3M CO

Item 1, Business Segments, provides an overview of 3M’s business segments. In addition, disclosures relating to 3M’s business segments are provided in Note 17. Effective in the first quarter of 2024, 3M made certain changes within its business segments. The changes are described in Note 17. While they impacted the composition and names of certain divisions within 3M's business segments, they did not change the overall composition of segments or the measure of segment operating performance used by 3M’s chief operating decision maker (CODM). Information provided herein reflects the impact of these changes for all periods presented. 3M manages its operations in four business segments. The reportable segments are Safety and Industrial; Transportation and Electronics; Health Care; and Consumer.

Corporate and Unallocated: In addition to these four business segments, 3M assigns certain costs to “Corporate and Unallocated,” which is presented separately in the preceding business segments table and in Note 17. Corporate and Unallocated operating income (loss) includes “corporate special items” and “other corporate expense-net”. Corporate special items include net costs for significant litigation impacting operating income (loss) associated with PFAS-related other environmental and Combat Arms Earplugs matters. In addition, during the voluntary chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023—see Note 16) costs associated with the Aearo portion of respirator mask/asbestos matters were also included in corporate special items. Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were not included in the Corporate net costs for significant litigation special item, instead being reflected in the Safety and Industrial business segment. Corporate special items also include divestiture costs impacting operating income. These include costs related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture. Other corporate expense-net includes certain enterprise and governance activities resulting in unallocated corporate costs and other activity and net costs that 3M may choose not to allocate directly to its business segments. Because Corporate and Unallocated includes a variety of miscellaneous items, it is subject to fluctuation on a quarterly and annual basis.

Corporate and Unallocated net operating loss increased in the first three months of 2024, when compared to the same period last year. The subsections below provide additional information.

Corporate Special Items:

Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items and to Note 17 for additional information on the components of corporate special items. Corporate special item net costs were similiar year-over-year primarily due to increased divestiture costs offset by lower net costs for significant litigation associated with Corporate and Unallocated.

Other Corporate Expense - Net:

Other corporate operating expenses, net, increased year-over-year in the first three months of 2024 primarily due to higher unallocated corporate costs relating to certain enterprise and governance activities.

Operating Business Segments: Information related to 3M’s business segments is presented in the tables that follow with additional context in the corresponding narrative below the tables.

Refer to 3M's 2023 Annual Report on Form 10-K, Item 1, Business, for discussion of 3M products that are included in each business segment.

Safety and Industrial Business:

The preceding table also displays business segment operating income (loss) information adjusted for special items. For Safety and Industrial these adjustments include net costs related to respirator mask/asbestos (Aearo-related and non-Aearo related). During the voluntary Aearo chapter 11 bankruptcy period (which began in July 2022 and ended in June 2023 —see Note 16), net costs related to Aearo-respirator mask/asbestos matters were reflected as corporate special items in Corporate and Unallocated while those associated with non-Aearo respirator mask/asbestos matters continued to be reflected as special items in the Safety and Industrial business segment. Prior to the bankruptcy, costs associated with Combat Arms Earplugs matters were reflected in the Safety and Industrial business segment (rather than reflected in Corporate and Unallocated—see Note 17 for additional information). Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

Sales in Safety and Industrial were down 1.7 percent in U.S. dollars.

•Sales increased in roofing granules and industrial adhesives and tapes, and decreased in industrial specialties, electrical markets, abrasives, automotive aftermarket and personal safety.

•Growth was held back by disposable respirator sales decline within personal safety (which negatively impacted year-on-year first quarter organic growth by 0.8 percentage points) and industrial end market demand remained mixed. This was partially offset by growth in roofing granules and industrial adhesives and tapes.

Business segment operating income margins increased year-on-year driven by benefits from productivity actions, restructuring, strong spending discipline, timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin and lower special item costs for significant litigation which more than offset the decline in organic sales volume and higher restructuring costs. Adjusting for special items (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

Transportation and Electronics Business:

The preceding table also displays business segment sales (and sales change) and operating income (loss) information adjusted for special items. For Transportation and Electronics these adjustments include the sales and estimates of income regarding PFAS manufactured products that 3M plans to exit by the end of 2025. Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details.

Sales in Transportation and Electronics were up 2.6 percent in U.S. dollars. Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 6.9 percent in U.S. dollars.

•Sales increased in electronics, automotive and aerospace, and commercial branding and transportation,and decreased in advanced materials.

•Growth came from strong momentum in automotive electrification and share gains with spec-in wins and new product introductions in automotive and consumer electronics driving strong volume growth to support customer production ramp and product launches along with continued channel inventory normalization as electronics demand stabilizes.

Acquisitions:

•Impacts related to reconsolidation of Aearo entities are included in Transportation and Electronics.

◦In the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 16). For each of the 12-months post-deconsolidation and post-reconsolidation, impacts are each reflected separately as divestiture and acquisition, respectively.

Business segment operating income margins increased year-on-year driven by benefits from strong leverage on organic sales volumes growth, productivity actions, restructuring, strong spending discipline, and timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin partially offset by higher restructuring costs. Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

Health Care Business:

Sales in Health Care were up 0.3 percent in U.S. dollars.

•Sales increased in purification and filtration, and was flat in medical surgical (MedSurg), dental solutions and health information systems.

Business segment operating income margins decreased year-on-year largely due to public company stand-up costs.

As discussed in Note 3, on April 1, 2024, 3M completed the previously announced separation of its Health Care business as a separate public company, Solventum. 3M retained equity ownership interest of approximately 19.9% in Solventum.

Consumer Business:

Sales in Consumer were down 4.3 percent in U.S. dollars.

•Sales decreased in packaging and expression, home and auto care, home improvement and consumer safety and well-being.

•Growth was negatively impacted by continued softness in consumer discretionary spending along with product portfolio and geographic prioritization.

Business segment operating income margins increased year-on-year driven by benefits from productivity actions, restructuring, portfolio initiatives, strong spending discipline and timing of stock-based compensation grants to be incurred in the second quarter of 2024 versus the first quarter of 2023 due to Solventum spin partially offset by decline in organic sales volume and higher restructuring costs.