Ladies and gentlemen, thank you for standing by. Welcome to the 3M First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, April 24, 2012. I would now like to turn the call over to Matt Ginter, Vice President of Investor Relations at 3M.

Thank you. Good morning, everyone, and welcome to our first quarter business review. With me today are Inge Thulin, 3M President and Chief Executive Officer; and David Meline, Chief Financial Officer. Before we begin, I'd like to mention a few calendar items. We will announce our second quarter earnings on Thursday, July 26, and our third quarter earnings on Tuesday, October 23. In addition, we are planning to host our next Investor Day in St. Paul on Thursday, November 8. We'll provide more details out in the future. But for now, please hold these dates on your calendars. Please take a moment to read the forward-looking statement on Slide 2. During today's conference call, we will make certain predictive statements that reflect our current views about our future performance and financial results. We base these statements 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. So let's begin today's review, and I'll turn the program over to Inge. Please turn to Slide #3.

Thank you, Matt, and good morning, everyone. Thanks for joining us on the call today. I'm very pleased to report that we're off to a good start this year, with positive sales, operating income and EPS growth. In fact, we achieved an all-time Q1 sales record of $7.5 billion. Industrial and Transportation, SS&PS, Health Care and Consumer and Office all performed well, while weakness in Electronics hurt Display and Graphics and Electro and Communications. As we said, we look for the electronics market to pick up as the year goes on. Geographically, for 3M, the Americas were strong. Asia Pacific was somewhat slower, and Western Europe held its own with very good operational discipline. For the company, operating margins improved to nearly 22%, with 5 out of 6 businesses above 20%. We executed well, and the result was a 7% increase in EPS to $1.59, including a $0.04 charge for a voluntary early retirement program and some miscellaneous restructuring. In February, we announced a 7% dividend increase, 3M's 54th consecutive annual increase. The first quarter dividend payment combined with Q1 share repurchases of over $500 million resulted in a first quarter return to shareholders of nearly $1 billion. So we're off to a good start, one that sets the right tone for the rest of the year and one that gives us confidence in our ability to deliver even against weak segments and regions and against an uncertain global economy. I thank the 3M team for their outstanding work that achieved these very good results. The quarter highlights their ability to manage 3M's embedded systems and tools to drive operational excellence, and I'm extremely pleased with the outcome. Now David will take you through the detail of the quarter. David?

Thank you, Inge. Let's begin with sales. Please turn to Slide #4. First quarter sales were $7.5 billion, up 2.4% year-on-year. Organic local currency growth was 1.8% in the first quarter, with volumes up just slightly and selling prices up 1.7%. Acquisitions added 1.5% to sales in the quarter, and foreign exchange impacts reduced sales by nearly 1 percentage point. On a geographic basis, total growth was the strongest in the combined Latin America/Canada region at more than 8%. Organic local currency growth was nearly 12% in the quarter, so our teams here continued to do an excellent job of building the business. Currency impacts reduced sales in the region by nearly 4%, largely due to weakness in the Mexican peso and the Brazilian real. In the United States, sales grew 6.3% with double-digit increases in both Industrial and Transportation and in Safety, Security and Protection Services. The U.S. manufacturing sector remains quite robust and we are seeing some good growth as a result. Sales in Asia Pacific declined by 2% in the quarter, reflecting slower year-on-year demand in global consumer electronics, along with slower growth in China. Both were fully anticipated in our prior outlook, so no real surprises here. On the electronics side, we continue to expect the market to turn positive around midyear. As for China, we are expecting below trend growth in the second quarter with better growth rates returning in the second half of the year. Sales in Europe were basically flat in Q1, with strength in Middle East Africa and Central East Europe offset by year-on-year declines in the West. In aggregate, the economies in Western Europe have stabilized at least for the moment, so things are not getting worse sequentially, but they are also not getting better. We built our 2012 plan on…

Thank you, David. So far today, we have been focused on the first quarter, but I would like to change the subject for a few minutes and address the topic that is generating a lot of enthusiasm and support with our employees and with our customers. That is our new vision for 3M. I sense that the vision for the entire company could really inspire our employees and position us positively with our customers. So we set out to capture the essence of 3M with a clear vision that is both timely and timeless. I shared this with my direct reports on my first day in office and with all employees worldwide a few days later. I introduced it earlier to connect immediately with employees and to send a very clear message about 3M's direction, purpose and future. Today, it's my pleasure to share it with you. Please turn to Slide 8. I believe this capture well the essence of 3M: technology, products and innovation. It reflects what we do for our customers every day, advance, enhance and improve. It sets a stretch goal for all of us, every company, every home and every life, all around the world. From a performance standpoint, if we can make good progress toward realize our vision, we can look forward to many more good quarters and many more years of increasing value for our shareholders. We have had a super response from our employees, very supportive and excited. It was very encouraging to me also to see how our customers have responded. Whenever we meet with our customer, we share the vision, and it resonates very, very well with them. Of course, a vision means very little if you don't perform. With that, let's turn to Slide 9 for our outlook for the…

[Operator Instructions] And our first question comes from the line of Steven Winoker of Sanford Bernstein.

Just maybe starting with a little bit more picture around the inventory stocking dynamics that led to the 10 basis points of volume increase. What were the puts and takes especially around the Electronics side? Do you think you're through the destocking elements? Is it improving sequentially? And when might you think about or are you planning for a rebound on that front?

Sure. So what I would say, Steve, is that inventory stock and destock was not a big feature of the results overall this quarter. We saw, certainly, last year, quite dramatic impacts on the business as we saw destocking take place. This quarter, we didn't really see anything significant in any of the segments. And that included Electronics. So Electronics remained weak, as we talked about, but we continue to believe that we'll see this uptick develop around midyear. So very much consistent with what we had expected previously.

Okay. And then on pricing power and particularly in Health Care, as a company, you've often talked about high 20s being kind of a sustainable run rate in Health Care margins. And clearly, you were back up over -- well over 30% this quarter. I mean, to what extent was that a function of something that's sustainable versus just taking down expenses for one quarter to help meet your commitments?

Well, you're right. We have said we would like to run that business in the high 20s, and that is our objective. And as I made some comments, we are now looking to accelerate our investments, specifically, in the emerging markets, where we have big opportunities. And it's very nice to see that the leverage is coming based on the investment we have done earlier in Health Care, specifically in emerging market, but also in Consumer and Office. So we have done investment there the last couple of years, and we now start to see the growth coming. It is a mix issue, which is positive for us due to the fact that many of the products that we are selling for Health Care, specifically into the developed economy, is adding a lot of value. Meaning that we're able to maintain very good margins as we penetrate more there. And in the emerging market now, we start to see that we take good market share, and the penetration is accelerating. China specifically, we will continue to make more investment as we go, and Latin America, as well as I called out on the call. But you are right, we would like to run it in the upper 20s. And by doing so, I think we will be able to really build out a good position on a global base.

Our next question comes from the line of Deane Dray from Citi.

Since the transition occurred during the quarter, this would be a good opportunity to hear from you, and maybe this would be better at a Analyst Day, but we don't have that luxury. But what areas are you focused on for the company in terms of why it might be different? And specifically, getting a lot of questions about your thoughts on the growth rate over the cycle, that 7% to 8% that had been set. So just a little bit more color in terms of what imprint we might expect over the near term and then very specifically, how you're feeling about that 7% to 8% growth target.

Well, thank you. First of all of all, my target and objective and focus is to deliver the plan for 2012. I was part of the team to build the plan here, and that's important for us. And this, as you know, is a volatile time, and we are absolutely focused to make sure that we deliver what we have promised you for this year. So that's initially what is very important for us. And it's not only important for me, it's important for the whole team, and the transition have gone very, very well. And it was a very solid and robust process that we had in place. And I think this is also a good time to thank George for everything he did in that transition, which was just extraordinary, at least for me and for the team here. Relative to the growth, first of all, this is an organization that is responding very well to stretch targets. And I think there is more elements to the business on a holistic way than just the top line growth. And at least, for me, 2 other very important metrics is margins and return of the invested capital. So we are focusing on that as well. So I would say that the 7% to 8% is a long-term target for 3M, and something that our organization really are responding very well to. And I would say the mindset in 3M today is changed versus many years ago, where we believe today that we can win and we have a capability to do so. So we are not at 7% to 8% as of yet, as we know, but it's a long-term target for us. And our organization, whatever we put out in terms of really tough stretch targets are responding very well.

That's very helpful. And then from a follow-up, it is interesting that there is a change that we've not seen previously, and that's you're talking -- calling out 2 end markets where you'd like to see growth, both oil and gas and aero. And just give us a sense what that competitive edge might be that 3M would bring to both of those end markets.

Yes. We have been in those markets for some time, but at least in my mind and the organization's mind here in total, we have not given full attention in terms of additional investment in order to accelerate our growth. So if you combine oil and gas and mining, that's a big market in total, which is, for us, where we can utilize many technology platforms in order to expand our presence into that market. So I think it's a -- in terms of integrated safety, protect and renew. It's also, for us, to go into water management and filtration, and make sure that we add services into the whole environment. So that's a business that, I believe and we believe here, by combining them and make sure that we make additional investments into research and development and a strong front, then, in terms of commercialization, really can move forward into and expand and accelerate. And we will call that business the natural resource management and extraction division that will be formed. Relative to aerospace, for us, if you think about our technology platforms there, which is everything from composites films, abrasive, masking product and personal protection, with all platforms there, that's a good opportunity for us to enabling lighter, safer, quieter aircraft constructed faster. So that's a business that is growing fast for us as we speak, but we believe with additional technologies that we can accelerate that even more. So we're very excited about that. And as David said, we move that from a department to a division recently, meaning more focus and investment will go into that business.

Our next question comes from the line of Ajay Kejriwal from FBR Capital Markets.

Just maybe first on the pricing raw materials, very impressive positive contribution in the quarter. So maybe talk a little bit about what you saw on the raw material side. And then what's your expectation on pricing raw for the rest of the year?

Right. So Ajay, in terms of price raw materials, we did see -- we continued to see some level of raw material cost increases in Q1 to the tune of about 2%. So if you may recall, last year, we had raw material cost inflation of a little bit over 4%. So obviously, we see some moderation, and we continue to believe 1% to 2% for the year in terms of raw material cost increases is going to take place. And then in terms of pricing, yes, we picked up 1.7% in the quarter, more than offsetting raw material cost. And that was basically a consequence of the carryover effect of the pricing actions that we took last year. So if you look at that through the year, of course, that will have less of an effect on a comparable basis as we move through the year. But we think it's reasonable. We had said 0% to 1% on price for the year. It's reasonable to think that we'll get to the top end of that range as we go through this year.

Got it. And then on SG&A, looks like you exclude the restructuring, flattish year-over-year, so very impressive. Maybe talk about some of the initiatives that you have on cost control and then what are the expectation on SG&A for the rest of the year.

Yes, right. So as we had said, as we had the meeting in New York in December, we really were posturing ourselves this year for a weaker growth environment in the first half. And frankly, unfortunately, that's developed as we expected. We expect that to be true again here in the second quarter, a pretty weak economic environment. And so we've taken a posture to really be carefully managing our discretionary spending. The other part we saw come through very positively in the first quarter, which we were pleased with, is really the factories were running very efficiently in the quarter. Lean Six Sigma is a key focus there, and that's certainly coming through, including in a lot of the newer locations that we've put in place around the world over recent years. So combination of carefully managing spending and also running the factories effectively. As we look forward, then, we expect, as we go into the second quarter here, to maintain a tight rein on spending. And then secondly, as Inge mentioned, we are more confident now of the outlook for the year, and we believe it appropriate to continue to selectively look as to where we can target some additional investments.

Our next question comes from the line of John McNulty from Crédit Suisse.

This is Abhi Rajendran calling in for John. A few quick questions on M&A. One, could you provide an update on the pending Avery Dennison Office and Consumer acquisition and what sort of timing you're looking at to close that transaction?

Yes. We are still in that regulatory process as we have talked to you about before. But our expectation is to close that in the second part of this year.

And Abhi, this is Matt. To be clear, just as we said last quarter, we have not yet factored in any financial impact from Avery into our guidance. It is not in those numbers yet.

Okay. Great. And then just a quick follow-up, just a general M&A question. Could you talk a little bit about the health of the M&A pipeline overall, as well as which businesses are the primary areas of focus for potential add-ons through the course of the year?

Sure. Yes. So if you look at the pipeline right now, it looks very similar and healthy compared to where we've been over the last couple of years, at least. We've announced a couple of transactions thus far here in the first quarter, the one being the Avery and the other one being this CodeRyte business that we are bolting on to the health information systems business, which we think is a very good opportunity for us. And we foresee, going forward, a combination of acquisitions that have good growth characteristics, as well as from time to time, doing transactions that give us scale and leverage similar to Avery. So as you might know, we look across the business. We look for opportunities where we can fill in gaps in existing businesses or adjacencies that we think we can bring our own capabilities to bear, whether that be our global reach or whether that be technology combinations that we can really drive businesses with.

Our next question comes from the line of Terry Darling of Goldman Sachs.

Inge, I'm wondering if you could -- just following up on Deane's line of questioning about potential changes in the formula under your leadership. I'm wondering if you might address the idea that a lot of companies, not just multi-industry companies, but a lot of companies use divestitures of slower-growing businesses over time as a way to reinvest in higher-growing businesses. That hasn't been a big part of the 3M formula historically. I'm wondering if you're considering a change in that regard.

Well, I would say that, as you know, that both relative to organization and relative to businesses, it's always an evolution as you go. And first of all, as I said earlier, my initial focus here, together with the team, is to deliver this year plan. As we go into the strategic planning season in the middle of the year, I'm sure that as we always do, we will have those type of discussions in terms of performance of businesses, where [ph] they fit into our overall direction as we move ahead and make those calls. But it's not top of mind on my agenda at this point in time. As I said, very focused on this year, and then we will evaluate it as we go. I see it that we have a broad-base business opportunity for us with 6 businesses, and the way we are spreading ourself geographically with execution capabilities. So at this point in time, it's not top of mind of me. Top of mind for me is to deliver this year plan.

Okay. And then Dave, I'm wondering if you might be able to calibrate the organic volume assumption for the year up 2 to 5, first quarter close to flat. Maybe a little color around how the full year expectations may have changed for the various segments relative to the 2 to 5 and how you're seeing the second quarter within that range.

Sure. So first of all, if you look at the full year expectations by segment, right now, we continue to believe that the ranges that we set out are still very good. So we don't see any change in terms of the prospects for growth across those segments. If you might recall, we had the highest expectations for growth for the year around our industrial-oriented businesses, that being Industrial and Transportation and Safety and Security. That continues to be our view. And the toughest segments, obviously, D&G and the Electronics business, again, we don't see any change. We had 0 to 5 for the year on Electronics and a negative growth rate on D&G. And we think that's going to be the case. What is also true, as you work through the year, second quarter we think will continue to be relatively modest in terms of the growth opportunities. And then we're expecting a pickup in the second half still, which is a combination of improving trends, for example, in the Electronics business, as well as the fact that the comps get easier for us as we work through the year.

Okay. And then just lastly on the cost-cutting narrative, Dave, that you've talked about in the past, you had SG&A pretty much flat on a year-over-year basis and there was an indication that you would modulate that as you move through 2012 based on how you saw the growth and risk around the business. Sounds like you're seeing things pretty much spot on. So cost cutting, essentially, the same message as we had before, not stepping that up, not stepping that down to fund additional growth. Maybe just refresh us there.

Yes. No, that's -- I think you put it well, which is, if you look now, kind of looking back at Q1, we feel very good about what we were able to achieve here. And we also feel very good about our ability to deliver for the year having got off with quite reasonable results despite pretty weak growth. So we'll continue to run with that posture here into the second quarter and looking for that growth upturn, which is yet to be validated. So we're going to be pretty careful in terms of how we're managing on the cost side in the near term. But again, as both Inge and I have mentioned, we do need to be very clear and continue to focus on where we're investing for the future because we need to get the right balance there. And we have the capability to do that.

Our next question comes from the line of Jeff Sprague of Vertical Research.

To David's point, you guys are off to a good start. But, Inge, your comment that the focus is really to execute on this year's plan. I mean, obviously, you don't have control of the end markets. What, in your view, is kind of the biggest challenge, if you will, as you think about the remainder of the year? Is there execution within a certain division you're focused on? Is it cost? Is it restructuring? What, if anything, is really kind of taking the majority of your attention here near term?

Well, first of all, it's important for us to see growth coming. And as you know, one of the challenge is, which is not a 3M challenge by definition, is the global economy. So, of course, Asia, with China being slower than we have seen before and Japan, also, has a recovery that is slightly slower than people expected. And then you have West Europe. So I think those are the 3 things that is top of mind for me that I would like to see us coming back and materialize the growth that we've laid out in the plan. I think that's important. Now if you think about China for a second, we talked about that on the last call, there were 3 things that impacted China growth. One was domestic growth due to government management of spending there. It is export to West Europe, and it's electronics. We said at that time, and we still believe it's correct, that export to West Europe will probably not come back this year. But we see an uptick in electronics, and we also see a slight uptick on the domestic market there. So our business, in fact, last quarter or this quarter, Q1, we had a 20% sequential growth versus Q4, and it was an all-time high in China, meaning our base business grew 8%-plus, our Infrastructure business was flat and the Electronic business was down around 16%. But as I said, as we see the semiconductor business type of -- get a pickup in terms of utilization in factories, we believe that will come back. So I think that's -- we see that coming. That's a big point. That's my biggest concern at this point in time. I think in West Europe, that, that have stabilized, but at a lower level. And we have a very good business model and a very mature team in place there. I think we will be able to deliver the plan. But still, I hope that we can capitalize and take some market shares there. So I think it's very much to make sure we continue a very controlled management relative to our investment. Let out some of them, as we talked about, in oil and gas and mining, aerospace, emerging market specifically for Health Care and for Personal Protection. And when we see that coming and Electronics start to pick up and we see them materializing in terms of real growth midyear, then I think we are -- I see more positive on the outlook. But I just would like to make sure that I see it before we move forward full time.

That's good color. And just a little more on China, if you could. How different from normal sequential patterns was that lift from Q4 to Q1 that you saw with...

Very similar. Very similar to the past in terms of the sequential. And we see Q2 still be tougher in China. But then as we go in the second part of the year, I call it, to the plan, we will start to see the growth coming. So very similar, that's the answer to your question. But the good sign, I think the good sign, all-time high in terms of growth in China first quarter was -- which I personally see very positive.

Right. And then just on Optical. Can you give us where your plug-in versus battery mix is now?

Yes. So in the first quarter, as you might recall, we exited the year, fourth quarter, battery was 58% of the sales of the Optical Systems division, so that being handheld devices in particular. In the first quarter, we were a little higher than that. It was, I think, 64%. So we had said about 2/3 of the sales this year we expected to be battery and 1/3 plug-in. And it looks very much in line, what we're seeing in Optical division to that plan. And likewise, very tough comp in the first quarter, not a surprise to us, the result here. And we expect to be up modestly, sequentially, on Optical Systems. But still on a year-over-year in Q2, it'll be down quite substantially again.

Our next question comes from the line of Shannon O'Callaghan of Nomura Capital.

Can I just get a little more clarification on that China comment in terms of, as you said, still tough in 2Q, but yet you've got this sequential recovery in 1Q. Do you mean that it -- I mean, does the sequential recovery continue into 2Q and you're just at a tough year-over-year spot? Can you just maybe give us what you're looking for on a year-over-year basis for those quarters?

Yes. So as Inge said, the sequential performance we saw in Q1 was typical of past performance, which gave us some comfort that we're not seeing a further decline. So as you might recall, in the second half of last year, x Electronics, we were running now in around high-single digits to low-double-digit growth. We expect, then, as we move through the year in China, that we will see modest sequential growth on an absolute revenue basis continuing through the year. And therefore, on a year-over-year comp basis, that'll be a rising percentage comp as we move through the year.

Okay. And so far, it sounds like the Electronics side of things is where you've seen the pickup. I mean, have you seen anything on, I guess, more of the industrial business or the infrastructure-related businesses? Can you maybe break it by the pieces?

Yes. So Electronics, sequentially, was up. But if you look on a year-over-year basis, not yet. So it was following a typical seasonal pattern. Industrial was modestly growing, but at a similar level to what we saw in the second half of last year, and infrastructure as well. So really, no big changes in terms of the individual segments in the first quarter.

Okay. And just on the $30 million to $50 million of increased investment, is that just going to kind of spread evenly now? Or are you going to do it all at once? How does that kind of flow out?

Yes. So that you can expect will spread through the year. What we're doing is, in a number of cases, we were managing very tightly spending. And so to some extent, we're loosening up on that as we see specific areas where we have opportunities. In others, we're taking the opportunity to devote more focus in resources such as these couple of divisions that Inge talked about. So I think fair to say, you can think about that being timed throughout the year.

Our next question comes from the line of John Roberts of Buckingham Research.

Inge, on Slide 9, you indicated Japan along with the other areas that were slow. Don't you have pretty easy comps in Japan right now against the earthquake impacted year-ago results?

I think we will start to see that in the second quarter. And that's, I think, that's where you will see the comparison becoming a little bit easier. So when I talk about it, it is to say that it take a little bit longer time for the investment back in Japan in the country in order to recover. And I think, as we have a broad-based business there, which in fact is one of our biggest subsidiaries in the world, as you know, take us a little bit longer time to see the growth coming as well.

Our next question comes from the line of Nigel Coe of Morgan Stanley.

So David, you mentioned that you still feel pretty good about the full year guidance by segment. But can you maybe just spin back to 1Q, and which businesses saw -- geographic areas exceeded your plan, your internal plan? Obviously, you don't publish guidance, but internally, which businesses came in stronger?

If I think about it by segment in the first quarter, what I would say, Nigel, is actually -- you look at it, first of all, 0 growth on an organic basis is nothing that we get too excited about at all. But if you walk through the segments, again, we are pleased with the momentum we continue to see in the industrial-related businesses. I mean, you look at Industrial and Transportation, both good growth, around 9%, and a quite a substantial margin pickup to 22.5%. If you look at Safety and Security business, again, good growth, 5.5% and a nice margin pickup, including sequentially. So we feel good about those businesses continuing to run. But of course, we had them pegged for the highest growth through the year. If you think about Health Care and Consumer, I would say very much in line with what we expected here in the first part of the year. Consumer retail is -- in the mature markets, in particular, continues to be quite soft, although we were pleased with our own performance in the U.S., which was indicating some pickup of share. And certainly, in the case of Health Care, with the exception of the Drug Delivery business, all of those businesses ran quite nicely in mid-single digits to double digits in the case of health information systems. So tougher environment for those couple of businesses. Both performed in terms of managing the margin and growth question. And then finally, Electronics segments, including Display and Graphics and Electro and Communications, were very much in line. I mean, very, very much in line with what we were expecting. And as we've discussed, we continue to expect to see that recovery develop. And there are some indications, such as in semiconductor that, that's on the horizon.

This is Inge. And one thing to add to that is also our performance in Latin America, that is very strong. And this has been going on for multiple years now and, yes, continuing. And that's a very, very good sign for us. It's a part of the world where our brand equity is very high. We have a incredible, solid organization there that is both able to execute with [ph] operational excellence and are able to grow in most segments that we are in there. So we're very, very pleased with Latin America. And as I said earlier, there will be some additional investment there to some businesses. But we are very, very pleased with them. And I would just like to highlight that in addition to what David said as well.

Okay. Great. And then Inge, on your comment about that you feel more confident in the growth environment or maybe the 2012 plan. Can you maybe just go through how you think in terms of managing discretionary costs versus growth investments? And are we now in a slightly more of a bias towards growth investments versus discretionary cost management? And does that mean that maybe we've got a bias towards a higher revenue number and perhaps a slightly lower margin number?

Well, it's not either/or. It's always a balance, as you know. And I'm not there yet to say that I'm confident that the growth is on the bag. So that's why we're holding also the $6.50 on the top of our guidance range because we would like to see it really coming through. But as I said, we are letting out for the year here. As a first step, $30 million to $50 million in very targeted investment for growth. And that's the starting point for us. And as I said, it's not either/or. We are committed to the commitment to you, and that's what we would deliver. But I think the areas that we now have identified for additional investment based on the platforms we have and the presence, and specifically around global customers, plays very well for us. So the businesses we talked about earlier, which is aerospace, oil and gas and mining, et cetera, the global customers, and we can serve them very well, and not only with solution from a technology perspective, but also with a geographical reach as we have subsidiaries all over the world. So this is a perfect space for us, but we're rolling it out carefully. And I would like to see growth materialize and feel more confident before we make a even bigger investment.

Okay. And then quickly, David, do you have the book-to-bill ratio for Electro this quarter?

Could you repeat that?

Do you have the book-to-bill ratio for Electro, the Electro segment?

We don't, in fact.

Yes. That's not a number we monitor, Nigel, book-to-bill explicitly.

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

So can you just help me reconcile how -- the leverage, obviously, this quarter was phenomenal. Maybe that was price cost. But you guys have said pretty consistently that your emerging markets or Asia business has -- is kind of accretive to margins, yet this seemed to be more of a developed markets kind of quarter. So is it just that price cost dynamic that's throwing that off? Or -- I'm just trying to kind of reconcile those comments.

Sure. Yes. So what I would say, Steve, first of all, is we did see very good performance not only in the mature markets -- for example, in the U.S., we're up over 1 point in margin. But also developing markets continue to deliver on margin despite what was a weaker growth environment. So we don't see any big shift as between kind of those sources of income for the business right now because we've been managing into what we expected to be a softer growth environment. And that's true, really, across the globe for us and across our businesses. And I think as you look at the margins, certainly, as you can see it by sector, and I would tell you that's not dissimilar geographically to what we traditionally deliver on.

And then just on Health Care, another blowout margin there. Can you maybe get into what was the key driver of that margin number and then how do we think about that margin going forward? You guys have said it's high 20s. You're now kind of comfortably above 30. Maybe talk about that.

Yes. Yes, what I would say is, what particularly was encouraging for us is the factories are really running efficiently right now in Health Care, which had a material contribution to the margin this quarter. We've also been able to offset what were raw material cost increases that came through, particularly last year. And then finally, we've been continuing to invest to grow that business. And typically, with the increasing product portfolio, that enables us to hold and to increase margin over time. And we're encouraged by the results of those investment efforts that are also, we believe, coming through to the results.

What's your most favorable division there, from a profitability perspective?

Well, honestly, they're all very, very strong businesses.

Our next question comes from the line of Laurence Alexander of Jefferies.

So 2 quick questions. Can you parse the growth that you're seeing in Latin America and the trends that you're seeing in terms of how much is underlying demand versus market share gains? And then on the CNG agreement with Chesapeake, if you look out 5, 6 years, what kind of market opportunity or size business could this be for 3M?

Yes. So in terms of Latin America, the growth that we saw, it was actually very impressive. So if you look at across our 6 business sectors, with the exception of one that was -- ran at 9% growth, the others all had double-digit growth in the first quarter. So it was a very broad-based growth pattern we saw in Latin America, which is nothing new for us, and obviously quite encouraging as we look across our businesses. So answer is, in fact, yes, we're picking up share across those businesses. As Latin America, while economic growth was reasonable, certainly in particular in Brazil, if you look at the data, it looked quite weak in the first quarter, and frankly, we had some concerns going into the year. But the team did a really nice job in our biggest markets, Brazil and Mexico. And also importantly, the smaller markets, the guys have done a great job across the business.

Laurence, your second question didn't come through. What was that?

So on the compressed natural gas announcement with Chesapeake, if you looked out at 5, 7 years, what you think the possible business size could be for 3M?

Yes. We actually haven't put a number on it, Laurence. The guys are really excited, because if you look at the nature of these CNG containers that we're partnering with them on, we think it's a very significant opportunity for the company. But to be honest, we haven't put a number on it yet.

That concludes the question-and-answer portion of our conference call. I will now turn the call back over to 3M for some closing comments.

Good. Well, thanks for joining us this morning. The questions were very good. We appreciate your spending time with us, and we'll look forward to talking here as the next quarter progresses. So bye.

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