3M CO — Call Transcript 2026

Ladies and gentlemen, thank you for standing by. Welcome to the 3M Q1 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you do have a question, please press star one on your telephone keypad. As a reminder, this call is being recorded Tuesday, April 21st, 2026. I would now like to turn the call over to Chinmay Trivedi, Senior Vice President of Investor Relations and Financial Planning and Analysis at 3M. Thank you. Good morning, everyone, and welcome to our first-quarter earnings conference call. With me today are Bill Brown, 3M's Chairman and Chief Executive Officer, and Anurag Maheshwari, our Chief Financial Officer. Bill and Anurag will make some formal comments, then we will take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3m.com. Please turn to slide 2 and take a moment to read the forward-looking statements. During today's conference call, we'll be making certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K lists some of these most important risk factors that could cause actual results to differ from our predictions. Please note, throughout today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the attachments to today's press release. With that, please turn to slide 3 and I will hand the call off to Bill. Bill? Thank you, Chinmay, and good morning, everyone. We delivered solid operating performance in Q1 with earnings per share of $2.14, up mid-teens versus last year. Operating margin increased 30 basis points to 23.8%, and free cash flow was over $500 million, up double digits. During the quarter, we returned $2.4 billion to shareholders, including $400 million in dividends and $2 billion of share repurchases. We had a light start to the year on the top line with organic growth of 1.2%, driven by pockets of macro pressure. We saw encouraging order trends that support our outlook for acceleration in the balance of the year. Looking forward, we remain confident in achieving our full year 2026 guidance despite the volatile environment. Our performance reflects strong execution on productivity, cost discipline, and commercial rigor. We're building a stronger foundation based on commercial, innovation, and operational excellence, underpinned by a relentless focus on strengthening our performance culture. In commercial excellence, we're seeing benefits from improved sales effectiveness and lower customer attrition, and we continue to make progress on cross-selling opportunities. To date, we've closed on approximately $80 million of new business against the three-year, $100 million target we laid out at Investor Day with a pipeline of $85 million of additional cross-sell opportunities. We've introduced AI tools to drive growth, reduce churn, and automate manual work, including an agent that analyzes our sales and opportunity pipeline data to develop customized coaching plans for sales managers to help reps meet their targets. We believe digital tools like Ask 3M, a new AI-powered digital assistant that helps customers find solutions to design challenges using 3M products, will allow us to reach a broader population of customers. Our pace of new product introductions is accelerating with better on-time performance, reduced cycle times, and clearer governance and accountability across R&D. We launched 84 new products in Q1, up 35% versus last year, and we're on pace to launch 350 in 2026. This will put us ahead of our Investor Day target to launch 1,000 new products through 2027. We've maintained OTIF service levels above 90%, while at the same time reduced inventory by three days and delivery lead time by 25%, improving our competitiveness with customers. OEE improved over 100 basis points year-on-year as we optimize asset run length, runtime, and changeovers, creating a stronger foundation for sustained productivity and fixed cost leverage. Cost of poor quality decreased by approximately 100 basis points versus Q1 last year, driven by more structured root cause analysis, significantly increased Kaizen activity, and tighter process controls. What matters is that these are not isolated wins. They collectively reflect greater execution discipline and constancy of purpose. That consistency and momentum gives us confidence that we can meet or exceed the medium-term goals we outlined at our Investor Day last year, even in an uncertain macro environment. While we continue to strengthen our foundation and shift from a holding company to an operating company model, we're beginning a broad-based transformation of the company, simplifying and standardizing processes, reducing complexity, reshaping our portfolio, and improving resilience and predictability. We see substantial opportunities to streamline operations and consolidate facilities. The transformation includes both deliberate footprint actions as well as targeted investments in manufacturing and process technology. For example, transitioning from solvent to solvent-free coating, which brings cost, capital, and environmental benefits. Earlier this month, we closed on the previously announced sale of our Precision Grinding & Finishing business within SIBG, which reduced our footprint by seven factories, and we closed one factory and announced three other full or partial closures, bringing our total projected manufacturing site count to below 100. At the same time, we're investing more than $250 million over the next three years in standard, easy-to-replicate automation across our plants and distribution centers. By automating material handling in our warehouses, replacing manual slitters with automated systems, and automating our current manual visual inspection processes, we are improving safety, reducing labor costs, increasing yield, and putting ourselves in a better position to support demand as volumes recover. To illustrate the opportunity, we have 7,000 material handlers and over 600 operators performing manual visual inspections across our network and about 500 manual slitters. When we automated the slitting operation at our Nevada facility late last year, we achieved a 30% increase in square yards per hour productivity. Over time, this transformation will allow us to accelerate towards a structurally higher growth, higher margin potential portfolio of priority verticals. Slide 4 provides a more detailed view of growth and orders by end market. When you look across our portfolio, roughly 60% of our businesses showed relative strength in Q1, including general industrial and safety. Importantly, we also saw strong orders in these markets, which gives us visibility and reinforces that the demand environment in these verticals remains healthy. At the same time, we experienced macro and industry-driven softness in about 40% of the portfolio that we've been highlighting as watch areas. In electronics, we delivered flat year-over-year growth in Q1 versus mid-single digits last year. Our performance in semiconductor and data centers was very strong, while consumer electronics was soft due to industry-wide memory chip issues, which is impacting demand. Electronics orders were up double digits due to significant activity in semis and data centers, which will convert to revenue in Q2 and the H2. In automotive, the market was soft as expected in the Q1. Global IHS build rates were down about 3% overall and 10% in China, which pressured volumes. In consumer, we continue to see soft U.S. consumer discretionary spending with a few pockets of strength in categories with recent new product introductions. POS trends in the U.S. improved over the course of the quarter and were positive in 7 weeks of the last 8 weeks, providing some encouragement heading into Q2. Overall, orders were up slightly over 10% in Q1, and backlog grew double digits both sequentially and year-over-year, giving us momentum into Q2. This strength reflects the combined impact of our new product introductions, continued progress in commercial excellence, and orders for longer lead time products, with some additional benefit from pre-buying ahead of recent price actions. It's encouraging to see order strength continue into the first few weeks of April. Turning to slide 5. As part of our ongoing focus on portfolio shaping, last month, we announced the acquisition of Madison Fire & Rescue, which will be combined with our Scott Safety business to create a leading global fire and safety business. The combination of Scott Safety's premium self-contained breathing apparatus with Madison Fire & Rescue's premier portfolio in rescue technology and fire suppression creates an $800 million revenue business growing at a high single-digit growth rate. This strategic transaction broadens our safety portfolio, one of our priority verticals, by expanding our market reach and building scale for future growth. It positions us to maintain above-market growth, enhance margins, and drive strong free cash flow generation. I also want to highlight our growing data center and associated power utility business with current revenue of approximately $600 million, $100 million inside the data center and about $500 million bringing power to the facility. This is a priority vertical space where we are introducing new products like EBO, or Expanded Beam Optics, a high-performance optical connector engineered to improve installation speed, reliability, and operational efficiency within data centers. EBO builds on our existing TwinAx copper connector for high-speed data transmission and positions us well for the copper-to-fiber transition underway. With hyperscaler validation, a significant order in hand, and a $1 billion+ addressable market, we're investing to more than double our capacity to support growing AI demand. We see additional opportunities here as demand expands to ceramics, silicon photonics, and on-chip optical connectors. We have strong IP to support this evolving market and a clear roadmap to develop new products that further drive growth. Overall, I'm pleased with our progress this quarter, encouraged by the pace, op tempo, and executional rigor of the 3M team. We're on a multi-year journey and progress won't be linear, but we're building the capability to execute consistently, to innovate with purpose, and to allocate resources toward the parts of the portfolio that deliver the most value. I'm grateful to the 3M team for their commitment, hard work, and focus as we deliver progress every day. With that, I'll turn it over to Anurag to share the details of the quarter. Anurag? Thank you, Bill. Turning to slide 6, we had a good start to the year, performing ahead of expectations on orders, margins, earnings, and cash. Starting with top line, we delivered organic sales growth of 1.2%. SIBG showed continued momentum and grew over 3%, slightly better than expectations. TBG was flat, lighter than expectations due to ongoing weakness in certain end markets like consumer electronics and auto, as well as late timing of order intake within the quarter. In CBG, we did not see the expected recovery in the U.S. consumer market, resulting in organic sales down 1%. Notably, we saw significant strength in orders this quarter, driven by progress on commercial excellence and NPI. Overall, orders grew slightly more than 10%, with SIBG and TBG growing mid-teens, driven by industrials, safety, data center, semiconductor, and aerospace. The order momentum accelerated through the quarter, resulting in backlog growth of 20% over last year and 35% sequentially, positioning us well for the Q2. Q1 adjusted operating margins were 23.8%, up 30 basis points year-on-year driven by strong volume and broad-based productivity, which more than offset approximately $145 million of tariff impact, stranded costs, and investments. Operating income from the three Business Groups was up $85 million, with 60 basis points of margin expansion driven by supply chain productivity, including improvements in cost of quality and procurement and logistics, and continued focus on structural G&A reduction. Corporate was a 30 basis point headwind from planned wind down of Solventum transition services agreements. Our sustained operational performance of driving growth and productivity led to EPS improvement of $0.26 or 14% to $2.14. In addition, we benefited from lower share count, timing of tax benefit and FX, offsetting tariffs, stranded costs, and investments. Adjusted free cash flow was $540 million in the quarter, or up 10% from strong earnings growth and improvement in inventory, a decrease of three days while maintaining service levels of greater than 90%. In addition, we returned $2.4 billion to shareholders in the Q1, including approximately $400 million in dividends, reflecting a 7% increase per share and $2 billion through opportunistic share repurchases. Turning to slide 7, I will provide an overview of our Business Groups performance for the Q1. First, Safety and Industrial add another quarter of 3%+ growth as we continue to gain traction on commercial excellence initiatives and realize benefits from new product launches. We delivered mid-single-digit growth across industrial adhesives and tapes, safety, electrical markets, and abrasive systems driven by continued share gains from new product introductions and targeted commercial initiatives to reduce customer churn, strengthen sales coverage, and increase cross-selling. Collectively, this growth more than offset continued weakness in roofing granules as the housing market and consumer sentiment remained soft. Even though auto repair claims were down mid-single digits, it was encouraging to see our auto aftermarket business be flat to slightly up after a couple of years of decline from good execution of the key account strategy. Turning to Transportation and Electronics. While growth was flat, orders were up low teens accelerating through the quarter, resulting in backlog up about 30%. Approximately half the business delivered mid-single digits growth, including double-digit growth in semiconductor and data center, driven by continued market demand and ramp-up of EBO that Bill referenced earlier. In addition, we saw growth in aerospace and commercial branding from better sales effectiveness. This was offset by the other half of the business, which is exposed to consumer electronics and auto, where the market was down. Finally, Consumer Q1 organic sales were down 1%, driven by weakness in USAC, as we did not see the expected pickup in retail traffic in the early part of the quarter. We did see pockets of strength. Scotch-Brite grew approximately 10% on the back of new product launches. We also saw good traction in international markets, especially in China and Asia, but it was not enough to offset the impact of USAC, which makes up majority of the CBG revenue. By geography, in China, we again grew mid-single digits despite soft auto and consumer electronics end market, as we executed on our key account strategy and launched local NPIs in a relatively strong industrial market. USAC was up slightly with mid-single-digit growth in industrials being offset by softness in electronics and consumer. Asia had another quarter of good growth with India in the high teens as we drove higher sales coverage across the country. EMEA was down about 1% due to market weakness in auto. Moving to slide 8. Though the macro remains uncertain, given our good performance in the Q1, we are reiterating our guidance for the year. Organic sales growth of approximately 3%, earnings per share ranging from $8.50-$8.70, and free cash flow conversion of greater than 100%. For sales, the strong backlog, combined with continued strength in orders in the first three weeks of April, gives us confidence that all three Business Groups will accelerate growth in the Q2 and through the balance of the year. On margins, we had a solid start with the three Business Groups growing 60 basis points despite 100 basis points year-on-year tariff impact. As we lap tariff pressure in the H2, the continued momentum on productivity and volume acceleration gives us confidence in our expectation of approximately 100 basis points margin expansion for Business Groups this year. On non-operational, we expect positive trends driven by a $2 billion share repurchase in the Q1 and lower net interest expense. Overall, we are maintaining our EPS guidance, which includes a contingency, and we will go through the components of the earnings bridge on the next slide. Given the strong earnings growth and good progress on working capital, particularly inventory and continued CapEx efficiency, we believe our free cash flow will be more than $4.5 billion for the year and greater than 100% conversion. Slide 9 shows the trend of key earnings elements and the current guidance. We are trending $0.05-$0.15 higher on earnings from momentum on productivity and lower share count and interest expense. We are facing higher input costs due to the recent increase in oil price, but have implemented targeted price increases to mitigate the impact at the current levels. Given that we are early in the year and we are operating in a volatile macro environment, we think it is prudent to keep a contingency till we have more clarity about the rest of the year. Overall, we are moving with determined pace and will continue to calibrate as the year progresses. Regarding cadence, we expect sales growth to accelerate in Q2 and the H2 of the year. Backlog conversion and continued order strength is expected to support growth momentum in both SIBG and TBG in the Q2. We anticipate consumer to improve as point of sale is on an upward trend, resulting in normalized inventory levels. On EPS, given the contingencies for the H2, we expect the H1 EPS to be higher than theH2. Our 2026 financial outlook puts us on pace to exceed our medium-term financial commitments that we laid out during Investor Day around growth, margin, and cash. On capital allocation, we have already returned over $7 billion of the $10 billion shareholder returns that we had committed to. Before we open the call for questions, I want to take a minute to thank the team for a strong start to the year and being proactive in this environment to mitigate risks and control the controllable, and for the commitment to strengthen the foundation and drive profitable growth. With that, let's open the call for questions. Ladies and gentlemen, if you would like to register a question, please press star one on your telephone keypad. If your question has been answered and you would like to withdraw, please press star two. If you are using a speakerphone, please lift up your handset before entering your request. Please limit your participation to one question and one follow-up. Our first question comes from the line of Jeff Sprague with Vertical Research. Please proceed with your question. Thank you. Good morning, everyone. Hey, Bill or Anurag. Just trying to dig into the order commentary a little bit more. Maybe you could give us a little more perspective on the pre-buy, the size of it, if you could, and I guess the pre-buy would imply getting ahead of price increases and the like. Maybe a little bit of color on how much additional price is now embedded in your organic growth forecast. Just also on these backlog numbers, obviously the deltas sound great, but it's not really a backlog business. Kind of the question, is it law of small numbers on those deltas, or is there actually significant visibility that you can anchor to as you look into Q2? Hey, Jeff. Good morning. Thank you for the question. I'll start and maybe pass on to Anurag on the backlog point. As we said, we had very good orders in the Q1, up double digits, which was very good. You're right, we're not really a backlog-driven business, but backlog was very strong coming out of Q1 and continues to build into Q2. Over the course of the quarter, we saw good order growth in January and February, kind of up mid-single digits, but it accelerated quite a bit in the month of March It'd be well over the double digit number that we ascribed for the whole quarter, and it continues into April, which I think is very encouraging. Now, how much is price? The reality is we do a price increase every year on April 1st, so it's hard to discern how much was a pre-buy. We think there's some of it. We've signaled to customers that we're going ahead with a price increase on top of what we went out with April 1st, associated with the price of oil coming up. That could cause a little bit of a pre-buy, if you will. Again, it's hard to discern exactly how much would that be. You asked about price for the year. For the year, we had guided before at about 80 basis points. We came in a little bit below that in Q1. We still see, outside of oil-based increases, around 80 basis points. When you add in oil and the expected price increase from oil, it could be around an extra 50 basis points, is what we're thinking at the moment. Price for the year, around 1.3 points. I know that Anurag may share a little bit about the backlog. Yeah. Thanks, Bill. You are right that we are largely a book and ship business. We have about 75% of our revenue in a quarter comes from book and ship. We do get backlog coverage as we enter the quarter. The numbers that we mentioned, which was about 35% up sequentially to 20% year-over-year, provides us about 400 basis points-500 basis points of additional coverage as we enter into the quarter, which is not insignificant given the growth acceleration that we expect from Q1 and Q2. I think it's really good to kind of see that we are starting with a very good backlog coverage for the quarter, combined with the order momentum that Bill spoke about in the first three weeks of April. It gives us real confidence for acceleration of growth through Q2. Typically, we do not talk about orders and sales because of the book and ship, because they converge together. This time you could see the big spike, and as Bill mentioned, part of it could be the pre-buy, but a lot of it is the commercial excellence, NPI, and other initiatives that we are driving, which resulted in order acceleration. Great. Maybe just a quick follow-up then. Just a comment about then accelerating in the remainder of the year. By that, do you mean each quarter will be a faster growth quarter than the one that preceded it, even though the comps are getting tougher in the H2 of the year? Yeah, we see Q2 being better than Q1, and we see the H2 being better than the H1, is the way we're currently looking at it, Jeff. Great. Thank you very much. You bet. Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question. Good morning, everybody. Good morning, Scott. Just to follow up on Jeff's question, are customer inventories low and there's a little bit of a restock occurring, or are they balanced? How do you guys kind of see that element right now? We track it pretty carefully. On the Safety Industrial Business Group, the distribution inventory is relatively normal. I'd say maybe a tick below what we typically would see. We would typically see 65 days-70 days, and it's a bit below that. On the consumer side, it's about normalized from where we were last year, around 13 weeks of supply. Coming into the year was a bit higher, maybe 13.5, but right now we're around 13. On the consumer side, fairly normal. On the Safety Industrial side, I'd say normal to maybe a bit light in the channel. Okay. Helpful. Hey, I think you mentioned your factory footprint is down like 10%. Is there another 10%? How do you guys kind of think of where the endpoint on that journey is? We're going to keep talking about this with investors as we go forward. At the end of last year, we had 108. We sold and closed on PG and half the Precision Grinding business, which was 7 factories scattered across Europe, 1 in Asia, a couple in the U.S. It was not a large business, but a big factory footprint. That brought it down by 7. We closed 1 in the Q1. We announced a couple of others. That'll close over the course of this year into next year. That puts us below 100. The number will be below where we happen to be today. We'll continue to look at that and size it for investors as we go. Clearly the footprint at just under 100 is bigger than we really need today. Makes sense. Okay. Best of luck, guys. Thank you. You bet. Appreciate it. You bet. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question. Hi. Good morning. Just wanted to start maybe if you could give any color around the Q2 dynamics in a bit more detail. Understand the organic sales growth accelerates year-on-year from the 1% in Q1. Also, I think, Anurag, you'd said H1 EPS more than H2 because of the contingency. Just want to gauge sort of how much sequentially or year-on-year EPS could grow in Q2, and what the sort of margin embedded in that guide would be. Sure, Julian. Let me answer those questions. First, just on the revenue growth. As we mentioned, because of the good backlog and the order momentum, we expect organic growth in the Q2 to be higher than 3%, with all the three BGs accelerating. SIBG, which was at 3.2%, obviously going higher than that. TBG, low single digit, and CBG flat to positive. That's the expectation on the revenue growth acceleration. Obviously, that's going to come with high flow-throughs. We're going to continue with the productivity that we did in the Q1. We'll continue to the Q2. Between volume and productivity, we'll offset all the last quarter of the tariff year-over-year impact for us, a pickup in stranded costs and investments. You will see operationally for us, it's going to be a solid margin, about 24.5% and a good EPS flow-through coming from that. On below the line, we will see a couple of pennies of headwind relative to last year. Last year, in the Q2, we had a divestment of an investment that we had in India, which was about $0.08-$0.10. You see a little bit of tax, which was favorable in Q1, coming back in Q2. Those are two headwinds. Of course, they'll be offset by the share buyback, which we did in the Q1, which is going to help us in the Q2, plus a little bit on the non-op pension side. You put all of that together, we should grow more than $0.05 in the Q2, which for the H1 would put us at about $0.30+ of EPS growth, which is more than half if you include the contingency for the full year. Now, the contingency, as I mentioned, we kept it for the H2 of the year, depending on how things evolve. If we continue performing the way we do, revenue grows over 3% in the Q2, which is a good exit rate as we enter into the H2. If it continues at that a little bit better, with good volume flow through, no tariff headwind, the margins in the H2 could be much higher than the H1. Yeah. I appreciate all the color. Just one very quick follow-up. That was very thorough. Maybe on the pre-buy dynamics, credit for calling that out, but trying to understand what you're assuming for how much that sort of reverses, because you've got organic sales growth accelerating in Q2 with maybe some sort of, I don't know if a pre-buy is helping that or the unwind hurts that. Maybe flesh out that pre-buy sort of dynamic over the balance of the year. Julian, it's hard to discern exactly how much is pre-buy. We had orders coming in. It's quite strong. We are seeing much better traction on new product introductions. A lot of momentum building on commercial excellence. Keep in mind, part of what was driving Q1 growth, including into early April, are some longer lead products that will go into semis, more importantly in data centers, delivering in Q2 in the back end of the year. You have all these factors in there. I think when I step back and look at the full year, as we said, we'll see acceleration into Q2 and then in the H2 and all these pieces to come together. Any pre-buy that's happened will wash out in Q2. We do see acceleration in the H2 on the back of really core operating fundamentals around NPI and commercial excellence. Great. Thank you. You bet. Our next question comes from the line of Joe O'Dea with Wells Fargo. Please proceed with your question. Hi. Good morning. On the $0.05-$0.15 of contingency tied to oil macro uncertainty, can you just outline kind of roughly how you think about the split on the demand side versus the cost side of that in your planning assumptions? Really looking for any color on the oil exposure sort of across the business and where you're thinking about that contingency could flow through if you need to use it. Okay. Let me start with the contingency and then Bill, you can add from there on. On the $0.05-$0.15 of contingency that we kept is actually across the two buckets that you mentioned around here. As I mentioned, Q2 will be above 3%, which is a good exit rate as we go into the H2. If there is a little bit of an impact on the volume piece because of macro, which we are not currently seeing right now, or a little bit of the input cost that goes up. I guess it gets spread between the two, Joe. To be honest, our objective right now is to continue driving what we control on the NPI commercial excellence, continue to outperform the macro and drive more productivity so that we don't have to use the contingency in the H2. Joe, on the oil price, the way we look at it is really two pieces. One is on the supply side, the other is demand. On supply side, we have about 45% of our cost of goods is raw materials, and about a 1/3 of that, so it's about $6 billion of raw material spend, and about a 1/3 of that is its basis in petrochem. It's ethylenes, propylenes, esters, acrylates, all those various things, and we are seeing some upward cost pressure on that. What we've seen so far and expect is about $125 million of cost increase there, which we're offsetting into pricing. That's why I mentioned earlier on that we expect about a 50 basis point uplift on price coming from that oil-based exposure. How that affects the overall macroeconomy, what's going to happen with consumer spending, auto, that's still all unfolding as we speak, and depending upon what happens in the Middle East, but that's our current assumption as we speak today. Got it. Just on the Transportation & Electronics Commercial Excellence Program, can you talk about where you are on that trajectory? I think you started to see traction in SIBG last year, and that continues. Just the efforts that are underway, and as we think about the growth acceleration, just any quantification of how you're thinking about commercial excellence contributing to better T&E growth as you move through the year. Yeah. It's a good question. They're doing a great job on this. They're following right behind what we've done in SIBG, which has been very successful. I'm very pleased with the traction on the sales force, on pricing discipline, on cross-selling, on churn reduction, and looking very hard at attrition with the predictive AI models that we have in place. The team at TEBG is doing the same sorts of things. I think the cross-sell opportunity is not going to be as robust. They move very aggressively on improving on the sales force and better incentives, better targeting, more close one targets. They're tracking attrition rates, which I think is very good. They have the same predictive models tailored for TEBG into that business. They're making good progress. It's going to roll out over the balance of the year. One of the key things they're focused on is making sure we have the right mix and focus of our sales reps versus application engineers. Do we have the right mix between the two, and are they calling at the right level in the customer, for example, in automotive, at the OE versus the tier? It's a little bit different than what we see in SIBG, but they're working it pretty hard, and I think you're going to see in the back end of the year, certainly improvements in TEBG coming from a lot of that commercial excellence work. Thank you. Our next question comes from the line of Andrew Obin with Bank of America. Please proceed with your question. Good morning, Andrew. Good morning. Good morning. On the transportation electronics, just to dig in a little bit further, also double-digit orders. It seems like a lot of questions into the quarter about weakness in consumer electronics. Does that mean that we are offsetting consumer electronics into the H2? Yes, Andrew, that's exactly what's happened and will happen, in fact. Again, when you discern with TEBG, just in Q1, they were flattish, but half the business was up mid-single digits and half the business was down mid-single digits. You can really isolate that in the two areas, which is auto, OE and commercial vehicles, and consumer electronics. We show in our slides that electronics as a whole is flattish. What you see there is very strong semiconductor data center business offsetting a weaker consumer electronics business. As we look at the balance of the year, we see electronics starting to get modestly positive. Again, I think CE or consumer electronics may soften a little bit, but we are seeing better trajectory and growth in the data center and the semiconductor business. Bill, just to follow up on that. At CES, you showcased some pivot in strategy on consumer electronics. You've also talked with your first analyst day about the need to rebuild the R&D pipeline, particularly on the electronic side. Can you just talk about how these two internal initiatives impacting your growth and the growth trajectory over the next 12 months, let's say? Thank you. Yeah, that's a great question. We're putting a lot of time and effort into making sure we have good new product introductions in consumer electronics, both for the premium segment as well as for the mainstream segment. Wendy's been talking about this quite a bit. We are seeing good traction here. Unfortunately, the market isn't cooperating with us. We do see a greater downturn in LCD, which is where our strength happens to be. We do see a lot of innovation in this space. We are gaining some share modestly in the mainstream side. We look at content per device. Three of four China OEMs have increased their content per device in the Q1, and the Q4 we saw a pretty good order for. I think we're making some progress here, and this comes on the back of a lot of the NPI work that's happened in TEBG, and there's more to come. Very much. Our next question comes from Andrew Kaplowitz with Citigroup. Please proceed with your question. Good morning, everyone. Hey, good morning, Andy. Can you give us more color into what you're seeing in consumer? I know you talked about share gain actions in consumer, so maybe you can elaborate on what you're doing there, and how much discounting do you have to do to get there? Should consumer contribute to your margin performance this year, or could consumer margin continue to be pressured a bit over the year? Look, I'm pleased with what's happening at Consumer. The market for us, we're 70% U.S., so it's really focused on the U.S. consumer. We sell a discretionary product. As Anurag mentioned, we had a couple of pockets of strength in the year from new product introductions. I think the team has really gotten back to basics, focusing on priority brands and started to innovate again. The reality is we went for a lot of years without a lot of new product introductions. A lot are class three, so they're incremental. Some are class four, but really starting to kind of be more aggressive on new product introductions. I think we're holding our own and, in fact, starting to gain back shelf space because we have new product coming into the marketplace. Yeah, it's not a segment that we see upward movement on pricing. We're trying to contain the discounting that happens to be here. Again, the market's a little bit soft. For the year, we expect to see some growth. It'll be positive. It won't be a meaningful driver of the overall 3M growth in the year. But again, we're down 1.3 in Q1, down a little bit more than that in Q4. We were up sort of modestly for the first nine months of last year at 0.3 points. So they're hanging right around flat to up a little bit. When the consumer starts to spend more, we'll have the right products with good innovation, great commercial excellence efforts there, and we'll see that business return to growth. Helpful. Bill, maybe just a little more thoughts about portfolio management. You obviously opted for a JV structure with the purchase of Madison, despite seemingly leaning into safety as one of your priorities. Maybe a little more color on why you chose the JV structure there, and then stepping back, can you give us an update on how you're thinking about overall 3M portfolio? I think you've said in the past 2%-3% of your portfolio is actionable in terms of divestitures, 10% is commodity-like. Are those still the right numbers for the company? Yeah. Look, I'm really pleased with the structure and the conclusion of this Madison Scott SCBA joint venture, where 51% owner is going to be consolidated. It's a strategic bolt-on acquisition in what you just referred to as a priority vertical. It is. It does strengthen our SCBA business. It's a great brand. We have been innovating in this space. We talked last year about some new innovations coming onto the marketplace. This also creates some scale by putting this business together for future organic and inorganic opportunities. Madison, and all of its fire and rescue products, have been performing very well. They bring a terrific management team. They're growing double digits. The margins are coming up. I think it's a great combination in a space that we like quite a bit. Bain Capital is our partner on this. They're 49%. We know them well. They are very good at post-merger integration. They bring a lot of operating rigor, and good expertise on driving incremental M&A while we focus on other areas around the company. When you put all that together, I think it's a strategic opportunity for us. It gives some optionality for do we pull it back or do we suit something else over time. The reality is, it's a terrific deal that is going to be accretive to our growth margins, earnings over time. I feel pretty good about that particular deal. We closed on PG&F, the precision grinding business, on April 1st. It wasn't very big, but businesses that don't perform sometimes can be difficult to transact on. I'm very pleased that that one got over the line. We continue to look at the rest of the portfolio. Yes, around 10% of our business is more commodity-like, where we don't have a clear right to win, not a lot of technology differentiation. We said 2%-3% was in flight. PG&F was part of that. We continue to evaluate this, and we'll talk to investors as we go on what that shaping happens to be. The reality, investors should see that the transaction on Madison with Scott is an important strategic signal for investors around the things that we want to do to reshape our portfolio to be structurally higher growth and higher margin potential. Appreciate all the color. Sure. Our next question comes from the line of Chigusa Katoku with J.P. Morgan. Please proceed with your question. Hi. Good morning. Thanks for taking my question. First, can you maybe recalibrate us on the outlook for U.S. IP and electronics you're embedding in your assumptions for the full year? I think it was U.S. IP flat, electronics up mid-single digit last quarter. Sorry, Chigusa, you're talking about IPI, the macro? Yep. The U.S. IPI. Okay. Well, thanks for the question, and I guess congratulations in the role. Welcome to the call. Just in terms of the macro, as we came into Q1, we saw some of the similar trends we saw in 2025 continue. Maybe a couple of comments relative to where we were in January. The global IPI is still around 2%. It's not moved around very much. U.S. is up a little bit better. EMEA is down a little bit. China's still mid-single digits. Interestingly, those trends are exactly what we saw in our business through Q1. U.S. up a little bit, Europe down a little bit, China mid-single digits. It's pretty much aligned with that. GDP is still sort of in that same 2.5% range. Auto builds are still floating around between flat to down 1%. It's really early in the year. I think that tends to be more of a backward-looking indicator, but right now it's sort of flat to down a little bit. U.S. retail is flattish. The place that we're watching a little bit is consumer electronics, where the outlook is for a little bit more softness as we get into the back end of the year. Overall, the macro is trending about where we saw it in January and through last year. Okay, great. Thanks. Then on this contingency, I was just wondering what it would take for you to remove this. I think it's prudent that you're including in guidance, but you've been seeing good order trends. You're operationally raising guidance by about $0.025. Without this contingency, it would have been a $0.10 raise. Kind of what would it take for this to be removed? Yeah. Thank you for the question, Chigusa. Listen, we'll probably give you an update in our next earnings call on that. As we go through the next couple of months, we're pretty confident with the backlog and auto momentum on the Q2 revenue. We'll see how that plays out, as well as we have executed. We have a very good playbook which we adopted from the tariffs last year in terms of working with the customers and pushing out the price increases over there. That's an area we will kind of monitor on the yield over there over the next couple of months. Plus, see where oil's at which levels it's at after a few months. If we continue performing the way we did in Q1, both on the productivity as well as on operational excellence, then come July, we will give you an update on where we stand for the full year. Okay, great. Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question. Oh, thanks. Good morning. Thanks for the question. We've covered most of the major topics, so I just wanted to, a couple of quick follow-ons. Just going back to the pre-buy comments. Just trying to understand why you think there may have been a pre-buy. Is it because you're trying to rationalize the strong orders, or is it something else that you're hearing from customers? Just maybe cover that. Then on the 50 basis points of the initial price, is that in the form of a surcharge? It certainly seems like a surcharge, so that rolls back if oil comes down. Would that hit in Q2 or is that more in the H2 of the year? Thanks. Really, Nigel, thanks for the questions. Look, it's hard to avoid the fact that we're pushing pricing a little bit more aggressively. We know there's an inflationary environment. We know the price of oil is going to go up. We know the impact on our company. We know perhaps what we did four or five years ago, maybe not moved as quickly on pricing when oil came up, which we're correcting for that. I think we're being a lot more attuned to what's going on in the macro, and we're enforcing it better. If a shipment goes out beyond a date, that shipment will have a price increase associated with it. I think customers have seen that and heard that. Maybe when you put all that together, it gives a sense that perhaps there's some advanced buying from these price increases that are going out. Again, we'll know more in the next month, six weeks, how much of that might be pre-buy, simply because we'll watch the orders through the balance of the quarter into May. That's kind of basically how we're thinking about the pre-buy here at the moment. On pricing, yeah, we do see right now about $125 million worth of cost impact, which would have been relayed into pricing, and that would translate to about 50 basis points. That's factored into the guidance of about 3% organic for the year. That's kind of what we're thinking at the moment on pricing. Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question. Thank you. I wanted to also follow up on pricing and I guess a little bit on price cost. When do these surcharges take effect? I would imagine some point in Q2, but any color on when they take effect would be helpful. It just seems like with the $120 million of cost inflation that you referenced, Bill, and the 50 basis points of price, the plan here is to, I guess, be neutral on price cost. I ask because if I remember a year ago, you guys were actually EPS negative on the tariff inflation. Just want to make sure I have that neutral view right. Thank you. Chris, I think we've learned a little bit. Yeah, we're moving a lot faster than we did last year on tariffs. Tariffs came on and I think maybe we're a little tentative up front, but I think we ended up offsetting a good part of the tariffs with cost and price. We're trying to be careful on that. Yeah, exactly. We will offset cost increases associated with oil through price increases and that's the assumption that we're making here. I mean, you're right. Historically, we have covered material cost inflation with pricing. Historically, with a 2% material inflation, that would translate into roughly 50 basis points of price. For the year, we are guiding to about 80 basis points. Again, a little bit lighter in Q1, but inflation in Q1 came in a little bit lighter as well. For the year, 80 basis points. With oil coming in, that's driving an incremental 50 basis points of price. Total about 1.3 points roughly for the year on pricing. That's our current expectation. It's not a surcharge. The price is going out embedded into the pricing of our products, and it's dependent on the product and the geography, but generally speaking, it was less of a surcharge, more being built into the underlying price. Yeah. In terms of the rollout in the timeline, we've already started in April in a couple of countries in Asia, and then in the United States, it starts in May 1st and Europe as well. It is imminent right now with all the letters going out to the customers knowing when the surcharge is going to impact them, or price increase is going to impact them. Yeah. Thank you. I appreciate that. Maybe if I could follow up, just any color you could provide on how firm or how much flexibility is there on these delivery dates for these orders or what's in the backlog? I guess ask, because I remember a year ago, there was elongation on those orders, I think tied to some of the pre-ordering ahead of tariffs, and it seems like there could be some of that again now. Just kind of wondering, trying to gauge that as a potential risk into Q2. Thank you. Yeah. Chris, the delivery is limited to the lead times that we have. It's not like an order can be placed for 6 months or 12 months of delivery. It's definitely within the time frame that is we always prescribe. Yeah. Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question. Good morning. This is Neil. I'm for Amit. I know we just got Q1 results, but if I could ask about the growth algorithms into 2027 because the outlook suggests some meaningful improvement in trends exiting this year. If I just look at new product introductions, for example, I mean, these are accelerating and if we add maybe 2 points of macro growth to new product introduction, would that math imply that 3M is growing around 4.5% organically next year? Yeah. Hey, thanks for the question, Amit. I'll start and Bill can add from there. It's Neil. Yeah. Neil. I'm sorry. Neil for Amit. Yeah.We said this year that we will grow about $333 million above macro. As we get into the H2 of the year, from the exit rates, you're right, we will be north of 3.5%, which would imply that we would be above where we are in the H1 and above where the full year would be. We do feel very good as we enter into next year, with what we are doing on the NPI as well as what we are doing on commercial excellence and how that is translating. First is obviously we got to grow in the Q2 about 3%. If we do grow above the 3.5% in the H2 of the year, I think it'll give us good momentum to kind of accelerate the growth into 2027. It's a little bit too early to kind of talk about that, and we'll provide more color as we go through the course of the year. Great. Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question. Thank you. Good morning, everyone. Good morning, Deane. I was hoping we can address the point of sale momentum. That's a surprising number, up seven out of the last eight weeks, given the pockets of macro pressure. Just your impression here, is this consumer-driven? Is it more on the commercial side at all? Just some context and the momentum into April. Deane, it is consumer-driven because in the Consumer Business Group, I think it's very encouraging for us to see POS up. That's a sell-out, 7 weeks of 8 weeks, which I think is really good. It does kind of make us feel a little bit better going into Q2 and that consumer business stabilizing, perhaps growing a little bit in Q2 and the balance of the year. Those are good trends. I think it reflects the team's very aggressive efforts on driving promotions, getting shelf space, driving NPI, being really aggressive at hustling at the customer interface, good on-time performance, still in at 95%-94.5% range. Just really good work. Anurag talked a little bit about a couple of pockets that are growing a bit better, but it's pretty broad-based. We see really good trajectory here through the Q1 now going into Q2 on the clubs, which is not surprising, given where consumers happen to be today. We feel good about the trends and good about the outlook for Q2 so far. Good to hear. I'd love to hear a bit more about the Expanded Beam Optics opportunity. There's a lot of focus on this. It's addressing the data transfer bottlenecks in AI processing. Just where do you stand competitively? How quickly can you ramp on this? Is there any question of manufacturing capacity? Because the take rate on this is one of the fastest-growing right now in data centers. Well, Deane, exactly. That's why we're so optimistic about it and why we're talking more about it, and the fact that we've had some really good, robust IP protection around the technology. It is Expanded Beam, so it's not a point-to-point fiber connection at the data center. It's sort of like an easy click between two pieces of multi-fiber devices, ferrules, that come together, and we can put that together at 80% less time with a less trained technician. Better reliability, can operate in a dusty environment, which is why it's gotten some good take rate. We've had at least a validation by at least one hyperscaler. A second one is in testing. I expect that will be positive as well. We had a fairly large order come in in Q1 relating to the hyperscaler that has certified it. We are in a ramp-up mode. We will double capacity towards the back end of the year. We're investing quite significantly to expand capacity. We're relying on other partners in the space. Hyperscalers won't go with a single source of supply, so we've got to make sure we have some dual source, either couple of factories or us with a contract manufacturer. All of this is working. We're working the ecosystem. The pace at which this has happened is very encouraging, and the team is pushing hard. I'm really optimistic about where it's going to go from here. This is a polymer EBO. As it moves to ceramics, which is more EBO or fiber to the chip, I think it opens up a lot more opportunities with a lot of other players in the space. Look, it's encouraging, which is why we wanted to share it today with investors. Great. Thank you. Sure. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please proceed with your question. Yeah, thanks. Good morning, guys, and thanks for fitting me in here. I'm just going to ask one since we're near the top of the hour and we've gotten through a lot of the questions on my list. Just on some of the margin puts and takes. Have you guys made any changes to your full-year productivity assumption or stranded costs or growth investments? I guess, was any of that kind of front-loaded into the Q1? How are we thinking about phasing throughout the year of those three items? Thank you. Right. Thanks for the question, Nicole. We said that we have a contingency of $0.05-$0.15. Let's say at the midpoint it's $0.10. About half of that is because of productivity, and most of that was in the Q1. I would say the only two changes that we made from our previous guidance of $0.05 of that was very good productivity, both on the supply chain side as well as the G&A, and a lot of it we saw in the Q1. Obviously, we can try to continue with the momentum that we have. The second $0.05 at the midpoint, I would say, is because of our active capital deployment, where we bought back $2 billion of shares in the Q1 out of $2.5 billion, which obviously gives us accretion through the course of the year and active cash management with the cash balance that we have. Those are the big changes. We're not changing our productivity guidance, stranded cost guidance at $150, tariffs. That all stays the same as it was back in January. Yep. Got it. Thanks, guys. I'll pass it on. Thank you, Nicole. Our final question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question. Good morning, Anurag Thanks, Anurag. Just very quickly, can you just address what your customers are saying about potential supply chain bottlenecks? I guess particularly in the kind of sulfur, helium, methanol derivatives chains. Are those factored into your contingency that you kind of see ways to work around those shortages if they develop in the H2 of the year? Laurence, it's a good question. That's probably affecting some of the pre-buy activity, perhaps. Look, I think we're all working through this. We're in direct contact with all of our suppliers, trying to manage all of our sources of supply, making sure we've got a variety of players that we can go to. It's on our minds, so I know it's on theirs, and it's going to affect behavior as we go through the next several months, and we watch what's happening in the Middle East and through the Strait of Hormuz. We'll keep you updated on that, but it's certainly a factor that's on everyone's mind today for sure. Thank you. This concludes the question and answer portion of our conference call. I will now turn the call back over to Bill Brown for some closing comments. I know we're a couple of minutes late, but thank you all for joining today. I want to thank again all of the 3Mers for their efforts, for their dedication in executing against our priorities, strengthening the foundation. As Anurag said, controlling the controllables, delivering value to our customers and shareholders. Thank you. Thank you all for joining today. Have a good day. Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation and ask that you please disconnect your line.

Speaker 15: Ladies and gentlemen, thank you for standing by. Welcome to the 3M Q1 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you do have a question, please press star one on your telephone keypad. As a reminder, this call is being recorded Tuesday, April 21st, 2026. I would now like to turn the call over to Chinmay Trivedi, Senior Vice President of Investor Relations and Financial Planning and Analysis at 3M. Ladies and gentlemen, thank you for standing by. ladies and gentlemen thank you for standing by Welcome to the 3M Q1 earnings conference call. welcome to the 3m q1 earnings conference call During the presentation, all participants will be in a listen-only mode. during the presentation all participants will be in a listen-only mode Afterwards, we will conduct a question-and-answer session. afterwards we will conduct a question-and-answer session At that time, if you do have a question, please press star one on your telephone keypad. at that time if you do have a question please press star one on your telephone keypad As a reminder, this call is being recorded Tuesday, April 21st, 2026. as a reminder this call is being recorded tuesday april 21st 2026 I would now like to turn the call over to Chinmay Trivedi, Senior Vice President of Investor Relations and Financial Planning and Analysis at 3M. i would now like to turn the call over to chinmay trivedi senior vice president of investor relations and financial planning and analysis at 3m

Speaker 6: Thank you. Good morning, everyone, and welcome to our first-quarter earnings conference call. With me today are Bill Brown, 3M's Chairman and Chief Executive Officer, and Anurag Maheshwari, our Chief Financial Officer. Bill and Anurag will make some formal comments, then we will take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3m.com. Please turn to slide 2 and take a moment to read the forward-looking statements. During today's conference call, we'll be making certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Thank you. thank you Good morning, everyone, and welcome to our first-quarter earnings conference call. good morning everyone and welcome to our first-quarter earnings conference call With me today are Bill Brown, 3M's Chairman and Chief Executive Officer, and Anurag Maheshwari, our Chief Financial Officer. with me today are bill brown 3m's chairman and chief executive officer and anurag maheshwari our chief financial officer Bill and Anurag will make some formal comments, then we will take your questions. bill and anurag will make some formal comments then we will take your questions Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3m.com. please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our investor relations website at 3m.com Please turn to slide 2 and take a moment to read the forward-looking statements. please turn to slide 2 and take a moment to read the forward-looking statements During today's conference call, we'll be making certain predictive statements that reflect our current views about 3M's future performance and financial results. during today's conference call we'll be making certain predictive statements that reflect our current views about 3m's future performance and financial results These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. these statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties Item 1A of our most recent Form 10-K lists some of these most important risk factors that could cause actual results to differ from our predictions. Please note, throughout today's presentation, we'll be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the attachments to today's press release. With that, please turn to slide 3 and I will hand the call off to Bill. Bill? Item 1A of our most recent Form 10-K lists some of these most important risk factors that could cause actual results to differ from our predictions. item 1a of our most recent form 10-k lists some of these most important risk factors that could cause actual results to differ from our predictions Please note, throughout today's presentation, we'll be making references to certain non-GAAP financial measures. please note throughout today's presentation we'll be making references to certain non-gaap financial measures Reconciliations of the non-GAAP measures can be found in the attachments to today's press release. reconciliations of the non-gaap measures can be found in the attachments to today's press release With that, please turn to slide 3 and I will hand the call off to Bill. with that please turn to slide 3 and i will hand the call off to bill Bill? bill

Speaker 4: Thank you, Chinmay, and good morning, everyone. We delivered solid operating performance in Q1 with earnings per share of $2.14, up mid-teens versus last year. Operating margin increased 30 basis points to 23.8%, and free cash flow was over $500 million, up double digits. During the quarter, we returned $2.4 billion to shareholders, including $400 million in dividends and $2 billion of share repurchases. We had a light start to the year on the top line with organic growth of 1.2%, driven by pockets of macro pressure. We saw encouraging order trends that support our outlook for acceleration in the balance of the year. Looking forward, we remain confident in achieving our full year 2026 guidance despite the volatile environment. Our performance reflects strong execution on productivity, cost discipline, and commercial rigor. Thank you, Chinmay, and good morning, everyone. thank you chinmay and good morning everyone We delivered solid operating performance in Q1 with earnings per share of $2.14, up mid-teens versus last year. we delivered solid operating performance in q1 with earnings per share of $2.14 up mid-teens versus last year Operating margin increased 30 basis points to 23.8%, and free cash flow was over $500 million, up double digits. operating margin increased 30 basis points to 23.8% and free cash flow was over $500 million up double digits During the quarter, we returned $2.4 billion to shareholders, including $400 million in dividends and $2 billion of share repurchases. during the quarter we returned $2.4 billion to shareholders including $400 million in dividends and $2 billion of share repurchases We had a light start to the year on the top line with organic growth of 1.2%, driven by pockets of macro pressure. we had a light start to the year on the top line with organic growth of 1.2% driven by pockets of macro pressure We saw encouraging order trends that support our outlook for acceleration in the balance of the year. we saw encouraging order trends that support our outlook for acceleration in the balance of the year Looking forward, we remain confident in achieving our full year 2026 guidance despite the volatile environment. looking forward we remain confident in achieving our full year 2026 guidance despite the volatile environment Our performance reflects strong execution on productivity, cost discipline, and commercial rigor. our performance reflects strong execution on productivity cost discipline and commercial rigor We're building a stronger foundation based on commercial, innovation, and operational excellence, underpinned by a relentless focus on strengthening our performance culture. In commercial excellence, we're seeing benefits from improved sales effectiveness and lower customer attrition, and we continue to make progress on cross-selling opportunities. To date, we've closed on approximately $80 million of new business against the three-year, $100 million target we laid out at Investor Day with a pipeline of $85 million of additional cross-sell opportunities. We've introduced AI tools to drive growth, reduce churn, and automate manual work, including an agent that analyzes our sales and opportunity pipeline data to develop customized coaching plans for sales managers to help reps meet their targets. We believe digital tools like Ask 3M, a new AI-powered digital assistant that helps customers find solutions to design challenges using 3M products, will allow us to reach a broader population of customers. We're building a stronger foundation based on commercial, innovation, and operational excellence, underpinned by a relentless focus on strengthening our performance culture. we're building a stronger foundation based on commercial innovation and operational excellence underpinned by a relentless focus on strengthening our performance culture In commercial excellence, we're seeing benefits from improved sales effectiveness and lower customer attrition, and we continue to make progress on cross-selling opportunities. in commercial excellence we're seeing benefits from improved sales effectiveness and lower customer attrition and we continue to make progress on cross-selling opportunities To date, we've closed on approximately $80 million of new business against the three-year, $100 million target we laid out at Investor Day with a pipeline of $85 million of additional cross-sell opportunities. to date we've closed on approximately $80 million of new business against the three-year $100 million target we laid out at investor day with a pipeline of $85 million of additional cross-sell opportunities We've introduced AI tools to drive growth, reduce churn, and automate manual work, including an agent that analyzes our sales and opportunity pipeline data to develop customized coaching plans for sales managers to help reps meet their targets. we've introduced ai tools to drive growth reduce churn and automate manual work including an agent that analyzes our sales and opportunity pipeline data to develop customized coaching plans for sales managers to help reps meet their targets We believe digital tools like Ask 3M, a new AI-powered digital assistant that helps customers find solutions to design challenges using 3M products, will allow us to reach a broader population of customers. we believe digital tools like ask 3m a new ai-powered digital assistant that helps customers find solutions to design challenges using 3m products will allow us to reach a broader population of customers Our pace of new product introductions is accelerating with better on-time performance, reduced cycle times, and clearer governance and accountability across R&D. We launched 84 new products in Q1, up 35% versus last year, and we're on pace to launch 350 in 2026. This will put us ahead of our Investor Day target to launch 1,000 new products through 2027. We've maintained OTIF service levels above 90%, while at the same time reduced inventory by three days and delivery lead time by 25%, improving our competitiveness with customers. OEE improved over 100 basis points year-on-year as we optimize asset run length, runtime, and changeovers, creating a stronger foundation for sustained productivity and fixed cost leverage. Cost of poor quality decreased by approximately 100 basis points versus Q1 last year, driven by more structured root cause analysis, significantly increased Kaizen activity, and tighter process controls. Our pace of new product introductions is accelerating with better on-time performance, reduced cycle times, and clearer governance and accountability across R&D. our pace of new product introductions is accelerating with better on-time performance reduced cycle times and clearer governance and accountability across r&d We launched 84 new products in Q1, up 35% versus last year, and we're on pace to launch 350 in 2026. we launched 84 new products in q1 up 35% versus last year and we're on pace to launch 350 in 2026 This will put us ahead of our Investor Day target to launch 1,000 new products through 2027. this will put us ahead of our investor day target to launch 1,000 new products through 2027 We've maintained OTIF service levels above 90%, while at the same time reduced inventory by three days and delivery lead time by 25%, improving our competitiveness with customers. we've maintained otif service levels above 90% while at the same time reduced inventory by three days and delivery lead time by 25% improving our competitiveness with customers OEE improved over 100 basis points year-on-year as we optimize asset run length, runtime, and changeovers, creating a stronger foundation for sustained productivity and fixed cost leverage. oee improved over 100 basis points year-on-year as we optimize asset run length runtime and changeovers creating a stronger foundation for sustained productivity and fixed cost leverage Cost of poor quality decreased by approximately 100 basis points versus Q1 last year, driven by more structured root cause analysis, significantly increased Kaizen activity, and tighter process controls. cost of poor quality decreased by approximately 100 basis points versus q1 last year driven by more structured root cause analysis significantly increased kaizen activity and tighter process controls What matters is that these are not isolated wins. They collectively reflect greater execution discipline and constancy of purpose. That consistency and momentum gives us confidence that we can meet or exceed the medium-term goals we outlined at our Investor Day last year, even in an uncertain macro environment. While we continue to strengthen our foundation and shift from a holding company to an operating company model, we're beginning a broad-based transformation of the company, simplifying and standardizing processes, reducing complexity, reshaping our portfolio, and improving resilience and predictability. We see substantial opportunities to streamline operations and consolidate facilities. The transformation includes both deliberate footprint actions as well as targeted investments in manufacturing and process technology. For example, transitioning from solvent to solvent-free coating, which brings cost, capital, and environmental benefits. What matters is that these are not isolated wins. what matters is that these are not isolated wins They collectively reflect greater execution discipline and constancy of purpose. they collectively reflect greater execution discipline and constancy of purpose That consistency and momentum gives us confidence that we can meet or exceed the medium-term goals we outlined at our Investor Day last year, even in an uncertain macro environment. that consistency and momentum gives us confidence that we can meet or exceed the medium-term goals we outlined at our investor day last year even in an uncertain macro environment While we continue to strengthen our foundation and shift from a holding company to an operating company model, we're beginning a broad-based transformation of the company, simplifying and standardizing processes, reducing complexity, reshaping our portfolio, and improving resilience and predictability. while we continue to strengthen our foundation and shift from a holding company to an operating company model we're beginning a broad-based transformation of the company simplifying and standardizing processes reducing complexity reshaping our portfolio and improving resilience and predictability We see substantial opportunities to streamline operations and consolidate facilities. The transformation includes both deliberate footprint actions as well as targeted investments in manufacturing and process technology. we see substantial opportunities to streamline operations and consolidate facilities. the transformation includes both deliberate footprint actions as well as targeted investments in manufacturing and process technology For example, transitioning from solvent to solvent-free coating, which brings cost, capital, and environmental benefits. for example transitioning from solvent to solvent-free coating which brings cost capital and environmental benefits Earlier this month, we closed on the previously announced sale of our Precision Grinding & Finishing business within SIBG, which reduced our footprint by seven factories, and we closed one factory and announced three other full or partial closures, bringing our total projected manufacturing site count to below 100. At the same time, we're investing more than $250 million over the next three years in standard, easy-to-replicate automation across our plants and distribution centers. By automating material handling in our warehouses, replacing manual slitters with automated systems, and automating our current manual visual inspection processes, we are improving safety, reducing labor costs, increasing yield, and putting ourselves in a better position to support demand as volumes recover. To illustrate the opportunity, we have 7,000 material handlers and over 600 operators performing manual visual inspections across our network and about 500 manual slitters. Earlier this month, we closed on the previously announced sale of our Precision Grinding & Finishing business within SIBG, which reduced our footprint by seven factories, and we closed one factory and announced three other full or partial closures, bringing our total projected manufacturing site count to below 100. earlier this month we closed on the previously announced sale of our precision grinding & finishing business within sibg which reduced our footprint by seven factories and we closed one factory and announced three other full or partial closures bringing our total projected manufacturing site count to below 100 At the same time, we're investing more than $250 million over the next three years in standard, easy-to-replicate automation across our plants and distribution centers. at the same time we're investing more than $250 million over the next three years in standard easy-to-replicate automation across our plants and distribution centers By automating material handling in our warehouses, replacing manual slitters with automated systems, and automating our current manual visual inspection processes, we are improving safety, reducing labor costs, increasing yield, and putting ourselves in a better position to support demand as volumes recover. by automating material handling in our warehouses replacing manual slitters with automated systems and automating our current manual visual inspection processes we are improving safety reducing labor costs increasing yield and putting ourselves in a better position to support demand as volumes recover To illustrate the opportunity, we have 7,000 material handlers and over 600 operators performing manual visual inspections across our network and about 500 manual slitters. to illustrate the opportunity we have 7,000 material handlers and over 600 operators performing manual visual inspections across our network and about 500 manual slitters When we automated the slitting operation at our Nevada facility late last year, we achieved a 30% increase in square yards per hour productivity. Over time, this transformation will allow us to accelerate towards a structurally higher growth, higher margin potential portfolio of priority verticals. Slide 4 provides a more detailed view of growth and orders by end market. When you look across our portfolio, roughly 60% of our businesses showed relative strength in Q1, including general industrial and safety. Importantly, we also saw strong orders in these markets, which gives us visibility and reinforces that the demand environment in these verticals remains healthy. At the same time, we experienced macro and industry-driven softness in about 40% of the portfolio that we've been highlighting as watch areas. In electronics, we delivered flat year-over-year growth in Q1 versus mid-single digits last year. When we automated the slitting operation at our Nevada facility late last year, we achieved a 30% increase in square yards per hour productivity. when we automated the slitting operation at our nevada facility late last year we achieved a 30% increase in square yards per hour productivity Over time, this transformation will allow us to accelerate towards a structurally higher growth, higher margin potential portfolio of priority verticals. over time this transformation will allow us to accelerate towards a structurally higher growth higher margin potential portfolio of priority verticals Slide 4 provides a more detailed view of growth and orders by end market. slide 4 provides a more detailed view of growth and orders by end market When you look across our portfolio, roughly 60% of our businesses showed relative strength in Q1, including general industrial and safety. when you look across our portfolio roughly 60% of our businesses showed relative strength in q1 including general industrial and safety Importantly, we also saw strong orders in these markets, which gives us visibility and reinforces that the demand environment in these verticals remains healthy. importantly we also saw strong orders in these markets which gives us visibility and reinforces that the demand environment in these verticals remains healthy At the same time, we experienced macro and industry-driven softness in about 40% of the portfolio that we've been highlighting as watch areas. at the same time we experienced macro and industry-driven softness in about 40% of the portfolio that we've been highlighting as watch areas In electronics, we delivered flat year-over-year growth in Q1 versus mid-single digits last year. in electronics we delivered flat year-over-year growth in q1 versus mid-single digits last year Our performance in semiconductor and data centers was very strong, while consumer electronics was soft due to industry-wide memory chip issues, which is impacting demand. Electronics orders were up double digits due to significant activity in semis and data centers, which will convert to revenue in Q2 and the H2. In automotive, the market was soft as expected in the Q1. Global IHS build rates were down about 3% overall and 10% in China, which pressured volumes. In consumer, we continue to see soft U.S. consumer discretionary spending with a few pockets of strength in categories with recent new product introductions. POS trends in the U.S. improved over the course of the quarter and were positive in 7 weeks of the last 8 weeks, providing some encouragement heading into Q2. Our performance in semiconductor and data centers was very strong, while consumer electronics was soft due to industry-wide memory chip issues, which is impacting demand. our performance in semiconductor and data centers was very strong while consumer electronics was soft due to industry-wide memory chip issues which is impacting demand Electronics orders were up double digits due to significant activity in semis and data centers, which will convert to revenue in Q2 and the H2 . electronics orders were up double digits due to significant activity in semis and data centers which will convert to revenue in q2 and the h2 In automotive, the market was soft as expected in the Q1 . in automotive the market was soft as expected in the q1 Global IHS build rates were down about 3% overall and 10% in China, which pressured volumes. global ihs build rates were down about 3% overall and 10% in china which pressured volumes In consumer, we continue to see soft U.S. consumer discretionary spending with a few pockets of strength in categories with recent new product introductions. in consumer we continue to see soft u.s consumer discretionary spending with a few pockets of strength in categories with recent new product introductions POS trends in the U.S. improved over the course of the quarter and were positive in 7 weeks of the last 8 weeks, providing some encouragement heading into Q2. pos trends in the u.s improved over the course of the quarter and were positive in 7 weeks of the last 8 weeks providing some encouragement heading into q2 Overall, orders were up slightly over 10% in Q1, and backlog grew double digits both sequentially and year-over-year, giving us momentum into Q2. This strength reflects the combined impact of our new product introductions, continued progress in commercial excellence, and orders for longer lead time products, with some additional benefit from pre-buying ahead of recent price actions. It's encouraging to see order strength continue into the first few weeks of April. Turning to slide 5. As part of our ongoing focus on portfolio shaping, last month, we announced the acquisition of Madison Fire & Rescue, which will be combined with our Scott Safety business to create a leading global fire and safety business. The combination of Scott Safety's premium self-contained breathing apparatus with Madison Fire & Rescue's premier portfolio in rescue technology and fire suppression creates an $800 million revenue business growing at a high single-digit growth rate. Overall, orders were up slightly over 10% in Q1, and backlog grew double digits both sequentially and year- over- year, giving us momentum into Q2. overall orders were up slightly over 10% in q1 and backlog grew double digits both sequentially and year- over- year giving us momentum into q2 This strength reflects the combined impact of our new product introductions, continued progress in commercial excellence, and orders for longer lead time products, with some additional benefit from pre-buying ahead of recent price actions. this strength reflects the combined impact of our new product introductions continued progress in commercial excellence and orders for longer lead time products with some additional benefit from pre-buying ahead of recent price actions It's encouraging to see order strength continue into the first few weeks of April. it's encouraging to see order strength continue into the first few weeks of april Turning to slide 5. turning to slide 5 As part of our ongoing focus on portfolio shaping, last month, we announced the acquisition of Madison Fire & Rescue, which will be combined with our Scott Safety business to create a leading global fire and safety business. as part of our ongoing focus on portfolio shaping last month we announced the acquisition of madison fire & rescue which will be combined with our scott safety business to create a leading global fire and safety business The combination of Scott Safety's premium self-contained breathing apparatus with Madison Fire & Rescue's premier portfolio in rescue technology and fire suppression creates an $800 million revenue business growing at a high single-digit growth rate. the combination of scott safety's premium self-contained breathing apparatus with madison fire & rescue's premier portfolio in rescue technology and fire suppression creates an $800 million revenue business growing at a high single-digit growth rate This strategic transaction broadens our safety portfolio, one of our priority verticals, by expanding our market reach and building scale for future growth. It positions us to maintain above-market growth, enhance margins, and drive strong free cash flow generation. I also want to highlight our growing data center and associated power utility business with current revenue of approximately $600 million, $100 million inside the data center and about $500 million bringing power to the facility. This is a priority vertical space where we are introducing new products like EBO, or Expanded Beam Optics, a high-performance optical connector engineered to improve installation speed, reliability, and operational efficiency within data centers. EBO builds on our existing TwinAx copper connector for high-speed data transmission and positions us well for the copper-to-fiber transition underway. This strategic transaction broadens our safety portfolio, one of our priority verticals, by expanding our market reach and building scale for future growth. this strategic transaction broadens our safety portfolio one of our priority verticals by expanding our market reach and building scale for future growth It positions us to maintain above-market growth, enhance margins, and drive strong free cash flow generation. it positions us to maintain above-market growth enhance margins and drive strong free cash flow generation I also want to highlight our growing data center and associated power utility business with current revenue of approximately $600 million, $100 million inside the data center and about $500 million bringing power to the facility. i also want to highlight our growing data center and associated power utility business with current revenue of approximately $600 million $100 million inside the data center and about $500 million bringing power to the facility This is a priority vertical space where we are introducing new products like EBO, or Expanded Beam Optics, a high-performance optical connector engineered to improve installation speed, reliability, and operational efficiency within data centers. this is a priority vertical space where we are introducing new products like ebo or expanded beam optics a high-performance optical connector engineered to improve installation speed reliability and operational efficiency within data centers EBO builds on our existing TwinAx copper connector for high-speed data transmission and positions us well for the copper-to-fiber transition underway. ebo builds on our existing twinax copper connector for high-speed data transmission and positions us well for the copper-to-fiber transition underway With hyperscaler validation, a significant order in hand, and a $1 billion+ addressable market, we're investing to more than double our capacity to support growing AI demand. We see additional opportunities here as demand expands to ceramics, silicon photonics, and on-chip optical connectors. We have strong IP to support this evolving market and a clear roadmap to develop new products that further drive growth. Overall, I'm pleased with our progress this quarter, encouraged by the pace, op tempo, and executional rigor of the 3M team. With hyperscaler validation, a significant order in hand, and a $1 billion+ addressable market, we're investing to more than double our capacity to support growing AI demand. with hyperscaler validation a significant order in hand and a $1 billion+ addressable market we're investing to more than double our capacity to support growing ai demand We see additional opportunities here as demand expands to ceramics, silicon photonics, and on-chip optical connectors. we see additional opportunities here as demand expands to ceramics silicon photonics and on-chip optical connectors We have strong IP to support this evolving market and a clear roadmap to develop new products that further drive growth. we have strong ip to support this evolving market and a clear roadmap to develop new products that further drive growth Overall, I'm pleased with our progress this quarter, encouraged by the pace, op tempo, and executional rigor of the 3M team. overall i'm pleased with our progress this quarter encouraged by the pace op tempo and executional rigor of the 3m team We're on a multi-year journey and progress won't be linear, but we're building the capability to execute consistently, to innovate with purpose, and to allocate resources toward the parts of the portfolio that deliver the most value. I'm grateful to the 3M team for their commitment, hard work, and focus as we deliver progress every day. With that, I'll turn it over to Anurag to share the details of the quarter. Anurag? We're on a multi-year journey and progress won't be linear, but we're building the capability to execute consistently, to innovate with purpose, and to allocate resources toward the parts of the portfolio that deliver the most value. we're on a multi-year journey and progress won't be linear but we're building the capability to execute consistently to innovate with purpose and to allocate resources toward the parts of the portfolio that deliver the most value I'm grateful to the 3M team for their commitment, hard work, and focus as we deliver progress every day. i'm grateful to the 3m team for their commitment hard work and focus as we deliver progress every day With that, I'll turn it over to Anurag to share the details of the quarter. with that i'll turn it over to anurag to share the details of the quarter Anurag? anurag

Speaker 3: Thank you, Bill. Turning to slide 6, we had a good start to the year, performing ahead of expectations on orders, margins, earnings, and cash. Starting with top line, we delivered organic sales growth of 1.2%. SIBG showed continued momentum and grew over 3%, slightly better than expectations. TBG was flat, lighter than expectations due to ongoing weakness in certain end markets like consumer electronics and auto, as well as late timing of order intake within the quarter. In CBG, we did not see the expected recovery in the U.S. consumer market, resulting in organic sales down 1%. Notably, we saw significant strength in orders this quarter, driven by progress on commercial excellence and NPI. Overall, orders grew slightly more than 10%, with SIBG and TBG growing mid-teens, driven by industrials, safety, data center, semiconductor, and aerospace. Thank you, Bill. thank you bill Turning to slide 6, we had a good start to the year, performing ahead of expectations on orders, margins, earnings, and cash. turning to slide 6 we had a good start to the year performing ahead of expectations on orders margins earnings and cash Starting with top line, we delivered organic sales growth of 1.2%. starting with top line we delivered organic sales growth of 1.2% SIBG showed continued momentum and grew over 3%, slightly better than expectations. sibg showed continued momentum and grew over 3% slightly better than expectations TBG was flat, lighter than expectations due to ongoing weakness in certain end markets like consumer electronics and auto, as well as late timing of order intake within the quarter. tbg was flat lighter than expectations due to ongoing weakness in certain end markets like consumer electronics and auto as well as late timing of order intake within the quarter In CBG, we did not see the expected recovery in the U.S. consumer market, resulting in organic sales down 1%. in cbg we did not see the expected recovery in the u.s consumer market resulting in organic sales down 1% Notably, we saw significant strength in orders this quarter, driven by progress on commercial excellence and NPI. notably we saw significant strength in orders this quarter driven by progress on commercial excellence and npi Overall, orders grew slightly more than 10%, with SIBG and TBG growing mid-teens, driven by industrials, safety, data center, semiconductor, and aerospace. overall orders grew slightly more than 10% with sibg and tbg growing mid-teens driven by industrials safety data center semiconductor and aerospace The order momentum accelerated through the quarter, resulting in backlog growth of 20% over last year and 35% sequentially, positioning us well for the Q2. Q1 adjusted operating margins were 23.8%, up 30 basis points year-on-year driven by strong volume and broad-based productivity, which more than offset approximately $145 million of tariff impact, stranded costs, and investments. Operating income from the three Business Groups was up $85 million, with 60 basis points of margin expansion driven by supply chain productivity, including improvements in cost of quality and procurement and logistics, and continued focus on structural G&A reduction. Corporate was a 30 basis point headwind from planned wind down of Solventum transition services agreements. Our sustained operational performance of driving growth and productivity led to EPS improvement of $0.26 or 14% to $2.14. The order momentum accelerated through the quarter, resulting in backlog growth of 20% over last year and 35% sequentially, positioning us well for the Q2 . the order momentum accelerated through the quarter resulting in backlog growth of 20% over last year and 35% sequentially positioning us well for the q2 Q1 adjusted operating margins were 23.8%, up 30 basis points year-on-year driven by strong volume and broad-based productivity, which more than offset approximately $145 million of tariff impact, stranded costs, and investments. q1 adjusted operating margins were 23.8% up 30 basis points year-on-year driven by strong volume and broad-based productivity which more than offset approximately $145 million of tariff impact stranded costs and investments Operating income from the three Business Groups was up $85 million, with 60 basis points of margin expansion driven by supply chain productivity, including improvements in cost of quality and procurement and logistics, and continued focus on structural G&A reduction. operating income from the three business groups was up $85 million with 60 basis points of margin expansion driven by supply chain productivity including improvements in cost of quality and procurement and logistics and continued focus on structural g&a reduction Corporate was a 30 basis point headwind from planned wind down of Solventum transition services agreements. corporate was a 30 basis point headwind from planned wind down of solventum transition services agreements Our sustained operational performance of driving growth and productivity led to EPS improvement of $0.26 or 14% to $2.14. our sustained operational performance of driving growth and productivity led to eps improvement of $0.26 or 14% to $2.14 In addition, we benefited from lower share count, timing of tax benefit and FX, offsetting tariffs, stranded costs, and investments. Adjusted free cash flow was $540 million in the quarter, or up 10% from strong earnings growth and improvement in inventory, a decrease of three days while maintaining service levels of greater than 90%. In addition, we returned $2.4 billion to shareholders in the Q1, including approximately $400 million in dividends, reflecting a 7% increase per share and $2 billion through opportunistic share repurchases. Turning to slide 7, I will provide an overview of our Business Groups performance for the Q1. First, Safety and Industrial add another quarter of 3%+ growth as we continue to gain traction on commercial excellence initiatives and realize benefits from new product launches. In addition, we benefited from lower share count, timing of tax benefit and FX, offsetting tariffs, stranded costs, and investments. in addition we benefited from lower share count timing of tax benefit and fx offsetting tariffs stranded costs and investments Adjusted free cash flow was $540 million in the quarter, or up 10% from strong earnings growth and improvement in inventory, a decrease of three days while maintaining service levels of greater than 90%. adjusted free cash flow was $540 million in the quarter or up 10% from strong earnings growth and improvement in inventory a decrease of three days while maintaining service levels of greater than 90% In addition, we returned $2.4 billion to shareholders in the Q1 , including approximately $400 million in dividends, reflecting a 7% increase per share and $2 billion through opportunistic share repurchases. in addition we returned $2.4 billion to shareholders in the q1 including approximately $400 million in dividends reflecting a 7% increase per share and $2 billion through opportunistic share repurchases Turning to slide 7, I will provide an overview of our Business Groups performance for the Q1. turning to slide 7 i will provide an overview of our business groups performance for the q1 First, Safety and Industrial add another quarter of 3%+ growth as we continue to gain traction on commercial excellence initiatives and realize benefits from new product launches. first safety and industrial add another quarter of 3%+ growth as we continue to gain traction on commercial excellence initiatives and realize benefits from new product launches We delivered mid-single-digit growth across industrial adhesives and tapes, safety, electrical markets, and abrasive systems driven by continued share gains from new product introductions and targeted commercial initiatives to reduce customer churn, strengthen sales coverage, and increase cross-selling. Collectively, this growth more than offset continued weakness in roofing granules as the housing market and consumer sentiment remained soft. Even though auto repair claims were down mid-single digits, it was encouraging to see our auto aftermarket business be flat to slightly up after a couple of years of decline from good execution of the key account strategy. Turning to Transportation and Electronics. While growth was flat, orders were up low teens accelerating through the quarter, resulting in backlog up about 30%. Approximately half the business delivered mid-single digits growth, including double-digit growth in semiconductor and data center, driven by continued market demand and ramp-up of EBO that Bill referenced earlier. We delivered mid-single-digit growth across industrial adhesives and tapes, safety, electrical markets, and abrasive systems driven by continued share gains from new product introductions and targeted commercial initiatives to reduce customer churn, strengthen sales coverage, and increase cross-selling. we delivered mid-single-digit growth across industrial adhesives and tapes safety electrical markets and abrasive systems driven by continued share gains from new product introductions and targeted commercial initiatives to reduce customer churn strengthen sales coverage and increase cross-selling Collectively, this growth more than offset continued weakness in roofing granules as the housing market and consumer sentiment remained soft. collectively this growth more than offset continued weakness in roofing granules as the housing market and consumer sentiment remained soft Even though auto repair claims were down mid-single digits, it was encouraging to see our auto aftermarket business be flat to slightly up after a couple of years of decline from good execution of the key account strategy. even though auto repair claims were down mid-single digits it was encouraging to see our auto aftermarket business be flat to slightly up after a couple of years of decline from good execution of the key account strategy Turning to Transportation and Electronics. turning to transportation and electronics While growth was flat, orders were up low teens accelerating through the quarter, resulting in backlog up about 30%. while growth was flat orders were up low teens accelerating through the quarter resulting in backlog up about 30% Approximately half the business delivered mid-single digits growth, including double-digit growth in semiconductor and data center, driven by continued market demand and ramp-up of EBO that Bill referenced earlier. approximately half the business delivered mid-single digits growth including double-digit growth in semiconductor and data center driven by continued market demand and ramp-up of ebo that bill referenced earlier In addition, we saw growth in aerospace and commercial branding from better sales effectiveness. This was offset by the other half of the business, which is exposed to consumer electronics and auto, where the market was down. Finally, Consumer Q1 organic sales were down 1%, driven by weakness in USAC, as we did not see the expected pickup in retail traffic in the early part of the quarter. We did see pockets of strength. Scotch-Brite grew approximately 10% on the back of new product launches. We also saw good traction in international markets, especially in China and Asia, but it was not enough to offset the impact of USAC, which makes up majority of the CBG revenue. In addition, we saw growth in aerospace and commercial branding from better sales effectiveness. in addition we saw growth in aerospace and commercial branding from better sales effectiveness This was offset by the other half of the business, which is exposed to consumer electronics and auto, where the market was down. this was offset by the other half of the business which is exposed to consumer electronics and auto where the market was down Finally, Consumer Q1 organic sales were down 1%, driven by weakness in USAC, as we did not see the expected pickup in retail traffic in the early part of the quarter. finally consumer q1 organic sales were down 1% driven by weakness in usac as we did not see the expected pickup in retail traffic in the early part of the quarter We did see pockets of strength. we did see pockets of strength Scotch-Brite grew approximately 10% on the back of new product launches. scotch-brite grew approximately 10% on the back of new product launches We also saw good traction in international markets, especially in China and Asia, but it was not enough to offset the impact of USAC, which makes up majority of the CBG revenue. we also saw good traction in international markets especially in china and asia but it was not enough to offset the impact of usac which makes up majority of the cbg revenue By geography, in China, we again grew mid-single digits despite soft auto and consumer electronics end market, as we executed on our key account strategy and launched local NPIs in a relatively strong industrial market. USAC was up slightly with mid-single-digit growth in industrials being offset by softness in electronics and consumer. Asia had another quarter of good growth with India in the high teens as we drove higher sales coverage across the country. EMEA was down about 1% due to market weakness in auto. Moving to slide 8. Though the macro remains uncertain, given our good performance in the Q1, we are reiterating our guidance for the year. Organic sales growth of approximately 3%, earnings per share ranging from $8.50-$8.70, and free cash flow conversion of greater than 100%. By geography, in China, we again grew mid-single digits despite soft auto and consumer electronics end market, as we executed on our key account strategy and launched local NPIs in a relatively strong industrial market. USAC was up slightly with mid-single-digit growth in industrials being offset by softness in electronics and consumer. by geography in china we again grew mid-single digits despite soft auto and consumer electronics end market as we executed on our key account strategy and launched local npis in a relatively strong industrial market. usac was up slightly with mid-single-digit growth in industrials being offset by softness in electronics and consumer Asia had another quarter of good growth with India in the high teens as we drove higher sales coverage across the country. asia had another quarter of good growth with india in the high teens as we drove higher sales coverage across the country EMEA was down about 1% due to market weakness in auto. emea was down about 1% due to market weakness in auto Moving to slide 8. moving to slide 8 Though the macro remains uncertain, given our good performance in the Q1 , we are reiterating our guidance for the year. though the macro remains uncertain given our good performance in the q1 we are reiterating our guidance for the year Organic sales growth of approximately 3%, earnings per share ranging from $8.50- $8.70, and free cash flow conversion of greater than 100%. organic sales growth of approximately 3% earnings per share ranging from $8.50- $8.70 and free cash flow conversion of greater than 100% For sales, the strong backlog, combined with continued strength in orders in the first three weeks of April, gives us confidence that all three Business Groups will accelerate growth in the Q2 and through the balance of the year. On margins, we had a solid start with the three Business Groups growing 60 basis points despite 100 basis points year-on-year tariff impact. As we lap tariff pressure in the H2, the continued momentum on productivity and volume acceleration gives us confidence in our expectation of approximately 100 basis points margin expansion for Business Groups this year. On non-operational, we expect positive trends driven by a $2 billion share repurchase in the Q1 and lower net interest expense. Overall, we are maintaining our EPS guidance, which includes a contingency, and we will go through the components of the earnings bridge on the next slide. For sales, the strong backlog, combined with continued strength in orders in the first three weeks of April, gives us confidence that all three Business Groups will accelerate growth in the Q2 and through the balance of the year. for sales the strong backlog combined with continued strength in orders in the first three weeks of april gives us confidence that all three business groups will accelerate growth in the q2 and through the balance of the year On margins, we had a solid start with the three Business Groups growing 60 basis points despite 100 basis points year-on-year tariff impact. on margins we had a solid start with the three business groups growing 60 basis points despite 100 basis points year-on-year tariff impact As we lap tariff pressure in the H2 , the continued momentum on productivity and volume acceleration gives us confidence in our expectation of approximately 100 basis points margin expansion for Business Groups this year. as we lap tariff pressure in the h2 the continued momentum on productivity and volume acceleration gives us confidence in our expectation of approximately 100 basis points margin expansion for business groups this year On non-operational, we expect positive trends driven by a $2 billion share repurchase in the Q1 and lower net interest expense. on non-operational we expect positive trends driven by a $2 billion share repurchase in the q1 and lower net interest expense Overall, we are maintaining our EPS guidance, which includes a contingency, and we will go through the components of the earnings bridge on the next slide. overall we are maintaining our eps guidance which includes a contingency and we will go through the components of the earnings bridge on the next slide Given the strong earnings growth and good progress on working capital, particularly inventory and continued CapEx efficiency, we believe our free cash flow will be more than $4.5 billion for the year and greater than 100% conversion. Slide 9 shows the trend of key earnings elements and the current guidance. We are trending $0.05-$0.15 higher on earnings from momentum on productivity and lower share count and interest expense. We are facing higher input costs due to the recent increase in oil price, but have implemented targeted price increases to mitigate the impact at the current levels. Given that we are early in the year and we are operating in a volatile macro environment, we think it is prudent to keep a contingency till we have more clarity about the rest of the year. Given the strong earnings growth and good progress on working capital, particularly inventory and continued CapEx efficiency, we believe our free cash flow will be more than $4.5 billion for the year and greater than 100% conversion. given the strong earnings growth and good progress on working capital particularly inventory and continued capex efficiency we believe our free cash flow will be more than $4.5 billion for the year and greater than 100% conversion Slide 9 shows the trend of key earnings elements and the current guidance. slide 9 shows the trend of key earnings elements and the current guidance We are trending $0.05-$0.15 higher on earnings from momentum on productivity and lower share count and interest expense. we are trending $0.05-$0.15 higher on earnings from momentum on productivity and lower share count and interest expense We are facing higher input costs due to the recent increase in oil price, but have implemented targeted price increases to mitigate the impact at the current levels. we are facing higher input costs due to the recent increase in oil price but have implemented targeted price increases to mitigate the impact at the current levels Given that we are early in the year and we are operating in a volatile macro environment, we think it is prudent to keep a contingency till we have more clarity about the rest of the year. given that we are early in the year and we are operating in a volatile macro environment we think it is prudent to keep a contingency till we have more clarity about the rest of the year Overall, we are moving with determined pace and will continue to calibrate as the year progresses. Regarding cadence, we expect sales growth to accelerate in Q2 and the H2 of the year. Backlog conversion and continued order strength is expected to support growth momentum in both SIBG and TBG in the Q2. We anticipate consumer to improve as point of sale is on an upward trend, resulting in normalized inventory levels. On EPS, given the contingencies for the H2, we expect the H1 EPS to be higher than theH2. Our 2026 financial outlook puts us on pace to exceed our medium-term financial commitments that we laid out during Investor Day around growth, margin, and cash. On capital allocation, we have already returned over $7 billion of the $10 billion shareholder returns that we had committed to. Overall, we are moving with determined pace and will continue to calibrate as the year progresses. overall we are moving with determined pace and will continue to calibrate as the year progresses Regarding cadence, we expect sales growth to accelerate in Q2 and the H2 of the year. regarding cadence we expect sales growth to accelerate in q2 and the h2 of the year Backlog conversion and continued order strength is expected to support growth momentum in both SIBG and TBG in the Q2 . backlog conversion and continued order strength is expected to support growth momentum in both sibg and tbg in the q2 We anticipate consumer to improve as point of sale is on an upward trend, resulting in normalized inventory levels. we anticipate consumer to improve as point of sale is on an upward trend resulting in normalized inventory levels On EPS, given the contingencies for the H2 , we expect the H1 EPS to be higher than the H2 . on eps given the contingencies for the h2 we expect the h1 eps to be higher than the h2 Our 2026 financial outlook puts us on pace to exceed our medium-term financial commitments that we laid out during Investor Day around growth, margin, and cash. our 2026 financial outlook puts us on pace to exceed our medium-term financial commitments that we laid out during investor day around growth margin and cash On capital allocation, we have already returned over $7 billion of the $10 billion shareholder returns that we had committed to. on capital allocation we have already returned over $7 billion of the $10 billion shareholder returns that we had committed to Before we open the call for questions, I want to take a minute to thank the team for a strong start to the year and being proactive in this environment to mitigate risks and control the controllable, and for the commitment to strengthen the foundation and drive profitable growth. With that, let's open the call for questions. Before we open the call for questions, I want to take a minute to thank the team for a strong start to the year and being proactive in this environment to mitigate risks and control the controllable, and for the commitment to strengthen the foundation and drive profitable growth. before we open the call for questions i want to take a minute to thank the team for a strong start to the year and being proactive in this environment to mitigate risks and control the controllable and for the commitment to strengthen the foundation and drive profitable growth With that, let's open the call for questions. with that let's open the call for questions

Speaker 15: Ladies and gentlemen, if you would like to register a question, please press star one on your telephone keypad. If your question has been answered and you would like to withdraw, please press star two. If you are using a speakerphone, please lift up your handset before entering your request. Please limit your participation to one question and one follow-up. Our first question comes from the line of Jeff Sprague with Vertical Research. Please proceed with your question. Ladies and gentlemen, if you would like to register a question, please press star one on your telephone keypad. ladies and gentlemen if you would like to register a question please press star one on your telephone keypad If your question has been answered and you would like to withdraw, please press star two. if your question has been answered and you would like to withdraw please press star two If you are using a speakerphone, please lift up your handset before entering your request. if you are using a speakerphone please lift up your handset before entering your request Please limit your participation to one question and one follow-up. please limit your participation to one question and one follow-up Our first question comes from the line of Jeff Sprague with Vertical Research. our first question comes from the line of jeff sprague with vertical research Please proceed with your question. please proceed with your question

Speaker 9: Thank you. Good morning, everyone. Hey, Bill or Anurag. Just trying to dig into the order commentary a little bit more. Maybe you could give us a little more perspective on the pre-buy, the size of it, if you could, and I guess the pre-buy would imply getting ahead of price increases and the like. Maybe a little bit of color on how much additional price is now embedded in your organic growth forecast. Just also on these backlog numbers, obviously the deltas sound great, but it's not really a backlog business. Kind of the question, is it law of small numbers on those deltas, or is there actually significant visibility that you can anchor to as you look into Q2? Thank you. thank you Good morning, everyone. good morning everyone Hey, Bill or Anurag. hey bill or anurag Just trying to dig into the order commentary a little bit more. just trying to dig into the order commentary a little bit more Maybe you could give us a little more perspective on the pre-buy, the size of it, if you could, and I guess the pre-buy would imply getting ahead of price increases and the like. maybe you could give us a little more perspective on the pre-buy the size of it if you could and i guess the pre-buy would imply getting ahead of price increases and the like Maybe a little bit of color on how much additional price is now embedded in your organic growth forecast. maybe a little bit of color on how much additional price is now embedded in your organic growth forecast Just also on these backlog numbers, obviously the deltas sound great, but it's not really a backlog business. just also on these backlog numbers obviously the deltas sound great but it's not really a backlog business Kind of the question, is it law of small numbers on those deltas, or is there actually significant visibility that you can anchor to as you look into Q2? kind of the question is it law of small numbers on those deltas or is there actually significant visibility that you can anchor to as you look into q2

Speaker 4: Hey, Jeff. Good morning. Thank you for the question. I'll start and maybe pass on to Anurag on the backlog point. As we said, we had very good orders in the Q1, up double digits, which was very good. You're right, we're not really a backlog-driven business, but backlog was very strong coming out of Q1 and continues to build into Q2. Over the course of the quarter, we saw good order growth in January and February, kind of up mid-single digits, but it accelerated quite a bit in the month of March Hey, Jeff. hey jeff Good morning. good morning Thank you for the question. thank you for the question I'll start and maybe pass on to Anurag on the backlog point. i'll start and maybe pass on to anurag on the backlog point As we said, we had very good orders in the Q1 , up double digits, which was very good. as we said we had very good orders in the q1 up double digits which was very good You're right, we're not really a backlog-driven business, but backlog was very strong coming out of Q1 and continues to build into Q2. you're right we're not really a backlog-driven business but backlog was very strong coming out of q1 and continues to build into q2 Over the course of the quarter, we saw good order growth in January and February, kind of up mid-single digits, but it accelerated quite a bit in the month of March over the course of the quarter we saw good order growth in january and february kind of up mid-single digits but it accelerated quite a bit in the month of march It'd be well over the double digit number that we ascribed for the whole quarter, and it continues into April, which I think is very encouraging. Now, how much is price? The reality is we do a price increase every year on April 1st, so it's hard to discern how much was a pre-buy. We think there's some of it. We've signaled to customers that we're going ahead with a price increase on top of what we went out with April 1st, associated with the price of oil coming up. That could cause a little bit of a pre-buy, if you will. Again, it's hard to discern exactly how much would that be. You asked about price for the year. For the year, we had guided before at about 80 basis points. We came in a little bit below that in Q1. It'd be well over the double digit number that we ascribed for the whole quarter, and it continues into April, which I think is very encouraging. it'd be well over the double digit number that we ascribed for the whole quarter and it continues into april which i think is very encouraging Now, how much is price? now how much is price The reality is we do a price increase every year on April 1st, so it's hard to discern how much was a pre-buy. the reality is we do a price increase every year on april 1st so it's hard to discern how much was a pre-buy We think there's some of it. we think there's some of it We've signaled to customers that we're going ahead with a price increase on top of what we went out with April 1st, associated with the price of oil coming up. we've signaled to customers that we're going ahead with a price increase on top of what we went out with april 1st associated with the price of oil coming up That could cause a little bit of a pre-buy, if you will. that could cause a little bit of a pre-buy if you will Again, it's hard to discern exactly how much would that be. again it's hard to discern exactly how much would that be You asked about price for the year. you asked about price for the year For the year, we had guided before at about 80 basis points. for the year we had guided before at about 80 basis points We came in a little bit below that in Q1. we came in a little bit below that in q1 We still see, outside of oil-based increases, around 80 basis points. When you add in oil and the expected price increase from oil, it could be around an extra 50 basis points, is what we're thinking at the moment. Price for the year, around 1.3 points. I know that Anurag may share a little bit about the backlog. We still see, outside of oil-based increases, around 80 basis points. we still see outside of oil-based increases around 80 basis points When you add in oil and the expected price increase from oil, it could be around an extra 50 basis points, is what we're thinking at the moment. when you add in oil and the expected price increase from oil it could be around an extra 50 basis points is what we're thinking at the moment Price for the year, around 1.3 points. price for the year around 1.3 points I know that Anurag may share a little bit about the backlog. i know that anurag may share a little bit about the backlog

Speaker 3: Yeah. Thanks, Bill. You are right that we are largely a book and ship business. We have about 75% of our revenue in a quarter comes from book and ship. We do get backlog coverage as we enter the quarter. The numbers that we mentioned, which was about 35% up sequentially to 20% year-over-year, provides us about 400 basis points-500 basis points of additional coverage as we enter into the quarter, which is not insignificant given the growth acceleration that we expect from Q1 and Q2. I think it's really good to kind of see that we are starting with a very good backlog coverage for the quarter, combined with the order momentum that Bill spoke about in the first three weeks of April. It gives us real confidence for acceleration of growth through Q2. Yeah. yeah Thanks, Bill. thanks bill You are right that we are largely a book and ship business. We have a bout 75% of our revenue in a quarter comes from book and ship. you are right that we are largely a book and ship business. we have a bout 75% of our revenue in a quarter comes from book and ship We do get backlog coverage as we enter the quarter. we do get backlog coverage as we enter the quarter The numbers that we mentioned, which was about 35% up sequentially to 20% year-over-year, provides us about 400 basis points-500 basis points of additional coverage as we enter into the quarter, which is not insignificant given the growth acceleration that we expect from Q1 and Q2. the numbers that we mentioned which was about 35% up sequentially to 20% year-over-year provides us about 400 basis points-500 basis points of additional coverage as we enter into the quarter which is not insignificant given the growth acceleration that we expect from q1 and q2 I think it's really good to kind of see that we are starting with a very good backlog coverage for the quarter, combined with the order momentum that Bill spoke about in the first three weeks of April. i think it's really good to kind of see that we are starting with a very good backlog coverage for the quarter combined with the order momentum that bill spoke about in the first three weeks of april It gives us real confidence for acceleration of growth through Q2. it gives us real confidence for acceleration of growth through q2 Typically, we do not talk about orders and sales because of the book and ship, because they converge together. This time you could see the big spike, and as Bill mentioned, part of it could be the pre-buy, but a lot of it is the commercial excellence, NPI, and other initiatives that we are driving, which resulted in order acceleration. Typically, we do not talk about orders and sales because of the book and ship, because they converge together. typically we do not talk about orders and sales because of the book and ship because they converge together This time you could see the big spike, and as Bill mentioned, part of it could be the pre-buy, but a lot of it is the commercial excellence, NPI, and other initiatives that we are driving, which resulted in order acceleration. this time you could see the big spike and as bill mentioned part of it could be the pre-buy but a lot of it is the commercial excellence npi and other initiatives that we are driving which resulted in order acceleration

Speaker 9: Great. Maybe just a quick follow-up then. Just a comment about then accelerating in the remainder of the year. By that, do you mean each quarter will be a faster growth quarter than the one that preceded it, even though the comps are getting tougher in the H2 of the year? Great. great Maybe just a quick follow-up then. maybe just a quick follow-up then Just a comment about then accelerating in the remainder of the year. just a comment about then accelerating in the remainder of the year By that, do you mean each quarter will be a faster growth quarter than the one that preceded it, even though the comps are getting tougher in the H2 of the year? by that do you mean each quarter will be a faster growth quarter than the one that preceded it even though the comps are getting tougher in the h2 of the year

Speaker 4: Yeah, we see Q2 being better than Q1, and we see the H2 being better than the H1, is the way we're currently looking at it, Jeff. Yeah, we see Q2 being better than Q1, and we see the H2 being better than the H1 , is the way we're currently looking at it, Jeff. yeah we see q2 being better than q1 and we see the h2 being better than the h1 is the way we're currently looking at it jeff

Speaker 9: Great. Thank you very much. Great. great Thank you very much. thank you very much

Speaker 4: You bet. You bet. you bet

Speaker 15: Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question. Our next question comes from the line of Scott Davis with Melius Research. our next question comes from the line of scott davis with melius research Please proceed with your question. please proceed with your question

Speaker 16: Good morning, everybody. Good morning, everybody. good morning everybody

Speaker 4: Good morning, Scott. Good morning, Scott. good morning scott

Speaker 16: Just to follow up on Jeff's question, are customer inventories low and there's a little bit of a restock occurring, or are they balanced? How do you guys kind of see that element right now? Just to follow up on Jeff's question, are customer inventories low and there's a little bit of a restock occurring, or are they balanced? just to follow up on jeff's question are customer inventories low and there's a little bit of a restock occurring or are they balanced How do you guys kind of see that element right now? how do you guys kind of see that element right now

Speaker 4: We track it pretty carefully. On the Safety Industrial Business Group, the distribution inventory is relatively normal. I'd say maybe a tick below what we typically would see. We would typically see 65 days-70 days, and it's a bit below that. On the consumer side, it's about normalized from where we were last year, around 13 weeks of supply. Coming into the year was a bit higher, maybe 13.5, but right now we're around 13. On the consumer side, fairly normal. On the Safety Industrial side, I'd say normal to maybe a bit light in the channel. We track it pretty carefully. we track it pretty carefully On the Safety Industrial Business Group, the distribution inventory is relatively normal. on the safety industrial business group the distribution inventory is relatively normal I'd say maybe a tick below what we typically would see. i'd say maybe a tick below what we typically would see We would typically see 65 days-70 days, and it's a bit below that. we would typically see 65 days-70 days and it's a bit below that On the consumer side, it's about normalized from where we were last year, around 13 weeks of supply. on the consumer side it's about normalized from where we were last year around 13 weeks of supply Coming into the year was a bit higher, maybe 13.5, but right now we're around 13. coming into the year was a bit higher maybe 13.5 but right now we're around 13 On the consumer side, fairly normal. on the consumer side fairly normal On the Safety Industrial side, I'd say normal to maybe a bit light in the channel. on the safety industrial side i'd say normal to maybe a bit light in the channel

Speaker 16: Okay. Helpful. Hey, I think you mentioned your factory footprint is down like 10%. Is there another 10%? How do you guys kind of think of where the endpoint on that journey is? Okay. okay Helpful. helpful Hey, I think you mentioned your factory footprint is down like 10%. hey i think you mentioned your factory footprint is down like 10% Is there another 10%? is there another 10% How do you guys kind of think of where the endpoint on that journey is? how do you guys kind of think of where the endpoint on that journey is

Speaker 4: We're going to keep talking about this with investors as we go forward. At the end of last year, we had 108. We sold and closed on PG and half the Precision Grinding business, which was 7 factories scattered across Europe, 1 in Asia, a couple in the U.S. It was not a large business, but a big factory footprint. That brought it down by 7. We closed 1 in the Q1. We announced a couple of others. That'll close over the course of this year into next year. That puts us below 100. The number will be below where we happen to be today. We'll continue to look at that and size it for investors as we go. Clearly the footprint at just under 100 is bigger than we really need today. We're going to keep talking about this with investors as we go forward. we're going to keep talking about this with investors as we go forward At the end of last year, we had 108. at the end of last year we had 108 We sold and closed on PG and half the Precision Grinding business, which was 7 factories scattered across Europe, 1 in Asia, a couple in the U.S. we sold and closed on pg and half the precision grinding business which was 7 factories scattered across europe 1 in asia a couple in the u.s It was not a large business, but a big factory footprint. it was not a large business but a big factory footprint That brought it down by 7. that brought it down by 7 We closed 1 in the Q1 . we closed 1 in the q1 We announced a couple of others. we announced a couple of others That'll close over the course of this year into next year. that'll close over the course of this year into next year That puts us below 100. that puts us below 100 The number will be below where we happen to be today. the number will be below where we happen to be today We'll continue to look at that and size it for investors as we go. we'll continue to look at that and size it for investors as we go Clearly the footprint at just under 100 is bigger than we really need today. clearly the footprint at just under 100 is bigger than we really need today

Speaker 16: Makes sense. Okay. Best of luck, guys. Thank you. Makes sense. makes sense Okay. okay Best of luck, guys. best of luck guys Thank you. thank you

Speaker 4: You bet. You bet. you bet

Speaker 16: Appreciate it. Appreciate it. appreciate it

Speaker 4: You bet. You bet. you bet

Speaker 15: Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question. Our next question comes from the line of Julian Mitchell with Barclays. our next question comes from the line of julian mitchell with barclays Please proceed with your question. please proceed with your question

Speaker 11: Hi. Good morning. Just wanted to start maybe if you could give any color around the Q2 dynamics in a bit more detail. Understand the organic sales growth accelerates year-on-year from the 1% in Q1. Also, I think, Anurag, you'd said H1 EPS more than H2 because of the contingency. Just want to gauge sort of how much sequentially or year-on-year EPS could grow in Q2, and what the sort of margin embedded in that guide would be. Hi. hi Good morning. good morning Just wanted to start maybe if you could give any color around the Q2 dynamics in a bit more detail. just wanted to start maybe if you could give any color around the q2 dynamics in a bit more detail Understand the organic sales growth accelerates year-on-year from the 1% in Q1. understand the organic sales growth accelerates year-on-year from the 1% in q1 Also, I think, Anurag, you'd said H1 EPS more than H2 because of the contingency. also i think anurag you'd said h1 eps more than h2 because of the contingency Just want to gauge sort of how much sequentially or year-on-year EPS could grow in Q2, and what the sort of margin embedded in that guide would be. just want to gauge sort of how much sequentially or year-on-year eps could grow in q2 and what the sort of margin embedded in that guide would be

Speaker 3: Sure, Julian. Let me answer those questions. First, just on the revenue growth. As we mentioned, because of the good backlog and the order momentum, we expect organic growth in the Q2 to be higher than 3%, with all the three BGs accelerating. SIBG, which was at 3.2%, obviously going higher than that. TBG, low single digit, and CBG flat to positive. That's the expectation on the revenue growth acceleration. Obviously, that's going to come with high flow-throughs. We're going to continue with the productivity that we did in the Q1. We'll continue to the Q2. Between volume and productivity, we'll offset all the last quarter of the tariff year-over-year impact for us, a pickup in stranded costs and investments. You will see operationally for us, it's going to be a solid margin, about 24.5% and a good EPS flow-through coming from that. Sure, Julian. sure julian Let me answer those questions. let me answer those questions First, just on the revenue growth. first just on the revenue growth As we mentioned, because of the good backlog and the order momentum, we expect organic growth in the Q2 to be higher than 3%, with all the three BGs accelerating. as we mentioned because of the good backlog and the order momentum we expect organic growth in the q2 to be higher than 3% with all the three bgs accelerating SIBG, which was at 3.2%, obviously going higher than that. sibg which was at 3.2% obviously going higher than that TBG, low single digit, and CBG flat to positive. tbg low single digit and cbg flat to positive That's the expectation on the revenue growth acceleration. that's the expectation on the revenue growth acceleration Obviously, that's going to come with high flow-throughs. obviously that's going to come with high flow-throughs We're going to continue with the productivity that we did in the Q1. we're going to continue with the productivity that we did in the q1 We'll continue to the Q2 . we'll continue to the q2 Between volume and productivity, we'll offset all the last quarter of the tariff year-over-year impact for us, a pickup in stranded costs and investments. between volume and productivity, we'll offset all the last quarter of the tariff year-over-year impact for us a pickup in stranded costs and investments You will see operationally for us, it's going to be a solid margin, about 24.5% and a good EPS flow-through coming from that. you will see operationally for us it's going to be a solid margin about 24.5% and a good eps flow-through coming from that On below the line, we will see a couple of pennies of headwind relative to last year. Last year, in the Q2, we had a divestment of an investment that we had in India, which was about $0.08-$0.10. You see a little bit of tax, which was favorable in Q1, coming back in Q2. Those are two headwinds. Of course, they'll be offset by the share buyback, which we did in the Q1, which is going to help us in the Q2, plus a little bit on the non-op pension side. You put all of that together, we should grow more than $0.05 in the Q2, which for the H1 would put us at about $0.30+ of EPS growth, which is more than half if you include the contingency for the full year. On below the line, we will see a couple of pennies of headwind relative to last year. on below the line we will see a couple of pennies of headwind relative to last year Last year, in the Q2 , we had a divestment of an investment that we had in India, which was about $0.08-$0.10. last year in the q2 we had a divestment of an investment that we had in india which was about $0.08-$0.10 You see a little bit of tax, which was favorable in Q1, coming back in Q2. you see a little bit of tax which was favorable in q1 coming back in q2 Those are two headwinds. those are two headwinds Of course, they'll be offset by the share buyback, which we did in the Q1 , which is going to help us in the Q2, plus a little bit on the non-op pension side. of course they'll be offset by the share buyback which we did in the q1 which is going to help us in the q2 plus a little bit on the non-op pension side You put all of that together, we should grow more than $0.05 in the Q2 , which for the H1 would put us at about $0.30+ of EPS growth, which is more than half if you include the contingency for the full year. you put all of that together we should grow more than $0.05 in the q2 which for the h1 would put us at about $0.30+ of eps growth which is more than half if you include the contingency for the full year Now, the contingency, as I mentioned, we kept it for the H2 of the year, depending on how things evolve. If we continue performing the way we do, revenue grows over 3% in the Q2, which is a good exit rate as we enter into the H2. If it continues at that a little bit better, with good volume flow through, no tariff headwind, the margins in the H2 could be much higher than the H1. Yeah. Now, the contingency, as I mentioned, we kept it for the H2 of the year, depending on how things evolve. now the contingency as i mentioned we kept it for the h2 of the year depending on how things evolve If we continue performing the way we do, revenue grows over 3% in the Q2 , which is a good exit rate as we enter into the H2 . if we continue performing the way we do revenue grows over 3% in the q2 which is a good exit rate as we enter into the h2 If it continues at that a little bit better, with good volume flow through, no tariff headwind, the margins in the H2 could be much higher than the H1 . if it continues at that a little bit better with good volume flow through no tariff headwind the margins in the h2 could be much higher than the h1 Yeah. yeah

Speaker 11: I appreciate all the color. Just one very quick follow-up. That was very thorough. Maybe on the pre-buy dynamics, credit for calling that out, but trying to understand what you're assuming for how much that sort of reverses, because you've got organic sales growth accelerating in Q2 with maybe some sort of, I don't know if a pre-buy is helping that or the unwind hurts that. Maybe flesh out that pre-buy sort of dynamic over the balance of the year. I appreciate all the color. i appreciate all the color Just one very quick follow-up. just one very quick follow-up That was very thorough. that was very thorough Maybe on the pre-buy dynamics, credit for calling that out, but trying to understand what you're assuming for how much that sort of reverses, because you've got organic sales growth accelerating in Q2 with maybe some sort of, I don't know if a pre-buy is helping that or the unwind hurts that. maybe on the pre-buy dynamics credit for calling that out but trying to understand what you're assuming for how much that sort of reverses because you've got organic sales growth accelerating in q2 with maybe some sort of i don't know if a pre-buy is helping that or the unwind hurts that Maybe flesh out that pre-buy sort of dynamic over the balance of the year. maybe flesh out that pre-buy sort of dynamic over the balance of the year

Speaker 4: Julian, it's hard to discern exactly how much is pre-buy. We had orders coming in. It's quite strong. We are seeing much better traction on new product introductions. A lot of momentum building on commercial excellence. Keep in mind, part of what was driving Q1 growth, including into early April, are some longer lead products that will go into semis, more importantly in data centers, delivering in Q2 in the back end of the year. You have all these factors in there. Julian, it's hard to discern exactly how much is pre-buy. julian it's hard to discern exactly how much is pre-buy We had orders coming in. we had orders coming in It's quite strong. it's quite strong We are seeing much better traction on new product introductions. we are seeing much better traction on new product introductions A lot of momentum building on commercial excellence. a lot of momentum building on commercial excellence Keep in mind, part of what was driving Q1 growth, including into early April, are some longer lead products that will go into semis, more importantly in data centers, delivering in Q2 in the back end of the year. keep in mind part of what was driving q1 growth including into early april are some longer lead products that will go into semis more importantly in data centers delivering in q2 in the back end of the year You have all these factors in there. you have all these factors in there I think when I step back and look at the full year, as we said, we'll see acceleration into Q2 and then in the H2 and all these pieces to come together. Any pre-buy that's happened will wash out in Q2. We do see acceleration in the H2 on the back of really core operating fundamentals around NPI and commercial excellence. I think when I step back and look at the full year, as we said, we'll see acceleration into Q2 and then in the H2 and all these pieces to come together. i think when i step back and look at the full year as we said we'll see acceleration into q2 and then in the h2 and all these pieces to come together Any pre-buy that's happened will wash out in Q2. any pre-buy that's happened will wash out in q2 We do see acceleration in the H2 on the back of really core operating fundamentals around NPI and commercial excellence. we do see acceleration in the h2 on the back of really core operating fundamentals around npi and commercial excellence

Speaker 11: Great. Thank you. Great. great Thank you. thank you

Speaker 4: You bet. You bet. you bet

Speaker 15: Our next question comes from the line of Joe O'Dea with Wells Fargo. Please proceed with your question. Our next question comes from the line of Joe O'Dea with Wells Fargo. our next question comes from the line of joe o'dea with wells fargo Please proceed with your question. please proceed with your question

Speaker 10: Hi. Good morning. On the $0.05-$0.15 of contingency tied to oil macro uncertainty, can you just outline kind of roughly how you think about the split on the demand side versus the cost side of that in your planning assumptions? Really looking for any color on the oil exposure sort of across the business and where you're thinking about that contingency could flow through if you need to use it. Hi. hi Good morning. good morning On the $0.05-$0.15 of contingency tied to oil macro uncertainty, can you just outline kind of roughly how you think about the split on the demand side versus the cost side of that in your planning assumptions? on the $0.05-$0.15 of contingency tied to oil macro uncertainty can you just outline kind of roughly how you think about the split on the demand side versus the cost side of that in your planning assumptions Really looking for any color on the oil exposure sort of across the business and where you're thinking about that contingency could flow through if you need to use it. really looking for any color on the oil exposure sort of across the business and where you're thinking about that contingency could flow through if you need to use it

Speaker 3: Okay. Let me start with the contingency and then Bill, you can add from there on. On the $0.05-$0.15 of contingency that we kept is actually across the two buckets that you mentioned around here. As I mentioned, Q2 will be above 3%, which is a good exit rate as we go into the H2. If there is a little bit of an impact on the volume piece because of macro, which we are not currently seeing right now, or a little bit of the input cost that goes up. I guess it gets spread between the two, Joe. To be honest, our objective right now is to continue driving what we control on the NPI commercial excellence, continue to outperform the macro and drive more productivity so that we don't have to use the contingency in the H2. Okay. okay Let me start with the contingency and then Bill, you can add from there on. let me start with the contingency and then bill you can add from there on On the $0.05-$0.15 of contingency that we kept is actually across the two buckets that you mentioned around here. on the $0.05-$0.15 of contingency that we kept is actually across the two buckets that you mentioned around here As I mentioned, Q2 will be above 3%, which is a good exit rate as we go into the H2 . as i mentioned q2 will be above 3% which is a good exit rate as we go into the h2 If there is a little bit of an impact on the volume piece because of macro, which we are not currently seeing right now, or a little bit of the input cost that goes up. if there is a little bit of an impact on the volume piece because of macro which we are not currently seeing right now or a little bit of the input cost that goes up I guess it gets spread between the two, Joe. i guess it gets spread between the two joe To be honest, our objective right now is to continue driving what we control on the NPI commercial excellence, continue to outperform the macro and drive more productivity so that we don't have to use the contingency in the H2 . to be honest our objective right now is to continue driving what we control on the npi commercial excellence continue to outperform the macro and drive more productivity so that we don't have to use the contingency in the h2

Speaker 4: Joe, on the oil price, the way we look at it is really two pieces. One is on the supply side, the other is demand. On supply side, we have about 45% of our cost of goods is raw materials, and about a 1/3 of that, so it's about $6 billion of raw material spend, and about a 1/3 of that is its basis in petrochem. It's ethylenes, propylenes, esters, acrylates, all those various things, and we are seeing some upward cost pressure on that. What we've seen so far and expect is about $125 million of cost increase there, which we're offsetting into pricing. That's why I mentioned earlier on that we expect about a 50 basis point uplift on price coming from that oil-based exposure. Joe, on the oil price, the way we look at it is really two pieces. joe on the oil price the way we look at it is really two pieces One is on the supply side, the other is demand. one is on the supply side the other is demand On supply side, we have about 45% of our cost of goods is raw materials, and about a 1/3 of that, so it's about $6 billion of raw material spend, and about a 1/3 of that is its basis in petrochem. on supply side we have about 45% of our cost of goods is raw materials and about a 1/3 of that so it's about $6 billion of raw material spend and about a 1/3 of that is its basis in petrochem It's ethylenes, propylenes, esters, acrylates, all those various things, and we are seeing some upward cost pressure on that. it's ethylenes propylenes esters acrylates all those various things and we are seeing some upward cost pressure on that What we've seen so far and expect is about $125 million of cost increase there, which we're offsetting into pricing. what we've seen so far and expect is about $125 million of cost increase there which we're offsetting into pricing That's why I mentioned earlier on that we expect about a 50 basis point uplift on price coming from that oil-based exposure. that's why i mentioned earlier on that we expect about a 50 basis point uplift on price coming from that oil-based exposure How that affects the overall macroeconomy, what's going to happen with consumer spending, auto, that's still all unfolding as we speak, and depending upon what happens in the Middle East, but that's our current assumption as we speak today. How that affects the overall macroeconomy, what's going to happen with consumer spending, auto, that's still all unfolding as we speak, and depending upon what happens in the Middle East, but that's our current assumption as we speak today. how that affects the overall macroeconomy what's going to happen with consumer spending auto that's still all unfolding as we speak and depending upon what happens in the middle east but that's our current assumption as we speak today

Speaker 10: Got it. Just on the Transportation & Electronics Commercial Excellence Program, can you talk about where you are on that trajectory? I think you started to see traction in SIBG last year, and that continues. Just the efforts that are underway, and as we think about the growth acceleration, just any quantification of how you're thinking about commercial excellence contributing to better T&E growth as you move through the year. Got it. got it Just on the Transportation & Electronics Commercial Excellence Program, can you talk about where you are on that trajectory? just on the transportation & electronics commercial excellence program can you talk about where you are on that trajectory I think you started to see traction in SIBG last year, and that continues. i think you started to see traction in sibg last year and that continues Just the efforts that are underway, and as we think about the growth acceleration, just any quantification of how you're thinking about commercial excellence contributing to better T&E growth as you move through the year. just the efforts that are underway and as we think about the growth acceleration just any quantification of how you're thinking about commercial excellence contributing to better t&e growth as you move through the year

Speaker 4: Yeah. It's a good question. They're doing a great job on this. They're following right behind what we've done in SIBG, which has been very successful. I'm very pleased with the traction on the sales force, on pricing discipline, on cross-selling, on churn reduction, and looking very hard at attrition with the predictive AI models that we have in place. The team at TEBG is doing the same sorts of things. I think the cross-sell opportunity is not going to be as robust. They move very aggressively on improving on the sales force and better incentives, better targeting, more close one targets. They're tracking attrition rates, which I think is very good. They have the same predictive models tailored for TEBG into that business. They're making good progress. It's going to roll out over the balance of the year. Yeah. yeah It's a good question. it's a good question They're doing a great job on this. they're doing a great job on this They're following right behind what we've done in SIBG, which has been very successful. they're following right behind what we've done in sibg which has been very successful I'm very pleased with the traction on the sales force, on pricing discipline, on cross-selling, on churn reduction, and looking very hard at attrition with the predictive AI models that we have in place. i'm very pleased with the traction on the sales force on pricing discipline on cross-selling on churn reduction and looking very hard at attrition with the predictive ai models that we have in place The team at TEBG is doing the same sorts of things. the team at tebg is doing the same sorts of things I think the cross-sell opportunity is not going to be as robust. i think the cross-sell opportunity is not going to be as robust They move very aggressively on improving on the sales force and better incentives, better targeting, more close one targets. they move very aggressively on improving on the sales force and better incentives better targeting more close one targets They're tracking attrition rates, which I think is very good. they're tracking attrition rates which i think is very good They have the same predictive models tailored for TEBG into that business. they have the same predictive models tailored for tebg into that business They're making good progress. they're making good progress It's going to roll out over the balance of the year. it's going to roll out over the balance of the year One of the key things they're focused on is making sure we have the right mix and focus of our sales reps versus application engineers. Do we have the right mix between the two, and are they calling at the right level in the customer, for example, in automotive, at the OE versus the tier? It's a little bit different than what we see in SIBG, but they're working it pretty hard, and I think you're going to see in the back end of the year, certainly improvements in TEBG coming from a lot of that commercial excellence work. One of the key things they're focused on is making sure we have the right mix and focus of our sales reps versus application engineers. one of the key things they're focused on is making sure we have the right mix and focus of our sales reps versus application engineers Do we have the right mix between the two, and are they calling at the right level in the customer, for example, in automotive, at the OE versus the tier? do we have the right mix between the two and are they calling at the right level in the customer for example in automotive at the oe versus the tier It's a little bit different than what we see in SIBG, but they're working it pretty hard, and I think you're going to see in the back end of the year, certainly improvements in TEBG coming from a lot of that commercial excellence work. it's a little bit different than what we see in sibg but they're working it pretty hard and i think you're going to see in the back end of the year certainly improvements in tebg coming from a lot of that commercial excellence work

Speaker 10: Thank you. Thank you. thank you

Speaker 15: Our next question comes from the line of Andrew Obin with Bank of America. Please proceed with your question. Our next question comes from the line of Andrew Obin with Bank of America. our next question comes from the line of andrew obin with bank of america Please proceed with your question. please proceed with your question

Speaker 4: Good morning, Andrew. Good morning, Andrew. good morning andrew

Speaker 2: Good morning. Good morning. good morning

Speaker 4: Good morning. Good morning. good morning

Speaker 2: On the transportation electronics, just to dig in a little bit further, also double-digit orders. It seems like a lot of questions into the quarter about weakness in consumer electronics. Does that mean that we are offsetting consumer electronics into the H2? On the transportation electronics, just to dig in a little bit further, also double-digit orders. on the transportation electronics just to dig in a little bit further also double-digit orders It seems like a lot of questions into the quarter about weakness in consumer electronics. it seems like a lot of questions into the quarter about weakness in consumer electronics Does that mean that we are offsetting consumer electronics into the H2 ? does that mean that we are offsetting consumer electronics into the h2

Speaker 4: Yes, Andrew, that's exactly what's happened and will happen, in fact. Again, when you discern with TEBG, just in Q1, they were flattish, but half the business was up mid-single digits and half the business was down mid-single digits. You can really isolate that in the two areas, which is auto, OE and commercial vehicles, and consumer electronics. We show in our slides that electronics as a whole is flattish. What you see there is very strong semiconductor data center business offsetting a weaker consumer electronics business. As we look at the balance of the year, we see electronics starting to get modestly positive. Again, I think CE or consumer electronics may soften a little bit, but we are seeing better trajectory and growth in the data center and the semiconductor business. Yes, Andrew, that's exactly what's happened and will happen, in fact. yes andrew that's exactly what's happened and will happen in fact Again, when you discern with TEBG, just in Q1, they were flattish, but half the business was up mid-single digits and half the business was down mid-single digits. again when you discern with tebg just in q1 they were flattish but half the business was up mid-single digits and half the business was down mid-single digits You can really isolate that in the two areas, which is auto, OE and commercial vehicles, and consumer electronics. you can really isolate that in the two areas which is auto oe and commercial vehicles and consumer electronics We show in our slides that electronics as a whole is flattish. we show in our slides that electronics as a whole is flattish What you see there is very strong semiconductor data center business offsetting a weaker consumer electronics business. what you see there is very strong semiconductor data center business offsetting a weaker consumer electronics business As we look at the balance of the year, we see electronics starting to get modestly positive. as we look at the balance of the year we see electronics starting to get modestly positive Again, I think CE or consumer electronics may soften a little bit, but we are seeing better trajectory and growth in the data center and the semiconductor business. again i think ce or consumer electronics may soften a little bit but we are seeing better trajectory and growth in the data center and the semiconductor business

Speaker 2: Bill, just to follow up on that. At CES, you showcased some pivot in strategy on consumer electronics. You've also talked with your first analyst day about the need to rebuild the R&D pipeline, particularly on the electronic side. Can you just talk about how these two internal initiatives impacting your growth and the growth trajectory over the next 12 months, let's say? Thank you. Bill, just to follow up on that. bill just to follow up on that At CES, you showcased some pivot in strategy on consumer electronics. at ces you showcased some pivot in strategy on consumer electronics You've also talked with your first analyst day about the need to rebuild the R&D pipeline, particularly on the electronic side. you've also talked with your first analyst day about the need to rebuild the r&d pipeline particularly on the electronic side Can you just talk about how these two internal initiatives impacting your growth and the growth trajectory over the next 12 months, let's say? can you just talk about how these two internal initiatives impacting your growth and the growth trajectory over the next 12 months let's say Thank you. thank you

Speaker 4: Yeah, that's a great question. We're putting a lot of time and effort into making sure we have good new product introductions in consumer electronics, both for the premium segment as well as for the mainstream segment. Wendy's been talking about this quite a bit. We are seeing good traction here. Unfortunately, the market isn't cooperating with us. We do see a greater downturn in LCD, which is where our strength happens to be. We do see a lot of innovation in this space. We are gaining some share modestly in the mainstream side. We look at content per device. Yeah, that's a great question. yeah that's a great question We're putting a lot of time and effort into making sure we have good new product introductions in consumer electronics, both for the premium segment as well as for the mainstream segment. we're putting a lot of time and effort into making sure we have good new product introductions in consumer electronics both for the premium segment as well as for the mainstream segment Wendy's been talking about this quite a bit. wendy's been talking about this quite a bit We are seeing good traction here. we are seeing good traction here Unfortunately, the market isn't cooperating with us. unfortunately the market isn't cooperating with us We do see a greater downturn in LCD, which is where our strength happens to be. we do see a greater downturn in lcd which is where our strength happens to be We do see a lot of innovation in this space. we do see a lot of innovation in this space We are gaining some share modestly in the mainstream side. we are gaining some share modestly in the mainstream side We look at content per device. we look at content per device Three of four China OEMs have increased their content per device in the Q1, and the Q4 we saw a pretty good order for. I think we're making some progress here, and this comes on the back of a lot of the NPI work that's happened in TEBG, and there's more to come. Three of four China OEMs have increased their content per device in the Q1 , and the Q4 we saw a pretty good order for. three of four china oems have increased their content per device in the q1 and the q4 we saw a pretty good order for I think we're making some progress here, and this comes on the back of a lot of the NPI work that's happened in TEBG, and there's more to come. i think we're making some progress here and this comes on the back of a lot of the npi work that's happened in tebg and there's more to come

Speaker 2: Very much. Very much. very much

Speaker 15: Our next question comes from Andrew Kaplowitz with Citigroup. Please proceed with your question. Our next question comes from Andrew Kaplowitz with Citigroup. our next question comes from andrew kaplowitz with citigroup Please proceed with your question. please proceed with your question

Speaker 1: Good morning, everyone. Good morning, everyone. good morning everyone

Speaker 4: Hey, good morning, Andy. Hey, good morning, Andy. hey good morning andy

Speaker 1: Can you give us more color into what you're seeing in consumer? I know you talked about share gain actions in consumer, so maybe you can elaborate on what you're doing there, and how much discounting do you have to do to get there? Should consumer contribute to your margin performance this year, or could consumer margin continue to be pressured a bit over the year? Can you give us more color into what you're seeing in consumer? can you give us more color into what you're seeing in consumer I know you talked about share gain actions in consumer, so maybe you can elaborate on what you're doing there, and how much discounting do you have to do to get there? i know you talked about share gain actions in consumer so maybe you can elaborate on what you're doing there and how much discounting do you have to do to get there Should consumer contribute to your margin performance this year, or could consumer margin continue to be pressured a bit over the year? should consumer contribute to your margin performance this year or could consumer margin continue to be pressured a bit over the year

Speaker 4: Look, I'm pleased with what's happening at Consumer. The market for us, we're 70% U.S., so it's really focused on the U.S. consumer. We sell a discretionary product. As Anurag mentioned, we had a couple of pockets of strength in the year from new product introductions. I think the team has really gotten back to basics, focusing on priority brands and started to innovate again. The reality is we went for a lot of years without a lot of new product introductions. A lot are class three, so they're incremental. Some are class four, but really starting to kind of be more aggressive on new product introductions. I think we're holding our own and, in fact, starting to gain back shelf space because we have new product coming into the marketplace. Yeah, it's not a segment that we see upward movement on pricing. Look, I'm pleased with what's happening at Consumer. look i'm pleased with what's happening at consumer The market for us, we're 70% U.S., so it's really focused on the U.S. consumer. the market for us we're 70% u.s so it's really focused on the u.s consumer We sell a discretionary product. we sell a discretionary product As Anurag mentioned, we had a couple of pockets of strength in the year from new product introductions. as anurag mentioned we had a couple of pockets of strength in the year from new product introductions I think the team has really gotten back to basics, focusing on priority brands and started to innovate again. i think the team has really gotten back to basics focusing on priority brands and started to innovate again The reality is we went for a lot of years without a lot of new product introductions. the reality is we went for a lot of years without a lot of new product introductions A lot are class three, so they're incremental. a lot are class three so they're incremental Some are class four, but really starting to kind of be more aggressive on new product introductions. some are class four but really starting to kind of be more aggressive on new product introductions I think we're holding our own and, in fact, starting to gain back shelf space because we have new product coming into the marketplace. i think we're holding our own and in fact starting to gain back shelf space because we have new product coming into the marketplace Yeah, it's not a segment that we see upward movement on pricing. yeah it's not a segment that we see upward movement on pricing We're trying to contain the discounting that happens to be here. Again, the market's a little bit soft. For the year, we expect to see some growth. It'll be positive. It won't be a meaningful driver of the overall 3M growth in the year. But again, we're down 1.3 in Q1, down a little bit more than that in Q4. We were up sort of modestly for the first nine months of last year at 0.3 points. So they're hanging right around flat to up a little bit. When the consumer starts to spend more, we'll have the right products with good innovation, great commercial excellence efforts there, and we'll see that business return to growth. We're trying to contain the discounting that happens to be here. we're trying to contain the discounting that happens to be here Again, the market's a little bit soft. again the market's a little bit soft For the year, we expect to see some growth. for the year we expect to see some growth It'll be positive. it'll be positive It won't be a meaningful driver of the overall 3M growth in the year. it won't be a meaningful driver of the overall 3m growth in the year But again, we're down 1.3 in Q1, down a little bit more than that in Q4. but again we're down 1.3 in q1 down a little bit more than that in q4 We were up sort of modestly for the first nine months of last year at 0.3 points. we were up sort of modestly for the first nine months of last year at 0.3 points So they're hanging right around flat to up a little bit. so they're hanging right around flat to up a little bit When the consumer starts to spend more, we'll have the right products with good innovation, great commercial excellence efforts there, and we'll see that business return to growth. when the consumer starts to spend more we'll have the right products with good innovation great commercial excellence efforts there and we'll see that business return to growth

Speaker 1: Helpful. Bill, maybe just a little more thoughts about portfolio management. You obviously opted for a JV structure with the purchase of Madison, despite seemingly leaning into safety as one of your priorities. Maybe a little more color on why you chose the JV structure there, and then stepping back, can you give us an update on how you're thinking about overall 3M portfolio? I think you've said in the past 2%-3% of your portfolio is actionable in terms of divestitures, 10% is commodity-like. Are those still the right numbers for the company? Helpful. helpful Bill, maybe just a little more thoughts about portfolio management. bill maybe just a little more thoughts about portfolio management You obviously opted for a JV structure with the purchase of Madison, despite seemingly leaning into safety as one of your priorities. you obviously opted for a jv structure with the purchase of madison despite seemingly leaning into safety as one of your priorities Maybe a little more color on why you chose the JV structure there, and then stepping back, can you give us an update on how you're thinking about overall 3M portfolio? maybe a little more color on why you chose the jv structure there and then stepping back can you give us an update on how you're thinking about overall 3m portfolio I think you've said in the past 2%-3% of your portfolio is actionable in terms of divestitures, 10% is commodity-like. i think you've said in the past 2%-3% of your portfolio is actionable in terms of divestitures 10% is commodity-like Are those still the right numbers for the company? are those still the right numbers for the company

Speaker 4: Yeah. Look, I'm really pleased with the structure and the conclusion of this Madison Scott SCBA joint venture, where 51% owner is going to be consolidated. It's a strategic bolt-on acquisition in what you just referred to as a priority vertical. It is. It does strengthen our SCBA business. It's a great brand. We have been innovating in this space. We talked last year about some new innovations coming onto the marketplace. This also creates some scale by putting this business together for future organic and inorganic opportunities. Madison, and all of its fire and rescue products, have been performing very well. They bring a terrific management team. They're growing double digits. The margins are coming up. I think it's a great combination in a space that we like quite a bit. Bain Capital is our partner on this. They're 49%. We know them well. Yeah. yeah Look, I'm really pleased with the structure and the conclusion of this Madison Scott SCBA joint venture, where 51% owner is going to be consolidated. look i'm really pleased with the structure and the conclusion of this madison scott scba joint venture where 51% owner is going to be consolidated It's a strategic bolt-on acquisition in what you just referred to as a priority vertical. it's a strategic bolt-on acquisition in what you just referred to as a priority vertical It is. it is It does strengthen our SCBA business. it does strengthen our scba business It's a great brand. it's a great brand We have been innovating in this space. we have been innovating in this space We talked last year about some new innovations coming onto the marketplace. we talked last year about some new innovations coming onto the marketplace This also creates some scale by putting this business together for future organic and inorganic opportunities. this also creates some scale by putting this business together for future organic and inorganic opportunities Madison, and all of its fire and rescue products, have been performing very well. madison and all of its fire and rescue products have been performing very well They bring a terrific management team. they bring a terrific management team They're growing double digits. they're growing double digits The margins are coming up. the margins are coming up I think it's a great combination in a space that we like quite a bit. i think it's a great combination in a space that we like quite a bit Bain Capital is our partner on this. bain capital is our partner on this They're 49%. they're 49% We know them well. we know them well They are very good at post-merger integration. They bring a lot of operating rigor, and good expertise on driving incremental M&A while we focus on other areas around the company. When you put all that together, I think it's a strategic opportunity for us. It gives some optionality for do we pull it back or do we suit something else over time. The reality is, it's a terrific deal that is going to be accretive to our growth margins, earnings over time. I feel pretty good about that particular deal. We closed on PG&F, the precision grinding business, on April 1st. It wasn't very big, but businesses that don't perform sometimes can be difficult to transact on. I'm very pleased that that one got over the line. We continue to look at the rest of the portfolio. They are very good at post-merger integration. they are very good at post-merger integration They bring a lot of operating rigor, and good expertise on driving incremental M&A while we focus on other areas around the company. they bring a lot of operating rigor and good expertise on driving incremental m&a while we focus on other areas around the company When you put all that together, I think it's a strategic opportunity for us. when you put all that together i think it's a strategic opportunity for us It gives some optionality for do we pull it back or do we suit something else over time. it gives some optionality for do we pull it back or do we suit something else over time The reality is, it's a terrific deal that is going to be accretive to our growth margins, earnings over time. the reality is it's a terrific deal that is going to be accretive to our growth margins earnings over time I feel pretty good about that particular deal. i feel pretty good about that particular deal We closed on PG&F, the precision grinding business, on April 1st. we closed on pg&f the precision grinding business on april 1st It wasn't very big, but businesses that don't perform sometimes can be difficult to transact on. it wasn't very big but businesses that don't perform sometimes can be difficult to transact on I'm very pleased that that one got over the line. i'm very pleased that that one got over the line We continue to look at the rest of the portfolio. we continue to look at the rest of the portfolio Yes, around 10% of our business is more commodity-like, where we don't have a clear right to win, not a lot of technology differentiation. We said 2%-3% was in flight. PG&F was part of that. We continue to evaluate this, and we'll talk to investors as we go on what that shaping happens to be. The reality, investors should see that the transaction on Madison with Scott is an important strategic signal for investors around the things that we want to do to reshape our portfolio to be structurally higher growth and higher margin potential. Yes, around 10% of our business is more commodity-like, where we don't have a clear right to win, not a lot of technology differentiation. yes around 10% of our business is more commodity-like where we don't have a clear right to win not a lot of technology differentiation We said 2%-3% was in flight. we said 2%-3% was in flight PG&F was part of that. pg&f was part of that We continue to evaluate this, and we'll talk to investors as we go on what that shaping happens to be. we continue to evaluate this and we'll talk to investors as we go on what that shaping happens to be The reality, investors should see that the transaction on Madison with Scott is an important strategic signal for investors around the things that we want to do to reshape our portfolio to be structurally higher growth and higher margin potential. the reality investors should see that the transaction on madison with scott is an important strategic signal for investors around the things that we want to do to reshape our portfolio to be structurally higher growth and higher margin potential

Speaker 1: Appreciate all the color. Appreciate all the color. appreciate all the color

Speaker 4: Sure. Sure. sure

Speaker 15: Our next question comes from the line of Chigusa Katoku with J.P. Morgan. Please proceed with your question. Our next question comes from the line of Chigusa Katoku with J.P. our next question comes from the line of chigusa katoku with j.p Morgan. morgan Please proceed with your question. please proceed with your question

Speaker 5: Hi. Good morning. Thanks for taking my question. First, can you maybe recalibrate us on the outlook for U.S. IP and electronics you're embedding in your assumptions for the full year? I think it was U.S. IP flat, electronics up mid-single digit last quarter. Hi. hi Good morning. good morning Thanks for taking my question. thanks for taking my question First, can you maybe recalibrate us on the outlook for U.S. first can you maybe recalibrate us on the outlook for u.s IP and electronics you're embedding in your assumptions for the full year? ip and electronics you're embedding in your assumptions for the full year I think it was U.S. i think it was u.s IP flat, electronics up mid-single digit last quarter. ip flat electronics up mid-single digit last quarter

Speaker 4: Sorry, Chigusa, you're talking about IPI, the macro? Sorry, Chigusa, you're talking about IPI, the macro? sorry chigusa you're talking about ipi the macro

Speaker 5: Yep. The U.S. IPI. Yep. yep The U.S. the u.s IPI. ipi

Speaker 4: Okay. Well, thanks for the question, and I guess congratulations in the role. Welcome to the call. Just in terms of the macro, as we came into Q1, we saw some of the similar trends we saw in 2025 continue. Maybe a couple of comments relative to where we were in January. The global IPI is still around 2%. It's not moved around very much. U.S. is up a little bit better. EMEA is down a little bit. China's still mid-single digits. Interestingly, those trends are exactly what we saw in our business through Q1. U.S. up a little bit, Europe down a little bit, China mid-single digits. It's pretty much aligned with that. GDP is still sort of in that same 2.5% range. Auto builds are still floating around between flat to down 1%. It's really early in the year. Okay. okay Well, thanks for the question, and I guess congratulations in the role. well thanks for the question and i guess congratulations in the role Welcome to the call. welcome to the call Just in terms of the macro, as we came into Q1, we saw some of the similar trends we saw in 2025 continue. just in terms of the macro as we came into q1 we saw some of the similar trends we saw in 2025 continue Maybe a couple of comments relative to where we were in January. maybe a couple of comments relative to where we were in january The global IPI is still around 2%. the global ipi is still around 2% It's not moved around very much. it's not moved around very much U.S. is up a little bit better. u.s is up a little bit better EMEA is down a little bit. emea is down a little bit China's still mid-single digits. china's still mid-single digits Interestingly, those trends are exactly what we saw in our business through Q1. interestingly those trends are exactly what we saw in our business through q1 U.S. up a little bit, Europe down a little bit, China mid-single digits. u.s up a little bit europe down a little bit china mid-single digits It's pretty much aligned with that. it's pretty much aligned with that GDP is still sort of in that same 2.5% range. gdp is still sort of in that same 2.5% range Auto builds are still floating around between flat to down 1%. auto builds are still floating around between flat to down 1% It's really early in the year. it's really early in the year I think that tends to be more of a backward-looking indicator, but right now it's sort of flat to down a little bit. U.S. retail is flattish. The place that we're watching a little bit is consumer electronics, where the outlook is for a little bit more softness as we get into the back end of the year. Overall, the macro is trending about where we saw it in January and through last year. I think that tends to be more of a backward-looking indicator, but right now it's sort of flat to down a little bit. i think that tends to be more of a backward-looking indicator but right now it's sort of flat to down a little bit U.S. retail is flattish. u.s retail is flattish The place that we're watching a little bit is consumer electronics, where the outlook is for a little bit more softness as we get into the back end of the year. the place that we're watching a little bit is consumer electronics where the outlook is for a little bit more softness as we get into the back end of the year Overall, the macro is trending about where we saw it in January and through last year. overall the macro is trending about where we saw it in january and through last year

Speaker 5: Okay, great. Thanks. Then on this contingency, I was just wondering what it would take for you to remove this. I think it's prudent that you're including in guidance, but you've been seeing good order trends. You're operationally raising guidance by about $0.025. Without this contingency, it would have been a $0.10 raise. Kind of what would it take for this to be removed? Okay, great. okay great Thanks. thanks Then on this contingency, I was just wondering what it would take for you to remove this. then on this contingency i was just wondering what it would take for you to remove this I think it's prudent that you're including in guidance, but you've been seeing good order trends. i think it's prudent that you're including in guidance but you've been seeing good order trends You're operationally raising guidance by about $0.025. you're operationally raising guidance by about $0.025 Without this contingency, it would have been a $0.10 raise. without this contingency it would have been a $0.10 raise Kind of what would it take for this to be removed? kind of what would it take for this to be removed

Speaker 3: Yeah. Thank you for the question, Chigusa. Listen, we'll probably give you an update in our next earnings call on that. As we go through the next couple of months, we're pretty confident with the backlog and auto momentum on the Q2 revenue. We'll see how that plays out, as well as we have executed. We have a very good playbook which we adopted from the tariffs last year in terms of working with the customers and pushing out the price increases over there. That's an area we will kind of monitor on the yield over there over the next couple of months. Plus, see where oil's at which levels it's at after a few months. Yeah. yeah Thank you for the question, Chigusa. thank you for the question chigusa Listen, we'll probably give you an update in our next earnings call on that. listen we'll probably give you an update in our next earnings call on that As we go through the next couple of months, we're pretty confident with the backlog and auto momentum on the Q2 revenue. as we go through the next couple of months we're pretty confident with the backlog and auto momentum on the q2 revenue We'll see how that plays out, as well as we have executed. we'll see how that plays out as well as we have executed We have a very good playbook which we adopted from the tariffs last year in terms of working with the customers and pushing out the price increases over there. we have a very good playbook which we adopted from the tariffs last year in terms of working with the customers and pushing out the price increases over there That's an area we will kind of monitor on the yield over there over the next couple of months. that's an area we will kind of monitor on the yield over there over the next couple of months Plus, see where oil's at which levels it's at after a few months. plus see where oil's at which levels it's at after a few months If we continue performing the way we did in Q1, both on the productivity as well as on operational excellence, then come July, we will give you an update on where we stand for the full year. If we continue performing the way we did in Q1, both on the productivity as well as on operational excellence, then come July, we will give you an update on where we stand for the full year. if we continue performing the way we did in q1 both on the productivity as well as on operational excellence then come july we will give you an update on where we stand for the full year

Speaker 5: Okay, great. Thank you. Okay, great. okay great Thank you. thank you

Speaker 15: Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question. Our next question comes from the line of Nigel Coe with Wolfe Research. our next question comes from the line of nigel coe with wolfe research Please proceed with your question. please proceed with your question

Speaker 14: Oh, thanks. Good morning. Thanks for the question. We've covered most of the major topics, so I just wanted to, a couple of quick follow-ons. Just going back to the pre-buy comments. Just trying to understand why you think there may have been a pre-buy. Is it because you're trying to rationalize the strong orders, or is it something else that you're hearing from customers? Just maybe cover that. Then on the 50 basis points of the initial price, is that in the form of a surcharge? It certainly seems like a surcharge, so that rolls back if oil comes down. Would that hit in Q2 or is that more in the H2 of the year? Thanks. Oh, thanks. oh thanks Good morning. good morning Thanks for the question. thanks for the question We've covered most of the major topics, so I just wanted to, a couple of quick follow-ons. we've covered most of the major topics so i just wanted to a couple of quick follow-ons Just going back to the pre-buy comments. just going back to the pre-buy comments Just trying to understand why you think there may have been a pre-buy. just trying to understand why you think there may have been a pre-buy Is it because you're trying to rationalize the strong orders, or is it something else that you're hearing from customers? is it because you're trying to rationalize the strong orders or is it something else that you're hearing from customers Just maybe cover that. just maybe cover that Then on the 50 basis points of the initial price, is that in the form of a surcharge? then on the 50 basis points of the initial price is that in the form of a surcharge It certainly seems like a surcharge, so that rolls back if oil comes down. it certainly seems like a surcharge so that rolls back if oil comes down Would that hit in Q 2 or is that more in the H2 of the year? would that hit in q 2 or is that more in the h2 of the year Thanks. thanks

Speaker 4: Really, Nigel, thanks for the questions. Look, it's hard to avoid the fact that we're pushing pricing a little bit more aggressively. We know there's an inflationary environment. We know the price of oil is going to go up. We know the impact on our company. We know perhaps what we did four or five years ago, maybe not moved as quickly on pricing when oil came up, which we're correcting for that. I think we're being a lot more attuned to what's going on in the macro, and we're enforcing it better. If a shipment goes out beyond a date, that shipment will have a price increase associated with it. I think customers have seen that and heard that. Maybe when you put all that together, it gives a sense that perhaps there's some advanced buying from these price increases that are going out. Really, Nigel, thanks for the questions. really nigel thanks for the questions Look, it's hard to avoid the fact that we're pushing pricing a little bit more aggressively. look it's hard to avoid the fact that we're pushing pricing a little bit more aggressively We know there's an inflationary environment. we know there's an inflationary environment We know the price of oil is going to go up. we know the price of oil is going to go up We know the impact on our company. we know the impact on our company We know perhaps what we did four or five years ago, maybe not moved as quickly on pricing when oil came up, which we're correcting for that. we know perhaps what we did four or five years ago maybe not moved as quickly on pricing when oil came up which we're correcting for that I think we're being a lot more attuned to what's going on in the macro, and we're enforcing it better. i think we're being a lot more attuned to what's going on in the macro and we're enforcing it better If a shipment goes out beyond a date, that shipment will have a price increase associated with it. if a shipment goes out beyond a date that shipment will have a price increase associated with it I think customers have seen that and heard that. i think customers have seen that and heard that Maybe when you put all that together, it gives a sense that perhaps there's some advanced buying from these price increases that are going out. maybe when you put all that together it gives a sense that perhaps there's some advanced buying from these price increases that are going out Again, we'll know more in the next month, six weeks, how much of that might be pre-buy, simply because we'll watch the orders through the balance of the quarter into May. That's kind of basically how we're thinking about the pre-buy here at the moment. On pricing, yeah, we do see right now about $125 million worth of cost impact, which would have been relayed into pricing, and that would translate to about 50 basis points. That's factored into the guidance of about 3% organic for the year. That's kind of what we're thinking at the moment on pricing. Again, we'll know more in the next month, six weeks, how much of that might be pre-buy, simply because we'll watch the orders through the balance of the quarter into May. again we'll know more in the next month six weeks how much of that might be pre-buy simply because we'll watch the orders through the balance of the quarter into may That's kind of basically how we're thinking about the pre-buy here at the moment. that's kind of basically how we're thinking about the pre-buy here at the moment On pricing, yeah, we do see right now about $125 million worth of cost impact, which would have been relayed into pricing, and that would translate to about 50 basis points. on pricing yeah we do see right now about $125 million worth of cost impact which would have been relayed into pricing and that would translate to about 50 basis points That's factored into the guidance of about 3% organic for the year. that's factored into the guidance of about 3% organic for the year That's kind of what we're thinking at the moment on pricing. that's kind of what we're thinking at the moment on pricing

Speaker 15: Our next question comes from the line of Chris Snyder with Morgan Stanley. Please proceed with your question. Our next question comes from the line of Chris Snyder with Morgan Stanley. our next question comes from the line of chris snyder with morgan stanley Please proceed with your question. please proceed with your question

Speaker 7: Thank you. I wanted to also follow up on pricing and I guess a little bit on price cost. When do these surcharges take effect? I would imagine some point in Q2, but any color on when they take effect would be helpful. It just seems like with the $120 million of cost inflation that you referenced, Bill, and the 50 basis points of price, the plan here is to, I guess, be neutral on price cost. I ask because if I remember a year ago, you guys were actually EPS negative on the tariff inflation. Just want to make sure I have that neutral view right. Thank you. Thank you. thank you I wanted to also follow up on pricing and I guess a little bit on price cost. i wanted to also follow up on pricing and i guess a little bit on price cost When do these surcharges take effect? when do these surcharges take effect I would imagine some point in Q2, but any color on when they take effect would be helpful. i would imagine some point in q2 but any color on when they take effect would be helpful It just seems like with the $120 million of cost inflation that you referenced, Bill, and the 50 basis points of price, the plan here is to, I guess, be neutral on price cost. it just seems like with the $120 million of cost inflation that you referenced bill and the 50 basis points of price the plan here is to i guess be neutral on price cost I ask because if I remember a year ago, you guys were actually EPS negative on the tariff inflation. i ask because if i remember a year ago you guys were actually eps negative on the tariff inflation Just want to make sure I have that neutral view right. just want to make sure i have that neutral view right Thank you. thank you

Speaker 4: Chris, I think we've learned a little bit. Yeah, we're moving a lot faster than we did last year on tariffs. Tariffs came on and I think maybe we're a little tentative up front, but I think we ended up offsetting a good part of the tariffs with cost and price. We're trying to be careful on that. Yeah, exactly. We will offset cost increases associated with oil through price increases and that's the assumption that we're making here. I mean, you're right. Historically, we have covered material cost inflation with pricing. Historically, with a 2% material inflation, that would translate into roughly 50 basis points of price. For the year, we are guiding to about 80 basis points. Again, a little bit lighter in Q1, but inflation in Q1 came in a little bit lighter as well. For the year, 80 basis points. Chris, I think we've learned a little bit. chris i think we've learned a little bit Yeah, we're moving a lot faster than we did last year on tariffs. yeah we're moving a lot faster than we did last year on tariffs Tariffs came on and I think maybe we're a little tentative up front, but I think we ended up offsetting a good part of the tariffs with cost and price. tariffs came on and i think maybe we're a little tentative up front but i think we ended up offsetting a good part of the tariffs with cost and price We're trying to be careful on that. we're trying to be careful on that Yeah, exactly. yeah exactly We will offset cost increases associated with oil through price increases and that's the assumption that we're making here. we will offset cost increases associated with oil through price increases and that's the assumption that we're making here I mean, you're right. i mean you're right Historically, we have covered material cost inflation with pricing. historically we have covered material cost inflation with pricing Historically, with a 2% material inflation, that would translate into roughly 50 basis points of price. historically with a 2% material inflation that would translate into roughly 50 basis points of price For the year, we are guiding to about 80 basis points. for the year we are guiding to about 80 basis points Again, a little bit lighter in Q1, but inflation in Q1 came in a little bit lighter as well. again a little bit lighter in q1 but inflation in q1 came in a little bit lighter as well For the year, 80 basis points. for the year 80 basis points With oil coming in, that's driving an incremental 50 basis points of price. Total about 1.3 points roughly for the year on pricing. That's our current expectation. It's not a surcharge. The price is going out embedded into the pricing of our products, and it's dependent on the product and the geography, but generally speaking, it was less of a surcharge, more being built into the underlying price. With oil coming in, that's driving an incremental 50 basis points of price. with oil coming in that's driving an incremental 50 basis points of price Total about 1.3 points roughly for the year on pricing. total about 1.3 points roughly for the year on pricing That's our current expectation. that's our current expectation It's not a surcharge. it's not a surcharge The price is going out embedded into the pricing of our products, and it's dependent on the product and the geography, but generally speaking, it was less of a surcharge, more being built into the underlying price. the price is going out embedded into the pricing of our products and it's dependent on the product and the geography but generally speaking it was less of a surcharge more being built into the underlying price

Speaker 3: Yeah. In terms of the rollout in the timeline, we've already started in April in a couple of countries in Asia, and then in the United States, it starts in May 1st and Europe as well. It is imminent right now with all the letters going out to the customers knowing when the surcharge is going to impact them, or price increase is going to impact them. Yeah. Yeah. yeah In terms of the rollout in the timeline, we've already started in April in a couple of countries in Asia, and then in the United States, it starts in May 1st and Europe as well. in terms of the rollout in the timeline we've already started in april in a couple of countries in asia and then in the united states it starts in may 1st and europe as well It is imminent right now with all the letters going out to the customers knowing when the surcharge is going to impact them, or p rice increase is going to impact them. it is imminent right now with all the letters going out to the customers knowing when the surcharge is going to impact them, or p rice increase is going to impact them Yeah. yeah

Speaker 7: Thank you. I appreciate that. Maybe if I could follow up, just any color you could provide on how firm or how much flexibility is there on these delivery dates for these orders or what's in the backlog? I guess ask, because I remember a year ago, there was elongation on those orders, I think tied to some of the pre-ordering ahead of tariffs, and it seems like there could be some of that again now. Just kind of wondering, trying to gauge that as a potential risk into Q2. Thank you. Thank you. thank you I appreciate that. i appreciate that Maybe if I could follow up, just any color you could provide on how firm or how much flexibility is there on these delivery dates for these orders or what's in the backlog? maybe if i could follow up just any color you could provide on how firm or how much flexibility is there on these delivery dates for these orders or what's in the backlog I guess ask, because I remember a year ago, there was elongation on those orders, I think tied to some of the pre-ordering ahead of tariffs, and it seems like there could be some of that again now. i guess ask because i remember a year ago there was elongation on those orders i think tied to some of the pre-ordering ahead of tariffs and it seems like there could be some of that again now Just kind of wondering, trying to gauge that as a potential risk into Q2. just kind of wondering trying to gauge that as a potential risk into q2 Thank you. thank you

Speaker 3: Yeah. Chris, the delivery is limited to the lead times that we have. It's not like an order can be placed for 6 months or 12 months of delivery. It's definitely within the time frame that is we always prescribe. Yeah. Yeah. yeah Chris, the delivery is limited to the lead times that we have. chris the delivery is limited to the lead times that we have It's not like an order can be placed for 6 months or 12 months of delivery. it's not like an order can be placed for 6 months or 12 months of delivery It's definitely within the time frame that is we always prescribe. it's definitely within the time frame that is we always prescribe Yeah. yeah

Speaker 7: Thank you. Thank you. thank you

Speaker 15: Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question. Our next question comes from the line of Amit Mehrotra with UBS. our next question comes from the line of amit mehrotra with ubs Please proceed with your question. please proceed with your question

Speaker 17: Good morning. This is Neil. I'm for Amit. I know we just got Q1 results, but if I could ask about the growth algorithms into 2027 because the outlook suggests some meaningful improvement in trends exiting this year. If I just look at new product introductions, for example, I mean, these are accelerating and if we add maybe 2 points of macro growth to new product introduction, would that math imply that 3M is growing around 4.5% organically next year? Good morning. good morning This is Neil. this is neil I'm for Amit. i'm for amit I know we just got Q1 results, but if I could ask about the growth algorithms into 2027 because the outlook suggests some meaningful improvement in trends exiting this year. i know we just got q1 results but if i could ask about the growth algorithms into 2027 because the outlook suggests some meaningful improvement in trends exiting this year If I just look at new product introductions, for example, I mean, these are accelerating and if we add maybe 2 points of macro growth to new product introduction, would that math imply that 3M is growing around 4.5% organically next year? if i just look at new product introductions for example i mean these are accelerating and if we add maybe 2 points of macro growth to new product introduction would that math imply that 3m is growing around 4.5% organically next year

Speaker 3: Yeah. Hey, thanks for the question, Amit. I'll start and Bill can add from there. Yeah. yeah Hey, thanks for the question, Amit. hey thanks for the question amit I'll start and Bill can add from there. i'll start and bill can add from there

Speaker 4: It's Neil. It's Neil. it's neil

Speaker 3: Yeah. Yeah. yeah

Speaker 4: Neil. Neil. neil

Speaker 3: I'm sorry. Neil for Amit. Yeah.We said this year that we will grow about $333 million above macro. As we get into the H2 of the year, from the exit rates, you're right, we will be north of 3.5%, which would imply that we would be above where we are in the H1 and above where the full year would be. We do feel very good as we enter into next year, with what we are doing on the NPI as well as what we are doing on commercial excellence and how that is translating. First is obviously we got to grow in the Q2 about 3%. I'm sorry. i'm sorry Neil for Amit. neil for amit Yeah. yeah We said this year that we will grow about $333 million above macro. we said this year that we will grow about $333 million above macro As we get into the H2 of the year, from the exit rates, you're right, we will be north of 3.5%, which would imply that we would be above where we are in the H1 and above where the full year would be. as we get into the h2 of the year from the exit rates you're right we will be north of 3.5% which would imply that we would be above where we are in the h1 and above where the full year would be We do feel very good as we enter into next year, with what we are doing on the NPI as well as what we are doing on commercial excellence and how that is translating. we do feel very good as we enter into next year with what we are doing on the npi as well as what we are doing on commercial excellence and how that is translating First is obviously we got to grow in the Q2 about 3%. first is obviously we got to grow in the q2 about 3%

Speaker 4: If we do grow above the 3.5% in the H2 of the year, I think it'll give us good momentum to kind of accelerate the growth into 2027. It's a little bit too early to kind of talk about that, and we'll provide more color as we go through the course of the year. If we do grow above the 3.5% in the H2 of the year, I think it'll give us good momentum to kind of accelerate the growth into 2027. if we do grow above the 3.5% in the h2 of the year i think it'll give us good momentum to kind of accelerate the growth into 2027 It's a little bit too early to kind of talk about that, and we'll provide more color as we go through the course of the year. it's a little bit too early to kind of talk about that and we'll provide more color as we go through the course of the year

Speaker 17: Great. Thank you. Great. great Thank you. thank you

Speaker 15: Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question. Our next question comes from the line of Deane Dray with RBC Capital Markets. our next question comes from the line of deane dray with rbc capital markets Please proceed with your question. please proceed with your question

Speaker 8: Thank you. Good morning, everyone. Thank you. thank you Good morning, everyone. good morning everyone

Speaker 4: Good morning, Deane. Good morning, Deane. good morning deane

Speaker 8: I was hoping we can address the point of sale momentum. That's a surprising number, up seven out of the last eight weeks, given the pockets of macro pressure. Just your impression here, is this consumer-driven? Is it more on the commercial side at all? Just some context and the momentum into April. I was hoping we can address the point of sale momentum. i was hoping we can address the point of sale momentum That's a surprising number, up seven out of the last eight weeks, given the pockets of macro pressure. that's a surprising number up seven out of the last eight weeks given the pockets of macro pressure Just your impression here, is this consumer-driven? just your impression here is this consumer-driven Is it more on the commercial side at all? is it more on the commercial side at all Just some context and the momentum into April. just some context and the momentum into april

Speaker 4: Deane, it is consumer-driven because in the Consumer Business Group, I think it's very encouraging for us to see POS up. That's a sell-out, 7 weeks of 8 weeks, which I think is really good. It does kind of make us feel a little bit better going into Q2 and that consumer business stabilizing, perhaps growing a little bit in Q2 and the balance of the year. Those are good trends. I think it reflects the team's very aggressive efforts on driving promotions, getting shelf space, driving NPI, being really aggressive at hustling at the customer interface, good on-time performance, still in at 95%-94.5% range. Just really good work. Anurag talked a little bit about a couple of pockets that are growing a bit better, but it's pretty broad-based. Deane, it is consumer-driven because in the Consumer Business Group, I think it's very encouraging for us to see POS up. deane it is consumer-driven because in the consumer business group i think it's very encouraging for us to see pos up That's a sell-out, 7 weeks of 8 weeks, which I think is really good. that's a sell-out 7 weeks of 8 weeks which i think is really good It does kind of make us feel a little bit better going into Q2 and that consumer business stabilizing, perhaps growing a little bit in Q2 and the balance of the year. it does kind of make us feel a little bit better going into q2 and that consumer business stabilizing perhaps growing a little bit in q2 and the balance of the year Those are good trends. those are good trends I think it reflects the team's very aggressive efforts on driving promotions, getting shelf space, driving NPI, being really aggressive at hustling at the customer interface, good on-time performance, still in at 95%-94.5% range. i think it reflects the team's very aggressive efforts on driving promotions getting shelf space driving npi being really aggressive at hustling at the customer interface good on-time performance still in at 95%-94.5% range Just really good work. just really good work Anurag talked a little bit about a couple of pockets that are growing a bit better, but it's pretty broad-based. anurag talked a little bit about a couple of pockets that are growing a bit better but it's pretty broad-based We see really good trajectory here through the Q1 now going into Q2 on the clubs, which is not surprising, given where consumers happen to be today. We feel good about the trends and good about the outlook for Q2 so far. We see really good trajectory here through the Q1 now going into Q2 on the clubs, which is not surprising, given where consumers happen to be today. we see really good trajectory here through the q1 now going into q2 on the clubs which is not surprising given where consumers happen to be today We feel good about the trends and good about the outlook for Q2 so far. we feel good about the trends and good about the outlook for q2 so far

Speaker 8: Good to hear. I'd love to hear a bit more about the Expanded Beam Optics opportunity. There's a lot of focus on this. It's addressing the data transfer bottlenecks in AI processing. Just where do you stand competitively? How quickly can you ramp on this? Is there any question of manufacturing capacity? Because the take rate on this is one of the fastest-growing right now in data centers. Good to hear. good to hear I'd love to hear a bit more about the Expanded Beam Optics opportunity. i'd love to hear a bit more about the expanded beam optics opportunity There's a lot of focus on this. there's a lot of focus on this It's addressing the data transfer bottlenecks in AI processing. it's addressing the data transfer bottlenecks in ai processing Just where do you stand competitively? just where do you stand competitively How quickly can you ramp on this? how quickly can you ramp on this Is there any question of manufacturing capacity? is there any question of manufacturing capacity Because the take rate on this is one of the fastest-growing right now in data centers. because the take rate on this is one of the fastest-growing right now in data centers

Speaker 4: Well, Deane, exactly. That's why we're so optimistic about it and why we're talking more about it, and the fact that we've had some really good, robust IP protection around the technology. It is Expanded Beam, so it's not a point-to-point fiber connection at the data center. It's sort of like an easy click between two pieces of multi-fiber devices, ferrules, that come together, and we can put that together at 80% less time with a less trained technician. Better reliability, can operate in a dusty environment, which is why it's gotten some good take rate. We've had at least a validation by at least one hyperscaler. A second one is in testing. I expect that will be positive as well. We had a fairly large order come in in Q1 relating to the hyperscaler that has certified it. We are in a ramp-up mode. Well, Deane, exactly. well deane exactly That's why we're so optimistic about it and why we're talking more about it, and the fact that we've had some really good, robust IP protection around the technology. that's why we're so optimistic about it and why we're talking more about it and the fact that we've had some really good robust ip protection around the technology It is Expanded Beam, so it's not a point-to-point fiber connection at the data center. it is expanded beam so it's not a point-to-point fiber connection at the data center It's sort of like an easy click between two pieces of multi-fiber devices, ferrules, that come together, and we can put that together at 80% less time with a less trained technician. it's sort of like an easy click between two pieces of multi-fiber devices ferrules that come together and we can put that together at 80% less time with a less trained technician Better reliability, can operate in a dusty environment, which is why it's gotten some good take rate. better reliability can operate in a dusty environment which is why it's gotten some good take rate We've had at least a validation by at least one hyperscaler. we've had at least a validation by at least one hyperscaler A second one is in testing. a second one is in testing I expect that will be positive as well. i expect that will be positive as well We had a fairly large order come in in Q1 relating to the hyperscaler that has certified it. we had a fairly large order come in in q1 relating to the hyperscaler that has certified it We are in a ramp-up mode. we are in a ramp-up mode We will double capacity towards the back end of the year. We're investing quite significantly to expand capacity. We're relying on other partners in the space. Hyperscalers won't go with a single source of supply, so we've got to make sure we have some dual source, either couple of factories or us with a contract manufacturer. All of this is working. We're working the ecosystem. The pace at which this has happened is very encouraging, and the team is pushing hard. I'm really optimistic about where it's going to go from here. This is a polymer EBO. As it moves to ceramics, which is more EBO or fiber to the chip, I think it opens up a lot more opportunities with a lot of other players in the space. Look, it's encouraging, which is why we wanted to share it today with investors. We will double capacity towards the back end of the year. we will double capacity towards the back end of the year We're investing quite significantly to expand capacity. we're investing quite significantly to expand capacity We're relying on other partners in the space. we're relying on other partners in the space Hyperscalers won't go with a single source of supply, so we've got to make sure we have some dual source, either couple of factories or us with a contract manufacturer. hyperscalers won't go with a single source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors All of this is working. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors We're working the ecosystem. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors The pace at which this has happened is very encouraging, and the team is pushing hard. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors I'm really optimistic about where it's going to go from here. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors This is a polymer EBO. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors As it moves to ceramics, which is more EBO or fiber to the chip, I think it opens up a lot more opportunities with a lot of other players in the space. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors Look, it's encouraging, which is why we wanted to share it today with investors. source of supply so we've got to make sure we have some dual source either couple of factories or us with a contract manufacturer all of this is working we're working the ecosystem the pace at which this has happened is very encouraging and the team is pushing hard i'm really optimistic about where it's going to go from here this is a polymer ebo as it moves to ceramics which is more ebo or fiber to the chip i think it opens up a lot more opportunities with a lot of other players in the space look it's encouraging which is why we wanted to share it today with investors

Speaker 8: Great. Thank you. Great. great Thank you. thank you

Speaker 4: Sure. Sure. sure

Speaker 15: Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please proceed with your question. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. our next question comes from the line of nicole deblase with deutsche bank Please proceed with your question. please proceed with your question

Speaker 13: Yeah, thanks. Good morning, guys, and thanks for fitting me in here. I'm just going to ask one since we're near the top of the hour and we've gotten through a lot of the questions on my list. Just on some of the margin puts and takes. Have you guys made any changes to your full-year productivity assumption or stranded costs or growth investments? I guess, was any of that kind of front-loaded into the Q1? How are we thinking about phasing throughout the year of those three items? Thank you. Yeah, thanks. yeah thanks Good morning, guys, and thanks for fitting me in here. good morning guys and thanks for fitting me in here I'm just going to ask one since we're near the top of the hour and we've gotten through a lot of the questions on my list. i'm just going to ask one since we're near the top of the hour and we've gotten through a lot of the questions on my list Just on some of the margin puts and takes. just on some of the margin puts and takes Have you guys made any changes to your full-year productivity assumption or stranded costs or growth investments? have you guys made any changes to your full-year productivity assumption or stranded costs or growth investments I guess, was any of that kind of front-loaded into the Q1 ? i guess was any of that kind of front-loaded into the q1 How are we thinking about phasing throughout the year of those three items? how are we thinking about phasing throughout the year of those three items Thank you. thank you

Speaker 3: Right. Thanks for the question, Nicole. We said that we have a contingency of $0.05-$0.15. Let's say at the midpoint it's $0.10. About half of that is because of productivity, and most of that was in the Q1. I would say the only two changes that we made from our previous guidance of $0.05 of that was very good productivity, both on the supply chain side as well as the G&A, and a lot of it we saw in the Q1. Obviously, we can try to continue with the momentum that we have. Right. right Thanks for the question, Nicole. thanks for the question nicole We said that we have a contingency of $0.05-$0.15. we said that we have a contingency of $0.05-$0.15 Let's say at the midpoint it's $0.10. let's say at the midpoint it's $0.10 About half of that is because of productivity, and most of that was in the Q1 . about half of that is because of productivity and most of that was in the q1 I would say the only two changes that we made from our previous guidance of $0.05 of that was very good productivity, both on the supply chain side as well as the G&A, and a lot of it we saw in the Q1 . i would say the only two changes that we made from our previous guidance of $0.05 of that was very good productivity both on the supply chain side as well as the g&a and a lot of it we saw in the q1 Obviously, we can try to continue with the momentum that we have. obviously we can try to continue with the momentum that we have The second $0.05 at the midpoint, I would say, is because of our active capital deployment, where we bought back $2 billion of shares in the Q1 out of $2.5 billion, which obviously gives us accretion through the course of the year and active cash management with the cash balance that we have. Those are the big changes. The second $0.05 at the midpoint, I would say, is because of our active capital deployment, where we bought back $2 billion of shares in the Q1 out of $2.5 billion, which obviously gives us accretion through the course of the year and active cash management with the cash balance that we have. the second $0.05 at the midpoint i would say is because of our active capital deployment where we bought back $2 billion of shares in the q1 out of $2.5 billion which obviously gives us accretion through the course of the year and active cash management with the cash balance that we have Those are the big changes. those are the big changes We're not changing our productivity guidance, stranded cost guidance at $150, tariffs. That all stays the same as it was back in January. We're not changing our productivity guidance, stranded cost guidance at $150, tariffs. we're not changing our productivity guidance stranded cost guidance at $150 tariffs That all stays the same as it was back in January. that all stays the same as it was back in january

Speaker 4: Yep. Yep. yep

Speaker 13: Got it. Thanks, guys. I'll pass it on. Got it. got it Thanks, guys. thanks guys I'll pass it on. i'll pass it on

Speaker 4: Thank you, Nicole. Thank you, Nicole. thank you nicole

Speaker 15: Our final question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question. Our final question comes from the line of Laurence Alexander with Jefferies. our final question comes from the line of laurence alexander with jefferies Please proceed with your question. please proceed with your question

Speaker 12: Good morning, Anurag Thanks, Anurag. Just very quickly, can you just address what your customers are saying about potential supply chain bottlenecks? I guess particularly in the kind of sulfur, helium, methanol derivatives chains. Are those factored into your contingency that you kind of see ways to work around those shortages if they develop in the H2 of the year? Good morning, Anurag Thanks, Anurag . good morning anurag thanks anurag Just very quickly, can you just address what your customers are saying about potential supply chain bottlenecks? just very quickly can you just address what your customers are saying about potential supply chain bottlenecks I guess particularly in the kind of sulfur, helium, methanol derivatives chains. i guess particularly in the kind of sulfur helium methanol derivatives chains Are those factored into your contingency that you kind of see ways to work around those shortages if they develop in the H2 of the year? are those factored into your contingency that you kind of see ways to work around those shortages if they develop in the h2 of the year

Speaker 4: Laurence, it's a good question. That's probably affecting some of the pre-buy activity, perhaps. Look, I think we're all working through this. We're in direct contact with all of our suppliers, trying to manage all of our sources of supply, making sure we've got a variety of players that we can go to. It's on our minds, so I know it's on theirs, and it's going to affect behavior as we go through the next several months, and we watch what's happening in the Middle East and through the Strait of Hormuz. We'll keep you updated on that, but it's certainly a factor that's on everyone's mind today for sure. Thank you. Laurence, it's a good question. laurence it's a good question That's probably affecting some of the pre-buy activity, perhaps. that's probably affecting some of the pre-buy activity perhaps Look, I think we're all working through this. look i think we're all working through this We're in direct contact with all of our suppliers, trying to manage all of our sources of supply, making sure we've got a variety of players that we can go to. we're in direct contact with all of our suppliers trying to manage all of our sources of supply making sure we've got a variety of players that we can go to It's on our minds, so I know it's on theirs, and it's going to affect behavior as we go through the next several months, and we watch what's happening in the Middle East and through the Strait of Hormuz. it's on our minds so i know it's on theirs and it's going to affect behavior as we go through the next several months and we watch what's happening in the middle east and through the strait of hormuz We'll keep you updated on that, but it's certainly a factor that's on everyone's mind today for sure. we'll keep you updated on that but it's certainly a factor that's on everyone's mind today for sure Thank you. thank you

Speaker 15: This concludes the question and answer portion of our conference call. I will now turn the call back over to Bill Brown for some closing comments. This concludes the question and answer portion of our conference call. this concludes the question and answer portion of our conference call I will now turn the call back over to Bill Brown for some closing comments. i will now turn the call back over to bill brown for some closing comments

Speaker 4: I know we're a couple of minutes late, but thank you all for joining today. I want to thank again all of the 3Mers for their efforts, for their dedication in executing against our priorities, strengthening the foundation. As Anurag said, controlling the controllables, delivering value to our customers and shareholders. Thank you. Thank you all for joining today. Have a good day. I know we're a couple of minutes late, but thank you all for joining today. i know we're a couple of minutes late but thank you all for joining today I want to thank again all of the 3Mers for their efforts, for their dedication in executing against our priorities, strengthening the foundation. i want to thank again all of the 3mers for their efforts for their dedication in executing against our priorities strengthening the foundation As Anurag said, controlling the controllables, delivering value to our customers and shareholders. as anurag said controlling the controllables delivering value to our customers and shareholders Thank you. thank you Thank you all for joining today. thank you all for joining today Have a good day. have a good day

Speaker 15: Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation and ask that you please disconnect your line. Ladies and gentlemen, that does conclude today's conference call. ladies and gentlemen that does conclude today's conference call We thank you for your participation and ask that you please disconnect your line. we thank you for your participation and ask that you please disconnect your line