3M Company (MMM) Earnings Call Transcript & Summary

All right. Welcome, everybody. Thank you for being here with us in person and on the webcast. We're very excited to have 3M with us. With me on the stage is Mike Roman, Chairman and CEO. And before we head into the fire side, I think Mike had a couple of opening remarks.

Yes. Thanks, John, and thanks for hosting this. A pleasure to be here. I thought I'd start with -- we're still facing as everyone is aware, a pretty fluid situation, a lot of uncertainty. We're seeing our industrial businesses end markets performing okay. I'll touch a little more on detail on that. Our consumer-facing businesses are seeing incremental weakness in their markets, and I'll touch more on that. And good examples are consumer electronics, where you've seen softness in end market demands. Retail -- the big-box retailers continue to focus on inventory, and we're seeing incremental softness in the retail side of it. We're also seeing some softness in elective procedures in health care. We've talked about getting back to 90% to 95% of 2019 by the end of the year. We're probably looking at lower part of that range as we go through Q4. So that said, 2 months in, I would say we're still confirming the implied guidance for our Q4, which is $7.9 million to $8.2 million on the top line, which is 1% to 3% organic and then our EPS in the range of $2.28 to $2.53. So it's -- you take those businesses, you look at our Safety and Industrial business, for example, again, broader-based industrial markets look good. The demand looks good. We are still working through the year-over-year declines in our disposable respirators, so the PPE coming off of the peak year and actually the peak year in 2021 of N95 sales. So we had said $150 million to $200 million of headwinds in Q4. We're still in that range as we look at it. Broader industrial doing okay otherwise. Transportation electronics, automotive, we're seeing Q4 year-over-year positive growth in build rates and still the outlook is for that, and we're seeing opportunities there, and maybe we'll talk a little more about the innovation opportunities, but we still see the ability to outgrow the build rates in transportation and automotive, in particular. Electronics side, as I said, seeing softness in consumer electronics incrementally being challenged broadly across mobile devices, notebook, tablets, televisions, all part of that consumer electronics. Health care, as I said, elective procedure is part of that. Part of that -- a big driver of that is staffing shortages that are persisting. And so you see that impacting. And the other notable dynamic is about half the hospitals in the U.S. are in the red in their income right now. And so they're holding back on investments, and we see that to some degree in health care, IT and our health information systems business. We're also seeing oral care impacted by some of the consumer trends. That was a number -- a significant part of the oral care procedures are consumer choice. They have out of pocket expenses, so you see some impact there. Consumer retail -- like I said, the big-box retailer is really driving a focus on inventory. But also there's a shift in consumer spending from hardline categories to other categories and consumer spending is moving into areas like food. We've heard a lot about that, but it's also shifting into services and other areas. So that's part of that incremental weakness. If you look geographically, U.S. is softening. The outlook for demand in the U.S., along with those same trends that I highlighted. Europe is weaker demand impacted there. They're facing into, obviously, high inflation, they get the energy challenges, geopolitics, all impacting that. The latest PMI is showing that we're already signaling contraction in Europe and the industrial segments. And then Asia is, again, an area that's very fluid. We're watching China closely with the latest lockdowns. We had recovered from the impact of the lockdowns in Q2 as we went through Q3. And now we're watching closely what's going to happen with -- what the impact is going to be on the end markets. We see some impacts already in the electronics side of that. So in the meantime, we stay focused on delivering for customers, focus on controlling what we can, executing, managing cost discipline to continue to deliver in the face of that uncertainty and some of those challenges. We're also focused on some strategies that we announced in our Q2 earnings call, the spin of health care. We've got -- our team stood up and executing and focused on delivering a successful spin of health care, which really is going to enable us to position 2 world-class leaders, well capitalized. Health care, going out with 3 to 3.5x leverage, well positioned to execute the growth strategies there. ParentCo 3M as we go forward, will -- takes a strong balance sheet today and makes it even stronger with the health care spend, and we'll maintain a 19.9% equity stake, which we do intend to monetize over the first 5 years. So it positions both companies to be well capitalized for what they have ahead, and we're excited about the opportunities in both companies. We see great opportunities for innovation. As we look at ParentCo going forward, some of the markets that are still going well, we see opportunities in transportation and automotive. The innovation and disruption in the technology in automotive is creating opportunities for 3M company. We see an opportunity to continue to win and grow above the build rates there and broader factory automation opportunities, areas like electronics. There's growth segments in electronics that continue to be areas we're investing in and excited about as we look forward. And also in our consumer segment, home improvement seeing some softness right now, but it's a trend that will continue, and we've got a great position with our innovation and our capabilities there. We also are focused on what we've been doing even as we've gone through the last couple of years of some of the dynamics we face in the markets and coming out of the pandemic. We continue to invest, invest in growth, invest in productivity and invest in sustainability, and we're following through on the commitment with our focus on the big areas of sustainability that we talked about driving to carbon neutrality over time, driving a big step forward in our water use and water quality, coming through our operations and then reducing our use of plastics. And we made a commitment to invest $1 billion in CapEx and OpEx over time, and we're on track. Well, actually a little ahead of pace on those strategies. So we'll continue to focus on those investments and navigate the uncertainty and take actions as we move forward the rest of this year and into 2023.

Great. Well, that was a great kind of state of the union there. So we'll kind of dig in a little bit here. So I guess one of the things love to get kind of a little bit more color on as we think about the industry is just from a price and a volume perspective, are you seeing anything discernible on where some of that incremental change you mentioned is coming from?

Yes. Prior to that, in my walk around, I probably didn't touch on supply chains, and that's certainly an area where we're seeing inflation still. We continue to see disruptions in our supply chain. Although there are some things that are -- some areas that we're seeing some easing logistics starting to get -- we're seeing coming off of the peak cost in logistics. We're seeing some easing in raw material supply, although we do purchase a number of specialty raw materials that are still challenged. And so as we look at how that's been impacting us, certainly, inflation was part of that. The cost of raw materials, logistics, labor, third-party purchases, third-party manufacturing still challenged in terms of high inflation. So we saw inflation broaden out as we came through the year. We had $600 million of impact from inflation in raw materials and logistics in 2021, we laid out and still are guiding to $750 million to $850 million impact this year. So $1.4 billion of challenges on the inflation side. And so when we look at taking that on, it's in the face of some of those disruptions, driving yield, productivity, multiple sources. We've made progress in stepping up and really driving to increasing the diversity of our sourcing activities. And then we manage it with price. And together, we have been able to offset that inflation as we've come through this year, and we're confident we continue to do that. And price is part of that. We're -- it's -- there's 2 components to pricing in this environment. One of it is your price value in the marketplace and the other is the inflation that you're trying to offset. You have to manage and protect your gross margins, so you can continue to invest in the future. And I think that's an important part of it. All of those strategies are part of that. So as we move forward, we'll see where inflation goes. If it moderates, then you'll see a bigger focus on price value and your price elasticity in the marketplace and your real value. Our pricing, I would say, strength over time has really been a reflection on our innovation. Companies that lead in their marketplace with innovation lead in margins and that value shows up there and price is an important part of that. And that price value understanding is an important part of our strategy.

And when you think about that price value piece, are there particular areas of the portfolio where you think you're able to execute that better than others? Or is it kind of a broad paint brush?

Well, as inflation came on, there was -- we talked about it a bit. We were a quarter or so behind in reacting. And some of that is how to execute price changes. When you're in a B2B, an industrial marketplace, you have a lot of distribution partners. You've got to work all your prices through that kind of a model, and that takes time. So that takes some time to -- even once you make the decision to execute certain price. There's other areas where you have contracts. So health care is a good example. You have contracts and so taking price in the health care, plus it's a bid environment. And so there's a dynamic there. Retail has got its own focus on that. There's been a lot of discussion around both the big box retailers, the online retailers, the brands, how we're all managing that price in the consumer environment. So each of our business models has a little different dynamic. In general, you saw us from when we first started talking about inflation being persistent and significant, it was in February of '21. And by, I would say, the end of third quarter, we were where we wanted to be in terms of our pricing plan. So it took us a couple of quarters to get caught up. We were taking actions early, but it took some time to get that executed. And then there's continued inflation, continued pricing dynamics, and you make adjustments around price value in the marketplace is an important part of that.

Great. If we take a little bit of a longer-term view and we think about like automotive -- automotive market that you mentioned. How does the transition from ICE to EV, the investments we're seeing, the major OEMs talk about in the U.S. around battery, how does that impact the industry and how does it impact 3M?

Yes. I would start in general, markets that are highly innovative and driving new demands for technology themselves create a significant opportunity for us as a company. It's always been true. Electronics -- that's why electronics continues to be, even though it has its ups and downs in cycles. It's a place where innovation takes place. And automotive is another area. The dynamics that you just highlighted in your question, moving to electric powertrains is such a dramatic innovation impacting all OEMs really and new companies emerging coming in. And it demands new material science solutions. In battery technology, we've got solutions in construction of the battery, the electric powertrain. We've got solutions in thermal management as part of that. At the same time, you're seeing the electrification of the automobile, whether it's an internal combustion engine, automobile or an electric or hybrid electric vehicle. They're all bringing in greater penetration of electronics. Displays come with that, sensor technology, new demands on material science in an automobile. In many ways, the automobile is becoming the next consumer electronics device. And so we see opportunities, increased, I would say, denominator of opportunities to invest in. And so electronics is one of those areas. We've talked about our automotive electrification priority and strategy for a number of years. It's now $0.5 billion business, growing double digits. And we see that as a way to continue to outgrow the build rate. So you look at it in terms of an attractive market for us, automotive. The build rates, what will depend on what happens in transportation and the transportation kind of evolution to some degree and how people use their automobiles. But beyond that, the opportunity within the build has gone up significantly with both those trends, that electric powertrain and the increasing use of electronics in the model. Then beyond that, I was just -- just came from Europe, as I mentioned to you, John, before we got up here. And I was talking to customers there and they're talking about now the need for solutions on electric vehicles that they didn't have in internal combustion. So sound, noise vibration harshness has new requirements. And we have solutions, material science solutions that can make a difference in that. You've got -- you notice road noise more when you don't have an internal combustion engine, and they've got to think about that in different ways. How do you solve that? How do you do that in an automobile environment and how you do that in a cost-effective way? And that's material science.

And then thinking about another kind of end market where there's a lot of data around unit in the marketplace, electronics, right? So I would just love to kind of get your thoughts around a similar thing there. What is -- what are you able to do to actually outgrow that market, as you mentioned earlier?

Yes. Consumer electronics has been the larger part of our business in electronics for over the years and continues to be a space of innovation. Every generation is demanding new solutions in display technology and battery life, going to thinner profiles. There's -- if you can help make displays thinner, then you have more room for batteries, and you can have bigger batteries, longer life batteries. And so there's a number of dynamics that continue to drive innovation, and there's always pressure on better and better displays and cameras and other capabilities on the device. Semiconductor manufacturers are pushing the leading edge to support consumer electronics. So we play in each of those areas. And that continues to be an important area. The build rates are a big factor. There are people going to be replacing their devices on a more frequent basis, less frequent basis, that will drive it. But there is underlying a very attractive market for innovation, valuable innovation. So we see an opportunity to leverage the things that differentiate 3M. Our technologies, our process technologies, importantly, to make some of the film technologies that you need for new electronic devices. It's new levels of processing capability that people haven't known how to do, and that's a great space for us. Then you've got other growth segments, as we talked about, we've got this continued focus on consumer electronics and the opportunities that are there. And you've got growth segments, factory automation, automotive electrification, which we've already talked about is an example of that. Data centers, semiconductor manufacturing, all needing additional innovation in material science. So we see those as growth strategy. I mean those are long-cycle growth markets that if we can innovate for our customers, we can carve out new opportunities, new growth segments. So our transportation and electronics business see both of these topics as areas that we have this continued drive for innovation where we are already positioned and then we have all these new opportunities in these growth segments that we can also bring solutions into. One of the ones we can talk a bit about is AR/VR, ER technologies as those start to be another looking like they will be a high-growth segment and require new levels of innovation and material science.

And so that brings up a question. So 3M's always talked a lot about innovation. So one of the things I'd love to kind of talk a little bit about is how you, as a CEO, kind of prioritize and actually measure that the investment dollars that you're making in innovation are the right dollars.

Yes. It's really important. It's -- there's a creative process behind it. There's a collaborative culture in 3M around innovation, and we have things like 15% time where we really encourage our people to pursue projects that they're excited about. That's helped us build new opportunities. So there's this creative side of it. And as CEO, it's important that you foster that. And you're part of that, right? That's a part of who we are and it's how we connect with customers. And so that's an important part of it. At the same time, you can't leave it to happenstance. It's a strategy, and we have a focus on that. And like any strategy, you're going to decide what you're going to prioritize, you're going to set objectives around it. You're going to hold yourselves accountable to what will enable you to get there. And we have that in our performance indicators and how we think about our R&D in it. There's certainly, I would say, a focus for us on prioritization amongst that. We look -- and this kind of brings in the idea of portfolio management, too. Our innovation model is what we do to create differentiated opportunities for us to grow and deliver value, strong margins, cash flow, shareholder returns over time. We couple that with portfolio management to -- first of all, we'll prioritize where we're going to make our organic investments. Not every portfolio, not every market is -- gets the same level even as we look at capital allocation, the first priority R&D and CapEx, we're looking at where do we -- it's not -- we have at the company level kind of an average of what across the company, but we are prioritizing areas. So prioritizing markets that are more attractive, where we can differentiate ourselves, where we have opportunities that are ready to ramp. One of the things that we do and we've talked about priority growth platforms, I talked about large commercial platforms. We have significant innovation prioritizing those for R&D and CapEx and make sure that we're accelerating those opportunities. And we also then measure kind of each of the components of that journey. How are we doing on the -- where we're spending our R&D on the bigger R, little d kinds of this? How are we doing in terms of spending into those priority areas? And what kind of returns are we getting? What are we seeing in the health of the pipeline that we have in front of us? How are we doing in our first year sales? How are we doing in our revenue off of the 5 years of new products? Which is an important measure for us on how we continue to replenish the pipeline and see it come through and make a difference for customers and make a difference in our top line and our bottom line. So we've got key measures across all of that. So it's as CEO, it's one of the strategic priorities that I stay focused on. And I spend a lot of time, I would say, with employees and customers around it. Certainly, that's an area, a topic that we spend a lot of time on. But we hold ourselves accountable. Our Board as well is a very strong Board, and we formed a committee actually 3 years ago and now the Science, Technology and Sustainability Committee. And they have kind of 2 big responsibilities. One is their -- they've got to focus on environmental health safety, environmental stewardship and things like PFAS, for example, the Board has strong oversight through that committee. They also have a very much of an offensive focus on innovation and delivering on that. The Board is very focused. So it's not -- doesn't stop at the CEO. The Board has a big responsibility for making sure we're holding ourselves very clear about where we're going with our strategy and our priorities, but also then holding ourselves accountable to continue to take that collaborative, innovative culture and deliver from it. So it's a senior management. It's a front and center priority all the way up through the Board.

Great. Earlier in your prepared remarks, right, you talked about the health care separation. Maybe just remind us the timeline and what investors should be watching for here?

Yes. When we announced in July, we talked about the end of next year, and that's what we're focused on as the plan for our team. And our team -- we stood up a separate team and their executing well and focused on all the steps that go into that. It's interesting just as you asked that question, I get that question a lot inside the company. Our people want to know, certainly, our health care team wants to know, but everybody wants to know how are we progressing. It's one of those areas where we've been probably more transparent than ever. It seems like that's a general challenge for company leaders is to be more transparent. Now there's not a lot to say until you make certain decisions. Our team is, of course, interested in where will the company be located and who will be the CEO and what will be the name of the company and what's the impact on capital investments and so on and pensions and things like that. So we're working through all of those work streams. And then I would say, important for us is it's also a focus on ParentCo. This is an opportunity to really make sure we position ParentCo. When we made this decision ultimately with the Board, it was a carefully thought-out strategy over time. But when we got to the decision, there were 3 answers that we had to have. Is health care going to create better value as a standalone health care company, be a leader, be a top 10 health care technology company? And what does that look like? And is this the right decision to do that? Do we have a strategy for ParentCo going forward that will also create this world-class company that can drive growth and continue to be able to outgrow the economies we're part of and deliver strong margins and leverage off of that growth and strong cash flow? And then can we capitalize both companies to be successful? And those are the big questions. And so our efforts are positioned to do all of that. So focus on successful spin of health care, but also positioning ParentCo, 3M Company as we go forward to do that as well.

Great. Maybe just kind of pivoting to a broader question. There's been a lot of conversations around just stimulus, be it U.S. or global, right, very global view for 3M. Are you seeing any of that impact? Is that something you expect to see? Any kind of color around that?

Yes, it's -- we've been talking about it for a while, but it's still early days. We're watching things like the CHIPS Act and the Inflation Reduction Act. And other programs, economic stimulus around the world. Those in particular, there's -- there are aspects of that, that are focused on technology and sustainability and will be incentives as part of that. And some of that can be important for us as we look at our opportunities as we go forward. But it's early to understand exactly how that's going to play out. There's also obviously in things like the CHIPS Act, incentive to reshore. And generally, there's a lot of focus on regionalization of supply chains. Now 3M, that's our model. We've built out our capabilities and our capacity over generations to be close to customers. So we manufacture a majority of what we sell in region around the world, every region of the world, whether it's China, Asia, Latin America, Europe, we manufacture in region close to customers, positions us well as supply chains move. And electronics is a great example. It's moved around Asia in different ways, and we've been able to adapt to that. And I would say maybe the one notable kind of difference in all of that is the U.S., we're a net exporter. So we export $5 billion of goods out of the U.S. and that's to a degree the historical origins of the company. There's also certain capacity you don't need to replicate everywhere around the world. We serve electronics markets out of the U.S. We export into Asia. We export into certain markets in Europe as well. So if there is reshoring of some of those markets into the U.S., we're well positioned today with capacity. But in general, we've been able to adapt to -- the automotive industry is a case where they built new capacity around the world, and we've adapted to it with our own investments and capacity and aligning ourselves to that. So we'll be ready to adapt as we go. And we're engaged with our customers and their plans, and we'll -- I think that we're well positioned to be able to make those changes as they do.

Got you. And just on that topic of near shoring, right, are you actually seeing it? Or is it still something that is less tangible today?

I think there's -- there are plans for it, but it's starting. And some of the near shoring, there's kind of a couple of dynamics. One is investing in new capacity. So that's the semiconductor industry, right? They're going to build plants in the U.S. That's going to take time. And so that's at the beginning of the capacity investment. They're making investments. You see some of that in Europe as well and maybe other parts of the world. And then you have supply chains, in general, companies looking at localizing your supply chains, more regionalizing your supply chains, where your capacity is, that's also been part of our model. When we build capacity in Asia or Europe, we localize our supply chains too, we aren't importing raw materials from other parts of the world. Our model is to be regional. And so we're well positioned for that, but you see that dynamic playing out to some degree with other companies. It hasn't been an impact on us, but more for us is a focus on our customers, where are they going to go with their capacity.

Yes. I got a couple more, but I'll toss it out to the audience if there's a question. So one of the things I also wanted to talk about, you've brought it up several times is this kind of 3M's digital journey, right, and what it means for 3M. And so from a customer perspective, from your own ability to drive margins, I mean I would just love to -- if you have some kind of quantifiable examples you can share us about 3M's kind of digital journey?

Yes. There's quantifiable, it certainly has had a measurable impact on our business. And we think of it in 4 strategies really, digital is a broad term, right? It applies to many things. But for us, it's digital customer and e-commerce as part of that. But importantly, it's our digital capabilities, data -- data, science and analytics and our ability to really position ourselves for greater success in the marketplace. Our consumer business has been one of the leaders in that area with -- they've been -- when you look at our growth in e-commerce, they lead the way for us. And the company, they lead the way for some of the digital capabilities that we're building with our retail partners. And so that's an exciting area. We're seeing that impact our position in categories, in the departments, in the e-commerce world. And it's also helping us to better serve our customers through e-commerce. So that continues to be an area that we see opportunity we invest in. We see the opportunity in the other businesses as well. And we're benefiting, I would say, to some degree, from the capabilities we've built in the consumer packaged goods kind of model. We have digital operations, which is a big focus for us. We have been taking advantage of that to get better visibility, of course, across our supply chains, but it's also enabled us to streamline our supply chains, and it's every aspect of it. Commercialize what we do in our -- to commercialize products in our supply chain gives us better visibility, analytics, better integration of our innovation model all the way through our scale-up capabilities. It's in our planning capabilities. We've been able to streamline and drive cycle time improvements in our planning operations. It's in our sourcing, really getting better visibility and we buy a lot of raw materials and some in small quantities that were sole sourced, and we're getting better visibility that's helping us on some of the things we're doing with multiple sources. And then you get into make, deliver these capabilities, it enables us to run more efficiently. It's driving clear visibility on where we can continue to drive improvement. And then you get into digital enterprise for us, and we've been deploying ERP, new ERP capabilities. We've been migrating to the cloud in much of what we've done, and we've been very successful in that progress, and that's an important strategy for us. Positions us for many things that are important to us, capabilities but also better positioning for cyber. And I would say competitive positioning of our operations globally. And then the fourth one, which is exciting, too, is digital product for us. We -- of course, we have digital businesses like health information system, which are part of our health care business, but we also have opportunities in our businesses in digital products. It's -- can you solve every customer problem if you don't have a digital solution? We're seeing opportunities to step into new digital solutions. We highlighted a couple of examples in our industrial business and our consumer business where we're taking that on. We've -- made the acquisition of a small company, LeanTec, where it enables us to bring a digital solution into the automotive repair shop where we have a strong presence with all of our capabilities. Now we help them with their efficiency, and we really integrate us into their operations. And it's a nice step forward in solving customer problems. Consumer business, we announced a partnership with Microsoft on a Teams platform, innovative approach to the collaboration use of post-it notes in a Team's environment, a digital environment. So it's an organic approach to digital products and solutions. We have them in factory automation. Our material science in many ways, is because of the differentiated capabilities we have in areas like adhesives and abrasives, we're well positioned to be in the automation. We've got robotics solutions that other abrasives companies can't bring to the table because we have consistent, reliable, predictable performance of our abrasives. And we're doing things in the painting process of automobiles, for example, where it's automating completely that process. And so there's exciting areas of digital, and we continue to see that as a growth opportunity for us as we go forward, too.

Very interesting. And then maybe just you talked sustainability when you were discussing it up to the Board level, right, maybe just a little bit of kind of what you guys are doing to drive both sustainability in the organization and then helping your customers, right, achieve their goals as well.

Yes. And sustainability is a core value of 3M. It has been. As a manufacturer, our generations ago said we have to be reducing waste. We have to be a driver of that. Pollution prevention was a big focus for us. In the last 20 years, we focused on greenhouse gas emissions and reducing that. We're down 70% from 2002 to today, in our greenhouse gas emissions. So it takes a lot less energy to produce a post-it note today than it did or a film for electronics than it did previously. So it's a process that we're going through. And we see that as an important -- important for our customers and our shareholders, our employees all care deeply the communities that we're part of that hold our license to operate, they all care about that, and we do too. And so we focused on the engineering to do that. So we -- when we announced going carbon-neutral as a manufacturer, we saw that as a step forward in our leadership and sustainability. Importantly to us, we said, we'll be down 50% by 2030 and 80% by 2040. And we got the math and the path to do that. And what are the investments and capital we need to do to drive that? What are the changes in our portfolio that we need to do to drive that? So those are -- that's kind of a frame for how we look at it. We think in terms of our strategies, we're driving a circular economy. So reducing air, water and solid waste. So we made a commitment to take our factories, and we have about 150 sites globally that we're committed to take to 0 landfill waste. Now we have 40% of them at 0 landfill waste today. And it's progress, we were just a few years ago at 30%. So we're making progress incrementally on that. We talk a lot about water because that was a big part of our commitment, reducing the use of water, improving the quality of water that comes through our operations. And we're on pace to do that. And we had big steps. We said we are going to reduce -- we're starting being in compliance with the regulations out there, and then we said we're going to reduce by 99%, anything that comes out of our plant. And that's -- that was the math and path that we could see with state-of-the-art technology, and we've implemented those capabilities in our U.S. operations. And we said we'd be there by the end of this next year. We're ahead of that pace with those commitments. So those are -- we've decided those are priorities for us as a company. We took all of the kind of grassroots interest in sustainability and then we prioritized and made commitments and the Board holds me accountable in my CEO objectives to each year's progress report. And then I would say it carries into our innovation. I don't want to leave without talking about that because we try to do this for our customers. We're helping them reduce their emissions. 75 million metric tons of emissions from our customers over the last, I think, 3 to 4 years now is the output of that innovation, helping them to reduce their energy consumption, their waste, their consumer electronics extending battery life as part of that. So we actually have a review in our new product introduction that says you don't get to pass the gate to scale up unless you have a path to addressing sustainability -- improving sustainability with this portfolio. So those are how we ultimately prioritize it and then do what companies do well. Once we decide goal as a priority, we allocate resources, we set intermediate goals and we hold ourselves accountable. And that's like another one of those areas, it goes all the way up to the Board.

Great. And I think with that, that's where we'll wrap up. So I would like to thank Mike and 3M for being here and hope everyone is well.

All right. Thanks, John.

Thank you.