TS — Tenaris S.A.

Tenaris S.A. Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Sales: $3 billion, a 2% increase year-on-year but a 3% decline sequentially.
• EBITDA: $753 million, up 3% sequentially; EBITDA margin at 25%. Adjusted EBITDA (excluding a one-off gain of $34 million from U.S. antidumping deposits) would be $719 million, or 24% of sales.
• Operating Cash Flow: $318 million; Capital Expenditure: $185 million; Free Cash Flow: $133 million.
• Net Cash Position: Declined to $3.5 billion after $351 million in share buybacks.
• Interim Dividend: Declared at $0.29 per share, a 7% increase from the previous year.

2. Strategic Updates and Business Highlights

• Market Resilience: Strong sales to rig direct customers in the U.S. and Canada, despite overall drill rig activity slowing.
• Production Capacity: U.S. mills operated at record levels; 90% of U.S. OCTG sales produced domestically.
• New Developments: Opened a service yard in British Columbia to extend Rig Direct services; ramping up production in Canada to support local operations.
• Energy Production: Initiated operations at a new 95-megawatt wind farm in Argentina, contributing to sustainability goals.
• Offshore Projects: Building a backlog for offshore projects, including significant contributions to the GranMorgu development in Suriname and TPAO Sakarya deepwater development in the Black Sea.

3. Forward Guidance and Outlook

• Q4 Expectations: Sales expected to remain flat or slightly lower; EBITDA anticipated to decrease due to higher tariffs impacting cost of sales.
• Long-term Outlook: Positive sentiment regarding Argentina's oil sector post-elections, with expectations for increased investment and rig activity in 2026.
• Middle East Stability: Anticipated stability in the Middle East market, with ongoing projects and potential for increased drilling activity.

4. Bad News, Challenges, or Points of Concern

• Sequential Sales Decline: Notable decrease in sales to the North Sea and offshore line pipe projects in the Middle East.
• Pricing Pressure: Average selling prices in the Tubes segment decreased by 1% year-on-year and sequentially, with expectations of continued pressure due to high inventory levels and tariffs.
• Tariff Impact: Anticipated additional costs from tariffs on steel imports could reduce EBITDA by approximately $40 million in Q4.
• Working Capital Issues: Increased receivables due to delayed payments from PEMEX, contributing to a negative movement in working capital.

5. Notable Q&A Insights

• Argentina Elections: The recent election results are expected to enhance financing conditions and stimulate investment in the energy sector, leading to increased rig activity.
• Market Share Gains: Tenaris is gaining market share in North America, attributed to the resilience of large operators amidst declining oil prices.
• Inventory Levels: High inventory levels are primarily seen in welded pipes, with expectations for both seamless and welded inventories to decrease moving forward.
• Future Tariff Negotiations: Ongoing discussions regarding tariffs may lead to potential reductions, impacting future cost structures positively.

This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, challenges, and insights from the Q&A session, providing a balanced view of Tenaris S.A.'s performance and outlook.