Tenaris SA (TS) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 27, 2023 9:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Q1 2023 Tenaris S.A. Earnings Conference Call. [Operator Instructions]. 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.

Giovanni Sardagna

Thank you, Gigi, and welcome to Tenaris 2023 First Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during this call, and that our actual results may vary from those expressed or implied during the call.

With me on the call today are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Gabriel Podskubka in his new position as Chief Operating Officer; 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. Our fourth quarter sales reached $4.1 billion, up 75% year-on-year and 14% sequentially, mainly driven by higher sales of OCTG and line pipe for offshore projects around the world in addition to a peak of shipments to a large pipeline project in Argentina. Average selling prices in our Tube operating segment increased 32% compared to the corresponding quarter of 2022 but declined 1.5% sequentially.

Our EBITDA for the quarter was up 16% sequentially, close to $1.5 billion. Our EBITDA margin reached 35.7% as lower cost of raw materials and energy costs combined with a better absorption of fixed costs higher volumes more than offset a small decline in selling prices.

With operating cash flow of $921 million and capital expenditure of $117 million, our free cash flow for the quarter was $804 million. At the end of the quarter, our net cash position increased to $1.7 billion, up from $921 million at the end of 2022.

Now I will ask Paolo to say a few words before we open the call to questions.

Paolo Rocca

Thank you, Giovanni, and good morning to all of you.

In this first quarter, Tenaris achieved many records. Net sales, EBITDA and net income all exceeded the previous record results of the fourth quarter last year. Our industrial and supply chain system combined to deliver the highest level of shipment since 2008, with a more differentiated production mix. Production records were exceeded in many of our plants, including at the Bay City.