- 3M Co MMM reported second-quarter FY22 net sales of $8.83 billion, a decline of 3% year-over-year, beating the consensus of $8.58 billion.
- Organic sales grew 1%, which included a 4% headwind from the combined impact of China's COVID-related lockdowns and decline in disposable respirator demand.
- Adjusted EPS was $2.48, down 9.8% Y/Y, above the consensus of $2.45.
- Operating income was $110 million, down from $1.97 billion a year ago, and margin fell by 2,070 bps to 1.3%. Adjusted operating income margin compressed 240 basis points to 21%.
- 3M generated cash from operating activities year-to-date of $2.14 billion, compared to $3.57 billion a year ago. It has cash and cash equivalents of $2.72 billion at the end of the quarter.
- Adjusted free cash flow conversion year-to-date was 57% compared to 92% a year ago.
- Adjusted EBITDA was $2.2 billion (-10.9% Y/Y) and the margin contracted by 242 bps to 26.3%.
- Sales by segments: Safety and Industrial $2.92 billion (-3.5% Y/Y), Transportation and Electronics $2.27 billion (-3.7% Y/Y), Health Care $2.18 billion (+0.7% Y/Y) and Consumer $1.33 billion (-5% Y/Y).
- "Looking ahead, we updated our adjusted full-year expectations largely due to the strength of the U.S. dollar and uncertain macroeconomic environment," commented 3M chairman and CEO Mike Roman.
- FY22 Outlook: 3M sees total sales growth of -2.5% to -0.5% (prior expectation of 1% to 4%), Organic sales growth of 1.5% to 3.5% (prior 2% to 5%).
- The company expects Adjusted EPS of $10.30 to $10.80 (prior view $10.75 to $11.25).
- The company sees operating cash flow of $6.6 billion to $7.2 billion, contributing to 90% to 100% adjusted free cash flow conversion.
- Price Action: MMM shares are trading higher by 7.10% at $143.66 on the last check Tuesday.
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