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3M (MMM) Q4 Earnings Beat Estimates, Revenues Decline Y/Y
MMM3M(MMM) Zacks Investment Research·2024-01-23 18:46

Core Viewpoint - 3M Company (MMM) reported fourth-quarter 2023 results with revenues and earnings exceeding the Zacks Consensus Estimate, although revenues showed a slight decline year-over-year while earnings increased [1][2]. Financial Performance - Adjusted earnings for the fourth quarter were 2.42pershare,surpassingtheZacksConsensusEstimateof2.42 per share, surpassing the Zacks Consensus Estimate of 2.31 and up from 2.18inthesamequarterlastyear[2].−Netsalesreached2.18 in the same quarter last year [2]. - Net sales reached 8,013 million, exceeding the Zacks Consensus Estimate of 7,686million,butdeclinedby0.87,686 million, but declined by 0.8% year-over-year due to a 1.9% decrease in organic sales [2]. - Foreign currency translation positively impacted sales by 0.9%, while acquisitions contributed an additional 0.2% [2]. Segmental Results - Safety & Industrial segment revenues totaled 2,661 million, down 2.7% year-over-year, with a 3.9% decrease in organic revenues [3]. - Transportation & Electronics segment revenues were 1,769million,reflectingayear−over−yearincreaseof4.51,769 million, reflecting a year-over-year increase of 4.5%, driven by a 2.7% improvement in organic sales [3]. - Health Care segment revenues were 2,037 million, down 0.3% year-over-year, impacted by a 1% decline in organic sales [4]. - Consumer segment revenues fell 1.6% year-over-year to 1,226million,withorganicsalesdecreasingby2.21,226 million, with organic sales decreasing by 2.2% [4]. Margin Profile - Cost of sales increased by 2% year-over-year to 4,678 million, while selling, general and administrative expenses decreased by 24.3% to 1,625million[5].−Operatingincomeforthequarterwas1,625 million [5]. - Operating income for the quarter was 1,243 million, significantly up from 632millioninthepreviousyear,drivenbyareductionintotaloperationalexpenses[5].−Adjustedoperatingincomerose9.1632 million in the previous year, driven by a reduction in total operational expenses [5]. - Adjusted operating income rose 9.1% year-over-year to 1,608 million, with an adjusted operating margin of 20.9% compared to 19.1% in the prior year [5]. Balance Sheet and Cash Flow - At the end of the fourth quarter, 3M had cash and cash equivalents of 5,933million,upfrom5,933 million, up from 3,655 million at the end of December 2022 [6]. - Long-term debt decreased to 13,088millionfrom13,088 million from 14,001 million at the end of December 2022 [6]. - The company generated net cash of 1,986millionfromoperatingactivities,a3.31,986 million from operating activities, a 3.3% increase from the previous year [7]. - Adjusted free cash flow at the end of the fourth quarter was 1,955 million, up 17.8% year-over-year, with a conversion rate of 145% [7]. 2024 Guidance - 3M expects adjusted earnings of 9.35−9.35-9.75 per share for 2024, with a midpoint of 9.55,whichisbelowtheZacksConsensusEstimateof9.55, which is below the Zacks Consensus Estimate of 9.90 [8]. - Adjusted total sales are projected to grow between 0.25% and 2.25%, indicating an adjusted organic sales growth of 0% to 2% [8]. - The company estimates adjusted operating cash flow of 6.5−6.5-7.1 billion, representing a 95-105% adjusted free cash flow conversion [8].