3M CO Quarterly Report for Q2 Ended Jun 30, 2018

Summary

3M Company reported a strong second quarter of 2018, with net sales increasing by 7.4% to $8.39 billion and diluted earnings per share (EPS) rising by 19% to $3.07 compared to the prior year. This performance was driven by broad-based organic sales growth across most business segments, particularly in Industrial and Safety and Graphics. The company also benefited from the divestiture of its Communication Markets Division in June 2018, which contributed significantly to earnings per share. For the first six months of 2018, however, net sales grew by 7.6% to $16.67 billion, but diluted EPS decreased by 15% to $4.04. This decline was primarily attributed to a substantial pre-tax charge of $897 million related to the resolution of a Minnesota natural resource damages lawsuit and a $217 million tax expense adjustment related to the Tax Cuts and Jobs Act. Excluding these significant items, adjusted EPS for the first six months of 2018 showed a 17% increase, highlighting the underlying operational strength of the business.

Key Highlights

• 1Q2 2018 Net Sales increased 7.4% year-over-year to $8.39 billion.
• 2Q2 2018 Diluted EPS increased 19% year-over-year to $3.07.
• 3First six months of 2018 performance was impacted by a $897 million charge for Minnesota Natural Resource Damages resolution and a $217 million tax adjustment.
• 4Divestiture of Communication Markets Division in June 2018 resulted in a pre-tax gain of $494 million and contributed positively to EPS.
• 5Industrial and Safety and Graphics segments showed strong sales growth, with Industrial operating income up 27.4% and Safety and Graphics operating income up 103.9% (largely due to prior year divestiture impacts).
• 6The company repurchased $2.5 billion of its own stock in the first six months of 2018.
• 73M announced a 16% increase in its quarterly dividend to $1.36 per share, marking its 60th consecutive year of dividend increases.

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