10-QPeriod: Q1 FY2012

3M CO Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 3, 2012For Securities:MMM

Summary

3M Company reported solid first-quarter 2012 results, with net sales increasing by 2.4% to $7.5 billion and net income attributable to 3M growing to $1.125 billion ($1.59 per diluted share). This represents an increase from $1.081 billion ($1.49 per diluted share) in the same period last year, driven by organic sales growth and contributions from recent acquisitions. The company saw particular strength in its Industrial and Transportation and Safety, Security and Protection Services segments, while the Display and Graphics and Electro and Communications segments experienced declines due to weakness in the consumer electronics market. Financial condition remains strong, with robust operating cash flow of $828 million. 3M also continued its commitment to returning capital to shareholders through dividends and share repurchases, increasing its quarterly dividend by 7.3% and maintaining a significant stock repurchase program. The company's liquidity is supported by substantial cash reserves and access to credit markets, with a solid debt-to-capital ratio and strong credit ratings.

Financial Highlights

51 data points
Beta

Revenue

$7.49B

48.0% Gross Margin

Net Income

$1.13B

15.0% Net Margin

EPS (Diluted)

$1.59

Total Assets

$32.02B

Cash & Equivalents

$2.33B

Free Cash Flow

$567.00M

Financial Statements
Beta
Revenue$7.49B
Cost of Revenue$3.89B
Gross Profit$3.60B
SG&A Expenses$1.55B
Operating Expenses$5.85B
Operating Income$1.63B
Net Income$1.13B
EPS (Basic)$1.61
EPS (Diluted)$1.59
Shares Outstanding (Basic)696.80M
Shares Outstanding (Diluted)706.10M

Key Highlights

  • 1Net sales increased by 2.4% to $7.5 billion in Q1 2012 compared to Q1 2011.
  • 2Net income attributable to 3M rose to $1.125 billion ($1.59 per diluted share) from $1.081 billion ($1.49 per diluted share) in the prior year.
  • 3Operating cash flow was strong at $828 million for the quarter.
  • 4The company increased its quarterly dividend by 7.3% and has a significant ongoing share repurchase program.
  • 5Industrial and Transportation and Safety, Security and Protection Services segments showed strong sales growth.
  • 6Display and Graphics and Electro and Communications segments experienced sales declines due to consumer electronics market weakness.
  • 73M is managing its financial risk through various hedging strategies, including foreign currency and interest rate swaps.

Frequently Asked Questions

Sales growth was driven by a combination of organic local-currency sales growth (1.8%), primarily from selling price increases (1.7%) and a slight organic volume increase (0.1%), as well as contributions from acquisitions (1.5%). Unfavorable foreign currency translation effects partially offset this growth (0.9%).

The Industrial and Transportation segment saw strong growth of 8.6%, and Safety, Security and Protection Services grew by 5.5%. Conversely, the Display and Graphics segment declined by 11.8%, and Electro and Communications decreased by 3.4%, both impacted by weakness in the consumer electronics market.

3M maintains strong liquidity with $4.5 billion in cash, cash equivalents, and marketable securities against $5.2 billion in debt, resulting in a net debt of $680 million. The company generated $828 million in operating cash flow and has access to a $1.5 billion revolving credit facility. Its debt-to-total capital ratio was 24%, supported by strong credit ratings (AA- from S&P, Aa2 from Moody's).

3M expects to contribute approximately $1 billion to its global pension and postretirement plans in 2012. Pension and postretirement benefit expense is anticipated to increase by about $89 million pre-tax for the full year 2012 compared to 2011, which includes costs related to a voluntary early retirement incentive program implemented in the first quarter of 2012.