Tenaris SA Q4 FY2024 earnings call

• 2024 was a good year with solid financial results, higher returns for shareholders, and investments in improving industrial efficiency and reducing environmental footprint.
• An accident in Argentina at the end of 2024, resulting in the loss of two employees, was a major setback, with a focus on reinforcing safety measures.
• In North America, strengthened service differentiation with shale operators, awarded contracts by ExxonMobil, Shell, and BP.
• In the Middle East, won a CCS pipeline tender in Saudi Arabia, extended agreements with ADNOC, and premium trading facility certified as an Industry 4.0 digital leader.
• In Mexico, sales affected by Pemex's financial difficulties, with reduced credit exposure.
• In Argentina, ramping up drilling activity, supplying oil pipeline to Puerto Rosales, and investing in renewable energy and automation.
• Investments in industrial systems for efficiency, decarbonization, and automation, including new furnaces and modernization projects.

During the fourth quarter of 2024, sales reached $2.8 billion, down 17% compared to the corresponding quarter of the previous year and 2% sequentially, mainly driven by lower volumes and lower average selling prices. EBITDA for the quarter was up 6% sequentially to $726 million, with an EBITDA margin of 25.5%, mainly reflecting the partial reversal of a provision for ongoing litigation. Excluding this one-off effect, EBITDA declined 4% sequentially to $659 million with a margin of 23%. Average selling prices in the tubes operating segment decreased by 7% compared to the corresponding quarter of the previous year and 1% sequentially. Cash flow from operations was $492 million. Net cash position at the end of the quarter was $3.6 billion following the payment of an interim dividend, share buybacks, and capital expenditures. For the full year 2024, net sales were $12.5 billion, EBITDA was $3.1 billion, net income was $2.1 billion, and free cash flow amounted to $2.2 billion.

• Expect Q1 2025 margin roughly in line with Q4 2024, influenced by lower volume in Europe and positive impact of price and volume in some regions.
• Second half 2025 expected margin improvement, influenced by tariff decisions in March.
• Buyback program ongoing, Board to decide new program after the May 2025 Annual General Shareholders' Meeting, considering market dynamics and investment opportunities.

• Geopolitical uncertainties, including changes in tariffs and trade policies, could alter the market environment.
• Accident in Argentina as a major setback, emphasizing the need to reinforce safety measures.
• Uncertainty in Mexico's oil and gas sector due to Pemex's financial difficulties and production declines.

Q: On tariffs, if 25% tariffs on imported steel tubulars are implemented by the US Commerce Department, would you still expect Section 232 quotas to remain in place?

A: Paolo Rocca discusses uncharted territories, stating the impact on pricing and imports, and that the US administration will monitor imports to support domestic industry.

Q: Growth prospects in Argentina for OCTG and services?

A: Paolo talks about ramping up rigs in Vaca Muerta, pipeline construction, and expanding fracking capabilities to meet increased oil evacuation needs.

Q: Sales and margins evolution in Q1 2025?

A: Paolo mentions Q1 margin in line with Q4, influenced by lower volume in Europe and positive impact of price and volume in some regions.

Q: Buyback program and potential acquisitions?

A: Paolo discusses Board decision on buyback, considering market dynamics and investment opportunities, with the Board to decide new program after May AGM.

Q: Supply-demand in North America?

A: Luca Zanotti talks about import reduction, inventory levels returning to normal, and demand from different operators, including major independents and smaller players in gas-related activities.

Q: Impact of US tariffs on production cost and Korean imports?

A: Paolo and Luca discuss steel supply sources, with comfort in integrated supply chains, and the US administration's monitoring to prevent flooding of the market by foreign imports.

Q: Impact of Pipe Logix price rises outside US?

A: Paolo explains the feed-through time frame of Pipe Logix increases into contracts, with a delay of one to two quarters.

Q: US market disaggregation into seamless and welded?

A: Paolo and Luca discuss seamless sales dominance in the US, welded capacity to ramp up if needed, and dependence on hot-rolled coil prices.