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- Guidance remains withdrawn, company to continue to provide monthly sales updates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) |
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|
||||
|
|
|
Six months ended |
||||||
|
|
|
June 30, |
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|
|
|
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) |
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(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