Tenaris SA Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alessandro Pozzi - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : Good afternoon. Thank you for taking my questions. I have three if I may. And the first one is we've seen the results of the US elections and I was wondering if you can give us your thoughts on how the new administration could have an impact on your business. Could have opportunities for you in the US. I'm thinking about potential a more protectionist approach with the higher tariffs or lower quotas or maybe even on the M&A side, whether potentially now you're looking at maybe acquisitions that may not have been available in the past with the previous administration. And we know that in 2023 and the acquisition of Benteler was terminated. So, any thoughts around the impact of the new administration could be really helpful. The second one, if you can just give us maybe your view on what we should think about the share buyback into next year? You just announced the $700 million until March. But I was wondering beyond March, what sort of let's say share buyback program we could envisage should we assume on a steady state? $1.2 billion for next year, let's say same as last year. And also final question on outlook for the activities in North America. Some of your peers have suggested potential flat if not down activities coming down next year. But it feels like you are more constructive for the US next year. And I was wondering if you can give us your thoughts on how we should see activities into 2025. Thank you.

Question: Alessandro Pozzi - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : What about potential new M&A opportunities in the US?

Question: Alessandro Pozzi - Mediobanca - Banca di credito finanziario S.p.A. - Analyst : Okay. It's very clear. Thank you very much.

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Yeah, good morning, good afternoon, gentlemen. Paolo, my first question is maybe a follow up on implications from the new administration. I wanted to get your thoughts on if the new administration did raise tariffs on imports --. So this is a what if kind of scenario, what would be the impact to Tenaris? And I'm just thinking about if you could give us a sense of how much of your North American revenues or volume do you supply with domestic product versus maybe some of the sourcing out of Veracruz or out of Argentina?

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Great. That's exactly what I wanted to get answered. My follow up is just thinking about kind of near-term thoughts on kind of volumes and in EBITDA margins. It does look like Paolo, the second half of '24 is matching what you mentioned at the recent Investor Day. But maybe the shape is a little bit different with higher 3Q results versus 4Q. I was wondering if you could give us your thoughts on maybe how EBITDA margin could look in 4Q. And if you had any visibility about trends into the first half of '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:00PM, TENR.MI - Q3 2024 Tenaris SA Earnings Call

Question: Marc Bianchi - TD Cowen - Analyst : Hi, thank you. I was curious to hear some more about the upside you see in Argentina and Mexico. I think I heard you say that there was a pipeline award that you have now for Argentina. Maybe talk to us about when that that starts to flow through results. And then just any sense of the magnitude of what kind of increase from those countries could be coming through to Tenaris?

Question: Marc Bianchi - TD Cowen - Analyst : That's very good. In Mexico?

Question: Marc Bianchi - TD Cowen - Analyst : Okay. Very good. Thank you for all of that. I just had one other as it relates to the capital return. And I know, well you'll formalize this plan in May, but as we think about your willingness to maybe dip into the cash balance to support capital return, what sort of cash balance does the company need to just run the business? Because certainly the current level is much more than you probably need.

Question: Marc Bianchi - TD Cowen - Analyst : And double digit up?

Question: Marc Bianchi - TD Cowen - Analyst : Thank you for the clarification. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:00PM, TENR.MI - Q3 2024 Tenaris SA Earnings Call

Question: Marc Bianchi - TD Cowen - Analyst : Thank you very much. I'll turn it back.

Question: Stephen Gengaro - Stifel Equity Research - Analyst : Thanks, good morning, good afternoon, everybody. I think two for me. The first and it gets the kind of cash usages and maybe even the M&A side. When we think about the kind of what you have done over the last 20 years as far as M&A right, everything from Maverick on through recent deals, it all seems to be kind of in the same line of business. I'm just curious how you think internally about what -- would you go outside of those product lines at all and maybe kind of how far outside you'd go from kind of a manufacturing versus a service business?

Question: Stephen Gengaro - Stifel Equity Research - Analyst : Great. Thank you. And the other question I had at maybe a higher level, but you've alluded to this in the past and I'm curious what your current thinking is on the margin front. You've done a great job over the last couple of years, getting margins high and maintaining at a pretty healthy level. Where do you see kind of margins sort of flowing out on a normalized basis? Like should we think about kind of low to mid-[20%s] as a pretty good normalized run rate or how do you think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:00PM, TENR.MI - Q3 2024 Tenaris SA Earnings Call

Question: Stephen Gengaro - Stifel Equity Research - Analyst : Great. No, that's great color. Thank you very much.

Question: Rodrigo Almeida - Santander - Analyst : Yeah. Hi. So I just have a couple of follow-ups here. I think the first one is related to the -- maybe the outlook that we talked about regarding the short term. And I wanted to get an update on the $200 million cost saving project that you guys are working on. And whether this is already included in this sort of guidance that we're talking about for fourth quarter and first quarter. And what is the progress of this cost saving projects? And then some additional color on South America, where we talk about Argentina a little bit and then we mentioned the project in Brazil, the project with Petrobras and the projects with Equinor as well. How soon could we expect these volumes, especially for Raia to kick in? And what REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:00PM, TENR.MI - Q3 2024 Tenaris SA Earnings Call would be the impact from these projects on your revenues for South America, especially for 2025 because Raia, I guess, it's going to come online very soon at some point. It'd be next two, three years? Thank you.

Question: Rodrigo Almeida - Santander - Analyst : Perfect. Thank you so much for the call. Very helpful.

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Yes. Paolo, sorry to double dip here, but I just wanted to see if we could get a little bit more clarification just sensing a little bit of confusion from the buy side on your outlook comments for 4Q and 1Q '25. So, could you just help us understand what you think the sequential impacts will be to revenue in 4Q and 1Q? And just trying to think about revenues versus volume in both of those quarters.

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Great. Thank you for clarifying that.

Question: Arun Jayaram - JPMorgan Chase & Co - Analyst : Super clear. Thank you.