3M COMPANY Mike Roman
Chairman & Chief Executive Officer
Electrical Products Group
Conference
May 20, 2019
Forward looking statement
This presentation contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "aim," "project," "intend," "plan," "believe," "will," "should," "could," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: risks associated with the contemplated transactions generally, such as the inability to obtain, delays in obtaining, or the imposition of burdensome conditions imposed in connection with obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; the occurrence of any event, change or other circumstances that could give rise to the termination of the purchase agreement; the outcome of any legal proceedings that may be instituted following announcement of the contemplated transactions; potential severe volatility in the capital markets and the impact on the cost to 3M to obtain debt financing as may be necessary to consummate the transactions; failure to retain key management and employees of Acelity and its subsidiaries; issues or delays in the successful integration of Acelity's operations with those of 3M, including incurring or experiencing unanticipated costs and/or delays or difficulties, which could result in additional demands on 3M's resources, systems, procedures and controls, disruption of its ongoing business and diversion of management's attention from other business concerns; difficulties or delays in the successful transition from the information technology systems of Acelity to those of 3M as well as risks associated with other integration or transition of the operations, systems and personnel of Acelity; failure or inability to implement growth strategies in a timely manner; unfavorable reactions to the contemplated transactions from customers, competitors, suppliers and employees; the possibility that certain assumptions with respect to Acelity's business or the contemplated transactions could prove to be inaccurate; worldwide economic, political, regulatory, capital markets, and other external conditions and other factors beyond 3M's control, including natural and other disasters or climate change affecting the operations of 3M or its customers and suppliers; 3M's credit ratings and its cost of capital; changes in tax and other laws, regulations, rates and policies; competitive conditions and customer preferences; foreign currency exchange rates and fluctuations in those rates; the timing and market acceptance of new product offerings; the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; operational execution, including scenarios where 3M generates fewer productivity improvements than estimated; unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to 3M's information technology infrastructure; financial market risks that may affect 3M's funding obligations under defined benefit pension and postretirement plans; and legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in 3M's Annual Report on Form 10-K for the year ended Dec. 31, 2018, and any subsequent quarterly reports on Form 10-Q (the "Reports"). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Reports). The information contained in this presentation is as of the date indicated. 3M assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments.
© 3M 2019. All Rights Reserved. | 2 |
Q2 trending in-line with expectations
•Organic growth and underlying earnings expected to be similar to Q1
•Health Care and Consumer doing well … remain cautious on China, auto and electronics
•Restructuring and other actions underway
•Q2pre-tax charge of $150 million, or $0.20 per share (included in FY 2019 guidance)
•Pre-taxsavings of $100 million in 2H 2019 (included in FY 2019 guidance)
•Annualizedpre-tax savings of $225 million to $250 million
•Stepped up focus on cash flow with targeted inventory reductions and indirect cost actions
•Continuing investments in organic growth including research and development and priority growth programs
•Announced acquisition of Acelity, a leading global medical technology company focused on advanced wound care and specialty surgical applications, expected close 2H 2019 (currently not included in FY 2019 guidance)
© 3M 2019. All Rights Reserved. | 3 |
Aligning businesses to customers and markets
FROM
Health Care | Safety & Graphics | Industrial | Electronics & Energy Consumer |
TO
Health Care | Safety & Industrial | Transportation & | Consumer |
Electronics |
© 3M 2019. All Rights Reserved. | 4 |
New structure supports and advances our four priorities
Portfolio, Innovation, Transformation, and People and Culture
•Enables business groups to better serve global markets and customers, and accelerate growth and operational efficiency
•Supports our global growth strategy of connecting directly with customers while leveraginggo-to- market models that will deliver where, when and how our customers want
•Enables consolidation of benefits from Transformation progress, while strengthening and maximizing value across our portfolio
•Strengthens innovation through better prioritization and alignment to Priority Growth Platforms
•3M will start reporting financial results under new structure starting with the second quarter 2019; will file 8K in late May/early June reflecting new structure
© 3M 2019. All Rights Reserved. | 5 |
Acelity Inc.
•A leading global medical technology company focused on advanced wound care and specialty surgical applications
•Well-knownfor creating and growing new segments based on the ability to identify and address unmet clinical needs
•Pioneer in Negative Pressure Wound Therapy (NPWT) beginning with introduction of V.A.C.® Therapy
•Offers a broad range of products that can be used across clinical applications, care settings and clinician groups
•2018 constant currency revenue growth of
10% with 30% adjusted EBITDA margins from continuing operations
2018 Results
$1.5B | $441M |
Total Revenue | Adjusted EBITDA |
(from continuing ops) | |
By Segment | By Geography |
Specialty Surgical
9%
Advanced | ||
Wound Dressings | International | |
12% | ||
24% | ||
Negative Pressure | Americas | |
76% | ||
Wound Therapy | ||
79% |
All financial information including non-GAAP measures as disclosed in KCI Holdings, Inc. Form S-1 filing dated April 17, 2019
© 3M 2019. All Rights Reserved. | 6 |
Acelity's KCI-branded products and technologies
Negative Pressure
Wound Therapy
Powered NPWT Systems for Acute and Post-Acute Care
Powered and
Mechanical
Disposable NPWT
Systems
$1.2 billion
2018 Revenue
Surgical Solutions
Negative pressure therapy for closed surgical incision management
Temporary abdominal closure system
$137 million
2018 Revenue
Advanced Wound
Dressings
Unique cellulose and collagen matrix dressings
Complete line of advanced wound dressings
$169 million
2018 Revenue
All financial information as disclosed in KCI Holdings, Inc. Form S-1 filing dated April 17, 2019
© 3M 2019. All Rights Reserved. | 7 |
Complementary advanced wound care offerings and brands
3M Solutions | Acelity Solutions | |||||||||||||
Prevent | Prepare | Secure & Protect | Activate | Advanced Closure | ||||||||||
Skin Protection and | Antimicrobial Dressings / | Advanced Wound Dressings / | Advanced Wound | Surgical Solutions Systems / |
Management | Cleansers / Debridement | Compression / Closure | Therapy Devices | Biologic Dressings |
Advanced wound care solutions driving efficacy and value across the care pathway
© 3M 2019. All Rights Reserved. | 8 |
Top priorities for 2019 and beyond
•Execute and deliver on our 2019 financial commitments
•Ongoing active portfolio management including successfully integrating pending acquisition of Acelity
•Consolidating gains and advancing our transformation journey
•Continued balanced and disciplined capital allocation
© 3M 2019. All Rights Reserved. | 9 |
Mike Roman
Chairman & Chief Executive Officer
Electrical Products Group
Conference
May 20, 2019
Forward looking statement
This presentation contains forward-looking information about 3M's financial results and estimates and business prospects that involve substantial risks and uncertainties. You can identify these statements by the use of words such as "anticipate," "estimate," "expect," "aim," "project," "intend," "plan," "believe," "will," "should," "could," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans or prospects. Among the factors that could cause actual results to differ materially are the following: risks associated with the contemplated transactions generally, such as the inability to obtain, delays in obtaining, or the imposition of burdensome conditions imposed in connection with obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; the occurrence of any event, change or other circumstances that could give rise to the termination of the purchase agreement; the outcome of any legal proceedings that may be instituted following announcement of the contemplated transactions; potential severe volatility in the capital markets and the impact on the cost to 3M to obtain debt financing as may be necessary to consummate the transactions; failure to retain key management and employees of Acelity and its subsidiaries; issues or delays in the successful integration of Acelity's operations with those of 3M, including incurring or experiencing unanticipated costs and/or delays or difficulties, which could result in additional demands on 3M's resources, systems, procedures and controls, disruption of its ongoing business and diversion of management's attention from other business concerns; difficulties or delays in the successful transition from the information technology systems of Acelity to those of 3M as well as risks associated with other integration or transition of the operations, systems and personnel of Acelity; failure or inability to implement growth strategies in a timely manner; unfavorable reactions to the contemplated transactions from customers, competitors, suppliers and employees; the possibility that certain assumptions with respect to Acelity's business or the contemplated transactions could prove to be inaccurate; worldwide economic, political, regulatory, capital markets, and other external conditions and other factors beyond 3M's control, including natural and other disasters or climate change affecting the operations of 3M or its customers and suppliers; 3M's credit ratings and its cost of capital; changes in tax and other laws, regulations, rates and policies; competitive conditions and customer preferences; foreign currency exchange rates and fluctuations in those rates; the timing and market acceptance of new product offerings; the availability and cost of purchased components, compounds, raw materials and energy (including oil and natural gas and their derivatives) due to shortages, increased demand or supply interruptions (including those caused by natural and other disasters and other events); the impact of acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and other evolving business strategies, and possible organizational restructuring; operational execution, including scenarios where 3M generates fewer productivity improvements than estimated; unanticipated problems or delays with the phased implementation of a global enterprise resource planning (ERP) system, or security breaches and other disruptions to 3M's information technology infrastructure; financial market risks that may affect 3M's funding obligations under defined benefit pension and postretirement plans; and legal proceedings, including significant developments that could occur in the legal and regulatory proceedings described in 3M's Annual Report on Form 10-K for the year ended Dec. 31, 2018, and any subsequent quarterly reports on Form 10-Q (the "Reports"). Changes in such assumptions or factors could produce significantly different results. A further description of these factors is located in the Reports under "Cautionary Note Concerning Factors That May Affect Future Results" and "Risk Factors" in Part I, Items 1 and 1A (Annual Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Reports). The information contained in this presentation is as of the date indicated. 3M assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments.
© 3M 2019. All Rights Reserved. | 2 |
Q2 trending in-line with expectations
•Organic growth and underlying earnings expected to be similar to Q1
•Health Care and Consumer doing well … remain cautious on China, auto and electronics
•Restructuring and other actions underway
•Q2pre-tax charge of $150 million, or $0.20 per share (included in FY 2019 guidance)
•Pre-taxsavings of $100 million in 2H 2019 (included in FY 2019 guidance)
•Annualizedpre-tax savings of $225 million to $250 million
•Stepped up focus on cash flow with targeted inventory reductions and indirect cost actions
•Continuing investments in organic growth including research and development and priority growth programs
•Announced acquisition of Acelity, a leading global medical technology company focused on advanced wound care and specialty surgical applications, expected close 2H 2019 (currently not included in FY 2019 guidance)
© 3M 2019. All Rights Reserved. | 3 |
Aligning businesses to customers and markets
FROM
Health Care | Safety & Graphics | Industrial | Electronics & Energy Consumer |
TO
Health Care | Safety & Industrial | Transportation & | Consumer |
Electronics |
© 3M 2019. All Rights Reserved. | 4 |
New structure supports and advances our four priorities
Portfolio, Innovation, Transformation, and People and Culture
•Enables business groups to better serve global markets and customers, and accelerate growth and operational efficiency
•Supports our global growth strategy of connecting directly with customers while leveraginggo-to- market models that will deliver where, when and how our customers want
•Enables consolidation of benefits from Transformation progress, while strengthening and maximizing value across our portfolio
•Strengthens innovation through better prioritization and alignment to Priority Growth Platforms
•3M will start reporting financial results under new structure starting with the second quarter 2019; will file 8K in late May/early June reflecting new structure
© 3M 2019. All Rights Reserved. | 5 |
Acelity Inc.
•A leading global medical technology company focused on advanced wound care and specialty surgical applications
•Well-knownfor creating and growing new segments based on the ability to identify and address unmet clinical needs
•Pioneer in Negative Pressure Wound Therapy (NPWT) beginning with introduction of V.A.C.® Therapy
•Offers a broad range of products that can be used across clinical applications, care settings and clinician groups
•2018 constant currency revenue growth of
10% with 30% adjusted EBITDA margins from continuing operations
2018 Results
$1.5B | $441M |
Total Revenue | Adjusted EBITDA |
(from continuing ops) | |
By Segment | By Geography |
Specialty Surgical
9%
Advanced | ||
Wound Dressings | International | |
12% | ||
24% | ||
Negative Pressure | Americas | |
76% | ||
Wound Therapy | ||
79% |
All financial information including non-GAAP measures as disclosed in KCI Holdings, Inc. Form S-1 filing dated April 17, 2019
© 3M 2019. All Rights Reserved. | 6 |
Acelity's KCI-branded products and technologies
Negative Pressure
Wound Therapy
Powered NPWT Systems for Acute and Post-Acute Care
Powered and
Mechanical
Disposable NPWT
Systems
$1.2 billion
2018 Revenue
Surgical Solutions
Negative pressure therapy for closed surgical incision management
Temporary abdominal closure system
$137 million
2018 Revenue
Advanced Wound
Dressings
Unique cellulose and collagen matrix dressings
Complete line of advanced wound dressings
$169 million
2018 Revenue
All financial information as disclosed in KCI Holdings, Inc. Form S-1 filing dated April 17, 2019
© 3M 2019. All Rights Reserved. | 7 |
Complementary advanced wound care offerings and brands
3M Solutions | Acelity Solutions | |||||||||||||
Prevent | Prepare | Secure & Protect | Activate | Advanced Closure | ||||||||||
Skin Protection and | Antimicrobial Dressings / | Advanced Wound Dressings / | Advanced Wound | Surgical Solutions Systems / |
Management | Cleansers / Debridement | Compression / Closure | Therapy Devices | Biologic Dressings |
Advanced wound care solutions driving efficacy and value across the care pathway
© 3M 2019. All Rights Reserved. | 8 |
Top priorities for 2019 and beyond
•Execute and deliver on our 2019 financial commitments
•Ongoing active portfolio management including successfully integrating pending acquisition of Acelity
•Consolidating gains and advancing our transformation journey
•Continued balanced and disciplined capital allocation
© 3M 2019. All Rights Reserved. | 9 |
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3M Company published this content on 20 May 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 20 May 2019 14:17:03 UTC
