3M Delivers Strong Fourth-Quarter Results; Improves Operational Performance and Exceeds Earnings and Cash Flow Expectations
PR Newswire
ST. PAUL, Minn., Jan. 23, 2024
-- 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:
Q4 2023 Q4 2022
-------------------------- ---------------- ----------------
GAAP earnings per share $ 1.70 $ 0.98
Special items:
Net costs for
significant
litigation 0.36 0.07
Other special items,
net 0.36 1.13
---------------- ----------------
Adjusted earnings per share
(EPS) $ 2.42 $ 2.18
---------------- ----------------
Memo:
GAAP operating income
margin 15.5 % 7.8 %
Adjusted operating
income margin(1) 20.9 % 19.1 %
(1) Above adjusted operating income margin for Q4 2023 includes
a 1.4 percentage point headwind from restructuring related net
charges.
---------------------------------------------------------------
-- 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.
Adjusted (Non-
GAAP GAAP)
------------------------------- ----------- ----------------
Net sales (Millions) $8,013 $7,693
Sales change
Total sales (0.8) % (0.3) %
Components of sales change:
Organic sales(2) (1.9) % (1.4) %
Acquisitions/divestitures 0.2 % 0.2 %
Translation 0.9 % 0.9 %
Adjusted sales excludes manufactured PFAS products.
(2) Above 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:
Full Year Full Year
2023 2022
------------------------------ -------------- --------------
GAAP earnings (loss) per share $ (12.63) $ 10.18
Special items:
Impact of Combat Arms
Earplug (CAE)
settlement 5.94 --
Impact of public water
systems (PWS)
settlement 14.45 --
Other net costs for
significant litigation 0.61 3.20
Other special items, net 0.87 (3.50)
-------------- --------------
Adjusted earnings per share
(EPS) $ 9.24 $ 9.88
-------------- --------------
Memo:
GAAP operating income (loss)
margin (27.9) % 19.1 %
Adjusted operating income
margin(1) 20.3 % 21.1 %
(1) Above adjusted operating income margin for full year 2023
includes a 1.4 percentage point headwind from restructuring
related net charges.
---------------------------------------------------------------
-- 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.
Adjusted
GAAP (Non- GAAP)
---------------------------------- ----------- -------------
Net sales (Millions) $32,681 $31,392
Sales change
Total sales (4.5) % (4.5) %
Components of sales change:
Organic sales(2) (3.2) % (3.2) %
Acquisitions/divestitures (0.7) % (0.8) %
Translation (0.6) % (0.5) %
Adjusted sales excludes manufactured PFAS products.
(2) Above 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.
---------------------------------------------------------------
-- 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 EPS(3) could be impacted up to an estimated ($0.20) from complete debt financing of these settlements based on current market and company expectations.
(3) As 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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