Our results in the second quarter continue to reflect a solid operating performance. Net sales were up 41%, operating income up 13% and earnings per share up 5% year on year, as a positive operating environment in the rest of the world offset a sharp decline in drilling activity in Canada. We continue to make progress in integrating our North American operations and positioning our commercial offer with its full range of products. Free cash flow (net cash provided by operations less capital expenditures) totaled US$101.9 million, and net financial debt (total financial debt less cash and other current investments) increased to US$3,761.7 million at June 30, 2007 following the Hydril acquisition and payment of an annual dividend.
Summary of 2007 Second Quarter Results
(Comparison with first quarter of 2007 and second quarter of 2006)
-------- ------------ ------------- Q2 2007 Q1 2007 Q2 2006 -------- ------------ ------------- Net sales (US$ million) 2,604.2 2,425.3 7% 1,841.3 41% Operating income (US$ million) 780.4 757.6 3% 690.1 13% Net income (US$ million) 534.5 509.4 5% 495.8 8% Shareholders' net income (US$ million) 496.0 480.3 3% 471.8 5% Earnings per ADS (US$) 0.84 0.81 3% 0.80 5% Earnings per share (US$) 0.42 0.41 3% 0.40 5% EBITDA (US$ million) 910.7 858.1 6% 745.2 22% EBITDA margin (% of net sales) 35% 35% 40%
Appointment of Chief Financial Officer
Carlos Condorelli, who was recently elected to serve as a member of our Board of Directors, will retire from his position as our Chief Financial Officer as of September 30, 2007. He will continue to serve as an advisor to Paolo Rocca, our Chairman and CEO. Ricardo Soler, who served as Executive Vice-President of Confab, our Brazilian welded pipe subsidiary, until November 2006 and is currently serving as CEO of our recently acquired Hydril subsidiary, will be our new CFO. As our CFO since inception as a publicly listed company in 2002, Carlos Condorelli has played a key role in the growth of Tenaris overseeing the exchange offer through which Tenaris was consolidated into a single, global enterprise as well as the subsequent expansion of the Company into Eastern Europe and North America.
Consolidation of Hydril
These second quarter results include the consolidation of Hydril's results of operations and financial condition beginning in May. Hydril's premium connection business has been included in our Tubes segment and a new segment has been created for Hydril's pressure control business.
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