3M reports Q2 2023 results

3M reported second quarter 2023 results.

“In the second quarter, the actions we took to strengthen our supply chain and restructure the company led to improved service for customers, reduced costs across 3M, and better than expected margins and cash flow,” said Mike Roman, 3M chairman and chief executive officer. “As we execute our strategy, we are positioning 3M for long-term performance, including progressing the planned spin of our Health Care business and addressing a significant portion of PFAS litigation.”

Second quarter highlights:

• GAAP loss per share of $12.35 and operating margin of minus 107.6% include the previously announced proposed settlement agreement with PWS in the United States regarding PFAS resulting in a pre-tax charge of $10.3 billion payable over 13 years, negatively impacting earnings per share by $14.19.
• Adjusted earnings per share of $2.17 includes pre-tax restructuring charges of $212 million, or negative $0.31 per share.
• Adjusted operating income margin of 19.3% includes a 2.7 percentage point headwind from pre-tax restructuring charges.

• Sales of $8.3 billion, down 4.3 percent year-on-year, with organic sales decline of 2.2 percent year-on-year.
• Adjusted sales of $8.0 billion, down 4.7 percent year-on-year with adjusted organic sales decline of 2.5 percent year-on-year.
• Operating cash flow of $1.5 billion, up 34 percent year-on-year; adjusted free cash flow of $1.5 billion, up 44 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 2023 Outlook
Given the company’s strong operational execution and cost discipline, 3M raises its full-year adjusted EPS2 expectations for 2023 to $8.60 to $9.10 vs. $8.50 to $9.00 prior.

Adjusted total sales growth2 in the range of -5 to -1 percent, reflecting adjusted organic sales growth of -3 percent to flat, which remains unchanged.

Adjusted operating cash flow2 of $5.9 to $6.3 billion is contributing to 90% to 100% adjusted free cash flow conversion2, which is also unchanged.

3M resolves claims by PWS in the United States
On June 22, 2023, 3M issued a press release announcing a proposed settlement agreement with PWS in the United States regarding PFAS. As a result of this agreement, 3M recorded a pre-tax charge of $10.3 billion in the second quarter of 2023. The charge reflects the present value of the expected $12.5 billion nominal value of 3M’s payments over 13 years under the agreement.
MB Bureau