Good day, and thank you for standing by. Welcome to Tenaris First Quarter 2025 Earnings 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. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Giovanni Sardagna, Investor Relations Officer. Please go ahead. Giovanni Sardagna Thank you, Liz, and welcome to Tenaris 2025 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 Guillermo Moreno, newly appointed President of our US 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 2.9 billion, down 15% year-on-year, but up 3% sequentially due to higher seasonal volumes in Canada and higher onshore sales in the US. While our average selling price declined due to market and product mix effects with lower sales of OCTG premium products in Mexico, Turkey and Saudi Arabia, in addition to lower sales of seamless line pipe for offshore projects. Average selling price in our Tubes operating segment decreased 11% compared to the corresponding quarter of 2024 and 5% sequentially. On a comparable basis, our EBITDA rose 6% and net income remained in line with the results of the previous quarter. Our EBITDA margin increased slightly to 24% due to a good operating performance and better absorption of fixed and semi-fixed cost, thanks to higher volumes. With operating cash flow of 821 million and capital expenditure of 174 million, our free cash flow for the quarter was 647 million. Following share buybacks of 237 million during the quarter, our net cash position increased to 4 billion, up from 3.6 billion at the end of last year. Now I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. I will start mentioning a change in our management team. Guillermo Moreno, who is with us on the call today, has taken the position of President of our US operation. Guillermo has more than 35 years of experience in Tenaris. He has led our US commercial operations over the last five and a half years, prior of which he was President of our Canadian operation. We wish him all the best in his new position. We began 2025 with a good performance in the first quarter. Not only did we deliver quarter-on-quarter increase in sales and EBITDA on a comparable basis, but our free cash flow rose to $647 million as we achieved a significant reduction in working capital. In Canada, we have been consolidating our Rig Direct strategy with long-term agreements, which have given us more stability and visibility in our operation. This winter season we shipped a record quarterly volume of OCTG. In the US, we have increased deliveries and continue to extend the range of services under our Rig Direct program. These results reflect the value perceived by our customer in working closely with us under long-term agreement as they seek further operational efficiencies. They include most of the largest shale operator with a longer backlog of Tier 1 acreage and the most resilient operation. In Argentina, we began pipe deliveries for the new which will add 550,000 barrels a day of additional oil export capacity and is expected to come into operation next year. As local operators increase their investment in this highly productive shale play, we are expanding our new fracking and coil tubing service unit with an investment in a third set of equipment which should come into operation next year. Our project backlog…

[Operator Instructions] Our first question comes from Alessandro Pozzi with Mediobanca.

Thank you for taking my questions. I think during your opening remarks you mentioned a potential slowdown in activities in the US. I was wondering are you really seeing companies pulling back on CapEx and what sort of say level of recount do you expect now by year end? And you also mentioned that potentially ahead of what could be maybe a slower second half, you may be willing to take some maybe cost saving initiatives. I was wondering if you can maybe give us more color around that. Thank you.

Thank you, Alessandro. Effectively, as you mentioned, I think that the change that are occurring at the geopolitical and macroeconomic level induce expectation of a lower level of economic activity and also the price of oil and the demand and the price of oil is reflecting this expectation and the announcement by the OPEC+ oil of increasing production. The combined effect, as you can see, is a reduction in the price of oil, if this situation stabilizes at the present level and this is something that may or may not happen because everything has been moving very fast in the last couple of months; action, counteraction and so on. Tariff on different areas have moved many variable. So if this situation stabilizes and the price of oil remains in this range, the oil company will have to adequate the level of CapEx to the reduced level of cash flow. So we expect that gradually there will be a reduction in level of operation as they count, especially in the area and in the project like in the United States that could be discontinued or postponed with less effort and change. How deep this could be? Well, as we mentioned in our outlook, we do not expect these to impact the second quarter of 2025. We have a pretty solid backlog. We do not expect, let's say, major change and we continue to maintain our estimate of results in line or slightly better than what we had in the first quarter. But when we look at the second half, there is uncertainty. We may estimate the reduction in the level of drilling activity in the US but we are confident that the project worldwide, especially the offshore, but also some of the program of drilling of National Oil Co. will continue…

And I mean if we look beyond the Q1, Q2, is there any visibility at the moment for Q3, do you think potentially the lower oil prices could impact Q3, or is it too early, or you have a view on how Q3 could shape up?

As I said before, if the price for remain at the present level around or below $60, gradually the CapEx of the oil company may be reduced and we will see the first effect in Q3. But as I say, still we have high uncertainty on the evolution on the main variable. Everything is on the move, but if the oil stays there, we will start to see reduction in activity maybe in the third quarter of 2025.

Okay, thank you very much.

Our next question comes from Arun Jayaram of JPMorgan.

Yeah, good morning. Paolo, I was wondering if you could maybe give us your updated views on how the implementation of US tariffs on steel is impacting or will impact your operating results. Obviously we've seen some improvement in price in terms of the pipe logics indices and maybe you could also highlight if you've seen any changes in imports to the US just as the section 232 quotas have been removed as part of the implementation of US tariffs.

Thank you. Well, tariff as you know, the 232 [Phonetic] appliance to steel is today affecting in part our operation for our import of steel and some import of pipe into the US. Even if we produce almost all of our pipes in the US but we still are importing some of the steel bars that go to our plant in Bay City and Enbridge. We estimate the impact of this in the range of 70 million per quarter of additional tariff on one side. On the other side, as you mentioned, the pipe logic has been moving up and we consider that all in all the price increase we will see reflected gradually in our contract in the US will offset this increase in tariff. I think this is basically the trend what we can expect. I would like to have Guillermo that is leading through this to add some comment. Before going a little more deep into this, one brief mention on import that you were asking for. In the first quarter, import there has been higher level of import compared to the previous quarter. Some of this has been anticipation of the coming tariff by an importer. They decided to raise the level of import at this point. This happened not only in our sector but also in other areas of the economy. There has been an increase in the stocking -- in the stocks in the entire economy in the expectation of tariff, but we will see depending on the negotiation underway, also how this will evolve coming quarter. But I would like to give Guillermo some additional comment on the situation and the reaction of the client to this environment.

Yes, thank you Paolo and good morning Arun. As you said, in the first quarter we saw an increase of imports after four quarters of a reduction of import and destocking of the market. We were expecting a rebound and when this became effective in the first quarter. For the second quarter, we still expect similar level a little bit downward and I think that the second half will depend a lot on what happens with activity. However, we expect that the administration will focus on the purpose of the 232 where the objective is to increase the utilization of the domestic industry. With regards to, as you said about activity, we have a good visibility with our clients because of our Rig Direct. Most of them have not so far announced any drops of rigs. However, they are in the process of analyzing. But we would expect that there will be some adjustment starting in the third half -- sorry, in the second half of the year.

Thank you, Guillermo. Great.

And Paolo, just to clarification, you mentioned 70 million of potential tariff cost impacts per quarter but that would be reflected in your flat EBITDA margin guide already. So it's not affecting your margins per se.

First of all, the 70 million per quarter that I mentioned will come in gradually during the coming three quarters, so this will be -- and then this is basically will also be reflected in the accounting due to the IFRS gradually. So for different reasons, this is the estimate, the running cost that we will have, but we will arrive there gradually because these numbers are entering into our cost of sales gradually and also because it will depend from our ability to expand production in copper as much as we can reduce import of steel over time. So it's a broad estimate, may materialize in the fourth quarter, as an impact in our cost, provided that we are, let's say -- we are not able to strengthen local production or negotiate because we don't know where the negotiation with Mexico and with Europe may advance. If there are changes in this negotiation, this may turns out into a reduction -- potential reduction of the 25% of the 232 for these specific SMEs that we are bringing to a state.

Great. And my second question is Paolo, Giovanni mentioned how the net cash balance at the company has reached 4 billion. So I wanted to get your thoughts on reinvestment opportunities. I believe that you've exhausted your share back buyback authorization and thoughts on potentially at the next annual meeting in May for the company to re-up the buyback authorization.

Yes, as you say, we completed the buyback under the authorization that the Board of Directors had in the assembly. One of the points of the agenda is exactly to renew the authorization for a buyback of up to 10% of the outstanding share. And then the new Board of Directors will consider what to do and if to proceed the program that has been carried on since last year.

Understood, thank you very much.

Our next question comes from David Anderson with Barclays.

Thank you. Good morning. Paolo, I certainly recognize all the uncertainty in the second half of the year, but if oil prices just stay where they are and if tariffs don't change from here, I'm just curious how you're seeing volumes in the second half progressing here. I certainly recognize the US is more sensitive to commodity prices, but your Rig Direct model encompasses most of the larger operators who are probably not going to change the programs too much. And then thinking about the rest of the world in that mix, I wouldn't think volume should fall too much in the second half but could you potentially just give us a range of kind of outcomes that you think could happen?

I think it's too early to give a prediction of the decision of the oil company. But you are right in the consideration that our portfolio of clients is mainly consisting of the major oil company, company that has large assets in the shale that are developing their assets on the basis of long-term program. They are taking the decision with medium and long-term horizon are not subject to, let's say, short-term input given by the level of cash flow, so they can plan. So our portfolio is this. We have our own stock in house to serve this as a Rig Direct. So we expect that whatever decision they may take or whatever the trend in the market, our portfolio client should be more resilient to the rest of the market. This is -- also other factor that we need to consider, there are components of the supply metrics in the states like import. They may be subject to a renewal of quota or others may changes in the negotiation with the different countries that are shipping their pipe to the United States. It is true that with the new 232 they have no quota but they pay the 25%. But I think that the administration will keep a close look at the volume coming from these countries and we'll consider this in the negotiation. So this is a factor. The other component of the matrix supply is also the welded pipe for local producer. In this moment the price of hot rolled coils has increased very fast since the introduction of tariff and the technology is increasing but not at the same pace. So there are other components of the supply chain that may be squeezed in this environment and reduce the pressure of supply in an environment of slightly reduced or strongly reducing demand this we do not know.

Appreciate the color. Thank you. A separate question, you'd mentioned offshore a few times in your remarks and I was just wondering within your mix of volumes, should we expect that offshore component to start growing later this year into 2026? There's a number of offshore developments starting next year talking about kind of longer programs that shouldn't be affected, I wouldn't think offshore should be impacted here. But I was just wondering if you start to see those volumes coming through your numbers later this year into 2026 and just kind of what you're hearing from your customers in terms of that potential offshore activity in 2026?

Yep. Thank you, David. Before passing to Gabriel the question for review of the short-term landscape, let me tell you that the overall invoicing that we are getting from the sale of Connect and CTG line pipe and coating is very rarely very relevant for Tenaris. So it's a very important component of our overall positioning. Gabriel, can you give a view?

Sure. Thank you, Paolo. Good morning, David. Indeed, the offshore market, as Paolo was saying, is very important for Tenaris and I would say with a high degree of resilience in an environment of high uncertainty. Tenaris is an absolute leader in this space, as we mentioned in some of the opening remarks. For example, we have been selected to be the superior of choice for one of the FIDs -- most recent FIDs in the quarter, which is a Shell Bonga project in Nigeria. Here we're going to deliver a full supply of subsea pipeline and risers. We will also deliver insulation coating services that we will produce in our coating facility in Port Harcourt, Nigeria. And we also are going to be the leading supplier of OCDG for the 25 west dad are required for this development. This is one of the main examples of the contracts of the backlog that we have for offshore which is quite high. This has been an area of strength for Tenaris in 2024 and will be in 2025 and even some of these backlog goes into 2026. We don't expect the short term volatility in oil prices to affect the development of the projects that are already sanctioned. These projects have been sanctioned with a horizon of a long span, a decade or more. And also it is important to mention that many of these deepwater breakevens have been very competitive in the range of 30 or even lower than that. So we expect the offshore to be a very resilient segment for Tenaris into the rest of 2025 and even into 2026.

Thank you, Gabriel.

Thank you. Appreciate it.

Our next question comes from Sebastian Erskine from Redburn Atlantic.

Yeah, hi, good morning. Thanks for taking my questions. The first one, I just had a question on the cost structure. I noticed in the first quarter kind of quite a large 9% sequential step down in unit labor costs and to a lesser extent on raw materials. Is there anything specific you can flag on that of what we can expect in terms of a quarterly cadence going forward to the end of the year?

Thank you, Sebastian. I think that we have seen a pretty stable evolution of key component. Slightly down the trend for iron ore, scrap went up slightly following the increasing the hot rolled coil in the US but basically in an environment which economic growth or the dynamic of the economy is turning more sour, we do not see that we should have cost impact. On the contrary, if there is an economy slowdown in some of the world, we should see some reduction from where we are today in our basic input. And then you were mentioning the variance of labor, as you know, we are in the process of structuring of some of our operations to increase productivity and to continuously proceed in achieving savings and increasing productivity in our operation. This may have an impact gradually on the overall labor cost in our position.

Appreciate the color there. Thank you. And then just the second one on Mexico, I mean the situation sort of appears to have further deteriorated with Pemex. So growing supply debt. I mean, could you give us an update on sort of where you see some movement to the upside in that geography and given some of the commentary of your peers being quite sort of sanguine and negative?

Well, two points. On one side we've been able to reduce our exposure to Pemex through operations that allow us to substantially reduce our exposure and you see this in the increase in the reduction in our working capital and in the cash flow. On the other side, when we look at the operation of Pemex, I maintain the position that I told you in the last quarter, I mean the situation of Pemex has been continuously deteriorating. Today they are arriving at the level of rigs operation that is extremely low. I think we are in the range of 16 rigs and the level of production is in the range of 1.600 million, going to 1 million, even lower because there has been for a few quarter reduction every month of production, it may be dry for a while, but it's there. So today the situation is clearly very difficult, but in my view is unsustainable. The government came out and presented a plan for refinancing to some extent Pemex and designing an energy plan that would bring back resources to Pemex and plan for getting back to drilling and to development of resources. This is supposed to happen, but we do not know when this plan will materialize. For the time being we have listened to the President of Mexico and exploring the lines of these plans. But we do not see the action in Pemex to implement this yet. But I'm confident that, I mean Mexico could not leave Pemex in the situation that it is now, and there will be in some moment in the coming quarter action following the planning that is being presented.

Thank you very much. I'll hand it back now. Thank you.

Our next question comes from Stephen Gengaro with Stifel.

Thank you. Good afternoon. Good morning everybody. Excuse me. So I had a question about the raw material costs in the US market versus the pricing. And I'm just sort of thinking back to prior periods where, you know, when the market was strong enough and raw material costs were higher. I think you generally more than offset the increase. And today it's a little bit different with the potential for lower activity. How do you think those two items balance themselves out in the second half of the year? Do you think you can manage through it to hold margin or do you think the input cost in the face of potentially lower demand will be a headwind on margins in the second half of the year?

Thank you, Stephen. Frankly, I do not think that our main concern in this moment should come from raw material. The all -- the tariff, the change, the retaliation and the uncertainty on the reciprocal tariff are creating some gap between the price situation within the United States and the pricing in the international market. This is very true for the hot rolled coils to some extent also for the scrap and some raw material. But in this moment I would say our concern is more the overall level of economic activity and the risk of a recession and some downtrend in the overall level of activity. This is more of a concern. Also we have five steel shop operating all in the world, some operating in the states, one in the States, the other in other region in Latin America, in Europe. And I think we can manage this change in the value and these gaps from the prices internally in the States or outside in the rest of the world. Also Tenaris has a highly differentiated product. The raw material have an impact on our overall cost, but it is not the same impact that you may have in companies that are focused on lower value-added product like long or flat product to some extent. So it's important but in this moment I don't think this is our major concern.

Great, thank you. And the other question I wanted to ask about is given the Rig Direct model that's in place, can you just give us a sense for if we do see a reversal in price at all as a result of low activity, what's sort of the timing on when we would see that start to get -- start to show up in the numbers? Would it be third quarter, would it be later? Just based on sort of the Rig Direct mile and sort of the relationships you have with your key customers.

Well, this is a question that is not easy to project in the second half. Also because of the change in tariff, the uncertainty on quota, what will the US Administration do to limit import into the states, this is a very important factor to determine the dynamic. Up to now we have seen the pipe logic growing slowly but moving on even this month. Here maybe Guillermo, you can add some color on the factor that may influence pricing in the medium term.

Yes, as you said, I mean since the beginning of the year the prices in the market have increased like 10%. And as you know and we have discussed in previous calls, because of the formulas of our direct long-term agreements, we have some inertia. So we don't expect any -- in case there is a reduction in the prices, we don't expect any impact in the third quarter and eventually it could start to affect to go into our P&L in the fourth. However, I think it's too early to say. As we said before, still we have not heard from any of our clients a reduction in their activities, though we are expecting them to come out probably with some during maybe May. I think that in one month we'll have a better visibility of their decisions about second half, but I don't see any impact on the contrary. I mean due to the inertia of our formulas, prices in third quarter should go up because of so far we have seen that increase.

Thank you.

Thank you.

Our next question comes from Derek Podhaizer with Piper Sandler.

Hey, good morning. Just to kind of wrap up all the conversations around tariffs and the impact on pricing and obviously we have an activity outlook that has deteriorated over the last three months. But I remember last quarter you discussed reaching a 25% margin target in the back half of the year. Obviously we now have this potential activity role in the US but considering the pricing increases, considering the tariffs, we're going to keep an eye on section 232 quotas, do you still think 25% EBITDA margin is still a good target for the second half of the year?

Well, I think many things happened between that estimation and today. I mean the changes have been substantial. Today we are looking at the price of oil in the range of below $60. This no doubt will have an impact on us. Still considering all the factors that we mentioned, stability of our portfolio, differentiation in the market that could be most affected by slowdown, I think we should be able to maintain over time our margin between the 20% and 25%, but will be difficult today to stay at the 25% margin rate with this environment in the second half of this year. But we will still stay, let's say, within this range looking at the environment as it is today.

Great. I appreciate the color, the comments there. Then just maybe if we can expand so the North America revenue was up 10% quarter-over-quarter. I know that includes Mexico obviously with your region has clearly deteriorated, so surprised to see the strength there. You talked about Canada seasonal recovery, but you also mentioned the increased sales through US Rig Direct. I just wanted to get your take, maybe if we can expand on that. Have you seen maybe a front loading of budgets as your largest E&P operators look to order steel, OCTG ahead of the tariff impact and potentially other impacts that could be coming throughout the year. Just maybe some thoughts on why you had such a strong quarter for North America driven by the US side, just considering Mexico was such a drag?

No. You know our business model, we sell on Rig Direct, we invoice directly when they use the pipe in the rig and today more than 95% of our clients are operating on this way. So in the end we are copying very precisely the exact level of operation. There is no room for anticipating stocks in most of our sales. There are maybe lime pipe, but also in this I don't think the company had the space for, let's say, anticipating order. So we are just following copying the curve of the activity. Our current has been resilient. I mean the level of their operation after consolidation by the different company has to some extent be solid. Now in Canada, we had a record season. I mean for us, it has been a record quarter and the record season also for Canada. In Canada, the level of drilling has been high. Our Rig Direct model in Canada is expanding. So also in Canada we are copying the level of operation. We do not see any anticipation of sales. Now, on this ground we are making our forecast for the second Q and is a positive forecast because we have a portfolio, we have this stability, we can predict, we think, pretty well the combination of volume and price in that region. When we look ahead in the second half of the year, this is much more difficult because the company will recalculate probably during the coming three, four months and they will maybe reorganize, re-plan some of the development and we will see this happening, but probably during the quarter, the second quarter. At the end of the second quarter, we will understand better the perspective for the second quarter. We will also better understand if the administration will limit import to some extend and if the expectation of the economy and the oil will continue to be as they are today, which is, let's say, pretty pessimistic point of view for the future.

Great. Thanks for all the comments. I'll turn it back.

Our next question comes from Jamie Franklin with Jefferies.

Hi there. Thank you for taking my questions. Just a couple of clarifications. So I wanted to come back on costs firstly, and last year at 2Q results you gave a target for 200 million cost savings to be realized by 1H25. Can you please quantify approximately how much of that has already been recognized as of 1Q25 results? And secondly, regarding the decline in sales in South America in the quarter, the press release mentions lower prices in Argentina, could you please just elaborate on that and any further color you could give us on possible timing of orders in Argentina later this year, please. Thank you.

Thank you, Jamie. Well, on the first point, I think we have been able to capture more than half of the 200 million saving that we planned in the middle of last year. This is coming from different sources; productivity increase, efficiency in our plant, some reorganization of our supply chain to also reduce the cost of input. And we're proceeding and we expect that this will contribute in the end. It will contribute to our margin because these savings are getting into our IFRS cost of sales over time, not immediately, because this is the logic of it. So we will proceed in this sense and we think we will get the expected reduction by the second -- the end of the second. Talking about Argentina, the overall level of price, what is going down is the mix, because we are combining line pipe project and OCTG. And in the line pipe project we have lower level of price for this. These are welded products like the Vemos line pipe project and so on. In the case of the OCTG, we are reflecting the formulas in the majority of our contract, are considering the pipe logic as a key factor. One of the factors, there are other in some of the contract, but mainly this will be pipe logic and so for instance, we may see increase of some percentage point in this. There has been a change of mix in Argentina because the rigs in the Vaca Muerta space has been increasing, are today in the range about 43, 44, I think now. They were in the range of 31, year and a half ago, I mean two years ago. So the increase is there in the Vaca Muerta space. But in the southern part of the country, YPF and the other companies have been selling asset -- less productive asset to focus on Vaca Muerta. And this has reduced the number of rigs operating in the south so when you look at the overall number, you see an increase that appears to be more limited. And probably also during the rest of 2025, we will see slight increase in the level of rigs. But in terms of price, I think overall we will follow the pipe logic and you will see the price apart from the mix between welded and seamless.

That's great. Thank you.

Our next question comes from Daniel Thomson with BNP Paribas.

Hi, good afternoon. Thanks for taking my question. Just a follow up on the shareholder returns comments and thinking around the balance sheet. Obviously the share price has taken a significant step down on the lower oil price environment already. And given your positive longer term outlook, your buybacks could represent one of the most attractive uses of cash here. So I just wondered how the lower share price factors into your thinking on repurchases and the pace of those repurchases that you've demonstrated under the existing program relative to maybe wanting to maintain a more defensive cash balance into the potentially weaker period. And second one's a bit more straightforward just on the mechanics of any reauthorization. What is the timeline between any reauthorization being issued in May and actually beginning with the implementation of the buyback? Are there any subsequent approvals required after that May meeting or not? Thank you.

Thank you, Daniel. Well, as I was saying before, the extension of the authorization of buyback is in the agenda of the General Assembly. We expect it to be approved. Then it will be up to the new Board of Directors to consider the different factor, the situation, perspective for venture acquisition, possible use of cash, decide which course of action to take. We will bring all this evidence to the Board. And after the General Assembly and the assumption of the new authority in the Board, the Board will consider this and see which is the best use of the cash that we have in the company.

All right, thank you.

Thank you.

That concludes today's question and answer session. I'd like to turn the call back to Giovanni Sardagna for closing remarks.

Thank you, Liz. And well, we would like to thank you all for joining us today in our conference call. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.