3M Reports Third-Quarter Results; Raises Full-Year 2024 Earnings Guidance

Rhea-AI Summary

3M (NYSE: MMM) reported strong third-quarter results for 2024, with sales of $6.3 billion, up 0.4% year-over-year. The company's GAAP EPS from continuing operations increased by 154% to $2.48, while adjusted EPS rose 18% to $1.98. 3M's adjusted operating income margin improved by 1.4 percentage points to 23.0%. Despite a cash outflow of $1.8 billion from operations due to significant litigation costs, the company generated $1.5 billion in adjusted free cash flow.

Based on strong year-to-date performance, 3M has raised its full-year 2024 adjusted EPS guidance to a range of $7.20 to $7.30, up from the previous forecast of $7.00 to $7.30. The company also updated its outlook for adjusted total sales growth to approximately 1% and adjusted organic sales growth to about 1% for the full year.

Positive

• GAAP EPS from continuing operations increased 154% year-over-year to $2.48
• Adjusted EPS rose 18% year-over-year to $1.98
• Adjusted operating income margin improved by 1.4 percentage points to 23.0%
• Generated $1.5 billion in adjusted free cash flow
• Raised full-year 2024 adjusted EPS guidance to $7.20-$7.30 from $7.00-$7.30

Negative

• Cash outflow of $1.8 billion from operations due to significant litigation costs
• Organic sales decreased 0.1% year-over-year
• Adjusted organic sales growth outlook for 2024 lowered to ~1% from previous flat to +2%

Insights

Financial Analyst

3M's Q3 2024 results show resilience and operational improvement. The 18% YoY increase in adjusted EPS to $1.98 and the 1.4 percentage point improvement in adjusted operating margin to 23.0% are particularly noteworthy. These metrics indicate enhanced profitability and operational efficiency.

The company's ability to generate $1.5 billion in adjusted free cash flow despite significant litigation payments demonstrates strong underlying cash generation capabilities. This is important for maintaining dividends and share repurchases, which totaled $1.1 billion in Q3.

The raised full-year 2024 adjusted EPS guidance to $7.20-$7.30 reflects management's confidence in the company's near-term outlook. However, investors should note the modest organic sales growth of 1.0%, which suggests challenges in driving top-line expansion.

Overall, 3M's focus on operational excellence is yielding results, but sustained organic growth remains a key area to monitor for long-term value creation.

Legal Expert

The Q3 results highlight 3M's ongoing legal challenges and their financial impact. The $3.6 billion net after-tax payments for significant litigation, primarily related to Public Water Systems and Combat Arms Earplugs, significantly affected cash flow from operations, resulting in a negative $1.8 billion.

The $0.51 per share impact from net costs for significant litigation in Q3 2024, while substantial, is notably lower than the $6.13 per share impact in Q3 2023. This suggests progress in addressing legal issues, but also indicates ongoing financial exposure.

The $1.05 per share benefit from the increase in value of Solventum ownership is a positive development, potentially offsetting some litigation costs. However, investors should remain cautious about future legal liabilities and their potential to impact 3M's financial performance and strategic flexibility.

• Sales of $6.3 billion, up 0.4% YoY
• Adjusted sales of $6.1 billion with organic growth up 1.0% YoY
• GAAP EPS from continuing operations of $2.48, up 154% YoY
• Adjusted EPS from continuing operations of $1.98, up 18% YoY
• Operating cash flow of $(1.8) billion with adjusted free cash flow of $1.5 billion
• Updating full-year 2024 adjusted EPS from continuing operations to $7.20 to $7.30 from $7.00 to $7.30

ST. PAUL, Minn., Oct. 22, 2024 /PRNewswire/ -- 3M (NYSE: MMM) today reported third-quarter results.

"The 3M team delivered another quarter of strong operational execution, resulting in a double-digit increase in adjusted earnings along with solid adjusted free cash flow generation," said William Brown, 3M Chief Executive Officer. "Our ongoing execution positions us well to deliver a strong finish to the year. I am confident that our work on advancing our three priorities – organic growth, operational excellence, and capital deployment – will deliver long-term value creation for our shareholders."

Third-Quarter Highlights:

					Q3 2024		Q3 2023
			GAAP EPS from continuing operations (GAAP EPS)		$          2.48		$        (4.56)
			Special items:
			Net costs for significant litigation		0.51		6.13
			(Increase) decrease in value of Solventum ownership		(1.05)		—
			Other special items, net		0.04		0.11
			Adjusted EPS from continuing operations (Adjusted EPS)		$          1.98		$          1.68
			Memo:
			GAAP operating income margin		20.9 %		(49.4) %
			Adjusted operating income margin		23.0 %		21.6 %

• GAAP EPS of $2.48 and operating margin of 20.9%.
• Adjusted EPS of $1.98, up 18% year-on-year.
• Adjusted operating income margin of 23.0%, an increase of 1.4 percentage points year-on-year.

					GAAP		Adjusted (Non-GAAP)
			Net sales (Millions)		$6,294		$6,068
			Sales change
			Total sales		0.4 %		1.5 %
			Components of sales change:
			Organic sales1		(0.1) %		1.0 %
			Acquisitions/divestitures		0.8 %		0.9 %
			Translation		(0.3) %		(0.4) %
			Adjusted sales excludes manufactured PFAS products.
			1Above adjusted organic sales increase includes a 100 basis point headwind from product portfolio initiatives and exit of certain small countries.

• Sales of $6.3 billion, up 0.4% year-on-year, with organic sales down 0.1% year-on-year.
• Adjusted sales of $6.1 billion, up 1.5% year-on-year with adjusted organic sales up 1.0% year-on-year.
• 3M returned $1.1 billion to shareholders via dividends and share repurchases.
• Cash from operations of $(1.8) billion, driven by $3.6 billion net after tax payments for costs of significant litigation, primarily Public Water Systems and Combat Arms Earplugs.
• Adjusted free cash flow of $1.5 billion.

This document includes reference to certain non-GAAP measures. See the "Supplemental Financial Information Non-GAAP Measures" section for applicable information.

Updating Full-Year 2024 Earnings Outlook

As a result of our strong year-to-date performance the company is raising its full-year adjusted earnings expectations. The 2024 earnings outlook below reflects the continuing operations of 3M.

					Prior 2024 forecast2		Current 2024 forecast2
			Adjusted total sales growth		(0.25%) to +1.75%		~1%
			Adjusted organic sales growth		flat to +2%		~1%
			Adjusted EPS		$7.00 to $7.30		$7.20 to $7.30

2As further discussed at 6 within the "Supplemental Financial Information Non-GAAP Measures" sections, 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.

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 https://investors.3M.com 
• Webcast replay at https://investors.3m.com/financials/quarterly-earnings 

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 statements. 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. Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors. 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, and 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) liabilities and the outcome of contingencies related to certain fluorochemicals; known as "PFAS," 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 class-action settlement to resolve claims by public water suppliers in the United States regarding PFAS; (5) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's reports on Form 10-K, 10-Q and 8-K (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 system, or security breaches and other disruptions to the Company's information or operational 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 spin-off of the Company's Health Care business, including the risk that the expected benefits will not be realized; the risk that the costs or dis-synergies will exceed the anticipated amounts; potential business disruption; the diversion of management time; the impact of the transaction 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; the risk that any consents or approvals required will not be obtained; risks under the agreements and obligations entered into in connection with the spin-off, and (16) matters relating to Combat Arms Earplugs ("CAE"), including those related 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 and/or the Company. 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). Changes in such assumptions or factors could produce significantly different results. 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:
Sean Lynch, slynch2@mmm.com

 

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SOURCE 3M Company

FAQ

What were 3M's (MMM) third-quarter 2024 sales?

3M reported sales of $6.3 billion in the third quarter of 2024, up 0.4% year-over-year.

How much did 3M's (MMM) adjusted EPS increase in Q3 2024?

3M's adjusted EPS from continuing operations increased by 18% year-over-year to $1.98 in the third quarter of 2024.

What is 3M's (MMM) updated full-year 2024 adjusted EPS guidance?

3M raised its full-year 2024 adjusted EPS guidance to a range of $7.20 to $7.30, up from the previous forecast of $7.00 to $7.30.

How much adjusted free cash flow did 3M (MMM) generate in Q3 2024?

3M generated $1.5 billion in adjusted free cash flow during the third quarter of 2024.

What was 3M's (MMM) adjusted operating income margin in Q3 2024?

3M's adjusted operating income margin for the third quarter of 2024 was 23.0%, an increase of 1.4 percentage points year-over-year.