3M Reports Fourth-Quarter and Full-Year 2021 Results

·13 min read
Cision

Fourth-Quarter Highlights:

- Sales of $8.6 billion, up 0.3 percent year-on-year; organic local-currency sales increased 1.3 percent year-on-year

- Earnings per share of $2.31

- Operating cash flow of $2.0 billion; adjusted free cash flow of $1.5 billion, down 30 percent year-on-year

- Returned $1.8 billion to shareholders via dividends and gross share repurchases

- Announced Food Safety business divestiture involving a Reverse Morris Trust transaction with NEOGEN Corporation

Full Year Highlights:

- Sales of $35.4 billion, up 9.9 percent year-on-year; organic local-currency sales increased 8.8 percent year-on-year

- Earnings per share of $10.12 vs. $9.36 in 2020, up 8 percent year-on-year

- Adjusted earnings per share of $10.12 vs. $8.85 in 2020, up 14 percent year-on-year

- Operating cash flow of $7.5 billion; adjusted free cash flow of $6.0 billion, with adjusted free cash flow conversion of 101 percent

- Returned $5.6 billion to shareholders via dividends and gross share repurchases

- Company to host virtual Strategic Update and 2022 Outlook meeting on Feb. 14, 2022

ST. PAUL, Minn., Jan. 25, 2022 /PRNewswire/ -- 3M (NYSE: MMM) today reported fourth-quarter and full-year 2021 results.

"3M delivered a solid fourth-quarter performance – with notable strength in December – as we maintained our relentless focus on serving customers in a challenging external environment," said 3M chairman and chief executive officer Mike Roman. "Our team effectively managed supply chain disruptions, made good progress on pricing actions and controlled costs."

"Throughout 2021 we performed well, delivering full-year sales growth of 10 percent, robust cash flow and a strong increase in EPS. We also returned significant cash to shareholders, reduced debt and helped the world respond to COVID-19," Roman continued. "As we continue to actively manage our portfolio and improve our operations, we will prioritize investments in fast-growing end markets to drive long-term growth, as well as advance our commitment to sustainability. As we enter 2022, I am confident we will continue to grow our business and find new ways to apply science to improve lives."

Fourth-Quarter Results

Sales grew 0.3 percent year-on-year to $8.6 billion. Organic local-currency sales increased 1.3 percent. Foreign currency translation decreased sales by 1.0 percent year-on-year.

Total sales grew 4.1 percent in Consumer and 0.7 percent in Health Care, and decreased 1.5 percent in Transportation and Electronics, and 2.2 percent in Safety and Industrial. Organic local-currency sales grew 4.9 percent in Consumer and 1.6 percent in Health Care, and decreased 0.4 percent in Transportation and Electronics, and 1.3 percent in Safety and Industrial.

On a geographic basis, total sales grew 2.1 percent in the Americas, and decreased 0.2 percent in Asia Pacific, and 4.5 percent in EMEA (Europe, Middle East and Africa). Organic local-currency sales grew 2.2 percent in the Americas, 1.4 percent in Asia Pacific, and decreased 1.9 percent in EMEA.

Fourth-quarter earnings per share was $2.31 per share, down 4 percent year-on-year. Fourth quarter operating income was $1.6 billion with operating margins of 18.8 percent.

The company's operating cash flow was $2.0 billion with adjusted free cash flow of $1.5 billion contributing to adjusted free cash flow conversion of 110 percent. 3M returned $1.8 billion to shareholders in the fourth quarter of 2021, including $848 million in cash dividends and $938 million of gross share repurchases. See the "Supplemental Financial Information Non-GAAP Measures" section for applicable information.

Fourth-Quarter Business Group Discussion

Safety and Industrial

  • Sales of $3.1 billion, down 2.2 percent in U.S. dollars. Organic local-currency sales decreased 1.3 percent, and foreign currency translation decreased sales by 0.9 percent.

  • On an organic basis:

  • Segment operating income was $543 million, a decrease of 21.7 percent year-on-year; operating margins of 17.7 percent.

Transportation and Electronics

  • Sales of $2.3 billion, down 1.5 percent in U.S. dollars. Organic local-currency sales decreased 0.4 percent, and foreign currency translation decreased sales by 1.1 percent.

  • On an organic basis:

  • Segment operating income was $406 million, a decrease of 14.7 percent year-on-year; operating margins of 17.6 percent.

Health Care

  • Sales of $2.3 billion, up 0.7 percent in U.S. dollars. Organic sales increased 1.6 percent and, foreign currency translation decreased sales by 0.9 percent.

  • On an organic basis:

  • Segment operating income was $536 million, a decrease of 1.6 percent year-on-year; operating margins were 23.6 percent.

Consumer

  • Sales of $1.5 billion, up 4.1 percent in U.S. dollars. Organic sales increased 4.9 percent, and foreign currency translation decreased sales by 0.8 percent.

  • On an organic basis:

  • Segment operating income was $316 million, a decrease 0.4 percent year-on-year; operating margins were 21.4 percent.

Full-Year 2021 Results

Full-year 2021 sales increased 9.9 percent year-on-year to $35.4 billion. Organic local-currency sales increased 8.8 percent while acquisitions, net of divestitures, decreased sales by 0.5 percent. Foreign currency translation increased sales by 1.6 percent year-on-year.

Both GAAP and adjusted earnings were $10.12 per share, an increase of 8 percent on a GAAP basis and an increase of 14 percent on an adjusted basis, as referenced in the "Supplemental Financial Information Non-GAAP Measures" section. Full-year operating income was $7.4 billion with operating margins of 20.8 percent.

The company's operating cash flow was $7.5 billion with adjusted free cash flow of $6.0 billion, contributing to adjusted free cash flow conversion of 101 percent for the year. In addition, 3M generated 19.5 percent return on invested capital. Refer to the "Supplemental Financial Information Non-GAAP Measures" section.

For the full year, 3M paid $3.4 billion in cash dividends to shareholders and repurchased $2.2 billion of its own shares.

3M will conduct an investor teleconference at 9 a.m. EST (8 a.m. CST) today. Investors can access this conference via the following:

  • Live webcast at http://investors.3M.com.

  • Live telephone:
    Call 800-762-2596 within the U.S. or +1 212-231-2916 outside the U.S. Please join the call at least 10 minutes before the start time.

  • Webcast replay:
    Go to 3M's Investor Relations website at http://investors.3M.com and click on "Quarterly Earnings."

  • Telephone replay:
    Call 800-633-8284 within the U.S. or +1 402-977-9140 outside the U.S. (for both U.S. and outside the U.S., the access code is 21999288). The telephone replay will be available until 11:30 a.m. EST (10:30 a.m. CST) on Feb. 1, 2022.

Strategic Update and 2022 Outlook Meeting

3M will host a virtual strategic update and 2022 outlook meeting on Monday, Feb. 14, 2022, starting at 9 a.m. EST (8 a.m. CST). The event can be accessed via telephone at (800) 762-2596 within the U.S. or +1 (212) 231-2916 outside the U.S. This event will be webcast live, and a replay will be available on 3M's Investor Relations website at http://investors.3M.com.

Forward-Looking Statements

This news release contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "aim," "project," "intend," "plan," "believe," "will," "should," "could," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: (1) worldwide economic, political, regulatory, capital markets and other external conditions and other factors beyond the Company's control, including natural and other disasters or climate change affecting the operations of the Company or its customers and suppliers; (2) risks related to public health crises such as the global pandemic associated with the coronavirus (COVID-19); (3) foreign currency exchange rates and fluctuations in those rates; (4) liabilities related to certain fluorochemicals, including lawsuits concerning various PFAS-related products and chemistries, and claims and governmental regulatory proceedings and inquiries related to PFAS in a variety of jurisdictions; (5) legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and any subsequent quarterly reports on Form 10-Q (the "Reports"); (6) competitive conditions and customer preferences; (7) the timing and market acceptance of new product offerings; (8) the availability and cost of purchased components, compounds, raw materials, labor, and energy (including oil and natural gas and their derivatives) due to shortages, increased demand and wages, logistics, manufacturing site disruptions or supply chain interruptions (including those caused by natural and other disasters and other events); (9) unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to the Company's information technology infrastructure; (10) the impact of acquisitions, strategic alliances, divestitures and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; (11) operational execution, including scenarios where the Company generates fewer productivity improvements than estimated; (12) financial market risks that may affect the Company's funding obligations under defined benefit pension and postretirement plans; (13) the Company's credit ratings and its cost of capital; and (14) tax-related external conditions, including changes in tax rates, laws or regulations. Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Reports), as updated by applicable Current Reports on Form 8-K. The information contained in this news release is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this news release as a result of new information or future events or developments.


3M Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

(Millions, except per-share amounts)

(Unaudited)




Three months ended December 31,


Year ended
December 31,



2021


2020


2021


2020

Net sales


$ 8,612


$ 8,583


$ 35,355


$ 32,184










Operating expenses









Cost of sales


4,698


4,388


18,795


16,605

Selling, general and administrative expenses


1,824


1,890


7,197


6,929

Research, development and related expenses


474


456


1,994


1,878

Gain on sale of businesses





(389)

Total operating expenses


6,996


6,734


27,986


25,023

Operating income


1,616


1,849


7,369


7,161










Other expense (income), net


52


118


165


366










Income before income taxes


1,564


1,731


7,204


6,795

Provision for income taxes


227


321


1,285


1,337

Income of consolidated group


1,337


1,410


5,919


5,458










Income (loss) from unconsolidated subsidiaries, net of taxes


3


(4)


10


(5)

Net income including noncontrolling interest


1,340


1,406


5,929


5,453










Less: Net income (loss) attributable to noncontrolling interest


1


1


8


4










Net income attributable to 3M


$ 1,339


$ 1,405


$ 5,921


$ 5,449










Weighted average 3M common shares outstanding – basic


574.9


578.7


579.0


577.6

Earnings per share attributable to 3M common shareholders – basic


$ 2.33


$ 2.43


$ 10.23


$ 9.43










Weighted average 3M common shares outstanding – diluted


579.9


584.0


585.3


582.2

Earnings per share attributable to 3M common shareholders – diluted


$ 2.31


$ 2.41


$ 10.12


$ 9.36


3M Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(Dollars in millions)

(Unaudited)




December 31,
2021


December 31,
2020

ASSETS





Current assets





Cash and cash equivalents


$ 4,564


$ 4,634

Marketable securities – current


201


404

Accounts receivable – net


4,660


4,705

Inventories


4,985


4,239

Prepaids


654


675

Other current assets


339


325

Total current assets


15,403


14,982

Property, plant and equipment – net


9,429


9,421

Operating lease right of use assets


858


864

Goodwill and intangible assets – net


18,774


19,637

Other assets


2,608


2,440

Total assets


$ 47,072


$ 47,344

LIABILITIES AND EQUITY





Current liabilities





Short-term borrowings and current portion of long-term debt


$ 1,307


$ 806

Accounts payable


2,994


2,561

Accrued payroll


1,020


747

Accrued income taxes


260


300

Operating lease liabilities – current


263


256

Other current liabilities


3,191


3,278

Total current liabilities


9,035


7,948

Long-term debt


16,056


17,989

Other liabilities


6,864


8,476

Total liabilities


31,955


34,413

Total equity


15,117


12,931

Shares outstanding





December 31, 2021: 571,845,478





December 31, 2020: 577,749,638





Total liabilities and equity


$ 47,072


$ 47,344


3M Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Dollars in millions)

(Unaudited)




Year ended

December 31,



2021


2020

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES


$ 7,454


$ 8,113






Cash flows from investing activities:





Purchases of property, plant and equipment


(1,603)


(1,501)

Acquisitions, net of cash acquired



(25)

Purchases and proceeds from sale or maturities of marketable securities and investments – net


204


232

Proceeds from sale of businesses, net of cash sold



576

Other investing activities


82


138






NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES


(1,317)


(580)






Cash flows from financing activities:





Change in debt


(1,145)


(1,875)

Purchases of treasury stock


(2,199)


(368)

Proceeds from issuances of treasury stock pursuant to stock option and benefit plans


639


429

Dividends paid to shareholders


(3,420)


(3,388)

Other financing activities


(20)


(98)






NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES


(6,145)


(5,300)






Effect of exchange rate changes on cash and cash equivalents


(62)


48






Net increase (decrease) in cash and cash equivalents


(70)


2,281

Cash and cash equivalents at beginning of year


4,634


2,353






Cash and cash equivalents at end of period


$ 4,564


$ 4,634

3M Company and Subsidiaries
SUPPLEMENTAL FINANCIAL INFORMATION
NON-GAAP MEASURES

(Unaudited)


(Dollars in millions, except per share amounts)


Operating

Income


Operating

Income

Margin


Income

Before

Taxes


Provision

for

Income

Taxes


Effective

Tax

Rate


Net Income

Attributable

to 3M


Earnings

Per

Diluted

Share


Earnings

per

diluted

share

percent

change

Q4 2020 GAAP


$ 1,849


21.5 %


$ 1,731


$ 321


18.6 %


$ 1,405


$ 2.41



Adjustments for special items:

















None

















Q4 2020 adjusted amounts (non-GAAP measures) (a)


$ 1,849


21.5 %


$ 1,731


$ 321


18.6 %


$ 1,405


$ 2.41




















Q4 2021 GAAP


$ 1,616


18.8 %


$ 1,564


$ 227


14.5 %


$ 1,339


$ 2.31


(4) %

Adjustments for special items:

















None

















Q4 2021 adjusted amounts (non-GAAP measures) (a)


...