ST. PAUL, Minn., April 27, 2021 /PRNewswire/ -- 3M (NYSE: MMM) today reported first-quarter 2021
results.
"The first quarter was highlighted by broad-based organic
growth, robust cash flow and a double-digit increase in earnings
per share," said Mike Roman,
3M chairman and chief executive
officer. "Our four industry-leading businesses are delivering
strong results, while we accelerate 3M's digital transformation and
sustainability efforts with significant new goals to improve air
and water quality. While uncertainty related to COVID-19 remains,
we will stay focused on driving growth, building on favorable
market trends, improving operational performance and delivering for
customers and shareholders."
First-Quarter Results
Sales grew 9.6 percent year-on-year to $8.9 billion. Organic local-currency sales
increased 8.0 percent while divestitures decreased sales by 1.4
percent. Foreign currency translation increased sales by 3.0
percent year-on-year.
Total sales grew 13.7 percent in Safety and Industrial, 13.1
percent in Transportation and Electronics, 9.8 percent in Consumer,
and 6.8 percent in Health Care. Organic local-currency sales
increased 10.3 percent in Safety and Industrial, 9.8 percent in
Transportation and Electronics, 9.3 percent in Health Care, and 7.8
percent in Consumer.
On a geographic basis, total sales grew 18.1 percent in
Asia Pacific, 10.4 percent in EMEA
(Europe, Middle East and Africa), and 4.5 percent in the Americas.
Organic local-currency sales grew 12.8 percent in Asia Pacific, 6.3 percent in the Americas, and
5.5 percent in EMEA.
Both first-quarter GAAP and adjusted earnings were $2.77 per share, resulting in year-on-year
increases of 23 percent and 27 percent on a GAAP and
adjusted-basis, respectively. First quarter operating income was
$2.0 billion with operating margins
of 22.5 percent, as referenced in the "Supplemental Financial
Information Non-GAAP Measures" section.
The company's operating cash flow was $1.7 billion with adjusted free cash flow of
$1.4 billion contributing to adjusted
free cash flow conversion of 86 percent. 3M returned $1.1
billion to shareholders in the first quarter of 2021,
including $858 million in cash
dividends and $231 million of gross
share repurchases. The company reduced total debt by $0.6 billion, or 3 percent, and net debt by
$0.7 billion, or 5 percent,
sequentially. See the "Supplemental Financial Information Non-GAAP
Measures" section for applicable information.
As previously disclosed in the company's Form 8-K dated
March 22, 2021, effective in the
first quarter of 2021, 3M changed its
accounting principle for pension/postretirement plan costs and its
measure of segment operating performance. The information provided
herein reflects the impact of these changes for all periods
presented.
First-Quarter Business Group Discussion
Safety and Industrial
- Sales of $3.3 billion, up 13.7
percent in U.S. dollars. Organic local-currency sales increased
10.3 percent and foreign currency translation increased sales by
3.4 percent.
- On an organic local-currency basis:
-
- Sales increased in personal safety, roofing granules,
industrial adhesives and tapes, automotive aftermarket, electrical
markets, and abrasives; sales declined in closure and masking.
- Sales grew across all geographic areas.
- Segment operating income was $811
million, an increase of 17 percent year-on-year; operating
margins of 24.4 percent.
Transportation and Electronics
- Sales of $2.5 billion, up 13.1
percent in U.S. dollars. Organic local-currency sales increased 9.8
percent and foreign currency translation increased sales by 3.3
percent.
- On an organic local-currency basis:
-
- Sales increased in electronics, automotive and aerospace, and
advanced materials; sales were flat in transportation safety; sales
declined in commercial solutions.
- Sales grew in Asia Pacific;
sales were flat in EMEA; sales declined in the Americas.
- Segment operating income was $591
million, an increase of 27 percent year-on-year; operating
margins of 23.3 percent.
Health Care
- Sales of $2.2 billion, up 6.8
percent in U.S. dollars. Organic local-currency sales increased 9.3
percent, foreign currency translation increased sales by 3.1
percent and divestitures decreased sales by 5.6 percent.
- On an organic local-currency basis:
-
- Sales increased in oral care, separation and purification,
medical solutions, and health information systems; sales declined
in food safety.
- Sales grew across all geographic areas.
- Segment operating income was $509
million, an increase of 13 percent year-on-year; operating
margins were 22.7 percent.
Consumer
- Sales of $1.4 billion, up 9.8
percent in U.S. dollars. Organic local-currency sales increased 7.8
percent and foreign currency translation increased sales by 2.0
percent.
- On an organic local-currency basis:
-
- Sales increased in home improvement, stationery and office
supplies, and home care; sales declined in consumer health and
safety.
- Sales grew across all geographic areas.
- Segment operating income was $289
million, up 9 percent year-on-year; operating margins were
21.1 percent.
Full-Year 2021 Outlook
3M's full-year 2021 guidance remains unchanged with earnings
expected to be in the range of $9.20
to $9.70 per share. The company
expects its full-year total sales growth in the range of 5 to 8
percent with organic local-currency growth between 3 to 6 percent.
3M also expects its full-year free
cash flow conversion to be in the range of 95 to 105 percent, as
referenced in the "Supplemental Financial Information Non-GAAP
Measures" section.
Committed to Leadership in Sustainability
In February, 3M announced plans to
invest approximately $1 billion over
the next 20 years to accelerate its new environmental goals:
achieve carbon neutrality by 2050, reduce water use by 25% at its
facilities, and return higher quality water to the environment
after use in manufacturing operations.
Achieving Carbon Neutrality
- By applying science and technological expertise, 3M expects to further reduce carbon emissions 50%
by 2030, 80% by 2040, and achieve 100% carbon neutrality in its
operations by 2050.1,2
Reducing Water Use
- 3M is targeting water use
reductions of 10% by 2022, 20% by 2025, and 25% by
2030.1,3 Through various efforts, 3M expects to reduce its overall water usage by
2.5 billion gallons per year. The new commitments build upon the
company's existing 2025 goal of engaging with all of the
water-stressed/scarce communities where it manufactures on
community-wide approaches to water management.
Returning Higher Quality Water
- 3M expects to install
state-of-the-art water purification technology by the end of 2023
and be fully operational in 2024 at all of its largest water-using
locations. This will enable the company to return even higher
quality water to the environment after its use in manufacturing
operations. The company will use its expertise and advanced
technology to remove impurities from the water it uses.
In addition, 3M announced last
week it expects to reduce its dependence on virgin fossil-based
plastics by 125 million pounds by 2025.4 To achieve this
new goal, 3M is innovating the
products and packaging in its Consumer Business Group with
advancements focused on the use of recycled content and bio-based
plastics, as well as more sustainable product and packaging designs
to decrease overall plastic use.4
Over the last two decades 3M has
reduced its emissions by 70 percent, while doubling its revenues.
The company's headquarters in Saint Paul,
Minnesota, is powered by renewable electricity, and 40
percent of 3M's global electricity use is renewable, on its way to
100 percent. Sustainability is embedded in every new 3M product, and over the last five years the
company's innovations have helped customers avoid 75 million tons
of emissions. The company will provide its annual sustainability
report in early May which will provide further details.
3M will conduct an investor
teleconference at 9:00 a.m. EDT
(8:00 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
21972035). The telephone replay will be available until
11:30 a.m. EDT (10:30 a.m. CDT) on May 4,
2021.
Footnotes:
|
|
1.
|
2019 is the baseline
measure year.
|
|
2.
|
Expands previous 2025
goal of staying below 50% of 2002 baseline. 3M's 2030 Scope 1 and 2
emissions will now be reduced more than 85% from 2002
levels.
|
|
3.
|
Expands previous
commitment to reduce water use by 10% between 2015-2025.
|
|
4.
|
2020 is the baseline
measure year.
|
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, 2020, 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; and (14) tax-related external conditions,
including changes in tax rates, 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), as updated by applicable Current Reports on
Form 8-K. The information contained in this news release is as of
the date indicated. The Company assumes no obligation to update any
forward-looking statements contained in this news release as a
result of new information or future events or developments.
3M Company and
Subsidiaries
CONSOLIDATED
STATEMENT OF INCOME
(Millions, except
per-share amounts)
(Unaudited)
|
|
|
|
Three months ended
|
|
|
March 31,
|
|
|
2021
|
|
2020
|
Net sales
|
|
$
|
8,851
|
|
$
|
8,075
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
4,525
|
|
|
4,109
|
Selling, general and
administrative expenses
|
|
|
1,808
|
|
|
1,768
|
Research, development
and related expenses
|
|
|
524
|
|
|
537
|
Gain on sale of
businesses
|
|
|
—
|
|
|
(2)
|
Total operating
expenses
|
|
|
6,857
|
|
|
6,412
|
Operating
income
|
|
|
1,994
|
|
|
1,663
|
|
|
|
|
|
|
|
Other expense
(income), net
|
|
|
49
|
|
|
75
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
|
1,945
|
|
|
1,588
|
Provision for income
taxes
|
|
|
319
|
|
|
278
|
Income of
consolidated group
|
|
|
1,626
|
|
|
1,310
|
|
|
|
|
|
|
|
Income (loss) from
unconsolidated subsidiaries, net of taxes
|
|
|
1
|
|
|
—
|
Net income including
noncontrolling interest
|
|
|
1,627
|
|
|
1,310
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
|
|
3
|
|
|
2
|
|
|
|
|
|
|
|
Net income
attributable to 3M
|
|
$
|
1,624
|
|
$
|
1,308
|
|
|
|
|
|
|
|
Weighted average 3M
common shares outstanding – basic
|
|
|
580.5
|
|
|
576.8
|
Earnings per share
attributable to 3M common shareholders – basic
|
|
$
|
2.80
|
|
$
|
2.27
|
|
|
|
|
|
|
|
Weighted average 3M
common shares outstanding – diluted
|
|
|
586.3
|
|
|
581.5
|
Earnings per share
attributable to 3M common shareholders – diluted
|
|
$
|
2.77
|
|
$
|
2.25
|
3M Company and
Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEET
(Dollars in
millions)
(Unaudited)
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2021
|
|
2020
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,636
|
|
$
|
4,634
|
Marketable securities
– current
|
|
|
501
|
|
|
404
|
Accounts receivable –
net
|
|
|
4,817
|
|
|
4,705
|
Inventories
|
|
|
4,458
|
|
|
4,239
|
Prepaids
|
|
|
535
|
|
|
675
|
Other current
assets
|
|
|
398
|
|
|
325
|
Total current
assets
|
|
|
15,345
|
|
|
14,982
|
Property, plant and
equipment – net
|
|
|
9,240
|
|
|
9,421
|
Operating lease right
of use assets
|
|
|
871
|
|
|
864
|
Goodwill and
intangible assets – net
|
|
|
19,351
|
|
|
19,637
|
Other
assets
|
|
|
2,373
|
|
|
2,440
|
Total
assets
|
|
$
|
47,180
|
|
$
|
47,344
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Short-term borrowings
and
|
|
|
|
|
|
|
current portion of
long-term debt
|
|
$
|
1,368
|
|
$
|
806
|
Accounts
payable
|
|
|
2,670
|
|
|
2,561
|
Accrued
payroll
|
|
|
655
|
|
|
747
|
Accrued income
taxes
|
|
|
277
|
|
|
300
|
Operating lease
liabilities – current
|
|
|
267
|
|
|
256
|
Other current
liabilities
|
|
|
3,126
|
|
|
3,278
|
Total current
liabilities
|
|
|
8,363
|
|
|
7,948
|
Long-term
debt
|
|
|
16,819
|
|
|
17,989
|
Other
liabilities
|
|
|
8,170
|
|
|
8,476
|
Total
liabilities
|
|
$
|
33,352
|
|
$
|
34,413
|
|
|
|
|
|
|
|
Total
equity
|
|
$
|
13,828
|
|
$
|
12,931
|
Shares
outstanding
|
|
|
|
|
|
|
March 31, 2021:
579,675,002
|
|
|
|
|
|
|
December 31,
2020: 577,749,638
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
47,180
|
|
$
|
47,344
|
3M Company and
Subsidiaries
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in
millions)
(Unaudited)
|
|
|
|
Three months ended
|
|
|
|
March 31,
|
|
|
|
2021
|
|
2020
|
|
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES
|
|
$
|
1,688
|
|
$
|
1,213
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
|
(310)
|
|
|
(332)
|
|
Acquisitions, net of
cash acquired
|
|
|
—
|
|
|
(25)
|
|
Purchases and proceeds
from sale or maturities of marketable securities and investments –
net
|
|
|
(110)
|
|
|
(111)
|
|
Proceeds from sale of
businesses, net of cash sold
|
|
|
—
|
|
|
86
|
|
Other investing
activities
|
|
|
51
|
|
|
7
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
(USED IN) INVESTING ACTIVITIES
|
|
|
(369)
|
|
|
(375)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Change in
debt
|
|
|
(444)
|
|
|
2,207
|
|
Purchases of treasury
stock
|
|
|
(231)
|
|
|
(365)
|
|
Proceeds from
issuances of treasury stock pursuant to stock option and benefit
plans
|
|
|
293
|
|
|
149
|
|
Dividends paid to
shareholders
|
|
|
(858)
|
|
|
(847)
|
|
Other financing
activities
|
|
|
(11)
|
|
|
(36)
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES
|
|
|
(1,251)
|
|
|
1,108
|
|
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(66)
|
|
|
(46)
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
2
|
|
|
1,900
|
|
Cash and cash
equivalents at beginning of year
|
|
|
4,634
|
|
|
2,353
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
4,636
|
|
$
|
4,253
|
|
3M Company and
Subsidiaries
SUPPLEMENTAL
FINANCIAL INFORMATION
NON-GAAP
MEASURES
(Unaudited)
|
|
(Dollars in
millions, except per share amounts)
|
|
|
Operating
Income
|
|
Operating
Income
Margin
|
|
|
Income
Before
Taxes
|
|
|
Provision
for
Income
Taxes
|
|
Effective
Tax
Rate
|
|
|
Net Income
Attributable
to 3M
|
|
|
Earnings
Per
Diluted
Share
|
|
Earnings
per
diluted
share
percent
change
|
|
Q1 2020
GAAP
|
|
$
|
1,663
|
|
20.6
|
%
|
$
|
1,588
|
|
$
|
278
|
|
17.5
|
%
|
$
|
1,308
|
|
$
|
2.25
|
|
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
litigation-related charges/benefits
|
|
|
17
|
|
|
|
|
17
|
|
|
56
|
|
|
|
|
(39)
|
|
|
(0.06)
|
|
|
|
Gain/loss on sale of
businesses
|
|
|
(2)
|
|
|
|
|
(2)
|
|
|
(3)
|
|
|
|
|
1
|
|
|
—
|
|
|
|
Q1 2020 adjusted
amounts (non-GAAP measures) (a)
|
|
$
|
1,678
|
|
20.8
|
%
|
$
|
1,603
|
|
$
|
331
|
|
20.7
|
%
|
$
|
1,270
|
|
$
|
2.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2021
GAAP
|
|
$
|
1,994
|
|
22.5
|
%
|
$
|
1,945
|
|
$
|
319
|
|
16.4
|
%
|
$
|
1,624
|
|
$
|
2.77
|
|
23.1
|
%
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
Q1 2021 adjusted
amounts (non-GAAP measures) (a)
|
|
$
|
1,994
|
|
22.5
|
%
|
$
|
1,945
|
|
$
|
319
|
|
16.4
|
%
|
$
|
1,624
|
|
$
|
2.77
|
|
26.8
|
%
|
|
|
|
|
|
|
|
(a)
|
In addition to
reporting financial results in accordance with U.S. GAAP, the
Company also provides non-GAAP measures that adjust for the impact
of special items. Special items for the periods presented include
the items described in the section entitled "Description of Special
Items". Operating income (measure of segment operating
performance), income before taxes, net income, earnings per share,
and effective tax rate are all measures for which 3M provides the
reported GAAP measure and a measure adjusted for special items. The
adjusted measures are not in accordance with, nor are they a
substitute for, GAAP measures. The Company considers these non-GAAP
measures in evaluating and managing the Company's operations. The
Company believes that discussion of results adjusted for these
items is meaningful to investors as it provides a useful analysis
of ongoing underlying operating trends. The determination of these
items may not be comparable to similarly titled measures used by
other companies.
|
3M Company and
Subsidiaries
SUPPLEMENTAL
FINANCIAL INFORMATION
NON-GAAP MEASURES
– (CONTINUED)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31,
|
|
Major GAAP Cash
Flow Categories (dollars in millions)
|
|
2021
|
|
2020
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
1,688
|
|
$
|
1,213
|
|
Net cash provided by
(used in) investing activities
|
|
|
(369)
|
|
|
(375)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(1,251)
|
|
|
1,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year
2021
|
|
Free cash flow
(non-GAAP measure) (dollars in billions)
|
|
Forecast
|
|
Net cash provided by
(used in) operating activities
|
|
$7.1 to
$7.8
|
|
Purchases of
property, plant and equipment
|
|
($1.8 to
$2.0)
|
|
Free cash flow
(b)
|
|
$5.1 to
$6.0
|
|
|
|
|
|
Net income
attributable to 3M
|
|
$5.4 to
$5.7
|
|
Free cash flow
conversion (b)
|
|
95% to
105%
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
|
March 31,
|
|
Adjusted Free Cash
Flow (non-GAAP measure) (dollars in millions)
|
|
2021
|
|
2020
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
1,688
|
|
$
|
1,213
|
|
Purchases of
property, plant and equipment
|
|
|
(310)
|
|
|
(332)
|
|
Free cash
flow
|
|
$
|
1,378
|
|
$
|
881
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
Significant
litigation-related after-tax payment impacts
|
|
$
|
3
|
|
$
|
50
|
|
TCJA transition tax
payment
|
|
|
9
|
|
|
—
|
|
Divestiture-related
restructuring after-tax payment impacts
|
|
|
1
|
|
|
—
|
|
Adjusted free cash
flow (c)
|
|
$
|
1,391
|
|
$
|
931
|
|
|
|
|
|
|
|
|
|
Net income
attributable to 3M
|
|
$
|
1,624
|
|
$
|
1,308
|
|
Adjustments for
special items:
|
|
|
|
|
|
|
|
Significant
litigation-related charges/(benefits)
|
|
|
—
|
|
|
(39)
|
|
(Gain)/loss on sale of
businesses
|
|
|
—
|
|
|
1
|
|
Adjusted net income
attributable to 3M (a)
|
|
$
|
1,624
|
|
$
|
1,270
|
|
Adjusted free cash
flow conversion (c)
|
|
|
86
|
%
|
|
73
|
%
|
|
|
|
|
|
|
|
(b)
|
Free cash flow and
free cash flow conversion are not defined under U.S. generally
accepted accounting principles (GAAP). Therefore, they should not
be considered a substitute for income or cash flow data prepared in
accordance with U.S. GAAP and may not be comparable to similarly
titled measures used by other companies. The Company defines free
cash flow as net cash provided by operating activities less
purchases of property, plant and equipment. It should not be
inferred that the entire free cash flow amount is available for
discretionary expenditures. The Company defines free cash flow
conversion as free cash flow divided by net income attributable to
3M. The Company believes free cash flow and free cash flow
conversion are meaningful to investors as they function as useful
measures of performance and the Company uses these measures as an
indication of the strength of the company and its ability to
generate cash.
|
|
|
(c)
|
Adjusted free cash
flow and adjusted free cash flow conversion are not defined under
U.S. GAAP. Therefore, they should not be considered a substitute
for income or cash flow data prepared in accordance with U.S. GAAP
and may not be comparable to similarly titled measures used by
other companies. The Company defines adjusted free cash flow as net
cash provided by operating activities, adjusted for special items,
less purchases of property, plant and equipment. Cash payments
associated with special items in the determination of adjusted free
cash flow are reflected net of applicable tax using the U.S.
statutory corporate tax rate during the period of payment. It
should not be inferred that the entire adjusted free cash flow
amount is available for discretionary expenditures. The Company
defines adjusted free cash flow conversion as adjusted free cash
flow divided by net income attributable to 3M, adjusted for special
items. Special items for the periods presented include the items
described in section entitled "Description of Special Items". The
Company believes adjusted free cash flow and adjusted free cash
flow conversion are meaningful to investors as they are useful
measures of performance and the Company uses these measures as an
indication of the strength of the company and its ability to
generate cash.
|
3M Company and
Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES – (CONTINUED)
(Unaudited)
|
|
|
Adjusted EBITDA
(non-GAAP measure) (d)
|
|
Adjusted EBITDA
Margin (non-GAAP measure) (d)
|
|
|
|
Three months ended March 31,
|
|
Three months ended March 31,
|
|
(Dollars in
millions)
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Safety and
Industrial
|
|
$
|
952
|
|
$
|
818
|
|
28.6
|
%
|
27.9
|
%
|
Transportation and
Electronics
|
|
|
690
|
|
|
564
|
|
27.3
|
|
25.2
|
|
Health
Care
|
|
|
667
|
|
|
604
|
|
29.7
|
|
28.7
|
|
Consumer
|
|
|
323
|
|
|
299
|
|
23.5
|
|
23.9
|
|
Corporate and
Unallocated
|
|
|
(19)
|
|
|
(54)
|
|
|
|
|
|
Elimination of Dual
Credit
|
|
|
(159)
|
|
|
(113)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Company
|
|
$
|
2,454
|
|
$
|
2,118
|
|
27.7
|
%
|
26.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Adjusted EBITDA
(non-GAAP measure) (dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
March 31,
2021
|
|
March 31,
2020
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
$
|
8,851
|
|
$
|
8,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to 3M
|
|
|
|
|
|
|
|
|
|
|
|
1,624
|
|
|
1,308
|
|
Add/(subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
2
|
|
(Income)/loss from
unconsolidated subsidiaries, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
—
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
|
|
|
319
|
|
|
278
|
|
Other
expense/(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
(Income)/expense
|
|
|
|
|
|
|
|
|
|
|
|
128
|
|
|
113
|
|
Pension & OPEB
non-service cost (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
(79)
|
|
|
(38)
|
|
Depreciation and
amortization expense
|
|
|
|
|
|
|
|
|
|
|
|
460
|
|
|
440
|
|
Adjustments for special
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
litigation-related charges/(benefits)
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
17
|
|
(Gain)/loss on sale of
businesses
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(2)
|
|
Adjusted EBITDA
(d)
|
|
|
|
|
|
|
|
|
|
|
$
|
2,454
|
|
$
|
2,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (d)
|
|
|
|
|
|
|
|
|
|
|
|
27.7
|
%
|
|
26.2
|
%
|
3M Company and
Subsidiaries
SUPPLEMENTAL
FINANCIAL INFORMATION
NON-GAAP MEASURES
– (CONTINUED)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP measure)
Three months ended March 31, 2021 (dollars in
millions)
|
|
Safety and
Industrial
|
|
Transportation
and
Electronics
|
|
Health
Care
|
|
Consumer
|
|
Corporate
and
Unallocated
|
|
Elimination
of Dual
Credit
|
|
Total
Company
|
|
Net sales
|
|
$
|
3,327
|
|
$
|
2,531
|
|
$
|
2,248
|
|
$
|
1,373
|
|
$
|
(2)
|
|
$
|
(626)
|
|
$
|
8,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating income (measure of segment
operating performance)
|
|
|
811
|
|
|
591
|
|
|
509
|
|
|
289
|
|
|
(47)
|
|
|
(159)
|
|
|
1,994
|
|
Add/(subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
141
|
|
|
99
|
|
|
158
|
|
|
34
|
|
|
28
|
|
|
|
|
|
460
|
|
Adjustments for special
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP measure) (d)
|
|
$
|
952
|
|
$
|
690
|
|
$
|
667
|
|
$
|
323
|
|
$
|
(19)
|
|
$
|
(159)
|
|
$
|
2,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (non-GAAP measure) (d)
|
|
|
28.6
|
%
|
|
27.3
|
%
|
|
29.7
|
%
|
|
23.5
|
%
|
|
|
|
|
|
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(non-GAAP measure)
Three months ended March 31,
2020 (dollars in millions)
|
|
Safety and
Industrial
|
|
Transportation
and
Electronics
|
|
Health
Care
|
|
Consumer
|
|
Corporate
and
Unallocated
|
|
Elimination
of Dual
Credit
|
|
Total
Company
|
|
Net sales
|
|
$
|
2,927
|
|
$
|
2,239
|
|
$
|
2,104
|
|
$
|
1,250
|
|
$
|
—
|
|
$
|
(445)
|
|
$
|
8,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating income (measure of segment
operating performance)
|
|
|
694
|
|
|
464
|
|
|
452
|
|
|
265
|
|
|
(99)
|
|
|
(113)
|
|
|
1,663
|
|
Add/(subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
124
|
|
|
100
|
|
|
152
|
|
|
34
|
|
|
30
|
|
|
|
|
|
440
|
|
Adjustments for special
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
litigation-related charges/(benefits)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
17
|
|
(Gain)/loss on sale of
businesses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
|
|
(2)
|
|
Adjusted EBITDA
(non-GAAP measure) (d)
|
|
$
|
818
|
|
$
|
564
|
|
$
|
604
|
|
$
|
299
|
|
$
|
(54)
|
|
$
|
(113)
|
|
$
|
2,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (non-GAAP measure) (d)
|
|
|
27.9
|
%
|
|
25.2
|
%
|
|
28.7
|
%
|
|
23.9
|
%
|
|
|
|
|
|
|
|
26.2
|
%
|
|
|
|
|
|
|
|
(d)
|
Adjusted EBITDA and
adjusted EBITDA margin are not defined under U.S. GAAP. Therefore,
adjusted EBITDA and adjusted EBITDA margin should not be considered
a substitute for other measures prepared in accordance with U.S.
GAAP and may not be comparable to similarly titled measures used by
other companies. The Company defines adjusted EBITDA as net income
attributable to 3M, adjusted for net income/(loss) attributable to
noncontrolling interest, (income)/loss from unconsolidated
subsidiaries, provision for income taxes, other expense/(income),
depreciation and amortization expense, and special items. For
business segments, the Company defines adjusted EBITDA as business
segment operating income (3M's measure of segment operating
performance) adjusted for depreciation and amortization expense.
The Company defines adjusted EBITDA margin as adjusted EBITDA
divided by net sales. Special items for the periods presented
include the items described in the section entitled "Description of
Special Items". The Company considers these non-GAAP measures in
evaluating and managing the Company's operations. The Company
believes adjusted EBITDA and adjusted EBITDA margin are meaningful
to investors as they provide useful analyses of ongoing underlying
operating trends.
|
|
|
|
March 31,
|
|
December
31,
|
|
Net Debt
(non-GAAP measure)
|
|
2021
|
|
2020
|
|
Total debt
|
|
$
|
18,187
|
|
$
|
18,795
|
|
Less: Cash, cash
equivalents and marketable securities
|
|
|
5,168
|
|
|
5,068
|
|
Net debt
(e)
|
|
$
|
13,019
|
|
$
|
13,727
|
|
|
|
|
|
|
|
(e)
|
Net debt is not
defined under U.S. GAAP and may not be computed the same as
similarly titled measures used by other companies. The Company
defines net debt as total debt less the total of cash, cash
equivalents and current and long-term marketable securities. 3M
believes net debt is meaningful to investors as 3M considers net
debt and its components to be an important indicator of liquidity
and a guiding measure of capital structure strategy.
|
3M Company and
Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES –
(CONTINUED)
(Unaudited)
Description of Special Items:
In addition to reporting financial results in accordance with
U.S. GAAP, the Company also provides various non-GAAP measures that
incorporate adjustments for the impacts of special items. Special
items incorporated in the preparation of these non-GAAP measures
for the periods presented include the items described below:
Significant litigation-related charges/benefits:
- In the first quarter of 2020, 3M
recorded a net pre-tax charge of $17
million ($13 million after
tax) related to PFAS (certain perfluorinated compounds) matters.
The charge was more than offset by a reduction in tax expense of
$52 million related to resolution of
tax treatment with authorities regarding the previously disclosed
2018 agreement reached with the State of
Minnesota that resolved the Natural Resources Damages
lawsuit. These items, in aggregate, resulted in a $39 million after-tax benefit. In the first
quarter of 2021 and 2020, 3M made
payments of approximately $4 million
and $63 million, respectively,
related to significant litigation-related matters.
Gain/loss on sale of businesses:
- In the first quarter of 2020, 3M
recorded a pre-tax gain of $2 million
($1 million loss after tax) related
to the sale of its advanced ballistic-protection business and
recognition of certain contingent consideration.
Divestiture-related restructuring actions:
- In the first quarter of 2021, 3M
made payments of approximately $1
million associated with divestiture-related restructuring
actions.
Enactment/measurement period adjustments related to the Tax
Cuts and Jobs Act (TCJA)
- In the first quarter of 2021, 3M
made payments of approximately $9
million related to the transition tax expense incurred as a
result of the 2017 enactment of the TCJA.
3M Company and
Subsidiaries
SALES CHANGE
ANALYSIS (f)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
2021
|
|
|
|
|
|
|
|
Europe,
|
|
|
|
|
|
|
|
|
|
Middle
|
|
|
Sales Change Analysis
|
|
|
|
Asia-
|
|
East and
|
|
World-
|
|
By Geographic Area
|
|
Americas
|
|
Pacific
|
|
Africa
|
|
Wide
|
|
Volume –
organic
|
|
5.1
|
%
|
13.3
|
%
|
4.5
|
%
|
7.3
|
%
|
Price
|
|
1.2
|
|
(0.5)
|
|
1.0
|
|
0.7
|
|
Organic
local-currency sales
|
|
6.3
|
|
12.8
|
|
5.5
|
|
8.0
|
|
Divestitures
|
|
(1.6)
|
|
—
|
|
(3.0)
|
|
(1.4)
|
|
Translation
|
|
(0.2)
|
|
5.3
|
|
7.9
|
|
3.0
|
|
Total sales
change
|
|
4.5
|
%
|
18.1
|
%
|
10.4
|
%
|
9.6
|
%
|
|
|
|
Three months ended March 31,
2021
|
|
Worldwide
Sales Change
|
|
Organic
local-
|
|
|
|
|
|
|
|
Total
sales
|
|
By Business Segment
|
|
currency
sales
|
|
Acquisitions
|
|
Divestitures
|
|
Translation
|
|
change
|
|
Safety and
Industrial
|
|
10.3
|
%
|
—
|
%
|
—
|
%
|
3.4
|
%
|
13.7
|
%
|
Transportation and
Electronics
|
|
9.8
|
|
—
|
|
—
|
|
3.3
|
|
13.1
|
|
Health
Care
|
|
9.3
|
|
—
|
|
(5.6)
|
|
3.1
|
|
6.8
|
|
Consumer
|
|
7.8
|
|
—
|
|
—
|
|
2.0
|
|
9.8
|
|
Total
Company
|
|
8.0
|
%
|
—
|
%
|
(1.4)
|
%
|
3.0
|
%
|
9.6
|
%
|
|
|
|
|
|
|
|
|
|
(f)
|
Total sales change is
calculated based on reported sales results. The components of sales
change include organic local-currency sales, acquisitions,
divestitures, and translation. Organic local-currency sales include
both organic volume impacts (which excludes acquisition and
divestiture impacts) and selling price changes. Acquisition and
divestiture impacts are measured separately for the first 12 months
post-transaction.
|
3M Company and
Subsidiaries
BUSINESS SEGMENTS
(Unaudited)
3M discloses business segment
operating income as its measure of segment profit/loss, reconciled
to both total 3M operating income and
income before taxes. Note 19 to 3M's consolidated financial
statements in its 2020 Annual Report on Form 10-K describes 3M's
business segments and measure of segment operating performance used
by 3M's chief operating decision maker (CODM). As discussed
therein, the measure of segment operating performance includes dual
credit for certain related operating income and excludes certain
expenses and income that are not allocated to business segments and
instead reflected in Corporate and Unallocated.
Additionally, the following special items are excluded from
business segment operating income and, instead, are included within
Corporate and Unallocated: significant litigation-related
charges/benefits, gain/loss on sale of businesses, and
divestiture-related restructuring actions.
Effective in the first quarter of 2021, the measure of segment
operating performance used by 3M's CODM changed and, as a result,
3M's disclosed measure of segment profit/loss (business segment
operating income) was updated. The change to business segment
operating income aligns with the update to how the CODM assesses
performance and allocates resources for the Company's business
segments. The change included the following:
Changes in cost
attribution
The extent of allocation and
method of attribution of certain net costs were updated to result
in fewer items remaining in Corporate and Unallocated and, instead,
including them in 3M's business segments' operating performance.
Previously, a larger portion of ongoing corporate staff costs and
costs associated with centrally managed material resource centers
was retained in Corporate and Unallocated. In addition, portions of
pension costs and costs associated with certain centrally managed
but ongoing business-related legal matters, along with certain
insurance-related costs, were retained in Corporate and
Unallocated.
Continued alignment of customer
account activity
As part of 3M's regular
customer-focus initiatives, the Company realigned certain customer
account activity ("sales district") to correlate with the primary
divisional product offerings in various countries and reduce
complexity for customers when interacting with multiple
3M businesses. This impacted the
amount of dual credit certain business segments receive as a
result of sales district attribution.
Also effective in the first quarter of 2021, within 3M's
Consumer business segment, certain safety products formerly within
the Construction and Home Improvement Division and the Stationery
and Office Division were moved to the newly-named Consumer Health
and Safety Division (formerly the Consumer Health Care
Division).
The financial information presented herein reflects the impact
of the preceding changes for all periods presented.
|
|
|
|
|
|
|
BUSINESS SEGMENT INFORMATION
|
|
Three months ended
|
NET SALES
|
|
March 31,
|
(Millions)
|
|
2021
|
|
2020
|
Safety and
Industrial
|
|
$
|
3,327
|
|
$
|
2,927
|
Transportation and
Electronics
|
|
|
2,531
|
|
|
2,239
|
Health
Care
|
|
|
2,248
|
|
|
2,104
|
Consumer
|
|
|
1,373
|
|
|
1,250
|
Corporate and
Unallocated
|
|
|
(2)
|
|
|
—
|
Elimination of Dual
Credit
|
|
|
(626)
|
|
|
(445)
|
Total
Company
|
|
$
|
8,851
|
|
$
|
8,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BUSINESS SEGMENT INFORMATION
|
|
Three months ended
|
OPERATING INCOME
|
|
March 31,
|
(Millions)
|
|
2021
|
|
2020
|
Safety and
Industrial
|
|
$
|
811
|
|
$
|
694
|
Transportation and
Electronics
|
|
|
591
|
|
|
464
|
Health
Care
|
|
|
509
|
|
|
452
|
Consumer
|
|
|
289
|
|
|
265
|
Elimination of Dual
Credit
|
|
|
(159)
|
|
|
(113)
|
Total business
segment operating income
|
|
$
|
2,041
|
|
$
|
1,762
|
Corporate and
Unallocated
|
|
|
|
|
|
|
Special
items:
|
|
|
|
|
|
|
Significant
litigation-related (charges)/benefits
|
|
|
—
|
|
|
(17)
|
Gain/(loss) on sale of
businesses
|
|
|
—
|
|
|
2
|
Other corporate expense
- net
|
|
|
(47)
|
|
|
(84)
|
Total Corporate and
Unallocated
|
|
$
|
(47)
|
|
$
|
(99)
|
Total Company
operating income
|
|
$
|
1,994
|
|
$
|
1,663
|
|
|
|
|
|
|
|
Other
expense/(income), net
|
|
$
|
49
|
|
$
|
75
|
Income before income
taxes
|
|
$
|
1,945
|
|
$
|
1,588
|
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.
Contacts
3M
Investor
Contacts:
Bruce Jermeland,
651-733-1807
or
Tony Riter, 651-733-1141
or
Media Contact:
Tim Post,
651-733-9789
View original
content:http://www.prnewswire.com/news-releases/3m-reports-first-quarter-2021-results-301277313.html
SOURCE 3M