Vallourec S.A.

Good day and welcome to Valorec Q2 2025 results conference call hosted by Philippe Guillemot, Chairman of the Board and Chief Executive Officer, and Sacha Biber, Chief Financial Officer. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star one on your telephone keypad. And now, I'd like to hand the call over to Conor Laina, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us for Valorac's second quarter 2025 results presentation. I'm Conor Laina, Vice President of Investor Relations at Valorac. I'm joined today by Valorac's Chairman and Chief Executive Officer, Philip Guillemot, and Valorac's Chief Financial Officer, Sasha Bieberg. Before we begin our presentation, I would like to note that this conference call will be recorded. A replay will be available following the call. You can find the audio webcast on our investor relations website. Presentation slides referred to during this call are also available for download here. Today's call will contain forward-looking statements. Future results may differ materially from statements or projections made on today's call. The forward-looking statements and risk factors that could affect those statements are referenced on slide two of today's presentation. These are also included in our universal registration document filed with the French financial markets regulator, the AMF. This presentation will be followed by a Q&A session. I'll now turn the call over to Philippe Guillemot.

Thank you, Conor. Welcome, ladies and gentlemen, and thank you for joining us to discuss VALUEX second quarter 2025 results. In the second quarter, we delivered another quarter of disciplined execution and resilient performance. We extended our streak of positive cash generation and returned 370 million euros to shareholders. Despite microeconomic volatility, our core markets remain active and our strategic initiatives, particularly in Brazil, are ahead of schedule. You can see today's agenda on slide three. I will move directly to slide five, where I will start by discussing the highlights of the second quarter. Our second quarter results were in line with our expectations. The BDA of 187 million euros came in slightly above our guidance midpoint. declined versus the first quarter as anticipated. However, tubes and group APD margins increased sequentially. Total cash generation was positive for the 11th straight quarter. We generated 57 million euros of total cash generation and returned 270 million euros of cash to shareholders. Looking ahead, we expect third quarter EBITDA to round between 195 and 225 million euros. We also confirm our full year outlook. We expect group EBITDA to improve in the second half of 2025 versus the first half of 2025. Looking at our operations and end markets, we have seen some positive trends in the business despite recent volatility. We announced several significant OCTG orders, particularly in the Middle East, across multiple key countries and customers. This will support our results in the second half of 2025 and early 2026. In the U.S., market prices have increased in response to higher tariff rates, but the upside has been limited by lower drilling activity. Operationally, we have completed our cost reduction plan in Brazil ahead of schedule, with savings above target. In the quarter, we closed the acquisition of Thermotide Ovasil, which now gives us an integrated coating offering for deep water line pipe. As I mentioned, we commence shoulder returns in the second quarter. We paid a euro and 50 cents per share dividend, and we purchased 1.2 million shares in the quarter. Let's move to slide six to discuss an update on our Brazil performance program. Recall that we announced this program in July 2024. This was intended to meaningfully improve our tubes operation in the country. Since then, we have made significant headway on this project. Consistent with our overall strategic playbook, the elimination of complexity was a key enabling factor in this plan. We closed our aging 150 kiloton plug mill at the end of 2024 as planned. We further simplified our product offering and have enforced strict minimum order quantities to ensure optimal mill loading. At this point, we have completed the major cost reduction actions. We have reduced headcount, renegotiated raw materials and logistics contracts, and improved our production quality. We have targeted at least €150 per ton of residual cost reduction by year-end 2025. We are tracking significantly ahead of target in terms of cost savings and are several months ahead of schedule. I thank the South American team for their great performance in delivering this objective. The second key target was to deliver higher production capability in the region. We have progressed well on debottlenecking high-value equipment and are further integrating upstream production in Brazil with downstream capacity in our other regions. We have also made significant changes in our sales and operational planning. We are investing further in our systems and processes to enable better performance and information sharing across the organization. With better integration, we can offer we can offer more products with better lead times while generating higher returns for value add. We continue to see opportunity to deliver at least 100 kilotons of incremental annual pollution from the region. Globally, we see potential to drive better returns across the organization as we push the group towards true operational excellence. Let's turn to the current market environment on slide We start here with the U.S. OCTG market. Volatile crude prices have led to reduced drilling activity in oil plays over the past few months. However, there has been a partial offset due to the increase in gas drilling. Strong spot prices and a positive multiyear outlook for gas demand are driving higher levels of investment. Our domestic order intake has remained healthy, and our meals are well utilized at current staffing levels. Excluding one-off effect in January, imports increased sequentially in the second quarter following the change in U.S. trade policy. Recall that this change removed still import quotas in favor of a 25% tariff. The U.S. administration increased tariff rates to 50% The effect of this change has yet to influence the import data you see here. Market prices increased once again in the second quarter, driven by strong order books across the U.S. OCD industry and steel tariffs. The latest Pipelogix survey indicated an expectation of falling imports and price increases ahead. Let's move to slide 9 to discuss the U.S. trade situation in more detail. There is some detailed U.S. data to help you understand the impact of evolving trade policies. On the left, you see supply to the U.S. market over the past three years. While industry demand dropped in two sequential years, Domestic seamless shipments from Valourec and our piece were stable. Domestic manufacturers are the baseload of U.S. OCTG supply. Imports act as swing supply. On the right, we show the sources of imports. Wender spikes are more commoditized and, as such, come from low-cost countries. Seamless, right? tend to come from higher-cost producers offering higher-value products. Below, you can see the average import values of this product in 2024, which are now subject to a 50% price. You can also see last year's market prices compared to the latest market price from five projects. Clearly, prices have not yet risen enough to offset the cost increase related to this tariff. We do not compete directly with welded pipes in most of our work product applications. The effect of welded supply on our pricing are indirect and inconsistent. Meanwhile, the implication of this tariff on seamless imports should be clear. Every import will decrease Our prices will increase to support import economies. Let's move to the international OCTG market on slide 10. Demand, as measured by the recount, remains stable at a high level outside of the U.S. Onshore drilling activity increased in the latest month, driven by gains in some of our core markets in the Middle East and Africa. As we noted last quarter, there has been selective softness in global activity. Overall, though, our customers are forging ahead with multi-year plans to increase capacity. We have received several meaningful orders from an area of customers so far this year. This supports the expected improvement in our cubes volumes in the second half of 2025. Market prices, according to Hystat Energy, have been resilient in offshore markets like the North Sea, while drifting lower in the Middle East over the past few months. I again emphasize that our product mix is biased toward higher steel grade and more premium products than these index tracks. Therefore, our pricing remains robust. As we look ahead, we continue to see a wide range of opportunities across our market, including the structural shift towards increased gas and unconventional draining, and the resilient development of deep-water basins. I will now turn the call over to Sacha to discuss the second quarter financial results.