3M (NYSE:MMM) executives said the company opened 2026 with “solid operating performance” in the first quarter, driven by margin expansion, stronger earnings, and a sharp uptick in orders that management believes supports an acceleration in growth over the remainder of the year.
Chairman and CEO Bill Brown told investors the company delivered first-quarter earnings per share of $2.14, up “mid-teens versus last year,” while operating margin increased 30 basis points to 23.8%. Free cash flow was “over $500 million,” up double digits, he said, as 3M continued to emphasize productivity and cost discipline.
First-quarter results and shareholder returns
On the top line, 3M reported organic sales growth of 1.2%, which Brown characterized as “a light start to the year” amid “pockets of macro pressure.” Maheshwari said the company performed ahead of expectations on “orders, margins, earnings, and cash,” while noting weaker-than-expected performance in some end markets and in the Consumer segment.
Maheshwari said adjusted operating margins rose to 23.8%, with volume and productivity offsetting roughly $145 million of “tariff impact, stranded costs, and investments.” He added that operating income from the three business groups increased $85 million, while corporate results were a headwind due to the planned wind-down of Solventum transition services agreements.
Orders surge, backlog builds despite “book-and-ship” model
Management repeatedly pointed to orders as a key positive in the quarter. Brown said overall orders rose “slightly over 10%” in Q1, and Maheshwari said the momentum accelerated through the quarter, lifting backlog 20% year over year and 35% sequentially.
Responding to questions about how meaningful backlog is for 3M, Maheshwari said the company remains “largely a book and ship business,” with about 75% of quarterly revenue coming from book-and-ship activity. Still, he said the backlog improvement provides “about 400-500 basis points of additional coverage” entering the second quarter, which he called “not insignificant” given expected growth acceleration.
Brown said order growth was mid-single digits in January and February but “accelerated quite a bit” in March and continued into April. He also acknowledged some uncertainty around how much of the order strength could be tied to pre-buying ahead of pricing actions, saying it was “hard to discern” because the company typically implements annual price increases on April 1.
Pricing actions, oil-related inflation, and contingency planning
Executives discussed input-cost inflation tied to higher oil prices and the company’s plans to offset those costs through pricing. Brown said about 45% of cost of goods sold is raw materials and roughly a third of that raw material spend is petrochem-based, adding that the company expects about $125 million of cost increases. Brown said 3M plans to offset that pressure through pricing, which is why management expects “about a 50 basis point uplift on price” from oil-driven actions.
On pricing assumptions, Brown said 3M previously guided to about 80 basis points of price for the year, with Q1 coming in slightly below that. Including oil-related pricing, he said the company is currently thinking total price for the year could be “around 1.3 points.” In response to questions, management emphasized this is being built into underlying product pricing rather than treated as a surcharge.
Maheshwari said the company is maintaining its full-year EPS guidance but keeping a contingency of $0.05 to $0.15 given macro volatility. When asked about what could remove the contingency, Maheshwari said the company would provide an update on a future call after seeing how conditions evolve, including the trajectory of oil prices and execution on pricing and productivity.
Business group performance and end-market commentary
Maheshwari said Safety and Industrial posted another quarter of 3%+ growth, citing mid-single-digit growth across industrial adhesives and tapes, safety, electrical markets, and abrasive systems. He said that strength more than offset continued weakness in roofing granules tied to soft housing and consumer sentiment. Brown added that distribution inventory in Safety & Industrial was “relatively normal,” though “a tick below” typical levels.
In Transportation and Electronics, Maheshwari said organic sales were flat, but orders rose in the low teens and backlog increased about 30%. Brown said strength in semiconductor and data centers offset softer consumer electronics. He attributed consumer electronics weakness to “industry-wide memory chip issues” that reduced demand, while noting that electronics orders were up double digits due to activity in semiconductors and data centers expected to convert to revenue in Q2 and the second half.
Brown also said the automotive market was soft as expected in Q1, citing global IHS build rates down about 3% overall and 10% in China. In Consumer, Maheshwari said organic sales declined 1% because the company “did not see the expected recovery in the U.S. consumer market.” Brown said the segment is not seeing upward pricing, and management is focused on containing discounting while rebuilding innovation and shelf presence.
On point-of-sale trends, Brown said U.S. POS improved through the quarter and was positive in “seven of the last eight weeks,” which he called “consumer-driven” and encouraging for Q2.
Portfolio actions, footprint reductions, and investment priorities
Brown said 3M is moving from a holding company to an operating company model and pursuing a broader transformation to simplify and standardize processes, reduce complexity, and reshape the portfolio. He cited opportunities to streamline operations and consolidate facilities.
He said 3M closed the previously announced sale of the Precision Grinding & Finishing business within SIBG, reducing its footprint by seven factories, and also closed one factory while announcing three other full or partial closures. Brown said those actions bring 3M’s projected manufacturing site count to “below 100,” while adding that the footprint “is bigger than we really need today.”
Brown also described more than $250 million of investment over the next three years in “standard, easy-to-replicate automation” across plants and distribution centers. As one example, he said automating a slitting operation at a Nevada facility produced a 30% increase in productivity measured in square yards per hour.
On growth investments, Brown highlighted the acquisition of Madison Fire & Rescue, which will be combined with Scott Safety in a joint venture structure where 3M will own 51% and consolidate the results. Brown said the combination creates an $800 million revenue fire and safety business growing at a high single-digit rate, with Bain Capital as a 49% partner.
Brown also emphasized the company’s data center and associated power utility business, which he said currently generates about $600 million in revenue. He discussed Expanded Beam Optics (EBO), a connector designed to improve installation speed and reliability, and said 3M has hyperscaler validation, a significant order in hand, and is investing to “more than double” capacity to support rising AI demand.
Guidance reiterated, growth expected to accelerate
Despite uncertainty in the macro environment, Maheshwari said 3M is reiterating full-year 2026 guidance of approximately 3% organic sales growth, EPS of $8.50 to $8.70, and free cash flow conversion greater than 100%. He said the company expects free cash flow to exceed $4.5 billion for the year.
For the second quarter, Maheshwari said 3M expects organic growth “to be higher than 3%,” with all three business groups accelerating, and he cited an expected operational margin of about 24.5%. Brown summarized the outlook as Q2 being better than Q1, with the second half better than the first half.
Management also said the company is monitoring potential supply chain bottlenecks and geopolitical developments, including risks related to the Middle East and the Strait of Hormuz, which Brown said could influence customer behavior and contribute to pre-buying.
About 3M (NYSE:MMM)
3M Company, originally founded in 1902 as the Minnesota Mining and Manufacturing Company, is a diversified global technology and manufacturing firm headquartered in St. Paul, Minnesota. Over its history the company has expanded from mineral mining into a broad portfolio of industrial, safety, healthcare and consumer products, building a reputation for applied science and product innovation across many end markets.
3M’s businesses span a wide range of product categories including adhesives and tapes, abrasives, filtration and separation technologies, personal protective equipment such as respirators, medical and dental products, industrial and automotive solutions, and a suite of consumer brands (for example, well-known office and home products).
