3M Reports Fourth-Quarter 2018 Results Fourth-Quarter Highlights: Sales of $7.9 billion, down 0.6 percent year-on-year Organic local-currency sales growth of 3.0 percent; growth across all business

For Immediate Release

3M Reports Fourth-Quarter 2018 Results

Fourth-Quarter Highlights:

Sales of $7.9 billion, down 0.6 percent year-on-year

Organic local-currency sales growth of 3.0 percent; growth across all business groups and all geographic areas

GAAP EPS of $2.27 vs. $0.85 last year, up 167 percent year-on-year

Q4 2018 earnings included a net charge of $0.04 per share for tax adjustments related to both the Tax Cuts and Jobs Act (TCJA) and the Q1 2018 legal settlement; and a $0.02 per share net benefit from a divestiture gain, net of actions

Q4 2017 earnings included tax expense of $1.25 per share related to TCJA

Adjusted EPS of $2.31 vs. $2.10 last year, up 10.0 percent year-on-year, excluding the above tax-related items in both years

Returned $2.1 billion to shareholders via dividends and gross share repurchases

Full-Year Highlights:

Sales of $32.8 billion, up 3.5 percent year-on-year

Organic local-currency sales growth of 3.2 percent; growth across all business groups and all geographic areas

GAAP EPS of $8.89 vs. $7.93 last year, up 12.1 percent year-on-year

Full-year 2018 earnings included a net charge of $1.57 per share related to TCJA and the Q1 2018 legal settlement; and a $0.50 per share net benefit from divestiture gain, net of actions

Full-year 2017 earnings included tax expense of $1.24 per share related to TCJA

Adjusted EPS of $10.46 vs. $9.17 last year, up 14.1 percent year-on-year, excluding the impact of TCJA and the Q1 2018 legal settlement

Returned $8.1 billion to shareholders via dividends and gross share repurchases

ST. PAUL, Minn. Jan. 29, 2019 - 3M (NYSE: MMM) today reported fourth-quarter and full-year 2018 results.

3M executed well in the fourth quarter, with results that were in line with our expectations, said Mike Roman, 3M chief executive officer. We delivered organic growth of 3 percent which included growth across all business groups and geographic areas along with strong cash flow and earnings. The fourth quarter capped an important year for 3M, as we posted good results and continued to take actions to strengthen our company for the future.

Going forward, our team remains focused on executing our four priorities Portfolio, Transformation, Innovation, and People & Culture which are keys to growth and value creation, Roman continued. We are positioned for a successful 2019, and are focused on delivering for our customers and shareholders.

Fourth-Quarter Results

Fourth-quarter 2018 GAAP earnings were $2.27 per share, an increase of 167 percent versus the fourth quarter 2017. During the fourth quarter of 2018, the company incurred a net charge of $0.04 per share for tax adjustments related to both the Tax Cut and Jobs Act (TCJA) and its first quarter 2018 legal settlement. Fourth-quarter 2017 GAAP earnings were $0.85 per share which included a net tax expense of $1.25 per share related to TCJA.

Excluding the above items, fourth quarter 2018 adjusted earnings were $2.31 per share versus $2.10 per share in the fourth quarter 2017, an increase of 10.0 percent, as referenced in the Supplemental Financial Information Non-GAAP Measures section. The company s fourth quarter 2018 earnings include a $0.02 per share benefit related to a divestiture, net of restructuring actions.

Sales were down 0.6 percent to $7.9 billion. Organic local-currency sales increased 3.0 percent while divestitures decreased sales by 1.3 percent. Foreign currency translation decreased sales by 2.3 percent year-on-year.

Fourth-quarter operating income was $1.8 billion and operating income margins were 22.4 percent. The company s operating cash flow was $2.3 billion, contributing to conversion of 128 percent of net income to free cash flow, as referenced in the Supplemental Financial Information Non-GAAP Measures section.

3M paid $787 million in cash dividends to shareholders and repurchased $1.3 billion of its own shares during the quarter.

Total sales grew 2.4 percent in Health Care, 0.3 percent in Safety and Graphics, and 0.1 percent in Consumer. Total sales declined 0.3 percent in Industrial and 4.5 percent in Electronics and Energy. Organic local-currency sales increased 4.8 percent in Health Care, 4.1 percent in Electronics and Energy, 3.3 percent in Safety and Graphics, 2.5 percent in Industrial, and 1.9 percent in Consumer.

On a geographic basis, total sales grew 3.3 percent in the U.S. Total sales declined 0.8 percent in Asia Pacific, 2.8 percent in Latin America/Canada, and 6.4 percent in EMEA (Europe, Middle East and Africa). Organic local-currency sales increased 5.0 percent in Latin America/Canada, 4.4 percent in the U.S., 2.0 percent in Asia Pacific, and 1.3 percent in EMEA.

Fourth-Quarter Business Group Discussion

Sales of $3.0 billion, down 0.3 percent in U.S. dollars. Organic local-currency sales increased 2.5 percent, divestitures decreased sales by 0.1 percent and foreign currency translation decreased sales by 2.7 percent.

On an organic local-currency basis:

Sales grew in advanced materials, industrial adhesives and tapes, separation and purification, abrasive systems, and automotive aftermarket.

Sales grew in all geographic areas led by the U.S., Latin America/Canada, and EMEA.

Operating income was $627 million, an increase of 8.1 percent year-on-year; operating margins were 21.2 percent.

Safety and Graphics

Sales of $1.6 billion, up 0.3 percent in U.S. dollars. Organic local-currency sales increased 3.3 percent, foreign currency translation decreased sales by 2.8 percent and acquisitions, net of divestitures, decreased sales by 0.2 percent.

On an organic local-currency basis:

Sales grew in personal safety and commercial solutions; sales declined in transportation safety and roofing granules.

Sales grew in Latin America/Canada, the U.S., and EMEA; sales declined in Asia Pacific.

Operating income was $345 million, down 14.8 percent year-on-year; operating margins were 22.0 percent.

Sales of $1.5 billion, up 2.4 percent in U.S. dollars. Organic local-currency sales increased 4.8 percent, foreign currency translation decreased sales by 2.4 percent.

On an organic local-currency basis:

Sales grew in food safety, health information systems, medical solutions, and oral care; sales declined in drug delivery.

Sales grew in all geographic areas led by Asia Pacific, Latin America/Canada, and EMEA.

Operating income was $458 million, a decrease of 0.2 percent year-on-year; operating margins were 30.2 percent.

Electronics and Energy

Sales of $1.3 billion, down 4.5 percent in U.S. dollars. Organic local-currency sales increased 4.1 percent, foreign currency translation decreased sales by 1.5 percent and divestitures decreased sales by 7.1 percent.

On an organic local-currency basis:

Electronics-related sales grew 3 percent with growth in both electronics material solutions and display materials and systems; energy-related sales increased 5 percent.

Sales grew in Latin America/Canada, the U.S., and Asia Pacific; sales declined in EMEA.

Operating income was $396 million, an increase of 8.2 percent year-on-year; operating margins were 29.5 percent.

Sales of $1.2 billion, up 0.1 percent in U.S. dollars. Organic local-currency sales increased 1.9 percent and foreign currency translation decreased sales by 1.8 percent.

On an organic local-currency basis:

Sales grew in home improvement, and stationery and office supplies; sales declined in home care, and consumer health care.

Sales grew in Latin America/Canada and the U.S.; sales declined in Asia Pacific and EMEA.

Operating income was $257 million, down 5.2 percent year-on-year; operating margins were 21.3 percent.

Full-Year 2018 Results

Full-year 2018 GAAP earnings were $8.89 per share, an increase of 12.1 percent. During the year, the company recorded a net tax expense of $0.29 per share related to TCJA. In addition, the company recorded an after-tax expense of $1.28 per share related to its first quarter 2018 legal settlement. Full-year 2017 GAAP earnings were $7.93 per share, which included a $1.24 per share net tax expense related to TCJA.

Excluding the above items, 2018 adjusted earnings were $10.46 per share, an increase of 14.1 percent, as referenced in the Supplemental Financial Information Non-GAAP Measures section. During 2018, the company recorded an earnings benefit of $0.50 per share from the divestiture of its communication markets business, net of related restructuring actions.

Sales increased 3.5 percent to $32.8 billion and organic local-currency sales increased 3.2 percent. The combination of acquisitions and divestitures increased sales 0.1 percent. Foreign currency translation increased sales 0.2 percent. Full-year operating income margins were 22.0 percent, while adjusted operating margins were 24.7 percent, up 40 basis points versus 2017.

The company s operating cash flow was $6.4 billion, contributing to conversion of 91 percent of net income to free cash flow for the year. In addition, 3M generated 22 percent return on invested capital. Refer to the Supplemental Financial Information Non-GAAP Measures section. The net impact from TCJA, Q1 2018 legal settlement, and communication markets divestiture gain, net of related actions, reduced full-year free cash flow conversion by 2 percentage points and reduced return on invested capital by 2 percentage points.

For the full year, 3M paid $3.2 billion in cash dividends to shareholders and repurchased $4.9 billion of its own shares.

2019 Updated Outlook

The company updated its earnings and organic local-currency sales growth expectations to reflect the current external environment and to include the pending acquisition of the technology business of MModal which was previously excluded from guidance. Full-year 2019 earnings are now expected to be in the range of $10.45 to $10.90 per share, including a $0.10 per share earnings headwind from the MModal acquisition, versus a prior expectation of $10.60 to $11.05 per share. 3M also expanded its full-year organic local-currency growth expectation to a range of 1 to 4 percent versus 2 to 4 percent, previously. The company maintained its full-year expectations for free cash flow conversion of 95 to 105 percent and return on invested capital of 22 to 25 percent, as referenced in the Supplemental Financial Information Non-GAAP Measures section.

3M will conduct an investor teleconference at 9:00 a.m. EST (8:00 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 21898676). The telephone replay will be available until 11:30 a.m. EST (10:30 a.m. CST) on Feb. 5, 2019.

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, and capital markets 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) the Company s credit ratings and its cost of capital; (3) competitive conditions and customer preferences; (4) foreign currency exchange rates and fluctuations in those rates; (5) the timing and market acceptance of new product offerings; (6) the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); (7) 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; (8) generating fewer productivity improvements than estimated; (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) financial market risks that may affect the Company s funding obligations under defined benefit pension and postretirement plans; and (11) 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 Dec. 31, 2017, and any subsequent quarterly reports on Form 10-Q (the Reports ). 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). 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)

3M Company and Subsidiaries