Investor Presentation
Disclaimer This presentation contains “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 statements include information regarding management strategy, investment plans, development and growth of the steel pipe and oil and gas industries, trends and other prospective data, including trends regarding the development of raw material costs and the levels of investment in oil and gas drilling worldwide and general economic conditions in the countries where Tenaris operates and sells its products and services. We do not undertake to update any forward-looking statement to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Except where otherwise stated, the data presented herein is based on Tenaris analysis and estimates. Investor Presentation Tenaris 2 September 2017
Global Leader in Pipes for the Oil & Gas Industry Investor Presentation Tenaris 3 September 2017
Industry Response to Lower Prices 90 Breakeven Evolution 80 for Key Shale Plays 70 60 [US$/bbl] 50 40 30 120,0 20 20,0 10 100,0 - Eagle Ford Permian Delaware Permian Midland 15,0 80,0 2014 2015 2016 [US$/MMBtu] 60,0 WTI 10,0 40,0 LNG 5,0 20,0 Gas (Henry Hub) 0,0 0,0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Source: Bloomberg + World Gas Intelligence; Rystad Energy NASWellCube Investor Presentation Tenaris 4 September 2017
OCTG Demand Recovery Underway USA & CANADA [Mill tons] LATIN AMERICA 17.7 INTERNATIONAL CHINA & RUSSIA 8.0 12.1 11.6 8.8 4.0 5.2 1.1 2.2 0.8 3.9 0.7 0.6 2.6 2.6 2.6 4.8 4.2 3.7 3.5 2014 2015 2016 2017F 23% PJ Mix 22% 20% 21% Source: TS estimates Investor Presentation Tenaris 5 September 2017
Rig Direct™ Global Deployment Integrated service solution that addresses costs, quality, operational efficiency and sustainability TS OCTG Sales: % Rig Direct™ Dec 2016 Investor Presentation Tenaris 6 September 2017
North America USA Demand and Imports USA Inventory 7 [Mill Tn] 3,5 16 [Months] USA Demand [Mill Tn] 6 US Inventory 14 3,0 Imports from @5 months of stock 5 subject countries Months of stock 12 2,5 4 10 2,0 8 3 1,5 6 2 1,0 4 1 0,5 2 0,0 0 0 1Q02 4Q02 3Q03 2Q04 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 1Q17 2013 2014 2015 2016 1H 2017 E Investor Presentation Tenaris 7 September 2017
North America Pipe Logix Raw Materials Costs Evolution 180 2.200 [US$/Mt ton] Iron Ore (IODEX) Scrap USA (CRU) 160 2.000 HRC USA (CRU) 140 Pipe Logix 193 US$/Tn HCC (Platts) 1.800 120 675 US$/Tn 100 1.600 1,605 US$/Tn 80 293 US$/Tn 1.400 60 70 US$/Tn 1.200 40 20 1.000 2013 avg 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Jul-17 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Investor Presentation Tenaris 8 September 2017
Rig Direct™ in North America Differentiated service offer in the world’s largest and most dynamic market Industrial infrastructure Service infrastructure Product development Shorter , more efficient and flexible supply chain Investor Presentation Tenaris 9 September 2017
American Manufacturing Revival Bay City, the world’s most modern seamless pipe mill, now in Texas Investor Presentation Tenaris 10 September 2017
Well Positioned in Growth Areas Short term Medium term E. Mediterranean Gas Vaca Muerta Shale Offshore Recovery Mex. Energy Reform Fast track deepwater Conditions for Energy reform process Recovery in offshore pipeline developments investment in advancing steadily but projects will increase (eg Zohr) with outstanding shale play impact in demand will be demand for advanced demanding schedules, gradually falling into premium products and limited over the next two pipe and service place years services requirements Investor Presentation Tenaris 11 September 2017
Financial Performance 2012 2013 2014 2015 2016 H1 2017 M illions of US$ (except ratios and per ADS amounts) Net Sales 10,648 10,424 10,141 6,903 4,294 2,397 EBITDA 2,856 2,780 2,696 1,219 598 399 EBITDA Adjusted 2,856 2,780 2,696 1,396 672 420 EBITDA Adjusted margin 27% 27% 27% 20% 16% 18% Net income (loss) of owners of the parent 1,699 1,551 1,159 (80) 55 280 Earnings per ADS 2.88 2.63 1.96 (0.14) 0.09 0.47 Cash flow from operations 1,856 2,377 2,044 2,215 864 (7) Capital expenditures 790 753 1,089 1,132 787 294 Free cash flow 1,066 1,624 955 1,083 77 ( 301) Net financial position -271 911 1,257 1,849 1,441 1,129 Dividend 508 508 531 531 484 * EBITDA adjusted excludes restructuring expenses Investor Presentation Tenaris 12 September 2017
Closing Remarks • Market has changed in response to lower commodity prices: recovery underway led by North American shales • Pipe prices increasing from unsustainable levels on higher demand • Tenaris is uniquely positioned to take advantage in all regions and segments where growth is taking place • Rig Direct™ is a game changer for the efficiency, capital discipline and time to market of the oil and gas industry • Tenaris is leveraging its strengths in product technology, supply chain efficiency and global reach • Tenaris has maintained a solid balance sheet and good financial performance throughout the downturn Investor Presentation Tenaris 13 September 2017
Investor Presentation Tenaris 14 September 2017
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