Q4 2022 Tenaris SA Earnings Call

The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.

[music].

Yeah.

[laughter].

Good day and thank you for standing by welcome to the Q4 to <unk> S. A earnings conference 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 to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Giovanni sort of Danya. Please go ahead.

Thank you Gigi and welcome to <unk> 2022 fourth quarter and annual results Conference call.

Before we start I would like to remind you that we'll 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 <unk> our chief.

Chief Financial Officer, Guillermo Vogel, Vice Chairman and member of our board of Directors Gabriel <unk> President of our Eastern Hemisphere operations, and Luca Zanotti President of our U S operations.

Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results.

During the fourth quarter of 2022 sales reached $3 6 billion up 76% compared with those of the corresponding quarter of the previous year and 22% sequentially, mainly driven by further increases in shipments and realized prices.

Our EBITDA for the quarter was up 34% sequentially close to $1 3 billion, reflecting higher volumes better pricing and then good industrial performance with increased levels of activity and utilization of production capacity.

Our EBITDA margin for the quarter rose above 35%, despite your raw material and energy costs.

Average selling prices in our tubes operating segment increased 50% compared to the corresponding quarter of 2021 and 9% sequentially.

During the quarter cash flow from operation was $524 million.

Our net cash position at the end of the year increased to $921 million. Following the payment of an interim dividend of $201 million in November last year.

And capital expenditures of $108 million during the quarter.

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.

We closed 2022 with a quarterly record.

Let's see.

EBITDA and net income.

A year in which we were able to take advantage of favorable market conditions, particularly in North America to generate strong increases in sales and margin through the year.

Taking data as a whole our sales grew 8% to 11 8 billion, our EBITDA rose to $3 6 billion and our net income rose to an annual rate of $2 5 billion or 22% of net sales.

We have a solid balance sheet and good prospects for an increasing cash flow.

<unk> ahead.

Proposing to raise our dividend for the 22022, a year by 24% to 51 cents per share.

Sure.

These results were made possible through the efficient deployment of our global industrial system.

Where we produced a record volume of over 312 million tonnes of seamless pipe worldwide.

Staying in an ongoing ramp up of our facility in the U S.

Despite the use of longer and more complex production and logistic growth, we were able to maintain high standards for safety quality and consumption of materials.

During the year, we had it.

<unk> 6500, new employees.

And then our induction training routines, we pay close attention to the importance of having a safety mindset with awareness and behavior suitable for the industrial environment of our shortfall.

We empower all of our employees to be proactive in taking preventive safety action at all times.

This action, we were able to reduce our lost time injury frequency rate for the year by 10%.

Zero point to nine.

They're mainly on man hours work.

We are grateful to our people working in the plant for their contribution to these results.

As we increased production in sales our logistics operation.

Have reached a substantial magnitude to give you an idea of the effort involved between intermediate transportation and delivery to customer we moved around 10 million tons of material around the world. We are strengthening the reliability of hours of later through the digitalization of our amount of material flows.

Good good progress over the year in this respect.

We increased the deployment of our rig direct services. We are now serving close to 600 rigs worldwide.

Our unique service platform allow us allow us to integrate our operation more closely with our customer and provide digital and technical services that can further differentiate us from our competitors.

2022 market, a turning point in our deployment in the United States.

Currently accounted for more than 40% of our total sales.

Both of which are now produced locally.

We brought the Bay City mill to full production capacity and ramped up production in the rest of our UAS in the associates at.

Including the restart of production of welded pipes and heat treatment and finishing.

At our baytown and copper facilities.

We had more than 1500 new employees.

In the U S.

And now employed 3600 people.

Yes.

The $460 million.

We will avoid spending novabay internet acquisition.

We are reorienting, our investment plan in the United States to achieve through organic growth objective of strengthening our local industrial and logistic system that we had planned with the acquisition.

As we look ahead, we view it.

Tightness in the oil market and high demand for LNG will support oil and gas price cash flows and investment in the oil and gas sector.

We expect that.

The number of oil and gas wells drilled around the world in 2023 will increase and this will drive global CPG demand to exceed the 16 million tonnes and reached its highest level since 2000.

This environment will support further sales grow in 2023, when we expect an increase in sales.

For the offshore developments.

Middle East and in the pipeline infrastructure.

Our achievement over the past year.

It will support this growth include.

Our multi year agreement with Exxonmobil to supply their offshore operations with Yana.

Our agreement with Petrobras to supply their pre salt operation.

The renewal of our long term worldwide agreement with NII.

The renewal of our long term agreement with <unk>.

The consolidation of our long term agreement with that.

Yeah.

We also extended our long term agreement with <unk>.

Okay. Thanks.

Pipelines will drive a relevant increase in our sales of welded pipes.

Argentina, we are supplying a number of pipelines that we stimulate further investment in the vaca <unk> shale by expanding capacity to transport, the gas and liquid to domestic and export market.

We will deliver a major offshore pipeline for the north field expansion in Qatar.

Seeing increased demand for offshore pipelines to bring gas to Europe .

Our cash flow in 2023 will benefit from the stabilization of our working capital requirement.

Our capex will increase to around $650 million.

A relevant part of this capex will be directed to projects that will contribute to our 2030 targets for reducing the carbon emission intensity of our operation.

In addition to our wind farm in Argentina.

We'll make investments, which will contribute to improving energy efficiency in Italy and Argentina.

Over the past year <unk> has made good progress on many fronts and produced record financial results.

We have been able to achieve these only thanks to the confidence.

Our customer has placed us.

And the constant effort understanding performance of our diverse and United team all around the world in a volatile and fast moving and vital.

We are now open for any questions you may have.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Our first question comes from the line of Marc Bianchi from Cowen.

Hi, Thank you.

I'm curious about the margin progression from here.

It seems like there's some cross currents.

North America pricing on the leading edge is starting to rollover raw materials are increasing I understand that your business would lag that so maybe that's that's what's.

Kind of keeping things in good shape here in the first half, but I am curious how that looks as you go to the second half and then is the international improvement enough to perhaps offset that.

Okay.

Thank you.

Mark.

No.

As far as let's say the overall environment that you can anticipate that with the vision 2023.

First of all.

I think that the.

There is tightness in the oil and gas.

Market and there are reason.

To justify expectation.

Price of oil may stay stable or higher or whether it is today.

The economic expectation of the perspective of the economy with some recovery in China is probably even more positive today than a few months ago.

The.

U S production.

Maybe you will remain.

Above 12 million about it a day.

Some moment also the strategic reserves will.

I have two.

To build back position so on the side of it.

The demand.

There could be some traction in this.

The reduction of the exports from Russia.

We'll wait.

So I think there is a reasonable expectation of sustained price decrease.

Gas also.

Beyond the short term.

Yes.

Sure.

Leica <unk>.

Some closure of the LNG and LNG plant in the USA the gas price and the rest also baidu.

Baidu will have some support for the project that will come in gradually over the year.

And so also indicating gas I think that is there a reasonable expectation of.

Some recovery from the present level.

Price of gas in these kind of issues. If you look at the cash flow.

The oil companies that we can expect an increase in investment and increasing investment in.

Capex.

Drilling in.

North America.

This will be supporting.

Increased demand.

You are saying.

Press release increased demand or CTG worldwide.

Particularly.

In North America.

The level of.

Drilled uncompleted wells.

Is very low but all of it is at the minimum in the last three years in terms of relation with their wells.

Drill.

This also.

Sure.

To some extent that will contribute.

Supporting.

Drilling activity the U S.

On the side, though.

Supply is were saying.

Pricey sell some of the factor of <unk>.

The cost increasing.

Hot rolled coils.

Start recall that iron ore went up.

Since the last quarter.

So there is also there will be some support.

These costs are only partially affecting us but are affecting.

Okay.

Production.

Cost efficiency of our competitor.

So in my view.

The level of pricing may have adjusted slightly now, but we have no reason to think that the.

So.

Okay.

Types, especially for complex heat treated application.

Seamless.

In the United States It should.

Adjust substantially.

B E.

Relatively tight.

Equilibrium for awhile.

The drilling activity increased and we are expecting over the longer that.

Okay. Okay. That's helpful Paolo I.

I guess my other question relates to <unk> you alluded to this in your commentary.

I think there was going to be some pretty substantial capex in maybe 24 and 25 for a steel shop.

With that now not happening.

What should we be looking for for spending.

From you for you in North America operations to <unk>.

Maybe replace what was going to come from Bachelor.

Well.

I think we need to.

Adjust and redefined our strategy.

The America.

The.

We need to strengthen our industrial system.

The bottleneck.

<unk>.

The value add that process.

And.

Also.

Increase our capacity of welded product.

Differentiated with the product so we will.

Direct our investment.

These data action there will be an increase overall as you comment on the overall investment during 2023 compared worldwide to the level of 2022.

Part of this investment will be focused on the debottleneck and strengthening.

Our production and logistics capability.

In the United States.

Okay. Thank you for the answers I'll turn it back.

Thank you one moment for our next question.

Our next question comes from the line of Alessandro Pozzi from Mediobanca.

Hi, there. Thank you for taking my questions.

In the outlook you mentioned.

The increase in revenues and EBITDA with stable margins I was wondering.

If you can maybe give us.

Bit of a view.

You see sales going up maybe in Q1 and also I think in your opening remarks, you mentioned a number of pipeline projects.

Was wondering if there is maybe some.

Lumpiness in there.

<unk> volumes throughout the year potentially big pipeline projects coming in in any specific quarters, but also I think can be in the middle East. If you can give us a view of where sales that might go in the middle east that throughout the year.

Thank you.

Canada in fact, Youre, saying, we expect in the first quarter of 2023.

A further increase in sales in the range of 10%.

Steve relatively stable margin.

Then.

I mean for the rest of the year.

This is a data asset.

As alternative.

Manny issue there is volatility in the world in many aspects we will have also to to see if the.

Samsung that I was mentioning before on the level of economic activity.

In the USA, the corridor, China, solar going and where the price of oil fleet remains stable or even higher than what it is this will have any influence.

The second part of the year, but for the first part of the year. This is what basically we can anticipate.

Now when we go to the pipeline.

I will divide in two big.

Different areas one is the development of infrastructure for the gasoline South America development of Vaca <unk> integration to some extent.

The infrastructure and network.

That is taking place now in Argentina for the oil and gas.

These are mainly welded product, where the product will increase.

Sure on our sales of it or for the.

The pipeline in the offshore and middle East.

I will ask Gabriel.

To give an outline of what we can expect in 2023 sure. Thank you Paolo good morning, Alessandro Indeed, the business in Middle East, we expect to continue to grow the drilling activity is growing steadily.

The most relevant nlc's have announced.

Function of capacity and we are following through.

We are seeing them pursuing a multi year investment cycles.

This is well positioned to capitalize on that for example in the UAE last month.

We achieved a record of delivering.

CDG to 65.

<unk> <unk>.

Following our rig direct model.

This is a new level of activity that we're seeing in the Emirates. After.

After many months of ramping up the operation. We are also they are moving.

Full speed ahead with the construction of the state of the art trading facility.

In Qatar, we also consistently supporting.

It really meets of Qatar gas as they want to expand their gas production capacity.

And these months going back to your point of pipelines, we are starting the first.

Delivery of these massive.

North field pipeline order that we have I would probably take the whole year, but this is happening.

This month the first shipment.

So we will expect sales.

Qatar to ramp up as strongly.

Strongly during the year.

Encore is also.

Growing steadily in the drilling activity, we have booked several orders in all business segments in the quarter with a strong backlog already going well into 2024.

So overall, we expect the growing trajectory in middle East that we have seen already in the second half of 2022, but this will strongly accelerate especially in the first half of 'twenty three.

And continuing into the second half of the year.

Yeah.

On offshore very quickly.

A segment that is also very dynamic.

Demanding pipelines and obviously DG recap.

In offshore already where white has recovered to pre pandemic levels.

We expect the number of verified this in 2023 to be the best in the last 10 years and this is something that will support new projects. So this is something that we are seeing in several basins.

Talked about the middle East, we see North sea very active.

There are projects being developed looking for additional capacity to be connected to Europe . We see also sub Saharan Africa, moving very very strongly.

Angola, Ivory Coast are two particular areas, where we're booking project.

CTG and in line pipe as well.

Also the Mediterranean North Africa, the Black Sea are areas, where new projects are being sanctioned and some others are in the making but that also will give some important prospects of pipeline activity as well. So overall, we see offshore increasing into 2023 and probably beyond that so this would be a.

A growing segment Internet is contributing to a to a richer mix of the company into 2023 and beyond.

Thank you.

Just going back to the line pipes. If you just look at the big projects that you have already been awarded.

What is the volumes that you are planning to ship during the 2020 fee for those big line pipe projects already in the backlog.

Well.

In.

Let me tell you in Argentina.

23.

We should be delivering.

The range of 100 and.

Obviously at 102250.

<unk> thousand to answer.

The <unk>.

The nation.

All of the North field expansion is it broadly in the range of 200000.

Tom.

All of these are basically welded.

Pipelines.

And then.

It is.

Sizable.

Number of project and intonation that area.

Or more.

Seamless pipeline for offshore operation like the one that will feed the gas.

For Europe from different sources.

Yes.

Okay, that's very clear thank you.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Our next question comes from the line of Stephen <unk> from Stifel.

Okay.

Thanks, and good morning, everybody.

Two things from me.

Wanted to follow up first.

First on.

I think a question mark as to start off the Q&A.

When we think about the international and offshore markets strengthening throughout the year and in 2024.

Is that accretive.

Two the current EBITDA margin level.

Yeah.

Well there are some projects that.

In that vein.

<unk>.

I mean acquire the.

Almost more than <unk>.

Six months, so one year ago in which we still have.

Yeah.

Relatively.

Limited margin because of the price and the cost increase that we saw further in this area.

The Neal project.

I'd imagine that are.

Let's say.

Substantially all of them.

I would say positive margin and.

Relatively high margin, but the mix.

You have to keep in mind there is also considering.

Some of the Florida as being acquired sometimes ago.

One example is <unk>.

<unk> is a big project that has very limited much.

Okay.

Is that.

Although.

Those are clearly contemplated in your expectation that margins are.

Around these levels over the next couple of quarters.

Yes, yes, we are considering this is our mentioning for the next quarter, we expect to have margin and this level and also.

I think these will be sustainable.

First half now.

Then volatility.

And then we have to take this into consideration, but the cause.

The initial that he made at the beginning.

Supporting our let's say.

If you're a good level of margin for the 2023.

Great. Thank you and then.

The other question I have for you was when we think about.

The balance sheet and the cash generation I mean, even even with your $650 million of Capex.

Youre going to generate it looks like.

Significant free cash flow this year and 2020 right Robin.

Give or take $2 billion I think you bumped the dividend somewhat.

How do you think about.

Accelerating.

The amount of cash coming back to industrial I mean, that's a big theme in oil services. These days.

Acceleration of capital return to investors.

Yes, clearly clearly want that.

You don't have the acquisition now that you're spending 400 plus million on how do we think about your willingness to even increase the amount of capital coming back to shareholders given the free cash flow.

Well you know.

What do we really were proposing.

Term of dividend, we tend to fall established path.

<unk>.

Keeping in mind the.

Cash flow generation the resolved.

The long term view for the company.

We will stick to this policy.

Also through that.

We are increasing dividend.

24% of the Sierra even if the cash flow.

It's been influenza affected the way.

The strong increase in the working capital this year, we will take.

D C shrink consideration next theater, and we will propose a dividend. According to the policy. We are following ingalls in the past that he has always taken into consideration.

That is all of that and the cash flow generation.

Okay, great. Thank you for the details.

Okay.

Thank you as a reminder to ask a question. Please press star one one on your telephone.

Wait for your name to be announced to withdraw your question. Please press star one one again.

Our next question comes from the line of Frank Mcgann from Bank of America.

Okay. Thank you very much a couple of questions. If I might first wanted to just in terms of the outlook you seem pretty confident in.

In the first quarter.

Sure.

Obviously less visibility into the later quarters.

Second quarter third quarter.

As you are looking at.

Do you have some indication.

The level of strength that you have.

And related to that one year.

Rolling things forward now.

You're seeing the <unk>.

Reising at which youre being able to roll over contracts starting to go down in the U S.

Thank you Frank as I was saying.

Yeah.

We see that 2023.

Volume.

In term of volume in terms of invoicing, we will we will have any year higher than 2022.

Thanks Tracy.

The opening of Antarctica in the basin.

Press release.

I also made a comment on pricing.

The driver that it maybe you should see.

Or.

Pricing in the different scenario in the U S.

Internationally.

That is clear that for the second part of the year.

There are many factors that are.

Creating.

On that.

Dynamic.

Part of these results in April .

But on the dynamic of pricing for.

The U S I will ask.

Luca.

And gave us his view.

On the perception for export or any for the year.

Thank you.

Hi, Frank maybe you are not immune.

There is some noise coming from your side that maybe in eastern Europe , Okay I apologize.

Alright. Thank you. Thank you Frank good morning, Luke.

I need to go back to what Paolo.

Express the beginning when you look at the different factors.

Do you see that.

The market that option to a decrease in our rig activity should remain pretty balanced now there are factors like Paolo was mentioning before.

Like some important day, we're seeing coming in.

Lately, but.

But we do believe that these are going to be dissipating over time, because if you look at the origins of this important and the supply chain that is behind it.

See that that maybe they're not they're sustainable.

Going going forward, but again options I think Lisa.

Significant occasion rig activity, which at this stage, we don't see you look at other.

Factors like the Doctor that side of the minimum if.

If you take a <unk> approach sample big over either on Prem, yes, they are saying that they're going to rebuild.

The inventory then you start looking at.

The the domestic production when you see the domestic production and you split it seamless and yes.

You'll see that the seamless is capped maybe there can be sand capacity creeping here and there, but there is not much that can go we can go and.

And the stimulus that is limited and constrained by.

Labor shortages, so overall I believe that again absent the crew.

In our rig activity that we don't see a reason to believe that that.

The market is going to be balanced going into 2023.

Obviously, the back half up with some more let's say volatility then we need to contemplate going forward and we don't have time to do that but overall.

<unk> rewards.

Pablo said that the other big game.

Okay. Thanks, that's really helpful. If I could follow up just.

With a question on the pipeline activity.

The pipelines in Argentina that you mentioned the gas pipeline has a number of phases.

First of all obviously seems to be the one that you're talking about in Q1 to 250000 tons. This year with phases, two and then the third of the final Big extension.

When would you expect to see volumes from that and secondly in terms of the oil pipeline activity in Argentina.

The expansion.

The main pipeline that goes to the.

Atlantic Coast.

Are you involved in that at all as a very significant and I know, there's some early discussions about a major additional pipeline that could be built 260000 barrels a day.

Over the next three four years.

Is that something that looks like it could happen and when might that.

Affect your volumes.

Thank you.

But.

Four.

Sure.

Yes.

I would say that.

For sure.

<unk> will develop a substantial infrastructure too.

To bring gas and oil to the coast.

But this will happen over the years now the timing.

Will be affected by the political volatility.

And the ability to finance some of these bad right.

It is.

Possible debt the second stage.

Of the pipeline from Bank of America.

To the right.

<unk>.

It would be.

Started within 2023, it's possible, but will require financing flora.

The entire project.

This is not sure I mean.

His movement on this side, but theres not sure.

The financing will be.

Organized.

Within the coming few months.

For sure is a project that makes sense, considering the declination of the gas supply from Bolivia.

And this is one project than there are project of bringing oil and gas with the Costa.

These are large project <unk>.

Let's say a major player in this.

Also these florida, making local made a lot of sense, but they will need it.

Yes.

Financing and will not be easy in an electoral year.

Situation in which Argentina will be facing difficult.

<unk> environment.

Financing of these broader these annuities.

Some of the projects like all day value.

That is.

Also an oil pipeline.

Underway and we are.

Wrapping it within D. C. We expect to supply 60000 tonne stories. These are things that are moving on lagged the first Asia.

<unk>.

The pipeline from Neal Ken.

Domino's so.

Some.

In production and will be the lever of dealing with us.

But the extension and the second stage.

And at the other major pipeline maybe delayed in 2024.

Depending on the financial foundation of the count.

Okay.

Okay, great. Thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Luke Lemoine from Piper Sandler.

Hey, good morning.

Hello, just wanted to clarify the guidance a little bit <unk> was pretty clear and with revenues up 10% and stable margins from <unk> levels. It sounds like the <unk> visibility is good EBITDA margins should remain near the current level, but wanted to see if you could kind of give us a revenue outlook from <unk> for <unk>.

And then on second half I appreciate the uncertainty as you see it now it.

It seems like maybe margins touched down a bit are you still expecting these to remain above 30% in the second half.

Well, we May guide with some more precise indication for the first quarter.

And I will say and we can also have relatively good idea of what is happening in the second view in line with what we are saying.

The margin, we should remain pretty stable in the second part of the year.

I mean, it's difficult to make it clear and sound prediction, what we can say is to look at.

Demand fundamentals is that.

Maybe oil price of oil remains stable gas also would have a positive.

Pollution from where it is now drilling and the level of <unk>.

Wilson.

Israel will increase compared to 2022.

And.

The supply and demand in the Fi business.

And maybe it will be a differentiator between the heat treated more complex product.

Or let's say value added product.

So we remain pretty tight and maybe there could be.

The same.

More softer market, Florida normally treated.

But in this environment.

Also the cost will drop the costs, we are paying now we'll get into our profit and loss.

Through the third and the fourth Q. So we would have some.

<unk>.

The pressure on margin from this but still.

I'm pretty positive on it.

Okay, Alright, thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Alessandro Pozzi from Mediobanca.

Hi, Thank you I have a just a.

A follow up.

Capex, if you can give us maybe the breakdown.

Why are you spending capex and also.

If you can talk about your ESG initiatives because.

<unk>.

Well I mean, especially on decided upon the ESG Angola East Debbie.

Sales and strong so.

And at the same time, I guess youre, increasing sales and therefore <unk> emissions would probably go up.

I was wondering.

In terms of carbon intensity what is detained.

Maybe this year over the next few years, how much you can how fast you can decarbonize that your industrial.

Footprint.

Thank you.

Yeah.

Thank you Alejandro.

If I should say, where our way out of them.

Capex.

Anna.

I will stress first of all DCF.

In 2023, we will complete our wind farm in Argentina.

And some other.

Project for their carbonization. These will require an investment in the range of 200 plus.

<unk>.

Then we will invest in our facility to also reduce carbon by improving the processor new heat treatment.

And our facility in Italy is the case.

Investment in the steel shop.

In Italy in.

Argentina.

The investment also.

Management of correct to.

Supported the carbonization in the definitive mail this will represent also.

Another important part of our investment and then strengthening of industrial operation.

In the U S because in the USA.

We need as I was saying to debottleneck.

Some of the value added process, which we will need additional capacity.

To expand through organic grow our ability to serve our clients.

This would be basically the structure of it.

De carbonization will.

<unk>.

Take care.

35, 40% of our investment will have let's say at least contributing.

Contributing to our record of monetization in the trend of de Carbonization, we start with what one of Toms 0.43 in that.

Tons of steel pipes produced.

In 2018.

<unk>.

Currently with the greenhouse gas methodology in scope, one two and three are the.

Today's call today, we are in the range of $1 17, So we did a very good.

Advances in our de carbonization.

In 2023.

We will feel that increase in well the product. It implies that we are acquiring steel from third party and this delay in some case has.

Let's say higher content.

<unk> so the scope three.

We'll reflect these but we fully plan to compensate with reduction in scope one.

And in scope.

So we are advancing as you know our target is 0.98 tons per ton a pipe in 2013, we have done a very big.

Very big at that one of the investment.

Not be strictly related to the capitalization, but very much related with engie is it the.

The investment in the exhaust fumes of our corpus. The shopper is a major investment that will transform the steel shop and reduce <unk>.

Imation.

Particular formation.

Yes.

We will also increase capacity of steel in the same time today, we're limited exactly why.

The capacity of managing the fumes from this deal.

Okay very clear thank you very much.

Thank you one moment for our next question.

Yes.

Our next question comes from the line of Luigi the release from <unk>.

Yes. Good afternoon. Thank you for taking my question.

One on the pricing trend.

The two prizes and U S settle down now close to 5% from the peak level.

You are seeing a solid outlook for the vast supply, but how much do you expect prices to evolve in the coming months and quarters for the market and what do you expect fourth jannati several surprises.

There is also the mix effect and now the duty supplied in our Mexico, Argentina are affecting the business dynamic and if the change during during the year. Thank you.

Yes.

Thank you.

Well on the first point.

The.

Evolution of our.

<unk> prices in the U S. So as I was saying before I think there are two different.

Ed Uprising, one of the area of the.

Value added products.

Seamless history, Timothy area with semi premium or premium thread.

This is a market in which.

We remain relatively tight I don't expect.

In an environment in which.

The number of wells drilled increase.

I don't expect let's say.

Tom.

<unk> all of these rise there could be softening over there is in the in the low end product that.

As days of welders in particular.

N.

But let's.

Let's say if the price of oil support.

And the level of wells drilled and drilling continue.

These were basically depends from main product.

<unk>.

I remain very important.

Also penalized by the day.

But the 232 in many cases so.

Even in this case I think the softening should be contained.

Okay.

Cost impact.

Crazy in hot rolled coil.

I don't know I mean.

<unk> two <unk>.

Maybe will contain April now.

The level of.

So in the ground.

Is it.

Still within let's.

Let's say normal ratio, we don't see it at all.

Talk overhang on the ground.

So in this condition, that's a reason that's suggesting that.

There shouldnt be softening.

Beyond the certain level by the way our system is less exposed to the low end.

In the United States.

So to some extent in our accounting I think we are.

Relatively defended some softening of prices.

Yeah.

Thank you.

Thank you I would now like to turn the conference back to Giovanni <unk> for closing remarks.

Yes.

Thank you Gigi and while there are no. Other question I would like to thank everybody, who joined US for the quarterly conference call and we hope to see you soon.

Thank you.

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

The conference will begin shortly to raise and lower Johan during Q&A you can dial one one.

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Good day and thank you for standing by welcome to the Q4, the <unk> SA earnings Conference 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 to ask a question. During this session you will need to press.

Star one one on your telephone you will.

Then here an automated message advising your hand is raised to withdraw your question. Please press star one one again, please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to your speaker today Giovanni sort of Danya. Please go ahead.

Thank you Gigi and welcome to <unk> 2022 fourth quarter and annual results 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.

Chief Financial Officer, Guillermo Vogel, Vice Chairman and member of our board of Directors Gabriel <unk> President of our Eastern Hemisphere operations, and Luca Zanotti President of our U S operations.

Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results.

Okay.

During the fourth quarter of 2022 sales reached $3 6 billion up 76% compared with those of the corresponding quarter of the previous year and 22% sequentially, mainly driven by further increases in shipments and realized prices.

Our EBITDA for the quarter was up 34% sequentially close to $1 3 billion, reflecting higher volumes better pricing and then good industrial performance with increased levels of activity and utilization of production capacity.

Our EBITDA margin for the quarter rose above 35%, despite higher raw material and energy costs.

Average selling prices in our tubes operating segment increased 50% compared to the corresponding quarter of 2021 and 9% sequentially.

During the quarter cash flow from operation was $524 million.

Net cash position at the end of the year increased to $921 million. Following the payment of an interim dividend of $201 million in November last year and.

And capital expenditures of $108 million during the quarter.

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.

We closed two.

22, with a quarterly record.

Net sales EBITDA and net income to cap a year in which we were able to take advantage of favorable market conditions, particularly in North America to generate strong increases in sales and margin through the year.

Taking data as a whole our sales grew 8% to $11 8 billion, our EBITDA rose to $3 6 billion and our net income rose to an annual record of $2 5 billion or 22% of net sales.

We have a solid balance sheet and good prospects for an increasing cash flow.

It ahead.

Posing to raise our dividend for the 202022 year by 24% to <unk> 51 per share.

Yeah.

These results were made possible through the efficient deployment of our global in the system.

Where we produced a record volume of over three 1 million tons of seamless pipe worldwide.

Sustain an ongoing ramp up of our facility in the U S.

Despite the use of longer and more complex production and logistic growth, we weren't able to maintain high standards for safety quality and consumption of materials.

During the year, we had.

6500, new employees.

And in our induction training routines, we pay close attention to the importance of having a safety mindset, we've awareness and behavior suitable for the industrial environment of our shortfall.

We empower all our employees to be proactive in taking preventive safety action at all times with this action, we were able to reduce our lost time injury frequency rate for the year by 10%.

Two 0.9.

Per million man hours work.

We are grateful to our people working in the plant for their contribution to these results.

As we increased production in sales our logistics operation.

We have reached the substantial magnitude to give you an idea of the effort involved between intermediate transportation and delivery to customer we moved around 10 million tons of material all around the world. We are strengthening the reliability of hours of later through the digitalization of our amount of material flows.

Made good progress over the year in this respect.

We increased the deployment of our rig direct services. We are now serving close to 600 rigs worldwide.

Our unique service platform allow us allow us to integrate our operation more closely with our customer and provide digital and technical services that can further penetrate us from our competitors.

2022 market, a turning point in our deployment in the United States.

Concrete accounted for more than 40% of our total sales.

Most of which are now produced locally.

We brought the Bay City mill to full production capacity and ramped up production in the rest of our U S and that is Houston.

Clothing, the restart of production of welded pipes and heat treatment and finishing.

At our baytown and copper facilities.

We had more than 1500, new employees in the U S.

And now employed 3600 people.

Yes.

With the $460 million.

We will avoid spending on the <unk> acquisition.

We are reorienting, our investment plan in the United States to achieve through organic growth objective of strengthening our local industrial and logistic system that we had planned with the acquisition.

As we look ahead, we view the tightness in the oil market and high demand for LNG, we support oil and gas price cash flows and investment in the oil and gas sector.

We expect that the number of oil and gas wells drilled around the world in 2023 will increase.

And this will drive global DG demand to exceed 16 million tonnes and reached its highest level since 2000.

Yes.

This environment, we support further sales grow in 2023, when we expect an increase in sales.

The offshore developments.

Middle East and in the pipeline infrastructure.

Our achievement over the past year.

It will support these growth include our multi year agreement with Exxonmobil to supply that offshore operation in with you on.

Our agreement with Petrobras to supply their pre salt operation.

The renewal of our long term worldwide agreement with NII.

That a new other of our long term agreement with Qatar gas.

Consolidation of our long term agreement with that.

We also extended our long term agreement with <unk> and lease Felix.

Pipelines will drive a relevant increase in our sales of welded pipes.

Tina we are supplying a number of pipelines that we stimulate further investment in the vaca <unk> shale by expanding capacity to transport, the gas and liquid to domestic and export market.

We will deliver a major offshore pipeline for the north field expansion in Qatar.

And we are seeing increased demand for offshore pipeline to bring gas to Europe .

Our cash flow in 2023 will benefit from the stabilization of our working capital requirement.

Our capex will increase to around $650 million.

A relevant part of this capex will be directed to projects that will contribute to our 2030 targets for reducing the carbon emission intensity.

In addition to our wind farm in Argentina.

We will make investment, which will contribute to improving energy efficiency in Italy.

Over the past year <unk> has made good progress on many fronts and produced record financial results.

We have been able to achieve decent only thanks to the confidence.

Our customer has placed in us.

And the constant effort of those standing performance.

Our diverse and United team all around the world in a volatile and fast moving and vital.

Hello will.

We are now open for any questions you may have.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please standby, while we compile the Q&A roster.

Our first question comes from the line of Marc Bianchi from Cowen.

Hi, Thank you.

I'm curious about the margin progression from here.

It seems like there's some cross currents.

North America pricing on the leading edge is starting to rollover raw materials are increasing I understand that your business would lag that.

So maybe that's that's what's kind of keeping things in good shape here in the first half, but I am curious how that looks as you go to the second half and then is the international improvement enough to perhaps offset that.

Thank you.

Mark.

No.

As far as let's say the overall environment that you can anticipate that with the vision 2023.

First of all.

I think that the.

There is tightness in the oil and gas.

Market and there are reason.

To justify expectation of the price of oil may stay stable or higher or whether it is today.

Yes.

The economic the expectation of the perspective of the economy with some recovery in China is probably even more positive today that few months ago.

The.

Yeah.

U S production.

Maybe you will remain.

Above 12 million about it a day.

In some moment also the strategic reserves.

Have to start to build back his position so on the side of <unk>.

The demand.

There could be some traction in the reduction of the exports from Russia.

We'll wait.

So I think that is a reasonable expectation of sustained price of oil <unk> gas also.

Beyond the short term.

Yes.

<unk>.

Sure.

Like they're the.

Some closure of the LNG and.

LNG plant in the USA, the gas price and the rest also.

Maybe we will have some support for the project that will come in gradually over the year.

And so also indicating gas I think is there a reasonable expectation of.

Some recovery from the present level.

The price of gas in these kind of issues. If you look at the cash flow.

The oil companies that we can expect an increase in investment and increasing investment in.

Capex and drilling.

In North America, this would be supporting.

Increased demand as we were saying in our press release.

Demand for.

For CTG worldwide.

Particularly in.

Domestic.

The level of.

Drilled uncompleted wells.

Is very low probably is at the minimum EBITDA three years in terms of relation with the wells.

This also.

To some extent that will contribute.

Supporting.

Religion DVT.

Yes.

On the side, though.

Supply is we're saying.

Crises sell some of the factor of <unk>.

The cost increasing.

Hot rolled coils.

Recall that iron ore went up.

Since the last quarter.

So there is also there will be some support.

These costs are only partially affecting us but are affecting.

Okay.

Production.

Cost efficiency of our competitor.

So in my view.

The level of pricing may have adjusted slightly now, but in India and we have no reason to think that the price of.

Okay.

Types, especially for complex heat treated application.

Seamless.

In the United States It should.

Adjust substantially.

B E.

Relatively tight.

Equilibrium for awhile.

The drilling activity increase.

Vesting over the longer that.

Okay. Okay. That's helpful Paolo I.

I guess my other question relates to <unk> you alluded to this in your commentary.

Sure.

I think there was going to be some pretty substantial capex in maybe 24 and 25 for a steel shop.

With that now not happening.

What should we be looking for for spending.

You for your North America operations to maybe replace what was going to come from Bachelor.

Well.

<unk>.

I think we need to.

Adjust and redefined our strategy.

The America.

The.

We need to strengthen our industrial system.

Debottleneck.

<unk>.

The value add that process.

And.

Also.

Increase our capacity of welded product.

Differentiated where the product so we will.

Direct our investment.

These data action there would be an increase overall as you comment on the overall investment during 2023 compared worldwide to the level of 2022.

Part of this investment will be focused on the debottleneck and strengthening.

Our production and logistics capability.

In the United States.

Okay. Thank you for the answers I'll turn it back.

Thank you one moment for our next question.

Our next question comes from the line of Alessandro Pozzi from Mediobanca.

Hi, there. Thank you for taking my question.

In the outlook you mentioned.

The increase in revenues and EBITDA with stable margins I was wondering.

If you can maybe give us.

Bit of a view.

You see our sales going up maybe in Q1 and also I think in your opening remarks, you mentioned a number of pipeline projects.

Was wondering if there is maybe some.

Lumpiness in the volumes.

Throughout the year potentially big pipeline projects coming in in any specific quarters, but also I think it can be in the middle East. If you can give us a view of where sales that might go in the middle east that throughout the year.

Thank you.

Canada in fact, Youre, saying, we expect in the first quarter of 2023.

A further increase in sales in the range of 10%.

Steve relatively stable margin.

Then.

I mean for the rest of the year.

This is the.

As I turn it on.

Manny issue there is volatility in the world in many aspects we will have also to to see even the.

The assumption that I was mentioning before on the level of economic activity in the USA, Colorado, China solar going and where the price of oil fleet remains stable or even higher than what it is this will have any influence there.

The second part of the year, but for the first part of the year. This is what basically we can anticipate.

Now when we go to the pipeline.

I will divide in two big.

Different areas one is the development of infrastructure for the gasoline South America development of Atlanta integration to some extent.

The infrastructure and network.

<unk>.

He is taking place now in Argentina for oil and gas.

These are mainly welded product, where the product will increase.

Sure on our sales of it or for the.

The pipeline in the offshore in the Middle East.

I will ask Gabriel.

Gabrielle.

To give an outline of what we can expect in 2023 sure. Thank you Paolo good morning Alessandro.

The business in Middle East, we expect to continue to grow the drilling activity is growing steadily.

The most relevant nlc's habit.

<unk> expansion of capacity and they are following through.

We are seeing them pursuing a multi year investment cycles.

Obviously, well positioned to capitalize on that for example in the UAE last month, we achieved a record of delivering.

OCD to 65 rigs or whatnot.

Following our rig direct model.

This is a new level of activity that we are seeing in the <unk> after <unk>.

After many months of ramping up the operation. We are also they are moving.

Full speed ahead with the construction of the state of the art trading facility in <unk>.

We are also consistently supporting.

Really needs of Qatar gas as they want to expand their gas production capacity.

And these months going back to your point of pipelines. We are starting the first delivery of these massive.

North field pipeline or that we have out will probably take the whole year, but this is happening.

This month the first shipment.

So we will expect sales.

Cut us to ramp up as strongly.

Strongly during the year, Saudi Aramco is also.

Growing steadily in the drilling activity, we have booked several orders in all segments in the quarter.

With a strong backlog already going well into 'twenty 'twenty four.

So overall, we expect a growing trajectory in the middle East we have seen already in the second half of 2022, but this will strongly accelerate especially in the first half of 'twenty three.

And continuing to into the second half of the year.

Touching on offshore very quickly.

Segment that is also very dynamic.

Demanding pipelines and also DG recounting offshore already where white has recovered to pre pandemic levels and we expect the number of verified. This in 2023 to be the best in the last 10 years and this is something that will support new projects. So this is something that we are seeing in several basins.

We talked about the middle East, we see North sea very active.

There are projects being developed looking for additional capacity to be connected to Europe . We see also sub Saharan Africa, moving very very strongly.

Angola, Ivory Coast are two particular areas, where we're booking projects.

So did you earn in line pipe as well.

And also the Mediterranean North Africa, the Black Sea are areas, where new projects are being sanctioned and some others are in the making but that also will give some important prospects of our pipeline activity as well. So overall, we see offshore increasing into 2023 and probably beyond that so this would be.

A growing segment Internet is contributing to a to a richer mix of the company into 2023 and beyond.

Thank you.

Just going back to the line pipes. If you just look at the Big project you have already been awarded.

What is the volumes that you are planning to ship during the 2020 fee for those big line pipe projects already in the backlog.

Well.

Let me tell you in Argentina.

23.

We should be delivering.

The range of 200 and then.

Obviously, it rather than 2250.

And to answer.

The <unk>.

Our nation.

All of the North field expansion is it broadly in the range of 200000.

Tom.

All of this.

Basically well.

Sure.

Pipelines.

And then there is <unk>.

Sizable.

Number of project and intonation that area there are more.

Seamless pipeline for offshore operation like the one that will feed the gas.

For Europe from different sources.

Okay.

Okay, that's very clear thank you.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Our next question comes from the line of Stephen <unk> from Stifel.

Okay.

Thanks, and good morning, everybody.

Two things from me.

Wanted to follow up first.

First.

I think a question mark as to start off the Q&A.

When we think about the.

International and offshore markets strengthening throughout the year and in 2024.

Is that accretive.

Two the current EBITDA margin level.

Yeah.

Well there are some projects that.

That being.

I mean acquired.

Almost more than <unk>.

Six months, so one year ago in which we still have.

Yeah.

Relatively.

Limited margin because of the price and the cost increase that we saw further in this area.

The Neal project.

I would imagine that are.

Let's say.

Substantially.

Yes.

I would say positive margin and.

Relatively high margin, but the mix that you have to keep in mind. There is also considering.

Some of the Florida, Theres being acquired sometimes ago.

One example is <unk>.

<unk> is a big project that has very limited much.

Okay and is that.

On those those are clearly contemplated in your expectation that margins are.

Around these levels over the next couple of quarters.

Yes, yes, we are considering this is our mentioning for the next quarter.

We expect to have margin and this level and also.

These will be sustainable in the first half now.

Then volatility there than we are.

To take this into consideration, but the consideration that he made at the beginning.

Supporting.

It's a relatively good level of margin for the 2023.

Great. Thank you and then.

The other the other question I have for you was when we think about.

The balance sheet and the cash generation I mean.

Even with your $650 million of Capex.

Youre going to generate it looks like a significant free cash flow this year and 2022 way Robin Roberts.

Give or take $2 billion I think you bumped the dividend somewhat.

Do you think about.

Accelerating.

The amount of cash coming back to investors I mean, that's a big theme in oil services. These days.

Acceleration of capital returns investors.

Yes, clearly clearly want that.

You don't have the acquisition now that you're spending 400 plus million on how do we think about your willingness to even increase the amount of capital coming back to shareholders given the free cash flow.

Well.

What do we really we're proposing in term of dividend, we tend to fall row established path.

<unk>.

Keeping in mind the.

Cash flow generation, the resolve and the long term view for the company.

We will stick to this policy.

Also through that.

We are increasing dividend.

24% of the Sierra <unk>.

If the cash flow.

It's been influenza affected the way.

The strong increase in the working capital this year, we will take.

This issue in consideration next theater, and we will propose a dividend. According to the policy we have fallen ingalls in the past that he has always taken into consideration.

That is also in the cash flow generation.

Okay, great. Thank you for the details.

Okay.

Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Your question. Please press star one one again.

Our next question comes from the line of Frank Mcgann from Bank of America.

Okay. Thank you very much a couple of questions. If I might the first one would be just in terms of the outlook you seem pretty confident in.

In the first quarter.

Sure.

Obviously less visibility.

In later quarters.

Second quarter third quarter.

As you are looking at them.

Do you have some indication.

The level of strength that you have.

And related to that one year.

Rolling things forward now.

Are you seeing the pricing at which you are being able to roll over contracts starting to go down in the U S.

Yeah.

Thank you Frank as I was saying.

Yeah.

Yeah.

We see that 2023.

Volume.

Term of volume in terms of invoicing, we will we will have any or higher than 2022.

<unk>.

Expressing.

The opening of Antarctica.

<unk>.

But I said it is.

I also made a comment on pricing.

I mean, the driver that he may view should support.

Pricing in the different scenario in the U S.

Yes.

Internationally.

That is clear that for the second part of the year.

There are many factors that are creating.

On that.

Dynamic part of these notes in April .

But on the dynamic of pricing for.

I will ask.

Luke.

Two gave us his view.

On the perception for export or any for the year.

Thank you.

Hi, Frank maybe you are not immune.

There is some noise coming from your side and maybe in eastern Europe .

Apologize.

Alright. Thank you. Thank you Frank good morning, Luke.

I need to go back to what Paolo.

Express the beginning when you look at the different factors.

Youll see that.

The market the opposite to a decrease in our rig activity should remain pretty balanced now there are factors like Paolo was mentioning before like.

Like some important day, we're seeing coming in.

Lately, but.

But we do believe that these are going to be dissipating over time, because if you look at the origins of this important law in the supply chain that is behind it.

That that maybe they are not that sustainable.

Going going forward, but again options I think Lisa.

Can you if you got the Canadian rig activity, which at this stage, we don't see you look at other.

Factors like the Doctor that's the minimum.

If you take <unk> for example, big over either on premise they are saying that they're going to rebuild.

The inventory then you start looking at.

The the domestic production when you see the domestic production and you split it seamless and yes.

You'll see that the seamless is capped maybe there can be some capacity creeping here and there, but there's not much that can go we can go and.

And the stimulus that is limited and constrained by.

Labor shortages. So overall I believe that again offset the decrease in our rig activity that we don't see a reason to believe that that.

The market is going to be balanced going into 2023.

Obviously, the back half with some more let's say volatility then we need to contemplate going forward.

Have time to do that but overall I.

I stick to what.

Pablo said that the other big game.

Okay. Thanks, that's really helpful. If I could follow up just.

We have a question on the pipeline activity.

The pipelines in Argentina that you mentioned the gas pipeline has a number of phases.

Firstly, obviously seems to be the one that youre talking about in Q1 to 250000 homes. This year with phases, two and then and then the third of the final Big extension.

When would you expect to see volumes from that and secondly in terms of the oil pipeline activity in Argentina.

The expansion.

Named pipeline that goes to the.

Atlantic Coast.

Are you involved in that at all as a very significant and I know there are some early discussions about a major additional pipeline that could be built 260000 barrels a day.

Over the next four years.

Is that something that looks like it could happen and when might that.

Affect your volumes.

Thank you.

But.

Four.

I would say that.

For sure Argentina will develop a substantial infrastructure too.

To bring gas and oil to the coast.

But this will happen over the years now the timing.

Will be affected by the political volatility.

And the ability to finance some of these bad right.

It is.

Possible debt the second stage.

Of the pipeline from Bank of America.

Two the winner.

It would be.

Started within 2023 is possible, but will require financing flora.

The entire project.

This is not sure I mean.

There is movement on this side, but theres not sure.

The financing will be.

Organized that.

Within the coming few months.

For sure is a project that makes sense, considering the declination of the gas supply from Bolivia.

And this is one project than there are project of bringing oil and gas to the coast.

Again these are large project <unk>.

Let's say a major player in this.

Also these florida, making local made a lot of sense, but they will need it.

Yes.

Financing and will not be easy in an electoral year.

Situations in which Argentina will be facing difficult.

Economic environment.

The financing of these broader these annuities.

Some of the project like all the value.

That is.

Also an oil pipeline.

Underway and we are.

Wrapping it within D. C. We expect to supply 60000 tonne stories. These are things that are moving on lagged the first stage.

<unk>.

The pipeline from Ken.

The windows so.

Some is.

In production and will be the lever to do anything with us.

But the extension and the second stage.

And the other major pipeline maybe delayed in 2024.

Depending on the financial foundation of the count.

Okay, great. Thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Luke Lemoine from Piper Sandler.

Hey, good morning.

Hello, just wanted to clarify the guidance a little bit once he was pretty clear on with revenues up 10% and stable margins from <unk> levels. It sounds like the <unk> ability is good EBITDA margins should remain near the current level, but wanted to see if you could kind of give us a revenue outlook from <unk> for <unk>.

And then on second half I appreciate the uncertainty as you see it now it.

It seems like maybe margins touched down a bit are you still expecting these to remain above 30% in the second half.

Well, we May guide with some more precise indication on for the first quarter.

And I will say and we can also have relatively good idea of what is happening in the second view in line with what we are saying.

The margin, we should remain pretty stable in the second part of the year.

I mean, it is difficult to make it clear and sound prediction, what we can say is to look at.

Demand fundamentals is that.

Maybe oil price of oil remained stable gas also would have a positive.

Pollution from where it is now drilling and the level of.

Wilson.

We drilled that will increase compared to 2022.

And.

The supply and demand in the Fi business.

And maybe it will be differentiated between the heat treated more complex product.

Or let's say value added product.

We remain pretty tight and maybe.

Could be.

The same.

More softer market, Florida Noni treated.

But in this environment.

Also the cost will drop the costs, we are paying now will get into our profit and loss.

Through the third and the fourth <unk>. So we would have some.

Sam.

The pressure on margin from these are still.

Im pretty positive on it.

Okay, Alright, thank you very much.

Thank you one moment for our next question.

Our next question comes from the line of Alessandro Pozzi from Mediobanca.

Hi, Thank you I have a just a.

A follow up on Capex, if you can give us maybe the breakdown.

Why are you spending capex and also.

If you can talk about your ESG initiatives because.

<unk>.

Well, I mean, especially on decided upon the ESG Angola each Debbie.

Felt and strong so.

At the same time I guess, you are increasing sales and therefore <unk> emissions would probably go up.

I was wondering.

In terms of carbon intensity, what is the pain and.

Maybe this year over the next few years, how much you can how fast you can decarbonize that your industrial.

Footprint.

Thank you.

Okay.

Thank you Alejandro.

If I should say, where our way out of them.

Capex.

Anna.

I will stress first of all D C. It away.

In 2023, we will complete our wind farm in Argentina.

And some other.

Project for the Carbonization. These will require an investment in the range of 200 plus.

<unk>.

Then we will invest in our facility to also reduce carbon by improving the process new heat treatment.

In our in our facility in Italy is the case.

Investment in the steel shop.

In Italy.

Argentina.

The investment also.

The management of correct to.

Supported the carbonization in the definitive mail this will represent also.

Another important part of our investment and then strengthening of industrial operation.

<unk>.

The U S because in the USA.

We need as our same to Debottleneck.

Some of the value added process, and which we will need additional capacity too.

To expand through organic grow our ability to serve our clients.

This would be basically the structure of it.

De carbonization will.

<unk>.

Take care.

35, 40% of our investment will have let's say at least.

Contributing to our record of monetization in the trend of de Carbonization, we start with what one of Toms 0.43 in that.

Per ton of steel pipes produced.

In 2018 this is.

Currently with the greenhouse gas methodology in scope, one two and three on the telescope today.

In the range of $1 17, so we did a very good.

Advances in our de carbonization.

In 2023.

We will feel that increase in well the product. It implies that we are acquiring steel from third party and this delay in some case has.

It's a higher content.

<unk> so the scope three.

We'll reflect these but we fully plan to compensate with a reduction in scope one.

And in scope.

Two of our.

So we are advancing as you know our target is 0.98 tons per ton a pipe in 2013, we have done a very big.

Very big at that one of the investments that would not be strictly related to the cannibalization, but very much related with LNG.

Is it the.

The investment in the exhaust fumes of our corpus the shop is a major investment that will transform the steel shop and reduce <unk>.

Imation.

Particular formation.

Yes.

We will also increase capacity of steel in the same time today, we're limited exactly why.

The capacity of managing the fumes from this deal.

Okay that was very clear thank you very much.

Thank you one moment for our next question.

Our next.

Question comes from the line of Luigi the release from Etsy.

Yes, good afternoon.

For taking my question.

One on the pricing trend.

<unk> settled down now close to 5% from the peak level.

You are seeing a solid outlook for the vast supply by the.

Much do you expect pricing to evolve in the coming months and quarters for the market and what do you expect for cannot say very surprising.

There is also the mix effect.

And now the duty supplied in our Mexico, Argentina are affecting the business dynamic and if the change during during the year. Thank you.

Yes.

Thank you.

Well on the first point.

Evolution of.

Our prices in the U S. As I was saying before I think there are two different.

One of the area of the.

Value added products.

Seamless history, Timothy area with semi premium or premium thread.

This is a market in which.

We remain relatively tight I don't expect.

In an environment in which.

The number of wells drilled increase.

I don't expect let's say.

Tom.

<unk> all of these right there could be softening over the rising in the low end product that.

As days of welders in particular.

And.

But let's.

Let's say if the price of oil support.

And the level of wells drilled and drilling continue.

These were basically advance from imported from important lever.

I remain very important to us.

Also penalized by the day.

232 in many cases so.

Even in this case I think the softening should be contained.

Yeah.

The.

Cost impact.

Crazy in hot rolled coil.

I don't know.

<unk> two <unk>.

Maybe will contain April now.

The level of.

So in the ground.

Is it.

Still within.

Let's say a normal ratio, we don't see it.

Stock overhang on the ground. So in this condition, that's a reason that.

Suggesting that.

But shouldnt be softening.

Beyond the certain level by the way our system is less exposed to the low end.

Product.

The states.

So to some extent in our accounting I think we are.

Relatively defended from softening of prices.

Yeah.

Thank you.

Thank you I would now like to turn the conference back to Giovanni <unk> for closing remarks.

Thank you Gigi and while there are no. Other question I would like to thank everybody, who joined US for the quarterly conference call and we hope to see you soon.

Yes.

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