3M Company

Ladies and gentlemen, thank you for standing by. Welcome to the 3M Fourth Quarter Earnings Conference Call. During the presentation, all participants will be in the listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone keypad. It is recommended that you use a landline phone if you are going to register for a question. As a reminder, this conference is being recorded Tuesday, January 29, 2019. I would now like to turn the call over to Bruce Germeland, Director of Investor Relations at 3M.

Thank you and good morning, everyone. Welcome to our fourth quarter 2018 business review. With me today are Mike Roman, 3M's Chief Executive Officer, and Nick Gangstad, our Chief Financial Officer. Mike and Nick will make some formal comments, and 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 two. Before we begin, let me remind you of the dates for our 2019 quarterly earnings conference calls, which will be held on April 25th July 25th, and October 24th. Please take a moment to read the forward-looking statement on slide three. During today's conference call, we will make certain predictive statements that reflect our current views about 3M's future performance and financial results. 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-K lists some of the most important risk factors that could cause actual results to differ from our predictions. Finally, please note that throughout today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the appendix of today's presentation and press release. Please turn to slide four, and I'll hand it off to Mike. Mike? Mike? Thank you, Bruce.

Good morning, everyone, and thank you for joining us. I will open with a brief summary of our fourth quarter, and later in the call, I will come back to discuss our full-year performance along with our outlook for 2019. 3M executed well in the fourth quarter, with results that were in line with our expectations. We delivered organic growth across all business groups and geographic areas, along with a double-digit increase in both cash flow and adjusted earnings. Looking at the numbers, total sales in the quarter were $7.9 billion. We posted organic growth of 3%, which is on top of 6% growth in last year's fourth quarter. Growth was led by our healthcare business group, which grew 5% organically, along with electronics and energy, which grew 4%. With respect to EPS, our team delivered adjusted earnings of $2.31 per share, up 10% year over year. This includes a $0.02 net benefit from a divestiture, which Nick will cover in more detail. The strength of our value model is in enabling us to consistently generate premium margins and healthy cash flow. Margins in the quarter were more than 22%, with all of our business groups above 21%. Cash flow increased by 23% year over year, with a conversion rate of 128%. Finally, in the fourth quarter, we returned $2.1 billion to our shareholders through both dividends and share repurchases. That concludes my opening comments. I will now turn the call over to Nick, who will take us through the details of the quarter.