Tenaris S.A.(US:TS)2025-10-30 14:02Financial Data and Key Metrics Changes - Third quarter sales reached $3 billion, up 2% year on year but down 3% sequentially, primarily due to lower sales to the North Sea and reduced shipments for offshore line pipe projects in the Middle East [4] - EBITDA for the quarter was $753 million, up 3% sequentially, with an EBITDA margin of 25%. Excluding a one-off gain of $34 million, EBITDA would have been $719 million or 24% of sales [4][5] - Operating cash flow was $318 million, with capital expenditure of $185 million, resulting in free cash flow of $133 million. After share buybacks of $351 million, the net cash position declined to $3.5 billion [5] Business Line Data and Key Metrics Changes - Average selling prices in the tubes operating segment decreased by 1% year on year and sequentially [4] - Sales to Rig Direct customers in the U.S. and Canada remained resilient despite overall rig activity slowing [7] - The company has been increasing production in the U.S. and Canada to ensure a reliable supply of high-quality products, with around 90% of U.S. sales of OCTG produced domestically [8] Market Data and Key Metrics Changes - The company noted a strong backlog for offshore projects, particularly in deepwater developments, which are expected to contribute significantly to future revenues [9][10] - In Argentina, the results of the Congressional midterm elections have improved conditions for financing the development of the Vaca Muerta shale play, leading to an expected increase in rig operations [10][19] Company Strategy and Development Direction - The company is focusing on increasing production in the U.S. and Canada to mitigate the impact of tariffs and trade restrictions [8] - A new service yard was opened in British Columbia to extend the scope of Rig Direct services in Canada, while production in Sault Ste. Marie is ramping up [9] - The company is also investing in renewable energy, with a new 95 megawatt wind farm operational, contributing to sustainability goals [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the Argentine market following the elections, anticipating increased investment and activity in the energy sector [19] - The company expects a gradual increase in investment in the Vaca Muerta shale play and other long-term projects [19] - Management acknowledged the impact of tariffs on costs but indicated that the company is taking steps to mitigate these effects through increased domestic production [51][93] Other Important Information - The board approved an interim dividend of $0.29 per share, a 7% increase compared to the previous year [6] - The company is experiencing a cash return of around 11% to shareholders for the year, reflecting strong financial performance [12] Q&A Session Summary Question: Implications of Argentinian elections on Tenaris - Management noted that the elections marked a turning point, with a clear victory for President Milei's party, leading to improved investor perception and access to financing for oil companies [16][18] Question: Outlook for margins in Q4 - Management expects EBITDA to be lower in Q4 due to the impact of tariffs, estimating an additional $40 million in costs related to tariffs [38][39] Question: Trends in sales and market share in North America - Management indicated that clients are gaining market share due to their resilience, and the company is also seeing increased sales despite lower rig counts [57][58] Question: Profitability by region - Management stated that profitability varies by product rather than region, with some products being more competitive than others [92] Question: Working capital movement in Q3 - The increase in working capital was attributed to delays in payments from Pemex, which is expected to improve in Q4 [93] Question: Inventory levels and imports - Management noted that inventory levels are higher for welded pipes than seamless, and both are expected to decrease moving forward [102]