Post-It Maker 3M Stock Gains On Q3 Performance, Raises FY23 Outlook Following EBITDA Margin Expansion

3M Co MMM reported third-quarter FY23 adjusted net sales of $8.02 billion, a decline of 3% year-over-year, beating the consensus of $7.97 billion. Net sales totaled $8.31 billion, down 3.6% Y/Y, with an organic sales decline of 3.7%.

Adjusted EPS was $2.68 compared to $2.60 in 3Q22, beating the consensus of $2.34.

MMM reported an operating loss of $2.65 billion, compared to operating income of $4.16 billion a year ago.

Net cash provided by operating activities for the nine months ended September 30, 2023, was $4.69 billion, compared to $3.67 billion in 3Q22.

Adjusted free cash flow conversion year-to-date was 115% compared to 72% a year ago.

Adjusted EBITDA increased 4.6% Y/Y to $2.33 billion, and the margin expanded 211 bps to 29%.

3M returned $828 million to shareholders via dividends during the quarter.

The company stated that Q3 results demonstrate robust operational execution, ongoing restructuring efforts, and proactive spending discipline, alongside advancing the Health Care spin with leadership appointments, which is expected to occur during the first half of 2024.

4Q23 Outlook: MMM sees Adjusted sales of $7.6B to $7.7B and Adjusted earnings per share of $2.13 to $2.33.

FY23 Outlook, raised: 3M anticipates adjusted EPS to be in the range of $8.95-$9.15 from $8.60-$9.10 prior, versus the $8.68 estimate.

It expects Adjusted operating cash flow of $6.5 to $6.9 billion (prior $5.9 billion to $6.3 billion).

The company expects Adjusted FY23 total sales growth to decline by -5% versus a decline of -5% to -1% prior, reflecting a decline in adjusted organic sales of approximately -3%.

Price Action: MMM shares are trading higher by 5.30% at $90.14 on the last check Tuesday.

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