Tenaris S.A.(TS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, sales reached $2.8 billion, down 17% year-over-year and 2% sequentially, primarily due to lower volumes and average selling prices [4] - EBITDA for the quarter increased 6% sequentially to$ 726 million, with an EBITDA margin of 25.5% [4] - Net cash position decreased to $3.6 billion after dividend payments and share buybacks [6][11] - Free cash flow amounted to$ 2.2 billion, all distributed to shareholders through dividends and buybacks [11] Business Line Data and Key Metrics Changes - Average selling prices in the tubes operating segment decreased by 7% year-over-year and 1% sequentially [5] - EBITDA, excluding one-off effects, declined 4% sequentially to $659 million with a margin of 23% [5] Market Data and Key Metrics Changes - In North America, consolidation among major shale operators continued, with Tenaris strengthening service differentiation [12] - Sales in Mexico were affected by a steep decline in drilling activity due to Pemex's financial difficulties [16] - In Argentina, drilling activity in Vaca Muerta is ramping up, with pipeline investments expected to increase [17] Company Strategy and Development Direction - Tenaris aims to improve industrial efficiency and reduce environmental footprint through various investments [9] - The company is focusing on expanding its capabilities in the energy sector, particularly in Argentina and North America [12][17] - Investments include new electrical furnaces and wind farms to enhance renewable energy usage [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the energy sector's development in Argentina, anticipating increased rig activity and pipeline construction [33] - The company is preparing for potential changes in U.S. tariffs and their impact on pricing and market dynamics [46][60] - Management acknowledged the uncertainty in the geopolitical landscape and its potential effects on the market [20][21] Other Important Information - The Board proposed an annual dividend of$ 0.83 per share, a 38% increase from the previous year [6][11] - A tragic accident at the main plant in Argentina resulted in the loss of two employees, prompting a renewed focus on safety [9] Q&A Session Summary Question: Impact of U.S. tariffs on OCTG pricing and import trends - Management expects the introduction of 25% tariffs to gradually increase prices in the U.S. market, supporting domestic industry [26][27] Question: Growth prospects in Argentina's energy sector - Management is positive about increased investment and rig activity in Vaca Muerta, with expectations of a significant rise in operational rigs [33][34] Question: Sales and margins outlook for Q1 2025 - Management anticipates margins in Q1 2025 to be in line with Q4 2024, influenced by reduced volumes to Europe and price increases in the U.S. [44][46] Question: Share buyback program and potential acquisitions - The decision on the new buyback program will be made by the Board in April, considering market conditions and investment opportunities [50][60] Question: Activity recovery in Mexico - Management noted an unprecedented reduction in Pemex's production and rig count, expecting a policy reset in the second half of 2025 [63][66] Question: Supply-demand dynamics in North America - Management indicated a balanced supply-demand situation, with reduced imports and stable inventory levels [75][80] Question: Positioning in Saudi Arabia and the Middle East - Management highlighted stable drilling activity in the Middle East, particularly in gas, while noting uneven dynamics in oil production [88][92]