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3M’s (NYSE:MMM) earnings guidance for 2023 excludes the potential cost of litigation related to earplugs made for the military and the production of what have been called “forever chemicals,” the company’s finance chief said Thursday.
“We can’t predict what that number is going to look like, and therefore, the guidance that we’ve given you of [adjusted] EPS of $8.50 to $9 excludes those litigation matters,” Monish Patolawala, chief financial and transformation officer at the company, said at the Bank of America Global Industrials Conference. “Every quarter, as we go through the quarter, we’ll show you what the actuals are.”
3M (MMM), which is best known for making Scotch tape and Post-It Notes, is entangled in two legal disputes with potential liabilities that analysts have estimated may cost the company billions of dollars.
More than 200,000 veterans sued 3M subsidiary Aearo Technologies, claiming that its foam earplugs were defective and didn’t guard them from hearing loss. 3M (MMM) has argued the earplugs worked properly when soldiers were trained on how to use them.
3M (MMM) also was sued for making perfluoroalkyl or polyfluoroalkyl substances (PFAS) that contaminated drinking water and soil. They’ve been called “forever chemicals” because they take a long time to break down.
The chemicals were used to make firefighting foam. 3M (MMM) is expected to argue that because the products were made to U.S. military requirements, it has legal immunity. 3M (MMM) last year announced a plan to stop making PFAS by the end of 2025.
3M (MMM) awaits court decisions that are expected next month, Patolawala said. One will determine whether 3M (MMM) is part of the bankruptcy of Aearo, and the other will decide whether Aearo can even file for bankruptcy. In early May, appeals to two earplug lawsuits will be heard.
Patolawala said to keep an eye on regulatory filings for more details about litigation expenses.
“Just make sure you are reading our ‘Ks’ and ‘Qs’ not only for combat arms and the updates to this, but for all our litigation matters because we try to make sure we are as comprehensive as we can on that,” he said.
