3M earnings increased in the third quarter of 2026, with adjusted earnings per share rising 12% to $2.50 as sales grew and operating margins widened. The industrial company announced the results on October 20 and raised its full-year adjusted earnings forecast to $9.10–$9.15 per share, incorporating an updated treatment of intangible asset amortization.
Key Takeaways
- Adjusted organic sales grew 3.3%, while adjusted operating margin widened to 26.2%.
- Reported earnings and adjusted earnings improved, but the two measures reflect different exclusions.
- An Amazon warrant covers up to 3.2 million shares, subject to sales and other milestones.
Table of Contents
- 3M earnings improve as margins widen
- Annual outlook incorporates a reporting change
- Optical connectivity agreements carry future milestones
- Conclusion
3M earnings improve as margins widen
3M’s third-quarter 2026 results announcement showed reported sales of $6.6 billion, up 1.0% from a year earlier. Adjusted sales, which exclude manufactured PFAS products, also rounded to $6.6 billion but increased 4.2%, including adjusted organic growth of 3.3%. Reported organic sales growth was 0.2%.
Adjusted operating margin increased 110 basis points to 26.2%, from 25.1% a year earlier. Reported operating margin rose to 23.7% from 22.2%. Chairman and Chief Executive Officer William Brown attributed the performance to improving productivity, structural transformation and a stronger pipeline of differentiated technologies.
Reported earnings per share rose 70% to $2.63 from $1.55. Adjusted EPS increased to $2.50 from $2.23. The reported figure included a benefit from the change in value of 3M’s Solventum ownership, which was excluded from adjusted earnings.
Cash from operations totaled $0.5 billion, compared with adjusted free cash flow of $1.2 billion. The latter is a non-GAAP measure, not the same as reported operating cash flow. 3M returned $0.6 billion to shareholders through dividends and share repurchases.
| Item | Details |
|---|---|
| 2026 adjusted EPS guidance | $9.10–$9.15 per share |
| 2026 adjusted total sales growth guidance | Above 4.5% |
| 2026 adjusted organic sales growth guidance | Above 3.5% |
| 2026 adjusted operating cash flow guidance | Approximately $5.9 billion |
| 2026 adjusted free cash flow guidance | Approximately $4.8 billion |
Annual outlook incorporates a reporting change
The updated 2026 forecast reflects year-to-date performance, the acquisition of Madison Fire & Rescue and a change in non-GAAP accounting treatment. 3M now treats intangible asset amortization as a special item excluded from adjusted results.
That change increases the third-quarter adjusted operating margin by approximately 40 basis points and adjusted EPS by approximately $0.04 relative to the previous reporting basis. Because 3M applied the same treatment to the comparative periods, it said year-over-year comparisons were not materially affected.
The distinction matters when assessing the higher annual earnings outlook: the forecast incorporates both business performance and the revised reporting basis. The full-year targets below are management guidance, not completed results.
Optical connectivity agreements carry future milestones
3M also outlined an expanded commercial relationship with Amazon to deploy optical connectivity and other data-center products. It issued Amazon a warrant to purchase up to 3.2 million common shares, tied to achieving $6 billion in cumulative sales of specified products over seven years and other event-based milestones. The sales threshold is a condition of the arrangement, not revenue already earned.
Separately, 3M is collaborating with Genius Electronic Optical to develop and manufacture Expanded Beam Optics solutions. It is investing to acquire approximately 4.7% of the optical technology company’s common shares, combining 3M’s optical interconnect expertise with its partner’s precision optics manufacturing capabilities.
Conclusion
The remaining fourth-quarter performance will determine whether 3M delivers its updated 2026 earnings, sales and cash-flow targets. Its optical connectivity agreements extend beyond that annual outlook and remain subject to future commercial milestones.
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