Good day, and thank you for standing by. Welcome to the First Quarter 2021 Tenaris S.A. Earnings Conference Call. [Operator Instructions]. As a reminder: This conference call is being recorded. I would now like to turn the conference over to your host, speaker Giovanni Sardagna, Head of Investor Relations. Please go ahead, sir.

Thank you, Nora. And welcome to Tenaris' 2021 First 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 from -- may -- from those expressed or implied during this conference 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 operation; and Luca Zanotti, President of our U.S. 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 first quarter reached $1.2 billion, down 33% compared to those of the previous year but up 5% sequentially, mainly driven by a recovery in sales in North America, partially offset by lower sales in the Eastern Hemisphere. Average selling prices in our Tubes operating segment declined 4% compared to the corresponding quarter of 2020 and 5% sequentially mainly due to a poorer geographic sales mix. Our EBITDA for the quarter, which included $23 million of additional costs associated to the winter storm in Texas, was up 2% sequentially to $196 million, reflecting continued improvement in our industrial performance. Our EBITDA margin was stable at around 17%. Our quarterly net income of $106 million benefited from a strong contribution from our investment in Ternium. During the quarter, working capital increased by $83 million mainly due to higher inventories, which reflect the increased level of activity. With operating cash flow of $70 million and capital expenditures of $45 million, our free cash flow amounted to $25 million. Our positive financial position remained flat during the quarter at around $1.1 billion. Now I will ask Paolo to say a few words before we open the call to questions. Thank you.

Thank you, Giovanni. And good morning to all of you. Our first quarter results show the progress we are making with our repositioning in the U.S. market despite the impact of the Texas freeze which affected production volume as well as costs. Drilling activity had been increasing steadily through the first part of the year, though it remains significantly below pre-pandemic levels, and is supported by current oil and gas price levels and operator cash flow. Pipe inventory are returning to more normal level. Pipe price are on an upward trend, reflecting increased demand and raw material costs. With hot rolled coil prices making welded pipe production uncompetitive at current price levels, there is an opportunity for Tenaris to strengthen its position in the market and expand its range of customers. This opportunity is reinforced by the ongoing consolidation in the shale sector, where our customer has offered us the opportunity to extend our service to their newly acquired operations. As a result, we continue to advance our Rig Direct service model as the preferred way of working among many operators and consolidate our offer of TenarisHydril Wedge production casing [indiscernible] while we are expanding our service to reach smaller operators. In the U.S., we will fully deploy our unique industrial capability as we ramp up our Bay City mill to its full capacity, reopen our Conroe plant; and start-up of the Koppel steel shop operation and Ambridge seamless pipe mill, together with field associated finishing facilities. We will incorporate 1,000 employees into our U.S. operations this year. We are also structuring our position in the Middle East. After our success in the ADNOC tender in 2019, we are well positioned in the recent Kuwait deep drilling tender to take a majority share of the tender volume. This will be…

[Operator Instructions]. Your first question comes from the line of Ian MacPherson with Simmons.

Paolo, I was interested to hear about your bidding on the Kuwait tender, a 3-year contract starting next year. How would you characterize the volume and the mix of that tender relative to your current business? Because I look at your Middle East region revenues. You've been -- in 2019 and '20, they were $1.2 billion to $1.3 billion of revenues per year. And you're obviously down very significantly this year, but as we expect the OPEC region to reopen, it sounds like you're also taking share. And I wanted to see how your expectations for the revenue level in that region could progress next year as you take on that contract in addition to your existing business.

Thank you, Ian. You're right, the -- our Middle East sales down in this quarter. They will recover. And they will recover, I will say, much more in 2022, but I will ask Gabriel Podskubka to give a view of the business in Middle East; and specifically of the tendering, where it is very substantial trend.

Okay, thank you, Paolo. Ian, in fact, as you were pointing out, this quarter in the Middle East and Africa segment was particularly low. We had some end of pipelines and coating projects in Saudi and West Africa and also some seasonal lower OCTG shipments into Qatar and Iraq. From the activity point of view, the international rig count has bottomed at a level of around 38% versus pre-pandemic levels. And from this low point, we expect a gradual ramp-up of activity during 2021, as -- and as you were pointing out during your question, lead -- to be led by the OPEC countries. So our sales will partially recover in the upcoming 2 quarters as we resume shipments in Qatar, in Iraq while we phase out the previous Kuwait contract. Now going in particular to the award, I take the opportunity to congratulate our team in the Middle East, who has done an outstanding job in positioning Tenaris for this important award in Kuwait. The contract will be slightly above $600 million, representing about 65% share in KOC's tubular needs for their deep drilling segment. Deep drilling is a critical area for the country to meet its gas production targets. These are very demanding drilling conditions, deep wells. Environment is sour, HP/HT, so all factors contributing to a high-end product mix, okay? The contract will last probably 3 to 3.5 years, starting, as Paolo mentioned, early 2022. So this compounded with the ADNOC award and other LTAs, this will substantially increase our level of shipments into 2022 and onwards.

That's very helpful. Now I also wanted to ask. It's good to see that the business is expanding. You say you're hiring 1,000 people over the course of this year. It's been -- we've had such extreme cyclicality recently. You're just finishing the restructuring expenses from the past year-plus, so are there going to be any incremental start-up expenses that we should think about associated with this, the hiring and the reactivation of capacity, that would be separate from your 20% EBITDA objective for the third quarter?

Well, you are right. We will -- we are now ramping up our operation in the U.S. to respond to the increase in demand. This will lead to a significant increase in our sales in the second Q and in the third Q following the increase in demand. We are -- in this start-up, we are incurring in costs of this, but I mean we are -- when we are, let's say, mentioning or guiding the level of EBITDA margin, we are considering this included into it because in the end some of this expenditure is related to facility that are operating now, like in the case of Bay City. So in this facility, we are hiring people. We raised level of operation in Bay City or in McCarty or in Hickman, and we cannot consider this a substantial additional expenditure. Some additional expenditure will be required by the Koppel and Ambridge, the new mills that we really are starting from idle, but I think we are considering this in our forecast. The increase in volume and in revenue will be important. And this, to support and to respond to this increase in volume, it is important that we execute very effectively and efficiently this start-up for this operation.

Your next question comes from the line of Marc Bianchi with Cowen.

So it sounds like, second quarter, third quarter, the volume and sales will be pretty strong for North America. I was curious if you could perhaps quantify the expectation overall for maybe volume and ASP in second quarter, third quarter. I'm sure there is some uncertainty, but maybe if you could give us a little bit of a guide there would be helpful.

Well, as I will say, our results in the coming quarter will be characterized, will be marked by a significant increase in volume mainly in the U.S. and North America, while the activity in the Middle East will recover but slightly on this. This is implying that our mix in term of sales will be affected more by the increase in the sales in the U.S. Now in the U.S. also prices will be increasing and more than offset the increase that we have in the cost. So going on, the increase in sales will be significant. And we expect that we are able to raise gradually our EBITDA margin over time, but the mix between sales in the North America that has basically a lower price per tonne and a more -- relatively more simple mix compared to the rest of this will be, let's say, containing in the increase in our overall average price per tonne.

Okay, that's very helpful. So the target is to be around 20% for third quarter. I know there are some moving parts in terms of your inventory of perhaps scrap and other metal costs that are perhaps below where the leading-edge market prices are. I'm curious how you see things evolving beyond third quarter just between everything we've seen in the pricing and Pipe Logix and the tight market that you mentioned and then also on the raw materials side.

Well, as I say, we expect the increase in price and like as you see in the Pipe Logix to offset what we see as the increase in our raw material costs. I'm not referring to the hot rolled coils that we -- really is increasing very, very much, but I'm referring to the costs of scrap or iron ore. Now this increase in price and decrease in Pipe Logix is translating into an increase in our sales price only gradually because we have contract. Our Rig Direct business model is basically based on contract and agreement with clients that have some kind of delays, some reference or formula that are not synchronic. So the increase in price is getting into our sales gradually, but it's getting there. So this is what we expect. And when the increase in the volume, as I say, will be significant, you can imagine how things will evolve. The EBITDA will reflect this mix between U.S. and rest of the world or more complex mix in the other region.

Your next question comes from the line of Igor Levi with BTIG.

So your raw material -- the raw material costs have risen quite high at this point, but your cost of goods sold surprisingly continue -- per tonne. They continue to go down even this quarter, so could you talk about how you're able to drive that cost decrease on a per-tonne basis? And what raw material costs are currently embedded in your inventory? Are they basically marked to the -- to where the market is right now?

Well, thank you, Igor. Our cost, the raw material, is getting into our cost of goods sold only gradually because -- for IFRS. We will see the full impact of the increase of the costs that we have today only, let's say, in -- basically in the third and fourth quarter. I mean it's getting into our cost of goods sold only gradual. That's the reason why I'm saying the price increase will more than offset in absolute terms this increase in costs, clearly, but we will see the costs increasing only gradually. The effect, as I say, will be embedded in the cost of goods over the -- mainly in third Q and fourth Q...

Great. And...

Well, there is one concept, the absorption. In an environment in which we are raising strongly and fast our level of production, also the absorption is contributing to a containment of our cost of goods sold. Also, have you noticed that our depreciation went down from the fourth quarter into the first quarter? Because in the last 2 quarters of last year, we had anticipated depreciation for Canada and for mills in the United States in an amount of around $40 million. This is no longer affecting our depreciation. So you'll see in the containment of the costs of goods sold also the impact of absorption due to a much higher level of production.

Great. And then on the energy transition theme, it was great to hear that you're participating on carbon capture and hydrogen projects already. Would you be able to comment on the type of spec of pipe that is required for those applications? And how does the margin on those -- on that type of work compare to what you're earning on your oil and gas business?

Well, in the specific case of the Northern Lights, I mean, these are product -- complex product, but I mean the margin are not very different from the margin that we have on complex offshore pipeline in this case. The full range of product that goes into hydrogen development and carbon capture and sequestration is, let's say, a complex set of products to face the challenges of hydrogen and CO2, but in the case of northern light, let's say, the margin that we expect is similar to the margin of Nova complex pipelines offshore. The issue here is embrittlement in the case of H2, hydrogen; and corrosion in the case of CO2. Products that should resist embrittlement and corrosion are products on which we have a clear differentiation. For instance, in our cylinder for hydrogen, it's clearly we have a much higher margin, but when we talk about line pipeline, Northern Lights, you can compare this managing complex pipeline.

Your next question comes from the line of Connor Lynagh with Morgan Stanley.

You were alluding to this dynamic somehow in your prepared remarks, but just wanted to get some incremental color on this. So when we look at the price of seamless pipe versus welded pipe there, at least part of the data we track about is as close as they've ever been. Certainly I think you alluded to that leading to some market share opportunities for you, but is there a pricing tailwind from the lower-grade products pushing on the higher-grade products? How should we think about that?

Sorry. I didn't get that part. You are asking for the -- can you repeat the last part of the question as well...

Yes. Basically is -- the pricing momentum in welded, which seems to be more significant than that on seamless, is there a delayed follow-through we should expect from that? Or do -- or should we think about it as more of just driving incremental market share for your seamless production?

Yes, you are perfectly right. The -- if you look at Pipe Logix, welded pipe increased since the bottom point by 45%, in the case of welded; 32% in the case of seamless. The increase in welded is reflecting the increase in hot rolled coils. Now this is giving us an opportunity to advance and gaining market share in some lines that are shifting from welded to seamless because of the price pressure they are facing in the welded. So this is an opportunity for gaining market share and clients but is also a stimulus to, let's say, increasing prices in general. As I was saying, you see these getting into our sales over time, following the time of the formulas that are embedded in our contract with the different client, but you are right, is an opportunity for us. In -- we mentioned it in the opening remark. Because in my view it's something that is changing, especially in the North America, in the U.S. and in Canada, changing the competitive lens. But this is also true for some pipeline the rest of the region where there are alternative between seamless and welded. The increased costs of welded worldwide, of hot rolled coils and plates worldwide leave some room for our large diameter seamless mill, especially from Italy.

Got it. That's helpful context. I was wondering if we could maybe just return to this pricing-versus-cost dynamic. It sounds like basically the pricing that you already sort of expect to receive based on your contracts is getting you already to that 20% mark. I guess the question is, if we were to mark raw materials to market sort of where things are today, do you need to realize further price increases in the Pipe Logix or whatever marker you have out there in order to get to that 20%? Or is the 20% guidance based on what you already know you're going to receive on pricing? I hope that makes sense but moving off that.

No. The guidance we are giving of 20% related to an environment of increased volume and sales and a gradual increase in our sales reflecting the price increase that has been basically in the market today. There will be additional increase, in my view, in the Pipe Logix, but when we are guiding the 20%, we are basically guiding on the price increase that's happened until today; and some marginal increases we may expect and on a substantial stability in pricings part of our raw materials but that will reflect in our cost of sale gradually, as I was saying, during the third -- marginally in the second quarter and more substantially in the third and fourth Q. These are the premises on which basis we are guiding. Now in my view, if the rigs count continue to raise over time and the price of hot rolled coil remain the level -- or present level or even lower, there will be room for additional increase in the price and Pipe Logix. This is what we expect.

Your next question comes from the line of Alessandro Pozzi with Mediobanca.

No, it's more Mediobanca, but that's okay. The -- I was wondering. Your guidance for 20% is Q3 rather than Q2. I was wondering. What was the main reason for the shift? I know it's just a quarter, but I was wondering what is the main reason behind the shift in marginality in -- from Q2 to Q3. Also you mentioned much higher volumes in North America, but at the same time, I think rig count is slowing down a little bit in the rate of growth, so I was wondering. Should we look at -- I mean, is -- what is -- what type of lag in month is between rig count and the volumes in North America?

Thank you, Alessandro. I think I would ask Luca to give some color on how we perceive things going on in North America. And this is, let's say, the area in which we expect the larger expansion in our volume of sale for the coming quarter. Luca...

Yes. Thanks, Paolo. Alessandro, no, yes -- I mean our focused are based, as you know -- I mean the great majority of our contracts are linked with direct and so to long-term contracts. And what we see as growth is linked to the forecasts that are -- that our customer are giving us in the short term, so what you'll see in the next quarter and most likely in the following is volume that we're pretty sure we can materialize now. If the rig count would increase more, which it is what I believe -- we expect this to keep on increasing. We may have some upsides there. However, as Paolo already mentioned, you're going to see a significant increase of volume from Q1 to the last quarter of the last year, from Q2 to Q1 and also from Q3 to Q2, to -- as far as the prices are concerned, going back to what Paolo was saying, we believe that in the end, also considering that the inventory on the ground has broken the 6 months mark, according to our expectation, we should see Pipe Logix to continue go up even because there is still a very low spread between the seamless and the real value. And this will be an upside to our forecast.

And on the shift of guidance from Q2 to Q3...

Sorry. Can you say it again...

The reason while well -- I mean we perceive that during Q2 we will see, let's say, a gradual increase, I was saying, of our sales price, strong increase in our volume, but we gave a reference that we consider a more, let's say, indicating a medium-term trend. But we will see part of this in the second Q also.

Okay. And just a final one: Do you have any indication of what the EBITDA could be in Q2?

Well, we are moving among -- I mean, in an environment of increasing sales, the EBITDA will increase in absolute term, but in term of margin, even if we exclude the Texas freeze, EBITDA of the first quarter is in the range of 19%. It will in term of margin increase gradually. In absolute term, it will increase.

Okay. Is there going to be any other one-offs in Q2?

Well, for the moment, we have no indication of -- nothing similar to the Texas freeze that has been very substantial. I think, unless there is something related to the pandemia or some disruption that could come from the sourcing in countries that are more exposed, we do not see particular issue that could affect one-off this quarter.

Your next question comes from the line of Amy Wong with UBS.

I have a couple of questions, please, one focused on the short term and then one on the longer term. In the short term, I'm thinking about your comments about Eastern Hemisphere recovering in the second half, but you also typically have a third quarter seasonal decline in your volumes, so how do we think about the dynamic of the recovery and a cyclical declined? What should we be expecting in volumes and particularly as we move from 2Q to 3Q? That's the short-term question. On the longer term, I just wanted to go back to your announcement a couple of months ago about reducing your carbon emission intensity by 30% by 2030. Can you quantify the sort of investments or -- that you may need to make in terms of your plants and equipment and your -- to achieve that kind of CO2 emission reductions?

Yes. Well, in the first question: We project an increase in volume in the second Q and the third Q in both of them independently from the seasonal that is affecting mainly Europe, but the mix will reflect a strong increase in North America; increase also in Europe, in all of the -- let's say, the components that we are selling to non-energy segment, industrial and segment related to automotive that will also increase; and slightly less from Eastern Hemisphere. That's the reason why the increase in our overall price of sale will reflect the change in mix that is containing this increase. In term of carbon reduction. As you know, we committed a 30% reduction in our CO2 emission. We expect to invest in the range of $150 million in the next 4 years to achieve the target. Part of this investment will be realized this year. Particularly, in Italy we are investing during the course of this year, but I mean this $150 million will be distributed along this period of time. This is our program today. We are continually exploring opportunities for -- let's say, for adding additional program or projects that could reduce our carbon footprint, but this is one we have in hand concretely for the time being.

Okay. To follow up on that. So the $150 million is a -- is an investment to achieve that change. What about operating costs when we think -- when we kind of move out to that point? Will the cost per tonne be substantially different? Or how do we think about that?

No. I think this -- the program that we have are a program of investments that are justified by the economics of the existing condition today. What I mean is that, if there is a change, for instance, in the price of carbon in some of the region in which we operate, then we have -- we will have to consider additional program based on different economics. This program has a return in the condition -- in existing today condition.

Your next question comes from the line of Vlad Sergievskii with Bank of America.

A couple of questions, if I may try to clarify your volume and pricing outlook in the near term. So on shipments, I mean, in the last 2 quarters, you grew shipments by about 10% every quarter. When you're alluding to strong growth in the next 2 quarters, does it mean that growth will be higher than those 10%? And if you could perhaps give us a range of the growth, that would be very helpful. And then on the realized prices, I understand there is a trend of less-favorable mix but higher sales prices overall. Would it be fair to assume that -- the realized prices for the year actually bottoming in Q1? Or it's too early to say.

Well, I mean, increasing volume, I will say significant, significantly higher than 10% in the two quarters. And I think this is where we see the results of increase in the market in North America and increasing our market share. As far the prices, if I understand well your question, as I say, the increase in the Pipe Logix, the reference, will get into our sale price with some delay because of the nature of the Rig Direct agreement with the different client, but we will get there. And we expect price -- Pipe Logix also to continue to increase in the coming months. In our forecast, we are not considering this additional increase substantial, but we consider that it will happen.

That's great. And if I can squeeze a longer-term question: In the last year and during this year, OCTG market globally has had some clear consolidation trends. It's happened among distributors in the U.S. and among producers in the Eastern Hemisphere. Do you see the scope for any further meaningful consolidation in OCTG globally? And if yes, then is Tenaris still willing to become a consolidator, if I may ask this.

Well, this is a more, let's say, medium-, long-term view. In our forecast, we expect, let's say, in -- following the energy transition, we expect the demand and drilling for oil and gas to continue to grow in the coming year because we need to substitute part of the core that has been -- that is used largely in China, in other countries; and to shift the metrics in a way that leave more room for gas. So overall we still expect drilling to grow in the coming 5, 10 years; and then peak; and the demand for oil and gas to start reducing [indiscernible]. I mean this environment -- our market may be growing for a while, but we need to imagine that on the long term the consolidation will be important in our market. And Tenaris is clearly the stronger and leading player in this. We are financially very strong. We are, as we did in the past, considering option that could create value for our shareholder related to consolidation. And we will be prepared for this when we see that opportunities could be had.

Your next question comes from the line of Faisal Qureshi with Jefferies International.

Just I would like to know. In an environment of rising input costs and rising HRC prices, what impact will this have on your working capital investment in the coming quarters?

Thank you, Faisal. In this environment, we will not increase volume for our operation. We will gradually increase our inventories, but what is mostly affecting our working capital will be receivable. The volume, as I say, of our sale will increase and receivable will be higher. In inventories, let me tell you that, during the first quarter, we raised our level of inventory of raw material. And we do not expect a very substantial increase in inventory because we think that we should be able now to manage our Rig Direct model with more efficient use of inventory, of working capital and so to contain the increase in our working capital. In other words, we expect to increase working capital less than the increase in our sales. Still there will be absorption of cash flow to support increase. Well, now hot rolled coil is not one of our -- where -- I mean it's not a relevant component of our inventories. Our inventories are mainly the scrap, iron ore and the labor and energy that are embedded in increased production levels. Now in this sense we see that hot rolled coil that has high price and, in my view, will remain at very high prices during 2021 is not a key component of our working capital. We are more focused on seamless in this moment, and that's a reason for this.

Your next question comes from the line of Vebs Vaishnav with Coker & Palmer.

Okay. Just I know that people have tried to ask this question, so maybe if I can rephrase or make sure that I understand how you guys are thinking about 2Q and 3Q. So it seems like, when you talk about significant increases, you are talking about maybe around 10% revenue growth in 2Q. And you are talking about around 19% gross margins. And maybe then I think -- in response to questions to Amy's, I think it talked -- it seems like you still think 3Q revenues would still be higher from 2Q despite seasonality, with EBITDA margins around 20%. Am I phrasing that correctly?

Yes. Basically, as I mentioned before, the increase in our sales will be higher than the 10% in the next Q and will continue to grow. And the change in the mix, the increase in the price in our sales gradually and in the cost of sale, keep in mind that the absorption is an important component because in the end, when we increase production, our cost of goods sale -- goods sold is affected by the impact of a better absorption. This is containing our costs, and this has been in our margin.

Got it. And just on like -- well, I think I talked about gross margins. I meant EBITDA margin. And in terms of working capital for the full year, I couldn't understand what you are trying to say. Could you please repeat that? In a past question. [indiscernible] for the year.

Well, the working capital for the year, what I'm saying is during 2021 we -- working capital will increase because of the increase in sales and will absorb capital resources because increasing sales is important, but -- and probably the stronger component of this increase will be the increasing receivable because increasing sales imply an increasing receivable. Last year, in 2020, we were generating cash flow in a moment of reduction of sales. In 2021, in increase on sale, we will absorb capital in receivable and to some extent in basic of inventory, but we expect to be efficient and be able to support higher level of sales which less level of inventory comparing, for instance, with the past.

Next question comes from the line of Luigi De Bellis with Equita SIM.

[Indiscernible] on the Argentina and Mexico. How do you see the development of the countries in the coming quarters and 2022 onwards?

Thank you, Luigi. Well, we expect the level of activity in South America, let's say, to increase slow because Mexico will move on but very gradually. I mean there will be no sudden change. Even if the price point that is raising, it's supporting the decision to continue investments by Pemex and by the private operator companies based over there. We expect in Argentina the negotiation of the [indiscernible] that occurred the beginning of this year is stabilizing drilling for gas for the next 4 years. So in general, we expect the level of activity to be relatively stable with around 50, 55 rigs operating with some continuity. Now there could be disruption that could come from different reason, including the pandemic, in this operation, but this is what we see. Now when we look at the entire Latin America, we perceive 2021 as a more positive year compared to 2020. In Argentina, not only the level of rigs will remain there, but there will be some pipelines that will also contribute to an increase of our sales in the second part of the year and even in the second quarter. Now there is the project in the Caribbean, in Suriname, in the northern part of the continent, are very important. And they continue and go on, Exxon, Apache, Repsol. I mean the company are either exploring or developing the different field in Guyana and in Suriname. This is a important component of complex products that also will be higher in the second -- in 2021 compared to 2020. So the whole, considering Mexico and Latin America, we expect the market to improve.

Your next question comes from the line of Alejandro Demichelis with Nau Securities.

Actually two questions. The first one, Paolo, to go back to your volume guidance, yes. So with the, say, increasing in activity in North America, your mills going back to full capacity and so on, can we actually see at some point this year the whole volumes of Tenaris going back to, say, pre-COVID levels, when you were doing 800,000, 150,000 tonnes per quarter? That's the first question. And then the second question is on Argentina that you just touched. Have you seen any kind of impact from the social demonstrations in Vaca Muerta we've seen these months?

Yes, well, on the first -- well, I will say that activity in seamless will -- in the seamless side will go back pretty close to that. And in 2022, we will perceive the strong, let's say, demand from the contracts in the Middle East and from a get back -- a coming back of the offshore because we perceive that the offshore projects are -- let's say, are moving on. And we will see this in 2022. What we are probably still missing are large pipeline in Brazil, for instance. There is some moment in the past that were supporting our sales of welded pipe in Brazil. We do not see this yet, but probably in 2022 we will see also the level of activity in Brazil picking up more strongly. So we are going in that direction. And in 2022, Tenaris will be able to deploy all this capacity and the capacities that is coming from acquisition and from the investments realized over the last 4 years. I mean we are going in that direction, but we will see these gradually.

Okay, but in terms of seamless that -- you're seeing that happening in 2021 or close to that number in 2021, yes.

By the end of this year -- by third quarter or the end of this year, we will be working at a very high level of operation.

There are no further questions at this time. I would like to turn the call back over to speaker Giovanni Sardagna, Head of Investor Relations. Please go ahead, sir.

Thank you, Nora. And well, thank you all for joining us in our quarterly conference call, and well, we hope to meet you soon. Hopefully, we will be out of this and we will start to meet you again physically. Thank you. Bye.

Thank you very much, everybody. Thank you.

This concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.