MMM - Earnings call transcript Q1 2018

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Operator

Thank you for standing by. Welcome to the 3M First Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded, Tuesday, April 24, 2018. I would now like to turn the call over to Bruce Jermeland, Director of Investor Relations at 3M.

Bruce Jermeland

morning, good and you, everyone. Thank first Welcome business XXXX to our review. quarter

Gangestad, Thulin, and on the call we'll Chief then President Nick comments, Officer. our website today Xm.com under release Investor Quarterly questions. accompanying Earnings. some the will this that XM's today's Please and Operating Chief Nick Relations Inge are and and presentation our On note call formal heading Roman, Inge your Chairman, make Financial Mike and Officer; our earnings take slide are posted at CEO;

be we remind Before closer Day, will let Please More on the for XX. held of begin, our Investor Thursday, your Minnesota our X. October earnings get headquarters details take we Paul, statement have moment next read for Please July Also, which upcoming X. events we me in calendars established to on found you as XXXX at a the on St. the upcoming our our and forward-looking to calls on November in Slide date a dates for event. mark investor XX be available Slide XX. will

some Reconciliations to the legal measures, press and in the the release. particular, non-GAAP XA of can financial based measurement certain to our views of call, During reflect the could found that cause Jobs impact These adjustment Cuts Minnesota. appendix throughout today's for current predictive the of performance measures presentation financial of State Form that settlement measures our results make are Act of important we'll about in of the events lists today's future presentation, actual on making most and note and of the and differ disclosed predictions. from references are results. and Item XM's most risks statements we'll our the be statements uncertainties. certain assumptions future be with previously expectations risk Please that which factors certain today's conference and XX-K Tax exclude to that subject recent non-GAAP

reflected a segment reporting for accounting on new filed XX, to and historical Both of this we reflecting Slide results of X, updating the are on Please updates Form I'll March financial to Lastly, X-K reported post-retirement a turn and dual cost. quarter. basis Inge. pension and these adoption the standard credit in our relative our and business starting hand off Inge? benefit to

Inge Thulin

you, posted We Bruce, per growth with strong Thank new return in our a good team business and continuing and year XXXX, organic and opened to cash expanded to increase a broad-based margins double-digit in off our groups. shareholders. invest business all everyone. the morning, while earnings Coming our across share

$X.XX billion, first enterprise. an growth and the numbers, our business of Safety robust deliver share, their is organic our X% sales in Graphics good all a organic Company-wide, Graphics, rose XXXX. Electronics was full groups, XX% and Total which earnings per year-on-year. quarter expected and for performance Consumer, increase to at year we $X.X Safety was high all-time delivered growth and growth, Looking of Three coming or above growth posted another X% ranges. within with that off Energy X%.

positive our straight in and and strengths improvements group, with Within portfolio growth, its business. we quarter growth, growth adjusted Electronics center pay and the and and growth in with addition home margins. know, posted growth, now X% organic strong particular Consumer recent sustained continued this to in and last in continued markets. in several over and see, actions quarter the in growth margins. we those portfolio adjusted improved you business Safety have also the we data also the fourth have of to of As in Graphics years, significantly years, improvement Energy terms semiconductor delivered X% off

Within and and drug Health food also which systems and that a saw each we consumables, health few growth safety. overall Business We X% of areas in delivery tough sales had against strengths information flat care growth. in medical good of Our comparison. Care, softness Groups, but were oral temper X%, grew many and Care Health areas respectively, down delivered Industrial growth in

Industrial for automotive tapes. to global grew year Industrial opened adhesives in again with industry. outperformed and build business Turning industrial our Business with also auto growth despite and Group. negative X% well the the OEM performance total once abrasives rates and good builds Automotive

in into aftermarket our anticipated year. was business than automotive growth going softer we Finally, the

developing Southeast continue including Looking Asia in at double-digit growth QX, in we in India, and strong on along our in to posted entire company's opportunities a X% China, geographical we Brazil. growth In capitalize perspective, growth markets, markets. performance from with developing

Turning to margins.

to expanded or at margins team X healthy with groups XX% Our our business higher. X a of XX%

years in XX we much In reminder, quarter a of year. In continued also which XX% research the to including returning by dividends dividend QX the billion as summary, throughout increased returned going of through anticipated we into combination the and for and while the of shareholders portfolio softer the to we We we sales into markets increases. to repurchases. the shareholders. significant consecutive cash future, build quarter, a dividend delivered investing XX%, both and our And few share of than while our marks were $X.X CapEx good growth our development

we're per top for today, guidance our of adjusting end year result, share. a full and As growth organic the earnings

prior of to expect We to versus along X% against growth to EPS previously, X% the of $XX.XX. $XX.XX $XX.XX with of organic $XX.XX X% to range X%

our premium our Going remain forward, value to keep returns customers confident we ability and our in for for shareholders. premium generating

We competitiveness you the deliver would beyond. and I that, results in to the With and strengthen strong playbook call will Nick? will XXXX positioned execute our Nick, to details. turn well and through who XM the are over continue to take

Nicholas Gangestad

and Thank morning, Inge, everyone. Slide to turn X. you, good Please

that topics following tax provisional Bruce Act, Cuts Recall with recorded call. the the in in expense touched earnings Tax me on Jobs quarter we of of QX. GAAP that begin beginning the the passage Let a impacted the first at two and that

IRS the these issued guidance to resulting expected, in As subsequent updates has amounts.

$X.XX As quarter. tax an share booked million the a $XXX per in or of result, first we additional expense

expect We we a for This within to Also, throughout million the reflected and impact an amounted per incurred updates charge legal further is charge Unallocated. to $XXX share. Corporate the $X.XX settlement earnings year. which IRS

these in on in first XXXX quarter Please organically. prepared first was items impact quarter sales. per turn both Excluding exclude Sales increase that of the XX% prices impacts, earnings points growth Slide first today were balance note $X.XX my quarter. review Selling the Please X earnings. to basis quarter increased will of share, the XX year-on-year. of an first the remarks X.X% to

prices impact and points marks across basis several positive businesses, XX geographic acquisitions Excluding divestitures contributed selling up price growth were the The net all our our underlying basis XX points to years. and of in electronics strongest quarter. performance were This areas. in

in, U.S. basis addition, increased prices X%. with X.X led sales Safety down percentage In Europe versus All Growth points. increased by points. first flat currency Consumer. was in the was quarter and by and sales X.X% West with up last growth in X.X% QX year. In dollars selling was XX translation foreign EMEA U.S., organic Graphics

in organic and China/Hong Health excluding growth, Asia Graphics led XX% Organic and Safety was electronics. X%, growth Care. Pacific up flat by or Kong. delivered Japan was mid-single-digit

up was X.X%, first Please a growth Brazil country of P&L to growth X%. Mexico delivered operating the in of Care $X.X were sales income billion, level, Finally, for At X.X%. Slide billion Health was organic by Graphics. Latin $X.X highlights. QX Canada while X%, up and X first America/Canada and Company-wide and organic quarter turn led with Safety quarter

operating quarter were margins First XX XX%, points basis year-over-year. up

XX the in Acquisitions basis points lower Let's a reduced net at margin material of margins. quarter. organic year-on-year by take points basis on inflation, Selling productivity the XXX basis footprint operating a divestitures closer of performance margins growth, look and actions first raw offset contributed our more price Leverage than to performance benefits to XX points. margins. components and combined adding

net hedging impacts retirement and by basis of points. higher points, basis benefit currency operating by reduced margins decreased Foreign XX margins cost XX

a look turn Let's at X closer Slide to for earnings-per-share. now

lower benefits actions portfolio growth, were share, per XX% added share year-on-year earnings quarter quarter. earnings to combined footprint The and a per the First year-over-year. organic productivity $X.XX $X.XX of in and up

hedging due $X.XX interest of by expense. net added a $X.XX earnings Other share retirement decreased impacts higher and expense net expenses currency year-on-year per to Foreign share.

which by for tax performance. driven tax in XX.X%, with was rate expertise. QX was $X.XX our line at benefits Slide cash and by turn X flow expectations, earnings our per rate continued underlying increased our reform from Please Our lower a look centers tax to The of chain share. supply

reform minus flow quarter percentage The earlier. to impact settlement and free conversion a by from legal settlement points. free that XX I cash adjustment legal the the flow decreased $XXX million, was First referred net cash by tax impacted

expenditures were million, $XXX First million quarter $XX up year-on-year. capital

to billion continue investments $X.X of we to year, For billion. the full the range CapEx in $X.X anticipate

first resulting cash our by Inge per As in increased mentioned to the during dividends paid quarter quarter. shareholders share we dividend $XXX in earlier, million XX%,

returned through our also $X versus to in to $XXX to billion are repurchases. year We With previously. million increasing this $X full billion share we billion growth $X billion mind, to shareholders range $X

Industrial, group on mid-single up and of organically. digits, Slide abrasives, delivered $X.X and first led growth up sales our review Let's The billion, quarter adhesives starting Within XX. performance, now business with X.X% Industrial tapes, up Group X%. Industrial Business was industrial by

Industrial's in margin XXX in offset growth single-digit Please shops. income and In truck a business geographic builds Industrial delivered automotive operating we and both over than in low by followed more up points. auto was a up of million, the good On by Pacific, increase from light X%, demand organic $XXX an solutions was X% operating growth outpacing aftermarket, a in quarter first car retail by was products States. XX.X%. United to basis, softer turn our and XX. for with X.X%, care, of Latin led Slide automotive OEM growth saw Our growth Asia America/Canada global over car by basis which body

First quarter up billion with businesses growth X.X% were sales $X.X all across Safety organically to Graphics geographies. and and

see business continued up across Safety our roofing demand in continues commercial to sheeting personal marking were growth, and our segments. markets. the pavement posted granules Personal global equipment double driven excellent business and This digits protective also growth, strong digits. positive both for The core solutions end Transportation mid-single businesses to by Our post quarter. safety all up

growth mid-single-digit increases Pacific business XX.X%, was Latin State and organic roadway in In to the XXX up future. their of Asia with with U.S. contracts Geographically, to operating both turn Please the year-on-year. recently Slide won points was high $XXX income California and infrastructure basis enable and in led America/Canada. addition, the single-digit upgrade million and EMEA both growth margins by of the of Operating XX. this

billion, both in food high increase first Growth safety was led sales business health single-digit Our up systems. a X.X% organically. $X.X Health and Care generated of quarter information by

in QX. America/Canada. with growth X%, X% saw Pacific $XXX which Care's followed X% care Our and margins mid-single-digit On softness strength the quarter business, internationally, developing growth offset in a represents first was geographic growth were markets, Brazil. good Latin million, the medical China/Hong XX%. by income Care, consumables particularly in and up flat basis, which Oral We economies, were by in U.S. quarter, segment within operating largest Health way, Health Asia the led in the posted by XX% operating led up in Kong continued to nearly developing continued increased

with in strong Partially robust systems semiconductor display consumer organic electronics. interconnect solutions. manufacturing side let's growth and Next, X.X% low X% decline grew in The in XX. Electronics very softness Growth Energy double-digit Sales demand electronics was growth on electronics billion. business in in and were centers, a for sales this and data solutions. including due cooling quarter. and materials $X.X the the continues to Electronics offsetting first Slide growth cover be organically, was materials fluids Energy of and to

with later down. business energy-related our flat geographic single expect in digits of this growth On Our telecommunications Please the Asia were note, down businesses low by X% close and a continue year. a we to organically basis, on organic to electrical sale increase markets led was telecommunications Pacific.

with Please $XXX Slide First turn quarter XX.X%. Electronics million Energy was margins to and XX. of operating for income operating

year-on-year. sales in and billion X.X% growth quarter were First organic $X.X Consumer was

declined. building grew several Home past business over record growth on performance the digits improvement high while consumer home the strong of quarter in single also delivered Our its care organically, track health positive care years.

Consumer Latin at was growth increase in by in the led by followed growth Looking X% a X% America/Canada. geographically, U.S.

category-leading as and invest expand Filtrete Post-it. brands, to our and such continue We

Smart During launched Filtrete QX, Filter. first-ever Bluetooth-enabled the we Air

conditions. Post-it We which hold rough in are surfaces to challenging designed Notes, also Extreme launched to even

were operating with operating at Finally, million by margins margins mentioned. footprint income was with product new launches actions, impacted year-over-year the Operating associated $XXX portfolio previously with and investments the I along XX.X%.

wraps That guidance. in be to margins to our quarter up results. Slide similar expect XXXX XX, XXs, I'll turn we our the and updated year, the low review Please review For XXXX. first of to

As Inge to our a EPS to growth of X%. year we full of X% guidance expect now are to prior a of to be updating versus respect in $XX.XX organic to range of $XX.XX remarks, we year to earnings, his the to $XX.XX. range previous full summarized X% expectation X% opening range With versus adjusted $XX.XX in

Our free we'll flow we conversion With you return cash full-year unchanged. now attention invested for for that, capital and take questions. expectations thank your and on your remain

Operator

[Operator Instructions].

Our comes of Research. first from Melius the line question Davis of Scott

Scott Davis

Chairman, Is he's thingie? special that new this before Inge's job call the last he becomes hosting

Inge Thulin

it's next I'm well, July quarter the as in going I I not. own No, as be would and away. well, so not

Scott Davis

is one one supply questions glad on you and on dynamic on have we're or really, around. keep change curve But the there business succession. supply-demand to on first, Or and several Well, X now anyways, still decelerating the price you for it really the Is good. in But sort in got dynamic? I've on just electronics, business, that's electronics? years? or is of some same, been Well,

Nicholas Gangestad

as Yes, it I'd worse. there's electronics better nor pretty the price trend business, side seeing typically seeing expect a slight We've It's say compete discernible accelerating accelerating trend forward, that Energy getting of Scott. the in not to up. down going and or Electronics and decline Scott. that in business. the What we on price been no continue but constant, of a in of it It's we

Scott Davis

Any mean, transition what what Mike Inge, change has I what focus? or of read mean, on? working as -- And Right. I been the Roman a early follow-on, on what's difference? just CEO might

Inge Thulin

yes, many know. that. together you here, transition of comments. Mike couple But going around as well. very so of worked Yes, have for is first The give we he all, comments will some Mike, years, a is

on and initial what most early he what But here, in were time every so day. every and that focused to delivering together to needs he's QX course, in with he with we done. be to XXXX is First his also thought out laid And Europe comments XXXX think make was very of relative But did like of so the aligned and feel on was some back currently, working in XXXX, talk should totally hour text much And me importantly, I and Mike worked so. together I we then also we so XXXX. are and forth. us all strategies QX. we

So Mike, if you like to add some comment on...

Michael Roman

with I Yes. starting to. delivering I'm would Scott, that's start where focused on now. QX XXXX

advance years, So six be leadership. proud Especially company. over -- enjoyed has those really working leadership helped accomplished of with team XX to we've his I his lot Inge. years, a I've I part the under And that been the last

to the and I playbook, as of that and Business playbook. focus And on things innovation say in lot what so Management been I on building a would the we've opportunities we commitment we our ahead. Portfolio in move our have And have the is Transformation the focus where similarities, is that we and really, including

right So that's where now. focus the is

Operator

Our line next UBS. the Winoker Steven question from of comes with

Steven Winoker

to I reduction wanted high at reduction the whole end high sort make incrementals Is the high on just sure of Just the that guidance. the of end? $X.XX at X% understood

Michael Roman

X% for outlook some a making to Yes, on specific to we X% businesses came through in where X% Steve. focused to of those and doing adjustment doing guidance of really as what that result the really X% organic market our we're EPS QX. the really and is markets on and adjustment we change saw that, The to softness growth from

Steven Winoker

maybe terms seeing softness heard, sounds this a the I what's mostly Europe, more side. Western cycle market discussion, little you're there what around what that -- And on going -- of clarity in in like Okay. short on

Michael Roman

Yes.

margin and in built and and to XXXX, look in to do low expected. And our say our part organic you in by our on still It's I back taking on -- digits. West what margins. past, with at talked of that's we're West as going improve footprint continue to If to Europe the be about so expectations XX% our portfolio we see that our growth to income we're tracking Europe, actions delivering that. growth came Europe would We that And in. focus West plan come in single

Steven Winoker

broadly then the in saw short just that Okay. you you that the for just that weakest case, us? speaking, And growth organic on cycle globally, basis can nail down

Michael Roman

several out think I markets. specific we Well, called

consumer electronics tracking I So would as the and as come expected our automotive say, aftermarket, we care into is year. we oral

Operator

of Ritchie comes question Joe next Our the Goldman of Sachs. line from

Joseph Ritchie

X% growth range some It we spent guidance, to March. was seems end organic higher step-down in the X%.? the still Can year. talk the achievable like of on be going to We the together for to time maybe the

I'm near-term at of wondering, a than from a things have So expected things to -- Have if all? April? a changed perspective, just originally bit off gotten in slower start little

Michael Roman

would I as back see at those month was coming we point, through out even called it it through we we in they specific March, the the And thought QX and out, tell market we played that through we would March. Joe, went segments that. that to softness was started to you, and -- as the to signaled

April, line in with is look starting April our expectations. you If at

those and we think driving what's the a but I in of improvement the some see really through that's it's so to And adjustment. that to to coming that specific couple the range we saw areas, expect adjustment -- really was those markets looking QX,

Joseph Ritchie

Okay, on just fair second. just costs to enough. a price for maybe If I touch were

difficult like it's just little the standpoint, for products. So But cost expected. for try with substitute expectations a to year the pricing cost better is little both inflation through also year to seems the on coming pricing from also, side. Maybe bit and more update on bit than inflation this an offset clearly, it a a

Nicholas Gangestad

Yes, Joe.

raw inflation. good You're across it with inflation, some prices strong to picking material that for price see points But on up as with expect accurately. a will -- prices. geographies. offset positive up it material our we XX are We in increases raw that on ourselves to more two all selling and the those and growth material points more than year, seeing off we remain start to basis end, raw And

transportation particularly December and around what guidance than more fact, we back In originally when the estimated derivatives logistics gave is crude expenses. we in and

the commodity offset on And if headwind. more stronger to raw we price back For this the of do that see think little materials. you to expecting the for than $X.XX earlier the -- our offset we may out benefit projects depending question we're somewhere now, a growth a somewhere to about materials, too, we a answer the of Steve's prices materials, raw set still to and year, to push, between that. Right $X.XX a guidance started year raw be $X.XX that headwind, a $X.XX expecting between to that's net we bit

So being now that's that offset by of impacting the that's year. But pricing higher for for we're what the earnings the also more expecting part year. we're our seeing than

Joseph Ritchie

That's $X.XX headwind helpful, Nick. perspective. Maybe well? a a the freight include that just of one cost clarification as range like kind from there, increased new $X.XX to Does there's

Nicholas Gangestad

does. it Yes,

Operator

of of comes question from next Tusa Our the Stephen Securities. JPMorgan line

Charles Tusa

in quarter? as there you the Easter us the -- had or perspective? year timing in I before. called little course then volatility how is to second around over bit So a does that the of had here know the the could level? quarter trend how lumpiness just do you kind from and a half first of going on the quarter, the of we that growth play the well second color how you the fourth growth out any maybe in How -- third we're into high give And

Nicholas Gangestad

Yes. to off I the out of and start April, a the Steve, rest strong year, expected us. as look over we're seeing for

trend the amongst year, any X So of those X. difference the don't see look really as at I I discernible quarters remaining

line the for there. organic coming in growth any them with I to X% now in, really don't our of All see year. expected X% lumpiness

Charles Tusa

your impacted the costs -- anything But of Okay. the would think are quarter I neutral-ish, the depresses the cost. here think wouldn't you so it from still that seasonality that first quarter anything there seasonal mean, a abnormally in in here? Is be result perspective? price I the Maybe price kind

Nicholas Gangestad

mentioned that, as -- I we timing thing we one anything Easter, that's with seasonal, the like anything than far Other think don't the see of Steve. as else

Operator

from of question line Kaplowitz Citi. next Our comes Andrew the of

Andrew Kaplowitz

little Health in soft growth So quarters, below Care, a over the couple last of has been but expectations. maybe

was the quarters. You has obviously, care, little a of it -- mentioned oral last than weaker couple been flat,

of X% You get to Care above for last We oral in this quarter. range the on? to your growth in year expectations year. the you as What goes in kind could seem improved long-term better know but care outperform Health year, Care are the did that reaccelerate reported high Health

Michael Roman

Yes. Thank you, Andy.

look medical growth we information did Health but had businesses, in softness flat. trend that care systems was health our at economies, Care, growth in our year. especially We we safety, go see continue developing by good was good through some consumables business, U.S. to our the You expect offset food internationally, the in we that as and Oral

a -- there. drug in year-on-year if So year. QX expect a playing that to that And pulling look delivery quarter. down see organic improvement last first up quarter-to-quarter was and our out, we down growth had we that also the know, But the that and down business we project-based and as comp business, some you strong you can against saw what's be is we at

-- more the those quarter issue, was care a first So oral focus. maybe was flat of but real

Andrew Kaplowitz

just in Industrial. maybe a There, second the you of momentum half did shifting to have the year. strong then relatively And Okay.

all forward? that look rebates having to growth. do do Industrial. pricing at of obviously, overpriced you sort pulling You What's that's Industrial, mentioned sort of how good in -- And it you've whether is with slowing on in had anything Do you aftermarket going at talked obviously auto think [indiscernible]. the you also Industrial? last maybe interesting you're in had And

Michael Roman

Yes.

and growth auto performance And As in and price rates. part of those of OEM and industrial that you over we in as abrasives tapes adhesives good were well. all build heard, had

In So portfolio, off aftermarket, products broad growth strong for of any didn't I we of because think a that's was care see our price. our automotive the Car QX, solutions was that really in retail. decline and so we market. It the indications it saw a for of price really just And was quarter. any specific and as no no a very ahead a we declines us market through was in went auto and pull-in in part and of which volume fall that body, saw changes. soft increases

was really that. it So

So the I we industrial see to think continue broader growth portfolio. strong across

Andrew Kaplowitz

don't in like Okay. aftermarket? And you it's or share think anything loss that auto

Michael Roman

No, any don't at see we that Andy. indication of all,

Operator

Our line & Stifel, next McCarthy of of question comes from Nicolaus Rob Company. the

Robert McCarthy

from do in strength that at maybe probably aside the Consumer And of commoditization care? consumer fair of of react I global facing parts there. was for U.S., mean defiance? think, U.S.? following you kind on 'XX, Andy's I decent about -- some the price But you did weakness, -- some up got Obviously, decent leveraging think it's overall the you U.S. indexed and be see of how questions product XX IPI do And some plus if you and you it don't formula some to slight line your Definitely, think some up under and to level your think points you might some questioning. raises in having basis think portfolio, you some XQ, to I health you say

Michael Roman

broad overall those again, do economic to and relative So -- I markets we backdrop. see to Rob, growth back go

and it's of project-based And aftermarkets, segments, couple the across portfolio so seeing really I it's and to we're when U.S., been care in you And in the it's market that's what think really now. businesses. it's U.S. right the a broadly look automotive isolated specific oral it's --

have Those some price couple value We changes. a kinds of project-based businesses. comps year-over-year of with are not

Robert McCarthy

just year-over-year any you main going look Q kind -- the coming a narrative there driver contracted basis? margin terms there give gross Slide XX of in out you can XX of And a way. at costs? that's kind about points. price Is of then your mix, terms P&L Obviously, if in consolidated by become on different us on on What's of a basis your maybe there

Nicholas Gangestad

be Rob, our one you visibility that's of not from to risk to our our is FX a that weaker offsets doing partially the bigger offset get by per strategy margin. Clearly, gross may there seeing some that U.S. some benefit share is from hedging dollar, things of FX. to our what earnings we in but

those become part our the goods first down in All points. sold. margin of that of in as cost of hedging down by XX -- losses as gross operating And of XXXX basis XX brought bringing margin well quarter

Robert McCarthy

of Or do drop think through the XX% teens, of Should about rolling definition we that currency margin incremental translation the kind the like about we low hedges structurally? coming of from through like by a drop think and how growth? FX

Nicholas Gangestad

that direction. margin, incremental The of Generally, in Rob, I haven't it what... quite thought

Robert McCarthy

through to bottom FX the line. drop from the Sorry,

Nicholas Gangestad

we movements. at point where hedging where we FX the cycle Right ago now, year are depending against a going comp we're gains. we're where vary will with a it in were having Yes, a

the hedging weaker having with losses we're Now U.S. dollar.

one out it will So I that put metric can't vary quarter-to-quarter. because like

Robert McCarthy

and Well, oversimplification. like traffic

Operator

[Operator Instructions].

Dray RBC from Capital of Our of Deane line Markets. next comes question the

Deane Dray

forth, to digits. there. development? and market given end us things war XM risk. Just is drivers consideration with the give potential impressive, so that about the the boycott you strength an geographies, have or that about a if all the Maybe is double And maybe just was of context China issue this in overhang up here, terms part product a drivers at the protectionism would boil, headline put and And American likely any brands any to news of trade came of

Michael Roman

trend a you in heard. talked we by And Deane, it advantage China, saw bit as domestic-facing our we're broad-based businesses, taking led So was how growth that. and would here of I say about again the

a care, adhesives businesses, parts grower. So strong of personal safety, and the of tapes industrial health was our domestic-facing some industrial

-- continued China the seeing in quality, are safety. trends strength the And been year, has over their are key electronics line so food we're innovations, we really that taking advantage with growth. also start We some broader as in air water quality,

different in in particular we portfolio be portfolio the I of customers economy the -- markets domestic outlook about So that broad-based China face at part plans the customer is we right set. and or see you contingency for the positioned how is it that with with the for businesses. and that our the position, with the things outcome is for think can in market, look broader good our -- broader But whatever China a growth, we're now, led all to we When there. it the a well

Nicholas Gangestad

add just I'll Deane, one Nick. is this Deane, thing.

local China there layer putting that's for we execute strategy think China. our think -- we I our within as that's in you're have China we are other aware, been customers. strategy we that our we manufacture in manufacturing of protection one has Chinese in that And

Deane Dray

helpful. Beginning And range just we kind today be $X.X you of do that Nick, what's terms a expectation expect announced of to Where -- a follow-up, timing? the of buybacks the $X in that adding billion being in range billion what of year, as leverage? see added. then increase and That's expected the to on

Nicholas Gangestad

would our the and to that our range best the in biggest the year. difficult not to added we're range total is December. expect we'll leverage variable the where impact share right level buyback -- of one end that's communicated estimate we I'm seeing adjustment estimate, with that This The what timing on leverage. now doesn't in for estimated updating say we add the is M&A expected leverage, I that. Deane, on up

Operator

the of from Julian line Our next of Mitchell comes question Barclays.

Julian Mitchell

from first business If in the road question then aspect the the sort productivity or you that $X.XX earnings map and aggregate had you of productivity. I laid and on so coming EPS maybe or previously. of out portfolio footprint, look transformation that, at just Maybe

raw of headwinds material around there light year any the volume shortfall and increased in as year, pulling urgency extracting from some higher the wondered, on this also was organic just the I increasing growth, for the if whether whole. So forward savings just amount a or productivity

Nicholas Gangestad

-- December. Julian, level originally the that we our estimate in estimated we productivity at how still for year, we're

expect our our we and But with quarter to was margins margins underlying at forward. first at Looking year, productivity the for positive. underlying XX%, that improve going productivity, the

to we're the in productivity think, than levels estimated And slightly we're in be the year on, we estimating lower of as have the year. volumes causing total that were in confident the one goes we'll lower the Our December. productivity first quarter, what factors for we

Julian Mitchell

be Understood. Electronics And just around segment. would and follow-up Energy the then my

there in Just trying slowdown at did the that obviously XXXX. very see end had of of to slowdown clearly manifest itself a sort you guided We understand, back QX.

So as that rate balance accelerate representative start low of you growth year, you to XXXX? base Or move may that sense QX that the a at you as is is look the think the the that, there of through current year? from

Michael Roman

Yes.

as markets, out those outlook, the of expected. offset interconnect our and we but fluids it our in those our with by centers solutions that I see markets. robust markets. consumer solutions, in the demand And -- we it for in consumer out would playing say, So as data We look much electronics and at that's in out products, And that, demand year, that's it's and electronics. growth beginning line we when laid semiconductor had playing strong the pretty at Julian, you that see

so range what through right we thought our come for And we're be would we we year. the as doing in

Inge Thulin

yes, around it's going business forth. think because I talk One that forward volume This comment, more about group important when so and is Inge. you

You work have ourself the to have done yourself and remind we remind the relative that's to portfolio. to been

had forward, now the And go right quarter we if the on margin ago growth see couple So really for challenged after a and many you side. relevance is of back us. were correct if years, -- is market now, years after can rate structure that you now we quarter quarter, tougher the and the for moving

now good very -- So quarter-by-quarter order some on the And But downs we in in know more I is ahead. us of important manage very where the because of volatile, work think element return very we as that put there XM. is to place sustainable for the despite I able feel move you. deliver high for and even be that is us very, We part think business to as portfolio end that a the and has it's right? very, business positive that's to a now volumes enterprise the up there where we and in some well margins now

Julian Mitchell

the balance if in the now in good point, electronics you in just inventory? that Maybe just on sell would any right being there's sell-through characterize and

Inge Thulin

Yes, yes. Yes, no it increase, does.

Operator

line the comes of from Laurence question Our of Jefferies. next Alexander

Laurence Alexander

quick Two ones.

outstanding, the on you're an Or product construction. Your there can by spending reasonably comments however draw touch Is any time is you secondly, to the innovation see customers? where line, were in lines to on issues the better update or markets what shoes, small, what if sprinkled your -- with spending us before that more a hear cycle expect that And to respect various of you are there, we traction end dropping? or could seeing an use various it increase with settlement, you is is litigation are, your on side?

Michael Roman

Yes.

we so strong side, out channel. important market. to home been products it -- for we -- part see is the growth the put and of increasing -- that see a through business the our our and is that that of construction, bringing It's buy portfolio, Business position I big of that strong improvement construction that growth that growth the in construction. the part expanded the into we of the channel markets coming that Group, ourselves And on Laurence, is that as big, has being our a a a are -- them. have innovation mix businesses in Consumer So that part lot we from growth continue well end as is and of in well that's to we of

your the So second on settlement. to NRD question, on back to follow-up your Laurence, second question, just the

Minnesota, with We are implementing working the the we're and the of expected. the as closely to State of process state, grant

well there think focus ahead. -- we've as got We are and we positioned we move

Laurence Alexander

precedent for -- can scenarios, I if a it seeing issues states? mudslinging just clarify, that. which I that mean, of does there's we're rule just But any Or other give just most in perspective improbable. maybe out highly states? guess, a similar your media on different you maybe around But other to of is lot been

Michael Roman

This our with them home a is No, something a on for and state of number situation. unique this is that years. we've been working

case in we're unique both is a them. as well as with this through working of So process the and grant the nature situation the that the

Operator

question comes Jeffrey from last line Vertical Sprague the Partners. of our of Research And

Jeffrey Sprague

I ones quick if me, could. for two Just

see to the apparent idiosyncratic a consumer these a anecdotes you of couple going concerning, Or or on channels? think some you other question. back actually shared perhaps from is kind It noise it perhaps consumer is timing the kind of the strength that in a interesting there. of potentially Do macroeconomic readily Just results and yet in cracking your -- of you some in things do is standpoint? just not U.S.

Michael Roman

you was home was We one as at talked by came consumer we growth through stronger Yes. Jeff, actually about, strengths as the QX. but care look we that it business And our home as there. was our led the business of U.S., of improvement, also saw positive.

to stronger see channel, in office our market. some the based, slight We continue broad but it declines growth in was U.S.

improvements very no, much for low outlook So line in in GDP and with retail spending.

Jeffrey Sprague

doing direct, business that see you there things model, of way? distribution all specifically anything very going to just kind any through of it's proactive these a for any on been opportunity reshape, on. that business there you of reposition kind change various these not and then and distribution perhaps care, channels? you Are Do others, And changes in kind dental, slog oral and maybe Danaher just go go the

Michael Roman

for really manage they it. interesting. how has It's become channel more efficient oral care changed The They over time.

in the in balanced channel and our and that maybe sellout in see the in channel. our You balance is how sell

that I our So changes on the channels that's care included. that oral would kind in our commerce many we across of with, We continue constant work more see say, change businesses, the going of broadly. -- to

focused customers through So models really that through channel work our We're with we think always our new as customers. partners their focus models that's serve use and well. is on and -- I changes new come our creating to those end

we're So in range focused there of oral broad strategies care beyond. a and on

Operator

conference That now Thulin back concludes closing turn the Inge portion call. of call question-and-answer over the comments. some our for will I to

Inge Thulin

Thank you.

we quarter broad-based continue performance, position is in have look long-term at pricing, strong in to I for EPS. you our XM and expanded important, XXXX for business margins into included day. and the which future. out many increase capabilities market listening, sustained experience, positives, and good evolve enterprise As growth profitable strong have across Equally and and build all double-digit and groups, first a success. Thank growth the we a continue to are our delivering well there

Operator

and your ask you that does the please today. gentlemen, We Ladies disconnect that participation conclude call you conference and for thank lines. for your

3M (MMM) 24 Apr 182018 Q1 Earnings call transcript