3M raised its 2026 adjusted earnings forecast Tuesday after reporting third-quarter adjusted EPS of $2.50, up 12% from a year earlier, and adjusted organic sales growth of 3.3%. The company also reported $1.2 billion in adjusted free cash flow, while its non-GAAP reporting basis changed to classify intangible-asset amortization as a special item.
The accounting change matters when the new forecast is set against prior guidance. 3M said the change did not materially affect year-over-year comparisons because it applied the new treatment to all periods shown.
Organic growth and margins improved
3M reported GAAP sales of $6.6 billion, up 1% year over year. Adjusted sales were also $6.6 billion and grew 4.2%, with adjusted organic sales up 3.3%. The adjusted measure excludes manufactured PFAS products and removes acquisition, divestiture and currency effects from the growth calculation. The gap between the GAAP and adjusted growth rates comes down to what each measure includes.
GAAP operating margin was 23.7%, compared with 22.2% a year earlier. Adjusted operating margin reached 26.2%, up 110 basis points on the new non-GAAP basis. GAAP EPS was $2.63, while adjusted EPS was $2.50. The company’s reconciliation lists several items affecting the difference, including changes in the value of its Solventum ownership, litigation and PFAS exit costs, transformation costs, and amortization and acquisition-related costs.
Adjusted EPS topped the $2.39 analyst estimate cited by Investing.com, while revenue of about $6.6 billion was close to its $6.61 billion consensus.
Full-year earnings forecast moves higher
3M raised its 2026 adjusted EPS outlook to $9.10 to $9.15. It now expects adjusted total sales growth above 4.5%, including adjusted organic sales growth above 3.5%. The company also forecast about $5.9 billion in adjusted operating cash flow and about $4.8 billion in adjusted free cash flow.
Management said the outlook incorporates results to date, the Madison Fire & Rescue acquisition and the updated treatment of intangible amortization. The forecast uses non-GAAP measures, and the company said it cannot reasonably forecast some of the items needed to give comparable GAAP guidance.
Cash generation and comparability matter
Third-quarter cash from operations was $0.5 billion and adjusted free cash flow was $1.2 billion. 3M said it returned $0.6 billion to shareholders through dividends and share repurchases during the quarter. The turnaround case rests on sales growth, productivity gains and cash generation holding up together, not on the adjusted EPS increase alone.
The company changed its non-GAAP presentation to treat intangible-asset amortization as a special item in all periods presented. It said the new basis increases the reported third-quarter adjusted margin by approximately 40 basis points and adjusted EPS by about four cents, but does not materially change year-over-year comparisons. Anyone comparing 3M’s adjusted figures with older reports or with other companies will need the current reconciliations.
The next tests are whether organic growth holds, whether the margin gains stick and whether 3M turns earnings into cash within its annual range. Legal liabilities, trade conditions, material costs and execution of productivity plans remain risks the company identifies in its forward-looking disclosures.