Ladies and gentlemen, thank you for standing by. Welcome to the 3M First 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. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, April 28, 2020. I would now like to turn the call over to Bruce Jermeland, Vice President of Investor Relations at 3M.

Thank you, and good morning, everyone. Welcome to our first quarter 2020 business review. With me today are Mike Roman, 3M's Chief Executive Officer; and Nick Gangestad our Chief Financial Officer. Mike and Nick 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. Please turn to slide 2. Before we begin let me remind you of the dates for our upcoming 2020 quarterly earnings conference calls, which will be held on July 28 and October 27. Also please note given the uncertainty related to the COVID-19 pandemic, we have not set a date for an investor meeting later this year. Please take a moment to read the 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. Finally, throughout today's presentation, we will be making references to certain non-GAAP financial measures. Reconciliations of the non-GAAP measures can be found in the attachments to today's press release. Please note, we have provided segment and total company adjusted EBITDA reconciliations for reference in today's press release attachments as part of our non-GAAP measures. Please turn to slide 4, and I'll hand it off to Mike.

Thank you, Bruce. Good morning everyone. I hope you and your families are safe, and I thank you for joining us. Let me also take this opportunity to say how much we appreciate and admire everything our heroic nurses, doctors and first responders around the world are doing to fight COVID-19. And I'd like to share this sentiment with our employees. In this unprecedented time, I could not be more proud of how you have stepped up to help protect those on the front lines of this crisis. I would like to also recognize those 3Mers in our manufacturing and distribution sites who in these most challenging circumstances continue to work around the clock to accelerate production of respirators and other critical supplies. I thank all of our people for your tireless efforts and your incredible work. At 3M, we have a unique and critical responsibility in pandemic preparedness and response. Our response throughout COVID-19 has been guided by our purpose as an enterprise and shaped by these three principles. First an uncompromising commitment to the safety of our employees; second, fighting the pandemic with urgency from all angles, including everything we're doing to help protect health care workers and first responders; and third, maintaining business continuity, executing actions to deliver for our customers and shareholders and to lead out of the economic slowdown. Please turn to slide 5. In January, we mobilized 3M's crisis action team to coordinate our response to COVID-19. This team meets daily to ensure we are addressing our highest priorities, which as I mentioned starts with protecting the safety and well-being of our people. Our learnings from China which was impacted by the virus first helped guide our actions worldwide and made a significant difference in our ability to rapidly prepare and respond. We moved…

Thank you, Mike, and good morning, everyone. I will start on slide 10, and review the first quarter P&L highlights. Company-wide first quarter sales were $8.1 billion with adjusted operating income of $1.7 billion and adjusted operating margins of 20.8%. On the right-hand side of this slide, you see the components of our margin performance in the first quarter. Solid underlying productivity in the quarter along with benefits from our Q2, 2019 restructuring actions contributed 40 basis points to the margins. This result includes COVID-19-related asset write-downs, which negatively impacted margins by 40 basis points. Acquisitions and divestitures combined reduced margins by 90 basis points. This impact is primarily due to the integration and amortization costs associated with our acquisition of Acelity. Higher selling prices along with lower raw material costs together, contributed 40 basis points to first quarter margins. And finally, foreign currency net of hedging impacts reduced margins by 40 basis points. Let's now turn to slide 11 for a closer look at earnings per share. First quarter adjusted earnings were $2.16 per share down 3% year-over-year. Looking at the components of our year-on-year earnings performance, solid productivity and benefits from Q2 2019 restructuring actions increased first quarter per share earnings by $0.07. This includes a negative $0.04 impact from the asset write-downs related to COVID-19 mentioned on the prior slide. Acquisitions and divestitures reduced first quarter earnings by $0.05 per share versus last year, primarily due to the Acelity acquisition. Please note that this result includes financing costs associated with the acquisition. Foreign currency net of hedging was an $0.08 per share headwind in the quarter. Turning to tax rate, our first quarter adjusted tax rate was 20.6% versus 19.5% last year, lowering earnings per share by $0.03. And finally, average diluted shares outstanding declined 1% versus…

Thank you, Nick. I'll start by providing an update on the market trends we're seeing so far in April. On a geographic basis, we're seeing ongoing improvements in Asia Pacific, most notably in China where the virus first emerged. However, we continue to experience significant downturns in the U. S., Europe and Latin America, areas that remain in the throes of the crisis. I can share that we are seeing a slowdown in growth during the first several weeks of Q2, with total company organic growth through late April down in the mid-teens. We anticipate continued strong demand for respirators, which we expect to contribute approximately 150 basis points to company-wide Q2 growth. At the same time, we expect ongoing weakness in other end markets through Q2, including oral care, automotive, office supplies and general industrial. Due to this end market uncertainty, at this time, we are unable to adequately quantify the impacts to our business for the remainder of the year. Therefore, we are temporarily withdrawing our 2020 guidance, until we have better visibility of the duration and impact of the slowdown. At this time, we believe Q2 results will be especially challenged, given the trends we have seen so far in April, with revenue and EPS declines year-over-year. In lieu of guidance, starting in May, we will provide monthly updates on how our business is performing and we will continue to provide this until we are better able to forecast future performance. Please turn to slide 14. To wrap up, our strong fundamentals and position with customers across industries provides a firm foundation during this time of uncertainty. We may not know the exact shape of the recovery, but we are well prepared for a wide range of scenarios and are taking actions to prepare us to lead out of this slowdown. Before turning to Q&A, I'd like to once again thank all 3Mers for your tremendous work and for everything you're doing in this unprecedented moment. I'm very proud to represent 3M and our people around the world. Going forward, we'll continue to do all we can to protect our employees, protect our enterprise and help the world get through this crisis. That concludes our remarks and we'll now take your questions.

[Operator Instructions] Our first question comes from the line of Andrew Obin with Bank of America. Please proceed.

Good morning.

Hey, Andrew.

Good morning, Andrew.

It's great to see 3M finally doing what 3M always does. Congratulations.

Thank you.

Just first question, just a big picture question. In terms of your capacity additions in nonwovens and specifically respirators, how do you think the industry will change, because you're not the only ones adding capacity? Lots of capacity added in China. All of a sudden you have Honeywell showing up in North America and Europe. What does it mean for competitive environment two years out?

Yes. Andrew, it's a little hard to look two years out. But, certainly, as we think about capacity expansion that we're doing today, a big part of that is in that category of surge capacity for situations like we're facing with COVID-19, there is going to be, we think, a significant tail to demand in this. You can look out. There's demand from governments from healthcare and there's also ongoing demand in the industry as industry comes back from economic slowdown. So we're mapping all of that into our capacity and then we're working with governments and the Department of Defense in the U. S. to plan for capacity that would be dedicated to their needs in a COVID-like crisis. So I think it's really lined up well with what we see as ongoing market and industry demand. And we're looking obviously broader than just our capacity. We're looking at the marketplace and the capabilities. And we're focusing here on N95 and just really respiratory solutions that meet those requirements. So I think it's got a view as far as we can see it. As we look out further beyond, you said, a couple of years out its going to depend on where we end up in those big end markets, healthcare and industrial.

And just on an unrelated topic, I think, there were some news items. I think, Bloomberg reported some sort of developments in the hearing protection lawsuits. Can you just -- and it's interesting, I guess, the message is on pricing and disclosure. And, I guess, in light that you guys actually published list for N95. But can you just comment where you are in terms of this hearing protection lawsuit? And any comment sort of on the Bloomberg article? Thank you.

Yes. Thank you, Andrew. Let me start here. 3M has great respect for the brave men and women who protect us around the world. And we have a long history of partnering with the U. S. military and we continue to be committed to making safe products. We've worked in close coordination with them and 3M did not withhold information from the government about fit and use of this product. The narrative out there is misleading and really lacks context. So, I think it's -- we will defend ourselves. And we deny that our product was defectively designed. So, I would just say that, that narrative is very misleading.

Thank you very much and congratulations on a great quarter..

Thanks, Andrew.

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

Thank you. Good morning, everyone.

Hi, Deane.

Good morning, Deane.

I'd also like to add my appreciation for all the 3M has done to help health care workers globally. And in my view that's exactly the kind of corporate citizen we'd expect 3M to respond and so, congratulations to everybody.

Yeah. Thanks, Deane.

Thank you.

A number of companies have in lieu of -- considering suspending guidance they've been offering some scenario analysis or sensitivity in terms of how the year could play out, in terms of decrementals, margins. Can you take a stab at that? And how might this all compare to the financial crisis of 2008, 2009, if we use that as kind of a benchmark? Could we start there please?

Yeah. Deane I'll take that one. First of all, of course we like I think any other company we're going through a number of scenarios. And while I don't plan to share the different scenarios because this is a dynamic situation, a couple of things I will share. First of all, we -- as Mike noted, as we go through this quarter. And until we see a reason to change that we're going to be providing monthly revenue to give you the insight of what's going on with our businesses in different geographies. In addition, you heard Mike talk about the cost-saving actions that we are -- that we've implemented for Q2. And inclusive of that, we expect in the second quarter that we will be seeing decremental margins between 30% and 40%. And now that's inclusive of the $350 million to $400 million of cost saving actions. So, between sharing the revenue, each month as we see it and this -- and our view on, decremental margins, we think that gives you some insight, as to what you can be expecting from us from an earnings perspective, as we're going forward.

That's a helpful start. And then, could you also clarify since this is -- and we appreciate getting the monthly revenue updates. You just suggested we could be getting it by geography. Will you also be sharing -- will it be organic and also by segment?

We think organic is the best way to share this. And that's our plan right now. And we do plan to be providing insights of what's going on by both, business and geography.

Okay. That's going to be really helpful, so I appreciate it. Just last question, it got cited but not clarified. What were the asset write-downs that were COVID-related? You sized it. But what were the businesses and why?

Those are -- within our company we have -- what we call new ventures, where we're investing venture capital in a number of places of emerging technologies that we think will complement the 3M business model. These were some mark-to-market actions. All or virtually all were felt within the [core] [ph] miscellaneous aspect of our company.

But why were those COVID-related?

As a result of changes in triggering events, in terms of the value of those companies that, we saw that as COVID-related.

Okay. Thank you. Good luck to everyone. Stay healthy. Thank you.

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

Hi guys. Good morning.

Good morning, Steve.

Hi Steve.

Hey, sorry if I missed this busy earnings morning. But the $350 million to $450 million in costs in the second quarter that's a pretty big number. Does that -- is there kind of carry forward into the – sorry, in the second quarter. Does that carry forward in like the third and the fourth? And how much of that is temporary? How much of that was from last year's restructuring? Just unclear to me what's included there? Sorry if I missed you detailing it earlier in the call. I'm sure you did. But I missed -- I might have missed that. Thanks.

Yeah. Steve, I'll go through a few of those details. First of all, it is taking actions on a number of components of cost structure. The first and the biggest component is things what we internal to 3M called indirect costs, things that are not payroll or raw material cost related. So, travel, external services, temporary workers, targeted ad merch, things like that we are working on bringing that spending down, in line with what we're seeing happen in the external market. We've also frozen any new hiring. And in the case of with employees there are some parts of the world where we have put employees on required mandatory use of vacation. So, those are the things that are driving that. In terms of carry forward into future quarters, I'd say Steve it's just volatile now that -- and flexible that some of it, or much of it may carry forward depending on what we see, but not necessarily depending on the type of recovery that 3M sees in the coming quarters.

Okay. So you seem to, kind of, have yet to take structural action -- incremental structural action beyond what you guys did last year, which is what most companies are doing just by the way.

That is correct Steve.

Okay. And then one last one just on how you're approaching this environment. The inventories, a lot of companies are keeping a little bit of a buffer stock. Have you guys maintained that buffer stock, or have you continued to work down inventories from where they were last year?

Yeah, Steve one of the things I highlighted in my prepared remarks was how our enterprise operations bringing together manufacturing supply chain and customer operations together into one organization that we launched at the beginning of the year. It's really been benefiting us and this is another area where really we continue to take down days of inventory outstanding. So we do have plans to reduce inventory, some of it in response to slower demand, some of it really taking advantage of that improved performance. So we have targeted significant inventory reductions on both of those drivers.

Okay, great. Thanks a lot guys. Appreciate all the details.

Thanks, Steve.

Thank you.

Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed.

Thanks, good morning.

Good morning, Nigel.

By the way great idea. Good morning. Great idea on the multi sales and please continue that post COVID. It's one of the information I have. I'm sure you want to. So looking at the April trends, and obviously a lot of companies are using April to anchor their expectations for 2Q and beyond and then using China as a sort of the lead indicator for what to expect elsewhere. So just two-part question here; one, would be can we use the mid-teens kind of placeholder for April as a guide particularly, or are you seeing sequential deterioration through April, which indicates that might get a little bit worse or get better? And then in China the strength that we've seen in April, which is obviously very encouraging. But how much of that is a sort of restock versus the obviously the severe declines we saw in February?

Yeah. Nigel, maybe I'll take that. When you look at April, it's what it is. Our April trends to date. I led with outlook description, very fast changing lot of uncertainty. So to look beyond that trend part of the reason we're going to give monthly updates is it's just -- you can't project April into May or June or any further than what we are seeing right now. And I would -- so we'll update you as we go on that and give you better clarity month-by-month. When you look at China, we are seeing improvements. We're returning to growth in China. It's pretty broad-based across our portfolio. And for sure there's going to be some restocking. But we're seeing the economy start to show signs of recovery broadly. And it's not back to normal yet, but improving as we move through April.

Okay, great. Thanks, Mike. And then I think one for Nick. On the pricing 40 basis points in the quarter, are we confident that pricing will remain positive this year? Are we seeing any warning signs outside of Asia on pricing? And then can you just mark-to-market on where the raw material benefit is right now for FY 2020?

Yeah, Nigel we started the year saying our price growth that we thought would be consistent with past trends and the 40 basis points that we saw in the first quarter is very much in line. If we look forward for the balance of this year, we're not seeing any kind of material change in what we're expecting for price growth for us. We think it will stay in this zone. In regards to raw materials Nigel we -- at the beginning of the year, we said that we expected raw materials to be between flat to up to a $0.10 tailwind to us. Right now if we look at it, it's going to be better than that. It's going to be a more significant tailwind. I'm not going to quantify it because things are dynamic enough, but we're seeing it go beyond that for benefit right now.

Okay. Thanks very much.

Yeah. Thanks, Nigel.

Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed.

Hi, good morning. Maybe…

Hi, Julian.

Hi. Maybe just a first question please around the Health Care division. Maybe just help us understand within that what you've seen so far as the puts and takes from COVID? And it looks like underlying margins, excluding the acquisition impacts have been flattish in Q1 and Q4. So just wondering if and when health care sales recover alongside say oral care coming back, should we expect good incremental margins, or is it just that Health Care is at a higher level of reinvestment for the near or medium-term? Thank you.

Yeah, Julian maybe I'll comment just on the business trends that we're seeing. So we saw Health Care grow by a little over 1% in first quarter. It was led by medical solutions and food safety. As we got to March, we saw a significant slowdown in oral care. And we also saw an impact from elective surgeries and a slowdown in Health Care in some of our medical solutions areas as well. So those are some of the trends we're seeing behind that overall growth number. Maybe I'll ask Nick to comment on the margin and your question around margins.

Yes. Julian, of course, the biggest thing that we're seeing from margins in Health Care right now is from our acquisition of Acelity. And I think you will note in the appendix we're now providing EBITDA margins. We felt that would be helpful given the acquisition of Acelity to give one more level of information on that. In terms of the margins that we're seeing, it was absent Acelity pretty close to flat. And we've seen some mix impact in the first quarter as we've seen some parts of that business more impacted by COVID. And as Mike said, as we go into second quarter we will continue to see impacts on elective procedures that will be having an impact both on our growth and on our margin. As those recover and as we see people going back to their oral care professionals and electing to do elective procedures, we've also seen that have a positive impact on our margin going forward.

That's helpful. And then just my second question around the Safety and Industrial business. Clearly, some good tailwinds from all the work being done around respirators, but maybe focusing on the margin side very good margin uplift in the first quarter. Do you think we're now at a level in that business where given the cost-cutting actions some of the reorganization measures at 3M once we see the sales side improve in the second half or next year in industrial within that division we should see very good operating leverage there as well as good sales growth?

Hey, Julian, I'll take that one. So we have been doing a number of actions within our Safety and Industrial business to be enhancing the margins. The things that we've been doing to make that a more efficient productive operation and part of what we were announcing on our January earnings call. When we look at what -- in our margins in particular in the first quarter that's been impacting that. But I think even more importantly we've had really good spending control going on in our Safety and Industrial business and that's been one of the big drivers of what you see in our first quarter margin. So yes going forward if there's -- as when we return to growth we will be seeing some benefits. But we also are seeing an impact right now of really good disciplined spending control in that business.

Great. Thank you.

Thank you. Our next question comes from the line of Jeff Sprague with Vertical Research. Please proceed.

Thank you. Good morning, everyone.

Hey, Jeff.

Good morning.

Good morning. And just a little more granularity on some of the divisional stuff if I could. Excuse me. Personal safety was up looks like 7% in the quarter $60 million or so. I guess, I would have expected maybe it to be even stronger than that. I guess the 1.5% benefit you're talking about for Q2 I think is relative to total company sales. So it looks like you're looking for another kind of $120 million or so, kind of, lift on a year-over-year basis. Is that correct? And would that be kind of indicative of what your kind of current run rate production is for that business?

Hey, Jeff. This is Bruce. Organically, personal safety is up 14%. What you're seeing for all-in sales growth we had divestiture impact from our gas and flame detection divestiture which is impacting obviously total sales growth.

All right. That's helpful. Thanks, Bruce. And then Nick just thinking about the sources and uses of cash and thanks for your color there what is your view on repo? Should we consider it's off the table for the balance of the year? Is this something that you'll be reconsidering as the year progresses? And is there going to be any requirement in pension as you get towards the end of this year looking into next?

Yes. Jeff, as I mentioned earlier, we continue to look at a number of scenarios and manage accordingly for those. I think it would be fair to say that it's a dynamic situation. So I'm not going to put a timeline of when we would be possibly back in the market with a the share buyback program, but I think it's safe to say that we would want to have enough confidence in the future that we can resume guidance of what we're anticipating for our financial results before we would be resuming our share buyback program. In regards to the pension, we started the year with a well-funded pension. And we took what I will call a minor hit in our pension-funded status in the first quarter. And right now we don't foresee any changes in our capital allocation plans to our pension. We've been targeting around $200 million a year to our global defined benefit pension plans. And we don't see any required -- changes required in that pension funding going forward. So we don't -- for the foreseeable future at this point we're not seeing that change Jeff.

Right. Thank you.

Thank you. Our next question comes from the line of Joe Ritchie with Goldman Sachs. Please proceed.

Thanks. Good morning, everyone. Hope, you're all well.

Good morning, Joe.

Just maybe touching on China to start-off. It looks like the rebound in April has been pretty strong. Is there any end market-specific commentary that you can provide on what's really driving the strength in April?

Yes. Joe, it -- when I said it was broad-based, we're seeing it across our businesses. Maybe I'd highlight, automotive is recovering. And remember, we had a big decline in Q1. So it's coming off of a low point, but starting to see some recovery there. Electronics has been leading the way. Semiconductor manufacturing has been strong demand for us. Consumer electronics off, but not as much. We're seeing Health Care and oral care recovering as we come into April. And then broader industrial and consumer as well. So it's really broad-based the market all the markets and businesses for us.

Got it. And Mike, I may have missed this earlier, but as you're kind of thinking about the guidance and clearly, we don't have one now for the rest of the year. But like as you're kind of thinking about the trajectory for the U.S. and Europe, how much are you using China as like a guidepost from a growth perspective for the rest of the company?

Yes. I would say, back to this fast-changing and lots of uncertainty, I think it's encouraging what we're seeing in China. But it's as good as April to date for us, because it's a pretty fast-changing dynamic globally. We did see as I mentioned trends in the second half of March in the Americas and EMEA down. And in some of the businesses that we highlighted that were weaker oral care elective procedures in our medical solutions, automotive general industrial, those are trends that we saw coming into the quarter. We'll have to see how it plays out and get a little further before we can give you a better projection.

Okay. Good enough. Thanks guys.

Thanks, Joe.

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

Good morning guys.

Hey, Scott.

Hi, Scott.

Just comment here just says late April 75% plants and distribution centers fully or partially operational. What -- is there a sense -- how do you compare that to past cycles? Is that -- given that you'd probably be shutting some stuff down or shifts declined and stuff like that, is that materially different than what you saw in late 2008? Is it something you expect to ramp up meaningfully over the summer? Just a bit more color on that please.

Scott, I think the way to think about it is look at our sales value of production. And we -- as I talked about some of the benefits of our enterprise operations the way we're operating that we're able to adjust more quickly and track with our demand and make sure our production plans are tracking with it. I remember, Q1 last year was one of the things we're working on adjusting to a slowdown in end markets. We are shortening our cycle times to do that. So our SVOP is tracking with what you saw in Q1. It's tracking with what we're seeing April year-to-date. That 75% number is kind of a view over a broader portfolio against end demand and just how we're managing the factories in the middle of the COVID crisis. So I think looking at SVOP is the way to look at it. And we can adapt quickly and we'll adjust as we see changes in the marketplace.

Okay. Good, Mike. But can you help us understand, how that might compare to past recessions if you -- it doesn't have to be explicit, but if you have a sense of where you were in late 2008 was this 80%, 85%, or is this...

I think the way I would probably think about it Scott is, I'd look at the magnitude of the slowdown and it's probably similar. There might be a little faster reaction to it and adoption to it now than even then. But we -- and living in 2009, we really managed our operations very quickly to in line with what we're seeing in the slowdown. And then back up again as the markets recovered even in the second half of the year. So I think it's similar, and it's one of the strengths of our model being vertically integrated with our manufacturing that we can do this. So I do give our teams credit for reducing cycle times, but the strategy and the 3M model, the strength is there in 2009 and it's here again in 2020.

Okay. Super helpful. Thanks. Good luck guys and stay safe and we appreciate the monthly data too. So thank you.

Thank you.

Thanks, Scott.

Thank you. Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed.

Good morning, guys. Hope, you're well.

Hey, Andy.

Thanks, Andy.

So you mentioned – Mike, you mentioned the impact from respirators in the business. Just following up Jeff -- on Jeff's question a little bit 150 basis points. But given you're ramping to 2 billion respirators a year would seem like your impact could be more than 150 basis points by the end of the year, especially for the total PPE business. You do make surgical masks, gowns. You've got safety now. So could you give us some more color on the sizing of overall PPE? Any more color there would be helpful.

Well I think the 150 basis points is -- that's Q2. That's the way we look at it in Q2. And we are adding capacity in the U.S. coming out of Q2. In late June, we'll get to 50 million respirators a month. That's up 40% from where we've been running coming into the quarter and where we expect to run for much of the quarter. And then our increased capacity that we plan to bring on later in the year and that likely to be a Q4 impact kind of on the business results. It will give us additional supply into very strong demand. So, we'll see additional growth impact from that. I don't have a number for you at this time. It's not clear the demand and how exactly the timing of when that production comes on, but you can use that 35 million to 50 million in the U.S. which the 35 million was part of 100 million worldwide. So, you can kind of back into maybe a 15% increase on the worldwide N95 piece of that come out of Q2.

And Andy for reference our disposable respirator business which is largely the N95, pre-crisis was about 2% of our global revenue, slightly less than that or around $600 million.

Got it. That's helpful guys. And then Mike I wanted to follow-up on the comments on electronics. I mean you mentioned the recovery in China. It's obviously more of a China-based business for you guys, but is that business being a little more resilient this cycle than expected? Can you give us some more color on what your -- to the extent you can on expectations moving forward between semicon? Obviously, you've got mobile devices in there. What are you seeing in that business?

Yes. And Andy even as we came into the year, we were starting to feel better about electronics and it was really semiconductor manufacturing demand increasing. And that has held up. We're seeing that and that's part of that broader growth and return to growth in China. Consumer Electronics has been year-over-year a bit of a slowdown. We continue to see that. But overall, electronics is seeing a positive uptick as we come into Q2.

So just pushing you a little bit, is it up year-over-year at this point in April?

April year-to-date -- or April month-to-date yes.

Okay. Thanks guys.

Andy, I want to just give a little -- just go at one level down that where we are seeing our most significant growth in electronics in China is around fluids and semiconductor and less so on the consumer electronics side.

Got it. Thanks Nick.

Thank you. Our next question comes from the line of Nicole DeBlase with Deutsche Bank. Please proceed.

Yes, thanks. Good morning.

Good morning, Nicole.

Good morning, Nicole.

So, just following up on some of the questions around cost-cutting activities that you guys are doing this year, does that -- the 30% to 40% decremental margin assumption, I assume that also includes the carryover from payback on last year's restructuring actions. Is that correct?

When we say the $30 million to $40 million, that's also including the year-on-year impact of taking those actions last year, so that's -- that is part of us being able to deliver a 30% to 40% decremental in the second quarter. Yes, that's part of it. On -- plus the extra $350 million to $400 million of cost savings we're initiating in this quarter.

Okay. Got it. Thanks Nick. And as my follow-up, if we think about the Health Care business, is there a way to quantify how much of the Health Care business is actually being impacted by elective surgeries not taking place? I'm just trying to get a sense of what part of the business has the potential to come back as COVID cases die down and elective surgeries return?

Well medical solutions Nicole is our largest business in Health Care and that's being impacted by elective procedures. We're also seeing that in our Acelity business which is part of medical solutions. Oral care has been the more sharply impacted in demand slowdown as we come out of March. So, that's our second largest business in Health Care. So it's the bigger part of the impact I would say as we come into the quarter. But we would expect as elective procedures come back and demand there increases we'll see the benefit of that in that medical solutions business. And I -- so I think it's both is the answer and it's -- we expect it to recover as elective procedures come back.

Thanks. I'll pass it on.

Thanks, Nicole.

Thank you. Our next question comes from John Walsh with Credit Suisse. Please proceed.

Hi, good morning. Kind of a specific question here, but just want to understand the geography of where something might live looking at slide 22 when you talk about the sales by divisions. But it was interesting. I think in your prepared remarks you talked about respirator demand government industry health care I didn't hear consumer. Just wondering if we actually start to see some different behavior from consumers. Where that would show up? Does that actually hit the consumer segment through some type of health care, or would that go through a different segment and then ultimately end up in a consumer's home?

Yes. And John, thank you for catching me on that because consumer is an important part of where we do supply respirator solutions. It reaches a broad range of customers. Some of them in -- through our DIY channel and small construction companies are strong customers for that. But we do expect to see a demand from consumers as we move forward as well. And that will show up in the results of our consumer business.

Yes. John, the biggest impact we're seeing is in our stationery and office business. Currently, as people have gone or work remotely from home on the negative side along with obviously schools shutting down.

Yes. No, thank you. That's helpful. And then there's kind of a lot of excitement that we might see some manufacturing return to the U.S. Obviously you highlighted on PP&E. There's been some discussion around life sciences. Just curious, what you're hearing or seeing from some of your folks that are doing pharma filtration. I'm thinking about, if they're actually starting to get quotes or see an uptick activity for some of those solutions that you sell to that manufacturing front?

Yes. And John, maybe I'll start there. We have seen some increased demand in our biopharma filtration. I highlighted as one of the stronger demand, stronger growth in Q1 and even as we come into April. When talking about manufacturing and having supply in the U.S., we are a company that as we took our model overseas, we never left the U.S. We continue to manufacture in the U.S. for the demand we have in this marketplace and then some. We have -- we take advantage of our strong base here and our technology in the U.S. and we do export as well. So our strategy -- and it's true around the world but especially true in the U.S., our strategy is to locate our manufacturing and supply chains close to customers to be able to serve them regionally and that's true of respirators and it's true of health care products and it's true of biopharma.

Great. Thank you for the color.

Thanks, John.

Thank you. That concludes the question-and-answer portion of our conference call. I will now turn the call back over to Mike Roman for some closing comments.

To close, I am incredibly proud of how our people are helping lead the response to COVID-19 and managing through this uncertain time. Going forward, we will continue to be guided by the three principles I laid out at the beginning of my remarks, protecting our employees; fighting the pandemic from all angles; and maintaining business continuity while positioning 3M to lead out of the slowdown and deliver for our employees' customers and shareholders. Thank you for joining us.