Good day, and thank you for standing by. Welcome to Q1 2024 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 2024 First Quarter 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 Mondolo, our Chief Financial Officer, Gabriel Podskubka, our Chief Operating Officer, and Luca Zanotti, our President of our U.S. operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on quarterly results. Our first quarter sales reached $3.4 billion, down 17% year-on-year, and flat sequentially, as an increase in volume and the full consolidation of the coating business acquired in the previous quarter offset the impact of lower selling prices in the Americas. Average selling prices in our tubes operating segment decreased 15% compared to the corresponding quarter of 2023 and 6% sequentially. Our EBITDA for the quarter was up 1% sequentially to $987 million. Our EBITDA margin remained flat at around 29%, as the reduction in average selling prices was offset by a strong operating performance, a positive contribution for our newly acquired coating business, and a $25 million gain from legal claims resolutions in Mexico and Brazil. With operating cash flow of $887 million and capital expenditures of $172 million, our free cash flow for the quarter was $715 million. Following share buybacks of $311 million during the quarter, our net cash position increased to $3.9 billion, up from $3.4 billion at the end of last year. Now, I will ask Paolo to say a few words before we move the call to questions. Thank you, Giovanni, and good morning to all of you. We have had a good start to the year, maintaining our sales and EBITDA at the same level as in the fourth quarter of last year, despite the unfavorable pricing environment that is affecting our sales in the Americas. This reflects the strength of our global positioning as well as a solid performance across our business lines. In the coming quarters, however, our results will be affected by a soft U.S. rig count, affected by low natural gas prices, by an increase in the OCTG imports, and an extended decline in prices. Our free cash flow will remain solid. During the quarter, our newly acquired TenarisShawcor Pipe Coating operations, where we successfully completed an exceptionally large project with concrete weight coating for a pipeline in Mexico, made a positive contribution to our sales and EBITDA. TenarisShawcor also awarded a $108 million project to supply wet insulation and anti-corrosive coating for the offshore pipeline for the ExxonMobil Whiptail development in Guyana. This project will be supplied during 2025. Around the world, offshore projects are moving forward, and with our extended reach, we are providing a wide range of integral solutions for this complex development. The Middle East is another area which has seen growing activity. In Saudi Arabia, we are benefiting from the increase in demand for their gas development program and the consolidation of our GPC large diameter welded pipe operation. In the United Arab Emirates, with our new premium trading facility in full operation, we have been awarded a two year extension of our Rig Direct contract, while our long-term agreement with QatarEnergy LNG has also been extended for three years to cover the drilling in the North Field to supply the related expansion program. In Canada, we have been successfully repositioning our operation and extending our Rig Direct program following the Canadian government decision to impose normal value on Chinese OCTG imports and the investment we made in our Sault Ste. Marie mill. As the LNG Canada and other LNG projects move forward, operators are increasing their operation in the Montney, and we recently awarded a long-term Rig Direct contract to supply a major operator there. We participated in the CERA Week Conference last month, where we were able to share views on the energy transition and the prospect of the oil and gas market over the long term. What came out from the discussion was the sense that a more pragmatic approach to the complexities of the transition is required, with a focus on reducing emissions using all means available across the energy industry and its value chain. At the same time, due to the enormous cost and complexity of the transition, oil and gas will continue to be required for many years to support the growing demand for secure, affordable energy, particularly from developing countries, and to support technological development such as artificial intelligence. This year, in the third quarter, when we have a seasonal slowdown in demand, we will implement a major investment and maintenance program that has been postponed over the last two years of intensive operation. This will involve stoppages in our five steel shops and our main seamless rolling mills. In Argentina, we will install an electric arc furnace that will be fed by a Consteel scrap reheating furnace and by our DRI plant. Once we complete our second wind farm in 2025, the new furnace will use 100% renewable energy to produce steel with a minimal level of carbon emission. In the U.S., we will upgrade our copper steel shop, installing a new baghouse system to reduce emissions. In several of our facilities, we are enhancing our capabilities to produce high alloy chrome products as demand for these high-value products is growing. In Mexico, we will have the first major maintenance of our Tamsa medium diameter rolling mill in four years, in addition to a maintenance shutdown at our [CSD shop]. This investment will be executed within our previous CapEx guidance, but they will limit, to some extent, our capacity during the second half. We are now ready for any question you may have. 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 Arun Jayaram from JP Morgan Securities LLC. Good morning, Paolo and team. Gentlemen, I wanted to get your thoughts on trends in U.S. pricing. You know, we received the latest Pipe Logix number, which did suggest continued declines in the 3%-3.5% range. So maybe I was wondering if you could give us a sense of your average selling price in 1Q, you know, trended where leading edge prices is per the Pipe Logix index, and how does this impact your thoughts on 2Q in the back half of the year? Well, thank you, Arun, for your question. You are right in looking at the decline in the Pipe Logix as a relevant factor. This is mainly due to increased imports in the United States, some soft view on the rig count, and the volume. And this, to some extent, is being affecting. But I would ask Luca to give us the view on the perspective of this for the next quarter and for the first the second half of 2024. Okay. Yes, thank you, Paolo. Morning, Arun. Yes, as just picking up, what, Paolo was saying before, I believe that, in this Q1, first of all, looking at the spot price in one, single month like April, it really is not representative. We see, Pipe Logix's readings that were better maybe in, in the past. And so I believe that we need a more, long-term approach, to this, to these readings. But getting back to what Paolo was, was saying, here, in the first quarter, what we saw is, an industry that was expecting a little bit higher activity, getting into the first quarter, second quarter of 2024. And as a consequence, domestic and especially imports, increased. So what happened is that distributors, went out, started buying, mainly, from, Korea that had a reset of quotas, Taiwan, Austria, and Thailand. And so the combination of slightly softer expectations on demand and higher imports led to this pressure on prices. And this will delay the stabilization of the Pipe Logix. When it gets to our pricing, you always have to remember that we have a one-quarter delay between the Pipe Logix's reading and the way it gets into our profit and loss. So, you're gonna see this even going forward. Thank you, Luca. Understood. Great. And I wanted to see, Paolo, if you could comment on some of the maintenance activities that you've planned for the second half. Could you help us think about what kind of impact this could have, you know, to volumes? I mean, you know, we've generally been thinking that the company could ship 4 million tons of product this year, but give us a sense of what kind of impact that could have in the second half. Well, as I mentioned in the opening remark, we have been working at full capacity for almost two years. Then, we want to take advantage of this slight reduction that we see in the rig count and in the demand for concentrating some key interventions on our industrial system. Part of this is maintenance, but also we are focusing on some major investments from our point of view, which is the change in the furnace in Argentina, and also investments in the other steel shop and in the finishing line of our mill in different parts of the world. We think that we can take advantage of this time for changing our profile in terms of emissions, increased automation, and productivity, and also cost reduction over time by this cycle of investment. As I mentioned in the opening remark, this will be in line with our forecast for CapEx in the range of $730 million during 2024. So there is no change with this. Our volume will be impacted only in seamless, to some extent, but it's, I would call it, not something substantial. But it will be impacted in our seamless component. So the welded will remain at the level of last year. You know, the third quarter is seasonally below. Overall, the volume will not be very different from last year volume, but with a participation of welded higher than the participation we had of welded last year. Great. That looks a lot. Thank you. One moment for our next question. Our next question comes from the line of Alessandro Pozzi from Mediobanca. Good afternoon. Thank you for taking my questions. The first one is on the outlook for the rest of the year. In the Q4 conference call, you mentioned average EBITDA margin of 25% for the first half of 2024. And given that you have printed 29% in Q1, it looks like potentially you are going to have higher margins in Q2. But then I was wondering, given that you have the stoppages in Q3, what should we assume for EBITDA margins in the second half of the year based on what you see, obviously, at the moment? Also, my second question is on the DUCs. So we've seen those DUCs halting since they've reached the peak. And I was wondering, is that going to be potentially a trigger for having a higher rig count at some point down the line this year? Well, thank you, Alessandro. What we expect, that our margin in the first half of 2024, as you are saying, will be slightly higher than we anticipated because we had margin slightly higher. If you look at the adjusted EBITDA, it is in the range of 28 point something. We think that in the second Q, we will have lower EBITDA than 25%, but as a whole, on average, we will be slightly higher than 25%. When we look at the second half of 2024, there is not so much visibility on price, but for what we are seeing in the evolution of the Pipe Logix, we should be prepared to an EBITDA margin between 20%-25%. We don't know, let's say, yet how far the price reduction will go and also our reaction in terms of cost reduction that will accompany the pressure that we are feeling. There are many pieces moving here. One of the important pieces is also Argentina recovery in its oil and gas sector. There are also, let's say, some uncertainty about the evolution of the rig count. So when we speak about the second half of 2024, we are considering a range. It's very difficult to have, let's say, a number for a semester in which we will have different factors affecting our sales and our profitability. On the question of. Yeah, so just in Q3, given the loss of volumes from seamless, should we assume EBITDA margins more towards 20% just for that quarter in Q3? We will have, well, as I was saying, still, the prices for the third Q are not being entirely defined yet, you know? But if the reduction in the Pipe Logix is going on and imports maintain this level in the U.S., we will be slightly higher than what you are saying, but still close to the number you are saying. Now, talking about the DUCs and the possible influence on drilling, I would ask Luca to give us a view of the possible impact of this. Yes, Paolo. Thank you. Hi, Alessandro. On the DUCs, yes, you're right. In March 2024, according to the Energy Information Administration, we had a number of DUCs that was the lowest over the last 10 years. For example, if you just go back five or four years, and in the Permian, we had 3,200 DUCs, and in March, we had slightly less than 900. So you might think that here there is a potential upside, and you may be right. This upside is not in our forecast, and we may have it. On the other hand, I do believe that the business model by which E&Ps were building large inventory of DUCs, given the capital discipline, is no longer on the table. But you're right. There are two aspects that may play on the upside, which is the number of DUCs, one, and also the fact that with this lower rig activities, the U.S. is maintaining crude production above the $13 million barrels per day—sorry, $13 million barrels per day—which is pretty, pretty significant. Okay. Thank you. Thank you very much. Thank you. One moment for our next question. Our next question comes from the line from Marc Bianchi from TD Cowen. Hi. Thank you. I'd like to just first clarify, Paolo, if we could, the progression you laid out on the margins. I think I heard that second quarter could be below 20%-25%. The second half would be between 20%-25% with the third quarter approaching 20%. Did that capture it? Yes. In the first half, we will be slightly higher than 25 because we had a good first quarter. In the second half, as you are saying, for the visibility that we have, we will be in that range. And in the third quarter, because of the reduction on seamless, we will probably be above 20, but, let's say, slightly above 20. 20-25 is, let's say, what we can envisage today. Okay. That's helpful. Thank you. The press release talked about the TenarisShawcor project that contributed to first quarter. Could you maybe discuss how much of a contribution that was and help us think about what the maybe normalized contribution from that business should be as we progress? Thank you, Marc. You know, the Shawcor business has ups and downs depending from large projects, you know? It is a business that depends on relevant contract for relevant project run. But I would ask, Gabriel, to give us a view on how we see the perspective of Shawcor, for the foreseeable future, no? Yeah. Thank you, Paolo. Yeah. Good morning, Mark. Yes. Indeed, Shawcor has contributed importantly to the results of the first quarter, given the last stage, the tail of a large concrete weight coating project in Mexico in the Altamira region. So this has had a contribution of about $80 million in revenue specifically in the first quarter for this project that we will not carry further down in the year. But we are very pleased with the Shawcor acquisition. The brand of Shawcor is very well recognized as a global leader, a global footprint of facilities, R&D centers, track record, and product knowledge that complements and strengthens very well the position of Tenaris in the offshore segment. As a matter of fact, Paolo announced in the opening remarks the recent order related to the insulation coating in Guyana development, more than $100 million order insulation coating, with good margins and contributions. So we expect the Shawcor business to continue supporting revenues and our position in the offshore segment. I would normalize annual revenues in Shawcor after this Altamira project in the range of $250-$300 million, annually. This would be a running rate where we see Shawcor contribution going forward. Thank you, Gabriel. Wonderful. Thank you very much. I'll turn it back. Thank you. One moment for our next question. Our next question comes from the line of David Anderson from Barclays. Hi. Good morning. I wanted to ask a bit about the Middle East and how that's going to impact your volumes, kind of thinking about kind of 2025 and beyond. You just noted a two-year extension on the UAE Rig Direct, but I believe that contract is actually been the volume's been fairly slow because they've been working down a lot of the inventory. So I'm curious if you start to see that spike and start to pick up over the next couple of years. And then secondarily, you also mentioned unconventionals in Saudi. And that looks like a massive opportunity there. And I would love to understand a little bit from your perspective of how you see that changing things. The Jafurah wells, I believe, are quite a bit more OCTG-intensive than even U.S. onshore conventionals. If you could talk about those two markets, please. Thank you. Yeah. Thank you, Dave. Also, on this question, I would ask Gabriel an overview for Middle East in general and unconventional in Saudi, which also we share, the view that it is a very relevant development for Saudi, you know, important for us. Yeah. Thank you, Paolo. Good morning, Dave. Yes. What we see in the Middle East is that the drilling activity remains strong. We see continued investment in expansion of capacity both in oil and in gas with a very positive momentum. Saudi clearly remains the brightest spot. During the last quarter, the Kingdom announced and revised upwards the target of gas production increase for 2030. Now, they are targeting an increase of 60%. Previously, the target was 50%. So we see that the drilling in gas, onshore gas related also to the unconventional that you're mentioning, Dave, will more than offset the decrease in the offshore rigs related to oil that were also announced during the last quarter. So overall, in Saudi, the strong level of activity, also the CAPEX guidance for 2024 for the year of Saudi was given a range, but it's importantly higher than 2023. So we believe that with the backlog that we have, with the position that we have in the country for OCTG and pipelines, Tenaris is well positioned to remain delivering strong shipments into the Kingdom. The Emirates is also expanding. Paolo mentioned the extension of our long-term agreement with ADNOC. We extended it for another two years. We had the chance to incorporate other coating services, digital services, and also expanded our Dopeless range in the Emirates where we have our facility up and running. So overall, we also see strength coming from the Emirates in the Middle East. And last but not least, Qatar also during the quarter made an announcement about an expansion, a further development expansion for their LNG project. This is a North Field project. This will require drilling of approximately 50 production and injection wells in Qatar. Also, our long-term agreement with QatarEnergy LNG was extended for another three years. This is a demand that we intend to cover with this year. With all this backlog plus the network of contracts that we have, we have a very good visibility into 2024 and even 2025 that revenues in the Middle East, in the whole region, will keep the current high levels going forward. Thank you, Gabriel. We are doing good inroads in the region. It's also a region in which there is competition. To some extent, some areas also—I mean, prices are also perceiving, let's say, the competitiveness in our business. Okay. Thank you, Paolo. If I could just follow up on that question, do you have some capacity in Saudi itself, and I believe you have a seamless mill. I'm just curious to talk about your competitive advantage. That is certainly a competitive advantage. You're having production in-country. Would you expect to maybe build out that capacity? Do you expect to maybe expand the capacity of that facility in Saudi in order to improve your competitive position? We are developing plans for expansion. You know, in this sense, even the SSP is listed in the local market, and the expectations are very high also from the investor. But, Gabriel, you can give us some indication on how we can make grow the position we have and the activity that we have in Saudi, which are expensive. Yes. As of course, we monitor capacity level with demand expectations. So far, with the finishing premium capacity that we have in the Kingdom, we feel comfortable to accommodate this demand, and this is something that we'll continue to monitor. The same on the welded capabilities. And on the GPC, the new recently acquired facility, we are expanding. We are at this point commissioning our second line, which roughly will double the capacity for pipelines and conductors in the Kingdom to accompany the trunk lines, and the expansion of oil and gas transmission in the Kingdom. So we are certainly willing and capable of expanding capacity in the Kingdom as we see need for it. Yeah. We are preparing for an expansion of the gas master plan that should go on in Saudi. But hopefully, I mean, the new line and so will, let's say, increase capacity. But this will be for probably later on, at the beginning of 2025 or so. Great. Okay. Thank you very much, gentlemen. Have a good day. Thank you. One moment for our next question. Our next question comes from the line of Luke Lemoine from Piper Sandler. Hey. Good morning. Luca, you've given us various pieces, kind of of U.S. land, but could you just talk about your activity outlook and what you think maybe the rig count will do for the balance of the year and what conversations with customers are like on activity levels? No. Sorry. I didn't understand the first part. Can you repeat, please, to be clear on your question? Yeah. Sure. Just asking about, you know, you've talked about DUCs, imports in the U.S., but if you could just talk about general activity and how you see that unfolding for the balance of the year within U.S. land. Yes. Yes. I understand on the U.S. land. Here, also, Luca, which is your view on basic level of activity that we may expect in the U.S. from your view? Yes. Thank you, Paolo. Good morning, Luke. Look, as we look forward, what we see is certainly some weakness on the dry gas side with these gas prices. We don't see this increasing. Actually, we see this probably going down a bit from where we are today. The importance of the share of the gas drilling in the U.S. is limited. So what we expect is some weakness over there that is going to be offset from one upside some upsides on the oil side. In general, we see a flattish drilling activity going through 2024. This is what we see today. We don't know how this will progress in the second half. There are many factors at play in this case, and we need to go a little bit ahead in the year to give a more firm view on the second half of the year. Yeah. Thank you, Luca. Frankly, from my point of view, with this price of oil in the WTI, the level of uncertainty and volatility in the market, maybe a further reduction in the interest rate in the States, this is also an important factor in this. I think that in oil, there should be if, if the interest rate is going down in the second part of the year, there should be a pickup or a stabilization first, but also maybe a pickup of the, the, the level of drilling in oil. But we will see, as Luca is saying, it's too a little early today in an electoral year to have an evaluation of what will happen in the second half of 2024. Thank you, Luca, so. Okay. Thanks very much. Thank you. One moment for our next question. Our next question comes from the line of Joseph Shahrour from Bank of America. Hi, gentlemen, and congrats for a solid set of results. Two questions from me. So net cash now sits at $3.9 billion. If free cash flow is to remain solid across the year, is it safe to assume that the buyback program needs to continue post-November? And if so, could we even see a step up in the run rate above your current $300 million a quarter? Secondly, and again, talking about U.S. onshore, as we see some consolidation via M&A, how has your market share evolved, and how much extra tonnage does this represent? Yeah. Thank you, Joseph. Well, on the first part, you know, we enter into our buyback program. This is not a decision. It's a decision that will have to be taken by the board, in due time. We have a larger cash position and, as I was saying, a very solid, Free Cash Flow, even considering the investment and the commitment that we have. This will be kept into consideration. Also, we will, as we say in the past, always look at the option. But I would say that, if there are no major change, it is likely that this program may proceed. On the second point, which is, we don't go give information about market share and, usually, but, Luca, you may elaborate a little on our positioning in this environment. Yes. Good morning. On the consolidation, obviously, we don't provide sensitive information. But what I can say, Joseph, is that our presence with our Rig Direct model in the large operators is very strong. So we have been benefiting from the consolidation. And if further consolidation is going to happen, we're going to continue benefiting from this consolidation on this segment. Now, bear in mind that in some cases, we are already on both sides of the transaction in terms of supply. So you wouldn't need to take this at face value because this would be misleading. But certainly, consolidation has benefited us. And if further consolidation would happen on this side of the market, this will continue benefiting us. Yeah. Thank you, Luca. To some extent, the consolidation may be one of the reason why the rig count is stable in spite of a relatively high level of price on oil. I'm not saying gas, in which is more understandable. But in my view here, the companies are taking a time because also these consolidations are announced but are not really executed in some cases because still they need authorization and so on. So let's take a time, and we will see. Logical thing will be for us, the Pipe Logix, to the Pipe Logix rig count over time to reflect deployment of this consolidation in a more active level of activity, especially if, as I was saying before, interest rate go down to some extent. Okay. Thank you. Well understood. 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 Luigi de Bellis from EQUITA SIM. Good morning. Thank you for taking my question. The first one is on South America. So you mentioned the political and economic volatility affecting activity. So can you elaborate on the expected trend for the coming two quarters in Argentina and Mexico, even in terms of rig count expectations? And the second question, on the pricing. So what is your pricing evolution, your margins, outlook for the coming quarters, and when do you expect the bottoming out of Pipe Logix prices? And you performed, very, very well in terms of cost in Q1. How much room do you have to improve the cost structure in the coming quarters? Thank you. Thank you, Luigi. The first point on South America. Well, Argentina after the change in the government, the stabilization plan underway is successful in terms of reducing inflation, reducing the country risk, substantially, almost halving the country risk. Now, the government is in the process of asking for approval of very relevant set of laws in the Congress. If they succeed in this, this set of law include specific treatment for large project and hydrocarbon law, that in my view will stimulate investment in the sector. So, we are in a kind of standstill, while everybody is waiting for understanding if the government is able to get approval for transformational law that like the one they are proposing today in the Congress. Once this is done, and I think will be done, I think that the company will move on. It will take time. I would expect that in a positive environment, starting in the beginning of 2025, we will see actual action because today, the rig count is probably slightly lower than last year. There are marginal rigs that are not operating. But there are new equipment coming in into Argentina, moved from the U.S. and so in preparation of a raising level of activity. But we will see this, in my view, full in during 2025. At the same time, there are activities for the evacuation of oil and transportation of gas. These are projects that in the case the law for large project is approved, will also be put in motion. Now, to put in motion the project, find the financing, private financing, organizing all of this, will take time. So again, I think this will, we will see, let's say, real activity, and acquisition of key inputs in the beginning of 2025, so not so much during the coming quarter. Brazil is growing. Brazil is moving on. It has a program for developing resources. Resources are rich. So I say this is more predictable, will gradually move on in developing deep water reserves and increasing the level of rigs. Venezuela is what it is. Only Chevron will continue to be allowed to continue to operate. And we are serving, in fact, Chevron in Venezuela, but it's a relatively limited set of operation. Colombia is going down because of the policy adopted by Petro. Still, the number of rigs must be 10% below the level of rigs last year and may be reduced even further. Mexico, for Mexico, the level of operation of rigs operation in Mexico is basically going down slightly while waiting for the change in the government. The new government will have to define the policy for Pemex, probably refinancing or restructuring the debt of Pemex and deciding after the construction of the refinery that has been almost completed in Dos Bocas, will decide which will be the next stage of development for Pemex. Also, this I expect in 2025, we will see a stable or increasing activity in 2025. It will be very logical with this price of oil and the need of oil and gas development in Mexico. The new government will assume in December of 2024. This is the overview for Latin America. The second question is the bottoming out of the Pipe Logix. It basically will depend from import. Imports, some of these unfair trading conditions are, has been getting in this quarter. I don't know if going on we will see similar volumes of imports. But I would expect the Pipe Logix to level up, to level, let's say, by the middle of the year, because if there is, let's say, slight reduction in imports, the level of inventory will could go down slowly. And this will allow the level of the Pipe Logix to level off. In terms of cost, you are right that we have had a positive quarter. Costs, we are considering the reduction in Pipe Logix. We are launching specific action all around our system to contain variable direct and indirect costs. We expect that this will help us to contain the reduction in the Pipe Logix and to defend our margin, especially in the second part of 2024. Thank you, Paolo. Thank you. At this time, I would now like to turn the conference back over to Giovanni Sardagna for closing remarks. Well, thank you, Gigi. Thank you all for joining us in our conference call. See you soon. Thanks. This concludes today's conference call. Thank you for participating. You may now dis.