3M CO

Item 1, Business Segments within 3M's 2023 Annual Report on Form 10-K, provides an overview of 3M’s business segments. In addition, disclosures relating to 3M’s business segments are provided in Note 19. As discussed in Note 19, 3M made changes to the composition of segment information reviewed by 3M's chief operating decision maker (CODM) effective in the second quarter of 2024 largely as a result of the separation of Solventum and changes within its business segments effective in the first quarter of 2024. Information provided herein reflects the impact of these changes for all applicable periods presented. 3M manages its continuing operations in three business segments. The reportable segments are Safety and Industrial; Transportation and Electronics; and Consumer.

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 17), 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 19 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 up 0.5 percent in U.S. dollars.

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

•Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for electronic devices and from growth in roofing granules and electrical markets.

Business segment operating income margins decreased year-on-year driven by cost inefficiencies due to the spin of Solventum, partially offset by benefits from organic growth and productivity. Adjusting for special item costs for significant litigation (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

Sales in Safety and Industrial were down 0.5 percent in U.S. dollars.

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

•Industrial end market demand remained mixed as end user and channel remain cautious. Growth primarily came from industrial adhesives and tapes driven by strength in bonding solutions for electronic devices and roofing granules driven by replacement demand for residential roofs.

Business segment operating income margins increased year-on-year primarily driven by benefits from productivity actions and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum. Adjusting for special item costs for significant litigation (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 down 1.5 percent in U.S. dollars. Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 1.8 percent in U.S. dollars.

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

•Growth was held back by headwinds related to PFAS manufactured products.

•Growth primarily came from electronics as consumer electronics OEM customers ramped production volumes ahead of the upcoming holiday season. Automotive and aerospace was negatively impacted by decline in automotive OEM build rates partially offset by growth in aerospace driven by bonding and acoustic solutions.

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 17). 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 organic growth and productivity, partially offset by cost inefficiencies due to the spin of Solventum. Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins decreased year-on-year as displayed above.

Sales in Transportation and Electronics were down 0.4 percent in U.S. dollars. Adjusting for special item PFAS manufactured products (non-GAAP measure), sales were up 3.7 percent in U.S. dollars.

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

•Growth from strength in electronics due to additional spec-in wins and strength in semiconductor was offset by headwinds related to PFAS manufactured products.

Acquisitions/divestitures:

•Divestiture and acquisition impacts relate to lost/gained Transportation and Electronics sales year-on-year from the Aearo Entities. In the third quarter of 2022, 3M deconsolidated the Aearo Entities and, in the second quarter of 2023, reconsolidated those entities (discussed in Note 17). 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 growth, productivity actions, and strong spending discipline, partially offset by cost inefficiencies due to the spin of Solventum. Adjusting for special item PFAS manufactured products (non-GAAP measure), business segment operating income margins increased year-on-year as displayed above.

Consumer Business:

Sales in Consumer were down 1.2 percent in U.S. dollars.

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

•Growth was led by home improvement driven by Command’s new product introductions for the back-to-school and holiday seasons. The remaining divisions within the Consumer business declined due to portfolio prioritization actions as well as retail customers continuing to be price sensitive and value focused.

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

Business segment operating income margins decreased year-on-year driven by organic growth declines and headwinds from cost inefficiencies due to the spin of Solventum.

Sales in Consumer were down 2.6 percent in U.S. dollars.

•Sales increased in home improvement, and decreased in home and auto care, packaging and expression 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 from benefits from productivity actions, portfolio initiatives, and strong spending discipline, partially offset by decline in organic growth and cost inefficiencies due to the spin of Solventum.

Corporate and Unallocated and Other: Outside of 3M's reportable operating segments, 3M has Corporate and Unallocated and Other which are not reportable business segments as they do not meet the segment reporting criteria. Because Corporate and Unallocated and Other include a variety of miscellaneous items, they are subject to fluctuation on a quarterly and annual basis. Corporate and Unallocated and Other are presented separately in the preceding business segments table and in Note 19.

•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 17), 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 for the periods presented also include divestiture costs and Russia exit costs/ benefits. Divestiture costs include costs that were not eligible to be part of discontinued operations related to separating and divesting substantially an entire business segment of 3M following public announcement of its intended divestiture.

▪Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section for additional details on the impact of special items for additional information on the components of corporate special items. Corporate special item net costs decreased year-over-year in the third quarter and first nine months of 2024 primarily due to lower net costs for significant litigation associated with Corporate and Unallocated.

◦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. Other corporate expense-net also includes costs previously allocated to Solventum prior to the Separation that were not eligible to be part of discontinued operations, commercial activity with Solventum post-Separation, and certain operations of the former Health Care business segment retained by 3M.

▪Other corporate operating expenses, net, decreased year-over-year in the third quarter and first nine months of 2024 primarily due to the extent of non-discontinued operations-eligible former Solventum-allocated costs included in Corporate and Unallocated prior to Solventum's April 2024 Separation.

•Other:

◦This category principally reflects activity associated with:

▪Operations of businesses of the former Health Care segment divested prior to the Separation and therefore not reflected as discontinued operations within 3M's financial statements, along with limited-duration supply agreements with those previous divestitures.

▪Transition arrangement agreements (e.g. fees charged by 3M, net of underlying costs) related to divested businesses, including those related to the Separation, as well as other applicable divestitures.

◦Operating income categorized as "Other" were similar year-over-year in the third quarter of 2024 and decreased year-over-year in the first nine months of 2024 primarily due to the extent of transition arrangement income from divested businesses.

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.