Ladies and gentlemen, thank you for standing by. Welcome to the 3M second 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. At that time if you have a question, please press the one followed by the four on your telephone keypad. It is recommended that you use a landline phone if you are going to register for a question. As a reminder, this conference is being recorded Tuesday, July 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 second quarter 2020 business review. With me today are Mike Roman, 3M’s Chief Executive Officer, along with Nick Gangestad and Monish Patolawala, our Chief Financial Officers. As you may know, Nick will be retiring at the end of July. Monish joined the 3M team on July 1, succeeding Nick as CFO. Mike, Nick and Monish 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. Let me remind you to mark your calendars for our third quarter earnings call, which will take place on Tuesday, October 27. Please take a moment to read the forward-looking statement on Slide 3. During today’s conference call, we’ll 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-Q 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. Mike?

Thank you Bruce. Good morning everyone. I hope you and your families are staying safe and healthy, and I thank you for joining us. We continue to fight the pandemic from all angles to ensure the safety of our employees, healthcare workers, first responders, and the public. In a highly uncertain environment where economic activity was restricted by global lockdowns, we executed well and delivered another strong operational performance in the second quarter. We posted solid margins and robust cash flow while strengthening our balance sheet, innovating for our customers, investing in the future, and continuing our transformation. Our value model is strong and we are taking action on a number of fronts to lead through this crisis and emerge even stronger. While there remains a great deal of economic uncertainty, we are seeing an improvement in sales trends in July across all businesses and geographies as we start the third quarter, and Monish will provide additional comments later in the call. I am proud of how our team is leading through these unprecedented times and I thank all 3Mers for their tireless efforts to serve those who count on us. Please turn to Slide 5. Our COVID-19 response starts with a steadfast commitment to the health of our employees. We have robust safety protocols in our manufacturing plants and distribution sites, enabling us to effectively protect our people while maintaining supply chain operations. For remote employees, we have developed a phased approach for their return to the workplace with enhanced safety measures and emphasis on flexibility for individuals. We have had our colleagues return to the workplace in two dozen countries, mainly in Asia and EMEA, along with our global R&D community, and we are adjusting based on government guidelines and the evolution of the pandemic across the world.…

Thank you Mike and good morning everyone. Please turn to Slide 9. Company-wide second quarter sales were $7.2 billion, with adjusted operating income of $1.4 billion and adjusted operating margins of 19.6%. On the right-hand side of this slide, you see the components of our margin performance in the second quarter. The impact of the pandemic was varied and numerous across the business and operations. The biggest factor negatively affecting Q2 operating margins was the impact of the pandemic on global customer demand, which resulted in nearly a 14% year-on-year decline in organic sales volumes. In addition, during the quarter we undertook restructuring actions resulting in a Q2 charge of $58 million due to the impact of the pandemic. These headwinds were partially offset by aggressive cost management during the quarter which reduced costs by approximately $400 million year-on-year. Also providing a year-on-year benefit to operating margins is a restructuring charge in last year’s second quarter. All in, these benefits were more than offset by the decline in organic sales volume and restructuring actions resulting in a 100 basis point reduction to second quarter margins versus last year. Acquisitions and divestitures reduced margins by 80 basis points due to Acelity purchase accounting impacts. Higher selling prices along with lower raw material costs contributed 70 basis points to second quarter margins. Finally, foreign currency net of hedging impacts reduced margins by 10 basis points. Overall, we effectively managed costs throughout the quarter in a very dynamic and challenging global economy, and as Mike mentioned, we expanded EBITDA margins by 110 basis points year-on-year to 26.5%. Let’s now turn to Slide 10 for a closer look at earnings per share. Second quarter adjusted earnings were $1.78 per share, down 16.4% year-over-year. Let me now cover the items that made up our second…

Thank you Nick, and good morning everyone. First, I would like to recognize and thank Nick not only for his 35 years of outstanding service to 3M, but also for his partnership, counsel and guidance over the past month in helping me learn 3M and ensure a smooth transition. Like Nick, I am humbled to be a part of this outstanding company. I have had great admiration of 3M and its vast scientific capabilities to positively impact the world, including and across industry, healthcare and consumers’ lives. It’s great to be a part of the leadership team and to lead the company’s global finance organization. Over the past month, I have spent time meeting with leadership, key finance members, and also participating in strategic and operating reviews and discussions. While I have only been on the job for a few weeks, this past month has given me a great opportunity to personally engage with our leadership team and learn the company. I want to thank all 3Mers for their warm welcome. With that, let me make a few remarks regarding our thoughts on the coming quarter. As we start the third quarter, we are seeing sequential improvements in end markets, including automotive, healthcare, and general industrial. While the strength and pace of recovery remains uncertain, we currently are expecting global economic activity to be stronger in Q3 as compared to Q2. Turning to our business, we are seeing a broad-based pick-up in growth across our businesses and geographies as we start the third quarter. With one week left in July, total company sales are currently up low single digits year-on-year. With respect to respirators, we anticipate continued strong demand which we estimate will contribute approximately 300 to 350 basis points to company-wide Q3 organic growth. As we did throughout Q2, we will continue to provide monthly sales information, therefore we will provide an update on July sales once we have finalized results in a few weeks. From an operational standpoint, though we anticipate some pick-up in costs as sales growth improves, we are maintaining our aggressive cost discipline while also continuing to invest in future growth and productivity, therefore looking at margins, we currently anticipate our third quarter adjusted operating income margins in the range of 20% to 21%. Finally with respect to free cash flow, we will continue our efforts to drive improvements in working capital and prioritize capex spend. Our ongoing focus on cash flow along with disciplined capital allocation are central to enhancing our financial flexibility and strengthening our capital structure. While uncertainty remains, we are confident in our ability to continue to execute on our priorities, respond to changes in the marketplace, and invest in future growth and productivity. With that, I thank you for your attention, and we will now take your questions.

[Operator instructions] Our first question comes from the line of Scott Davis with Melius Research. Please go ahead.

Good morning guys.

Morning Scott.

Congrats Nick on your retirement. Hope you enjoy, well done.

Thank you.

And Monish, good luck to you.

Thank you.

Anyways, two questions here. One, on the cost out, how much of the $400 million would you guys say is permanent, you can hold onto, versus the more temporary action?

Scott, I’d say the majority of the $400 million is temporary, that much of what we were doing in second quarter was reducing expenses through disciplined holding down of expenses. There were some other things that we did of restructuring actions that we think will--that we know will benefit us going forward, but the majority of this $400 million we see as temporary spending reductions and not permanent spending reductions.

Okay. Then as a follow-up, the July--I mean, I know we’re only--we’re not totally through the yet, close, but that seems pretty positive based on the sequential--I mean, I wouldn’t have expected positive until later in the year. Can you give us a little bit of color on that? Is there any particular snapback or inventory rebuild or discretionary healthcare has started up again, things like that, that perhaps is driving that growth?

Yes Scott, maybe I’ll characterize it a little, really in line with what Monish said in his remarks. It’s pretty broad right across businesses and geographies. We are seeing some positive growth in China coming out of Q2, and that continues, but it’s really broad-based. It is related to some of the things you highlighted - elective procedures coming back, the automotive build rate sequentially getting better, still negative but getting better, so we’re seeing--I wouldn’t say we’re seeing the signs of a snapback in the inventory in the channel yet, but we’re certainly early days benefiting that broader improvement across businesses and geographies.

Our next question comes from the line of Julian Mitchell with Barclays. Please go ahead.

Hi, good morning, and I’ll echo the thanks to Nick and welcome to Monish. Maybe just a question on the adjusted operating margin first of all. I saw the guidance of 20% to 21% for Q3. It is up slightly sequentially, but I guess year-on-year it’s still a very heavy decline, maybe heavier even than what you had seen in Q2, even with a better revenue trajectory. I just wanted to try and understand if that’s right, if it’s maybe a three-point decline in the adjusted margin year-on-year, and maybe what’s driving that to offset the better volume performance.

Hey Julian. Yes, with the guide that we’re putting out for third quarter margin 20% to 21%, we’ve been looking at it from a sequential perspective and seeing it up 50 to 100 basis points over where we finish Q2 of this year. Now, as you’re doing and looking at last year, you’ve got to remember last year had some one-off things benefiting it. We had a gain on a sale of a building that’s included in that. We also have the impact of Acelity year-on-year with Acelity not in our third quarter results last year but they’re now in there. Those are the two biggest things impacting the year-on-year number.

That’s helpful, thank you. Then maybe my second question, if we look at the healthcare business specifically, I think there was a comment around improving margins in the prepared remarks. Maybe just put a finer point on it, I suppose, in healthcare, help us understand the pace at which the elective surgery-related businesses are coming back, and did the comment mean that margins could grow even in the second half, or it’s more just a much narrower decline than what you’ve seen in Q2?

Yes Julian, I wouldn’t take the comments to say that we expect the margins to be up year-on-year in our healthcare business. My comments there were in regards to compared to where we saw margins in the second quarter, we anticipate those continuing to expand as we see elective procedures coming back and our own volumes going up. If I use oral care as an example, each month of the second quarter we were seeing improvement in our year-on-year growth rates in that, and we expect that to continue going forward. We’re also seeing improvements on the month in our medical solutions business, so we are seeing signs that these elective procedures are coming back and we’re seeing the start of that later in the second quarter, early into the third quarter, and as that continues, we expect that to have a positive impact on the sequential operating margins for healthcare.

Our next question is from the line of Andrew Obin, Bank of America. Please go ahead.

Yes, good morning. Just a question, as things improve for you guys, what do you need to see, what are the goalpost--oh, I apologize. Before I go onto my question, I do want to thank Nick and welcome Monish. I apologize for skipping that, Nick. Good luck and thank you, and Monish, welcome. Apologies for that.

Thank you.

So just going back to capital allocation, what do you need to see in terms of things getting back to normal to go back to share buybacks, to go back to looking at M&A? What are the takes, what are the goal posts?

Thanks for the question. The way we look at it is we have said before, it’s an extremely uncertain environment, so for us to look at what you call stability, we’ll have to figure out what our end markets look like. Think about big end markets, whether that’s healthcare, automotive, and personal safety, so until we see that stability, it’s just going to be really hard for us, so I would call those as the goalposts. Of course, how the coronavirus cases play out in the world will be another big factor in this and how the economies start opening up, so those are just some of the macro indicators that we’ll have to look at before we feel comfortable, and that’s why we are taking this day by day and we’re going to continue providing you monthly guidance on our revenue, and then as that stabilizes I think we’ll be in a better position to have a stronger view on capital allocation.

So when you stop providing monthly guidance, I should expect buybacks? Sorry, that was a joke. Another question, you guys have some of the strongest presence in China of anybody we cover, and we’ve been reading about possible supply chain disruptions related to the Yangtze River flooding. Are you seeing any impact on your customers in China? I mean, I know where you guys are, but are you seeing any impact from flooding on your supply chain or are you making any contingency plans? Just trying to figure out how real that thing is. Thanks.

Yes Andrew, through the entire COVID experience, we really have validated the model that we have around the world. As you know we manufacture in China a majority of what we sell in China, so we really are closely connected with the supply chains there, and I would say at this point we don’t see an impact from the flooding. We’re watching it closely, we’re staying connected to our customers as they see interruptions. If it worsens or their businesses are interrupted, we will certainly adjust in the supply chain, but at this point we don’t see a material impact on the China results. We’re seeing fairly broad-based improvements really across electronics and industrial and transportation markets leading the way. Like the U.S., elective procedures in healthcare are a little slower to recover, but it’s fairly broad-based in that growth that we saw in Q2. So not at this time, but we will stay close to it and update as we go.

Our next question is from the line of Steve Tusa with JP Morgan. Please go ahead.

Hey guys, good morning. Can you just discuss where you stand on some of the cost actions for second half? I know you said you got $400 million out in second quarter, but maybe just discuss what you’re getting in second half and the how that temporary versus structural plays into next year, just assuming flat sales for example, even though they probably won’t be flat, just what you see as temporary and structural now. Just an update there.

Sure Steve. So as Nick mentioned in his prepared remarks and the prior question, most of the actions that were taken in the second quarter were temporary in nature. We have taken some structural actions through a restructuring charge, but most of them were temporary in nature. I would say we are going to continue our strong cost discipline that we are doing, but at the same time as the economic recovery starts coming back up, we are going to see investments in both growth and productivity, as well as some of the timing items in 2Q will play back out in Q3 and Q4, so that’s our current view right now. As I said, uncertain environment, but depending on which way the world plays out, we are ready to act in both investing in growth and productivity at the same time.

So I guess that sounds like for--I guess that sounds just pretty--you know, performance next year will be pretty consistent to normal incremental margins on growth, with maybe just the 2Q temporary actions as the key item to call out?

As of right now, I would say that, Steve; but again, as I said, let’s see how the world plays out. We’ll act both on growth and productivity as required. But for Q3, again, looking at the cost actions, just to reiterate, we are looking at as sequential revenue goes up, margin rate is going to go up to 20% to 21%, which is 50 to 150 BPs better than Q2.

Right, okay. Thanks a lot, I appreciate it.

Our next question is from the line of Nigel Coe, Wolfe Research. Please go ahead.

Thanks, good morning. Nick, good luck, and Monish, good luck in your new role as well. I just wanted to touch quickly on July versus June. I wasn’t on for the whole prepared remarks, but what caused the big snap in--you know, it looks like mid-teens declines in June on a daily basis, and then snapping into positive growth in July. Is that positive growth, is that inclusive of acquisitions or is that purely organic? Just wondering what changed between the two months.

Yes, so the growth was all in sales, Nigel, so it’s both acquisitions and organic. I would say that broad-based view of businesses and geographies, it’s adding up everywhere a little bit. That’s what’s making the difference, and we’re seeing demand come back. There was a lot of--I think a lot of optimism that we were seeing an economic recovery at the end of second quarter, and we saw pretty consistent organic growth across the months in the quarter. We’re seeing it come through now in July, so it’s just, I would say, the timing of it and that broad-based across businesses and geographies is adding up to improving trends. I’m encouraged by what I see. It’s still early days in the third quarter, but we’re off to a good start, and I think it’s a start of a trend in those markets is the cause of it.

Yes, I’d be curious if there’s any channel impacts that’s causing that, but my follow-on question is really on healthcare margins. I think the best way to think about these is on an EBITDA basis, and we saw sequentially EBITDA margins declining from 28% down to 24.1%. Obviously volumes took a big step down in 1Q versus 2Q. Is that just purely a volume impact that we’re seeing there, or were there some mix impacts that we need to figure in as well?

Nigel, before I give it to Nick, maybe just a comment about the channel at the end there. We did see some strong point of sale as we came through second quarter, so there was expectation that sell-in would follow. That’s probably contributing some of it, but we aren’t seeing a big, as I said earlier, a big snapback in the channel, but there has been stronger point of sale, so that’s also contributing.

Okay, thanks.

Nigel, to your question on the EBITDA margins for healthcare, and yes, we’re seeing that down, and your presumption is correct. What we are seeing there is almost all volume related when we look at it on an EBITDA basis, because then we’re pulling out the impact of the Acelity purchase accounting impact. It’s almost all volume related, and then again, as we see volumes coming back up, we expect that to abate and come back to more normal operating margins for our healthcare business.

Our next question is from the line of John Walsh, Credit Suisse. Please go ahead.

Hi, good morning, and a thank you to Nick and a welcome to Monish.

Thank you John.

Wanted to go back to the Q3 margin guidance. I was trying to calculate the year-on-year decline if I make adjustments for the flame detection gain last year, the property gain which you kind of sized in the prepared remarks last year, and it seems like the year-on-year delta actually gets worse in Q3 versus Q2. Wanted to know, one, if that math was right or if we missed something there.

The way to look at it, John, I think the reason we went to incremental quarter-over-quarter or sequential is because it’s so hard to do the math year-on-year. There were some gains last time as well as we’ve got the impact of the Acelity acquisition this year, and that’s why I would just request that you focus on the sequential, and that’s where we are showing margin improvement of 50 to 150 basis points as we go forward, as volume starts getting better.

Okay, thank you for that. Then maybe just a follow-up, thinking about price raws for the back half here. Price ticked up, was just curious where you’re actually seeing an acceleration in getting price, maybe by the segment units because we already have it by the geography.

Yes, so we’re at 50 basis points of price growth in the second quarter, and we don’t foresee that having a material change in the second half of the year. What we’ve been experiencing for price growth, both for the first and the second quarter, we think is pretty indicative of where we’ll be for the total year. John, there’s really not any big trend change going on there to highlight. It’s been a very stable number and we think it will remain stable.

Great, thank you.

The next question is from Joe Ritchie, Goldman Sachs. Please go ahead.

Thanks, good morning everyone. I will echo all the comments - we’ll miss you, Nick, and look forward to working with you, Monish.

Same here, Joe.

Maybe just my first question, maybe following up on Nigel’s question on healthcare margins, if we were to take out the Acelity acquisition from 2Q, what were the core decrementals in 2Q in healthcare?

Yes Joe, the core decrementals in healthcare once I pull out Acelity, then we’re in 60% or a little higher than 60%, which is not unusual given the make-up of our cost structure in healthcare. Once I pull out Acelity, then we’re in that range.

That’s helpful. Nick, just following up on a comment you made earlier, so none of that is mix related, like elective procedures isn’t exacerbating that decremental? It’s just basically volume oriented and that’s it?

Yes, when we look at a mix impact, we have pluses and minuses. It really nets out to very little change on our overall healthcare margin.

Okay, all right. Thanks. Then maybe one follow-on question, just going back to the comments around capital deployment and when you could potentially get more aggressive with a buyback or M&A. The question I have is how are you thinking about your balance sheet and your leverage going forward? There’s a lot of moving pieces clearly from a PFAS perspective, and so I’m just wondering whether you’re thinking about your leverage in a different way when we start thinking about you getting a little bit more aggressive in the future.

Sure, so I will just start by saying a hallmark of 3M has been its strong capital structure, and our plan is to continue doing that. De-leveraging has been a priority for 3M and we are going to continue that journey. I think the pace of de-leveraging will depend on how economic activity recovers and also our ability to continue driving strong cash flow and control our working capital. That’s what I would just say for the time being is our current view. To reiterate capital allocation, our first priority has always been to invest in the business. It’s R&D organic growth, best returns right there. Dividend is our second, which has been a big hallmark of 3M, that’s our second priority, and then M&A is third, and then share buybacks would be our last priority. That’s the way we are looking at it right now.

The next question is from the line of Jeff Sprague, Vertical Research Partners. Please go ahead.

Thank you, good morning everyone. Nick, 35 years? You look so young! I thought maybe you started out in middle school. Best of luck to you.

Jeff, you’re kind. Thank you.

Just two business related questions for me, if I could. First on electronics, can you just provide a little more color on what you saw there? It sounds like kind of a tale of two markets, right, consumer electronics versus the other buckets. Can you give us a little more color on what you saw in the quarter in those pieces, and what the trajectory looks like into the third quarter?

Yes Jeff, electronics for us was down 1%, and as you said, it was kind of a mix of different stories. There was strength in semiconductor, data centers, factory automation. Those were all up double digits for us. Those have been part of our focus on where we invest for growth in electronics. That was offset by softness in consumer electronics. The broader transportation electronics was impacted more heavily by automotive and, I would say, our commercial solutions business, but in electronics the strength was in those categories. We see those trends continuing. Semiconductor fabrication continues robust growth. Consumer electronics is still soft as we start third quarter, but the benefit of being in those higher growth segments gave us some strength in electronics in the quarter.

Secondly, unrelated, on the consumer side, obviously potentially a very peculiar back to school, or maybe we don’t even have back to school this year. What is going on in retail in terms of planning for this channel fill, that sort of thing, and what are you expecting in the third quarter?

Well, our retail partners are planning for back to school, and as you said, there’s a lot of uncertainty around it. It’s another one of those things that’s almost day by day. We are--we built a little bit of inventory even as we went through the first half and anticipation of back to school. We see that being something that is going to add to some of the growth as we move forward, but it’s a lot of uncertainty around how it’s going to play out. The strength in consumer for us has been around home improvement and our cleaning products. Stationary and office had been declining as schools were closed, of course. We’re hoping to see an uptick in demand as schools open, but that still remains to be seen.

Our next question is from the line of Deane Dray, RBC Capital Markets. Please go ahead.

Thank you, good morning everyone, and echo best of luck to Nick and welcome to Monish.

Thanks Deane.

I’m not surprised that air quality is one of the priorities for 3M. You’ve got such a big presence on the residential side with Filtrete. Where and how do you see opportunities on the commercial building side on filtration as people start venturing back to work? Are there new products that you’re expecting to launch?

Yes Deane, you hit it. Our innovation and really a core of what we do in Filtrete has been focused on residential, both indoor air quality and, I would say, residential HVAC, together with room air purifiers being part of that. Our innovation goes into the Filtrete filters that are part of that. The commercial side, while we contribute some of our non-woven technology, it’s not a big part of our air quality growth. It’s one of those areas that it’s still nascent in how the innovation is going to make a difference there. We work in our innovation on opportunities there, but when we talk about the outlook for the strength in this area and the growth that we’re seeing in our priority growth platform, it’s really in that residential side of the marketplace.

Got it. Then for 2020, how do new product introductions shape up - again, this is a strange year, but in terms of product launches and contributions?

Yes, it’s still the heart of 3M is our innovation. It comes through in those new product launches. We highlighted a little bit the benefit we’re seeing in these priority growth platforms, but it’s much broader than that. We continue to launch new products and like everything else, we’re adjusting in the middle of COVID, prioritizing where we see market opportunities, and I would say in some cases you see in our capex delaying some of the investments as we see slowness in markets. Now, we have plans for robust new product launches in the second half of the year. It’s going to be still a critical part of our growth drivers, so it doesn’t change, we just have to adjust to the market opportunities, and I would say too the pace of investment as we go through the rest of the year.

The next question is from the line of Andy Kaplowitz, Citigroup. Please go ahead.

Good morning guys. Nick, thanks for all your help, much appreciated. Monish, welcome.

Thank you.

Thanks Andy.

Just focusing on safety and industrial for a second, the margin performance in the quarter was strong. Can you give us a little more color in terms of what led to the margin improvement in the quarter? Is the big increase in mask sales actually helping mix? Is it realignment that that’s now helping that segment, and would you expect to see this kind of performance we saw in safety and industrial moving forward?

Yes Andy, in total the fact that our revenue was down year-on-year, we’re not seeing a benefit margin in our safety and industrial business from the combination of the higher respirator sales and the lower sales in the rest. Those look pretty much as a push to us. The 180 basis point margin expansion, some of that is coming from that $400 million of cost actions that we’re doing, that safety and industrial had its share of that, but this was also a business where we were taking actions last year in restructuring, so the lack of repeat of that expense plus the positive benefit of that restructuring, all of those things in combination led to that 180 basis point margin expansion. It’s really not a mix or a respirator story. Then going forward, we do see continued margin expansion potential in this business going forward, possibly not on the same scale as what we saw here in regards to the margin guidance that we provided, but it’s still a business where we see upside on the margin on a year-on-year basis.

Thanks for that, Nick. Then just focusing geographically again, China seems to be continuing to improve, but Japan looked worse and Latin America looked expectedly weak, so can you talk about Asia and some of the other emerging markets? It seems like China continues with more of a V-shaped recovery for you guys. Is that what you’re seeing? And then why did Japan turn down in Q2?

Yes Andy, we are seeing that recovery in China, and I highlighted earlier it’s really across safety and industrial, transportation and electronics leading the improvements there as we move ahead. Healthcare is still slow as elective surgeries even--or elective procedures come back in China as well. We are--you know, we see that, as I highlighted, continuing as we start the third quarter. Japan was down 12% in the quarter, really seeing declines in safety industrial and consumer, transportation electronics as well, so it’s a broad-based slowness there. I think we’re seeing that across geographies, that there’s kind of a sequence to things. You’re seeing the earlier recovery in China, then you see EMEA, Americas, and Japan, other parts of Asia kind of going through--a step behind that, and we saw some of that in Japan as we went through the second quarter.

The last question is from Markus Mittermaier, UBS. Go ahead.

Hi, good morning everyone, and again welcome Monish, thanks Nick for all your help, and all the best.

Thanks Markus.

If I can maybe come back to just the monthly data - sorry for that. Mike, Nick, when we spoke intra-quarter, we talked about the billing day adjustments that we would have to make in May and June, and if I do that arithmetic, I actually see June down significantly more than May was, which surprised me a bit. Then correct me if I’m wrong, but did you say July, the low single digit number, was that all-in or was that organic? Maybe let’s start here.

Yes, when we look at on a per-billing day sales from April to May to June, we saw an improvement each of those months. However, that’s a normal pattern for us. It’s a normal pattern as we go through the second quarter that May and June sales per billing day goes up, and we saw that again this year. So in a year-on-year growth comparison, what we saw on a per-billing day was very comparable, about the same growth on a sales per billing day in May as what we saw in June. What we’re seeing now in July is now a more noticeable direction change, where on a sales per billing day and on an absolute basis, we are seeing it up low single digits versus where we were in July of last year.

Okay, thank you. Maybe I’ll come back to that after the call, just to make sure. Then on the interim consent order with ADEM in your prepared remarks, is that something that you had already provisioned for before, because in the special items, if I look at it, there were no litigation-related charges in the quarter. Is that something that’s still coming up, or is that something that was already provisioned for in the past?

Markus, the announcement on ADEM, that’s something that we had previously disclosed, and we’ve reached an interim consent order in partnership with ADEM, so this will have requirements as we move ahead. What we know about remediation that’s probable and estimable is part of our reserve, but there will also be capital and operating costs that go along with complying with the consent order. It’s not expected to be material for 3M, but it is something that will become part of our operational costs as we move ahead.

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 remarks.

To wrap up, the 3M team delivered another strong operational performance in the second quarter. In a challenging environment, we posted robust cash flow, managed costs, and continued to invest for the future. We will continue to fight COVID-19 from all angles, and we are well positioned to deliver value for our customers and shareholders during the pandemic and as the economy recovers. Thank you for joining us.

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