FORM 6 - K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a - 16 or 15d - 16 of

the Securities Exchange Act of 1934

 

 

As of February 21, 2019

 

TENARIS, S.A.

(Translation of Registrant's name into English)

 

TENARIS, S.A.

29, Avenue de la Porte-Neuve 3rd floor

L-2227 Luxembourg

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or 40-F.

 

Form 20-F Ö Form 40-F __

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12G3-2(b) under the Securities Exchange Act of 1934.

 

Yes __No Ö

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-__.

 

 

 

The attached material is being furnished to the Securities and Exchange Commission pursuant to Rule 13a-16 and Form 6-K under the Securities Exchange Act of 1934, as amended. This report contains Tenaris’s Press Release announcing 2018 Fourth Quarter and Annual Results.

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Date: February 21, 2019.

 

 

Tenaris, S.A.

 

 

By: /s/ Cecilia Bilesio

Cecilia Bilesio

Corporate Secretary

 

 

 

 

 

 

 

 

Giovanni Sardagna

Tenaris

1-888-300-5432

www.tenaris.com

 

 

Tenaris Announces 2018 Fourth Quarter and Annual Results

 

The financial and operational information contained in this press release is based on audited consolidated 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, Net cash / debt and Free Cash Flow. See exhibit I for more details on these alternative performance measures.

 

Luxembourg, February 20, 2019. - Tenaris S.A. (NYSE, Buenos Aires and Mexico: TS and MTA Italy: TEN) (“Tenaris”) today announced its results for the fourth quarter and year ended December 31, 2018 with comparison to its results for the fourth quarter and year ended December 31, 2017.

 

Summary of 2018 Fourth Quarter Results

 

(Comparison with third quarter of 2018 and fourth quarter of 2017)

		4Q 2018				3Q 2018								4Q 2017
Net sales ($ million)			2,105				1,899				11	%			1,589				32	%
Operating income ($ million)			179				258				(31	%)			168				6	%
Net income ($ million)			225				247				(9	%)			162				39	%
Shareholders’ net income ($ million)			226				247				(9	%)			160				41	%
Earnings per ADS ($)			0.38				0.42				(9	%)			0.27				41	%
Earnings per share ($)			0.19				0.21				(9	%)			0.14				41	%
EBITDA ($ million)			426				394				8	%			319				33	%
EBITDA margin (% of net sales)			20.2	%			20.7	%							20.1	%

 

In the fourth quarter of 2018, sales rose a further 11% quarter on quarter on higher sales throughout North America and the completion of deliveries for the second Zohr pipeline in the Eastern Mediterranean. EBITDA rose to the highest level of the year but operating income was affected as we accelerated the residual amortization ($109 million) of the value of the customer relationships we recorded in 2006 at the time of the acquisition of Maverick.

 

During the quarter, cash flow from operations amounted to $239 million, despite an increase in working capital of $79 milion following the increase in sales in the quarter. After capital expenditures of $76 million and dividend payments of $153 million, our net cash position rose to $485 million.

 

 

 

 

 

 

Summary of 2018 Annual Results

 

		12M 2018				12M 2017				Increase/(Decrease)
Net sales ($ million)			7,659				5,289				45	%
Operating income ($ million)			872				335				161	%
Net income ($ million)			874				536				63	%
Shareholders’ net income ($ million)			876				545				61	%
Earnings per ADS ($)			1.48				0.92				61	%
Earnings per share ($)			0.74				0.46				61	%
EBITDA ($ million)			1,536				943				63	%
EBITDA margin (% of net sales)			20.1	%			17.8	%

 

In 2018, our financial results recovered strongly at all levels. Our sales rose 45% year on year, increasing in all regions and also in our non-Tubes profit centers. Highlights of the year include the consolidation of our positioning and Rig Direct® service in USA and Canada, the fast track delivery of the pipes for three East Mediterranean offshore gas piplines, and our successful positioning for major gas developments in Argentina, Qatar, Indonesia, Mozambique and Australia.

 

EBITDA rose 63% year on year to $1.5 billion, with margins recovering to the level of 20%. Shareholders net income rose strongly to $876 million, benefitting from substantially higher operating income, and an excellent contribution from our investment in Ternium.

 

Despite a build up in working capital to support our growth in sales, we were able to generate free cash flow of $261 million. After payment of dividends, our net cash position declined during the year to $485 million at December 31, 2018, compared to $647 million at December 31, 2017.

 

Annual Dividend Proposal

 

The board of directors proposes, for the approval of the annual general shareholders’ meeting to be held on May 6, 2019, the payment of an annual dividend of $0.41 per share ($0.82 per ADS), or approximately $484 million, which includes the interim dividend of $0.13 per share ($0.26 per ADS), or approximately $153 million, paid in November 2018. If the annual dividend is approved by the shareholders, a dividend of $0.28 per share ($0.56 per ADS), or approximately $331 million will be paid on May 22, 2019, with an ex-dividend date on May 20, 2019 and record date on May 21, 2019.

 

 

 

 

 

 

Market Background and Outlook

 

Drilling activity in the US shales continued to grow in 2018, following the previous year’s strong recovery, while drilling activity in Canada was affected at the end of the year by the drop in oil prices. For 2019, following the recent reset of oil prices, US drilling activity is expected to be stable while in Canada drilling activity is expected to be well below the level of last year.

 

In Latin America, a recovery in drilling activity in Mexico is expected as the new government makes more funds available for Pemex and private operators begin implementing their energy reform commitments. In the rest of the regions drilling activity is expected to be relatively stable, with shale drilling activity in Argentina likely to switch from gas to oil.

 

In the eastern Hemisphere, drilling activity is expected to continue a gradual recovery with a focus on gas developments.

 

After our strong performance in 2018, we expect to consolidate our sales and margins through the year, with sales and margins in line with those of the second half of 2018. We should benefit from growing sales of premium connection products for offshore projects around the world, and the inclusion of consolidated revenues from our new operation in Saudi Arabia, but we will not repeat the exceptional level of offshore line pipe shipments to the Eastern Mediterranean and will have lower sales in Canada. With a stable level of sales, and limited capital investment requirements, we should be able to generate a strong free cash flow during the year.

 

 

 

 

 

 

Analysis of 2018 Fourth Quarter Results

 

Tubes Sales volume (thousand metric tons)		4Q 2018				3Q 2018								4Q 2017
Seamless			700				654				7	%			593				18	%
Welded			247				199				24	%			171				45	%
Total			947				853				11	%			764				24	%

 

Tubes		4Q 2018				3Q 2018								4Q 2017
(Net sales - $ million)
North America			967				887				9	%			707				37	%
South America			356				334				7	%			296				20	%
Europe			148				148				0	%			133				11	%
Middle East & Africa			436				350				25	%			290				51	%
Asia Pacific			77				77				0	%			51				50	%
Total net sales ($ million)			1,984				1,797				10	%			1,478				34	%
Operating income ($ million)			154				233				-34	%			150				2	%
Operating margin (% of sales)			7.7	%			13.0	%							10.1	%

 

Net sales of tubular products and services increased 10% sequentially and 34% year on year. Sequentially, the increase in sales in North America, reflects higher sales of OCTG products in the United States, Canada and Mexico. In South America, sales increased due to higher sales of OCTG products in the Andean region and higher sales of line pipe in Argentina. In Europe sales remained stable across the region and for the different products. In the Middle East and Africa sales increased significantly as we completed deliveries of Zohr’s offshore line pipe in the East Mediterranean. In Asia Pacific we had stable sales.

 

Operating income from tubular products and services, amounted to $154 million in the fourth quarter of 2018, compared to $233 million in the previous quarter and $150 million in the fourth quarter of 2017. Operating income during the quarter was negatively affected by a higher customer relationships amortization charge of $109 million, after the full amortization of the residual value of Maverick’s Tubes segment customer relationships. Excluding this one off effect operating income would have increased 13%, mainly thanks to an increase in shipments that improved the utilization of production capacity and therefore the absorption of fixed costs.

 

 

 

 

 

 

Others		4Q 2018				3Q 2018								4Q 2017
Net sales ($ million)			121				102				18	%			111				8	%
Operating income ($ million)			25				26				(3	%)			18				36	%
Operating income (% of sales)			20.7	%			25.2	%							16.5	%

 

Net sales of other products and services increased 18% sequentially and 8% year on year. The sequential increase in sales is mainly due to higher sales of sucker rods, small diameter pipe for plumbing applications from our facility in Piombino, Italy, and excess energy and raw materials.

 

Selling, general and administrative expenses, or SG&A, amounted to $487 million, including a higher amortization charge of $109 million, after the full amortization of the residual value of Maverick’s Tubes segment customer relationships. Excluding this one off effect, SG&A amounted to $378 million (18% of sales), compared to $336 million (18%) in the previous quarter and $344 million (22%) in the fourth quarter of 2017. The sequential increase is mostly due to higher selling expenses following an increase in revenues of 11%, while as a percentage of sales SG&A remained stable.

 

Financial results amounted to a loss of $6 million in the fourth quarter of 2018, compared to a gain of $13 million in the previous quarter and $4 million in the fourth quarter of 2017. The loss during the quarter corresponds mainly to the effect of an 8.6% appreciation of the Argentine peso on net fiscal, trade and financial liabilities denominated in Argentine peso.

 

Equity in earnings of non-consolidated companies generated a gain of $51 million in the fourth quarter of 2018, compared to a gain of $56 million in the previous quarter and $26 million in the same period of 2017. These results are mainly derived from our equity investment in Ternium (NYSE:TX).

 

Income tax amounted to a gain of $2 million in the fourth quarter of 2018. This result includes a gain of $48 million derived from a fiscal revaluation in Argentina and a gain of $26 million derived from the reversal of deferred tax liabilities after the amortization of the residual useful life of Maverick’s Tubes segment customer relationships. On the other hand, we recorded a charge of $19 million due to the effect on the tax base used to calculate deferred taxes of the devaluation of the Mexican and Colombian peso and the Canadian dollar, partially offset by the revaluation of the Argentine peso.

 

 

 

 

 

 

Cash Flow and Liquidity of 2018 Fourth Quarter

 

Net cash provided by operations during the fourth quarter of 2018 was $239 million, compared with $50 million in the previous quarter and a use of cash of $13 million in the fourth quarter of 2017. Working capital increased by $79 million during the fourth quarter of 2018, in line with the increase in trade receivables on higher sales, while a reduction in inventories of $120 million was offset by other items.

 

Capital expenditures amounted to $76 million for the fourth quarter of 2018, compared to $78 million in the previous quarter and $121 million in the fourth quarter of 2017.

 

During the quarter, our net cash position increased by $77 million to $485 million at the end of the year, following the payment of an interim dividend of $153 million in November 2018.

 

Analysis of 2018 Annual Results

 

Tubes Sales volume (thousand metric tons)		12M 2018				12M 2017				Increase/(Decrease)
Seamless			2,694				2,157				25	%
Welded			877				461				90	%
Total			3,571				2,618				36	%

 

Tubes		12M 2018				12M 2017				Increase/(Decrease)
(Net sales - $ million)
North America			3,488				2,362				48	%
South America			1,284				982				31	%
Europe			628				497				26	%
Middle East & Africa			1,541				921				67	%
Asia Pacific			292				204				43	%
Total net sales ($ million)			7,233				4,966				46	%
Operating income ($ million)			777				292				166	%
Operating income (% of sales)			10.7	%			5.9	%

 

Net sales of tubular products and services increased 46% to $7,233 million in 2018, compared to $4,966 million in 2017, reflecting a 36% increase in volumes and a 7% increase in average selling prices. Sales increased mainly due to a strong increase in demand in the United States and Canada and higher sales of line pipe for complex projects, including shipments for the second Zohr offshore welded pipeline in Egypt. In North America sales increased mainly due to higher demand of OCTG and line pipe and the consolidation of our market position throughout the region. In South America, sales increased mainly due to higher demand of OCTG and line pipe in Argentina, associated with increased investments in Vaca Muerta shale and higher demand for OCTG in the Andean region, including sales to the Liza development in Guyana, partially offset by lower sales of OCTG in Brazil, reflecting transition to new contracts with Petrobras. In Europe, sales increased reflecting higher demand for industrial products and for OCTG products in the North Sea and continental Europe. In the Middle East and Africa sales increased significantly, thanks to an exceptional level of sales for offshore line pipe for East Mediterranean gas development projects and higher sales of OCTG in the Middle East and Caspian areas. In Asia Pacific sales increased following a recovery in Indonesia and China from very low levels in 2017.

 

 

 

 

 

 

Operating income from tubular products and services, amounted to $777 million in 2018, compared to $292 million in 2017. Operating income during 2018 was negatively affected by a higher customer relationships amortization charge of $109 million, after the full amortization of the residual value of Maverick’s Tubes segment customer relationships. Excluding this one off effect operating income would amount to $886 million, 12% of sales. The significant improvement in Tubes operating income reflects a better operating environment, where a 46% increase in sales improved the utilization of production capacity and therefore the absorption of fixed costs.

 

Others		12M 2018				12M 2017				Increase/(Decrease)
Net sales ($ million)			426				323				32	%
Operating income ($ million)			95				43				122	%
Operating margin (% of sales)			22.2	%			13.2	%

 

Net sales of other products and services increased 32% to $426 million in 2018, compared to $323 million in 2017, mainly due to higher sales of energy related products e.g., sucker rods and coiled tubing.

 

Operating income from other products and services, increased from $43 million in 2017 to $95 million in 2018, while all the profit centers improved their results, the main contributors were the energy related businesses, mainly sucker rods and coiled tubing.

 

Selling, general and administrative expenses, or SG&A, increased by $240 million (19%) in 2018 from $1,270 million in 2017 to $1,510 million in 2018. SG&A during 2018 includes a higher amortization charge of $109 million, after the full amortization of the residual value of Maverick’s Tubes segment customer relationships. Excluding this one off effect, SG&A amounted to $1,401 million (18% of sales), compared to $1,270 million (24%) in 2017. The decline of SG&A as a percentage of net sales reflects the containment of fixed and semi-fixed expenses in a higher volumes environment.

 

Financial results amounted to a gain of $37 million in 2018, compared to a loss of $23 million in 2017. The 2018 gain corresponds mainly to an FX gain of $29 million; $24 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, $17 million related to the Euro depreciation on Euro denominated intercompany liabilities (offset in the currency translation reserve in equity), partially offset by a loss of $8 million due to the devaluation of the Canadian dollar. Additionally, we gained $7 millions on derivatives, mainly covering net receivables in Canadian dollar and $3 million net interest on our net cash position.

 

Equity in earnings of non-consolidated companies generated a gain of $194 million in 2018, compared to $116 million in 2017. These results were mainly derived from our equity investment in Ternium (NYSE:TX).

 

 

 

 

 

 

Income tax charge amounted to $229 million in 2018 (25% over income before tax), compared to a gain of $17 million in 2017. In 2017 we recorded a gain of $63 million due to the reduction in income tax rates in Argentina, the United States and Colombia over deferred tax liabilities. Additionally, during 2017 we recorded an income tax charge of $29 million corresponding to a settlement agreement between Dalmine, our Italian subsidiary, and the Italian tax authorities in connection with all withholding tax claims on 2007 and 2008 dividend payments. Under such settlement agreement, Dalmine paid to the Italian tax administration an aggregate amount of EUR42.9 million (approximately $51 million), net of EUR3.2 million (approximately $4 million) corresponding to the amount previously paid during the litigation proceeding.

 

Net income for continuing operations amounted to $874 million in 2018, compared with $536 million in 2017. The improvement in results reflects a better operating environment, where a 45% increase in sales improved the utilization of production capacity and therefore the absorption of fixed costs, better financial results and better results from our investment in Ternium.

 

Cash Flow and Liquidity of 2018

 

Cash flow provided by operating activities amounted to $611 million during 2018 (net of an increase in working capital of $738 million). Following dividend payments of $484 million during the year, and capital expenditures of $349 million, we maintained a positive net cash position of $485 million at December 31, 2018.

 

Conference call

 

Tenaris will hold a conference call to discuss the above reported results, on February 21, 2019, at 09:00 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 “5687985”. 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 February 21 through 11:59 pm on March 1, 2019. To access the replay by phone, please dial +1 855 859.2056 or +1 404 537.3406 and enter passcode “5687985” 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 Income Statement

 

(all amounts in thousands of U.S. dollars)		Three-month period ended December 31,								Twelve-month period ended December 31,
		2018				2017				2018				2017
Continuing operations
Net sales			2,104,977				1,588,916				7,658,588				5,288,504
Cost of sales			(1,442,005	)			(1,077,134	)			(5,279,300	)			(3,685,057	)
Gross profit			662,972				511,782				2,379,288				1,603,447
Selling, general and administrative expenses			(487,054	)			(343,730	)			(1,509,976	)			(1,270,016	)
Other operating income (expense), net			2,765				(23	)			2,501				1,157
Operating income			178,683				168,029				871,813				334,588
Finance Income			10,070				11,843				39,856				47,605
Finance Cost			(7,760	)			(8,613	)			(36,942	)			(27,072	)
Other financial results			(8,770	)			1,081				34,386				(43,550	)
Income before equity in earnings of non-consolidated companies and income tax			172,223				172,340				909,113				311,571
Equity in earnings of non-consolidated companies			51,118				25,987				193,994				116,140
Income before income tax			223,341				198,327				1,103,107				427,711
Income tax			1,724				(36,159	)			(229,207	)			17,136
Income for continuing operations			225,065				162,168				873,900				444,847
Discontinued operations
Result for discontinued operations			—				—				—				91,542
Income for the period			225,065				162,168				873,900				536,389
Attributable to:
Owners of the parent			225,825				160,232				876,063				544,737
Non-controlling interests			(760	)			1,936				(2,163	)			(8,348	)
			225,065				162,168				873,900				536,389

 

 

 

 

Consolidated Statement of Financial Position

 

(all amounts in thousands of U.S. dollars)		At December 31, 2018								At December 31, 2017
ASSETS
Non-current assets
Property, plant and equipment, net			6,063,908								6,229,143
Intangible assets, net			1,465,965								1,660,859
Investments in non-consolidated companies			805,568								640,294
Other equity investments			—								21,572
Other investments			118,155								128,335
Deferred tax assets			181,606								153,532
Receivables, net			151,905				8,787,107				183,329				9,017,064
Current assets
Inventories, net			2,524,341								2,368,304
Receivables and prepayments, net			155,885								135,699
Current tax assets			121,332								132,334
Trade receivables, net			1,737,366								1,214,060
Derivative financial instruments			9,173								8,230
Other investments			487,734								1,192,306
Cash and cash equivalents			428,361				5,464,192				330,221				5,381,154
Total assets							14,251,299								14,398,218
EQUITY
Capital and reserves attributable to owners of the parent							11,782,882								11,482,185
Non-controlling interests							92,610								98,785
Total equity							11,875,492								11,580,970
LIABILITIES
Non-current liabilities
Borrowings			29,187								34,645
Deferred tax liabilities			379,039								457,970
Other liabilities			213,129								217,296
Provisions			36,089				657,444				36,438				746,349
Current liabilities
Borrowings			509,820								931,214
Derivative financial instruments			11,978								39,799
Current tax liabilities			250,233								102,405
Other liabilities			165,693								157,705
Provisions			24,283								32,330
Customer advances			62,683								56,707
Trade payables			693,673				1,718,363				750,739				2,070,899
Total liabilities							2,375,807								2,817,248
Total equity and liabilities							14,251,299								14,398,218

 

 

 

 

 

Consolidated Statement of Cash Flows

 

		Three-month period ended December 31,								Twelve-month period ended December 31,
(all amounts in thousands of U.S. dollars)		2018				2017				2018				2017
Cash flows from operating activities
Income for the period			225,065				162,168				873,900				536,389
Adjustments for:
Depreciation and amortization			247,110				151,281				664,357				608,640
Income tax accruals less payments			(46,344	)			(33,367	)			58,494				(193,989	)
Equity in earnings of non-consolidated companies			(51,118	)			(25,987	)			(193,994	)			(116,140	)
Interest accruals less payments, net			187				3,978				6,151				11,550
Changes in provisions			2,419				4,723				(8,396	)			(17,245	)
Income from the sale of Conduit business			—				—				—				(89,694	)
Changes in working capital			(78,991	)			(321,460	)			(737,952	)			(853,184	)
Derivatives, currency translation adjustment and others			(59,046	)			45,765				(51,758	)			91,648
Net cash provided by (used in) operating activities			239,282				(12,899	)			610,802				(22,025	)
Cash flows from investing activities
Capital expenditures			(75,804	)			(121,074	)			(349,473	)			(558,236	)
Changes in advance to suppliers of property, plant and equipment			(86	)			868				4,851				7,077
Proceeds from disposal of Conduit business			—				—				—				327,631
Acquisition of subsidiaries			—				—				—				(10,418	)
Investment in companies under cost method			—				—				—				(3,681	)
Loan to non-consolidated companies			—				—				(14,740	)			(10,956	)
Repayment of loan by non-consolidated companies			—				—				9,370				3,900
Proceeds from disposal of property, plant and equipment and intangible assets			1,811				1,045				6,010				5,443
Dividends received from non-consolidated companies			—				—				25,722				22,971
Changes in investments in securities			368,945				53,341				717,368				565,387
Net cash provided by investing activities			294,866				(65,820	)			399,108				349,118
Cash flows from financing activities
Dividends paid			(153,470	)			(153,470	)			(484,020	)			(484,020	)
Dividends paid to non-controlling interest in subsidiaries			(1,800	)			(4,800	)			(3,498	)			(24,000	)
Changes in non-controlling interests			(28	)			(15	)			(24	)			(49	)
Proceeds from borrowings			295,999				334,818				1,019,302				1,196,781
Repayments of borrowings			(483,766	)			(201,614	)			(1,432,202	)			(1,090,129	)
Net cash (used in) financing activities			(343,065	)			(25,081	)			(900,442	)			(401,417	)
(Decrease) increase in cash and cash equivalents			191,083				(103,800	)			109,468				(74,324	)
Movement in cash and cash equivalents
At the beginning of the period			236,030				434,778				330,090				398,580
Effect of exchange rate changes			(396	)			(888	)			(12,841	)			5,834
(Decrease) increase in cash and cash equivalents			191,083				(103,800	)			109,468				(74,324	)
At December 31,			426,717				330,090				426,717				330,090

 

 

 

 

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 December 31,								Twelve-month period ended December 31,
		2018				2017				2018				2017
Operating income			178,683				168,029				871,813				334,588
Depreciation and amortization			247,110				151,281				664,357				608,640
EBITDA			425,793				319,310				1,536,170				943,228

 

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 (Currentand Non-Current)+/-Derivatives hedging borrowings and investments–Borrowings(Current and Non-Current)

 

(all amounts in thousands of U.S. dollars)		At December 31,
		2018				2017
Cash and cash equivalents			428,361				330,221
Other current investments			487,734				1,192,306
Non-current Investments			113,829				123,498
Derivatives hedging borrowings and investments			(6,063	)			(32,734	)
Borrowings – current and non-current			(539,007	)			(965,859	)
Net cash / (debt)			484,854				647,432

 

 

 

 

 

 

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 December 31,								Twelve-month period ended December 31,
		2018				2017				2018				2017
Net cash provided by (used in) operating activities			239,282				(12,899	)			610,802				(22,025	)
Capital expenditures			(75,804	)			(121,074	)			(349,473	)			(558,236	)
Free cash flow			163,478				(133,973	)			261,329				(580,261	)