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01/11 03:08
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed outlook. Financial performance shows strong sales and a positive cash position, but margins are expected to decline due to tariffs. The Q&A reveals concerns about future EBITDA impacts and uncertainties in guidance, yet there's optimism in market expansions and shareholder returns. The strategic plan indicates potential growth in 2026, but short-term challenges remain. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
Third quarter sales $3 billion, up 2% year-on-year, but down 3% sequentially. The year-on-year increase was mainly due to resilient sales to rig direct customers in the U.S. and Canada, while the sequential decline was due to lower sales to the North Sea and lower shipments for offshore line pipe projects in the Middle East.
Average selling prices in Tubes operating segment Decreased 1% compared to the corresponding quarter of last year and 1% sequentially. The decline reflects market conditions.
EBITDA for the quarter $753 million, up 3% sequentially. The increase includes a $34 million gain from the return of U.S. antidumping deposits paid on OCTG imports from Argentina. Without this one-off gain, EBITDA would have been $719 million or 24% of sales.
EBITDA margin 25% for the quarter. Without the one-off gain, it would have been 24% of sales.
Operating cash flow $318 million for the quarter.
Capital expenditure $185 million for the quarter.
Free cash flow $133 million for the quarter, after accounting for operating cash flow and capital expenditure.
Net cash position $3.5 billion at the end of the quarter, a decline due to share buybacks amounting to $351 million.
Interim dividend per share $0.29 per share or $0.58 per ADR, up 7% compared to the interim dividend per share paid last year.
Rig Direct services: Expanded scope in Canada with a new service yard in British Columbia. The mill in Sault Ste. Marie is ramping up production to support operations in the Montney shale and LNG export to Asia.
Offshore projects: Supplying coated seamless risers, flow lines, and welded line export line and casing for TPAO Sakarya deepwater development in the Black Sea. Building a strong offshore order backlog for deliveries starting mid-next year.
Energy production in Argentina: Started operations at a new 95-megawatt wind farm, complementing an existing 100-megawatt wind farm. These facilities now power the Campana steel shop and pipe facility entirely with renewable energy.
North America market: Maintained sales levels in the U.S. and Canada despite a slowdown in overall drill rig activity, supported by efficient operations and strong customer portfolio.
Canadian market expansion: Celebrated 25 years of operations in Canada. Expanded Rig Direct services and increased production to support the Montney shale and LNG export to Asia.
Offshore market: Gearing up for major offshore projects like GranMorgu in Suriname and TPAO Sakarya in the Black Sea, with a growing offshore order backlog.
Operational efficiency in North America: Mills in Bay City, Hickman, and Sault Ste. Marie operated at record production levels with high efficiency.
Sustainability in Argentina: Achieved 100% renewable energy usage for operations in Campana through wind farms and a thermal electric plant.
Global industrial flexibility: Leveraging a flexible global industrial system to produce locally in various regions while maintaining high quality standards.
Sustainability initiatives: Invested in renewable energy projects like wind farms in Argentina to reduce carbon emissions and improve operational sustainability.
Lower sales in North Sea and Middle East: Sales declined due to reduced shipments for offshore line pipe projects in the Middle East and lower sales to the North Sea, impacting revenue.
Decreasing average selling prices: Average selling prices in the Tubes segment decreased by 1% year-on-year and sequentially, potentially affecting profitability.
High tariff rates and trade restrictions: Tariff rates and trade restrictions necessitate increased local production in the U.S. and Canada, which could increase operational costs.
Slowing drill rig activity in U.S. and Canada: Overall drill rig activity has slowed, which could impact future sales and operational efficiency.
Dependence on offshore projects: The company relies on offshore projects, which are subject to delays and uncertainties in final investment decisions (FID).
Economic and political risks in Argentina: Operations in Argentina are influenced by political and economic conditions, which could affect financing and development of the Vaca Muerta shale play.
Volatile global steel market: China's increasing steel exports and Europe's safeguard measures create a volatile market environment, impacting operations and pricing.
Offshore Projects: Tenaris is building a strong offshore order backlog for deliveries starting from the middle of next year, including contributions to the GranMorgu development in Suriname and the TPAO Sakarya deepwater development in the Black Sea. The company is also anticipating the confirmation of other major offshore project FIDs.
Canadian Operations: The company is ramping up production at its Sault Ste. Marie mill to support the development of the Montney shale and LNG exports to Asia. A new service yard has been opened in British Columbia to extend Rig Direct services in the region.
Argentina Operations: The Congressional midterm election results are improving financing conditions for the Vaca Muerta shale play. Additional rigs are being deployed, and local companies are raising fresh dollar financing. Tenaris has also started operations at a new 95-megawatt wind farm, aiming to power its Campana operations entirely with renewable energy.
European Operations: The production line for boiler and heat exchanger pipes in Europe is operating at full capacity. Strengthened steel safeguard measures in Europe are expected to benefit Tenaris' operations in the region.
Interim Dividend: The 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. This represents a 7% increase compared to the interim dividend per share paid last year.
Share Buybacks: The company executed share buybacks amounting to $351 million during the quarter.
The earnings call presents a mixed outlook. Financial performance shows strong sales and a positive cash position, but margins are expected to decline due to tariffs. The Q&A reveals concerns about future EBITDA impacts and uncertainties in guidance, yet there's optimism in market expansions and shareholder returns. The strategic plan indicates potential growth in 2026, but short-term challenges remain. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
The earnings call presents a mixed outlook. While there are positive developments like the multi-year award from Chevron and record shipments, the guidance for the second half of 2025 is weak, with expected sales declines and tariff impacts. The Q&A reveals concerns about margin pressures and uncertainties in the fourth quarter. The share buyback program is a positive factor, but the lack of clear guidance and potential for lower activity due to oil prices and tariffs balance the sentiment to neutral.
The earnings call highlights mixed signals: financial performance shows a decline in sales but an increase in EBITDA and net cash position, indicating operational efficiency. However, macroeconomic uncertainties, potential impacts from low oil prices, and tariff challenges create concerns. The Q&A reveals high uncertainty and management's vague responses about future impacts, particularly regarding oil prices and Pemex. Share buybacks are a positive factor, but overall, the lack of clear guidance and potential risks balance the positives, leading to a neutral sentiment.
The earnings call presents a mixed outlook: while there are positive aspects like increased dividends and share buybacks, there are also challenges such as decreased sales and price reductions. The Q&A reveals uncertainties regarding the impact of US policies and M&A opportunities, but management's expectation of stable margins and increased future activity provides some optimism. The absence of clear guidance on certain issues tempers the overall sentiment, leading to a neutral prediction for the stock price movement.
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