3M Reports First-Quarter 2021 Results

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First-Quarter Highlights:
- Sales of $8.9 billion, up 9.6 percent year-on-year
- Organic local-currency sales increased 8.0 percent year-on-year
- Both GAAP and adjusted EPS of $2.77
- Operating cash flow of $1.7 billion; adjusted free cash flow of $1.4 billion, up 49 percent year-on-year
- Returned $1.1 billion to shareholders via dividends and gross share repurchases
- Leading in sustainability: introduced new carbon, water and plastics goals

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.

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.

Further information in the press release to download