Applied science company 3M Co (NYSE: MMM) reported better-than-anticipated fiscal 2021 first-quarter earnings and revenues as the COVID-19 pandemic continued to boost the demand for personal safety items such as N95 masks.
The company also reaffirmed its FY 2021 earnings outlook. The stock closed at $194.45, down $5.18 or 2.59% from the previous close.
Saint Paul, Minnesota-based 3M reported first-quarter revenues of $8.851 billion, an increase of 9.5% from $8.075 billion in a similar quarter last year.
For the quarter ended March 31, 2021, the manufacturer of Post-it notes posted a net income of $1.624 billion, or $2.77 per share, an increase from $1.308 billion, or $2.25 a share in the quarter ended March 31, 2020.
Analysts polled by Refinitiv had anticipated the company to post earnings of $2.30 per share on revenues of $8.47 billion.
Commenting on the quarterly results, Mike Roman, 3M chairman, and CEO, said, “The first quarter was highlighted by broad-based organic growth, robust cash flow, and a double-digit increase in earnings per share.”
Segment-wise,
- Safety and Industrial revenues were $3.30 billion, an increase of 13.7% on a y-o-y basis. The growth was led by industrial adhesives, personal safety, tapes, roofing granules, electrical markets, automotive aftermarkets, and abrasives.
- Transportation and Electronics posted sales of $2.5 billion, up 13.1% year-on-year. The increase was driven by electronics, automotive and aerospace, and advanced materials.
- Health Care revenues rose by 6.8% y-o-y to $2.2 billion. Oral care, separation and purification, medical solutions, and health information systems contributed to the growth.
- Consumer revenues increased 9.8% y-o-y to $1.4 billion. The growth was driven by home improvement, stationery and office supplies, and home care.
The company recorded an adjusted free cash flow of $1.40 billion for the quarter, an increase of 49% on a y-o-y basis.
In the future, the manufacturer of industrial coatings reaffirmed its FY 2021 earnings guidance of between $9.20 and $9.70 per share. 3M anticipates its FY 2021 total sales growth to be in the range of 5% to 8%.
3M also anticipates its FY free cash flow conversion to be between 95% and 105%.
During the quarter, the company returned $1.10 billion to shareholders. This includes $858 million in cash dividends and $231 million in the form of share repurchases.
3M also slashed its total debt by $600 million (3%) and net debt by $700 million (5%).
In February, the ceramics manufacturer announced a capital outlay of roughly $1 billion to be spent over the next two decades to expedite its latest environmental objectives.
3M anticipates additionally cut its carbon emissions 50% by 2030 and 80% by 2040. The company aims to attain carbon neutrality by 2050.
The company also intends to achieve water usage reductions of 10% by 2022, 20% by 2025, and 25% by 2030. 3M anticipates reducing its aggregate water usage by 2.50 billion gallons per year.
By the end of 2023, the company anticipates installing state-of-the-art water purification technology and be operations in 2024 at all of its major water-utilizing production facilities.
The quarterly earnings and reaffirmation of the FY 2021 earnings outlook are expected to keep the stock range-bound with a slight bullish bias.
The historical price chart indicates that the stock has broken above the long-term resistance level of 175. The stock is also trading above its 50-day moving average, while the MACD indicator is rising. Therefore, we are anticipating the uptrend to resume in the short term.
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