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MMM Investor Day 3.29.16 Transcript 3 2016 Investor Day Transcript March 29, 2016 Slide 1, Opening Bruce Jermeland, Director – Investor Relations Good morning. I am Bruce Jermeland, Director of Investor Relations, for those that I didn't meet last night. Welcome to 3M's Customer Innovation Center. We had a very good turn out last night at our new R&D facility on our campus, the 3M Carlton Science Center. Hopefully you got to learn more about 3M and also got an opportunity to interact with our leadership team. A number of those leaders will be speaking this morning. Of course we'll hear from Inge Thulin, our CEO, and Nick Gangestad, our CFO. But you'll also hear from all of our business group leaders, Mike Vale, Frank Little, Mike Roman, Joaquin Delgado and Jim Bauman. And you also hear from H.C. Shin, Head of our International Operations, and Paul Keel, Head of Supply Chain. Slide 2, Upcoming Events Bruce Jermeland Just a quick update on upcoming events in 2016. Four weeks from today, we'll have our first-quarter earnings announcement. Then the Q3 and Q4 earnings dates will be July 26 and October 25. And in December we will have our 2017 outlook meeting on December 13. Please mark your calendars. Slide 3, Today’s Agenda Bruce Jermeland Today's agenda, we will conclude formal presentations at about 11:45 and then have 45 minutes of Q&A. We will have a break about halfway through. After we wrap up Q&A, we'll have lunch downstairs where we had breakfast this morning. And then our World of Innovation will also be open for an open house. Buses heading back to the airport will start running at 1:00 PM and will run every half hour till 3:30 PM. If you have luggage, make sure you grab that on the way out the door. If you have other arrangements, please let us know at the break and we can certainly make other arrangements for you to get where you need to go. Slide 4, Forward Looking Statement Bruce Jermeland Before we begin today's presentation, please take a moment to read our forward-looking statement. During today's meeting, we will make predictive statements that reflect our current views about our future performance and financial results. We base those statements 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 those important risk factors that could cause actual results to differ from our expectations. So with that, again, we really appreciate your coming to the meeting today and your attention. Now I would like to introduce Inge Thulin, 3M's Chairman, President and Chief Executive Officer. Inge. Slide 1 Inge Thulin, Chairman, President and CEO Thank you, Bruce and good morning, everyone, and welcome to 3M. It is a pleasure for us to host you here today and to talk about our next five-year plan and also give you some perspective on the journey that we are on. Slide 2 Inge Thulin What I will do this morning is first of all give you the highlights of the day so you can get that early on and then follow the presentation and go through here. I will talk to you about our model that is based on building strength on strength and around efficient growth. And as you will see, we have been able to build strength on strength the last couple of years again and you also see the outcome has been efficient growth and that's also the theme as we go ahead. Slide 3 Inge Thulin So the highlights of the day is, first of all, you will see that we have a playbook that is working. And you will see it constantly through all the business groups through international. You will see that we are able to execute on the key levels for us -- Portfolio Management, Invest in Innovation, and Business Transformation. We have a model where we are winning with our customers in order to make sure that they deliver on their promises to their customers. And we call that Customer First and you will see that as well today in terms of initiative. You will see that we will further enhance our capital structure and allocation that we started a couple of years back. You will also see that we will maintain our strong track record of returning cash to our shareholders. And then we will today announce our 2016 to 2020 financial objectives that you saw came out this morning and we are also reaffirming our 2016 outlook. So that's basically the highlights that you will be able to go away with as we end the morning here at 11:30. Slide 4 Inge Thulin Now let me start by talking about building strength on strength and how we have been able to position ourselves to win and win more. And I go back to 2012 in terms of laying out on the journey what we have been doing. So if you recall in 2012, that's where we laid out the new 3M visions and our six strategies. We also laid out the financial targets for the five-year plan which we are now in three years to. And then we also established a robust portfolio management system that was where we started in 2012. When we went into 2013, we prioritized the three levers that we will talk about today. We enhanced our capital deployment plan and we strengthened our code of conduct which was important for us to do. As you know, you need to protect the enterprise and everything you do. When we went into 2014, we defined the fundamental strengths of the Company. And they are important because they together with the portfolio work is taking us on the journey on the road where we try to go. And then we also reshaped our leadership behaviors. We had up to that point leadership attributes and we reshaped them to behaviors because it's all believed that what you do as a leader is based on your behaviors. And then as we went into 2015, we deployed and unified 3M Brand strategy which is 3M science applied to life. And we restructured the organization, as you recall. It took something into account our 1,500 to 1,700 people in order to position us well for the future and then put in place the efficient growth model. So when you look upon what we have done here step-by-step in order to build up the model, that's quite a bit that's been going on and I will comment more on that. Slide 5 Inge Thulin But let me start relative to the vision that we laid out and it was important for us because the vision is what is guiding us. And a vision is all about what you do, how you do it and where you do it. It should be calling out the competitive strengths of you as a company. It should be a stretch and it should be authentic to you of who you are as an enterprise. And 3M has for 114 years -- 3M has woke up every morning and asked themselves how can we advance, enhance and improve. That is what we are all about. And how we do it, we do that through technologies, products and innovation. And where we can do it we can in fact do it for every company, in every home and for every life. So when we put that vision together it was an important element for us in order to talk about who we are, how we do it, where we do it, and how we can expand around the world. And if you think about every life -- it's a big statement, but every life for us is about healthcare, it's about schools, it is about sustainability and community. So it is very well ingrained in everything we do. At the same time, we laid out six strategies that are type of the enabler for what we tried to do. And the first one are all about growth, the fifth one is about us, people, and the last one is around operational excellence. When we laid them out they were very precise in terms of articulation. So you see the first one, expand relevance to our customers. It was very precisely around our customers and our relevance to them. You can see in the second strategy we talk gain profitable market share. It is not gain market share -- profitable market share. And you can see the third one starts with the statement invest in innovation. And I think you saw something around that yesterday. It was just a small piece of it, but we said we will move from 5.5 percent closer to 6 percent. And then as you will see later here both in terms of diversity and performance team and then operational excellence we will touch on as you go. So they were very precise in terms of how they were laid out now we have executed versus them and they still stay in place as we move ahead. Slide 6 Inge Thulin So that became our playbook and I will say this is the playbook that you will see the businesses driving towards. You have the vision, you have the strategies, you have the business conduct and you have the leadership behaviors.
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