Tenaris S.A.

Good day and thank you for standing by. Welcome to third quarter 2024 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 2024 Third 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 Podkuska, our Chief Operating Officer, and Luca Zanotti, President of RUS 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 third quarter of 2024 reached $2.9 billion, down 10% compared to those of the previous year, and down 12% sequentially, mainly due to lower prices in the Americas and lower demand in the USA, Mexico, and Saudi Arabia, as well as lower line-pipes to Argentina. Average selling prices in our tubes operating segment decreased 14 percent compared to the corresponding quarter of last year and 2 percent sequentially. Our EBITDA for the quarter was up 6 percent sequentially to $688 million as the previous quarter was affected by an extraordinary provision recorded for an ongoing litigation related to the acquisition of a participation in Usiminas in 2012. Without this extraordinary provision in the previous quarter, the EBITDA for the quarter would have declined 16% sequentially. However, our EBITDA margin at 23.6% was only marginally lower compared to the margin recorded last quarter on a comparable basis. With operating cash flow of $552 million and capital expenditure of $179 million, our free cash flow for the quarter was $373 million. After share buybacks of 182 million, our net cash position amounted to 4 billion at the end of the quarter. Our board of directors approved the payment of an interim dividend 27 cents per share or 54 cents per ADR to be paid on November 20th. The interim dividend is up 35% compared to the interim dividend we paid last year. In addition to the dividend, the Board of Directors also approved a share buyback of $700 million to be executed within the next five months. Now, I will ask Paolo to say a few words before we open to questions.

Thank you, Giovanni, and good morning to all of you. In the third quarter, we successfully carried out our extensive program of plant stoppages. We have now largely concluded an important cycle of investment in the maintenance and modernization of our industrial system, incorporating innovative technology for steelmaking and heating furnaces and further automation. Steel Ongoing is an investment at our U.S. steel shop to modernize the dust collection system and expand capacity, which will be concluded this month. This investment will contribute to significant improvement in productivity and environmental performance with lower emissions. We're confident that we will see the benefit of this investment over time. We have expanded our relationship with international oil companies and consolidated our positioning in complex offshore projects. This is being reflected in a number of recent awards that will support our offshore order backlog for 2025 in 2026. The Guayana Suriname Basin, where we are already serving ExxonMobil casing requirements under a long-term agreement, Saipem awarded us a lime pipe and insulation coating package for the total Grand Morgue development, recognizing the benefit of our Tenaris shock core integration. In Brazil, We were awarded a riser and flow line package with thermal insulated coating for Petrobras Busio 9 development, as well as the conductor casing and super chrome tubing for the Scipia and Atapu project, which we are currently delivering the export line, the export pipeline, riser, and coating for Echino Raya project. west africa exxon mobil awarded are the casing for their block 15 development in angola we also secured the offshore line pipe for shell bonga project in nigeria in the united states where drilling activity has stabilized osg imports are coming down import from thailand have come to a halt after they were found to have been violating trade rules. For this year, the Korean import quota has been reduced by 50,000 tons, and this will also apply for 2025. The pipe logic index of US OCTG prices has started to rebound with increases over the past two months, and we expect that this trend will continue in the coming months. In Canada, trade action implemented in recent months has limited unfairly traded Chinese OCTG imports. We are being successful in showing the value of our redirect service program by extending the coverage and duration of our service agreement among the larger Canadian operators. This includes Petronas, who awarded us with a three-year contract for their OCTG requirement in the Monty as they prepare for the start-up next March of the LNG Canada project. In Argentina, economic conditions are improving and investments are starting to move forward in Vaca Muerta, where there are plans to increase oil exports from the country to 1 million barrels a day before the end of the decade. We were awarded the supply contract, and receive a down payment for the first phase of the Vaca Muerta Sur oil pipeline, which will connect production in the shale to a new deepwater port at Punta Colorado in Rio Negro Province. In the Middle East, while gas drilling activity remain at the stable level, we are seeing some softening in oil drilling activity. In Saudi Arabia, we have just completed deliveries under a special stock replenishment program, and now Aramco is looking to reduce stocks and increase cash flow. Even if in the third quarter our shipments remain relatively high, this stocking will have an impact on our sales for the fourth quarter. Our free cash flow remains strongly positive, even if with the transition to the new government, Pemex in Mexico has further delayed payments. Free cash flow has amounted to $1.9 billion in the nine months, and our net cash position at September 30 amounted to $4 billion. In this situation, our board of directors decided to increase our interim dividend by 35% to $0.27 per share and to authorize a follow-on share buyback program of around $700 million using the authority granted at the Annual General Shareholder Assembly in June 2020. With this interim dividend and extension of our share buyback program, we will return close to $2 billion to our shareholder in this calendar year. We are now opening for any questions you may have.