3M Company
MMM · NYSE
Next quarter
Reports Oct 20, 2026.
Consensus is $2.40 EPS for Sep 2026 across 5 estimates, ranging $2.37 to $2.43.
MMM Jun 2026
- 5.73%
- 0.00%
- $2.27
- $2.40
- —
- $6.50B
Reported results
- $6.50B
- 41.28%
- $984.00M
- 15.14%
- $933.00M
- $1.78
Highlights
- Adjusted EPS: Q2 adjusted EPS was $2.40, 11% above $2.16 a year ago and 5.7% above the $2.27 consensus; GAAP diluted EPS was $1.78 versus $1.34.
- Underlying sales: Adjusted sales increased 5.5% to $6.5 billion, with adjusted organic growth of 5.4%; reported sales rose 2.4% after a 0.6% divestiture headwind.
- Margin delivery: Adjusted operating margin expanded 40 basis points to 24.9%, while GAAP margin fell 290 basis points to 15.1% because of special items.
- Segment momentum: Organic sales grew 8.2% in Safety and Industrial and 5.9% in Transportation and Electronics, offsetting a 2.1% decline in Consumer.
- Guidance increase: 3M raised full-year adjusted EPS guidance to $8.80-$8.95 from $8.50-$8.70, alongside adjusted organic sales growth above 3.5% and margin expansion of 70-80 basis points.
- Cash generation: Operating cash flow was $986 million and adjusted free cash flow was $1.35 billion in the quarter; 3M returned $1.4 billion through dividends and share repurchases.
- Portfolio actions: 3M recorded a $336 million pre-tax loss on the Dyneon divestiture and completed the $1.95 billion Madison Fire & Rescue acquisition on July 1, which was not included in guidance.
- Litigation exposure: PFAS-related environmental liabilities stood at $7.4 billion at quarter-end, while Combat Arms Earplugs liabilities were $1.9 billion.
Analysis
3M's second quarter was a clear adjusted earnings beat and a continuation of the operating recovery, although reported results remained heavily distorted by portfolio and legacy-liability items. Adjusted EPS of $2.40 exceeded the $2.27 consensus by 5.7% and rose 11% year over year, while adjusted sales increased 5.5% to $6.5 billion on 5.4% organic growth. GAAP revenue was up 2.4% from $6.34 billion a year ago and 7.8% from $6.03 billion in Q1. GAAP diluted EPS rose to $1.78 from $1.34 last year and $1.23 in the prior quarter.
The core print was led by industrial demand and margin execution. Safety and Industrial delivered 8.2% organic growth and $859 million of operating income, while Transportation and Electronics posted 5.9% organic growth and $503 million of operating income. Consumer remained the weak spot, with organic sales down 2.1% and operating income declining to $252 million. Adjusted margin reached 24.9%, up 40 basis points year over year despite tariffs, growth investments and post-exit cost dis-synergies. Strong first-half performance drove the EPS guidance increase to $8.80-$8.95. Cash generation was also solid, with $1.35 billion of adjusted free cash flow, though the quarter included a $336 million divestiture loss and ongoing PFAS and Combat Arms liabilities.
Core operating performance
Underlying execution was stronger than the reported sales line suggests. Adjusted sales grew 5.5% year over year to $6.5 billion, including 5.4% adjusted organic growth. Industrial, safety, semiconductor and data-center demand drove the improvement, while consumer and consumer electronics were weaker. Adjusted operating income was $1.62 billion, producing a 24.9% margin versus 24.5% a year earlier. Management attributed the margin improvement to growth, productivity and favorable foreign exchange, partly offset by tariffs, growth investments and cost dis-synergies following the PFAS exit and Solventum spin-off.
- GAAP distortion: GAAP operating income fell to $984 million from $1.14 billion, and GAAP margin declined to 15.1% from 18.0%, primarily because of the $336 million divestiture loss and $100 million of transformation costs.
- Non-operating items: Other income was $136 million, compared with $217 million of other expense a year ago, including a $303 million gain from the change in value of 3M's Solventum ownership interest.
- Per-share benefit: The diluted share count fell to 522.4 million from 540.6 million a year ago, supporting adjusted EPS growth alongside operating improvement.
Segment demand and mix
The quarter's growth was concentrated in 3M's industrial franchises. Safety and Industrial and Transportation and Electronics together generated 5.3% organic growth, while Consumer contracted. Segment operating income increased 8.0% in Safety and Industrial and 5.0% in Transportation and Electronics, whereas Consumer operating income declined 6.0%.
- Safety and Industrial: Sales rose to $3.09 billion from $2.86 billion, with 8.2% organic growth and operating income of $859 million versus $738 million. Personal Safety sales were $965 million, up from $882 million, and Industrial Adhesives and Tapes sales were $642 million, up from $568 million.
- Transportation and Electronics: Sales increased to $2.07 billion from $1.94 billion, with 5.9% organic growth and operating income of $503 million versus $479 million. Electronics sales reached $682 million, up from $633 million.
- Consumer: Sales declined to $1.25 billion from $1.27 billion, including 2.1% organic contraction. Operating income fell to $252 million from $268 million, with weakness in Home Improvement and Packaging and Expression.
Raised 2026 outlook
3M raised its full-year outlook after the first-half performance. The revised forecast implies that the company expects to sustain improving organic growth and adjusted profitability through the second half, while excluding the Madison Fire & Rescue acquisition because it closed after quarter-end.
- Sales: Adjusted total sales growth is expected to exceed 4.5%, including adjusted organic sales growth above 3.5%.
- Profitability: Adjusted operating margin expansion is now expected at 70-80 basis points.
- Earnings: Adjusted EPS guidance increased to $8.80-$8.95 from $8.50-$8.70; the six-month adjusted EPS base was $4.54.
- Cash: Adjusted operating cash flow is expected at $5.8-$6.0 billion, with adjusted free cash flow of $4.7-$4.9 billion and conversion above 100%.
- Acquisition: Madison Fire & Rescue closed July 1 for approximately $1.95 billion. 3M owns 50.1% of the consolidated venture and received approximately $0.7 billion of net proceeds from venture financing and Bain Capital's contribution.
Cash deployment and balance sheet
Cash generation improved materially from the prior-year period, but shareholder returns and portfolio activity continued to reduce liquidity. Quarter-end cash and cash equivalents were $2.96 billion, down from $5.24 billion at December 31, 2025, while long-term debt was broadly stable at $10.9 billion.
- Cash flow: Operating cash flow was $986 million versus an outflow of $954 million in Q2 2025. Adjusted free cash flow was $1.35 billion, up from $1.28 billion, and adjusted free cash flow conversion was 107%.
- Capital deployment: 3M returned $1.4 billion to shareholders in the quarter. Through six months, treasury stock purchases and dividends totaled $3.81 billion.
- Working capital: Accounts receivable increased to $3.93 billion from $3.53 billion at year-end, while inventories rose to $3.77 billion from $3.66 billion.
- Acquisition financing: 3M's $1.43 billion term loan facility was undrawn at June 30 but was drawn in July to fund the Madison transaction.
Litigation and portfolio cleanup
Legacy liabilities and portfolio restructuring continued to dominate the gap between GAAP and adjusted earnings. 3M completed its exit from PFAS manufacturing by the end of 2025, but remediation, settlement payments and legal proceedings remain material. The quarter also included the divestiture of Dyneon GmbH, a former PFAS manufacturer, at a significant accounting loss.
- PFAS: Net costs for significant litigation and PFAS exit reduced operating income by $183 million in Q2, compared with $347 million a year earlier. Recorded PFAS-related environmental liabilities were $7.4 billion at June 30, including $2.9 billion current and $4.5 billion noncurrent.
- Combat Arms Earplugs: Accrued CAE liabilities were $1.9 billion at quarter-end, down from $2.4 billion at December 31, 2025, primarily reflecting scheduled payments and interest accretion.
- Cash payments: Pre-tax cash payments related to significant litigation and PFAS exit were $858 million in Q2 and $960 million in the first six months. Insurance recovery benefits were $13 million in the quarter and $290 million year to date.
- Divestiture and restructuring: The Dyneon transaction generated a $324 million pre-tax loss, included within the $336 million consolidated loss on business divestitures. Transformation charges were $100 million in Q2 and $166 million in the first half.
