10-25-17 BUSINESS BY CARLSON

Content provided by Paul Vaaler of the Carlson School

Well, this weekend, autumn in Minnesota becomes early winter with the arrival of some rain mixed with snow. So let’s savor the next couple of days. And while were at it, let’s savor the latest round of third quarter (of 2017) earnings reports from prominent Minnesota companies that indicate continued business strength. Here are three examples.

1) 3M. Here is where you can learn more about 3M’s report: http://s2.q4cdn.com/974527301/files/doc_financials/2017/Q3/Q3-2017-3M-Press-Release_Final.pdf. 3M CEO Inge Thulin got to tell a great story to shareholders, analysts and the broader public. Sales of $8.2 billion, up 6.0 percent year-on-year; organic local-currency sales growth of 6.6 percent; growth in all business groups and across all geographic areas; EPS of $2.33, up 8.4 percent year-on-year; operating margins of 25.0 percent; returned $1.1 billion to shareholders via dividends and gross share repurchases. It doesn’t get much better for the Maplewood diversified technology manufacturer. A little more than a year ago, 3M was battling “headwinds” in sales and profits overseas related to an appreciating US dollar. Much of that appreciation has reversed itself in 2017, and that’s been great for 3M sales and profit margins in overseas markets. Yesterday, 3M stock jumped more than 5.9% to about $235/share.

2) Polaris. Here is where you can learn more about Polaris’ report: http://s2.q4cdn.com/339036663/files/doc_presentations/2017/10/2017-Q3-PII-Earnings-Pres-10-24-17-final.pdf. Polaris CEO Scott Wine has also got a lot to tell shareholders and the broader public. Q3 reported sales were about $1.5 billion, up 25% from Q3 2016; reported net income was $82 million, up 153% from prior year; adjusted* sales were up 25% finishing ahead of expectations; acquisition of Transamerican Auto Parts (TAP) added $191 million of sales in Q3 2017; GAAP earnings per share was $1.28, up 156% from prior year; Adjusted* earnings per share was $1.46, up 192%. A year ago Polaris was reeling from recalls to their ATV line. The recalls are fading into history. The ATV and off-road models have seen increased sales in the “mid-teens” while sales are down in the broader industry. Polaris is stealing market share, and doing so profitably.

3) Ameriprise. Here is where you can learn more about Ameriprise’ report: http://ir.ameriprise.com/Cache/1500104372.PDF?O=PDF&T=&Y=&D=&FID=1500104372&iid=113901. Ameriprise CEO James Cracchiolo also has a lot to crow about: third quarter 2017 net income of $503 million, up $288 million compared to a year ago, or $3.24 per diluted share, up $1.94; operating earnings were $548 million, up $321 million compared to a year ago, with operating earnings per diluted share of $3.53, up $2.16; excluding the non-cash impact of annual unlocking(1) in both periods, operating earnings were up 27 percent to $484 million in the quarter and operating earnings per diluted share increased 36 percent to $3.12. With the Dow Jones Industrial index up nearly 20% since January, retail investors –you and me– have upped their participation in the market and sought more financial market services Ameriprise produces.

4) Are there any Minnesota losers in all of this winning? Maybe Wells Fargo, which on top of a new rash of scandal is also seeing dowward pressure on its stock price along with other US banks in part because of the expectation of higher interest rates from the Fed. Faster economic growth means more inflationary pressure and more interest rate tightening. The days of easy money and lending since 2009 may be ending…like this great autumn weather.

Four Minnesota companies reflecting the broader state of the US economy, which is pretty rosy right now. But remember roses don’t do so well when it snows.

Enjoy this week’s earnings reports and autumn weather. See you at 8:23!

Paul

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