Q2 2024 Tenaris SA Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Quarter 2, 2024 Tenaris 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 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.

Unknown Executive: Good day, and thank you for standing by.

Yes.

Speaker Change: Good day and thank you for standing by welcome to quarter, two 2024, Senates 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.

Unknown Executive: Welcome to Quarter 2, 2024, Tenaris S.A. Earnings conference call. At this time, all participants are in a listen-only mode.

Unknown Executive: 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Ask a question during the session you will need to press star one one on your telephone you hold.

Speaker Change: Dan here, an automated message advisory your hand is raised to withdraw your question. Please press star one one again please.

Unknown Executive: Please be advised that today's conference is being recorded.

Speaker Change: 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.

Unknown Executive: I would not like to hand a conference over to your speaker today.

Giovanni Sardagna: Giovanni Sardagna, please go ahead. Thank you, Gigi, and welcome to Tenaris, 2024, second quarter conference call. Before we start, I would like to remind you that we will be discussing for a look information in the call and that actual results may vary from those expressed or implied during this call.

Giovanni Sardagna: Thank you, Gigi, and welcome to Tenaris' 2024 second quarter conference call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call, and that our actual results may vary from those expressed or implied during the event. With me on the call today are Paolo Rocca, our Chairman and CEO, Alicia Mondolo, our Chief Financial Officer, Gabriel Podskubka, our Chief Operating Officer, and Luca Zanotti, President of our U.S. Operations.

Speaker Change: Thank you Gigi and why they come to their knowledge 2024 second quarter conference call.

Speaker Change: Before we start I would like to remind you that we will be discussing forward looking information in the call.

Speaker Change: Our actual results may vary from those expressed or implied during this call.

Giovanni Sardagna: We meet on the call today are Paolo Rocca, Chairman and CEO, Alicia Mondolo, Archive Financial Officer, Gabriel Potcucca, Archive Operating Officer, and Luca Zanotti, President of our U.S. Operations.

Speaker Change: With me on the call today are Paolo Rocca, our chairman and CEO, Alicia Mondello, Chief Financial Officer that would help us get our chief operating officer, and Luca Zanotti President of our U S operation.

Giovanni Sardagna: I would like to start by mentioning that we will host an investor presentation in London on September 24. We hope to see many of you there.

Speaker Change: I would like to start by mentioning that we will host an investor presentation in London on September 24, we hope to see many of you there.

Giovanni Sardagna: Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarter results. Our second quarter sales reached 3.3 billion, down 18% year-on-year and 3% sequentially, mainly due to slightly lower volumes and average selling prices during the call. Other selling prices in our tubes operating segment decreased 17% compared to the corresponding quarter of last year and 1% sequentially, as lower prices have been greatly offset by favorable sales mix. Our ABDA for the quarter was down 34% sequentially to 650 million due to lower selling prices and an extraordinary provision recorded for an ongoing litigation related to the acquisition of a participation in Uzi Minas in 2012.

Giovanni Sardagna: Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarterly results. Average selling prices in the R-Tubes operating segment decreased 17% compared to the corresponding quarter of last year and 1% sequentially as lower prices were greatly offset by favorable sales mix. Our EBDI margin for the quarter was close to 20%. Without this extraordinary provision, our EBITDA would have been $821 million, and our EBITDA margin would have been 25%. With operating cash flow of $935 million and capital expenditure of $161 million, our free cash flow for the quarter was $774 million.

Speaker Change: Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarter it yourself.

Speaker Change: Our second quarter sales reached $3 3 billion down 18% year on year, and 3% sequentially, mainly due to slightly lower volumes and average selling prices during the quarter.

Speaker Change: Average selling prices in our tubes operating segment decreased 17% compared to the corresponding quarter of last year.

Paolo: And 1% sequentially as lower prices have been greatly offset by a favorable sales mix.

Speaker Change: EBITDA for the quarter was down 34% sequentially to 650 million due to lower selling prices and an extraordinary provision for the quarter for an ongoing litigation related to the acquisition of a participation. He knows you mean us in 2012.

Giovanni Sardagna: Our ABDA margin for the quarter was close to 20%. Without this extraordinary provision, our ABDA would have been 821 million, and our ABDA margin would have been 25%. With the parity cashflow of 935 million and capital expenditure of 161 million, our free cashflow for the quarter was 774 million. After a dividend payment of 459 million in May and shared by banks of 492 million, our net cash position amounted to 3.8 billion at the end of the quarter.

Speaker Change: Our EBITDA margin for the quarter was close to 20%.

Speaker Change: Without this historically provision our EBITDA would have been $821 million and our EBITDA margin would have been 25%.

Speaker Change: With operating cash flow of $935 million and capital expenditure of 161 million, our free cash flow for the quarter was 774 million.

Speaker Change: After a dividend payment of <unk>.

Speaker Change: $159 million in May and share buybacks of 492 million net cash position amounted to $3 8 million at the end of the quarter.

Giovanni Sardagna: Now, I will ask Paolo to say a few words before we open the call to questions.

Speaker Change: Now I will ask Paolo to say a few words before we open the call to questions.

Paolo Rocca: Thank you, Giovanni, and good morning to all of you. This reflected the differential market positioning we have built up in North America with our rigged direct service model, as well as in offshore projects around the world, the particularly high level of shipments we have been making in the Middle East, and the contribution from our newly acquired Tenaris shock core coating. I would also like to highlight our strong free cash flow. Thus, we were able to maintain our excellent net cash position of $3.8 billion while we distributed $950 million to our shareholders.

Paolo Rocca: Thank you, Giovanni, and good morning to all of you. During the first two quarters, our sales have remained remarkably resilient, considering a market environment in which drilling activity has reduced. And OCTG prices have been falling in the United States. This reflected the differential market positioning we have built up in North America with our RIG Direct Service Model, as well as in a short project around the world. The particularly high level of shipment we have been making in the Middle East, and the contribution for our newly acquired Tenerys Schokorko. I would also like to highlight our strong free cash flow of 774 million during the second quarter, when we were able to achieve a 285 million reduction in working capital.

Paolo: Thank you Giovanni and good morning to all of you.

Paolo: During the first two quarter a lot of.

Paolo: Sales have remained remarkably resilient considering the market environment in which the drilling activity is reduced.

Speaker Change: <unk> prices have been falling in the United States.

Paolo: This reflected the differential market positioning we have built up in North America with our rig direct service model as well as in offshore projects around the world the particularly high level of shipment, we have been making in the middle East and the contribution for our newly acquired <unk>, So shawcor coating business.

Paolo: I would also like to highlight our strong free cash flow.

Paolo: $774 million during the second quarter, what do we were able to achieve a $285 million reduction in working capital.

Paolo Rocca: Thus, we were able to maintain our excellent net cash position of 3.8 billion while we distributed 950 million to our shareholders.

Paolo: Thus, we were able to maintain our excellent net cash position of $3 8 billion, while we distributed the $950 million to our shareholders.

Gabriel Podskubka: Industry spending on offshore projects, particularly in complex deep-water operations, has increased since 2009. For this project, we are a preferred supplier for the majors, with a fully integrated offer of pipes. This includes large-diameter conductor and surface casing with connectors. Intermediate in production case, tubing, and accessories, dopless connection tested for use in the new extreme application required by the Gulf of Mexico Department. In the second half... Today, however, as we look toward the second half, we see that our sails...

Paolo Rocca: This is an offshore project, particularly in complex depotal operation, has increased since 2023 and is set to increase further in the year ahead. For this project, we are a preferred supplier for the majors with a fully integrated offer of pipes and services. This includes large diameter conductor and surface casing with connectors. The immediate and production casing, tubing and accessories, stainless, high chrome alloy steels, dopless connection tested for use in the new extreme application required by the Gulf of Mexico development. We are also supplying the 3D mapping services for high-collapse application as well as a shoreline pipe delivered with a full range of Tenaris shock or coatings and advanced project management services.

Speaker Change: In the tech spending on offshore products, particularly complex deepwater operation has increased since 2023 and is set to increase further in the year ahead.

Speaker Change: Are these projects that we are a preferred supplier for the major center with a fully integrated offer of types of services.

Speaker Change: This includes large diameter conductor and surface casing with connectors.

Speaker Change: Immediate and production casing.

Speaker Change: Clothing, and accessories stainless high chrome alloy steel.

Speaker Change: Duplex connection tested for use in the new extreme application required by the Gulf of Mexico development.

Speaker Change: We're also supplying the three D mapping services for high classification.

Speaker Change: Israel is offshore line pipe deliver with a full range of scenarios Shawcor coatings and advanced project management services.

Paolo Rocca: This quarter, we renewed our long-term contract for shell operation in the Gulf of Mexico and it has been selected by EXO Mobile for their upcoming operation in Angola. We were also awarded the supply of casing and offshore line-pipe and coatings by Woodside for the Trion project in Mexico. In the second half, we will begin the deliveries of coated line-pipe for Echinor Raya project in Brazil, and we have an extensive backlog of orders for offshore projects going into 2025.

Speaker Change: This quarter, we renewed our long term contract for shell operation in the Gulf of Mexico and had been selected by Exxon mobile for their upcoming operation in Angola.

Speaker Change: We're also awarded the supply of casing and offshore line pipe in coatings by Woodside for try and project in Mexico.

Speaker Change: In the second half.

Speaker Change: We will begin deliveries of coated line pipe before it can order Raia project in Brazil.

Speaker Change: Have an extensive backlog of order for offshore project going into 2025.

Paolo Rocca: Today, however, as we look toward the second half, we see that our sail will be lower than the sail in the first semester, affected mainly by three factors. In the United States, a record level of oil and gas production is being sustained even as drilling activity is decreased and reduced overall demand for pipe. At the same time, OCTG imports, particularly from Asian countries, remain high, accounting for 40% of demand, which compares to the 20% for other steel products always in the USA. This level of imports is affecting pipe prices and is causing damage to the domestic industry.

Speaker Change: Today, However, as we look towards the second half, we see that our sale.

Speaker Change: Will be lower than the sale in the first semester affected mainly by three factors.

Luca Zanotti: Affected mainly by thrift. This level of import is affecting pie price beyond our original. The change in the government in Mexico and the uncertainty surrounding the policy for the energy sector are limiting drilling investment in the country. In Argentina, the necessary stabilization of the macroeconomic environment is delaying investment in drilling and the development of infrastructure. And there will be further adjustment to our prices in the America's Reflecting Markets. This quarter, as anticipated, we are carrying out important investment and maintenance stoppages in many areas of our industrial sector and reducing Logistics and Operations. Looking further ahead, we expect all the regions in which we have a strong competitive advantage, an established customer. This positions us favorably for serving the growing demand for energy across the world.

In the United States.

Speaker Change: Our record level of oil and gas production are being sustained even as drilling activity decreased.

Speaker Change: Reduced the overall demand for pipe.

Speaker Change: At the same time or CTG imports.

Speaker Change: Particularly from Asian countries remained high.

Speaker Change: Accounting for 40% of demand, which compares with a 20% for other steel product in the USA.

Speaker Change: This level of importance is affecting pipe prices and is causing damage to the domestic industry.

Paolo Rocca: In the Middle East, activities and assumptions from the region remain at a good level. But in the main countries, we see a destocking trend beyond our regional expectation. This combined with the completion of deliveries for the NFE offshore pipeline in Qatar will affect our sales in the region in the second half.

In the middle East activity in consumption from the region remain at good level, but in the main countries, we see a destocking trend beyond our original expectation.

Speaker Change: This combined with the completion of deliveries for the NFC offshore pipelining, Qatar will affect our sales in the region in the second half.

Paolo Rocca: The change in the government into Mexico and the alternatives surrounding the policy for the energy sector are limiting drilling investment in the country. In Argentina, the necessary stabilization of the macroeconomic environment is delaying investment in railing and the development of infrastructure in the back of the world. This factor will affect our sales and results in the second half. When we expect that our sales volume will be 10% to 15% below those of the first half. And there will be further adjustment to our prices in the Americas, reflecting market conditions.

Speaker Change: The change in the government in Mexico, and the uncertainty surrounding the policy for the energy sector are limiting drilling investment in the country.

Speaker Change: In Argentina, the necessary stabilization of the macroeconomic environment is delaying investment in drilling and the development of infrastructure backend work.

Speaker Change: This factor.

Speaker Change: Will affect our sales and results in the second half when we expected our sales volume will be 10% to 15% below those of the first half.

Speaker Change: And there will be further adjustment to our prices in the Americas, reflecting market conditions.

Paolo Rocca: This quarter has anticipated we are carrying out important investment and maintenance stoppages in many areas of our industrial system, aimed at recovering full operational capacity, improving efficiency, and reducing our carbon footprint. This investment includes a major overhaul of our medium diameter rolling mill in Mexico, the installation of a new electric arc furnace in our Argentine steel shop. The revamping of our copper steel shop in the United States to increase capacity and reduce environmental impact, and the finishing line of our Italian mail. We also start in the construction of our second wind farm in Argentina, which will have a capacity for 92 megawatt and will allow us to supply 100% of the need of Argentina from renewable resources.

Speaker Change: This quarter as anticipated we are carrying out important investment and maintenance stoppages in many areas of our industrial system aimed at recovering full operational capacity.

Speaker Change: Improving efficiency.

Speaker Change: Reducing our carbon footprint.

Speaker Change: This investment includes a major overhaul of our medium diameter or already made in Mexico.

Speaker Change: Installation of a new electric arc furnaces in our Argentine steel shop.

Speaker Change: The revamping of our Corpus still show up in the United States to increase capacity and reduce environmental impact.

Speaker Change: And the finishing line of our entitlement is there.

Speaker Change: We're also starting the construction of our second wind farm in Argentina, which.

Speaker Change: Which will have a capacity for 92 megawatts and will allow us.

Speaker Change: To supply, 100% of the need of Argentina from renewable resources.

Paolo Rocca: The biggest level of demand is requiring an adjustment in our industrial operation, concentration of production in the more efficient facilities, and the reduction of logistics and operational cost.

Speaker Change: The level of demand is required an adjustment in our industrial operations.

Speaker Change: Duration of production in the more efficient facilities and the reduction of logistic and operational cost.

Paolo Rocca: Looking further ahead, we expected all the region in which we have a strong competitive position will drive an increase in our activity over time. Our global rich, competitive product and service differentiation and unique portfolio of long-term agreement with established customer position as favourable for serving the growing demand of energy across the world.

Speaker Change: Looking further ahead, we expect that all the regions in which we have a strong competitive position will drive an increase in our TVT overtime.

Speaker Change: Our global reach and competitive product and service differentiation and unique portfolio of long term agreements with established customer position us favorably for serving the growing demand of energy across the world.

Paolo Rocca: I will leave now to any question you may have. Thank you.

Speaker Change: I will leave now.

Speaker Change: Any question.

Speaker Change: Thank you.

Unknown Executive: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by when we compile the Q&A roster.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone.

Speaker Change: <unk> for your name to be announced to withdraw your question. Please press star one one again please.

Operator: Please stand by while we compile the Q&A roster.

Speaker Change: Please standby, while we compile the Q&A roster.

Mark Bianchi: Our first question comes from the line of Mark Bianchi from TD Cowan. Hi, thank you. I was hoping you could talk a little bit more about the progression of margin in the back half here. So now we've got volume; I heard you down 10 to 15% in the back half with some weaker pricing.

Speaker Change: Our first question comes from the line of Marc Bianchi from TD Cowen.

Marc Bianchi: Hi, Thank you.

Marc Bianchi: I was hoping you could talk a little bit more about the progression of margin in the back half here. So now we've got volume I heard you're down 10% to 15% in the back half with some weaker pricing.

Paolo Rocca: Maybe you could talk about the margin progression, but perhaps first before you say that or along with that, talk to us about your expectation for the progression of pipelines from here, just so we can understand the context. Thank you, Mark. As I mentioned in the remark, in the last conference, we are expecting the papalogic to destabilize in some moments. But the level of importance has been relatively high at what was our expectation. And so the papalogic is a register, a minus 3% that appears today on a comparable set of data. And we expect the deal will continue to maybe remain stabilized, but probably after one month more in which there could be some further reduction.

Speaker Change: Maybe maybe you could talk about the margin progression, but perhaps first.

Speaker Change: Before you say that are along with that talk to us about your expectation for the progression of pipe logics from here just so we can understand the context.

Paolo Rocca: Thank you, Marc. As I mentioned in the remarque, at the last conference, we were expecting PaperLogic. We think it should stabilize, and also we think that the import... For other regions, for us, because it's part of the formula that we have in some of the countries, especially in the Americas.

Speaker Change: Thank you America.

America: As I mentioned in the America.

Alaska: The Alaska.

Speaker Change: The conference.

Speaker Change: We're expecting that the paper logic too.

Speaker Change: To this stabilizing sometime but the level of input at that as being relatively higher to what was our expectation and so that pivot logica.

Speaker Change: Register.

Speaker Change: Yes.

Speaker Change: And minus 3% that appeared yesterday.

Speaker Change: Compatible.

Speaker Change: Set of data.

Speaker Change: And we expect that they will continue to maybe remain it stabilized, but probably after what matters more and which.

Speaker Change: There could be some.

Speaker Change: Further reduction.

Paolo Rocca: We think it should stabilize, and also we think that the import, to some extent, should recede, as I mentioned in the opening remark. It is an important variable.

Speaker Change: We think we should stabilize and also we think that it is important.

Speaker Change: To some extent should recede as I mentioned.

Speaker Change: Okay.

Speaker Change: He is an important variable.

Luca Zanotti: Maybe Luca, you may add which is your perception of pricing in the US market that is important also for other regions for us because it's part of the formula that we have in some other countries, especially in the Americas. Yes, thank you. Hi Mark. No, I believe that I will go back to what I said or what we said already in the last earnings call. And here, Mark, the problem is the following. The industry, the OCTG industry, was somewhat tricked by some expectation of increased activity at the beginning of 2024. And for this reason, the distributors placed impulse orders that have been flowing in during the first quarter and the second quarter of 2024.

Luca: Maybe luca.

Luca: Yeah.

Luca: You may add and which is your perception of.

Luca: Pricing in the U S market that is important also.

Luca: For other region for us because it's part of the Formula that we have.

Speaker Change: Some other content, especially in the Americas.

Speaker Change: Yes. Thank you.

Mark: Hi, Mark.

Mark: I believe that.

Marc Gregory Bianchi: I will go back to what I said or what we said already in the last earnings call. And here, Marc, the problem is the following for 2024.

Mark: We'll go back to what I said, what we said already in the last earnings call and ear Mark the bottom is the following.

Mark:

Speaker Change: The industry the CPG industry was somewhat.

Speaker Change: By some expectation of increased activity at the beginning of 2024 and for these Arizona distributors placed impulse over there that have been flowing in are viewing that.

Mark: The first quarter in the second quarter.

Luca Zanotti: Now, as we all know, this expectation of increased demand did not materialize, and so this import ended up remaining in the image. Now, imports are expected to go down. Actually, they already went down a bit in the second quarter, and we expect this to go down also thanks to some trade enforcement action that we've been able to successfully implement as a result. As Paolo was to conclude, as Paolo was mentioning before, the adjustment is going to take a little bit more than originally expected, but we see no reason why this should not happen going forward.

Mark: Of.

Luca Zanotti: Now, as we all know, this expectation of increased demand did not materialize, and so these imports ended up remaining in the inventory. Now, imports are expected to go down. Actually, they already went down a bit in the second quarter, and we expect this to go down. Thank also to some trade enforcement action that we've been able to successfully implement as a domestic industry. And to a certain extent, even Section 232 with the decrease in price, we start to buy it. Also, with respect to reduction in the domestic side of the supply. And so, as Paulo was to conclude, as Paulo was mentioning before, the advertisement is going to take a little bit more than what originally expected.

Mark: But it might be for now as we all know.

Mark: This expectation of increased demand did not materialize and so these imports.

Mark: Ended up.

Mark: Remaining in the inventory now.

Speaker Change: I expect it to go down actually they already went down a bit in the second quarter and we expect this to go down. Thank also to summer trade enforcement action that we are being able to successfully implement is a mess.

Mark: Domestic endlessly.

Speaker Change: And to a certain extent, even sexual 232, it implies it will start to bite.

Speaker Change: Also we do expect a reduction in that in the domestic.

Speaker Change: Side of the supply.

Speaker Change: And so as Paolo was to conclude as Paolo was mentioning before.

Paolo Rocca: But we see no reason why this should not happen going forward. Thank you.

Alicia Mondolo: Thank you, Luca. The second question was about the margin. We guided on the last conference call for our margin to be between 20-25. We ended up with this quarter close to the high part of this range. I think that in the second semester we should be around the lower end of this.

Paolo Rocca: The second question was about the margin. We were guiding the last conference call for our margin to be between 2020-25. We ended up with this quarter close to the high part of this range. I think that in the second semester, we should be around the lower end of this. Thank you, Paulo.

Giovanni Sardagna: Okay, thank you, Paolo. And may I just confirm, when you said the second half down 10 to 15%, was that a comment about volume or a comment about revenue?

Mark Bianchi: May I just confirm when you said the second half down 10 to 15% was that a comment about volume or a comment about revenue? No, it's a comment about volume. This is what we see today. We see volume going down for the reason that we mentioned in the prepared remark. And this is due to the factor that we mentioned.

Paolo Rocca: Basically, there is something that we also just to recap briefly what we mentioned: the uncertainty in Mexico and in Argentina, just waiting for the decision of the energy policy in Mexico. And Argentina could finance a development of our community that we frankly see as inevitable. So we are convinced that there is ample scope for expansion and for demand in Argentina in line, paper in OCTG. But the point is that the macroeconomic environment is postponing the moment which this project could be reliably financed. So we are optimistic in this sense on the development and is an area in which we are very strong.

Paolo: One thing that we also.

Paolo: Just to recap.

Paolo Rocca: Briefly, what we mentioned, the uncertainty in Mexico and in Argentina, just waiting for the decision on the energy policy in Mexico and how Argentina could finance a development of ACOMAR that we frankly see as inevitable. So, we are convinced that there is ample scope for expansion and for demand in Argentina, in LimePip, and in OCTG. But the point is that the macroeconomic environment is postponing the moment when this project could be reliably financed. So we are optimistic. In this sense, on development, and this is an area in which we are very focused.

Paolo: But equally what we mentioned the uncertainty in.

Paolo: In Mexico and in Argentina.

Speaker Change: Just waiting for the decision of the energy policy in Mexico and.

Speaker Change: How Argentina could finance the development of a commodity that we frankly see as inevitable. So we're convinced that the reason.

Speaker Change: Ample scope for expansion and for demand in Argentina in line pipe in.

Speaker Change: CTG, but the point to you that the macroeconomic environment.

Speaker Change: Is postponing the moment to ensure that this project could be reliably finance. So we are optimistic.

Speaker Change: In the sense that on the development and is an area in which we had a very strong, but we need to reduce third of the fact that in this month in the second semester.

Mark Bianchi: But we need to register the fact that in this month, in the second semester, there will be not so much movement on this. Makes sense. Thank you very much. We'll turn it back. Thank you.

Speaker Change: Not so much movement on this.

Speaker Change: Okay makes sense. Thank you very much I'll turn it back.

Speaker Change: Yeah.

Unknown Executive: One moment for next question. Our next question comes from the line. Good afternoon. Thank you for taking my questions. The first one is on the US market. You mentioned a record level of production, and yet drilling activity is remains quite muted as a number of operators focus more on efficiencies and productivity. I was wondering, are we in a paradigm change where we are going to see even lower, let's say, drilling operations. And for the fewer weeks, basically we could see even higher production. And is that a concern for you for OCTG demand going forward in the US?

Speaker Change: Thank you one moment far next question.

Alessandro Pozzi: Our next question comes from the line of Alessandro Pozzi from Mediovanca.

Alessandro Pozzi: Good afternoon. Thank you for taking the time to answer my questions. The first one is on the U.S. market. You mentioned a record level of production, and yet, drilling activities remain quite muted as a number of operators focus more on efficiencies and productivity. I was wondering if we are in a paradigm change where we are going to see even lower, let's say, drilling operations, and for fewer rigs, basically, we could see even higher production? And is that a concern for you for our CTG demand going forward?

Alessandro Pozzi: in the U.S. And one thing in the U.S., there has been a change, as you mentioned, in the pipe logics. Is the new basket more effective, better for your mix? And I was wondering if you could give us maybe your thoughts on how the basket has changed and whether it can better capture, basically, your average selling price. That's the first question.

Unknown Executive: And one thing in the US, there has been a change as you mentioned in the pythlogics. Is the new basket more reflective better of your mix. And I was wondering if you can give us maybe your source on how the basket has changed and whether it can capture better, basically your average selling price.

Unknown Executive: That's the first question. The second question is on the working capital, sorry, on the share buyback, and the share buyback is going to terminate quite soon, or the next maybe on next few days or within weeks, certainly. Are we going to have a new share buyback, a new announcement with the November results, because I believe there is still some room in the share buyback. The mandate is about 10% of the shares of spending, and potentially there could be another maybe 700 million to go before the next AGM or before the next EGM. Thank you. Thank you, Retandro.

Alessandro Pozzi: The second question is on the share buyback, and the share buyback is going to end quite soon, maybe in the next few days or within weeks, certainly. Are we going to have a new share buyback, a new announcement with the November results? Because I believe there is still some room for the share buyback. The mandate is about 10% of the shares for spending, and potentially, there could be another maybe 700 million to go before the next AGM or before the next EGM.

Speaker Change: It is about 10% of the shares of spending and potentially there could be another maybe 700 million to go before the next AGM or before the next AGM.

Speaker Change: Thank you.

Speaker Change: Thank you.

Paolo Rocca: On the first one, on demand in the US. Frankly, I don't think there are structural reasons that discourage investment. We mentioned last conference call. The role that interest rate has clearly a reduction in the interest rate with support is financing of product by the smaller company and the equals could help, but the price of oil in the range of 7580 is a good ground for investing in in some stop and reflection by some of the operator. So probably the time we have now, the six months we have had with election in the United States. Interest rate is still relatively high compared to what we expect in the long term.

Speaker Change: The tundra.

Speaker Change: On the first one on demand in new ways.

Speaker Change: And frankly, I don't think there a structural reason that discourage investment we mentioned last conference call.

Speaker Change: The interest rate hedges.

Speaker Change: Are clearly a reduction in the interest rate, which support the financing of project by the smaller company and vehicles could help but the price of oil in the range of $75 80.

Speaker Change: Good ground for investing.

Speaker Change: In shale development.

Luca Zanotti: but it's also true that consolidation has led to some stop and reflection by some of the operators, so probably the time we have now, the six months we have had with the election in the United States on his way, is maintaining the level of drilling and activity. It is clear that the efficiency and productivity of the wealth realized are... But I think that the...

Speaker Change: But it's also true that consolidation has laid.

Speaker Change: Two.

Speaker Change: Some stop in reflection by some of your very thorough.

Paolo Rocca: And consolidation on its way is a maintaining level of drilling and activity at this point, even if it's clear that the efficiency and productivity of the wells relies is, let's say, gradually improving. So the production is a very high level. But I think that the overall scenario is positive in this. There should be recovery in the line, and it also associated the level of demand and recount over time. The problem here, as Luca was mentioning, is more on the side of the import. 40% of the market is a very high share of the market, and I think the issue here, how to contain the pressure on the import on the domestic, on the domestic interest.

Luca Zanotti: Here, how to contain the pressure on imports on the domestic industry. On the second point, pipe logic. As I mentioned, we expect to continue to expect the stabilization of by logic after.

Luca Zanotti: Now, on the second point, the pipe logic, as I mentioned, we expect to continue this progress stabilization of the logic after, let's say, the impact also of these 3% and these months and the next one. But the mix has changed. Look, you can give the momentum on the change in the market. Yes. At one point before we move into the basket specifics, I believe that this change of, even if the pipe logic readings is directionally correct, I believe that this change in basket may have introduced some, let's say, perturbations of the readings. So we need to see going forward.

Luca Zanotti: Comment on the change in the battery. Yes.

Speaker Change: <unk> the basket.

Speaker Change: Yes.

Luca Zanotti: At one point, before we move into the basket specifics, I believe that this change, even if the pipe logic readings... are directionally correct. I believe that this change in basket may have introduced... Let's say perturbations in the reading. So we need to see going forward. But to answer specifically to your question, yes, the change in basket is more reflective of one. The product range that is being sold in the United States, in general, and specifically the ones that we are selling, in particular, one of the, let's say, major changes that PipeLogic introduced is a split in the semi-premium, let's say, space, where we differentiate between battery-like or battery-compatible connections and high-torque connections, like our wedge 400 series, 441, 461, which, as you know, have been our So the answer is yes.

Speaker Change: Yes.

Speaker Change: At one point before we move into the basket specifics I believe that this change of even if the pipe logic ratings isn't.

Speaker Change: Is that Directionally correct I believe that this change in basket.

Speaker Change: May ever introduced.

Speaker Change: Some let.

Speaker Change: Let's see.

Speaker Change: Utilizations of everything so we need to see going forward, but to answer specifically to your question. Yes. The change in basket is more reflective of one.

Luca Zanotti: But to answer specifically to your question, yes, the change in basket is more reflective of one. The problem range that is being solved in the United States in general, and specifically the ones that we are selling, in particular, one of the, let's say, major changes that the pipe logic into the use is just played between, in the semi-premium, let's say, space, where we differentiate between batteries like, or batteries compatible connections, and high torque connections like our wedge 400 series, 441, 461, which is, you know, our bestseller over the last, let's say, many quarters. Yes, I was asking because I mean, if you look at the old one, it is down three percent, and the new one is a completely different picture, up once a month, so I'm not sure.

Speaker Change: The product range that is being sold in the United States in general and specifically the ones that we are selling.

Speaker Change: One of the let's say major.

Speaker Change: Changes that biologics into the Wuxi, just bleed between in the semi premium.

Speaker Change: A space, where we differentiate between.

Speaker Change: But the rest are like Oh, bottlers compatible connection I'm, saying, hi tore connections.

Speaker Change: Like our way.

Speaker Change: The 400 series.

Luca Zanotti: I mean, is it going down or up based on what you see based on your basket. Sorry, can you repeat the example? I'm not sure if we understood the question, Alessandro. Yeah, because there is a big difference between the two indices. The old one is pointing to a menu for decline, three percent, but the new one is, I think it's more up months a month. So, which one is the new one you think is more reflective of your business. And therefore, it's starting to go up a little bit. Yeah, I mean, in the end, what they did, they took out some items and they put in other items, and the items taken out or coming in at an absolute lower price than the one that put in.

Luca Zanotti: Yeah, because there is a big difference between the two indices. The old one is pointing to a meaningful decline, 3%, but the new one is, I think, a small increase month to month. So, which one is... So, the new one, are you saying, is more reflective of your business and, therefore, price here starting to...

Luca Zanotti: And so, overall, you see this in place. But responding to your question, I think that the new basket is probably more in line with our mix. So, we should be able to probably to have a lower reduction in our basket in our sales compare, let's say, to the original basket that is going down three percent; we should be able to have a lower reduction in this. This is, let's say, the analogy of the basket. By the way, it comes out yesterday. I think we need to compare. Remember, in some formula, we are not using the index as a whole, but we are using a specific part of the basket, adjusting to the need of the client.

Luca Zanotti: This is, let's say, the analysis of the market. By the way, it came out yesterday.

Luca Zanotti: I think we need to compare. Remember, in some formulas... We're not using the index as a whole, but we're using a specific part of the basket adjusting to the needs of the client, different for different clients because the clients are selecting indicators that best reflect their demands.

Luca Zanotti: So, there are different formulae, internationally or locally. And I would say that the impact is different in different clients because the clients are selecting indicators that best reflect their demand.

Speaker Change: It's different.

Speaker Change: In different clients because the client are selecting indicator that best reflect the demand.

Paolo Rocca: Now the last point you made on the share buyback, we are still in the middle of the process of doing the buyback of the last tranche of the program that we launched last year, and we will continue to complete this, taking into consideration the environment, the situation, and everything, how to proceed or not on this. I will leave this to the decision of the next board. The next board has the ability to continue using the delegation from the General Assembly or having a strong General Assembly to deliver further expansion of the program. I mean, there are no limitations. But the point is, they will evaluate the circumstances for the...

Paolo Rocca: Now, the last point you made on the share by Beck. We are still doing by Beck of the last branch of the program that we launched last year. And we will continue to complete this program. And then, I think it's up to the board in November to decide what to do and how to take into consideration the environment, the situation, and everything, how to proceed or not on this. I will leave this to the decision for the next board. The next board have the ability to continue using the delegation from the general assembly or having a straw in an assembly to deliver further expansion of the program.

Speaker Change: Alright.

Speaker Change: On the you made on the on the share buyback.

Speaker Change: We have.

Speaker Change: Yes.

Speaker Change: The.

Speaker Change: During buyback of the last tranche of the program that we land onshore last year.

Speaker Change: And we will continue to complete this.

Speaker Change: This program and then.

Speaker Change: I think he is up to the board in November to decide what to do and how to.

Speaker Change: Taken into consideration environment situation and everything how to proceed or not on the I will leave these settled the decision for the next board. The next board. However.

Speaker Change: The ability to continue using the litigation from the general Assembly or having.

Strong at Assembly to de lever further expansion of the program I mean, there are no limitation in this but the point is that.

Unknown Executive: I mean, there are no limitations in this. But the point is, they will evaluate circumstances for the decision. Thank you very much. Thank you.

Operator: Thank you. Please take a moment for our next question.

Arun Jaram: One moment for our next question. Our next question comes from the line of Arun Jaram from JP Morgan Securities LLC. Yeah, good morning. You know, Paolo, I was wondering if he could elaborate on some of the destocking trends that you mentioned, you know, in the Middle East. And then, you know, as you think about reducing your prior expectations for second half volumes, do you see this more as just lower demand? Or do you expect some of this, you know, volume, perhaps in Argentina and Mexico to shift into 2025? Thank you. I told you before, I'm very confident that Argentina has relevant plans for developing the camera by different operator.

Arun Jayaram: Yeah, good morning. You know, Paolo, I was wondering if you could elaborate on some of the destocking trends that you mentioned, you know, in the Middle East. And then, you know, as you think about reducing your prior expectations for second half volumes, do you see this more as just lower demand, or do you expect some of this volume, perhaps in Argentina and Mexico, to shift into 2025?

Paolo Rocca: Thank you, Arun. Well, on the second point, as I... You have seen that there are announcements of decisions taken in the new LNG plant. It will take time to formalize finance, get all the clearance for the project, but this will go on over time, and then also the export of oil will go on. So I'm very positive in the medium term, but the new government is six months in charge. So, seven months in charge, a difficult situation to put under control from the point of view of inflation and fiscal equilibrium.

Paolo Rocca: And there will, there will be activity in the infrastructure and the railing. And so in gas, you have seen, there are announcements of the decision taken in the new LNG plant. It will take time to formalize finance, gets all the clearance for the project. But this will go on over time. And then also the export of oil will go on. So I'm very positive on the middle term, but it's a new government six months in charge or seven months in charge. Difficult situation to put under control from the point of view of inflation and fiscal equilibrium.

Paolo Rocca: So, Argentina will recover credibility and access to the market, but it will take a little more time. We were all probably over optimistic in thinking that this could be done in shorter term, but it will happen. In the case of Mexico, changing government implied changes also in the sector of energy, and the appointment in the key energy company, PEMEX and CFE has not been done yet. So it's more difficult to understand which is the policy of the new government and cloud a shame on looking in the future. PEMEX needs action by the government in refinancing part of this debt, but it's clear that Mexico needs energy.

Paolo Rocca: So Agiatina will recover credibility and access to the market, but it will take a little more time. We were all probably over-optimistic in thinking that this could be done in a shorter term, but it was not. In the case of Mexico, changing government. PEMEX NEET, Action by the government in refinancing, Postponement of some of the... To give an overview... Good morning.

Paolo Rocca: These last months, we had shortages of electric power; we had disruption, and they say, and it's clear that there is need of investment. So I'm also positive, but the assumption that you're going to assume in October, something of this that we were expecting, maybe in the second half, will materialize later on. There will be, let's say, any policy action will have impact later. So we are positive on this, but we expected the postponement of some of the demand.

Speaker Change: We had disruption in data and it is clear that there is need of investment so im also.

Speaker Change: The positive, but the assumption of new governance will assume in October.

Speaker Change: Sampling of <unk>.

Speaker Change: That we were expecting maybe in the second half.

Speaker Change: Will materialize later on.

Speaker Change: There would be.

Speaker Change: Let's say.

Speaker Change: Any.

Speaker Change: Policy action, we'll take it.

Speaker Change: Have impact later, so we are positive on this but we expect.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Postponement of some of the demand as far as the middle East.

Gabriel Podskubka: As far as the Middle East, in all these aspects is concerned, I would ask Gabriel to give an overview of how we look at, we see the situation and the demand in these six months. Good morning, Arun. Regarding the Middle East, as Paolo dissipated the opening remarks, the drilling activity remains strong, with the NOC operating at high levels. For example, Zabiramco, still at the 300 rigs, increasing on the unconventional, reducing on the offshore oil, keeping that level; UAE as well, operating at healthy levels of 120 rigs. So I would say that we see stability in the consumption of OCDG in the region in the main operators.

Speaker Change: Is this aspect is concern.

Gabriel: I would ask Gabriel.

Gabriel: Yes.

Gabriel: To give you an overview of how.

Gabriel: We look at we see the situation and the demand in these six months.

Gabriel: Good morning.

Speaker Change: Regarding the middle East as part of dissipated in the opening remarks, the drilling activity remains strong within <unk> operating at high levels for example, Aramco deal.

Gabriel Podskubka: Increasing on the unconventional, reducing on the offshore, of OCDG in the region in the main operation. At the same time, we see some of these NOCs in the region rebalancing their inventories and entering into a destocking mode for the delivery of the NFE pipeline in Qatar. There are some other large projects in the region that are still not defined. Second half comparison versus first half. So overall, there's gonna be a reduction, still at high levels of shipment in the second half of the region in the Middle East in the second half, but lower.

Speaker Change: 300 <unk>.

Gabriel Podskubka: At the same time, we see some of these NOCs in the region rebalancing their inventories and entering into a destocking mode next semester. Okay, so this is something that is important to mention and will affect our shipments in the second half of the year. In addition to that, we have the completion of the delivery of the NFE pipeline in Qatar. There are some other large projects in the region that are still not defined. And that we will see more into 2025. So this will also affect the second half comparison versus first half. So overall, there is one reduction.

Gabriel Podskubka: Still at high level of shipments in the second half of the region in Middle East in the second half, but lower than the record shipments that we had in the first half of the year. Great.

Paolo Rocca: Great. Just my follow-up question is on the buyback. Paolo, the company at the end of the quarter had $3.8 billion of net cash. I assume you don't want to turn Tenaris into a bank, but just some thoughts on capital allocation or what you think is the most prudent use of excess cash on the balance sheet.

Paolo Rocca: Just my follow-up is on the buyback. Paolo, the company at the end of the quarter had $3.8 billion in net cash. I assume you don't want to turn to Naris into a bank, but just some thoughts on capital allocation or what you think is the most prudent use of excess cash on the balance sheet. Well, you know, on this latter, we opened the door for a ship by the bank. This is combined with our dividend policy. At the same time, we are looking for potential opportunity for investing capital with the capital. High return in our business.

Paolo Rocca: Open the door to a share buyback that is combined with our dividend policy. (inaudible)

Paolo Rocca: If we don't identify opportunity within our sector that has potential impact, well, it will be up to the shareholder and to the board to decide what to do. In the meantime, we manage prudently our cash. We are not a bank, but we try to protect the best we can, the liquidity to have return on it that you can see in our... Financial statement. Great. Thanks a lot. Thank you.

Unknown Executive: One moment for our next question. Our next question comes from the line of Christopher Copeland from Bank of America. Yeah, thank you very much. A lot of my questions have been answered, but maybe I can try again and ask you what you're hoping to present. That'll be new in September without obviously expecting you to tell us the details and the content, but I'm intrigued by the timing. You expect to be through maintenance by then. You expect that we will have a better outlook on pricing progression in the US by then, or do you expect to have more visibility on exactly what you've just highlighted: opportunities for M&A or not, i.e.

Christopher Copeland: Our next question comes from the line of Christopher Copeland from Bank of America.

Unknown Executive: in other words. The capacity to deploy your balance sheet for future buybacks, et cetera.

Christopher Copeland: And if I can sneak in one more on the litigation provision that you've taken, what kind of timelines are you attaching to that if we're looking for a resolution anytime soon? Thank you.

Unknown Executive: And if I can sneak in one more on the litigation provision that you've taken, what kind of timelines are you attaching to that if we're looking for a resolution anytime soon. Thank you. Thank you very much.

Paolo Rocca: Well, I think it's passed sometimes since the last time we did any best of day. The company has changed in its perimeter. There are a new region, new business, the profile of the company has changed and also our market and our competitive environment. Change, I think will be useful to meet with our world of investor and to present where we are and where we see the key market in which we have a very relevant presence. Also, our industrial profile is changing because we are introducing technological change. We are more defined this and we think that we will be prepared to increase efficiency and productivity and to reposition also our in data structure from the point of view of decarbonization and environmental food.

Paolo Rocca: It has passed been some time since the last time we did an Investor's Day. The company has changed in its perimeter. There are new regions and new businesses. The profile of the company has changed, and also our market and our competitive environment have changed. I think it will be useful to meet with our world of investors. Changing, because we are introducing technological change, we are modifying this, and we think that we were. We will be prepared to increase efficiency and productivity and to reposition our industrial structure from the point of view of decarbonization and environmental protection.

Speaker Change: Which I think would be useful to.

Speaker Change: Meet with our rules of Investor and two.

Speaker Change: <unk> presented where we are and where we see the key market in which we have a very relevant.

Speaker Change: Presence also our industrial.

Speaker Change: Profile.

Speaker Change: Is it.

Speaker Change: Changing because we are to.

Speaker Change: Reducing that can always change.

Speaker Change: We are more we find these and we think that.

Speaker Change: We are.

Speaker Change: <unk>.

Speaker Change: We will be prepared to increase.

Speaker Change: The efficiency and productivity and to reposition also our industrial structure from the point of view of the kind of monetization.

Paolo Rocca: I think it will be important to, after some years in which we didn't have this opportunity, to have an overview of where we are and also on the point that you mentioned how is our capital allocation and what we see in the medium run as, let's say, the path that the company could follow, including the aspect concerning capital location.

Speaker Change: And by no means that 40%.

Speaker Change: And I think will be important to after some years in which we didn't have this opportunity.

Paolo Rocca: This is the first point. The second point is the... that we have in Brazil and in which we are registering a provision. We are. We'll be in, uh..., required to make a provision as a result of this adverse decision by the Superior Court of Justice in Brazil. CONFIRMED, And there will also be included the determination of the actual payout amount. If any, they should be made. This should be decided by a lower court in a separate proceeding, so it will take time to get the definition for this, and we are... We will do all we can to defend our position and... Establishment

Paolo Rocca: This is the first point on the second point in the case for that we have in Brazil and in which we are registering a provision. Let me tell you that we are, we have been required to make provision as a result of this adverse decision by the Superior Court of Justice in Brazil in a litigation against CSN for the acquisition 12 years ago of Ziminas. Let me tell you that Tenaris believed that such a decision is contrary to the applicable substantive and procedural law. We cannot comment so much on it. This is not something that will end very quickly. We expect there will be additional space for litigation, and we will pursue this as much as we can in all the areas.

Operator: Thank you. Please take a moment for our next question.

Paolo Rocca: We plan to defend our position because remember this is a position that has been. This will be this motion and appeal will need to be resolved before the case becomes final, and there will be also included the determination of the actual payout amount. If any, there should be made. This should be made by a lower court in a separate proceeding, so it will take time to get the definition on this, and we are, we will do all we can to defend our position. And establishing, let's say, our right to operate as we operate in 2012.

Unknown Executive: Great. I appreciate that. Thank you.

Luigi Bellis: One moment for our next question. Our next question comes from the line of Luigi Develis from Equita Siam. Hi, good morning. Just three questions for me. The first one is on the course. You mentioned it. You are acting to reduce course. Can you elaborate on the size of the cost reduction expected? Then when do you expect the rate impact of this action? The second question of working capital, so excellent reduction is a concorter. How do you expect this to evolve during the second half of the year? And the last question on the outlook, so can you elaborate on the exit speed in Q4 in terms of sales and profitability?

Luigi Bellis: And if you expect a better quarter entering 2025, if you have visibility on this, consider schools. So the end of the stocking in Middle East, your visibility on US Redirect clients. Thank you. Thank you, Luigi.

Paolo Rocca: This is on the first point. As we mentioned in our press release and in our open framework, we see this lower volume in the second semester. And we take advantage of this situation for doing all the extraordinary maintenance and investment, using this time also to address some of the extraordinary maintenance work that we are needed in because we were working at almost full capacity for a long period of time. During this, we will expand the level of automation, renew the process and the technology in some of the core areas of our business. Because we have been successful also in this last year and the previous year in developing the full potential of our strong facility.

Paolo Rocca: our open remark, we see this lower volume in the second semester, and we take advantage of this situation for doing all the extraordinary maintenance and investment using this time. Uh... This, uh..., will allow us to reduce our overall cost. Some of this is unpredictable. Some is something that is more under our control.

Paolo Rocca: So, facility like Bay City today are operating at record level. So, we have an efficient facility, core facility. They are operating even above the level that we were originally planned. So, we need to restructure, reorganize also this closing or reducing operation in some of the facility in particular in the United States, but not only the United States. This will allow us to reduce our overall cost. At the same time, we think we can address some specification in which we can reduce cost. We have a plan of action for this. We think we can reach savings in the range of $200 million per year over, let's say, the core materialize between now and June 2025.

Paolo Rocca: This is a broad number that are issue like devaluation or exchange in appreciation of the exchange rate that are relevant for our labor cost all around the world. Some of this is unpredictable; something is something that is more under our control. The whole, this adjustment plan is justified, but there's low down that we have seen in the second method here. But we will not affect our capability to enter in 2025 and respond to, let's say, the opportunity that I mentioned that we see going on. The second point, this was the... in related to the US.

Paolo Rocca: As a whole, the second point, this was the... Second Queue, Extraordinary Positive Condition, will continue to support our cash flow in the coming quarter, different regions. I mentioned Latin America, and as I tell you, I am positive about it. As far as the U.S., over time. Elections are important in the U.S., but maybe, Luca, you can add... Yes, Paolo To the extent to which you think we have visibility, Mon

Speaker Change: Cleanup.

Speaker Change: Affect our capability to enter in 2025 and respond.

Speaker Change: To let's say the opportunity that I mentioned that we see.

Speaker Change: Going on.

Speaker Change: The second point.

Speaker Change: This was at the.

Speaker Change: Related to the U S.

Paolo Rocca: Working capital exclusively all over the working capital. Well, working capital has been giving us a positive contribution to our cash flow in the second queue, extraordinary positive conditions. We continue to support our cash flow in the coming quarter. Because we are reducing our inventory, we have good progress in our collection. So we expect this to continue to contribute, but probably not in the same volume and same amount as in the second queue.

Speaker Change: Working capital working capital exclusively all all the.

Speaker Change: The working capital what do you got me there has been.

Speaker Change: Giving us a positive.

Speaker Change: The contribution to our cash flow in the second Q extraordinary positive nutrition will continue to support our cash flow in the coming.

Luca Zanotti: So the third question is what we see and the visibility that we have in 2000 and for the next year. I think that at this point in time we really do not have full visibility of this. The different region, I mention the Latin America and as I tell you, I am positive on it. As far as US over time, elections are important in the US, but maybe Luca, you can add, yes, Paolo, to the extent to which we think we have visibility. Morning, Luigi. Obviously, election and the result of the election are going to be a factor, together with the cost of capital.

Luca Zanotti: Good morning, Luigi. Obviously, the election and the result of the election are going to be factors together with the cost of capital. And so there are a number of variables that are obviously beyond our control. And depending on how the combination of these variables plays out, we might see a different scenario in terms of overall activity.

Luca Zanotti: And so there are a number of variables that are obviously beyond our control, and depending on the combination of these variables, plays out, play out. So we might see a different scenario in terms of overall activity. Now when we get to our sales, probably the point that is worth mentioning is that the rest is too big, let's say consolidation that have not been yet cleared by the answer being Diamondback with Endeavor and Conoco Phillips with Marathon. And obviously, should this transaction go through as we all expect, this would be an important upside on our sales, being diamond back in Conoco to very important customers within our portfolio.

Gabriel Podskubka: And for the Middle East and let's say the rest of the market, including the offshore, Gabriel, we know that there is not so much visibility, but still. Yeah, thank you, Paolo. Yeah, Luigi, in terms of the international markets, including the Middle East and the offshore in general, the outlook is quite positive; the fundamentals are there. The NOC in the Middle East continue to invest in infrastructure projects as well, going on. And in the offshore space, the level of FIDs that have been announced and are in the pipeline, we expect that that will sustain a multi-year cycle of.

Luca Zanotti: We know that there is not so much visibility, but still.

Gabriel Podskubka: are there. The NOCs in the Middle East continue to invest. There are infrastructure projects as well going on. But as Paolo said, this is a partial, partial visibility into 2025. We already have some contracts that are going in. A bit, pardon the...

Gabriel Podskubka: of a high level of graphics. But, as Paolo said, we have partial visibility into the 2025. We already have some contrasts that are going to the 25, but this does not pertain to all segments and countries and regions involved. So overall, I would say a positive outlook in the mid-term, but this is a bit far down the timeline. Thank you.

Unknown Executive: At this time, I'm showing no further questions.

Giovanni Sardagna: I would like to turn the conference back over to Giovanni Sardagna for closing remarks. Thank you, Gigi, and thank you all for joining us, and we hope to see you in London at the end of next month.

Unknown Executive: This concludes today's conference call. Thank you for participating.

Unknown Executive: You may now disconnect.