Tenaris S.A.

Good day, and thank you for standing by. Welcome to the Tenaris First Quarter 2025 Earnings 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 this session, you'll 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 turn the conference over to Giovanni Sardagna, Investor Relations Officer. Please go ahead.

Thank you, Liz, and welcome to Tenaris 2025 first quarter conference call. Before we start, I would like to remind you that we will be discussing information in the 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, Gabriel Podkuska, our chief operating officer, and Guillermo Moreno, newly appointed 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 $2.9 billion, down 15% year-on-year, but up 3% sequentially due to higher seasonal volumes in Canada and higher onshore sales in the U.S., while our average selling price declined due to market and product mix effects with lower sales of OCTG premium products in Mexico, Turkey, and Saudi Arabia, in addition to lower sales of seamless line pipe for offshore projects. Our selling price in our tubes operating segment decreased 11% compared to the corresponding quarter of 2024 and 5% sequentially. On a comparable basis, our EBDA rose 6% and net income remained in line with the results of the previous quarter. Our EBDA margin increased slightly to 24% due to a good operating performance and better absorption of fixed and semi-fixed costs thanks to higher volumes. With operating cash flow of 821 million and capital expenditure of 174 million, our free cash flow for the quarter was 647 million. Following share buybacks of 237 million during the quarter, our net cash position increased to 4 billion, up from 3.6 billion at the end of 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. I will start mentioning the change in our management team. Guillermo Moreno, who is with us on the call today, has taken the position of president of our U.S. operation. Guillermo has more than 35 years of experience in Tenaris. He has led our U.S. commercial operation over the last five and a half years, prior of which he was president of our Canadian operation. We wish him all the best in his new position. We began 2025 with a good performance in the first quarter. Not only did we deliver quarter-on-quarter increase in sales and EBITDA on a comparable basis, but our free cash flow rose to $647 million as we achieved a significant reduction in working capital. We've been consolidating our rig direct strategy with long-term agreements, which have given us more stability and visibility in our operation. This winter season, we ship a record quarterly volume of OCTG. In the U.S., we have increased deliveries and continue to extend the range of services under our rig direct program. These results reflect the value perceived by our customer in working closely with us under long-term agreements as they seek further operational efficiencies. They include most of the largest shale operator with a longer backlog of tier one acreage and the most resilient operation. In Argentina, we began pipe deliveries for the new Vaca Moreta sewer pipeline, which will add 550,000 barrels a day of additional oil export capacity. And it is expected to come into operation next year. As local operators increase their investment in this highly productive shale play, we are expanding our new fracking and coal tubing service unit with an investment in a third set of equipment, which should come into operation next year. Our project backlog for offshore project is solid, and we expect to have further opportunities with a new wave of FID that we expect to be sanctioned in 2026. This backlog is made up of highly differentiated OCTG line pipe connector and coating products. Here, our recent success in qualifying products for high pressure 20K deep water project in the US with Shell and BP. And the value we bring through the integration of shock or coating technology give us an edge in tackling future challenges. In the coming months, we will supply line pipe for the Ndungu and Bonga North offshore projects in West Africa. In Australia, we received a multi-year award from Chevron to supply the backfield wells for Gorgon and Wheatstone projects in Australia. In the Middle East, we made a record quarterly level of shipment to Adenauk under our long-term service agreement. as they started the new shale drilling operation. We also commenced a pipe shipment for a major gas processing facility in Algeria. The major NOCs in the region have long-term planning cycles, and we expect that their operation will remain relatively resilient through the year. The last conference call, we mentioned that we were heading for uncharted territories. The subsequent chain of announcements on tariff and counter-tariff has not dispelled this uncertainty on the global macroeconomic and geopolitical situation. This has fueled expectations for a lower level of economic activity and lower demand for oil. The price of oil has been additionally affected by the production increases announced by the OPEC+. If the price of oil remains near or below $60 per barrel, there will inevitably be a slowdown in North American shale drilling activity. While a long cycle sanction process project will likely continue, a new project sanctioning may be subject to delays. As we face this less favorable macroeconomic and oil price environment, we are preparing for lower levels of activity ahead. We do so from a position where we expect to demonstrate the resilience and the solidity of our customer portfolio, our flexible industrial and supply chain system, and our solid balance sheet. In the longer term, the outlook for our industry remains secure in a world where demand for reliable sources of affordable energy will continue to grow. I will stop here and open the floor for any questions we may have.