On Jan. 25, 3M Co. (MMM, Financial) reported fourth-quarter and full-year 2021 results that left Wall Street pleasantly surprised.
For the fourth-quarter, the St. Paul, Minnesota-based company reported sales of $8.6 billion, up 0.3% year-over-year. Organic local-currency sales increased 1.3%. Earnings per share were $2.31. Operating cash flow was $2.0 billion, while adjusted free cash flow was $1.5 billion, down 30% compared to the prior-year quarter. The company returned $1.8 billion to shareholders via dividends and gross share repurchases.
The quarterly reslults may not have been great, but for all of 2021, the company reported sales of $35.4 billion, up 9.9% over 2020 numbers. Organic local-currency sales increased 8.8%, while earnings per share were $10.12 as compared with $9.36 in 2020, an increase of 8%. Adjusted earnings per share were $10.12 versus $8.85 in 2020, a gain of 14%.
3M manufactures industrial, safety and consumer products. It operates through the following segments: Safety and Industrial, Transportation and Electronics, Health Care and Consumer. In the earnings release, the company announced its food safety business divestiture involving a Reverse Morris Trust transaction with Neogen Corp. (NEOG, Financial).
The stock finished at $173.74 after hours, barely changing as investors digested the mixed news. Growth for the year was spectacular, but the quarterly results weren't that much of a win compared to the year-ago quarter. In the quarter ended December 2020, in fact, earnings per share came in at $2.38.
"3M delivered a solid fourth-quarter performance – with notable strength in December – as we maintained our relentless focus on serving customers in a challenging external environment," said 3M CEO Mike Roman in the announcement. "Our team effectively managed supply chain disruptions, made good progress on pricing actions and controlled costs."
"Throughout 2021 we performed well, delivering full-year sales growth of 10 percent, robust cash flow and a strong increase in EPS. We also returned significant cash to shareholders, reduced debt and helped the world respond to COVID-19," Roman continued. "As we continue to actively manage our portfolio and improve our operations, we will prioritize investments in fast-growing end markets to drive long-term growth, as well as advance our commitment to sustainability. As we enter 2022, I am confident we will continue to grow our business and find new ways to apply science to improve lives."
While 3M's fourth quarter results didn't quite make a splash, they were better than Wall Street had expected, helping to prevent too much negative investor sentiment. “A solid end to 2021 is great,” noted Barron’s, “but investors want to hear about 2022. They’ll have to wait a little longer to hear what 3M thinks about the coming year.”
Investors looking for 3M’s full year 2022 outlook will need to wait until Feb. 14. Analysts are expecting $10.34 in earnings per share and $36.5 billion in sales for the next full fiscal year.
3M “continues to navigate supply chain disruptions, raw material and logistics cost inflation and a semiconductor shortage,” Reuters says. Citi analyst Andrew Kaplowitz noted, "We think macro-related headwinds plus the spread of Omicron somewhat increases near-term growth/earnings volatility for the company." The company also worked to offset higher costs and inflationary pressures by raising prices. Chief Financial Officer Monish Patolawala said during a conference call with analysts, "Our selling price actions continued to gain traction as we went through the quarter."
