10-QPeriod: Q1 FY2011

3M CO Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:MMM

Summary

3M Company reported strong first-quarter 2011 results, showcasing a 15.2% increase in net sales to $7.311 billion compared to the prior year's $6.348 billion. This growth was driven by broad-based performance across all six business segments and geographic regions, with organic volume accounting for a significant portion of the increase. Net income attributable to 3M also saw a substantial rise to $1.081 billion ($1.49 per diluted share) from $930 million ($1.29 per diluted share) in the first quarter of 2010. Despite some headwinds, including impacts from the Japan earthquake and tsunami and increased pension and postretirement expenses, the company demonstrated resilience. Acquisitions also played a role in sales growth, contributing 3.2%. 3M maintained a strong financial position with robust operating cash flow and a stable debt-to-total capital ratio, allowing for continued investment in growth initiatives, share repurchases, and dividend increases. The company expects continued strong sales growth for the full year 2011.

Financial Highlights

52 data points
Beta

Revenue

$7.31B

48.0% Gross Margin

Net Income

$1.08B

14.8% Net Margin

EPS (Diluted)

$1.49

Total Assets

$31.13B

Cash & Equivalents

$2.75B

Free Cash Flow

$502.00M

Financial Statements
Beta
Revenue$7.31B
Cost of Revenue$3.80B
Gross Profit$3.51B
SG&A Expenses$1.53B
Operating Expenses$5.73B
Operating Income$1.58B
Net Income$1.08B
EPS (Basic)$1.52
EPS (Diluted)$1.49
Shares Outstanding (Basic)711.50M
Shares Outstanding (Diluted)726.40M

Key Highlights

  • 1Net sales increased by 15.2% to $7.311 billion in Q1 2011 compared to Q1 2010.
  • 2Net income attributable to 3M increased to $1.081 billion ($1.49 per diluted share) from $930 million ($1.29 per diluted share) in the prior year.
  • 3All six business segments reported strong sales growth, indicating broad-based performance.
  • 4Acquisitions contributed 3.2% to sales growth, with notable additions like Winterthur Technologie AG and Alpha Beta Enterprise Co. Ltd.
  • 5Operating cash flow was $733 million, though lower than the prior year's $1.082 billion, due to investments in working capital and acquisitions.
  • 6The company repurchased $680 million of treasury stock in Q1 2011 under a new $7.0 billion authorization.
  • 7The company raised its quarterly dividend by 4.8%, marking the 53rd consecutive year of dividend increases.

Frequently Asked Questions

The primary drivers of 3M's sales growth in the first quarter of 2011 were a 15.2% increase in net sales, driven by broad-based performance across all six business segments and geographic regions. Organic volume growth accounted for approximately 9 points of this increase, with acquisitions contributing 3.2% and favorable currency effects adding another 3%.

3M estimated that the combined direct and indirect business disruption from the Japan natural disaster reduced first-quarter 2011 sales growth by approximately 0.70 percentage points, operating margins by 0.40 percentage points, and earnings by about 3 cents per diluted share.

3M maintained a strong financial position with $4.4 billion in cash, cash equivalents, and marketable securities and $5.6 billion in debt at the end of Q1 2011. The company generated robust operating cash flow of $733 million and had a debt-to-total capital ratio of 25%. Significant share repurchases and a 4.8% dividend increase further demonstrate financial strength and commitment to shareholder returns.

Yes, effective in the first quarter of 2011, 3M made certain product moves between its business segments to better align businesses around markets and customers. The financial information for all periods presented has been reclassified to reflect these changes. These moves involved reallocating products between the Industrial and Transportation, Health Care, Safety, Security and Protection Services, and Electro and Communications segments.