Tenaris S.A. Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Sales:: $3 billion, a decrease of 4% year-on-year and sequentially.

EBITDA:: $649 million, down 12% sequentially.

Net Income:: $492 million, a decline of 13%.

Operating Cash Flow:: $518 million.

Capital Expenditure:: $121 million.

Free Cash Flow:: $396 million.

Dividend Payment:: $606 million; interim dividend of $0.59 per share or $1.18 per ADS approved for payment on November 25.

Net Cash Position:: Decreased to $3.6 billion.

2Strategic Updates and Business Highlights

The decline in sales was primarily due to postponed shipments to the Middle East caused by the closure of the Strait of Hormuz.

Despite challenges, Tenaris maintained operations in Saudi Arabia and the UAE, continuing supply to Aramco and ADNOC.

Increased drilling activity noted in the U.S., Canada, and Argentina, with investments in production capacity in Canada ($230 million) and operational enhancements in U.S. facilities.

New technology deployment for longer laterals and the inauguration of a service center in Suriname.

Backlog of offshore projects has increased, with expectations for sales growth in Q4 2026 and into 2027.

3Forward Guidance and Outlook

Guidance for H2 2026 indicates revenues and EBITDA in line with H1, with a more affected Q3 and anticipated improvement in Q4.

The reopening of the Strait of Hormuz is seen as a potential upside, with $130 million in backlog material awaiting shipment.

Expectations for an uptick in drilling activity and pricing in North America, particularly as oil prices rise due to geopolitical tensions.

4Bad News, Challenges, or Points of Concern

The ongoing conflict in the Middle East and the closure of the Strait of Hormuz have significantly impacted shipments and revenue.

Increased raw material and logistics costs are affecting margins.

The second quarter is expected to be one of the weakest in 2026, with Q3 likely to show similar performance before recovery in Q4.

Concerns regarding the sustainability of the new dividend policy amidst market volatility and uncertainty.

5Notable Q&A Insights

The decision to double the interim dividend reflects a strong balance sheet and sustained cash generation, with a commitment to maintaining shareholder returns.

Guidance for the second half of 2026 has been adjusted to account for ongoing disruptions in the Middle East.

North American pricing is lagging behind Pipe Logix increases, but a 5% rise is expected by year-end, with a one-quarter delay in Tenaris's pricing adjustments.

The fracking segment is expected to see increased invoicing with the addition of a third unit in Q4.

Seasonal effects in Q3 are anticipated due to operational shutdowns in Europe and a shift in product mix with lower-margin projects impacting overall profitability.