Tenaris SA Q3 FY2024 earnings call

• Carried out extensive plant stoppages and completed investment in maintenance and modernization of industrial systems, including steelmaking, heating furnaces, and automation. • Expanded relationships with international oil companies and secured awards in offshore projects like Guyana-Suriname Basin, Brazil, West Africa. • In the US, OCTG imports are coming down, prices are rebounding. In Canada, trade actions limited Chinese imports and RIG Direct Service Program is successful. • In Argentina, economic conditions improving with oil pipeline contract awarded. In Mexico, Pemex delayed payments but free cash flow remains positive. • Board approved interim dividend increase of 35% and $700 million share buyback program.

In the third quarter of 2024, Tenaris' sales reached $2.9 billion, a 10% decrease compared to the previous year and a 12% sequential decline. The tubes operating segment saw average selling prices decrease 14% y-o-y and 2% sequentially. EBITDA for the quarter was $688 million, up 6% sequentially. Operating cash flow was $552 million, with capital expenditure of $179 million, resulting in free cash flow of $373 million. The net cash position at the end of the quarter was $4 billion. The EBITDA margin was 23.6%, marginally lower than the previous quarter on a comparable basis.

• Q4 volume expected to be down single digits compared to Q3. • Q1 2025 volume expected to rebound by around 10%. • EBITDA margin to remain inline with Q3 levels. • Free cash flow remains strongly positive, with $1.9 billion in nine months.

• Pemex in Mexico further delayed payments. • Uncertainty around new US administration's trade policies, tariffs, and M&A regulations. • Softening oil drilling activity in the Middle East affecting sales.

Q: What is the impact of the new US administration on Tenaris' business, including potential trade policies and M&A opportunities?

A: The new administration is perceived as potentially positive for the energy sector, with expectations of permitting speed-up and repositioning of supply chains away from China. Uncertainty remains on antitrust and M&A policies.

Q: Could you provide insights on the share buyback beyond the announced $700 million until March?

A: The board will analyze the situation in February and consider share buyback policy at that time; no anticipation of future plans today.

Q: What is the outlook for North America activities, especially in the US?

A: Activity in North America is expected to increase in Q1 2025, driven by customer budget resets, contract roll-overs, and returning legacy operators. Prices are also expected to increase.

Q: How do potential tariff increases affect Tenaris' US operations?

A: Tenaris has significant production capacity in the US and can serve the market from within, though policy needs to be clarified.

Q: What is the progress on the $200 million cost-saving project and the impact of South American projects?

A: The cost-saving project is advancing, with over one-third materializing in H2 2024 and the rest in H1 2025. South American projects like Raia pipeline in Brazil and Buzios 9 in Brazil will positively impact revenues, with shipments ongoing and to be completed in 2025.