Tenaris Announces 2024 First Quarter Results

The financial and operational information contained in this press release is based on unaudited consolidated condensed interim financial statements presented in U.S. dollars and prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board and adopted by the European Union, or IFRS. Additionally, this press release includes non-IFRS alternative performance measures i.e., EBITDA, Net cash / debt, Free Cash Flow and Operating working capital days. See exhibit I for more details on these alternative performance measures.

LUXEMBOURG, April 25, 2024 (GLOBE NEWSWIRE) -- Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN) (“Tenaris”) today announced its results for the quarter ended March 31, 2024 in comparison with its results for the quarter ended March 31, 2023.

Summary of 2024 First Quarter Results

(Comparison with fourth and first quarter of 2023)

Net sales, operating income and EBITDA remained in line with our results for the fourth quarter of last year despite lower OCTG prices in the Americas. This reflected a solid performance across our business lines and included an increase in Rig Direct shipments in North America and the realization of a major coating project in Mexico at our newly acquired TenarisShawcor business. Net income, which did not include any extraordinary effects, declined to $750 million, or 22% of sales.

During the quarter, our free cash flow amounted to $715 million and, after spending $311 million on share buybacks, our positive net cash position increased to $3.9 billion at March 31, 2024.

Market Background and Outlook

Demand for oil and gas continues to grow to meet the needs of developing countries and secure affordable energy during the energy transition.

Although oil prices have risen, there has been no pick up in drilling activity in the USA so far this year and in North America it remains below last year’s level. At the same time, OCTG imports increased which is delaying price stabilization.

In the rest of the world, offshore projects are proceeding in line with our expectations and demand in the Middle East remains at a good level. In Latin America, however, political and economic volatility is affecting activity.

For the second quarter, as anticipated, our sales and margins will be lower than the first quarter reflecting the ongoing decline in OCTG prices in the Americas. In the third quarter, we will have stoppages at many of our mills, including at our Siderca steel shop where we will install a new furnace that will improve our environmental footprint, and this will lead to a further decline in sales and margins in the quarter.

Analysis of 2024 First Quarter Results

Net sales of tubular products and services decreased 2% sequentially and 21% year on year. Volumes increased 4% sequentially but decreased 7% year on year while average selling prices decreased 6% sequentially and 15% year on year. In North America, higher seasonal sales in Canada were largely offset by lower OCTG prices throughout the region. In South America, higher sales for pipeline projects and for offshore drilling in Guyana compensated lower OCTG prices in Argentina and Colombia. In Europe sales declined due to lower sales for offshore line pipe products. In Asia Pacific, Middle East and Africa we had a continuing high level of sales throughout the region.

Operating income from tubular products and services amounted to $769 million in the first quarter of 2024, compared to $780 million in the previous quarter and $1,312 million in the first quarter of 2023. Operating margin of the quarter remained stable as the reduction in prices was compensated by a reduction in costs. Operating income of the quarter includes gains amounting to $25 million from positive legal claim’s resolutions in Mexico and Brazil.

Net sales of other products and services increased 43% sequentially and 86% year on year. Quarterly sales included $160 million from the coating business acquired in the previous quarter.

Selling, general and administrative expenses, or SG&A, amounted to $508 million, or 14.8% of net sales, in the first quarter of 2024, compared to $471 million, 13.8% in the previous quarter and $487 million, 11.8% in the first quarter of 2023. Sequentially, our SG&A expenses increased mainly due to higher selling expenses associated with higher shipment volumes, higher depreciation and amortization due to the integration of the coating business acquired in the previous quarter and higher provisions for contingencies.

Financial results amounted to a loss of $25 million in the first quarter of 2024, compared to a gain of $93 million in the previous quarter and a gain of $21 million in the first quarter of 2023. The loss of the quarter is mainly explained by a $68 million loss from the change in fair value of U.S. dollar denominated Argentine bonds, partially offset by net finance income of $35 million and other net foreign exchange gains of $8 million.

Equity in earnings of non-consolidated companies generated a gain of $48 million in the first quarter of 2024, compared to a gain of $57 million in the previous quarter and a gain of $53 million in the first quarter of 2023. Results from non-consolidated companies are mainly derived from our participation in Ternium (NYSE:TX).

Income tax charge amounted to $85 million in the first quarter of 2024, compared to a gain of $177 million in the previous quarter and a charge of $296 million in the first quarter of 2023. The charge of the quarter is net of $104 million tax gains, mostly related to the effect of inflation adjustment in Argentina.

Cash Flow and Liquidity

Net cash provided by operations during the first quarter of 2024 was $887 million, compared with $836 million in the previous quarter and $921 million in the first quarter of 2023. Working capital increased by $10 million during the quarter.

Capital expenditures amounted to $172 million for the first quarter of 2024, compared to $167 million in the previous quarter and $117 million in the first quarter of 2023.

During the quarter free cash flow amounted to $715 million, compared to $669 million in the previous quarter and $804 million in the first quarter of 2023.

Following share buybacks of $311 million during the quarter, our positive net cash position increased to $3.9 billion at March 31, 2024, compared to $3.4 billion at December 31, 2023.

Conference call

Tenaris will hold a conference call to discuss the above reported results, on April 26, 2024, at 08:00 a.m. (Eastern Time). Following a brief summary, the conference call will be opened to questions.

To listen to the conference please join through one of the following options:
ir.tenaris.com/events-and-presentations or
https://edge.media-server.com/mmc/p/nk5skspv 

If you wish to participate in the Q&A session please register at the following link:

https://register.vevent.com/register/BI6438ef4528ce4b68a87ee220e3cc959e

Please connect 10 minutes before the scheduled start time.
A replay of the conference call will also be available on our webpage at:
ir.tenaris.com/events-and-presentations

Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.

Consolidated Condensed Interim Income Statement

Consolidated Condensed Interim Statement of Financial Position