Tenaris S.A. (NYSE:TS) Q3 2023 Earnings Call Transcript

Tenaris S.A. (NYSE:TS) Q3 2023 Earnings Call Transcript November 5, 2023

Operator: Good day, and thank you for standing by. Welcome to the Third Quarter 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. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the call over to the Head of Investor Relations, Mr. Giovanni Sardagna.

Giovanni Sardagna: Thank you, Carmen, and welcome to Tenaris 2023 Third Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information in the 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 our quarterly results. Our sales in the third quarter of 2023 reached $3.2 billion, up 9% compared to those of the corresponding quarter of last year, but down 21% sequentially, mainly due to lower volumes and prices throughout the Americas, lower quarterly shipments to offshore projects and lower pipeline shipments in Argentina.

Average selling prices in our Tubes operating segment increased 2% compared to the corresponding quarter of last year, but declined 5% sequentially. As anticipated, our EBITDA, excluding a one-off gain of $32 million, fell just short of $1 billion with a margin of 31%. The sequential EBITDA decline was mainly driven by the ongoing price declines in the Americas. Our net income for the quarter at $547 million was affected by non-cash charges of $144 million related to the remeasurement and recycling of CTA to the income statement of our direct and indirect investment in Usiminas. Cash generated by operating activities during the quarter was $1.3 billion, while our free cash flow for the quarter was $1.1 billion, with a further reduction in working capital of $415 million.

Our net cash position at the end of the quarter rose to $3.3 billion. Our Board of Directors approved the payment of an interim dividend of $0.20 per share or $0.40 per ADR to be paid on November 22. The interim dividend is up 18% compared to the interim dividend we paid last year. In addition to the dividend, the Board of Directors also approved a share buyback of $1.2 billion to be executed within the next 12 months. Now, I will ask Paolo to say a few words before we open the call to questions.

Paolo Rocca: Thank you very much, Giovanni, and good morning to all of you. As anticipated, our third quarter results were affected by, among other factors, lower onshore drilling activity and an ongoing adjustment in market price level in the Americas and the lower level of shipment in certain regions following a strong second quarter. On the other hand, we had another extraordinary quarter for cash flow with a generation of $1.1 billion of free cash flow, making the $3.1 billion in the year-to-date. With this cash flow adding to our already-strong financial position, yesterday, we announced the launch of our first share buyback program, together with an 18% increase in our interim dividend. The share buyback program, which is for an amount of up to $1.2 billion, is to be carried over — carried out over the next 12 months.

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Q&A Session

We consider that buying back our own shares would constitute a better use of our excess cash than our current liquidity investment. During the quarter, we invested $90 million on the acquisition of additional heat treatment and threading facilities in Houston, which will help us to debottleneck our US industrial system. We also acquired a small pipe coating facility located close to our Dalmine plant in Italy for $10 million and announced the acquisition of the larger Shawcor global pipe coating business. This remains subject to the abstention of regulatory approvals and is expected to be concluded by the end of year. The expansion of our pipe coating operation at the global level will help us to serve customers with an integrated offer for complex and offshore line pipe projects.

In North America, we expect a recovery in drilling activity as we look toward 2024. In the United States, the relatively low level of drill and uncompleted wells and the DUC and the crude oil inventories, favorable oil price and rising natural gas prices should support an increase in investment as oil and gas companies reset their budgets for the next year. With OCTG inventory declining from excess level, the declining prices for several product items is starting to slow down. The Pipe Logix index can be subdivided into different product item groups whose performance is not uniform. For example, item groups such as surface casing and tubing, which are most exposed to low quality imports, have fallen further than higher quality product item groups, such as production casing, which are largely produced by domestic producers.

We expect that if inventory continue to come down, market pricing should start to stabilize by the end of the year. At the same time, we are increasing the level of differentiation through our Rig Direct service. By the end of 2023, around 85 of our OCTG sales in the US will be supplied under our Rig Direct service model, and 75% of those sales will be done with our new run-ready service included. This compare with 65% and 30%, respectively, at the end of last year. In Canada, we also expect drilling activity to pick up as we head into the peak winter drilling season. We are repositioning ourselves following the revision of normal values on Chinese OCTG imports made by the Canadian government earlier this year, and an expected increase in activity in the Montney shale.

In the Middle East, the Saudi market is growing particularly strongly, as Aramco is rapidly increasing gas drilling activity, both conventional and unconventional and investing in pipeline construction under the Master Gas 3 plan. We recently won a tender with a value of $600 million to supply seamless casing and tubing with short delivery times. For this increased activity, as Aramco has reduced stock levels during the pandemic, our recently consolidated GPC subsidiary which invoiced $52 million during the quarter is positioned itself to supply the large diameter conductor casing used in most wells in Saudi Arabia. Our new premium trading facility in the Emirates — in the United Arab Emirates, will begin operation this month. This will be the first industrial facility of its kind in the Emirates and has been built along with a special Tenaris University training facility to increase the local content provision under our multi-year Rig Direct agreement with ADNOC.

Offshore drilling and pipeline construction activity is in an expansionary cycle. We have been quick to capture the first wave of this cycle and our sale to offshore project will be 50% higher in 2023 than they were last year. Our position in Guayana and Brazil has been central to this achievement. And in October at the OTC event in Rio, Petrobras awarded us the 2022 Best Supplier recognition in the category of Goods for Drilling and Completing Wells. Our research and development area and technical teams continue to develop material and product solutions tested for the specific conditions involved in more complex low-carbon energy applications such as CCS, carbon capture and storage injection wells and hydrogen storage wells. In October, we were awarded a contract to supply high-chrome alloy tubing for carbon injection wells for the EU-founded Porthos project in Rotterdam.

The materials were selected to withstand the high corrosion risk and expected cryogenic thermal shocks. In Argentina, our first 100-megawatt wind farm has entered full operation and is delivering power through the interconnected grid to our operation in Campana. We have secured the opportunity for a second 90-megawatt wind farm and we will go ahead with $214 million investment to be completed within 24 months. Both wind farms will provide cost-competitive electric power with capacity factor of 55% and above, with no subsidy. With the investment in the wind farms and our ongoing investment in energy efficiency, we expect to meet almost 100% of our energy requirement in Argentina through renewable energy. Digitalization is central to our strategy.

One investment that is currently coming on stream is a $20 million digital global programming and scheduling system that will help us to improve production lead times, cost and compliance. With favorable market condition ahead, we are strengthening our competitiveness and focusing on service and margin differentiation. We are now ready for any question you may have.

Operator: Thank you. [Operator Instructions] It comes from the line of Alessandro Pozzi with Mediobanca. Please proceed.

Alessandro Pozzi: Hi there. Thank you for taking my questions and congratulations on the good sets of results. My first question is on the average selling price. As you pointed out, there are different categories that are seeing different movement in prices. And if I look at your average selling price in Q3, it’s not that different from Q4 in 2022, marginally down, but not as much as the Pipe Logix. So the question here is, is there a growing disconnect between your ASP and the Pipe Logix, or is it just a matter of the time lag between the two and we will see your ASP actually falling in line with the Pipe Logix maybe in the coming quarters? And on this point, maybe if you can give us some color on where you see sales going in Q4 and in Q1 with the EBITDA margin?

That’s the first question. The second question is on the share buyback. Maybe if you can clarify when you’re planning to start the share buyback and whether maybe Techint is going to participate or when we will know whether Techint is going to participate. Thank you.

Paolo Rocca: Thank you, Alessandro. As far as your first question is concerned, the association between the Pipe Logix indicator and our overall price is influenced by many different factors. On one side, the majority of our prices are driven by different factors compared to the Pipe Logix. Some of the formulas are taking into consideration costs or different variables independent from the Pipe Logix. Even within the US and North America that is more influenced by Pipe Logix, the formula we have with our client are reflecting specific products within the Pipe Logix portfolio that in some cases are not moving in the same direction as the average of Pipe Logix. There are differences between, for instance, premium or complex products and more simple products.

So I don’t think we can derive a strict correlation between the pipe line and the overall average price of Tenaris. Yes, we have a more strict correlation with our operation in North America, but North America is very important in our overall sales. So I will ask Luca Zanotti to add some color on this relation between the Pipe Logix index and the dynamics of our prices.

Luca Zanotti: Yes, thank you, Paolo. Good morning, Alessandro. As Paolo was saying, when we look at the North America and we look how the demand is structured, you see that always more and more we have a predominance of seamless heat treated. If you look at, for example, a key component of the demand, which is the production casing, which is more or less 40%, 45% of the total market, the great majority of this is seamless. When we cope this with the structure of the Pipe Logix and the price, you see that these items are the ones that suffer less of the decrease within the Pipe Logix. So for you to come up with a conclusion, you should put together the structure of the market and the way the different items are moving within the Pipe Logix.

And this is one point that is worth mentioning. The second point that is worth mentioning is that when you look at the United States, our formula with our customers are not necessarily 100% related to the Pipe Logix. We have other indicators and obviously these indicators in this context are much less volatile than the Pipe Logix itself. I believe that these are the two main reasons why you see a sort of not perfect match between our prices, even in the United States, when you look at the Pipe Logix.

Paolo Rocca: Then, Gabriel, you can comment on the wide range of prices and the dynamic that is very different that we have in many other markets of our system.

Gabriel Podskubka: Yes, Paolo, thank you very much and good morning, Alessandro. Indeed, the dynamics of the prices in international markets differ from the dynamics of the Pipe Logix. Internationally, we are benefiting from an increased demand on Middle East and offshore markets, and we have at the same time a tight supply of premium products, sophisticated grades, sour service, or high chromium grades as well. So, these segments are not linked or influenced by no means by the Pipe Logix. The products required, the competitive environment completely differs from that influenced by Pipe Logix. So, in international markets, we continue to see in the high end of the market opportunities to enrich our mix and drive prices up. There is typically a lag of six months to nine months in this part of the world from booking prices and into deliveries, but we see a positive trajectory on the international pricing into the end of this year and into 2024.

Paolo Rocca: Thank you, Gabriel. And on the second question, which is the share buyback, the share buyback will be executed in quarterly tranche from now until within one year, and we didn’t receive any specific information on this from our majority shareholder.

Alessandro Pozzi: Okay, thank you. And just to follow up on the evolution of margins for the next couple of quarters, is there any additional color that you can provide?

Paolo Rocca: Well, to the extent to which the Pipe Logix is influencing, at least as Luca was explaining, part of our sale in North America and in some cases also other markets, we will see this reflected in our margin with some delay. So, the decline that you have seen in this quarter will also be reflected in the next and possibly according to the evolution of Pipe Logix in the coming months, November and December. We will see if this trend will continue or not. To this extent, this will be reflected in our margin. As you have seen, last quarter we anticipated the margin in the range of 30%. This is where we are today. Considering all the factors, I think that we can have slightly lower margin in next quarter, but we will remain, let’s say, between 25% and 30% over time. This is also our long-term view.

Alessandro Pozzi: Okay, and potentially picking up from Q2 if Pipe Logix stabilizes. Is that fair?

Paolo Rocca: Difficult to predict. There are many factors that will be influencing demand and supply in, let’s say, during the first half of 2024. There is activity that is important, the level of drilling, the demand of pipe, the level of import is also relevant, imports went down, but we have to see if this is a trend that will continue. In general, we perceive a reduction in the level of inventory in the market, which is positive for giving support to the overall price level in the US.

Alessandro Pozzi: Thank you very much for the color. I’ll turn it back. Thank you.

Operator: Thank you. One moment for our next question, please. And it comes from the line of Arun Jayaram with JPMorgan Securities.

Arun Jayaram: Yeah, good morning. My first question is on the US, perhaps for Luca. I was wondering if you could comment on what you’re seeing in terms of the import of products into the US. How is lower pricing impacting imports into the US?

Paolo Rocca: Thank you, Arun. Luca, you can comment on these, because it is…

Luca Zanotti: Yes, and I can tie back to what, Paolo, you were saying on the inventory. So, when you look at the imports, we have seen imports to go down, and this is basically, with the exception of Koreans that are complying with their quota quarterly, I mean, all the importers have come down, both ERW and seamless. Now, one thing that was not mentioned before, but it is important is there also the domestic production, especially on the ERW side, came down, which helped reducing the inventory on the ground during this month. But getting back to your point, obviously, as price goes down, some importers will start to face the 25% imposed on the Section 232, especially as they complete their quota. And in the case in which we’re going to see a recovery in demand starting 2024, obviously this is going to have an impact on the possibility of some very low imports to come in.

However, we believe that the imports are high and this is a problem that the domestic industry is going to take care of.

Arun Jayaram: Okay. And just a quick follow-up is, what about the potential — if the imports are declining into the US, could that impact international pricing if the imports find a new home?

Luca Zanotti: Well, I don’t think there is a clear overlapping because — between the material that some company is importing in the States and the international market. For instance, the space for welded product outside the United States is very limited. I mean, the demand — international demand is different. There could be some redirection of import, but it is a much lower scale to what is imported in the States because the overlapping — also, this is a market in which qualification, establishing the product in every different place in the different companies is a complex process. In the US, it is easier for a producer with relatively limited experience and track record to penetrate or some segment of the low-end in the market.

Arun Jayaram: Great. And, Paolo, I just want to get quick thoughts on the Argentinian election. Obviously, there is a candidate who is proposing dollarizing Argentina, but just some quick thoughts. I know we still don’t know the outcome yet.

Paolo Rocca: There is — we are in an election process. There will be a ballotage in 19 of November. Whoever wins the ballotage will assume the Presidency on the 10th of December. I think that whatever the outcome of the ballotage, there will be the need in Argentina for an adjustment program that will require a reduction of public spending, devaluation, and it is possible that economic activity may be reduced to, let’s say, align some of the variables that today are out of the normal situation for a country like Argentina. So we will see is, there is no clear indication on the results of the ballotage and there is no clear indication on the program that will be implemented after the assumption.

Arun Jayaram: Okay, thank you.

Operator: Thank you. One moment for our next question, please. It comes from the line of Marc Bianchi with TD Cowen.

Marc Bianchi: Hi, thank you. Maybe following up to the last question, you had previously discussed some concern on South America in the back half of the year because of election uncertainty. Could you talk about how that evolves? Obviously, there may be still some uncertainty for Argentina but the rest of the region and thoughts heading into ’24 would be helpful.

Paolo Rocca: Well, I mentioned Argentina, as I say, we expected that after the assumption Argentina will need to implement, as I was saying, an adjustment program that will have some impact on, as I say, the exchange rate, public spending. No doubt, to some extent we may expect a reduction of the level of economic activity, but any government will need to promote export and attraction of investment. Argentina has a very important potential for attractive investment in the oil and gas sector, in the agricultural sector, in lithium, in development of lithium, in development of renewable and in other area of its economy. I think this will be part of the program of any of the two candidates. And also the condition of the agricultural sector in 2023 has been extremely difficult due to the drought that affected the country.

This will help the next government in facing the challenges of the adjustment process. So this is where we stand and I think that in the case that the program is successful, the need to develop infrastructure in the energy sector for oil and gas is very relevant. We think that there are potential in Vaca Muerta. It is very important. As far as Brazil is concerned, Brazil is more stable, developing its oil and gas industry. Petrobras has very ambitious target for increasing its production level. Contracts like the one that we signed with Equinor are indicating that also the private sector and private companies are investing in Brazil, with large projects that have relevant infrastructural content, areas in which we participate from Confab in all the segments of drilling and evacuation line pipes that are used for this.

In the case of Mexico — also in the case of Mexico, it will be logical for Mexico to, after the new refineries coming upstream, to invest in the energy sector and to support financially Pemex. And also, too, what we see today is that there are private companies investing in the development of Mexican resources, but it is also true that the financial situation of Pemex is very difficult. And we, as other companies in the oil service system, in this moment, are facing some delay in payment from Pemex. It will be very important over the coming months, let’s say, for Pemex, at the same time, to expand its operation if possible and also to reduce the payable to part of a supplier. One of this is Tenaris. In the case of the rest of the Latin America, in Colombia, after the election, we expect that some of the decisions in the oil and gas sector may be reconsidered.

And I feel there could be also, in the case of Colombia, during 2024 and 2025, let’s say, some recovery from the situation where we are today, after the reduction during 2023 that has been pretty strong, either stable or improving.

Marc Bianchi: Okay. Thank you for that, Paolo. I want to ask a couple more quick ones on sort of the direction of direction of business over the next couple quarters. Volumes were down 17% in third quarter. It sounds like you’re anticipating volumes to improve in the fourth quarter. I’m curious if you think a million tons a quarter is sort of the right number to be thinking about for fourth quarter and entering 2024, and then if there’s any regional comments around that.

Paolo Rocca: Yeah, you’re right. I mean, this is what we expect. The situation in Argentina may influence some of the decision on the pipeline and moving this in time between the different quarters, but basically we are in the range that you mentioned. This is what we expect in the coming quarter.

Marc Bianchi: Okay, great. And then the other one was just related to profit per ton. The guidance of 25% to 30% or so for the fourth quarter would suggest you’re maybe over $800 a ton of EBITDA. The long-term average has been around $500, and there’s another company out there saying the normalized price or average margin is $500. Do you think you can maintain this $800, and why do you think it would be better than the long-term average?

Paolo Rocca: Well, I think that there has been a structural change both on the side of the market and on the positioning of Tenaris in this market. Today, I think the relevance of the activity and investment in the US is much more accessible for Tenaris. We have deployed our asset in the last five years, especially, but even we started with our investment in the States in 2007 on a substantial way, and this is positioning Tenaris very differently in a very important area of oil and gas market. So, we are, in this sense, structurally different. We are also structurally different because of the expansion of the differentiated product and services. The Rig Direct is giving us additional margin in my view and in my view, we can defend the differentiation coming from the Rig Direct and the level of service that we are adding to our product delivery.

This was not the situation five years ago. We progressed over time. Also, our positioning in the Gulf, Middle East, is substantially different today with the investment in Saudi Arabia, the new plant in Emirates, let’s say, the positioning of Tenaris has changed. So the combination of the change in the market, because the concentration will also help the concentration of oil producers and the international oil company, to some extent is favoring producers like Tenaris that have an established global footprint. And there are, let’s say, having standards from quality to safety to environment that fit with the demand of international oil company. Also, this has introduced, in my view, a structural change that justify a level of margin higher than the level of margin that is the average of the last 10 years.

Marc Bianchi: Thank you very much.

Operator: Thank you. One moment for our next question, please. All right. And it comes from the line of Luke Lemoine with Piper Sandler.

Luke Lemoine: Good morning. Just one question. With your Rig Direct program in the US, you have pretty good insight into some of the larger operators’ programs. I just wanted to see if you could comment on how you see future activity unfolding over the next three to six months.

Paolo Rocca: Thank you, Luke. I think Luca, you can…

Luca Zanotti: Yeah, sure. As I was saying before, we see activity increasing from the current levels. And when we look at, let’s say, a large portion of either our direct customers or customers’ prospects or that we are in a relationship, we see this going up. And our, let’s say, estimation of this activity increase is very much in line with what the drillers that already hold our — sorry, their earnings call have said. We see activity moving up 5%, 6% from our current levels into first quarter of 2024. This is what we’re seeing.

Luke Lemoine: Okay. That’s perfect. Thanks so much.

Operator: Thank you. [Operator Instructions] One moment for our last question, please. It comes from the line of David Anderson with Barclays.

David Anderson: Hi, good morning. So, if we assume the rig count — US rig count bottoms here in the next month or so, can you talk about how you see volumes trending over the next 12 months? Middle East continues to ramp up, as you highlighted, Saudi and UAE. Offshore should be close to speed by midyear. I would think volumes in the second half of ’24 should be up quite a bit compared to the second half of this year, perhaps even up double digits. Am I thinking about kind of that trajectory, right, in terms of how you’re seeing the market developing for volumes?

Paolo Rocca: Thank you, David. I think it’s difficult to guide expectation for such a long, distant future, because the world is moving on, let’s say, faster on different aspects. There are conflicts around, and there are issues that are really out of our control. We can perceive and we can see our horizon in the next couple of quarters. That is the one that we are trying to represent. But it is difficult to understand for us where we could be in the second part of 2024. Probably the area on which we can have a medium term is the area of offshore projects that are, let’s say, possibly more stable over time. Once they are decided, they go. Gabriel, maybe in this sense you can add some comment on what you see for the second part or medium term, let’s say, 2024.

Gabriel Podskubka: Sure, Paolo. Good morning, David. Indeed, offshore drilling continues to increase. The number of rigs that we have operating today globally in the offshore are even increasing the pre-pandemic levels, both in shallow water and deep water. So every discussion that we have with our customers, FID projections, cap projections, indicate that this is a multi-year cycle. The activity is robust and will continue to grow. There is traction virtually in all offshore basins around the world. And as a matter of fact, Tenaris has already benefited from this growing trend, if you consider, as we are closing November and December shipments, but our sales revenues in 2023 will be at least 50% higher year-on-year than 2022.

So this is already a trend that is embedded in our sales in 2023. And we see this continuously increasing. We have seen during the quarter also some signs of increased activity in exploration. This is an important niche for us. And we had some awards on exploration campaigns in Egypt, Angola, offshore Colombia as well. So we have a strong backlog in offshore mainly on the development, OCTG and pipeline with deliveries into 2024 and some of these projects will even arrive to deliveries into 2025. We see this as a — at the early part of a multi-year cycle and I think our acquisition of the coating facility in Italy and the announcement of the Shawcor coating division is a sign of our confidence on this segment where we already have a differentiated portfolio and have an established position.

So we see that this will be an ongoing contribution within the portfolio.

Paolo Rocca: Thank you, Gabriel. Still, let me add. We have some caveats. The situation in the world is exposed to very different issues that could come out, disruption I would say that would come out. The price of LNG globally continues to be influenced by the situation in Europe. Price of oil may be influenced also by the situation in Middle East. Our operation also, for instance, in the eastern Mediterranean sand oil project has been cancelled. In general, also in Latin America election year in Mexico, now in Argentina. So the overall view is the one that we expressed, but we need to take into consideration the potential for disruption that is for sure something that exists in 2024.

David Anderson: Very much understood, Paolo. One final question as it relates to the buyback that you announced today. Is this targeting just the open float of shares or will the closely held shares be participating in the buyback as well?

Paolo Rocca: We don’t know. I mean, we launched the program having in mind the return that we can get from our cash by investing in the company compared to the investment we can get by managing the liquidity. This is a key factor for the decision. As I mentioned, we will have an intermediate bank to perform the acquisition in the coming quarters, starting next week probably and we will see. I don’t think we can add more on this.

David Anderson: Okay. Thank you very much, Paolo. Appreciate it.

Operator: Thank you. And we have time for one more question. One moment, please. And it comes from the line of Jamie Franklin with Jefferies.

Jamie Franklin: Hi there. Thank you for taking my question. I was just wondering if you’d give us any color on CapEx plans for 2024 and ’25. Obviously, there’s been the announcement of this second investment in a wind farm in Argentina, which is great to see. Beyond that, should we be expecting further bolt-on M&A and where specifically would you be looking? And what about the possibility of adding seamless capacity internationally? Is that an option? Thank you.

Paolo Rocca: Thank you, Jamie. Our — we will be spending in CapEx in the range of $350 million in the first semester of 2024. And we plan to spend a similar amount in the second half. So we’re running at a pace of around $700 million in CapEx. We have among our investment, investment, as you mentioned, in the wind farm in Argentina. The wind farm in Argentina, we completed the first one in line with our budget more or less with very small difference. We consider that this is an area in which — it’s the first priority for decarbonizing Tenaris because we can do it in very effective condition and very competitive condition. We could continue with the development of the second wind farm. Then we have intervention in improving in Argentina, in improving our operation in the steel shop, reducing also our energy consumption that goes in the same direction and add, let’s say, improve operational condition for our — we also have investment in our operation in Dalmine and in the US in our steel shop in copper.

So these are basically the issue that are, let’s say, receiving investment of, let’s say, relevant size. Then we will have to, let’s say, to consolidate the acquisition of Shawcor and see once we receive the antitrust clearance, if this goes on, maybe that — this will require, let’s say, additional investment or consideration for this that we cannot predict now. I think these are the main areas. We do not see, after the acquisition of Republic, specific target or areas for our M&A, but we, as always, are analyzing and considering our strategic positioning in every region of the world. Tenaris is a global player, is a leader worldwide, and has to maintain, let’s say, an exercise of strategic focus in all of the regions in which we operate to understand how we can strengthen structurally our position.

But for the time being, we have nothing so relevant to consider.

Jamie Franklin: All right, thank you.

Operator: Thank you. And ladies and gentlemen, this concludes the question-and-answer period. I would like to turn the call back to Giovanni Sardagna for his closing comments.

Giovanni Sardagna: Thank you, Carmen. And, well, thank you all for joining us on our quarterly call, and we’ll see you soon. Thanks.

Operator: Thank you, ladies and gentlemen, for your participation, and you may now disconnect.