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    TS
    Earnings call· Sep 2025(Q3 FY25)

    TENARIS SA TS

    Oct 30, 2025 Source

    Executive summary

    Tenaris Q3 FY25 — Strong Offshore Backlog and Argentina Recovery

    Tenaris demonstrated resilience in Q3 FY25 with solid sales and EBITDA, driven by strong US and Canadian operations and a growing offshore backlog. While facing sequential sales declines and tariff-related cost pressures, the company is poised for future growth, particularly from an improving outlook in Argentina's Vaca Muerta and increasing offshore project FIDs. Management is focused on local production and strategic market positioning to navigate a volatile environment.

    Highlights

    5

    • Sales reached $3 billion, up 2% year-on-year.

    • EBITDA was $753 million, up 3% sequentially, with a 25% margin.

    • Interim dividend increased by 7% to $0.29 per share.

    • Strong offshore order backlog building for deliveries from mid-2026.

    • Argentinian election results improving conditions for Vaca Muerta development, with increased access to foreign financing for oil companies.

    Concerns

    5

    • Sales down 3% sequentially due to lower North Sea sales and reduced offshore line pipe shipments in the Middle East.

    • Average selling prices in Tubes segment decreased 1% sequentially and year-on-year.

    • Net cash position declined to $3.5 billion from $3.8 billion due to $351 million in share buybacks.

    • High inventory levels (7 months) and continued imports in the US market are keeping pressure on prices.

    • Expected Q4 EBITDA to be lower by single digits due to $40 million impact from tariffs on steel bars entering cost of sales.

    Guidance & targets

    4
    CategoryTargetConfidence
    Sales
    close or in line with Q3 FY25
    medium materiality
    Medium
    Adjusted EBITDA
    lower in the range of single digit
    high materiality
    Medium
    EBITDA Margin
    20% and 25%
    high materiality
    Medium
    Tariff impact on EBITDA
    $40 million
    medium materiality
    High

    Operational metrics

    19
    Sales
    $3 billionup 2% YoY, down 3% QoQ
    Q3 FY25

    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.

    EBITDA
    $753 millionup 3% QoQ
    Q3 FY25

    Our EBITDA for the quarter was up 3% sequentially to $753 million with our EBITDA margin for the quarter at 25%.

    EBITDA Margin
    25%
    Q3 FY25

    Our EBITDA for the quarter was up 3% sequentially to $753 million with our EBITDA margin for the quarter at 25%.

    Adjusted EBITDA (excluding one-off gain)
    $719 million
    Q3 FY25

    Without this one-off gain, our EBITDA would have been $719 million or 24% of sales.

    Adjusted EBITDA Margin (excluding one-off gain)
    24%
    Q3 FY25

    Without this one-off gain, our EBITDA would have been $719 million or 24% of sales.

    One-off gain (US antidumping deposits)
    $34 million
    Q3 FY25

    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.

    Capital Expenditure
    $185 million
    Q3 FY25

    With operating cash flow of $318 million and capital expenditure of $185 million, our free cash flow for the quarter was $133 million.

    Share Buybacks (executed)
    $351 million
    Q3 FY25

    After share buybacks for $351 million, our net cash position declined to $3.5 billion at the end of the quarter.

    Net Cash Position
    $3.5 billiondeclined from $3.8 billion
    Q3 FY25

    After share buybacks for $351 million, our net cash position declined to $3.5 billion at the end of the quarter.

    Interim Dividend per Share
    $0.29up 7% YoY
    Q3 FY25

    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.

    Interim Dividend per ADR
    $0.58
    Q3 FY25

    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.

    Shareholder Return
    11%
    ACV

    In this volatile environment, Tenaris continues 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.

    US OCTG Sales from US Production
    90%
    Q3 FY25

    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.

    New Wind Farm Capacity
    95 megawatts
    September 2025

    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 steel shop and pipe facility in Campana.

    Total Wind Farm Capacity
    195 megawatts
    Q3 FY25

    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 steel shop and pipe facility in Campana.

    Tariff Impact (quarterly)
    $150 million
    quarterly

    just to summarize, today, we are paying every quarter an amount in the range of $150 million this tariff.

    OCTG Consumption Intensity Increase
    2% to 3% higher
    YoY

    I would say that it's around 2% to 3% higher. So if you see a rig count reduction of 5%, you need to consider that half of this has been compensated by an increase of productivity, right, the days that it takes them to drill a well, but also because they are extending the lateral length.

    Working Capital Movement
    EUR 300 million negative
    Q3 FY25

    Analyst-stated figure for negative working capital movement, attributed by management primarily to delayed PEMEX payments.

    Tariff Impact on Cost of Sales
    $80 million
    Q3 FY25

    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.

    Industry KPIs

    3
    MetricValueDetails
    Rpo backlogstrong
    FCF CAPEX leverage$133 million FCFUSD
    Orders bookings by segment—

    Orderbook & backlog

    2
    Share Buyback Authorization$1.2 billionlast year

    Original announcement made last year.

    Remaining Share Buyback Authorization$600 millionQ3 FY25

    Remaining amount to complete the original $1.2 billion authorization.

    Deals & partnerships

    2
    Woodside EnergySupply of products for the Trion project

    Secured work for the Trion project in Mexico, part of positive news flow for Mexico's energy sector.

    TPAOSupply of coated seamless risers, flow lines, welded line export line, and casing for deepwater development

    Gearing up for supply to the Sakarya deepwater development in the Black Sea, contributing to a strong offshore order backlog.

    Capital programs

    1
    Campana Wind Farm (new)completed
    Start: September 2025

    Benefit: 95 megawatts

    Started operation in September, adding to previously installed 100-megawatt wind farm, now powering steel shop and pipe facility in Campana.

    Risks & headwinds

    5
    Lower sales in North Sea and reduced offshore line pipe shipments in Middle EastQ3 FY25

    Sales down 3% sequentially

    Mitigation: Resilient sales to rig direct customers in US and Canada; building strong offshore order backlog for mid-2026 deliveries.

    Decreased average selling prices in Tubes segmentQ3 FY25

    Decreased 1% YoY and 1% QoQ

    Mitigation: Expect gradual price recovery as market balances; focus on high-quality products and Rig Direct services.

    High inventory levels and continued imports in US marketQ3 FY25

    7 months of inventory on the ground (above normal levels)

    Mitigation: Expect further import reductions in Q4 FY25 and H1 FY26 due to 50% tariff; increasing US production to reduce reliance on imports.

    Impact of tariffs on steel bars on cost of salesQ4 FY25

    $40 million additional impact on Q4 FY25 EBITDA

    Mitigation: Increasing production in US steel plant and pipe facilities to reduce import needs; ongoing negotiations for tariff reductions with Argentina, Mexico, and Europe.

    Delayed payments from PEMEX impacting working capitalQ3 FY25

    Contributed to EUR 300 million negative working capital movement in Q3 FY25

    Mitigation: Expect substantial payments from PEMEX in Q4 FY25; PEMEX's refinancing operations improving ability to pay suppliers.

    What to watch in Q4 FY25

    5

    US Market Inventory Levels

    Q4 FY25 and H1 FY26
    Current7 months on the ground
    TargetGo down

    Why it matters

    High inventory levels are keeping pressure on prices; reduction is key for price recovery.

    Today, the level of inventories on the ground are at around 7 months, so above normal levels. And as soon as this happens, prices will have some more power to increase.

    Q&A highlights

    6

    How will the Argentinian election results impact Tenaris's business in the country, particularly for Vaca Muerta development and frac fleet deployment, given recent softness?

    Paolo Rocca highlighted the election as a turning point, with a clear victory for President Milei's party, leading to improved investor perception and financial support from the American administration. This has reduced country risk and increased access to foreign financing for oil companies (e.g., Tecpetrol's EUR 750 million bond issuance). He expects a gradual increase in investment and rig activity in Vaca Muerta, with more substantial programs in 2026-2027, and positive long-term project stimulus like the NEI LNG facility.

    “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.”

    asked by Arun Jayaram · answered by Paolo Rocca

    2 min read6 chapters

    Detailed Narrative

    01

    US & Canada Operations Resilience

    Despite a slowdown in overall drill rig activity, Tenaris maintained sales levels in the US and Canada, attributed to the strength of its customer portfolio and efficient operations. The company's mills in Bay City, Hickman, and Sault Ste. Marie operated at record production levels, with around 90% of US OCTG sales produced domestically. This local production strategy ensures reliable supply and quality for customers.

    02

    Offshore Project Momentum

    Offshore projects, particularly complex deepwater developments, are moving forward. Tenaris is gearing up for supply to the TPAO Sakarya deepwater development in the Black Sea and building a strong offshore order backlog for deliveries from mid-2026. The company anticipates confirmation of other major offshore project Final Investment Decisions (FIDs), indicating continued growth in this segment.

    03

    Argentina's Vaca Muerta Outlook

    The recent Argentinian midterm election results are seen as a turning point, improving conditions for financing Vaca Muerta shale play development. Increased access to foreign financing for oil companies, exemplified by Tecpetrol's EUR 750 million bond issuance, is expected to stimulate investment. This should lead to a gradual increase in operating rigs and long-term projects like the NEI LNG export facility, positively impacting Tenaris's local operations.

    04

    Energy Transition & Sustainability

    Tenaris is advancing its sustainability goals, with a new 95-megawatt wind farm in Argentina (totaling 195 MW with a prior installation) now powering its Campana steel shop and pipe facility. In October, these wind farms provided all required power for Campana operations, eliminating local grid purchases. The global demand for electric energy is accelerating, benefiting Tenaris's production line for boiler and heat exchanger pipes in Europe.

    05

    Global Trade Dynamics

    China's increasing steel exports are prompting Europe to strengthen steel safeguard measures, which is expected to benefit Tenaris's European operations. In the US, the 50% tariff on steel imports, while initially leading to inventory accumulation and price pressure (pipe logic index down 1.3% in October), is anticipated to result in further import reductions in Q4 FY25 and H1 FY26, potentially balancing the market.

    06

    Working Capital & PEMEX Payments

    The increase in working capital in Q3 was primarily driven by delays in payments from PEMEX, contributing to an analyst-stated EUR 300 million negative movement. Management expects this to reverse in Q4, with substantial payments anticipated, as PEMEX's refinancing operations improve its ability to pay suppliers. The incorporation of tariffs into inventory also contributed to higher stock costs, which will impact Q4 EBITDA.

    AI-generated summary of the company’s earnings call. Not investment advice.