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 November 2017
Industry Adapting to Lower Oil Prices US Shale Breakeven Costs Deepwater Breakeven Costs ($/boe) ($/bbl) 80 80 1,000 120 60 60 Range Kaikias 900 40 40 100 Liza 800 Coral 20 20 700 80 0 0 Capex US$ Bn 600 2014 2017 2014 2017 US$/bbl 500 60 400 40 300 200 20 100 - - 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Onshore/Conventional Onshore/Unconventional Offshore WTI Source: Bloomberg ; Rystad ; IHS Investor Presentation Tenaris 3 November 2017
OCTG Demand Recovering 20 17.7 18 1.7 16 1.3 14 Million Tonnes ∆ 2016 12.1 11.6 +8% 12 5.8 0.9 (4%) 1.3 10 8.8 8 +126% 4.1 4.6 6 2.3 +60% 4 4.3 +5% 2 3.5 - 2014 2015 2016 2017 Russia & China Onshore Others Onshore Shales Middle East Offshore Source: TS estimates Investor Presentation Tenaris 4 November 2017
Strengthening Rig Direct™ in North America Expanded North American footprint Fort McMurray Grande Prairie Leduc Fort Saskatchewan Nisku Bienfait AlgomaTubes Prudential Hickman Bakersfield Oklahoma City Conroe Manufacturing Centers BayCity Westwego Service Centers Midland Houston Bay City Others Freeport Reynosa Poza Rica Tamsa State of the art Ciudad del Carmen 6 new service centers Dos Bocas manufacturing center Comalcalco Investment Product development (TSH Shorter, more efficient and Wedge XP™) flexible supply chain $1.8 Bn Bay City PipeTracer™ digital pipe by Lead time & inventory pipe tracking system $0.1 Bn Service Centers reduction Investor Presentation Tenaris 5 November 2017
Rig Direct™ Global Deployment Integrated service solution that addresses costs, quality, operational efficiency and sustainability USA: extensive adoption in • Rig Direct™ Evolution Permian, Eagle Ford and Haynesville; extending to other regions 297 Rigs Served 205 Canada: widespread adoption • facilitating market share gains 157 Customers Served 97 Latam: established in Mexico • and Argentina for 20 years, now in Colombia and Ecuador 54 % OCTG Sales 49 EH: fully established in North • Sea, Romania and Chevron Thailand, expanding in Jul-17 Jul-16 Indonesia, Caspian and UAE Investor Presentation Tenaris 6 November 2017
US OCTG Imports 1,800 70% 1,600 60% 1,400 50% 1,200 Thousand Tonnes 40% 1,000 800 30% 600 20% 400 10% 200 - 0% 2014 2015 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Quarterly Quarterly Average Average Domestic Supply Other Imports Imports from Subject Countries % of imports on Total Demand Investor Presentation Tenaris 7 November 2017
Well Positioned in Growth Areas Short term Medium term E. Mediterranean Gas Vaca Muerta Shale Offshore Recovery Mex. Energy Reform Deliveries to fast track Investments in world- Recent discoveries by New offshore projects deepwater pipeline class Vaca Muerta shale Talos and ENI will are starting to be developments (eg Zohr) are being confirmed and encourage energy sanctioned and a will boost results from sales in Argentina are gradual recovery should reform process: as Q4 recovering investments are take place implemented demand should gradually recover Investor Presentation Tenaris 8 November 2017
Costs and Price evolution Pipe Logix Input costs 120 Iron Ore (IODEX) 555 US$/Tn Scrap USA (CRU) 2.200 [US$/Mt ton] 100 HRC USA (CRU) HRC FOB China 285 US$/Tn 2.000 80 589 US$/Tn 1.800 63 US$/Tn 1.600 60 1.400 40 1.200 1.000 20 2014 avg 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 16-Oct Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Investor Presentation Tenaris 9 November 2017
Financial Performance 2012 2013 2014 2015 2016 9M 2017 Millions of US$ (except ratios and per ADS amounts) Net Sales 10,648 10,424 10,141 6,903 4,294 3,700 EBITDA 2,856 2,780 2,696 1,219 598 624 EBITDA Adjusted 2,856 2,780 2,696 1,396 672 651 EBITDA Adjusted margin 27% 27% 27% 20% 16% 18% Net income (loss) of owners of the parent 1,699 1,551 1,159 (80) 55 385 Earnings per ADS 2.88 2.63 1.96 (0.14) 0.09 0.65 Cash flow from operations 1,856 2,377 2,044 2,215 864 (9) Capital expenditures 790 753 1,089 1,132 787 437 Free cash flow 1,066 1,624 955 1,083 77 (446) Net financial position (271) 911 1,257 1,849 1,441 974 Dividend 508 508 531 531 484 153 * EBITDA adjusted excludes restructuring expenses Investor Presentation Tenaris 10 November 2017
Closing Remarks • Market is adapting to lower oil and gas prices: North American shales will remain a key driver in coming years • Tenaris is uniquely positioned to take advantage in all regions and segments where growth is taking place • Rig Direct™ is being adopted in many parts of the world as its benefits for the efficiency, capital discipline and time to market of the oil and gas industry are demonstrated in the field • Tenaris is leveraging its strengths in product technology, supply chain efficiency and global service delivery • Tenaris maintains a solid balance sheet and good financial performance giving it the flexibility to take advantage of market opportunities Investor Presentation Tenaris 11 November 2017
Investor Presentation Tenaris 12 November 2017
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