Tenaris Q2 Earnings Call Highlights

Second-quarter performance weakened as sales fell 4% to $3 billion and EBITDA declined 12% sequentially to $649 million, pressured by Strait of Hormuz shipping disruptions, lower fixed-cost absorption, and higher raw-material and logistics costs. Tenaris approved a higher interim dividend of $0.59 per share ($1.18 per ADR), totaling about $600 million, supported by $396 million in quarterly free cash flow and $3.6 billion in net cash. Management expects second-half revenue and EBITDA to be roughly in line with the first half, while potential upside could come from resumed Gulf shipments, stronger fourth-quarter volumes and pricing, rising North American drilling activity, and an expanding offshore project backlog. Tenaris reported second-quarter sales of $3 billion, down 4% from both a year earlier and the prior quarter, as shipping disruptions in the Middle East delayed deliveries to customers in Iraq, Kuwait and Qatar. Investor Relations Officer Giovanni Sardagna said the effective closure of the Strait of Hormuz for most of the quarter prevented vessels from entering the Gulf. Average selling prices in the company’s tube operating segment were broadly flat year over year and sequentially. Quarterly EBITDA declined 12% sequentially to $649 million, while net income fell 13% to $492 million. Sardagna attributed the decline primarily to lower fixed-cost absorption as well as higher raw-material and logistics costs. Operating cash flow totaled $580 million and capital expenditures were $121 million, resulting in free cash flow of $396 million. Following a $606 million dividend payment during the quarter, Tenaris ended the period with net cash of $3.6 billion. The company’s board approved an interim dividend of $0.59 per share, or $1.18 per American depositary receipt, totaling about $600 million. The dividend is scheduled to be paid Nov. 25. Chief Executive Officer Gabriel Podskubka said the board’s decision to increase the interim dividend reflected Tenaris’ “strong balance sheet and sustained cash generation.” He said the company has favored dividends as a means of returning capital because of their simplicity and their role in preserving share liquidity. Podskubka said the board remains committed to shareholder returns broadly in line with prior levels, while retaining financial flexibility amid an uncertain environment and possible growth opportunities. He noted that future dividends remain subject to board decisions and shareholder approval, but indicated that the company’s historical pattern has been an interim payment representing about one-third of the total annual dividend, followed by the remaining portion in May. Tenaris has removed a near-term reopening of the Strait of Hormuz from its base-case forecast for the second half of 2026. The company previously assumed a relatively short disruption, but Podskubka said prolonged uncertainty prompted management to change that premise. The company now has approximately $130 million of material destined for Iraq, Kuwait and Qatar that is excluded from its base-case outlook. If navigation through the strait is restored, Tenaris expects it would take roughly 70 to 90 days to ship the material from its mills and invoice customers. Podskubka said the delayed shipments would represent upside to the company’s outlook, particularly because the products involved are premium, special-grade materials with relatively ...