3M Reports Second-Quarter 2020 Results

Strong Execution and Cash Flow in Uncertain Environment

Second-Quarter Highlights:


  • Sales of $7.2 billion, down 12.2 percent year-on-year
  • Organic local-currency sales declined 13.1 percent year-on-year
  • GAAP EPS of $2.22; adjusted EPS of $1.78
  • Both GAAP and adjusted EPS affected by COVID-19 impacts and actions (including associated restructuring charge of $58 million, or $0.08 per share)
  • Operating cash flow of $1.9 billion, up 15 percent year-on-year; adjusted free cash flow of $1.5 billion, up 18 percent year-on-year
  • Improving sales trends; July month-to-date sales up low-single digits year-on-year
  • Guidance remains withdrawn, company to continue to provide monthly sales updates

ST. PAUL, Minn.--(BUSINESS WIRE)--3M (NYSE: MMM) today reported second-quarter 2020 results.

While our results were significantly impacted by the global economic slowdown, we executed well, managed our costs and delivered another quarter of robust cash flow,” said Mike Roman, 3M chairman and chief executive officer. “We are taking actions to navigate near-term challenges, while relentlessly innovating for our customers and investing for the future to lead out of the slowdown and continue to deliver long-term value for our shareholders.

Globally across 3M, we continue to fight the pandemic from all angles and help ensure the safety of our employees, healthcare workers and first-responders, and the public,” Roman continued. “I remain incredibly proud of how our team is leading through these unprecedented times, and I thank all 3Mers for their tireless efforts.”

Advancing Pandemic Response in Dynamic Environment

3M has been aggressively responding to the COVID-19 pandemic given its critical role as a provider of personal protective equipment in the U.S. and across the world. The company continues to adjust and adapt quickly with a focus on mitigating the near-term impact while positioning 3M’s businesses for success coming out of the crisis. The company continues to:

  • Protect employees
    • Strong, global workplace safety protocols to protect employees
    • Employees effectively adjusting to different ways to work while ensuring business continuity
    • In early stages of return-to-workplace; complying with government guidelines and policies
  • Lead in pandemic response
    • Global production of nearly 800 million respirators in the first half of 2020; approximately 50 percent distributed in U.S. primarily to healthcare and FEMA; on-track to approximately 2 billion globally, including 1 billion in the U.S. for full-year 2020
    • Partnering with U.S. Department of Defense and other governments to expand global respirator manufacturing capacity
    • Advanced membrane technology being used in blood oxygenation procedures; biopharma filtration solutions supporting new vaccine and therapeutic development efforts
    • Expanding partnerships, including new innovative rapid diagnostic COVID-19 test with the Massachusetts Institute of Technology
  • Fight fraud and price gouging
    • Created hotlines and websites around the world to report suspected fraud
    • Filed 18 lawsuits including in 10 U.S. states and Canada
    • Secured removal of more than 7,000 counterfeit websites and more than 10,000 false or deceptive social media posts to date
  • Relentlessly serve customers
    • Maintaining strong customer service with new global enterprise operations team
    • Ongoing adjustments to manufacturing/supply chain operations as demand trends evolve
    • Nearly all plants and distribution centers fully or partially operational
    • Continue to innovate for customers to solve big challenges such as air quality, automotive electrification and food safety; Priority Growth Platforms outperforming markets they serve
  • Protect financial flexibility
    • Strong operating cash flow of $1.9 billion, up 15 percent year-on-year; adjusted free cash flow of $1.5 billion, up 18 percent year-on-year, benefitting from year-on-year improvements in working capital and timing of income tax payments
    • Aggressively reduced costs by approximately $400 million year-on-year to help offset COVID-19 related impacts and actions
    • Undertook restructuring actions as a result of the COVID-19 pandemic and related economic impact resulting in a $58 million charge
    • Divested the drug delivery business, generating a pre-tax gain of $387 million
    • Strengthened the balance sheet by reducing net debt by $1.7 billion since March 31, 2020

Second-Quarter Results

The COVID-19 pandemic continues to evolve and affect 3M’s businesses in a number of ways. During the second quarter, end-market demand remained strong in personal safety, home improvement, general cleaning, semiconductor, data center and biopharma filtration. At the same time, several other end markets continued to experience significant weakness including healthcare elective procedures, automotive OEM and aftermarket, general industrial, commercial solutions and office supplies.

Second-quarter sales declined 12.2 percent year-on-year to $7.2 billion. Organic local-currency sales declined 13.1 percent, while acquisitions, net of divestitures, increased sales by 2.4 percent. Foreign currency translation reduced sales by 1.5 percent year-on-year.

Total sales declined 0.4 percent in Health Care, 6.2 percent in Consumer, 9.2 percent in Safety and Industrial and 20.9 percent in Transportation and Electronics. Organic local-currency sales decreased 5.0 percent in Consumer, 6.1 percent in Safety and Industrial, 12.4 percent in Health Care and 18.9 percent in Transportation and Electronics.

On a geographic basis, total sales declined 8.5 percent in Asia Pacific, 12.7 percent in the Americas and 16.4 percent in EMEA (Europe, Middle East and Africa). Organic local-currency sales decreased 8.1 percent in Asia Pacific, 14.5 percent in EMEA and 15.6 percent in the Americas.

Second-quarter GAAP earnings were $2.22 per share, an increase of 15.6 percent year-on-year, with operating income of $1.7 billion and operating margins of 24.3 percent.

Excluding special items, second-quarter adjusted earnings were $1.78 per share, a decline of 16.4 percent year-on-year, with operating income of $1.4 billion and operating margins of 19.6 percent, as referenced in the “Supplemental Financial Information Non-GAAP Measures” section.

The company’s operating cash flow was $1.9 billion with adjusted free cash flow of $1.5 billion contributing to adjusted free cash flow conversion of 149 percent. See the “Supplemental Financial Information Non-GAAP Measures” section for applicable information.

The company paid $846 million in cash dividends to shareholders during the quarter.

Second-Quarter Business Group Discussion

Safety and Industrial

  • Sales of $2.7 billion, down 9.2 percent in U.S. dollars. Organic local-currency sales decreased 6.1 percent, foreign currency translation decreased sales by 2.2 percent, and divestitures decreased sales by 0.9 percent.
  • On an organic local-currency basis:
    • Sales increased in personal safety; sales declined in closure and masking, electrical markets, roofing granules, industrial adhesives and tapes, abrasives, and automotive aftermarket.
    • Sales declined in EMEA, Asia Pacific and the Americas.
  • Segment operating income was $636 million, a decline of 1.6 percent year-on-year; operating margins of 23.8 percent.

Transportation and Electronics

  • Sales of $1.9 billion, down 20.9 percent in U.S. dollars. Organic local-currency sales decreased 18.9 percent, foreign currency translation decreased sales by 0.9 percent, and divestitures decreased sales by 1.1 percent.
  • On an organic local-currency basis:
    • Sales decreased in electronics, transportation safety, advanced materials, commercial solutions, and automotive and aerospace.
    • Sales declined in Asia Pacific, the Americas and EMEA.
  • Segment operating income was $382 million, a decline of 35.4 percent year-on-year; operating margins of 19.7 percent.

Health Care

  • Sales of $1.8 billion, down 0.4 percent in U.S. dollars. Organic local-currency sales decreased 12.4 percent, foreign currency translation decreased sales by 1.6 percent and acquisitions, net of divestitures, increased sales by 13.6 percent.
  • On an organic local-currency basis:
    • Sales grew in separation and purification; sales declined in medical solutions, food safety, health information systems and oral care.
    • Sales declined in EMEA, Asia Pacific and the Americas.
  • Segment operating income was $306 million, a decline of 36.7 percent year-on-year; operating margins of 16.8 percent.

Consumer

  • Sales of $1.2 billion, down 6.2 percent in U.S. dollars. Organic local-currency sales decreased 5.0 percent and foreign currency translation decreased sales by 1.2 percent.
  • On an organic local-currency basis:
    • Sales grew in home care, and home improvement; sales declined in consumer health care, and stationery and office supplies.
    • Sales declined in the Americas, Asia Pacific and EMEA.
  • Segment operating income was $287 million, up 4.8 percent year-on-year; operating margins of 23.2 percent.

Guidance Remains Withdrawn; July 2020 Sales Trends

Due to the continued evolving and uncertain impact of the COVID-19 pandemic, 3M is not able to estimate the full duration, magnitude and pace of recovery across its diverse end markets with reasonable accuracy. Therefore, 3M continues to believe it is prudent to not provide guidance. The company is seeing broad-based sales improvements across businesses and geographies to start the third quarter. With one week left in July, total company sales are currently up low-single digits year-on-year. 3M will maintain its monthly reporting of sales information during the third-quarter to provide transparency on its ongoing business performance.

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 21930638). The telephone replay will be available until 11:30 a.m. EDT (10:30 a.m. CDT) on August 4, 2020.

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) 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; (4) 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, 2019, and any subsequent quarterly reports on Form 10-Q (the “Reports”); (5) competitive conditions and customer preferences; (6) foreign currency exchange rates and fluctuations in those rates; (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; and (13) the Company's credit ratings and its cost of capital. 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

 

Six months ended

 

 

June 30,

 

June 30,

 

 

2020

 

2019

 

2020

 

2019

Net sales

 

$

7,176

 

 

$

8,171

 

$

15,251

 

 

$

16,034

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,805

 

 

 

4,313

 

 

7,914

 

 

 

8,623

 

Selling, general and administrative expenses

 

 

1,594

 

 

 

1,686

 

 

3,362

 

 

 

3,634

 

Research, development and related expenses

 

 

424

 

 

 

470

 

 

961

 

 

 

947

 

Gain on sale of businesses

 

 

(387

)

 

 

 

(389

)

 

 

(8

)

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

5,436

 

 

 

6,469

 

 

11,848

 

 

 

13,196

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,740

 

 

 

1,702

 

 

3,403

 

 

 

2,838

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

 

111

 

 

 

256

 

 

207

 

 

 

304

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

1,629

 

 

 

1,446

 

 

3,196

 

 

 

2,534

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

342

 

 

 

315

 

 

615

 

 

 

510

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interest

 

$

1,287

 

 

$

1,131

 

$

2,581

 

 

$

2,024

 

 

 

 

 

 

 

 

 

 

Less: Net income (loss) attributable to noncontrolling interest

 

 

(3

)

 

 

4

 

 

(1

)

 

 

6

 

 

 

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

1,290

 

 

$

1,127

 

$

2,582

 

 

$

2,018

 

 

 

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding – basic

 

 

577.0

 

 

 

577.7

 

 

576.9

 

 

 

577.6

 

Earnings per share attributable to 3M common shareholders – basic

 

$

2.24

 

 

$

1.95

 

$

4.48

 

 

$

3.49

 

 

 

 

 

 

 

 

 

 

Weighted average 3M common shares outstanding – diluted

 

 

580.8

 

 

 

586.1

 

 

581.2

 

 

 

587.3

 

Earnings per share attributable to 3M common shareholders – diluted

 

$

2.22

 

 

$

1.92

 

$

4.44

 

 

$

3.44

 

 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2020

 

2019

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

4,219

 

$

2,353

Marketable securities – current

 

 

247

 

 

98

Accounts receivable – net

 

 

4,459

 

 

4,791

Inventories

 

 

4,168

 

 

4,134

Prepaids

 

 

567

 

 

704

Other current assets

 

 

446

 

 

891

Total current assets

 

 

14,106

 

 

12,971

Property, plant and equipment – net

 

 

9,089

 

 

9,333

Operating lease right of use assets

 

 

840

 

 

858

Goodwill and intangible assets – net

 

 

19,393

 

 

19,823

Other assets

 

 

1,651

 

 

1,674

Total assets

 

$

45,079

 

$

44,659

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Short-term borrowings and

 

 

 

 

current portion of long-term debt

 

$

1,486

 

$

2,795

Accounts payable

 

 

1,975

 

 

2,228

Accrued payroll

 

 

500

 

 

702

Accrued income taxes

 

 

371

 

 

194

Operating lease liabilities – current

 

 

248

 

 

247

Other current liabilities

 

 

2,702

 

 

3,056

Total current liabilities

 

 

7,282

 

 

9,222

Long-term debt

 

 

19,276

 

 

17,518

Other liabilities

 

 

7,606

 

 

7,793

Total liabilities

 

$

34,164

 

$

34,533

 

 

 

 

 

Total equity

 

$

10,915

 

$

10,126

Shares outstanding

 

 

 

 

June 30, 2020: 576,019,442 shares

 

 

 

 

December 31, 2019: 575,184,835 shares

 

 

 

 

Total liabilities and equity

 

$

45,079

 

$

44,659

 

3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)

 

 

 

 

 

 

 

Six months ended

 

 

June 30,

 

 

2020

 

2019

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

$

3,118

 

 

$

2,710

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property, plant and equipment

 

 

(711

)

 

 

(812

)

Acquisitions, net of cash acquired

 

 

(25

)

 

 

(704

)

Purchases and proceeds from sale or maturities of marketable securities and investments – net

 

 

342

 

 

 

254

 

Proceeds from sale of businesses, net of cash sold

 

 

573

 

 

 

6

 

Other investing activities

 

 

23

 

 

 

21

 

 

 

 

 

 

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

 

 

202

 

 

 

(1,235

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Change in debt

 

 

467

 

 

 

953

 

Purchases of treasury stock

 

 

(366

)

 

 

(1,101

)

Proceeds from issuances of treasury stock pursuant to stock option and benefit plans

 

 

236

 

 

 

365

 

Dividends paid to shareholders

 

 

(1,693

)

 

 

(1,660

)

Other financing activities

 

 

(45

)

 

 

(34

)

 

 

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

 

(1,401

)

 

 

(1,477

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(53

)

 

 

(2

)

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

1,866

 

 

 

(4

)

Cash and cash equivalents at beginning of year

 

 

2,353

 

 

 

2,853

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

4,219

 

 

$

2,849

 

 

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

Q2 2019 GAAP

$

1,702

 

 

20.8

%

 

$

1,446

 

 

$

315

 

 

21.8

%

 

$

1,127

 

 

$

1.92

 

 

 

Adjustments for special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on deconsolidation of Venezuelan subsidiary

 

 

 

 

 

162

 

 

 

 

 

 

 

162

 

 

 

0.28

 

 

 

(Gain)/loss on sale of businesses

 

 

 

 

 

 

 

43

 

 

 

 

 

(43

)

 

 

(0.07

)

 

 

Q2 2019 adjusted amounts (non-GAAP measures) (a)

$

1,702

 

 

20.8

%

 

$

1,608

 

 

$

358

 

 

22.3

%

 

$

1,246

 

 

$

2.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2020 GAAP

$

1,740

 

 

24.3

%

 

$

1,629

 

 

$

342

 

 

21.0

%

 

$

1,290

 

 

$

2.22

 

 

15.6

%

Adjustments for special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain)/loss on sale of businesses

 

(387

)

 

 

 

 

(387

)

 

 

(83

)

 

 

 

 

(304

)

 

 

(0.52

)

 

 

Divestiture-related restructuring actions

 

55

 

 

 

 

 

55

 

 

 

9

 

 

 

 

 

46

 

 

 

0.08

 

 

 

Q2 2020 adjusted amounts (non-GAAP measures) (a)

$

1,408

 

 

19.6

%

 

$

1,297

 

 

$

268

 

 

20.7

%

 

$

1,032

 

 

$

1.78

 

 

(16.4

)%

 

 

 

 

 

 

 

 

 

(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

First six months 2019 GAAP

$

2,838

 

 

17.7

%

 

$

2,534

 

 

$

510

 

 

20.1

%

 

$

2,018

 

 

$

3.44

 

 

 

Adjustments for special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant litigation-related charges/benefits

 

548

 

 

 

 

 

548

 

 

 

124

 

 

 

 

 

424

 

 

 

0.72

 

 

 

Loss on deconsolidation of Venezuelan subsidiary

 

 

 

 

 

162

 

 

 

 

 

 

 

162

 

 

 

0.28

 

 

 

(Gain)/loss on sale of businesses

 

(8

)

 

 

 

 

(8

)

 

 

42

 

 

 

 

 

(50

)

 

 

(0.09

)

 

 

First six months 2019 adjusted amounts (non-GAAP measures) (a)

$

3,378

 

 

21.1

%

 

$

3,236

 

 

$

676

 

 

20.9

%

 

$

2,554

 

 

$

4.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First six months 2020 GAAP

$

3,403

 

 

22.3

%

 

$

3,196

 

 

$

615

 

 

19.2

%

 

$

2,582

 

 

$

4.44

 

 

29.1

%

Adjustments for special items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Significant litigation-related charges/benefits

 

17

 

 

 

 

 

17

 

 

 

56

 

 

 

 

 

(39

)

 

 

(0.07

)

 

 

(Gain)/loss on sale of businesses

 

(389

)

 

 

 

 

(389

)

 

 

(86

)

 

 

 

 

(303

)

 

 

(0.52

)

 

 

Divestiture-related restructuring actions

 

55

 

 

 

 

 

55

 

 

 

9

 

 

 

 

 

46

 

 

 

0.08

 

 

 

First six months 2020 adjusted amounts (non-GAAP measures) (a)

$

3,086

 

 

20.2

%

 

$

2,879

 

 

$

594

 

 

20.7

%

 

$

2,286

 

 

$

3.93

 

 

(9.7

)%

 
(a)

In addition to reporting financial results in accordance with U.S. GAAP, the Company also provides non-GAAP measures that adjust for the special items. Special items for the periods presented include the items described in the section entitled “Description of Special Items”. Beginning in 2020, the Company includes gain/loss on sale of businesses and divestiture-related restructuring actions as special items due to their potential distortion of underlying operating results. Information provided herein reflects the impact of this change for all periods presented. Operating income, 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

 

Six months ended

 

 

June 30,

 

June 30,

Major GAAP Cash Flow Categories (dollars in millions)

 

2020

 

2019

 

2020

 

2019

Net cash provided by (used in) operating activities

 

$

1,905

 

 

$

1,662

 

 

$

3,118

 

 

$

2,710

 

Net cash provided by (used in) investing activities

 

 

577

 

 

 

(10

)

 

 

202

 

 

 

(1,235

)

Net cash provided by (used in) financing activities

 

 

(2,509

)

 

 

(1,735

)

 

 

(1,401

)

 

 

(1,477

)

 

 

 

 

 

 

 

 

 

Adjusted Free Cash Flow (non-GAAP measure) (dollars in millions)

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

$

1,905

 

 

$

1,662

 

 

$

3,118

 

 

$

2,710

 

Purchases of property, plant and equipment

 

 

(379

)

 

 

(421

)

 

 

(711

)

 

 

(812

)

Free cash flow

 

$

1,526

 

 

$

1,241

 

 

$

2,407

 

 

$

1,898

 

Adjustments for special items:

 

 

 

 

 

 

 

 

Significant litigation-related after-tax payment impacts

 

$

14

 

 

$

31

 

 

$

64

 

 

$

31

 

Divestiture-related restructuring after-tax payment impacts

 

 

 

 

35

 

 

 

 

 

45

 

Adjusted free cash flow (b)

 

$

1,540

 

 

$

1,307

 

 

$

2,471

 

 

$

1,974

 

 

 

 

 

 

 

 

 

 

Net income attributable to 3M

 

$

1,290

 

 

$

1,127

 

 

$

2,582

 

 

$

2,018

 

Adjustments for special items:

 

 

 

 

 

 

 

 

Significant litigation-related charges/benefits

 

 

 

 

 

 

(39

)

 

 

424

 

Loss on deconsolidation of Venezuelan subsidiary

 

 

 

 

162

 

 

 

 

 

162

 

(Gain)/loss on sale of businesses

 

 

(304

)

 

 

(43

)

 

 

(303

)

 

 

(50

)

Divestiture-related restructuring actions

 

 

46

 

 

 

 

 

46

 

 

 

Adjusted net income attributable to 3M (a)

 

$

1,032

 

 

$

1,246

 

 

$

2,286

 

 

$

2,554

 

Adjusted free cash flow conversion (b)

 

 

149

 

%

 

105

 

108

 

%

 

77

%

 

(b)

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.


Contacts

3M
Investor Contacts:
Bruce Jermeland, 651-733-1807
or
Tony Riter, 651-733-1141
or
Media Contact:
Fanna Haile-Selassie, 651-736-0876


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