Tenaris S.A.

Good day and thank you for standing by. Welcome to the Q1 2022 Tenaris S.A. Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Giovanni Sardagna. Please go ahead.

Thank you, Gigi, and welcome to Tenaris 2022 First Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information in this call and that the actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our Chairman and CEO, Alicia Mondolo, our Chief Financial Officer, Guillermo Fogel, Vice Chairman and member of our Board of Directors, Germán Curá, Vice Chairman and member of our Board of Directors, Gabriel Podskubka, President of our Eastern Hemisphere Operations, and Luca Zanotti, President of our U.S. Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. Our sales in the first quarter of 2022 reached $2.4 billion, doubling those of the previous year and up 15% sequentially, mainly driven by higher prices in the Americas and higher shipments of line pipe in Europe and South America. Average selling prices in our tubes operating segment increased 41% compared to the corresponding quarter of 2021 and 12% sequentially. Our ABDA for the quarter, which included 12 million of several charges related to the discontinuation of our industrial equipment business in Brazil and the closure of NKK tubes in Japan was up 30% sequentially to 627 million. Our ABDI margin reached 26.5% as higher prices more than offset increases in energy and raw material costs. During the quarter, working capital increased by $609 million, mainly reflecting higher trade receivables following the increase in sales, and higher inventories partially offset by an increase in trade payables. With a negative operating cash flow of $27 million and capital expenditure of $67 million, our free cash flow for the quarter was negative for $94 million, but at the end of the quarter, our net cash position was 562 million. Now I will ask Paolo to say a few words before we open the call to questions.

Thank you very much, Giovanni. Good morning to all of you. We are pleased to have our team here in Luxembourg for this conference call after more than two years of pandemic due to travel restrictions. We are visiting customers again and all around Tenaris our teams are meeting up while we maintain the benefit of flexible working routines. Since our last conference call, the world has changed. The Russian invasion of Ukraine is deeply affecting the global politics and markets. Energy markets are being disrupted as governments, particularly in Europe and the United States, look to replace Russian exports and impose financial sanctions on individuals, companies and institutions. Security of supply has become a prime concern as prices rise along with concern about supply shortfalls. At the same time, inflation has increased all around the world, casting doubts on future global growth. Tenaris, with the unique positioning it has developed around the world, has an important role to play in supporting oil and gas companies in their commitment to develop regional energy independence and local value chains in a time of supply chain disruption and economic uncertainty. In North America, we have been quick to accompany the recovery in drilling activity following the pandemic-induced collapse in 2020. Since the recovery began, we have been steadily ramping up production in our U.S. industrial system, adding 1,400 new employees over the last 18 months. Today, we have 3,100 employees in the United States and expect to add a further 700 in the rest of the year. Our modern Bay City mill has been operating at full capacity since March, and we have reopened many of the facilities we had to shut down following the outbreak of the pandemic. We have gained a head start over our competitors, and this puts us in a good position to respond to the requirements of our customers as they expand their operations in the region. Latin America is an important producer of oil and gas for the Western Hemisphere as it develops its prolific deepwater and shale resources. Teneris, with the extensive local manufacturing and service capabilities it has built over the years in Argentina, Brazil, Colombia and Mexico,