01—Abstract
Summary
Summary of the 10-Q filed April 21, 2026. Cited figures are marked; the original filing is the authoritative source.
3M Company reported net sales of $6.03 billiona for the first quarter of 2026, a slight increase of 1.3% compared to the same period in 2025.
However, GAAP Earnings Per Share (EPS) saw a significant decline of 40% to $1.23b, primarily due to substantial "special items." Adjusted EPS, which excludes these items, increased by 14% to $2.14, indicating underlying operational improvements. The company's Safety and Industrial segment showed robust organic sales growth of 3.2%, while Transportation and Electronics experienced a slight organic sales decline of 0.3%. The Consumer segment's organic sales also decreased by 1.3%.
The most significant factors impacting profitability were the substantial litigation and PFAS-related liabilities, which incurred significant "special item" costs. Despite these headwinds, adjusted operating income margin improved, driven by productivity gains and favorable foreign currency impacts. The company's financial condition remains stable, with a strong liquidity profile and consistent access to capital markets.
02—Key points
Key Highlights
- Net sales increased by 1.3% to $6.03 billion in Q1 2026 compared to Q1 2025.
- GAAP EPS decreased by 40% to $1.23, heavily impacted by $0.91 per share in "special items."
- Adjusted EPS increased by 14% to $2.14, reflecting improved operational performance excluding special items.
- Safety and Industrial segment demonstrated strong organic sales growth of 3.2%.
- The company continues to make significant payments and accruals related to PFAS litigation and settlements, amounting to substantial "special item" costs.
- Despite increased litigation costs, adjusted operating income margin improved by 0.3 percentage points, indicating underlying operational efficiencies.
- 3M ended the quarter with $3.73 billion in cash, cash equivalents, and marketable securities, maintaining a strong liquidity position.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, 3M Co kept $0.11.
- Revenue$6.03B100.0%
- Cost of revenue−$3.57B59.3%
- Gross profit$2.46B40.7%
- Operating costs−$1.06B17.6%
- Operating income$1.40B23.2%
- Interest, other & tax−$744.0M12.3%
- Net income$653.0M10.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed April 21, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $6.03B$5.95B | +1.3% |
| Cost of Revenue | $3.57B$3.48B | +2.8% |
| Gross Profit | $2.46B$2.48B | −0.8% |
| SG&A Expenses | $744.00M$945.00M | −21.3% |
| Operating Expenses | $4.63B$4.71B | −1.6% |
| Operating Income | $1.40B$1.25B | +12.1% |
| Interest Expense | $106.00M$110.00M | −3.6% |
| Net Income | $653.00M$1.12B | −41.5% |
| EPS (Basic) | $1.23$2.05 | −40.0% |
| EPS (Diluted) | $1.23$2.04 | −39.7% |
| Shares Outstanding (Basic) | 529.10M543.80M | −2.7% |
| Shares Outstanding (Diluted) | 532.80M547.70M | −2.7% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the significant decrease in GAAP EPS?
The primary driver behind the 40% decrease in GAAP EPS to $1.23 is the impact of "special items," which totaled $0.91 per share. These special items include significant litigation costs (respirator mask/asbestos, PFAS, Combat Arms Earplugs), business divestiture losses, costs related to manufactured PFAS products, changes in Solventum ownership value, and transformation costs. Excluding these items, adjusted EPS showed a 14% increase.
How are the PFAS-related liabilities and litigation impacting 3M's financial performance?
PFAS-related liabilities and litigation are a major financial factor for 3M. The company has recorded substantial "special item" costs related to these matters, including significant increases in accruals for environmental liabilities and payments associated with settlements, such as the PWS Settlement and New Jersey Settlement. These costs significantly impact GAAP net income and EPS. While insurance recoveries provided some offset, the overall financial impact remains substantial.
What is the outlook for the company's business segments based on the Q1 2026 results?
The Safety and Industrial segment showed strong organic sales growth of 3.2%, indicating resilience. The Transportation and Electronics segment experienced a slight organic sales decline of 0.3%, while the Consumer segment saw a 1.3% organic sales decrease. This suggests a mixed performance across segments, with Safety and Industrial being a notable performer, while Consumer discretionary spending and weakness in consumer electronics are headwinds.
Has 3M exited its PFAS manufacturing operations as planned?
Yes, 3M announced the completion of its exit from PFAS manufacturing by the end of 2025. The report notes that the company will continue to take actions to address PFAS manufactured prior to the exit and will continue to work through the disposition of its assets and interests in manufacturing facilities. The costs associated with this exit and ongoing remediation efforts are reflected as "special items."
06—Continue