Andrew Obin: Got you. And just a follow-up question on health care. I appreciate that you guys are doing a lot of sort of sort of accounting, et cetera, et cetera. But you have done the separations in the past. And I guess the question I have, any thoughts, as Bryan has joined the Company, I know in the past, there’s been headlines about Health Information System being separated. I know there are other sort of businesses inside health care. Any thought about sort of maybe repositioning the portfolio as particularly as Bryan came on board, repositioned the portfolio for sort of future as a stand-alone Company.
Michael Roman: Yes, Andrew, going back to really how did we think about the strategy to spin out health care. And one of the important questions was do we see health care as a leading health care technology Company attractive to shareholders with a great future. And that portfolio of businesses, the answer for us was yes. And that the — the best way to create that value was to stand it up as a stand-alone Company and the portfolio work we had done even over time as part of 3M position it to be a successful stand-alone Company. And each of the businesses play an important role there. Now it is going to be an independent Company. We’ll have a new CEO and a Board and they will develop the strategies for how they think about creating the greatest value driving growth for that business, thinking about how to really manage that portfolio of businesses as they go forward.
So we see it as being ready to stand forward as a leader and are really confident in the leadership that will take the Company as a stand-alone.
Operator: Our next question comes from the line of Joe Ritchie with Goldman Sachs. You may proceed with your question.
Joseph Ritchie: Thanks. Good morning, everyone. Can we start just on the restructuring, the benefits and the push out a little bit of the expenses? Just — it seems like you’re running ahead of schedule on the benefits. So I’d love to get any color about where this is. What you see coming in better than expected? And then also just on the push-out on the cost into 4Q, just what were some of the reasons for why the costs are getting pushed out from 3Q to 4Q?
Monish Patolawala: Yes. So I’ll just start, again, as a reminder, Joe, the total benefits for this program over the period of the program is $700 million to $900 million, with costs approximately of $700 million to $900 million. And coming into the year, we had said for 2023, we would see benefits in the ranges of $400 million to $450 million of benefits and equal offsetting charges. So when you look year-to-date, we are, I would say largely on track for the year, we still believe will be in the $400 million to $450 million of benefits, which will get offset by cost of $400 million to $450 million. So the teams have done a really nice job of continuing to execute. There are multiple pieces to this program. One was corporate simplification.
The second was streamlining our supply chain. And third was making sure that we are closer to our customers in our business group units. And all three of these programs are running well on track. As regards to just timing from Q3 to Q4, I would say nothing big. We operate in multiple countries, as you know, and we wanted to make sure we follow all rules and regulations in those countries. And so some items dropped from Q3 to Q4, and we had a couple of other small investments that we had to make in Q3. They’re just based on all the work the teams are doing, we just felt better to do it in Q4, so nothing major. So still pretty much largely on track, $400 million to $450 million of benefits for the year and $700 million to $900 million for the program.
Joseph Ritchie: Got it. Okay. Great. That’s helpful, Monish. And then I guess — I know it’s probably too early to think about 2024. But if you kind of think through like the price/cost equation from here on out, it seems like raw materials are becoming less and less of a headwind for you guys. Can you maybe just provide any type of framework for 2024 and ultimately, like how you think about both price and what you’re seeing from a raw mat perspective?
Monish Patolawala: So, I’ll just start first, Joe, by 2024 is a little ways away. So I think our first focus is just getting Q4 done, getting the teams continuing to focus on our priorities. You’ve seen what our teams have done. So we continue to execute on our priorities. You’ve seen we have delivered a solid Q3. We have taken guidance up for the whole year. We’re gaining momentum, and we want the team to continue to focus on doing that getting 2023 closed out. So when we get into 2024 and Q4 2023 earnings call, we’ll definitely give you an update on 2024. To answer your question on deflation and price, I’ll start with deflation. I’ll start by saying, first of all, the headwinds that we have seen or the carryover headwinds are approximately $25 million in the quarter, which we called out, which was very similar to Q2.
When you look at overall market and material, I would say we are seeing more disinflation than deflation. When you think about places where energy is still a little more — is still inflationary, downstream materials are still inflationary and then labor is still sticky from an inflation perspective. Where we have seen some benefits is upstream chemicals and logistics and the teams have taken advantage of that. But I would say more importantly, I don’t think the teams are just focused on material cost, they are more focused on saying, how do we drive overall cost down in the factories, whether it is driving yield and efficiency, whether it is dual sourcing, whether it is making sure we have alternate materials. That’s what Peter Gibbons and the team is working.
And the work that they have done through this year is clearly evident in the results that you’re seeing. So that team has done a very nice job. And then when it comes to price, I would tell you, we came into the quarter — into the year, we said low single digits price increase. That’s what we are — as of right now, we are on track with pretty much the same range. And Joe, as you know, you’ve followed 3M longer than I have. This is not a formula-based pricing. We are very thoughtful about it. We look at it market by market, product by product, and we make sure that the price that we are charging our customers is a representation of the value that we — that our customers get. And I would say, if you leave 2024 aside for a moment, long term, 3M has always had a very good price/cost equation because of the value that we add to our customers.
And I don’t see that changing. And I believe that with the innovation that we bring with the customer focus that we have that, that equation remains.
Operator: Our next question comes from the line of Chris Snyder with UBS. You may proceed with your question.
Christopher Snyder: Thank you. One thing that has really stood out to us over the last couple of quarters is the underlying margin improvement of the business. if we ex out restructuring spend and savings, we see an operating margin on the underlying business of roughly 22% this quarter, first, less than 21% in Q2 and like a mid-’18 in Q1. So a very strong ramp here. Can you just talk about what’s driving that outside of the restructuring, why is the underlying business seeing so much margin momentum?
Monish Patolawala: So I would say, first, Chris, it’s a huge thanks to the 3Mers who have been focused on their priorities. The priorities, as Mike mentioned, driving performance across all of 3M, spinning out health care, reducing risk by managing litigation is all starting to show up in the results. To your point, even if you exclude our restructuring costs and benefits, the margin rate is — has shown a pretty good ramp. And that’s driven, I would say, by two or three things. One is continued execution in the supply chain, with some of the restructuring that we have made and the supply chain is definitely more agile. We are also using a lot of data and data analytics. We have also learned through the pandemic on how to continue to operate our supply chain.
