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Tenaris Announces 2024 First Quarter Results
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)
1Q 2024 4Q 2023 1Q 2023 Net sales ($ million) 3,442 3,415 1 % 4,141 (17 %) Operating income ($ million) 812 819 (1 %) 1,351 (40 %) Net income ($ million) 750 1,146 (35 %) 1,129 (34 %) Shareholders' net income ($ million) 737 1,129 (35 %) 1,129 (35 %) Earnings per ADS ($) 1.27 1.92 (34 %) 1.91 (34 %) Earnings per share ($) 0.64 0.96 (34 %) 0.96 (34 %) EBITDA ($ million) 987 975 1 % 1,477 (33 %) EBITDA margin (% of net sales) 28.7 % 28.6 % 35.7 %
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
Tubes Sales volume (thousand metric tons) 1Q 2024 4Q 2023 1Q 2023 Seamless 777 760 2 % 840 (8 %) Welded 269 246 9 % 283 (5 %) Total 1,046 1,006 4 % 1,123 (7 %)
Tubes 1Q 2024 4Q 2023 1Q 2023 (Net sales - $ million) North America 1,488 1,501 (1 %) 2,229 (33 %) South America 614 590 4 % 975 (37 %) Europe 226 302 (25 %) 252 (10 %) Asia Pacific, Middle East and Africa 804 805 0 % 519 55 % Total net sales ($ million) 3,132 3,198 (2 %) 3,975 (21 %) Operating income ($ million) 769 780 (1 %) 1,312 (41 %) Operating margin (% of sales) 24.6 % 24.4 % 33.0 %
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 $25 million from positive legal claim's resolutions in Mexico and Brazil.
Others 1Q 2024 4Q 2023 1Q 2023 Net sales ($ million) 310 217 43 % 167 86 % Operating income ($ million) 42 39 7 % 40 7 % Operating margin (% of sales) 13.7 % 18.1 % 23.8 %
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
(all amounts in thousands of U.S. dollars) Three-month period ended March 31,
2024 2023
Unaudited
Net sales 3,441,544 4,141,181
Cost of sales (2,134,052 ) (2,307,779 )
Gross profit 1,307,492 1,833,402
Selling, general and administrative expenses (508,132 ) (487,347 )
Other operating income (expense), net 12,304 5,299
Operating income 811,664 1,351,354
Finance Income 56,289 47,887
Finance Cost (20,583 ) (31,545 )
Other financial results, net (60,468 ) 4,477
Income before equity in earnings of non-consolidated companies and income tax 786,902 1,372,173
Equity in earnings of non-consolidated companies 48,179 53,006
Income before income tax 835,081 1,425,179
Income tax (84,856 ) (295,972 )
Income for the period 750,225 1,129,207
Attributable to:
Shareholders' equity 736,980 1,128,627
Non-controlling interests 13,245 580
750,225 1,129,207
Consolidated Condensed Interim Statement of Financial Position
(all amounts in thousands of U.S. dollars) At March 31, 2024 At December 31, 2023
Unaudited
ASSETS
Non-current assets
Property, plant and equipment, net 6,094,145 6,078,179
Intangible assets, net 1,356,065 1,377,110
Right-of-use assets, net 137,026 132,138
Investments in non-consolidated companies 1,681,971 1,608,804
Other investments 983,519 405,631
Deferred tax assets 774,014 789,615
Receivables, net 177,221 11,203,961 185,959 10,577,436
Current assets
Inventories, net 3,911,719 3,921,097
Receivables and prepayments, net 291,694 228,819
Current tax assets 261,983 256,401
Trade receivables, net 2,303,293 2,480,889
Derivative financial instruments 2,883 9,801
Other investments 2,248,863 1,969,631
Cash and cash equivalents 1,323,350 10,343,785 1,637,821 10,504,459
Total assets 21,547,746 21,081,895
EQUITY
Shareholders' equity 17,407,503 16,842,972
Non-controlling interests 201,564 187,465
Total equity 17,609,067 17,030,437
LIABILITIES
Non-current liabilities
Borrowings 28,122 48,304
Lease liabilities 97,078 96,598
Derivative financial instruments - 255
Deferred tax liabilities 488,082 631,605
Other liabilities 282,147 271,268
Provisions 103,465 998,894 101,453 1,149,483
Current liabilities
Borrowings 608,278 535,133
Lease liabilities 42,097 37,835
Derivative financial instruments 3,569 10,895
Current tax liabilities 476,280 488,277
Other liabilities 493,293 422,645
Provisions 35,492 35,959
Customer advances 239,342 263,664
Trade payables 1,041,434 2,939,785 1,107,567 2,901,975
Total liabilities 3,938,679 4,051,458
Total equity and liabilities 21,547,746 21,081,895
Consolidated Condensed Interim Statement of Cash Flows
(all amounts in thousands of U.S. dollars) Three-month period ended March 31,
2024 2023
Unaudited
Cash flows from operating activities
Income for the period 750,225 1,129,207
Adjustments for:
Depreciation and amortization 175,442 125,453
Income tax accruals less payments (29,222 ) 188,856
Equity in earnings of non-consolidated companies (48,179 ) (53,006 )
Interest accruals less payments, net 11,938 (3,700 )
Changes in provisions 1,545 7,957
Changes in working capital (9,548 ) (460,557 )
Others, including net foreign exchange 34,776 (13,440 )
Net cash provided by operating activities 886,977 920,770
Cash flows from investing activities
Capital expenditures (172,097 ) (117,088 )
Changes in advance to suppliers of property, plant and equipment 2,952 33
Loan to joint ventures (1,354 ) -
Proceeds from disposal of property, plant and equipment and intangible assets 5,412 4,796
Changes in investments in securities (759,667 ) (890,636 )
Net cash used in investing activities (924,754 ) (1,002,895 )
Cash flows from financing activities
Changes in non-controlling interests 1,120 -
Acquisition of treasury shares (311,064 ) -
Payments of lease liabilities (16,768 ) (10,758 )
Proceeds from borrowings 829,947 559,274
Repayments of borrowings (754,078 ) (679,892 )
Net cash used in financing activities (250,843 ) (131,376 )
Decrease in cash and cash equivalents (288,620 ) (213,501 )
Movement in cash and cash equivalents
At the beginning of the period 1,616,597 1,091,433
Effect of exchange rate changes (4,921 ) (16,518 )
Decrease in cash and cash equivalents (288,620 ) (213,501 )
1,323,056 861,414
Exhibit I - Alternative performance measures
Alternative performance measures should be considered in addition to, not as substitute for or superior to, other measures of financial performance prepared in accordance with IFRS.
EBITDA, Earnings before interest, tax, depreciation and amortization
EBITDA provides an analysis of the operating results excluding depreciation and amortization and impairments, as they are recurring non-cash variables which can vary substantially from company to company depending on accounting policies and the accounting value of the assets. EBITDA is an approximation to pre-tax operating cash flow and reflects cash generation before working capital variation. EBITDA is widely used by investors when evaluating businesses (multiples valuation), as well as by rating agencies and creditors to evaluate the level of debt, comparing EBITDA with net debt.
EBITDA is calculated in the following manner:
EBITDA = Net income for the period + Income tax charges +/- Equity in Earnings (losses) of non-consolidated companies +/- Financial results + Depreciation and amortization +/- Impairment charges/(reversals)
EBITDA is a non-IFRS alternative performance measure.
(all amounts in thousands of U.S. dollars) Three-month period ended March 31,
2024 2023
Income for the period 750,225 1,129,207
Income tax charge 84,856 295,972
Equity in earnings of non-consolidated companies (48,179 ) (53,006 )
Financial Results 24,762 (20,819 )
Depreciation and amortization 175,442 125,453
EBITDA 987,106 1,476,807
Free Cash Flow
Free cash flow is a measure of financial performance, calculated as operating cash flow less capital expenditures. FCF represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base.
Free cash flow is calculated in the following manner:
Free cash flow = Net cash (used in) provided by operating activities - Capital expenditures.
Free cash flow is a non-IFRS alternative performance measure.
(all amounts in thousands of U.S. dollars) Three-month period ended March 31,
2024 2023
Net cash provided by operating activities 886,977 920,770
Capital expenditures (172,097 ) (117,088 )
Free cash flow 714,880 803,682
Net Cash / (Debt)
This is the net balance of cash and cash equivalents, other current investments and fixed income investments held to maturity less total borrowings. It provides a summary of the financial solvency and liquidity of the company. Net cash / (debt) is widely used by investors and rating agencies and creditors to assess the company's leverage, financial strength, flexibility and risks.
Net cash/ debt is calculated in the following manner:
Net cash = Cash and cash equivalents + Other investments (Current and Non-Current)+/- Derivatives hedging borrowings and investments - Borrowings (Current and Non-Current).
Net cash/debt is a non-IFRS alternative performance measure.
(all amounts in thousands of U.S. dollars) At March 31,
2024 2023
Cash and cash equivalents 1,323,350 861,494
Other current investments 2,248,863 1,081,141
Non-current investments 976,206 375,677
Derivatives hedging borrowings and investments - 11,680
Current borrowings (608,278 ) (536,907 )
Non-current borrowings (28,122 ) (56,739 )
Net cash / (debt) 3,912,019 1,736,346
Operating working capital days
Operating working capital is the difference between the main operating components of current assets and current liabilities. Operating working capital is a measure of a company's operational efficiency, and short-term financial health.
Operating working capital days is calculated in the following manner:
Operating working capital days = [(Inventories + Trade receivables - Trade payables - Customer advances) / Annualized quarterly sales ] x 365
Operating working capital days is a non-IFRS alternative performance measure.
(all amounts in thousands of U.S. dollars) At March 31,
2024 2023
Inventories 3,911,719 3,991,501
Trade receivables 2,303,293 2,834,369
Customer advances (239,342 ) (136,172 )
Trade payables (1,041,434 ) (1,067,602 )
Operating working capital 4,934,236 5,622,096
Annualized quarterly sales 13,766,176 16,564,724
Operating working capital days 131 124
Giovanni Sardagna
Tenaris
1-888-300-5432
www.tenaris.com
COMTEX_451422197/2241/2024-04-25T16:30:29