Tenaris S.A.

Good day and thank you for standing by. Welcome to Q1 2024 The NADES 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 11 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 2024 First Quarter 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, Gabriele Potkuska, our Chief Operating Officer, and Luca Zanotti, our 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 first quarter sales reached $3.4 billion, down 17% year-on-year and flat sequentially. As an increase in volume and the full consolidation of the quoting business acquired in the previous quarter offset the impact of lower selling prices in the Americas. Average selling prices in our tubes operating segment decreased 15% compared to the corresponding quarter of 2023 and 6% sequentially. Our EBDA for the quota was up 1% sequentially to $987 million. Our EBDA margin remained flat at around 29% as the reduction in average selling prices was offset by a strong operating performance, a positive contribution for our newly acquired quoting business, and a $25 million gain from legal claims resolution in Mexico and Brazil. With operating cash flow of $887 million and capital expenditures of $172 million, our free cash flow for the quarter was $715 million. Following share buybacks of $311 million during the quarter, our net cash position increased to $3.9 billion, up from $3.4 billion at the end of last year. Now, I will ask Paolo to say a few words before we move the call to questions.

Thank you, Giovanni, and good morning to all of you. We have had a good start to the year, maintaining our sales and EBITDA at the same level as in the fourth quarter of last year, despite the unfavorable pricing environment that is affecting our sales in the Americas. This will reflect the strength of our global positioning as well as its solid performance across our business lines. In the coming quarters, however, Our results will be affected by a soft U.S. rate count, affected by low natural gas prices, by an increase in DOCG imports, and an extended decline in prices. Our free cash flow will remain solid. During the quarter, our newly acquired Tenaris shock core pipe coating operations, where we successfully completed an exceptionally large project with concrete-weighted coatings or a pipeline in Mexico, made positive contribution to our sales and EBITDA. Tenaris Shock Core were also awarded a 108 million project to supply wet insulation and anti-corrosive coating for the offshore pipeline for the ExxonMobil Whiptail development in Guayana. This project will be supplied during 2025 Around the world, offshore projects are moving forward. And with our extended reach, we are providing a wide range of integral solutions for this complex development. The Middle East is another area which has seen growing activity. In Saudi Arabia, we are benefiting from the increasing demand for their gas development program and the consolidation of our GPC large diameter welded pipe operation. In the United Arab Emirates, With our new premium trading facility in full operation, we have been awarded a two-year extension of our redirect contract. While our long-term agreement with Qatar Energy LNG has also been extended for three years to cover the drilling in the Northwest field to supply the latest expansion program. In Canada, we have been successfully repositioning our variation and extending our redirect program following the Canadian government decision to impose normal value on Chinese OCTG imports and the investment we made in our sauce and marine meal. As the LNG Canada and other LNG projects move forward, operators are increasing their operation in the mountain shale. And we recently awarded a long-term rig direct contract to supply a major operator there. We participated in the CERA week conference last month, where we were able to share view on the energy transition and the prospect of the oil and gas market over the long term. What came out from the discussion was the sense that a more pragmatic approach to the complexities of the transition is required. with a focus on reducing emission using all means available across the energy industry and its value chain. At the same time, due to the enormous cost and complexity of the transition, oil and gas will continue to be required for many years to support the growing demand for secure, affordable energy, particularly from developing countries and to support technological development such as artificial intelligence. This year, in the third quarter, When we have a seasonal slowdown in demand, we will implement a major investment and maintenance program that has been postponed over the last two years of intensive operation. This really will involve stoppages in our five steel shops and our main seamless rolling mills. In Argentina, we will install an electric furnace that will be fed by a cone steel scrapery heating furnace and by our DRI plant. Once we complete our second wind farm in 2025, the new furnace will use 100% renewable energy to produce steel with a minimal level of carbon emission. In the US, we will upgrade our copper steel shop, installing a new back house system to reduce emissions. In several of our facilities, we are enhancing our capabilities to produce high alloy chrome products. as demand for these high-value products is growing. In Mexico, we will have the third major maintenance of our Thompson medium-diameter rolling mill in four years, in addition to a maintenance shutdown at our CST shop. This investment will be executed within our previous CAPEX guidance, but they will limit, to some extent, our capacity during the second half. We are now ready for any questions you may have.