This PFAS development is very bullish for the stock longer term.
If they can do some things with this strategy, it will meaningfully lower the probability of 3M bankruptcy, which IMO now stands at 90% in the next 5 years.
They obviously need to have a plan to replace PFAS with some other safe material which delivers similar properties. They need to allocate and execute MASSIVE R&D and manufacturing resources to replace PFAS in as many applications as possible. They claim they have been doing this and are in position to support customers….so that is a positive if true.
They need to have a good way to serve customers in businesses they have to exit (there will be many) at or below the costs they have disclosed today. They claim 70-80% of these charges will be non-cash…so they claim their CF will remain very robust to support the dividend.
IF that is true, then they will likely weather this OK (with issues in some Qs) with purely CF and dividend driven investors.
When they can say they are exiting the chemistry, Courts and juries will have a tougher time saying they should go BK, as they can say prior executives made bad decisions, but society is better off letting them stay in business than bankrupting them.
Plus, if they can develop a few acceptable solutions to some 3M Branded ki---r apps, they could get a competitive edge on competitors who might not have the R&D capability to replace PFAS with still good performance.
PFAS free could be a marketing slogan in a few areas…but you have to be VERY careful not to denigrate the older product, NOT an easy job and their marketing is incompetent.
Overall, with what I know now, I am lowering my probability of BK to 70% over the next 5 years.
Market does not appreciate how important this is. If you truly believe they are not at threat from BK this is a good time to buy the stock IMO, which has a massive liability and risk of BK hit to the valuation.
This is their best shot to possible emerge from BK threat on the PFAS issue.
They can also say we are trying to remain a going concern to help those that were injured by the ear plugs, even though it wasn’t our fault.
Still 70% chance they go BK -- Largely because this requires a new truly strong CEO and CFO with some kind of trust from employees, customers. Roman and Patolawala are incompetent shareholder value killers who have absolutely devastated employee morale.