What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-10-22 compared with 2024-07-26 · 161 added, 163 removed, 537 unchanged (38% of the section changed)

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Earnings (loss) from continuing operations per diluted share Three months ended

June 30, 2024 Six months ended

June 30, 2024

September 30, 2024 Nine months ended

September 30, 2024

Same period last year $ (4.56) $ (16.32)

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Divestiture costs 0.01 0.02

Gain on business divestitures (0.05) (0.05)

Russia exit charges (benefits)

(0.04) (0.04)

Manufactured PFAS products 0.15 0.08

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Divestiture costs — (0.24)

Manufactured PFAS products (0.04) (0.04)

Pension risk transfer cost — (1.09)

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Total organic growth/productivity and other:

• For the second quarter of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

◦ Timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin (further discussed in "Results of Operations" section) resulted in a net year-on-year headwind of $0.18 per share.

• For the third quarter of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

◦ Benefits from organic growth, continued productivity and restructuring resulted in a net year-on-year increase of $0.12 per share

◦ Income from transition service agreements with Solventum (refer to Note 2 for additional discussion) resulted in a net year-on-year increase of $0.01 per share

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.31 per share which was impacted by the following:

▪ Benefits from volume growth, productivity, spending discipline and restructuring

• For the first six months of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

• For the first nine months of 2024, the following components impacted operating margins and earnings (loss) from continuing operations per diluted share year-on-year:

◦ Benefits from organic growth, productivity, strong spending discipline and restructuring resulted in a net year-on-year increase of $0.79 per share

◦ Nonrecurring items including gain on property sales resulted in a net year-on-year increase of $0.08 per share.

◦ Income from transition services agreements with Solventum (refer to Note 2 for additional discussion) resulted in a net year-on-year increase of $0.05 per share

◦ Remaining organic growth/productivity and other impacts resulted in a net year-on-year increase of $0.65 per share which was impacted by the following:

▪ Benefits from productivity, volume growth, sourcing actions, spending discipline and restructuring

▪ Investments in growth, productivity, and sustainability

Restructuring and related charges:

• 3M recorded restructuring pre-tax charges of $35 million and $138 million in the second quarter and first six months of 2024, respectively, compared to $202 million and $252 million in the same periods last year, respectively, (refer to Note 6 for additional discussion).

In addition, 3M recorded certain related accelerated depreciation.

• 3M recorded restructuring pre-tax charges of $40 million and $178 million in the third quarter and first nine months of 2024, respectively, compared to $58 million and $310 million in the same periods last year, respectively, (refer to Note 6 for additional discussion).

In addition, 3M recorded certain related pre-tax adjustments, accelerated depreciation and other charges of $8 million and $34 million in the third quarter and first nine months of 2024, respectively.

Foreign exchange impacts:

• Foreign currency impacts (net of hedging) decreased operating income from continuing operations by approximately $24 million (or a decrease of pre-tax income from continuing operations by approximately $31 million) year-on-year for the second quarter of 2024 and decreased operating income from continuing operations by approximately $73 million (or a decrease of pre-tax income from continuing operations by approximately $82 million) year-on-year for the first six months of 2024.

• Foreign currency impacts (net of hedging) decreased operating income from continuing operations by approximately $18 million (or a decrease of pre-tax income from continuing operations by approximately $25 million) year-on-year for the third quarter of 2024 and decreased operating income from continuing operations by approximately $91 million (or a decrease of pre-tax income from continuing operations by approximately $107 million) year-on-year for the first nine months of 2024.

These estimates include:

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Other expense (income), net:

• Interest expense (net of interest income) included in other expense (income), net as presented above decreased for the second quarter and first six months of 2024 compared to the same period year-on-year.

• Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for the second quarter and first six months of 2024.

• Interest expense (net of interest income) included in other expense (income), net as presented above decreased for the third quarter and first nine months of 2024 compared to the same period year-on-year.

• Lower income related to non-service cost components of pension and postretirement expense increased expense year-on-year for the third quarter and first nine months of 2024.

Income tax rate:

• Certain items above reflect specific income tax rates associated therewith.

Overall, the effective tax rate for the second quarter of 2024 was 14.4 percent on a pre-tax income, compared to 24.0 percent on pre-tax loss in the prior year.

The effective tax rate for the first six months of 2024 was 18.1 percent, compared to 24.6 percent in the prior year.

The primary factors that impacted the comparison of these rates year-over -year were the second quarter 2023 charge related to the settlement agreement with public water systems in the United States regarding PFAS (see Note 17) and the tax rate associated with second quarter 2024 benefit related to the change in value of the retained ownership interest in Solventum.

• On an adjusted basis (as discussed below), the effective tax rate for the second quarter and first six months of 2024 was 19.1% and 19.9%, respectively, a decrease of 0.4 percentage points and an increase of 1.2 percentage points, respectively, compared to the same period year-on-year.

Overall, the effective tax rate for the third quarter of 2024 was 20.3 percent on a pre-tax income, compared to 23.5 percent on pre-tax loss in the prior year.

The effective tax rate for the first nine months of 2024 was 19.0 percent, compared to 24.3 percent in the prior year.

The primary factors that impacted the comparison of these rates year-over-year were the third quarter 2023 charge related to the settlement agreement to resolve CAE litigation (see Note 17), second quarter 2023 charge related to the settlement agreement with public water systems in the United States regarding PFAS (see Note 17), and the tax rate associated with the 2024 benefit related to the change in value of the retained ownership interest in Solventum.

• On an adjusted basis (as discussed below), the effective tax rate for the third quarter and first nine months of 2024 was 20.5% and 20.1%, respectively, a decrease of 4.3 percentage points and a decrease of 1.1 percentage points, respectively, compared to the same period year-on-year.

Shares of common stock outstanding:

• Shares outstanding did not significantly impact earnings (loss) from continuing operations per share year-on-year for the second quarter and first six months of 2024.

• Shares outstanding impacted earnings (loss) from continuing operations per share year-on-year.

Certain amounts adjusted for special items - (non-GAAP measures):

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Net costs include the impacts of changes in accrued liabilities (including interest imputation on applicable settlement obligations), external legal fees, and insurance recoveries, along with the associated tax impacts.

Associated tax impacts of significant litigation include impacts on Foreign Derived Intangible Income (FDII), Global Intangible Low Taxed Income (GILTI), and foreign tax credits.

Associated tax impacts of significant litigation include impacts on Foreign Derived Intangible Income (FDII), Global Intangible Low Taxed Income (GILTI), foreign tax credits and tax costs of repatriation.

3M does not consider the elements of the net costs associated with these matters to be normal, operating expenses related to the Company’s ongoing operations, revenue generating activities, business strategy, industry, and regulatory environment.

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• These amounts relate to sales and estimates of income (loss) regarding manufactured PFAS products that 3M plans to exit by the end of 2025 included within the Transportation and Electronics business segment.

Along with other costs in arriving at this associated income, these amounts include estimates of costs of sales of $186 million and $233 million for the three months ended June 30, 2024 and 2023, respectively, and $416 million and $509 million for the six months ended June 30, 2024 and 2023, respectively.

Along with other costs in arriving at this associated income, these amounts include estimates of costs of sales of $210 million and $348 million for the three months ended September 30, 2024 and 2023, respectively, and $626 million and $857 million for the nine months ended September 30, 2024 and 2023, respectively.

Estimated income does not contemplate impacts on non-operating items such as net interest income/expense and the non-service cost components portion of defined benefit plan net periodic benefit costs.

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• This amount relates to the change in value of 3M's retained ownership interest in Solventum common stock reflected in other expense (income), net.

Three months ended June 30, 2023

Three months ended September 30, 2023

(Dollars in millions, except per share amounts) Net sales Operating income (loss) Operating income (loss) margin Income (loss) from continuing operations before taxes Provision (benefit) for income taxes Effective tax rate Net income (loss) from continuing operations attributable to 3M Earnings (loss) from continuing operations per diluted share

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Manufactured PFAS products (292) 105 105 25 80 0.15

Russia exit charges (benefits) — (18) (18) 3 (21) (0.04)

Gain on business divestitures — (36) (36) (11) (25) (0.05)

Divestiture costs — 7 7 2 5 0.01

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3 For the per share amount, this includes adjusting-out the impact of this item causing weighted average shares outstanding to be the same for both basic and diluted loss per share in periods of resulting net losses.

Three months ended June 30, 2024

Three months ended September 30, 2024

(Dollars in millions, except per share amounts) Net sales Sales change Operating income (loss) Operating income (loss) margin Income (loss) from continuing operations before taxes Provision (benefit) for income taxes Effective tax rate Net income (loss) from continuing operations attributable to 3M Earnings (loss) from continuing operations per diluted share Earnings (loss) from continuing operations per diluted share percent change

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Manufactured PFAS products (226) 34 34 9 25 0.04

Divestiture costs — 14 14 (113) 127 0.23

Solventum ownership - change in value

— — (581) — (581) (1.05)

Pension risk transfer charge

— — 795 188 607 1.09

Total special items (226) 81 (343) (66) (277) (0.50)

Adjusted amounts (non-GAAP measures) $ 6,068 1.5 % $ 1,397 23.0 % $ 1,378 $ 282 20.5 % $ 1,095 $ 1.98 18 %

Three months ended June 30, 2024

Three months ended September 30, 2024

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

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Adjusted Transportation and Electronics (non-GAAP measures) 2.0 % — % — % (0.2) % 1.8 %

Six months ended June 30, 2023

Nine months ended September 30, 2023

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Manufactured PFAS products (969) 54 54 12 42 0.08

Gain on business divestitures — (36) (36) (11) (25) (0.05)

Russia exit charges (benefits) — (18) (18) 3 (21) (0.04)

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Adjusted amounts (non-GAAP measures) $ 17,639 $ 3,215 18.2 % $ 3,050 $ 645 21.2 % $ 2,398 $ 4.33

Six months ended June 30, 2024

Nine months ended September 30, 2024

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Adjusted amounts (non-GAAP measures) $ 17,822 1.0 % $ 3,923 22.0 % $ 3,910 $ 786 20.1 % $ 3,116 $ 5.62 30 %

Six months ended June 30, 2024

Nine months ended September 30, 2024

Sales Change Organic sales Acquisitions Divestitures Translation Total sales change

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Sales and operating income (loss) by business segment:

The following tables contain sales and operating income (loss) results by business segment for the three and six months ended June 30, 2024 and 2023.

The following tables contain sales and operating income (loss) results by business segment for the three and nine months ended September 30, 2024 and 2023.

Refer to the section entitled Performance by Business Segment later in MD&A for additional discussion concerning 2024 versus 2023 results, including Corporate and Unallocated and Other.

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Refer to Note 19 for additional information on business segments.

Three months ended June 30,

Three months ended September 30,

2024 2023 % change

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Total Company $ 6,294 $ 1,316 $ 6,270 $ (3,096) 0.4 % N/M

Six months ended June 30,

Nine months ended September 30,

2024 2023 % change

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Total Company $ 18,565 $ 3,737 $ 18,608 $ (11,588) (0.2) % N/M

Three months ended June 30, 2024

Three months ended September 30, 2024

Worldwide Sales Change

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Consumer (0.7) — — (0.5) (1.2)

Six months ended June 30, 2024

Nine months ended September 30, 2024

Worldwide Sales Change

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Sales by geographic area:

Percent change information compares the three and six months ended June 30, 2024 with the same prior year period, unless otherwise indicated.

Percent change information compares the three and nine months ended September 30, 2024 with the same prior year period, unless otherwise indicated.

Additional discussion of business segment results is provided in the Performance by Business Segment section.

Three months ended June 30, 2024

Three months ended September 30, 2024

Americas Asia Pacific

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Organic sales 0.3 1.7 (4.2) (0.1)

Acquisitions 0.5 0.2 — 0.4

Divestitures 1.2 0.1 0.5 0.8

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Total sales change 0.7 % 1.4 % (2.4) % 0.4 %

Six months ended June 30, 2024

Nine months ended September 30, 2024

Americas Asia Pacific Europe, Middle East & Africa Worldwide

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Additional information beyond what is included in the preceding tables are as follows:

• For the second quarter of 2024, in the Americas geographic area, U.S.

total sales increased 3 percent which included increased organic sales of 1 percent.

Total sales in Mexico increased 12 percent which included increased organic sales of 6 percent.

In Canada, total sales increased 3 percent which included increased organic sales of 3 percent.

In Brazil, total sales decreased 3 percent which included increased organic sales of 2 percent.

• For the third quarter of 2024, in the Americas geographic area, U.S.

total sales increased 1 percent which included flat organic sales.

In the Asia Pacific geographic area, China total sales increased 8 percent which included increased organic sales of 7 percent.

In Japan, total sales decreased 14 percent which included decreased organic sales of 4 percent.

• For the first six months of 2024, in the Americas geographic area, U.S.

• For the first nine months of 2024, in the Americas geographic area, U.S.

total sales increased 1 percent which included flat organic sales.

Total sales in Mexico increased 12 percent which included increased organic sales of 4 percent.

In Canada, total sales increased 1 percent which included flat organic sales.

In Brazil, total sales decreased 2 percent which included decreased organic sales of 2 percent.

In the Asia Pacific geographic area, China total sales increased 8 percent which included increased organic sales of 9 percent.

In Japan, total sales decreased 13 percent which included decreased organic sales of 4 percent.

Financial condition:

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This new program authorizes the repurchase of up to $10 billion of 3M’s outstanding common stock, with no pre-established end date.

In the first six months of 2024, the Company purchased $421 million of its own stock, compared to $29 million of stock purchases in the first six months of 2023.

As of June 30, 2024, approximately $3.8 billion remained available under the authorization.

In the first nine months of 2024, the Company purchased $1,096 million of its own stock, compared to $31 million of stock purchases in the first nine months of 2023.

As of September 30, 2024, approximately $3.1 billion remained available under the authorization.

In February 2024, 3M’s Board of Directors declared a first-quarter 2024 dividend of $1.51 per share.

In May 2024, 3M's Board of Directors declared a second-quarter 2024 dividend of $0.70 per share resetting 3M's dividend post-Solventum spin.

In August 2024, 3M's Board of Directors declared a third-quarter 2024 dividend of $0.70 per share.

Results of Operations

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Percent of net sales) 2024 2023 Change 2024 2023 Change

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Research, development and related expenses (R&D) 4.3 4.3 — 4.3 4.6 (0.3)

Gain on business divestitures — (0.6) 0.6 — (0.2) 0.2

Operating income (loss) margin 20.9 % (49.4) % 70.3 % 20.1 % (62.3) % 82.4 %

Stock compensation expense was $154 million and $35 million for the second quarter of 2024 and 2023, respectively, and $180 million and $155 million for the six months ended 2024 and 2023, respectively, which impacts cost of sales;

selling, general and administrative expenses (SG&A);

and research, development and related expenses (R&D).

The Company’s annual stock option and restricted stock unit grant is typically made in February.

As discussed in Note 18, because of certain accounting rules, grants to employees that are retiree-eligible are essentially fully reflected as compensation at time of grant.

This retiree-eligible population generally represents approximately 34 percent of the annual grant stock-based compensation expense;

therefore, higher stock-based compensation expense is typically recognized in the first quarter.

However, due to the spin-off of Solventum (see Note 2), the 2024 annual grant was made in May, after the April 1, 2024 separation.

Defined benefit pension and postretirement service cost expense for continuing operations (which impacts cost of sales, SG&A, and R&D) for the first six months of 2024 was $48 million compared to $56 million in same period last year (as discussed in Note 13).

For total year 2024, considering the remeasurements of U.S.

pension and postretirement pension plans and second quarter 2024 $795 million pension settlement charge associated the pension risk transfer special item (all discussed in Note 13), 3M estimates full year 2024 continuing operations defined benefit pension and postretirement service cost expense to total approximately $195 million while continuing operations non-service pension and postretirement net benefit cost is anticipated to be a charge of approximately $810 million, for a total estimated continuing operations consolidated defined benefit pre-tax pension and postretirement expense of approximately $1,005 million.

These amounts reflect a decrease of $27 million and an increase of $918 million in the service and non-service cost components, respectively, compared to 2023 on similar basis as discussed below

For total year 2023 on a comparable continuing operations basis, the Company recognized defined benefit pension and postretirement service cost expense of $222 million and a benefit of $108 million related to all non-service pension and postretirement net benefit costs (after settlements, curtailments, special termination benefits and other) for a total continuing operations defined benefit pension and postretirement expense of $114 million.

For 2025, 3M preliminarily expects a year-on-year non-service pension and postretirement expense tailwind of approximately $720 million, primarily as a result of the second quarter 2024 pension risk transfer charge special item (see Note 13 and section entitled “Description of special items”).

Adjusting for this 2024 special item, 3M expects a year-on-year headwind of approximately $70 million primarily due to amortization of prior service costs and impacts from previously deferred asset losses.

These estimates are based on assumptions from 3M's most recent remeasurements of applicable plans carrying over to the year-end 2024 measurement.

The Company continues to make investments in the implementation of new business systems and solutions, including enterprise resource planning, with these investments impacting cost of sales, SG&A, and R&D.

Cost of Sales:

Cost of sales, measured as a percent of sales, decreased in the second quarter and first six months of 2024 when compared to the same period last year.

Cost of sales, measured as a percent of sales, decreased in the third quarter and first nine months of 2024 when compared to the same period last year.

Decreases were primarily due to ongoing manufacturing productivity initiatives and lower raw materials and energy costs, along with lower year-on-year restructuring charges.

In the second quarter of 2024, these decreases were partially offset by timing of stock-based compensation grants.

See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Selling, General and Administrative Expenses:

SG&A, measured as a percent of sales, decreased in the second quarter and first six months of 2024 when compared to the same period last year.

Decreases were primarily impacted by a $10.3 billion pre-tax charge related to the PWS settlement in the second quarter of 2023 (discussed in Note 17).

SG&A in 2024 was impacted by lower year-on-year restructuring charges and the second quarter 2024 timing of stock-based compensation grants.

SG&A, measured as a percent of sales, decreased in the third quarter and first nine months of 2024 when compared to the same period last year.

Decreases were primarily impacted by a $10.3 billion pre-tax charge related to the PWS settlement and the $4.2 billion pre-tax charge related to the CAE settlement in the second and third quarters of 2023 respectively (both discussed in Note 17).

SG&A in 2024 was also impacted by lower year-on-year restructuring charges.

See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Research, Development and Related Expenses:

R&D, measured as a percent of sales, slightly decreased in the second quarter and first six months of 2024 when compared to the same period last year.

R&D, measured as a percent of sales, was consistent in the third quarter and decreased in the first nine months of 2024 when compared to the same period last year.

3M continues to invest in a range of R&D activities from application development, product and manufacturing support, product development and technology development aimed at disruptive innovations.

See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Gain on Business Divestitures:

In 2023, 3M recorded a pre-tax gain of $36 million related to the sale of assets associated with its dental local anesthetic business net of a previous contingent indemnification obligation from a 2020 divestiture.

Other Expense (Income), Net:

See Note 7 for a detailed breakout of this line item.

Interest expense (net of interest income) increased in the second quarter and first six months of 2024 compared to the same period year-on-year primarily driven by the addition of imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement in the second and third quarter of 2023 respectively (discussed in Note 17).

The non-service pension and postretirement net benefit decreased approximately $821 million and $836 million in the second quarter and first six months of 2024, respectively, compared to the same period year-on-year, largely due to the $795 million second quarter 2024 pension settlement charge as a result of transferring a portion of U.S.

Interest expense (net of interest income) decreased in the third quarter compared to the same period last year due to the pay down of debt maturities and additional interest income from increased cash balances.

Interest expense (net of interest income) increased in the first nine months of 2024 compared to the same period last year primarily driven by the addition of imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement in the second and third quarters of 2023 respectively (discussed in Note 17) partially offset by additional interest income.

The non-service pension and postretirement net benefit decreased approximately $33 million in the third quarter of 2024 and decreased approximately $869 million in the first nine months of 2024 compared to the same period last year, largely due to the $795 million second quarter 2024 pension settlement charge as a result of transferring a portion of U.S.

pension payment obligations and related plan assets to an insurance company (see Note 13).

Solventum ownership - change in value resulted in a year-on-year benefit of $1.1 billion for both second quarter and first six months of 2024 following Solventum's separation from 3M in April 2024 (discussed in Note 2).

See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Solventum ownership - change in value resulted in a year-on-year benefit of $0.6 billion and $1.7 billion for the third quarter and first nine months of 2024, respectively, following Solventum's separation from 3M in April 2024 (discussed in Note 2).

Provision (benefit) for Income Taxes:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Percent of pre-tax income/loss) 2024 2023 2024 2023

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June 30, Six months ended

September 30, Nine months ended

September 30,

(Millions) 2024 2023 2024 2023

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

(Millions) 2024 2023 2024 2023

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The primary noncontrolling interest relates to 3M India Limited, of which 3M’s effective ownership is 75 percent.

Certain Expenses Impacting Multiple Line Items within Results of Operations:

Stock compensation expense is discussed in Note 18 and impacts cost of sales, SG&A, and R&D.

As note therein, higher stock-based compensation expense is recognized in the quarter in which 3M’s annual stock option and restricted stock unit grant is made because of accounting rules for grants to employees that are retiree-eligible.

Typically, the annual grant is made in the first quarter.

However, due to the spin-off of Solventum (see Note 2), the 2024 annual grant was made in May, after the April 1, 2024 separation.

Defined benefit pension and postretirement service cost expense for continuing operations (which impacts cost of sales, SG&A, and R&D) for the first nine months of 2024 was $148 million compared to $167 million in same period last year (as discussed in Note 13).

The non-service cost component of pension and postretirement service cost impacts the other expense (income), net line item.

For total year 2024, considering the remeasurements of U.S.

pension and postretirement pension plans and second quarter 2024 $795 million pension settlement charge associated the pension risk transfer special item (all discussed in Note 13), 3M estimates full year 2024 continuing operations defined benefit pension and postretirement service cost expense to total approximately $195 million while continuing operations non-service pension and postretirement net benefit cost is anticipated to be a charge of approximately $825 million, for a total estimated continuing operations consolidated defined benefit pre-tax pension and postretirement expense of approximately $1,025 million.

These amounts reflect a decrease of $27 million and an increase of $933 million in the service and non-service cost components, respectively.

These estimates are based on assumptions from 3M's most recent remeasurements of applicable plans carrying over to the year-end 2024 measurement.

Significant Accounting Policies:

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Performance by Business Segment

Item 1, Business Segments, provides an overview of 3M’s business segments.

Item 1, Business Segments within 3M's 2023 Annual Report on Form 10-K, provides an overview of 3M’s business segments.

In addition, disclosures relating to 3M’s business segments are provided in Note 19.

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and Consumer.

Corporate and Unallocated and Other:

Outside of 3M's operating segments, 3M has Corporate and Unallocated and Other which are not reportable business segments as they do not meet the segment reporting criteria.

Because Corporate and Unallocated and Other include a variety of miscellaneous items, they are subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated and Other are presented separately in the preceding business segments table and in Note 19.

• Corporate and Unallocated operating income (loss) includes “corporate special items” and “other corporate expense-net”.

◦ Corporate special items include net costs for significant litigation impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters.

In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023—see Note 17), costs associated with the Aearo portion of respirator mask/asbestos matters were also included in corporate special items.

Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were not included in the Corporate net costs for significant litigation special item, instead being reflected in the

Safety and Industrial business segment.

Corporate special items for the periods presented also include divestiture costs and Russia exit costs/ benefits.

Divestiture costs include costs that were not eligible to be part of discontinued operations related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture.

▪ Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items and to Note 19 for additional information on the components of corporate special items.

Corporate special item net costs decreased year-over-year primarily due to lower net costs for significant litigation associated with Corporate and Unallocated.

◦ Other corporate expense-net includes certain enterprise and governance activities resulting in unallocated corporate costs and other activity and net costs that 3M may choose not to allocate directly to its business segments.

Other corporate expense-net also includes costs previously allocated to Solventum prior to the Separation that were not eligible to be part of discontinued operations, commercial activity with Solventum post-Separation, and certain operations of the former Health Care business segment retained by 3M.

▪ Other corporate operating expenses, net, decreased year-over-year in the second quarter and first six months of 2024 primarily due to lower pre-tax restructuring charges (see Note 6).

◦ This category principally reflects activity associated with:

▪ Operations of businesses of the former Health Care segment divested prior to the Separation and therefore not reflected as discontinued operations within 3M's financial statements, along with limited-duration supply agreements with those previous divestitures.

▪ Transition arrangement agreements (e.g.

fees charged by 3M, net of underlying costs) related to divested businesses, including those related to the Separation, as well as other applicable divestitures.

◦ Operating income categorized as "Other" increased year-over-year in the second quarter of 2024 and decreased year-over-year in the first six months of 2024 primarily due to the extent of transition arrangement income from divested businesses.

Operating Business Segments:

Information related to 3M’s business segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

Refer to 3M's 2023 Annual Report on Form 10-K, Item 1, Business, for discussion of 3M products that are included in each business segment.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

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Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

Second quarter 2024 results:

Sales in Safety and Industrial were down 0.2 percent in U.S.

Third quarter 2024 results:

Sales in Safety and Industrial were up 0.5 percent in U.S.

On an organic sales basis:

• Sales increased in industrial adhesives and tapes, personal safety, and automotive aftermarket, were flat in electrical markets and roofing granules, and decreased in industrial specialties and abrasives.

• Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for consumer electronics devices partially offset by continued mixed industrial end market demand as end customers remained cautious.

Business segment operating income margins increased year-on-year driven by benefits from organic volume growth, productivity and lower restructuring charges partially offset by headwinds from stock-based compensation and cost inefficiencies due to the spin of Solventum.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

First six months 2024 results:

• Sales increased in roofing granules, industrial adhesives and tapes and electrical markets, were flat in industrial specialties and automotive aftermarket, and decreased in abrasives and personal safety.

• Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for electronic devices and from growth in roofing granules and electrical markets.

Business segment operating income margins decreased year-on-year driven by cost inefficiencies due to the spin of Solventum, partially offset by benefits from organic growth and productivity.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

First nine months 2024 results:

Sales in Safety and Industrial were down 0.5 percent in U.S.

On an organic sales basis:

• Sales increased in roofing granules and industrial adhesives and tapes, were flat in personal safety, and decreased in industrial specialties, abrasives, electrical markets and automotive aftermarket.

• Growth was held back by disposable respirator sales decline within personal safety (which negatively impacted year-on-year first quarter organic growth by 0.8 percentage points) and industrial end market demand remained mixed.

This was partially offset by growth in industrial adhesives and tapes.

Business segment operating income margins increased year-on-year primarily driven by benefits from productivity actions, restructuring and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum.

• Sales increased in roofing granules and industrial adhesives and tapes, were flat in personal safety and electrical markets, and decreased in industrial specialties, abrasives and automotive aftermarket.

• Industrial end market demand remained mixed as end user and channel remain cautious.

Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for electronic devices and roofing granules driven by replacement demand for residential roofs.

Business segment operating income margins increased year-on-year primarily driven by benefits from productivity actions and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum.

Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

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Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

Second quarter 2024 results:

Third quarter 2024 results:

Sales in Transportation and Electronics were down 1.5 percent in U.S.

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On an organic sales basis:

• Sales increased in electronics, and decreased in advanced materials, and commercial branding and transportation,and automotive and aerospace.

• Sales increased in electronics and commercial branding and transportation, and decreased in advanced materials and automotive and aerospace.

• Growth was held back by headwinds related to PFAS manufactured products.

• Growth primarily came from electronics as consumer electronics OEM customers ramped production volumes ahead of the upcoming holiday season.

Automotive and aerospace was negatively impacted by decline in automotive OEM build rates partially offset by growth in aerospace driven by bonding and acoustic solutions.

Acquisitions:

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For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively.

Business segment operating income margins increased year-on-year driven by benefits from organic volume growth, productivity, and lower restructuring charges partially offset by headwinds from stock-based compensation and cost inefficiencies due to the spin of Solventum.

Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

First six months 2024 results:

Sales in Transportation and Electronics were up 0.2 percent in U.S.

Business segment operating income margins increased year-on-year driven by benefits from organic growth and productivity, partially offset by cost inefficiencies due to the spin of Solventum.

Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

First nine months 2024 results:

Sales in Transportation and Electronics were down 0.4 percent in U.S.

Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 3.7 percent in U.S.

On an organic sales basis:

• Sales increased in electronics and automotive and aerospace, were flat in commercial branding and transportation, and decreased in advanced materials.

• Growth came from strength in electronics due to additional spec-in wins and strength in semiconductor.

This was partially offset by headwinds related to PFAS manufactured products.

• Sales increased in electronics, were flat in commercial branding and transportation, and decreased in advanced materials, and in automotive and aerospace.

• Growth from strength in electronics due to additional spec-in wins and strength in semiconductor was offset by headwinds related to PFAS manufactured products.

Acquisitions/divestitures:

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For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively.

Business segment operating income margins increased year-on-year driven by benefits from strong leverage on organic sales volume growth, productivity actions, restructuring and strong spending discipline partially offset by cost inefficiencies due to the spin of Solventum.

Business segment operating income margins increased year-on-year driven by benefits from strong leverage on organic growth, productivity actions, and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum.

Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

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Percent of sales 20.2 % 20.5 % 18.9 % 18.0 %

Second quarter 2024 results:

Third quarter 2024 results:

Sales in Consumer were down 1.2 percent in U.S.

On an organic sales basis:

• Sales increased in home improvement and consumer safety and well-being, and decreased in home and auto care and packaging and expression.

• Growth was negatively impacted by continued softness in consumer discretionary demand for hardline goods along with product portfolio and geographic prioritization.

Business segment operating income margins decreased year-on-year driven by headwinds from organic volume decline, stock-based compensation and cost inefficiencies due to the spin of Solventum partially offset by lower restructuring charges.

First six months 2024 results:

• Sales increased in home improvement, and decreased in home and auto care, packaging and expression and consumer safety and well-being.

• Growth was led by home improvement driven by Command’s new product introductions for the back-to-school and holiday seasons.

The remaining divisions within the Consumer business declined due to portfolio prioritization actions as well as retail customers continuing to be price sensitive and value focused.

• Growth was negatively impacted by continued softness in consumer discretionary spending for hard goods along with product portfolio and geographic prioritization.

Business segment operating income margins decreased year-on-year driven by organic growth declines and headwinds from cost inefficiencies due to the spin of Solventum.

First nine months 2024 results:

Sales in Consumer were down 2.6 percent in U.S.

On an organic sales basis:

• Sales increased in home improvement and consumer safety and well-being, and decreased in home and auto care and packaging and expression.

• Sales increased in home improvement, and decreased in home and auto care, packaging and expression and consumer safety and well-being.

• Growth was negatively impacted by continued softness in consumer discretionary spending along with product portfolio and geographic prioritization.

Business segment operating income margins increased year-on-year from benefits from productivity actions, restructuring, portfolio initiatives, strong spending discipline partially offset by decline in organic sales volume and cost inefficiencies due to the spin of Solventum.

Business segment operating income margins increased year-on-year from benefits from productivity actions, portfolio initiatives, and strong spending discipline, partially offset by decline in organic growth and cost inefficiencies due to the spin of Solventum.

Corporate and Unallocated and Other:

Outside of 3M's reportable operating segments, 3M has Corporate and Unallocated and Other which are not reportable business segments as they do not meet the segment reporting criteria.

Because Corporate and Unallocated and Other include a variety of miscellaneous items, they are subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated and Other are presented separately in the preceding business segments table and in Note 19.

• Corporate and Unallocated operating income (loss) includes “corporate special items” and “other corporate expense-net”.

◦ Corporate special items include net costs for significant litigation impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters.

Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were not included in the Corporate net costs for significant litigation special item, instead being reflected in the Safety and Industrial business segment.

Corporate special items for the periods presented also include divestiture costs and Russia exit costs/ benefits.

▪ Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items for additional information on the components of corporate special items.

Corporate special item net costs decreased year-over-year in the third quarter and first nine months of 2024 primarily due to lower net costs for significant litigation associated with Corporate and Unallocated.

▪ Other corporate operating expenses, net, decreased year-over-year in the third quarter and first nine months of 2024 primarily due to the extent of non-discontinued operations-eligible former Solventum-allocated costs included in Corporate and Unallocated prior to Solventum's April 2024 Separation.

◦ This category principally reflects activity associated with:

▪ Transition arrangement agreements (e.g.

fees charged by 3M, net of underlying costs) related to divested businesses, including those related to the Separation, as well as other applicable divestitures.

◦ Operating income categorized as "Other" were similar year-over-year in the third quarter of 2024 and decreased year-over-year in the first nine months of 2024 primarily due to the extent of transition arrangement income from divested businesses.

Operating Business Segments:

Information related to 3M’s business segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

Financial Condition and Liquidity

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3M’s commercial paper program permits the Company to have a maximum of $5 billion outstanding with a maximum maturity of 397 days from date of issuance.

The Company had no commercial paper outstanding at June 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

The Company had no commercial paper outstanding at September 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

The strength of 3M’s credit profile and significant ongoing cash flows provide 3M proven access to capital markets.

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As of the date of this report, 3M has a credit rating of A3, stable outlook from Moody's Investors Service, a credit rating of BBB+, negative outlook from S&P Global Ratings, and a credit rating of A-, stable outlook from Fitch.

The Company’s total debt associated with continuing operations at June 30, 2024 decreased when compared to December 31, 2023 as a result of $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

The Company’s total debt associated with continuing operations at September 30, 2024 decreased when compared to December 31, 2023 as a result of $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

Amounts borrowed by Solventum during the first quarter of 2024 were a liability associated with discontinued operations and, as transferred obligations, became the sole responsibility of Solventum after the April 1, 2024 Separation, as discussed in Note 12.

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3M also has a medium-term notes program (Series F) program, originally established in 2016, up to an aggregate principal amount of $18 billion.

As of June 30, 2024, the total amount of debt issued under the (Series F) program is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).

As of September 30, 2024, the total amount of debt issued under the (Series F) program is approximately $17.6 billion (utilizing the foreign exchange rates applicable at the time of issuance for the euro denominated debt).

The Company has not issued any debt under the (Series F) program since February 2019 and does not intend to issue any additional debt under this program in the future.

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The agreement replaced the amended and restated $3.0 billion, five-year revolving credit agreement and the $1.25 billion 364-day credit facility that would have expired in November 2024 and November 2023, respectively.

The credit facility was undrawn at June 30, 2024.

The credit facility was undrawn at September 30, 2024.

Under the $4.25 billion credit facility, the Company is required to maintain its EBITDA to Interest Ratio as of the end of each fiscal quarter at not less than 3.0 to 1.

This is calculated (based on amounts defined in the amended agreement) as the ratio of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for the same period.

At June 30, 2024, this ratio was approximately 16 to 1.

At September 30, 2024, 3M was in compliance with this requirement.

Debt covenants do not restrict the payment of dividends.

The Company also had $329 million in stand-alone letters of credit and bank guarantees issued and outstanding at June 30, 2024.

The Company also had $343 million in stand-alone letters of credit and bank guarantees issued and outstanding at September 30, 2024.

These instruments are utilized in connection with normal business activities.

Cash, cash equivalents and marketable securities:

At June 30, 2024, 3M had $10.4 billion of cash, cash equivalents and marketable securities, of which approximately $4.8 billion was held by the Company’s foreign subsidiaries and approximately $5.6 billion was held in the United States.

At September 30, 2024, 3M had $7.3 billion of cash, cash equivalents and marketable securities, of which approximately $5.3 billion was held by the Company’s foreign subsidiaries and approximately $2.0 billion was held in the United States.

These balances are invested in bank instruments and other high quality securities.

At December 31, 2023, 3M had $5.8 billion of cash, cash equivalents and marketable securities, of which approximately $3.1 billion was held by the Company’s foreign subsidiaries and $2.7 billion was held by the United States.

The increase from December 31, 2023 was driven by proceeds from Solventum's issuance of debt prior to the Separation as discussed in Note 12, of which approximately $7.7 billion of proceeds was retained by 3M in the Separation, partially offset by debt maturities.

As discussed in the "Material Cash Requirements from Known Contractual and Other Obligations" section further below, 3M expects to pay approximately $3.7 billion in July 2024 related to the PWS Settlement and CAE Settlement, reducing cash, cash equivalents and marketable securities ($0.7 billion was paid in the first half of 2024 - discussed in Note 17).

The increase from December 31, 2023 was driven by $8.4 billion in proceeds from debt (primarily related to Solventum's issuance of debt prior to the Separation as discussed in Note 12) partially offset by approximately $4.5 billion in payments associated with PFAS-related other environmental liabilities and the CAE legal settlement (both discussed in Note 17 - note also the "Material Cash Requirements from Known Contractual and Other Obligations" section further below) and debt maturities.

Net Debt (non-GAAP measure):

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3M believes net debt is meaningful to investors as 3M considers net debt and its components to be important indicators of liquidity and financial position.

The table below provides net debt as of June 30, 2024 and December 31, 2023.

(Millions) June 30, 2024 December 31, 2023 Change

The table below provides net debt as of September 30, 2024 and December 31, 2023.

(Millions) September 30, 2024 December 31, 2023 Change

Total debt $ 13,189 $ 16,035 $ (2,846)

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Working capital (non-GAAP measure):

(Millions) June 30, 2024 December 31, 2023 Change

(Millions) September 30, 2024 December 31, 2023 Change

Current assets $ 16,299 $ 16,379 $ (80)

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3M believes working capital is meaningful to investors as a measure of operational efficiency and short-term financial health.

Working capital increased $4.1 billion compared with December 31, 2023.

Balance changes in current assets increased working capital by $3.1 billion, driven largely by increases in cash and cash equivalents due to proceeds retained by 3M in the Separation from Solventum's issuance of debt partially offset by debt maturities.

Balance changes in current liabilities increased working capital by $1.0 billion, primarily due to short-term borrowings and current portions of long-term debt partially offset by increases in current liabilities relating to other environment liabilities and the CAE Settlement (discussed in Note 17).

Working capital increased $3.8 billion compared with December 31, 2023 primarily driven by lower balances of current liabilities principally of discontinued operations, short-term borrowings and current portions of long-term debt, and current liabilities relating to the PWS settlement (discussed in Note 17).

Discussions of cash flows from operating, investing and financing activities are provided in the sections that follow.

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Cash flows from operating activities can fluctuate significantly from period to period, as working capital movements, tax timing differences and other items such as litigation payments can significantly impact cash flows.

In the first six months of 2024, cash flows provided by operating activities decreased $996 million compared to the same period last year, primarily driven by payments of $603 million related to the CAE Settlement (discussed in Note 17) and balance changes in inventories decreasing operating cash flow $371 million (a decrease of operating cash flow by $270 million in 2024, compared to an increase in operating cash flow by $101 million in 2023).

The second quarter pre-tax charge of approximately $10.3 billion in 2023 related to the PWS Settlement (discussed in Note 17 largely impacted the net income component above, with offsets in the other-net and deferred tax elements.

In the first nine months of 2024, cash flows provided by operating activities decreased $4.7 billion compared to the same period last year, primarily driven by approximately $4.5 billion in payments associated with PFAS-related other environmental liabilities and the CAE legal settlement (both discussed in Note 17).

The 2023 pre-tax charges of $10.3 billion related to the PWS Settlement and of $4.2 billion related to the CAE settlement largely impacted the net income component within the Consolidated Statements of Cash Flows, with offsets in the other-net and deferred tax elements.

Cash Flows from Investing Activities:

Investments in property, plant and equipment (PP&E) enable growth across many diverse markets, helping to meet product demand and increasing manufacturing efficiency.

3M invested $644 million on PP&E in the first six months of 2024.

3M invested $890 million on PP&E in the first nine months of 2024.

3M invests in renewal and maintenance programs, which pertain to cost reduction, cycle time, maintaining and renewing current capacity, eliminating pollution, and compliance.

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Debt cash flow activity includes proceeds from Solventum's issuance of $8.4 billion in aggregate principal amount of debt in the first quarter of 2024 partially offset by $2.9 billion in debt maturities, consisting of $1.1 billion of medium-term notes and $1.8 billion repayment of commercial paper borrowings.

The gross commercial paper issuances and repayments, in addition to repayments of the fixed-rate notes are largely reflected in “Proceeds from debt (maturities greater than 90 days)” and "Repayment of debt (maturities greater than 90 days)".

The Company had no commercial paper outstanding at June 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

Gross commercial paper issuances and repayments, in addition to repayments of the fixed-rate notes are largely reflected in “Proceeds from debt (maturities greater than 90 days)” and "Repayment of debt (maturities greater than 90 days)".

The Company had no commercial paper outstanding at September 30, 2024, compared to $1.8 billion commercial paper outstanding as of December 31, 2023.

3M’s primary short-term liquidity needs are met through cash on hand and U.S.

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Repurchases of common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes.

In the first six months of 2024, the Company purchased $421 million of its own stock.

In the first nine months of 2024, the Company purchased $1,096 million of its own stock.

For more information, refer to the table titled “Issuer Purchases of Equity Securities” in Part II, Item 2.

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In May 2024, 3M's Board of Directors declared a second-quarter 2024 dividend of $0.70 per share resetting 3M's dividend post-Solventum spin.

In August 2024, 3M's Board of Directors declared a third-quarter 2024 dividend of $0.70 per share.

Cash flows from financing activity in 2024 also include $0.6 billion of net cash transferred to Solventum associated with the close of the Separation (discussed in Note 2).

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See the Financial Condition and Liquidity - Material Cash Requirements from Known Contractual and Other Obligations section of Item 7 of 3M's 2023 Annual Report on Form 10-K.

Amongst the items and amounts referenced therein, 3M expects to pay approximately $3.7 billion in July 2024 related to the PWS Settlement and CAE Settlement.

Cautionary Note Concerning Factors That May Affect Future Results

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• the availability and cost of purchased components, compounds, raw materials and energy due to shortages, increased demand and wages, supply chain interruptions, or natural or other disasters,

• 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,

• the impact of acquisitions, strategic alliances, divestitures, and other strategic events resulting from portfolio management actions and other evolving business strategies,

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis