Call Us : +8615869615801;0086-577-86852888
|

Edited Transcript of TEN.MI earnings conference call or presentation 3-May-19 1:00pm GMT

Views : 757
Update time : 2019-10-06 11:06:33

Q1 2019 Tenaris SA allowance Call

Lux can 10, 2019 (Thomson StreetEvents) -- Edited Transcript of Tenaris SA allowance council summon or presentation Friday, can 3, 2019 at 1:00:00pm GMT

TEXT translation of Transcript

================================================================================

Corporate Participants

================================================================================

* Edgardo Carlos

Tenaris S.A. - CFO

* Gabriel Podskubka

Tenaris S.A. - principal of Eastern Hemisphere

* Germán Curá

Tenaris S.A. - Vice Chairman of the Board

* Giovanni Sardagna

Tenaris S.A. - IR Director

* Guillermo Francisco Vogel Hinojosa

Tenaris S.A. - Vice Chairman of the Board

* Luca Zanotti

Tenaris S.A. - principal of U.S.A. Operations

* Paolo Rocca

Tenaris S.A. - Chairman & CEO

================================================================================

Conference summon Participants

================================================================================

* Alan Henri Spence

Jefferies LLC, research piece - Equity Analyst

* Alessandro Pozzi

Mediobanca - Banca di credito finanziario S.p.A., research piece - research Analyst

* frank J. McGann

BofA Merrill Lynch, research piece - MD

* Ian MacPherson

Simmons & corporation International, research piece - MD & Senior research Analyst of fat Service

* Igor Levi

BTIG, LLC, research piece - Director

* John David Anderson

Barclays beach PLC, research piece - Director and Senior North America Oilfield Services & implement Analyst

* Marc Gregory Bianchi

Cowen and Company, LLC, research piece - MD

* Michael Hogarth Rae

Redburn (Europe) Limited, research piece - research Analyst

* Robert John Pulleyn

Morgan Stanley, research piece - Analyst

* Stephen David Gengaro

Stifel, Nicolaus & Company, Incorporated, research piece - MD & Senior Analyst

* Vladimir Maximovich Sergievskii

Barclays beach PLC, research piece - preceding Equity research Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day, ladies and gentlemen, and address ought the Q1 2019 Tenaris S.A. allowance council Call. (Operator Instructions) because a reminder, this council is being recorded.

I used to now alike ought introduce your host because today's conference, Giovanni Sardagna, Investor Relations Officer. You can begin.

--------------------------------------------------------------------------------

Giovanni Sardagna, Tenaris S.A. - IR Director [2]

--------------------------------------------------------------------------------

Thank you, and address ought Tenaris 2019 First area council Call.

Before we start, I used to alike ought recolect you that during this council call, we will exist discussing forward-looking information, and that our genuine results can alter from those expressed or implied during this call.

With me above the summon today are Paolo Rocca, our Chairman and CEO; Edgardo Carlos, our head economical Officer; Guillermo Vogel, Vice Chairman and member of our Board of Directors; Germán Curá, Vice Chairman and member of our Board of Directors; Gabriel Podskubka, principal of our Eastern Hemisphere Operations; and Luca Zanotti, principal of our U.S. Operations.

Before passing above the summon ought Paolo because his opening remarks, I used to alike ought briefly comment our quarterly results. during the first area of '19, sales were $1.9 billion, at rope with the corresponding area of persist year and down 11% sequentially principally reflecting no deliveries of offshore rope pipe because East Mediterranean gas projects and the slowdown at the U.S. and Canadian markets.

Our quarterly operating earnings at $259 million, which benefited from a $50 million recovery of tariffs paid above the imports of steel block into the U.S., was 22% higher year-on-year above a although even of sales.

Average selling prices at our tubes operating segments were up 13% compared ought the corresponding area of persist year and up 2% compared ought the previous area due ought a more favorable produce mix.

During the quarter, our working chief declined by almost $200 million, principally reflecting a reduction at receivables and inventories.

Our release cash flow amounted ought $462 million and our net cash locality increased by $281 million ought $766 million at the purpose of the quarter.

Now I will entreat Paolo ought say a little words ago we empty the summon ought questions.

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [3]

--------------------------------------------------------------------------------

Thank you, Giovanni, and good morning ought full of you. at this first area of 2019, we improved our cash flow performance, reducing our working chief and generating a release cash flow of $462 million, match ought 25% of our sale. With this, we increased our net cash locality ought $766 million at the purpose of the quarter, even after paying because the controlling shareholding at Saudi steel pipe. because little months now, we eat been focusing above this look of our operation, and we are pleased ought look the results coming through.

Financial might is an significant differentiator because Tenaris at today's volatile world and one which enable us ought accept employ of the new opportunities that are opening up at our sector.

As we mentioned at our persist call, we are entering a new phase of expansion at key markets because the fat and gas industry, following little years of organic growth, which culminated at the construction and start-up of our bay city seamless pipe plant at Texas.

Now, at Saudi Arabia, we are working difficult ought integrate and upgrade, the industrial deed of the welded pipe implement we acquired at January, and we empty up new markets at the region.

In the U.S., we recently announced the conclusion of an harmony ought earn IPSCO Tubulars, puzzle ought the corresponding regulatory approvals. This investment used to add ought the USD 8 billion we eat invested at the nation above the past 15 years, supporting the growth and efficiency of the U.S. country industry and protection a hard U.S. manufacturing footprint. The acquisition and subsequent integration of IPSCO used to intimate our geographical deployment at the United States and amplify our produce mountain produced domestically, also because our produce portfolio. With the Koppel steel shop, we will heighten our perpendicular integration at the country, however there is a well produce and geographical complementarity among our bay city seamless plant and IPSCO's Ambridge small-range seamless plant at Pennsylvania. And IPSCO's extensive welded pipe, fever treatment and finishing implement throughout the country, will complement our industrial implement at the South, allowing us ought diminish time-to-market and improve service ought our customers. We tax the team at IPSCO, and study that they will exist an significant supplement ought our U.S. human resources.

Through this the integration of the companies, we will exist able ought generate plentiful industrial and logistic synergies and eat an even stronger platform ought advance efficiencies and improve service ought visitor throughout the country. This year, even if, at the first half there is a slowdown at the onshore North American market, at the interval of the world and at offshore markets, we are seeing stable growth at the activity. We are winning significant awards because deepwater projects in: Guyana, China, at one of the first deepwater project, the Lingshui design by CNOOC, and above the both phase of the bay of Mexico, American and Mexican side, we eat awards because exploration and development campaigns because little foremost fat companies. Tenaris at 2019 will exist committed above full fronts, at supporting our customers with the total digitalization of the equip chain, at strengthening our industrial system with advanced automation tools ought improve safety, estate and productivity and at executing our growth initiatives.

In closing, I used to also alike ought mention that we were recognized by the worldsteel because a Steel Sustainability Champion because the second consecutive year. This is an significant recognition of the contribution made by our nation at this identical relevant zone because our long-term strategy.

Thank you, and I will accept any puzzle that you can have.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first puzzle is from Igor Levi from BTIG.

--------------------------------------------------------------------------------

Igor Levi, BTIG, LLC, research piece - Director [2]

--------------------------------------------------------------------------------

Hi guys, could you oration a portion nearly your relationship with Oxy and Anadarko, specially at relative ought Rig Direct? And how the task could affect your competitive position?

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [3]

--------------------------------------------------------------------------------

Thank you, Igor. I study we eat a long-term, identical good relative with both companies. except I used to entreat ought Luca ought add concrete comment that could exist related ought our Rig govern deployment at this.

--------------------------------------------------------------------------------

Luca Zanotti, Tenaris S.A. - principal of U.S.A. Operations [4]

--------------------------------------------------------------------------------

Thank you, Paolo. Good morning, Igor. Anadarko and Oxy are both large customers we eat a multiple relationship with, no only at the U.S. except also outer internationally. And no only above OCTG except also at other produce line. And we are working with both of them ought tool our strategy. hence frankly, it's new ought this acquisition, provided that this went along because since we full know, it's cabin under, let's say, negotiation.

--------------------------------------------------------------------------------

Igor Levi, BTIG, LLC, research piece - Director [5]

--------------------------------------------------------------------------------

Thank you. And then impartial ought follow up. You mentioned some activity reductions at the U.S. at Rig govern customers. Could you recolect us how much of the U.S. impartial are at Rig Direct? And does that disagree by basin? And is there an occur ought improve your Rig govern exposure at the Marcellus with the supplement of IPSCO's seamless mill?

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [6]

--------------------------------------------------------------------------------

Well, what I've mentioned at my remarks is the activity at habitual is subdued at this first language above 2019. We look this at the even of rig count, except I was no referring ought our Rig Direct. Our Rig govern digest ought expand. We are above the 60% that we mentioned at the persist council call, and we will digest ought proceed at the introduction of this manner of serving the customer at an integrated way. And we indeed study that this is identical relevant because increasing the efficiency and the competence of the corporation ought follow their goal of improved efficiency and fare reduction at their operation.

Now, because distant because the second point that you mentioned, we desire from the IPSCO acquisition well ought intimate our geographical deployment. And we conceive that this will enable us ought amplify the mountain of products that we are supplying today at our Rig govern at some region, except also ought add and serve and offer excellent at different region. above time, also above the north, we want ought understand fully the locality of the client, their willingness ought enter at this even of service and their logistic constraint. except I study that geographical integration is one of the chief spread that we will follow with this integration -- with this acquisition with IPSCO.

--------------------------------------------------------------------------------

Igor Levi, BTIG, LLC, research piece - Director [7]

--------------------------------------------------------------------------------

Great, thank you. I'll become it back.

--------------------------------------------------------------------------------

Operator [8]

--------------------------------------------------------------------------------

Thank you. Our next puzzle is from Ian MacPherson from Simmons. Your rope is now open.

--------------------------------------------------------------------------------

Ian MacPherson, Simmons & corporation International, research piece - MD & Senior research Analyst of fat Service [9]

--------------------------------------------------------------------------------

Hi, thank you. I wanted ought entreat nearly the international outlook. It looks -- it sounds from your guidance that the second area will about resemble the first quarter, excluding the one-time tariff benefit. except I wonder if you appear beyond the clouds at North America, if you eat any visibility because improving sequential material momentum internationally at the second half compared ought the first half, or if you desire more of a even trajectory ought the year at this point?

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [10]

--------------------------------------------------------------------------------

Thank you, Ian. What we look there, clearly, we will no cite the particular sales ought the rope pipe material at the Mediterranean of persist year. And also, we will eat ought look a reduction at Canada. That is the one that you look at the rig compute at Canada at this month. Now we will compensate ought some extent because this, with the supplement of sales from our acquisition at Saudi, with extra gradual expansion of activity at Mexico. And there will exist also some, this what we summon the condition of recovery that is below manner at different geography of the Eastern Hemisphere. I will entreat ought Gabriel ought award an symptom what we will desire above this.

--------------------------------------------------------------------------------

Gabriel Podskubka, Tenaris S.A. - principal of Eastern Hemisphere [11]

--------------------------------------------------------------------------------

Yes. Thank you, Paolo. Good morning, Ian. at fact, because we are seeing a gradual recovery at drilling activity at international markets, at the middle East, Saudi, UAE, Kuwait, they're pursuing aggressive gas targets fund. They are seeking self-sufficiency, fat replacement and even exports. We also look Qatar ramping up because drilling at the -- trying ought accept employ of their North field and amplify their LNG position. We look India moving also into offshore developments. outstanding also, the activity and the efforts of the Chinese NOCs boosting gas manufacture at the country. hence overall, there is an improvement at drilling activity. The North sea is another dynamic zone where we're seeing some comeback because exploration and some great projects coming above stream, alike because example, Equinor Mariner. hence overall, the surroundings is slowly getting better. And with our technologies and our local locality and service capabilities, we are robust positioned ought accept employ of this certain trend. because you were saying, perhaps the second area will exist at rope with the first one, except we will begin ought look some of the impact of this recovery with increased shipments during the second half of the year, specially at the OCTG front, including also the supplement of SSP into the portfolio.

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [12]

--------------------------------------------------------------------------------

Yes. at general, we mentioned at our outlook, we desire the second area ought exist more or less at rope with the first quarter. Now we do no eat total visibility above the second divide of the year. And I personally study that if the price of fat stays at the mountain at which it is today. It's no clean ought me why some of the large, independent and the foremost at the U.S. shouldn't grow hind ought some extra investment at the second divide of the year. except this is no something that we eat clean symptom or visibility today. We will see, I think, above time. Some of the decision ought retrench has been taken following the reduction of the price of fat at the purpose of persist year. except today, it looks ought me that the situation, ought some extent, has changed. And maybe at the second half of 2019, this can affect investment decision of the fat corporation also at the United States apart from a steady, gradual recovery that we can look at international and at Mexico because I mentioned initially.

--------------------------------------------------------------------------------

Ian MacPherson, Simmons & corporation International, research piece - MD & Senior research Analyst of fat Service [13]

--------------------------------------------------------------------------------

That's identical helpful, thank you everyone. because a follow-up question, I wanted ought entreat nearly IPSCO. I suppose that you're cabin tracking a near ought the transaction at the second half. I don't learn if you could exist any more concrete above that however at this point. maybe not. except also, one of the things that strikes me nearly the deal, alike Tenaris, they flow at a identical high utilization above the seamless capacity, except their margins are pretty a portion weaker than yours are. And I study we've been making our hold guesses because ought what the synergies could appear alike and how much edge accretion you could come above their business. And I wanted ought look if you could speak ought those synergy opportunities however at this stage.

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [14]

--------------------------------------------------------------------------------

Thank you, Ian. because you say, we are actively working because the closing of this deal. We desire this ought grow at the coming months. We are identical confident that this will grow through. because distant because the synergies are concerned, there are, because I mentioned at the beginning, synergy that comes from the geographical integration. There are synergies that comes from the complementation of the portfolio of product. The IPSCO Tubulars has developed products that are -- that coincide with the want of some of the client, we study the complementation with our portfolio is also important. And we study that there are synergies at the industrial segment. This comes from knowledge sharing. Tenaris is a great company, identical experienced at this. We study there is synergies coming from this. if I ought say which could exist the relevance of this because 2000 -- above time because this is no something we can grow immediately, except above time, at 2020 and looking forward, we can desire above the 100 base points above our margins that ought grow from the synergies that we study we can achieve, and then we will see, when we will eat a identical clean harmony of what we can do at condition of logistics and so, if this is -- let's say, could exist enhanced above time.

--------------------------------------------------------------------------------

Ian MacPherson, Simmons & corporation International, research piece - MD & Senior research Analyst of fat Service [15]

--------------------------------------------------------------------------------

. Great, thank you Paolo.

--------------------------------------------------------------------------------

Operator [16]

--------------------------------------------------------------------------------

Our next puzzle is from David Anderson from Barclays, your rope is now open.

--------------------------------------------------------------------------------

John David Anderson, Barclays beach PLC, research piece - Director and Senior North America Oilfield Services & implement Analyst [17]

--------------------------------------------------------------------------------

Just a genuine brief follow-up above the IPSCO deal. Are there any concerns at full at the antitrust side? do you study you're going ought eat ought figure any divestitures? Or do you feel handsome confident this can proceed through?

--------------------------------------------------------------------------------

Paolo Rocca, Tenaris S.A. - Chairman & CEO [18]

--------------------------------------------------------------------------------

No, we are identical confident that the task will proceed through. The U.S. impartial is an empty market, and this appear ought describe more than 50% of the market. We desire the task ought grow through, because I mentioned before. We don't learn exactly the timing because this, except because I was saying, this ought occur at the coming months.

--------------------------------------------------------------------------------

John David Anderson, Barclays beach PLC, research piece - Director and Senior North America Oilfield Services & implement Analyst [19]

--------------------------------------------------------------------------------

Okay. Say, different puzzle altogether. Gabriel, you were talking a little portion nearly the international markets. I wonder if you can impartial concentrate impartial a portion more above impartial the offshore side. hence significant divide of your business, this -- above the persist connect of weeks, we've been hearing nearly bid books increasing offshore, rigs going hind ought work, new FIDs potentially being announced. OCTG is also expect guide time item. hence I'm especial if you're starting ought grow those inquiries from your customers above some of the -- excluding the rope pipe, except impartial the more normal OCTG business. Are you certain ought grow those inquiries? used to you begin ought desire ought look orders at the hind divide of the year? can you award us impartial a flavor because ought what you're seeing above that from the offshore customers, please?

--------------------------------------------------------------------------------

Gabriel Podskubka, Tenaris S.A. - principal of Eastern Hemisphere [20]

--------------------------------------------------------------------------------