Good day and thank you for standing by. Welcome to Fourth Quarter and Full Year 2023 Tenaris S.A. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna. Please go ahead.

Thank you, Gigi, and welcome to Tenaris 2023 fourth quarter and annual results conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in this call and that our actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Luca Zanotti President of our US Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarterly results. During the fourth quarter of 2023, sales reached $3.4 billion, down 6% compared with those of the corresponding quarter of the previous year but up 5% sequentially, mainly driven by a high level of shipment to the Middle East and to offshore pipeline projects, combined with the inclusion of our newly acquired Shawcor pipe coating business, which offset the ongoing price declines in the Americas. Our EBITDA for the quarter was down 3% sequentially to $975 million and the EBITDA margin declined to 29%, mainly reflecting lower pricing in the Americas. Our net income for the quarter at $1.1 billion was positively affected by a good result from non-consolidated companies, positive financial results and an important net deferred tax gain. Average selling prices in our Tubes operating segment decreased by 11% compared to the corresponding quarter of 2022 and 6% sequentially. During the quarter, cash flow from operation was $836 million. Our net cash position at the end of the quarter increased to $3.4 billion, following the payment of an interim dividend of $235 million in November last year, $214 million spent on share buybacks and capital expenditures of $167 million during the quarter. The Board of Directors has decided to propose for the approval of the Annual General Shareholders' Meeting to be held at the beginning of May, the payment of an annual dividend of $0.60 per share or $1.20 per ADR, which includes the interim dividend of $0.20 per share or $0.40 per ADR that we paid at the end of November last year. If approved, a dividend of $0.40 per share or $0.80 per ADR will be paid on May 22. The proposed annual dividend for this year is 18% higher compared to the annual dividend paid last year. Now, I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. We ended the year with a strong fourth quarter supported by a high level of shipment to the Middle East and for offshore projects. Thanks to the good performance of our industrial and supply chain system, we were able to anticipate some premium shipments to Aramco under our recent tender award. We were also able to include the first contribution from our newly acquired Shawcor pipe coating business after expediting all the necessary antitrust approvals. 2023 has been an outstanding year for Tenaris with record financial results under most metrics. Net sales of $14.9 billion, EBITDA of $4.9 billion, net income of $4 billion, operating cash flow of $4.4 billion. As a global supplier of pipes to the energy industry, we have developed a unique position, present in the most challenging developments in the oil and gas industry serving its most important players. With these results, a net cash of $3.4 billion in our balance sheet, we are increasing returns to shareholders. We are proposing to increase our annual dividend to $0.60 per share. Together with the share buyback program we initiated in November, this would imply a 10% yield to shareholders for the year at current prices. We have extended the perimeter of our operation through a series of acquisitions. In Saudi Arabia, we increased our stake in GPC to gain a controlling position in this large diameter pipe mill, producing conductor casing and large diameter line pipe. With the acquisition of the Shawcor pipe coating business, we are strengthening our line pipe business, especially for offshore line pipe where Shawcor has a leading position in anti-corrosion and insulation coatings. In the United States, we increased the flexibility and overall capacity of our US operations by acquiring additional key treatment and trading facilities. Each of these integrations into our global industrial system enhances our capacity to serve our wide customer base with a growing range of products and services. Our global integrated industrial and supply chain system produced and shipped over four million tons of pipes to customers around the world. Many of these pipes are delivered directly to our customer operations in the field. Under our Rig Direct service program, which now serves over 500 rigs worldwide, we enhance customer intimacy and differentiation, adding services to simplify customer operations and reduce on-site manpower requirements. With our Rig Direct program, which now incorporates our RunReady service, we are reducing inventories in North America and transforming the supply chain. We are advancing with our Rig Direct service in other regions around the world. In North America, we have strengthened our positioning among large operators. We were recently awarded a long-term agreement by ExxonMobil to serve their unconventional operations in the United States, which confirms the preference the large operators are giving to our industrial footprint specialized products and supply services. We are now serving each of the 10 largest operators in the country who are maintaining a stable level of operation even as the overall US rig count has declined. We are also strengthening our position among major operators in Canada. Our sales for offshore operations projects grew more than 50% during the year. In Guyana, where the development of prolific deep-water reserves is transforming the country, we are serving ExxonMobil operations under a long-term contract. While in Brazil, we are supplying Petrobras with a wide range of products for the Buzios development and we are supplying a number of offshore gas pipeline developments around the world. Our sales are growing in the Middle East where we have increased our local content and presence. In Saudi Arabia, Aramco, while postponing some of its offshore oil expansion, is expanding its gas drilling activity including the development of the Jafurah unconventional reserves. We are supplying premium seamless OCTG, following a tender awarded to replenish depleted stocks and are ramping up deliveries of conductor and surface casing from our local welded pipe subsidiaries. The expansion of gas drilling activity will also provide valuable opportunities for sales of line pipe as Aramco proceeds with its master gas pipeline program. Last week, we inaugurated a new industrial complex in Abu Dhabi along with officials from ADNOC and the Ministry of Industry and Advanced Technology. This includes a new premium trading facility, training facility, and an expanded service yard, which will support the Rig Direct service we are providing to ADNOC under our long-term agreement, as well as contributing to the industrial development of the Emirates. Our industrial system, operating at a high level throughout the year, has performed well in supporting our position worldwide. In safety, however, we had three fatalities in our operations after four years without any. We are deeply sorry for the loss of life and we are reinforcing all our preventive actions with a particular focus on the activities of contractors working in our system. We made a significant advance in our decarbonization program. After a $200 million investment, we successfully put into operation our first wind farm in Argentina and we are now moving forward with a similar investment to build a second one. The Buena Ventura wind farm is now supplying 100 megawatts of power to our industrial facility in Campana, meeting close to 50% of its total electric power requirement and contributing to a lower cost of energy. As we look forward to 2024, Tenaris, with its extended global reach, enhanced competitive differentiation, and exceptional financial position is well-placed to strengthen its positioning around the world. The current favorable market conditions in the Middle East and offshore are expected to continue through the year. While in the Americas, we are consolidating a solid position ready to take advantage of any further opportunities that may arise. I would like to give a special thanks to our employees without whose continuous effort and commitment our many achievements during 2023 would not be possible. I will now open the floor for any questions you may have. Thank you.

Thank you. Our first question comes from the line of Arun Jayaram from JPMorgan Securities LLC.

Yes. Good morning. Paolo, the net cash balance now has grown from $921 million to over $3.4 billion as of year-end. And I was wondering if you could highlight some of your longer-term thoughts on deploying some of this excess cash on the balance sheet in terms of inorganic M&A opportunities like you did with Shawcor or perhaps what the next phase of cash return to shareholders could look like just given how much net cash there is on the balance sheet?

Thank you, Arun. And you're right the company is arriving at the end of 2023 with very strong cash. Well, as we did in the past, we will consider all the options. On one side, we need to continue on some organic investments to complete and advance our decarbonization program. We should also focus on areas of digitalization and automation that will enhance our competitiveness. This is important for us. So we will have organic growth more than anything else in improving our competitiveness and advancing in decarbonization. On the other side, we see opportunities for growing along our value chain. An example is being Shawcor and also the investment we did in Italy and in the States in coating or in increasing capacity in areas in which we really need to be ready to react to the needs of our clients because Rig Direct is demanding on our industrial and supply chain structure. We are also prepared to analyze opportunities in different regions that may arise and then we can complete our deployment. But we know that we need to identify a clear strategy that allows us to grow and enhance our profitability. As we did last year, we can propose to return to shareholders either in buyback or in dividend according to the results of the business. We are contemplating all of the options and we are keeping our options open in this field.

Great. And my follow-up Paolo, you mentioned that Tenaris expects sales in the first half of 2024 to be very similar to the second half of 2023. It appears that maybe the Shawcor pipe coating business was one of the drivers of that as well. Can you help us think about how margins could look like in the first half of 2024 on an EBITDA basis?

Well, as you say, we expect the invoicing in the first half of 2024 to be in line with the invoicing in the second half of 2023. But this you should consider on one side some of the advancements that we have done in the contract in Saudi and on the other side also the inclusion of Shawcor, particularly of part of a very large project in Mexico in Altamira, which will imply an extraordinary invoicing level for Shawcor. When we look at the EBITDA, we have to take into consideration the reduction in prices that is taking place in the United States following the Pipe Logix. Our sense is that this should stabilize, but will have an influence on our margins, but still we think that we should be able to maintain a margin in the first half in around 25%.

Great. That’s helpful. Thanks a lot.

Thank you. Our next question comes from the line of Alessandro Pozzi from Mediobanca.

Hi there. Thank you for taking my questions. My first question is about your Q4 results. I believe that one of the reasons the numbers exceeded expectations was possibly due to advanced shipments to Saudi Arabia. As we move into 2024, how should we consider the overall level of sales from the Middle East, specifically from Saudi Arabia, the Emirates, and Qatar? Additionally, you mentioned that sales will be flat in Q1, but I'm curious if Q1 will present more challenges for sales and margins, and whether we can expect a recovery starting in Q2 or if the recovery will mainly impact margins later in 2024. Thank you.

Thank you, Alessandro. Well, on the first one we think that in 2024, our sales in the Middle East will increase substantially. But I will ask Gabriel to give an overview because we are present in different countries with different perspectives and it’s interesting to see how we can grow there.

Thank you, Paolo. Good morning Alessandro. Indeed, we were with Paolo last weekend in Saudi Arabia visiting our operations. The sense that we have is that the activity in Saudi will remain very strong despite this announcement of a change in the target of sustained capacity remaining at 12 million barrels, and we see that drilling activity continued at high levels at this level of 300-plus rigs. The Kingdom is increasing its focus on drilling for gas, driven by the economic expansion and also the aim of improving their power generation metrics. So, we see drilling on gas has been ongoing and will continue to do so in the years to come. As a matter of fact, today to give us a reference, the gas-driven OCTG demand is about two-thirds of the OCTG demand in Saudi, okay? So this we expect to continue and this is positive for our presence in the Kingdom. With the addition of GPC, I think we have a unique setting in the Kingdom being able to supply to Aramco everything of every type of well, conventional/unconventional, oil and gas onshore and offshore. We are also exposed to the pipeline business, which is also growing in Saudi. Currently, we are producing Marjan and Zuluf pipelines, which are offshore oil pipelines, and the projects that are going ahead are not impacted by the recent announcement. We see opportunities in gas trend lines that are being developed in Saudi like for Jafurah Phase 2 or even the Master Gas Phase 3. We are very confident in our backlog and capabilities in Saudi, which will have virtually no impact or already limited impact from the announcement. This is in terms of Saudi. So we expect the level of shipments that we have in Saudi in the fourth quarter to continue at very high levels throughout 2024. On top of that, Paolo commented on the opening remarks regarding the inauguration of Abu Dhabi; we were there as well. ADNOC is going ahead with drilling plans. Today, we are serving on a just-in-time basis about 70 rigs every month with our service center and Rig Direct model. We are creating value and enhancing loyalty with ADNOC as well. So there are also important plans of expansion in Qatar, Egypt, Iraq. So we believe that the Middle East in general has already seen an increase in the second half of 2023 versus the first half of 2023 and we expect this to continue into 2024.

Thank you, Gabriel. On the second question, which is basically about the margin in 2024, I think we have visibility for the first part of the year. We do not have so much visibility on the entire year. The factors that are affecting margins on one side is the evolution of prices in North America reflecting Pipe Logix. We have seen the Pipe Logix coming down in the recent months. In our view, it should stabilize in the coming months. This will be an important factor affecting our results. We will compensate with increasing volume in the US where our client base is solid even in an environment in which the rig count remains substantially stable. We will compensate to some extent by increased sales in the Eastern hemisphere and in offshore. On the other side, the consolidation of Shawcor and the increase of business of welded pipes also in the Middle East will tend to lower our margin slightly. That's the reason why I'm saying we should be around 25% as a reference at least for the coming six months.

And just a follow-up on Shawcor. What would be the contribution from the new business in 2024 in terms of revenue?

Well, we are expecting an invoicing above $300 million with $300 million to $350 million, depending on the contracts that we may capture for the second part of the year. This will contribute with margins that are below 25% because the business is a different service. But I wouldn't underestimate the relevance of the synergy between our business and the business of Shawcor. The combination of Tenaris line pipe from different types of welded and seamless pipes with state-of-the-art well-recognized coatings, especially for complex applications like insulation, in our view is important. Now we have to work on it to materialize and expand our offer, to add service to our clients and we will see the extent of these synergies which should exceed the contribution of the single business in our business.

Okay. That's very clear. Thank you very much.

Thank you. One moment for our next question. Our next question comes from the line of Marc Bianchi from TD Cowen.

Hi. Thank you. I know it's hard to have visibility into the back half of the year, but I'm curious, you probably have some large projects internationally that are ramping up that should be contributors to your revenue and your margin. It sounds like there's some invoicing with Shawcor that maybe is going to be benefiting first half that goes away in the second half. Could you maybe just talk us through the moving pieces going from first half to second half, recognizing these are all variables that we can't have precision on, but just so we can understand it?

As I was saying, we don't have so much visibility. But as you were saying, we have the business in the offshore and Middle East that is clearly strengthening. Then we have some uncertainty in an area like Argentina and Mexico to some extent. In Argentina, because it's not clear if the new government will be able to advance key reforms that may promote increasing investment in the oil and gas business. Oil and gas business is a key driver for the economy in Argentina and will be an important piece of any government program for the future, but how fast this will happen is not clear to us today. In the case of Mexico, the point is an election year, with a new administration, and the financial position of Pemex has been weak in the last year, which may limit their ability to develop the large resources that Mexico obviously has. Then, there is probably the most important piece that may determine, in the medium term in 2024, the evolution of the US market, especially with regard to price dynamics, volume, rigs, and what will happen with gas considering the recent decision by the administration is kind of a question mark. I would ask Luca to give some color on how we see the US market for us in the coming quarters.

Yes. Thank you, Paolo, and good morning, Marc. Specifically, to the US and on the Pipe Logix, the way we see it now is that it should be bottoming out. Obviously, there are uncertainties, but there are some key factors worth considering. Number one is the level of imports that went down; it is down to one of the lowest figures in recent history. For quite some time, the rig activity has been stabilizing around 620 to 630 rigs in the United States. Others need to be considered when you look at the Pipe Logix and our prices is how is the exposure of the Pipe Logix depending on the mix. Not all items behaved in the same way; production casing was much more resilient than tubing, for example. Our exposure is very large on production casing. Now when we go to the activity, again, we think that the activity is going to be stable in the United States. Maybe we have some downside risk on gas depending in the short term on how the price will react. But again, the activity is not equal across the regions. If you look at the Permian, activity has been much more resilient than the average of the market, and it's not even among different operators. Paolo was mentioning our very large exposure to the 10 largest operators in the United States, and when you look at this activity, you see that they actually grew in the recent past. So to summarize, we see stabilizing prices, a stable market, and very good exposure to the most resilient part of the regions and customers.

Yes. Thank you, Luca. The Pipe Logix index is important for us. It is guiding not only the US but also other parts of our contracts in the region, and it influences more than half of our contracts around the world, to some extent it is influenced by the evolution. This is a variable that is not easy to predict for the long run. We are seeing this should stabilize because we see that the imports in the United States are at probably the lowest level in recent quarters. So, the decline in the import, should at some point lead to a stabilization of this indicator. This is a very important factor for understanding our level of margin in the future.

Is the implication that if the Pipe Logix stabilizes here, in say February or March, we get to a bottom that the second half margin would be better than 25%?

Well, considering the delay that we have between the price or the level of Pipe Logix and the lag for affecting the contract. I mean, we don't have so relevant visibility. But still there are many moving pieces here. So I come back to my first statement: visibility on the second half is not something that we have today. We can see in the first half that the numbers are what we are telling you; we think that we are pretty confident on this. In the second half, we have to see at least what is happening in the coming quarter before having a clearer picture.

Makes sense. Thank you very much.

Thank you. One moment for our next question. Our next question comes from the line of Kevin Roger from Kepler Cheuvreux.

Yes, good afternoon. Thanks for taking the time. I just wanted to follow up on your comments, Paolo, regarding the margin development and the impact of the Pipe Logix index, because basically the trend on the Pipe Logix Index has been very, let's say, poor in Q2 and Q3. But when you look at the movement that we have seen in Q4, we were facing a kind of 1% or 2% month-on-month decline. So, in a way that was much less negative than it used to be. So why would you say that the impact on the marginality will be stronger in let's say, Q1 2024 compared to Q4 2023 while compared to what we have seen sequentially Q4 versus Q3? Because you maintain a margin that is probably better than you anticipated when you discussed in the Q3 earnings?

Well, there is a lag between the indicator and the contract. As you can imagine, we are now seeing in the next quarter, we will see reflected the weakness of the indicator in the third Q. This will lead to a decline in prices in our sales in the U.S. not anywhere. This decline in sale prices in the first Q will be compensated to some extent by increasing volume in the United States.This is maintaining the top line, but is affecting our profitability and our margin slightly. Well, there is not a big change, but we anticipated in the fourth quarter a slight reduction in the margin, and we expect this trend to extend to the first quarter of the next year.

Okay understood. And maybe the follow-up if I may please will be related to Arun. Can you give us some color to try to understand what could be the effect of the Forex on your accounts for the coming quarters? And what would be the potential upside if the government decides to move forward on the energy projects that we are talking about?

In Argentina, you're referring to Argentina. In Argentina, I think we did a very good job in defending the financial position of the company in the face of a sudden devaluation in the range of 120%. This comes from a strategy of defending and stabilizing our position as much as we can trying to reduce the risk on foreign exchange and sudden changes like the one that we had in the fourth quarter. I think we can maintain this strategy, and it won't be affected by other potential shifts in the Forex. The potential of Argentinian energy and the opportunities for us are huge. We have a very large market share in supplying the energy business in Argentina. In 2023, we were able to pursue major pipeline execution in Argentina with our pipes and associated activities in drilling for gas. If the new government succeeds in implementing reforms in the hydrocarbon sector over the coming months, we expect investment in the area. We will see investment in pipelines and a rebound of activity in oil and gas drilling for resources. Just the signal that the government is successful in their program of reform will give a strong incentive for motivating investment in the energy sector. This could be an upside. Argentina is very, very important for Tenaris; in 2023 invoicing exceeded $2 billion during the year. If there are positive signs on the stability of the country and the position of the government, I think we could see a positive trend of investment that may reflect in the second part or even in the first part of 2025.

Okay. Thanks.

Thank you. One moment for our next question. Our next question comes from the line of David Anderson from Barclays.

Hi. Good morning. A question on your Middle East business. So revenue in MENA has doubled over the past year. Clearly, the Middle East business itself has inflected. You talked about opening a new facility, a new threading facility, and training facility in Abu Dhabi. I'm curious, is that facility going to serve the entire Middle East or is that just for Abu Dhabi? And then kind of a broader question about your footprint in the Middle East; you've talked about a number of I think you had the conductor pipe and I think you also have a welded facility in Saudi. Are you looking to expand your footprint in the Middle East? Do you have what you want? Is this an area where you're considering investing more to build out that footprint?

Thank you. I will ask Gabriel to give some color on this.

Yes. Thank you, David. The Middle East indeed is an area where we have expanded our footprint in the last years. SSP, GPC, and the facility in Abu Dhabi that you mentioned that we inaugurated last week is primarily intended to serve ADNOC in Abu Dhabi, but it is a facility that certainly increases also the capacity of premium trading for Tenaris. So it's a facility that we intend to qualify with the major NOCs of the region, so it could potentially serve other customers in the region. Going back to the point that you asked about our final setup in the Middle East; I think as Paolo mentioned, we're always looking for opportunities. The Middle East is an area that has been and is increasing in its potency for Tenaris. There is a trend that we have discussed in the past about industrialization in different countries, converting this richness in oil and gas into industrialization and diversification of the industry. This is a process that we have been accompanying. It is a strategy and expertise that we have developed in other geographies around the world, and we're continuing this strategy of expanding. Our business is growing, and I think we have the capabilities and willingness to continue enhancing our footprint. This has been very distinctive; historically we have differentiated in the Middle East with products and services like the Rig Direct service in ADNOC, but local content and industrialization is also part of our strategy, which has proven successful so far.

Thank you, Gabriel. Just as a follow-up to that, I think in the remarks earlier you had said that you're providing the pipe on Jafurah on the unconventional project there. I'm just curious, is Rig Direct a potential with Aramco? Or does Aramco procure their products differently where that model may not make sense with that particular NOC?

Yes. Today, Rig Direct is not there, but the potential is there. Aramco has already changed their supply chains from foreign producers to the local network, creating an ecosystem of producers on the different product lines. The supply chain that we have today in the Kingdom is getting us closer to thinking of a Rig Direct potential. Today, the interaction, demand planning, and procurement cycle of Aramco today is different than what it was two or three years ago, where they were buying one or two years in advance. Now, the synchronization between the manufacturing facilities in Saudi and the rigs in Saudi is much more aligned. So I think we are heading into further integration down the line.

Okay. Thank you, Gabriel. Appreciate it.

You are welcome, David.

Thank you. One moment for our next question. Our next question comes from the line of Jamie Franklin from Jefferies.

Hi there. Thanks for taking my questions. Just three quick ones from me. So firstly, I just wanted to clarify on US volumes. If you can give us any color on the direction of change of the volumes and to what extent they moved in the first quarter? And then the second point, which has been answered to some extent, is just on the devaluation of the peso. So obviously, there are several moving parts there in terms of the positive FX impact, but also a deferred tax liability. So I just wanted to understand, whether there are going to be any further impacts in the first quarter. And then finally, maybe ask about expectations for working capital through 2024. Thanks.

Thank you, Jamie. The last question is on CapEx for the entire year, that's correct? Or working capital?

Working capital, yes, through 2024.

Yes. On the first one US volume, Luca maybe you can expand on where we see that we can increase our volume level.

Sure. If we consider the three main segments, which are the Gulf of Mexico, the onshore and the line pipe, we see stable volumes heading into the first quarter on the Gulf of Mexico. Standard line pipe and line pipe, in general, are more or less equal. But getting back to the point we were making before on our large exposure to the largest operators and the most active regions, we see a significant increase in the OCTG volume. If I had to give a number it would be high single-digits.

Yes. Because also the contracts that we are signing, including the Exxon contract, will drive some increase in volume for OCTG, and really the position of Tenaris at the moment with a major player is very strong. And this player I think will be more resilient, keeping their level of operation. Now one question that we will see and is important to analyze is also the effect of consolidation in this environment. This will lead to a change of the approach, the structure of the column longer laterals, and some modifications in the way the company will address access to locations that are coming from different consolidations. But I think we will see this later on more into the back end of 2024.

Yes. But in our view this could be a favorable effect for a company like Tenaris that has solid ties with these major operators.

The second point is on devaluation and the possible impact in the first quarter. Here, Alicia, you may give a view on this.

Okay, thank you, Paolo. Hello, Jamie. The official exchange rate in Argentina was increased by almost 120% in the middle of December. After that, the government set the growth impact at the range of 2% per month since that devaluation. The devaluation impact has positive effects on our financial results since we were short to the exposure to the Argentine peso, and it had a negative impact on our deferred tax asset because it produced an erosion of the fiscal value of the fixed assets. So if the growth impact continues at the order of 2% every month, we are not seeing another negative impact in our tax position. But if a new devaluation appears, we can expect some kind of effect in the deferred tax asset management. Not much, but we will see that. But at the moment we are not seeing that.

Thank you, Alicia for devaluation. And the third point is on working capital. We do not expect a major change in working capital because Tenaris requires important working capital to operate its Rig Direct and RunReady modes. In this environment, we have substantial stability of volume with not big changes in it. We will be able to maintain the working capital, releasing possibly some of it during 2024 because of a more efficient operation. We are continually striving to reduce the lead time in our plant and the lead time in our supply chain. This progress will reflect in some release of working capital from inventories. On a part of receivable, if we are able to maintain the level of invoicing, this will not change too much.

Okay. Very clear. Thank you very much.

Thank you. One moment for our next question. Our next question comes from the line of Joseph Charuy from Bank of America Securities.

Good afternoon, gentlemen. Congrats on a strong set of results. I have two questions. Maybe we can talk about the moving parts on the cost side of the EBITDA equation. Do you have any further comments on potential impacts of the Red Sea on logistics, given that the situation is likely to persist for at least the next quarter? My second question is with regards to the dividend; obviously, your $0.60 per share represents a nearly 20% uplift year-on-year. Is this a growth rate that you see being sustained moving forward? And then lastly, maybe I'll ask about the CapEx expectations for the full year 2024. Thank you.

Thank you. Well, on the cost side, we don't see major changes, because we will have some improvements in our costs following the devaluation in Argentina. But on the other side, other parts of our cost system are moving in the opposite direction. Something that will be always relevant will be the evolution of the Hot Rolled Coils because our system today is acquiring plates or Hot Rolled Coils on the market in fair volume. We have welded representing between 15% and 20% of our sales. In general, apart from the Hot Rolled Coils that could have a movement less predictable, we do see some decline in price in raw material. The increase in Hot Rolled Coils may compensate for this. So we do not expect major impacts on our EBITDA today from movements in cost. When we talk about the Red Sea here, Gabriel you can tell us, because the region and these are regions mostly affecting the Eastern Hemisphere region.

Yeah. Just to comment on the Red Sea, it's something that we have been monitoring very closely since the attacks started in November with practically no effect in December, but we are having a limited impact in this first quarter of 2024. Around 50,000 tons of the one million tons plus that we manage every quarter are going through areas affected by the conflict in the Red Sea. The majority of these vessels have been diverted through South Africa with delays of about 15 to 20 days of longer delivery time. We are monitoring and in constant communication with our customers. So none of our customers are suffering any impact in their operations, and this diversion of 15 to 20 days also affects some extra logistic costs in terms of fuel, timing, and limited insurance as well in the range of $3 million in the quarter. I would say it's quite limited. Since we also have in our industrial system multi-sourcing alternatives and we have experience with many logistic providers, I think we are able to manage this crisis with a relatively limited impact.

Thank you, Gabriel. On the second question, well, the dividend policy will be defined by the shareholders in the future. We don't say much on the future dividend policy. What you can say is that this 20% increase, together with the buyback, is a significant return to shareholder money, the 10% that I was mentioning in my remarks. On the third point, which is the CapEx, we expect CapEx to be in the range of $700 million for 2024, considering the second part of the second wind farm in Argentina that should be executed during 2024. We are in this range, and this is what we see now.

Thank you very much. Maybe just following up on that $3 million number. Is that the number that you incurred in the fourth quarter or the number that you expect to incur in the first quarter from the Red Sea logistical impact?

In the first quarter. This is something that is a conflict that I expect to persist probably two projects down the line, we will see. But it's in the first quarter.

Thank you very much.

Thank you. At this time I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.

Thank you, Gigi and thank you all for joining us at our conference call. See you soon.

This concludes today's conference call. Thank you for participating. You may now disconnect.