# Dear Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-equipment-services/NYSE_TS_2020/NYSE_TS_2020.mmd` · pages 5-11_

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Dear Shareholders,

2020 was a particular year which has left an indelible mark on the world. The pandemic is reshaping societal expectations and changing established paradigms. But it is still too early to understand the full extent of the transformation that it will bring. The energy transition is also accelerating. We, as a company, wish to maintain flexibility as we redefine our strategy and actions to meet the new realities.

At Tenaris, we opened the year by concluding the acquisition of IPSCO and with the expectation that U.S. drilling activity would soon start to recover after a year-long decline. Instead, shortly thereafter, everything changed as the pandemic spread rapidly around the world. From one day to the next, demand for our products and services began to shrink and our way of working changed. Global oil demand collapsed and oil prices with it, even becoming negative at one point. In the U.S., drilling activity plunged precipitously and we had to close most of our newly acquired facilities.

The challenges involved every aspect of our business and affected all our employees. We had to adopt new safety protocols to assure the safety of all persons entering our plants and offices, to halt production while minimizing labor cost inefficiencies as demand plummeted, to provide support for the medical systems in many of our communities, to find new ways of meeting customer commitments, to change the way we work and communicate, all while implementing an intense restructuring program to ensure the financial stability and long-term sustainability of our company.

We responded rapidly and have been disciplined in implementing our objectives. I would like to give a special thanks to all our employees for the way they adapted to the circumstances and their contribution to our efforts in what has been an extraordinarily difficult year.

Our focus was on establishing a safe working environment at our plants and offices and adapting to an environment where employees could work from home. With the pandemic affecting the lives of all our employees and their families, we worked hard to maintain good levels of engagement and promote wellbeing, as well as adapting our training programs to the changed circumstances.

Since the start of the pandemic, we have had a total of 2,400 persons affected by the virus among employees and contractors, an infection rate of a little over 10%. Currently, we have less than 100 active cases and we still have 550 people in the "at risk" category who are prevented from coming to work. At the same time, despite the constantly changing production schedules at our plants, we maintained the improvements we made over the past years in our physical safety indicators.

To reinforce the medical systems and infrastructure in our communities, particularly in Latin America, we quickly deployed a dedicated 56 million fund. Leveraging our global procurement structure, we deployed to source and deliver ventilators, Intensive Care Unit ("ICU") equipment units, and Personal Protection Equipment ("PPE") items to medical units and were instrumental in the deployment of four new field hospitals in our diverse communities.

Our employees were quick to show solidarity and initiative. At the onset of the pandemic, in Bergamo, which was then the epicenter of the contagion in Europe, they worked tirelessly to produce oxygen cylinders for the local hospitals, while in Campana they designed and produced 80,000 face shields for medical staff and first responders in the local community using one of our finishing lines.

In addition to maintaining service quality in a rapidly changing environment, we reinforced our Rig Direct \( ^{®} \)  customer programs by integrating digital initiatives aimed at simplifying operational and administrative processes and making them more reliable. In the USA, for example, two thirds of call-outs made by our Rig Direct \( ^{®} \)  customers are now made through our Rig Direct \( ^{®} \)  portal and several are starting to use our PipeTracer \( ^{®} \)  system to perform digital tallies. We will continue to deepen these digital integration initiatives to reinforce service differentiation and customer loyalty.

To secure the financial stability of the company, we implemented a detailed plan to reduce our fixed cost structure by 25%, by the end of 2020, and to generate cash through reducing inventories, managing receivables closely and reducing investments. We have met or exceeded our targets, generating $1.3 billion in free cash flow for the year, which includes a $1.1 billion reduction in working capital. If we exclude impairment and restructuring charges, our net income for the year would have been positive.

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In the fourth quarter, we ended the year with a higher EBITDA margin than we had at the end of 2019, despite a 35% drop in revenues year on year. With these results, a strong balance sheet and a brighter outlook ahead, we are proposing to reinstate the annual dividend at 50% of the level it was prior to the pandemic.

As drilling activity in North America picks up, we are strengthening our position in the U.S. and Canadian markets, building on our Rig Direct \( ^{\circledR} \)  service proposition, and taking advantage of the market opportunities offered by consolidation in the shale sector and the competitive environment. We are preparing to operate Bay City at full capacity and to restart the Koppel steel shop and Ambridge seamless pipe mill together with their associated finishing facilities later this year. Meanwhile, we are proceeding with a 72 million investment to increase our domestic production capabilities by integrating seamless, premium and welded pipe production at our mill in Sault Ste. Marie after closing the Prudential mill in Calgary.

In offshore markets, we have strengthened our position through the introduction of BlueDock \( ^{®} \)  connectors in the Gulf of Mexico and Guyana, while, in Brazil, we are also successfully introducing our seamless pipe products to complement our welded pipe and connector solutions in the Brazilian pre-salt market.

In Argentina, the implementation of a new Plan Gas aimed at reducing the level of gas imports is helping to reactivate activity in the Vaca Muerta shale play, while, in Colombia, we are strengthening our Rig Direct \( ^{®} \)  programs with Ecopetrol and other operators with digital integration initiatives.

In the Middle East, we are supplying the casing for the expansion of the North Field in Qatar, which will supply the gas for the recently sanctioned Qatar LNG expansion. These products will include our Dopeless \( ^{®} \)  technology, which is now firmly established in this market. Although demand in the Middle East during 2021 will be affected by ongoing destocking in key markets, we continue to consolidate our position in the U.A.E. with investments in a premium threading facility which will begin operating in 2022.

In China, we established a joint venture with state-owned Baogang Baotou Steel, a large integrated steel maker in Inner Mongolia which supplies casing and tubing to China's onshore oil and gas fields. The joint venture, in which we have a 60% shareholding, will install a premium threading facility, with an initial annual capacity of 45 thousand tons, to thread Tenaris Hydril premium connections on Baogang's pipe. The new facility is expected to start operations at the end of 2021.

Decarbonization has become a major issue for all the world and, in particular, for our industry. In February, our Board of Directors approved a medium-term target to reduce the carbon emissions intensity of our operations by 30% from a 2018 baseline and the introduction of an internal carbon price of $80 per ton to accelerate the investments and changes necessary to achieve this target and our long-term objective of eventually reaching carbon neutrality. We will continue to add transparency to this program, which will be followed on a quarterly basis in our Board. This will become an ever more important part of our agenda in the coming years.

Moreover, our customers, as they pursue their own decarbonization initiatives, are looking more closely at the carbon footprint of their supply chains, particularly for steel products. With our new medium-term reduction target, we expect to maintain or enhance the competitive differentiation we consider that we have today on this ground.

We are also positioning ourselves in new segments associated with the energy transition, developing our product and service portfolio for these applications. Although our sales for low carbon energy applications are marginal today, they will increase over time. Today, we are active participants in projects for building the new infrastructure for hydrogen mobility, as suppliers of large, high pressure vessels for hydrogen filling stations particularly in Europe and California, and we have recently been selected to supply the pipe for the main pipeline in the pioneering Northern Lights  \( CO_{2} \)  transportation and storage project in Norway.

As the world's economy recovers from the worst effects of the pandemic, Tenaris, with its solid financial position and extensive global agenda, is well positioned for the new challenges ahead. I would like to thank our employees again for their contributions over the past year, as well as our customers, suppliers and shareholders for their continued support.

March 29, 2021

/s/ Paolo Rocca

Paolo Rocca