Tenaris S.A. (TS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Second quarter sales $3.1 billion, down 7% year-on-year, but up 6% sequentially, mainly reflecting an increase in North American OCTG prices and stable volumes.
Average selling prices in Tubes operating segment Decreased 2% compared to the corresponding quarter of last year, but increased 6% sequentially.
EBITDA $733 million, up 5% sequentially, with an EBITDA margin close to 24%. Margins remain in line with the previous quarter.
Cost of sales Rose 5%, mainly reflecting product mix differences and higher tariff payments.
Operating cash flow $673 million.
Capital expenditure $135 million.
Free cash flow $538 million.
Net cash position $3.7 billion at the end of the quarter, after a dividend payment of $600 million in May and share buybacks of $237 million.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Successful delivery of pipes and coatings: Delivered to complex line pipe projects globally, including Equinor Raia project in Brazil, ConocoPhillips Willow project in Alaska, Shell's Bonga project in Nigeria, Azule Nengo project in Angola, and Chevron Leviathan project in the Mediterranean.
Award for casing and tubing supply: Received for the GranMorgu project in Suriname, supported by a new base being set up in Suriname.
Expansion in Guyana-Suriname Basin: Set up local service bases to support operations of ExxonMobil, TotalEnergies, and other customers in the region.
Development in Vaca Muerta shale play, Argentina: Supplied fracking and coil tubing services and pipeline infrastructure for crude export capacity to Puerto Rosales and Duplicar North pipeline.
U.S. domestic production base: Strong position with efficient seamless pipe mill at Bay City and copper steel production facility, enabling competitive service under Section 232 tariff changes.
Operational efficiency in North America: Resilient sales due to customer focus on operational efficiency and extended lateral lengths, leveraging seamless products and Rig Direct service.
Adaptation to Section 232 tariff changes: Positioned to benefit from increased domestic capacity utilization and reduced imports, with potential price impacts as inventories adjust.
Focus on offshore line pipe projects: Lower deliveries expected until 2026, with anticipation of new projects like GranMorgu in Suriname.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Section 232 Tariff Increase: The increase in the U.S. Section 232 tariff on steel imports from 25% to 50% and ongoing tariff negotiations have created market uncertainty. This could impact the competitive environment, favoring domestic production but potentially affecting pricing and import levels.
Offshore Line Pipe Project Deliveries: There will be a lower delivery to offshore line pipe projects until a new wave of projects progresses to the development phase in 2026. This could lead to reduced sales in this segment in the short term.
Drilling Activity Slowdown: Drilling activity in several areas of the world has slowed, which could impact sales and operational performance, particularly in the U.S. and Canada.
Economic Challenges in Mexico: Pemex's low level of operation and supplier debt issues, despite recent financing, could pose challenges to increasing operations and fulfilling contracts.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Market Conditions and Tariffs: The U.S. Section 232 tariff on steel imports has increased from 25% to 50%, creating market uncertainty. Negotiations are ongoing, and the tariff structure is expected to shift towards a more specific product-based approach. This will favor domestic production and reduce imports, impacting prices once excess inventories are drawn down.
Offshore Line Pipe Projects: Deliveries to offshore line pipe projects will decrease until a new wave of projects progresses to the development phase in 2026. The GranMorgu project in Suriname is one such future project.
Guyana-Suriname Basin: Tenaris is setting up local service bases to support operations in the fast-growing Guyana-Suriname Basin, including ExxonMobil and TotalEnergies projects.
Vaca Muerta Shale Play (Argentina): Deliveries for the Vaca Muerta Sur pipeline will be completed in Q3 2025, enabling crude export capacity to a new deepwater port. Pipes for the Duplicar North pipeline, connecting Northern Vaca Muerta to main crude export pipelines, will be delivered early next year.
Mexico Operations: Pemex's $12 billion financing facility is expected to increase its operational levels and reduce supplier debt, potentially leading to higher supply levels under Tenaris' current contract.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividend Payment: $600 million dividend payment in May.
Share Buybacks: $237 million share buybacks during the quarter.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the outlook for the second half of 2025, particularly regarding volume and margin trends?
A:Paolo Rocca stated that there are many moving parts affecting the second half of 2025. For the third quarter, lower sales are expected due to reduced invoicing in fracking operations in Vaca Muerta and lower shipments of line pipe. North America operations will see some price increases but also reduced rig activity due to current oil prices. Sales are expected to decline in the high single digits for the third quarter. The fourth quarter is harder to predict due to tariff impacts and price dynamics. Maintenance activities in August will also affect sales.
Q:What is the outlook for the project pipeline in 2026 compared to 2025?
A:Gabriel Podskubka explained that the offshore market remains positive, with resilient deepwater drilling activity. Tenaris is building a backlog with projects in Suriname, Brazil, and Nigeria. The acquisition of Shawcor has strengthened their capabilities. Pipeline deliveries in the second half of 2025 will be lower, but 2026 is expected to see significant contributions from the offshore segment.
Q:What is the outlook for margins in Q3 and Q4 of 2025, and how will tariffs impact them?
A:Paolo Rocca noted that the 50% tariff under Section 232 could cost $140-$150 million per quarter. Negotiations with countries like Mexico and Canada might reduce this impact. The tariffs will gradually affect costs due to inventory flow. Prices are expected to rise over time, which could offset some tariff impacts. Margins in Q3 are expected to be slightly lower than Q2 but remain between 20%-25%. The fourth quarter outlook is uncertain and depends on price adjustments and importer decisions.
Q:What is the outlook for sales in South America, particularly in Argentina?
A:Paolo Rocca stated that sales in Argentina have been affected by a reduction in rig count due to divestitures in the southern region and cautious investment in Vaca Muerta. Financing challenges and country risk are slowing development. However, devaluation of the local currency is reducing costs, and Vaca Muerta is expected to expand over time.
Q:How will imports and tariffs affect Tenaris' market share and pricing in the U.S.?
A:Paolo Rocca explained that imports represent 40% of U.S. demand. The 50% tariff will reduce imports and increase prices over time. Domestic production capacity is high, but welded supply is limited to specific market segments. Prices are expected to rise gradually, supporting margins.
Q:What is the status of Tenaris' share buyback program?
A:Paolo Rocca confirmed that the Board approved a $1.2 billion share buyback program in two tranches. The first tranche of $600 million is nearly two-thirds complete. The second tranche will be considered in the October 29 Board meeting.
Q:What is the outlook for the Middle East market, particularly Saudi Arabia?
A:Gabriel Podskubka noted that Saudi Arabia's rig count is down 15% year-over-year due to austerity measures. Inventory levels are now aligned with consumption. Other Middle East markets like the UAE, Kuwait, and Qatar are maintaining resilient activity levels. Overall, Middle East shipments are expected to remain stable into 2026.
Q:What is the outlook for Mexico and Pemex's activity?
A:Paolo Rocca stated that Pemex's rig count has increased to 24 from a low of 19. The Mexican government is supporting Pemex with $12 billion in financing, which is expected to stabilize and gradually increase activity. Private operators like Woodside are also contributing to demand.
Q:What is Tenaris' exposure to the U.S. gas market?
A:Guillermo Moreno explained that Tenaris has significant exposure to gas markets like Haynesville and Appalachia, with increasing sales and market share. The company is competitive in these regions due to proximity to the plays.
Q:What is the current inventory situation in the U.S., and how will it affect pricing?
A:Guillermo Moreno stated that imports in the first half of 2025 were 70% higher than the second half of 2024, increasing inventory by one month of consumption. This has pressured prices, but inventory levels are expected to decrease in Q3 and Q4, supporting price increases.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear answer on the fourth quarter outlook for 2025, citing difficulty in predicting price dynamics and the impact of tariffs. Additionally, the response to how much of the $140 million tariff headwind could be mitigated through production adjustments was vague, with no specific figures provided.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Banca credito
Bank PLC
Barclays Bank
BofA Securities
CEO Alessandro
Chase Co
Cheuvreux Research
Co Research
Conference Instructions
Corporate Participant
Cowen Research
Derek Podhaizer
Director Corporate
Division Anderson
Division Arun
Division Bianchi
Division Derek
Division Kevin
Division Kuplent
Division Sebastian
Division division
ET day
Europe Limited
Investor Relations
JPMorgan Chase
Kepler Cheuvreux
Kevin Roger
Kuplent BofA
Limited Research
Mediobanca Banca
North OCTG
Officer Investor
Research Division
payment
TS Transcript
Tenaris S.A. (TS) Q3 2025 Earnings Call Transcript
Unknown10-31
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.
Tenaris S.A. (TS) Q2 2025 Earnings Call Transcript
Unknown7-31
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.
Tenaris S.A. (TS) Q1 2025 Earnings Call Transcript
Unknown5-1
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.
Tenaris S.A. (TS) Q3 2024 Earnings Call Transcript
Unknown11-7
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.
TS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
