Good day, and thank you for standing by. Welcome to the Q4 Tenaris SA Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna. Please go ahead. Thank you, Gigi, and welcome to Tenaris 2022 Fourth Quarter and Annual Results conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our chairman and CEO, Alicia Móndolo, our Chief Financial Officer, Guillermo Vogel, Vice Chairman and member of our board of directors, Gabriel Podskubka, President of our Eastern Hemisphere Operations, and Luca Zanotti, President of our U.S. operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. During the fourth quarter of 2022, sales reached $3.6 billion, up 76% compared with those of the corresponding quarter of the previous year, and 22% sequentially, mainly driven by further increases in shipments and realized prices. Our EBITDA for the quarter was up 34% sequentially, close to $1.3 billion, reflecting higher volumes, better pricing, and a good industrial performance with increased levels of activity and utilization of production capacity. Our EBITDA margin for the quarter rose above 35% despite higher raw material and energy costs. Average selling prices in our tubes operating segment increased 50% compared to the corresponding quarter of 2021, and 9% sequentially. During the quarter, cash flow from operation was $524 million. Our net cash position at the end of the year increased to $921 million, following the payment of an interim dividend of $201 million in November last year and capital expenditures of $108 million during the quarter. Now, I will ask Paolo to say a few words before we open the call to questions. Thank you, Giovanni. Good morning to all of you. We close 2022 with a quarterly record of net sales, EBITDA and net income to cap a year in which we were able to take advantage of favorable market condition, particularly in North America, to generate strong increases in sale and margin through the year. Taking the year as a whole, our sales grew 80% to $11.8 billion. Our EBITDA rose to $3.6 billion, and our net income rose to an annual record of $2.5 billion or 22% of net sales. With a solid balance sheet and good prospect for an increase in cash flow in the year ahead, we are proposing to raise our dividend for the 2022 year by 24% to $0.51 per share. These results were made possible through the efficient deployment of our global industrial system, where we produce a record volume of over 3.1 million tons of seamless pipe worldwide and sustain an ongoing ramp-up of our facility in the U.S. Despite the use of longer and more complex production and logistic routes, we were able to maintain high standard for safety, quality, and consumption of materials. During the year, we hired 6,500 new employees, and in our induction and training routines, we pay close attention to the importance of having a safety mindset with awareness and behavior suitable for the industrial environment of our shop floor. We empower all our employee to be proactive in taking preventive safety action at all times. With this action, we were able to reduce our Lost Time Injury Frequency Rate for the year by 10% to 0.9 per million man-hours worked. We are grateful to our people working in the plant for their contribution to this result. As we increase production and sales, our logistic operation have reached a substantial magnitude. To give you an idea of the effort involved, between intermediate transportation and delivery to customer, we moved around 10 million tons of material all around the world. We are strengthening the reliability of our supply chain through the digitalization of our material flows and made good progress over the year in this respect. We increased the deployment of our Rig Direct services. We are now serving close to 600 rigs worldwide. Our unique service platform allow us to integrate our operation more closely with our customer and provide digital and technical services that can further differentiate us from our competitor. 2022 marked a turning point in our deployment in the United States. The country accounted for more than 40% of our total sales, most of which are now produced locally. We brought the Bay City mill to full production capacity and ramped up production in the rest of our U.S. industrial system, including the restart of production of weather pipes and of heat treatment and finishing at our Baytown and Koppel facilities. We hired more than 1,500 new employees during the year in the U.S., and now employ 3,600 people in the country. With the $460 million, we will avoid spending on the Benteler acquisition, we will reorient our investment plan in the United States to achieve, through organic growth, the objective of strengthening our local industrial and logistics system that we had planned with the acquisition. As we look ahead, we view that the tightness in oil market and high demand for LNG will support oil and gas price cash flows and investment in the oil and gas sector. We expect that the number of oil and gas well drilled around the world in 2023 will increase, and this will drive global OCTG demand to exceed 16 million tons and reach its highest level since 2004. This environment will support further sales growth in 2023, when we expect an increase in sales for the offshore developments in the Middle East and in the pipeline infrastructure development. Our achievement over the past year that will support this growth include our multi-year agreement with ExxonMobil to supply their offshore operation in Guyana, our agreement with Petrobras to supply their pre-salt operation, the renewal of our long-term worldwide agreement with Eni, the renewal of our long-term agreement with Qatargas, the consolidation of our long-term agreement with ADNOC. We also extended our long-term agreement with YPF and with Pecom. Pipelines will drive a relevant increase in our sales of welded pipes. In Argentina, we are supplying a number of pipelines that will stimulate further investment in the Vaca Muerta shales by expanding capacity to transport the gas and liquid to domestic and export market. We will deliver a major offshore pipeline for the North Field Expansion in Qatar. We are seeing increased demand for offshore pipelines to bring gas to Europe. Our cash flow in 2023 will benefit from the stabilization of our working capital requirement. Our CapEx will increase to around $650 million. A relevant part of this CapEx will be directed to project that will contribute to our 2030 target for reducing the carbon emission intensity of our operation. In addition to our wind farm in Argentina, we will make investment which will contribute to improving energy efficiency in Italy and Argentina. Over the past year, Tenaris has made good progress on many fronts and produced record financial results. We've been able to achieve this only thanks to the confidence our customer has placed on us and the constant effort and outstanding performance of our diverse and united team all around the world in a volatile and fast moving environment. We are now open for any questions you may have. Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Marc Bianchi from Cowen. Hi. Thank you. I'm curious about the margin progression from here. It seems like there's some crosscurrents. The North America pricing on the leading edge is starting to roll over. Raw materials are increasing. I understand that your business would lag that. Maybe that's what's kind of keeping things in good shape here in the first half. I'm curious how that looks as you go to the second half, and then is the international improvement enough to perhaps offset that? Thank you, Marc. As far as, let's say, the overall environment that you can anticipate with a vision to 2023, first of all, I think that there is tightness in the oil and gas market, and there are reason to justify expectation of a price of oil that may stay stable or higher or what it is today. The economic expectation, the perspective of the economy with some recovery in China is probably more positive today than a few months ago. The U.S. production, my view will remain above 12 million barrel a day. In some moments also, the strategic reserves will have to start to build back its position. On the side of demand, there could be some traction in this area. The reduction of the exports from Russia will wait into this. I think there is a reasonable expectation of sustained price of oil. In the case of gas also, beyond the short term issue, like the sum closure of the LNG plant in the U.S. The gas price in the U.S. also, in my view, will have some support for the project that will come in gradually over the year. Also indicating different gas, I think there are reasonable expectation of, let's say, some recovery from the present level and a reasonable price of gas. In these conditions, if you look at the cash flow of the oil companies, we can expect an increase in investment, an increase in investment in CapEx, drilling in North America. This should be supporting increased demand, as we were saying in our press release, increased demand of OCTG worldwide, and particularly in North America. The level of drilled and completed wells is very low. Probably is at the minimum in the last three years in term of relation with the wells drilled. This also to some extent will contribute in supporting drilling activity in the U.S. On the side of the supply, as we're saying, prices of some of the factor of the costs are increasing and the hot rolled coils start to recover. Iron ore went up since the last quarter. There will be some support. These costs are only partially affecting us, but are affecting the production, the cost efficiency of our competitor. In my view, the level of pricing may have adjusted slightly now, but in the end, we have no reason to think that the price of pipes, especially for complex heat-treated application, seamless in the United States should adjust substantially. There will be a relatively tight equilibrium for a while if the drilling activity increase, and we are expecting over the long run. Okay, that's helpful, Paolo. I guess my other question relates to Benteler, and you alluded to this in your commentary. I think there was gonna be some pretty substantial CapEx in maybe 2024 and 2025 for a steel shop. With that now not happening, what should we be looking for spending from you for your North America operations to maybe replace what was going to come from Benteler? Well, I think we need to adjust and redefine our strategy in North America. We need to strengthen our industrial system, debottleneck some of the value-added process, and also increase our capacity of welded product, of differentiated welded product. We will direct our investment in this direction. There will be an increase overall, as I comment on the overall investment during 2023 compared worldwide to the level of 2022. Part of this investment will be focused on the debottlenecking and strengthening our production and logistic capability in the United States. Okay. Thank you for the answers. I'll turn it back. Thank you. One moment for our next question. Our next question comes from the line of Alessandro Pozzi from Mediobanca. Hi there. Thank you for taking my questions. I think in the outlook, you mentioned a further increase in revenues and EBITDA with stable margins. I was wondering if you can maybe give us a bit of a view of where sales going up maybe in Q1. I think in your opening remarks, you mentioned a number of pipeline projects. I was wondering if there is maybe some lumpiness in the volumes throughout the year, potentially big pipeline projects coming in in any specific quarters. I think in the Middle East, if you can give us a view of where sales might go in the Middle East throughout the year. Thank you, Alessandro. In fact, as you're saying, we expect in the first quarter of 2023, further increase in sales in the range of 10% with relatively stable margin. I mean, for the rest of the year, this is, there are uncertainty on many issues. You know, there is volatility in the world on many aspects. We will have also to see if the assumption that I was mentioning before on the level of economic activity in the U.S., in the COVID of China also are going, and where the price of oil, if it remains stable or even higher or what it is. This will have an influence in the second part of the year. For the first part of the year, this is what basically we can anticipate. When we go to the pipelines, I would divide in two big different area. One is the development of infrastructure for the gas in South America, development of Vaca Muerta, integration to some extent of the infrastructure network that is taking place now in Argentina for oil and gas. These are mainly welded product, where the product will increase in its share on our sales overall. For the pipeline in the offshore and Middle East, I will ask Gabriel to give an outline of what we can expect in 2023. Sure. Thank you, Paolo. Good morning, Alessandro. Indeed, the business in Middle East, we expect to continue to grow. The drilling activity is growing steadily. You know that the most relevant NOCs have announced expansion of capacity, and they are following through, and we are seeing them pursuing a multi-year investment cycles. Tenaris is well positioned to capitalize on that. For example, in the UAE last month, we achieved a record of delivering OCTG to 65 rigs of ADNOC, following our Rig Direct model. This is a new level of activity that we are seeing in the Emirates after many months of ramping up the operation. We are also there moving spool full speed ahead with the construction of the state-of-the-art threading facility. In Qatar, we are also consistently supporting drilling needs of Qatargas as they want to expand their gas production capacity. This month, going back to your point of pipelines, we are starting the first delivery of this massive North Field pipeline order that we have, and will probably take the whole year, but this is happening this month, the first shipment. We will expect sales of Qatar to ramp up as well strongly during the year. Aguarague is also growing steadily in the drilling activity. We have booked several orders in all business segments in the quarter with a strong backlog already going well into 2024. Overall, we expect a growing trajectory in Middle East that we have seen already in the second half of 2022, but this will strongly accelerate, especially in the first half of 2023 and continue into the second half of the year. Touching on offshore very quickly, this is a segment that is also very dynamic, demanding pipelines and OCTG. Recounting offshore already worldwide has recovered to pre-pandemic levels, and we expect the number of FIDs in 2023 to be the best in the last 10 years. This is something that will support new projects. This is something that we are seeing in several basins. We talked about the Middle East. We see North Sea very active. There are projects being developed looking for additional capacity to be connected to Europe. We see also Sub-Saharan Africa moving very, very strongly. Angola, Ivory Coast are two particular areas where we're booking projects in OCTG and in line pipe as well. Also the Mediterranean, North Africa, the Black Sea are areas where new projects are being sanctioned and some others are in the making, but that also will give some important prospects of pipeline activity as well. Overall, we see offshore increasing into 2023 and probably beyond that. This will be a growing segment in Tenaris contributing to a richer mix of the company into 2023 and beyond. Thank you. Thank you. Just going back to the line pipes, if you just look at the big projects that you have already been awarded, what is the volumes that you are planning to ship during 2023 for those big line pipe projects already in the backlog? In, let me tell you, in Argentina, in 2023, we should be delivering in the range of 200 and, obviously 220, 250,000 tons. Only the North Field Expansion is a project in the range of 200,000 tons of weld problem. All of these are basically welded pipelines. There is a sizable number of projects in the international area that are more seamless pipeline for offshore operation like the one that will feed gas for Europe from different sources. Okay, that's very clear. Thank you. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question comes from the line of Stephen Gengaro from Stifel. Thanks, good morning, everybody. Two things for me. I wanted to follow up, first on I think a question Marc asked to start off the Q&A. When we think about the international and offshore markets strengthening throughout the year into 2024, is that accretive to the current EBITDA margin level? Well, there are some project that has been acquired almost more than 6 months or 1 year ago, in which we still have relatively limited margin because of the price and the cost increase that we saw during this year. The new project are acquired a margin that are, let's say, substantially, I would say, positive margin and relatively high margin. The mix, you have to keep in mind, is also considering some of the products that has been acquired some times ago. One example is North Field Expansion is a big project that has a limited margin. Okay. And is that... Are those are clearly contemplated in your expectation that margins are, you know, around these levels over the next couple quarters? Yes, yes. We are considering this, as I were mentioning, for the next quarter. We expect to have margin in this level. Also, I think this will be sustainable in the first half. Now, then volatility is there and then we have to take this into consideration. The consideration that I made at the beginning are supporting, let's say, a relatively good level of margin for 2023. Great. Thank you. The other question I had for you was when we think about the balance sheet and the cash generation, I mean, even with your $650 million in CapEx, you know, you're gonna generate, it looks like, a significant free cash flow this year in 2023. Right. I mean, I don't know if it's give or take $2 billion, I think. You bumped the dividend somewhat. How do you think about accelerating the amount of cash coming back to investors? I mean, that's a big theme in oil services these days, is acceleration of capital returns. Investors, you know, clearly want that. You don't have the acquisition now that you're spending $400+ million on. How do we think about your willingness to even increase the amount of capital coming back to shareholders given the free cash flow? Well, you know, the, what we will be proposing, you know, in term of dividend, we tend to follow established path and keeping in mind the cash flow generation, the results, the long-term view for the company. We will stick to this policy. It's also true that we are increasing dividend by 24% this year, even if the cash flow, has been influenced or affected by strong increase in the working capital this year. We will take this issue in consideration next year, and we will propose a dividend according to the policy we are following also in the past. The result is taken into consideration, the results and the cash flow generation. Okay, great. Thank you for the details. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our next question comes from the line of Frank McGann from Bank of America. Okay. Thank you very much. A couple questions, if I might. The first one would be just in terms of the outlook. You seem pretty confident in the first quarter. You have obviously less visibility for the later quarters. The second quarter, third quarter, you know, as you're looking at them, do you have some indication of the level of strength that you have? And related to that, as you're rolling things forward now, are you seeing the pricing at which you're being able to roll over contracts starting to go down in the U.S.? Yeah. Yeah, thank you, Frank. As I was saying, we see that 2023, the volume, in term of volume, in term of invoicing, we will have an year higher than 2022, as we expressed in the opening remark in the press release. I also made a comment on pricing. I mean, the driver that, in my view, should support pricing in the different scenario in the U.S. and internationally. It's clear that for the second part of the year, there are many factors that are creating uncertainty on the dynamic of this. Part of this is also related to import into the U.S. On the dynamic of pricing for U.S., I will ask Luca to give us his view on the perception for next quarter and for the year. Thank you. Hi, Frank. Maybe you are not in mute. Frank, there is some noise coming from your side. Maybe you needs to mute for- Okay, apologies. I'll mute. All right. Thank you. Thank you, Frank. Good morning. Look, I need to go back to what Paolo expressed at the beginning. When you look at the different factors, you see that the market, absent to a decrease in rig activity, should remain pretty balanced. There are factors, like Paolo was mentioning before, like some imports that we're seeing coming in lately. We do believe that these are gonna be dissipating over time because if you look at the origins of these imports and the supply chain that is behind it, you really see that maybe they are not that sustainable going forward. Again, absent a decrease, a significant decrease in rig activity, which at this stage, we don't see, you look at other factors like the DUCs. The DUCs are at the minimum. If you take XTO, for example, big operator in Permian, they are saying that they're gonna rebuild the inventory. You start looking at the domestic production. When you see a domestic production and you split it seamless and ERW, you see that the seamless is capped. Maybe there can be some capacity creeping here and there, but there's not much that can go, we can go. The seamless is limited and constrained by labor shortages. Overall, I believe that again, absent a decrease in rig activity that we don't see, there are reason to believe that the market is gonna be balanced going into 2023. Obviously, the back half, with some more, let's say, volatility, then we need to contemplate going forward. We're gonna have time to do that. Overall, I stick to what Paolo said at the beginning. Okay. Thank you. It's really helpful. If I could follow up just with a question on the pipeline activity. The pipelines in Argentina that you mentioned, the gas pipeline has a number of phases. The first phase, obviously seems to be the one that you're talking about, the 200,000-250,000 tons this year. Will phases 2 and then the third or the, you know, the final big extension, when would you expect to see volumes from that? Secondly, in terms of the oil pipeline, activity in Argentina, the expansions of the main pipeline that goes to the Atlantic Coast, are you involved in that at all? Is it very significant? I know there's some early discussions about a major additional pipeline that could be built, 260,000 barrels a day, over the next 3-4 years. Is that something that looks like it could happen, and when might that affect your volumes? Well, thank you, Frank. You know, for... I would say that for sure Argentina will develop a substantial infrastructure to bring gas and oil to the coast, but this will happen over the years. Now, the timing will be affected by the political volatility and the ability to finance some of these pipelines. It is possible that the second stage of the pipeline from Vaca Muerta to Buenos Aires would be started within 2023, it's possible, but will require financing for the entire project. This is not sure. I mean, there is movement on this side, but it's not sure that the financing will be organized within the coming few months. For sure the project that makes sense considering the declination of the gas supply from Bolivia. This is one project. There are project of bringing oil and gas to the coast. These are large project. YPF is, let's say, a major player in this. Also, this project made a lot of sense, but they will need financing and will not be easy in, in electoral year with a situation in which Argentina will be facing difficult economic environment. The financing of this project is not easy. Some of the projects, like Oldelval, there is also an oil pipeline, are underway, and we are supplying it. Within this year, we expect to supply 60,000 tons for it. These are things that are moving on, like the first stage of the pipeline from Neuquén to Buenos Aires. Some is in production and will be delivered during 2023, the extension and the second stage and the other major pipeline may be delayed in 2024, depending on financial condition of the country. Okay, good. Thank you very much. Thank you. One moment for our next question. Our next question comes from the line of Luke Lemoine from Piper Sandler. Hey, good morning. Paolo, just wanted to clarify the guidance a little bit. 1Q was pretty clear with revenues up 10% and stable margins from 4Q levels. It sounds like the 2Q visibility is good, and EBITDA margins should remain, you know, near the current level. Wanted to see if you could kinda give us a revenue outlook from 1Q for 2Q. On second half, appreciate the uncertainty, but as you see it now, it seems like maybe margins touched down a bit. Were you still expecting these to remain above 30% in the second half? Well, we may guide with some more precise indication for the first quarter. I was saying we can also have a relatively good idea of what is happening in the second Q. In line with what we are saying, the margin should remain pretty stable. In the second part of the year, I mean, it's difficult to make a clear and sound prediction. What we can say is to look at the fundamentals. The fundamentals is that, in my view, price of oil will remain stable, gas also will have a positive evolution from where it is now. Drilling and the level of the wells and that will be drilled will increase compared to 2022. The supply and demand in the pipe business, in my view, will be differentiated between the heat-treated, more complex product, or, let's say, value-added product that will remain pretty tight. Maybe there could be some more soft market for non-heat treated low-end product. In this environment, you know, also the cost we are paying now will get into our profit and loss through the third and the fourth Q. We will have some pressure on margin from this, but still, I'm pretty positive on it. Okay. All right. Thank you very much. Thank you. One moment for our next question. Our next question comes from the line of Alessandro Pozzi from Mediobanca. Hi there. Thank you. I have just a follow-up on CapEx. If you can give us maybe the breakdown of where you're spending CapEx, and also, if you can talk about your ESG initiatives. Because as you're probably aware, I mean, especially on this side of the pond, the ESG angle is very felt and strong. At the same time, I guess you are increasing sales and therefore CO2 emissions will probably go up. I was wondering, in terms of carbon intensity, what is the trend? Maybe this year, over the next 2 years, how much you can how fast you can decarbonize your industrial footprint? Thank you for this. Thank you, Alessandro. If I should say where our CapEx is going, I will stress, first of all, this year, in 2023, we will complete our wind farm in Argentina and some other project for decarbonization. This will require an investment in the range of $200+ million. We will invest in our facility to also reduce carbon by improving the process. A new heat treatment in our facility in Italy is a case in investment in the steel shop in Italy, in Argentina. Investment also in management of scrap to support the decarbonization in the different mill. This will represent also an another important part of our investment, and then strengthening of industrial operation in the U.S. In the U.S., we need, as I was saying, to debottleneck some of the value-added process in which we will need additional capacity to expand through organic growth, our ability to serve our client in this. This will be basically the structure of it. The decarbonization will take 35%-40% of our investment. We'll have, let's say, at least contributing to our decarbonization. In the trend of decarbonization, you know, we started with 1.43 tons per tons of steel of pipes produced in 2018. This is accounted with the Greenhouse Gas Methodology in Scope 1, 2, and 3, on the 3 scope. Today, we are in the range of 1.17. We did a very good advance in our decarbonization. In 2023, we will feel the increase in welded product. It implies that we are acquiring steel from third party, and this steel, in some case, has, let's say, higher content CO2 emission. The Scope 3 will reflect this, but we plan to compensate with reduction in Scope 1 and in Scope 2 of our methods. We are advancing. As you know, our target is 0.98 tons per ton of pipe in 2030. We have done a very big advance. One of the investments that will not be strictly related to decarbonization, but very much related to ESG is the investment in the exhausting fumes of our couple steel shop. Is a major investment that will transform the steel shop and reduce emission, particular emission and. We will also increase capacity of steel in the same time. Today, we are limited exactly by the capacity of managing the fumes from the steel. Okay. That was very clear. Thank you very much. Thank you. One moment for our next question. Our next question comes from the line of Luigi De Bellis from Equita. Yes, good afternoon to... Thank you to taking my question. I have one on the pricing trend. The two prices in U.S. are down now close] to 5% from the peak level. You are seeing a solid outlook for demand supply, how much do you expect prices to evolve in the coming months or quarters for the market? What do you expect for Tenaris average prices? Considering also the mix effect and how the duties applied now on Mexico, Argentina are affecting this dynamic and if could change during the year. Thank you. Thank you, Luigi. On the first point is, evolution of prices in the U.S. As I was saying before, I think there are two different area of price. One is the area of the value-added product, seamless, heat-treated material with semi-premium or premium thread. This is a market in which the situation will remain relatively tight. I don't expect, in an environment in which the number of wells drilled increase, I don't expect, let's say, to softening of these price. There could be softening of price in the low-end product in the United States, welded in particular. Let's say if the price of oil support and the level of wells drill and drilling continue, this will basically depend from import, from import level. Remember import is also penalized by the 232 in many cases. Even in this case, I think the softening should be contained. Cost impact, I mean, the increase in hot rolled coils, iron ore, I mean, contribute to, in my view, containing import. Now, the level of stock in the ground is still within, let's say, a normal ratio. We don't see no stock overhang on the ground. In this condition, that's the reason that are suggesting that we there shouldn't be softening beyond a certain level. By the way, our system is less exposed to the low-end product in the United States. To some extent, in our accounting, I think we are relatively defended from softening of prices. Thank you. Thank you. I would now like to turn the conference back to Giovanni Sardagna for closing remarks. Thank you, Gigi. Well, if there are no other question, I would like to thank everybody who joined us for the quarterly conference call, and we hope to see you soon. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.