Tenaris S.A.

Good day and thank you for standing by. Welcome to the Q4 Tenatis Essay 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. 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 Fourth Quarter and Annual Results Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our 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, Gabriele Podkuska, 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. During the fourth quarter of 2022, sales reached $3.6 billion, up 76% compared with those of the corresponding quarter of the previous year, and 22% sequentially, mainly driven by further increases in shipments and realized prices. Our EBITDA for the quarter was up 34% sequentially, close to $1.3 billion, reflecting higher volumes, better pricing, and good industrial performance with increased levels of activity and utilization of production capacity. Our ABDA margin for the quarter rose above 35%, despite higher raw material and energy costs. Average selling prices in our tubes operating segment increased 50% compared to the corresponding quarter of 2021. and 9% sequentially. During the quarter, cash flow from operation was $524 million. Our net cash position at the end of the year increased to $921 million following the payment of an interim dividend of $201 million in November last year and capital expenditures of $108 million during the quarter. Now, I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. We close 2022 with a quarterly record of net sales, EBITDA, and net income to cap a year in which we were able to take advantage of favorable market conditions, particularly in North America, to generate strong increases in sale and margin through the year. Taking the year as a whole, our sales grew 80% to $11.8 billion, our EBITDA rose to 3.6 billion and our net income rose to an annual record of 2.5 billion or 22% of net sales. With a solid balance sheet and good prospects for an increasing cash flow in the year ahead, we are proposing to raise our dividend for the 2022 year by 24% to 51 cents per share. These results were made possible through the efficient deployment of our global in-data system, where we produce a record volume of over 3.1 million tons of seamless pipe worldwide, and sustain an ongoing ramp-up of our facility in the US. Despite the use of longer and more complex production and logistic routes, we were able to maintain high standard for safety, quality, and consumption of materials. During the year, we hired 6,500 new employees. And in our induction and training routines, we pay close attention to the importance of having a safety mindset with awareness and behavior suitable for the industrial environment of our shop floor. We empower all our employees to be proactive in taking preventive safety action at all times. With this action, we were able to reduce our lost time injury frequency rate for the year by 10% to 0.9 per million man hours work. We are grateful to our people working in the plant for their contribution to this result. As we increase production and sales, our logistic operation have reached a substantial magnitude. To give you an idea of the effort involved, between intermediate transportation and delivery to customer, we moved around 10 million tons of material all around the world. We are strengthening the reliability of our supply chain through the digitalization of our material flows and made good progress over the year in this respect. We increased the deployment of our rig direct services. We are now serving close to 600 rigs worldwide. Our unique service platform allow us to integrate our operation more closely with our customer and provide digital and technical services that can further differentiate us from our competitors. 2022 marked a turning point in our deployment in the United States. The country accounted for more than 40% of our total sales, most of which are now produced locally. We brought the Bay City mill to full production capacity and ramped up production in the rest of our U.S. industrial system, including the restart of production of weather pipes and of heat treatment and finishing at our Baytown and Coppell facilities. We hired more than 1,500 new employees during the year in the U.S. and now employ 3,600 people in the county. With the $460 million, we will avoid spending on the Bantler acquisition. We will reorient our investment plan in the United States to achieve, through organic growth, the objective of strengthening our local industrial and logistic system that we had planned with the acquisition. As we look ahead, we view that the tightness in the oil market and high demand for LNG will support oil and gas price cash flows and investment in the oil and gas sector. We expect that the number of oil and gas wells drilled around the world in 2023 will increase, and this will drive global OCTG demand to exceed 16 million tons and reached its highest level since 2003. This environment will support further sale growth in 2023 when we expect an increase in sales for the offshore developments in the Middle East and in the pipeline infrastructure in South America. Our achievements over the past year that will support this growth include our multi-year agreement with ExxonMobil to supply their offshore operation in Guyana, our agreement with Petrobras to supply their pre-sold operation, the renewal of our long-term worldwide agreement with NEI, the renewal of our long-term agreement with Qatar Gas, the consolidation of our long-term agreement with Aetna. We also extended our long-term agreement with YPF and with PebEx. Pipelines will drive a relevant increase in our sales of welded pipes. In Argentina, we are supplying a number of pipelines that will stimulate further investment in the Vaca Muerta shales by expanding capacity to transport the gas and liquid to domestic and export markets. We will deliver a major offshore pipeline for the Northfield expansion in Qatar, and we are seeing increased demand for offshore pipelines to bring gas to Europe. Our cash flow in 2023 will benefit from the stabilization of our working capital requirements. Our CAPEX will increase to around 650 million. A relevant part of this CAPEX will be directed to projects that will contribute to our 2030 target for reducing the carbon emission intensity of our operation. In addition to our wind farm in Argentina, will make investments which will contribute to improving energy efficiency in Italy and Argentina. Over the past year, Tenaris has made good progress on many fronts and produced record financial results. We have been able to achieve this only thanks to the confidence our customers have placed on us and the constant efforts and outstanding performance of our diverse and united team all around the world in a volatile and fast-moving environment. We are now open for any questions you may have.