Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3M.com. The 3M team delivered another strong quarter in Q3 with organic sales growth of 3.2%. The fourth consecutive quarter of positive organic growth across all three business groups against a macro backdrop that is largely unchanged and generally soft. Our 3M Excellence operating model helped drive operating margins up 170 basis points, earnings per share up 10% to $2.19, and free cash flow of $1.3 billion, a conversion of 111%.
Our strong performance through the first three quarters of the year enables us to increase our earnings per share guidance to $7.95 to $8.05. On the back of a strong Q3, we now expect full-year organic sales growth to be greater than 2%, with adjusted free cash flow conversion remaining above 100%. Our cross-selling program continues to outperform our expectations, and we have nearly doubled the pipeline since last quarter and closed on nearly $30 million of new business. Another launch in the consumer business expanded our size offering in our Filtrete business, giving us broader coverage of the market and leading to high single-digit growth in the category in Q3.
Last quarter, we launched a new lightweight wireframe self-contained breathing apparatus, which contributed to our high teens growth this quarter in our SCBA business and SIBG. Our efforts here are driving margin expansion, improving customer service, increasing asset utilization, and reducing cost of poor quality. Year to date, OEE is about 63%, up 300 basis points versus last year. Our cost of poor quality in the quarter was 5.7%, down 40 basis points sequentially and 150 basis points year over year.
| Metric | Period | Current guidance |
|---|---|---|
| Earnings per share | FY2025 | $7.95-$8.05 |
| Organic sales growth | FY2025 | Greater than 2% |
| Adjusted operating margin expansion | FY2025 | 180-200 basis points |
| Free cash flow conversion | FY2025 | Greater than 100% (absolute dollars higher) |
| New product launches | FY2025 | Over 250 |
| Transformation charges | Q4 2025 | About $15 million |
| Metric | YoY | Note |
|---|---|---|
| Q3 organic sales growth | 3.2% | Commercial excellence execution and NPI contribution; ~50 bps of the 70 bps beat versus the 2.5% plan was self-help, ~20 bps discrete timing from Q4 into Q3. |
| Q3 adjusted operating margin | Up 170 bps to 24.7% | ~$325 million benefit from volume, broad-based productivity and lower restructuring, partly offset by ~$50 million investments and ~$100 million tariff/stranded cost. |
| Q3 EPS | Up 10% to $2.19 | Strong operating performance ($0.25 contribution) partly offset by $0.04 from FX and non-operational items. |
| SIBG Q3 organic sales | Up 4.1% (highest since 2018 ex-COVID) | Electrical markets up low teens on data center construction, mid-single-digit IATD, and accelerating personal safety and abrasives. |
| TEBG Q3 organic sales | Up 3.6% (from 1% in H1) | Double-digit aerospace growth, electronics momentum (mainstream wins), auto flattish, plus a pavement-marking project timing shift. |
| China growth | Up high single digits (~8%) | Strength in industrial adhesives, films and electronics bonding solutions from strong local commercial execution; better than expected. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Portfolio shaping / divestitures | 2-3% of revenue under review for divestiture | Agreement to sell Precision Grinding & Finishing (less than 1% of sales, seven underutilized factories); not expected to be dilutive; process ongoing and disciplined. | — |
| Restructuring / transformation | Enterprise program focused on short-term quick-payback actions | New longer-term redesign of manufacturing, distribution and business process services; $14 million Q3 charge, not a big bang; will be sized for 2026 in early next year. | — |
| New product mix | Largely class three incremental line extensions (~80%) | Still ~80% class three but more class four/five adjacencies (e.g., electrical cable prep) entering the pipeline into 2026-2027. | — |
| PFAS litigation | Public water supplier settled ($12.5 billion); AG cases progressing | Personal injury bellwether October trial date removed by judge to allow unfiled cases; just under 14,000 cases now being vetted. | — |
| Tariffs | — | Net tariff impact ~$0.10 (gross ~$0.20), split 50/50 between price actions and cost; incremental 20 bps of price covering part of tariffs. | — |