3M Q3 2023 Earnings Report
Key Takeaways
3M reported Q3 2023 results, highlighting strong operational execution, restructuring actions, and proactive spending discipline. The company is progressing with the Health Care spin-off, expected to be completed in the first half of 2024, and addressing legal matters with the Combat Arms settlement and preliminary court approval for the PFAS Public Water Systems agreement.
GAAP loss per share of $3.74 and operating margin of minus 31.9% include the previously announced settlement for Combat Arms, resulting in a pre-tax charge of $4.2 billion, negatively impacting EPS by $5.80.
Adjusted EPS of $2.68 includes pre-tax restructuring related charges of $68 million, or negative $0.10 per share; restructuring program on track including forecasted full-year 2023 pre-tax restructuring charges and associated benefits.
Adjusted EPS up 3 percent year-on-year.
Adjusted operating income margin of 23.2% includes a 0.8 percentage point headwind from pre-tax restructuring related charges.
3M
3M
3M Revenue by Segment
Forward Guidance
3M anticipates adjusted EPS to be in the range of $8.95 to $9.15 versus $8.60 to $9.10 prior. Adjusted operating cash flow is estimated in the range of $6.5 to $6.9 billion, contributing to 100 to 110 percent adjusted free cash flow conversion. Adjusted full-year total sales growth is forecasted to decline by approximately -5 percent versus a decline of -5 to -1 percent prior, reflecting a decline in adjusted organic sales of approximately -3 percent versus the lower end of -3 percent to flat prior.
Positive Outlook
- Adjusted EPS2 to be in the range of $8.95 to $9.15 versus $8.60 to $9.10 prior.
- Adjusted operating cash flow2 is estimated in the range of $6.5 to $6.9 billion
- Adjusted free cash flow conversion2 of 100 to 110 percent
- Notification and registration process progressing on the Combat Arms Earplug agreement
- Received preliminary court approval for PFAS Public Water Systems agreement
Challenges Ahead
- Adjusted full-year total sales growth2 is forecasted to decline by approximately -5 percent versus a decline of -5 to -1 percent prior
- Decline in adjusted organic sales2 of approximately -3 percent versus the lower end of -3 percent to flat prior.
- Impact of Combat Arms Earplug settlement
- Uncertainty in global economic conditions
- Risks related to PFAS-related products and chemistries
Revenue & Expenses
Visualization of income flow from segment revenue to net income