Tenaris Stock price
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = €26.46b | Revenue (TTM) = €10.58b
Market Cap = €26.46b | Estimated Revenue = €10.89b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = €24.40b | Revenue (TTM) = €10.58b
Enterprise Value = €24.40b | Forward Revenue = €10.89b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Tenaris Stock Analysis
Analyst Opinions
20 Analysts have issued a Tenaris forecast:
Analyst Opinions
20 Analysts have issued a Tenaris forecast:
Tenaris Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
|
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MAY
7
Q1 2026 Earnings Call
5 months ago
|
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FEB
19
Q4 2025 Earnings Call
7 months ago
|
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OCT
30
Q3 2025 Earnings Call
11 months ago
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Tenaris — Q2 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the Second Quarter Tenaris S.A. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Please go ahead.
Thank you, Carmen, and welcome to Tenaris 2026 Second Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call.
With me on the call today are Gabriel Podskubka, our Chief Executive Officer; Carlos Gomez Alzaga, our Chief Financial Officer; and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Gabriel for his opening remarks, I would like to briefly comment our quarterly results. Our second quarter sales reached $3 billion, down 4% year-on-year and sequentially, mainly reflecting the postponement of shipments to customers in the Middle East due to the effective closure of the Strait of Hormuz for most of the quarter.
Average selling prices in our Tube operating segment were basically flat compared to the corresponding quarter of last year and sequentially. Our quarterly EBITDA decreased 12% sequentially to $649 million, while our net income decreased 13% to $492 million, mainly due to lower absorption of fixed costs in addition to higher raw material and logistic costs.
With operating cash flow of $518 million and capital expenditure of $121 million, our free cash flow for the quarter was $396 million. Following a dividend payment of $606 million in the quarter, our net cash position at the end of the quarter decreased to $3.6 billion.
The Board of Directors approved the payment of an interim dividend of $0.59 per share or $1.18 per ADS approximately $600 million that will be paid the 25th of November. Now I will ask Gabriel to say a few words before we open the call to questions.
Thank you, Giovanni, and I would like to extend a warm welcome to all of you participating in our call today. Our second quarter results clearly reflect the impact of the Middle East conflict and disruption in the Strait of Hormuz. As well as the consequent impact of logistics and energy cost increases.
Even so, they also demonstrate the resilience of our performance based on the strength of our global positioning and the efficiency of our industrial operations. In the Middle East, shipments to Iraq, Kuwait and Qatar have been postponed as our customers were forced to reduce their operations and ships are unable to enter the Gulf. This situation will continue until the Hormuz Strait reopens. In Saudi Arabia and the Emirates, however, we were able to continue supply of OCTG to Aramco and ADNOC who have maintained their drilling operations fairly intact.
In other regions of the world, customers are advancing investments to meet the need for energy security and diversification of supply. Drilling activity in unconventional plays is increasing in the United States, in Canada and also in Argentina.
In the United States, we are adding work shifts at our industrial facilities. Our Bay City mill is producing at record levels, and we continue to invest to improve the production capabilities of our Koppel steel shop and our Ambridge seamless pipe mill.
We are also extensively deploying a new high-torque wedge connection, which we developed for longer laterals. In Canada, we have launched a major $230 million investment program to increase the effective production capacity of our mill in Sault Ste. Marie. These investments will strengthen our domestic supply capabilities for our Canadian customers. In Argentina, 9 high-spec rigs have been added in Vaca Muerta since the beginning of the year, bringing the total to 42 in operation today.
In addition, YPF, together with Eni and XRG are advancing investment plans for the $30 billion Argentina LNG project for which an FID is expected at the end of this year. We commented last time on the favorable outlook for long-cycle deepwater projects. With technology advances and short-term development schedules, these projects have become more cost competitive and are well suited to support security and diversification of supply.
Several FIDs were taken over the last 3 months. An example is the Cronos project sanctioned by Eni and TotalEnergies, which will take deepwater gas from Cyprus to an LNG facility in Egypt. Tenaris has been supporting Eni in the definition and the supply of the pipeline requirements and also on the OCTG needed for the 4 wells of the project.
We inaugurated our new service center in Suriname together with TotalEnergies and government officials. From this base, we managed the OCTG supply chain for the GranMorgu project. We also began deliveries of line pipe and coating for the Sakarya project in the Black Sea. Our backlog of offshore projects has increased, and we expect this to be reflected in our sales from the fourth quarter and into 2027.
This year, our raw material costs have increased and are impacting our results progressively. We are also increasing prices. And in the fourth quarter, we should see this positive effect in our sales and margins. As we all adapt to a world of increased volatility and supply chain disruption, Tenaris is uniquely positioned to meet the diverse needs of its customers around the world with its global reach, differentiated service and technology and investments to strengthen its industrial system.
With this, we open the floor for questions.
[Operator Instructions] Our first question is from Arun Jayaram with JPMorgan Securities.
2. Question Answer
I was wondering, Gabriel, if you could review the Board's decision and move on the dividend. It looks like you're effectively doubling the dividend rate and perhaps shifting a little bit away from the previous cash return strategy that included a mix of buybacks and still a strong dividend previously.
But wondered if you could maybe talk a little bit about that move on the dividend? And do you view this as sustainable over the long term?
Yes. Thank you, Arun. And thank you for your question on this point. As you mentioned, the Board has decided to increase the interim dividend to $600 million, doubling, as you mentioned, given the strong balance sheet and sustained cash generation of the company.
As you mentioned, the Board has favored distribution through dividends given the simplicity and also as a means of preserving the liquidity of the company's shares. So that's the rationale for the decision. And in terms of sustainability going forward, I believe that we can say that the Board remains committed to maintaining a level of shareholder returns that are broadly in line with the past levels.
And at the same time, wishes to maintain financial flexibility in an environment of uncertainty, but that can also offer growth opportunities. Regarding sustainability and future, I would say at this time that this will be decided by the Board and subject to the approval of a shareholder annual meeting. But that said, and based on past practice and our track record and our strong balance sheet, this could be a continuation in the amount of the dividend and the proposal for payment in May as well.
Great. And my follow-up, and we do appreciate just the uncertainty and the disruption caused by the Middle East conflict on your business there. Gabriel, could you maybe give us a little bit more detail on what your assumptions assume for the second half of '26 in terms of that disruption?
And perhaps maybe if we separate that impact, talk a little bit about how the underlying business is doing because it sounds like you are expecting a nice improvement or inflection as we think about the fourth quarter in terms of your base business, again, excluding some of the noise associated with the Strait of Hormuz.
Sure, Arun. I think it's an important point on the assumption of the Strait of Hormuz reopening or not. This is an important premise, and we have changed the premise that we had last quarter in which we believe or at least the base case scenario for our guideline was given with a short resolution of Hormuz opening.
Today, and given the uncertainty that we suffered the last few months, we are changing -- not the outlook, but we're changing the premise on which we give our guidance for the second semester of the year. And what we are considering that the opening of the Strait of Hormuz in the short term will be an upside to our scenario, okay?
Last quarter, we mentioned that we have about a business of $100 million of material that is going to the upper part of the Gulf, the one that is compromised due to the inability to -- for ships to transit through Hormuz. Which is Iraq, Kuwait and Qatar. We have even enlarged this backlog.
Today, this figure would be $130 million. And this is the material that we have for that part of the Middle East that today is out of our forecast. If at any point in time, the conflict gets resolved or navigability in the Strait is restored, it will take us 70 to 90 days to ship this material from our mills and invoice it in the upper part of the Gulf.
This is an upside that we will have when and if this happens, and this will be a recurrent upside in our forecast. But for now, we have taken this out of our base case scenario. Having said that, if we talk about the outlook, the guidance that we have given is that -- in the second half of 2026, we expect revenues and EBITDA in line with the first half with clearly a third quarter that is more affected and more in line with the second quarter.
And as you are anticipating an uptick and an interesting jump in the fourth quarter that it will reflect all the other things that are happening in the world because the higher price of oil that is driven by the Hormuz disruption is creating the conditions in the U.S., in Canada, in Argentina and also the strength of the offshore market to start showing, and this has taken some time for these rigs to be added and for our mills to be ramped up, and we will see an important jump of volume and to some extent, some pricing as well in the fourth quarter of the year.
So this in a nutshell gives a description of the outlook with an important clarification on the premise on the upper part of Hormuz because, as you know, UAE and Saudi, the lower part of Hormuz, despite the difficulties, they have been able to continue the drilling activity, and we have been able to continue shipping with additional logistics and effort, but this part has been less affected, I would say. Hopefully, this clarifies your point, Arun?
Yes, sir.
Our next question comes from Marc Bianchi with TD Cowen.
I'd like to follow up on that progression into the fourth quarter here. And maybe, Gabriel, you could help us maybe translate this backlog opportunity of $100 million plus that's being compromised.
On a quarterly basis, if we were to sort of remove the effect of the Strait being impassable, I think if I work the math out, your fourth quarter EBITDA should be looking like your first quarter EBITDA in that $730 million range. If none of the stuff with the Strait were happening and you had a normal level of activity in the northern part of the Gulf, what would that look like?
I think you're having a very fair assumption on what the fourth quarter from what we're seeing and with all the uncertainty that we are managing. But without this northern part of the Gulf, our projection for the fourth quarter will be pretty much in line with the first quarter that you're indicating.
And if you -- if this conflict of Hormuz will assure a navigability in the short term, during the next few weeks, we will be able to ship and invoice this additional $130 million within the fourth quarter. It still -- it's an upside, still a possible upside. And this will clearly increase. And you would assume that the margin on the material that we are selling in Iraq, in Kuwait in Qatar is premium material special grade. So it has a good average margin compared to the rest of the portfolio of Tenaris.
So it will be a nice upside addition that will happen in the fourth quarter or thereafter. We would need 90 days for this to materialize.
Yes. Okay. That's very helpful. And then just following back up on the capital return. You made the comment about a similar level of capital return to the prior periods with this new program. And just to clarify on that.
So typically, what Tenaris has done is pay an interim dividend that's about 1/3 of the total dividend. And then in May, we get a dividend that's the remaining 2/3. I mean I know it's ultimately a Board decision, but is that sort of the message that you're looking to deliver here?
Yes, Marc. This is exactly. It's not my decision. It's a Board decision. But based on past practice, this 1/3, 2/3 has been a bit the track record of the company also. This is what I was implying.
Our next question comes from Sebastian Erskine with Rothschild & Company Redburn.
Just to focus in on kind of North America and 2 parts to this. So North American sales were flat quarter-on-quarter. You've called out sort of U.S. OCG strength offsetting Canada and Mexico. And how much of that flat outcome reflects the fact that U.S. pricing is still lagging the Pipe Logix increases that we've seen? And maybe if you could give some color specifically on how you see that evolving in the second half of the year for North America in terms of price and volume? And then just a sort of bigger picture question on U.S. pricing. I mean, obviously, we started to see that the cycle turn. You're offsetting the step-up in hot-rolled coil prices. But at what level do you see imported OCTG coming back as a competitive threat again even net of the Section 232? So how much headroom basically is there before you begin to approach some level of parity with imports would be helpful to get your thoughts on that.
Thank you, Sebastian. I think on both questions related to U.S. activity and pricing, I will ask Guillermo to add more color, and maybe I will come back to the rest of North America, Canada and Mexico that complements our reporting group. But Guillermo on...
Perfect, Gabriel and Sebastian. Well, in the case of the U.S., let me first start with what we -- how we are seeing the market. So far, since the beginning of the conflict in Iran, we have seen activity increase by almost 10%, so an addition of around 50 rigs. And our view is that from now to the rest of the year and another 10 or 15 rigs will be added on top of those.
Our expectation is that our shipments to the market will be -- will grow in line with the growth of activity as we capture additional sales because of the higher activity of our customers. Regarding prices, well, you know that normally, our prices go in line with -- very much in line with the increase of Pipe Logix with a 1 quarter delay, as we have explained in many conference calls.
Since the beginning of the conflict or the beginning of the year, we have seen that Pipe Logix has increased around 9%. And in our view, an additional 5% is expected at least 5% till the end of the year. And our prices will be reflecting these increases accordingly to the 1 quarter relay that I mentioned before.
Okay. Regarding Canada and Mexico, we see to complete the North America view, Mexico, we see it stable with a gradual increase in activity. Pemex has been clearly supported and funded by the higher prices of hydrocarbons in the recent months and the backing of the government. So we see that stable and progressing. And we see a lot of efforts of the government in Mexico, creating incentives and conditions for private companies in different schemes to support with oil and gas activity in Mexico.
So that is something that in volume will gradually progress. And there is also the pricing effect in Mexico that is somehow linked with the international indicators of pricing that are also moving north. Regarding Canada, after a very strong season in the first quarter, it's natural in the second quarter of the year to have a seasonality decrease in volume and activity, but this is an area that is also where we have a good promising perspective of increase of drilling activity, both in oil and in gas.
That's why we have made the decision on the increase of capacity. So this is an area where we have a unique setup, and we believe that gradually, we will grow our position and revenue in Canada as well. So overall, I think all the 3 main components of North America are going to start contributing in a positive direction in the quarters to come.
Super. That's helpful. And just very quickly, just to follow up on that point, just in terms of the import level that's fallen quite aggressively this year. But I'm just trying to work out sort of what -- how much room is there in this pricing cycle above which then you bring imports to become more competitive again even net of the Section 232. I wonder if you maybe just give some thoughts on that parity level with the imports.
Yes. I mean, 2026, as you said, imports have been contained, and we expect to see similar levels in the coming quarters. The main reason of this containment, as you said, are the Section 232 tariffs, but also the trade cases filed against unfairly traded imports. So assuming that we have a positive determination in the new trade case, we expect imports to stay contained. And for them to start to grow, we will need a more relevant price increase.
Our next question comes from Isacco Brambilla with Mediobanca.
A batch of questions have already been answered. So just a couple. First on profitability, is it correct to assume that the second quarter should represent the weakest quarter of 2026 for you in terms of EBITDA margin with sequential improvement throughout the second half?
Isacco, I believe the second quarter and the third quarter will be similar in revenues and pretty much in line on EBITDA margin. So I would say that second and third are looking very similar, pretty much in line, and we will see the uptick starting in the fourth quarter and going forward. So second and third, I would categorize them as very similar. As the lower volume and the logistic extra cost and the same components that we explained that reduction in the second quarter is still present. in the third quarter.
Okay. So just a follow-up on that as impact from lower absorption of fixed cost and higher logistics and transportation for -- say it for our third quarter reviews, we can take into account the same indication given together with the second quarter. So...
Yes, correct. While when you go to the fourth quarter, we are seeing a volume that is going to be north of 1 million tons. So in that moment, I think the volume will start supporting and helping the absorption of fixed cost in the EBITDA margin that you're looking at.
[Operator Instructions] We have a question from Jamie Franklin with Jefferies.
Just a couple of quick ones. Just on the fracking operations. Obviously, the operating margin in your other line came down a little bit in 2Q. Of course, it's small numbers relative to the overall group, but just wondering what a normalized level of margin kind of looks like for this business going forward? And also, if you can give us an update on the third set of equipment that's expected to be added by year-end? And then secondly, just on the 3Q impact, could you just dive a bit deeper into the seasonality and product mix effects that you mentioned, please?
Sure, Jamie. On the first question, second quarter and third quarter, we will have some white space in our utilization of our 2 units of fracking in Argentina. And on the fourth quarter, we will have our third unit starting operations. So we will see an uptick in the level of invoicing of this segment of the business.
And in terms of margin and profitability, I will not disclose it for competitive reasons, but I would say that it is a business that is with an EBITDA ratio contributing and accretive to the average of Tenaris.
On your second point regarding the mix, third quarter, we have seasonality in Europe. Typically, the third quarter, we have our shutdown of our operations in Europe and also many of our customers reduce their level of activity of purchasing. So there is a slight reduction on seamless volumes in the third quarter. And related to the additional mix point is that we are starting the shipment of the large Sakarya pipeline, a welded SAW pipeline from Brazil into Turkey.
It started this quarter and will continue for 3 or 4 quarters. And this has an average price and margin that is below the average of Tenaris. So it's a very interesting project. But from that point of view, has a slight effect on the mix. So these are the color behind the seasonality and mix. which are particular to the third quarter.
[Operator Instructions] As I see no further questions in the queue, I will turn the call back to Giovanni Sardagna for final comments.
Well, thank you, Carmen, and thank you all for joining us, and we talk soon. Thank you.
Thank you.
And this will conclude our conference. Thank you for participating, and you may now disconnect.
Tenaris — Q1 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the First Quarter Tenaris S.A. Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to the Investor Relations Officer, Giovanni Sardagna. Please go ahead.
Thank you, Carmen, and welcome to Tenaris 2026 First Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call and that our actual results may vary from those expressed or implied in this call. With me on the call today are Gabriel Podskubka, our newly appointed Chief Executive Officer; Carlos Alzaga, our Chief Financial Officer; and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Gabriel for his opening remarks, I would like to briefly comment our quarterly results.
Our first quarter sales reached $3.1 billion, up 6% year-on-year and 4% sequentially despite the disruption in the Middle East caused by the conflict and the closure of the Strait of Hormuz. Our sales benefited from seasonally higher activity in Canada, a limited recovery of activity in Mexico, higher offshore sales in Brazil, some stock building in North Africa and an advance of shipment in Saudi Arabia.
Average selling prices in our Tubes operating segment increased 5% compared to the corresponding quarter of 2025 and 1% sequentially. Our quarterly EBITDA rose 3% sequentially to $735 million, while our net income increased 22% to $564 million due to better results below the operating line. Our EBITDA margin remained at 24% as higher costs for maintenance shutdowns were offset by lower tariff costs.
With operating cash flow of $618 million and capital expenditure of $114 million, our free cash flow for the quarter was $503 million. Following share buybacks of $90 million during the quarter, our net cash position at the end of the quarter increased to $3.8 billion. Now I will ask Gabriel to say a few words before we open the call to questions.
Thank you, Giovanni, and I would like to extend a warm welcome to all of you. Before we go to our results, I would like to express that I'm deeply honored by the trust that Paolo Rocca and the Tenaris Board of Directors have placed in me and with it, the enormous responsibility of leading this company in the next phase of growth. At the same time, I'm very pleased that we will be able to count on the continued support and leadership of Paolo as Chairman of the Board.
When I joined the company as a graduate engineer in 1995, I never imagined how Tenaris would grow so quickly and come to play the leading role in serving the world's energy industry that it does today. During all these years, Paolo has been the architect of the growth and the transformation of Tenaris and a constant presence and inspiration to all of us. The journey has been truly extraordinary, and it has been a privilege to experience it from the inside and to have had so many opportunities for professional growth. I look forward to building on his remarkable achievements.
Now let's move on to our first quarter results and the Panorama that we have ahead. This quarter, reminding us that the geopolitical risk and uncertainty is ever present in the oil and gas industry. As is well known, the conflict in the Middle East has led to the closure of Hormuz through which 20% of the world's oil and LNG normally passes. During this time, our first priority has been the safety of our 1,000 employees in the region. I would like to give a special thanks to them for their unwavering commitment to serving our customers through this turbulent period.
In Saudi Arabia and the UAE, our customers have continued their operations, and we continue to support them. However, customers in Kuwait, Qatar and Iraq have had to shut in most of their operations. We expect our sales in the region to be affected in the second quarter in around $140 million. We are also seeing higher logistic costs as we seek alternative routes to the region and also from the global increase in fuel prices.
Amidst the regional turmoil, we continue to differentiate our service in the region. ADNOC Offshore recognized our reliable service and HSE performance with the Supplier of the Year award. In Kuwait, we have been awarded a 5-year contract for the supply of casing products and accessories to be used in the development of a complex new field. As an immediate consequence of the supply disruption in the Middle East, oil and gas companies and consuming countries are looking at diversifying supply.
Investments in short-cycle shale plays in the Americas are likely to benefit and some rig direct customers in the United States and Argentina are already confirming that they are adding rigs. The fleet of high-spec rigs operating in Vaca Muerta is expected to increase by 15% by the year-end as new rigs and hydraulic fracturing sets are brought into the country.
Tenaris will start to operate its third set of hydraulic fracturing equipment towards the end of the year. We are preparing for an increase of activity in the United States in the second half of the year, while in Canada, industry and government are working to increase LNG and pipeline takeaway capacity, which will allow activity growth in the years ahead. We are also strengthening our rig direct service through the integration of [Indiscernible], hardware and software for torque monitoring operations. We recently acquired this specialized technology and know-how that now forms part of our well integrity service and will add further value to our customers.
The outlook for deepwater drilling, offshore pipeline construction and further exploration activity in the next 3 years is promising. There is a significant number of deepwater projects in Africa, Asia and the Mediterranean, which are nearing final investment decisions, while in the United States, Brazil and the Guyana-Suriname Basin, developments are also moving forward.
Operators are looking to shorten time from discovery to first production, and Tenaris is supporting them by fast tracking the integrated supply of OCTG, line pipe, coating and accessories. As we look into the eventual reopening of the Strait of Hormuz, Tenaris, with its extensive presence, flexible supply options around the world. Its differentiated service and technology for shale and deepwater operations and the strength of its financial position is well placed to serve our customers as they respond to the need to replenish oil and gas inventories and increase drilling activity. I would now open the floor for questions.
[Operator Instructions] It comes from Sebastian Erskine with Rothschild & Company.
2. Question Answer
Gabriel best wishes to you on the new chapter here as CEO. My first question is on the 2Q kind of guide, you indicated EUR 440 million impact from kind of lower revenue and then the higher kind of cost impact. Could you maybe mention and give a sense of what that looks like in terms of absolute EBITDA impact from the higher costs? I presume if I assume decrementals sort of 50% and then obviously, the logistics cost in absolute terms. But any color on what that might look like to EBITDA? And then should we expect you to operate at sort of lower end of that 20% to 25% sort of medium-term target?
Very good. Thank you, Sebastian, for the question and for the kind remarks. Regarding the second quarter, as I was anticipating, due to the situation in the Middle East, we expect in the second quarter, lower revenues, probably mid- to high single digits is the range that we would like to guide today. There's still uncertainty. And this is mainly driven by the Middle East conflict. This $140 million that we had earmarked for invoicing in the second quarter. $40 million of that was anticipated in the first quarter and the balance due to the difficulties to get into the region are probably going to go into the third quarter delay. This is on the revenue side. Then you're talking about EBITDA margin.
There, we expect the EBITDA margin to contract a couple of points. This is going to be 1/3 related to the logistic costs that I will comment in a minute and 2/3 related to the lower absorption of fixed cost -- semi-fixed cost related to the lower volumes that we expect this quarter. Logistics is an important component. We expect about $32 million of higher logistic costs in the second quarter due to the conflict. And here, we need to separate 2 effects. One, the difficulty in arriving to our customers through the Strait of hormuz. We have additional cost on vessels that are waiting for berth in ports that are either in [Indiscernible] in the outer part of hormuz on the Emirates or Oman as well, some ports in Oman that we are using on even Jeddah in the Red Sea to access to Saudi.
So waiting times unloading and a second leg and inland transportation that is additional to the cost that we would normally have if the straight would be open. This accounts to around $8 million of estimate additional cost in the quarter. In addition to that, related to the price of oil, fuel prices are going up all over the world. This creates an additional cost of logistics, mainly in trucking, to some extent also in maritime freight and also railroads.
This is around, in our estimate, $24 million of higher freight costs related to the increase in fuel in the different parts of the world, clearly, a higher impact in North America, given the amount of intensity and service that we have, especially in U.S. and Canada. So these effects are temporary in this quarter, contracting the EBITDA margin.
That's very helpful. And my second question is on the North American business, obviously, performing very well now at a high commodity price environment, likely to see a ramp-up in spending at some point from E&Ps. But if I look at the business, do you expect the growth predominantly to be led by pricing? And we're seeing, obviously, Pipe Logix is now beginning to step up or by volumes? Is there really that much more kind of share gain to take given your position already? So I'm just thinking about that. Is it pricing led or volume-led in North America going forward?
Yes, Sebastien, on this point, I think the short answer is both volume and pricing, but I will let Guillermo give you a bit on color about what we expect on North America on the second half of the year, where we are seeing activity increase and possible price increases, and this will be -- is part of the improved outlook towards the second half of the year for Tenaris.
Thank you, Gabriel, and good afternoon Sebastian. As you said, we are expecting upside in both in terms of activity and sales and in prices moving forward. By talking with our clients, we are starting them to say that they will be adding rigs, particularly led by the small private operators, but also some medium and large-sized independents are planning to add rigs.
Putting all together, our expectation is that activity by the end of the year in terms of rig count will increase around 50 rigs, in other words, around 10% of activity. And we expect that we will grow with our clients in line with this. In terms of prices, Pipe Logix has increased 4% in the last 2 months. And we expect this trend to continue in the following months. So mainly pushed by the increase of raw material and logistic costs, but also because of the expectation of increase of demand.
Our next question, one moment please, comes from Marc Bianchi with TD Cowen.
Giovanni, I didn't hear you introduce Paolo, but I'm sure he's listening. I want to congratulate him on everything that the company has accomplished under his leadership. And Gabriel, welcome into the role.
Thank you very much, Mark, for your comment. And probably later today or tomorrow, I talk to Paolo and pass along the message if he's not listening, probably, but anyway.
Yes. Great. Well, I guess maybe continuing the conversation of how the business is progressing here. So second quarter, you've outlined pretty clearly, but the comment in the press release was that second half recovers, assuming the straight opens shortly. But can you talk about how quickly that happens? Is the expectation that maybe third quarter can back to be where first quarter was? And maybe unpack that a little bit for us, if you could.
Sure. Indeed, we are seeing volumes recovering in the third and fourth quarter. At this point, I would say, probably towards a higher fourth quarter than the third. But it's reasonable to assume that we will get very close to the first quarter levels during the second half. This is our best estimation today. And then we have, as [Indiscernible] anticipated, the trajectory on price increases that will offset the cost increases that we're having because besides the logistics that we talk about, that is an impact starting in the second quarter.
We have had higher raw materials on the metallic side, scrap, ferroalloys, hot-rolled coils, the full impact on these cost increases over the last few months, we will start to see, to a large extent, the full impact on that on the third quarter. So the pricing trajectory with a better North America, with a better offshore as well in the second half will support together with the volume, an increase on the pricing, returning to EBITDA margin levels close to the first quarter.
And just specifically related to that, does the Pipe Logix price need to improve beyond what we've seen so far to get to that? Or is it just what we've seen through April that gets you to where you just talked about by 4Q? Or do we need additional Pipe Logix improvement?
I think we need some more steam on the Pipe Logix, but I will let Guillermo comment on which are our basic premises that are really conservative on the Pipe Logix increase. Yes, we need some additional increases, but our expectation is that Pipe Logix will increase at least to allow us to offset those cost increases.
Yes. Okay. Very good. And then the other question I had was just on -- back on the Middle East and the opportunity for perhaps some more pipeline work to try to reduce the risk of all of the volume going through the Strait. There's been talk of expanding the East-West pipeline within Saudi Arabia. So I'm curious what your opportunity is for that or any other similar type of investments in the region?
Yes. In that regard, indeed, the East West pipeline in Saudi Arabia and the pipeline going to Fujairah and the Emirates have been redundancy contingency until now, but now are strategically important. So I think it's rational to assume that this is a study that might be continued and expanded. There is no clear indication announcement that these projects are going ahead, but it's very rational to assume that they will add a lot of value. From that point of view, we see how and if this will occur, probably for this type of pipelines, you are talking about a year, 2 year under a fast track scenario.
So this is not something that can be produced and built over a few months. In any case, we have a large diameter facility in Jubail, GPC in Saudi Arabia. So we will be ideally positioned if this project goes ahead. We have a capacity of around 450,000 tons in our facility in Saudi. And this -- depending on the diameter wall thickness and the trajectory of this pipeline, these pipelines could demand hundreds of thousands of tons to be built.
So I think we will see how this develops. -- over time, but we are ideally positioned to capture that from the pipeline point of view. And if there's a pipeline capacity, there's going to be drilling behind. So both in Saudi Arabia and UAE, we also have a distinctive OCTG position, so we will also benefit from that down the line. So too early to tell, but important upside opportunity for Tenaris if this develops.
Our next question comes from Matt Smith with Bank of America.
Congrats from myself as well, Gabriel and best wishes to Paolo too. For the first question, could I focus on tariffs? And the first part of that would be to ask what the current run rate you're seeing for Section 232 costs within your financials at the moment post the mitigation efforts that you've been carrying out and whether -- how you expect that cost line to evolve in the coming quarters? And then perhaps, would you mind if I add on to that, are you able to add any comments on Canadian antidumping headlines that we've seen in recent weeks?
Thank you, Matt, for the congrats. Regarding your first point on tariffs, we have arrived to a level of tariffs impacting our first quarter results of $110 million, $120 million. And we believe that we arrive at that steady state, and we will take this towards the same level towards the end of the year. So this is what we expect. We know that there is a USMCA that's starting to be discussed, but this will take probably all the second semester. So no variations, I think that we have in our forecast in the short term for further mitigation.
But as you said, this number used to be much higher than that in the range of $140 million, $150 million, I believe, at the peak, and we are maximizing steel production and pipe manufacturing in the U.S. to mitigate these tariff numbers. Regarding your second point of antidumping against Mexico in Canada, this is something that, yes, was announced early last month.
Let me tell you first that in Canada, like in many important bases in the world, we have a strategy of mainly domestic manufacturing and sourcing. So today, in Canada, 80% of our sales of OCTG come from domestic manufacturing. But still, we import from our different mills around the world to complement this local manufacturing. The impact of this antidumping, I believe, is quite limited going forward.
We expect 7% of our supply in Canada to be sourced from Tamsa going forward, in line with the pricing indication of this result. And this is particular products, specialized products, but that, by the way, are not manufactured by the local petitioners of the case. So we believe we have ability to continue to serving our customers in Canada with mainly domestic base, which has been all along our strategy. So this is something that we are factoring in our supply. It had an impact on the first quarter, which was $14 million, and this is something that we expect not to have later on throughout the year.
Perfect. And then perhaps could I switch turn for the second question towards the buyback. I think last quarter, I asked Paolo, whether the philosophy had changed at all, how you view the buyback. Could I ask you the same question in this volatile environment? Does your philosophy in terms of how you implement that, how you size that? Does that change at all? And should we look to the AGM next week to hear news on it, please?
Yes, yes. Thank you. On that point, as you know, this is a decision that is to be taken by the shareholder meeting first and then by the Board. So next week, we will see on May 12, the company shareholder meeting will consider among other topics, the renewal of the authorization of a repurchase of shares. Afterwards, it will be up to the Board to decide on that. So I cannot offer more color on that at this point.
And our next question comes from Paul Redman with BNP Paribas.
Gabriel, congratulations on the new role. I just wanted to ask, you've been COO for a number of years. I wanted to ask where you see the greatest opportunities for Tenaris as you step into the role? And then secondly, just on the Middle East, can you provide a bit more detail by country in terms of where you're seeing the greatest issues around logistics, costs, delivery to customer? Just a bit more detail than Middle East in general.
Yes. Thank you very much for the congrats again. Maybe I start from the second part related to the logistic costs into the Middle East. Clearly, Saudi and UAE due to this pipeline capacity that we talked before, they have continued their drilling operations, okay? It has been remarkable that the majority of the rigs have been operating under the challenging conditions that we had in the month of March and April. So it has been very important for us to serve them every day with our local manufacturing, our local service centers and bringing material into these 2 countries to replenish our inventories and support them, and we had 0 rig stoppages. So we have been able to serve them under this condition as in normal times.
So this is an important part of the effort. But again, going through logistics outside through almost with longer transit times and higher costs. When you go to the upper part of the Gulf, it's much more difficult to reach, much more costly to reach. And in Qatar, which is mainly producing LNG for export. And in Kuwait and in Iraq, the capabilities of export alternative routes is much limited. So drilling activity there has reduced much more.
So there was less of a need for the customers to receive new material, and there was more of a difficulty for us to reach those locations upper part of the Gulf, okay? So this is -- we will see how this unfolds in the next few weeks, in the next few months. Our base scenario continues to be that is a resolution that will come in the short term, and we hope for that. But this is what we see today. So the majority of the big delays have been in the northern part of the Gulf, while Saudi and UAE, we are finding alternative routes because the material is really needed, the rigs are working. Regarding the first question, maybe you remind me again on the first point.
It was just as you step into the CEO role, where do you see...
Yes. Well, I think there are a lot of opportunities for growth in Tenaris. This situation in the Middle East creates and strengthens the importance of energy security. diversification of supply. So I believe that as we were saying in the opening remarks, we're going to see actions by customers increasing drilling in different parts of the world. Guillermo mentioned about the U.S., but I think this creates and strengthen conditions for growth in Canada. Certainly, Venezuela was starting, but makes Venezuela even more interesting into the future.
We have Vaca Muerta, which is our world-class play that is also strengthened by the outlook on this situation. And the offshore, which has and will continue to have steam, we are seeing FIDs being even anticipated due to these conditions. So we believe that we are already entering an expansion cycle in the offshore in the deepwater. And this is something that we will carry into the balance of '26, '27 and '28. We are seeing projects that are already with FID and schedules even with 2-, 3-year visibility. So I believe that in these different areas and parts of the world, has a lot of opportunity to increase its business.
Our next question comes from Jamie Franklin with Jefferies.
Congratulations, Gabriel, and best wishes to Paolo. So firstly, I just wanted to ask on the international business. So last quarter, you spoke to generally seeing some stability in pricing with balanced demand and supply. Can you just give us a sense of recent price moves in the different regions given the current geopolitical situation and a kind of best estimate as to how you see that evolving as we move forward through the year?
And then secondly, you already partially touched on this, but could you give us an update on how your offshore backlog is shaping up? You previously talked to an expectation of 1H '26 revenues offshore being higher than 2H '25 and that 2H '26 would likely be at least as positive as the first half. So just wondering if you can give us a sense of how things have evolved since your last set of results.
Yes. Jamie, thank you for the congrats. On the second point, in the offshore, I confirmed what we said in the previous call. We are even seeing anticipation on some of the backlog of first half into the second half of '26. So where I'm sitting today, we are seeing an increase in revenue for the offshore in the second half of '26 versus what we are having in the first half of '26 in the range of 10%, okay? So this backlog for offshore is very important and continues to build up and even anticipate a bit.
So I'm ready to be a bit even more optimistic than I was in the previous call. Regarding pricing in the international markets, probably we need to divide Europe from the international markets. In Europe, as you know, CBAM has started in the beginning of this year. And the new safeguard in Europe will be implemented July 1. This is a safeguard that is much more stringent than the previous one. The quotas are going to be reduced by half of what they were.
And volumes in excess of the quota that today are paying a tariff of 25% to get it into Europe, this will go to 50%. So this will protect and strengthen steelmaking and steel pipe making in Europe, which I think is positive for Tenaris as we supply our European customer mainly with European production. So we see a trend in pricing that had already started that we are seeing in the second quarter of this year and probably continuing moving upwards in Europe.
Then when we go to the international pricing, as I was saying in the last quarter, there's certain stability between supply and demand. With the situation of the war in the Middle East, there is a pressure on costs, okay? So -- and we believe that this pressure of cost will be translated into the international pricing. The majority of our work in the international markets are contracts that have formulas in place from the different components. There's typically a legacy on 2 to 3 quarters for this to be seen in the invoicing of pricing. So I would believe that in our pricing, pricing in international business will go accompany offsetting the increase in cost over time.
Our next question comes from Arun Jayaram with JPMorgan Securities.
Gabriel and Paul, congratulations on your new roles. Great to see, Gabriel. Tenaris mentioned an increased focus on security and the diversification of supply in your release. One of the things that in an era of more energy security, there's been thoughts that key players in the Middle East, the NOCs may be focused on having more redundancy in terms of evacuation options by pipelines, so they're less reliant on the Strait of hormuz.
So I was wondering if you could talk about how Tenaris could be levered to this dynamic. I know there's been news about a Gulf Super Express pipeline that would take flows to the Red Sea and Mediterranean. But I just wanted to talk about -- see if you could elaborate on this dynamic.
Yes. Thank you, Arun, for the best wishes. And yes, let me tell you, I think a similar question came up earlier in the call, but still, I would tell you that this possibility or potential of additional pipeline capacity in Saudi and UAE is something that would look very rational today and a big business opportunity. I was saying before that this will probably take a year or 2 under a fast track scenario to be built. But it's something that we cannot take out of the equation. On the contrary, no announcements, media reports.
So this is something that we don't have anything to comment yet. But if that opportunity would materialize, Tenaris with its GPC large diameter facility in Jubail, we would be able to take an important part of this pipeline capacity going forward. This facility where we just last year expanded into the second line, and we have an ability even to debottleneck with limited investment to take this capacity even higher. So these pipelines would entail hundreds of thousands of tons of demand of tubulars.
So one way or the other, I believe that Tenaris will be well positioned to capitalize on that and all the drilling of OCTG that we come behind to make this pipeline capacity full. So we'll see a bit early to tell, but certainly a potential maybe eventually into a 2027 type of scenario.
Great. And I did join the call because I had another call, so I apologize on the question. And then my follow-up here is I did -- you hear your comments on outlook. I know the stock is maybe reacting to the near-term impacts in 2Q relative to some of the Middle East impacts. But I just want to see if you could maybe clarify your comments on the second half.
What we heard is your expectations that second half EBITDA could be close to 1Q, which is in that $735 range, which would be a little bit above the Street. So just wondering if you could comment on that outlook.
Yes. I would say that this would be a good estimate, give and take, it's a bit early. There is a lot of uncertainty. The Street is not open yet. So to be precise in the third and fourth quarter, to be honest, is kind of challenging. But from where we see and based on this assumption of a relatively short-term resolution of the conflict and the positive dynamics on volume in the offshore in North America and pricing trajectory, I think this is where we are seeing our results heading into the second half.
Our next question -- it comes from Guillaume Delaby with Bernstein.
For the new role. One question. Globally, when I look at the structure of the industry in terms of competition, the past 4 or 5 years have seen that probably reduced competition for companies like yours. My question is, given the strengthening outlook for the next 3 to 5 years, is it reasonable to expect that at some stage, of course, it is much too early to worry about, but at some stage, you may face increasing competition by the end of the decade. For example, in North America with the recent combination of U.S. Steel and Nippon Steel. So maybe I would like to have your view on the competitive landscape, very, very strong today, likely to remain, but how do you see it evolving over the next 3 to 5 years?
Thank you, Guillaume, for the congrats on the new role. Look, I think your question is very important. I would say that it's difficult for me at this position to illustrate in the next 5 years, the competitive landscape will improve or deteriorate. I would say that we are competing every day. Tenaris is built on being the best and bringing the best value proposition to our customers in different parts of the world. We are catering those segment customers, countries where we can find differentiation where we can be different.
We can be a partner of choice, differentiating on technology, service, local capacity. So these are the -- some of the values that we bring, and we are building on these capabilities over time. So I believe that there is a common threat for our industry, there has been steel pipe manufacturing from China. This has been what we consider in general, the majority of the international markets unfairly traded imports.
So this is a threat that we had that we confronted with the technology, with services and in certain areas of the world, also with antidumping and protective measures according to what the different parts of the world where we operate, consider that these were unfairly traded imports. Difficult to see how this will progress into the future. So we have been and will continue to be in a competitive world. We don't take our customer trust. We don't take our differentiated EBITDA margins for granted, and we work every day to remain competitive and to become the best option. So difficult to project this into the future, but this is what we are all focusing every day. We'll see.
Thank you very much for this answer. What I like is the humility. So I think it has been probably the main characteristic of Tenaris over the past few years. So very happy that it continues.
Thank you, Guillaume. And there is clearly a message of continuity in Tenaris and with my new appointment and the support of Paolo. I have been -- he has been planning this transition for the last 3 years as I have the role of COO. We travel together, we work together. And when I say on a daily basis, it's not a metaphor. It was on a daily basis. So I think the part of the message of the new role today is the continuity of the support on Paolo and the 25,000 employees that make Tenaris. And that lies -- that probably is one of the secrets of the strength of this company.
And we have a question from Paul Redman with BNP Paribas.
I want to touch on Venezuela. There has been a production increase over the past few months. I wanted to ask how involved you are in terms of sales in that market. And when you think about Venezuela, where do you think production could go to and the opportunity that makes for Tenaris?
Thank you, Paul. On Venezuela, we continue to have a favorable look and outlook. After the legal framework that we had in the previous quarter, there have been licenses granted to some of the companies. Some of the companies of the majors that are starting to operate have made some announcement of additional areas. So we see things progressing in the right direction, obviously, from a small size. Tenaris has never left Venezuela. We have always remained closed and waiting for this opportunity to return. We are mobilizing more resources, and we have plenty of Venezuelan colleagues in different parts of the world. So we are stepping up our presence in the country from the commercial, the technical and the service side. We will start rig direct services in Venezuela in the Orinoco area starting in July.
We are certainly a first mover, and we are the frontrunner as Venezuela recovers. Today, the business is important. I gave a figure of around $50 million for this 2026 in the last call, I think we are going to be in that range still. And we see rigs going up from the different operators that are early positioning in Venezuela. So it will be -- this will be a country that for us will increase substantially from this level into 2027. So we're quite positive about the opportunity in Venezuela. The range of production increase varies and it's still a bit uncertain. But with the outlook that we described before of the need of diversifying supply of oil, I think Venezuela becomes even more attractive and important to the global matrix than it was before the conflict. So we see that this is going to increase and Ten will be an important part of that.
Thank you, ladies and gentlemen. This concludes our Q&A session, and I will turn the call back to Giovanni Sardagna for closing comments.
Thank you, Carmen, and well, thank you, all of you for joining us during the call. Thanks.
And this concludes our conference. Thank you for participating, and you may now disconnect.
Tenaris — Q4 2025 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the Fourth Quarter Tenaris S.A. Earnings Conference Call.
[Operator Instructions]
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Please go ahead.
Thank you, Gigi, and welcome to Tenaris 2025 Fourth Quarter and Annual Results Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call and that our actual results may vary from those expressed or implied during the call.
With me on the call today are Paolo Rocca, our Chairman and CEO; Carlos Gomez Alzaga, our Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results.
During the fourth quarter of 2025, sales reached $3 billion, up 5% compared with those of the corresponding quarter of the previous year and 1% sequentially as our sales to Rig Direct customers in the United States and Canada continue to show resilience and in Argentina, we resumed our fracking and coiled tubing services. Our EBITDA for the quarter was down 5% sequentially to $717 million or 24% of sales. These results include the full impact of the 50% Section 232 tariffs in the U.S. Average selling prices in our Tube operating segment decreased by 1% compared to the corresponding quarter of last year and were flat sequentially.
During the quarter, cash flow from operations was $787 million. Our net cash position at the end of the quarter decreased to $3.3 billion, following the payment of an interim dividend of $300 million in November last year, $ 537 million spent on share buybacks and capital expenditure of $123 million during the quarter. The Board of Directors have decided to propose for the approval of the general -- Annual General Shareholders' Meeting to be held at the beginning of May, the payment of an annual dividend of $0.89 per share or $1.78 per ADR, which includes the interim dividend of $0.29 per share or $0.58 per ADR that we paid at the end of November of last year.
If approved, a dividend of $0.60 per share or $1.20 per ADR will be paid on May 20, up 7% compared to the dividend per share of the corresponding period of the previous year. Thanks to the benefit of our buyback program.
Now I will ask Paolo to say a few words before we open the call to questions.
Thank you, Giovanni, and good morning to all of you. 2025 was a year in which Tenaris demonstrated the resilience of its operation in the face of a disruptive geopolitical environment and lower activity in key markets. Thanks to our extensive geographical presence, the depth of the service we offer to our customers and the commitment of our employees, we were able to respond rapidly to the various situations we faced. Our results remained remarkably stable through the year, which we completed with an EBITDA of $2.9 billion and a net income of $2 billion on net sales of $12 billion.
Free cash flow amounted to $2 billion, all of which was distributed to shareholders through dividend and share buybacks. We are proposing a further increase of the annual dividend per share of 7% over that for the previous year. At the same time, we maintained a net cash position of $3.3 billion. In the U.S. and Canada, the U.S. was marked by further oil and gas industry consolidation and productivity improvement, a lower rig count and the extension of Section 232 tariff to the import of all steel products, including the steel bars we require for our seamless pipe operation Bay City, and the subsequent increase to 50%.
In this environment, Tenaris raised the performance of its U.S. production and supply chain system with its Koppel, steel shop, main pipe production plants at Bay City, at Hickman and Enbridge and various pipe processing facilities acting in concert to achieve a record level of production and supply, 90% of our U.S.A. In both the U.S. and Canada, we strengthened our market position and extended the differentiation we offer under our Rig Direct service model.
As customers targeted operational efficiency, we continue to develop and roll out our run-ready and well-integrated services that support them by increasing safety and reliability at the well site. Major oil and gas companies are seeking new production reserves to meet a more resilient long-term demand outlook and they're looking beyond the shales with their fast-to-decline curves, to deepwater development and exploration in frontier region.
Tenaris with its capacity to develop product for complex operation and to support fast track development with service and the supply of advanced coated line pipe solution at scale is working with most of these companies as they develop such projects. As new offshore projects are sanctioned around the world, we see many opportunities to renew our order backlog, while we execute on existing commitments.
Currently, we are delivering casing for Shell's Sparta 20K project in the U.S. deepwater extending our services for ExxonMobil's operation in Guyana and preparing a service base for TotalEnergies, GranMorgu development in Suriname while planning the production of seamless and welded line pipe and coating for the third phase of TPAO Sakarya gas development in the Black Sea. In Latin America, the Mexican government is taking steps to address the financial difficulties Pemex, which took a toll on oil and gathering activity in the country last year.
While in Argentina, domestic companies have been able to raise more than $4 billion in financing to develop infrastructure and expand production operation in the Vaca Muerta fields. We supplied the Vaca Muerta Sur pipeline and are currently supplying the Duplicar North pipeline. We are also investing to expand our new fracking and coiled tubing service business and expect to put a third set of equipment to work before the end of the year.
In Venezuela, following the intervention of the U.S. government, we are resuming our service to Chevron operation and building up our service capability in the country to support an increase in drilling activity. In the Middle East, we continue to consolidate our presence with the award of a long-term agreement for the supply of OCTG to the Northwest field development in Qatar, while in the Emirates, we enhanced our Rig Direct service to ADNOC, delivering a record amount of OCTG.
Saudi Arabia, also conventional drilling activity was reduced during the year. We completed an expansion at our local large diameter facility, from which we are supplying line pipe for the development of gas infrastructure. In addition to the OCTG, we supply for Aramco drilling operation. Our global integrated industrial and supply chain operations have been key to our ability to respond effectively to the different events we faced during the year. We continue to invest and enhance the efficiency and digital integration of these operations as well as reducing their environmental impact.
We made further progress towards our midterm target of reducing the carbon emission intensity of our operations as we brought our second wind farm in Argentina into operation. The 2 wind farms now supply essentially all of the energy requirement for our electric steel shop and operation in Canada. As an industrial company, our commitment to the safety of our employees and to the environment sustainability in our communities is absolute.
Also, our indicator have improved this year. We continue to reinforce our preventive action and monitor our performance in this aspect. Tenaris, with its presence across the world, competitive differentiation in product service, the quality and compliance of its operation and the financial strength to support its strategy remains well placed to confront an unpredictable and volatile future. I would like to thank all our employees and the communities which sustain our operation for their constant commitment and engagement that have made possible our results and achievement this year. I would also like to thank our customers and our suppliers for their ongoing trust and support.
Thank you very much, and we are open to any questions you may have.
[Operator Instructions] Our first question comes from the line of Marc Bianchi from TD Cowen.
2. Question Answer
I wanted to start by asking about the outlook here in first quarter and maybe you could talk about, to the extent you're comfortable how things progress beyond first quarter. When you talked about being close to current levels in fourth quarter, is that -- should we interpret that as meaning flat? And are there any nuances with volume and price that we should be thinking about as we build that out? And then any comments sort of beyond first quarter would be great.
Well, thank you, Marc. Well, within our visibility today and considering many parts moving in the energy market and also in the general geopolitical environment, I think it will not be easy to have a medium-term forecast. Now what we see is a relative stability of our performance and our position in the market during the first quarter and it is not so easy.
We do not see today a point that should disrupt our operation even in the second quarter. But for the time being, as we say, we feel comfortable in forecasting the first quarter in which the level of margin and in general, the results we can get are more or less in line with the 4Q. But it's difficult to have a more long-term forecast considering the volatility of the environment in which we are moving.
Yes. That makes sense. And then the other one maybe somewhat related, the margin resilience in the fourth quarter was quite good. And I'm curious how much of that benefited from some of the actions that you're taking? I think you mentioned Koppel in the press release to try to offset some of the tariff headwind that you've experienced. I think previously, we talked about that being something like $140 million a quarter of tariff costs that you're having to deal with. So I'm curious how much progress did you make on that in 4Q? And what is the opportunity going forward?
Well, we are, let's say, continuously operating in the efficiency of our operation, including our capacity to produce more steel in the U.S. So we expect for the first quarter of next year, that a lower level of tariff we get into our IFRS because in the end, we are operating on this even in the past few months. And we think that what is getting into our results in the first Q will be relatively slightly lower of what we have in the fourth Q.
But on the other side, the indicator of prices in North America, I mean, in spite of the impact on the hot-rolled coils and other products of the steel industry are moving relatively slow in the pipe business and especially in a welded pipe. So considering the impact of slightly lower tariff and where we are in terms of Pipe Logix and so I think what is moving around in the world, I think that this is the component that justify our vision of a relatively stable top line and margin data for the first quarter.
Our next question comes from the line of Matt Smith from Bank of America.
My first question was around the international business and on pricing. Just whether you have seen any signs at all of pricing pressure given how some of the international benchmarks have traded down, I guess, since summer 2025? Any color you could give on different regions could be useful.
Thank you, Matt. I would say that, as you know, our business globally is composed of many different niche, high-demanding product, different region, different level of service. So I would say, to some extent that the price impact is more easy to understand and project in North America than internationally. But by the way, I will ask Gabriel to give you a vision of what we see in front of us on the ground.
Yes. Thank you, Paolo. Good morning, Matt. On the pricing on the international markets, we see, in general, some stability, a balanced demand and supply, especially on the premium products, where we are mainly focused. So premium is our service, high technical qualified pipelines. This demand is quite strong, driven by offshore, by Middle East, in gas and our service development. So we see the demand on these segments quite stable. We have, in many cases, long-term agreements that have some formulas related to raw materials.
So I would say that the majority of our backlog and our business in international market are driven by stability in the pricing. It is true that there are some spot tendering where we're seeing a slight deterioration in the environment, especially when we are talking about lower end applications, but this is not the most important part of our business, and this is something that we monitor. So I would say, given all the moving pieces and the increasing component of our offshore during 2026 in our international mix, I would say that the pricing in the international markets are quite stable for Tenaris.
Thank you, Gabriel. Let me just add one point on which maybe -- that is the European. In Europe, maybe it's early to perceive the impact, but the CBAM and the safeguard that is supposed to raise the quota -- to raise the tariff to 50% and reduce the quota by almost 50% may have a favorable impact on relatively important segment of our international business that is all supported by the industrial power gen activity into Europe.
To some extent, I think in the view of the overall say, future of our operation, maybe not immediately, but we should be able to maybe improve our situation and pricing in Europe. And also this reflects with the present exchange rate gets into our -- to our top line relatively well.
I wanted to ask a second question around the buyback, if I could. So I appreciate the current tranche of $600 million is still ongoing, and we'll have to sort of await the next announcement later in the year. So I just wanted to ask, check whether your philosophy around the buyback has changed at all since last year? Or should we very much expect this to continue to be a material component of shareholder returns in the near future?
Yes, thank you. As you are saying, the General Assembly and the Board decided for a program of share buyback of $1.2 billion from May 2025 until May in 2026 divided in 2 tranches. The second tranche has been approved again in October. Now the decision obviously is to the assembly and the Board for the decision on this ground. But let's say, the factors that were relevant for the decision on the shareholder didn't change so much. So we will see if in the assembly in May and the Board after this should decide on this, when the second tranche of $600 million will be closed. They will consider the different factor, the level of cash availability in the company, the perspective of this. And on this basis, they will consider a possibility to continue the program of share buyback.
Our next question comes from the line of Arun Jayaram from JPMorgan.
I was wondering if we could talk about your expectations around potentially getting to an inflection point in the Pipe Logix pricing indices, just given your thoughts on import trends and where -- when and where could do you expect us to see that pricing inflection point? Because it continues to trend down, call it, in low percentage points at this point, looking at the most recent pricing data?
Yes. Thank you, Arun. Well, the factors that are, let's say, having an impact on the Pipe Logix are different. But you should also consider that there is a Pipe Logix for seamless and the Pipe Logix for welded. What we see is that, to some extent, the Pipe Logix for welded is having a drag down on the overall impact, something that maybe we were not estimating -- fully estimating before. Why?
When we saw the hot-rolled coil index going up as it is going up today, we were considering that this should have driven an increase in the welded pipe. But the import of welded pipe coming in based on the Chinese or Southeast Asia or other sources flat product is, let's say, containing movement in the Pipe Logix for welded. And this is, to some extent, having also an impact on the Pipe Logix for seamless product.
Now the hot-rolled coil went up so much. There is clearing the way for some import in the welded product and putting under stress the producer of welding product based on hot-rolled coils coming from the U.S. In my view, this is kind of temporary because antidumping action against importation or import of welded will contribute to the gradual alignment of the Pipe Logix to the higher level of the hot-rolled. But this is not something that we can anticipate immediately for the first quarter. But over time, should be acting, should be a factor.
Great. And my follow-up, Paolo, I was wondering if you could just provide us your thoughts on how Argentina could play out in 2026 versus 2025? I know that you're adding a third frac fleet in Argentina, but give us a sense of how you see things progressing in the ground because we have seen some IOCs adding rigs in that market.
Well, let me tell you that as I was saying in the previous conference, after the election in Argentina in November, the confidence on the investment community is increasing in Argentina. And even the oil and gas companies have been able to finance more than $4 billion, collect financing from different tools that will be used to, let's say, promote and carry on investment planned during 2026.
This process has been relatively gradual, but I think that over the second part of '26 and also following the biggest investment in the infrastructure, we will see this collection of financial capability will transform into a higher level of drilling in the country. This has been slower than probably we were expecting 1 year ago because opportunity are there, but also the level of country risk stayed a little higher after the election than we maybe were estimating. And this is maybe slowing down or at least is making more gradual -- the pickup has increased.
Also some of these resources has been used for consolidation in the industry, especially by local player. And after this consolidation, the investment will go in operation in the development. First, some of the acquisition has been completed and gradually in this field, drilling will increase. I would expect in the second half of 2026, we will see something moving in this sense. I remember, part of the drilling containment has been coming by the reduction of the operation in the south part of the country. Now this is obvious. There has been a closure of operation in the South. So the key and the core of it -- of everything will be Vaca Muerta.
Our next question comes from the line of Sebastian Erskine from Rothschild & Co Redburn.
I'd like to just start on the margin trajectory for Tenaris in 2026. And I think, Paolo, you mentioned earlier about the impact of kind of hot-rolled coil on ERW margins. I mean, looking at that, I think in the U.S., those have compressed about sort of $350 a ton since August. So I guess that would equate to something like a sort of $35 million, $40 million quarterly cost headwind, but that will take a while to show up. So when does that flow through into COGS? Or is it something we shouldn't really be thinking about as a meaningful impact? Any color there would be helpful.
And then I guess on top of that and more positively, when we look into the second half of the year, you've obviously got a lot of offshore work to materialize. So you mentioned Sakarya, Suriname and presumably, obviously, that's higher margin. So can we expect you to operate at the top end of your kind of 20% to 25% EBITDA margin guidance? Is that realistic going forward through the rest of the year and a kind of second half weighting?
Maybe, Gabriel, you can give an overview on part of the question. And then eventually, we will ask Guillermo on the other pathway.
Sure, Paolo. Good morning, Sebastian. Going to the part of your question related to offshore and how they will play out during 2026. I would say that the market in the offshore is quite operating at high levels. We have a strong backlog that we need to execute. As Paolo commented in the opening remarks, we are getting ready to deliver this impeccable execution. These are complex projects that require local deployment.
You mentioned the Suriname project. We are building the new service base in Suriname. The new -- the first shipments will arrive in June. So we are ready to deploy the OCTG and the Rig Direct services there into the second half of the year. We are also, for example, producing today thermal insulation coating in Nigeria to support the Shell Bonga North deepwater development. So these are important part of our focus and attention is on delivering this high backlog of orders. And we expect revenues in the offshore in the first half of 2026 to be higher than the second half of 2025.
When we talk about the second half, it's true we have an important backlog of Sakarya and other projects. Some of these awards -- additional awards require FIDs. We see some of the FIDs being announced towards the end of this year or even in 2027. So this will depend. So we don't have fully confirmed the backlog of second half of 2026. But we are confident that it will be at least as positive as the first half of 2026. So overall, I would say, the offshore contribution will be important for Tenaris.
And if you look at the industry projections, the level of FIDs of deepwater that we are seeing for 2027 are pretty strong, higher than the average of '25 and '26. And we are engaging with our customers early on in those projects much earlier than the FID. So we believe that we're in an offshore cycle that is going to be sustained for a multiyear period.
Yes. This is very important. When we look at the estimate of the investment in deep offshore for '27 and '28, the number apparently of estimation are showing level of investment in the range of $120 billion in '28 that are almost 3x some of the low-end years in the past 2, 3 years. So long term, look promising for this. Now Guillermo, maybe you can add on the U.S. operation best vision.
Yes. Thank you, Paolo, and good morning, Sebastian. Well, regarding your question about the trajectory of margins in the U.S. and particularly for our ERW pipes, clearly, the recent increase of prices of the hot-rolled coil and still the reduction of prices for the same products is putting a lot of pressure on our margins. And that is going -- that are going to be reflected mainly in the second quarter.
For the following quarters, with all the volatility that we are seeing, it's more difficult to forecast, as Paolo explained before, but -- and will depend mainly on the ability of the Pipe Logix to recover that we think that eventually will based on the push of the cost hot-rolled coil and scrap and also because of the expectation that the imports will continue to go down in the future.
Our next question comes from the line of Stephen Gengaro from Stifel.
So 2 things from me really. One is, can you talk a little bit about your expectations in 2026 for any material changes in working capital as we sort of try to think about free cash flow generation? And then maybe aligned with that, what level of cash do you feel like you need on the balance sheet to run the business? Like what level is excess versus what's sort of normal necessary operational cash?
Thank you, Stephen. Well, in general, remember, it's not only a question of the capital we need to run the business, but we also need to have always in mind the capital we need to have available for any expansion or opportunity that may come in front of us. This is an important consideration for the Board, for everybody when we consider the financial strategy in the flows to the shareholder. But as far as the working capital is concerned, I would ask Carlos an overall view because there are some areas like the receivable from some of the clients that is improving. And so you can give us a view of how you see this.
Sure. Thanks, Paolo. For the 2026, we expect to be quite neutral in working capital, but we will have some swings over the year. Especially in the first quarter, we're expecting an increase in working capital, mainly driven by our accounts receivable. As you saw during the fourth quarter, we have a big reduction in receivables, mainly driven by collections in some -- big collections from Pemex.
I think with Pemex, we have arrived to a level that from now on will maintain or increase a little bit. So we won't be seeing a working capital reduction coming from there. And then we are seeing also some terms, we negotiate some terms with customers in the U.S. that might impact a little bit our working capital needs. And also, we are seeing some slight increase in sales for the first quarter that will also imply an increase in account receivables.
In terms of inventory, maybe for managing our -- in our balance sheet, the service component of the company is very visible. We have the fixed capital that is slightly higher than our working capital because in the end, we have a lot of inventory to support our service strategy and our Rig Direct strategy. You think, Gabriel, we can imagine some reduction of this streamlining inventory or basically you imagine a stable situation here.
In general, Paolo, we are always looking for opportunities to improve. This is the case in all our Rig Direct programs, we are managing and balancing the ability to supply and have the right stock at the right moment and have efficient working capital. So this is a constant work. We have done an improvement during the year that we will continue this year on the work in process material. So this is something related to our industrial efficiency where we have been improving, and we have more room to improve.
And then there is a part of steel as we have this important LSAW pipelines that we need to buy the steel in anticipation. So typically, there is a longer lead time on these large pipelines that are also reflected throughout the year. But this is an area of attention, and we always think there is room for improvement.
It is important for projects like Sakarya.
For example.
Long term, long period of time.
Yes.
And also our operation may demand working capital for serving ADNOC with a long operation and stock demand.
We are serving every month 550 rigs worldwide. So this requires to have the raw material close to this rig.
Serving 550 rigs every day imply to keep all the inventory even in a remote region or at least like in the Gulf. But still, we're working every day to understand how we can optimize this by the way.
No, that's very helpful.
Our next question comes from the line of Alessandro Pozzi from Mediobanca.
The first one is really going back to the Q2 guidance. You mentioned a bit of an impact from higher raw material costs. I was wondering if you could perhaps quantify or give a sense of what that could be in Q2? And also, as we look throughout the year, I was wondering if there is any quarter where we could see an impact from mix, for example, more line pipe versus seamless and having an idea of the cadence of line pipe volumes, I think it could be quite interesting? And also on maintenance, whether you have any big maintenance quarters?
And second question on Argentina. Can you comment on the level of competition you've seen there? We've seen an Indian company getting a contract for a pipeline. And I was wondering your thoughts about the competition there as volumes, as you pointed out, are going up possibly from second half?
Thank you, Alessandro. Well, on the first point, there is, let's say, the impact of the row. When we look at the medium term in terms of this, we always keep -- follow basically 4 points: the Pipe Logix for seamless, the Pipe Logix for welded, the cost of hot-rolled coil and the cost of scrap. So on these 4 variables that are moving are acting on our, let's say, the indicator in the formula of our contract many times and also the costs that are underlying.
Up till now, I mean, what we see is an increase in the hot-rolled coils that is not followed by the Pipe Logix in welded because there is import from companies that could stay below the line of price, even paying 50%. This is hitting our -- to some extent, in our margin, but we think that this will be a reaction by the Pipe Logix some antidumping action to contain import. And I will ask Guillermo, if you see this happening in medium term, I mean, when we can recover the increased cost of the hot-rolled coils in our top line.
Yes. I think that following what I said before, I mean, remember, there is always a lag between the Pipe Logix and how they reflect in our prices. So normally, we have 1 quarter delay. And while the impact of hot-rolled coils, it comes sooner than that. Our expectation would be that we should start to see some reduction in Q3, but particularly in Q4.
Thank you, Guillermo. Now on the line pipe seamless after the acquisition of Shawcor, the line pipe for us is very relevant, and we are I think very competitive. But maybe, Gabriel, you see some changes in the balance between 2.
Yes, Paolo. Alessandro, regarding your question about the cadence of the pipeline projects, I would say that it's quite stable during the 4 quarters of this year. This is the visibility that we have today and pretty much in line in volumes on what we had on 2025, where we had important projects like Sakarya -- I mean, like [indiscernible] in 2025 in Brazil.
This year, we are concluding some pipelines in Argentina in the first quarter and second quarter. Then we will have Sakarya in the third and fourth quarter. We have, I would say, a relatively stable plan of pipelines in Saudi Arabia as well. And then the deepwater pipelines that we have in different parts of the world. So I would say, there is not a significant imbalance in our shipments of line pipe.
Thank you, Gabriel. On the last point on the tender in Argentina. Well, this was a tender for a large project for producing LNG in Argentina. The project is carried on by a private company that, let's say, include different shareholders, but it's a private company. They made a tender, a very open tender to everybody. And basically, we lose the tender because they were higher than the lowest bidder. The bidder, as you were saying, was an Indian company. Things like this happens, obviously.
Now what we are doing, we are analyzing the offer to see if this is an offer that is following the trade practice or is exposed to potentially an antidumping case raised by us. For the time being, we didn't take the decision here. We are just studying the condition, the condition of the local market for the Indian company, the condition of the pricing of this because we think this is important.
We also remember that Argentina had signed an agreement with the United States in which both parties are committing themselves to address the unfair trade practices in both countries. It is logical for U.S. to advance or introduce close of this in the relation with different region, different areas. And this is part of the agreement, the reciprocal trader investment agreement between Argentina. So we think there should be a good environment to analyze the specific situation of this offer and this tender.
All right. I don't know if I can squeeze in a last one on Venezuela. In your opening remarks, you mentioned that Chevron is ramping up drilling activities. Could you quantify the Venezuela opportunities short term, longer term for Tenaris?
Yes. On this, Gabriel, you follow closely this.
Yes, Alessandro on Venezuela, clearly, the situation is evolving. It's a dynamic environment. But clearly, there are signs that things are going to move positively with the hydrocarbons law and the recent of licenses, I think there are clear signs that some resumption of activity will occur. Today, Tenaris is in a unique position. We are fully serving the Chevron, the only major that is operating in Venezuela. They have a plan to accelerate rigs and demand for 2-wheelers, and we are ramping up for that.
This is today something limited, but we expect to expand into 2026. So we are also following the licenses of the other majors that might be coming back to Venezuela soon. So this is, I would say, still in the $50 million for 2026, but with a clear perspective of a higher potential into 2027 and when maybe more clear plans about the other majors are materialized. But overall, a big upside potential in the midterm, depending on how things evolve.
Remember, Chevron will not be alone. There will be other company moving. I think our position in Venezuela is unique. Remember, in Venezuela, we're operating the only seamless pipe plant until the plant was expropriated in 2008 by the government by [indiscernible] and at that time, we were the company serving the oil industry in Venezuela. So we also have human resources or people that are familiar with the operation in Venezuela, the service, the complexity on this, the product demand and so even if a lot of time passed, but we still, I think we have a very competitive and differentiated position.
Right. Sorry, did you say $15 million EBITDA, 1-5?
$50 million of revenue, 5-0.
Our next question comes from the line of Luigi De Bellis from Equita SIM.
Just one for me. On the Middle East and Mexico, could you share your view on the evolution for the coming quarter for both Middle East and Mexico?
Thank you, Luigi. Well, starting, let's say, from Mexico. Mexico, there has been a number of positive events in supporting Pemex. The government capitalized Pemex with a program of $20 billion that is important. And now Pemex is also issuing bonds and getting access into the market for important sum like $1.7 billion. I mean, relevant access with government guarantee. Now what we do not see yet is the definition of the plans that the Pemex will execute during 2026. We do not have clear indication of this.
And the private company are moving slowly. And some of the group is moving. Obviously, Woodside in the Trion is moving on. But some of, let's say, the contract that may have enabled private company to come and develop the resources. In my view, this is moving relatively slowly today. Maybe by the end -- the middle of 2026, we will have a better understanding of how they will organize, let's say, the development of the clearly huge resources that Mexico has. Now the question on Middle East, medium-term vision, I think, Gabriel, you also may comment on this.
Yes, sure. Luigi, for the question on Middle East, I would say, there's not much change on what we have been reporting in the last couple of quarters. Activity remains high. All the main key countries are investing. We have a strong position there with our long-term agreements in Saudi, UAE, Qatar and part of the market in Iraq as well. So I would expect our revenues and shipment in the next 2 quarters, first and second quarter of '26 to be pretty much in line with the last 2 quarters of 2025.
The only noticeable news is a probable uptick of drilling activity in Saudi. This is still to be confirmed, but probably during the second quarter of '26, maybe later in the year, we will see a comeback of rigs in Saudi, which reduce rigs during 2025. So we'll monitor that, and there could be a potential upside, but for the second half of this year on the [indiscernible] side.
Our next question comes from the line of Marco Cristofori from Intesa.
My question which relate on shale oil, shale industry in the U.S. Let's say that since the end of 2023, we have seen declining rig count, but a growing crude output. So -- and also breakeven are going strongly down according to oil [measure]. So do you think that this trend could allow a further increase of your volumes in the U.S.? And secondly, there are several insights that the shale in the U.S. could reach a plateau in the second half of 2027. So how do you see the evolution of the shale industry in the U.S.?
Yes. Thank you, Marco. I would ask to Guillermo to give his view on the evolution of this. In the question of plateau, frankly, I wouldn't -- I don't think we are able to predict the plateau. It will depend on the overall price of oil around. And there are many issues that are unpredictable concerning the major production region and so on and so forth. So in U.S. the plateau has been forecasted in the past at a lower level, and it is continuous surprising us with higher. And so I wouldn't bet on where this number will be in '27. Guillermo, on the question of the productivity.
Yes. I mean, as you said, I mean, the operators in the U.S. have been increasing their efficiency and productivity big time in the last 2 years. So with a much less number of rigs, they are not only producing more, but they are drilling almost the same amount of wells, and they are even going longer. So we are seeing much less rigs, but more production and slightly reduction in the consumption of OCTG compared to what we used -- I mean, so there is no such correlation that we used to have with the rig count.
Now looking forward, we still see kind of a stable market for 2026 compared to 2025. We may see some reduction of activity, slight reduction in oil offset by an increase of activity in gas. And as Paolo said, difficult to predict about production. Everybody is talking about plateauing, but at the same time, we see them becoming more creative and producing more oil from each well with the new technologies in terms of fracking, but also in terms of the level of chemicals they use. So we need to see as to where the innovation of the industry can go.
But clearly, if we are not at the peak, we are not far from it with this level of activity and rig count. The other variable that we need to take into account is that during the last 2 years, there has been a reduction of drilled by uncomplete wells. So some of the increase of the activity was also coming from wells that were previously drilled but not completed. The level of inventories of those wells has gone -- has come to kind of a bottom. So we don't expect much more of this in the coming quarters.
Our next question comes from the line of Kevin Roger from Kepler Cheuvreux.
I just have one question to follow on the U.S. and all those stories on the tariff implemented by the Trump administration and notably on the recent news flow that the Trump administration could reduce the tariff on steel and aluminum. I was wondering if you comment a bit more on what should be the implication on your side from a potential reduction on the tariff if, for example, we come back to a 50% steel tariff to 25% or something like that. Just to understand the potential impact on the U.S. OCTG market if we move in that direction, please?
Thank you, Kelly. Well, we don't know which is -- I mean, we only have an article on the newspaper. We do not have a written definition. If I should say, the issue may come from the impact of the U.S. economy of the extension of the 232 to the derivative of steel. There are in many products, derivative of steel, which means that they contain steel, there are basically affect price level in the states, but are not having a beneficial impact of industry in the states that is not producing this.
Now this universe of derivative increased so much that I think the comment of Trump maybe are just indicating a willingness to reshape what is considered derivative and what is not. Remember, there has been stages of expansion of the definition of derivative 1, 2. And before going to the third, he is considering what would it be, let's say, not creating undue distress in the pricing system. So this is what I understood. We will reconsider the derivative more than reconsidering the level of 50 for 25 because this is a key component of the 232. I don't see this to change.
Our next question comes from the line of Jamie Franklin from Jefferies.
So firstly, and apologies if I missed the answer to this one, but I just wanted to focus on your other business segment. Obviously, a big revenue and margin recovery in 1Q, driven by your fracking and coiled tubing services in Argentina. Can you just talk about how you expect that to trend through 2026 and whether we can expect a similar contribution in the first and second quarter and beyond that?
And then the second question, just if you could give us an update on your CapEx expectations for 2026 and kind of an outline of where you expect to be spending?
Thank you, Jamie. On the oil and gas, I was saying, during the second part of 2026, we are considering that the activity of oil and gas fracking should go up. The drilling activity will also pick up later on. There will be more need to frac. We are just bringing in one additional set of fracking because we are anticipating some increase by the end of the year. And this should drive to some increase on our activity in the second half of '23. This is basically the position on this.
The other point, CapEx, I mean, the CapEx will be more or less in line with what we have been spending in 2025. Looking at the forecast, we see even something lower. But I imagine that during the year, new need may come out. Usually, there is something that is coming out from specific intervention. So there will be something lower when we look at this from a planning point of view today. But maybe in the end, we will be close to the level of today.
Thank you. At this time, I'm showing no further questions. I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.
Well, thank you, Gigi, and thank you all for joining us today. Bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.
Tenaris — Q3 2025 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the third quarter Tenaris S.A. Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Please go ahead.
Thank you, Gigi, and welcome to Tenaris 2025 Third Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call and that our actual results may vary from those expressed or implied during the call.
With me on the call today are Paolo Rocca, our Chairman and CEO; Carlos Gomez Alzaga, our Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Guillermo Moreno, President of our U.S. operations.
Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. Our third quarter sales reached $3 billion, up 2% year-on-year, but down 3% sequentially, mainly reflecting lower sales to the North Sea and lower shipments for offshore line pipe projects in the Middle East, partially offset by a resilient level of sales to our rig direct customers in the U.S. and Canada.
Average selling prices in our Tubes operating segment decreased 1% compared to the corresponding quarter of last year and 1% sequentially. Our EBITDA for the quarter was up 3% sequentially to $753 million with our EBITDA margin for the quarter at 25%.
Our EBITDA for the quarter included $34 million gain recorded for the return of U.S. antidumping deposits paid on OCTG imports from Argentina for which the duty rate has been revised downward. Without this one-off gain, our EBITDA would have been $719 million or 24% of sales.
With operating cash flow of $318 million and capital expenditure of $185 million, our free cash flow for the quarter was $133 million. After share buybacks for $351 million, our net cash position declined to $3.5 billion at the end of the quarter.
Our Board of Directors approved the payment of an interim dividend of $0.29 per share or $0.58 per ADR to be paid on the 26th of November. The interim dividend per share is up 7% compared to the interim dividend per share we paid last year. Now I will ask Paolo to say a few words before we open the call.
Thank you, Giovanni, and good morning to all of you. Our results in third quarter once again highlight the unique industrial and commercial position. We have built around the world with competitive differentiation in key markets as well as an efficient industrial performance. In the United States and Canada, where overall drill reactivity has slowed, we maintain our level of sales thanks to the relative strength of our customer portfolio that due to the efficient operation, could maintain the level of activity even as oil price soften.
They have chosen to work with us for the long term and appreciate the reliable quality and performance of our product and the benefit that our differential Rig Direct services providing maintaining the efficiency of their operations.
Considering the high level of tariff rate and trade restrictions, we have been increasing production in the United States and Canada to ensure a reliable supply of high-quality products to our customers. Our mill in Bay City, in Hickman and so [ summary ] operated at record level of production and high levels of operational efficiency through the quarter.
Around 90% of our U.S. sales of OCTG are produced in the United States, with the remaining 10% being mainly imported for special application that nobody produced in the United States. In a dynamic and changing world, one of the key strength of Tenaris is our uniquely flexible global industrial system, where we can produce locally in many regions of the world, maintaining the same high level of quality through our fully integrated quality and HSE management system.
Two weeks ago, I was in a summary to celebrate 25 years of operations in Canada. Our employees and the local major and the NPE. This win, which is the core of our industrial presence in Canada was idle when we arrived in 2000. Today, following many years of investment, it is a leading supplier of seamless and welded part with accessories and coatings for the Canadian oil and gas industry.
Now the industry is expanding through the development of the [ Montney ] shale and export to LNG to Asia, extend the scope of our Rig Direct service in the region. We opened a new service yard in British Columbia, while the mill in so summary is further ramping up production to supply this operation. Offshore projects, especially complex deepwater development, which can provide significant new sources of oil and gas to meet the world's growing demand for energy, continue to move forward.
Last quarter, we mentioned the contribution we will be making to the Grand [ Mogo ] development [indiscernible]. Now we are also gearing up for the supply of coated seamless risers and flow lines and well deadline export line and ceasing for [ TPLO ] [indiscernible] deepwater development in the Black Sea. With this project, we are building a strong offshore order backlog for deliveries from the middle of next year as we look forward to the confirmation of other major offshore process FID.
In Argentina, the results of the Congressional midterm election are improving the condition for the financing of the development of the [ Vaca Muerta ] shale play. Additional rigs are being put into operation local companies are raising fresh dollar financing for their operations. While NII has confirmed is interesting in participating in the development of new LNG export facility.
Tenaris has also increased its energy production in Argentina. In September, we started operation at a new 95-megawatt wind farm, which in addition to our previously installed 100-megawatt wind farm is now powering our stop and pipe facility in campaign. In October, the 2 wind farms plus a small complement from our thermal electric plant provided all the power we require for our operation in [ Campana], with no power purchased from the local network.
The new wind farm is a further step to our goal of reducing carbon emission and improving the sustainability of our operations. Around the world, demand for electric energy is accelerating our production line for boiler and heat exchanger pipes in Europe is operating at full capacity.
As China continues to increase its overwhelming level of steel exports. Europe is also taking action to contain steel import with the strengthening of its steel safeguard measure which should benefit our operations in the region. In this volatile environment, Tenaris continue to demonstrate the resilience of its operation and financial performance, which is allowing us to distribute a cash return of around 11% to shareholders for the ACV.
We can now take any questions you may have.
[Operator Instructions]. Our first question comes from the line of Arun Jayaram from JPMorgan Securities, LLC.
2. Question Answer
Arun Jayaram from JPMorgan. Paolo, I was wondering if you could maybe elaborate a little bit more on the implications to [ Tenaris ] from the Argentinian elections. and perhaps narrowing in and the fact that you did mention in third quarter, you saw lower activity levels, some softness in frac and coiled tubing services. What is your outlook for the fourth quarter in 2026 in Argentina, particularly as you deploy an incremental new build frac fleet?
Well, thank you, Arun. Well, I would say that the agile in the Argentina election is marking an important turning point. The expectation of the market where for a substantial let's say, for a balanced results, but the real results has been a clear victory of the party or the [ President Mila ] with more than 40%. This has changed the -- let's say, the perception by the investor about the future sustainability and the ability to continue the transformation plan in Argentina by the present administration, even if this was a midterm election still is changing the proportion and the presence in the Congress, in the chamber.
So it will allow and give more leeway for the administration for pushing ahead with this transformation plan. This has been combined with a very strong support from the American administration and a substantial financial support by the American administration. This has changed the perception and the view of the financial community. There has been a very important increase in the level of stock exchange in the range of 30%. There has been a substantial reduction in the country risk, almost 400 basis points down, which was not expected or anticipated by the market.
This is important because it has changed also the willingness of financial operators to support initiative and business in Argentina. The oil company, in particular, will have enhanced access foreign financing for their development project. just in this week. Yesterday, there has been a first issuance of bonds, Tecpetrol with EUR 750 million. In this week, also YPF will do something similar.
So the access to finance by the oil company, in our view, will be stimulating the level of investment in the moment or at least in the last 6 months, the constraint on the finance operation has been a factor in the decision-making for new investment and for big project that could be developed in the coming 2, 3, 4 years.
So we expect that gradually, there will be increase in the investment in development of the asset in camera and also a stimulus to long-term project. One example could be the NEI project for LNG. If you refer to the first quarter, I would anticipate some increase in the number of rigs operating in the country. And gradually, we will see possibly something more during 2026 and 2027 when more substantial program will proceed. So we are positive on Argentina, and the election has been a turning point, in my view, in stimulating the level of activity in the energy sector and not only in the energy sector.
Great. That's super helpful. Paolo, I was wondering if you can maybe provide your thoughts on how margins could trend in the fourth quarter. As you know, in the U.S., the last couple of pipe logic index readings have been fractionally down 1.3%. The prior month, 0.5% this during October thoughts around margins in the fourth quarter because I do think the guidance implies relatively flat sales on a sequential basis.
Well, you are right, in describing the evolution of 1 index -- relevant index, that is pipe logic. As we mentioned in the last conference call, in a market that is in which the important material represent share in the range of 40%. When -- like what has been done in June this year was raising the level of tariffs to 50%, sooner or later, as we anticipated in last conference call, we'll have some impact on the price.
The point is that the accumulation of stocks before the set of the tariff in the market and a slight decline in the number of rigs are keeping pressure on prices. But as I say in the last quarter, I think that gradually sooner or later, we will see, let's say, the impact of this situation and the level of price will start to recover.
On this more specifically level of stock, I would ask Guillermo to have his point of view from inside concerning, let's say, the potential evolution of this in the future.
Thank you, Paolo and Arun. Yes, I mean during the first 3 -- so far this year, we have seen a high level of imports very high during the first semester, we started to see some decrease in the third quarter. But still, we have not seen the full impact of the 50% tariff in those imports. So we are expecting further reductions during the current quarter, and particularly in the first semester that should allow the market to be much more balanced today, the level of inventories on the ground at around 7 months, so above normal levels. And as soon as this happens, prices will have some more power to increase.
Our next question comes from the line of Matt Smith from Bank of America.
I wanted to start off with a very strong sales print in the quarter, some surprises on the mix as well, especially welded sales up in the quarter. You also referenced a bit of a pull forward in Middle East orders. So just hoping you could reflect on those trends within the quarter and how you expect those mix effects to potentially change or not to change as we head into the fourth quarter, please?
Thank you, Matt. As you see, the -- we think we had a good level of sales and we also expect for the next quarter to have a level of sales close or in line with the third quarter. Now there has been strong sales of [indiscernible] mainly due to 2 factors.
One is OCTG, oil country tube goods in the United States. Areas in which also to respond to the pressure of tariff we are substituting some of the intermediate and surface casing with welded product instead of seamless product. This had an impactment impact. The other point is the delivery of the big pipeline, the terms as it's called, there is the big oil pipeline there is enhancing the evacuation of [ Vaca Muerta ] in the first stage, the 350,000 barrel a day and subsequent 550. So it's very big pipeline. We are finishing the delivery of the [ pie ] for it just in the third quarter.
This has been one of the reasons. Looking ahead is likely that in the fourth quarter, this ratio get back to the previous levels. I mean we do not have similar strong delivery for the pipeline. While in the case of OCTG, we will continue to maintain the share of well. So you can expect that this could be slightly lower.
Okay. Perfect. Then I wanted to change tack on to shareholder distributions, if I could, a 7% increase in the interim DPS level today. I mean, given the extent of the cash power, you still sat on the strong performance you reported and the recent sort of announcement was referenced to the controlling shareholder family.
I just wondered how sustainable the market should view the current buyback level by which I'm really referring to the $1.2 billion announcement made last year. I mean that looks like something that's very affordable for 2026 too from my perspective. I know you still have the $600 million to complete first of that original announcement, but I was hoping you could already talk to next year's decision and your early thought process there, please?
Well, what we have in front of us, we will execute the second tranche of the buyback. And as you saw, we -- the Board approved a level of dividend more or less in line in absolute term with the previous year but higher per share due to the buyback impact. This is what we have in front of us. And then it will be up to the Board to decide what to do once we completed this second buyback.
As we mentioned in the opening remarks, by the way, the 11% return for shareholder is, let's say, good showing a good performance of the company. I mean, in this moment, Tenaris has shown resilience in a very volatile environment and delivering to the shareholder, I mean, a very substantial return in our view.
Our next question comes from the line of Marc Bianchi from TD Cowen.
The press release commented on some additional tariff cost headwind in 4Q related to this, I guess, second to 30% to 25%. We previously talked about that, I think, being the 25% being equivalent to about $70 million of quarterly EBITDA or quarterly cost. Is that the right way to think about the progression from 3Q to 4Q on an EBITDA basis? It sounds like maybe there could be some offsets. You mentioned the mix of more OCTG that should be a favorable benefit to margins. Maybe you could help us understand a little bit better the EBITDA progression from 3Q to 4Q.
Thank you, Marc. Well, in the next few will see, as I mentioned, maybe some lower volume but potential sales in line or close to what we have seen in the third -- but we expect the EBITDA to be lower in the range of single digit because of the impact of the tariff in our cost of sales. We are paying tariff on the bars of steel that we are bring into the states for supporting our rolling mill. We pay the 50% tariff on this.
But this tariff is getting in our inventory and is released gradually while we proceeded in the cost of goods sold. So in the third quarter, we pay a higher number, a higher amount compared to what is included in our cost of sales. But in the fourth quarter, we expect an additional, let's say, that this tariff included in our inventory will get into our cost of sales. So we will have higher cost of sale for this region.
We expect this in the range of $40 million that will, let's say, affect our EBITDA in absolute terms. Then there are other factors that could contribute to this, but this is our estimate today. In terms of the margin, as we anticipated, also in the last conference we continue to expect margin in the range between [ 20 and 25], not far slightly lower than the one we had in the third quarter.
Okay. That's very helpful. And just to clarify on the starting point for the EBITDA comment, was that the $753 million that included the $34 million gain? Or are you excluding that when you talk about being down single digits?
No, no. I'm talking about the adjusted EBITDA because I'm considering without, let's say, the recovery weather on the antidumping. We think that considering this, there is a normal -- in the coming quarter, we will have a lower EBITDA for the reason that I mentioned.
Very clear. The other question I had was on the -- I think last quarter, we talked about some pipe that had been shipped from Asia before the second round of [ 232 ] and that was still in transit and that needed to get landed and integrated into the market before things stabilized, I guess. I mean, I understand that you mentioned the inventory on the ground is still a bit of a problem, but how do we see this type and transit issue playing out?
Giovanni, maybe you can say if this is how this situation evolves?
Yes. Yes. This is correct, Marc. I mean the impact of the additional 25% that were implemented in June, we said that we were going to start the full effect of this during the fourth quarter of the year. And this is what we expect. Now due to the shutdown of the government of the -- in the U.S. We don't have import statistics, but our understanding is that they are going down, and we will see further reductions in the following quarters.
Our next question comes from the line of Alessandro Pozzi from Mediobanca.
First one is on the outlook. You provided a description of what you think is going to happen any chance you can venture a little bit further out in Q1 and see what could be the main moving parts as we go into 2026. And also while we are on the topic maybe any color on the level of tender that you expect Middle East and the deep water for 2026.
And the second question is on Q3, strong sales, especially in North America, it feels like you are gaining some market share. But if you can maybe elaborate a bit more on the reason for the increase in sales in Q3 despite lower rig count in the U.S., of course, all U.S. would be appreciated.
Thank you, Alessandro. Just on the first point, which is the forecast. Let me -- I mean, will be very relevant what's happened with the tariff because just to summarize. Today, we are paying every quarter an amount in the range of $150 million this tariff. And as I say before, in the third quarter, only a part, a substantial part of this enter into our cost of sales.
But looking ahead in the coming quarter, we will have increasing cost getting into our cost of sales. But on the other side, we are doing taking action to reduce the tariff by increasing production into the states for steel, for pipe. We expect production in our copper plant steel plant to increase from now on, continuously and contribute to a reduction in our import of this. And also, we are expanding our production in pipe.
So also the sum of the import that is complementing our sale will be reduced. So we have our own plan for reducing this. But there is also the negotiation underway. All the country from which we are shipping steel into the States, Argentina, Mexico, Europe, from Italy and Romania have a negotiating table with the United States and there could be some reduction or negotiation that may affect the 232 for still in this case, for still semi-labor product, not for finished product probably.
So this is not predictable today. But I expect that over time, with Argentina due to the extraordinary relation special relation that has been established between treat Trump, presemilate and the administration, there's going to be a discussion on this. With Europe also maybe there could be an agreement in line with the U.K. agreement and with Mexico also, there could be negotiating citing table.
So this will be relevant and will affect our performance also in the coming quarter in the medium term. Probably, we won't see any change here in the fourth quarter apart from what I mentioned. But looking in 2026, we need to consider also a potential change in the level of tariff for our steel bars on top of what we can do ourselves. As far as the Middle East and the situation in this, I will ask Gabriel to comment on this.
Thank you, Paolo. Alessandro, the Middle East business, I would say, is overall stable at good levels. If we break down the important components Saudi, as you know, has been decreasing activity in the first half of the year, but we see this drop in rates stabilize. We believe that Saudi as bottom in its drilling activity. And even there are some early indications that there might be a rebound of rigs into 2026, but this is something too early for us to factor in our forecast.
Another component of our business in Saudi is our pipeline business. And last month, in September, we started deliveries of the large pipeline. So this is something that we accompany us well into 2026. So line pipe offsetting some of the lower OCTG in Saudi. When we look outside Saudi, the key producers in the [ GCC], UAE, Kuwait, Iraq, they're all pressing ahead, increasing capacity and offsetting depletion in line with the core of increasing crude production.
So we see those plans steadily going ahead. Qatar, which is more of an LNG story, we see Qatargas preparing for the new campaign of the North Field West, 50 wells that would probably supply towards the end of '26 and '27. So overall, a lot of moving pieces, but I would say, the Middle East, stable and resilient into next year.
There was also a comment on offshore, Alessandro. We commented that the shipment for offshore in the second half was a bit lower in the first half, where we had a lot of offshore pipelines in Brazil, in South [ Subsaharan ] Africa that were not repeating in the second half. But as Paolo mentioned in the opening remarks, we are building a strong backlog into 2026. The [ Scaria ] Phase 3 is a good example. And we are seeing some other projects moving ahead with likely FID in the first part of the year. So overall, we are pretty much positive and constructive on the contribution of offshore into 2026.
Thank you, Gabriel. On the last point, that is the market share, I think we are gaining some market share. But let me tell you I think the reality is that our clients are gaining market share for different reasons into the space of North America. I will let Guillermo to comment on this, even if this is in your view to [indiscernible].
Yes, I think that it is sustainable. Our clients are mainly the large operators that have shown much more resilience and the smallest one, and we expect this to continue. Now regarding the correlation of demand of OCTG with rig count there, we need to be very careful because as we have explained in other conference calls. Most of the tractors, particular hours are increasing productivity and efficiency. And therefore, the impact on the demand of CTG is on the downward trend is lower than if you just take into account the rig count. So you need to take both into account. But indeed, our market shares have slightly increased due to the resilience of our grid.
Yes. I would add just one comment. The large operator are more resilient in front of a perception of a reduction of the price of oil. They have more productive play. They operate in more productive play. They have better efficiencies. So the operator we are serving tends to be more stable and resilient even when the perception of price of oil over time may be subdued consider, let's say, maybe months ago.
Okay. And sorry, on the -- you mentioned intensity. Can you give us maybe an update on where we are in terms of intensity now versus the, let's say, a year ago? And how much improvement there was?
Yes. You mean OCTG consumption?
Yes.
I would say that it's around 2% to 3% higher. So if you see a record you need to consider that half of this has been compensated by an increase of productivity, right? [indiscernible] takes them to drill a well, but also because they are extending the lateral [indiscernible].
Our next question comes from the line of Sebastian Erskine from Rothschild & Company Redburn.
The first one, just on Mexico. So you secured some work from [ Woodside ] for the [ Trion ] project. And I think recent news flow more broadly has been positive for Mexico as kind of [ PNX's ] strategic plan is being flushed out and the mixed contracts are being signed. In your view, how much of a factor is Mexico going to be on a volume perspective in 2026 versus this year? What was the potential upside from that region?
Sorry for the region were -- we were mentioning which reasons can you repeat?
Yes, sure. Just in Mexico -- just obviously ...
First of all, on the question of [ Trian ] and other private company that are, let's say, operating. What we see is that this is starting to moving on in different direction, also some of the contract -- new contract that [ Pemex ] is giving for drilling are moving on.
The first one has been assigned this will imply additional drilling in Mexico. This is one point, including the project like [ Tryon ] and outside that are going on. Second point is the financial situation of [ PEMEX]. After the refinancing operation for $12 billion is more -- I mean, is recovering ability to consider, let's say, payment to the supplier during the third Q, we didn't receive, but now we are receiving payment, and we expect during the fourth quarter to receive a substantial payment on our receivable you'll notice the receivable has been going up.
One of the reasons has been the delay in payments, but we expect this to improve and we expect the, let's say, the recovery in the financial reason of [ Pemex ] to have an impact some moment. In our -- for the visibility that we have in the coming quarter, we do not see a major change. But we consider the refinancing signal that over time, during 2026, there will be additional activity by the private company and maybe hopefully by [indiscernible] also.
Really appreciate that. And just a quick one on kind of unit raw material costs. It looks like you benefited from some kind of meaningful deflation in the third quarter, particularly in hot rolled coil. Can you give an update what you're expecting on the input cost into the fourth quarter and for the moving parts kind of ex tariffs?
We do not expect a major change because the situation of high inventory, there basically containing the impact of tariff is also something that is to some extent, affecting the hot rolled coil. I mean the price of other coil is higher, but it's not care as much as one could have expected for the size of the increase in the import of this. I think that maybe, Carlos, you're looking at our -- the impact of oral coils on our cost of sales, you can add something.
I don't see major change in small increase for next quarter, then flat and going down. The effect that we're going to see in our costs next quarter is the effect of tariffs, as you mentioned already. The impact of tariffs in our cost of goods sold will increase during this quarter to achieve almost the full effect of the tariffs.
Our next question comes from the line of David Anderson from Barclays.
Just want to get back to the Middle East, if we could, please. Specifically on the emerging unconventional resource plays in Saudi and UAE. So [ Aramco ] just signed contracts in the third phase of [ Japara ] is now planning to drill something in the order of 400 or 500 wells next year. And the UAE, [ ADNOC ] has recently talked about 300 wells annually [indiscernible] 2027.
Presumably, all that's going to be seamless as it is in the U.S. I was wondering if you could talk about this opportunity for Tenaris. I mean if we just kind of run the rough numbers here, this seems like a pretty substantial uptick if we kind of use the same numbers that we see in the U.S. shale and applied over there. Can you just talk about how important this is for your Middle East business over the next couple of years, please?
Thank you, David. And Gabriel?
Yes, David, indeed, we are excited about the unconventional opportunity in the Middle East. As you mentioned, this is something that is not new. [indiscernible] Jaora has been there and increasing rigs steadily over the last 3 years since the development started. And this is an area that we are participating. As of today, we have an important share in the seamless and conventional space in Saudi and that also demand pipelines for connectivity and transportation of gas in the Kingdom.
So this is exciting and is the part that has been more resilient the decrease of rigs for Saudi that I was referring before. Clearly, the gas development in Saudi is the most resilient that they are targeting to replace oil for internal consumption. Going to UAE. There is also an opportunity of unconventional is a bit smaller, but the [ nano ] is accelerating in their own operations and with partners they are bringing and they have some partnerships of some concessions. And there, we are also leading in terms of market share and position all the unconventional plays. So within the broad scope of supply that we have with [ ADNOC ] unconventional is an area that we are participating and leading. So it's [indiscernible] that we expect growth as well going forward.
And just a quick follow-up. Where do you source that pipe? I don't think you manufacture any seamless in the Middle East? I know you've got a well good facility, I think you have a JV with [ Aramco ] in Saudi, but I don't think you have any seamless production over there. Where do you source that from a project like this? That's a lot of [ pipe ]?
Yes. For the -- in Saudi Arabia for pipelines, we saw domestically for our SAW large landmine. When you go to the OCTG side, there is a mix string of welded and seamless. The welded we produce ERW welded for surface casing, domestically sort on coils of Saudi and our production of pipes in the kingdom.
And for the similar component, we source linen from the local mills in Saudi and then we finish to our connection. When we go to UAE, all our material is brought from our main mills in Argentina and Mexico and to a large extent, also feed it in our finishing facility that we have in [ Abu Dhabi]. So it's a mix of combination of pits with a heavy component of domestic [indiscernible].
Our next question comes from the line of Kevin Roger from Kepler Cheuvreux.
Yes. two, if I may. The first one is on the profitability of the business based on the region, the different region. And I was wondering if you can give a bit of color on where do you stand U.S. versus international right now in terms of profitability? Is there any big difference or the things that are normalizing close to the same level? That would be the first question, please.
And the second one is related on the working capital and maybe you have, in a way, given the answer with [ PEMEX], but just trying to understand the [ 300 million ] negative movement in working cap in Q3 when you say that it's an increase in receivables. Is it something in where a one-off that you expect to recover in Q4? Or there is something else beyond this movement, please?
Thank you, Kevin. Well, on the first line, Tenaris is selling in the different region, a very diversified portfolio product. So it's pretty difficult to say profitability for the market. For instance, when we're talking about offshore, depending if it is in Africa, in the Gulf or in the Southeast Asia or in the Mediterranean.
We have a range of products, including line pipe with quoting that following an acquisition of [indiscernible] some cases represent an invoicing even superior or higher than the invoicing on pipes. So it's difficult to do differentiation region. We have differentiation due by product. Some of the most competitive products are the onshore welded line pipe. There are examples in Argentina or in Saudi Arabia.
These are, let's say, the tail of our profitability, while the most profitable area could be the line time coated with insulation for complex offshore product. In the U.S., there is an average, but still in the U.S., there are also there differentiation between production casing and suffer caring or tubing.
So I wouldn't say there is a regionally driven profitability impact, I would say, is more delivered by the mix of different projects and sales. When you talk about working capital, we are seeing the increase in the working capital, this is driven by the delay in payment of [ PEMEX], and this is something that we expect we will be going in the opposite direction in the fourth quarter.
The other component of the increase in stock is due to the incorporation of tariffs into our stock will probably stay at the same level. So the inventory has a higher cost inventory or bars because of the impact of the tariffs. As we mentioned, the tariff had an impact in the third quarter in the range of $80 million and will increase something in the range of $40 million, incorporating in our inventory in the fourth -- this is the reason for some lower EBITDA.
It is also something that will remain relatively high. Then that is all what we can do in speeding up the receivable of some other areas like Middle East that maybe may contribute to improvement of the, let's say, to reduction of the need of working capital during the fourth Q. In this sense -- has been a kind of trade, I would say, in terms of absorption .
Our next question comes from the line of Paul Redman from BNP Paribas.
I had a quick question on inventory levels in the U.S. and where you expect imports to fade quicker. Would that be more on the seamless or the welded from and where are inventories fire on heater product?
And then secondly, for our press release earlier this month, earlier this month, I think it was talking about some [indiscernible] now being included in the buyback process. I just wanted to confirm whether there's any change here or anything else we should know about on that change in positioning
Sorry, can you repeat the second question? Just to be sure I understand you well.
Yes, your largest shareholder is now wanting to be included in the buyback process. I believe this is a change from its previous positioning. I just want to understand whether you're aware of any change in positioning here?
Yes. Okay. Understood. Now the first one is on inventory. Here, Guillermo, if you can.
If you can -- yes, when we look at the imports it's more on welded pipe on [indiscernible]. And regarding the increase of inventories on the ground that we have seen lately has also been higher on the ERW than in [ internal]. Looking forward, the expectation is that both GRW and [ SEAMLESS ] inventories on the ground will go down.
On the second one, the controlling shareholder has informed that it may start selling share but will not go below a certain threshold. And then we'll see this in the public information because -- the shareholder is also by the tool is indicating when the movements are above the 1%. This is what we can see we can say about this.
Our next question comes from the line of Rodrigo Almeida from Santander.
So just a couple of questions here from my side. The first one, I'm not sure if we talked about this during the call, but regarding Argentina, right, we are a food services business in Argentina. If you could give us an update on hurricanes evolving there? Are we talking a little bit about the Argentina macro environment, but how could this business say, health results maybe over the next few quarters. I think this will be [indiscernible] for you.
And then I have another question here. When you look into South America, we saw a nice contracts recently signed with Petrobras, which I suppose could somewhat offset they project that just ended. So if you could give us some color on how we pick about the South American operations going forward.
Thank you, Rodrigo. Well, about Argentina, as I comment, I think, the oil company, including YPF and all the other will have more access to financing and willingness of. The investor of support this has been clearly reacting to the results of the election in a very positive way.
What does this mean for us? Well, it means additional rigs there are coming into operation gradually because this, you cannot bring it. The number of rigs idle in the country is almost 0 now. So will increase only slightly. But there will be action to bring into the country additional rigs for operations during 2026.
It means that fracking operation will increase, and this is important for our division that is doing fracking in Argentina. We can expect increase in invoicing by fracking operations and all by our sales of pipe and services over time will not be immediate, but will have an impact in the coming quarter. So more sales.
Now in the line pipe, the project of LNG, the Cs project promoted by Pan America and together with partners like Pan so is going on and will -- in the present situation, we will see the tender and the FID has been done in June and we expect in 2026 that the process of construction of time plan will start and also the assignment of the contract for the pipes. This kind of movement are important from our point of view and we enhance the market for us. In the [ kero ] Petrobras, I will ask Gabriel comment on the contract.
Yes. Thank you, Paolo. Rodrigo, in terms of drilling activity in Brazil, we see steadily increasing by Petrobras and the other majors that are made in the deepwater play in Brazil. And there are many moving parts of the supply of Tenaris, both in OCTG and Line Pipe.
In [ CTG], we have a long-term agreement with Petrobras and the other majors for the large OD connectors, which we produce locally in our facility in fab. We are also suppliers in certain fields of the similar casing as well with Petrobras. And we also have an important contract for completions of 13 and CRA given the -- our service conditions of completions in Petrobras.
So we believe that this, together with the pipeline, the seamless pipeline bookings that are also carrying insulation call. I will mention, I believe in the last few calls, [ Buzios 9 and Buses 11]. The contribution of these different segments will contribute to offset the conclusion of the big [ Ria SAW ] that we had and we enjoyed until the first half of this year. So a lot of moving parts and it's very interesting, the breadth of the portfolio and the position that has in Brazil.
Thank you. At this time, I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.
Thank you, Gigi, and thank you all for joining us, and I hope to see you soon around and thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.
Financial data from Tenaris
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 10,584 10,584 |
2%
2%
100%
|
|
| - Direct Costs | 6,996 6,996 |
2%
2%
66%
|
|
| Gross Profit | 3,588 3,588 |
3%
3%
34%
|
|
| - Selling and Administrative Expenses | 1,505 1,505 |
1%
1%
14%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 2,050 2,050 |
11%
11%
19%
|
|
| - Depreciation and Amortization | 76 76 |
5%
5%
1%
|
|
| EBIT (Operating Income) EBIT | 1,973 1,973 |
11%
11%
19%
|
|
| Net Profit | 1,681 1,681 |
5%
5%
16%
|
|
In millions EUR.
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Tenaris Stock News
Company Profile
Tenaris SA engages in the manufacture and supply of steel pipe products. The firm supplies round steel bars and flat steel products for its pipes business. The company operates through Tubes business segment. The Tubes segment includes the production and sale of both seamless and welded steel tubular products, and related services primarily for the oil and gas industry, principally oil country tubular goods (OCTG) used in drilling operations, and for other industrial applications with production processes that include in the transformation of steel into tubular products. The company operates in geographical areas, such as North America, South America, Europe, Middle East and Africa, and Asia Pacific. Its products and services include OCTG, Premium Connections, Rig Direct, Offshore Line Pipe, Onshore Line Pipe, Hydrocarbon Processing, Power Generation, Sucker Rods, Coiled Tubing, Industrial and Mechanical, and Automotive.
StocksGuide Premium
| Head office | Luxembourg |
| CEO | Mr. Rocca |
| Employees | 25,169 |
| Website | www.tenaris.com |


