“ In a separate ruling, Rodgers on jurisdictional grounds dismissed a lawsuit by two veterans seeking to block 3M's planned spinoff of its healthcare business, which they called an illegal attempt to avoid compensating veterans” (https://www.reuters.com/legal/us-judge-penalizes-3m-bars-it-shifting-liability-earplug-litigation-2022-12-22/).
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$800MM divided by $34,229MM (2022 sales) = 2.3% of annual sales
(or about 6 working days of sales)
A better question: What is the enterprise-wide backorder right now? I don't get to see the whole company in my role, but I'm willing to bet it is bigger than $800MM.
On top of all that, only a fraction of NWI is actually dead, half or less in my experience. Most of it is slow-moving, like products we make one run a year of.
I repeat my assessment: Not great, but not the worst thing facing 3M by a long shot.
Insert your favorite '3.6 roentgen, not Great, not terrible' meme here.
Varys,
I understand your points about CBG. But over $800M in NWI across the enterprise is product sitting in warehouses that our customers aren’t demanding. These types of financial implications coupled with litigation $$$ and other things all add up and it makes it that more difficult to be financially viable. There was a directive from PG and SJ to start scrapping in ‘21 to bring the # down and efforts continue because they didn’t want divisions leasing additional property to house NWI.
All I want to know is how the stock will behave after the spin off . Do we get healthcare 3m stock if we own regular stock?
To: Let's Taco Bout It
@kio+1kXmUs9r
3M's NWI is not awful. I can't say honestly is it great, but it is not 3M's main problem. If it were, this would be a much quieter site. In addition, spinning off businesses does nothing to improve that NWI metric, it just moves it to another balance sheet.
Consumer really can't be spun off cleanly for one simple reason, it owns very little of its production base.
HC is different in that most of its production is in HC-focused plants (Brookings, Kamen, etc.). These HC assets that can be relatively cleanly moved from 3M to the HC spinoff or whoever buys HC.
Consumer's production is largely tied to 'excess' capacity in industrial factories, with a few exceptions. The business model is that industrial fills most of the plant with consistent sales and Consumer takes the 'free/available' or 'marginal' capacity and makes cash in the fickle consumer markets. This makes great margins, but doesn't have the consistency to support the fixed costs of the required equipment. Of course there are exceptions, but this is CBG's business model.
Given all the litigation and the fact that our non-working inventory $$$ is ridiculous and there is no real investment in meaningful growth and all the smart talented people are exiting 3M will need to continue selling off or spinning off assets or equity to stay viable. I have not doubt health care will not be the only spin-off. Would make sense to spin consumer because it's the 2nd most profitable and then have a remaining business that is restructured with a remaining BG structure being sacrificed to cover bankruptcy.
Say it ain’t so. This is clearly a shell game for 3M to hide its assets from the lawsuits and bankruptcy.
They shouldn’t be allowed to spin anything anywhere. 3m is a corporation, they should not be allowed to just drive one sector in the ground… invest in another , ruin peoples town and community. And just politely spin a side hustle out the back door after destroying so much and leave people jobless , sick and injured. And they celebrate a spin-off with no f—-ks given about everything they’ve destroyed along the way.
Hopefully 3M won’t be allowed to spin-off and play a shell game with its assets. Hopefully this can get escalated to the next level of the judicial system.