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3M Releases Fourth-Quarter and Full-Year 2023 Financial Results

Images of 3M offices at St. Paul Monument place — 3M offices at St. Paul Monument Place. Photo courtesy of 3M.

3M reported fourth-quarter and full-year 2023 results and provided its 2024 financial outlook. A strong fourth-quarter reported $8.0 million in net sales, down only slightly year-on-year, but that small decrease was offset by an exceptional operating income margin. Full-year net sales were $32.7 billion, down $4.5% from the previous year. These results reflect strong operational execution, progress on restructuring, and spending discipline 3M believe to be well-positioned to continue to improve performance, including continued expansion of adjusted operating margins in 2024.

“The fourth quarter capped a strong year for 3M," said 3M Chairman and CEO Mike Roman. "Throughout 2023, we executed our priorities and delivered on our commitments – including expanding underlying operating margins and cash flow. We initiated actions to restructure our organization and simplify our supply chain, while progressing our Health Care spin and addressing legal matters."

Fourth-Quarter 2023 Results:

GAAP earnings per share were $1.70 with an operating margin of 15.5%. Adjusted EPS of $2.42, up 11% year-on-year, includes pre-tax restructuring related net charges of $109 million, or negative $0.17 per share. Adjusted operating income margin of 20.9%, up 1.8% year-on-year, includes a 1.4%-point headwind from restructuring related net charges.

Sales were $8.0 billion, down 0.8% year-on-year, with organic sales decline of 1.9% year-on-year. Adjusted sales were $7.7 billion, down 0.3% year-on-year with adjusted organic sales decline of 1.4% year-on-year.

Operating cash flow was $2.0 billion, up 3% year-on-year, and adjusted free cash flow of $2.0 billion, up 18% year-on-year.

3M returned $828 million to shareholders via dividends.

Full-Year 2023 Results:

GAAP loss per share was $12.63 and the operating margin of -27.9% includes the previously announced Combat Arms Earplugs (CAE) and Public Water Suppliers (PWS) settlements in the United States. This resulted in a pre-tax charges of $4.3 billion and $10.5 billion, respectively, negatively impacting EPS by a total of $20.39.

The adjusted EPS of $9.24 includes pre-tax restructuring related net charges of $441 million, or negative $0.65 per share.

Adjusted operating income margin of 20.3% includes a 1.4%-point headwind from restructuring related net charges.

Sales were $32.7 billion, down 4.5% year-on-year, with organic sales decline of 3.2% year-on-year. Adjusted sales were $31.4 billion, down 4.5% year-on-year with adjusted organic sales decline of 3.2% year-on-year.

Operating cash flow was $6.7 billion, up 19% year-on-year, and adjusted free cash flow of $6.3 billion was up 30% year-on-year. Year-on-year improvements were driven by an ongoing focus on working capital management, especially inventory.

3M returned $3.3 billion to shareholders via dividends.

Full-Year 2024 Outlook:

The expectations for 2024 continues to reflect the Health Care business as part of the company for the full year but does not reflect the potential impact of funding amounts due under the PWS and CAE legal settlements absent receipt of cash payments in the Health Care business spin. However, for illustrative purposes only, adjusted EPS could be impacted up to an estimated $0.20 from complete debt financing of these settlements based on current market and company expectations.

Expected adjusted total sales growth are in the range of 0.25 to 2.25%, reflecting adjusted organic sales growth of flat to up 2%. Forecasted adjusted EPS is in the range of $9.35 to $9.75. Adjusted operating cash flow is predicted to be $6.5 to $7.1 billion, contributing to 95 to 105% adjusted free cash flow conversion.

"Our team remains focused on further improving our operational performance, optimizing our portfolio, and reducing risk," said Roman. "We will continue to invest in high-growth markets where 3M's unique capabilities can make a difference, including automotive electrification, climate technology, and industrial automation. I am confident we will deliver a successful 2024."

To learn more, visit www.3m.com.