Q3 2025 Tenaris SA Earnings Call

Speaker #2: Good day and thank you for standing by . Welcome to the third quarter , Tenaris SA Earnings Conference call . At this time , all participants are in a listen only mode .

Operator: Good day and thank you for standing by. Welcome to the third quarter Tenaris S.A. Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giovanni Sardagna, Investor Relations Officer. Please go ahead.

Speaker #2: After the speakers presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .

Speaker #2: You will then hear an automated message advising your hand is raised to withdraw your question . Please press star one . One again .

Speaker #2: Please be advised that today's conference is being recorded . I would now like to hand the conference over to your speaker today , Giovanni Sardagna Investor Relations Officer .

Speaker #2: Please go ahead .

Speaker #3: Thank you . Gigi , and welcome to Tenaris SA 2025 Third Quarter Conference Call . Before we start , I would like to remind you that we will be discussing forward looking information during the call and that our actual results may vary from those expressed or implied during call .

Giovanni Sardagna: Thank you, Gigi, and welcome to Tenaris S.A. 2025 third quarter conference call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call today and that our actual results may vary from those expressed or implied during the call. With me on the call today are Paolo Rocca, our Chairman and CEO, Carlos Gómez Alzaga, our Chief Financial Officer, Gabriel Podskubka, our Chief Operating Officer, and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarterly results.

Speaker #3: With me on the call today are Paolo Rocca , our chairman and CEO . Carlos Gomez , our chief financial officer . Gabriel Podskubka , our chief operating officer .

Speaker #3: And German Moreno , president of our US operations . Before passing over the call to Paolo for his opening remarks , I would like to briefly comment our quarterly results .

Speaker #3: Our third quarter sales reached 3 billion , up 2% year on year , but down mainly reflecting lower sales to the North Sea and lower shipments for offshore line pipe projects in the Middle East .

Giovanni Sardagna: 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 shipment 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. Average selling prices in our Tubes operating segment decreased 1% compared to the corresponding quarter of last year and 1% sequentially. Our EBITDA for the quarter was up 3% sequentially to $753 million, with our EBITDA margin for the quarter at 25%. Our EBITDA for the quarter included a $34 million gain recorded for the return of U.S. anti-dumping deposits paid on OCTG imports from Argentina for which the duty rate has been revised downwards. Without this one-off gain, our EBITDA would have been $719 million or 24% of sales.

Speaker #3: Partially offset by a resilient level of sales to our rig . Direct customers in the US and Canada . Average selling prices in our tubes operating segment decreased 1% compared to the corresponding quarter of last year , and 1% sequentially .

Speaker #3: Our EBITDA for the quarter was up 3% sequentially to 753 million , with our EBITDA margin for the quarter at 25% . Our EBITDA for the quarter included 34 million gain recorded for the return of US anti-dumping deposits paid on Octg imports from Argentina , for which the duty rate has been revised downwards .

Speaker #3: Without this one off gain , our EBITDA would 3% sequentially , been 719 million , or 24% of sales , with operating cash flow of 318 million and capital expenditure of 185 million , or free cash flow for the quarter was 133 million .

Giovanni Sardagna: With operating cash flow of $318 million and capital expenditure of $185 million, our free cash flow for the quarter was $133 million. After share buybacks for $351 million, our net cash position declined to $3.5 billion.

Speaker #3: After share buybacks for 351 , 351 million . Our net cash position declined to 3.5 billion at the end of the quarter . 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 .

Paolo Rocca: At the end of the quarter.

[Analyst]: Our.

Giovanni Sardagna: Board of Directors approved the payment of an interim dividend of $0.29 per share or $0.58 per ADR to be paid on 26th November. The interim dividend per share is up 7% compared to the interim dividend per.

Speaker #3: The interim dividend per share is up 7% compared to the interim dividend per share we paid last year . Now I will ask Paolo to say a few words before we open the call to .

Paolo Rocca: Share we paid last year.

Giovanni Sardagna: Now I will ask Paolo to say a few words before we open the call.

Speaker #3: Thank you .

Paolo Rocca: Thank you Giovanni and good morning to all of you. Our result in the third quarter once again highlight the unique industrial and commercial position we have built around the world with competitive differentiation in key markets as well as an efficient industrial performance in the United States and Canada where overall drilling activity has slowed. We maintain our level of sales thanks to the relative strength of our customer portfolio that due to their efficient operation could maintain the level of activity even as oil prices soften. They have chosen to work with us for the long term and appreciate the reliable quality and performance of our product and the benefit that our differential Rig Direct services provide in maintaining the efficiency of their operation.

Speaker #4: Giovanni , and good morning to all of you . Our results in the third quarter , once again highlight the unique industrial and commercial position we have built around the world with competitive differentiation in key markets , as well as an efficiency industrial performance in the United States and Canada , where overall drinking activity is slowed .

Speaker #4: We maintain our level of sales thanks to a relative strength of our customer portfolio that due to the efficient operation , could maintain the level of activity even as oil prices soften .

Speaker #4: They have chosen to work with us for the long term and appreciated the reliable quality and performance of our product and the benefit that our differential rig , direct services providing maintaining the efficiency of their operation .

Speaker #4: Considering the high level of tariff rate and trade restrictions , we have been increasing production in the United States and Canada to assure a reliable supply of high quality products to our customers .

Paolo Rocca: Considering the high level of tariff rate and trade restriction, we have been increasing production in the United States and Canada to assure a reliable supply of high quality products to our customers. Our mill in Bay City, in Hickman, and Sault Ste. Marie operated at record level of production and high levels of operational efficiency through the quarter. Around 90% of our U.S. sales of OCTG are produced in the United States, with the remaining 10% being mainly imported for special applications that nobody produce in the United States. In a dynamic and changing world, one of the key strengths of Tenaris is our uniquely, uniquely flexible global industrial system where we can produce locally in many regions of the world maintaining the same high level of quality through our fully integrated quality and HSE management system. Two weeks ago I was in Sault Ste.

Speaker #4: Our mail in Bay city in Hickman and South . Summary operated at record level of production and high levels of operational efficiency through the quarter .

Speaker #4: Around 90% of our U.S. sales of OCTG are produced in the United States, with the remaining 10% being mainly imported for special applications that nobody produces in the United States.

Speaker #4: In a dynamic and changing world , one of the key strengths of Tenaris is our uniquely flexible , flexible , uniquely flexible global industrial system , where we can produce locally in many regions of the world , maintaining the same high level of quality through our fully integrated quality and HSC management system .

Speaker #4: Two weeks ago , I was in South America to celebrate 25 years of operations in Canada with our employees and the local major and the MP .

Paolo Rocca: Marie to celebrate 25 years of operations in Canada with our employees and the local mayor and the MP. This mill, which is the core of our industrial presence in Canada, was idle when we arrived in 2000. Today, following many years of investment, it is a leading supplier of seamless and welded pipe with accessory and coatings for the Canadian oil and gas industry. Now the industry is expanding through the development of the Montney Shale and export of LNG to Asia. To extend the scope of our Rig Direct service in the region, we opened a new service yard in British Columbia. While the mill in Sault Ste. Sault Ste. Marie is further ramping up production to supply this offshore project, especially complex deepwater development, which can provide significant new sources of oil and gas to meet the world's growing demand for energy, continue to move forward.

Speaker #4: This mill , which is the core of our industrial presence in Canada , was idle when we arrived in 2000 . Today , following many years of investment , it is a leading supplier of seamless and welded pipe .

Speaker #4: With accessories and coatings for the Canadian oil and gas industry, the industry is expanding through the development of the Montney Shale and export LNG to Asia to extend the scope of our rig direct service in the region.

Speaker #4: We opened a new service yard in British Columbia while the mill in South America is further ramping up production to supply this operation , offshore projects , especially complex deepwater development , which can provide significant new sources of oil and gas to meet the world's growing demand for energy , continue to move forward .

Speaker #4: Last quarter , we mentioned the contribution we will be making to the Grand Morgan Development . Surinam . Now we are also gearing up for the supply of coated , seamless riser and flow lines and welded line export line and casing for TPO .

Paolo Rocca: Last quarter we mentioned the contribution we will be making to the Gran Marlim development in Suriname. Now we are also gearing up for the supply of coated seamless riser and flow lines and welded line, export line, and casing for TPAO Sakarya Deepwater development in the Black Sea. With this project, we are building a strong offshore order backlog for deliveries from the middle of next year as we look forward to the confirmation of further major offshore project FID in Argentina. The results of the Congressional midterm election are improving the condition for the financing of the development of the Vaca Muerta shale play. Additional rigs are being put into operation. Local companies are raising fresh dollar financing for their operation. While YPF has confirmed its interest in participating in the development of new LNG export facility, Tenaris S.A. has also increased its energy production in Argentina.

Speaker #4: Sakarya Deepwater development in the Black Sea . With this project , we are building a strong offshore order backlog for deliveries from the middle of next year .

Speaker #4: As we look forward to the confirmation of further major offshore process , FID in Argentina , the results of the congressional midterm elections are improving .

Speaker #4: The conditions for the financing of the development of the Vaca muerta shale play . Additional rigs are being put into operation . Local companies are raising fresh dollar financing for their operation while Nhai has confirmed its interest in participating in the development of new LNG export facility .

Speaker #4: Tenaris has also increased its energy production in Argentina . In September . We started operations 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 Campania .

Paolo Rocca: In September, we started operation at the 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. In October, the two wind farms plus a small complement from our thermoelectric plant provided all the power we required for our operation in Campana. With no power purchased from the local network, the new wind farm is a further step toward our goal of reducing carbon emissions and improving the sustainability of our operation. Around the world, demand for electric energy is accelerating. Our production line for boiler and heat exchanger pipes in Europe is operating at full capacity. As China continues to increase its overwhelming level of steel export, Europe is also taking action to contain steel import with the strengthening of its steel safeguard measures, which should benefit our operation in the region.

Speaker #4: In October , the two wind farms plus small complement from our thermoelectric plant provided all the power we required for our operation in Campana with no power purchased from the local network .

Speaker #4: The new wind farm is a further step toward our goal of reducing carbon emissions and improving the sustainability of our operations around the world .

Speaker #4: Demand for electric energy is accelerating our production line for boiler and heat exchanger pipes in Europe is operating at full capacity as China continues to increase its overwhelming level of steel exports .

Speaker #4: Europe is also taking action to contain steel import with the strengthening of its steel safeguard measure , which should benefit our operations in the region .

Speaker #4: In this volatile environment , Tenaris continues to demonstrate the resilience of its operations and financial performance , which is allowing us to distribute a cash return of around 11% percent to shareholders for this year .

Paolo Rocca: In this volatile environment, Tenaris S.A. 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 this year. We can now take any question you may have.

Speaker #4: We can now take any question you may have .

Speaker #2: Thank you . As a reminder to ask a question , please press star one . One on your telephone and wait for your name to be announced .

Operator: Thank you. As a reminder to ask a question, please press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Arun Jayaram from JPMorgan Securities LLC.

Speaker #2: To withdraw your question , please press star one . One again . Please stand by while we compile the Q&A roster . Our first question comes from the line of Arun Juru from J.P.

Speaker #2: Morgan Securities , LLC .

Speaker #5: Yeah . Good morning . Arun from J.P. Morgan . Paulo , I was wondering if you could maybe elaborate a little bit more on the implications to Tenaris from the Argentinian elections .

[Analyst]: Yeah, good morning, Arun Jayaram from JPMorgan Securities LLC. Paolo, I was wondering if you could maybe elaborate a little bit more on the implications to Tenaris S.A. from the Argentinian elections and perhaps, you know, narrowing in on the fact that you did mention in the third quarter you saw lower activity levels, some softness in fracked and coiled tubing services. What is your outlook for the fourth quarter in 2026 in Argentina, particularly as you deploy an incremental new build frac fleet?

Speaker #5: And perhaps , you know , narrowing in in the fact that you did mention in third quarter , you saw lower activity levels , some softness in practical tubing services .

Speaker #5: What is your outlook for the fourth quarter in 2026 ? In Argentina , particularly as you deploy an incremental new build frack fleet .

Speaker #4: Well , thank you . Ahem . Well , I would say that the Argentine , the Argentina election is marking an important turning point .

Paolo Rocca: Thank you. I would say that the Argentina election is marking an important turning point. The expectation of the market were for a substantial, say, for balanced results. The real results have been a clear victory of the party of President Milei with more than 40%. This has changed the, let's say, the perception by the investor about the future, the sustainability, and the ability to continue the transformation plan in Argentina by the present administration. Even if this was a midterm election, it still is changing the proportion and the presence in the Congress in the two chambers. It will allow and give more leeway for the administration for pushing ahead with its transformation plan. This has been combined with very strong support from the American administration and a substantial financial support by the American administration. This has changed the perception and the view of the financial community.

Speaker #4: The the expectation of the market was for a substantial . Let's say for a balanced results . But the real results has been a clear victory of the party of the president .

Speaker #4: Emily . With more than 40% . This has changed the let's say , the perception by the investor and about the future , the sustainability and the ability to continue the transformation plan in in Argentina by the present administration .

Speaker #4: Even if this was a midterm election , still is changing the proportion and the presence in in the Congress , in the two chamber .

Speaker #4: So it will allow and give more leeway for the administration , for pushing ahead with its transformation plan . This is been combined with a very strong support from the American administration and a substantial financial support by the American administration .

Speaker #4: This has the perception and the view of . The the financial community . There has been a very important increase in the level of stock exchange in the range of 30% .

Paolo Rocca: There has been a very important increase in the level of stock exchange in the range of 30%. There has been a substantial reduction in the country risk, almost 400 basis points down, which was not expected or anticipated by the market. This is important because it has changed also the willingness of financial operators to support initiative and business in Argentina. The oil company in particular will have enhanced access to foreign financing for their development project. Just in this week, yesterday there has been a first issuance of bonds, the capital with $750 million. In this week also YPF will do something similar. The access to finance by the oil company in our view will be stimulating the level of investment in this moment, or at least in the last six months.

Speaker #4: There has been a substantial reduction in the country risk , almost 400 basis points down , which is was not expected or changed anticipated by the market .

Speaker #4: This is important because it has changed also , the the the willingness of the financial operators to support initiative and business in Argentina .

Speaker #4: The the oil company in particular , are will have enhanced access to foreign financing for their development project . Just in this week .

Speaker #4: Yesterday . There has been a first issuance of bonds petrol with 750 million in this week . Also , YPF will do something similar .

Speaker #4: So the access to finance by the company , in our view , will be stimulating the level of investment in this moment , or at least in the last six months .

Speaker #4: The constraint on the finance for operation has been a factor in the decision making for new investment and for . Big project that could be developed in the coming two , three , four years .

Paolo Rocca: The constraint on the finance for operation has been a factor in the decision making for new investment and for big project that could be developed in the coming two, three, four years. We expect that gradually there will be increase in the investment in development of the asset in Vaca Muerta and also a stimulus to long term project. One example could be the NEI project for LNG. If you refer to the first quarter, I would anticipate some increase in the number of rigs operating in the country. Gradually we will see possibly something more during 2026 and 2027 when more substantial program will proceed. 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.

Speaker #4: So we expect that gradually there will be increase in the investment in development of the asset in Vaca muerta and also a stimulus to long term projects .

Speaker #4: One example could be the any project for LNG . If you refer to the first quarter , I would anticipate some increase in the number of rigs operating in the country and gradually we will see possibly something more during 2026 and 2027 , when more substantial program will proceed .

Speaker #4: 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 .

Speaker #5: Great . That's super helpful . Powell I was wondering if you could maybe provide your thoughts on how margins could trend in the fourth quarter ?

[Analyst]: Great, that's super helpful. Paolo, I was wondering if you could maybe provide your thoughts on how margins could trend in the fourth quarter. As you know, in the US the last couple of pipe logic index readings have been fractionally down, you know, 1.3% the prior month, a half a percent this during October. Thoughts around margins in the fourth quarter because I do think the guidance implies relatively flat sales on a sequential basis.

Speaker #5: As you know , in the US , the last couple of pipe logic index readings have been fractionally down . You know , 1.3% .

Speaker #5: The prior month , a half a percent . This , you know , during October , thoughts around margins in the fourth quarter , because I do think the guidance implies relatively flat sales on a sequential basis .

Speaker #4: Well , you're right , the the the you in describing the evolution of one index relevant index . That is a pipe logic .

Paolo Rocca: You're right in describing the evolution of one index, relevant index, that is a pipelogic, as we mentioned in the last conference call, in a market in which the imported material represents share in the range of 40%. When, like what has been done in June this year, raising the level of tariff to 50%, sooner or later, as we anticipated in the last conference call, will have some impact on the price. The point is that the accumulation of stocks before the set of the tariff in the market and the slight decline in the number of rigs are keeping pressure on prices. As I say, in the last quarter I think that gradually, sooner or later, we will see, let's say, the impact of this situation and the level of price will start to recover on this more specifically level of stock.

Speaker #4: As we mentioned in the last conference call , in a market that is in which the the important material represents share in the range of 40% .

Speaker #4: When like the what has been done in June this year of raising the level of tariff to 50% , sooner or later , as we anticipated in the last conference call , will have some impact on on the price .

Speaker #4: The point is that the accumulation of stocks before the set of the tariff in the market and the slight decline in the number of rigs are keeping pressure on on prices .

Speaker #4: But as I say in the last , in the last quarter , I think that gradually , sooner or later , we will see , let's say the impact of this situation and the level of price will start to recover on this .

Speaker #4: More specifically , level of stock . I would ask Gjermo to have his point of view from inside concerning , let's say , the potential evolution of this in the future .

Paolo Rocca: I would ask Guillermo to have his point of view from inside concerning, let's say, the potential evolution of this in the future.

Speaker #3: Yeah . Thank you Paola , and good morning . Yes . I mean , during the first so far this year , we have seen a high level of imports very high during the first semester , we started to see some decrease in the third quarter , but still we have not seen the full impact of the 50% tariff in those inputs .

Giovanni Sardagna: Thank you, Paula, and good morning, Arun. Yes, I mean during the first three so far this year we have seen a high level of imports, very high during the first semester. We started to see some decrease in the third quarter, but still we have not seen the full impact of the 50% tariff in those imports. We are expecting further reductions during the current quarter, particularly in the first semester of 2026. That should allow the market to be much more balanced. Today, the level of inventories on the ground is around seven months, so above normal levels. As soon as this happens, prices will have some more power to increase. Thank you.

Speaker #3: So we are expecting further reductions . During the current quarter . And particularly in the first semester of 2026 , that should allow the market to be much more balanced .

Speaker #3: Today , the level of inventories on the ground are around seven months . So above normal levels , and as soon as this happened , prices will have some more power to to to increase .

Speaker #4: Thank you .

Speaker #5: Okay . Thanks a lot .

[Analyst]: Okay, thanks a lot.

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Matt Smith from Bank of America .

Operator: Thank you. One moment for our next question. Our next question comes to the line of Matt Smith from Bank of America. Hi there.

Speaker #6: Hi there . Good morning . Thanks for taking my questions . I wanted to start off with a very strong sales print in the quarter .

[Analyst]: Good morning. Thanks for taking my questions. I wanted to start off with a very strong sales print in the quarter. Some surprise on the mix as well, especially welded sales up in the quarter. You also referenced a bit of a pull forward in Middle East orders. Just hoping you could reflect on those trends within the quarter and how you expect those mix effects to potentially change or not to change as we head into the fourth quarter. Please.

Speaker #6: There were some surprises in the mix as well, especially with welded sales up in the quarter. You've also referenced a bit of a pull forward in Middle East orders.

Speaker #6: So just hoping you could reflect on those trends within the quarter and how you expect those mix affects to potentially change or not to change .

Speaker #6: As we head into the fourth quarter , please .

Speaker #4: Thank you . Matt . As you see the . We think we had a good level of sales and we also expect for the next quarter to have a level of sales close or in line with the third quarter .

Paolo Rocca: Thank you, Matt. As you see, we think we had a good level of sales and we also expect for the next quarter to have a level of sales close or in line with the third quarter. Now, there has been strong sales, mainly due to two factors. One is OCTG, oil country tubular goods, in the United States. Areas in which, also to respond to the pressure of tariff, we are substituting some of the intermediate and surface casing with welded product instead of seamless product. This had an impact. The other point is the delivery of the big pipeline, the VMO, the VMOs, as it's called. There is the big oil pipeline that is enhancing the evacuation of Vaca Muerta in the first stage, the 350,000 barrels a day and subsequently 550,000. It's a very big pipeline.

Speaker #4: Now , there has been a strong sales of welded mainly due to two factor . One is octg oil country tubular goods in the United States , areas in which also to respond to the pressure of tariff .

Speaker #4: We are substituting some of the intermediate and surface casing with welded products instead of seamless product . This had an impact and impact .

Speaker #4: The other point is the delivery of the big pipeline . The VMO , the Vamos , as it's called . There is a big oil pipeline that is enhancing the evacuation of Vaca muerta .

Speaker #4: In the first stage , the 350,000 barrels a day a subsequently , in 550 . So it's a very big pipeline . We are finishing the delivery of the pipe for it just in the third quarter .

Paolo Rocca: We are finishing the delivery of the pipe for it just in the third quarter. This has been one of the reasons. Looking ahead, it's likely that in the fourth quarter this ratio gets back to the previous levels. I mean, we do not have similar strong delivery for the pipeline, while in the case of the OCTG, we will continue to maintain the share of weld. You can expect that this could be slightly lower.

Speaker #4: This has been one of the reasons looking ahead is likely , that in the fourth quarter , this ratio get back to the previous levels .

Speaker #4: I mean , we do not have similar . Strong delivery for the pipeline . While in the case of the Octg , we will continue to maintain the share of wealth .

Speaker #4: So you can expect that this will could be slightly lower .

Speaker #6: Okay . Perfect . Thank you for all that color . Then I wanted to change tack onto shareholder distributions . If I could , a 7% increase in the interim DPS level today .

[Analyst]: Okay, perfect. Thank you for all that color then. I wanted to change tact onto shareholder distributions if I could. A 7% increase in the interim DPS level today. I mean, given the extent of the cash pile you're still sat on, the strong performance you reported, and the recent sort of announcement with reference to the controlling shareholder family. I just wondered how sustainable the market should view the current buyback level, by which I'm really referring to the $1.2 billion announcement made last year. I mean, that looks like something that's very affordable for 2026 too, from my perspective. I know you still have the $600 million to complete first of that original announcement, but I was hoping you could already talk to next year's decision and your early thought process there, please.

Speaker #6: I mean , given the extent of the cash pile , you're still sat on the strong performance . You're reported and you know , the recent sort of announcement with reference to the controlling shareholder family .

Speaker #6: I just wondered how sustainable the market should view the current buyback level by which I'm really referring to the 1.2 billion announcement made last year .

Speaker #6: I mean , that looks like something that's very affordable for 2026 to , from my perspective , I know you still the 600 million to complete .

Speaker #6: First of of that original announcement , but I was hoping you could already talk to next year's decision and your early thought process there .

Speaker #6: Please .

Speaker #4: Well , what we have in front of us , we will execute the second tranche of the buyback . And as you saw

Paolo Rocca: What we have in front of us, we will execute the second tranche of the payback. As you saw, the board approved a level of dividend more or less in line in absolute terms with the previous year, but higher per share due to the buyback impact. This is what we have in front of us. It will be up to the board to decide what to do once we completed this second buyback. As I mentioned in the opening remark, by the way, the 11% return for shareholder is, let's say, showing a good performance of the company. I mean, in this moment, Tenaris S.A. has shown resilience in a very volatile environment and delivering to the shareholder, I mean, a very substantial return in our view.

Speaker #4: , we , the board approved a level of dividend more or less in line in absolute terms with the previous year . And but higher per share due to the buyback impact .

Speaker #4: This is what we have in front of us . And then it will be up to the the board to decide what to do once we completed this second buyback , as have we are mentioned in the opening remarks , by the way , the 11% return for shareholders is , let's say , a good showing , a good performance of the company .

Speaker #4: I mean , in this moment , Tenaris has shown resilience in a very volatile environment and delivering to the shareholders , I mean , a very substantial return .

Speaker #4: In our view .

Speaker #6: Perfect . Well , thank you very much . Happy to pass it on .

[Analyst]: Perfect. Thank you very much. Happy to pass it on.

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Mark Bianchi from TD Cowan .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Mark Bianchi from TD Cowen.

Speaker #7: Hi . Thank you release commented on some additional tariff cost headwind in for Q related to this , I guess second two 3,225% .

[Analyst]: Hi. Thank you. The press release commented on some additional tariff cost headwind in Q4 related to this. I guess Section 232 to 25% we previously talked about that, I think being the 25% being equivalent to about $70 million of quarterly EBITDA or quarterly cost. Is that the right way to think about the progression from Q3 to Q4 on an EBITDA basis? It sounds like maybe there could be some offsets. You mentioned the mix of more OCTG. That should be a favorable benefit to margins. Maybe you could help us understand a little bit better the EBITDA progression from Q3 to Q4.

Speaker #7: The press

Speaker #7: We previously talked about that . I think being that the 25% being equivalent to about $70 million of quarterly EBITDA or quarterly cost , is that the right way to think about the progression . 3 to 4 ?

Speaker #7: We previously talked about that . I think being that the 25% being equivalent to about $70 million of quarterly EBITDA or quarterly cost , is that the right way to think about the progression .

Speaker #7: should be a favorable benefit to margins . Maybe you could help us understand a little bit better the EBITDA progression from three Q to four Q .

Speaker #4: Thank you . Mark . Well , in the next Q , we will see , as I mentioned , maybe some lower volume , but substantial sales in line or close to the what we have seen in the third Q but we expect EBITDA to be lower in the range of single digit because of the impact of the tariff in our cost of sales .

Paolo Rocca: Thank you, Marc. In the next Q, we will see, as I mentioned, maybe some lower volume but substantial sales in line or close to what we have seen in the third Q. We expect the EBITDA to be lower, in the range of single digit, because of the impact of the tariff in our cost of sales. You know we are paying tariff on the bars of steel that we are bringing into the U.S. for supporting our rolling mill. We pay the 50% tariff on this. This tariff is getting in our inventory and is released gradually while we proceed in the cost of capital goods sold. In the third quarter, we pay a higher number, higher amount, compared to what is included in our cost of sale.

Speaker #4: You know , we are paying tariff on the bars of steel that we are bringing into the states for supporting our rolling mill .

Speaker #4: We pay the 50% tariff on this , but this tariff is getting in our inventory and is released gradually while we proceed in , in the cost of goods sold .

Speaker #4: So in the third quarter . We pay a higher number , higher amount compared to what is included in our cost of sale .

Speaker #4: But in the fourth quarter , we expect . An additional , let's say , the this tariff included in our inventory will get into our cost of sales .

Paolo Rocca: In the fourth quarter, we expect an additional, let's say, that this tariff included in our inventory will get into our cost of sale. We will have higher cost of sale for this reason. We expect this in the range of $40 million. That will, let's say, affect our EBITDA in absolute terms. There are other factors that could contribute to this. This is our estimate today in terms of the margin, as we anticipated. Also, in the last conference, we continue to expect margin in the range between 20% and 25%, not far, slightly lower than the one we had in the third quarter.

Speaker #4: So we will have higher cost of sales for this reason , we expect this in the range of 40 million . That will , let's say , affect our our our EBITDA in are absolute terms .

Speaker #4: Then there are other factors that could contribute to to this . But this is our estimate today in terms of the margin as we anticipated .

Speaker #4: Also in the last conference , we continue to expect margin in the range between 20 and 25 , not far slightly lower than the one we had in the third quarter .

Speaker #7: Yeah . Okay . That's very helpful . Thank you . And just to clarify on the starting point for the EBITDA comment , was that the 753 that included the 34 million gain or are you excluding that when you talk about being down single digits ?

[Analyst]: Okay, that's very helpful, thank you. Just to clarify on the starting point for the EBITDA comment, was that the $753 million that included the $34 million gain, or are you excluding that when you talk about being down single digits?

Speaker #4: No , no , I'm talking about the adjusted EBITDA because I'm considering the a , B without , let's say , the recovery when on the anti-dumping , we think that considering this , there is a normalized EBITDA in the coming quarter .

Paolo Rocca: No, no, I'm talking about the adjusted EBITDA because I'm considering the EBITDA without, let's say, the recovery where on the anti-dumping we think that considering this, there is a normalized EBITDA. In the coming quarter, we will have a lower EBITDA for the reason that I mentioned.

Speaker #4: We will have a lower EBITDA for the reason that I mentioned .

Speaker #7: Yep . Very clear . Thank you . The other question I had was on the I think last quarter , we talked about some pipe that had been shipped from Asia before the second round of 232 , and that was still in transit .

[Analyst]: Yep, very clear. Thank you. The other question I had was on the, I think last quarter we talked about some pipe that had been shipped from Asia before the second round of Section 232 tariffs and that was still in transit. There was that needed to get landed and integrated into the market before things stabilized, I guess. I mean, I understand that you mentioned the inventory on the ground is still a bit of a problem, but how do we see this type in transit issue playing out?

Speaker #7: And that needed to get landed . And integrated into the market before things stabilized , I guess . I mean , I understand that you mentioned the inventory on the ground is still a bit of a problem , but how do we see this pipe in transit ?

Speaker #7: Issue playing out ?

Speaker #4: Hey , maybe you can say with this is how this situation evolves . No .

Paolo Rocca: Guillermo, maybe you can say if this is how this situation evolved.

Speaker #3: Yes , yes . This is correct . Mark . We said I mean , the impact of the additional 25% that were implemented in June .

Giovanni Sardagna: Yes, yes, this is correct. Mark. We said, I mean the impact of the additional 25% that were implemented in June. We said that we were going to start the full effect of this during the fourth quarter of the year. This is what we expect. Now, due to the shutdown of the government in the U.S., we don't have input statistics, but our understanding is that they are going down and we will see further reduction in the following quarters.

Speaker #3: We said that we were going to start the full effect of this during the fourth quarter of the year . And this is what we expect now due to the shutdown of the government of the in the US , we don't have .

Speaker #3: Import statistics , but our understanding is that they are going down and we will see further reductions in the in the following quarters .

[Analyst]: Got it. Thank you. Thank you. I'll turn it back.

Speaker #3: But thank you . Okay .

Speaker #7: Thank you . I'll turn it back .

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Alessandro Pozzi from Mediobanca .

Operator: Thank you. One moment for our next question. Our next question comes in the line of Alessandro Pozzi from Mediobanca.

Speaker #8: Hi . Good afternoon . And thank you for taking the questions . The first one is on the outlook . You provided a good description of what you think is going to happen in Q4 .

[Analyst]: Hi, good afternoon, and thank you for taking the questions.

Paolo Rocca: The first one is on the outlook. You provided a good description of what you think is going to happen in Q4. Any chance you can venture a little bit further out in Q1 and see what could be the main moving parts as we go into 2026? Also, while we are on the topic, maybe any color on the level of tendering that you expect, Middle East and the deep quarter for 2026. The second question is on Q3, strong sales, especially in North America. It feels like you are gaining some market share. If you can maybe elaborate a bit more on the reason for the increase in sales in Q3 despite lower rig counts in the U.S., of course, not all of it will be appreciated. Thank you. Yeah, thank you.

Speaker #8: Any chance you can venture a little bit further out in Q1 and see what could be the main moving parts as we go into 2026 ?

Speaker #8: And also while we are on the topic , maybe any color on the level of tendering that you expect with the least and the deepwater for 2026 .

Speaker #8: And the second question is on Q3 , strong sales , especially in North America , it feels like you are gaining some market share .

Speaker #8: But if you can , maybe elaborate a bit more of the reason for the increase in sales in Q3 , despite lower recounts in the US , of course , not all US , but will be appreciated .

Speaker #8: Thank you .

Speaker #4: Yeah . Thank you . Just on the first point , which is the forecast , let me . I mean , it will be .

Paolo Rocca: Alejandro, just on the first point, which is the forecast, let me say that it will be very relevant what happens with the tariff because just to summarize, today we are paying every quarter an amount in the range of $150 million for this tariff. As I said before.

Speaker #4: Will be very relevant . What's happened with the tariff . Because just to summarize , today we are paying every quarter an amount in the range of 150 million for this quarter .

Speaker #4: For this tariff . And as I say before , in the in the third quarter , only part a substantial part of this entered into our cost of sales .

[Analyst]: In the.

Paolo Rocca: Third quarter, only part, a substantial part of this enter into our cost of sales. Looking ahead, in the coming quarter we will have increasing cost getting into our cost of sales. On the other side, we are taking action to reduce the tariff by increasing production into the States for steel, for pipe. We expect production in our Coppel plant, steel plant to increase from now on continuously and contribute to a reduction in our import of this. We are expanding our production in pipe. The sum of the import that is complementing our sale will be reduced. We have our own plan for reducing this. There is also the negotiation underway.

Speaker #4: But looking ahead in the coming quarter , we will have increasing cost , getting into our cost of sales . But on the other side , we are doing taking action to reduce the tariff by increasing production into the into the states for steel , for pipe , we expect production in our copper plant , steel plant to increase from now on continuously and contribute to a reduction in our import of this .

Speaker #4: And also we are expanding our production in pipe . So also the some of the import that is complemented our sales will be reduced .

Speaker #4: So we have our own plan for reducing this . But there is also the negotiation underway . All the country from which we are shipping steel into the states , Argentina , Mexico , Europe from Italy and Romania have a negotiating table with the United States .

Paolo Rocca: All the country from which we are shipping steel into the state, Argentina, Mexico, Europe from Italy and Romania have a negotiating table with the United States and there could be some reduction or negotiation that may affect the Section 232 tariffs for steel, in this case for steel, semi elaborate products, not for finished product probably. This is not predictable today. I expect that over time with Argentina, due to the extraordinary relation, the special relation that has been established between President Trump, President Milei and the administration, there could be a discussion on this. With Europe also maybe there could be an agreement in line with the UK agreement and with Mexico also there could be negotiating table. This will be relevant and will affect our performance also in the coming quarter.

Speaker #4: And there could be some reduction, or it may affect the two, three, two for steel in this case for steel.

Speaker #4: Semi elaborate product , not for finished product . Probably . So this is not predictable today , but I expect that over time with Argentina due to the extraordinary relation , the special relation that has been established between President Trump , President Millay and the administration , there could be a discussion on this with Europe also .

Speaker #4: Maybe there could be an agreement in line with the UK agreement . And with Mexico . Also , there could be a negotiating negotiating table .

Speaker #4: So this will be relevant and will affect our performance . Also in the coming quarter in the medium term , probably we won't see any change here in the fourth quarter .

Paolo Rocca: In the medium term, probably we won't see any change here in the fourth quarter apart from what I mentioned. Looking in the 2026, we need to consider also the potential change in the level of tariff for our steel bars on top of what we can do ourselves as far as the Middle East and the situation in this. I will ask Gabriel to comment on this.

Speaker #4: Apart from what I mentioned . But looking in the 2026 , we need to to consider also the potential change in the level of tariff for our steel bars on top of what we can do ourselves .

Speaker #4: As far as the Middle East and the situation in this region, I will ask Gabriel to comment on this.

Speaker #3: Thank you . Paolo . Good morning Alejandro . Middle East Business I would say , is overall stable at good levels . If we break down the important components .

Giovanni Sardagna: Thank you, Paolo. Good morning, Alessandro. Middle East business I would say is overall stable at good levels. If we break down the important components, Saudi, as you know, has been decreasing activity in the first half of the year, but we see this drop in rigs stabilized. We believe that Saudi has bottomed in its drilling activity and even there are some early indications that there might be a rebound of rigs into 2026. This is something a bit too early for us to factor in our forecast. Another component of our business in Saudi is our pipeline business, and last month in September we started deliveries of the large CCS pipeline. This is something that will accompany us well into 2026. Line pipe is offsetting some of the lower OCTG in Saudi.

Speaker #3: Saudi as , as you know , has been decreasing activity during the first half of the year . But we see this drop in rigs stabilized .

Speaker #3: We believe that Saudi has bottomed in its drilling activity . And even there are some early indications that there might be a rebound of rigs into 2026 .

Speaker #3: But this is something a bit too early for us to factor in . In our forecast . Another component of our business in Saudi is our pipeline business .

Speaker #3: And last month, in September, we started deliveries of the large CCS pipeline. So this is something that will accompany us well into 2026.

Speaker #3: So line pipe offsetting some of the lower octg in Saudi . When we look outside outside Saudi , the key producers in the GCC , UAE , Kuwait , Iraq , they are all pressing ahead , increasing capacity and offsetting depletion in line with the call of OPEC , of increasing crude production .

Giovanni Sardagna: When we look outside Saudi, the key producers in the GCC, UAE, Kuwait, Iraq, they're all pressing ahead increasing capacity and offsetting depletion in line with the call of OPEC of increasing crude production. We see those plans steadily going ahead. Qatar, which is more of an LNG story, we see Qatar Gas preparing for the new campaign of the North Field West 50 wells that will probably supply towards the end of 2026 and 2027. Overall, a lot of moving pieces, but I would say Middle East stable and resilient into next year. There was also a comment on offshore, Alessandro. We commented that the shipment for offshore in the second half was a bit lower than the first half, where we had a lot of offshore pipelines in Brazil, in Sub-Saharan Africa that were not repeated in the second half.

Speaker #3: So we see those plants steadily going ahead . Qatar , which is more of an LNG story . We see Qatar Gas preparing for the new campaign of the North Field West , 50 wells that will probably supply towards the end of 26 and 27 .

Speaker #3: So overall , a lot of moving pieces . But I would say Middle East stable and resilient into next year . There was also a comment on offshore Alessandro .

Speaker #3: We commented that the shipments for offshore in this in the second half was a bit lower than the first half , where we had a lot of offshore pipelines in Brazil , in sub-Saharan Africa that were not repeated in the second half , but as Paolo mentioned in the opening remarks , we are building a strong backlog into 2026 .

Giovanni Sardagna: As Paolo mentioned in the opening remarks, we are building a strong backlog into 2026. The Sakarya Phase 3 is a good example, and we are seeing some other projects moving ahead with likely FID in the first part of the year. Overall, we are pretty much positive and constructive on the contribution of offshore into 2026.

Speaker #3: The Zakaria phase three is a good example , and we are seeing some other projects moving ahead with likely aphid in the first part of the year .

Speaker #3: So overall , we are pretty much positive and constructive on the contribution offshore into 2026 .

Speaker #4: Thank you Gabriel . On the last point , that is the market share . I think we are gaining some market share , but let me tell you , I think the reality is that our clients are gaining market share for different reasons into the space of North America .

Paolo Rocca: Thank you, Gabriel. On the last point, that is the market share, I think we are gaining some market share, but let me tell you, I think the reality is that our clients are gaining market share for different reasons into the space of North America. I will ask Guillermo to comment on this, even if this is, in your view, sustainable.

Speaker #4: I will ask chairman to comment on this , even if this is in your view , sustainable .

Speaker #3: Yes . I think that it is sustainable . Our clients are mainly the large operators that have shown much more resilient than the smaller ones , and we expect this to continue .

Giovanni Sardagna: Yes, I think that it is sustainable. Our clients are mainly the large operators that capture much more resilience than the smaller one, and we expect this to continue. Now, regarding the correlation of demand of OCTG with rig count there, we need to be very careful because we have explained in other conference calls, most of the vectors, particularly ours, are increasing productivity and efficiency, and therefore the impact on the demand of OCTG is on the downward trend and is lower than if you just take into account the rig count. You need to take both into account. Indeed, our market share has slightly increased due to the resilience of our clients.

Speaker #3: Now , regarding the correlation demand of Octg with the recount there , we need to be very careful because as we have explained in other conference calls , most of the predictors , particularly ours , are increasing productivity and efficiency and therefore the impact on the demand of CTG is on the downward trend is lower than if you just take into account the rig count .

Speaker #3: So you need to take both into account . But indeed our market share has slightly increased due to the resilience of our client .

Speaker #3: Yeah . Thank you . Okay , I would just ask .

Paolo Rocca: Thank you.

[Analyst]: Okay.

Speaker #4: Yeah I would I just one comment . The last operator are more resilient in front of a perception of a reduction of the price of oil .

Paolo Rocca: I would add just one comment. The large operator are more resilient in front of perception of a reduction of the price of oil. They have more productive play. They operate in more productive play. They have better efficiencies. The operator we are serving tends to be more stable and resilient even when the perception of price of oil over time may be subdued. Consider, let's say maybe months ago.

Speaker #4: They have more productive play . They operate in more productive play . They have better efficiencies . So the operator we are serving tends to be more stable and resilient , even when the perception of price of oil over time may be subdued , let's say maybe months ago .

Speaker #4: Okay , okay .

Giovanni Sardagna: Okay.

[Analyst]: Okay.

Speaker #8: I'm sorry, but regarding the intensity you mentioned, can you provide us with an update on where we stand in terms of intensity now, compared to a year ago, and how much improvement there has been?

Paolo Rocca: Sorry, you mentioned intensity. Can you give us maybe an update?

[Analyst]: On where we are in terms of.

Paolo Rocca: Intensity now versus let's say a year ago, and how much improvement there was?

Speaker #3: Yeah, you mean octg consumption?

Giovanni Sardagna: Yeah. You mean OCTG consumption.

Speaker #8: Yeah , yeah .

Paolo Rocca: Yeah.

[Analyst]: Correct. Yeah, yeah.

Speaker #3: Yeah , I would say that it's around 2 to 3% higher . So if you see a reduction of 5% you need to consider that half of this has been compensated by increase of productivity .

Giovanni Sardagna: I would say that it's around 2 to 3% higher.

[Analyst]: So.

Giovanni Sardagna: If you see a rig count reduction of 5%, you need to consider that this has been compensated by increase of productivity.

Speaker #3: Right . That there is that it takes time to , to drill a well , but also because they are extending their laterals length .

Paolo Rocca: Right.

Giovanni Sardagna: The days that it takes them to drill a well, but also because they are extending their lateral length.

Speaker #8: Thank you very much .

[Analyst]: Thank you very much.

Speaker #4: Thank you .

Paolo Rocca: Thank you.

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Sebastian Erskine from Rothschild and Company .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Sebastian Erskine from Redburn Atlantic.

Speaker #2: Redburn .

Speaker #9: Yeah . Hi . Good morning . Thanks very much for taking my questions . The first one just on Mexico . You secured some work from Woodside for the Trion project , and I think recent news more broadly has been positive for Mexico as Pemex strategic plan is being thrashed out .

[Analyst]: Yeah, hi, good morning. Thanks very much for taking my questions. The first one just on Mexico. You secured some work from Woodside for the Trion project, and I think recent news flow more broadly has been positive for Mexico as kind of Pemex's strategic plan is being threshed out and the mixed contracts are being signed. In your view, how much of a factor is Mexico going to be on a volume perspective in 2026 versus this year? What's the potential upside from that region?

Speaker #9: And , you know , the mixed contracts are being signed in your how much of a factor is Mexico going to be on a volume perspective in 2026 versus this year ?

Speaker #9: What's the potential upside from that region ?

Speaker #4: Sorry for the region you were mentioning , which region can you repeat ?

Paolo Rocca: Sorry, for the region you were mentioning. Which region? Could you repeat?

Speaker #9: Yeah , sure . Just in in Mexico , just obviously . Yeah .

[Analyst]: Yeah, sure. Just in Mexico, just obviously.

Speaker #4: First of all , on the question of the region and other private company that are , let's say , operating what we see is that this is start to to to moving on in different direction .

Paolo Rocca: First of all, on the question of the Trion and other private company that are, let's say, operating, what we see is that this is starting to move on in different direction. Also, some of the new contract that Pemex is giving for drilling are moving on. The first one has been assigned. This will imply additional drilling in Mexico. This is one point, including the project like Trion on the roadside that are going on. Second point is the financial situation of Pemex after the refinancing operation for $12 billion. Pemex is more, I mean, is recovering ability to consider, let's say, payment to the supplier. During the third quarter we didn't receive, but now we are receiving payment and we expect during the fourth quarter to receive substantial payment on our receivable. Have you noticed the receivable has been going up?

Speaker #4: Also , some of the contracts the new contracts that Pemex is giving for drilling are moving on . The first one has been assigned .

Speaker #4: So this will imply additional drilling in Mexico . This is one point including the project like at Woodside that are going on . Second point is the financial situation of Pemex .

Speaker #4: After the refinancing operation for 12 billion Pemex is more I mean , it has is recovering ability to consider , let's say , payment to the supplier during the third quarter , we didn't receive .

Speaker #4: But now we are receiving payment and we expect during the fourth quarter to receive substantial payment on our receivable . If you notice , the receivable has been going up , one of the reasons has been the delay in Pemex .

Paolo Rocca: One of the reason has been the delay in payments. We expect this to improve and we expect the, let's say, the recovery in the financial reason of Pemex to have an impact some moment in our. For the visibility that we have in the coming quarter, we do not see a major change, but we can see that the refinancing has signaled that over time during 2026 there will be additional activity by the private companies and maybe hopefully by Pemex also.

Speaker #4: But we expect this to improve and we expect the let's say , the recovery in the financial of Pemex to have an impact .

Speaker #4: Some moment in our for the visibility that we have in , in the coming quarter , we do not see a major change , but we consider the refinancing a signal that over time , during 2026 , there will be additional activity by the private company and maybe hopefully by Pemex .

Speaker #4: Also .

Speaker #9: Really , really appreciate that . And just a quick one on on kind of raw material costs . It looks like you benefited from some kind of meaningful deflation in the third quarter , particularly in hot rolled coil .

[Analyst]: Really appreciate that. Just a quick one on kind of unit raw material costs. It looks like you benefited from some kind of meaningful deflation in the third quarter, particularly in hot rolled coil. Can you give an update what you're expecting on the input costs into the fourth quarter and some of the moving parts kind of ex tariffs?

Speaker #9: Could you maybe give an update on what you're expecting on input costs into the fourth quarter and some of the moving parts kind of ex tariffs ?

Speaker #4: We do not expect major change because the situation of high inventory that is basically containing the impact of tariff is also something that is to some extent affecting the hot rolled coils .

Paolo Rocca: We do not expect major change because the situation of high inventory basically containing the impact of tariff is also.

[Analyst]: Something.

Paolo Rocca: That is to some extent affecting the hot rolled coils. I mean the price of hot rolled coils is higher, but it's not higher as much as one could have expected for the size of the increase in the import of this. I think that maybe, Carlos, you looking at the impact of hot rolled coils on our cost of sales, you can add something. I don't see major changes.

Speaker #4: I mean , the price of coils is higher but is not higher as much as one could have expected for for the size of the increase in the import of this .

Speaker #4: I think that maybe Carlos , you are looking at our the impact of hot rolled coils on our cost of sales . You can add something I don't see major change in prices .

Speaker #3: But a small increase for the next quarter, and then flat, going down. The effect that we are going to see in our costs next quarter is the effect of tariffs.

Giovanni Sardagna: No small increase for next quarter, then flat and going down. The effect that we are going to see in our costs next quarter is the effect of tariffs. As you mentioned already, the impact of tariffs in our cost of goods sold will increase during this quarter to achieve almost the full effect of the tariffs. Yeah.

Speaker #3: No , that you mentioned already , the the impact of tariffs in in our cost of goods sold will increase during this quarter to achieve almost a full effect of of tariffs .

Speaker #3: Yeah . Okay .

Speaker #9: Super . Thanks very much for the for the color Paolo and Tim I'll hand it back now . Thank you .

[Analyst]: Super. Thanks very much for the color, Paolo and team. I'll hand it back now. Thank you.

Speaker #2: Thank you . Our next question comes from the line of David Anderson from Barclays .

Operator: Thank you. Our next question comes from the line of David Anderson from Barclays.

Speaker #10: Great. Thank you. Just want to get back to the Middle East, if we could please, specifically on the emerging unconventional resource plays in Saudi Arabia and the UAE.

[Analyst]: Great, thank you. Just want to get back to the.

Giovanni Sardagna: Middle East if we could please specifically.

[Analyst]: On the emerging unconventional resource plays in Saudi Arabia and UAE, Aramco just signed contracts on the third phase of GEFORA and is now planning.

Speaker #10: So Ramco just signed contracts on the third phase of . Japura and is now planning to drill something on the order of 4 or 500 wells next year .

Giovanni Sardagna: To drill something on the order of.

[Analyst]: Four or five hundred wells next year.

Speaker #10: In the UAE . Adnoc has recently talked about 300 wells annually , starting in 2027 , presumably all that's going to be seamless as it is in the US .

Giovanni Sardagna: The UAE, ADNOC has recently talked about.

[Analyst]: 300 wells annually starting drilling in 2027. Presumably all that's going to be seamless.

Giovanni Sardagna: As it is in the U.S.

Speaker #10: I was if you could talk about this opportunity for Tenaris , I mean , if we just kind of run the rough numbers here , this seems like a pretty substantial uptick .

[Analyst]: Was wondering if you could talk about this opportunity for Tenaris.

Giovanni Sardagna: If we just kind of.

[Analyst]: Run the rough numbers here, this seems like a pretty substantial uptick if we kind of use the same numbers that we see in the U.S. shale and apply that over there.

Speaker #10: If we kind of use the same numbers that we see in US shale and apply that over there , can you just talk about how important this is for your Middle East business over the next couple of years , please ?

Giovanni Sardagna: Can you just talk about how important this is.

[Analyst]: This is for your Middle East business over the next couple of years, please?

Speaker #10: Thank you .

Giovanni Sardagna: Thank you.

Speaker #4: Thank you, David and Gabriel.

Paolo Rocca: Thank you, David and Gabriel.

Speaker #3: Yeah , David . Indeed . We are excited about the unconventional opportunity in the Middle East . As you mentioned , this is something that that is not new .

Giovanni Sardagna: Yes, David, indeed we are excited about the unconventional opportunity in the Middle East. As you mentioned, this is something that is not new. Jafura has been there and increasing rigs steadily over the last three years since the development started. This is an area that we are participating as of today. We have an important share in the seamless and conventional space in Saudi, and that also demands pipelines for connectivity and transportation of gas in the kingdom. This is exciting and is the part that has been more resilient in the decrease of rigs of Saudi that I was referring to before. Clearly, the gas development in Saudi is the most resilient as they are targeting to replace oil for internal consumption going.

Speaker #3: Jaguar has been there and increasing rigs steadily over the last three years since the development started . And this is an area that we are participating as of today .

Speaker #3: We have an important share in the in the seamless , unconventional space in , in Saudi . And that also demands pipelines for connectivity and transportation of gas in the kingdom .

Speaker #3: So this is is exciting and is a the part that has been more resilient in the decrease of of rigs of Saudi . That was referring before .

Speaker #3: Clearly the gas development in Saudi is the most resilient as they are targeting to to replace oil for internal consumption . Going to to UAE .

Paolo Rocca: To.

Speaker #3: There is also an opportunity of unconventional is a bit smaller , but the Adnoc is accelerating their own operations and with partners they are bringing in and they have some , some , some partnerships of some concessions .

Giovanni Sardagna: There is also an opportunity of unconventional. It's a bit smaller, but in ADNOC, it's accelerating their own operations and with partners that they are bringing in, and they have some partnership of some concessions. There we're also leading in terms of market share and position of the unconventional play. Within the broader scope of supply that we have with ADNOC, unconventional is an area that we are participating and leading. It is an area we expect growth.

Speaker #3: And there we are also leading in terms of market share and position of the unconventional play . So within the the broad scope of supply that we have with Adnoc , unconventional is an area that we are participating and leading .

Speaker #3: So it's an area we expect growth as well . Going forward .

Paolo Rocca: As well, going forward.

Speaker #10: And just a quick follow up , where do you source that pipe ? I don't think you manufacture any seamless in the Middle East .

[Analyst]: Just a quick follow up. Where do you source that pipe? I don't think you manufacture any seamless.

Giovanni Sardagna: In the Middle East, I know you've got a welded facility.

Speaker #10: I know you've got a welded facility . I think you have a JV with Aramco in Saudi , but I don't think you have any seamless production over there .

[Analyst]: I think you have a JV with Ramco in Saudi, but I don't think you have any seamless production over there. Where do you source that from for projects like these? That's a lot of pipe.

Speaker #10: Where do you source that from for projects like these? That's a lot of pipe.

Speaker #3: Yeah . For the in in Saudi Arabia for pipelines . We source domestically for our large OD pipeline mill in Jubail . When you go to the Octg side , there is a mixed string of welded and seamless .

Giovanni Sardagna: Yeah, for the in Saudi Arabia for pipelines, we source domestically for our SAW large OD pipeline mill in Jubail. When you go to the OCTG side, there is a mixed string of welded and seamless. The welded, we produce ERW welded for surface casing domestically sourced from coils of Saudi and our production of pipes in the Kingdom. For the seamless component, we source from the local mills in Saudi. We finish to our connection when we go to UAE. All our material is brought from our main mills in Argentina and Mexico and to a large extent also threaded in our finishing facility that we have in Abu Dhabi. It's a mix of combination of pieces with a heavy component of domestic.

Speaker #3: The welded products we produce here are welded for surface casing, which is domestically sourced from coils in Saudi Arabia, along with our production of pipes in the kingdom.

Speaker #3: And for the seamless component we sourced from the local mills in Saudi . And then we finished to our connection . When we go to UAE , all our material is brought from our main mills in Argentina and Mexico , and to a large extent also threaded in our finishing facility that we have in in Abu Dhabi .

Speaker #3: So it's a mix of a combination of pieces, with a heavy component of a domestically produced.

Speaker #10: Great . Gabriel , thank you for the insight . Appreciate it .

[Analyst]: Great. Gabriel, thank you for the insight.

Giovanni Sardagna: Appreciate it. Thank you, David.

Speaker #3: Thank you David .

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Kevin Roger from Kepler Chevre .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Kevin Roger from Kepler Cheuvreux.

Speaker #11: Yes . Good afternoon . Thanks for taking the time . I have two , if I may , the first one is on the profitability of the business based on the region .

Paolo Rocca: Yes, good afternoon. Thanks for taking the time.

[Analyst]: I have two if I may.

Paolo Rocca: The first one is on the profitability of the business based on the region, the different region. I was wondering if you can give a bit of color on where do you stand US versus International right now in terms of profitability. Is there any big difference or the things are normalizing close to the same level? That would be the first question please. The second one is related on the working capital and maybe you have in a way given the answer with Pemex, but just trying to understand the $300 million negative movement in working cap in Q3. When you say that it's an increase in receivable, is it something in a way one of that you expect to recover in Q4? There is something else beyond this movement. Please. Thank you, Kevin. On the first line, you know, Tenaris S.A.

Speaker #11: The different region . And I was wondering if you can give a bit of color on where do you stand us versus international right now in terms of profitability ?

Speaker #11: Is there any big difference or the things that are normalizing close to to the same level ? That would be the first question .

Speaker #11: Please . And the second one is related on the working capital . And maybe you have in a way , given the answer with with Pemex , but just trying to understand the 300 million negative movement in working cap in Q3 , when you say that it's an increase in receivable , is it something in a way , a one off that you expect to recover in Q4 or there is something else beyond this movement ?

Speaker #11: Please .

Speaker #4: Thank you . Kevin . Well , on the first line , you know , Tenaris SA is selling in the different regions , a very diversified portfolio of of products .

Paolo Rocca: is selling in the different region a very diversified portfolio of product. It's pretty difficult to say profitability for the market. For instance, when we're talking about offshore, depending if it is in Africa, the Gulf or in Southeast Asia or in the Mediterranean, we have a range of products including pipeline line pipe with coating that following our acquisition of Sakarya in some cases represent an invoicing even superior or higher than the invoicing on pipes. It's difficult to differentiate on region. We have differentiation due by product. Some of the most competitive products are the onshore welded line pipe. There are examples in Argentina or in Saudi Arabia. These are, let's say, the tail of our profitability. While the most profitable area could be the line pipe coated with insulation for complex offshore product. In the US there is an average.

Speaker #4: So pretty difficult to say profitability for the market . For instance , when we're talking about offshore , depending if it is in Africa , in the Gulf or in the Southeast Asia or in the Mediterranean , we have a range of products , including pipeline line , pipe with coating that following our acquisition of , in some cases , it represents an invoicing .

Speaker #4: Even superior or higher than invoicing on pipes . So it's difficult to to differentiate on region . We have differentiation due by by product .

Speaker #4: Some of the more competitive products are the onshore welded line pipe . There are examples in Argentina or in Saudi Arabia . These are , let's say the tail of our profitability .

Speaker #4: While the most profitable area could be the line pipe coated with insulation for complex offshore product in the US , there is an average but still in the US there are also there .

Paolo Rocca: Still in the US there are also differentiation between production cases and surface casing or tubing. I wouldn't say that this is a regionally driven profitability impact. I would say is more derived by the mix of different project and sales. When we talk about working capital, you have seen the increase in the working capital. This is driven by the delay in payment of Pemex. This is something that we expect will be going in the opposite direction in the fourth quarter. The other component of the increasing stock that is due to the incorporation of tariff into our stock will probably stay at the same level. The inventory have a higher cost inventory or bars because of the impact of the tariff.

Speaker #4: Differentiation between production casing and surface casing . Or tubing . So I wouldn't say that this is a regionally driven profitability impact . I would say is more driven by the mix of different projects and sales .

Speaker #4: When we talk about working capital , you have seen the increase in the working capital . This is driven by the delay in payment of Pemex , and this is something that we expect will be will will be going in the in the opposite direction in the fourth quarter .

Speaker #4: The other component of the increase in stock, that is due to the incorporation of the tariff into our stock, will probably stay.

Speaker #4: At the same level . So the inventory have a higher cost inventory or bars because of the impact of the tariff . As we mentioned , the tariff had an impact into in the third quarter .

Paolo Rocca: 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 quarter. This is the reason for some lower EBITDA. It is also something that will remain relatively high. There is all what we can do in speeding up the receivable of some other area like in Middle East that maybe may contribute to an improvement of the, say to reduction of the need of working capital during the fourth quarter in this sense. Third quarter has been a kind of extraordinary, I would say, in terms of absorption.

Speaker #4: In the third quarter, in the range of $80 million, we will increase something in the range of $40 million, incorporating it into our inventory in the fourth quarter.

Speaker #4: This is the reason for some lower EBITDA . It is also something that we remain relatively high . Then there is all the what we can do in speeding up the receivable of some other area , like in Middle East .

Speaker #4: There may be may contribute to a improvement of the , let's say , to reduction of the need of working capital during the fourth Q in this sense , Sergio has been a kind of extraordinary , I would say , in terms of absorption .

Speaker #11: Okay , perfect . Thanks a lot for that . Thanks .

[Analyst]: Okay, perfect. Thanks a lot for that.

Paolo Rocca: Thanks.

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Paul Rudman from BNP Paribas Exchange .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Paul Rudman from BNP Paribas Exane.

Speaker #12: Yeah . Thank you very much for your time . I just had a quick question on inventory levels in the US . And where you expect imports to fade quicker .

[Analyst]: Thank you very much for your time. I had a quick question on inventory.

Paolo Rocca: Levels in the US and where you.

[Analyst]: Expect imports to fade quicker. Would that be more on the seamless or the welded front?

Speaker #12: Would that be more on the seamless or the welded front ? And where our inventories fire on either product ? And then secondly , you put out a press release earlier this month .

Paolo Rocca: Where are inventories higher on either product?

[Analyst]: Secondly, you put out a press release earlier this month. Earlier this month, I think it was talking about some foul spin now being included in the bond buyback process. I just wanted to confirm whether there's any change here. Anything else we should know about on that change in positioning?

Speaker #12: Earlier this month , I think it was talking about some fasting . Now being included in the buyback process . I just wanted to confirm whether there's any change here .

Speaker #12: Anything else we should know about on that change in positioning ? Thank you .

Giovanni Sardagna: Thank you.

Speaker #4: Sorry . Can you repeat the second question just to be sure and understand you well , yes .

Paolo Rocca: Sorry, can you repeat the second question just to be sure and understand you?

[Analyst]: Your largest shareholder is now wanting to be included in the buyback process. I believe this is a change from its previous positioning, and I just want to understand whether you're aware of any.

Speaker #12: Your largest shareholder is now wanting to be included in the buyback process . I believe this is a change from its previous positioning .

Speaker #12: And I just want to understand whether you're aware of any change in positioning here .

Paolo Rocca: Change in positioning here. Okay, understood. Now the first one is on inventory here, Guillermo, if you can.

Speaker #3: Yeah .

Speaker #4: Okay . Understood . Now , the first one is on inventory here . If you can .

Speaker #3: Yes . When we look at the imports it's more on welded pipeline on seamless . And regarding the increase of inventories on the ground that we have seen lately has also been higher on the year than in seamless .

[Analyst]: Yes.

Giovanni Sardagna: When we look at the imports, it's more on welded pipe than on seamless. Regarding the increase of inventories on the ground that we have seen lately, it has also been higher on the ERW than in seamless. Now, looking forward, the expectation is that both seamless inventories on the ground will go down. Yes.

Speaker #3: Now looking forward , the expectation is that both W and seamless inventories on the ground will will go down . Yes .

Speaker #4: On the second one, you know, the controlling shareholder has informed us that he may start selling a share but will not go below a certain threshold.

Paolo Rocca: On the second one, the controlling shareholder has informed that he may start selling share but will not go below a certain threshold. We will see this in the public information because the shareholder is also by the rule indicating when the movement are above the 1%. This is what we can see, we can say about this.

Speaker #4: And then we will see this in the public information , because the shareholder is also by the rule is indicating when the movement are above the 1% .

Speaker #4: This is what we can see . We can say about this .

Speaker #2: Thank you . One moment for our next question . Our next question comes from the line of Rodrigo Almeida from Santander .

Operator: Thank you. One moment for our next question. Our next question comes from the line of Rodrigo Almeida from Santander.

Speaker #13: Hi everyone . So just a couple questions here for my side . The first one , I'm not sure if we talked about this during the call , but it's regarding Argentina , right .

[Analyst]: Hi everyone, just a couple questions here from my side.

Giovanni Sardagna: The first one, I'm not sure if.

[Analyst]: We talked about this during the call, but it's regarding Argentina, right?

Speaker #13: Regarding the oil field services business and Argentina . If you could give us an update on how things are evolving , there are we talked a little bit about Argentina macro environment , but how could this business say help results ?

Giovanni Sardagna: Regarding the oil field services business in Argentina, if you could give us an update.

[Analyst]: On how things are evolving there.

Giovanni Sardagna: We talked a little bit about the Argentina macro environment, but how could this business, say, help resilience, maybe over the next few quarters? I think this would be nice to hear from you. I have another question here.

Speaker #13: Maybe over the next few quarters ? I think this would be nice to hear from you . And then I have another question here .

Speaker #13: When we look into South America , we saw a nice contract recently signed with Petrobras , which I suppose could somewhat offset the Raya project that just ended .

[Analyst]: When we look into South America, we.

Giovanni Sardagna: Saw a nice contract recently signed with.

[Analyst]: Petrobras, which I suppose could somewhat offset.

Giovanni Sardagna: The Raya project that just ended, if you could give us some color on how we could think about.

Speaker #13: So if you could give us some color on how we could think about the South American operations going forward .

[Analyst]: This automatic operation is going forward.

Speaker #3: Yeah .

Paolo Rocca: Thank you, Rodrigo. About Argentina, as I comment, I think the oil company, including YPF and all the others, will have more access to financing and willingness of the investor of support. This has been clearly reacting to the results of the election in a very positive way. What does this mean for us? It means additional rigs that are coming into operation gradually because this you cannot bring it. The number of rigs idle in the country is almost zero now, so will increase only slightly. There will be action to bring into the country additional rigidity for operation during 2026. It means that fracking operation will increase and this is important for our division that is doing fracking in Argentina.

Speaker #4: Thank you . Rodrigo . Well , about Argentina a comment . I think the oil company , including YPF and all the other will have more access to financing and willingness of different the investor of support this has been clearly reacting to the results of the election in a very positive way .

Speaker #4: What does this mean for us ? Well , it means additional rigs . There are coming into is operation gradually because this you cannot bring it .

Speaker #4: The number of rigs idle in the country is almost zero now . So we'll increase only slightly , but there will be action to bring into the country additional rigs for operation during 2026 .

Speaker #4: It means that fracking operation will increase and this is important for our division . That is doing fracking in Argentina . We can expect increase in invoicing by our fracking operation and all by our sales of pipe and services .

Paolo Rocca: We can expect increase in invoicing by our fracking operation and all by our sales of pipe and services over time will not be immediate, but will have an impact in the coming quarter. More sales now in the line pipe. You know, the project of LNG, the Caesar project promoted by Pan American together with partner like YPF and so is going on and in the present situation we will see the tender and the FID has been done in June and we expect in 2026 that the process of construction of pipe plan will start and also the assignment of the contract for the pipe. This kind of movement are important from our point of view and will enhance the market for us in the case of Petrobras. I will ask Gabriel to comment on the contract.

Speaker #4: Over time will not be immediate , but will have an impact in in the coming quarter . So more sales now in the line pipe .

Speaker #4: You know , the project of LNG , the size project promoted by Pan-American together with partner like YPF and so on , is going on is an and will in the present situation .

Speaker #4: We will see the tender and the the FID has been has been done in June and we expect in 2026 that the process of construction of pipeline , we start and also the assignment of the contract for the pipes , this kind of movement are important from our point of view and our .

Speaker #4: We are enhance the market for us . In the case of Petrobras , I will ask Gabriel comment on the contract .

Speaker #3: Yeah . Thank you . Paulo Rodrigo , in terms of drilling activity in Brazil , we see steadily increasing by Petrobras and the other majors that are playing in the in the Deepwater play in Brazil and there may many moving parts of the supply of , of Tenaris , both in Okediji and line pipe in the OCG .

Giovanni Sardagna: Yeah, thank you, Paolo Rocca. In terms of drilling activity in Brazil, we see steadily increasing by Petrobras and the other majors that are playing in the deepwater play in Brazil. There are many moving parts of the supply of Tenaris both in OCTG and line pipe. In the OCTG, we have long-term agreements with Petrobras and the other majors for their large ODs connectors, which we produce locally in our facility. We are also suppliers in certain fields of the seamless casing as well with Petrobras. We also have an important contract for completions of 13 Chrome and CRA given the sour service conditions of completions in Petrobras. We believe that this, together with the pipelines, the seamless pipeline bookings that are also carrying insulation coats I mentioned, I believe in the last two calls, Búzios 9 and Búzios 11.

Speaker #3: We have a long term agreements with Petrobras and the other majors for their large OD connectors , which we produce locally in our facility in confab , we are also suppliers of in certain fields of the seamless casing as well , with Petrobras , and we also have an important contract for completions of 13 Chrome and Sierra .

Speaker #3: Given the the our service conditions of completions in Petrobras . So we believe that this together with the the pipelines , the seamless pipelines , bookings that are also carrying insulation costs .

Speaker #3: And we mentioned , I believe in the last few calls , nine and 11 . The contribution of these different segments will contribute to offset the conclusion of the big pipeline that we had .

Giovanni Sardagna: The contribution of these different segments will contribute to offset the conclusion of the big Rota 3 pipeline that we had and we enjoyed until the first half of this year. A lot of moving parts and it's very interesting the breadth of the portfolio and the position that Tenaris has in Brazil. Thank you, Gabriel.

Speaker #3: And we enjoyed until the first half of this year . So a lot of moving parts and it's very interesting . The breadth of the portfolio and the position that has in Brazil .

Speaker #4: Thank you . Gabriel .

Speaker #13: Thank you .

[Analyst]: Thank you.

Speaker #2: Thank you . At this time , I would now like to turn the conference back over to Giovanni Sardagna for closing remarks .

Operator: Thank you. At this time, I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.

Speaker #3: Thank you . Gigi , and thank you all for joining us . And I hope to see you soon around . And thank you .

Giovanni Sardagna: Thank you, Gigi, and thank you all for joining us. I hope to see you soon around, and thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.