10-QPeriod: Q2 FY2013

3M CO Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 1, 2013For Securities:MMM

Summary

3M Company reported solid results for the second quarter and first half of 2013, demonstrating resilience in a challenging economic environment. Net sales for the second quarter increased by 2.9% to $7.75 billion, driven by organic local-currency sales growth of 2.3% across most segments, bolstered by strategic acquisitions. Diluted earnings per share (EPS) rose to $1.71 in the quarter, up from $1.66 in the prior year, reflecting improved operational efficiencies and a lower effective tax rate. The company maintained a strong liquidity position with substantial cash reserves and a robust credit rating, enabling continued investment in growth initiatives and returning capital to shareholders through dividends and share repurchases. While most business segments showed positive organic sales growth, the Electronics and Energy segment experienced a decline. The company also highlighted ongoing investments in R&D and business transformation efforts, which are expected to drive future growth. Despite some headwinds from currency fluctuations and acquisition integration, 3M's diversified business model and strong operational execution position it favorably for continued performance.

Financial Highlights

52 data points
Beta

Revenue

$7.75B

48.2% Gross Margin

Net Income

$1.20B

15.4% Net Margin

EPS (Diluted)

$1.71

Total Assets

$34.13B

Cash & Equivalents

$2.94B

Free Cash Flow

$1.28B

Financial Statements
Beta
Revenue$7.75B
Cost of Revenue$4.01B
Gross Profit$3.74B
SG&A Expenses$1.61B
Operating Expenses$6.05B
Operating Income$1.70B
Net Income$1.20B
EPS (Basic)$1.74
EPS (Diluted)$1.71
Shares Outstanding (Basic)688.20M
Shares Outstanding (Diluted)699.10M

Key Highlights

  • 1Net sales for Q2 2013 increased 2.9% year-over-year to $7.75 billion.
  • 2Diluted EPS increased to $1.71 in Q2 2013 from $1.66 in Q2 2012.
  • 3Organic local-currency sales grew 2.3% company-wide, with Health Care, Industrial, Consumer, and Safety and Graphics showing positive growth.
  • 4Electronics and Energy segment experienced a 2.1% decline in organic local-currency sales.
  • 5The company generated $2.67 billion in operating cash flow for the first six months of 2013.
  • 63M repurchased $1.995 billion of its stock in the first six months of 2013 and maintained its dividend, increasing it for the 55th consecutive year.
  • 7The effective tax rate decreased to 27.4% in Q2 2013 from 30.1% in Q2 2012.

Frequently Asked Questions

3M reported an increase in net sales of 2.9% to $7.75 billion and an increase in diluted earnings per share (EPS) to $1.71 from $1.66. This improvement was driven by organic sales growth, strategic acquisitions, and a lower effective tax rate, despite a challenging economic environment and currency headwinds.

Most segments experienced positive organic local-currency sales growth: Health Care (5.7%), Industrial (3.3%), Consumer (2.9%), and Safety and Graphics (2.0%). The Electronics and Energy segment saw a decline of 2.1% in organic local-currency sales.

3M maintains a strong financial position with $5.794 billion in cash, cash equivalents, and marketable securities and $5.946 billion in debt as of June 30, 2013, resulting in a net debt of $152 million. The company has reliable access to capital markets, maintains strong credit ratings (AA- from S&P, Aa2 from Moody's), and generated $2.67 billion in operating cash flow in the first six months of 2013.

3M is committed to returning capital to shareholders through dividends and share repurchases. They increased their quarterly dividend for the 55th consecutive year and repurchased $1.995 billion of stock in the first six months of 2013 under a new $7.5 billion authorization. The company also continues to invest in R&D and business transformation initiatives to drive future growth and innovation.