3M (MMM) Q4 Earnings Beat Estimates, Revenues Decline Y/Y

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 $2.42 per share, surpassing the Zacks Consensus Estimate of $2.31 and up from $2.18 in the same quarter last year [2]. - Net sales reached $8,013 million, exceeding the Zacks Consensus Estimate of $7,686 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 $1,769 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 $1,226 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 $1,625 million [5]. - Operating income for the quarter was $1,243 million, significantly up from $632 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 $5,933 million, up from $3,655 million at the end of December 2022 [6]. - Long-term debt decreased to $13,088 million from $14,001 million at the end of December 2022 [6]. - The company generated net cash of $1,986 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-$9.75 per share for 2024, with a midpoint of $9.55, 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-$7.1 billion, representing a 95-105% adjusted free cash flow conversion [8].