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3M Company (MMM - Free Report) reported fourth-quarter 2023 results, where its revenues and earnings surpassed the Zacks Consensus Estimate. The top line inched down, while the bottom line increased on a year-over-year basis.
Inside the Headlines
In the fourth quarter, 3M delivered adjusted earnings of $2.42 per share, surpassing the Zacks Consensus Estimate of $2.31. The metric increased from $2.18 reported in the year-ago quarter.
The company’s net sales of $8,013 million outperformed the Zacks Consensus Estimate of $7,686 million. However, the top line declined 0.8% year over year due to a 1.9% decrease in organic sales. Foreign currency translation had a positive impact of 0.9%, while acquisitions boosted the top line by 0.2%.
Region-wise, organic sales in the Americas inched up 0.3% year over year, while that in the Asia Pacific declined 5.8%. Organic sales from businesses in Europe, the Middle East and Africa inched down 0.6%.
The company reports top-line results under four business segments — Safety & Industrial, Transportation & Electronics, Health Care and Consumer.
Revenues from Safety and Industrial totaled $2,661 million, decreasing 2.7% year over year. The decline can be attributed to a 3.9% decrease in organic revenues. The Zacks Consensus Estimate for Safety and Industrial segment revenues was pegged at $2,624 million.
Revenues from Transportation & Electronics totaled $1,769 million, reflecting a year-over-year increase of 4.5%. The increase is attributable to a 2.7% improvement in organic sales. Acquisitions boosted segmental revenues by 1.3%, while foreign currency translation had a 0.5% positive impact. The Zacks Consensus Estimate for Transportation & Electronics segment revenues was pinned at $1,619 million.
Revenues from Health Care were $2,037 million, down 0.3% year over year. The results were hurt by an organic sales decline of 1% and a 0.4% negative impact from divestitures. The Zacks Consensus Estimate for Health Care revenues was pegged at $2,108 million.
Revenues from the Consumer segment fell 1.6% year over year to $1,226 million. Organic sales decreased 2.2%. Movements in foreign currencies had a positive impact of 0.6%. The Zacks Consensus Estimate for Consumer segment revenues was pinned at $1,301 million.
Margin Profile
In the quarter under review, 3M’s cost of sales increased 2% year over year to $4,678 million. Selling, general and administrative expenses declined 24.3% to $1,625 million. Research, development and related expenses increased 4.9% year over year to $467 million.
In the fourth quarter, 3M reported an operating income of $1,243 million compared with the operating income of $632 million 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 9.1% year over year to $1,608 million. The adjusted operating margin was 20.9% compared with 19.1% in the year-ago quarter. The adjusted tax rate in the quarter was 14.9% compared with 16.6% in the year-ago period.
Balance Sheet and Cash Flow
Exiting the fourth quarter, 3M had cash and cash equivalents of $5,933 million compared with $3,655 million at the end of December 2022. Long-term debt was $13,088 million at the end of December 2023 compared with $14,001 million at the end of December 2022.
In the quarter, 3M generated net cash of $1,986 million from its operating activities, reflecting an increase of 3.3% from the year-ago quarter. Capital used for purchasing property, plant and equipment decreased 7.7% to $1.6 billion in 2023.
Adjusted free cash flow at the end of the fourth quarter was $1,955 million, up 17.8% year over year. Adjusted free cash flow conversion was 145% at the end of the same period.
In 2023, 3M rewarded its shareholders with $3.3 billion in dividend payments. The company did not repurchase shares in the fourth quarter.
2024 Guidance
MMM expects adjusted earnings of $9.35-$9.75 per share for 2024. The mid-point of the guided range is $9.55, which lies below the Zacks Consensus Estimate of $9.90.
Adjusted total sales are expected to be in the range of 0.25-2.25%. This implies an adjusted organic sales growth of 0-2%.
It has a trailing four-quarter average earnings surprise of 28.6%. The Zacks Consensus Estimate for GFF’s fiscal 2024 (ending September 2024) earnings increased 13% in the past 60 days. Shares of Griffon have surged 51% in the past year.
ITT Inc. (ITT - Free Report) presently carries a Zacks Rank #2 (Buy). ITT delivered a trailing four-quarter average earnings surprise of 8%.
In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has increased 0.2%. The stock has risen 36.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days. Shares of Applied Industrial have jumped 43.4% in the past year.
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3M (MMM) Q4 Earnings Beat Estimates, Revenues Decline Y/Y
3M Company (MMM - Free Report) reported fourth-quarter 2023 results, where its revenues and earnings surpassed the Zacks Consensus Estimate. The top line inched down, while the bottom line increased on a year-over-year basis.
Inside the Headlines
In the fourth quarter, 3M delivered adjusted earnings of $2.42 per share, surpassing the Zacks Consensus Estimate of $2.31. The metric increased from $2.18 reported in the year-ago quarter.
The company’s net sales of $8,013 million outperformed the Zacks Consensus Estimate of $7,686 million. However, the top line declined 0.8% year over year due to a 1.9% decrease in organic sales. Foreign currency translation had a positive impact of 0.9%, while acquisitions boosted the top line by 0.2%.
Region-wise, organic sales in the Americas inched up 0.3% year over year, while that in the Asia Pacific declined 5.8%. Organic sales from businesses in Europe, the Middle East and Africa inched down 0.6%.
3M Company Price, Consensus and EPS Surprise
3M Company price-consensus-eps-surprise-chart | 3M Company Quote
Segmental Results
The company reports top-line results under four business segments — Safety & Industrial, Transportation & Electronics, Health Care and Consumer.
Revenues from Safety and Industrial totaled $2,661 million, decreasing 2.7% year over year. The decline can be attributed to a 3.9% decrease in organic revenues. The Zacks Consensus Estimate for Safety and Industrial segment revenues was pegged at $2,624 million.
Revenues from Transportation & Electronics totaled $1,769 million, reflecting a year-over-year increase of 4.5%. The increase is attributable to a 2.7% improvement in organic sales. Acquisitions boosted segmental revenues by 1.3%, while foreign currency translation had a 0.5% positive impact. The Zacks Consensus Estimate for Transportation & Electronics segment revenues was pinned at $1,619 million.
Revenues from Health Care were $2,037 million, down 0.3% year over year. The results were hurt by an organic sales decline of 1% and a 0.4% negative impact from divestitures. The Zacks Consensus Estimate for Health Care revenues was pegged at $2,108 million.
Revenues from the Consumer segment fell 1.6% year over year to $1,226 million. Organic sales decreased 2.2%. Movements in foreign currencies had a positive impact of 0.6%. The Zacks Consensus Estimate for Consumer segment revenues was pinned at $1,301 million.
Margin Profile
In the quarter under review, 3M’s cost of sales increased 2% year over year to $4,678 million. Selling, general and administrative expenses declined 24.3% to $1,625 million. Research, development and related expenses increased 4.9% year over year to $467 million.
In the fourth quarter, 3M reported an operating income of $1,243 million compared with the operating income of $632 million 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 9.1% year over year to $1,608 million. The adjusted operating margin was 20.9% compared with 19.1% in the year-ago quarter. The adjusted tax rate in the quarter was 14.9% compared with 16.6% in the year-ago period.
Balance Sheet and Cash Flow
Exiting the fourth quarter, 3M had cash and cash equivalents of $5,933 million compared with $3,655 million at the end of December 2022. Long-term debt was $13,088 million at the end of December 2023 compared with $14,001 million at the end of December 2022.
In the quarter, 3M generated net cash of $1,986 million from its operating activities, reflecting an increase of 3.3% from the year-ago quarter. Capital used for purchasing property, plant and equipment decreased 7.7% to $1.6 billion in 2023.
Adjusted free cash flow at the end of the fourth quarter was $1,955 million, up 17.8% year over year. Adjusted free cash flow conversion was 145% at the end of the same period.
In 2023, 3M rewarded its shareholders with $3.3 billion in dividend payments. The company did not repurchase shares in the fourth quarter.
2024 Guidance
MMM expects adjusted earnings of $9.35-$9.75 per share for 2024. The mid-point of the guided range is $9.55, which lies below the Zacks Consensus Estimate of $9.90.
Adjusted total sales are expected to be in the range of 0.25-2.25%. This implies an adjusted organic sales growth of 0-2%.
3M estimates adjusted operating cash flow of $6.5-$7.1 billion, representing 95-105% adjusted free cash flow conversion.
Zacks Rank & Key Picks
MMM currently carries a Zacks Rank #3 (Hold). Some better-ranked companies are discussed below:
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 28.6%. The Zacks Consensus Estimate for GFF’s fiscal 2024 (ending September 2024) earnings increased 13% in the past 60 days. Shares of Griffon have surged 51% in the past year.
ITT Inc. (ITT - Free Report) presently carries a Zacks Rank #2 (Buy). ITT delivered a trailing four-quarter average earnings surprise of 8%.
In the past 60 days, the Zacks Consensus Estimate for ITT’s 2023 earnings has increased 0.2%. The stock has risen 36.4% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank #2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 (ending June 2024) earnings remained steady in the past 60 days. Shares of Applied Industrial have jumped 43.4% in the past year.