Tenaris S.A.

Good day, and thank you for standing by. Welcome to fourth quarter and full year 2023 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 2023 Fourth Quarter and Annual Results Conference Call. Before we start, I would like to remind you that we will be discussing forward information in this 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, Gabriele Podkucka, our Chief Operating Officer, 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 2023, sales reached $3.4 billion, down 6% compared with those of the corresponding quarter of the previous year, but up 5% sequentially, mainly driven by high level of shipment to the Middle East and to offshore pipeline projects, combined with the inclusion of our newly acquired shock or pipe coating business. which offset the ongoing price declines in the Americas. Our EBITDA for the quarter was down 3% sequentially to $975 million, and that EBITDA margin declined to 29%, mainly reflecting lower pricing in the Americas. Our net income for the quarter at $1.1 billion was positively affected by good results from non-consolidated companies, positive financial results, and an important net deferred tax gain. Average selling prices in our tubes operating segment decreased by 11% compared to the corresponding quarter of 2022 and 6% sequentially. During the quarter, cash flow from operation was $836 million. Our net cash position at the end of the quarter increased to $3.4 billion following the payment of an interim dividend of $235 million in November last year, $214 million spent on share buybacks and capital expenditures of $167 million during the quarter. The Board of Directors has decided to propose for the approval of the annual general shareholders meeting to be held at the beginning of May, the payment of an annual dividend of $0.60 per share or $0.120 per ADR, which includes the interim dividend of $0.20 per share or $0.40 per ADR that we paid at the end of November last year. If approved, a dividend of $0.40 per share or $0.80 per EDR will be paid on May 22. The proposed annual dividend for this year is 18% higher compared to the annual dividend paid last year. 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 ended the year with a stronger fourth quarter supported by a high level of shipment to the Middle East and for offshore projects. Thanks to the good performance of our industrial supply chain system, we were able to anticipate some premium sourdough shipment to Aramco under our recent tender award. We were also able to include the first contribution from our newly acquired shock core pipe coating business after expediting all the necessary antitrust approvals. 2023 has been an outstanding year for Tenaris, with record financial results under most metrics. Net sales of 14.9 billion, EBITDA of 4.9 billion, net income of 4 billion, operating cash flow of 4.4 billion. As a global supplier of pipes to the energy industry, we have developed a unique position present in the most challenging development in the oil and gas industry, serving its most important players. With these results and net cash of 3.4 billion in our balance sheet, we are increasing returns to shareholders. We are proposing to increase our annual dividend to 60% per share. Together with the share buyback program we initiated in November, this would imply a 10% yield to shareholders for the year at current prices. We have extended the perimeter of our operation through a series of acquisitions. In Saudi Arabia, we increased our stake in GPC to gain a controlling position in this large diameter weather pipe mill, producing conductor casing and large diameter line pipe. With the acquisition of the shock core pipe coating business, we are strengthening our line pipe business, especially for offshore line pipe, where shock core has a leading position in anti-corrosive and insulation coatings. In the United States, we increase the flexibility and overall capacity of our U.S. industrial system by acquiring additional key treatment and trading facilities. Each of these integrations to our global industrial system enhance our capacity to serve our wide customer base with a growing range of products and services. Our globally integrated industrial and supply chain system produces and ships over 4 million tons of pipes to customers around the world. Many of these pipes are delivered directly to our customer operations in the field under our Rig Direct Service Program, which now serves over 500 rigs worldwide. Under this program, which requires investment in working capital, service yard infrastructure, logistic and digital systems, we enhance customer intimacy and differentiation, adding services to simplify customer operations and reduce on-site manpower requirements. With our redirect program, which now incorporates our run-ready service, we are reducing inventories in North America and transforming the supply chain. We are advancing with our rig direct service in other regions around the world. In North America, we have strengthened our positioning among large operators. We were recently awarded a long-term agreement by ExxonMobil to serve their unconventional operation in the United States, which confirms the preference that large operators are giving to our industrial footwear, specialized products and supply services. We are now serving each of the 10 largest operators in the country who are maintaining a stable level of operation even as the overall US rig count has declined. We are also strengthening our position among major operators in Canada. Our sales for offshore operations and projects grew more than 50% during the year. In Guyana, where the development of prolific deep water reserves is transforming the country, we are serving ExxonMobil operations under a long-term contract, while in Brazil we are supplying Petrobras with a wide range of products for the Búzios development. We are supplying a number of offshore gas pipeline developments around the world. Our sales are growing in the Middle East, where we have increased our local content and presence. In Saudi Arabia, Aramco, while postponing some of its offshore oil expansion, is expanding its gas drilling activity, including the development of the Al Jafura in unconventional reserves. We are supplying premium seamless OCTG following a tender awarded to replenish depleted stocks and are ramping up deliveries of conductor and surface casings from our local welded pipe subsidiaries. The expansion of gas drilling activity will also provide valuable opportunities for sales of lime pipe as Aramco proceed with its master gas pipeline program. Last week, we inaugurated a new industrial complex in Abu Dhabi, along with officials from ADNOC and the Ministry of Industry and Advanced Technology. This includes a new premium trading facility training facility, and an expanded service yard, which will support the rig direct service we are providing to ADNOC under our long-term agreement, as well as contributing to the industrial development of the Emirates. Our industrial system, operating at a high level throughout the year, has performed well in supporting our positioning worldwide. In safety, however, we had three fatalities in our operations. after four years without any. We are deeply sorry for the loss of life, and we are reinforcing all our preventive action with a particular focus on the activities of contractors working in our system. We made a significant advance in our decarbonization program when, after a $200 million investment, we successfully put into operation our first wind farm in Argentina. And we are now moving forward with a similar investment to build a second one. The Buena Ventura wind farm is now supplying 100 megawatts of power through the interconnected grid to our industrial facility in Campana, meeting close to 50% of its total electric power requirement and contributing to a lower cost of energy. As we look forward to 2024, Tenaris, with its extended global reach, enhanced competitive differentiation, an exceptional financial position, is well placed to strengthen its positioning around the world. The current favorable market conditions in the Middle East and offshore are expected to continue through the year, while in the Americas we are consolidating a solid position ready to take advantage of any further opportunities that may arise. I would like to give a special thanks to our employees. Without whose continuous effort and commitment, our many achievements during 2023 would not have been possible. I will leave now the floor open for any questions you may have. Thank you.