Tenaris Announces 2023 Second Quarter Results
The financial and operational information contained in this press release is based on unaudited consolidated condensed interim financial statements presented in
LUXEMBOURG,
Summary of 2023 Second Quarter Results
(Comparison with first quarter of 2023 and second quarter of 2022)
2Q 2023 | 1Q 2023 | 2Q 2022 | |||
Net sales ($ million) | 4,075 | 4,141 | (2%) | 2,800 | 46% |
Operating income ($ million) | 1,278 | 1,351 | (5%) | 663 | 93% |
Net income ($ million) | 1,136 | 1,129 | 1% | 634 | 79% |
Shareholders’ net income ($ million) | 1,123 | 1,129 | 0% | 637 | 76% |
Earnings per ADS ($) | 1.90 | 1.91 | 0% | 1.08 | 76% |
Earnings per share ($) | 0.95 | 0.96 | 0% | 0.54 | 76% |
EBITDA ($ million) | 1,409 | 1,477 | (5%) | 806 | 75% |
EBITDA margin (% of net sales) | 34.6% | 35.7% | 28.8% |
Our second quarter sales were close to the record level we posted in the first quarter reflecting a high level of offshore sales and of shipments to US onshore customers, as well as an increase in sales in the
Our free cash flow for the quarter reached a record level of
Market Background and Outlook
In the past month, oil prices have recovered above
In
Following record results in the first half, we expect that our sales and margins will be significantly lower in the second half. Although we expect our sales in the
Analysis of 2023 Second Quarter Results
Tubes
The following table indicates, for our Tubes business segment, sales volumes of seamless and welded pipes for the periods indicated below:
Tubes Sales volume (thousand metric tons) | 2Q 2023 | 1Q 2023 | 2Q 2022 | ||
Seamless | 844 | 840 | 0% | 815 | 4% |
Welded | 255 | 283 | (10%) | 75 | 241% |
Total | 1,099 | 1,123 | (2%) | 890 | 23% |
The following table indicates, for our Tubes business segment, net sales by geographic region, operating income and operating income as a percentage of net sales for the periods indicated below:
Tubes | 2Q 2023 | 1Q 2023 | 2Q 2022 | ||
(Net sales - $ million) | |||||
2,142 | 2,229 | (4%) | 1,583 | 35% | |
893 | 975 | (8%) | 462 | 93% | |
270 | 252 | 7% | 259 | 4% | |
612 | 519 | 18% | 327 | 87% | |
Total net sales ($ million) | 3,918 | 3,975 | (1%) | 2,632 | 49% |
Operating income ($ million) | 1,251 | 1,312 | (5%) | 636 | 97% |
Operating margin (% of sales) | 31.9% | 33.0% | 24.2% |
Net sales of tubular products and services decreased 1% sequentially but increased 49% year on year. On a sequential basis volumes sold decreased 2% due to a reduction in welded shipments while average selling prices increased 1%. In
Operating results from tubular products and services amounted to a gain of
Others
The following table indicates, for our Others business segment, net sales, operating income and operating income as a percentage of net sales for the periods indicated below:
Others | 2Q 2023 | 1Q 2023 | 2Q 2022 | ||
Net sales ($ million) | 157 | 167 | (6%) | 168 | (7%) |
Operating income ($ million) | 27 | 40 | (31%) | 27 | 2% |
Operating margin (% of sales) | 17.3% | 23.8% | 15.8% |
Net sales of other products and services decreased 6% sequentially and 7% year on year. Sequentially, sales declined due to lower sales of oil services in
Selling, general and administrative expenses, or SG&A, amounted to
Financial results amounted to a gain of
Equity in earnings of non-consolidated companies generated a gain of
Income tax charge amounted to
Cash Flow and Liquidity of 2023 Second Quarter
Net cash generated by operating activities during the second quarter of 2023 was
With capital expenditures of
Analysis of 2023 First Half Results
6M 2023 | 6M 2022 | Increase/(Decrease) | |
Net sales ($ million) | 8,216 | 5,168 | 59% |
Operating income ($ million) | 2,630 | 1,147 | 129% |
Net income ($ million) | 2,265 | 1,137 | 99% |
Shareholders’ net income ($ million) | 2,252 | 1,139 | 98% |
Earnings per ADS ($) | 3.81 | 1.93 | 97% |
Earnings per share ($) | 1.91 | 0.97 | 97% |
EBITDA ($ million) | 2,886 | 1,433 | 101% |
EBITDA margin (% of net sales) | 35.1% | 27.7% |
Our sales in the first half of 2023 increased 59% compared to the first half of 2022 as volumes of tubular products shipped increased 30% and average selling prices increased 26% while sales in the Others segment decreased 2%. Following the increase in sales, EBITDA doubled thanks to the increase in margins, as the increase in prices of tubular products more than offset a 12% increase in unit cost of sales, year on year.
Cash flow provided by operating activities amounted to
The following table shows our net sales by business segment for the periods indicated below:
Net sales ($ million) | 6M 2023 | 6M 2022 | Increase/(Decrease) | ||
Tubes | 7,892 | 96% | 4,836 | 94% | 63% |
Others | 324 | 4% | 332 | 6% | (2%) |
Total | 8,216 | 5,168 | 59% |
Tubes
The following table indicates, for our Tubes business segment, sales volumes of seamless and welded pipes for the periods indicated below:
Tubes Sales volume (thousand metric tons) | 6M 2023 | 6M 2022 | Increase/(Decrease) |
Seamless | 1,684 | 1,587 | 6% |
Welded | 538 | 125 | 329% |
Total | 2,222 | 1,712 | 30% |
The following table indicates, for our Tubes business segment, net sales by geographic region, operating income and operating income as a percentage of net sales for the periods indicated below:
Tubes | 6M 2023 | 6M 2022 | Increase/(Decrease) |
(Net sales - $ million) | |||
4,371 | 2,930 | 49% | |
1,868 | 810 | 131% | |
522 | 491 | 6% | |
1,131 | 603 | 87% | |
Total net sales ($ million) | 7,892 | 4,836 | 63% |
Operating income ($ million) | 2,563 | 1,107 | 131% |
Operating margin (% of sales) | 32.5% | 22.9% |
Net sales of tubular products and services increased 63% to
Operating results from tubular products and services amounted to a gain of
Others
The following table indicates, for our Others business segment, net sales, operating income and operating income as a percentage of net sales for the periods indicated below:
Others | 6M 2023 | 6M 2022 | Increase/(Decrease) |
Net sales ($ million) | 324 | 332 | (2%) |
Operating income ($ million) | 67 | 40 | 68% |
Operating margin (% of sales) | 20.6% | 12.0% |
Net sales of other products and services decreased 2% to
Operating results from other products and services amounted to a gain of
Selling, general and administrative expenses, or SG&A, amounted to
Financial results amounted to a gain of
Equity in earnings of non-consolidated companies generated a gain of
Income tax amounted to a charge of
Cash Flow and Liquidity of 2023 First Half
Net cash provided by operating activities during the first half of 2023 amounted to
Capital expenditures amounted to
After a dividend payment of
Tenaris Files Half-Year Report
Holders of Tenaris’s shares and ADSs, and any other interested parties, may request a hard copy of the half-year report, free of charge, at 1-888-300-5432 (toll free from
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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 |
Three-month period ended |
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||
2023 | 2022 | 2023 | 2022 | |
Unaudited | Unaudited | |||
Net sales | 4,074,913 | 2,800,474 | 8,216,094 | 5,167,515 |
Cost of sales | (2,267,164) | (1,735,342) | (4,574,943) | (3,257,284) |
Gross profit | 1,807,749 | 1,065,132 | 3,641,151 | 1,910,231 |
Selling, general and administrative expenses | (528,736) | (411,740) | (1,016,083) | (776,662) |
Other operating income (expense), net | (823) | 9,453 | 4,476 | 13,530 |
Operating income | 1,278,190 | 662,845 | 2,629,544 | 1,147,099 |
Finance Income | 45,866 | 6,441 | 93,753 | 15,266 |
Finance Cost | (36,379) | (6,127) | (67,924) | (7,962) |
Other financial results, net | 30,074 | (11,771) | 34,551 | (19,879) |
Income before equity in earnings of non-consolidated companies and income tax | 1,317,751 | 651,388 | 2,689,924 | 1,134,524 |
Equity in earnings of non-consolidated companies | 95,921 | 103,102 | 148,927 | 190,706 |
Income before income tax | 1,413,672 | 754,490 | 2,838,851 | 1,325,230 |
Income tax | (277,632) | (120,464) | (573,604) | (187,771) |
Income for the period | 1,136,040 | 634,026 | 2,265,247 | 1,137,459 |
Attributable to: | ||||
Shareholders' equity | 1,123,029 | 636,718 | 2,251,656 | 1,139,492 |
Non-controlling interests | 13,011 | (2,692) | 13,591 | (2,033) |
1,136,040 | 634,026 | 2,265,247 | 1,137,459 |
Consolidated Condensed Interim Statement of Financial Position
(all amounts in thousands of |
At |
At |
|||
Unaudited | |||||
ASSETS | |||||
Non-current assets | |||||
Property, plant and equipment, net | 5,779,137 | 5,556,263 | |||
Intangible assets, net | 1,334,036 | 1,332,508 | |||
Right-of-use assets, net | 115,550 | 111,741 | |||
Investments in non-consolidated companies | 1,603,609 | 1,540,646 | |||
Other investments | 373,309 | 119,902 | |||
Deferred tax assets | 219,704 | 208,870 | |||
Receivables, net | 208,480 | 9,633,825 | 211,720 | 9,081,650 | |
Current assets | |||||
Inventories, net | 3,884,364 | 3,986,929 | |||
Receivables and prepayments, net | 195,711 | 183,811 | |||
Current tax assets | 321,152 | 243,136 | |||
Trade receivables, net | 2,597,353 | 2,493,940 | |||
Derivative financial instruments | 21,638 | 30,805 | |||
Other investments | 1,849,978 | 438,448 | |||
Cash and cash equivalents | 755,305 | 9,625,501 | 1,091,527 | 8,468,596 | |
Total assets | 19,259,326 | 17,550,246 | |||
EQUITY | |||||
Shareholders' equity | 15,625,585 | 13,905,709 | |||
Non-controlling interests | 160,894 | 128,728 | |||
Total equity | 15,786,479 | 14,034,437 | |||
LIABILITIES | |||||
Non-current liabilities | |||||
Borrowings | 50,997 | 46,433 | |||
Lease liabilities | 88,313 | 83,616 | |||
Deferred tax liabilities | 376,676 | 269,069 | |||
Other liabilities | 253,021 | 230,142 | |||
Provisions | 108,308 | 877,315 | 98,126 | 727,386 | |
Current liabilities | |||||
Borrowings | 642,294 | 682,329 | |||
Lease liabilities | 29,725 | 28,561 | |||
Derivative financial instruments | 6,702 | 7,127 | |||
Current tax liabilities | 382,147 | 376,240 | |||
Other liabilities | 372,976 | 260,614 | |||
Provisions | 40,936 | 11,185 | |||
Customer advances | 100,596 | 242,910 | |||
Trade payables | 1,020,156 | 2,595,532 | 1,179,457 | 2,788,423 | |
Total liabilities | 3,472,847 | 3,515,809 | |||
Total equity and liabilities | 19,259,326 | 17,550,246 |
Consolidated Condensed Interim Statement of Cash Flows
(all amounts in thousands of |
Three-month period ended |
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|||
2023 | 2022 | 2023 | 2022 | ||
Unaudited | Unaudited | ||||
Cash flows from operating activities | |||||
Income for the period | 1,136,040 | 634,026 | 2,265,247 | 1,137,459 | |
Adjustments for: | |||||
Depreciation and amortization | 130,581 | 143,024 | 256,034 | 286,100 | |
Income tax accruals less payments | (131,682) | 39,036 | 57,174 | 45,951 | |
Equity in earnings of non-consolidated companies | (95,921) | (103,102) | (148,927) | (190,706) | |
Interest accruals less payments, net | (18,240) | (311) | (21,940) | (1,611) | |
Changes in provisions | 31,976 | 3,591 | 39,933 | 10,479 | |
Reclassification of currency translation adjustment reserve | - | (71,252) | - | (71,252) | |
Changes in working capital | 293,795 | (232,003) | (166,762) | (823,824) | |
Others, including currency translation adjustment | (4,915) | 14,743 | (18,355) | 8,552 | |
Net cash provided by operating activities | 1,341,634 | 427,752 | 2,262,404 | 401,148 | |
Cash flows from investing activities | |||||
Capital expenditures | (165,161) | (74,409) | (282,249) | (141,343) | |
Changes in advance to suppliers of property, plant and equipment | 2,211 | (1,290) | 2,244 | (19,855) | |
Acquisition of subsidiaries, net of cash acquired | (4,108) | (4,082) | (4,108) | (4,082) | |
Loan to non-consolidated companies | (1,235) | - | (1,235) | - | |
Proceeds from disposal of property, plant and equipment and intangible assets | 3,579 | 41,177 | 8,375 | 45,996 | |
Dividends received from non-consolidated companies | 43,513 | 45,488 | 43,513 | 45,488 | |
Changes in investments in securities | (896,993) | (152,807) | (1,787,629) | (43,571) | |
Net cash used in investing activities | (1,018,194) | (145,923) | (2,021,089) | (117,367) | |
Cash flows from financing activities | |||||
Dividends paid | (401,383) | (330,584) | (401,383) | (330,584) | |
Dividends paid to non-controlling interest in subsidiaries | (17,437) | - | (17,437) | - | |
Changes in non-controlling interests | 1,739 | 1,622 | 1,739 | 1,622 | |
Payments of lease liabilities | (13,011) | (12,727) | (23,769) | (28,405) | |
Proceeds from borrowings | 472,764 | 583,593 | 1,032,038 | 851,736 | |
Repayments of borrowings | (463,195) | (185,032) | (1,143,087) | (441,176) | |
Net cash (used in) provided by financing activities | (420,523) | 56,872 | (551,899) | 53,193 | |
(Decrease) increase in cash and cash equivalents | (97,083) | 338,701 | (310,584) | 336,974 | |
Movement in cash and cash equivalents | |||||
At the beginning of the period | 861,414 | 314,319 | 1,091,433 | 318,067 | |
Effect of exchange rate changes | (9,060) | (17,092) | (25,578) | (19,113) | |
(Decrease) increase in cash and cash equivalents | (97,083) | 338,701 | (310,584) | 336,974 | |
755,271 | 635,928 | 755,271 | 635,928 |
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 |
Three-month period ended |
Six-month period ended |
||
2023 | 2022 | 2023 | 2022 | |
Income for the period | 1,136,040 | 634,026 | 2,265,247 | 1,137,459 |
Income tax charge | 277,632 | 120,464 | 573,604 | 187,771 |
Equity in earnings of non-consolidated companies | (95,921) | (103,102) | (148,927) | (190,706) |
Financial Results | (39,561) | 11,457 | (60,380) | 12,575 |
Depreciation and amortization | 130,581 | 143,024 | 256,034 | 286,100 |
EBITDA | 1,408,771 | 805,869 | 2,885,578 | 1,433,199 |
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 |
Three-month period ended |
Six-month period ended |
||
2023 | 2022 | 2023 | 2022 | |
Net cash provided by operating activities | 1,341,634 | 427,752 | 2,262,404 | 401,148 |
Capital expenditures | (165,161) | (74,409) | (282,249) | (141,343) |
Free cash flow | 1,176,473 | 353,343 | 1,980,155 | 259,805 |
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 |
At |
|
2023 | 2022 | |
Cash and cash equivalents | 755,305 | 636,571 |
Other current investments | 1,849,978 | 559,827 |
Non-current investments | 367,105 | 177,594 |
Derivatives hedging borrowings and investments | 7,901 | 5,738 |
Current borrowings | (642,294) | (727,497) |
Non-current borrowings | (50,997) | (16,931) |
Net cash / (debt) | 2,286,998 | 635,302 |
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 |
At |
|
2023 | 2022 | |
Inventories | 3,884,364 | 3,370,139 |
Trade receivables | 2,597,353 | 1,890,697 |
Customer advances | (100,596) | (343,613) |
Trade payables | (1,020,156) | (998,807) |
Operating working capital | 5,360,965 | 3,918,416 |
Annualized quarterly sales | 16,299,652 | 11,201,896 |
Operating working capital days | 120 | 128 |
Giovanni Sardagna
1-888-300-5432
www.tenaris.com
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Source: Tenaris SA