3M Company (MMM - Free Report) reported first-quarter 2024 results, wherein revenues and earnings surpassed the Zacks Consensus Estimate. Both the top and bottom lines (on adjusted basis) increased on a year-over-year basis.
Inside the Headlines
3M delivered adjusted earnings of $2.39 per share, surpassing the Zacks Consensus Estimate of $2.08. The metric increased from $1.97 reported in the year-ago quarter.
The company’s adjusted net sales of $7.72 billion outperformed the Zacks Consensus Estimate of $7.64 billion. The metric increased 0.5% year over year, driven by organic sales growth of 0.8%. Foreign currency translation had a negative impact of 0.6%, while acquisitions boosted the top line by 0.3%. On a GAAP basis, MMM’s net sales inched down 0.3% year over year to $8.0 billion.
Region-wise, organic sales in the Americas declined 0.9% year over year, while that in the Asia Pacific inched up 2.6%. Organic sales from businesses in Europe, the Middle East and Africa increased 3.3%.
Segmental Results
In April 2024, 3M completed the spin off its Health Care business into a separate public company. Notably, the company’s first-quarter results include the performance of Health Care unit, as the spin-off was completed after first-quarter-end.
Revenues from Safety and Industrial totaled $2.73 billion, decreasing 1.7% year over year. This was caused by a 1.4% decrease in organic revenues and negative impact of 0.3% from foreign currency translation.
Revenues from Transportation & Electronics totaled $1.82 billion, reflecting a year-over-year increase of 6.9%. The increase is attributable to a 6.7% improvement in organic sales. Acquisitions boosted segmental revenues by 1.7%, while foreign currency translation had a 1.5% negative impact.
Revenues from Health Care were $2.02 billion, up 0.3% year over year. This were driven by organic sales increase of 1%. Divestitures and foreign currency translation had negative impacts of 0.3% and 0.4%, respectively.
Revenues from the Consumer segment fell 4.3% year over year to $1.14 billion. Organic sales decreased 3.9%. Movements in foreign currencies had an adverse impact of 0.4%.
Margin Profile
In the quarter under review, 3M’s cost of sales decreased 6.2% year over year to $4.33 billion. Selling, general and administrative expenses increased 1.8% to $1.74 billion. Research, development and related expenses decreased 7.4% year over year to $437 million.
In the first quarter, 3M reported operating income of $1.50 billion compared with $1.24 billion in the year-ago period. The upside was driven by a decline in the company’s total operational expenses.
MMM’s adjusted operating income in the quarter ascended 23.7% year over year to $1.71 billion. The adjusted operating margin was 21.9% compared with 17.9% in the year-ago quarter. The adjusted tax rate in the quarter was 20.5% compared with 17.7% in the year-ago period.
Balance Sheet and Cash Flow
Exiting the first quarter, 3M had cash and cash equivalents of $10.9 billion compared with $5.9 billion at the end of December 2023. Long-term debt was $20.6 billion at the end of the reported quarter compared with $13.1 billion at the end of December 2023.
In the quarter, 3M generated net cash of $767 million from its operating activities, reflecting a decrease of 39.8% from the year-ago quarter. Capital used for purchasing property, plant and equipment decreased 21.1% to $375 million in the quarter.
Adjusted free cash flow at the end of the first quarter was $833 million, down 11.9% year over year. Adjusted free cash flow conversion was 63% at the end of the same period.
In the first three months of 2024, 3M rewarded its shareholders with $835 million in dividend payments.
2024 Guidance
MMM expects adjusted earnings in the range of $6.80-$7.30 per share. The mid-point of the guided range is $7.05, which reflects a decline from $9.24 reported in 2023.
Adjusted total sales are expected to decline 0.25% to increase 1.75%. This implies an adjusted organic sales growth of 0-2%.
3M expects its dividend payout ratio to be approximately 40% of adjusted free cash flow.
Zacks Rank & Key Picks
MMM currently carries a Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:
Carlisle Companies Incorporated (CSL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 5.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Federal Signal (FSS - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.3%.
In the past 60 days, the Zacks Consensus Estimate for FSS’ 2024 earnings has increased 1.4%.
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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3M Company (MMM - Free Report) reported first-quarter 2024 results, wherein revenues and earnings surpassed the Zacks Consensus Estimate. Both the top and bottom lines (on adjusted basis) increased on a year-over-year basis.
Inside the Headlines
3M delivered adjusted earnings of $2.39 per share, surpassing the Zacks Consensus Estimate of $2.08. The metric increased from $1.97 reported in the year-ago quarter.
The company’s adjusted net sales of $7.72 billion outperformed the Zacks Consensus Estimate of $7.64 billion. The metric increased 0.5% year over year, driven by organic sales growth of 0.8%. Foreign currency translation had a negative impact of 0.6%, while acquisitions boosted the top line by 0.3%. On a GAAP basis, MMM’s net sales inched down 0.3% year over year to $8.0 billion.
Region-wise, organic sales in the Americas declined 0.9% year over year, while that in the Asia Pacific inched up 2.6%. Organic sales from businesses in Europe, the Middle East and Africa increased 3.3%.
Segmental Results
In April 2024, 3M completed the spin off its Health Care business into a separate public company. Notably, the company’s first-quarter results include the performance of Health Care unit, as the spin-off was completed after first-quarter-end.
Revenues from Safety and Industrial totaled $2.73 billion, decreasing 1.7% year over year. This was caused by a 1.4% decrease in organic revenues and negative impact of 0.3% from foreign currency translation.
Revenues from Transportation & Electronics totaled $1.82 billion, reflecting a year-over-year increase of 6.9%. The increase is attributable to a 6.7% improvement in organic sales. Acquisitions boosted segmental revenues by 1.7%, while foreign currency translation had a 1.5% negative impact.
Revenues from Health Care were $2.02 billion, up 0.3% year over year. This were driven by organic sales increase of 1%. Divestitures and foreign currency translation had negative impacts of 0.3% and 0.4%, respectively.
Revenues from the Consumer segment fell 4.3% year over year to $1.14 billion. Organic sales decreased 3.9%. Movements in foreign currencies had an adverse impact of 0.4%.
Margin Profile
In the quarter under review, 3M’s cost of sales decreased 6.2% year over year to $4.33 billion. Selling, general and administrative expenses increased 1.8% to $1.74 billion. Research, development and related expenses decreased 7.4% year over year to $437 million.
In the first quarter, 3M reported operating income of $1.50 billion compared with $1.24 billion in the year-ago period. The upside was driven by a decline in the company’s total operational expenses.
MMM’s adjusted operating income in the quarter ascended 23.7% year over year to $1.71 billion. The adjusted operating margin was 21.9% compared with 17.9% in the year-ago quarter. The adjusted tax rate in the quarter was 20.5% compared with 17.7% in the year-ago period.
Balance Sheet and Cash Flow
Exiting the first quarter, 3M had cash and cash equivalents of $10.9 billion compared with $5.9 billion at the end of December 2023. Long-term debt was $20.6 billion at the end of the reported quarter compared with $13.1 billion at the end of December 2023.
In the quarter, 3M generated net cash of $767 million from its operating activities, reflecting a decrease of 39.8% from the year-ago quarter. Capital used for purchasing property, plant and equipment decreased 21.1% to $375 million in the quarter.
Adjusted free cash flow at the end of the first quarter was $833 million, down 11.9% year over year. Adjusted free cash flow conversion was 63% at the end of the same period.
In the first three months of 2024, 3M rewarded its shareholders with $835 million in dividend payments.
2024 Guidance
MMM expects adjusted earnings in the range of $6.80-$7.30 per share. The mid-point of the guided range is $7.05, which reflects a decline from $9.24 reported in 2023.
Adjusted total sales are expected to decline 0.25% to increase 1.75%. This implies an adjusted organic sales growth of 0-2%.
3M expects its dividend payout ratio to be approximately 40% of adjusted free cash flow.
Zacks Rank & Key Picks
MMM currently carries a Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:
Carlisle Companies Incorporated (CSL - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 17%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSL’s 2024 earnings has increased 5.8% in the past 60 days.
Ingersoll Rand plc (IR - Free Report) currently carries a Zacks Rank of 2 (Buy). IR delivered a trailing four-quarter average earnings surprise of 15.9%.
In the past 60 days, the Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 1.6%.
Federal Signal (FSS - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.3%.
In the past 60 days, the Zacks Consensus Estimate for FSS’ 2024 earnings has increased 1.4%.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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