3M CO — Call Transcript 2026

Hi. Good morning, everyone. I'm Joe O'Dea. I lead the multis effort at Wells Fargo, and very pleased to welcome 3M for our next session, and CEO Bill Brown. Bill, thank you so much for being with us this morning. Thanks for being here. Thank you. We're going to get right into the Q&A. Why don't we start on some of the shorter-term side of things, thinking about the demand patterns where with Q1, you outlined Q2 and some acceleration in thinking about organic that could move north of three, just kind of what you've seen over the course of the quarter so far. Well, first of all, good morning, everybody. It's great to be here. Thanks for having us. Just overall, our strategy is gaining traction. It's a back-to-basics, focus-on-fundamentals approach to rebuild 3M as a more resilient, more consistent, higher-performing company with better top-line growth coming from innovation and commercial excellence, better operational execution at the ground level, driving margin expansion, cash generation, and disciplined capital deployment. That's basically what we laid out a couple of years ago, and we're executing very well on that. We did have a solid Q1. Q1 start earnings per share up 14% in Q1, saw 30 basis points of margin expansion. We saw double-digit growth in free cash flow. Organic revenue growth came in just over 1%. We saw some pockets of macro pressure. I think encouragingly, as you referenced, we ended the quarter with very strong orders, up double-digit in Q1. Backlog grew year-over-year and sequentially double-digit, which was very encouraging for us. As we turn the corner into Q2, in fact, we're pretty far advanced into Q2. Those orders and that backlog is converting to revenue. We said we'd be above 3% in Q2. We'll be solidly above 3% in Q2, given the fact that we're pretty far deep into the quarter, so we're very confident about that. We see momentum continue to build. We saw good progress in Q1 in about 60% of the portfolio, that is general industrial or safety. That was up mid single-digits, which was very encouraging. We see trends in that area continuing into Q2. We saw five months of solid PMI. PMI in May was actually pretty good at 54%. It's actually encouraging, the macro trends. We see that continuing to build. A couple of places of some pressure in our business, but that's really around consumer electronics, auto, a little less so on the U.S. consumer behavior. Generally speaking, orders have been pretty good. They continue into Q2. As we sit here today, we've built backlog even further. Orders have continued to be solid through the quarter, so they're more resilient. It's all coming from a lot of the work we've done on commercial excellence in innovation, which is building momentum. The thought of it might've been some pre-buy, I think maybe we overstated that a little bit at the end of Q1. The fact is, commercial excellence has been pretty good. Innovation's been pretty good. The quarter's looking good. As we see the back end of the year, it continues to accelerate. We feel good from where we're standing. Again, a very solid Q2, and I think momentum building back into the second half of the year. Maybe just spend a little bit more time on the pre-buy aspect of things, because I think that was some focus thinking about the order growth that really accelerated. Yeah. Good order growth throughout Q1, but accelerating. Yeah. A little bit of why. What happened is, look, we typically go out with price increases on April 1st. With what was happening in the Middle East, we saw oil prices coming up. We went out with additional price increases on top of what was April 1st that we said. Based on our performance, the innovation, on-time delivery, our responsiveness into the channel, we believe our ability to drive price is a lot better, we're going to hold the line on that. We were very careful about that. We communicate that to our channel partners, to our customers. Naturally, we thought we would see some acceleration of orders. It was probably some of that. Given the momentum we saw in April, in May, and now into June on orders, there might've been some pre-buy, predominantly it is innovation driven, commercial excellence driven, and probably less so on the pre-buy. Okay. More, I think, the self-help part of it than the pre-buy. That was going to be the follow-up. Yeah. Is it does seem like there's a bit of a rising tide behind the short cycle macro, you would attribute more of it to? Look, there's clearly some macro strength behind us on the industrial side, on the safety side. A couple of other places, like semis are good. Our data center business has been pretty good. Aerospace & Defense has been pretty good. Commercial branding in Q1 was pretty good. There's good parts of the company that have performed pretty well. Some of it is macro driven. I think I would put more on just where there's a lot more hustle in the sales force on commercial excellence. We're clearly making good strides here on innovation. I know I'll talk more about that here, but really good progress on driving new products into the marketplace. Frankly, I put more on the fact that it's a lot of the things that we're doing differently inside the company than necessarily that there's a short cycle macro turn. That, we believe, is happening, I think it's more the self-help side. Yeah. Let's touch on the Middle East in terms of the $0.05-$0.15 of contingency within the guide on sort of oil just about what you've observed over the course of the quarter. Look, we said we would have $0.05-$0.15 of contingency, if you will, for macro or oil-based Middle East type effects. Our business in the Middle East is not very big. It's less than 2% of our revenue. We're not seeing an issue there. We, like other companies, have seen some logistical challenges of moving product through the Middle East, not into, but through the Middle East. We're managing through that. We have a big network. It's working very well. That's managing pretty well. As we sit here today, we do not see a need to call on that $0.05-$0.15 of contingency in the year, but that's as we see it today. Okay. Want to spend a little bit more time on segments. Sure. Starting with Safety and Industrial. 75% of the segment— Yeah. —we're seeing mid-single-digit plus type of growth. Yeah. To sort of address it from both a macro side or cyclical side and then a self-help— Yeah. —outgrowth side. Yeah. Just on the cyclical and in terms of things like abrasives and parts— Yeah. —of the business where you're seeing the good growth, what's behind that? Look, abrasives. Other parts of that portfolio have actually been performing very well. The electrical markets business has been pretty strong. Public safety in that space has been pretty good. It's actually going, I think, reasonably well. There's some macro behind it for sure. That's the business segment that we really launched our commercial excellence activities in back in the middle, towards the end of 2024 when I came on board, said, "We need to drive organic growth, and that's going to come from launching more products and then selling more of what we have in the market today, which is commercial excellence." The team there got on that very quickly. There's several dimensions of it. Part of it is sales force effectiveness. It's the coverage, the incentives, the training, the hustle at the front end. We're really seeing that take effect in that SIBG business for sure. We laid out an agenda to cross-sell. Perhaps we were a little conservative in retrospect. We said we would hit $100 million worth of cross-sell opportunities over three years. Last year, we were at $50 million. By Q1, we're at $80 million of booked cross-sell opportunities. Our pipeline's another $85 million, and we're sort of just a year and a half or so into that journey. That's going very well. We said we would reduce the attrition or the churn in the portfolio in SIBG. In fact, it's been running higher than we would have expected or you would expect it. I don't think we really necessarily focused on that. This is just share a wallet loss because you're not delivering something on time or not being responsive. With our OTIF coming up, our new product launches, the sales hustle, we are seeing improvements in attrition rate as well. You put all those pieces together, with some innovation that's happened across those segments, in abrasives and other parts, we are seeing good tailwinds in that particular part of the business. Do you have any kind of rough approximation for the outgrowth? When you see this traction building— Yeah. —behind something like commercial excellence— Yeah. —leading in Safety and Industrial in these markets that are growing. On a quarter-by-quarter basis, it's hard to see, but the way I look at this, we were, say, 3%-4% in the second half of last year. We're 3%-4% here in the first half, 3.2% in SIBG in the first quarter. We'll be in that 3%-4% range. It's going to accelerate. It's accelerated from second half last year into the first half this year. It's going to accelerate first half into second half. Call it 3.5%-4%, in that particular range. Look, IPI has been running around 1.6%-1.7%. U.S. is 1.0%. I don't think you debate that at 3%-4%, pick your number there, we're outrunning the macro for sure. Clearly, the goal we set was to drive $1 billion above the macro over three years, and we're seeing really good progress in that across the company, but particularly SIBG. On the electrical market side— Yeah. —of things, six straight quarters of— Yeah. —really good growth there. Part of that, you've got data center exposure within that. You've talked about $100 million of revenue— Yeah. —that's inside the data center— Yeah. —$500 million that's bringing power to it. Just overall, what your visibility is there, what you think that revenue can get to. It's been very good. First of all, EMMD, the electro markets business, about a $1.5 billion business, and it is growing very strongly going the last six, seven quarters. Been very good. Part of it is the data center business. As you pointed out, $600 million worth of business going at data centers. In SIBG, it's about 500 million. That's outside bringing power to the facilities, medium voltage cable splices, terminations, insulation, all the things you need to bring power to a facility, and that's been very good. It's been growing high single-digits, low double-digits. A lot of momentum behind that, a lot of backlog. We feel very good. If anything, it's a production constraint, not a demand constraint for us in that particular business. The other part of the business is roughly $100 million, is growing more than 50% each quarter, which has been really good, is around inside the data center business. It's really the combination of what we're doing on TwinAx, which is our copper cabling, moving to optical fiber, which is our new product called EBO, Expanded Beam Optical. That transition has been very encouraging. As we sit here today, some of the orders we saw in Q1, some of our longer lead, they deliver the back end of the year. Some of it comes from that particular business. EBO is an optical interconnect technology. It's something that's dust resistant, it's resilient, it's durable, and reduces the time to revenue for a data center doing all the cabling by about 85%. We've got tons of IP around this, more than 100 individual patents, another 50 patents pending. For a couple of years, we've been in testing with a major hyperscaler. It's been validated by that one. That one placed an order in Q1. It's part of the order trajectory we saw in Q1. That'll deliver in the back end of the year, and it's developing a lot of enthusiasm. The addressable market for us around optical connects inside of a data center, again, keep in mind, that business for us is $100 million as we sit here today. The TAM, we believe, at the end of Q1, we saw was over $1 billion. 90 days later, we're thinking it's more like north of $2 billion. As all these hyperscalers, chip designers, developers are looking more carefully at their architecture inside of data centers, how do you bring more optical interconnect because of all the data connectivity and replace copper? That is a trend that's really massive, is moving fast, we're scrambling to stay up. Earlier this year, we announced that we would expand the capacity of our optical fiber business by doubling it. In fact, 90 days later or so, we're feeling that might be a little bit short as we speak today. A lot of momentum in that business. I think we're at the front end of that, I'm really encouraged by the trend we're at. That $100 million is what sits in T&E. That piece sits on our Transportation Electronics business. That's correct. Yeah. $500 million, it's power outside SIBG, the other part's inside TEBG. Yep. Your market position there, you're talking about something in the scope of 10% market share. Again, there's other technology. It takes some time to get confidence with the hyperscalers. We wouldn't have the capacity even today to be able to provide much more than we have today. It's going to take some time to ramp up that business, but we believe we're very well-positioned to gain share in that particular space. Just last one on SIBG. As we move forward into the back half of the year, the areas that have been growing will naturally have some of the tougher comps, things like Roofing Granules— Yeah. —easier comps. As part of that mid single-digit growth potential, is there a narrowing of— Yeah. —growth spreads across the business? There will be. We will see better comps on the Roofing Granules side. We're seeing that already in Q2. I expect we'll see more of that in the back half of the year. Auto aftermarket was a little light. It'll probably be a little light in the quarter. We'll see easier comps in the back half of that business as well. Yeah, you'll probably see some narrowing of growth across SIBG, but solidly in the mid single-digit range or better in the back half of the year. It's not like the stuff that's really growing those comps become problematic? No, I think the momentum is behind us. Yeah, there are going to be some more challenging comps in certain parts of the business, we think there's momentum behind us. We think it's building, not slowing. Yep. I don't see there being much of a headwind on that side, yeah. Shifting to Transportation & Electronics just the organic growth acceleration opportunity— Yeah. —over the course of the year, and talk about the setup there and the drivers behind it. Q1, we were flattish in that TEBG business. Very strong orders. Orders were up double-digit. Backlog was up 30% over the course of the quarter. It was very strong in that business in terms of backlog. Again, coming back to something I mentioned before on the optical interconnection data centers is a part of that, for sure. When you think about the business, half of the business was growing mid single-digits. Again, semis, data centers, Aerospace & Defense in that area has been pretty good. Growing at high single-digits, low double-digits, very strong. Commercial branding in that business was pretty solid in Q1. Half the business was down. It was around consumer electronics and auto. Those are the two pieces. As it goes forward, we know we'll accelerate going into Q2, we'll see some acceleration into the back end of the year. The businesses in Q1 that were relatively strong continue to be very strong. The ones that were weak, the market, the macro isn't necessarily getting any better on consumer electronics or auto, we're gaining penetration, for example, in consumer electronics. We're penetrating more on the mainstream side. In auto, we're penetrating more where we don't have as much concentration. Like for example, in China, OEMs has been a big push. We're actually gaining some share in those vertical markets. We'll see some acceleration at business as we go from the first quarter to second, and second quarter into the back end of the year. Keep in mind too, we're going to start to see both in SIBG and TEBG, more tailwinds on price. We went out with a price increase on April 1, generally speaking, across all of our business. On top of that, we went out with oil-based price increases that will start to benefit us a little in Q2, more substantially in the back end of the year. If you can just unpack a little bit more this, the premium versus mainstream to understand the mainstream opportunity. The revenue mix today heavily toward the premium side, but the TAM that you have in mainstream. Look, first of all, we're about 70/30 premium to mainstream. We provide bonding solutions, adhesive tapes. We provide connectivity, thermal barriers, other things that go into phones and devices, films, polarizers. It goes into phones, tablets, notebooks, even wide screen TVs. It's a pretty broad business. We see opportunities to take some of the things we've done for premium suppliers. It's not just the premium device manufacturer, but sometimes the premium device manufacturer is also making mainstream or lower-end devices. We're seeing good penetration, both with those typically that are more mainstream as OEMs, as well as mainstream devices within premium suppliers. Sometimes it's de-featuring products we have on the market today. We're finding an ability to do that and attack parts of that business. Different polarizers we provide for wide screen TVs or small phones. Good penetration. It's growing over time. It's happening as we speak, and I think that's going to end up helping us perform a little bit better than the macro towards the back end of the year. Shifting to the Consumer side of things and the recovery prospects there. Yeah. Going from Q4, Q1, the challenges and— Yeah. —how you see that unfolding moving forward. On the Consumer side, we started out last year, we did three quarters of about 0.3% growth. It was just modestly positive. Q4, Q1 was a bit weaker. We see Q2 getting better than Q1. It could be flat to up a little bit. We see it accelerating a little bit in the back end of the year. I think what's encouraging of our Consumer business, it's not very big, it's 20% of the company. What's encouraging is 11 of the last 13 weeks, we've saw positive POS or point of sale growth, which I think is very good. We're seeing good trends. We're seeing weeks of supply in the channel compress. There's not as much channel inventory. We've seen weeks of supply, flow through the channel is getting a little bit better. That is a business that's benefiting from a lot of the activity that I've been talking about, commercial excellence and innovation. We went for a long stretch of time, we weren't bringing any new products into the consumer products market. We just were pulling back. We were pulling back on ad merch, on innovation, and we've reversed that. What's happening now, between 2023 and 2025, we've doubled the number of new product launches in the Consumer side. If you look at what we'll do in 2026 versus 2023, it's triple. We look at just what we're doing internationally, launching products for the international market, we're up like seven or eight times. It's substantial investments in new product development, and it's things like Brite by Scotch-Brite, which, as we sort of say in the tagline, we bring the joy to scrubbing back into the business. It's like there's really good things there. We talked last year about PROSharp painter's tape. It was very important. Filtrete, the number of varieties or SKUs we have in the Filtrete side. A lot of new innovations going into Consumer. Consumer, we're performing better, our on time, in full performance is getting better. We're advertising and promoting better, we're starting to see that traction happen in the business. It's not going to be a big grower in the back end, if we can get sequential a little bit better and start to see positive growth in the Consumer business, I think we'll be. The next topic, which is running the 3M asset better, right? Yeah. You talked about this on the second quarter 2024 call, gave more detail— Yeah. —at the Investor Day. Kind of three core priority areas— Yeah. —that I want to dig into a little bit starting on the growth side. Yeah. Within growth, there's commercial excellence, there's R&D. The R&D efficiency, right? The idea is we'll spend the same amount, but we'll get more out of it. Yeah. Just some of the tools that you're implementing there. Look, this is a fundamental relook back to basics, fundamentals approach to running the way we do R&D today, as I call like an R&D factory, like a factory with metrics instrumenting it. It's a variety of things like are we launching products on time? We weren't measuring on-time attainment. Q1, we were at 83%. Last year was in the low-80s. Before that, it was kind of at 70%. It's continuing to get a little bit better on launching products on time, which I think is quite important. We are spending a little bit more on R&D. We're shifting our spend more towards our priority verticals. Typically, we would have spent less than 30% of R&D on new product development. We're now running about 40%, which I think has been pretty good. We're running our business cases a lot more rigorously. We're tracking are we accomplishing them? In Q1, we launched 84 products. We're watching the funnel. We're bringing more new products into the front end of the funnel. I think the funnel health is quite important. If you go back to where we were in 2023, we launched 123 products into the marketplace. For 3M, it's not as much as we could do. We used to do 600, 700. It went to 169. Last year was 284. This year, we'll do more than 350, and we're well on our way tracking towards the goal of 1,000 products over the next three years by the end of 2027. The business is doing really well on this, bringing back innovation into the business, and a lot of it is just the fundamentals of how you're executing day to day. Now we're starting to bring AI technologies into how we innovate, which is very important. We laid out a goal at the Investor Day to reduce the cycle time to launch a product, to launch a new product by 20%. We're already tracking a little bit better than that, and AI is going to help us accelerate even further as we go beyond 2027. This is a complete remaking of how we innovate, which is the core capability of 3M is bringing new products to life. It's reinstrumenting that whole business, bringing what I call kind of a factory mentality to how we run R&D. Then also on the growth side, you introduced a target to outgrow the macro by about $1 billion, 2025 to 2027. Yeah. Just remind us where you are on that through 2025, 2026, what the setup would be for 2027. We're tracking beyond that. We said we would do $100 million, $300 million, $600 million between 2025, 2026, 2027 above the macro. Last year was about $150 million. This year will be more than $300 million. We're tracking well to achieve that growth of $1 billion over the macro. It's really coming from the segments we've just talked about. A lot of it is the tailwind around general industrial, safety, A&D, semiconductors, our data center business is all giving us tailwind to out accelerate the macro. We feel pretty good about that trajectory. Again, it's not just the new product development. The key piece last year is more around commercial excellence, because it's taking time as you launch more products till that actually starts to drive the top line, it takes some time. Last year it was more commercial excellence. This year it's kind of half and half between commercial excellence and innovation-driven growth. As we get into 2027, it's going to start to be a lot more driven by new product introduction. It's shifting a little bit. The flywheel is moving. We are this year outperforming the macro, and we'll continue to do that next year. It doesn't sound like doing better earlier on means that you're pulling anything in from 2027. No, I don't think so. If anything, it would be— No, no. Look, at the end of the day, we said we'd grow $1 billion over the macro. This is a year and a half ago, and a lot's changed since then. The macro, I think is, if anything, is a little bit tougher than what we had expected at the time, but the company is performing a lot better than I would have expected. It's not pulling anything in. It's capturing new opportunities. When we stood up at the Investor Day early last year, we knew we had a product inside a data center. It was copper. It's called TwinAx. We had developed EBO. It was sort of really nascent. It was sort of buried a little bit. Simply because of all the investment that's happening inside the data centers, the transition around AI, and the amount of data that's flowing through these data centers, they have to move the optical fiber. We've got a great technology at the right spot. We didn't highlight that last year. It's really evolved in the last 6-12 months. You have different pieces that are really picking up and taking on a lot of steam here. Another priority area is operational efficiency. When you outlined— Yeah. —the target was $1 billion of annualized net productivity. Yeah. Just walk us through— Yeah. —where you are on that cadence. By the end of this year, we'll be at least halfway through that. It's been good progress, and it's basic things. It's around procurement savings, logistics savings, modes and flows. Cost of poor quality has been something I've been talking about quite consistently. We had not been measuring it inside the company very rigorously, we were measuring it. We were north of 7% of cost of goods. We closed Q1 around 5%, 5.5%, 5.6%. On a $13 billion cost of goods base, $13.5 billion, it's over $200 million of cost improvement simply because of cost of poor quality. There's probably another $200 million ahead of us yet. There's a lot of opportunity here. It's really just rewiring this. When I think about what we're trying to do around operational excellence, it gets back to this concept that we had about moving from a holding company to an operating company, and it's a multi-step journey, and I've been laying this out for investors sort of consistently every earnings release and the track and the progress we're making here. I said that's the path we're going to go through. It starts off with just taking all the factories, which are run regionally, and have them run centrally. We did that two and a half years ago, and now we can look at across all of the company what's happening across the flows, how the factories run together. That's been a very important part of the journey. Building these metrics, I talk about utilization or OEE, that's now come up to 62.5%, 300 assets. That's been a very good performance. On time and in full, cost of poor quality, all these metrics around driving that factory network to be much more efficient, much more stable, and it's continuing to evolve. The next step is around the consolidation of the network, and we're making really good progress on the network consolidation. All of that is getting from sort of low-40s to the mid-40s to now the high-40s in terms of gross margin. That's the goal we have in that business, and this is the trajectory that we have put in place to get there. Each quarter, I go through some of these metrics, which demonstrates the progress we're making quarter to quarter. It's not a linear journey, but the company's making good progress in moving from holding company operating model to more of an integrated operating business. There's momentum behind the outgrowth, but the momentum behind the net productivity, because that step up next year, that would be a larger contribution. It's going to be a larger contribution next year. It's going to continue. Again, we're going to start to bring in things around the network consolidation. Lots of pieces to this. Yeah, we feel very good about $1 billion by the end of 2027. Yep. Then the third priority area was around the portfolio and what you do around capital deployment as well. You've talked about 2%-3%. There was the Precision Grinding & Finishing business. I think that was maybe 50 basis points. Yeah. Just where you are on the remaining part of that 2%-3%, is that something that happens this year? It'll happen over time. I'm not going to put a time stamp on it. Look, we said about 10% of the company is more commodity-like, meaning we didn't have the right to win in certain segments. Technology wasn't being used to drive differentiation in the space. We'll look at those pieces over time. We said there's 2%-3% that was more in active discussions or what things we would try to do. PGF happened to be one. We sold the Precision Grinding business. It took with it seven factories, brought our factory count down to now about just about 100 with a closure that happened as well. We saw some good activity there. Capital, the portfolio side, and generally capital deployment isn't just around the divestitures. There's activity here. I've said to grow the company long-term, sustainably, top-line growth, we've got to shift the portfolio, we know we've got to do that. It's both getting out of some things that don't really fit, but also starting to get more into things that fit into priority verticals, like we've done with the Madison Scott SCBA joint venture. Which, by the way, will close on July 1st. All the regulatory approvals are done. We're going to close that transaction on July 1st, and it's going to be an important one for us. It's also about organically prioritizing how we spend money inside the company. 80% of what we spend on R&D now goes to the priority verticals I laid out at the beginning of last year, and it also gets at how we do capital deployment. There's a broad piece around this. We'll continue to look at the portfolio. There's no time stamp on this. We'll be smart and disciplined in how we make decisions around the portfolio. When you think about the margin opportunity that comes through the net productivity, just in terms of which segments see the biggest impact from that— Yeah. —have the most opportunity going forward. You'll see margin growth across the company. A lot of the productivity, because it's an integrated network, it accrues to all of the businesses across all the portfolio. Each business runs into different market dynamics. Stepping back, I think the industrial businesses will see more margin growth over time than the Consumer. The Consumer business is a little bit lighter in terms of the portfolio across the company in terms of margin performance. I'd see more in the industrial side of the business. Again, a lot of the productivity work we're doing accrues to every one of them because it's an integrated network. Yep. On the pricing side of things, more pricing has had to be put in the market, just what you're seeing in terms of that sticking, or is there any kind of demand impact in pockets of the business? Yeah. We typically would see pricing to offset material cost inflation. If it's a 2% inflation environment, I know it's a little bit hotter than that, you'd see about 50 basis points of price. As we came into this year, we said we would get about 80 basis points of price in 2026, some to cover material cost inflation, some to cover some of the tariff impact that was there last year, which is where we're at. In Q1, we were a little bit lighter on pricing. We weren't surprised by that. Our pricing increases go out April 1st. You'll see that pick up in the balance of the year. On top of that, we went out with an oil-based price increase. At the earnings release, we sized that $125 million, about 50 basis points of price. The oil price impact, cost impact was going to be offset dollar for dollar with price. That's 50 basis points. That puts us at 1.3 points of pricing across the company. Again, similarly to my comment on the margin expansion, you'll see clearly more price in SIBG than TEBG and better in TEBG than the Consumer business, is kind of the way I would characterize it. We are seeing that price taking hold. We're very confident of that. It's a different environment today, thinking about pricing we were in a couple of years ago. When you're delivering products on time and you've got hustle in the sales force, you're bringing new products to market, you're executing better, your ability to drive pricing is better than if you're not performing. I'm confident we'll see pricing take hold in the business as I've just laid out. Yep. We went through an inflationary period in 2022, 2023. Saw across the multi-industry group, good pricing response, such that margins were actually moving up. Where are we in terms of that fatigue from the customer side of things? Is the right objective these days, price dollar for dollar? It does net, too. There's a margin headwind tied to it. We clearly want to offset some of the cost headwinds on inflation, oil, tariffs, those kinds of things. We're clearly embarking on a journey to offset that. Look, at the end of the day, when you bring in new products to market, you have an opportunity to think differently about price and the value you provide to the channel. We're thinking pretty hard about that. I don't think we were maybe as aggressive as we could have been last year on pricing on tariffs. I think we could have gone out harder than that. We're getting smarter about this. We're governing pricing a lot better. It's part of our commercial excellence initiatives. This is an area that it's taking a lot of time and attention for the business. We're watching sort of the discounting, the rebates, the things that happen, sort of the deals, if you will. A lot of times in the past, because again, in a holding company structure, pricing was negotiated down at a very local level, and we were seeing instances where you gave price discounts for volumes of one. There was really no volume coming from that. We're correcting all of that. There's a different governance process on pricing. When you put all that together and you're launching more products, I think our ability to drive price and maybe get some margin expansion from price is better today than it would have been three or five years ago. We probably only have time for one more. I want to touch on Madison. Sure. With that combination and talking about high single-digit growth targets. Yeah. The margin opportunity that you have there, just how bringing the businesses together becomes a best fit. This was a very important transaction. We're bringing together two complementary businesses in a priority vertical. It's a safety vertical. Just by way of background, we're creating a business about $800 million worth of revenue, a little bit better than that. We're combining our Scott SCBA Fire Safety business with Madison Fire & Rescue, so suppression tools, fire rescue tools, in a joint venture, which we'll own 51%. We've got a 49% partner in a private equity firm. We'll fully consolidate this. Again, it's targeting for closure on July 1st. The process is being done very well. The businesses together, independently were performing very well, and together we think it'll be better. Very complementary. It opens up a broader addressable market for us. We have opportunities to leverage channels. Scott was very important in the U.S. market, but really never took the product internationally. We have an opportunity there because Madison has a bigger presence in the international markets, particularly in Europe. We have an opportunity to get better at how we drive product through the channel within the U.S. We go through similar distributors, but a lot of times not the same one. We have an opportunity to do cross-sell and just better commercial execution in how we drive business. This is a space that the market itself is pretty resilient. It's been a high single-digit grower recently. The margins today are at or actually they're above a 3M-wide average. When I look at cost synergies, the opportunity to take revenue synergies, this is what we'd say, it's a quality asset with a lot of upside. We feel good about where we're at. I like the transaction. Again, because of the structure, when it does close, we'll be pulling $700 million of cash out back to the parent company from the closure of this deal, again, July 1st. It's a great transaction, and it'll be reported to the marketplace as a separate division within SIBG. You'll get visibility into what I'm talking about in terms of the growth performance over time, starting really in Q3. I think that brings us to the end of our time. Bill, thank you very.

Speaker 2: Hi. Good morning, everyone. I'm Joe O'Dea. I lead the multis effort at Wells Fargo, and very pleased to welcome 3M for our next session, and CEO Bill Brown. Bill, thank you so much for being with us this morning. Hi. hi Good morning, everyone. good morning everyone I'm Joe O'Dea. i'm joe o'dea I lead the multis effort at Wells Fargo, and very pleased to welcome 3M for our next session, and CEO Bill Brown. i lead the multis effort at wells fargo and very pleased to welcome 3m for our next session and ceo bill brown Bill, thank you so much for being with us this morning. bill thank you so much for being with us this morning

Speaker 1: Thanks for being here. Thank you. Thanks for being here. thanks for being here Thank you. for being here thank you

Speaker 2: We're going to get right into the Q&A. Why don't we start on some of the shorter-term side of things, thinking about the demand patterns where with Q1, you outlined Q2 and some acceleration in thinking about organic that could move north of three, just kind of what you've seen over the course of the quarter so far. We're going to get right into the Q&A. we're going to get right into the q&a Why don't we start on some of the shorter-term side of things, thinking about the demand patterns where with Q1, you outlined Q2 and some acceleration in thinking about organic that could move north of three, just kind of what you've seen over the course of the quarter so far. why don't we start on some of the shorter-term side of things thinking about the demand patterns where with q1 you outlined q2 and some acceleration in thinking about organic that could move north of three just kind of what you've seen over the course of the quarter so far

Speaker 1: Well, first of all, good morning, everybody. It's great to be here. Thanks for having us. Just overall, our strategy is gaining traction. It's a back-to-basics, focus-on-fundamentals approach to rebuild 3M as a more resilient, more consistent, higher-performing company with better top-line growth coming from innovation and commercial excellence, better operational execution at the ground level, driving margin expansion, cash generation, and disciplined capital deployment. That's basically what we laid out a couple of years ago, and we're executing very well on that. We did have a solid Q1. Q1 start earnings per share up 14% in Q1, saw 30 basis points of margin expansion. Well, first of all, good morning, everybody. well first of all good morning everybody It's great to be here. it's great to be here Thanks for having us. thanks for having us Just overall, our strategy is gaining traction. just overall our strategy is gaining traction It's a back-to-basics, focus-on-fundamentals approach to rebuild 3M as a more resilient, more consistent, higher-performing company with better top-line growth coming from innovation and commercial excellence, better operational execution at the ground level, driving margin expansion, cash generation, and disciplined capital deployment. it's a back-to-basics focus-on-fundamentals approach to rebuild 3m as a more resilient more consistent higher-performing company with better top-line growth coming from innovation and commercial excellence better operational execution at the ground level driving margin expansion cash generation and disciplined capital deployment That's basically what we laid out a couple of years ago, and we're executing very well on that. that's basically what we laid out a couple of years ago and we're executing very well on that We did have a solid Q1. we did have a solid q1 Q1 start earnings per share up 14% in Q1, s aw 30 basis points of margin expansion. q1 start earnings per share up 14% in q1, s aw 30 basis points of margin expansion We saw double-digit growth in free cash flow. Organic revenue growth came in just over 1%. We saw some pockets of macro pressure. I think encouragingly, as you referenced, we ended the quarter with very strong orders, up double-digit in Q1. Backlog grew year-over-year and sequentially double-digit, which was very encouraging for us. As we turn the corner into Q2, in fact, we're pretty far advanced into Q2. Those orders and that backlog is converting to revenue. We said we'd be above 3% in Q2. We'll be solidly above 3% in Q2, given the fact that we're pretty far deep into the quarter, so we're very confident about that. We see momentum continue to build. We saw good progress in Q1 in about 60% of the portfolio, that is general industrial or safety. That was up mid single-digits, which was very encouraging. We saw double-digit growth in free cash flow. we saw double-digit growth in free cash flow Organic revenue growth came in just over 1%. organic revenue growth came in just over 1% We saw some pockets of macro pressure. we saw some pockets of macro pressure I think encouragingly, as you referenced, we ended the quarter with very strong orders, up double-digit in Q1. i think encouragingly as you referenced we ended the quarter with very strong orders up double-digit in q1 Backlog grew year-over-year and sequentially double-digit, which was very encouraging for us. backlog grew year-over-year and sequentially double-digit which was very encouraging for us As we turn the corner into Q2, in fact, we're pretty far advanced into Q2. as we turn the corner into q2 in fact we're pretty far advanced into q2 Those orders and that backlog is converting to revenue. those orders and that backlog is converting to revenue We said we'd be above 3% in Q2. we said we'd be above 3% in q2 We'll be solidly above 3% in Q2, given the fact that we're pretty far deep into the quarter, so we're very confident about that. we'll be solidly above 3% in q2 given the fact that we're pretty far deep into the quarter so we're very confident about that We see momentum continue to build. we see momentum continue to build We saw good progress in Q1 in about 60% of the portfolio, that is general industrial or safety. we saw good progress in q1 in about 60% of the portfolio that is general industrial or safety That was up mid single-digits, which was very encouraging. that was up mid single-digits which was very encouraging We see trends in that area continuing into Q2. We saw five months of solid PMI. PMI in May was actually pretty good at 54%. It's actually encouraging, the macro trends. We see that continuing to build. A couple of places of some pressure in our business, but that's really around consumer electronics, auto, a little less so on the U.S. consumer behavior. Generally speaking, orders have been pretty good. They continue into Q2. As we sit here today, we've built backlog even further. Orders have continued to be solid through the quarter, so they're more resilient. It's all coming from a lot of the work we've done on commercial excellence in innovation, which is building momentum. The thought of it might've been some pre-buy, I think maybe we overstated that a little bit at the end of Q1. We see trends in that area continuing into Q2. we see trends in that area continuing into q2 We saw five months of solid PMI. we saw five months of solid pmi PMI in May was actually pretty good at 54%. pmi in may was actually pretty good at 54% It's actually encouraging, the macro trends. it's actually encouraging the macro trends We see that continuing to build. we see that continuing to build A couple of places of some pressure in our business, but that's really around consumer electronics, auto, a little less so on the U.S. consumer behavior. a couple of places of some pressure in our business but that's really around consumer electronics auto a little less so on the u.s consumer behavior Generally speaking, orders have been pretty good. generally speaking orders have been pretty good They continue into Q2. they continue into q2 As we sit here today, we've built backlog even further. as we sit here today we've built backlog even further Orders have continued to be solid through the quarter, so they're more resilient. orders have continued to be solid through the quarter so they're more resilient It's all coming from a lot of the work we've done on commercial excellence in innovation, which is building momentum. it's all coming from a lot of the work we've done on commercial excellence in innovation which is building momentum The thought of it might've been some pre-buy, I think maybe we overstated that a little bit at the end of Q1. the thought of it might've been some pre-buy i think maybe we overstated that a little bit at the end of q1 The fact is, commercial excellence has been pretty good. Innovation's been pretty good. The quarter's looking good. As we see the back end of the year, it continues to accelerate. We feel good from where we're standing. Again, a very solid Q2, and I think momentum building back into the second half of the year. The fact is, commercial excellence has been pretty good. the fact is commercial excellence has been pretty good Innovation's been pretty good. innovation's been pretty good The quarter's looking good. the quarter's looking good As we see the back end of the year, it continues to accelerate. as we see the back end of the year it continues to accelerate We feel good from where we're standing. we feel good from where we're standing Again, a very solid Q2, and I think momentum building back into the second half of the year. again a very solid q2 and i think momentum building back into the second half of the year

Speaker 2: Maybe just spend a little bit more time on the pre-buy aspect of things, because I think that was some focus thinking about the order growth that really accelerated. Maybe just spend a little bit more time on the pre-buy aspect of things, because I think that was some focus thinking about the order growth that really accelerated. maybe just spend a little bit more time on the pre-buy aspect of things because i think that was some focus thinking about the order growth that really accelerated

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Good order growth throughout Q1, but accelerating. Good order growth throughout Q1, but accelerating. good order growth throughout q1 but accelerating

Speaker 1: Yeah. Yeah. yeah

Speaker 2: A little bit of why. A little bit of why. a little bit of why

Speaker 1: What happened is, look, we typically go out with price increases on April 1st. With what was happening in the Middle East, we saw oil prices coming up. We went out with additional price increases on top of what was April 1st that we said. Based on our performance, the innovation, on-time delivery, our responsiveness into the channel, we believe our ability to drive price is a lot better, we're going to hold the line on that. We were very careful about that. We communicate that to our channel partners, to our customers. Naturally, we thought we would see some acceleration of orders. It was probably some of that. What happened is, look, we typically go out with price increases on April 1st. what happened is look we typically go out with price increases on april 1st With what was happening in the Middle East, we saw oil prices coming up. with what was happening in the middle east we saw oil prices coming up We went out with additional price increases on top of what was April 1st that we said. we went out with additional price increases on top of what was april 1st that we said Based on our performance, the innovation, on-time delivery, our responsiveness into the channel, we believe our ability to drive price is a lot better, we're going to hold the line on that. based on our performance the innovation on-time delivery our responsiveness into the channel we believe our ability to drive price is a lot better we're going to hold the line on that We were very careful about that. we were very careful about that We communicate that to our channel partners, to our customers. we communicate that to our channel partners to our customers Naturally, we thought we would see some acceleration of orders. naturally we thought we would see some acceleration of orders It was probably some of that. it was probably some of that Given the momentum we saw in April, in May, and now into June on orders, there might've been some pre-buy, predominantly it is innovation driven, commercial excellence driven, and probably less so on the pre-buy. Given the momentum we saw in April, in May, and now into June on orders, there might've been some pre-buy, predominantly it is innovation driven, commercial excellence driven, and probably less so on the pre-buy. given the momentum we saw in april in may and now into june on orders there might've been some pre-buy predominantly it is innovation driven commercial excellence driven and probably less so on the pre-buy

Speaker 2: Okay. Okay. okay

Speaker 1: More, I think, the self-help part of it than the pre-buy. More, I think, the self-help part of it than the pre-buy. more i think the self-help part of it than the pre-buy

Speaker 2: That was going to be the follow-up. That was going to be the follow-up. that was going to be the follow-up

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Is it does seem like there's a bit of a rising tide behind the short cycle macro, you would attribute more of it to? Is it does seem like there's a bit of a rising tide behind the short cycle macro, you would attribute more of it to? is it does seem like there's a bit of a rising tide behind the short cycle macro you would attribute more of it to

Speaker 1: Look, there's clearly some macro strength behind us on the industrial side, on the safety side. A couple of other places, like semis are good. Our data center business has been pretty good. Aerospace & Defense has been pretty good. Commercial branding in Q1 was pretty good. There's good parts of the company that have performed pretty well. Some of it is macro driven. I think I would put more on just where there's a lot more hustle in the sales force on commercial excellence. We're clearly making good strides here on innovation. I know I'll talk more about that here, but really good progress on driving new products into the marketplace. Frankly, I put more on the fact that it's a lot of the things that we're doing differently inside the company than necessarily that there's a short cycle macro turn. Look, there's clearly some macro strength behind us on the industrial side, on the safety side. look there's clearly some macro strength behind us on the industrial side on the safety side A couple of other places, like semis are good. a couple of other places like semis are good Our data center business has been pretty good. our data center business has been pretty good Aerospace & Defense has been pretty good. aerospace & defense has been pretty good Commercial branding in Q1 was pretty good. commercial branding in q1 was pretty good There's good parts of the company that have performed pretty well. there's good parts of the company that have performed pretty well Some of it is macro driven. some of it is macro driven I think I would put more on just where there's a lot more hustle in the sales force on commercial excellence. i think i would put more on just where there's a lot more hustle in the sales force on commercial excellence We're clearly making good strides here on innovation. we're clearly making good strides here on innovation I know I'll talk more about that here, but really good progress on driving new products into the marketplace. i know i'll talk more about that here but really good progress on driving new products into the marketplace Frankly, I put more on the fact that it's a lot of the things that we're doing differently inside the company than necessarily that there's a short cycle macro turn. frankly i put more on the fact that it's a lot of the things that we're doing differently inside the company than necessarily that there's a short cycle macro turn That, we believe, is happening, I think it's more the self-help side. That, we believe, is happening, I think it's more the self-help side. that we believe is happening i think it's more the self-help side

Speaker 2: Yeah. Let's touch on the Middle East in terms of the $0.05-$0.15 of contingency within the guide on sort of oil just about what you've observed over the course of the quarter. Yeah. yeah Let's touch on the Middle East in terms of the $0.05-$0.15 of contingency within the guide on sort of oil just about what you've observed over the course of the quarter. let's touch on the middle east in terms of the $0.05-$0.15 of contingency within the guide on sort of oil just about what you've observed over the course of the quarter

Speaker 1: Look, we said we would have $0.05-$0.15 of contingency, if you will, for macro or oil-based Middle East type effects. Our business in the Middle East is not very big. It's less than 2% of our revenue. We're not seeing an issue there. We, like other companies, have seen some logistical challenges of moving product through the Middle East, not into, but through the Middle East. We're managing through that. We have a big network. It's working very well. That's managing pretty well. As we sit here today, we do not see a need to call on that $0.05-$0.15 of contingency in the year, but that's as we see it today. Look, we said we would have $0.05-$0.15 of contingency, if you will, for macro or oil-based Middle East type effects. look we said we would have $0.05-$0.15 of contingency if you will for macro or oil-based middle east type effects Our business in the Middle East is not very big. our business in the middle east is not very big It's less than 2% of our revenue. it's less than 2% of our revenue We're not seeing an issue there. we're not seeing an issue there We, like other companies, have seen some logistical challenges of moving product through the Middle East, not into, but through the Middle East. we like other companies have seen some logistical challenges of moving product through the middle east not into but through the middle east We're managing through that. we're managing through that We have a big network. we have a big network It's working very well. it's working very well That's managing pretty well. that's managing pretty well As we sit here today, we do not see a need to call on that $0.05-$0.15 of contingency in the year, but that's as we see it today. as we sit here today we do not see a need to call on that $0.05-$0.15 of contingency in the year but that's as we see it today

Speaker 2: Okay. Want to spend a little bit more time on segments. Okay. okay Want to spend a little bit more time on segments. want to spend a little bit more time on segments

Speaker 1: Sure. Sure. sure

Speaker 2: Starting with Safety and Industrial. 75% of the segment— Starting with Safety and Industrial. 75% of the segment— starting with safety and industrial 75% of the segment—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —we're seeing mid-single-digit plus type of growth. —we're seeing mid-single-digit plus type of growth. —we're seeing mid-single-digit plus type of growth

Speaker 1: Yeah. Yeah. yeah

Speaker 2: To sort of address it from both a macro side or cyclical side and then a self-help— To sort of address it from both a macro side or cyclical side and then a self-help— to sort of address it from both a macro side or cyclical side and then a self-help—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —outgrowth side. —outgrowth side. —outgrowth side

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Just on the cyclical and in terms of things like abrasives and parts— Just on the cyclical and in terms of things like abrasives and parts— just on the cyclical and in terms of things like abrasives and parts—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —of the business where you're seeing the good growth, what's behind that? —of the business where you're seeing the good growth, what's behind that? —of the business where you're seeing the good growth what's behind that

Speaker 1: Look, abrasives. Other parts of that portfolio have actually been performing very well. The electrical markets business has been pretty strong. Public safety in that space has been pretty good. It's actually going, I think, reasonably well. There's some macro behind it for sure. That's the business segment that we really launched our commercial excellence activities in back in the middle, towards the end of 2024 when I came on board, said, "We need to drive organic growth, and that's going to come from launching more products and then selling more of what we have in the market today, which is commercial excellence." The team there got on that very quickly. There's several dimensions of it. Part of it is sales force effectiveness. It's the coverage, the incentives, the training, the hustle at the front end. We're really seeing that take effect in that SIBG business for sure. Look, abrasives. Other parts of that portfolio have actually been performing very well. look abrasives. other parts of that portfolio have actually been performing very well The electrical markets business has been pretty strong. the electrical markets business has been pretty strong Public safety in that space has been pretty good. public safety in that space has been pretty good It's actually going, I think, reasonably well. it's actually going i think reasonably well There's some macro behind it for sure. there's some macro behind it for sure That's the business segment that we really launched our commercial excellence activities in back in the middle, towards the end of 2024 when I came on board, said, "We need to drive organic growth, and that's going to come from launching more products and then selling more of what we have in the market today, which is commercial excellence." The team there got on that very quickly. that's the business segment that we really launched our commercial excellence activities in back in the middle towards the end of 2024 when i came on board said "we need to drive organic growth and that's going to come from launching more products and then selling more of what we have in the market today which is commercial excellence." the team there got on that very quickly There's several dimensions of it. there's several dimensions of it Part of it is sales force effectiveness. part of it is sales force effectiveness It's the coverage, the incentives, the training, the hustle at the front end. it's the coverage the incentives the training the hustle at the front end We're really seeing that take effect in that SIBG business for sure. we're really seeing that take effect in that sibg business for sure We laid out an agenda to cross-sell. Perhaps we were a little conservative in retrospect. We said we would hit $100 million worth of cross-sell opportunities over three years. Last year, we were at $50 million. By Q1, we're at $80 million of booked cross-sell opportunities. Our pipeline's another $85 million, and we're sort of just a year and a half or so into that journey. That's going very well. We said we would reduce the attrition or the churn in the portfolio in SIBG. In fact, it's been running higher than we would have expected or you would expect it. I don't think we really necessarily focused on that. This is just share a wallet loss because you're not delivering something on time or not being responsive. With our OTIF coming up, our new product launches, the sales hustle, we are seeing improvements in attrition rate as well. We laid out an agenda to cross-sell. we laid out an agenda to cross-sell Perhaps we were a little conservative in retrospect. perhaps we were a little conservative in retrospect We said we would hit $100 million worth of cross-sell opportunities over three years. we said we would hit $100 million worth of cross-sell opportunities over three years Last year, we were at $50 million. last year we were at $50 million By Q1, we're at $80 million of booked cross-sell opportunities. by q1 we're at $80 million of booked cross-sell opportunities Our pipeline's another $85 million, and we're sort of just a year and a half or so into that journey. our pipeline's another $85 million and we're sort of just a year and a half or so into that journey That's going very well. that's going very well We said we would reduce the attrition or the churn in the portfolio in SIBG. we said we would reduce the attrition or the churn in the portfolio in sibg In fact, it's been running higher than we would have expected or you would expect it. in fact it's been running higher than we would have expected or you would expect it I don't think we really necessarily focused on that. i don't think we really necessarily focused on that This is just share a wallet loss because you're not delivering something on time or not being responsive. this is just share a wallet loss because you're not delivering something on time or not being responsive With our OTIF coming up, our new product launches, the sales hustle, we are seeing improvements in attrition rate as well. with our otif coming up our new product launches the sales hustle we are seeing improvements in attrition rate as well You put all those pieces together, with some innovation that's happened across those segments, in abrasives and other parts, we are seeing good tailwinds in that particular part of the business. You put all those pieces together, with some innovation that's happened across those segments, in abrasives and other parts, we are seeing good tailwinds in that particular part of the business. you put all those pieces together with some innovation that's happened across those segments in abrasives and other parts we are seeing good tailwinds in that particular part of the business

Speaker 2: Do you have any kind of rough approximation for the outgrowth? When you see this traction building— Do you have any kind of rough approximation for the outgrowth? do you have any kind of rough approximation for the outgrowth When you see this traction building— when you see this traction building—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —behind something like commercial excellence— —behind something like commercial excellence— —behind something like commercial excellence—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —leading in Safety and Industrial in these markets that are growing. —leading in Safety and Industrial in these markets that are growing. —leading in safety and industrial in these markets that are growing

Speaker 1: On a quarter-by-quarter basis, it's hard to see, but the way I look at this, we were, say, 3%-4% in the second half of last year. We're 3%-4% here in the first half, 3.2% in SIBG in the first quarter. We'll be in that 3%-4% range. It's going to accelerate. It's accelerated from second half last year into the first half this year. It's going to accelerate first half into second half. Call it 3.5%-4%, in that particular range. Look, IPI has been running around 1.6%-1.7%. U.S. is 1.0%. I don't think you debate that at 3%-4%, pick your number there, we're outrunning the macro for sure. On a quarter-by-quarter basis, it's hard to see, but the way I look at this, we were, say, 3%-4% in the second half of last year. on a quarter-by-quarter basis it's hard to see but the way i look at this we were say 3%-4% in the second half of last year We're 3%-4% here in the first half, 3.2% in SIBG in the first quarter. we're 3%-4% here in the first half 3.2% in sibg in the first quarter We'll be in that 3%-4% range. we'll be in that 3%-4% range It's going to accelerate. it's going to accelerate It's accelerated from second half last year into the first half this year. it's accelerated from second half last year into the first half this year It's going to accelerate first half into second half. it's going to accelerate first half into second half Call it 3.5%-4%, in that particular range. call it 3.5%-4% in that particular range Look, IPI has been running around 1.6%-1.7%. look ipi has been running around 1.6%-1.7% U.S. is 1.0%. u.s is 1.0% I don't think you debate that at 3%-4%, pick your number there, we're outrunning the macro for sure. i don't think you debate that at 3%-4% pick your number there we're outrunning the macro for sure Clearly, the goal we set was to drive $1 billion above the macro over three years, and we're seeing really good progress in that across the company, but particularly SIBG. Clearly, the goal we set was to drive $1 billion above the macro over three years, and we're seeing really good progress in that across the company, but particularly SIBG. clearly the goal we set was to drive $1 billion above the macro over three years and we're seeing really good progress in that across the company but particularly sibg

Speaker 2: On the electrical market side— On the electrical market side— on the electrical market side—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —of things, six straight quarters of— —of things, six straight quarters of— —of things six straight quarters of—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —really good growth there. Part of that, you've got data center exposure within that. You've talked about $100 million of revenue— —really good growth there. —really good growth there Part of that, you've got data center exposure within that. part of that you've got data center exposure within that You've talked about $100 million of revenue— you've talked about $100 million of revenue—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —that's inside the data center— —that's inside the data center— —that's inside the data center—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —$500 million that's bringing power to it. Just overall, what your visibility is there, what you think that revenue can get to. —$500 million that's bringing power to it. —$500 million that's bringing power to it Just overall, what your visibility is there, what you think that revenue can get to. just overall what your visibility is there what you think that revenue can get to

Speaker 1: It's been very good. First of all, EMMD, the electro markets business, about a $1.5 billion business, and it is growing very strongly going the last six, seven quarters. Been very good. Part of it is the data center business. As you pointed out, $600 million worth of business going at data centers. In SIBG, it's about 500 million. That's outside bringing power to the facilities, medium voltage cable splices, terminations, insulation, all the things you need to bring power to a facility, and that's been very good. It's been growing high single-digits, low double-digits. A lot of momentum behind that, a lot of backlog. We feel very good. If anything, it's a production constraint, not a demand constraint for us in that particular business. It's been very good. it's been very good First of all, EMMD, the electro markets business, about a $1.5 billion business, and it is growing very strongly going the last six, seven quarters. first of all emmd the electro markets business about a $1.5 billion business and it is growing very strongly going the last six seven quarters Been very good. been very good Part of it is the data center business. part of it is the data center business As you pointed out, $600 million worth of business going at data centers. as you pointed out $600 million worth of business going at data centers In SIBG, it's about 500 million . in sibg it's about 500 million That's outside bringing power to the facilities, medium voltage cable splices, terminations, insulation, all the things you need to bring power to a facility, and that's been very good. that's outside bringing power to the facilities medium voltage cable splices terminations insulation all the things you need to bring power to a facility and that's been very good It's been growing high single -digits, low double -digits. it's been growing high single -digits low double -digits A lot of momentum behind that, a lot of backlog. a lot of momentum behind that a lot of backlog We feel very good. we feel very good If anything, it's a production constraint, not a demand constraint for us in that particular business. if anything it's a production constraint not a demand constraint for us in that particular business The other part of the business is roughly $100 million, is growing more than 50% each quarter, which has been really good, is around inside the data center business. It's really the combination of what we're doing on TwinAx, which is our copper cabling, moving to optical fiber, which is our new product called EBO, Expanded Beam Optical. That transition has been very encouraging. As we sit here today, some of the orders we saw in Q1, some of our longer lead, they deliver the back end of the year. Some of it comes from that particular business. EBO is an optical interconnect technology. It's something that's dust resistant, it's resilient, it's durable, and reduces the time to revenue for a data center doing all the cabling by about 85%. We've got tons of IP around this, more than 100 individual patents, another 50 patents pending. The other part of the business is roughly $100 million, is growing more than 50% each quarter, which has been really good, is around inside the data center business. the other part of the business is roughly $100 million is growing more than 50% each quarter which has been really good is around inside the data center business It's really the combination of what we're doing on TwinAx, which is our copper cabling, moving to optical fiber, which is our new product called EBO, Expanded Beam Optical. it's really the combination of what we're doing on twinax which is our copper cabling moving to optical fiber which is our new product called ebo expanded beam optical That transition has been very encouraging. that transition has been very encouraging As we sit here today, some of the orders we saw in Q1, some of our longer lead, they deliver the back end of the year. as we sit here today some of the orders we saw in q1 some of our longer lead they deliver the back end of the year Some of it comes from that particular business. some of it comes from that particular business EBO is an optical interconnect technology. ebo is an optical interconnect technology It's something that's dust resistant, it's resilient, it's durable, and reduces the time to revenue for a data center doing all the cabling by about 85%. it's something that's dust resistant it's resilient it's durable and reduces the time to revenue for a data center doing all the cabling by about 85% We've got tons of IP around this, more than 100 individual patents, another 50 patents pending. we've got tons of ip around this more than 100 individual patents another 50 patents pending For a couple of years, we've been in testing with a major hyperscaler. It's been validated by that one. That one placed an order in Q1. It's part of the order trajectory we saw in Q1. That'll deliver in the back end of the year, and it's developing a lot of enthusiasm. The addressable market for us around optical connects inside of a data center, again, keep in mind, that business for us is $100 million as we sit here today. The TAM, we believe, at the end of Q1, we saw was over $1 billion. 90 days later, we're thinking it's more like north of $2 billion. As all these hyperscalers, chip designers, developers are looking more carefully at their architecture inside of data centers, how do you bring more optical interconnect because of all the data connectivity and replace copper? For a couple of years, we've been in testing with a major hyperscaler. for a couple of years we've been in testing with a major hyperscaler It's been validated by that one. it's been validated by that one That one placed an order in Q1. that one placed an order in q1 It's part of the order trajectory we saw in Q1. it's part of the order trajectory we saw in q1 That'll deliver in the back end of the year, and it's developing a lot of enthusiasm. that'll deliver in the back end of the year and it's developing a lot of enthusiasm The addressable market for us around optical connects inside of a data center, again, keep in mind, that business for us is $100 million as we sit here today. the addressable market for us around optical connects inside of a data center again keep in mind that business for us is $100 million as we sit here today The TAM, we believe, at the end of Q1, we saw was over $1 billion. 90 days later, we're thinking it's more like north of $2 billion. the tam we believe at the end of q1 we saw was over $1 billion 90 days later we're thinking it's more like north of $2 billion As all these hyperscalers, chip designers, developers are looking more carefully at their architecture inside of data centers, how do you bring more optical interconnect because of all the data connectivity and replace copper? as all these hyperscalers chip designers developers are looking more carefully at their architecture inside of data centers how do you bring more optical interconnect because of all the data connectivity and replace copper That is a trend that's really massive, is moving fast, we're scrambling to stay up. Earlier this year, we announced that we would expand the capacity of our optical fiber business by doubling it. In fact, 90 days later or so, we're feeling that might be a little bit short as we speak today. A lot of momentum in that business. I think we're at the front end of that, I'm really encouraged by the trend we're at. That is a trend that's really massive, is moving fast, we're scrambling to stay up. that is a trend that's really massive is moving fast we're scrambling to stay up Earlier this year, we announced that we would expand the capacity of our optical fiber business by doubling it. earlier this year we announced that we would expand the capacity of our optical fiber business by doubling it In fact, 90 days later or so, we're feeling that might be a little bit short as we speak today. in fact 90 days later or so we're feeling that might be a little bit short as we speak today A lot of momentum in that business. a lot of momentum in that business I think we're at the front end of that, I'm really encouraged by the trend we're at. i think we're at the front end of that i'm really encouraged by the trend we're at

Speaker 2: That $100 million is what sits in T&E. That $100 million is what sits in T&E. that $100 million is what sits in t&e

Speaker 1: That piece sits on our Transportation Electronics business. That's correct. That piece sits on our Transportation Electronics business. that piece sits on our transportation electronics business That's correct. that's correct

Speaker 2: Yeah. Yeah. yeah

Speaker 1: $500 million, it's power outside SIBG, the other part's inside TEBG. $500 million, it's power outside SIBG, the other part's inside TEBG. $500 million it's power outside sibg the other part's inside tebg

Speaker 2: Yep. Your market position there, you're talking about something in the scope of 10% market share. Yep. Your market position there, you're talking about something in the scope of 10% market share. yep. your market position there you're talking about something in the scope of 10% market share

Speaker 1: Again, there's other technology. It takes some time to get confidence with the hyperscalers. We wouldn't have the capacity even today to be able to provide much more than we have today. It's going to take some time to ramp up that business, but we believe we're very well-positioned to gain share in that particular space. Again, there's other technology. again there's other technology It takes some time to get confidence with the hyperscalers. it takes some time to get confidence with the hyperscalers We wouldn't have the capacity even today to be able to provide much more than we have today. we wouldn't have the capacity even today to be able to provide much more than we have today It's going to take some time to ramp up that business, but we believe we're very well-positioned to gain share in that particular space. it's going to take some time to ramp up that business but we believe we're very well-positioned to gain share in that particular space

Speaker 2: Just last one on SIBG. As we move forward into the back half of the year, the areas that have been growing will naturally have some of the tougher comps, things like Roofing Granules— Just last one on SIBG. just last one on sibg As we move forward into the back half of the year, the areas that have been growing will naturally have some of the tougher comps, things like Roofing Granules— as we move forward into the back half of the year the areas that have been growing will naturally have some of the tougher comps things like roofing granules—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —easier comps. As part of that mid single-digit growth potential, is there a narrowing of— —easier comps. —easier comps As part of that mid single- digit growth potential, is there a narrowing of— as part of that mid single- digit growth potential is there a narrowing of—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —growth spreads across the business? —growth spreads across the business? —growth spreads across the business

Speaker 1: There will be. We will see better comps on the Roofing Granules side. We're seeing that already in Q2. I expect we'll see more of that in the back half of the year. Auto aftermarket was a little light. It'll probably be a little light in the quarter. We'll see easier comps in the back half of that business as well. Yeah, you'll probably see some narrowing of growth across SIBG, but solidly in the mid single-digit range or better in the back half of the year. There will be. there will be We will see better comps on the Roofing Granules side. we will see better comps on the roofing granules side We're seeing that already in Q2. we're seeing that already in q2 I expect we'll see more of that in the back half of the year. i expect we'll see more of that in the back half of the year Auto aftermarket was a little light. auto aftermarket was a little light It'll probably be a little light in the quarter. it'll probably be a little light in the quarter We'll see easier comps in the back half of that business as well. we'll see easier comps in the back half of that business as well Yeah, you'll probably see some narrowing of growth across SIBG, but solidly in the mid single- digit range or better in the back half of the year. yeah you'll probably see some narrowing of growth across sibg but solidly in the mid single- digit range or better in the back half of the year

Speaker 2: It's not like the stuff that's really growing those comps become problematic? It's not like the stuff that's really growing those comps become problematic? it's not like the stuff that's really growing those comps become problematic

Speaker 1: No, I think the momentum is behind us. Yeah, there are going to be some more challenging comps in certain parts of the business, we think there's momentum behind us. We think it's building, not slowing. No, I think the momentum is behind us. no i think the momentum is behind us Yeah, there are going to be some more challenging comps in certain parts of the business, we think there's momentum behind us. yeah there are going to be some more challenging comps in certain parts of the business we think there's momentum behind us We think it's building, not slowing. we think it's building not slowing

Speaker 2: Yep. Yep. yep

Speaker 1: I don't see there being much of a headwind on that side, yeah. I don't see there being much of a headwind on that side, yeah. i don't see there being much of a headwind on that side yeah

Speaker 2: Shifting to Transportation & Electronics just the organic growth acceleration opportunity— Shifting to Transportation & Electronics just the organic growth acceleration opportunity— shifting to transportation & electronics just the organic growth acceleration opportunity—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —over the course of the year, and talk about the setup there and the drivers behind it. —over the course of the year, and talk about the setup there and the drivers behind it. —over the course of the year and talk about the setup there and the drivers behind it

Speaker 1: Q1, we were flattish in that TEBG business. Very strong orders. Orders were up double-digit. Backlog was up 30% over the course of the quarter. It was very strong in that business in terms of backlog. Again, coming back to something I mentioned before on the optical interconnection data centers is a part of that, for sure. When you think about the business, half of the business was growing mid single-digits. Again, semis, data centers, Aerospace & Defense in that area has been pretty good. Growing at high single-digits, low double-digits, very strong. Commercial branding in that business was pretty solid in Q1. Half the business was down. It was around consumer electronics and auto. Those are the two pieces. Q1, we were flattish in that TEBG business. q1 we were flattish in that tebg business Very strong orders. very strong orders Orders were up double -digit. orders were up double -digit Backlog was up 30% over the course of the quarter. backlog was up 30% over the course of the quarter It was very strong in that business in terms of backlog. it was very strong in that business in terms of backlog Again, coming back to something I mentioned before on the optical interconnection data centers is a part of that, for sure. again coming back to something i mentioned before on the optical interconnection data centers is a part of that for sure When you think about the business, half of the business was growing mid single- digits. when you think about the business half of the business was growing mid single- digits Again, semis, data centers, Aerospace & Defense in that area has been pretty good. again semis data centers aerospace & defense in that area has been pretty good Growing at high single -digits, low double -digits, very strong. growing at high single -digits low double -digits very strong Commercial branding in that business was pretty solid in Q1. commercial branding in that business was pretty solid in q1 Half the business was down. half the business was down It was around consumer electronics and auto. it was around consumer electronics and auto Those are the two pieces. those are the two pieces As it goes forward, we know we'll accelerate going into Q2, we'll see some acceleration into the back end of the year. The businesses in Q1 that were relatively strong continue to be very strong. The ones that were weak, the market, the macro isn't necessarily getting any better on consumer electronics or auto, we're gaining penetration, for example, in consumer electronics. We're penetrating more on the mainstream side. In auto, we're penetrating more where we don't have as much concentration. Like for example, in China, OEMs has been a big push. We're actually gaining some share in those vertical markets. We'll see some acceleration at business as we go from the first quarter to second, and second quarter into the back end of the year. As it goes forward, we know we'll accelerate going into Q2, we'll see some acceleration into the back end of the year. as it goes forward we know we'll accelerate going into q2 we'll see some acceleration into the back end of the year The businesses in Q1 that were relatively strong continue to be very strong. the businesses in q1 that were relatively strong continue to be very strong The ones that were weak, the market, the macro isn't necessarily getting any better on consumer electronics or auto, we're gaining penetration, for example, in consumer electronics. the ones that were weak the market the macro isn't necessarily getting any better on consumer electronics or auto we're gaining penetration for example in consumer electronics We're penetrating more on the mainstream side. we're penetrating more on the mainstream side In auto, we're penetrating more where we don't have as much concentration. in auto we're penetrating more where we don't have as much concentration Like for example, in China, OEMs has been a big push. like for example in china oems has been a big push We're actually gaining some share in those vertical markets. we're actually gaining some share in those vertical markets We'll see some acceleration at business as we go from the first quarter to second, and second quarter into the back end of the year. we'll see some acceleration at business as we go from the first quarter to second and second quarter into the back end of the year Keep in mind too, we're going to start to see both in SIBG and TEBG, more tailwinds on price. We went out with a price increase on April 1, generally speaking, across all of our business. On top of that, we went out with oil-based price increases that will start to benefit us a little in Q2, more substantially in the back end of the year. Keep in mind too, we're going to start to see both in SIBG and TEBG, more tailwinds on price. keep in mind too we're going to start to see both in sibg and tebg more tailwinds on price We went out with a price increase on April 1, generally speaking, across all of our business. we went out with a price increase on april 1 generally speaking across all of our business On top of that, we went out with oil-based price increases that will start to benefit us a little in Q2, more substantially in the back end of the year. on top of that we went out with oil-based price increases that will start to benefit us a little in q2 more substantially in the back end of the year

Speaker 2: If you can just unpack a little bit more this, the premium versus mainstream to understand the mainstream opportunity. The revenue mix today heavily toward the premium side, but the TAM that you have in mainstream. If you can just unpack a little bit more this, the premium versus mainstream to understand the mainstream opportunity. if you can just unpack a little bit more this the premium versus mainstream to understand the mainstream opportunity The revenue mix today heavily toward the premium side, but the TAM that you have in mainstream. the revenue mix today heavily toward the premium side but the tam that you have in mainstream

Speaker 1: Look, first of all, we're about 70/30 premium to mainstream. We provide bonding solutions, adhesive tapes. We provide connectivity, thermal barriers, other things that go into phones and devices, films, polarizers. It goes into phones, tablets, notebooks, even wide screen TVs. It's a pretty broad business. We see opportunities to take some of the things we've done for premium suppliers. It's not just the premium device manufacturer, but sometimes the premium device manufacturer is also making mainstream or lower-end devices. We're seeing good penetration, both with those typically that are more mainstream as OEMs, as well as mainstream devices within premium suppliers. Sometimes it's de-featuring products we have on the market today. We're finding an ability to do that and attack parts of that business. Different polarizers we provide for wide screen TVs or small phones. Good penetration. It's growing over time. Look, first of all, we're about 70/30 premium to mainstream. look first of all we're about 70/30 premium to mainstream We provide bonding solutions, adhesive tapes. we provide bonding solutions adhesive tapes We provide connectivity, thermal barriers, other things that go into phones and devices, films, polarizers. we provide connectivity thermal barriers other things that go into phones and devices films polarizers It goes into phones, tablets, notebooks, even wide screen TVs. it goes into phones tablets notebooks even wide screen tvs It's a pretty broad business. it's a pretty broad business We see opportunities to take some of the things we've done for premium suppliers. we see opportunities to take some of the things we've done for premium suppliers It's not just the premium device manufacturer, but sometimes the premium device manufacturer is also making mainstream or lower-end devices. it's not just the premium device manufacturer but sometimes the premium device manufacturer is also making mainstream or lower-end devices We're seeing good penetration, both with those typically that are more mainstream as OEMs, as well as mainstream devices within premium suppliers. we're seeing good penetration both with those typically that are more mainstream as oems as well as mainstream devices within premium suppliers Sometimes it's de-featuring products we have on the market today. sometimes it's de-featuring products we have on the market today We're finding an ability to do that and attack parts of that business. we're finding an ability to do that and attack parts of that business Different polarizers we provide for wide screen TVs or small phones. different polarizers we provide for wide screen tvs or small phones Good penetration. good penetration It's growing over time. it's growing over time It's happening as we speak, and I think that's going to end up helping us perform a little bit better than the macro towards the back end of the year. It's happening as we speak, and I think that's going to end up helping us perform a little bit better than the macro towards the back end of the year. it's happening as we speak and i think that's going to end up helping us perform a little bit better than the macro towards the back end of the year

Speaker 2: Shifting to the Consumer side of things and the recovery prospects there. Shifting to the Consumer side of things and the recovery prospects there. shifting to the consumer side of things and the recovery prospects there

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Going from Q4, Q1, the challenges and— Going from Q4, Q1, the challenges and— going from q4 q1 the challenges and—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —how you see that unfolding moving forward. —how you see that unfolding moving forward. —how you see that unfolding moving forward

Speaker 1: On the Consumer side, we started out last year, we did three quarters of about 0.3% growth. It was just modestly positive. Q4, Q1 was a bit weaker. We see Q2 getting better than Q1. It could be flat to up a little bit. We see it accelerating a little bit in the back end of the year. I think what's encouraging of our Consumer business, it's not very big, it's 20% of the company. What's encouraging is 11 of the last 13 weeks, we've saw positive POS or point of sale growth, which I think is very good. We're seeing good trends. We're seeing weeks of supply in the channel compress. There's not as much channel inventory. We've seen weeks of supply, flow through the channel is getting a little bit better. On the Consumer side, we started out last year, we did three quarters of about 0.3% growth. on the consumer side we started out last year we did three quarters of about 0.3% growth It was just modestly positive. it was just modestly positive Q4, Q1 was a bit weaker. q4 q1 was a bit weaker We see Q2 getting better than Q1. we see q2 getting better than q1 It could be flat to up a little bit. it could be flat to up a little bit We see it accelerating a little bit in the back end of the year. we see it accelerating a little bit in the back end of the year I think what's encouraging of our Consumer business, it's not very big, it's 20% of the company. i think what's encouraging of our consumer business it's not very big it's 20% of the company What's encouraging is 11 of the last 13 weeks, we've saw positive POS or point of sale growth, which I think is very good. what's encouraging is 11 of the last 13 weeks we've saw positive pos or point of sale growth which i think is very good We're seeing good trends. we're seeing good trends We're seeing weeks of supply in the channel compress. we're seeing weeks of supply in the channel compress There's not as much channel inventory. there's not as much channel inventory We've seen weeks of supply, flow through the channel is getting a little bit better. we've seen weeks of supply flow through the channel is getting a little bit better That is a business that's benefiting from a lot of the activity that I've been talking about, commercial excellence and innovation. We went for a long stretch of time, we weren't bringing any new products into the consumer products market. We just were pulling back. We were pulling back on ad merch, on innovation, and we've reversed that. What's happening now, between 2023 and 2025, we've doubled the number of new product launches in the Consumer side. If you look at what we'll do in 2026 versus 2023, it's triple. We look at just what we're doing internationally, launching products for the international market, we're up like seven or eight times. It's substantial investments in new product development, and it's things like Brite by Scotch-Brite, which, as we sort of say in the tagline, we bring the joy to scrubbing back into the business. That is a business that's benefiting from a lot of the activity that I've been talking about, commercial excellence and innovation. that is a business that's benefiting from a lot of the activity that i've been talking about commercial excellence and innovation We went for a long stretch of time, we weren't bringing any new products into the consumer products market. we went for a long stretch of time we weren't bringing any new products into the consumer products market We just were pulling back. we just were pulling back We were pulling back on ad merch, on innovation, and we've reversed that. we were pulling back on ad merch on innovation and we've reversed that What's happening now, between 2023 and 2025, we've doubled the number of new product launches in the Consumer side. what's happening now between 2023 and 2025 we've doubled the number of new product launches in the consumer side If you look at what we'll do in 2026 versus 2023, it's triple. if you look at what we'll do in 2026 versus 2023 it's triple We look at just what we're doing internationally, launching products for the international market, we're up like seven or eight times. we look at just what we're doing internationally launching products for the international market we're up like seven or eight times It's substantial investments in new product development, and it's things like Brite by Scotch-Brite, which, as we sort of say in the tagline, we bring the joy to scrubbing back into the business. it's substantial investments in new product development and it's things like brite by scotch-brite which as we sort of say in the tagline we bring the joy to scrubbing back into the business It's like there's really good things there. We talked last year about PROSharp painter's tape. It was very important. Filtrete, the number of varieties or SKUs we have in the Filtrete side. A lot of new innovations going into Consumer. Consumer, we're performing better, our on time, in full performance is getting better. We're advertising and promoting better, we're starting to see that traction happen in the business. It's not going to be a big grower in the back end, if we can get sequential a little bit better and start to see positive growth in the Consumer business, I think we'll be. It's like there's really good things there. it's like there's really good things there We talked last year about PROSharp painter's tape. we talked last year about prosharp painter's tape It was very important. it was very important Filtrete, the number of varieties or SKUs we have in the Filtrete side. filtrete the number of varieties or skus we have in the filtrete side A lot of new innovations going into Consumer. a lot of new innovations going into consumer Consumer, we're performing better, our on time, in full performance is getting better. consumer we're performing better our on time in full performance is getting better We're advertising and promoting better, we're starting to see that traction happen in the business. we're advertising and promoting better we're starting to see that traction happen in the business It's not going to be a big grower in the back end, if we can get sequential a little bit better and start to see positive growth in the Consumer business, I think we'll be. it's not going to be a big grower in the back end if we can get sequential a little bit better and start to see positive growth in the consumer business i think we'll be

Speaker 2: The next topic, which is running the 3M asset better, right? The next topic, which is running the 3M asset better, right? the next topic which is running the 3m asset better right

Speaker 1: Yeah. Yeah. yeah

Speaker 2: You talked about this on the second quarter 2024 call, gave more detail— You talked about this on the second quarter 2024 call, gave more detail— you talked about this on the second quarter 2024 call gave more detail—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —at the Investor Day. Kind of three core priority areas— —at the Investor Day. —at the investor day Kind of three core priority areas— kind of three core priority areas—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —that I want to dig into a little bit starting on the growth side. —that I want to dig into a little bit starting on the growth side. —that i want to dig into a little bit starting on the growth side

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Within growth, there's commercial excellence, there's R&D. The R&D efficiency, right? The idea is we'll spend the same amount, but we'll get more out of it. Within growth, there's commercial excellence, there's R&D. within growth there's commercial excellence there's r&d The R&D efficiency, right? the r&d efficiency right The idea is we'll spend the same amount, but we'll get more out of it. the idea is we'll spend the same amount but we'll get more out of it

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Just some of the tools that you're implementing there. Just some of the tools that you're implementing there. just some of the tools that you're implementing there

Speaker 1: Look, this is a fundamental relook back to basics, fundamentals approach to running the way we do R&D today, as I call like an R&D factory, like a factory with metrics instrumenting it. It's a variety of things like are we launching products on time? We weren't measuring on-time attainment. Q1, we were at 83%. Last year was in the low-80s. Before that, it was kind of at 70%. It's continuing to get a little bit better on launching products on time, which I think is quite important. We are spending a little bit more on R&D. We're shifting our spend more towards our priority verticals. Typically, we would have spent less than 30% of R&D on new product development. We're now running about 40%, which I think has been pretty good. We're running our business cases a lot more rigorously. Look, this is a fundamental relook back to basics, fundamentals approach to running the way we do R&D today, as I call like an R&D factory, like a factory with metrics instrumenting it. look this is a fundamental relook back to basics fundamentals approach to running the way we do r&d today as i call like an r&d factory like a factory with metrics instrumenting it It's a variety of things like are we launching products on time? it's a variety of things like are we launching products on time We weren't measuring on-time attainment. we weren't measuring on-time attainment Q1, we were at 83%. q1 we were at 83% Last year was in the low -80s. last year was in the low -80s Before that, it was kind of at 70%. before that it was kind of at 70% It's continuing to get a little bit better on launching products on time, which I think is quite important. it's continuing to get a little bit better on launching products on time which i think is quite important We are spending a little bit more on R&D. we are spending a little bit more on r&d We're shifting our spend more towards our priority verticals. we're shifting our spend more towards our priority verticals Typically, we would have spent less than 30% of R&D on new product development. typically we would have spent less than 30% of r&d on new product development We're now running about 40%, which I think has been pretty good. we're now running about 40% which i think has been pretty good We're running our business cases a lot more rigorously. we're running our business cases a lot more rigorously We're tracking are we accomplishing them? In Q1, we launched 84 products. We're watching the funnel. We're bringing more new products into the front end of the funnel. I think the funnel health is quite important. If you go back to where we were in 2023, we launched 123 products into the marketplace. For 3M, it's not as much as we could do. We used to do 600, 700. It went to 169. Last year was 284. This year, we'll do more than 350, and we're well on our way tracking towards the goal of 1,000 products over the next three years by the end of 2027. The business is doing really well on this, bringing back innovation into the business, and a lot of it is just the fundamentals of how you're executing day to day. We're tracking are we accomplishing them? we're tracking are we accomplishing them In Q1, we launched 84 products. in q1 we launched 84 products We're watching the funnel. we're watching the funnel We're bringing more new products into the front end of the funnel. we're bringing more new products into the front end of the funnel I think the funnel health is quite important. i think the funnel health is quite important If you go back to where we were in 2023, we launched 123 products into the marketplace. if you go back to where we were in 2023 we launched 123 products into the marketplace For 3M, it's not as much as we could do. for 3m it's not as much as we could do We used to do 600, 700. we used to do 600 700 It went to 169. it went to 169 Last year was 284. last year was 284 This year, we'll do more than 350, and we're well on our way tracking towards the goal of 1,000 products over the next three years by the end of 2027. this year we'll do more than 350 and we're well on our way tracking towards the goal of 1,000 products over the next three years by the end of 2027 The business is doing really well on this, bringing back innovation into the business, and a lot of it is just the fundamentals of how you're executing day to day. the business is doing really well on this bringing back innovation into the business and a lot of it is just the fundamentals of how you're executing day to day Now we're starting to bring AI technologies into how we innovate, which is very important. We laid out a goal at the Investor Day to reduce the cycle time to launch a product, to launch a new product by 20%. We're already tracking a little bit better than that, and AI is going to help us accelerate even further as we go beyond 2027. This is a complete remaking of how we innovate, which is the core capability of 3M is bringing new products to life. It's reinstrumenting that whole business, bringing what I call kind of a factory mentality to how we run R&D. Now we're starting to bring AI technologies into how we innovate, which is very important. now we're starting to bring ai technologies into how we innovate which is very important We laid out a goal at the Investor Day to reduce the cycle time to launch a product, to launch a new product by 20%. we laid out a goal at the investor day to reduce the cycle time to launch a product to launch a new product by 20% We're already tracking a little bit better than that, and AI is going to help us accelerate even further as we go beyond 2027. we're already tracking a little bit better than that and ai is going to help us accelerate even further as we go beyond 2027 This is a complete remaking of how we innovate, which is the core capability of 3M is bringing new products to life. this is a complete remaking of how we innovate which is the core capability of 3m is bringing new products to life It's reinstrumenting that whole business, bringing what I call kind of a factory mentality to how we run R&D. it's reinstrumenting that whole business bringing what i call kind of a factory mentality to how we run r&d

Speaker 2: Then also on the growth side, you introduced a target to outgrow the macro by about $1 billion, 2025 to 2027. Then also on the growth side, you introduced a target to outgrow the macro by about $1 billion, 2025 to 2027. then also on the growth side you introduced a target to outgrow the macro by about $1 billion 2025 to 2027

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Just remind us where you are on that through 2025, 2026, what the setup would be for 2027. Just remind us where you are on that through 2025, 2026, what the setup would be for 2027. just remind us where you are on that through 2025 2026 what the setup would be for 2027

Speaker 1: We're tracking beyond that. We said we would do $100 million, $300 million, $600 million between 2025, 2026, 2027 above the macro. Last year was about $150 million. This year will be more than $300 million. We're tracking well to achieve that growth of $1 billion over the macro. It's really coming from the segments we've just talked about. A lot of it is the tailwind around general industrial, safety, A&D, semiconductors, our data center business is all giving us tailwind to out accelerate the macro. We feel pretty good about that trajectory. Again, it's not just the new product development. The key piece last year is more around commercial excellence, because it's taking time as you launch more products till that actually starts to drive the top line, it takes some time. Last year it was more commercial excellence. We're tracking beyond that. we're tracking beyond that We said we would do $100 million, $300 million, $600 million between 2025, 2026, 2027 above the macro. we said we would do $100 million $300 million $600 million between 2025 2026 2027 above the macro Last year was about $150 million. last year was about $150 million This year will be more than $300 million. this year will be more than $300 million We're tracking well to achieve that growth of $1 billion over the macro. we're tracking well to achieve that growth of $1 billion over the macro It's really coming from the segments we've just talked about. it's really coming from the segments we've just talked about A lot of it is the tailwind around general industrial, safety, A&D, semiconductors, our data center business is all giving us tailwind to out accelerate the macro. a lot of it is the tailwind around general industrial safety a&d semiconductors our data center business is all giving us tailwind to out accelerate the macro We feel pretty good about that trajectory. we feel pretty good about that trajectory Again, it's not just the new product development. again it's not just the new product development The key piece last year is more around commercial excellence, because it's taking time as you launch more products till that actually starts to drive the top line, it takes some time. the key piece last year is more around commercial excellence because it's taking time as you launch more products till that actually starts to drive the top line it takes some time Last year it was more commercial excellence. last year it was more commercial excellence This year it's kind of half and half between commercial excellence and innovation-driven growth. As we get into 2027, it's going to start to be a lot more driven by new product introduction. It's shifting a little bit. The flywheel is moving. We are this year outperforming the macro, and we'll continue to do that next year. This year it's kind of half and half between commercial excellence and innovation-driven growth. this year it's kind of half and half between commercial excellence and innovation-driven growth As we get into 2027, it's going to start to be a lot more driven by new product introduction. as we get into 2027 it's going to start to be a lot more driven by new product introduction It's shifting a little bit. it's shifting a little bit The flywheel is moving. the flywheel is moving We are this year outperforming the macro, and we'll continue to do that next year. we are this year outperforming the macro and we'll continue to do that next year

Speaker 2: It doesn't sound like doing better earlier on means that you're pulling anything in from 2027. It doesn't sound like doing better earlier on means that you're pulling anything in from 2027. it doesn't sound like doing better earlier on means that you're pulling anything in from 2027

Speaker 1: No, I don't think so. No, I don't think so. no i don't think so

Speaker 2: If anything, it would be— If anything, it would be— if anything it would be—

Speaker 1: No, no. Look, at the end of the day, we said we'd grow $1 billion over the macro. This is a year and a half ago, and a lot's changed since then. The macro, I think is, if anything, is a little bit tougher than what we had expected at the time, but the company is performing a lot better than I would have expected. It's not pulling anything in. It's capturing new opportunities. When we stood up at the Investor Day early last year, we knew we had a product inside a data center. It was copper. It's called TwinAx. We had developed EBO. It was sort of really nascent. It was sort of buried a little bit. No, no. no no Look, at the end of the day, we said we'd grow $1 billion over the macro. look at the end of the day we said we'd grow $1 billion over the macro This is a year and a half ago, and a lot's changed since then. this is a year and a half ago and a lot's changed since then The macro, I think is, if anything, is a little bit tougher than what we had expected at the time, but the company is performing a lot better than I would have expected. the macro i think is if anything is a little bit tougher than what we had expected at the time but the company is performing a lot better than i would have expected It's not pulling anything in. it's not pulling anything in It's capturing new opportunities. it's capturing new opportunities When we stood up at the Investor Day early last year, we knew we had a product inside a data center. when we stood up at the investor day early last year we knew we had a product inside a data center It was copper. it was copper It's called TwinAx. it's called twinax We had developed EBO. we had developed ebo It was sort of really nascent. it was sort of really nascent It was sort of buried a little bit. it was sort of buried a little bit Simply because of all the investment that's happening inside the data centers, the transition around AI, and the amount of data that's flowing through these data centers, they have to move the optical fiber. We've got a great technology at the right spot. We didn't highlight that last year. It's really evolved in the last 6-12 months. You have different pieces that are really picking up and taking on a lot of steam here. Simply because of all the investment that's happening inside the data centers, the transition around AI, and the amount of data that's flowing through these data centers, they have to move the optical fiber. simply because of all the investment that's happening inside the data centers the transition around ai and the amount of data that's flowing through these data centers they have to move the optical fiber We've got a great technology at the right spot. we've got a great technology at the right spot We didn't highlight that last year. we didn't highlight that last year It's really evolved in the last 6-12 months. it's really evolved in the last 6-12 months You have different pieces that are really picking up and taking on a lot of steam here. you have different pieces that are really picking up and taking on a lot of steam here

Speaker 2: Another priority area is operational efficiency. When you outlined— Another priority area is operational efficiency. another priority area is operational efficiency When you outlined— when you outlined—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —the target was $1 billion of annualized net productivity. —the target was $1 billion of annualized net productivity. —the target was $1 billion of annualized net productivity

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Just walk us through— Just walk us through— just walk us through—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —where you are on that cadence. —where you are on that cadence. —where you are on that cadence

Speaker 1: By the end of this year, we'll be at least halfway through that. It's been good progress, and it's basic things. It's around procurement savings, logistics savings, modes and flows. Cost of poor quality has been something I've been talking about quite consistently. We had not been measuring it inside the company very rigorously, we were measuring it. We were north of 7% of cost of goods. We closed Q1 around 5%, 5.5%, 5.6%. On a $13 billion cost of goods base, $13.5 billion, it's over $200 million of cost improvement simply because of cost of poor quality. There's probably another $200 million ahead of us yet. There's a lot of opportunity here. It's really just rewiring this. By the end of this year, we'll be at least halfway through that. by the end of this year we'll be at least halfway through that It's been good progress, and it's basic things. it's been good progress and it's basic things It's around procurement savings, logistics savings, modes and flows. it's around procurement savings logistics savings modes and flows Cost of poor quality has been something I've been talking about quite consistently. cost of poor quality has been something i've been talking about quite consistently We had not been measuring it inside the company very rigorously, we were measuring it. we had not been measuring it inside the company very rigorously we were measuring it We were north of 7% of cost of goods. we were north of 7% of cost of goods We closed Q1 around 5%, 5.5%, 5.6%. we closed q1 around 5% 5.5% 5.6% On a $13 billion cost of goods base, $13.5 billion, it's over $200 million of cost improvement simply because of cost of poor quality. on a $13 billion cost of goods base $13.5 billion it's over $200 million of cost improvement simply because of cost of poor quality There's probably another $200 million ahead of us yet. there's probably another $200 million ahead of us yet There's a lot of opportunity here. there's a lot of opportunity here It's really just rewiring this. it's really just rewiring this When I think about what we're trying to do around operational excellence, it gets back to this concept that we had about moving from a holding company to an operating company, and it's a multi-step journey, and I've been laying this out for investors sort of consistently every earnings release and the track and the progress we're making here. I said that's the path we're going to go through. It starts off with just taking all the factories, which are run regionally, and have them run centrally. We did that two and a half years ago, and now we can look at across all of the company what's happening across the flows, how the factories run together. That's been a very important part of the journey. Building these metrics, I talk about utilization or OEE, that's now come up to 62.5%, 300 assets. When I think about what we're trying to do around operational excellence, it gets back to this concept that we had about moving from a holding company to an operating company, and it's a multi-step journey, and I've been laying this out for investors sort of consistently every earnings release and the track and the progress we're making here. when i think about what we're trying to do around operational excellence it gets back to this concept that we had about moving from a holding company to an operating company and it's a multi-step journey and i've been laying this out for investors sort of consistently every earnings release and the track and the progress we're making here I said that's the path we're going to go through. i said that's the path we're going to go through It starts off with just taking all the factories, which are run regionally, and have them run centrally. it starts off with just taking all the factories which are run regionally and have them run centrally We did that two and a half years ago, and now we can look at across all of the company what's happening across the flows, how the factories run together. we did that two and a half years ago and now we can look at across all of the company what's happening across the flows how the factories run together That's been a very important part of the journey. that's been a very important part of the journey Building these metrics, I talk about utilization or OEE, that's now come up to 62.5%, 300 assets. building these metrics i talk about utilization or oee that's now come up to 62.5% 300 assets That's been a very good performance. On time and in full, cost of poor quality, all these metrics around driving that factory network to be much more efficient, much more stable, and it's continuing to evolve. The next step is around the consolidation of the network, and we're making really good progress on the network consolidation. All of that is getting from sort of low-40s to the mid-40s to now the high-40s in terms of gross margin. That's the goal we have in that business, and this is the trajectory that we have put in place to get there. Each quarter, I go through some of these metrics, which demonstrates the progress we're making quarter to quarter. It's not a linear journey, but the company's making good progress in moving from holding company operating model to more of an integrated operating business. That's been a very good performance. that's been a very good performance On time and in full, cost of poor quality, all these metrics around driving that factory network to be much more efficient, much more stable, and it's continuing to evolve. on time and in full cost of poor quality all these metrics around driving that factory network to be much more efficient much more stable and it's continuing to evolve The next step is around the consolidation of the network, and we're making really good progress on the network consolidation. the next step is around the consolidation of the network and we're making really good progress on the network consolidation All of that is getting from sort of low -40s to the mid-40s to now the high -40s in terms of gross margin. all of that is getting from sort of low -40s to the mid-40s to now the high -40s in terms of gross margin That's the goal we have in that business, and this is the trajectory that we have put in place to get there. that's the goal we have in that business and this is the trajectory that we have put in place to get there Each quarter, I go through some of these metrics, which demonstrates the progress we're making quarter to quarter. each quarter i go through some of these metrics which demonstrates the progress we're making quarter to quarter It's not a linear journey, but the company's making good progress in moving from holding company operating model to more of an integrated operating business. it's not a linear journey but the company's making good progress in moving from holding company operating model to more of an integrated operating business

Speaker 2: There's momentum behind the outgrowth, but the momentum behind the net productivity, because that step up next year, that would be a larger contribution. There's momentum behind the outgrowth, but the momentum behind the net productivity, because that step up next year, that would be a larger contribution. there's momentum behind the outgrowth but the momentum behind the net productivity because that step up next year that would be a larger contribution

Speaker 1: It's going to be a larger contribution next year. It's going to continue. Again, we're going to start to bring in things around the network consolidation. Lots of pieces to this. Yeah, we feel very good about $1 billion by the end of 2027. It's going to be a larger contribution next year. it's going to be a larger contribution next year It's going to continue. it's going to continue Again, we're going to start to bring in things around the network consolidation. again we're going to start to bring in things around the network consolidation Lots of pieces to this. lots of pieces to this Yeah, we feel very good about $1 billion by the end of 2027. yeah we feel very good about $1 billion by the end of 2027

Speaker 2: Yep. Then the third priority area was around the portfolio and what you do around capital deployment as well. You've talked about 2%-3%. There was the Precision Grinding & Finishing business. I think that was maybe 50 basis points. Yep. yep Then the third priority area was around the portfolio and what you do around capital deployment as well. then the third priority area was around the portfolio and what you do around capital deployment as well You've talked about 2%-3%. you've talked about 2%-3% There was the Precision Grinding & Finishing business. there was the precision grinding & finishing business I think that was maybe 50 basis points. i think that was maybe 50 basis points

Speaker 1: Yeah. Yeah. yeah

Speaker 2: Just where you are on the remaining part of that 2%-3%, is that something that happens this year? Just where you are on the remaining part of that 2%-3%, is that something that happens this year? just where you are on the remaining part of that 2%-3% is that something that happens this year

Speaker 1: It'll happen over time. I'm not going to put a time stamp on it. Look, we said about 10% of the company is more commodity-like, meaning we didn't have the right to win in certain segments. Technology wasn't being used to drive differentiation in the space. We'll look at those pieces over time. We said there's 2%-3% that was more in active discussions or what things we would try to do. PGF happened to be one. We sold the Precision Grinding business. It took with it seven factories, brought our factory count down to now about just about 100 with a closure that happened as well. We saw some good activity there. Capital, the portfolio side, and generally capital deployment isn't just around the divestitures. There's activity here. It'll happen over time. it'll happen over time I'm not going to put a time stamp on it. i'm not going to put a time stamp on it Look, we said about 10% of the company is more commodity-like, meaning we didn't have the right to win in certain segments. look we said about 10% of the company is more commodity-like meaning we didn't have the right to win in certain segments Technology wasn't being used to drive differentiation in the space. technology wasn't being used to drive differentiation in the space We'll look at those pieces over time. we'll look at those pieces over time We said there's 2%-3% that was more in active discussions or what things we would try to do. we said there's 2%-3% that was more in active discussions or what things we would try to do PGF happened to be one. pgf happened to be one We sold the Precision Grinding business. we sold the precision grinding business It took with it seven factories, brought our factory count down to now about just about 100 with a closure that happened as well. it took with it seven factories brought our factory count down to now about just about 100 with a closure that happened as well We saw some good activity there. we saw some good activity there Capital, the portfolio side, and generally capital deployment isn't just around the divestitures. capital the portfolio side and generally capital deployment isn't just around the divestitures There's activity here. there's activity here I've said to grow the company long-term, sustainably, top-line growth, we've got to shift the portfolio, we know we've got to do that. It's both getting out of some things that don't really fit, but also starting to get more into things that fit into priority verticals, like we've done with the Madison Scott SCBA joint venture. Which, by the way, will close on July 1st. All the regulatory approvals are done. We're going to close that transaction on July 1st, and it's going to be an important one for us. It's also about organically prioritizing how we spend money inside the company. 80% of what we spend on R&D now goes to the priority verticals I laid out at the beginning of last year, and it also gets at how we do capital deployment. There's a broad piece around this. I've said to grow the company long-term, sustainably, top-line growth, we've got to shift the portfolio, we know we've got to do that. i've said to grow the company long-term sustainably top-line growth we've got to shift the portfolio we know we've got to do that It's both getting out of some things that don't really fit, but also starting to get more into things that fit into priority verticals, like we've done with the Madison Scott SCBA joint venture. it's both getting out of some things that don't really fit but also starting to get more into things that fit into priority verticals like we've done with the madison scott scba joint venture Which, by the way, will close on July 1st. which by the way will close on july 1st All the regulatory approvals are done. all the regulatory approvals are done We're going to close that transaction on July 1st, and it's going to be an important one for us. we're going to close that transaction on july 1st and it's going to be an important one for us It's also about organically prioritizing how we spend money inside the company. 80% of what we spend on R&D now goes to the priority verticals I laid out at the beginning of last year, and it also gets at how we do capital deployment. it's also about organically prioritizing how we spend money inside the company 80% of what we spend on r&d now goes to the priority verticals i laid out at the beginning of last year and it also gets at how we do capital deployment There's a broad piece around this. there's a broad piece around this We'll continue to look at the portfolio. There's no time stamp on this. We'll be smart and disciplined in how we make decisions around the portfolio. We'll continue to look at the portfolio. we'll continue to look at the portfolio There's no time stamp on this. there's no time stamp on this We'll be smart and disciplined in how we make decisions around the portfolio. we'll be smart and disciplined in how we make decisions around the portfolio

Speaker 2: When you think about the margin opportunity that comes through the net productivity, just in terms of which segments see the biggest impact from that— When you think about the margin opportunity that comes through the net productivity, just in terms of which segments see the biggest impact from that— when you think about the margin opportunity that comes through the net productivity just in terms of which segments see the biggest impact from that—

Speaker 1: Yeah. Yeah. yeah

Speaker 2: —have the most opportunity going forward. —have the most opportunity going forward. —have the most opportunity going forward

Speaker 1: You'll see margin growth across the company. A lot of the productivity, because it's an integrated network, it accrues to all of the businesses across all the portfolio. Each business runs into different market dynamics. Stepping back, I think the industrial businesses will see more margin growth over time than the Consumer. The Consumer business is a little bit lighter in terms of the portfolio across the company in terms of margin performance. I'd see more in the industrial side of the business. Again, a lot of the productivity work we're doing accrues to every one of them because it's an integrated network. You'll see margin growth across the company. you'll see margin growth across the company A lot of the productivity, because it's an integrated network, it accrues to all of the businesses across all the portfolio. a lot of the productivity because it's an integrated network it accrues to all of the businesses across all the portfolio Each business runs into different market dynamics. each business runs into different market dynamics Stepping back, I think the industrial businesses will see more margin growth over time than the Consumer. stepping back i think the industrial businesses will see more margin growth over time than the consumer The Consumer business is a little bit lighter in terms of the portfolio across the company in terms of margin performance. the consumer business is a little bit lighter in terms of the portfolio across the company in terms of margin performance I'd see more in the industrial side of the business. i'd see more in the industrial side of the business Again, a lot of the productivity work we're doing accrues to every one of them because it's an integrated network. again a lot of the productivity work we're doing accrues to every one of them because it's an integrated network

Speaker 2: Yep. On the pricing side of things, more pricing has had to be put in the market, just what you're seeing in terms of that sticking, or is there any kind of demand impact in pockets of the business? Yep. yep On the pricing side of things, more pricing has had to be put in the market, just what you're seeing in terms of that sticking, or is there any kind of demand impact in pockets of the business? on the pricing side of things more pricing has had to be put in the market just what you're seeing in terms of that sticking or is there any kind of demand impact in pockets of the business

Speaker 1: Yeah. We typically would see pricing to offset material cost inflation. If it's a 2% inflation environment, I know it's a little bit hotter than that, you'd see about 50 basis points of price. As we came into this year, we said we would get about 80 basis points of price in 2026, some to cover material cost inflation, some to cover some of the tariff impact that was there last year, which is where we're at. In Q1, we were a little bit lighter on pricing. We weren't surprised by that. Our pricing increases go out April 1st. You'll see that pick up in the balance of the year. On top of that, we went out with an oil-based price increase. At the earnings release, we sized that $125 million, about 50 basis points of price. Yeah. yeah We typically would see pricing to offset material cost inflation. we typically would see pricing to offset material cost inflation If it's a 2% inflation environment, I know it's a little bit hotter than that, you'd see about 50 basis points of price. if it's a 2% inflation environment i know it's a little bit hotter than that you'd see about 50 basis points of price As we came into this year, we said we would get about 80 basis points of price in 2026, some to cover material cost inflation, some to cover some of the tariff impact that was there last year, which is where we're at. as we came into this year we said we would get about 80 basis points of price in 2026 some to cover material cost inflation some to cover some of the tariff impact that was there last year which is where we're at In Q1, we were a little bit lighter on pricing. in q1 we were a little bit lighter on pricing We weren't surprised by that. we weren't surprised by that Our pricing increases go out April 1st. our pricing increases go out april 1st You'll see that pick up in the balance of the year. you'll see that pick up in the balance of the year On top of that, we went out with an oil-based price increase. on top of that we went out with an oil-based price increase At the earnings release, we sized that $125 million, about 50 basis points of price. at the earnings release we sized that $125 million about 50 basis points of price The oil price impact, cost impact was going to be offset dollar for dollar with price. That's 50 basis points. That puts us at 1.3 points of pricing across the company. Again, similarly to my comment on the margin expansion, you'll see clearly more price in SIBG than TEBG and better in TEBG than the Consumer business, is kind of the way I would characterize it. We are seeing that price taking hold. We're very confident of that. It's a different environment today, thinking about pricing we were in a couple of years ago. When you're delivering products on time and you've got hustle in the sales force, you're bringing new products to market, you're executing better, your ability to drive pricing is better than if you're not performing. I'm confident we'll see pricing take hold in the business as I've just laid out. The oil price impact, cost impact was going to be offset dollar for dollar with price. the oil price impact cost impact was going to be offset dollar for dollar with price That's 50 basis points. that's 50 basis points That puts us at 1.3 points of pricing across the company. that puts us at 1.3 points of pricing across the company Again, similarly to my comment on the margin expansion, you'll see clearly more price in SIBG than TEBG and better in TEBG than the Consumer business, is kind of the way I would characterize it. again similarly to my comment on the margin expansion you'll see clearly more price in sibg than tebg and better in tebg than the consumer business is kind of the way i would characterize it We are seeing that price taking hold. we are seeing that price taking hold We're very confident of that. we're very confident of that It's a different environment today, thinking about pricing we were in a couple of years ago. it's a different environment today thinking about pricing we were in a couple of years ago When you're delivering products on time and you've got hustle in the sales force, you're bringing new products to market, you're executing better, your ability to drive pricing is better than if you're not performing. when you're delivering products on time and you've got hustle in the sales force you're bringing new products to market you're executing better your ability to drive pricing is better than if you're not performing I'm confident we'll see pricing take hold in the business as I've just laid out. i'm confident we'll see pricing take hold in the business as i've just laid out

Speaker 2: Yep. We went through an inflationary period in 2022, 2023. Saw across the multi-industry group, good pricing response, such that margins were actually moving up. Where are we in terms of that fatigue from the customer side of things? Is the right objective these days, price dollar for dollar? It does net, too. There's a margin headwind tied to it. Yep. yep We went through an inflationary period in 2022, 2023. we went through an inflationary period in 2022 2023 Saw across the multi-industry group, good pricing response, such that margins were actually moving up. saw across the multi-industry group good pricing response such that margins were actually moving up Where are we in terms of that fatigue from the customer side of things? where are we in terms of that fatigue from the customer side of things Is the right objective these days, price dollar for dollar? is the right objective these days price dollar for dollar It does net, too. it does net too There's a margin headwind tied to it. there's a margin headwind tied to it

Speaker 1: We clearly want to offset some of the cost headwinds on inflation, oil, tariffs, those kinds of things. We're clearly embarking on a journey to offset that. Look, at the end of the day, when you bring in new products to market, you have an opportunity to think differently about price and the value you provide to the channel. We're thinking pretty hard about that. I don't think we were maybe as aggressive as we could have been last year on pricing on tariffs. I think we could have gone out harder than that. We're getting smarter about this. We're governing pricing a lot better. It's part of our commercial excellence initiatives. This is an area that it's taking a lot of time and attention for the business. We're watching sort of the discounting, the rebates, the things that happen, sort of the deals, if you will. We clearly want to offset some of the cost headwinds on inflation, oil, tariffs, those kinds of things. we clearly want to offset some of the cost headwinds on inflation oil tariffs those kinds of things We're clearly embarking on a journey to offset that. we're clearly embarking on a journey to offset that Look, at the end of the day, when you bring in new products to market, you have an opportunity to think differently about price and the value you provide to the channel. look at the end of the day when you bring in new products to market you have an opportunity to think differently about price and the value you provide to the channel We're thinking pretty hard about that. we're thinking pretty hard about that I don't think we were maybe as aggressive as we could have been last year on pricing on tariffs. i don't think we were maybe as aggressive as we could have been last year on pricing on tariffs I think we could have gone out harder than that. i think we could have gone out harder than that We're getting smarter about this. we're getting smarter about this We're governing pricing a lot better. we're governing pricing a lot better It's part of our commercial excellence initiatives. it's part of our commercial excellence initiatives This is an area that it's taking a lot of time and attention for the business. this is an area that it's taking a lot of time and attention for the business We're watching sort of the discounting, the rebates, the things that happen, sort of the deals, if you will. we're watching sort of the discounting the rebates the things that happen sort of the deals if you will A lot of times in the past, because again, in a holding company structure, pricing was negotiated down at a very local level, and we were seeing instances where you gave price discounts for volumes of one. There was really no volume coming from that. We're correcting all of that. There's a different governance process on pricing. When you put all that together and you're launching more products, I think our ability to drive price and maybe get some margin expansion from price is better today than it would have been three or five years ago. A lot of times in the past, because again, in a holding company structure, pricing was negotiated down at a very local level, and we were seeing instances where you gave price discounts for volumes of one. a lot of times in the past because again in a holding company structure pricing was negotiated down at a very local level and we were seeing instances where you gave price discounts for volumes of one There was really no volume coming from that. there was really no volume coming from that We're correcting all of that. we're correcting all of that There's a different governance process on pricing. there's a different governance process on pricing When you put all that together and you're launching more products, I think our ability to drive price and maybe get some margin expansion from price is better today than it would have been three or five years ago. when you put all that together and you're launching more products i think our ability to drive price and maybe get some margin expansion from price is better today than it would have been three or five years ago

Speaker 2: We probably only have time for one more. I want to touch on Madison. We probably only have time for one more. we probably only have time for one more I want to touch on Madison. i want to touch on madison

Speaker 1: Sure. Sure. sure

Speaker 2: With that combination and talking about high single-digit growth targets. With that combination and talking about high single-digit growth targets. with that combination and talking about high single-digit growth targets

Speaker 1: Yeah. Yeah. yeah

Speaker 2: The margin opportunity that you have there, just how bringing the businesses together becomes a best fit. The margin opportunity that you have there, just how bringing the businesses together becomes a best fit. the margin opportunity that you have there just how bringing the businesses together becomes a best fit

Speaker 1: This was a very important transaction. We're bringing together two complementary businesses in a priority vertical. It's a safety vertical. Just by way of background, we're creating a business about $800 million worth of revenue, a little bit better than that. We're combining our Scott SCBA Fire Safety business with Madison Fire & Rescue, so suppression tools, fire rescue tools, in a joint venture, which we'll own 51%. We've got a 49% partner in a private equity firm. We'll fully consolidate this. Again, it's targeting for closure on July 1st. The process is being done very well. The businesses together, independently were performing very well, and together we think it'll be better. Very complementary. It opens up a broader addressable market for us. We have opportunities to leverage channels. Scott was very important in the U.S. market, but really never took the product internationally. This was a very important transaction. this was a very important transaction We're bringing together two complementary businesses in a priority vertical. we're bringing together two complementary businesses in a priority vertical It's a safety vertical. it's a safety vertical Just by way of background, we're creating a business about $800 million worth of revenue, a little bit better than that. just by way of background we're creating a business about $800 million worth of revenue a little bit better than that We're combining our Scott SCBA Fire Safety business with Madison Fire & Rescue, so suppression tools, fire rescue tools, in a joint venture, which we'll own 51%. we're combining our scott scba fire safety business with madison fire & rescue so suppression tools fire rescue tools in a joint venture which we'll own 51% We've got a 49% partner in a private equity firm. we've got a 49% partner in a private equity firm We'll fully consolidate this. we'll fully consolidate this Again, it's targeting for closure on July 1st. again it's targeting for closure on july 1st The process is being done very well. the process is being done very well The businesses together, independently were performing very well, and together we think it'll be better. the businesses together independently were performing very well and together we think it'll be better Very complementary. very complementary It opens up a broader addressable market for us. it opens up a broader addressable market for us We have opportunities to leverage channels. we have opportunities to leverage channels Scott was very important in the U.S. market, but really never took the product internationally. scott was very important in the u.s market but really never took the product internationally We have an opportunity there because Madison has a bigger presence in the international markets, particularly in Europe. We have an opportunity to get better at how we drive product through the channel within the U.S. We go through similar distributors, but a lot of times not the same one. We have an opportunity to do cross-sell and just better commercial execution in how we drive business. This is a space that the market itself is pretty resilient. It's been a high single-digit grower recently. The margins today are at or actually they're above a 3M-wide average. When I look at cost synergies, the opportunity to take revenue synergies, this is what we'd say, it's a quality asset with a lot of upside. We feel good about where we're at. We have an opportunity there because Madison has a bigger presence in the international markets, particularly in Europe. we have an opportunity there because madison has a bigger presence in the international markets particularly in europe We have an opportunity to get better at how we drive product through the channel within the U.S. we have an opportunity to get better at how we drive product through the channel within the u.s We go through similar distributors, but a lot of times not the same one. we go through similar distributors but a lot of times not the same one We have an opportunity to do cross-sell and just better commercial execution in how we drive business. we have an opportunity to do cross-sell and just better commercial execution in how we drive business This is a space that the market itself is pretty resilient. this is a space that the market itself is pretty resilient It's been a high single-digit grower recently. it's been a high single-digit grower recently The margins today are at or actually they're above a 3M-wide average. the margins today are at or actually they're above a 3m-wide average When I look at cost synergies, the opportunity to take revenue synergies, this is what we'd say, it's a quality asset with a lot of upside. when i look at cost synergies the opportunity to take revenue synergies this is what we'd say it's a quality asset with a lot of upside We feel good about where we're at. we feel good about where we're at I like the transaction. Again, because of the structure, when it does close, we'll be pulling $700 million of cash out back to the parent company from the closure of this deal, again, July 1st. It's a great transaction, and it'll be reported to the marketplace as a separate division within SIBG. You'll get visibility into what I'm talking about in terms of the growth performance over time, starting really in Q3. I like the transaction. i like the transaction Again, because of the structure, when it does close, we'll be pulling $700 million of cash out back to the parent company from the closure of this deal, again, July 1st. again because of the structure when it does close we'll be pulling $700 million of cash out back to the parent company from the closure of this deal again july 1st It's a great transaction, and it'll be reported to the marketplace as a separate division within SIBG. it's a great transaction and it'll be reported to the marketplace as a separate division within sibg You'll get visibility into what I'm talking about in terms of the growth performance over time, starting really in Q3. you'll get visibility into what i'm talking about in terms of the growth performance over time starting really in q3

Speaker 2: I think that brings us to the end of our time. Bill, thank you very. I think that brings us to the end of our time. i think that brings us to the end of our time Bill, thank you very. bill thank you very