# 3M Company (MMM) — Narrative, third quarter 2026

Sources: the Business, Risk Factors and annual MD&A sections draw on 3M's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (accession 0000066740-26-000014). The current-quarter sections draw on the Form 10-Q for the quarter ended September 30, 2026 (accession 0000066740-26-000311) and the third-quarter earnings release furnished as Exhibit 99.1 to the Form 8-K of October 20, 2026 (accession 0000066740-26-000308). Other filings are cited where used.

## Business

*From the FY2025 10-K, accession 0000066740-26-000014, unless noted.*

3M is a diversified industrial technology company that makes and sells adhesives, abrasives, films, safety equipment, electrical and electronic materials, and consumer goods to manufacturers, contractors, governments, retailers and households worldwide. It sells directly to users and through e-commerce, wholesalers, retailers, distributors and dealers. In 2025 it generated net sales of $24.95 billion, about 56% of them outside the United States. It reports three segments, which together account for nearly all sales; a small Corporate line holds the rest.

- **Safety and Industrial** (45.6% of 2025 sales; $11.38 billion). Abrasives, automotive aftermarket (collision repair, paint finishing), electrical markets (power-distribution and construction products), industrial adhesives and tapes (for example VHB tape), industrial specialties, personal safety (respirators, hearing, eye and fall protection), and roofing granules for shingles. Since July 2026 this segment also holds the Fire Safety and Rescue division (see "Current quarter").
- **Transportation and Electronics** (33.2%; $8.27 billion). Advanced materials (for example ceramic fibers), automotive and aerospace components, commercial branding and transportation (graphic films, reflective highway sheeting), display materials, and electronics materials, including semiconductor production materials, chip packaging and interconnects, and products for data centers.
- **Consumer** (19.7%; $4.92 billion). Branded household and office products such as Post-it notes, Scotch tape, Command hooks, Filtrete air filters, Scotch-Brite sponges, Nexcare bandages and Meguiar's car care. The business is somewhat seasonal (back-to-school and holiday).

The company's shape today comes mainly from two changes. On April 1, 2024 it spun off its former Health Care business as Solventum Corporation, distributing 80.1% of the shares; it kept a stake, which it intends to sell within five years of the spin-off. At the end of 2025 it completed its exit from manufacturing PFAS (per- and polyfluoroalkyl substances). It continues to treat and remediate legacy PFAS and to dispose of the related assets and sites.

At December 31, 2025, 3M employed about 60,500 people (22,500 in the U.S.). It operated 48 manufacturing facilities in 26 U.S. states and 60 manufacturing and converting facilities in 25 other countries. The company says no single patent is essential to the business; its brands, patents and trade secrets give it an edge mainly when it launches new products. In 2025, tariffs, pricing pressure and geopolitical uncertainty tightened raw-material supply and raised costs, which 3M says it offset through negotiated supply contracts and purchasing scale. William M. Brown is Chairman and CEO and Anurag Maheshwari is CFO.

## Risk factors

*From the FY2025 10-K, Item 1A, accession 0000066740-26-000014. The Q3 2026 10-Q (accession 0000066740-26-000311) reports no material changes to these risk factors.*

The risks below are the ones 3M itself ranks as most important. PFAS liability and the two large legal settlements carry by far the largest dollar amounts.

- **PFAS liabilities.** 3M faces lawsuits from states, municipalities, utilities and individuals, and growing regulation of PFAS, including the 2024 designation of PFOA and PFOS as hazardous substances under CERCLA (the U.S. Superfund law). Under the 2023 class settlement with U.S. public water suppliers (the "PWS Settlement"), 3M will pay $10.5 billion to $12.5 billion from 2024 through 2036. It also kept PFAS liabilities tied to products sold by its former health care business. Exiting PFAS manufacturing brings its own risks: costs could run higher than expected, substitute materials may fall short, and the company could face disputes with customers. Some third-party PFAS-containing components, such as lithium-ion batteries, circuit boards and seals, remain in 3M products beyond 2025.
- **Combat Arms Earplugs.** Under the 2023 settlement of the Combat Arms Earplugs litigation, 3M will pay $6.0 billion between 2023 and 2029. More than 99% of claimants are participating. Remaining risks include claimants who opted out, challenges to the settlement, and litigation outside the U.S.
- **Global economy, trade and tariffs.** Tariffs, export controls and sanctions, U.S.–China trade tensions, and limits on access to rare-earth minerals could raise production costs, disrupt supply chains and close off markets. Weaker growth in China or Europe directly affects demand.
- **Currency.** With most revenue earned outside the U.S., a stronger dollar reduces reported sales and earnings growth.
- **Legal and regulatory compliance.** This includes anti-corruption law (the FCPA), the False Claims Act and government-contract rules. Damages from these risks are unlikely to be fully insured, and an adverse ruling or settlement can lead to new charges.
- **Competition and customer preferences.** Demand depends on competing products, pricing, and changes in customer and channel inventory levels. Some customers prefer products free of third-party PFAS.
- **New products.** 3M's growth targets depend heavily on renewing its product pipeline, and new products may fail commercially.
- **Supply chain.** 3M relies on purchased materials and energy, including oil and gas derivatives, some from limited- or sole-source suppliers. If supply is interrupted, 3M could miss customer commitments and owe contract penalties.
- **Cybersecurity and IT.** Risks include attacks, including by nation-state actors, and the multi-year global rollout of a new enterprise resource planning (ERP) system. 3M says no incident to date has had a material impact.
- **Artificial intelligence.** AI can produce inaccurate outputs, leak confidential data, or fall foul of new regulation.
- **Portfolio changes.** Acquisitions, alliances and divestitures may fail to deliver expected synergies or may leave unexpected indemnification liabilities. This includes the supply, service and indemnity agreements with Solventum.
- **Execution and restructuring.** Productivity and restructuring programs may deliver less than planned or harm sales, employee relations or customer service.
- **Pension funding.** Falling markets or discount rates can raise required contributions.
- **Credit ratings.** At the 10-K date, 3M was rated A3 by Moody's, BBB+ by S&P and A- by Fitch, all with stable outlooks. More debt could pressure these ratings and raise borrowing costs.
- **Tax law.** This includes the OECD's global minimum-tax framework.
- **Solventum separation.** Risks include dis-synergies, dependence on transition agreements, a smaller and less diversified 3M, the uncertain value and timing of selling the retained Solventum stake, and the chance that the spin-off is later found taxable.

## Management's discussion — full year 2025

*From the FY2025 10-K, Item 7, accession 0000066740-26-000014.*

**Results.** 2025 net sales rose 1.5% to $24.95 billion, with organic growth of 0.9%. Excluding manufactured PFAS products, adjusted sales were $24.28 billion, up 2.7% (2.1% organic). Growth came from safety and general industrial markets, helped by commercial-excellence efforts and new products. Weakness in automotive aftermarket, roofing granules, commercial vehicles and consumer partly offset it. By region, organic sales grew 1.3% in the Americas and 1.7% in Asia Pacific but fell 1.7% in EMEA (Europe, the Middle East and Africa).

GAAP operating margin fell 1.0 point to 18.6%. The decline came from:
- higher litigation costs, mainly the 2025 PFAS settlement with New Jersey and updates to site-remediation obligations, partly offset by larger insurance recoveries;
- the wind-down of PFAS products;
- a $159 million write-down on a business held for sale;
- the start of transformation (restructuring) costs.

Adjusted operating margin rose 2.0 points to 23.4%, driven by growth, productivity and lower restructuring costs, partly offset by tariffs, growth investment, and cost dis-synergies from the PFAS exit and the Solventum spin-off.

GAAP diluted EPS was $6.00, down 17%; adjusted EPS was $8.06, up 10%. Special items account for the gap. Besides the operating items above, the retained Solventum stake produced a much smaller pre-tax gain: $402 million in 2025, compared with $1.56 billion in 2024. Working the other way, the 2024 base had absorbed a $0.8 billion pension settlement charge. The effective tax rate was 23.8% (adjusted 19.9%).

**Segments (2025, as reported in the 10-K).**
- **Safety and Industrial:** sales up 3.9% (3.2% organic); operating income $2.84 billion, a 24.9% margin. Growth came from electrical markets, industrial adhesives and tapes, personal safety, abrasives and industrial specialties. Roofing granules and automotive aftermarket declined.
- **Transportation and Electronics:** sales down 1.3% (organic -1.5%); operating income $1.44 billion, a 17.4% margin. PFAS losses rose as manufacturing ended, and the segment faced tough comparisons in automotive and consumer electronics. Excluding manufactured PFAS products, sales were $7.60 billion (up 2.3%) and the margin was 22.7%.
- **Consumer:** sales down 0.2% (organic -0.3%); operating income $996 million, a 20.2% margin. Consumer safety and home-and-auto care grew; packaging and expression declined on soft discretionary spending.

3M changed its segment profit measure and segment composition during 2026, so the 2025 segment figures shown in the 2026 10-Qs are recast and do not match these.

**Cash, capital and liabilities.** Operating cash flow was $2.31 billion in 2025, up about $0.5 billion, as payments on PFAS environmental liabilities and the Combat Arms settlement fell. Even so, those payments still totaled $3.4 billion in 2025. Other uses of cash were:
- $3.3 billion of share buybacks (under a $7.5 billion program authorized in February 2025, with $4.6 billion left at year end);
- $1.6 billion of dividends ($0.73 per quarter);
- $1.8 billion of debt maturities.

Sources included $1.1 billion of new debt and $0.6 billion from selling part of the Solventum stake in August 2025. At year end 3M held about 15% of Solventum, worth $2.0 billion.

Through December 31, 2025, 3M had paid $8.2 billion in total under the PWS and Combat Arms settlements. Goodwill was about $6.4 billion with no impairment. Pension and postretirement plans were 98% funded. Looking into 2026, the company:
- had $1.5 billion of long-term debt maturing in 2026;
- planned capital spending of about $1.1 billion;
- expected pension contributions of $100 million to $150 million;
- raised its dividend 7%, to $0.78 per quarter, in February 2026.

## Current quarter — Q3 2026

*From the Q3 2026 10-Q, accession 0000066740-26-000311, and the Q3 2026 earnings release, Exhibit 99.1 to the 8-K of October 20, 2026, accession 0000066740-26-000308.*

**Headline results.** Third-quarter net sales were $6.58 billion, up 1.0%, with organic growth of only 0.2%. That GAAP comparison is held down by the PFAS exit: the third quarter of 2025 included $199 million of sales of manufactured PFAS products. Excluding them, adjusted sales grew 4.2% and adjusted organic growth was 3.3%. Acquisitions added 1.4 points of growth (the July 2026 purchase of Madison Fire & Rescue, below, contributed about $90 million of sales), and divestitures took off 0.5 points.

By region, organic sales rose 4.4% in the Americas ($3.79 billion) but fell 6.2% in Asia Pacific ($1.72 billion) and 2.8% in EMEA ($1.08 billion). Management attributes the growth to industrial, safety, semiconductor and data-center demand, partly offset by weakness in consumer electronics and autos.

GAAP operating margin rose 1.5 points to 23.7%, and adjusted operating margin rose 1.1 points to 26.2%. Growth and productivity outweighed tariffs, PFAS and Solventum dis-synergies, and growth spending. GAAP diluted EPS was $2.63, up 70% from $1.55, and adjusted EPS was $2.50, up 12%. Three things made GAAP EPS grow much faster than adjusted EPS:
- the Solventum stake swung to a $281 million pre-tax gain, from a $94 million loss a year earlier, because Solventum shares rose in the quarter;
- the GAAP effective tax rate fell to 15.7% from 26.8%;
- the third quarter of 2025 had carried a $161 million divestiture loss that did not recur.

Insurance recoveries of $221 million in the quarter ($511 million year to date) reduced litigation costs.

Beginning this quarter, 3M treats amortization of acquired intangibles as a special item, restating all periods. On its own the change adds about $0.04 to third-quarter adjusted EPS and about 40 basis points to adjusted margin, with no material effect on year-over-year comparisons.

For the first nine months, sales were $19.11 billion, up 1.6% (0.4% organic; adjusted organic 3.3%). GAAP EPS was $5.63, up 14%, and adjusted EPS was $7.11, up 12%. GAAP operating margin of 20.6% absorbed two divestiture losses (below) and $224 million of transformation costs.

**Segments (Q3 2026 vs. recast Q3 2025).**
- **Safety and Industrial:** sales $3.18 billion, up 9.1% (7.0% organic, 3.1 points from acquisitions). Operating income was $960 million, up 21.2%, for a margin of 30.1% versus 27.1%. Electrical markets, fire safety, industrial adhesives and tapes, personal safety, automotive aftermarket, abrasives and industrial specialties all grew organically; roofing granules declined.
- **Transportation and Electronics:** sales $2.00 billion, up 0.4% (0.5% organic). Semiconductor, aerospace, data center, advanced materials and commercial branding grew, but consumer electronics and auto weakened. Operating income was $468 million, down 3.4%, and the margin fell to 23.4% from 24.3% as growth investment and PFAS-exit dis-synergies outweighed productivity.
- **Consumer:** sales $1.31 billion, down 0.4% (organic -0.2%). Lower U.S. retailer inventories more than offset gains in point-of-sale demand and market share. Operating income was $300 million, for a margin of 23.0% versus 22.2%, helped by productivity.

**Portfolio moves in 2026.**
- **Madison Fire & Rescue (acquisition, closed July 2026).** In partnership with Bain Capital, 3M bought Madison, a maker of rescue technology and fire-suppression products, for $1.91 billion net of $47 million cash acquired ($1.957 billion cash paid). The price is subject to closing adjustments. The deal was structured as a venture:
  - 3M contributed its self-contained breathing apparatus (SCBA) business, and Bain contributed about $1.3 billion in cash.
  - The venture drew a $1.43 billion term loan to fund the purchase.
  - 3M holds 50.1% of the voting interest and consolidates the venture, called the Fire Safety and Rescue division (3M Sentorum), within Safety and Industrial.
  - Bain can require 3M to buy its stake five years after the venture was formed, and 3M can buy Bain out at fair value. Both rights are subject to floors and caps, so Bain's stake is carried as a redeemable noncontrolling interest ($971 million at September 30).

  Madison added about $90 million of third-quarter sales with insignificant operating income, and $982 million of goodwill. Fire Safety and Rescue division sales were $206 million in the quarter, versus $108 million a year earlier.
- **Divestitures (second quarter of 2026).** 3M sold its precision grinding and finishing business, with annual sales of about $130 million; it had taken a $159 million write-down on this business in 2025. It also divested Dyneon GmbH, a former PFAS manufacturer, recording a $324 million pre-tax loss. Neither sale produced proceeds; 3M left cash in each business and paid the buyers.

**Balance sheet and cash.** Operating cash flow for the nine months was $2.0 billion, up $1.3 billion, mainly because net payments on PFAS and Combat Arms liabilities fell as insurance recoveries came in. Third-quarter operating cash flow was $0.5 billion, and adjusted free cash flow was $1.2 billion.

Cash and marketable securities fell to $5.2 billion from $5.9 billion at year end. The main uses of cash were:
- $3.2 billion of share buybacks;
- $2.0 billion of net litigation and PFAS-exit payments;
- $1.9 billion for Madison;
- $1.2 billion of dividends.

These were partly funded by Bain's $1.3 billion contribution, the term loan, and new euro notes. In September 2026 3M issued €1.5 billion of notes in three tranches: 3.50% due 2028, 3.90% due 2031 and 4.10% due 2034. It swapped the 2034 notes to a floating rate. The same month it repaid $650 million of maturing notes. Total debt was $15.0 billion at September 30 ($2.44 billion current and $12.56 billion long-term), up from $12.6 billion at year end.

In August 2026, a new $4.25 billion revolving credit facility expiring in August 2031 replaced the 2028 facility. It is undrawn and carries the same covenant of at least 3.0 times EBITDA to interest.

On the buyback, $1.54 billion of authorization remained at September 30; no shares were repurchased in September. The quarterly dividend is $0.78. 3M still holds about 15% of Solventum, worth $2.3 billion. Its 2026 capital spending outlook is now about $1.0 billion, down from about $1.1 billion at the start of the year.

**Litigation and PFAS liabilities.** Accrued PFAS environmental liabilities were $7.5 billion at September 30, versus $7.7 billion at year end. The portion classed as current rose to $2.8 billion from $0.7 billion; the 10-Q attributes the rise in current liabilities to the PWS Settlement. The Combat Arms accrual fell to $1.1 billion from $2.4 billion as payments were made. Developments during the quarter:
- In August 2026 a federal court gave final approval to 3M's settlement with New Jersey (up to $450 million).
- Public water suppliers had until the end of July 2026 to submit the PFAS test results that will help set the final PWS payout, and the claims administrator is reviewing them.
- New suits during the quarter included a New York Attorney General consumer-products PFAS action (July 2026) and a City of Hastings, Minnesota drinking-water suit (August 2026).
- In September 2026 the EPA issued a notice of violation to the Cottage Grove facility.

**Guidance.** 3M has raised its 2026 adjusted EPS outlook twice:
- **January 2026:** $8.50 to $8.70 (reaffirmed in April).
- **July 2026:** raised to $8.80 to $8.95. Other targets: adjusted sales growth above 4.5% (organic above 3.5%), adjusted operating margin expansion of 70 to 80 basis points, and adjusted operating cash flow of $5.8 billion to $6.0 billion. This guidance excluded Madison.
- **October 20, 2026:** raised to $9.10 to $9.15. This range now includes Madison and the new treatment of amortization, so part of the increase reflects the accounting change rather than better operations. Sales growth targets were unchanged; adjusted operating cash flow is about $5.9 billion and adjusted free cash flow about $4.8 billion.

## Subsequent events

*The Q3 2026 10-Q (accession 0000066740-26-000311) has no separate subsequent-events note. The events below come from filings and disclosures dated after September 30, 2026.*

- **Amazon commercial agreement and warrant (October 19, 2026).** *Source: 8-K, Item 7.01, accession 0000066740-26-000303.* 3M expanded its commercial relationship with an Amazon.com subsidiary covering optical connectivity and other data-center products. It issued Amazon a warrant to buy up to 3,162,015 3M shares at $164.89 per share over seven years. Of those shares, 85% vest as Amazon makes payments for these products, fully vesting once cumulative payments reach $6 billion; the rest vest on event-based milestones.
- **Genius Electronic Optical stake.** *Source: Q3 earnings release, accession 0000066740-26-000308.* The release says 3M is investing to acquire about 4.7% of Genius Electronic Optical Co., Ltd., an optics manufacturer, to support development and manufacturing of 3M's Expanded Beam Optics connectivity products. No purchase price or closing date was disclosed.
- **Gendorf, Germany.** *Source: Q3 2026 10-Q, Note 15.* In October 2026 the County of Altötting and the State of Bavaria told 3M Deutschland they were suspending talks on remediation around the former Dyneon Gendorf PFAS plant and would pursue legal options.
- **Belgium.** *Source: Q3 2026 10-Q, Note 15.* In October 2026 the Flemish government adopted a proposal that would let regulators, in some cases, hold the non-Belgian parent or affiliates of a Belgian company jointly liable for soil remediation. The proposal now awaits referral to the Flemish Parliament.
- **AFFF litigation.** *Source: Q3 2026 10-Q, Note 15.* AFFF refers to firefighting foam. In October 2026 the Judicial Panel on Multidistrict Litigation moved the New York Attorney General's PFAS suit into the AFFF multidistrict litigation. As of October 1, 2026, about 15,250 cases were pending there.

The 10-Q discloses no acquisition, divestiture or borrowing completed after September 30, 2026.