Tenaris S.A.(US:TS)2020-02-20 20:33Financial Data and Key Metrics Changes - In Q4 2019, sales reached $1.7 billion, down 17% year-over-year and 1% sequentially, primarily due to a slowdown in Argentina and lower prices in the Americas [6][10] - Quarterly EBITDA was $290 million, down 10% sequentially, with EBITDA margins decreasing to around 17% due to a drop in average selling prices and higher professional fees related to the IPSCO acquisition [6][10] - Cash flow from operations was $264 million, and the net cash position rose by $60 million to $990 million after an interim dividend payment of $153 million and capital expenditures of $80 million [7][12] Business Line Data and Key Metrics Changes - Average selling prices in the tubes operating segments declined by 3% compared to Q4 2018 and Q3 2019 [6][10] - The integration of IPSCO is expected to initially act as a drag on results due to high inventory and operational losses, but synergies are anticipated to improve profitability in the second half of 2020 [13][45] Market Data and Key Metrics Changes - In the U.S. market, despite a 10% drop in rig count, the company maintained sales levels due to a significant drop in imports, which fell to 35% of demand in Q4 2019 [25][26] - The company expects a low recovery in Argentina and sees potential growth in the Gulf of Mexico and Brazil in the second half of 2020 [78][79] Company Strategy and Development Direction - The company aims to strengthen its position in key markets through the integration of IPSCO and the expansion of its technology portfolio [14][16] - A focus on reducing environmental impact and improving operational efficiency is emphasized, with a commitment to sustainability [17][20] Management's Comments on Operating Environment and Future Outlook - Management noted that 2019 was more challenging than expected, with a prolonged adjustment in drilling activity in the U.S. and political uncertainty in Argentina affecting investment [9][10] - The company does not expect substantial changes in the market environment in 2020, but is cautious about the potential impact of the Coronavirus on the global economy and oil prices [20][21] Other Important Information - The Board proposed an annual dividend of $0.41 per share, which includes the interim dividend already paid [7] - The company completed significant investments to improve air quality and reduce its environmental footprint [17][19] Q&A Session Summary Question: North American numbers and rig count performance - Management explained that despite a reduction in rig count, they maintained their position due to a significant drop in imports and leveraging their manufacturing footprint [25][26] Question: IPSCO asset performance and Q1 drag - Management acknowledged that IPSCO's performance would negatively impact Q1 results but emphasized that synergies would gradually improve profitability [29][45] Question: Expectations for first quarter revenues - Management indicated that Q1 EBITDA margins would align with Q4 margins, affected by IPSCO's drag and other costs [38][41] Question: Pricing expectations in the first quarter - Management noted that pricing dynamics are complex, with a 5% reduction in Pipe Logix pricing not fully reflected in their pricing [43] Question: Cash flow expectations for 2020 - Management expects a positive contribution from working capital in 2020, estimating around $200 million [73][74] Question: Extraordinary expenses related to IPSCO - Management estimated extraordinary expenses for Q1 to be in the range of $15 million to $20 million [80] Question: Normalized margins for IPSCO - Management stated that they expect to establish leadership in the market and improve margins through synergies and operational efficiencies [67][69] Question: International market pricing - Management indicated that international pricing remains competitive, with some positive momentum in specific niches [71] Question: Joint venture in Russia - Management confirmed that the joint venture in Russia is progressing well, with a planned investment of around $70 million for 2020 [92][94]