10-QPeriod: Q3 FY2021

3M CO Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 26, 2021For Securities:MMM

Summary

3M Company's third quarter 2021 report shows a 7.1% increase in net sales year-over-year, reaching $8.94 billion. This growth was broad-based across all business segments, driven by strong industrial manufacturing activity and consumer demand. Diluted earnings per share remained consistent year-over-year at $2.45 for the quarter, but increased by 12% to $7.81 for the first nine months of the year. The company continues to navigate rising raw material and logistics costs, which impacted operating income margins, though these were partially offset by higher selling prices and cost management initiatives. Key financial highlights include a net income of $1.43 billion for the quarter and robust operating cash flow of $5.45 billion for the nine-month period. The company also demonstrated a commitment to shareholder returns, increasing its dividend for the 63rd consecutive year and continuing its share repurchase program. Despite these positive results, significant ongoing legal and environmental matters, particularly concerning PFAS and product liability claims, continue to be a notable factor, with the company increasing its accruals for PFAS-related liabilities. Investors should closely monitor management's commentary on supply chain impacts and litigation developments.

Financial Highlights

52 data points
Beta

Revenue

$8.94B

45.7% Gross Margin

Net Income

$1.43B

16.0% Net Margin

EPS (Diluted)

$2.45

Total Assets

$48.28B

Free Cash Flow

$1.53B

Financial Statements
Beta
Revenue$8.94B
Cost of Revenue$4.85B
Gross Profit$4.09B
SG&A Expenses$1.82B
Operating Expenses$7.15B
Operating Income$1.79B
Interest Expense$117.00M
Net Income$1.43B
EPS (Basic)$2.47
EPS (Diluted)$2.45
Shares Outstanding (Basic)579.60M
Shares Outstanding (Diluted)586.30M

Key Highlights

  • 1Total net sales increased by 7.1% to $8.94 billion in Q3 2021 compared to Q3 2020.
  • 2Net income attributable to 3M was $1.43 billion for Q3 2021, with diluted EPS remaining stable at $2.45.
  • 3Nine-month diluted EPS increased by 12% to $7.81 compared to the prior year.
  • 4Operating income margins saw a decrease of 2.9 percentage points year-over-year in Q3 2021, primarily due to increased costs.
  • 5The company generated $5.45 billion in operating cash flow for the first nine months of 2021.
  • 63M increased its quarterly dividend by 1% to $1.48 per share, marking its 63rd consecutive annual dividend increase.
  • 7Accruals for PFAS-related other environmental liabilities increased by $132 million during the first nine months of 2021.

Frequently Asked Questions

In the third quarter of 2021, 3M reported a 7.1% increase in net sales to $8.94 billion, with net income remaining flat at $1.43 billion. Diluted earnings per share were $2.45, consistent with the prior year's quarter. The company experienced strong sales growth across most segments, but faced increased costs for raw materials and logistics, which compressed operating margins.

All four business segments – Safety and Industrial, Transportation and Electronics, Health Care, and Consumer – reported sales growth. Safety and Industrial saw a 7.2% increase in sales, driven by industrial manufacturing activity. Health Care sales grew 4.1%, supported by demand in oral care and biopharma filtration. Transportation and Electronics sales were up 5.8%, benefiting from automotive production increases, while the Consumer segment posted an 8.1% sales increase, driven by home improvement and stationery products. However, operating margins in Safety and Industrial, Transportation and Electronics, and Consumer segments declined year-over-year.

3M continues to address significant legal and environmental matters, most notably those related to Per- and Polyfluoroalkyl substances (PFAS) and product liability claims, including those concerning Combat Arms earplugs and Bair Hugger patient warming systems. The company increased its accruals for PFAS-related liabilities by $132 million in the first nine months of 2021 and is actively defending against numerous lawsuits. The outcomes of these legal proceedings remain uncertain and could materially impact future financial results.

3M generated strong operating cash flow of $5.45 billion in the first nine months of 2021. The company demonstrated its commitment to shareholder returns by increasing its quarterly dividend by 1% to $1.48 per share, marking the 63rd consecutive annual increase. Additionally, 3M continued its share repurchase program, buying back approximately $1.26 billion of its stock in the first nine months of the year.