The financial and operational information contained in this press release is based on unaudited consolidated condensed interim financial statements presented in U.S. dollars and prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standard Board and adopted by the European Union, or IFRS. Additionally, this press release includes non-IFRS alternative performance measures i.e., EBITDA, Free Cash Flow, Net cash / debt and Operating working capital days. See exhibit I for more details on these alternative performance measures.
LUXEMBOURG, Aug. 03, 2022 (GLOBE NEWSWIRE) -- Tenaris S.A. (NYSE and Mexico: TS and EXM Italy: TEN) (“Tenaris”) today announced its results for the quarter ended June 30, 2022 in comparison with its results for the quarter ended June 30, 2021.
Summary of 2022 Second Quarter Results
(Comparison with first quarter of 2022 and second quarter of 2021)
| 2Q 2022 | 1Q 2022 | 2Q 2021 | ||||
| Net sales ($ million) | 2,800 | 2,367 | 18% | 1,529 | 83% | |
| Operating income ($ million) | 663 | 484 | 37% | 152 | 337% | |
| Net income ($ million) | 634 | 503 | 26% | 290 | 118% | |
| Shareholders’ net income ($ million) | 637 | 503 | 27% | 294 | 117% | |
| Earnings per ADS ($) | 1.08 | 0.85 | 27% | 0.50 | 117% | |
| Earnings per share ($) | 0.54 | 0.43 | 27% | 0.25 | 117% | |
| EBITDA* ($ million) | 806 | 627 | 28% | 301 | 167% | |
| EBITDA margin (% of net sales) | 28.8% | 26.5% | 19.7% | |||
*EBITDA in 2Q 2022 includes a $78 million charge from the settlement with the U.S. SEC, a $71 million non-cash gain from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders due to the cease of its operations, an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility and $8 million of severance charges. In 1Q 2022 EBITDA includes severance charges of $12 million (related to the discontinuation of our industrial equipment business in Brazil and the closure of NKKTubes). If these one-off charges and gains were not included EBITDA would have been $803 million (28.7%) in 2Q 2022 and $639 million (27.0%) in 1Q 2022.
Our second quarter sales increased a further 18% sequentially, led by further pricing gains in North America, a recovery of volumes in the Middle East and higher sales in South America. Our EBITDA, which included several one-off items which compensated among them, continued to grow strongly and its margin rose above 28% as higher average selling prices compensate increases in energy and raw material costs. Our net income, which also increased and reached 23% of sales, continues to receive a good contribution from our investment in Ternium.
Our free cash flow for the quarter turned positive at $353 million and our operating working capital days declined by 13 to 128. After a dividend payment of $331 million in May 2022, our net cash position increased to $635 million at June 30, 2022.
Market Background and Outlook
Even as global economic growth slows and central banks raise interest rates to contain inflationary pressures, prices for oil and gas remain high and prices for gas and electric energy in Europe have reached unprecedented levels. The Ukraine war drags on and the impact of further sanctions on Russian oil exports as well as reductions in flows of Russian gas to Europe have increased market uncertainty. Inventories remain at low levels and the supply response remains limited reflecting low investment levels over the past years and uncertainty about longer-term demand in the energy transition.
Drilling activity continues to increase around the world led by North America and the Middle East. Offshore drilling activity is increasing with deepwater developments in Brazil, Guyana and sub-Saharan Africa. Pipeline project activity is advancing in the Middle East and South America.
In the second half, we anticipate further growth in sales and stable margins, with higher prices compensating cost increases. Growth in sales will be more limited in the third quarter as they will be affected by seasonal factors and lower shipments to pipeline projects. We also anticipate that free cash flow will remain positive during the semester.
Analysis of 2022 Second Quarter Results
Tubes
The following table indicates, for our Tubes business segment, sales volumes of seamless and welded pipes for the periods indicated below:
| Tubes Sales volume (thousand metric tons) | 2Q 2022 | 1Q 2022 | 2Q 2021 | ||
| Seamless | 815 | 772 | 6% | 611 | 33% |
| Welded | 75 | 50 | 48% | 79 | (5%) |
| Total | 890 | 822 | 8% | 690 | 29% |
The following table indicates, for our Tubes business segment, net sales by geographic region, operating income and operating income as a percentage of net sales for the periods indicated below:
| Tubes | 2Q 2022 | 1Q 2022 | 2Q 2021 | ||
| (Net sales - $ million) | |||||
| North America | 1,583 | 1,347 | 18% | 706 | 124% |
| South America | 462 | 348 | 33% | 230 | 101% |
| Europe | 259 | 232 | 11% | 170 | 52% |
| Middle East & Africa | 260 | 182 | 43% | 228 | 14% |
| Asia Pacific | 67 | 94 | (29%) | 62 | 7% |
| Total net sales ($ million) | 2,632 | 2,203 | 19% | 1,397 | 88% |
| Operating income ($ million) | 636 | 471 | 35% | 130 | 389% |
| Operating margin (% of sales) | 24.2% | 21.4% | 9.3% | ||
Net sales of tubular products and services increased 19% sequentially and 88% year on year. On a sequential basis volumes sold increased 8% and average selling prices increased 10%. In North America, sales increased thanks to higher OCTG prices throughout the region reflecting higher U.S. drilling activity and low distributor inventory levels together with higher volume of OCTG delivered in U.S. onshore. In South America we had higher prices and volumes in Colombia and Argentina. In Europe sales increased due to higher product pricing reflecting high costs of energy and raw materials. In the Middle East and Africa we had a recovery of OCTG sales in UAE, Kuwait and sub-Saharan Africa. In Asia Pacific sales declined due to lower OCTG sales in Australia and lower sales of other products in the region.
Operating results from tubular products and services amounted to a gain of $636 million in the second quarter of 2022 compared to a gain of $471 million in the previous quarter and $130 million in the second quarter of 2021. Operating results for our Tubes segment include a $78 million charge from the settlement with the U.S. SEC, a $71 million non-cash gain from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders due to the cease of its operations, an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility and $8 million of severance charges. Our operating margin improved as tubes price increases more than offset higher energy and raw material costs.
Others
The following table indicates, for our Others business segment, net sales, operating income and operating income as a percentage of net sales for the periods indicated below:
| Others | 2Q 2022 | 1Q 2022 | 2Q 2021 | |||
| Net sales ($ million) | 168 | 164 | 3% | 132 | 28% | |
| Operating income ($ million) | 27 | 13 | 102% | 21 | 24% | |
| Operating margin (% of sales) | 15.8% | 8.0% | 16.3% | |||
Net sales of other products and services increased 3% sequentially and 28% year on year. Sequentially, higher sales from our oil services business in Argentina which offers hydraulic fracturing and coiled tubing services were offset by lower sales of excess raw materials. Operating income improved as the previous quarter was affected by a $5 million severance charge related to the discontinuation of the industrial equipment business in Brazil, and the current quarter we had improved margins, in particular in our oil services business in Argentina and utility conduits for buildings.
Selling, general and administrative expenses, or SG&A, amounted to $412 million, or 14.7% of net sales, in the second quarter of 2022, compared to $365 million, 15.4% in the previous quarter and $297 million, 19.4% in the second quarter of 2021. Sequentially, our SG&A expenses increased mainly due to higher selling expenses associated with higher sales, however, they decreased as a percentage of sales due to the better absorption of the fixed and semi-fixed components of SG&A expenses on higher sales.
Other operating results amounted to a gain of $9 million in the second quarter of 2022, compared to $4 million in the previous quarter and $34 million in the second quarter of 2021. Other operating results in the quarter include a $78 million charge from the settlement with the U.S. SEC, a $71 million non-cash gain from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders due to the cease of its operations and an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility. The gain in the second quarter of 2021 was mainly due to a $33 million recognition of fiscal credits in Brazil.
Financial results amounted to a loss of $11 million in the second quarter of 2022, compared to a loss of $1 million in the previous quarter and a gain of $10 million in the second quarter of 2021. The net financial income result of the quarter was negatively impacted by the decline in the fair value of certain financial instruments obtained in an operation of settlement of trade receivables. Main results of the quarter include net foreign exchange transaction losses of $12 million, mainly due to the Euro and the Brazilian Real depreciation on U.S. dollar denominated intercompany liabilities, in subsidiaries with functional currency Euro and Brazilian Real respectively, both largely offset in the currency translation reserve in equity.
Equity in earnings of non-consolidated companies generated a gain of $103 million in the second quarter of 2022, compared to a gain of $88 million in the previous quarter and a gain of $146 million in the second quarter of last year. These results are mainly derived from our participation in Ternium (NYSE:TX) and Usiminas. The result of the previous quarter is net of an impairment charge on the value of our joint venture in Russia, amounting to $15 million.
Income tax charge amounted to $120 million in the second quarter of 2022, compared to $67 million in the previous quarter and $17 million in the second quarter of last year. The increase in income tax reflects better results at several subsidiaries following the improvement in activity.
Cash Flow and Liquidity of 2022 Second Quarter
Net cash generated by operating activities during the second quarter of 2022 was $428 million, compared to $27 million used in the first quarter of 2022 and $50 million used in the second quarter of last year. During the second quarter of 2022 cash generated by operating activities is net of an increase in working capital of $198 million.
With capital expenditures of $74 million, our free cash flow amounted to $353 million during the quarter. After a dividend payment of $331 million in May 2022, our net cash position amounted to $635 million at June 30, 2022, from $562 million at March 31, 2022.
Analysis of 2022 First Half Results
| 6M 2022 | 6M 2021 | Increase/(Decrease) | |
| Net sales ($ million) | 5,168 | 2,710 | 91% |
| Operating income ($ million) | 1,147 | 203 | 464% |
| Net income ($ million) | 1,137 | 391 | 191% |
| Shareholders’ net income ($ million) | 1,139 | 400 | 185% |
| Earnings per ADS ($) | 1.93 | 0.68 | 184% |
| Earnings per share ($) | 0.97 | 0.34 | 185% |
| EBITDA ($ million) | 1,433 | 497 | 188% |
| EBITDA margin (% of net sales) | 27.7% | 18.4% |
Our sales in the first half of 2022 increased 91% compared to the first half of 2021 as volumes of tubular products shipped increased 36% and average selling prices increased 43% while sales in the Others segment increased 42%. Following the increase in sales, EBITDA more than doubled thanks to the increase in margins. The improvement in operating results was driven by the recovery in sales and margins, as higher tubes prices and an improvement in industrial performance due to the increased levels of activity and utilization of production capacity more than offset the increase in raw material and energy costs. Operating income in the first six months of 2022 includes a non-cash gain of $71 million from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders, an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility, offset by a $78 million charge from the settlement with the U.S. SEC and $20 million severance charges.
Cash flow provided by operating activities amounted to $401 million during the first half of 2022, net of an increase in working capital of $807 million, which reflects the recovery in activity levels. After capital expenditures of $141 million, our free cash flow amounted to $260 million. Following a dividend payment of $331 million in May 2022, our positive net cash position amounted to $635 million at the end of June 2022.
The following table shows our net sales by business segment for the periods indicated below:
| Net sales ($ million) | 6M 2022 | 6M 2021 | Increase/(Decrease) | ||
| Tubes | 4,836 | 94% | 2,476 | 91% | 95% |
| Others | 332 | 6% | 234 | 9% | 42% |
| Total | 5,168 | 2,710 | 91% | ||
Tubes
The following table indicates, for our Tubes business segment, sales volumes of seamless and welded pipes for the periods indicated below:
| Tubes Sales volume (thousand metric tons) | 6M 2022 | 6M 2021 | Increase/(Decrease) |
| Seamless | 1,587 | 1,108 | 43% |
| Welded | 125 | 150 | (16%) |
| Total | 1,712 | 1,258 | 36% |
The following table indicates, for our Tubes business segment, net sales by geographic region, operating income and operating income as a percentage of net sales for the periods indicated below:
| Tubes | 6M 2022 | 6M 2021 | Increase/(Decrease) |
| (Net sales - $ million) | |||
| North America | 2,930 | 1,220 | 140% |
| South America | 810 | 396 | 105% |
| Europe | 491 | 314 | 57% |
| Middle East & Africa | 442 | 424 | 4% |
| Asia Pacific | 161 | 122 | 32% |
| Total net sales ($ million) | 4,836 | 2,476 | 95% |
| Operating income ($ million) | 1,107 | 169 | 557% |
| Operating margin (% of sales) | 22.9% | 6.8% |
Net sales of tubular products and services increased 95% to $4,836 million in the first half of 2022, compared to $2,476 million in the first half of 2021 due to an increase of 36% in volumes and a 43% increase in average selling prices. Sales increased in all regions, mainly in North America where there was a recovery in volumes and prices throughout the region, led by the U.S. onshore market. Average drilling activity in the first half of 2022 increased 57% in the United States & Canada and 14% internationally compared to the first half of 2021.
Operating results from tubular products and services amounted to a gain of $1,107 million in the first half of 2022 compared to $169 million in the first half of 2021. Tubes operating income in the first six months of 2022 includes a non-cash gain of $71 million from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders, an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility, offset by a $78 million charge from the settlement with the U.S. SEC and $16 million severance charges. The improvement in operating results was driven by the recovery in sales and margins, as higher tubes prices and an improvement in industrial performance due to the increased levels of activity and utilization of production capacity more than offset the increase in raw material and energy costs.
Others
The following table indicates, for our Others business segment, net sales, operating income and operating income as a percentage of net sales for the periods indicated below:
| Others | 6M 2022 | 6M 2021 | Increase/(Decrease) |
| Net sales ($ million) | 332 | 234 | 42% |
| Operating income ($ million) | 40 | 35 | 14% |
| Operating margin (% of sales) | 12.0% | 14.8% |
Net sales of other products and services increased 42% to $332 million in the first half of 2022, compared to $234 million in the first half of 2021, mainly due to higher sales of our oilfield services business in Argentina which offers hydraulic fracturing and coiled tubing services, higher sales of sucker rods and excess raw materials, partially offset by lower sales from the discontinued industrial equipment business in Brazil.
Operating results from other products and services amounted to a gain of $40 million in the first half of 2022, compared to $35 million in the first half of 2021. The improvement in operating results is mainly driven by the increase in sales following a recovery in activity and in the level of capacity utilization of our production facilities.
Selling, general and administrative expenses, or SG&A, amounted to $777 million in the first half of 2022, representing 15.0% of sales, and $552 million in the first half of 2021, representing 20.4% of sales. SG&A expenses increased mainly due to higher selling expenses (in particular commissions and freights) associated with higher sales and higher labor costs. However, they decreased as a percentage of sales due to the better absorption of fixed and semi-fixed components of SG&A expenses on higher sales.
Other operating results amounted to a net gain of $14 million in the first half of 2022, compared to a net gain of $42 million in the first half of 2021. In the first six months of 2022 main other operating results include a non-cash gain of $71 million from the reclassification to the income statement of NKKTubes’s cumulative foreign exchange adjustments belonging to the shareholders, an $18 million gain from the sale of land in Canada after the relocation of the Prudential facility, partially offset by a $78 million loss from the settlement with the U.S. SEC. The gain in 2021 was mainly due to a $34 million recognition of fiscal credits in Brazil.
Financial results amounted to a loss of $13 million in the first half of 2022, compared to a gain of $21 million in the first half of 2021. The $7 million net finance income in the first six months of 2022 was negatively impacted by the decline in the fair value of certain financial instruments obtained in an operation of settlement of trade receivables. Additionally, the $20 million loss in other financial results is mainly related to losses on derivatives covering net receivables in Brazilian real, together with losses on derivatives covering net liabilities in Euro and Japanese yen.
Equity in earnings of non-consolidated companies generated a gain of $191 million in the first half of 2022, compared to a gain of $225 million in the first half of 2021. The result of the first half of 2022 is net of an impairment charge on the value of our joint venture in Russia, amounting to $15 million. The remaining results are mainly derived from our participation in Ternium (NYSE:TX) and Usiminas.
Income tax amounted to a charge of $188 million in the first half of 2022, compared to $59 million in the first half of 2021. The increase in income tax reflects better results at several subsidiaries following the improvement in activity in 2022.
Cash Flow and Liquidity of 2022 First Half
Net cash provided by operating activities during the first half of 2022 amounted to $401 million (net of an increase in working capital of $807 million), compared to cash provided by operations of $20 million (net of an increase in working capital of $397 million) in the first half of 2021. Working capital, mainly inventories and trade receivables, has been increasing since 2021 following the recovery in activity from very low levels in 2020.
Capital expenditures amounted to $141 million in the first half of 2022, compared to $97 million in the first half of 2021. Free cash flow amounted to $260 million in the first half of 2022, compared to a negative free cash flow of $76 million in the first half of 2021.
After a dividend payment of $331 million in May 2022, our net cash position amounted to $635 million at June 30, 2022, from $700 million at December 31, 2021.
Tenaris Files Half-Year Report
Tenaris S.A. announces that it has filed its half-year report for the six-month period ended June 30, 2022 with the Luxembourg Stock Exchange. The half-year report can be downloaded from the Luxembourg Stock Exchange’s website at www.bourse.lu and from Tenaris’s website at ir.tenaris.com.
Holders of Tenaris’s shares and ADSs, and any other interested parties, may request a hard copy of the half-year report, free of charge, at 1-888-300-5432 (toll free from the United States) or 52-229-989-1159 (from outside the United States).
Conference call
Tenaris will hold a conference call to discuss the above reported results, on August 4, 2022, at 09:00 a.m. (Eastern Time). Following a brief summary, the conference call will be opened to questions.
To listen to the conference please join through one of the following options:
ir.tenaris.com/events-and-presentations or
https://edge.media-server.com/mmc/p/5ds3uv62
If you wish to participate in the Q&A session please register at the following link: https://register.vevent.com/register/BId203987dd43c496785e4092b58a1eaa1
Please connect 10 minutes before the scheduled start time.
A replay of the conference call will also be available on our webpage at: ir.tenaris.com/events-and-presentations
Some of the statements contained in this press release are “forward-looking statements”. Forward-looking statements are based on management’s current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to future oil and gas prices and their impact on investment programs by oil and gas companies.
Consolidated Condensed Interim Income Statement
| (all amounts in thousands of U.S. dollars) | Three-month period ended June 30, | Six-month period ended June 30, | ||
| 2022 | 2021 | 2022 | 2021 | |
| Unaudited | Unaudited | |||
| Net sales | 2,800,474 | 1,528,511 | 5,167,515 | 2,710,300 |
| Cost of sales | (1,735,342) | (1,113,782) | (3,257,284) | (1,996,781) |
| Gross profit | 1,065,132 | 414,729 | 1,910,231 | 713,519 |
| Selling, general and administrative expenses | (411,740) | (296,785) | (776,662) | (551,811) |
| Other operating income (expense), net | 9,453 | 33,750 | 13,530 | 41,577 |
| Operating income | 662,845 | 151,694 | 1,147,099 | 203,285 |
| Finance Income | 6,441 | 21,517 | 15,266 | 27,215 |
| Finance Cost | (6,127) | (5,831) | (7,962) | (10,506) |
| Other financial results | (11,771) | (6,074) | (19,879) | 4,680 |
| Income before equity in earnings of non-consolidated companies and income tax | 651,388 | 161,306 | 1,134,524 | 224,674 |
| Equity in earnings of non-consolidated companies | 103,102 | 145,829 | 190,706 | 224,970 |
| Income before income tax | 754,490 | 307,135 | 1,325,230 | 449,644 |
| Income tax | (120,464) | (16,953) | (187,771) | (58,697) |
| Income for the period | 634,026 | 290,182 | 1,137,459 | 390,947 |
| Attributable to: | ||||
| Shareholders' equity | 636,718 | 293,940 | 1,139,492 | 400,286 |
| Non-controlling interests | (2,692) | (3,758) | (2,033) | (9,339) |
| 634,026 | 290,182 | 1,137,459 | 390,947 | |
Consolidated Condensed Interim Statement of Financial Position
| (all amounts in thousands of U.S. dollars) | At June 30, 2022 | At December 31, 2021 | |||
| Unaudited | |||||
| ASSETS | |||||
| Non-current assets | |||||
| Property, plant and equipment, net | 5,662,744 | 5,824,801 | |||
| Intangible assets, net | 1,358,935 | 1,372,176 | |||
| Right-of-use assets, net | 109,340 | 108,738 | |||
| Investments in non-consolidated companies | 1,539,006 | 1,383,774 | |||
| Other investments | 184,222 | 320,254 | |||
| Derivative financial instruments | 8,279 | 7,080 | |||
| Deferred tax assets | 264,161 | 245,547 | |||
| Receivables, net | 228,610 | 9,355,297 | 205,888 | 9,468,258 | |
| Current assets | |||||
| Inventories, net | 3,370,139 | 2,672,593 | |||
| Receivables and prepayments, net | 134,661 | 96,276 | |||
| Current tax assets | 201,786 | 193,021 | |||
| Trade receivables, net | 1,890,697 | 1,299,072 | |||
| Derivative financial instruments | 27,064 | 4,235 | |||
| Other investments | 559,827 | 397,849 | |||
| Cash and cash equivalents | 636,571 | 6,820,745 | 318,127 | 4,981,173 | |
| Total assets | 16,176,042 | 14,449,431 | |||
| EQUITY | |||||
| Shareholders' equity | 12,649,677 | 11,960,578 | |||
| Non-controlling interests | 144,371 | 145,124 | |||
| Total equity | 12,794,048 | 12,105,702 | |||
| LIABILITIES | |||||
| Non-current liabilities | |||||
| Borrowings | 16,931 | 111,432 | |||
| Lease liabilities | 83,315 | 82,694 | |||
| Deferred tax liabilities | 279,799 | 274,721 | |||
| Other liabilities | 236,224 | 231,681 | |||
| Provisions | 93,312 | 709,581 | 83,556 | 784,084 | |
| Current liabilities | |||||
| Borrowings | 727,497 | 219,501 | |||
| Lease liabilities | 29,357 | 34,591 | |||
| Derivative financial instruments | 12,811 | 11,328 | |||
| Current tax liabilities | 232,437 | 143,486 | |||
| Other liabilities | 317,846 | 203,725 | |||
| Provisions | 10,045 | 9,322 | |||
| Customer advances | 343,613 | 92,436 | |||
| Trade payables | 998,807 | 2,672,413 | 845,256 | 1,559,645 | |
| Total liabilities | 3,381,994 | 2,343,729 | |||
| Total equity and liabilities | 16,176,042 | 14,449,431 | |||
Consolidated Condensed Interim Statement of Cash Flows
| (all amounts in thousands of U.S. dollars) | Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2022 | 2021 | 2022 | 2021 | ||
| Unaudited | Unaudited | ||||
| Cash flows from operating activities | |||||
| Income for the period | 634,026 | 290,182 | 1,137,459 | 390,947 | |
| Adjustments for: | |||||
| Depreciation and amortization | 143,024 | 149,627 | 286,100 | 294,096 | |
| Income tax accruals less payments | 39,036 | (12,658) | 45,951 | (567) | |
| Equity in earnings of non-consolidated companies | (103,102) | (145,829) | (190,706) | (224,970) | |
| Interest accruals less payments, net | (311) | (12,001) | (1,611) | (12,047) | |
| Changes in provisions | 3,591 | 5,562 | 10,479 | 9,598 | |
| Reclassification of currency translation adjustment reserve | (71,252) | - | (71,252) | - | |
| Changes in working capital | (198,471) | (313,764) | (807,099) | (397,090) | |
| Currency translation adjustment and others | (18,789) | (11,472) | (8,173) | (39,826) | |
| Net cash provided by (used in) operating activities | 427,752 | (50,353) | 401,148 | 20,141 | |
| Cash flows from investing activities | |||||
| Capital expenditures | (74,409) | (51,274) | (141,343) | (96,565) | |
| Changes in advance to suppliers of property, plant and equipment | (1,290) | (2,624) | (19,855) | (5,728) | |
| Acquisition of subsidiaries, net of cash acquired | (4,082) | - | (4,082) | - | |
| Proceeds from disposal of property, plant and equipment and intangible assets | 41,177 | 416 | 45,996 | 5,339 | |
| Dividends received from non-consolidated companies | 45,488 | 49,131 | 45,488 | 49,131 | |
| Changes in investments in securities | (152,807) | 65,991 | (43,571) | 242,923 | |
| Net cash (used in) provided by investing activities | (145,923) | 61,640 | (117,367) | 195,100 | |
| Cash flows from financing activities | |||||
| Dividends paid | (330,584) | (165,275) | (330,584) | (165,275) | |
| Dividends paid to non-controlling interest in subsidiaries | - | (3,207) | - | (3,207) | |
| Changes in non-controlling interests | 1,622 | - | 1,622 | - | |
| Payments of lease liabilities | (12,727) | (10,404) | (28,405) | (26,304) | |
| Proceeds from borrowings | 583,593 | 191,515 | 851,736 | 286,120 | |
| Repayments of borrowings | (185,032) | (135,617) | (441,176) | (303,888) | |
| Net cash provided by (used in) financing activities | 56,872 | (122,988) | 53,193 | (212,554) | |
| Increase (decrease) in cash and cash equivalents | 338,701 | (111,701) | 336,974 | 2,687 | |
| Movement in cash and cash equivalents | |||||
| At the beginning of the period | 314,319 | 695,127 | 318,067 | 584,583 | |
| Effect of exchange rate changes | (17,092) | 1,813 | (19,113) | (2,031) | |
| Increase (decrease) in cash and cash equivalents | 338,701 | (111,701) | 336,974 | 2,687 | |
| 635,928 | 585,239 | 635,928 | 585,239 | ||
Exhibit I – Alternative performance measures
Alternative performance measures should be considered in addition to, not as substitute for or superior to, other measures of financial performance prepared in accordance with IFRS
EBITDA, Earnings before interest, tax, depreciation and amortization.
EBITDA provides an analysis of the operating results excluding depreciation and amortization and impairments, as they are recurring non-cash variables which can vary substantially from company to company depending on accounting policies and the accounting value of the assets. EBITDA is an approximation to pre-tax operating cash flow and reflects cash generation before working capital variation. EBITDA is widely used by investors when evaluating businesses (multiples valuation), as well as by rating agencies and creditors to evaluate the level of debt, comparing EBITDA with net debt.
EBITDA is calculated in the following manner:
EBITDA = Net income for the period + Income tax charges +/- Equity in Earnings (losses) of non-consolidated companies +/- Financial results + Depreciation and amortization +/- Impairment charges/(reversals)
EBITDA is a non-IFRS alternative performance measure.
| (all amounts in thousands of U.S. dollars) | Three-month period ended June 30, | Six-month period ended June 30, | ||
| 2022 | 2021 | 2022 | 2021 | |
| Income for the period | 634,026 | 290,182 | 1,137,459 | 390,947 |
| Income tax | 120,464 | 16,953 | 187,771 | 58,697 |
| Equity in earnings of non-consolidated companies | (103,102) | (145,829) | (190,706) | (224,970) |
| Financial Results | 11,457 | (9,612) | 12,575 | (21,389) |
| Depreciation and amortization | 143,024 | 149,627 | 286,100 | 294,096 |
| EBITDA | 805,869 | 301,321 | 1,433,199 | 497,381 |
Free Cash Flow
Free cash flow is a measure of financial performance, calculated as operating cash flow less capital expenditures. FCF represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base.
Free cash flow is calculated in the following manner:
Free cash flow = Net cash (used in) provided by operating activities - Capital expenditures.
Free cash flow is a non-IFRS alternative performance measure.
| (all amounts in thousands of U.S. dollars) | Three-month period ended June 30, | Six-month period ended June 30, | ||
| 2022 | 2021 | 2022 | 2021 | |
| Net cash provided by (used in) operating activities | 427,752 | (50,353) | 401,148 | 20,141 |
| Capital expenditures | (74,409) | (51,274) | (141,343) | (96,565) |
| Free cash flow | 353,343 | (101,627) | 259,805 | (76,424) |
Net Cash / (Debt)
This is the net balance of cash and cash equivalents, other current investments and fixed income investments held to maturity less total borrowings. It provides a summary of the financial solvency and liquidity of the company. Net cash / (debt) is widely used by investors and rating agencies and creditors to assess the company’s leverage, financial strength, flexibility and risks.
Net cash/ debt is calculated in the following manner:
Net cash = Cash and cash equivalents + Other investments (Current and Non-Current)+/- Derivatives hedging borrowings and investments - Borrowings (Current and Non-Current).
Net cash/debt is a non-IFRS alternative performance measure.
| (all amounts in thousands of U.S. dollars) | At June 30, | |
| 2022 | 2021 | |
| Cash and cash equivalents | 636,571 | 587,337 |
| Other current investments | 559,827 | 573,679 |
| Non-current investments | 177,594 | 286,264 |
| Derivatives hedging borrowings and investments | 5,738 | 6,833 |
| Current borrowings | (727,497) | (310,344) |
| Non-current borrowings | (16,931) | (290,071) |
| Net cash / (debt) | 635,302 | 853,698 |
Operating working capital days
Operating working capital is the difference between the main operating components of current assets and current liabilities. Operating working capital is a measure of a company’s operational efficiency, and short-term financial health.
Operating working capital days is calculated in the following manner:
Operating working capital days = [(Inventories + Trade receivables – Trade payables – Customer advances) / Annualized quarterly sales ] x 365
Operating working capital days is a non-IFRS alternative performance measure.
| (all amounts in thousands of U.S. dollars) | At June 30, | |
| 2022 | 2021 | |
| Inventories | 3,370,139 | 2,145,560 |
| Trade Receivables | 1,890,697 | 1,093,496 |
| Customer Advances | (343,613) | (37,580) |
| Trade Payables | (998,807) | (730,089) |
| Operating Working Capital | 3,918,416 | 2,471,387 |
| Annualized quarterly sales | 11,201,896 | 6,114,044 |
| Operating working capital days | 128 | 148 |
Giovanni Sardagna
Tenaris
1-888-300-5432
www.tenaris.com
