Tenaris S.A.(TS) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Sales in Q3 2022 reached almost $3 billion, up 70% year-over-year and 6% sequentially, driven by pricing gains that offset lower shipments [6] - EBITDA increased 17% sequentially to $946 million, with an EBITDA margin of around 32% [6] - Net income for the quarter was $606 million, slightly down sequentially due to non-operating items [7] - Free cash flow for the quarter was $113 million after capital expenditures of $129 million, with a net cash position of $700 million at the end of the quarter [7] Business Line Data and Key Metrics Changes - Average selling prices in the Tubes operating segment increased by 54% compared to Q3 2021 and 12% sequentially [6] - The company reported a strong performance in the deepwater market, with expectations for increased sales in upcoming quarters [15][28] Market Data and Key Metrics Changes - The company highlighted a strong position in the U.S. oil and gas industry, with a focus on meeting growing demand [12] - In the Middle East, there is an acceleration in oil and gas production capacity expansion plans, which Tenaris is well-positioned to support [14] Company Strategy and Development Direction - Tenaris aims to increase investment in energy to meet growing demand, emphasizing the need for oil and gas investments [10] - The company is focused on enhancing its competitiveness in various markets, including Canada and the Middle East, through new facilities and long-term agreements [13][14] - Tenaris is committed to reducing production bottlenecks and improving operational efficiency while addressing environmental impacts [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to build on strong financial results, despite geopolitical and macroeconomic risks [16] - The company is prepared to adapt to the outcomes of trade cases and is focused on increasing domestic production capacity in the U.S. [31][32] Other Important Information - The Board of Directors approved an interim dividend of $0.17 per share, a 30% increase compared to the previous year [7] - The company is investing in local facilities to support its operations and enhance service delivery [14] Q&A Session All Questions and Answers Question: Will the trade case impact imports? - Management confirmed a commitment to increase production in U.S. facilities and stated that the impact on margins would be marginal [20][21] Question: What is the Rig Direct sales percentage internationally? - Globally, Rig Direct sales account for approximately 60% of OCTG sales, with higher percentages in the U.S. [24][25] Question: How will the anti-dumping ruling affect Brazil strategy? - Management indicated a strong position in Brazil with a 50% share in casing and conductor contracts, and no immediate changes to strategy [41] Question: What is the outlook for working capital? - Working capital increased in Q3 due to higher inventory and receivables, with expectations for continued growth in sales [41][42] Question: What are the expectations for deepwater revenues? - Management did not disclose specific percentages but indicated that deepwater revenues are significant for overall business [42]