Ladies and gentlemen, thank you for standing by. Welcome to the 3M Third Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference is being recorded Tuesday, October 24, 2017. I would now like to turn the call over to Bruce Jermeland, Director of Investor Relations at 3M.

Thank you, and good morning, everyone. Welcome to our third quarter 2017 business review. On the call today are Inge Thulin, 3M's Chairman, President, and CEO; and Nick Gangestad, our Chief Financial Officer. Each will make some formal comments, and then we'll take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on our Investor Relations website at 3M.com under the heading Quarterly Earnings. Before we begin let me remind you of the dates for our future investor events. Please turn to slide 2. First, starting with earnings, our Q4 earnings conference call will be held on January 25. And second, our 2018 outlook meeting will take place in New York City on December 12 from 8 a.m. to noon. Invitations for this event will be sent this afternoon, so please RSVP as soon as possible. We hope to see you there. Please take a moment to read our forward-looking statement on slide 3. During today's conference call, we will make certain predictive statements that reflect our current views about 3M's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10-K lists some of the most important risk factors that could cause actual results to differ from our predictions. Please turn to slide 4. And I'll hand the call off to Inge.

Thank you, Bruce. Good morning, everyone, and thank you for joining us. Coming off a strong first half, our team delivered an even more robust performance in the third quarter. Organic growth accelerated to 7% with positive growth across all business groups and all geographic areas. We posted record sales and record earnings and did so while continuing to invest for the future. Let me take you through the highlights. Total sales were $8.2 billion, an all-time high for our enterprise. As I mentioned, we delivered strong broad-based organic growth of 7% led by Electronics & Energy at 13%. Health Care grew 7% organically, followed by 6% growth for both Industrial and Safety & Graphics. Our Consumer business posted organic growth of 2%, its second consecutive quarter of positive growth. It was also good to see broad-based growth across all geographic areas. This was true in both developed and developing markets, where our long-standing presence, market position, and depth of capabilities enable us to win. Growth in developed market was 4% with 14% growth in developing markets. With respect to EPS, we increased earnings more than 8% to $2.33 per share, which is a Q3 record. Company-wide we expanded margins to 25% with all business groups above 22%. Turning to free cash flow, we posted a good conversion rate of 100%. We continue to invest and grow the business while also returning significant cash to our shareholders. And in the quarter we returned $1.1 billion through dividends and share repurchases. Please turn to slide 5. Beyond financial results, we are continuing to build an enterprise that is positioned for success both today and into the future. This includes executing our three key levers, which are significant value creators. The first is portfolio management. And earlier this month we finalized our acquisition of Scott Safety. This will complement organic growth and further enhance our position in the fast-growing global personal safety market. At the same time, we completed the sales of the electronic monitoring business, which no longer aligned with our strategic objectives. Portfolio management, a process we have intensified over the last several years, is strengthening our competitiveness and making us more relevant to our customers and the marketplace. Investing in innovation is the second lever. Research and development is the heartbeat of 3M. It's how we deliver premium value to our customers and premium returns to our shareholders. This is why we continue to invest 6% of sales into research and development, which total $463 million in the quarter. The third lever is business transformation, which starts and ends with our customers. The deployment of our ERP system remains on track with West Europe nearly complete. We have also started initial deployments in the United States, which you will hear more about at our outlook meeting on December 12. That concludes my remarks. And I will now turn the call over to Nick. Nick?

Thanks, Inge, and good morning, everyone. I'll start on slide 6 with a recap of our third quarter sales performance. We posted strong organic growth in the quarter of 6.6%, as we continue to outgrow the markets we serve. Selling prices improved sequentially versus second quarter and were flat year on year. Excluding Electronics, price was up 20 basis points, which marks our strongest quarterly pricing performance this year. The divestiture of nonstrategic businesses over the last 12 months reduced sales in the quarter by 120 basis points. Conversely, foreign currency translation increased sales by 60 basis points. All-in, third quarter sales in U.S. dollars increased 6% versus last year. In the U.S., organic growth was 3.6%, led by a high single digit increase in Health Care and a mid-single-digit increase in Industrial. Our Safety & Graphics and Consumer businesses also delivered positive growth in the quarter. Asia-Pacific led the company with organic growth of 13% in Q3. All business groups within Asia-Pacific continued to post strong growth in the quarter, including double digit increases in our Electronics & Energy business and in our Safety & Graphics business. Organic growth was 23% in China/Hong Kong and 5% in Japan. Excluding Electronics, China/Hong Kong grew in the mid-teens and Japan was up 3%. Moving to EMEA, organic growth was 4% in Q3 with West Europe up 3%. Both the Safety & Graphics and Industrial businesses led the growth in EMEA. Finally, Q3 organic growth in Latin America/Canada was 5%. All businesses posted positive growth with Health Care leading the way, up high single digits. At a country level, Canada delivered strong organic growth of 14%. Mexico was up 5%, while Brazil was flat. We continue to generate broad-based growth across the globe, giving us confidence in raising our full year expectations,…

Thank you, Nick. As I look across our enterprise, I am very pleased with our performance in the quarter and throughout the year. As a result, today we are increasing our expectation for 2017 in terms of both organic growth and earnings per share. We now anticipate organic growth of 4% to 5% versus a prior range of 3% to 5%. With respect to EPS, we expect earnings of $9 to $9.10 per share, versus a prior range of $8.80 to $9.05. This is a 10% to 12% increase year on year. And as you can see, we continue to expect strong performance in terms of both return on invested capital and free cash flow conversion. With that I thank you for your attention. And we will now take your questions.

Please limit your participation to one question and one follow up. One moment, please, while we compile the Q&A roster. And our first question comes from the line of Andrew Obin of Bank of America Merrill Lynch. Please proceed with your question.

Good morning, guys.

Good morning.

Morning.

Morning, Andrew.

Just a question, sort of a top-down question. Top-line growth 6.6%. As you think, this economic environment, right, and as you overlay it over your longer term framework, would you describe current economic environment as average relative to your five-year framework? Above average? And from that perspective, I'm just trying to think, if 6.6% is something we can expect to achieve in this environment? Or is that a one off?

Well, first of all, good morning. I think to talk about the five-year plan is maybe difficult, and that's the frame you put it into. But I will say that it's maybe on the high end versus what we thought when we lay out the plan originally as we stand. You can also see that we have a range now that we move from. We've gone from 2% to 5%, then 3% to 5%. Now we are 4% to 5% for the year. And we have very high confidence as we move into 2018, which we will talk more about on December 12 in New York. But I will say that generally speaking, the execution of our commercialization programs are going very well for us. And it's broad-based, which is very, very good. So I think it's – I think about 4% to 5% for the remainder of this year. I would think more about on the high end of the 4% to 5%.

Okay. Terrific. And just a follow-up question. On the Electronics growth, that has been very good. Can you just give us a little bit more color what specifically drives it? And I'm just trying to understand how much of it, sort of increased content in mobile devices, particularly on adhesives. Or your participation in the Asian semiconductor cycle, if you could separate those two sources of growth. Thank you.

Yes. Well, first of all, I think always on Electronics & Energy as a business group, we have, yes, to take a step back and really understand what we have done from a portfolio perspective. And that is something that we all see as we take actions. What is not so visible if you're not right in the industry day by day is also how we have shifted and accelerated some investment to faster growing segments. So I think that's an important element for us to think about. Now on the platform for consumer electronics, we are very global. So for us, we are adding penetration on a global base in most of those devices. And it's going very fast. I will say specifically on the China OEM in terms of the pickup. And if you think about that, demand there for performance, quality, and functionality is exactly what we are all about. So that means that we are growing very fast on those platforms. So we are doing better there than we had estimated, which is a positive things. I think also in terms of growth, semiconductor, of course, we are part of that growth. And I will also say the shift in terms of us focusing more now versus three years ago on data centers, on automotive electrification, on energy grids is driving this growth. So if you think about it, just to give you facts, the base where we came from was a market that had a size of $60 billion, that had a growth of 1% to 3%. We're continuing there. But we have shifted during the last couple of years to market size that are $12 billion but have a growth rate to 10% to 15%. So I think that is the answer to what we are doing there. And I would say there the fact that the growth is coming, the margin are expanding, we are more relevant to our customer, is a big credit to that business group of what they have been doing.

But that would imply that Electronics growth is sustainable into 2018 as well, because these are structural drivers.

Yeah, I think so. It is. It is. But again, when you have technology conversion, you can have ups and downs in between quarters. But if you look upon the total business, we will continue to do well.

Thank you very much.

Our next question comes from the line of Julian Mitchell of Credit Suisse. Please proceed with your question. Julian Mitchell - Credit Suisse Securities (USA) LLC: Hi. Good morning.

Morning, Julian.

Hey, Julian.

Morning, Julian. Julian Mitchell - Credit Suisse Securities (USA) LLC: Morning. Maybe just a first question around strategic investments. I think previously you talked about that being a step-up year on year of $0.20, $0.25 in the second half. Now it's looking somewhat less than that based on your guidance. Maybe just give some background as to why that's happening. Is it just a pushout into 2018? And what kind of returns? How are returns on that investment to date coming through?

Yes, Julian, thanks for that question. I would call what we're doing in the third quarter as a really good example of our business model in action, where we have good organic growth, strong margins. And at the same time we're taking actions to position 3M for future success. As you mentioned, earlier this year we announced we expected to incur between $0.60 and $0.65 of strategic investments for the full year. And we're tracking right in that range. And those strategic investments include things we talked about at the beginning of the year for core growth platforms, but also actions to be improving our footprint and addressing our portfolio. All of that part of the 4% to 5% organic growth outlook we now are seeing for this year. We are making good progress on that in 2017 to better optimize our manufacturing supply chain footprint. And I'd point you back, Julian, to what we laid out when we – in March of 2016, about a plan to be investing between $500 million and $600 million over the course of a few years to ultimately generate $125 million to $175 million in annual benefits by 2020. So for the full year 2017, that $0.60 to $0.65 range does include the charge related to the debt tender that we'll be incurring in the fourth quarter. That has been part of our thinking. And we closed that tender in October, hence that charge coming in Q4. Julian Mitchell - Credit Suisse Securities (USA) LLC: Understood. Thank you. And then just my second question, price and raw materials in your operating margin bridge slightly picked up, a slightly larger tailwind in Q3 than in Q2. Within that, how much was the sort of raw materials portion? And do you view your current pricing trends as sustainable from here?

Most of that 30 basis points, Julian, is coming from raw materials. The pricing, as I mentioned for the total company, flat, or if I exclude Electronics, up 20 basis points. We're seeing that core underlying price growth growing as the year goes on, excluding the Electronics. So we're seeing Q3 as a quarter where our price strengthened. But the majority of that 30 basis points is coming from raw materials. And let me just elaborate a little more on that, Julian. The core underlying market we're facing for raw materials is certainly toughening. We are not seeing the underlying market creating that 30 basis points of benefit. That 30 basis points of benefit that we see hitting our financials is the result of work and projects that we're doing to take out raw material costs and the prices we're paying. So example, raw material substitutions or product reformulations to take out those raw material costs. That's the biggest thing driving that 30 basis points you're seeing. Julian Mitchell - Credit Suisse Securities (USA) LLC: That's very helpful. Thank you.

Our next question comes from the line of Steve Tusa of JPMorgan. Please proceed with your question.

Hi, guys. Good morning.

Good morning, Steve.

Morning, Steve.

Really, really good quarter.

Thank you.

Just following up on the Electronics commentary. You guided to kind of 10% for the year. I guess that implies, just making sure I get my math right here, that implies kind of 4Q at up high singles, kind of 7% to 8%. Is that correct from an organic perspective?

Yes, Steve. Your math's pretty sound there.

Okay. And I guess you talked about it as sustainable. I mean you're not saying that the double digit is sustainable obviously. I mean, semiconductor sales this year are up pretty solidly double digits. So it's not quite a surprise you guys are kind of doing well there. So when you say it's sustainable, do you mean relative to kind of an index of the devices you're on? Or within the range that you talked about? Kind of the trend line rate of that business over the last several years, it's just been more like mid-single digits? What did you kind of mean by sustainable?

So, Steve, when we say sustainable for Electronics & Energy and the opportunities that we see there, we continue to see opportunities for penetration in consumer electronics. As Inge mentioned earlier, we continue to evolve our technologies to grow our relevance in consumer electronics. But even more importantly, we're repositioning our portfolio to be going after faster growing market opportunities in Electronics & Energy. And those are places where we're seeing the results of our actions paying off, where we're seeing growth occurring there. Places like automobile electrification. So Inge said a few minutes ago, we'll always see some ups and downs based on what's happening with underlying consumer demand for electronics. But the – what you're seeing now is our business model really working, of us going after the higher growth markets.

Okay. And then one more question just on kind of the investments and margins and how that's playing through. R&D was a little bit light. And anything going on there? I guess you're just kind of repurposing investments to more kind of commercial type of things? Is that how we should think about it?

Yeah. Well, there's nothing going on. As you know, we have made a commitment to increase investment in research and development from 5.5% historically, closer to 6%. We are normally just running at 6%, so it's nothing abnormal going on there. But it's not the move to commercialization from those activities. We are very committed to research and development. And for us, science, technology, and sustainability is key driver for us as we move forward and as have been in the past. So there is no shift from R&D to commercialization. Commercialization, that's where we invested those additional $104 million for the year, when we expected 50 basis point to 100 basis point growth. And as you see, it's coming. So we're very pleased with that.

Great. Yeah. Great quarter. Congratulations. Thanks.

Thank you, Steve.

Steve.

Our next question comes from the line of Andrew Kaplowitz of Citi. Please proceed with your question.

Good morning, guys. Nice quarter.

Morning, Andrew.

Thank you.

You had an easier growth comparison in Health Care, but the acceleration in growth really is notable. I know you've been saying that you expect second half acceleration. But can you talk about whether this is simply your previous growth spending now really impacting the business? Or did you see an acceleration in Health Care markets? And can you talk about the sustainability of mid-single digit growth in this business moving forward?

Yes. First of all, we have invested for quite some time in Health Care. And I think for Health Care specifically was the first business where we made additional investment that we broad based called core search. And that's paying off. And a lot of those investment was of course in developing economies. And we can see broad based that that's paying off. And we had – in the developing economy for the quarter, Health Care grew 12%, but they also grew in developed 6%. So our base is very strong in developed, specifically in United States and in West Europe. And we continue to grow very, very well there. And then you can see that the developing economy is coming as we planned. So I will say when we have talked about the range of 4% to 6%, that's a realistic plan. And then we will be in that range as we move forward. I have no doubt about that.

All right. That's helpful. And then...

Hey, Andrew, excuse me. I'll just add one thing. For the year, we're guiding Health Care 3% to 5%. And with the results we're about 4% growth through the first nine months of the year. We see ourselves solidly in the 3% to 5% range for 2017. Now and of course in the longer term, as Inge was just mentioning, the 4% to 6% is how we see growth in that business.

Thanks for that, Nick. And then my follow-up is just on pricing again. You talked about U.S. pricing getting back closer to flat for the year, Nick, last quarter, which it does appear to be doing. But how much of the better pricing performance in the U.S. was 3M pulling back on rebating or discounting, versus just stronger overall Industrial and Consumer markets helping you? And do you think it's possible to get back to positive pricing in the U.S. in 2018?

Yeah. Andrew, we have been seeing slight incremental improvements in pricing in the U.S. And we continue to see that improving into the future. I wouldn't call it any kind of pullback on our part that's causing that to happen. It's in – it's a pricing environment where we see our business model, one where we have increased ability for price growth there. As far as 2018, I'm not ready to declare an up or down on that one. We'll talk more about that on December 12.

All right. Thanks, guys. Appreciate it. Nice quarter.

Thank you.

Thank you.

Our next question comes from the line of Robert McCarthy of Stifel. Please proceed with your question. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yes. I will echo the xylophone of a solid, strong quarter. In any event – and I want to follow up on the pricing question as well. I mean obviously, you've been fairly contrite about perhaps not getting as much price as you wanted to get in the back half – or excuse me, the beginning part of the year. And you talked about catching up on that. And you've cited the 20 basis points. But could you talk maybe a little bit just structurally how you're thinking about your businesses? Where you think you're going to see pricing pressure over the next two years to three years? Obviously, the debate around kind of what is much more perceived as lending itself to transparency around Consumer, Industrial. And then kind of the rubber is meeting the road in Safety. But could you talk about where your moats are? And how you're feeling about it? Just maybe not in the context of what is a very strong kind of third quarter, fourth quarter right now, but just structurally down the road.

Yeah. Well, you should think about 3M as the price leader in most, if not all, categories we are in. And if you look – if you think about that historically and as we move ahead, it's very much based on our scientifically based business model. So for us, if you think about the new products, the new solution that we are providing, it's all in order to drive improved productivity and/or efficiency for our customers. Our business model is about understanding our customers' business model. We are by definition not a commoditized company. So we don't go in and fight on businesses where price is the primary discussion. We try to go in and make things different versus just making them better. So you do things better. But where the real value is when you do it different. That's also the time when you can drive price. So there is – and as you can see, our commitment to science, technology, and sustainability is continuing that wave forward. And you have also seen the portfolio work we have done here the last three years, four years, five years have been businesses that are more commoditized. We don't think that we can add as much value to them versus other companies. That's also why they have exited our portfolio. So I would say that there will be no change moving forward relative to our strategy around pricing. Now again, as you know and we know, things in between quarters can change slightly. But there is no big change relative to our strategy around pricing. It's very, very important for us. And it's important due to the fact it's part of our business model. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Could – as a follow up maybe you could just talk about obviously the messaging for kind of your growth initiatives and continued commercialization. I suppose your outlook meeting will be around electrification. But could you talk about and maybe take it from the top for the portfolio where you see the most opportunities? And how we should be thinking about kind of quantifying what the longer term opportunity around electrification is?

Are you talking electrification, specifically? Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yeah, for autos.

Yeah, of course. If you think about that in terms of the mega trends and what we can do, we have three elements into that area specifically. We are very strong in automotive. We have showed that over time. We are outperforming automotive build quarter after quarter and year after year and within this quarter as well. So our connection into automotive is very strong. We have a strong technology platform in our Electronic & Energy that we then utilize through those contacts in order to build our platforms. And then the other thing that is easy to forget is that we are a global leader in traffic safety. And if you take those elements together, traffic safety, automotive electrification, and pull them together, that's exactly where the trends are going. And there is big platform for us to capitalize as we move ahead. So think about it in that perspective of I will say a certain thing that will – you and I will see today as we drive our cars. But also things that would come relative to the evolution of road safety in the automotive space. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Thanks for squeezing me in.

Thank you.

Our next question comes from the line of Scott Davis of Melius Research. Please proceed.

Hi. Good morning, guys.

Hey, Scott.

Hey, Scott.

Scott.

Welcome back.

Thank you. It's nice to be back. Appreciate it. Inge, you finally seemed to crack the code on China. That was a region that was tough for you guys for a while. And boy, you've had a couple pretty good years there. I mean what do you attribute most of the success? I mean I know you mentioned some of this earlier in the call. But have you changed up your sales and marketing? Does it just take time to get brand awareness? And is it pricing strategy? I mean what outside of Electronics, obviously.

Yeah.

But if you could just talk through that.

So first of all, we've been in China for a long time as you know. I think we started our wholly owned subsidiary there in 1984 and have made investment over time. And we have good capabilities in terms of manufacturing there. And we have also a good research and development center there. Now it looked like – and as we had talked about before, that being there is not a shift. But there have been additional investment in China for what we would call domestic markets. So that will for us then benefit Health Care and Consumer specifically. And I think what is happening as we speak is that the consumers in there and the OEMs, they're becoming more demanding on performance, on quality, and functionality and brands. And that is going right into our business model in order for us to be more relevant. So we are capitalizing on that. We have also made additional investment in the domestic markets. Right? So you think about it in terms of everything that is produced and commercialized there. And we grow two times GDP and IPI (43:54) in the last couple of quarters. And we have shifted a portfolio to more Safety also in Health Care. So that's helping us in addition our own initiative. So that's type of, I would say, Chinese mega trends if you like. And then we, in addition, have made a lot of efforts on air quality, water quality, and automotive electrification. So you take that together, growth are coming. And it's very nice to see. So I think it's a focus, a presence and a focus, a commitment under the long term that now has start to pay off I think very much because of demanding for performance, quality, and functionality. And then as you say, brands are becoming more and more important. If you take air quality in China, it's equal to 3M. 3M stands for air quality in China. So that's actually our brand in China. And if you travel into China and you do some interviews, they will like to talk about respiratory products, about our things in filtration, et cetera. So I think it's coming back to brand awareness and the quality and functionality we're able to provide in the country.

That makes sense. And just to follow up on that, I mean one of the things you've been doing, Inge, is trying to get more locally designed products in each of the regions.

Yeah.

Whether it be U.S., Europe, Asia, Latin America, and you've taken R&D up as a total spend, not just as a percent spend. But your revenues have grown, so you've taken it up meaningfully as a total spend. And how do you manage that structure, whereby you make sure you don't have guys working on duplicate projects? For air quality, for example, you've got guys in China working on new developments. And at the same time you've got guys in the U.S. working on the same things. I mean how do you really manage that complexity?

Well, we have our Senior Vice President from Research and Development that are managing the overall structure relative to how we do things. And there is very little duplication. And if you think about the science based off it, research and development, you think about research, there is four centers around the world that are doing the research. There's only four of them. Then you have – locally you will have capabilities for development. And that's a combination of the local business and the global division in order to manage that. So there is not duplication. And some time – to be honest, some time you can see duplication. But it's very, very seldom. And I think the advantage for us is sometime when someone is on something and find a solution for local market, we can replicate that other places. So will there be duplication sometime? Yes, I'm sure there will. But it's not much at all. And I think the evidence is there in terms of the outcome or the result.

Excellent. Keep up the good work, guys. Thank you.

Thank you.

Take care.

Our next question comes from the line of John Inch of Deutsche Bank. Please proceed with your question.

Thank you. Good morning, everyone.

Morning, John.

Yeah. Morning, John.

Morning, Inge. So can we talk about investment spending in the quarter? I guess I thought you were going to be doing about $100 million. And you did $48 million. But maybe that was $100 million over two quarters. Maybe Nick could – what's going on there?

Yeah. For the total year we're on track for the total investment spending. We ended up having $40 million, mid-$40 million for investment spending for the third quarter. It's roughly a 50/50 mix of some of our footprint actions and the accelerated growth investments. And we're continuing to execute that plan. It's going according to the expectations we had for how this would play out for 2017. So I see it tracking just as we've planned it for the year.

So, Nick, you didn't spend less than you had planned in the third quarter? And that's coming through in the fourth quarter? Or no?

In the fourth quarter we expect that to go up slightly to now to be – I can – I'll put in cents, earnings per share terms. That'll be $0.06 to $0.10 or roughly $70 million to $110 million of total incremental strategic investments. That will be more heavily focused on footprint than on growth. Because on the growth side, John, we're starting to lap ourselves with some of the growth investments that we started later in 2016.

Okay so $70 million to $100 million. That's incremental year over year, correct? That's...

That is correct, John.

It looks like inventory and receivables sort of sequentially as a function of sales maybe have moved up a little bit. Is that – I'm presuming that's, as a short cycle company, this is a response to channel fill. What is that? Is that new products that you're pushing through? Or is that actual pull-thorough from it could be a variety of sources. You're obviously a giant company, so it's hard to sort of parse that out. But what in fact is going on there? Is that just reflective of the global economy actually picking up?

Yeah. There is part of that that's the economy. So from an accounts receivable perspective, certainly our growth is the biggest driver of where we're seeing accounts receivable balances going up. On the inventory, that's also a function of the growth. The only thing on top of that I'd add is in the case of our business transformation effort, as we prepare to go-lives in different geographies around the world, one of the things we typically do is build some inventory in advance for our customers to ensure we can have an undisrupted supply chain for them. That's a little bit of what we're seeing right now.

But I think important, John, is there is no channel fill by definition. We don't see anything in the channels that is abnormal for us. So I think that's important to put in place as well.

Well, if anything to your point, Inge, Consumer should have actually have had channel down fill, right? So is that still going on? And what was price in Consumer by the way?

We don't typically put our price out by business group. And in the case of channel in the U.S., in the office supply channel we are continuing to see contraction there. Just not at the same level that we were seeing in the first half of this year, John.

Okay. I'll just ask one more, because that electrification of vehicle thing took up 17 questions. Gross margins, why were they down again this year for the first three quarters versus last year? Like, what's ultimately going on in the gross margin complexion of 3M today based on your businesses, you're spending versus last year? Why are they down? And do you think they will actually start to pick back up? Or is this all going to be about the OpEx management?

John, I think you must be looking at our gross margin on an all-in published basis.

I am, yeah.

Part of what we've been doing this year is we have been doing a number of these supply chain footprint actions. Those costs are impacting our gross margin. When we strip that out, we are continuing to see slightly improving gross margins for 3M.

And that – when does that alleviate, Nick? When do you start to look at kind of a trend up on an all-in?

In terms of our view on supply chain footprint actions, we originally laid out a year and a half ago that we expect between $500 million and $600 million of investments. We have done the majority, more than half of that, in 2017. So there will still be some footprint action expenses that we see in 2018. It will just be on a lower base than – a lower level than what we've seen in 2017. So it'll flip to become a tailwind for us from a margin perspective in 2018.

Got it. Thanks very much. Appreciate it.

Our next question comes from the line of Joe Ritchie of Goldman Sachs. Please proceed. Joe Ritchie - Goldman Sachs & Co. LLC: Thanks and good morning, everyone.

Morning, Joe.

Joe. Joe Ritchie - Goldman Sachs & Co. LLC: So maybe touching on organic growth, clearly, really nice quarter and good acceleration. I guess if you look at the fourth quarter kind of implied guidance of call it like roughly 3.5% to 4%, a little bit of a deceleration, still good growth. But I'm just wondering like maybe you guys can comment on exit rates through the quarter and whether you're seeing anything interesting in the current rates.

Joe, in terms of trends that we saw throughout the third quarter and continuing into the first three weeks of the fourth quarter, we're seeing no change in trend. What you may be noticing in our guidance for the year is the fourth quarter will be our toughest comp for the entire year. But we're seeing no underlying deceleration in the trajectory of our sales revenue. Joe Ritchie - Goldman Sachs & Co. LLC: Got it. And maybe following on there, Nick, as the quarter progressed, was there any change throughout the quarter? Or was the quarter just pretty even throughout?

Joe, it was pretty strong throughout the quarter. There was no discernible trend between the different weeks or months of the third quarter. It was very even and strong throughout the quarter. Joe Ritchie - Goldman Sachs & Co. LLC: Got it. Okay. Great. And then maybe just shifting gears a little bit to capital allocation. Clearly Safety & Graphics over the last couple years has been an area where you guys have invested. Looks like you're taking down the buyback a little bit this year. I'm just wondering as you're thinking about M&A across the portfolio, perhaps maybe prioritize where you think you guys should be putting your M&A dollars moving forward?

Well, I think first of all, the pipeline for all businesses is very good. And as you correctly have illustrated it, we have done acquisitions in Safety & Graphics specifically but also in Health Care, even if they have been smaller. I'm now talking the last couple of years. I think Safety & Graphics as a business group now, we had Capital Safety added in and now Scott Safety coming on the base that we have for our very strong franchise in personal safety. We're in a good position there to continue to accelerate that growth. And I would say that we have interest in all five business groups in order to do some additional thing. But as I said, we have now to make sure in Safety & Graphics that we focused everything in order to execute the implementation and integration of those businesses. But more than that, we are open to see where we can add businesses, that is strategically important for us and that are aligned with our four fundamental strengths, which is technologies, manufacturing capabilities, geographic reach, and brand equity. So if we can drive a faster return and fast return for ourself to those four fundamentals, and they are in a strategically good position in our portfolio, we are very interested. Joe Ritchie - Goldman Sachs & Co. LLC: Inge, maybe how much of a limiting factor right now is valuation?

I think always there – it's not now. There's always – whenever you talk about that, there is always a limitation to it. Right? There's – and I think it's important for you to really decide on where would you like to make it strategically. Right? So you can see some of the acquisitions we have made, we have looked upon the real value it can add to use. And then we have paid for it. Right? We are – in my mind we are world-class company. We are interested to buy world-class companies that we can integrate and drive forward. So then you need to pay a little bit more, but not too much. Joe Ritchie - Goldman Sachs & Co. LLC: Okay. Thanks, guys.

Thank you.

Thanks, Joe.

Our next question comes from the line of Steven Winoker of UBS. Please proceed.

Thanks. Good morning, guys.

Hey, Steve.

Hi, Steven.

Morning, Steve.

Hey. I'll just – I'll keep it to two questions. The first one, Inge, you know 3M has faced I think a lot of skepticism around its ability to hold Health Care operating margin over time. So far you've proven that skepticism wrong. And as we're facing yet another sort of high level margin before the strategic investment for the quarter. So maybe comment a little bit on the pressures in Health Care globally? And how you're withstanding that? And your conviction going forward in the business' ability to continue to do that over time.

Yeah, I think you're right. That, first of all, we've been in this business for a long time. It's a very attractive business to be in for reasons that we all know. The aging population trend, et cetera. I think the important thing is that you're able to provide at least two things. One is a benefit for the patient. And second, a benefit for the provider. And our portfolio is still right into those two things. That is what we do. And when you can add value even in an area like Health Care, which is very different than Industrial, you will be able to win in those segments. I don't know if you know, but I know that I was part, myself, of Health Care back in Europe in the early 1990s, 1991 to 1995 specifically. And there was a lot of pressure then through the German health care act. And what we had to do then was just, again, to prove the value for patients and for the provider and ourself, to be very efficient in the model in terms of manufacturing capabilities and logistics. And that's what we are doing. So when you look upon that specific business in terms of our growth rate, our margins, our cost of goods sold on SG&A, it's almost a perfect model for how you should do business in my mind. And you look upon that and you compare that to Safety & Graphics, they are soon at the same point. Not as high margins, but you can see the growth rate and very respectable margins of 25 plus percentage. It's again businesses that are regulated, it's about safety, it's about making sure that the patient or the worker always get the best. And people pay for that. And if you see Health Care, the acceleration we had in developing economy was 12%. The issue in developing economy is never quality, it's money. And as soon as the money is becoming available, 3M is one of the first products they will purchase into the system, based on key opinion leaders around the world writing papers of what is the best outcome in the treatment for patients.

Okay. That's helpful. And then secondly, on I think a question also that you've tackled repeatedly. But given once again the strength in the quarter that's showing up, any thoughts going forward about revisiting taking on incremental leverage for growth investments going forward? You're I think below one time net debt to EBITDA?

Yeah, Steve, you know our guidance of what we laid out for leverage over the course of five years. That we expect to add between $10 billion and $15 billion of leverage over that time. We've made progress in 2016 and progress on that in 2017 on that path. There's nothing changing on that front of seeing the capacity we have for adding that leverage.

Okay. Okay. Great. Thank you.

Thank you.

Our next question comes from the line of Nigel Coe of Morgan Stanley. Please proceed. Nigel Coe - Morgan Stanley & Co. LLC: Thanks. Good morning, gents.

Morning.

Good morning, Nigel. Nigel Coe - Morgan Stanley & Co. LLC: I'll keep it – covered a lot of ground, so I'll keep this very brief. So we've tackled the question on sustainability of organic sales. And obviously your 4Q guidance doesn't assume it continues. But I'm just trying to understand what caused the acceleration. And I know that there was some timing differences on days in 2Q. But do you have any intelligence in terms of the broad portfolio in terms of sell-in versus sell-through? I know in Consumer you got good data. But what about more broadly in Industrial and Health Care channels, sell-in versus sell-through. And were there any pricing increases or rebate concessions that maybe might have distorted the course? Or was this really just good end market demand?

This is good commercialization and market demand that we capitalize on. On sell-in and sell-out is often talked about relative to the retail and consumer lines. And there was no difference in this quarter for us relative to sell-out and very much the same in terms of sell-in as well, specifically in the office supply channel. But there is nothing here in terms of us pushing something into the system in terms of any specific activities. As and I said earlier, we – our business model is around creating value for the end customer and for the OEMs in the industry. So there is nothing else here that is pushing the growth up. And as you can see, it's broad based. If you think about we have EEBG [Electronics & Energy business group] of 13%. We have Health Care of 7%; IBG [Industrial business group] and Safety/Graphic at 6%. And then Consumer, 2%. And you look upon geographically, APAC, 13%. And if you take out Electronics, it's still 8%. And then you have Latin America/Canada at 5%, United States, 4%, and Europe/Middle East/Africa, 4%. So it's broad based and it's all businesses, which is very, very encouraging for us. Nigel Coe - Morgan Stanley & Co. LLC: No. No question. That's great detail. Thanks, Inge. And then on – Nick, on the raws, the $0.03 of benefit in 3Q. Obviously great job by the team. What does your plan embed for 4Q, just given the inflation we've seen post hurricane?

And, Nigel, could you repeat that, the $0.03 benefit from what? Nigel Coe - Morgan Stanley & Co. LLC: Raw materials.

From raw materials. Yeah. We think that will – we think that will be flat to some benefit for us in Q4 and probably a little bit of a mixed dynamic there. As I said, we've seen pricing continuing to benefit. So from a price raw material, I think we'll still see increasing benefit from our selling prices. On the raw material benefit, we continue to see that as a tougher and tougher comp for us. Up until now, it's been offset by the projects we're doing, as I mentioned earlier. That will likely sustain. But I wouldn't be surprised if the benefit from that came – the net benefit came down slightly in the fourth quarter. Nigel Coe - Morgan Stanley & Co. LLC: Got it. Okay. Thanks, guys.

Our next question comes from the line of Deane Dray of RBC Capital Markets. Please proceed.

Thank you. Good morning, everyone.

Good morning, Deane.

Hey, Deane.

Hey. I know we're into overtime here, so I'll keep it to one question. Can you talk about oral care in the U.S.? And how were you impacted by the ongoing distributor changes that's been causing stocking and restocking? And might you have picked up any more market share during this commotion?

Yeah. Deane, I wouldn't say that we're in a position where we're declaring that we've picked up market share in the recent months or quarters. I would say this is a strong global business for us. And we are – we see lots of demand for our oral care solutions around the globe. The U.S. is down slightly in our oral care business. And it's a business where we haven't seen quite the channel fluctuations that you might be talking about. It's been pretty stable for us. The biggest driver for us in our oral care business is our demand in emerging markets and other parts of the world.

Thank you.

Okay. And our next question comes from the line of Laurence Alexander of Jefferies. Please proceed with your question. Hello, Mr. Alexander? Your line is open. Please proceed with your question.

So good morning, guys. So two quick ones if I may.

Yeah.

The soft spots in your business, the stationery and the office and the commercial solutions in the safety and protection.

Yeah.

To what extent are those still core? Or how do they fit in the macro driven, mega trend driven, science-based growth that you were describing earlier?

Yeah.

And secondly, what are your criteria for adding new materials to your 46 technology platforms?

Yeah. Well, if you – relative to the two divisions, if you start with the division in Safety & Graphics, that's a division that have a very strong precision with films that is one of our core technologies. If that is – in this case, is film for decoration, for brand equity building, but it's also the same type of I will say equipment and asset we are using for all our light management businesses. So that's a business that is very strong for us. And if you look upon the underlaying capabilities in order to produce those product, that's core to 3M. So there is no question around that business. And there is no question about office and supply either. That is where you have the Post-it. That's where we have the Scotch Tape, et cetera. So those are brand equity big businesses that we earn good money with. And our customers are on very, very good margins with them as well. So if you think about that from a perspective, also those businesses in stationery products, they are based on technologies that are very solid for 3M as an enterprise. So there is not even a question relative if they belong to 3M or not. So that's that answer. In terms of building out technology platforms, we have 46 as you said. In some cases, if we need to build out something, we will look upon that. And I think the latest – we have a couple of them during the last couple of years. One is the ceramic business, where we bought one company that in fact had a defense business of around $450 million. So we purchased that. What we really purchased was actually a technology platform that we'll deepen and broaden what we already had ourself in the ceramic. And that that could be used for many, many, many divisions. And we did one in Lebrona (1:09:00) that is a filter capabilities that we built into filtration and non-woven (1:09:07) capabilities, et cetera. So if we see a need to add something that we not can do our self or take too long time for us, we will go out and look for that. But again it's built on the demand from the market and where the market going for the future. It's not us sitting internally and look upon what we are doing and, yes, try to see what we should add.

Thank you.

That concludes the question and answer portion of our conference call. I will now turn the call back over to Inge Thulin for some closing comments

Thank you. To wrap up, our team executed very well across enterprise and delivered another strong performance in the third quarter, including robust organic growth, increased earnings per share, and rising margins. The 3M playbook is working, and we are well-positioned going into 2018. Thank you for joining us. And I look forward to seeing you all in New York on December 12 for our outlook meeting. Have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation, and then ask that you please disconnect your lines.