3M Company (MMM)

[DewDiligence]

3M reports 4Q22 results—issues 2023 guidance:

https://s24.q4cdn.com/834031268/files/doc_financials/2022/q4/2022-Q4-Earnings-Release-vFinal.pdf

3M's full-year expectations for 2023 include the following:

• -6 to -2 percent adjusted total sales growth, reflecting the following:
o -3 percent to flat adjusted organic sales growth, includes -2 percentage point impact from disposable respirator decline and exit of Russia;
o -2 to -1 percent adjusted foreign currency translation impact;
o -1 percent adjusted divestiture impact.

• Adjusted earnings per share of $8.50 to $9.00, versus 2022 of $9.88 on a comparable basis. 2023 adjusted earnings per share include -$0.55 to -$0.80 of combined year-on-year headwinds from the decline in disposable respirator demand, exit of Russia, foreign currency translation, and divestitures

• Adjusted operating cash flow of $5.8 to $6.3 billion contributing to 90% to 100% adjusted free cash flow conversion

These expectations reflect changes in certain of 3M’s non-GAAP measures beginning in 2023 as discussed in the preceding section [see my comments below]. 3M expects to record a pre-tax restructuring charge of $75 to $100 million in the first quarter of 2023. This pre-tax charge and associated savings is included in the company’s full-year 2023 outlook.

The change in the way 3M calculates non-GAAP EPS is that PFAS manufacturing is now treated as a discontinued business (#msg-170742171) and is therefore excluded. (3M was already excluding earplug- and PFAS-related legal expenses from the non-GAAP EPS calculation.)