3M CO

Results of Operations

Net Sales: Percent change information compares the three months ended March 31, 2025 and 2024, unless otherwise indicated. Discussion of business segment results is provided in the Performance by Business Segment section. Information regarding sales by geographic area is included below.

1 Organic sales change (which includes both organic volume and selling price impacts), is defined as the change in net sales, absent the separate impacts from foreign currency translation and acquisitions, net of divestitures. 3M believes this information is useful to investors and management in understanding ongoing operations and in analysis of ongoing operating trends.

2 Acquisition and divestiture sales change impacts are measured separately for the first twelve months post-transaction and, beginning April 2024, include, within divestitures, the impact of commercial agreements associated with the separation of Solventum.

For the first quarter of 2025, in the Americas geographic area, U.S. total sales increased 3 percent which included increased organic sales of 1 percent.

Cost of Sales measured as a percent of sales: Increases in the first quarter of 2025 were primarily due to foreign currency impacts; cost dis-synergies due to the spin of Solventum and PFAS exit partially offset by ongoing manufacturing productivity initiatives. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

SG&Ameasured as a percent of sales: Decreases were primarily impacted by lower YoY restructuring charges, Solventum transition agreement income partially offset by timing of stock-based compensation grants. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

R&Dmeasured as a percent of sales:3M continues to invest in a range of R&D activities from application development, product and manufacturing support, product development and technology development aimed at disruptive innovations. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Other Expense (Income), Net: See Note 7 for a detailed breakout of this line item.

Interest expense (net of interest income) decreased in the first quarter of 2025 compared to the same period YoY driven by decreased imputed interest associated with the obligations resulting from the PWS Settlement and the CAE Settlement (discussed in Note 17).

The non-service pension and postretirement net benefit decreased approximately $39 million in the first quarter of 2025 compared to the same period YoY. See also Certain Expenses Impacting Multiple Line Items within Results of Operations subsection further below.

Solventum ownership - change in value resulted in a YoY benefit of $0.3 billion in the first quarter of 2025.

The primary factors that decreased the Company's effective tax rate for first quarter 2025 were the effective tax rate benefit on the change in value of 3M's retained ownership interest in Solventum offset by the effective tax rate on the PWS and CAE Settlements (as discussed in Note 17) and implementation of Pillar Two Model Rules published by the Organization for Economic Cooperation and Development (OECD). On an adjusted basis, the effective tax rate for the first quarter of 2025 was 20.9%, no change from the prior year. Refer to the Certain amounts adjusted for special items - (non-GAAP measures) section below.

Income (loss) from unconsolidated subsidiaries, net of taxes, is attributable to the Company’s accounting under the equity method for ownership interests in certain entities.

Net income (loss) attributable to noncontrolling interest represents the elimination of the income or loss attributable to non-3M ownership interests in 3M consolidated entities. The primary noncontrolling interest relates to 3M India Limited, of which 3M’s effective ownership is 75 percent.

Certain Expenses Impacting Multiple Line Items within Results of Operations:

Stock compensation is discussed in Note 18 and impacts cost of sales, SG&A, and R&D. As noted therein, higher stock-based compensation expense is recognized in the quarter in which 3M’s annual stock option, restricted stock unit and performance share grant is made because of accounting rules for grants to employees that are retiree-eligible. Typically, the annual grant is made in the first quarter. However, due to the spin-off of Solventum (see Note 2), the 2024 annual grant was made in May 2024, after the April 1, 2024 separation. Pre-tax continuing operations stock compensation expense was $85 million and $26 million for the first quarter of 2025 and 2024, respectively.

Pre-tax defined benefit pension and postretirement service cost expense for continuing operations impacts cost of sales, SG&A, and R&D while the non-service cost component of pension and postretirement benefits for continuing operations impacts the other expense (income), net line item. Refer to Note 13 for additional information. For the first quarter of 2025, the Company recognized pre-tax defined benefit pension and postretirement benefit service cost expense of $41 million and non-service pension and postretirement net benefit costs (including settlements, curtailments, special termination benefits and other) of $28 million for a total pre-tax continuing operations defined benefit pension and postretirement expense of $69 million.

For the first quarter of 2024 on a comparable continuing operations basis, the Company recognized pre-tax defined benefit pension and postretirement service cost expense of $52 million and a benefit of $11 million related to non-service pension and postretirement net benefit costs (including settlements, curtailments, special termination benefits and other) for a total pre-tax continuing operations defined benefit pension and postretirement expense of $41 million.

The Company continues to make investments in the implementation of new business systems and solutions, including enterprise resource planning, with the amortization relating to these investments impacting cost of sales, SG&A, and R&D.