Tenaris S.A.(US:TS)2024-11-07 21:36Financial Data and Key Metrics Changes - Sales in Q3 2024 reached $2.9 billion, down 10% year-over-year and down 12% sequentially, primarily due to lower prices in the Americas and reduced demand in the USA, Mexico, and Saudi Arabia [4] - Average selling prices in the tubes operating segment decreased by 14% year-over-year and 2% sequentially [5] - EBITDA for the quarter was $688 million, up 6% sequentially, but would have declined 16% sequentially without an extraordinary provision in the previous quarter [5] - Free cash flow for the quarter was $373 million, with a net cash position of $4 billion at the end of the quarter [6] Business Line Data and Key Metrics Changes - The company successfully executed a program of plant stoppages and investments in maintenance and modernization of its industrial system [7] - Significant contracts were awarded in offshore projects, including a long-term agreement with ExxonMobil in the Guyana-Suriname Basin and various projects in Brazil and West Africa [8][9][10] Market Data and Key Metrics Changes - In the United States, drilling activity has stabilized, and OCTG imports have decreased, with a reduction in Korean import quotas expected to apply for 2025 [10] - The pipe logic index of US OCTG prices has started to rebound, with expectations for continued increases in the coming months [11] - Economic conditions in Argentina are improving, with plans to increase oil exports from Vaca Muerta [11][12] Company Strategy and Development Direction - The company is focused on expanding relationships with international oil companies and consolidating its position in complex offshore projects [8] - Investments in modernization and automation are expected to improve productivity and environmental performance [7] - The company anticipates a positive impact from the new US administration on the energy sector, particularly regarding gas exports and industrial activity [17][19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the benefits of recent investments and the potential for increased activity in North America [8][25] - The company expects a slight decrease in volumes and sales in Q4 2024, with a rebound anticipated in Q1 2025 [35][65] - Management highlighted the importance of upcoming projects in Argentina and Brazil, with significant contributions expected in 2025 [40][58] Other Important Information - The Board of Directors approved an interim dividend of $0.27 per share, a 35% increase compared to the previous year, and a share buyback program of $700 million [6][14] - The company is advancing a $200 million cost-saving project, with materialization expected in the second half of 2024 and into 2025 [57] Q&A Session Summary Question: Impact of the new US administration on business - Management noted that it is early to assess the changes but expects a reduction in uncertainty and potential positive impacts on the energy sector [17][18][21] Question: Share buyback outlook - The board will evaluate the situation in February before making decisions on future share buyback programs [23] Question: North America activity outlook - Management expects an increase in activity driven by customer budget resets and the return of small operators [25] Question: Clarification on revenue and volume expectations for Q4 and Q1 - Management clarified that Q4 volumes and sales are expected to be lower by around 7-8%, with a rebound of approximately 10% in Q1 2025 [65]