So, I just listened to the earnings call... what a clusterfu-k.
The lowlights:
- They set out the first public hint of the future bankruptcy, I quote from the transcript:
"Absent the proceeds from the intended spin-off of the Health Care business, the company has not concluded how it would fund amounts due under the Public Water Supplier and Combat Arms Earplug legal settlements. Therefore, we have not included the potential impacts of changes in net debt that may be needed to fund amounts under these agreements."
- Essentially all of the OI improvement came from SG&A reduction.
- Free cash conversion over 100% is, by definition, not sustainable. This is a clear sign of leadership 'cashing out' the company to the detriment of the company's future.
- International is going to be gutted, if your job is outside the roughly 10 to 15 largest economies your job is toast.
- CBG and Corporate are looking at more cuts, probably 10% based on financials. (They should start with CHIMD's boss.)
- Restructuring is 'how we work' - This is a sign that Monish has no clue as to actual strategy. Chaos is not a winning strategy.
- Monish answered a question as 'when we get more volume...' when the volume forecast is essentially flat. Some smart analyst should have called him out on that.
Monish, I'm going to give you a really big hint on how to fix 3M. Repeat the below three times, then actually do it:
"We are going to actively take global market share from our competitors. We will use organic volume efficiency to maintain our current profit margins. After the spin, 3M's restructuring will be substantially complete. We will use that savings to fund aggressive growth. From now on we will only be providing guidance to investors on an annual basis, if bankers don't like it, they can sell the stock."