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Tenaris S.A. Form 6-K Summary

Business Context and Reporting Period

This filing contains the Consolidated Condensed Interim Financial Statements for Tenaris S.A. for the nine-month period ended September 30, 2021. The report was signed on November 3, 2021. Tenaris is a global manufacturer of steel pipes and related products, primarily serving the oil and gas industry. The financial statements are prepared in accordance with IFRS as adopted by the EU.

Key Financial Metrics

Note: Net cash position is calculated by management as Cash + Other Investments +/- Derivatives - Borrowings.

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 11.1% to $4,464 million from $4,016 million in the same period of 2020, driven by higher volumes and pricing in the Tubes segment.
• Profitability Turnaround: The company reported a Net Income of $730.2 million, a significant improvement from a Net Loss of $741.0 million in the prior year. This reversal is largely due to the absence of a $622.4 million goodwill impairment charge recorded in 2020 and improved operating margins.
• Operating Income: Operating income swung from a loss of $670.5 million in 2020 to a profit of $434.2 million in 2021.
• Equity in Earnings: Equity in earnings of non-consolidated companies (primarily Ternium) increased significantly to $379.1 million from $27.4 million in the prior year.
• Working Capital: Changes in working capital consumed $672.7 million of cash in 2021, compared to a release of $1,097.2 million in 2020, reflecting inventory build-up and receivables growth.

Outlook, Risks, and Unusual Items

• Dividend Distribution: The Board approved an interim dividend of $0.13 per share ($0.26 per ADS), totaling approximately $153 million, payable on November 24, 2021.
• Legal Contingencies:
  • Venezuela Nationalization: Tenaris obtained final judgments against Venezuela totaling approximately $533.3 million ($256.4M for Matesi and $276.9M for Tavsa) plus interest. Enforcement is currently restricted by U.S. sanctions.
  • Patent Litigation: A U.S. court found possible evidence of intent to commit fraud on the patent office regarding coiled tubing products. Trial is expected in May 2022.
  • Investigations: Ongoing investigations by Brazilian, Italian, and Swiss authorities regarding alleged payments prior to 2014. The company is cooperating with the SEC and DOJ.
• Asset Title Issue: Electronic title deeds for land plots in Saudi Arabia (carrying value $56.2 million) were cancelled by court order. The company has filed a petition to reinstate them.
• Argentina FX Controls: Significant foreign exchange restrictions in Argentina continue to impact liquidity and repatriation of funds. The company maintains a net short exposure of approximately $96.9 million in Argentine pesos.
• Subsequent Events:
  • Sale of Geneva Structural Tubes LLC for $24.1 million (closed Nov 1, 2021).
  • Preliminary agreement to terminate the NKKTubes joint venture in Japan due to economic unsustainability.

Investor Verification Checklist

• Enforceability of Venezuela Awards: Verify the status of U.S. sanctions and the likelihood of collecting the $533.3 million judgment against Venezuela.
• Patent Litigation Outcome: Monitor the May 2022 trial regarding the U.S. patent fraud allegations, which could impact the Coiled Tubing segment.
• Saudi Arabia Land Title: Confirm the resolution of the court-ordered cancellation of land title deeds valued at $56.2 million.
• Argentina Liquidity: Assess the impact of ongoing foreign exchange controls on the repatriation of earnings from Argentine subsidiaries.
• Antidumping Investigations: Track the U.S. Department of Commerce investigations into OCTG imports from Argentina, Mexico, and Russia initiated in October 2021.