3M Co. (NYSE: MMM) reported Q4 EPS of $2.31, $0.03 better than the analyst estimate of $2.28. Revenue for the quarter came in at $7.95 billion versus the consensus estimate of $7.87 billion.

• 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

“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.”

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 M*Modal 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 M*Modal 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.

GUIDANCE:

3M Co. sees FY2019 EPS of $10.45-$10.90, versus the consensus of $10.75.

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