Thank you, Monique. Thank you everyone.

Thank you for joining us for our Vallourec's full-year 2020 results presentation. I am Jerome Friboulet, Head of Investor Relations.

With me today to comment these results, we have Edouard Guinotte, Chairman of the Management Board; Olivier Mallet, Member of the Management Board and Chief Financial Officer. This conference will be recorded and a replay will be available.

This is audio webcasted on our Investor Relations website and the presentation slides are available for download. Before I hand over to Edouard, I must warn you that today's conference call contains forward-looking statements and that future results may differ materially from statements or projections made on today's call.

For your convenience, the forward-looking statements and Risk Factors that could affect those statements are referenced at the beginning of our slide presentation and are included in the annual registration document filed with the French Financial Market Regulator, the AMF. This presentation will be followed by a Q&A session.

Now, I would like to leave the floor to Edouard Guinotte.

Thank you, Jerome. Good evening everyone.

Thanks for joining. Let me start first with a few highlights for today's call, starting with full-year 2020 results.

No surprise, the revenue at €3.2 billion, down 22% year-on-year was strongly affected by the Coronavirus pandemic impact on the oil demand, oil price, and subsequently the activity of our main customers. In this context, we achieved an EBITDA of €258 million, with a stable EBITDA margin in percentage of revenue at 8%, very comparable to the 8.3% achieved in 2019, and this is a strong testament to the resilience of thought of our activity.

The free cash flow was down from last year and negative minus €111 million which led our cash position to remain at slightly below €1.4 billion at the end of 2020. Of note, in terms of achievement in gross savings at €165 million, clearly overachieving our initial target of €130 million.

Again, this is the result of the strong engagement and commitment from all Vallourec teams across the Group to cut costs and adapt activity as quickly as possible to exceptional circumstances. If we zoom in on Q4, the EBITDA margin in Q4 was even slightly higher at 9.2% of revenue, also very comparable to the 9.4% achieved in Q4 2019.

The net income of Q4 included significant impairment charges €409 million. But the positive free cash flow stood at €112 million positive higher than the positive free cash flow recorded in Q4, thanks to a major achievement in curbing the working capital requirement.

No need for me to come back on the major steps we achieved in our financial restructuring with the announcement we made two weeks ago. Of note, is a very high percentage of creditors who already committed or expressed their commitment to support the plan and stood at 92% as of Friday last week.

Finally, a quick word on 2021 outlook, and we'll have the opportunity to come back later on this call. All in all, and despite the recent increase in the oil price, we expect our activity related to the Oil & Gas market to remain subdued in 2021, particularly in the Eastern Hemisphere, where we know that customers typically take longer time to react to variation in the oil price than in the U.S., where we do expect some rebound to materialize progressively through the year.

The activity of our iron ore mine will be stable in volume, but boosted by favorable pricing, although we do expect the iron ore prices to gradually decrease throughout the year. And we'll continue relying heavily on cost savings and cash management programs through the year.

This should -- this leads to target EBITDA between €250 million and €300 million and the free cash flow which is targeted to remain negative between minus €380 million and minus €300 million as the result predominantly of the increase in working capital requirements, along with the progressive increase of our activity through the year. So with this short introduction, I'll hand over to Olivier, who will as usual detail the financial results for last year.

Thank you, Edouard. Good afternoon, everyone.

A few comments on the Slide 6, our volumes sold measured in tons was totally impacted by the COVID driven crisis dropping by 30%. The decline in our revenue was just pronounced at minus 15% at same exchange rate.

The EBITDA did suffer staying at plus €258 million, thanks to resilient margin and the decline in free cash flow amounted to €70 million. On Slide 7, same comments although with slightly better figures.

The volumes were down 22%, the revenue down 5% at same exchange rate, EBITDA declined by 19% and the free cash flow at plus €112 million better than in Q4 2019. On Slide 8, more details on the revenue evolution, starting with Oil & Gas, which represented 62% of our total revenue and where revenue was down by 22% at same exchange rates.

In North America, the decrease was driven by lower deliveries due to the sharp decrease in rig count and by lower prices. In EA-MEA, the decrease reflected lower volumes although high alloy product deliveries positively impacted the price mix.

In South America, the strong increase reflected higher degrees of premium OCTG for presold offshore and higher price mix, partially offset by an unfavorable currency condition effect. Petrochemicals revenue was down 26%, mainly driven by lower line pipes sales in North America.

Industry and other activities were up 6% at same exchange rates. In Europe, industry revenue was down, in South America, it was up, and it came mainly from the iron ore mine with both higher volumes, which reached 27.9 million tons, very good performance plus 26% compared with 2019 end prices.

Our sales to the Brazilian industry markets were stable before currency conversion effect. And finally, Powergen revenue was up 11%, mainly due to timing of project deliveries.

As a reminder, the shutdown of our general plant in Reisholz that was dedicated to tubes for conventional power plants is effective since last summer. Switching now to Slide 9, with more details on 2020 revenue bridge and EBITDA.

First on the revenue side, the negative volume impact came mostly from Oil & Gas in North America and EA-MEA. The positive price mix came from Oil & Gas in EA-MEA and South America and the currency effect from the devaluation of the Brazilian Real.

Moving to EBITDA, €258 million down 26% year-on-year, with margin almost stable at 8% reflecting first an industrial margin impacted primarily by the lower activity in Oil & Gas in North America and to a much smaller extent in industry Europe. This was partially offset firstly by savings, then by a higher contribution in Brazil from both the mine and Oil & Gas.

While the effect of lower Oil & Gas volumes in EA-MEA was slightly more than offset by the Federal impact of high alloy tubes deliveries. And SG&A were cut by 14% reflecting strong savings.

On the next slide, some comments on the most relevant lines of the P&L below EBITDA. First, the operating result was negative at minus €1 billion.

It includes impairment charges recorded in Q2 and in Q4 for a total of €850 million related mainly to the goodwill of the North American operations and to fixed assets in the Europe cash generating unit. They were driven by an increase in discount rate and a downward revision of long-term market perspective.

The restructuring charges reached €143 million, mostly in Europe, North America, and Brazil. To be noted as well, the financial result was negative at minus €227 million, a €17 million improvement compared to 2019, reflecting higher interest expenses, more than offset by other financial income, of which notably is a favorable outcome of two litigations in Brazil.

Let's move now to Q4 with first on Slide 11 some details on Q4 revenue and EBITDA. The revenue range shows a strong negative volume effect less though than on the full-year basis and the negative conversion effect offset to some extent by price mix.

Q4 EBITDA stood at €76 million, down €18 million year-on-year, with a margin almost stable at 9.2% of revenue. The decline in the industrial margin was due to the lower activity in Oil & Gas in North America, partially offset by savings and the higher mine contribution.

And SG&A were cut by 14%. On the Slide 12, some comments below EBITDA on Q4 P&L.

As already mentioned, the operating results includes an internal charge of €409 million mainly related to fixed assets in Europe and restructuring provisions of €90 million mainly in France and Germany. The financial results reflect stable net interest expenses, together with favorable decision on the litigation in Brazil for €15 million.

And this resulted in a Group net loss of minus €570 million. Moving to Slide 13, on our savings in 2020.

We have over achieved our €130 million savings target with €165 million gross savings realized, which do represent an impressive 10% cut of our cost base. As a result, our initial 2016 to 2020 gross savings target of €400 million was largely overachieved to reach €751 million.

As a reminder, in 2020, we launched extensive cost cutting measures across the Group. In North America, the workforce was reduced by more than one-third, more than 900 positions across all plants and support functions.

In Europe, we have launched significant cost saving measures with in-plant reduction of around 350 positions, including the closure of the Déville heat treatment facility. And in Germany, we announced reduction of around 200 positions over 2021/2022 and intensive use of short time work.

In Brazil, we have implemented a comprehensive action plan which were entered already in 2020, in a reduction of around 500 positions in support functions. Going to Slide 14, let me comment, start commenting on cash items and more specifically on working capital management.

As you can see on this slide, net working capital requirement was reduced by €240 million year-on-year. In terms of days of sales, it decreased to an unprecedented low level of 78 days of sales reflecting major successes in working capital management achieved thanks to the dedicated taskforce we have put in place.

On Slide 15, on free cash flow, the full-year cash flow from operating activities was negative minus at €146 million reflecting compared to 2019, the lower EBITDA as well as to a lesser extent, higher taxes and financial interest cash-out. The working capital was significantly reduced by €173 million more than in 2019 and we continued our CapEx tight monitoring with €138 million compared to €159 million in 2019.

Other reserves of full-year free cash flow generation was negative by €111 million compared to €41 million in full-year 2019. And it was positive in Q4, with €120 million on free cash flow generation, including the strong condition in working capital.

I will conclude this part on 2020 figures on Slide 16, with the net debt. The Group net financial debt at the end of the year was €2,214 million, an increase of €183 million at fiscal 2019.

This increase was mainly driven by the negative free cash flow and by €72 million of other items, mainly the repayment of leasing debt on the IFRS 16 for €31 million, negative currency effects, and the cash collateral related to bid and performance bonds. As of December 31, 2020, Vallourec maintained very strong cash position at almost €1.4 billion.

I don't think I need really to go through the Slide 18 in detail, since it is a reminder of the key principles of the agreement with our main creditors that we have already detailed on February 3rd. The new element in this regard is that this agreement in principle is now supported by creditors having reached or signed it's lock-up agreement representing 97% of Vallourec S.A.'

s credit facilities and 86% of its bonds exceeding therefore the two-third majority that will be required at their committee meetings, which will take place in the month of March. And I will now give back the floor to Edouard.

Thanks, Olivier. So let's have a look at what we can expect for 2021.

First of all, when we look at the macro environment for the Oil & Gas activity, we expect globally this activity to remain subdued. You have to keep in mind that latest forecasts for oil demand stand around 95 million barrels per day in 2021, which is not significantly different from what was achieved in the second half of 2020.

The current surge in oil price is more the result of supply cuts than the recovery of the oil demand because there is essentially still quite a bit of uncertainty in the evolution of the pandemic and its impact on the World economy and ultimately on the demand for oil. In this context, we do anticipate the evolution of activity to be quite different from one region to the next.

Starting with North America, there as it's usually the case the rig count has started to react favorably to the evolution of the oil price. And there we expect the OCTG market to start a gradual recovery through the year, albeit at a moderate pace.

We do expect a positive price trend on the back of this recovery in the activity also spurred by the strong increase in raw material costs which we're witnessing right now and which we expect that they will impact our margins at the beginning of the year at least. Moving on to Europe, Africa and Middle East Asia, overall, the activity will still be significantly impacted and since price will remain under pressure, the specificity of this Eastern Hemisphere market is that there the customers are of different nature than the U.S.

and typically take more time to adjust to a positive oil price environment. So we don't expect material evolution in the deliveries of our products in 2021.

And on top of that, you have to remember that in 2020, we benefited from the highest amount of deliveries of higher oil products as a result of orders, which were booked back in 2019. This will not happen again in 2021.

And this gap will have an impact on the profit we make in this region. All this being said, we do anticipate an increase in the tendering activity of our customers, which if we prove to be as commercially successful as we want to be, will favorably pave the way for our 2022 activity.

As far as the industry segments are concerned in Europe, the demand there is still impacted by the COVID-19 crisis and the ability to show weakness, early signs of recovery but very moderately. Moving on to South America, there the picture is quite different, in the Oil & Gas segments on the back of the drilling plan of both Petrobras and IOCs in Brazil, we do expect a continuous increase in our deliveries compared with 2020.

The industry segments have already in 2020 resisted very well to the pandemic and we expect them to continue to do so in 2021. And finally, the activity of our iron ore mine will be stable in volume that will benefit from the high prices we enjoy today and as we speak.

Although we think that these prices will not be sustained for the full-year and they will decrease all along 2021. Cost savings and cash management remains an imperious priority of ours.

So we'll continue pushing our savings initiatives to enable the Group to continue improving its competitiveness and a strict cash control measures remain in place. And the CapEx envelope has been set at €160 million a bit more than €20 million more than 2020 where we froze as much as possible in reaction to the crisis.

So as a result of all of these, we expect our EBITDA to land somewhere between €250 million and €300 million. And as a result of the increase -- the expected increase in working capital requirement in preparation for a higher activity towards the end of the year, and in 2022, the free cash flow is expected to be unfortunately negative between minus €380 million and minus €300 million.

So this is what we wanted to share with you today in a nutshell, and we'll open the floor for the usual Q&A session.

Thank you and good evening, I've got two questions. And I'll just kind of take them one at a time.

First one is regarding your guidance. If we compare that to the plan that you shared with the creditors back in October, you see better EBITDA but quite a bit worse free cash flow, is that -- is that working capital, is that higher restructuring, or it's particularly in the free cash flow side, if you can help bridge that for us, please?

So at this point, a few comments. The first one is that when you look at the EBITDA, the major or the almost only difference vis-à-vis what we had in mine is October is coming from iron ore prices, which are higher that anyone who hadn't mined at that time.

One point to keep in mind and it goes to your question about the free cash flow is that we pay taxes on the profit of iron ore mine with a rate which is I think 34%. So you have to make a discount when you move to the free cash flow from this increase in the EBITDA.

The other point is that, yes, we take into account an increase in our revenue at the end of 2021 with higher sales expectations in preparation for an higher 2022. So this has an impact on the working capital.

And the last comment is that there will be cost associated to U.S. recurring transaction itself, which are not yet precisely evaluated.

But that we have now to take into account as well.

Sorry just to confirm the last point, the transaction costs were not assumed in the October presentation, did I understand that?

No, because it's -- it was not and what we've shown during our February 3 communication clearly states that the figures do not include this transaction cost.

Okay, okay, that's got to be largest, okay that's very helpful. My second one is around the iron ore mine; can you please share with us your expectations for the iron ore price, the benchmark price, not your realized price for 2021?

So we -- we're not the biggest specialists in the iron ore pricing and we are humble people. So we follow the consensus.

And this is what we take into account and the consensus as you know expect some gradual decline from the transaction point [ph] over 2021. So this is what we take into account.

But does that mean you're assuming something close to $150 per ton, if you're just talking about a gradual decline or what is -- how steep you define gradual?

It's declining possibly below $150 per ton definitely.

Okay. Then just as a last follow-up question and you probably get sick of me asking this every quarter, would you consider changing the reporting, so that we can have better visibility into iron ore mine and better estimate and valuate the future cash flows from your core business in the iron ore mine?

Not at that time.

Would you consider it in the future?

No, no, so far, we stick to our usual publication procedures, and I have to say that most analysts are now fairly well in mind, what are the drivers of the profitability of our mine. So we don't believe we need to add a lot more.

But that keep in mind as well, when you look at the profitability of the mine that we have several customers. Each of them are different sales price, different contracts, the mix of the products that change as well.

So either it has to be extremely dealt or -- we -- or it doesn't mean that much, so we have to be careful with that.

Gentlemen, good afternoon. Thanks for taking the time.

If I can clarify something on your outlook, which is already very detailed, but if I can ask on the North America specifically, you mentioned in your raw materials cost inflation there. And then just wondering how this trend between raw material inflation and OCTG pricing inflation will play out.

Obviously, we saw a big pipe logics move by over 10% in January, how quickly do you think your P&L will reflect the raw material costs? And second, the increase in pipe prices?

Yes, thanks. So clearly the increase in raw material costs, which has started late last year will start to impact our accounts in Q1.

And then as the year progresses, as you may have seen, we announced price increases during the course of this quarter, and we expect these after the necessary negotiation with our customers to start impact our accounts in Q2.

Great. Thanks very much for this.

And also, if I can ask a similar question I would say on this EA-MEA business. Apart from just less, less profitable backlog in there, presumably there is also some cost inflation in EA-MEA as well.

How will it impact profitability of this business because presumably prices there are moving slower?

Yes, correct. So first of all, the increase in raw material costs is a world phenomenon.

It's iron ore, it's scrap. It's in the U.S., it's in Europe, it's in China, it's in Brazil, it's everywhere.

So every competitor is on an equal footing in with regards to absorbing and passing on raw material cost increases. You're right in the sense that typically, the time lag to pass on the increases is a bit longer in the case of EA-MEA than in the case of the U.S.

This being said, as you know, the tendering activity has been quite, quite low in this part of the world late last year. So we have ahead of us when we expect an increased tendering activity, and it will be the time to perform on as much as possible as much as we can of these cost increases.

That's great. And lastly from me, in terms of increasing tendering activity, are you already seeing early signs of that or just an anticipation of that at this point.

And also within this upcoming increase which regions do you think will lead this increase in activity? Are those Middle Eastern National Oil companies or U.S.

in fact some pickup in international tendering from international oil companies as well?

So on your -- on the latter part of your question, we do expect what we call the winning regions to lead the charge. So clearly, Middle East in general, North and East Africa with the big gas development project should be at the front -- the front row and the front runner for this increasing tendering activity, predominantly national oil companies, but also international oil companies in some areas.

I'm sorry, I'm afraid I forgot the first part of your question.

[Indiscernible].

So yes -- so -- some tenders are in the air or about to be bid for. And we anticipate an acceleration of this tendering activity later in the year.

That's great color. Thanks a lot, gentlemen.

Yes, so that's why we anticipate little impact on our 2021 delivery, but most likely on 2022 and onwards.

Yes, good afternoon gentlemen. As you look in the mine [indiscernible] because another line read the prediction that you had to share on April again you said 7.9 million tons if you can contend that.

And so I was wondering what the implication for like, to ramp up of your production unit, because with the time that you presented us few quarters ago, you were targeting an increase in the production to 8.5. So I was wondering if it's the case or is this productivity that you have right now in mind increasing your targets for like in 2022 in terms of production.

And the second question is related to the value of the minorities with the deal that you've launched a few days ago and the fact that you've again probably achieved in Brazil EBITDA, should we expect the change in the value of the minorities after the deal [indiscernible]?

So on your first question, Kevin there is no change. Always sticking to be expected in the future volume to be produced by the mine, because a large part of the increase in the current production is due to what we call mobile screen units, which are profitable units that are used to increase the production.

But for technical reasons, when the new plant the ITN2 [ph] will be running, you cannot have both at the same time. So you should stick to the announced 8.7 I think million tons to be produced.

On your second question, which is an accounting one, there is no change to be expected in the valuation of the minorities.

Okay, excellent. So sorry for that.

Can you maybe explain us the impact of the technical increase in prediction on your EBITDA for this year from the mine, does it mean that you increase the prediction at lower [indiscernible] optionality, is there any technical impact also on that side?

Sorry, can you rephrase it and your connection is not really good, so I just didn't understand the question.

Sorry, sorry for that. And [indiscernible] if I well understood you said that the prediction from the mine was leading to some technical things like that, is it the same profitability than in the traditional activity or you have kind of different mix in that?

No, no, it's basically the same kind of profitability on a budget.

Yes. Just a quick question [indiscernible] my question regarding the expectation for 2021 in terms of EBITDA, higher than expected compared to the previous estimates in October.

The question concerned for 2022 due to higher levels of EBITDA expected in 2021 so between like €250 million to €300 million. Do you expect a higher level expect in 2022 compared to what you published a few days ago.

This is more than [indiscernible] for 2022, should you expect higher level than that?

No, at this stage, we stick by the scenario we did and presented a couple of weeks ago which was based on our business plan, which we put together in October last year. And at the stage, we updated 2021, but nothing specific to report as for 2022.

This business trend is very much in line with what we expect for 2022 but normal.

Hi, good evening. I got a few questions.

I'll take them one by one if that's okay. The first question is embedded in your EBITDA guidance, what's the level of cost savings you expect to realize and during the year please?

So we don't give a very specific number for this year as we did last year, last year it was really very, very critical for us to adapt and adjust very, very quickly. We continue working on our savings plan.

I can only relate to what we said two weeks ago, our target is €400 million -- above €400 million of activity gross savings over 2021 to 2025.

Okay. My second question goes back a bit to the tendering activity question that was asked earlier.

You say this is a resuming tendering activity? Can you kind of talk about how much of this is like tenders that were from before the downturn and now kind of coming back?

Or really -- are we seeing a larger kind of pool of expenditures for kind of client spend actually increasing relative to when the pandemic hit just [indiscernible] my question is trying to understand if it's just kind of really just recovery of activity that was expected a bit of a delay, or receiving like an underlying improvement in the market?

I think it's a bit of a terminology debate, you have to keep in mind that the amount of E&P CapEx in 2019, in the Middle East for instance, was a record high-level, and it significantly decreased in 2020, you have a look at the rig count in EA-MEA, it decreased by 25% to 30% last year. So the tendering activity, we expect to see materializing in 2021, is a sort of a catch-up after one or two years of under spending and under investment in E&P.

Right. And maybe just a quick follow-up there, just to understand, is there any kind of appetite from your clients to start thinking about new projects that maybe weren't there before the pandemic but kind of, a rethink like are they reprioritizing new projects into the tendering pipeline?

No. I wouldn't say there's a lot of new projects, I think what we're seeing and what we expect going forward is more the confirmation of certain projects, which were put on hold or re-evaluated by some of our customers.

One example would be a Total in Uganda, which is a project they had in mind to execute already a year-ago or two, they put it on hold, and they communicated recently, and we're expecting there -- the results of that tender in the next two weeks. So it's more this type of behavior.

It's putting back on fact on projects, which were put on hold.

Yes, thank you. And just one last one for me.

At the Group level, do you think your shipments can be higher on a year-on-year basis either in Q3 or Q4?

If you compare to quarter-on-quarter, again it’s going to be different from one region to the next. I would expect absolutely our shipments in North America, for the North -- yes North America for the U.S.

market to increase year-on-year. As for the rest of the market, it's stable to slightly down.

Okay, very helpful. Thank you very much.

Have a good evening.

So if I can complement on that. In the U.S., we may expect some gradual recovery volume wise, in particular in EA-MEA.

The negatives will be coming to some extent from price mix with a much less, high alloy deliveries in 2020, as well more globally, the fact that we had that many new projects being launched in 2020. We need lower volumes and lower prices in year-in-year in 2021 than to 2020.

If you want to conclude in Oil & Gas, in 2021 continuing the good trend and in 2021 more on the project done side-by-side than on pure OCTG [indiscernible].

Okay, thanks everyone for your participation and questions. Talk to you soon.

Bye-bye.