Monish Patolawala
Executive Vice President, Chief Financial and Transformation Officer at 3M
Thank you, John, and I wish you all a very good morning. Please turn to Slide 9. The 3M team delivered strong execution in Q1 in a macro-environment that remains extremely fluid and increasingly uncertain. We remained focused on delivering for our customers, drove operational execution and maintained cost discipline, while also continuing to invest in the business to fuel growth. First quarter total sales were $8.8 billion, which increased 1.7% on an organic basis. As a reminder, organic sales growth does not include impacts from FX or M&A.
Adjusted operating income was $1.9 billion, with adjusted operating margins of 21.4% and adjusted earnings per share of $2.65. On this slide, you can see the components that impacted our operating margins and earnings per share performance as compared to Q1 last year. We continued to drive price actions, realized savings from past restructuring and maintained strong spending discipline, which helped offset both known and new headwinds. As I highlighted in my February Investor Day presentation, we made significant progress driving actions in 2021 to address rising raw material and logistics costs.
We are leveraging the power of daily management, data, and data analytics, along with the spirit of embracing the red to direct actions to offset the inflationary pressures. During the last year, we developed new sourcing and pricing tools and processes to improve agility, drive alignment, and simplify our processes. In addition, we are also enhancing our reporting and data analytics capabilities by rolling out tools that model price realization, leakage and elasticity. These efforts continued to pay off in Q1 as benefit from selling price actions offset raw material and logistics headwinds.
Looking ahead, while we see raw material and logistics inflation persisting, we will continue to leverage daily management powered by data and data analytics with the expectation of offsetting raw material and logistics inflation through pricing actions in 2022. Also, during the first quarter, we completed the final actions related to our December 2020 restructuring announcements. Since Q4 2020, we have incurred total pretax restructuring charges of approximately $280 million, versus an original expectation of $250 million to $300 million.
These actions are expected to deliver total pretax savings of approximately $250 million, are at the top end of our estimated range of $200 million to $250 million. We realized $180 million of the savings in 2021 and expect the balance of the savings of $70 million in 2022, which is incorporated in our guidance. In the quarter, we experienced a year-on-year decline in disposable respirator demand of nearly $50 million, which negatively impacted operating margins by 10 basis points and earnings by $0.03 a share.
On any given day our global sourcing, manufacturing and supply chain teams continue to navigate a number of items including raw material and logistics availability, evolving COVID-related impacts including mandated lockdowns, employee absenteeism in our U.S. factories in January and February and now in China, the continued shutdown of certain operations in our plant in Belgium and recently, the impacts on the geopolitical crisis in the Ukraine.
These dynamics continue to result in ongoing changes to demand plans along with increasing costs and pressuring manufacturing productivity as we work to serve our customers. Also, as you will hear from me throughout the year, we 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, electronics and software. Moving to raw materials; we continued to experience inflationary pressures which with a year-on-year increase of approximately $215 million in the quarter, which resulted in a headwind of 2.4 percentage points to margins and $0.30 per share to earnings.
Foreign exchange fluctuation is something we're watching closely, particularly given the geopolitical uncertainties. During the quarter FX was a benefit of 10 basis points to margins, however, was a negative $0.04 per share impact to earnings year-on-year, primarily the result of the strength of the U.S. dollar. Other financial items increased earnings by net $0.04 per share year-on-year, with benefits from a lower share count and a decline in net interest expense more than offsetting a headwind from higher tax rate. While year-on-year margins and earnings decline, it is also important to look sequentially given the fluid and uncertain environment.
Our actions to continue to drive price to offset inflation, navigate supply chain challenges and control costs enabled us to expand adjusted margins and earnings 140 basis points and $0.20 per share respectively. Please turn to slide 10. First quarter adjusted free cash flow was $715 million with conversion of 47% which was in line with our expectations. Year-on-year conversion was lower due to higher cash compensation and an increase in capex for growth and sustainability investments. Looking at the full year, our free cash flow conversion expectations of 90% to 100% remain unchanged.
As you know, we currently have a very fluid environment, especially around global supply chain and logistic challenges. Therefore, we will experience some working capital ups and downs in the short run, but you should see the benefits of the power of data and analytics and operational rigor start to play out once things stabilize. Capital expenditures were $424 million in the quarter, up 37% year-on-year as we increased investments in growth, productivity and sustainability. For the full year, we continue to expect capex to be in the range of $1.7 billion to $2 billion.
During the quarter, we returned $1.6 billion to shareholders through the combination of cash dividends of $854 million and share repurchases of $773 million. Our cash flow, the global economic situation and our stock price are all factors into determining the pace and amount of share repurchases. We believe our current stock price presents a good buying opportunity and we have been active in the market to start the year. While we are currently out of the market due to the pending Food Safety divestiture, we currently anticipate $2 billion in aggregate share repurchases over the course of the full year.
Net debt stands at $13.3 billion, up approximately 2%, as we continued to invest in the business. Our capital structure is well positioned, giving us financial flexibility and optionality. 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 12 for our business group performance for Q1.
I will start with our Safety and Industrial business, which posted organic growth of 0.5% year-on-year in the first quarter. This result included our disposable respirators sales decline of approximately $50 million year-on-year which negatively impacted Safety and Industrial's Q1 organic growth by 1.5 percentage points. Our Personal Safety business declined mid- single-digits organically versus last year's 20% pandemic-driven comparison. Looking ahead, we continue to anticipate that COVID-related disposable respirator demand will decline as we move through 2022. However, if trends change, we remain prepared to respond to changes in demand as COVID impacts evolve.
Turning to the rest of Safety and Industrial; Industrial Adhesives and tapes, electrical markets, Abrasives and closure on masking were all up mid- single-digits compared to last year, while roofing granules and Automotive Aftermarket businesses were up low single-digits. Safety and Industrial's first quarter adjusted operating income was $699 million, down 14% versus last year. Adjusted operating margins were 22.9%, down 3.5 percentage points. Year-on-year adjusted operating margin performance was impacted by higher raw materials and logistics costs and manufacturing productivity headwinds.
Partially offsetting these impacts was selling price increases, spending discipline and benefits from restructuring actions. The Safety and Industrial business group continues to focus on building the future through emerging trends and opportunities. Most recently, 3M acquired the technology assets of LeanTec to advance digital solutions for autobody shops. This digital platform integrates data capture and analysis with material product platforms providing shop owners and managers more access to data for enhanced productivity and inventory management.
Moving to Transportation and Electronics on slide 13, which declined 0.3% on an organic basis primarily due to the ongoing impacts of semiconductor supply chain constraints on the automotive and Consumer Electronics end markets. Organic sales in our Auto OEM business were flat year-on-year versus a 5% decline in global car and light truck builds as we continue to gain penetration on automotive platforms. Our Electronics related business declined low single digits organically with declines across Consumer Electronics, particularly smartphones and TVs.
These declines were partially offset by continued strong demand for our products and solutions in semiconductor and factory automation end markets. Turning to the rest of Transportation and Electronics, Commercial Solutions grew high-single digits. Advanced Materials was flat, while Transportation Safety was down mid-single digit year-on-year. First quarter operating income was $496 million, down 11% year-on-year. Operating margins were 21.2%, down 2 percentage points year-on-year.
Operating margins were impacted by higher raw materials and logistic costs, manufacturing productivity impacts and investments in Auto electrification. These year-on-year headwinds were partially offset by increases in selling price, strong spending discipline and benefits from restructuring actions. The Transportation and Electronics business group is focused on executing well against the strategic imperatives to build new growth platforms in high growth segments including automotive electrification, semiconductor, electronic materials and graphic and architectural films.
Turning to our Healthcare business on slide 14, which posted a first quarter organic sales increase of 4.7% with growth across every business. Our Medical Solutions business increased mid-single digits organically. First quarter U.S. elective medical procedure volumes were approximately 85% to 90% of pre-COVID levels as COVID slowed the pace of procedures, particularly in January and February. Sales in our Oral Care business grew low single-digits year-on-year. Global Oral Care procedure volumes dipped in January and February due to COVID but started to recover in March. Overall patient visits for the quarter were 85% to 90% of pre-pandemic levels.
We continue to watch COVID-related trends and its impacts on the global healthcare industry, including labor shortages which drove lower than expected surgical and dental procedure volumes in the quarter. The Separation and Purification business increased mid-single digits year-on-year with sustained demand for Biopharma Filtration Solutions for COVID-related vaccines and therapeutics. 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.
As Mike mentioned, we remain on track for a Q3 close of the planned divestiture of this business which will be combined with NEOGEN. Healthcare's first quarter operating income was $448 million, down 3.5% year-on-year. Operating margins were 21.1%, down 1.4 percentage points. Year-on-year operating margins were impacted by raw materials and logistics costs, manufacturing productivity, investments in the business, and Food Safety deal-related costs. These impacts were partially offset by benefit from leverage on sales growth, strong spending discipline and benefits from restructuring actions.
Despite the current environment, the healthcare business group is focused on delivering clinically differentiated innovative platforms that improve patient outcomes and reduce cost of care. We have been sharply focused on three key segments: wound care, healthcare IT and biopharma filtration. These segments are well supported by key market trends which include increasing chronic conditions driven by an aging population, shifting of care to lowest cost settings, improving healthcare access trends and finally digital and connected solutions.
Please turn to slide 15. Lastly, our Consumer business delivered first quarter organic growth of 3.4% versus last year, with growth across every business. Our Home Improvement business continued to perform well, up low single-digits on top of last year's growth of over 20%. This business continued to deliver strong growth with our Home Improvement retail customers in our category leading Filtrete and Command brands. Stationery and Office and home care grew low single-digits organically in Q1. And, finally, our Consumer Health and Safety business was up low teens year-on-year.
Consumer's operating income was $224 million, down 17% compared to last year. Operating margins were 17.1%, down 3.7 percentage points year-on-year. Historically, Q1 is typically our lowest margin quarter of the year for our Consumer business. But this year's operating margin was further impacted by ongoing supply chain constraints, along with higher raw materials and outsourced hard good manufacturing costs and manufacturing productivity impacts. These headwinds were partially offset by good price performance, strong spending discipline, and benefits from restructuring actions.
Continuing to innovate and drive sustainability within the Consumer business group is a top priority. As consumers and businesses are increasingly shopping online, they want solutions that protect their packages and contents while making the process more convenient and sustainable than ever. As a result, we recently launched Scotch Cushion Lock, a new sustainable alternative to plastic cushioned wrap, and a perfect solution for protecting and packaging items with 100% recycled paper, as Scotch portfolio is centered on innovating and serving this large and growing market. Please turn to slide 17 for a discussion on our 2022 outlook.
As you know, most companies are facing a macro environment that has become even more fluid and uncertain due to several factors, including continued global supply chain and logistic challenges, ongoing impact from semiconductor constraints, particularly on the automotive and electronics industries, evolving impacts of COVID-19, growing geopolitical uncertainties, increasing foreign exchange volatility, and, finally, rising inflationary pressures, including raw materials, logistics, labor and energy costs. This has resulted in softening trends impacting full year growth expectations for GDP and IPI. Both macro indexes are now expected to be up approximately 3% versus up 4% at the start of the year. Despite the fluid and uncertain macro environment, we continue to expect organic growth in the range of 2% to 5%.
Adjusted earnings per share is expected to be $10.75 to $11.25. This range incorporates the change to our adjusted earnings that Bruce highlighted at the start of the call. And, finally, free cash flow conversion expectations remain in the range of 90% to 100%. Before I wrap up, let me make a few comments regarding the second quarter. First, we are seeing a slow start to sales in April, primarily due to COVID-related impacts in China along with the geopolitical crisis in the Ukraine. Raw materials and logistics costs are expected to be up, impacting Q2 year-on-year by approximately $225 million.
We expect disposable respirator demand to decline both year-on-year and sequentially by approximately $100 million to $200 million. During the first quarter and particularly over the last month, growth expectations for transportation and electronic end markets have moderated. Second quarter global auto builds are currently forecasted to increase approximately 2% year-on-year, however, decline 3% sequentially. And smartphones are forecasted to be up approximately 1% year-on-year but declined 5% sequentially. We expect both U.S. medical and oral care elective procedure volumes in Q2 in the range of 90% to 95% of pre-COVID levels.
And finally, as a reminder, last year's second quarter included an approximately $90 million operating income benefit of $0.12 per share from a Brazilian Supreme Court social tax ruling. To wrap up, although we remain cautious in this current environment, we are bullish about the long term. We are committed to delivering for our customers, taking appropriate price actions, driving operational execution, and managing spending while continuing strong financial rigor and maintaining a strong capital structure and financial flexibility. In the long run, we will grow above the macro, expand margins, and deliver strong cash.
I want to take a minute to thank the 3M employees for delivering for our customers and shareholders in a very uncertain and fluid environment. Our team delivered 1.7% organic sales growth in the quarter, 21.4% adjusted margins, up 140 basis points sequentially, and generated $715 million in adjusted free cash flow. 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 partnership that help us navigate the current challenges. We are at a good start to the year. We are watching the environment closely and working on navigating current challenges with more work to do.
That concludes my remarks for the first quarter. With that, we will now take your questions.