3M Q4 2021 Earnings Call Transcript

Quartr
Provided by Quartr
January 25, 2022

There are 15 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the 3 ms 4th Quarter Earnings Conference Call. During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this conference is being recorded Tuesday, January 25, 2022.

Operator

I would now like to turn the call over to Bruce Jermeland, Senior Vice President of Investor Relations at 3 ms.

Speaker 1

Thank you, and good morning, everyone, And welcome to our Q4 earnings conference call. With me today are Mike Roman, 3 ms's Chairman and Chief Executive Officer and Mohnish Patelawala, our Chief Financial and Transformation Officer. Mike and Mohnish will make some formal comments, Then we'll take your questions. Please note that today's earnings release and slide presentation Accompanying this call are posted on our Investor Relations website at 3m.com under the heading Quarterly Earnings. Please turn to Slide 2.

Speaker 1

Before we begin, I would like to announce our next two investor events. On the morning of February 14, We will be having a virtual investor meeting where we will be providing a near term strategic update along with our 2022 guidance. Also, please mark your calendars for our Q1 earnings conference call, which will take place on Tuesday, April 26. Please take a moment to read the forward looking statement on Slide 3. During today's conference call, We will be making certain predictive statements that reflect our current views about 3 ms's future performance and financial results.

Speaker 1

These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10 ks lists some of the most important risk factors that could cause actual results to differ from our predictions. Please note, throughout today's presentation, we will be making references to certain non GAAP financial measures. Reconciliations of the non GAAP measures can be found in the attachments to today's press release. Before I hand the call over to Mike, I would like to take a moment and highlight a couple of presentation changes These changes are a result of discussions we have had with many of you over the last few years along with recent benchmarking work that we have done.

Speaker 1

First, we recognize that dual credit reporting has presented some challenges. For example, Having a clear understanding of the impact of disposable respirator performance over the past 2 years on our segment results, particularly Safety and Industrial and Healthcare. Therefore, we have decided to eliminate dual credit reporting And we'll no longer report dual credit within our business segments starting in Q1, 2022. We will provide a Form 8 ks ahead of our February 14 meeting with updated history for the past 3 years reflecting this change. And second, we will be providing organic sales change components in aggregate as opposed to reporting separate volume and price components.

Speaker 1

With this change, we will also be updating the descriptor to organic sales versus organic local currency sales. Please note, this change will be reflected in our 2021 Form 10 ks filing. We remain committed to providing strong transparency of reporting our financial performance. And of course, we are always here to address your questions. With that, please turn to Slide 4, and I'll now hand the call off to Mike.

Speaker 1

Mike?

Speaker 2

Thank you, Bruce. Good morning, everyone, and thank you for joining us. 3 ms delivered a solid performance in the 4th quarter, closing out a strong year as we focused on serving customers in a dynamic external environment. Our revenue in the quarter finished better than we expected across all businesses, including an increase in respirator demand due to the impact from the omicron variant. Organic growth company wide was 1% on top of 6% in last year's Q4, with earnings of $2.31 per share, to meet customer demand despite ongoing logistics and raw material challenges that are impacting many companies.

Speaker 2

While focusing on customers, we also saw good benefits from our actions to drive productivity, improve yields And control costs, which helped offset the margin impact of supply chain disruptions, inflation and COVID-nineteen. In addition, our selling price actions continued to gain traction with a year on year increase of 2.6% in Q4 versus 1.4 percent in Q3. We expect this to be a tailwind for the full year in 2022. Overall, demand remains strong across our market leading businesses, and we are continuing to prioritize growth investments in large attractive markets. We also took actions to strengthen our portfolio and advance our commitment to sustainability.

Speaker 2

I will highlight examples of our progress later in the call. In summary, we delivered a good finish to the year and are well positioned to drive growth in 2022. As Bruce noted, we will provide full year guidance along with strategic updates from our business leaders at our February 14 meeting. Monesh will now take you through the details of the quarter. Monesh?

Speaker 3

Thanks, Mike, and I wish you all a very good morning. Please turn to Slide 5. Looking back on the Q4, the 3 ms team continued to manage through a challenging environment. As Mike noted, revenues for December were better than previously expected across all the businesses, including disposable respirators As the OmriCon variant increased near term demand. Though manufacturing, raw materials and logistics challenges persisted throughout the quarter, The 3 ms team executed well by driving operating rigor and managing costs while continuing to invest in the business.

Speaker 3

Turning to the Q4 financial results. Sales were $8,600,000,000 up 0.3% year on year On an increase of 1.3% on an organic local currency basis against our toughest quarterly comparison last year. Operating income was $1,600,000,000 with operating margins of 18.8 percent and earnings per share of 2.31 On this slide, you can see the components that impacted our operating margins and earnings per share performance as compared to Q4 last year. The biggest impact to 4th quarter results was the ongoing effects from the well known global supply chain, raw materials and logistics challenges, which persisted throughout the Q4. Our enterprise operations teams continued to work tirelessly through ever evolving changes in customer demand, while navigating these challenges to keep our factories running, Serve our customers and protect the health and safety of our employees.

Speaker 3

We continue to experience significant productivity headwinds in our factories Due to shorter production runs and more frequent production changeovers throughout the quarter, as we focused on serving our customers. As forecasted at the start of last year, we also had higher year on year compensation and benefits costs. These impacts were partially offset through strong spending discipline along with benefits from restructuring and lower legal related expenses versus last year's Q4. We also continue to prioritize investments in growth, productivity and sustainability to drive long term performance and capitalize on trends in large attractive markets, including automotive, home improvement, Safety, Healthcare and Electronics. All in, these impacts lowered operating margins by 2.4 percentage points and earnings per share by $0.33 year on year.

Speaker 3

Moving to price and raw materials. As expected, Our selling price actions continue to gain traction as we went through the quarter. On a year on year perspective, Q4 selling prices increased 260 basis points as compared to 140 basis points in Q3 and 10 basis points in Q2. In dollar terms, higher year on year selling prices offset raw material and logistics cost inflation in Q4, which resulted in an increase in earnings of $0.03 However, remained a headwind of 20 basis points to operating margins. Next, foreign currency net of hedging impacts was a headwind of 10 basis points to margins and $0.04 per share year on year.

Speaker 3

There were 3 other non operating items that impacted our year on year earnings per share performance. 1st, A reduction in other expenses resulted in a $0.10 earnings benefit. This included a $0.06 benefit from non operating pension, which was similar to prior quarters. We also have been proactively managing our debt portfolio, including the early redemption of $1,500,000,000 which helped drive a $0.04 benefit year on year from lower net interest expense. 2nd, A lower tax rate versus last year provided a $0.12 benefit to earnings per share.

Speaker 3

Our Q4 tax rate was benefited by geographic income mix and favorable adjustments related to impacts of U. S. International tax provisions. And for the full year, Our tax rate was 17.8 percent. And finally, average diluted shares outstanding decreased 1% versus Q4 last year, Increasing per share earnings by $0.02 Please turn to Slide 6 for a discussion of our cash flow and balance sheet.

Speaker 3

4th quarter adjusted free cash flow was $1,500,000,000 or down 30% year on year with conversion of 110%. For the full year, adjusted free cash flow was $6,000,000,000 with adjusted free cash flow conversion of 101%. The decline in our Q4 year on year free cash flow performance was driven primarily by lower non cash legal and restructuring expenses versus Q4 last year, along with higher litigation related payments and CapEx Investments, which is partially offset by improvements in working capital velocity. 4th quarter capital expenditures were 5 $56,000,000 up $134,000,000 year on year and $213,000,000 sequentially As we continue to invest in growth, productivity and sustainability. Looking at the full year, capital expenditures totaled $1,600,000,000 During the quarter, we returned $1,800,000,000 to shareholders through the combination of cash dividends of $848,000,000 and share repurchases of $938,000,000 For the full year, we returned $5,600,000,000 to shareholders in the form of dividends and share repurchases.

Speaker 3

Our strong 4th quarter cash flow generation and disciplined capital allocation Enabled us to continue to maintain a strong capital structure. We ended the year with $4,800,000,000 in cash and marketable securities on hand And reduced net debt by $1,200,000,000 or 8% versus year end 2020. As a result, we exited the year with net debt to EBITDA of 1.4x. Our strong balance sheet and Cash flow generation capability along with disciplined capital allocation continues to provide us the financial flexibility to invest in our business, Pursue strategic opportunities and return cash to shareholders while maintaining a strong capital structure. Please turn to Slide 7, where I will summarize the business group performance for Q4.

Speaker 3

I will start with our Safety and Industrial business, which posted an organic sales decline of 1.3% year on year in the 4th quarter. This result included a disposable respirator sales decline of approximately $110,000,000 year on year, which negatively impacted Safety and Industrial's Q4 organic growth by nearly 4 percentage points. Our personal safety business declined mid teens organically versus last year's 40% pandemic driven comparison. Looking ahead, we anticipate that COVID related disposable respirator demand will decline as we move through 2022. However, we remain prepared to respond to changes in demand as COVID related impacts continue to evolve.

Speaker 3

Turning to the rest of Safety and Industrial, organic growth was led by a double digit increase in closure and masking. In addition, the abrasives business was up high single digits, industrial adhesives and tapes and electrical markets were each up mid single digits, Automotive aftermarket was flat, while roofing granules declined against a strong comparison from last year. Safety and Industrial's 4th quarter operating income was $543,000,000 down 22% versus last year. Operating margins were 17.7 percent, down 4.40 basis points versus Q4 last year. Year on year operating margin performance was impacted by a decline in sales volumes, higher raw materials, logistics and litigation related costs, Manufacturing productivity impacts along with last year's gain on sale of property.

Speaker 3

Partially offsetting these impacts were selling price increases, strong spending discipline, net benefits from restructuring and a smaller increase to our respirator mask reserve. Moving to Transportation and Electronics, which declined slightly on an organic basis due to the continued impact of the semiconductor supply chain constraints. Our auto OEM business was down mid teens organically year on year compared to the 13% decline in global car and light truck bills. As we mentioned last quarter, we experienced an increase in channel inventory levels with the tier suppliers in Q3 As auto OEM production volumes decelerated from 18,500,000 builds in Q2 to 16,300,000 in Q3. During the Q4, OEM production volumes increased to 20,200,000 builds or up over 20% sequentially.

Speaker 3

This sequential increase in build activity drove a reduction of channel inventory levels with the tier suppliers during the quarter, which negatively impacted Q4 organic growth for our automotive business by approximately 10 percentage points. For the full year, our auto OEM business was up low double digits as compared to global car and light truck bills growth of 2%. Throughout the year, we continued our track record of success of winning with our customers and gaining penetration on new internal combustion and electric vehicle platforms. Our electronics related business declined low single digits organically With declines across consumer electronics, particularly smartphones and TVs. These declines were partially offset Turning to the rest of Transportation and Electronics.

Speaker 3

Commercial Solutions grew low double digits, Advanced Materials was up high single digits, while Transportation Safety declined high single digits. 4th quarter operating income was $406,000,000 down 15% year on year. Operating margins were 17.6%, down 270 basis points year on year. Operating margins were impacted by higher raw materials and logistics costs, Manufacturing productivity impacts along with an increase in comp and benefits costs. These year on year headwinds were partially offset By increases in selling price, strong spending discipline and net benefits from restructuring actions.

Speaker 3

Turning to our Healthcare business, which posted a 4th quarter organic sales increase of 1.6%. This result included a nearly 4 percentage point drag from the year on year sales decline in disposable respirators. Our Medical Solutions business declined low single digits organically, which included a 6 percentage point impact from the year on year sales decline 4th quarter elective medical procedure volumes were approximately 90% of pre COVID levels, which is similar to Q3 and last year's Q4. Sales in our oral care business grew low single digits year on year as patient visits Continued to be near pre COVID levels. The separation and purification business increased high single digits year on year With sustained demand for biopharma filtration solutions for COVID related vaccines and therapeutics.

Speaker 3

Health Information Systems grew mid single digits, driven by strong growth in revenue cycle management and clinician solutions. And finally, food safety increased high single digits despite continued COVID related impacts of the global hospitality industry. In December, we announced the planned separation of this business which will be combined with Neogen. As disclosed in the December press release, We expect the transaction to close by the end of Q3 of this year. Healthcare's 4th quarter operating income was $536,000,000 down 2% year on year.

Speaker 3

Operating margins were 23.6%, down 50 basis points. Year on year operating margins were negatively impacted by raw materials and logistics costs, manufacturing productivity, Compensation and benefits costs and food safety deal related costs. These impacts were partially offset by benefits from leverage on sales growth, Strong spending discipline and restructuring actions. For the quarter and full year, Healthcare's adjusted EBITDA margins Was strong coming in at nearly 31%. Lastly, our consumer business finished out the year strong, With organic growth of 4.9% year on year on top of last year's 10% comparison.

Speaker 3

Our home improvement business continued to perform well, up low single digits on top of last year's strong double digit comp. This business continued to deliver strong growth with our home improvement retail customers in our category leading Filtrete, Command and Scotch Blue brands. Stationary and office along with the consumer health and safety business each grew low double digits organically in Q4. As both of these businesses continue to lap last year's COVID related comparisons. The holiday season demand drove strong growth for our Scotch branded products during the quarter.

Speaker 3

We also posted strong growth in posted branded products despite workplace reopenings being Pushed out due to the resurgence of COVID cases. And finally, our Home Care business was up low single digits versus last year's strong COVID driven comparison. During the quarter, we took a small portfolio action to divest our Flokare business in Europe, which is expected to close in Q1. Consumer's operating income was $316,000,000 flat compared to last year. Operating margins were 21.4%, down 100 basis points year on year.

Speaker 3

Operating margins were impacted by higher raw materials, logistics and outsourced hard goods manufacturing Manufacturing productivity impacts along with increased compensation and benefit costs. These impacts were partially offset by leverage on sales growth, which included good price performance, strong spending discipline and net benefits from restructuring actions. That concludes my remarks for the 4th quarter. Before I turn it back over to Mike to recap the year, I would like to make a few comments reflecting on our operating performance this past year. The macro environment in 2021 was defined by strong but fluid end markets, semiconductor constraints, Supply chain and logistics challenges, along with ever evolving impacts from COVID-nineteen, particularly on the global healthcare industry.

Speaker 3

These dynamics were further compounded by winter storm Yuri in mid February, which led to significant disruptions to raw material supply And logistics availability, which further disrupted global supply chains. All of these factors collectively helped Contribute to broad based and accelerating inflationary pressures throughout the year. Against this backdrop, The 3 ms team kept a relentless focus on serving customers, ensured continuity of raw material supply, Managed ever changing manufacturing production plans, navigated logistic constraints and delivered Strong full year organic growth of 9% with all business segments posting high single digit growth. We also worked hard to raise selling prices, control spending and drive improvements in operating rigor through daily management, Leveraging data and data analytics, while continuing to execute on our restructuring actions. These actions, Combined with strong organic growth helped to deliver full year operating margins of 20.8% or down 50 basis points year on year on an adjusted basis.

Speaker 3

This result included an 80 basis point headwind From raw materials and logistics inflation, net of selling price actions, along with increased spending to advance our sustainability efforts and higher legal related expenses. In addition, we continue to focus on working capital improvement, which helped contribute to another year of robust adjusted free cash flow coming in at $6,000,000,000 I want to thank the 3 ms employees for delivering for our customers and shareholders in a very uncertain and fluid environment. I also want to take a moment to personally thank our customers and suppliers for putting their trust and confidence in us and for maintaining strong and close partnerships that helped us navigate the challenges of the past year. We made good progress in 2021 and are well positioned for 2022. And in the spirit of continuous improvement, there is always more we can do and will do.

Speaker 3

With that, Please turn to Slide 8, and I will turn it back over to Mike for his recap of 2021.

Speaker 2

Thank you, Mohnish. As I look back at 2021, I am proud of our team and our performance. Our results demonstrated the strength of the 3 ms model And our investments in growth, productivity and sustainability advanced our company. In the face of an uncertain environment, We delivered strong organic growth of 9%, with strength across all business groups, along with margins of 21%. This drove a 14% increase in adjusted earnings per share.

Speaker 2

These results exceeded our original guidance that we communicated in January of 2021 and recent updates to that guidance. We generated robust free cash flow of $6,000,000,000 With an adjusted conversion rate of 101%, enabling us to invest in the business, reduce net debt by $1,000,000,000 and return significant cash to shareholders. All in, 3 ms returned $5,600,000,000 To our shareholders through dividends and share repurchases and 2021 marked our 63rd consecutive year of dividend increases. We continue to help the world respond to COVID-nineteen with 2,300,000,000 respirators distributed last year, For a total of $4,300,000,000 since the onset of the pandemic, while engaging with governments on how to prepare for future emergencies. We stepped up our commitments to ESG, including sustainability, as we made progress on new goals to achieve carbon neutrality, reduce water use, Improve water quality and reduce plastics.

Speaker 2

As part of our ongoing sustainability commitments, we proactively manage PFAS and deploy capital to make our factories and communities stronger and more sustainable. As one example, We are on track to complete a new water filtration system in Cordova, Illinois by the end of 2022. In Zweindrik, Belgium, we installed and activated a treatment system last month to reduce PFAS discharges by up to 90%. This is part of a €125,000,000 commitment to improve water quality and support the local community. As disclosed in our 8 ks in November, we continue to work with local authorities related to a safety measure that shut down certain operations in Sveindrich.

Speaker 2

We are also appealing and discussing with local authorities a new change to our wastewater discharge permit that if implemented could have a material impact And potentially interrupt production at the entire site, impacting customers and the supply of material to other 3 ms factories. We are actively working to address current and future potential impacts and we'll update you as appropriate. With respect to litigation, we reached settlements last year in certain PFAS cases And continue to vigorously defend ourselves on combat arms. As always, we encourage you to read our SEC filings for updates on these matters. As we advance our ESG priorities, we also continue to take actions to improve diversity, equity and inclusion.

Speaker 2

Our businesses have also made commitments. Safety and Industrial, for example, is focusing on access to skilled trades, And we are increasing transparency through an annual diversity, equity and inclusion report. At the same time, we are advancing our strategic priorities for long term growth and value creation. We are innovating faster and differently, including new ways to collaborate with customers and partners virtually, while investing $3,600,000,000 in the combination of R and D and CapEx to strengthen 3 ms for the future. To make the most of long term growth opportunities, We also continue to prioritize investments in large, fast growing areas like automotive, home improvement, safety, healthcare and electronics.

Speaker 2

In 2021, for example, our automotive electrification platform grew 30% organically And our biopharma business grew 26%. Our home improvement business grew 12% on top of 13% growth in 2020, Driven by iconic brands, including our Command Damage Free Hanging Solutions and Filtrete Home Filtration Products. To accelerate our ability to meet increasing demand for command and field treat, last week we announced a nearly $500,000,000 investment To expand our operations in Clinton, Tennessee, adding nearly 600 manufacturing jobs by 2025. We look forward to sharing more about how we are capitalizing on growth trends and winning in these markets at our February meeting. Last year, we also continued to reposition our portfolio to maximize value across the enterprise, including an agreement to divest And combine our food safety business with Neogen, creating a global leader that is well positioned to capture long term profitable growth.

Speaker 2

We continue to make progress in transforming 3 ms, accelerating our digital capabilities and expanding our use of data and analytics To better serve customers and improve our operational agility and efficiency. This includes the ongoing deployment of our ERP system, which went live in Japan in Q4 and also moving more than 60% of our enterprise applications And global data center infrastructure to the cloud, while streamlining our business group led operating model. To help our people be at their best, we also introduced new employee work models rooted in flexibility and trust, along with investments to support their health and well-being. As we enter 2022, I'm confident we will continue to grow our businesses, Improve our operational performance and find new ways to apply science to improve lives, delivering for our customers, shareholders And all stakeholders who have placed their trust in us. We are building a stronger 3 ms, and I want to thank our 95,000 employees for their contributions, including the 50,000 people in our factories who continue to show up day in and day out to make a difference.

Speaker 2

That wraps up our prepared remarks,

Operator

Our first question comes from Nigel Coe with Wolfe Research. You may proceed with your question.

Speaker 4

Thanks. Good morning. I wasn't expecting the first question. Good morning. Thanks for that.

Speaker 5

Good morning, Nigel.

Speaker 4

So some upside to your early December guidance, Manish. You called out a number of factors, but didn't call out N95, which given all the talk we've got from the federal government about free Your marks and the new guidance for the Q3. I'm just curious what you're seeing from that side of the business given all the commentary we've seen.

Speaker 3

Yes. So Nigel, I would say when we gave you the guidance in December, at that time, we had not seen the pickup of N95s. And one of the factors that made us deliver better than what we thought in December was the pickup of the respirator We came in $40,000,000 better than what we had originally predicted. So we have seen that pickup. But I would still say It's volatile.

Speaker 3

We'll see how this plays itself out. We are pleased with the partnership that we have with the federal government right now As regards this, we've had a lot of dialogue with them. And as things evolve, we'll keep you posted.

Speaker 4

Okay. And then just I know you're going to give guidance on Feb 14, but just curious, just given the lots of moving parts at the margin line, Just wondering how we think about the take off points into 2022, specifically 1Q 2022. Normal seasonality would have you up slightly from 4Q. Just wondering how you think about that? And have we seen the peak of the inflation curve at

Speaker 3

Have you seen the peak? I'm sorry about The inflation

Speaker 4

curve.

Speaker 3

Yes. So I'll start with that first comment, Nigel, and that's an item that we Constantly keep watching and debating. As you know, we've tried to fine tune our analysis as much as we can on inflation. So what we saw Exiting December was the pace of inflation slowed down versus the prior months. It's still inflationary, but we saw the pace slow down.

Speaker 3

And I think that's a positive. But again, it will depend on how winter plays itself out. It depends on logistics, etcetera and whether the ports get uncongested. Just on data points and your other points on margin etcetera, things to keep in mind as you get into 1Q Q22. First of all, from an inflation perspective, you're going to find not just us, but most companies have the highest, The toughest comp, because if you remember in the Q1 of 'twenty one, there wasn't as much inflation.

Speaker 3

We started seeing it in March and then it accelerated in April Onwards. So I would factor that one in first. The second I would say is COVID uncertainty. You brought up the respirator demand, but there are other impacts Also depending on what happens with COVID labor shortages that we are seeing from our customers, we are seeing it in our own factories, Our vendors, I'm sure are facing it too. So that's something we'll have to watch.

Speaker 3

The third one is we are going to continue to invest in growth And sustainability, so I would say that's an area as we continue to see it. We're going to keep investing, especially in the areas Mike has already talked about. I would say we continue to see a strong market. We saw it in the Q4. We have seen it right now, and I think 2022 will continue to remain a strong market.

Speaker 3

The team has done a marvelous job in driving price. Price has gone up from 0.1% to 1.4% to 2.6%. Mike had talked about that also in his opening remarks that we see that to be a tailwind. Team has done a good job on On restructuring, so there's approximately $70,000,000 of carryover of restructuring benefits for the year. Auto and electric growth right now sequentially From a build rate is showing flat for the year of 2022.

Speaker 3

It's a 9% increase. I think the chip shortage and where that ends up will have an impact on the auto business. Healthcare elective procedures came in at 90%. There are predictions that says they should be at 100% by Q4 2022. From our end, we are going to continue driving operating rigor.

Speaker 3

We are going to continue to drive margin expansion as we have said before. We'll also have to watch litigation costs and see where that goes with all the cases that are on. And then Mike mentioned about Weindrick and we're working with the authorities in Belgium for our factory and we'll have to see the impact and When we can start up production in some of those areas that are currently shut down. So all that put together, I would say again, we are well positioned and I know it's a long Answer to your question, Nigel, but I just wanted to give you all a full framework. We are well positioned for 2022.

Speaker 3

We closed Q4 Pretty well, and we hope to continue that momentum into 2022.

Speaker 4

Great. Thanks for the details. I'll leave it there. Thanks,

Operator

Our next question comes from Jeff Sprague with Vertical Research Partners. You may proceed with your question.

Speaker 6

Thank you. Good morning, everyone.

Speaker 5

Good morning, John.

Speaker 6

Good morning. A couple here for me. First, just I was wondering if you could level set us actually now on the actual size of the respirator business. I think we were $600,000,000 pre COVID. Feel like we're in the $1,500,000,000 to $2,000,000,000 range.

Speaker 6

But could you Put a finer point on where we stand at the end of 2021?

Speaker 3

Yes. So Jeff, it's $1,500,000,000 is what we did in 2021. It was 600 in 2019, 1.4 in 2020 and 1.5 in 2021. If you look at it quarter over Sequentially, we were down and we were also down $110,000,000 versus Q4 of 2020. We believe that the peak was Q1 of 2021 and then depending on how it goes, but we believe in 20

Speaker 6

I know you're going to reserve your guidance for next month, but You did essentially get to price cost neutrality in the quarter, right? A little negative on margins, a little positive on EPS. Is it your view that that gets better over the course of the year? As you think about kind of carryover price, I understand there's a ton of variables in that, but directionally, I just wonder if you could give us your preliminary thoughts on how that tracks for the year?

Speaker 3

Yes, Jeff, I think we are working through that. But just as Mike mentioned, pricing will continue to remain a tailwind for 2022. Inflation, I think we'll have to watch how the different factors play out back to raw material logistics. I think what you're going to see is you're going to see some of your Primary feedstocks start stabilizing, which we saw in December, but you are going to see specialty Feedstocks starting to get more expensive. We are seeing inflation has gone downstream now.

Speaker 3

So you're seeing it in much more places than you had seen it before. I think what's also going to impact inflation is what happens with the labor pool and what goes on there. And then as long as the ports can start getting I think you're going to see logistics costs come down. If commercial airline capacity comes back in, you're going to start seeing airfreight start coming down. So we are watching all of that.

Speaker 3

I would say first half and in talking to people, our own analysis etcetera, I think the first half is going to Tougher than the second half of twenty twenty two when it comes to inflation. First half part of it is as I mentioned we are still seeing sequential increases but Slower, so that's good. But you're going to start facing last year's comp when it comes to inflation. And I think that's going to impact us. So I think we are well positioned.

Speaker 3

And As I've told you before, the team has gone after price. We are managing our price raw equation as best we can And we're prepared to act as situation evolves.

Speaker 6

And then just lastly for me, if I could. Mike, I think you made a comment about dramatically reducing PFAS discharges. Perhaps this is my bad, but I didn't know you were still PFAS in places. Is this just at a single location or is this still an issue that You're addressing in multiple locations.

Speaker 2

Yes, Jeff, this was part of our really following through on what we committed to do and we announced Back at the beginning of 2021 to make an investment in reducing the water use in our factories, improving the water quality of our largest Facilities and part of that is this discharge, controlling discharge is reducing that as part of That investment and that includes PFAS is a broad category of chemistries. We've talked about how we Exited now almost 2 decades ago the PFOA, PFOS chemistries, which are A part of a lot of the discussions in PFAS, but there are other PFAS chemistries that are used in chemical manufacturing in general in some of our sites. That was the focus. I mean, we're always in compliance with the regulations that are on our plants. This is a Chance to step forward and do even more and reduce further and that was what I talked about with Vindraig.

Speaker 2

This is reducing further below Our requirements at the time are additional improving the water quality even further.

Operator

Our next question comes from Scott Davis with Melius Research. You may proceed with your question.

Speaker 5

Okay. Good morning, everybody.

Speaker 3

Hi, Scott.

Speaker 5

Just wanted to follow-up on Jeff's question on price a little bit. Are prices up again in January, meaning did you have a January 1 price increase Or did you implement your last big price increase in 4Q?

Speaker 3

So we've implemented big price increases in 4Q. But again, Scott, as we have said, a lot of these, we are pretty coordinated across different geographies, different markets. So To the extent we see the need that we have to do in 1Q, we'll do the same on 2022, we'll do the same.

Speaker 5

Okay, fair enough. And then this Belgium situation, can you give us a little bit of color on How material I mean, you've had a couple of months in your disclosure previous disclosure said you can't measure the materiality, but You've had a couple of months now. I mean, can you supply out of other factories and meet demand? How disruptive is this? And should we I mean, it's a fancy way of saying, should we build this into our models and some sort of a headwind in 2022?

Speaker 5

Or do you feel like you're going to have some remediation here?

Speaker 2

Yes, Scott, back to the comments I made in my prepared remarks, we're in the middle of this right now. We continue to work with the local authorities. We're appealing and discussing the change to our wastewater discharge permit there. It could have a material impact and potentially interrupt Production at the site, so that's something we wanted to be clear on. It's we're in the middle of it and I don't really want to speculate at Point on what it will ultimately mean.

Speaker 2

This is a priority for us. We have our best people working on it, actively working the problem and we'll Update as appropriate as we go forward here as we work through it.

Speaker 5

Okay. Good luck, Mike. Thank you.

Speaker 2

Yes. Thanks.

Operator

Our next question comes from Joe Ritchie with Goldman Sachs. You may proceed with your question.

Speaker 7

Hi, good morning, everyone. Hi, Joe. Good morning, Joe.

Speaker 5

So I know we'll get

Speaker 7

more details in mid February, but I guess maybe just kind of thinking about the margin trajectory for both Safety and Industrial and for Transportation and Electronics, both of those segments have been hit pretty hard the last couple of quarters. And I'm just curious, As you kind of think through the beginning part of 2022, I mean, should we continue to expect the same type of headwinds? Or Are there certain things that you would call out perhaps the litigation costs not recurring into 2022 There could be potential tailwinds to margins in the early part of the year.

Speaker 3

Yes, Joe, as you said, we'll give you more guidance as we go through. But just To answer your question more specifically, I would say a couple of things and I've said that before too. Volume has the biggest impact For us on a margin, whether it's SIBG, TBG, Healthcare or CBG, I think we'll have to see what 1Q margin volume turns out to be, What headwinds we have or tailwinds, when you think about just the trends that those two businesses are seeing, Overall, GDP and IPI is going to be positive for 2022. I think it's volatile in the Q1 And the Q2 and what that turns out. So that will determine industrial activity.

Speaker 3

On an auto build, it is flat to down sequentially. So and it's flat to down on a year over year basis too. So that will have an impact on TBG. That of course then we'll have to see smart Phone shipments. So that's the macroeconomic environment.

Speaker 3

On our own, you've seen the team's done a good job of raising price. So we have seen price go up Sequentially through the quarter and so you should see that price hold or get better. Inflation is another area that Again, I think we'll face a very tough comp from last year. We had very little inflation in the Q1 of last year. So you are On a year over year basis, Joe going to face that comp.

Speaker 3

And then the 3rd piece is on litigation. As we have told you, we are actively Working and defending ourselves in the combat arm cases, it's a little right now, I don't know where that goes and we'll keep doing what's right to keep defending And see where those expenses land. So I think this is the best I can give you at this moment, a little bit of macroeconomic, Some of our stuff. And then internally, the last piece before I turn it back to you for another question is from driving supply chain efficiency, driving our Factories improving rigor, that's just something we're going to keep doing. We've done it.

Speaker 3

We'll keep doing it. So that should help. And then supply chain availability or the manufacturing Activity impacts that we've had in the last two quarters, which has impacted SIBG and TBG a lot, we'll have to see how the material flows. Again, December turned out to be better and you saw that come through from a leverage perspective, which goes back to the comment that volumes is just the best leverage.

Speaker 7

That's super helpful. Thank you, Manish. And then just maybe my quick follow on. Just you mentioned the combat And clearly, PFAS being just an important part of the story here for investors. I'm just curious just From a timeline perspective, as you think about 2022, are there certain dates that we should be thinking about or penciling in, just

Speaker 2

We try to keep you updated even in these calls on what's coming next and we don't have any specific trials coming up in PFAS. The next One is related to the MDL, which we're expecting in 2023. There is, as you know, EPA is working on a management plan and there's a strategic roadmap Through the President Biden's administration. So we're we'll be watching that and updating you as we learn more around that. Related to combat arms, I would just frame this up.

Speaker 2

We have great respect for the brave men and women Of the military protectors around the world and we have a long partnership here. We've been providing products and continue to provide products In the matter with the combat arms, we believe our product was safe and effective in its use and we're vigorously defending ourselves and we've been working through these Bellwether trials, we've had 10 trials so far, 5 of those were in our favor, 8 actually were dismissed in addition to the 10 trials we've had and we're in the middle of those bellwethers. So there's another 6 bellwethers planned for 2022 and we'll update you as we go through that and update you as appropriate.

Speaker 7

Great. Thank you, both.

Operator

Our next question comes from Julian Mitchell with Barclays. You may proceed with your question.

Speaker 8

Hi, thanks very much. Maybe The first question on sort of cash flow and capital deployment. So cash flow was down Double digits in Q4 and the full year and understood the sort of abnormal base in 2020. But how should we think about cash flow for this year? How quickly do we get sort of working capital under control?

Speaker 8

And also in terms of the sort of disbursement of cash, you paid out around 90% or 95% of free cash flow Last year to shareholders, do we expect a sort of similar type approach in 2022?

Speaker 3

Yes. So I'll start, Julian, with just reminding you from a capital allocation perspective and I'll just for everyone's benefit, First is always organic growth, where we believe we'll get the best return. You saw us putting in $1,600,000,000 from a CapEx Perspective in 2021, for 2022 and beyond, we are going to continue to invest in growth. You've seen us make the big announcement in Clinton. It's $500,000,000 of investment that we're going to put over the next couple of years.

Speaker 3

We also have given you our goal on sustainability where we plan to spend $1,000,000,000 part of it CapEx, OpEx, which is front end loaded. 3rd, as we had talked about On CapEx, we had mentioned during our earnings call as well as other updates throughout the quarter. Our plan was to spend $1,800,000,000 to $2,000,000,000 We were not able to unfortunately because of raw material and labor availability. So to the extent that we have good programs out there, we're going to keep doing that. So that's organic growth.

Speaker 3

2nd is from a dividend perspective. We know it's an important piece for our shareholders. We're going to continue to do that. Mike mentioned it was The 63rd year in 2021 that we increased dividend, so we'll see where 2020 goes with that. 3rd is M and A and portfolio.

Speaker 3

We have an active pipeline and we are always looking for good businesses that can help us that we can add value as well as the business that we acquire can add value To 3 ms and the shareholders and then the last piece is share buyback which we have done and we stepped up in Q4 and we had mentioned that during our earnings call as well. I think I'm sorry and certain updates in the quarter where we said the stock was attractive and we stepped into it and that's what we did in Q4. Talking specifically about working capital, working capital continues to remain a big priority for us doing data and data analytics. And if you actually see And do the math, Julian, and you do cash conversion cycle in Q4 of 2020 versus Q4 of 2021, you're actually going to see That the velocity of working capital went up. The revenue was higher in total for 2021.

Speaker 3

So therefore, you do see the drag on working And at the same time if you further split the working capital up inventory is where with all the supply chain challenges That's an area that the team's done a nice job of managing the inventory, but that's where you have much more opportunity as Supply stabilizes. So that's an area I would say we're going to continue driving cash. There's a lot of opportunity to keep giving strong cash. We generated $6,000,000,000 and then from a net debt to EBITDA basis, we are down to 1.4 versus when I started 18 months ago, We were at close to 2.3, 2.4. So team has done a really nice job of driving cash and working capital is a big piece of it.

Speaker 8

That's helpful. And then maybe just as a follow-up, it feels a long time ago, but I suppose it was fairly recent, the Food Safety divestment, a sort of broad perspective on the portfolio. The fact that it was one of the 12 Priority growth platforms at the company and is still being divested. Does that tell us, At least on the outside, one could interpret that as meaning that there's a much broader sort of remit around potential divestments At 3 ms, if you're even willing to sell a priority growth business, is that a sort of reasonable interpretation?

Speaker 2

Yes, Julian, I would say, first, it reinforces what we've been talking about. Our portfolio strategy is Actively continuously evaluating our portfolio. We do that to make decisions on where we invest organically, more attractive markets that can leverage 3 ms Capabilities fundamental strengths. We look at acquisitions that can complement what we do organically and when integrated into 3 ms give us attractive markets that can Yes, add value and greater than the sum of the parts of the two businesses. We also are looking how to maximize value all the time and that There's everything from managing our businesses differently to up to and including divestitures, and we've done a number of those over time where we saw better owners or Greater value to be really achieved through the divestiture and sometimes that's strengthening the business so they can deliver greater value to customers.

Speaker 2

It's always focused on How can we deliver greater value creation through the business, including returns to our shareholders? And so when you look at food safety, while it was a Organic priority for us because it had strong growth opportunities and can leverage some of the capabilities of 3 ms. We also saw a path to greater value, a combination with Neogen where you can strengthen the 2 businesses by putting them together And really create greater value for customers and for shareholders. So it's very consistent with what how we look at our portfolio management and I think it's an outcome of that A continuous process and we're going to continue to actively manage our portfolio.

Speaker 7

Great. Thank you.

Operator

Our next question comes from Brent Lindsay with Mizuho Securities. You may proceed with your question.

Speaker 9

Thanks and good morning.

Speaker 3

Good morning, Brent.

Speaker 9

I wanted to come back to the margin bridge. You guys called out the manufacturing inefficiencies that occurred in Q4 related to the shorter production runs, more production changeovers, etcetera. Are you able to isolate in size in dollars or margins how large of a headwind that was in Q4 and on a full year basis in 2021?

Speaker 3

Yes, Brent, it's really hard to do it that way because it has a compounding effect. So Unfortunately, it's hard to isolate the number. In total, when we put the manufacturing productivity together, including the Spend, you can see it's $0.33 negative in total, which included 3 things. 1 is lower volume, Which has an impact first on just generally the plans. 2nd is the material productivity.

Speaker 3

The third is the wage inflation and the Prior headwinds that we had talked about when it comes to variable compensation and then we continue to invest in growth productivity and sustainability.

Speaker 9

Yes. It makes sense and understandably inflation logistics pressures continue, but I'm just trying to get a sense do those resolve Early in Q1 as some of the demand pulse gets better here?

Speaker 3

Yes. So I think we are watching it, Brent. I think our view is we're going to see a volatile environment in the first half. Things should get better in the second half, but I would not expect a big snapback on stability of supply in 1Q of 2022.

Speaker 9

Right, right. Okay. And just wanted to come back to the comment on prioritizing investments for this year. I think Last year R and D as a percent of sales was at the lower end of what it's been historically. Does the R and D number need to move Higher in 'twenty two or can you keep at the same level and just allocate those dollars more effectively?

Speaker 2

Brent, it's really something we focus on prioritizing our investments. We talk about prioritizing in growth, Productivity and sustainability as we've come through the pandemic, as we came through 2021, accelerating those investments where we saw the best opportunity. That's R and D, that's CapEx, that's commercial investments, very big focus on R and D as you would expect, it's where we Drive our innovation with that investment in R and D. And so the overall percent of sales that you see at an enterprise level, It wouldn't surprise you that there are parts of our portfolio that are much higher than that and others that are lower than average. And We're prioritizing that in some of the areas that I talked about in my prepared remarks.

Speaker 2

We see attractive investments. So we actually are increasing R and D in some areas and managing it overall Pretty well in line with where we've come from, but there's a lot going on underneath that. It's really that prioritization where we are targeting Stepping up our investments in those most attractive areas and it's true for CapEx as well.

Speaker 9

Got it. Makes sense. Best of luck.

Speaker 3

Thanks. Thanks,

Operator

Brian. Our next question comes from Deane Dray with RBC Capital Markets. You may proceed with your question.

Speaker 10

Thank you. Good morning, everyone.

Speaker 2

Hi, Dean. Good morning, Dean.

Speaker 10

Hey, just a couple of clarifications. Going back to the opening Q and A and Nigel's question on December coming in better, You did clarify that masks were better by $40,000,000 What were the other businesses that did better or product That did better in December.

Speaker 3

Yes, so $40,000,000 was for the whole quarter, Dean, just to clarify that. December definitely had a pickup there. Consumer came in strong and then healthcare came in strong. So that's the other 2 I would call out in December.

Speaker 10

Got it. And then, when Bruce made 2 topics that are going to change in reporting going forward, Could you just clarify the second one? It sounded like you were not going to report segment volume and price separately. Just clarify what the thinking is there and what will we see going forward?

Speaker 1

Yes, Dean, this is Bruce. We have never reported Separate segment volume and price by the segments. We have at the total enterprise level and the geography level. We are no longer going to report separate volume and price going forward. And it's due to a lot of the benchmarking work we have done.

Speaker 1

Also, the one conversation piece we've had throughout the year relative to price is what's showing up in price is what gets realized In the quarter, and it's not a true reflection of the actions we're taking in the end market. So I think it created a A lot of confusion relative to is 3 ms taking price or not. Yes, we're taking price, but it really is only showing up relative to what actually got realized in a particular period. So organic growth is our number one objective, and that's what we're going to report going forward.

Speaker 10

So Slide 12 in the appendix where you break out organic volume by region and price, Does that go away?

Speaker 2

Yes. So

Speaker 1

if you recall, Dean, When we move to our new business group led business model, we're running global businesses now. We no longer have a separate international structure. So and that's how we're operating the business, driving growth around the world no matter where it's at.

Speaker 7

Got it. Thank you.

Speaker 5

Yes.

Operator

Our next question comes from Andy Kaplowitz with Citigroup. You may proceed with your question.

Speaker 11

Hey, good morning, guys. Good morning, Andy. Can you give us a little more color into what you're seeing in Tronics, I think you mentioned in Q4 is down still and it tends to be quite volatile for you. So without giving specific outlook for 2022, have you seen any improvement in semiconductor availability, you're starting to help that business. How are inventories in the channel?

Speaker 11

At what point do your businesses, such as data center focused products, auto electrification,

Speaker 3

So I would say, Andy, I'll start with your first thing on chips. So production did go up in auto in December versus what was originally planned. For the year, auto ended at +2, for the Quarter ended at minus 13, and I think it came in a little better than what was the original forecast. So It did get a little better there. I think what we are seeing is it's still volatile from a supply chain perspective.

Speaker 3

And our view is that You're going to see that volatility in the first half of twenty twenty two. When you take consumer electronics, consumer electronics It was down on a year over year basis. It's projected to be up from 2021 to 2022 for the year and we'll have to see when launches happen etcetera. And then on the fluids or that's the semiconductor of our business, the business has grown very well. We continue to perform very well.

Speaker 3

We continue to deliver value for our customers. And in 2022, you should expect us to continue Doing the same.

Speaker 11

Manish, that's helpful. And then maybe a little more color on what you're seeing regionally. Obviously, You have tougher comparisons in China as you go into next year or into 2022. There's some geopolitical risk out there. So Any sort of trends that you're seeing or want to highlight as you're going into 'twenty two regionally?

Speaker 2

Yes, Andy, I would take you to GDP and IPI. I think there's an outlook For 2022 that says we're going to see a pretty good backdrop globally led by Probably U. S. And Asia in that regard and the stronger areas, IPI, GDP, both. If you look if you go into China in particular, we saw growth in 2021.

Speaker 2

We were up low Single digits in Q4, which is similar to the overall China macro. For the whole year, we were up low double digits, which was above the macro for China. So continue to see growth opportunities there. Our growth was led by our Healthcare business. We saw growth in our consumer business.

Speaker 2

Both of those were up low teens. Our industrial business was up low single digits in the quarter And where we saw some weakness was in transportation electronics really back to the semiconductor chip challenges, some of the supply chain challenges, Those were impacting that in China as well. So I paint that picture so you can kind of see where we have a focus on Growing at or above the macro in China as well and the outlook is to be positive and we're prioritizing like everywhere else where we see the trends and Some of those areas in electronics have continued to stay strong while overall consumer electronics challenged with the chip shortage. We saw strength in semiconductor Fabrication, factory automation, so there we see those as areas that we're well positioned as we come into 2022 as well.

Speaker 11

Appreciate it, guys.

Operator

Our next question comes from Steven Tusa with JPMorgan Securities. You may proceed with your question.

Speaker 12

Hey, guys. Good morning.

Speaker 7

Hey, Steve. Just

Speaker 12

a question on, I know, Mohnish, you've kind of taken on this, I guess an additional title of kind of transformation officer. Many times that means there's going to be Major portfolio moves,

Speaker 5

what

Speaker 12

does this Transformation title mean from that perspective? Is it really looking at kind of the structure of the company? Or is it You know more about improving processes and more of an operating.

Speaker 2

Yes, Steve, I'm interested in Monisha's answer as well, but I thought I'd just frame it up. He's leading transformation, which is really taking responsibility for leading Our IT and digital strategy and overall transformation includes what we've called business transformation. Mohnish Has been driving some of these efforts from his role as CFO and he led transformation as prior employer as well. He brings that operating rigor to it. So when we recently hired a new Chief Information and Digital Officer that reports to Monish as part of that.

Speaker 2

So you think about it, it's really That business transformation we've talked about for a number of years focused on deploying new digital capabilities, digital strategy broadly, digital enterprise Capabilities like our ERP and our move to the cloud, also digital operations and even how we're digitizing for our customers. And so it's really Bringing his leadership to that. So Manish can give you his perspective on it.

Speaker 3

Listen, I don't have much to add, Steve, other than the fact that when we look at the opportunity at 3 ms, whether it's growth at or about macro, margin Expansion and strong cash. Underneath that, you can tuck in portfolio. Digital is a big opportunity for us, whether it's leveraging data and data analytics. And I just view my job is to enable the teams to achieve what 3 ms can. So I'm excited and we have a great set of people working on this.

Speaker 12

Right. And then I think you guys mentioned buyback in the presentation. I might have missed this, but is that a new kind of are you guys going to Stepping up buybacks in a significant way here in the near term, is it a change in tone on buybacks or pretty consistent way you've said historically?

Speaker 3

No, Steve, it's pretty consistent. As the level of buyback is always our 4th priority in the 4 priorities. To the extent the amount of buyback will always get determined by the amount of cash we have, what the market is doing, what the opportunities are. And as I'd mentioned in the Q4, we saw an opportunity where we thought the stock was attractive and we felt we should step up buyback in the 4th But no change in tone. That still remains the 4th priority in our list of capital allocation priorities.

Operator

Our next question comes from Andrew Obed with Bank of America. You may proceed with your question.

Speaker 13

Yes. Good morning.

Speaker 3

Hi, Andrew. Good morning, Andrew.

Speaker 13

Yes. So my first question is on Asia and specifically as we see Omicron in China, What's the feedback you're getting on the ground about the scope of shutdowns versus what was expecting around the Olympics? And how is that going to play out in the Q1 given what you're seeing right now? Thanks.

Speaker 2

Yes, Andrew, I would say What we came through December into the New Year, there's a lot of uncertainty around Omicron and how it's going to impact Supply chains globally and in China, obviously, an important focus there and with the Olympics coming a spotlight on that as well. We've been managing supply chain logistics Issues there as well. You saw that a little bit play out in the China export numbers in Q4 down like low single digits, I think, for the quarter. So It's something we're focused on. We've been managing through the challenges we've seen and we'll update you as we get further And into February March.

Speaker 13

And just the second question is, Almost 2 years into COVID and maybe it's a little preview for your Analyst Day. But almost 2 years into COVID, What portions of your portfolio sort of look structurally better and what has lagged? And what do you think

Speaker 2

Yes, Andrew, I'll start with, we've been investing accelerated investments in a number of areas as We come through COVID and it's really recognizing some of the trends, maybe even that we came into the pandemic with that accelerated. So we talk about investments in Automotive electrification may be less COVID related, but certainly a trend that's accelerating. We saw home improvement accelerate during COVID. So We're investing in those areas. We're seeing strong growth as we came through 2021 in those areas and we see that continuing to go forward.

Speaker 2

So That's the way we look at it. There's across our portfolio, we've talked often about different parts of our portfolio, how are they doing Relative year over year, even back to 2019, I would say we had strength in broad parts of the portfolio, including those that we're investing in. There's a couple of areas that are still recovering. And one issue even highlighted one in his comments about how Elective procedures are still at about 90% of medical procedures that is at about 90% of where they were in 2019. So there's The impact of COVID on increased hospitalization rates and the knock on effect on healthcare, there's still we think there's still some Impact net net versus 2019 in some of those areas.

Speaker 2

So it plays out a little differently across our portfolio, even where we saw Strong demand in our home care and our cleaning products in 2020, tough comp and a little lower Growth as we came through 2021. So there's a number of trends that we're watching, again, prioritizing where we see an opportunity to invest and leverage 3 ms strengths And managing those other areas to in the middle of the supply chain disruptions to serve customers as things recover.

Speaker 13

Thank you very much.

Speaker 5

Yes.

Operator

And our final question comes from John Walsh with Credit Suisse, you may proceed with your question.

Speaker 14

Hi, good morning and thanks for fitting me in here.

Speaker 2

Good morning, John. Good morning,

Speaker 14

John. Maybe just one question from me and going back, I think, To a comment you made in response to Nigel's question around restructuring, I thought I heard 70,000,000 Just wanted to make sure that was kind of capturing all the restructuring delta and ask if that was in line with The Q3 update, because I guess by my math, I had a little bit higher of a number, but just wanted to ask for clarification there.

Speaker 3

Yes, it's a good one, John. So you heard it right, it's 70. And the reason is we achieved more in the 4th quarter Than we had previously thought and that's why you also saw margins came in higher and because we achieved more. So just to recap The program in total, we have spent the program that was announced in Q4 of 2020. We had said we would go in we have spent 260 to date.

Speaker 3

We had told you in Q3 that it would be 300 to 325. Right now, we are saying up to 300. We had said benefits would be in the range of $200,000,000 to $250,000,000 We achieved approximately $180,000,000 in that program. So there's a carryover benefit of $70,000,000

Speaker 14

Great. Appreciate the clarification. Thank you.

Speaker 3

Thanks.

Operator

That concludes the question and answer portion of our conference call. I will now turn the call back over to Mike Roman for some closing comments.

Speaker 2

Thank you. To wrap up, I am proud of our team's performance in 2021, And we are well positioned for a successful 2022. I look forward to talking to you again at our February 14 meeting. Have a good day.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and we ask that you please disconnect your lines.

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3M Q4 2021
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