10-QPeriod: Q1 FY2015

3M CO Quarterly Report for Q1 Ended Mar 31, 2015

Filed April 30, 2015For Securities:MMM

Summary

3M Company reported its first-quarter 2015 financial results, facing a challenging economic environment marked by a strong U.S. dollar that negatively impacted sales and earnings. Despite this, the company demonstrated resilience with organic local-currency growth across all its business segments and a notable expansion in operating income margins by nearly a full percentage point. Total sales for the quarter decreased by 3.2% to $7.6 billion, largely due to a 6.5% reduction from foreign currency translation. However, organic local-currency sales grew by 3.3%, driven by volume increases and a slight rise in selling prices. The company continued its strategic investments in R&D and acquisitions, including the announced acquisition of Polypore's Separations Media business for approximately $1.0 billion. Net income attributable to 3M was $1.199 billion, or $1.85 per diluted share, compared to $1.207 billion, or $1.79 per diluted share, in the prior year's quarter.

Financial Highlights

52 data points
Beta

Revenue

$7.58B

49.6% Gross Margin

Net Income

$1.20B

15.8% Net Margin

EPS (Diluted)

$1.85

Total Assets

$30.64B

Cash & Equivalents

$1.79B

Free Cash Flow

$789.00M

Financial Statements
Beta
Revenue$7.58B
Cost of Revenue$3.82B
Gross Profit$3.76B
SG&A Expenses$1.56B
Operating Expenses$5.85B
Operating Income$1.73B
Net Income$1.20B
EPS (Basic)$1.88
EPS (Diluted)$1.85
Shares Outstanding (Basic)636.20M
Shares Outstanding (Diluted)649.20M

Key Highlights

  • 1Sales decreased 3.2% to $7.6 billion, with foreign currency translation reducing sales by 6.5%.
  • 2Organic local-currency sales grew 3.3% across all five business segments.
  • 3Operating income margins expanded by 0.9 percentage points to 22.8%, driven by selling price increases, lower raw material costs, and productivity.
  • 4Net income attributable to 3M was $1.199 billion ($1.85 per diluted share), a slight decrease from $1.207 billion ($1.79 per diluted share) in the prior year.
  • 5The company announced plans to acquire Polypore's Separations Media business for approximately $1.0 billion.
  • 6Cash flow from operations was $1.080 billion, with free cash flow of $789 million.
  • 73M repurchased $886 million of its stock in the quarter and increased its quarterly dividend by 20%.

Frequently Asked Questions

The strong U.S. dollar significantly impacted 3M's results, reducing worldwide sales by 6.5% or approximately $490 million for the quarter. It also decreased pre-tax earnings by approximately $90 million, or $0.10 per diluted share, excluding the impact of foreign currency changes on tax rates.

All five business segments demonstrated organic local-currency growth. Industrial sales declined 4.3% in USD but grew 2.7% organically. Safety and Graphics sales were down 3.6% in USD but up 4.1% organically. Electronics and Energy saw modest growth of 0.8% in USD and strong organic growth of 5.8%. Health Care sales decreased 3.3% in USD but grew 3.0% organically, supplemented by acquisitions. Consumer sales were down 2.9% in USD but grew 2.1% organically.

3M generated $1.080 billion in operating cash flow and $789 million in free cash flow during the quarter. The company continued its share repurchase program, buying back $886 million of its stock. Additionally, 3M increased its quarterly dividend by 20% to $1.025 per share, marking its 57th consecutive annual dividend increase.

3M is focused on continued investment in research and development, commercialization, and strategic acquisitions. A key announcement was the agreement to acquire Polypore's Separations Media business for approximately $1.0 billion, which is expected to enhance its filtration platform. The company is also investing in its 'business transformation' initiative, including the phased implementation of an enterprise resource planning (ERP) system.