“In a challenging global environment, 3M delivered a strong start to 2022 with solid growth, operating margins, and robust cash generation,” said Mike Roman, the Chairman and Chief Executive Officer (CEO) at 3M, adding “In response to feedback from our shareholders and to provide additional clarity on the strength of our underlying business performance, starting in the first quarter, we are reporting adjusted earnings to exclude costs for significant litigation.”
He adds, “These included, as we communicated on March 30th, the announced additional investment related to Zwijndrecht, which resulted in a 26-cent charge, along with costs related to other significant litigation of 13-cents in the first quarter. Excluding the Zwijndrecht investment, our financial outlook for 2022 remains unchanged.”
Managing supply chain and inflationary challenges
We continue to prioritize actions to better serve our customers, while managing supply chain"
Mike Roman continues, “We continue to prioritize actions to better serve our customers, while managing supply chain and inflationary challenges. Our balance sheet remains strong and we continued to invest in capital expenditures and R&D, to support long-term growth and advance our sustainability commitments, while also returning significant cash to shareholders. Looking ahead, our teams will continue to focus on improving our operational performance and delivering value for our customers and shareholders.”
First-Quarter Highlights:
- Sales of US$ 8.8 billion, down 0.3 percent year-on-year, which included organic sales growth of 2 percent year-on-year.
- GAAP earnings per share were US$ 2.26, down 18 percent year-on-year. Adjusted earnings per share were US$ 2.65, down 10 percent year-on-year.
- Operating cash flow was US$ 1.0 billion, down 40 percent year-on-year, while adjusted free cash flow was US$ 0.7 billion, down 50 percent year-on-year.
- 3M returned US$ 1.6 billion to shareholders via dividends and gross share repurchases, up 49 percent year-on-year.
Company updates Non-GAAP Measures
As provided in 3M’s Form 8-K dated April 26, 2022, effective in the first quarter of 2022, 3M made further changes to its measure of segment operating performance (updating the Form 8-K dated February 11, 2022) and changed its calculation of certain non-GAAP measures.
The information reflects changes in the extent of matters and charges/benefits 3M, includes within special items with respect to net costs for significant litigation, when presenting these non-GAAP measures.
Adding litigation related to 3M’s Combat Arms Earplugs
Previously, 3M included net costs, when significant, associated with changes in accrued liabilities related to respirator mask/asbestos litigation and PFAS-related other environmental matters, along with the associated tax impacts.
These non-GAAP measure changes involved adding litigation related to 3M’s Combat Arms Earplugs and including the impacts of legal fees associated with applicable matters and of the net total change in accrued liability. The information provided herein reflects the impacts of these changes for all periods presented.
Full-year 2022 Outlook
Excluding this Zwijndrecht investment, 3M's full-year 2022 financial outlook remains unchanged
While the macroeconomic and geopolitical environment remains challenging and fluid, 3M continues to manage and navigate the headwinds facing its businesses. The company updated its full-year 2022 GAAP earnings outlook to incorporate the previously referenced first-quarter charge of US$ 0.26 per share for Zwijndrecht-related PFAS environmental commitments. Excluding this Zwijndrecht investment, 3M's full-year 2022 financial outlook remains unchanged.
3M now expects its full-year 2022 GAAP earnings per share to be in the range of US$ 9.89 to US$ 10.39 versus a prior expectation of US$ 10.15 to US$ 10.65. Full-year 2022 adjusted earnings is expected to be in the range of US$ 10.75 to US$ 11.25 per share, excluding estimated impacts from special items.
Investor teleconference
The company’s full-year organic sales growth and free cash flow conversion ranges remain unchanged.
3M will conduct an investor teleconference and investors can access this conference via the following:
- Live webcast
- 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 21999289). The telephone replay will be available until 11:30 a.m. EDT (10:30 a.m. CDT) on May 3, 2022.