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 and Net cash / debt. See exhibit I for
more details on these alternative performance measures.
Tenaris S.A. Tenaris S.A. (NYSE:TS) (BAE:TS) (BMV:TS)
(MILAN:TEN) (“Tenaris”) today announced its results for the quarter
ended June 30, 2018 in comparison with its results for the quarter
ended June 30, 2017.
Summary of 2018 Second Quarter Results
(Comparison with first quarter 2018 and second
quarter of 2017)
| |
|
|
|
| |
2Q 2018 |
1Q 2018 |
2Q 2017 |
| Net sales
($ million) |
1,788 |
|
1,866 |
|
(4 |
%) |
1,243 |
|
44 |
% |
| Operating
income ($ million) |
222 |
|
212 |
|
5 |
% |
51 |
|
332 |
% |
| Net income
($ million) |
166 |
|
235 |
|
(29 |
%) |
73 |
|
127 |
% |
|
Shareholders’ net income ($ million) |
168 |
|
235 |
|
(28 |
%) |
75 |
|
126 |
% |
| Earnings
per ADS ($) |
0.29 |
|
0.40 |
|
(28 |
%) |
0.13 |
|
126 |
% |
| Earnings
per share ($) |
0.14 |
|
0.20 |
|
(28 |
%) |
0.06 |
|
126 |
% |
| EBITDA ($
million) |
363 |
|
354 |
|
2 |
% |
200 |
|
81 |
% |
| EBITDA
margin (% of net sales) |
20.3 |
% |
19.0 |
% |
|
16.1 |
% |
|
| |
|
|
|
|
|
|
|
|
In the second quarter of 2018, sales rose in
most regions, except for Canada, reflecting seasonal effects, and
the East Mediterranean, where we had lower shipments for offshore
pipelines following the exceptional level recorded in the first
quarter. Sales for the first half of 2018 were up 52% year on year,
marking a strong recovery in the year to date. Margins improved on
higher average selling prices despite lower shipment volumes,
resulting in a 5% sequential increase in operating income. Net
income, however, declined sequentially due to deferred tax charges
relating to the devaluation of the Argentine and Mexican
currencies.
During the quarter, our working capital began to
stabilize and our operating cash flow rose to $351 million. Free
cash flow amounted to $247 million after capital expenditures of
$104 million. Following shareholder dividend payments of $331
million, our net cash position declined to $423 million.
Market Background and
Outlook
Shale drilling activity in the USA increased
during the first half of the year. The rapid increase in production
of crude, liquids and associated natural gas in the Permian region
is, however, leading to constraints in pipeline takeaway capacity
and wider commodity spreads, which are likely to dampen further
growth in US drilling activity in the coming months. In
Canada, activity is stable as growth this year has also been
affected by takeaway capacity constraints. In Latin America,
despite progress on the reform programs in Brazil and Mexico and
interest in the Vaca Muerta shale play in Argentina, drilling
activity has been slow to pick up. In the rest of the world,
however, higher oil prices and growing demand for natural gas are
leading to a gradual recovery in onshore drilling activity.
In the second half, we expect shipment volumes
to be similar to those of the first half, with higher shipments in
North America and lower shipments for East Mediterranean pipeline
projects, although these will include a second major offshore
pipeline for the Zohr project. Selling prices will show a further
moderate increase to compensate for additional costs from US
Section 232 tariffs. In the third quarter, we expect EBITDA and
operating income, considering seasonal effects, to be close to that
of the first two quarters before rising in the fourth
quarter.
Although Section 232 tariffs are today being
applied to imports of steel pipes into the United States from most
countries, any relevant change in the application of these tariffs
could have an impact on our future results and market
positioning.
Analysis of 2018 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 2018 |
1Q 2018 |
2Q 2017 |
|
Seamless |
689 |
651 |
6 |
% |
529 |
30 |
% |
| Welded |
146 |
285 |
(49 |
%) |
96 |
52 |
% |
|
Total |
834 |
936 |
(11 |
%) |
624 |
34 |
% |
| |
|
|
|
|
|
|
|
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 2018 |
1Q 2018 |
2Q 2017 |
| (Net sales
- $ million) |
|
|
|
|
|
| North
America |
827 |
|
807 |
|
3 |
% |
548 |
|
51 |
% |
| South
America |
310 |
|
285 |
|
9 |
% |
227 |
|
37 |
% |
| Europe |
179 |
|
153 |
|
17 |
% |
132 |
|
35 |
% |
| Middle East
& Africa |
299 |
|
456 |
|
(34 |
%) |
212 |
|
41 |
% |
| Asia
Pacific |
71 |
|
66 |
|
8 |
% |
55 |
|
29 |
% |
|
Total net sales ($ million) |
1,686 |
|
1,766 |
|
(5 |
%) |
1,175 |
|
43 |
% |
|
Operating income ($ million) |
197 |
|
194 |
|
2 |
% |
46 |
|
329 |
% |
| Operating
margin (% of sales) |
11.7 |
% |
11.0 |
% |
|
3.9 |
% |
|
| |
|
|
|
|
|
|
|
|
Net sales of tubular products and services
decreased 5% sequentially and increased 43% year on year. The
sequential decrease reflects a decline in volumes of 11% (welded
volumes related to pipeline projects) partially offset by an
average price increase of 7%. In North America we had higher sales
in the United States onshore market both for OCTG and line pipe and
an increase in Mexico compensating lower sales in Canada due to the
spring break-up season. In South America we had higher sales in
Argentina (Vaca Muerta) and in Colombia, partially offset by lower
line pipe sales. In Europe we had a strong quarter in the North Sea
and higher shipments to Russia. In the Middle East and Africa
although sales of OCTG to the Middle East increased, sales were
affected by sharply lower shipments to East Mediterranean
pipelines, following first quarter 2018 deliveries to Zohr project.
In Asia Pacific, sales increased due to higher sales in
Indonesia.
Operating results from tubular products and
services increased 2% sequentially, from a gain of $194 million in
the previous quarter to a gain of $197 million in the second
quarter of 2018. Despite the decline in revenues, our operating
margin improved as a 7% increase in the average selling price
related to a richer mix of products (more seamless and less welded
line pipe products), offset an increase in the cost of steel scrap,
hot rolled coils and other steelmaking raw materials.
Others
The following table indicates, for our Others
business segment, net sales, operating income and operating income
as a percentage of net sales for the periods indicated below:
| |
|
|
|
|
Others |
2Q 2018 |
1Q 2018 |
2Q 2017 |
| Net sales
($ million) |
103 |
|
100 |
|
3 |
% |
68 |
|
51 |
% |
| Operating
income ($ million) |
25 |
|
19 |
|
35 |
% |
6 |
|
346 |
% |
| Operating
income (% of sales) |
24.5 |
% |
18.7 |
% |
|
8.3 |
% |
|
| |
|
|
|
|
|
|
|
|
Net sales of other products and services
increased 3% sequentially and 51% compared to the second quarter of
2017. The increase versus the same quarter of the previous year was
mainly concentrated on energy related products, i.e., sucker rods
and coiled tubing and utility conduits for buildings.
Selling, general and administrative
expenses, or SG&A, amounted to $338
million, or 18.9% of net sales, in the second quarter of 2018,
compared to $350 million, 18.7% in the previous quarter and $327
million, 26.3% in the second quarter of 2017. Sequentially SG&A
decreased 3% due to lower freights related to lower volumes, lower
labor costs related to the devaluation of local currencies against
the U.S. dollar, partially offset by lower recoveries in the
allowance for doubtful accounts and contingencies.
Financial results amounted to a
gain of $39 million in the second quarter of 2018, compared to a
loss of $8 million in the previous quarter and a loss of $16
million in the second quarter of 2017. The gain of the quarter
corresponds mainly to an FX gain of $39 million; $26 million
related to the Euro depreciation on Euro denominated intercompany
liabilities, of which $23 million are offset in the currency
translation reserve in equity, and $15 million related to the
Argentine peso devaluation on Peso denominated financial, trade,
social and fiscal payables at Argentine subsidiaries which
functional currency is the U.S. dollar.
Equity in earnings of
non-consolidated companies
amounted to $41 million in the second quarter of 2018, compared to
$46 million in the previous quarter and $30 million in the second
quarter of last year. These results are mainly derived from our
equity investment in Ternium (NYSE:TX).
Income tax charge amounted to
$135 million in the second quarter of 2018, compared to $15 million
in the previous quarter and a gain of $7 million in the second
quarter of last year. This quarter’s income tax includes a charge
of approximately $100 million related to the devaluation of the
Argentine and Mexican peso affecting the tax base of our
subsidiaries in these two countries.
Cash Flow and Liquidity of 2018 Second
Quarter
Net cash provided by operating activities during
the second quarter of 2018 was $351 million, compared to cash used
in operations of $30 million in the first quarter of 2018 and $33
million in the second quarter of last year. During the second
quarter of 2018 we used $28 million for the increase in working
capital.
Free cash flow amounted to $247 million after
capital expenditures of $104 million. Following a dividend payment
of $331 million in May 2018, we maintained a net cash position
(i.e., cash, other current and non-current investments less total
borrowings) of $423 million at the end of the quarter.
Analysis of
2018 First Half
Results
| |
|
|
|
|
|
H1 2018 |
H1 2017 |
Increase/(Decrease) |
| Net sales
($ million) |
3,655 |
2,397 |
52% |
| Operating
income (loss) ($ million) |
435 |
88 |
397% |
| Net income
($ million) |
402 |
279 |
44% |
|
Shareholders’ net income ($ million) |
403 |
280 |
44% |
| Earnings
per ADS ($) |
0.68 |
0.47 |
44% |
| Earnings
per share ($) |
0.34 |
0.24 |
44% |
| EBITDA ($
million) |
717 |
399 |
80% |
| EBITDA
margin (% of net sales) |
19.6% |
16.6% |
|
| |
|
|
|
Our sales in the first half of 2018 increased
52% compared to the first half of 2017. While the increase was
mainly due to strong increase in demand in the USA and Canada,
sales increased also in the rest of the regions. EBITDA increased
80% to $717 million in the first half of 2018 compared to $399
million in the first half of 2017, following an increase in sales
and an improvement in the EBITDA margin, from 17% to 20%. Net
income attributable to owners of the parent during the first half
of 2018 was $403 million or $0.68 per ADS, which compares with $280
million or $0.47 per ADS in the first half of 2017. The improvement
in net income mainly reflects a better operating environment, where
a 47% increase in shipments improved the utilization of production
capacity and therefore the absorption of fixed costs, a 4% increase
in average selling prices, better financial results and results
from associated companies, partially offset by raw material cost
increases and higher income tax.
Cash flow provided by operating activities
amounted to $322 million during the first half of 2018, net of an
increase in working capital of $358 million. Following a dividend
payment of $331 million in May 2018, and capital expenditures of
$196 million during the first half of 2018, we maintained a
positive net cash position (i.e., cash, other current and
non-current investments less total borrowings) of $423
million at the end of June 2018.
The following table shows our net sales by
business segment for the periods indicated below:
| |
|
|
|
| Net
sales ($ million) |
H1 2018 |
H1 2017 |
Increase/(Decrease) |
| Tubes |
3,452 |
94% |
2,260 |
94% |
53% |
| Others |
203 |
6% |
137 |
6% |
49% |
|
Total |
3,655 |
100% |
2,397 |
100% |
52% |
| |
|
|
|
|
|
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) |
H1 2018 |
H1 2017 |
Increase/(Decrease) |
|
Seamless |
1,340 |
1,037 |
29% |
| Welded |
431 |
170 |
153% |
|
Total |
1,771 |
1,207 |
47% |
| |
|
|
|
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 |
H1 2018 |
H1 2017 |
Increase/(Decrease) |
| (Net sales
- $ million) |
|
|
|
| North
America |
1,634 |
1,021 |
60% |
| South
America |
595 |
430 |
38% |
| Europe |
331 |
247 |
34% |
| Middle East
& Africa |
755 |
461 |
64% |
| Asia
Pacific |
137 |
101 |
36% |
|
Total net sales ($ million) |
3,452 |
2,260 |
53% |
|
Operating income ($ million) |
391 |
76 |
411% |
| Operating
income (% of sales) |
11.3% |
3.4% |
|
| |
|
|
|
Net sales of tubular products and services
increased 53% to $3,452 million in the first half of 2018, compared
to $2,260 million in the first half of 2017, as a result of a 47%
increase in shipment and a 4% increase in average selling prices.
The increase in sales came from all regions, mainly due to a strong
increase in demand in the USA and Canada. In the first half of
2018, the average number of active drilling rigs, or rig count grew
10% worldwide compared to the first half of 2017. Rig count in the
United States and Canada grew 17%, while in the rest of the world
the rig count grew 2% year on year.
Operating results from tubular products and
services increased significantly, from $76 million in the first
half of 2017, to $391 million in the first half of 2018. Results
improved following a 47% increase in shipment volumes, increasing
sales and the utilization of production capacity and therefore the
absorption of fixed costs.
Others
The following table indicates, for our Others
business segment, net sales, operating income and operating income
as a percentage of net sales for the periods indicated below:
| |
|
|
|
|
Others |
H1 2018 |
H1 2017 |
Increase/(Decrease) |
| Net sales
($ million) |
203 |
137 |
49% |
| Operating
income ($ million) |
44 |
11 |
297% |
| Operating
margin (% of sales) |
21.6% |
8.1% |
|
| |
|
|
|
Net sales of other products and services
increased 49% to $203 million in the first half of 2018, compared
to $137 million in the first half of 2017, mainly due to higher
sales of energy related products, i.e., sucker rods and coiled
tubing and utility conduits for buildings.
Operating income from other products and
services increased significantly, from $11 million in the first
half of 2017 to $44 million in the first half of 2018, following
the increase in sales and an increase in operating margin from 8%
to 22%.
Selling, general and administrative
expenses, or SG&A, amounted to $687 million in the
first half of 2018 and $622 million in the first half of 2017,
representing 19% of sales in 2018 and 26% in 2017. Direct selling
expenses, like freights, increased due to higher shipment volumes
but were partially offset by lower amortization of intangibles
following the full amortization of Hydril intangibles.
Financial results amounted to a
gain of $31 million in the first half of 2018, compared to a loss
of $20 million in the first half of 2017. The gain in the first
half of 2018 corresponds mainly to an FX gain of $28 million; $19
million related to the Argentine peso devaluation on Peso
denominated financial, trade, social and fiscal payables at
Argentine subsidiaries which functional currency is the U.S.
dollar, $14 million related to the Euro depreciation on Euro
denominated intercompany liabilities (of which $13 million are
offset in the currency translation reserve in equity), partially
compensated by a loss of $6 million due to the devaluation of the
Canadian dollar.
Equity in earnings of non-consolidated
companies generated a gain of $87 million in the first
half of 2018, compared to a gain of $65 million in the first half
of 2017. These results are mainly derived from our equity
investment in Ternium (NYSE:TX).
Income tax amounted to a charge
of $151 million in the first half of 2018, compared to a gain of
$55 million in the first half of 2017. The increase in income tax
charges reflects both the improvement in result and the effect of
the Mexican and Argentine peso devaluation on the tax base at our
Mexican and Argentine subsidiaries which have U.S. dollar as their
functional currency.
Cash Flow and Liquidity of
2018 First Half
Net cash provided by operating activities during
the first half of 2018 amounted to $322 million (net of an increase
in working capital of $358 million, related to the increase in
shipments and production), compared to net cash used in operations
of $7 million in the first half of 2017 (net of an increase in
working capital of $292 million)
Capital expenditures amounted to $196 million in
the first half of 2018, compared to $294 million in the first half
of 2017, declining following the start up of our greenfield
seamless facility in Bay City, Texas at the end of 2017. Free cash
flow amounted to $126 million in the first half of 2018.
Following a dividend payment of $331 million in
May 2018, our financial position at June 30, 2018, amounted to a
net cash position (i.e., cash, other current and non-current
investments, less total borrowings) of $423 million.
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, 2018 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
www.tenaris.com/investors.
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 2, 2018, at 9:00 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 “2494516”. 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 August 2nd through 11.59 pm on August 10, 2018. To
access the replay by phone, please dial 855 859 2056 or 404 537
3406 and enter passcode “2494516” 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 Condensed Interim Income
Statement
| |
|
|
| (all
amounts in thousands of U.S. dollars) |
Three-month period ended June
30, |
Six-month period ended June
30, |
| |
2018 |
2017 |
2018 |
2017 |
|
Continuing operations |
Unaudited |
Unaudited |
| Net
sales |
1,788,484 |
1,242,804 |
3,654,719 |
2,396,664 |
| Cost of
sales |
(1,226,557) |
(865,729) |
(2,532,063) |
(1,689,585) |
|
Gross profit |
561,927 |
377,075 |
1,122,656 |
707,079 |
| Selling,
general and administrative expenses |
(337,574) |
(327,132) |
(687,208) |
(621,563) |
| Other
operating income (expense), net |
(1,917) |
1,547 |
(815) |
1,988 |
|
Operating income |
222,436 |
51,490 |
434,633 |
87,504 |
| Finance
Income |
9,609 |
11,059 |
18,982 |
23,986 |
| Finance
Cost |
(10,422) |
(6,020) |
(20,596) |
(11,958) |
| Other
financial results |
39,383 |
(20,667) |
32,317 |
(32,082) |
|
Income before equity in earnings of non-consolidated
companies and income tax |
261,006 |
35,862 |
465,336 |
67,450 |
| Equity in
earnings of non-consolidated companies |
40,920 |
30,201 |
86,946 |
65,401 |
|
Income before income tax |
301,926 |
66,063 |
552,282 |
132,851 |
| Income
tax |
(135,454) |
7,357 |
(150,576) |
54,602 |
|
Income for continuing operations |
166,472 |
73,420 |
401,706 |
187,453 |
| |
|
|
|
|
|
Discontinued operations |
|
|
|
|
| Result for
discontinued operations |
- |
- |
- |
91,542 |
|
Income for the period |
166,472 |
73,420 |
401,706 |
278,995 |
| |
|
|
|
|
|
Attributable to: |
|
|
|
|
| Owners of
the parent |
168,328 |
74,524 |
403,311 |
279,651 |
|
Non-controlling interests |
(1,856) |
(1,104) |
(1,605) |
(656) |
| |
166,472 |
73,420 |
401,706 |
278,995 |
| |
|
|
|
|
Consolidated Condensed Interim Statement
of Financial Position
| |
|
|
|
| (all
amounts in thousands of U.S. dollars) |
At June 30, 2018 |
|
At December 31, 2017 |
| |
Unaudited |
|
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
| Property, plant and equipment, net |
6,139,845 |
|
|
6,229,143 |
|
| Intangible assets, net |
1,614,043 |
|
|
1,660,859 |
|
| Investments in non-consolidated companies |
663,261 |
|
|
640,294 |
|
| Available for sale assets |
21,572 |
|
|
21,572 |
|
| Other investments |
197,158 |
|
|
128,335 |
|
| Deferred tax assets |
177,266 |
|
|
153,532 |
|
| Receivables, net |
155,734 |
8,968,879 |
|
183,329 |
9,017,064 |
| Current assets |
|
|
|
|
|
| Inventories, net |
2,530,072 |
|
|
2,368,304 |
|
| Receivables and prepayments, net |
142,276 |
|
|
135,698 |
|
| Current tax assets |
151,964 |
|
|
132,334 |
|
| Trade receivables, net |
1,536,323 |
|
|
1,214,060 |
|
| Derivative financial instruments |
2,484 |
|
|
8,231 |
|
| Other investments |
730,240 |
|
|
1,192,306 |
|
| Cash and cash equivalents |
427,960 |
5,521,319 |
|
330,221 |
5,381,154 |
| Total assets |
|
14,490,198 |
|
|
14,398,218 |
| EQUITY |
|
|
|
|
|
| Capital and reserves attributable to owners of the
parent |
|
11,431,575 |
|
|
11,482,185 |
| Non-controlling interests |
|
95,139 |
|
|
98,785 |
| Total equity |
|
11,526,714 |
|
|
11,580,970 |
| LIABILITIES |
|
|
|
|
|
| Non-current liabilities |
|
|
|
|
|
| Borrowings |
31,826 |
|
|
34,645 |
|
| Deferred tax liabilities |
472,965 |
|
|
457,970 |
|
| Other liabilities |
214,599 |
|
|
217,296 |
|
| Provisions |
35,966 |
755,356 |
|
36,438 |
746,349 |
| Current liabilities |
|
|
|
|
|
| Borrowings |
808,669 |
|
|
931,214 |
|
| Derivative financial instruments |
91,615 |
|
|
39,799 |
|
| Current tax liabilities |
158,235 |
|
|
102,405 |
|
| Other liabilities |
219,890 |
|
|
157,705 |
|
| Provisions |
27,181 |
|
|
32,330 |
|
| Customer advances |
89,566 |
|
|
56,707 |
|
| Trade payables |
812,972 |
2,208,128 |
|
750,739 |
2,070,899 |
| Total liabilities |
|
2,963,484 |
|
|
2,817,248 |
| |
|
|
|
|
|
| Total equity and liabilities |
|
14,490,198 |
|
|
14,398,218 |
| |
|
|
|
|
|
Consolidated Condensed Interim Statement
of Cash Flows
| |
|
|
| |
Three-month period ended June
30, |
Six-month period ended June
30, |
| (all
amounts in thousands of U.S. dollars) |
2018 |
2017 |
2018 |
2017 |
| Cash flows from operating
activities |
Unaudited |
Unaudited |
| |
|
|
|
|
| Income for
the period |
166,472 |
73,420 |
401,706 |
278,995 |
| Adjustments
for: |
|
|
|
|
|
Depreciation and amortization |
140,401 |
148,848 |
282,203 |
311,066 |
| Income tax
accruals less payments |
92,667 |
(36,888) |
67,851 |
(129,818) |
| Equity in
earnings of non-consolidated companies |
(40,920) |
(30,201) |
(86,946) |
(65,401) |
| Interest
accruals less payments, net |
6,155 |
7,349 |
6,775 |
4,889 |
| Changes in
provisions |
(7,148) |
(2,082) |
(5,621) |
(19,920) |
| Income from
the sale of Conduit business |
- |
- |
- |
(89,694) |
| Changes in
working capital |
(28,220) |
(247,336) |
(357,655) |
(291,721) |
|
Derivatives, currency translation adjustment and others |
21,835 |
54,060 |
13,362 |
(5,092) |
| Net cash provided by (used in) operating
activities |
351,242 |
(32,830) |
321,675 |
(6,696) |
| |
|
|
|
|
| Cash flows from investing
activities |
|
|
|
|
| Capital
expenditures |
(103,793) |
(155,191) |
(195,731) |
(293,806) |
| Changes in
advance to suppliers of property, plant and equipment |
4,632 |
826 |
4,218 |
4,329 |
| Proceeds
from disposal of Conduit business |
- |
- |
- |
327,631 |
| Loan to
non-consolidated companies |
(1,320) |
- |
(3,520) |
(10,956) |
| Repayment
of loan by non-consolidated companies |
3,520 |
- |
5,470 |
1,950 |
| Proceeds
from disposal of property, plant and equipment and intangible
assets |
1,224 |
916 |
2,708 |
2,878 |
| Investment
in companies under cost method |
- |
(3,681) |
- |
(3,681) |
| Dividends
received from non-consolidated companies |
25,722 |
22,971 |
25,722 |
22,971 |
| Changes in
investments in securities |
311,462 |
218,540 |
396,078 |
170,071 |
| Net cash provided by investing
activities |
241,447 |
84,381 |
234,945 |
221,387 |
| |
|
|
|
|
| Cash flows from financing
activities |
|
|
|
|
| Dividends
paid |
(330,550) |
(330,550) |
(330,550) |
(330,550) |
| Dividends
paid to non-controlling interest in subsidiaries |
(1,108) |
(19,200) |
(1,108) |
(19,200) |
|
Acquisitions of non-controlling interests |
(1) |
(13) |
(1) |
(31) |
| Proceeds
from borrowings |
298,296 |
438,188 |
576,007 |
519,735 |
| Repayments
of borrowings |
(448,811) |
(297,816) |
(696,852) |
(517,850) |
| Net cash (used in) financing
activities |
(482,174) |
(209,391) |
(452,504) |
(347,896) |
| |
|
|
|
|
| Increase (decrease) in cash and cash
equivalents |
110,515 |
(157,840) |
104,116 |
(133,205) |
| Movement in cash and cash
equivalents |
|
|
|
|
| At the
beginning of the period |
324,741 |
426,741 |
330,090 |
398,580 |
| Effect of
exchange rate changes |
(8,000) |
1,936 |
(6,950) |
5,462 |
| Increase
(decrease) in cash and cash equivalents |
110,515 |
(157,840) |
104,116 |
(133,205) |
| At June 30, |
427,256 |
270,837 |
427,256 |
270,837 |
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 June
30, |
Six-month period ended June
30, |
| |
2018 |
2017 |
2018 |
2017 |
| Operating
income |
222,436 |
51,490 |
434,633 |
87,504 |
|
Depreciation and amortization |
140,401 |
148,848 |
282,203 |
311,066 |
|
EBITDA |
362,837 |
200,338 |
716,836 |
398,570 |
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 June
30, |
Six-month period ended June
30, |
| |
2018 |
|
2017 |
|
2018 |
|
2017 |
|
| Net cash
provided by (used in) operating activities |
351,242 |
|
(32,830 |
) |
321,675 |
|
(6,696 |
) |
| Capital
expenditures |
(103,793 |
) |
(155,191 |
) |
(195,731 |
) |
(293,806 |
) |
|
Free cash flow |
247,449 |
|
(188,021 |
) |
125,944 |
|
(300,502 |
) |
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).
| (all amounts in thousands of U.S. dollars) |
At June 30, |
| |
2018 |
2017 |
| Cash and
cash equivalents |
427,960 |
271,224 |
| Other
current investments |
730,240 |
1,431,881 |
| Non-current
Investments |
192,613 |
279,232 |
| Derivatives
hedging borrowings and investments |
(87,806) |
38,669 |
| Borrowings
– current and non-current |
(840,495) |
(852,865) |
| Net
cash / (debt) |
422,512 |
1,168,141 |
Giovanni Sardagna
Tenaris1-888-300-5432www.tenaris.com
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