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. We delivered solid results in Q4, including organic growth of 2.2%, operating margin of 21.1%, earnings per share of $1.83, and free cash flow conversion of over 130%. These results capped a strong year with organic sales growth exceeding 2%, outperforming the macro environment and accelerating from 1.2% organic growth in 2024 and negative growth in 2023. This growth was underpinned by the strong commercial excellence foundation we've established and our focus on reinvigorating innovation.
Adjusted EPS grew double digits to $8.06, and free cash flow conversion was slightly above 100% for the year. 2025 was an important year for 3M, where we implemented fundamental changes in the company, building a foundation for our future growth through commercial excellence and innovation. These new products are vital for our long-term growth and are already contributing to our top line. Sales from products launched in the last five years were up 23% in the full year, exceeding our high teens target, and exited Q4 at 44%, giving us momentum into 2026.
OTIF ended the year above 90%, 300 basis points above the prior year and the best we've achieved in decades, and we sustained that rate for seven months in a row. OEE, our asset utilization metric, ended the year at about 63%, up over 300 basis points across assets covering 70% of production volume. Cost of poor quality also improved considerably last year and is now at 6% of cost of goods, down 100 basis points year on year. Slide four is a chart we've used for the past few quarters connecting macro trends to our organic growth.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales growth | FY2026 | Approximately 3% |
| Adjusted operating margin expansion | FY2026 | 70-80 basis points |
| Earnings per share | FY2026 | $8.50-$8.70 |
| Free cash flow conversion | FY2026 | Greater than 100% |
| New product launches | FY2026 | 350 expected |
| Cost of poor quality | FY2026 | Target 5.4% (long-term less than 4%) |
| Price | FY2026 | About 80 basis points |
| Market outgrowth | FY2026 | Over $300 million, roughly half NPI / half commercial excellence |
| Metric | YoY | Note |
|---|---|---|
| Q4 organic sales growth | 2.2% | Strength in Safety, Electronics and general industrial offsetting softness in Consumer, roofing granules and auto. |
| Q4 adjusted operating margin | Up 140 bps to 21.1% | $275 million benefit from volume growth, broad-based productivity and lower restructuring, partly offset by ~$50 million investments and ~$100 million tariff/stranded cost. |
| Q4 EPS | Up 9% to $1.83 | Strong operating performance ($0.17 contribution) partly offset by $0.02 of non-operational below-the-line items. |
| Full-year adjusted operating margin | Up 200 bps to 23.4% | $550 million of net productivity across supply chain and G&A plus $200 million volume, offset by ~$100 million of net headwinds. |
| SIBG Q4 organic sales | Up 3.8% (3.2% full year) | High-single-digit Safety growth, accelerating IATD and Abrasives, offsetting auto aftermarket and roofing granule weakness. |
| Consumer Q4 organic sales | Down 2.2% | Weaker consumer sentiment and sluggish U.S. retail traffic on discretionary categories. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Priority verticals | Defined a little north of 60% of the business | Growing on investment, with ~80% of R&D aligned to priority-vertical NPI; ~10% of company is commodity-like for potential exit over time. | — |
| Footprint / transformation | Ended 2025 at ~108 factories | Down to ~100 after Precision Grinding & Finishing (seven factories); investments in 2026 to restructure network with 3-5 year paybacks, building margin runway beyond 25% by 2027. | — |
| Tariffs | $0.20 gross impact in 2025 | Carryover ~$0.20 gross (mostly H1 2026) embedded in guidance; potential new Europe tariffs (~$30-$40 million in 2026) NOT yet included. | — |
| Consumer Electronics mainstream push | Premium-focused (~70/30 to 80/20 premium/mainstream) | Expanding into mainstream (market is the opposite mix), gaining share via NPI especially in China/Asia OEMs; not margin-dilutive. | — |
| China | Up mid-single digits in 2025 (double digits 2024) | Expected low to mid-single digits in 2026 as IPI softens ~2 points, still outperforming via hybrid local model. | — |