributing to 95 to 105 percent adjusted free
cash flow conversion3.
The above does not reflect, for reasons described at
3, the potential impact of funding amounts under the PWS
and CAE settlements absent cash received in the Health Care spin.
However, for illustrative purposes only, adjusted EPS3
could be impacted up to an estimated ($0.20) from complete debt financing of these
settlements based on current market and company expectations.
3As further
discussed at 7 within the "Supplemental Financial
Information Non-GAAP Measures" section, 3M cannot, without
unreasonable effort, forecast certain items required to develop
meaningful comparable GAAP financial measures and, therefore, does
not provide them on a forward-looking basis reflecting these
items.
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Conference Call
3M will conduct an investor
teleconference at 9 a.m. EST (8 a.m. CST) today.
Investors can access this conference via the following:
- Live webcast at https://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
at https://investors.3m.com/financials/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
22028938). The telephone replay will be available until 11:30
a.m. EST (10:30 a.m. CST) on
January 30, 2024.
Consolidated Financial Statements and Supplemental Financial
Information Non-GAAP Measures
View the Financial Statement Information on 3M's
website: https://investors.3m.com/financials/quarterly-earnings
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 "plan," "expect,"
"aim," "believe," "project," "target," "anticipate," "intend,"
"estimate," "will," "should," "could," "would," "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, international trade, geopolitical,
capital markets and other external conditions and other factors
beyond the Company's control, including inflation, recession,
military conflicts, natural and other disasters or climate change
affecting the operations of the Company or its customers and
suppliers; (2) foreign currency exchange rates and fluctuations in
those rates; (3) risks related to certain fluorochemicals,
including liabilities related to claims, lawsuits, and government
regulatory proceedings concerning various PFAS-related products and
chemistries, as well as risks related to the Company's plans to
exit PFAS manufacturing and discontinue use of PFAS across its
product portfolio; (4) risks related to the proposed class-action
settlement ("PWS Settlement") to resolve claims by public water
systems in the United States
regarding PFAS, including whether court approval of the PWS
Settlement will be obtained, whether the number of plaintiffs that
opt out of the PWS Settlement will exceed current expectations or
will exceed the level that would permit 3M to terminate the PWS Settlement (and whether
3M will elect to terminate the PWS
Settlement if this occurs), whether the PWS Settlement is appealed,
the timing and amount of payments made under the PWS Settlement,
and the impact of the PWS Settlement on other PFAS-related matters;
(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, 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 and service offerings; (8) the
availability and cost of purchased components, compounds, raw
materials and energy due to shortages, increased demand and wages,
supply chain interruptions, or natural or other disasters; (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 strategic events
resulting from portfolio management actions and other evolving
business strategies; (11) operational execution, including the
extent to which the Company can realize the benefits of planned
productivity improvements, as well as the impact of organizational
restructuring activities; (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 Combat Arms Earplugs ("CAE"), including those relating
to, the August 2023 settlement that
is intended to resolve, to the fullest extent possible, all
litigation and alleged claims involving the CAE sold
or manufactured by the Company's subsidiary Aearo Technologies and
certain of its affiliates ("Aearo Entities") and/or 3M ("CAE Settlement"), including, but not limited
to, whether the anticipated participation by plaintiffs in the CAE
Settlement will be achieved, whether the number of plaintiffs that
participate in the CAE Settlement will meet current expectations or
will fall below the level that would permit 3M to terminate the CAE Settlement (and whether
3M will elect to terminate the CAE
Settlement if this occurs), whether there will be a significant
number of future claims by plaintiffs that decline to participate
in the CAE Settlement, whether the CAE Settlement is appealed or
challenged, matters related to the potential issuance of the equity
securities that are contemplated to be part of the CAE Settlement,
the filing of additional, or the outcome of any other pending or
future, litigation relating to the products that are the subject of
the CAE Settlement, or changes in related laws or regulations.
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
3M (NYSE: MMM) believes science
helps create a brighter world for everyone. By unlocking the power
of people, ideas and science to reimagine what's possible, our
global team uniquely addresses the opportunities and challenges of
our customers, communities, and planet. Learn how we're working to
improve lives and make what's next at 3M.com/news.
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 @3M or @3MNews.
Contacts
3M
Investor
Contacts:
Bruce Jermeland,
651-733-1807
or
Diane Farrow, 612-202-2449
or
Eric Herron, 651-233-0043
Media Contact:
Tim Post,
tpost3@mmm.com
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