Tenaris SA (NYSE:TS) Q2 2020 Earnings Conference Call - Final Transcript
Aug 06, 2020 • 10:00 am ET
Ladies and gentlemen, thank you for standing by and welcome to the Tenaris Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Thank you. Please go ahead, sir.
Thank you and welcome to Tenaris 2020 second quarter 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 the call.
With me on the call today are Paolo Rocca, our Chairman and CEO; Alicia Mondolo, our Chief Financial Officer; Guillermo Vogel, Vice Chairman and member of our Board of Directors; German Cura, Vice Chairman and member of our Board of Directors; Gabriel Podskubka, President of our Eastern Hemisphere Operations; 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 quarterly results. Our sales for the second quarter were down 30% sequentially to $1.2 billion as a consequence of the rapid decline of the economic activity and the collapse in global oil demand as a result of the measures taken to contain the spread of the COVID-19 pandemic around the world.
Average selling prices in our Tubes operating segment increased 8% sequentially due to a particularly good mix of products sold during the quarter. Our EBITDA for the quarter, which includes $54 million of severance charges, was down 79% sequentially as it was affected by the low absorption of fixed and semi-fixed cost and inefficiencies related to the steep decline in capacity utilization at our production facilities. Our EBITDA margin decreased to around 5%. Excluding severance charges, our EBITDA for the quarter would have been $113 million with a margin of 9%.
During the quarter, our free cash flow remained strong at $402 million, with a further reduction in working capital of $446 million. Consequently, our net cash position at the end of the quarter improved to $670 million.
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.
The impact of the COVID-19 pandemic and the diverse measures taken to contain it continue to be felt around the world. While we may have seen the big impact on global economic activity and oil consumption during the second quarter, further recovery will be slow and this led to uncertainty. Many parts of the world have still to come out of the lock down, other are being hit by fresh outbreaks infection, and there is a constant risk of further waves of infection. While we are still far from finding a definitive solution, which would allow us to resume many activities that we took for granted prior to the pandemic onset.
All aspect of our operation has been affected as we implemented actions to secure the safety of our employees,