The financial and operational information contained in this
press release is based on audited consolidated 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, Net cash / debt and
Free Cash Flow. See exhibit I for more details on these alternative
performance measures.
Tenaris S.A. (NYSE:TS) (BAE:TS) (BMV:TS) (MILAN:TEN)
(“Tenaris”) today announced its results for the fourth quarter and
year ended December 31, 2017 with comparison to its results for the
fourth quarter and year ended December 31, 2016.
Summary of 2017 Fourth Quarter Results
(Comparison with third quarter of 2017 and fourth quarter of
2016)
|
|
|
|
|
4Q 2017 |
3Q 2017 |
4Q 2016 |
Net sales
($ million) |
1,589 |
|
|
1,303 |
|
|
22 |
% |
|
1,046 |
|
|
52 |
% |
Operating
income ($ million) |
168 |
|
|
79 |
|
|
113 |
% |
|
6 |
|
|
2,788 |
% |
Net
income ($ million) |
162 |
|
|
95 |
|
|
70 |
% |
|
24 |
|
|
563 |
% |
Shareholders’ net income ($ million) |
160 |
|
|
105 |
|
|
53 |
% |
|
34 |
|
|
374 |
% |
Earnings
per ADS ($) |
0.27 |
|
|
0.18 |
|
|
53 |
% |
|
0.06 |
|
|
374 |
% |
Earnings
per share ($) |
0.14 |
|
|
0.09 |
|
|
53 |
% |
|
0.03 |
|
|
374 |
% |
EBITDA ($
million) |
319 |
|
|
225 |
|
|
42 |
% |
|
172 |
|
|
85 |
% |
EBITDA
margin (% of net sales) |
20.1 |
% |
|
17.3 |
% |
|
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales rose strongly quarter on quarter as we saw higher demand
from Rig Direct® customers in USA and Canada, increasing investment
in the Vaca Muerta shale play in Argentina, a ramp up in deliveries
for East Mediterranean pipelines, higher OCTG sales to national oil
companies (NOC) in the Middle East and strengthening demand for
mechanical products in Europe. Earnings per share, operating income
and EBITDA margins all rose on higher absorption of fixed
costs.
During the quarter, we had an increase of working capital of
$274 million with a further inventory build of $163 million in
anticipation of higher shipments in the forthcoming quarter and
higher trade receivables associated with a higher level of sales.
Net cash flow used in operations amounted to $13 million. After
capital expenditures of $121 million and dividend payments of $153
million, our net cash position (cash, other current investments and
fixed income investments held to maturity less total borrowings)
declined to $680 million at the end of the quarter.
Summary of 2017 Annual Results
|
12M 2017 |
12M 2016 |
Increase/(Decrease) |
Net sales
($ million) |
5,289 |
4,294 |
23% |
Operating
income (loss) ($ million) |
335 |
(59) |
667% |
Net
income ($ million) |
536 |
59 |
813% |
Shareholders’ net income ($ million) |
545 |
55 |
885% |
Earnings
per ADS ($) |
0.92 |
0.09 |
885% |
Earnings
per share ($) |
0.46 |
0.05 |
885% |
EBITDA ($
million) |
943 |
598 |
58% |
EBITDA
margin (% of net sales) |
17.8% |
13.9% |
|
In 2017, our net sales rose steadily through the year, rising
23% compared to 2016, with the fourth quarter up 52% compared to
the fourth quarter of 2016. While sales rose strongly during the
year to Rig Direct® customers in USA, Canada, Colombia and Thailand
as well as in Saudi Arabia, there were significant declines in
sales of line pipe in Brazil, shipments of OCTG to other NOC
customers in the Middle East and sales for offshore projects in
sub-Saharan Africa.
EBITDA rose 58% year on year, with margins recovering on higher
volumes and better absorption of fixed costs. Shareholders net
income rose strongly to $545 million, benefitting from higher
operating income, a good return on our investment in Ternium, a tax
benefit due to the reduction in tax rates in Argentina and the
United States, and a gain on the sale of our Republic Conduit
business at the beginning of the year.
Our net cash position declined during the year to $680 million
at December 31, 2017, compared to $1.4 billion at December 31,
2016, as we completed construction of our Bay City mill, built up
working capital to support our growth in sales and maintained
dividend payments.
Annual Dividend Proposal
The board of directors proposes, for the approval of the annual
general shareholders’ meeting to be held on May 2, 2018, the
payment of an annual dividend of $0.41 per share ($0.82 per ADS),
or approximately $484 million, which includes the interim dividend
of $0.13 per share ($0.26 per ADS), or approximately $153 million,
paid in November 2017. If the annual dividend is approved by the
shareholders, a dividend of $0.28 per share ($0.56 per ADS), or
approximately $331 million will be paid on May 23, 2018, with an
ex-dividend date on May 21, 2018 and record date on May 22,
2018.
Market Background and Outlook
As we enter 2018, shale drilling activity in the USA and Canada,
which had fallen slightly in the fourth quarter of 2017, has
resumed growth. In the rest of the world, more projects are moving
forward and conditions in markets like the Middle East and the
North Sea have been improving but any recovery in 2018 will be
gradual. In Latin America, drilling activity in Colombia and in the
Vaca Muerta shale play in Argentina has been picking up. In Mexico,
however, despite further positive results of the energy reform
program, a significant recovery in activity remains unlikely this
year.
Growth in global OCTG demand, following a 40% increase in 2017,
will be more modest in 2018 and concentrated in the major markets
of USA, China, Russia and the Middle East.
We expect our sales in 2018 to show good growth in most regions
and product lines compared to 2017, with strong year on year growth
in each quarter. Sales in the first quarter will be boosted by an
exceptional level of shipments for East Mediterranean pipelines and
high sales in Canada in the peak drilling season. Raw material
costs have risen significantly in the last few months and we expect
that there will be a compensating increase in prices as demand
gradually increases. For the first quarter, our EBITDA margin
should remain close to that for the fourth quarter of 2017.
At this time, there is considerable uncertainty surrounding the
possible outcome, if any, of an eventual Section 232 ruling by the
US government to impose tariffs or quotas on the import into the
USA of steel products including pipe and tube. The US Department of
Commerce has recommended that the President take such an action and
outlined a number of approaches that such action could take. With
the continuing uncertainty about the likely outcome of such action,
we do not yet have sufficient elements to evaluate its possible
impact on our operations or results.
Analysis of 2017 Fourth Quarter Results
Tubes Sales volume (thousand metric tons) |
4Q 2017 |
|
3Q 2017 |
|
4Q 2016 |
Seamless |
593 |
|
527 |
|
13 |
% |
|
458 |
|
29 |
% |
Welded |
171 |
|
120 |
|
43 |
% |
|
67 |
|
154 |
% |
Total |
764 |
|
647 |
|
18 |
% |
|
526 |
|
45 |
% |
Tubes |
4Q 2017 |
3Q 2017 |
4Q 2016 |
(Net
sales - $ million) |
|
|
|
|
|
North
America |
707 |
|
633 |
|
12 |
% |
336 |
|
110 |
% |
South
America |
296 |
|
256 |
|
16 |
% |
212 |
|
40 |
% |
Europe |
133 |
|
117 |
|
13 |
% |
122 |
|
9 |
% |
Middle
East & Africa |
290 |
|
170 |
|
71 |
% |
275 |
|
5 |
% |
Asia
Pacific |
51 |
|
51 |
|
0 |
% |
38 |
|
35 |
% |
Total net sales ($ million) |
1,478 |
|
1,228 |
|
20 |
% |
983 |
|
50 |
% |
Operating income ($ million) |
150 |
|
66 |
|
127 |
% |
5 |
|
2,894 |
% |
Operating
margin (% of sales) |
10.1 |
% |
5.4 |
% |
|
0.5 |
% |
|
Net sales of tubular products and services increased 20%
sequentially and 50% year on year. Sequentially, the increase in
sales in North America, reflects higher sales of OCTG products,
line pipe and oil tools to shale producers in the United States and
Canada. In South America, sales increased due to higher sales of
line pipe in Argentina and increased sales of OCTG products in
Colombia. In Europe we had higher sales of industrial products,
line pipe for Hidrocarbon Process Industry (HPI) plants and OCTG
products throughout the region. In the Middle East and Africa sales
increased significantly as we started the ramp up in sales of
offshore line pipe in the East Mediterranean and in sub-Saharan
Africa, together with a partial recovery of OCTG sales in the
Middle East. In Asia Pacific we had stable Rig Direct® sales in
Thailand and low demand in the rest of the region.
Operating income from tubular products and services, amounted to
$150 million in the fourth quarter of 2017, compared to $66 million
in the previous quarter and $5 million in the fourth quarter of
2016. Sequentially, the increase in operating income is due to an
increase in shipments that improved the utilization of production
capacity and therefore the absorption of fixed costs, together with
a reduction in selling, general and administrative expenses as a
percentage of sales.
Others |
4Q 2017 |
3Q 2017 |
4Q 2016 |
Net sales
($ million) |
111 |
75 |
|
48% |
63 |
|
77% |
Operating
income ($ million) |
18 |
13 |
|
37% |
1 |
|
2,533% |
Operating
income (% of sales) |
16.5% |
17.8% |
|
|
1.1% |
|
|
Net sales of other products and services increased 48%
sequentially and 77% year on year. The sequential increase in sales
and operating income is mostly related to our sucker rods business
and other energy related products.
Selling, general and administrative expenses, or SG&A,
amounted to $344 million, 21.6% of net sales in the fourth quarter
of 2017, compared to $305 million, 23.4% in the previous quarter
and $280 million, 26.8% in the fourth quarter of 2016. Sequential
SG&A increased 13% mostly due to higher selling expenses
following an increase in revenues of 22% but decreased 180 basis
points as a percentage of sales.
Financial results amounted to a gain of $4
million in the fourth quarter of 2017, compared to a loss of $7
million in the previous quarter and a gain of $23 million in the
fourth quarter of 2016.
Equity in earnings of non-consolidated
companies generated a gain of $26 million in the fourth
quarter of 2017, compared to a gain of $25 million in the previous
quarter and $15 million in the same period of 2016. These results
are mainly derived from our equity investment in Ternium
(NYSE:TX).
Income tax charges totaled $36 million in the
fourth quarter of 2017. During the quarter, we recorded a gain of
$61 million, due to the reduction in income tax rates in Argentina
and the United States over deferred tax liabilities. A charge of
$51 million was recorded mainly due to the Argentine and Mexican
peso devaluation on the tax base used to calculate deferred taxes.
Additionally, during the quarter we recorded an income tax charge
of $19 million corresponding to a settlement agreement between
Dalmine, our Italian subsidiary, and the Italian tax authorities in
connection with all withholding tax claims on 2007 and 2008
dividend payments.
Results attributable to non-controlling
interests amounted to gain of $2 million in the fourth
quarter of 2017, compared to a loss of $10 million in the previous
quarter and a loss of $9 million in the fourth quarter of 2016.
During this quarter results include mainly gains from our pipe
coating subsidiary in Nigeria.
Cash Flow and Liquidity of 2017 Fourth
Quarter
Net cash used in operations during the fourth quarter of 2017
was $13 million, compared with uses of $2 million in the previous
quarter and $79 million in the fourth quarter of 2016. Working
capital increased by $274 million during the fourth quarter of 2017
mainly due to the increase in inventories and trade receivables
associated with the increase in shipments and production.
Capital expenditures amounted to $121 million for the fourth
quarter of 2017, compared to $143 million in the previous quarter
and $158 million in the fourth quarter of 2016.
During the quarter, our net cash position declined by $294
million to $680 million at the end of the year, following the
payment of an interim dividend of $153 million in November
2017.
Analysis of 2017 Annual
Results
Tubes Sales volume (thousand metric tons) |
12M 2017 |
|
12M 2016 |
|
Increase/(Decrease) |
Seamless |
2,157 |
|
1,635 |
|
32% |
Welded |
461 |
|
355 |
|
30% |
Total |
2,618 |
|
1,990 |
|
32% |
Tubes |
12M 2017 |
12M 2016 |
Increase/(Decrease) |
(Net
sales - $ million) |
|
|
|
North
America |
2,362 |
1,265 |
87% |
South
America |
982 |
1,032 |
(5%) |
Europe |
497 |
542 |
(8%) |
Middle
East & Africa |
921 |
1,041 |
(11%) |
Asia
Pacific |
204 |
136 |
50% |
Total net sales ($ million) |
4,966 |
4,015 |
24% |
Operating income (loss) ($ million) |
292 |
(71) |
510% |
Operating
income (% of sales) |
6% |
(1.8%) |
|
Net sales of tubular products and services increased 24% to
$4,966 million in 2017, compared to $4,015 million in 2016,
reflecting a 32% increase in volumes and a 6% decrease in average
selling prices. Sales increased mainly due to a strong increase in
demand in the United States and Canada, partially offset by lower
sales in the rest of the world appart from Asia Pacific. In North
America, our sales increased 87%, due to the recovery in shale
drilling in the United States and Canada. In the rest of the world,
recovery remained more elusive, appart from Asia Pacific due to
higher Rig Direct® sales in Thailand
Operating result from tubular products and services, amounted to
a gain of $292 million in 2017, compared to a loss of $71 million
in 2016. The recovery in Tubes operating income reflects a better
operating environment, where a 32% increase in shipments improved
the utilization of production capacity and therefore the absorption
of fixed costs and a reduction in severance costs ($67 million in
2016 vs. $32 million in 2017). Additionally, SG&A expenses as a
percentage of sales declined from 29.0% in 2016 to 24.8% in
2017.
Others |
12M 2017 |
12M 2016 |
Increase/(Decrease) |
Net sales
($ million) |
323 |
278 |
16% |
Operating
income ($ million) |
43 |
12 |
254% |
Operating
margin (% of sales) |
13.2% |
4.3% |
|
Net sales of other products and services increased 16% to $323
million in 2017, compared to $278 million in 2016, mainly due to
higher sales of energy related products e.g., sucker rods and
coiled tubing and excess raw materials and energy.
Operating income from other products and
services, increased from $12 million in 2016 to
$43 million in 2017, mainly due to improved profitability from our
coiled tubing business together with higher results from sales of
excess raw materials and energy.
Selling, general and administrative expenses,
or SG&A, increased by $73 million (6%) in 2017 from $1,197
million in 2016 to $1,270 million in 2017. However, SG&A
expenses decreased as a percentage of net sales to 24.0% in 2017
compared to 27.9% in 2016, mainly due to the effect of fixed and
semi fixed expenses on higher sales (e.g., depreciation and
amortization and labor costs).
Financial results amounted to a loss of $23
million in 2017, compared to a gain of $22 million in 2016. The
2017 loss is mostly related to an FX charge corresponding to the
Euro appreciation on Euro denominated intercompany liabilities,
fully offset in the currency translation reserve in equity.
Equity in earnings of non-consolidated
companies generated a gain of $116 million in 2017,
compared to $72 million in 2016. These results were mainly derived
from our equity investment in Ternium (NYSE:TX).
Income tax for the year was positive amounting
to $17 million. In 2017 we recorded a gain of $63 million due to
the reduction in income tax rates in Argentina, the United States
and Colombia over deferred tax liabilities. Additionally, during
2017 we recorded an income tax charge of $29 million corresponding
to a settlement agreement between Dalmine, our Italian subsidiary,
and the Italian tax authorities in connection with all withholding
tax claims on 2007 and 2008 dividend payments. Under such
settlement agreement, Dalmine paid to the Italian tax
administration an aggregate amount of EUR42.9 million
(approximately $51 million), net of EUR3.2 million (approximately
$4 million) corresponding to the amount previously paid during the
litigation proceeding.
Net income for the year amounted to $536
million in 2017, including a gain from discontinued operations of
$92 million, compared with a gain in 2016 of $59 million, including
a gain from discontinued operations of $41 million. Net income from
continuing operations amounted to a gain of $445 million in 2017,
which compares with a gain of $17 million in 2016. The improvement
in results reflects a better operating environment, where a 32%
increase in shipments improved the utilization of production
capacity and therefore the absorption of fixed costs, a reduction
in severance costs ($74 million in 2016 vs. $34 million in 2017), a
positive income tax of $17 million reflecting primarily the effect
of the changes in income tax rates in Argentina and the United
States on deferred tax positions, better results from our
investment in associated companies (mainly Ternium) and a gain of
$92 million from the sale of Republic Conduit.
Cash Flow and Liquidity of 2017
Cash flow used in operating activities amounted to $22 million
during 2017 (including an increase in working capital of $855
million). Following dividend payments of $484 million during the
year, and capital expenditures of $558 million, we maintained a
positive net cash position (i.e., cash, other current investments
and fixed income investments held to maturity less total
borrowings) of $680 million at December 31, 2017, including the
$328 million we collected from the sale of Republic Conduit.
Conference call
Tenaris will hold a conference call to discuss the above
reported results, on February 22, 2018, at 09:00 a.m. (Eastern
Time). Following a brief summary, the conference call will be
opened to questions. To access the conference call dial in +1 877
730.0732 within North America or +1 530 379.4676 Internationally.
The access number is “9286689”. Please dial in 10 minutes before
the scheduled start time. The conference call will be also
available by webcast at www.tenaris.com/investors.
A replay of the conference call will be available on our webpage
http://ir.tenaris.com/ or by phone from 12:00 pm ET on February 22
through 11:59 pm on March 3. To access the replay by phone, please
dial +1 855 859.2056 or +1 404 537.3406 and enter passcode
“9286689” when prompted.
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 Income Statement
(all amounts in
thousands of U.S. dollars) |
Three-month period ended December
31, |
Twelve-month period ended December
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Continuing
operations |
|
|
Net sales |
1,588,916 |
|
1,045,800 |
|
5,288,504 |
|
4,293,592 |
|
Cost of sales |
(1,077,134 |
) |
(757,549 |
) |
(3,685,057 |
) |
(3,165,684 |
) |
Gross
profit |
511,782 |
|
288,251 |
|
1,603,447 |
|
1,127,908 |
|
Selling, general and
administrative expenses |
(343,730 |
) |
(280,452 |
) |
(1,270,016 |
) |
(1,196,929 |
) |
Other operating income
(expenses) net |
(23 |
) |
(1,979 |
) |
1,157 |
|
9,964 |
|
Operating
income (loss) |
168,029 |
|
5,820 |
|
334,588 |
|
(59,057 |
) |
Finance Income |
11,843 |
|
7,871 |
|
47,605 |
|
66,204 |
|
Finance Cost |
(8,613 |
) |
(6,298 |
) |
(27,072 |
) |
(22,329 |
) |
Other financial
results |
1,081 |
|
21,434 |
|
(43,550 |
) |
(21,921 |
) |
Income (loss)
before equity in earnings of non-consolidated companies and income
tax |
172,340 |
|
28,827 |
|
311,571 |
|
(37,103 |
) |
Equity in earnings of
non-consolidated companies |
25,987 |
|
14,608 |
|
116,140 |
|
71,533 |
|
Income before
income tax |
198,327 |
|
43,435 |
|
427,711 |
|
34,430 |
|
Income tax |
(36,159 |
) |
(26,809 |
) |
17,136 |
|
(17,102 |
) |
Income for
continuing operations |
162,168 |
|
16,626 |
|
444,847 |
|
17,328 |
|
|
|
|
|
|
Discontinued
operations |
|
|
|
|
Result for discontinued
operations |
- |
|
7,852 |
|
91,542 |
|
41,411 |
|
Income for the
year |
162,168 |
|
24,478 |
|
536,389 |
|
58,739 |
|
|
|
|
|
|
Attributable
to: |
|
|
|
|
Owners of the
parent |
160,232 |
|
33,800 |
|
544,737 |
|
55,298 |
|
Non-controlling
interests |
1,936 |
|
(9,322 |
) |
(8,348 |
) |
3,441 |
|
|
162,168 |
|
24,478 |
|
536,389 |
|
58,739 |
|
Consolidated Statement of Financial
Position
(all amounts in
thousands of U.S. dollars) |
At December 31, 2017 |
|
At December 31, 2016 |
|
|
|
|
ASSETS |
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Property, plant
and equipment, net |
6,229,143 |
|
|
6,001,939 |
|
Intangible
assets, net |
1,660,859 |
|
|
1,862,827 |
|
Investments in
non-consolidated companies |
640,294 |
|
|
557,031 |
|
Available for
sale assets |
21,572 |
|
|
21,572 |
|
Other
investments |
128,335 |
|
|
249,719 |
|
Deferred tax
assets |
153,532 |
|
|
144,613 |
|
Receivables,
net |
183,329 |
9,017,064 |
|
197,003 |
9,034,704 |
Current
assets |
|
|
|
|
|
Inventories,
net |
2,368,304 |
|
|
1,563,889 |
|
Receivables and
prepayments, net |
143,929 |
|
|
124,715 |
|
Current tax
assets |
132,334 |
|
|
140,986 |
|
Trade
receivables, net |
1,214,060 |
|
|
954,685 |
|
Other
investments |
1,192,306 |
|
|
1,633,142 |
|
Cash and cash
equivalents |
330,221 |
5,381,154 |
|
399,737 |
4,817,154 |
Assets of
disposal group classified as held for sale |
|
- |
|
|
151,417 |
Total
assets |
|
14,398,218 |
|
|
14,003,275 |
EQUITY |
|
|
|
|
|
Capital and reserves
attributable to owners of the parent |
|
11,482,185 |
|
|
11,287,417 |
Non-controlling
interests |
|
98,785 |
|
|
125,655 |
Total
equity |
|
11,580,970 |
|
|
11,413,072 |
LIABILITIES |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
Borrowings |
34,645 |
|
|
31,542 |
|
Deferred tax
liabilities |
457,970 |
|
|
550,657 |
|
Other
liabilities |
217,296 |
|
|
213,617 |
|
Provisions |
36,438 |
746,349 |
|
63,257 |
859,073 |
Current
liabilities |
|
|
|
|
|
Borrowings |
931,214 |
|
|
808,694 |
|
Current tax
liabilities |
102,405 |
|
|
101,197 |
|
Other
liabilities |
197,504 |
|
|
183,887 |
|
Provisions |
32,330 |
|
|
22,756 |
|
Customer
advances |
56,707 |
|
|
39,668 |
|
Trade
payables |
750,739 |
2,070,899 |
|
556,834 |
1,713,036 |
Liabilities of
disposal group classified as held for sale |
|
- |
|
|
18,094 |
Total
liabilities |
|
2,817,248 |
|
|
2,590,203 |
Total equity
and liabilities |
|
14,398,218 |
|
|
14,003,275 |
Consolidated Statement of Cash Flows
|
Three-month period ended December
31, |
Twelve-month period ended December
31, |
(all amounts in
thousands of U.S. dollars) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Cash flows from operating activities |
|
|
Income for the
period |
|
162,168 |
|
24,478 |
|
536,389 |
|
58,739 |
|
Adjustments for: |
|
|
|
|
|
Depreciation and
amortization |
|
151,281 |
|
167,774 |
|
608,640 |
|
662,412 |
|
Income tax accruals
less payments |
|
(33,367 |
) |
(12,301 |
) |
(193,989 |
) |
(128,079 |
) |
Equity in earnings of
non-consolidated companies |
|
(25,987 |
) |
(14,608 |
) |
(116,140 |
) |
(71,533 |
) |
Interest accruals less
payments, net |
|
3,978 |
|
10,281 |
|
11,550 |
|
(2,567 |
) |
Changes in
provisions |
|
4,723 |
|
1,750 |
|
(17,245 |
) |
15,597 |
|
Income from the sale of
Conduit business |
|
- |
|
- |
|
(89,694 |
) |
- |
|
Changes in working
capital |
|
(274,134 |
) |
(210,988 |
) |
(855,282 |
) |
348,199 |
|
Currency translation
adjustment and Others |
|
(1,561 |
) |
(45,207 |
) |
93,746 |
|
(19,203 |
) |
Net cash (used
in) provided by operating activities |
|
(12,899 |
) |
(78,821 |
) |
(22,025 |
) |
863,565 |
|
Cash flows from
investing activities |
|
|
|
|
|
Capital
expenditures |
|
(121,074 |
) |
(158,074 |
) |
(558,236 |
) |
(786,873 |
) |
Changes in advance to
suppliers of property, plant and equipment |
|
868 |
|
9,015 |
|
7,077 |
|
50,989 |
|
Proceeds from disposal
of Conduit business |
|
- |
|
- |
|
327,631 |
|
- |
|
Investment in
non-consolidated companies |
|
- |
|
- |
|
- |
|
(17,108 |
) |
Acquisition of
subsidiaries |
|
- |
|
- |
|
(10,418 |
) |
- |
|
Investment in companies
under cost method |
|
- |
|
- |
|
(3,681 |
) |
- |
|
Loan to
non-consolidated companies |
|
- |
|
(6,996 |
) |
(7,056 |
) |
(42,394 |
) |
Proceeds from disposal
of property, plant and equipment and intangible assets |
|
1,045 |
|
1,377 |
|
5,443 |
|
23,609 |
|
Dividends received from
non-consolidated companies |
|
- |
|
- |
|
22,971 |
|
20,674 |
|
Changes in investments
in securities |
|
53,341 |
|
233,232 |
|
565,387 |
|
652,755 |
|
Net cash
provided by (used in) investing activities |
|
(65,820 |
) |
78,554 |
|
349,118 |
|
(98,348 |
) |
Cash flows from
financing activities |
|
|
|
|
|
Dividends paid |
|
(153,470 |
) |
(153,470 |
) |
(484,020 |
) |
(507,631 |
) |
Dividends paid to
non-controlling interest in subsidiaries |
|
(4,800 |
) |
(778 |
) |
(24,000 |
) |
(29,089 |
) |
Acquisitions of
non-controlling interests |
|
(15 |
) |
(285 |
) |
(49 |
) |
(1,071 |
) |
Proceeds from
borrowings |
|
334,663 |
|
384,756 |
|
1,196,781 |
|
1,180,727 |
|
Repayments of
borrowings |
|
(201,459 |
) |
(294,332 |
) |
(1,090,129 |
) |
(1,295,560 |
) |
Net cash used
in financing activities |
|
(25,081 |
) |
(64,109 |
) |
(401,417 |
) |
(652,624 |
) |
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents |
|
(103,800 |
) |
(64,376 |
) |
(74,324 |
) |
112,593 |
|
Movement in
cash and cash equivalents |
|
|
|
|
|
At the beginning of the
period |
|
434,778 |
|
468,123 |
|
398,580 |
|
286,198 |
|
Effect of exchange rate
changes |
|
(888 |
) |
(5,167 |
) |
5,834 |
|
(211 |
) |
(Decrease)
increase in cash and cash equivalents |
|
(103,800 |
) |
(64,376 |
) |
(74,324 |
) |
112,593 |
|
At December
31, |
|
330,090 |
|
398,580 |
|
330,090 |
|
398,580 |
|
Exhibit I – Alternative performance
measures
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 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= Operating results + Depreciation and amortization +
Impairment charges/(reversals).
(all
amounts in thousands of U.S. dollars) |
Three-month period ended December
31, |
Twelve-month period ended December
31, |
|
2017 |
2016 |
|
2017 |
2016 |
|
Operating income |
168,029 |
5,820 |
|
334,588 |
(59,057 |
) |
Depreciation and
amortization |
151,281 |
167,774 |
|
608,640 |
662,412 |
|
Depreciation and
amortization from discontinued operations |
- |
(1,222 |
) |
- |
(5,303 |
) |
EBITDA |
319,310 |
172,372 |
|
943,228 |
598,052 |
|
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/debt = Cash and cash equivalents + Other investments
(Current)+ Fixed income investments held to maturity – Borrowings
(Current and Non-current).
(all
amounts in thousands of U.S. dollars) |
At December 31, |
|
2017 |
|
2016 |
|
Cash and bank
deposits |
330,221 |
|
399,737 |
|
Other current
investments |
1,192,306 |
|
1,633,142 |
|
Fixed income
investments held to maturity |
123,498 |
|
248,049 |
|
Borrowings |
(965,859 |
) |
(840,236 |
) |
Net cash /
(debt) |
680,166 |
|
1,440,692 |
|
|
|
|
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.
(all
amounts in thousands of U.S. dollars) |
Three-month period ended December
31, |
Twelve-month period ended December
31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net cash (used in)
provided by operating activities |
(12,899 |
) |
(78,821 |
) |
(22,025 |
) |
863,565 |
|
Capital
expenditures |
(121,074 |
) |
(158,074 |
) |
(558,236 |
) |
(786,873 |
) |
Free cash
flow |
(133,973 |
) |
(236,895 |
) |
(580,261 |
) |
76,692 |
|
Giovanni SardagnaTenaris1-888-300-5432www.tenaris.com
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