Q2 2026 Tenaris SA Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Q2 TENARIS SA 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star one one 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.

Giovanni Sardagna: Thank you, Carmen, and welcome to TENARIS SA 2026 Q2 conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call and that our actual results may vary from those expressed or implied during this call. With me on the call today are Gabriel Podskubka, our Chief Executive Officer, Carlos Gómez Álzaga, our Chief Financial Officer, and Guillermo Moreno, President of our US operations. Before passing over the call to Gabriel for his opening remarks, I would like to briefly comment our quarterly results. Our Q2 sales reached $3 billion, down 4% year on year and sequentially, mainly reflecting the postponement of shipments to customers in the Middle East due to the effective closure of the Strait of Hormuz for most of the quarter.

Speaker #2: call. With me on the call today are Gabriel quarter sales reached 3 billion, down 4% year-on-year, and sequentially, mainly reflecting the postponement of shipment to customers in the Middle East due to the effective closure of the Strait of Hormuz for most of the quarter.

Giovanni Sardagna: Average selling prices in our tube operating segment were basically flat compared to the corresponding Q of last year and sequentially. Our quarterly EBITDA decreased 12% sequentially to $649 million, while our net income decreased 13% to $492 million, mainly due to lower absorption of fixed costs in addition to higher raw material and logistic costs. With operating cash flow of $518 million and capital expenditure of $121 million, our free cash flow for the quarter was $396 million. Following a dividend payment of $606 million in the quarter, our net cash position at the end of the quarter decreased to $3.6 billion. The board of directors approved the payment of an interim dividend of $0.59 per share or $1.18 per ADR, approximately $600 million, that will be paid 25 November.

Speaker #2: basically flat compared to the corresponding quarter of last year and sequentially. Our quarterly EBITDA decreased 12% sequentially to $649 million, while our net income decreased 13% to $492 million.

Speaker #2: Mainly due to lower absorption of fixed costs, in addition to higher raw material and logistics costs. With operating cash flow of $518 million and capital expenditure of $121 million, our free cash flow for the quarter was $396 million.

Speaker #2: Following a dividend payment of $606 million in the quarter, our net cash position at the end of the quarter decreased to $3.6 billion. The board of directors approved the payment of an interim dividend of $59 cents per share, or 1.18 dollars per ADR, approximately $600 million, that will be paid the 25th of November.

Speaker #2: Now I will ask Gabriel to say a few words before we open the call to questions.

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

Speaker #3: Thank you, Giovanni, and I would like to extend a warm welcome to all of you participating in our call today. Our second quarter results clearly reflect the impact of the Middle East conflict and its disruption in the Strait of Hormuz.

Gabriel Podskubka: Thank you, Giovanni, and I would like to extend a warm welcome to all of you participating in our call today. Our Q2 results clearly reflect the impact of the Middle East conflict and disruption in the Strait of Hormuz, as well as the consequent impact of logistics and energy cost increases. Even so, they also demonstrate the resilience of our performance based on the strength of our global positioning and the efficiency of our industrial operations. In the Middle East, shipments to Iraq, Kuwait, and Qatar have been postponed as our customers were forced to reduce their operations, and ships are unable to enter the Gulf. This situation will continue until the Hormuz Strait reopens. In Saudi Arabia and the Emirates, however, we were able to continue supply of OCTG to Aramco and ADNOC, who have maintained their drilling operations fairly intact.

Speaker #3: As well as the consequent impact of logistics and energy cost increases. Even so, they also demonstrate the resilience of our performance, based on the strength of our global positioning and the efficiency of our industrial operations.

Speaker #3: In the Middle East, shipments to Iraq, Kuwait, and Qatar have been postponed as our customers were forced to reduce their operations, and ships are unable to enter the Gulf.

Speaker #3: This situation will continue until the Hormuz Strait reopens. In Saudi Arabia and the Emirates, however, we were able to continue supply of all CTG to Aramco and ADNOC, who have maintained their drilling operations fairly intact.

Speaker #3: In other regions of the world, customers are advancing investments to meet the need for energy security and diversification of supply. Drilling activity in unconventional places is increasing in the United States, in Canada, and also in Argentina.

Gabriel Podskubka: In other regions of the world, customers are advancing investments to meet the need for energy security and diversification of supply. Drilling activity in unconventional plays is increasing in the United States, Canada, and Argentina. In the United States, we are adding work shifts at our industrial facilities. Our Bay City mill is producing at record levels, and we continue to invest to improve the production capabilities of our Koppel steel shop and our Ambridge seamless pipe mill. We are also extensively deploying a new TenarisHydril Wedge connection, which we developed for longer laterals. In Canada, we have launched a major $230 million investment program to increase the effective production capacity of our mill in Sault Ste. Marie. These investments will strengthen our domestic supply capabilities for our Canadian customers.

Speaker #3: In the United States, we are adding work shifts at our industrial facilities. Our base city mill is producing at record levels and we continue to invest to improve the production capabilities of our copped steel shop and our Ambridge seamless pipe mill.

Speaker #3: We are also extensively deploying a new high-torque wedge connection, which we developed for longer laterals. In Canada, we have launched a major 230 million dollar investment program to increase the effective production capacity of our mill in South St.

Speaker #3: Marie, this investment will strengthen our domestic supply capabilities for our Canadian customers. In Argentina, nine high-spec rigs have been added in Vaca Muerta since the beginning of the year, bringing the total to 42 in operation today.

Gabriel Podskubka: In Argentina, nine high-spec rigs have been added in Vaca Muerta since the beginning of the year, bringing the total to 42 in operation today. In addition, YPF, together with Eni and XRG, are advancing investment plans for the $30 billion Argentina LNG project, for which an FID is expected at the end of this year. We commented last time on the favorable outlook for long-cycle deepwater projects. With technology advances and short-term development schedules, these projects have become more cost-competitive and are well suited to support security and diversification of supply. Several FIDs were taken over the last 3 months. An example is the Cronos project, sanctioned by Eni and TotalEnergies, which will take deepwater gas from Cyprus to an LNG facility in Egypt.

Speaker #3: In addition, YPF, together with E&I and AXRG, are advancing investment plans for the 30 billion dollars Argentina LNG project for which an FID is expected at the end of this year.

Speaker #3: We commented last time on the favorable outlook for long-cycle dewater projects. With technology advances and short-term development schedules, this project has become more cost-competitive and our well-suited to support security and diversification of supply.

Speaker #3: Several FIDs were taken over the last three months. An example is the Kronos project sanctioned by E&I and TotalEnergies which will take dewater gas from Cyprus to an LNG facility in Egypt.

Speaker #3: TENARIS has been supporting E&I in the definition and the supply of the pipeline requirements and also on the OCDG needed for the four wells of the project.

Gabriel Podskubka: Tenaris has been supporting Eni in the definition and the supply of the pipeline requirements, and also on the OCTG needed for the four wells of the project. We inaugurated our new service center in Suriname, together with TotalEnergies and government officials. From this base, we manage the OCTG supply chain for the GranMorgu project. We also began deliveries of line pipe and coating for the Sakarya project in the Black Sea. Our backlog of offshore projects has increased, and we expect this to be reflected in our sales from Q4 and into 2027. This year, our raw material costs have increased and are impacting our sales progressively. We are also increasing prices, and in Q4, we should see this positive effect in our sales and margins.

Speaker #3: We inaugurated our new service center in Suriname, together with TotalEnergies and government officials. From this base, we manage the OCDG supply chain for the Grand Morgue project.

Speaker #3: We also began deliveries of line pipe and coating for the Zakaria project in the Black Sea. Our backlog of offshore projects has increased and we expect this to be reflected in our sales from the fourth quarter and into 2027.

Speaker #3: This year, our raw material costs have increased and are impacted in our SARS progressively. We are also increasing prices and in the fourth quarter we should see this positive effect in our sales and margins.

Speaker #3: As we all adapt to a world of increased volatility and supply chain disruption, TENARIS is uniquely positioned to meet the diverse needs of its customers around the world with its global reach, differentiated service and technology, and investments to strengthen its industrial system.

Gabriel Podskubka: As we all adapt to a world of increased volatility and supply chain disruption, Tenaris is uniquely positioned to meet the diverse needs of its customers around the world with its global reach, differentiated service and technology, and investments to strengthen its industrial system. With this, we open the floor for questions.

Speaker #3: With this, we open the floor for questions.

Giovanni Sardagna: Cool.

Speaker #2: Well, thank you, ladies and gentlemen. At this time, we'll open the floor for your questions. And as a reminder, STAR 11 to get in the queue and wait for your name to be announced.

Operator: Thank you. Ladies and gentlemen, at this time, we'll open the floor for your questions. As a reminder, star one one to get in the queue, and wait for your name to be announced. To remove yourself, press star one one again. Our first question is from Arun Jayaram with JPMorgan Securities. Please proceed.

Arun Jayaram: Yeah. Good morning, Gabriel and team. I was wondering, Gabriel, if you could review the board's decision and move on the dividend. Looks like you're effectively doubling the dividend rate, and perhaps shifting a little bit away from the previous cash return strategy that included a mix of buybacks and still a strong dividend previously. Wondering if you could maybe talk a little bit about that move on the dividend, and do you view this as sustainable over the long term?

Yeah, good morning Gabrielle and team. Uh, I was wondering, uh, Gabrielle if you could review the board's decision and move on the

On the dividend looks like you're effectively doubling the dividend rate. Um and and perhaps shifting a little bit away from

the previous cash return strategy, that included a mix of BuyBacks and still a strong dividend previously, but wondered, if you could maybe

Talk a little bit about that of of that move on the dividend and and do you view this as sustainable over the long term.

Gabriel Podskubka: Yeah. Thank you, Arun. Good morning, and thank you for your question on this point. As you mentioned, the board has decided to increase the interim dividend to $600 million, doubling, as you mentioned, given the strong balance sheet and sustained cash generation of the company. As you mentioned, the board has favored distribution through dividends given the simplicity and also as a means of preserving the liquidity of the company share. That's the rationale for the decision. In terms of sustainability and going forward, I believe that we can say that the board remains committed to maintaining a level of shareholder returns that are broadly in line with the past levels, and at the same time wishes to maintain financial flexibility in an environment of uncertainty, but that can also offer growth opportunities.

Yeah, thank you. I don't good morning, uh, and thank you for, for your question on this point, as you mentioned, uh, the board has decided to increase the interim dividend to 600 million doubling, as you mentioned, given the strong balance sheet and sustained cash generation of the company. Um, as you mentioned, the, the board has favored distribution through dividends

Given the the Simplicity and also as a means of preserving.

The liquidity of the company share. So, that's the rationale for the

For the decision. And as, uh, in terms of sustainability, I'm going forward. Uh, I believe that we can say that the board remains committed to maintaining a level of a shareholder returns that are broadly in line with the past levels.

And at the same time, which is to maintain.

Financial flexibility in an environment of uncertainty but can also offer uh growth opportunities.

Gabriel Podskubka: Regarding sustainability and future, I would say at this time that this will be decided by the board and subject to the approval of a shareholder annual meeting. That said, and based on past practice and our track record and our strong balance sheet, this could be a continuation in the amount of the dividend and the proposal for a payment in May as well.

Uh, regarding sustainability and the future.

I would say at this time that this will be decided by the board and subject to the approval of a shareholder annual meeting

but that said and based on past practice and our track record and our strong balance sheet,

uh, this could be a continuation in in the amount of the dividend and the proposal for

For a payment in may as well.

Arun Jayaram: Great. Thank you for that color. My follow-up, we do appreciate just the uncertainty and the disruption caused by the Middle East conflict on your business there. Gabriel, could you maybe give us a little bit more detail on what your assumptions assume for H2 2026 in terms of that disruption? Perhaps maybe if we separate that impact, talk a little bit about how the underlying business is doing, because it sounds like you are expecting a nice improvement or reflection as we think about Q4 in terms of your base business, again, excluding some of the noise associated with the Strait of Hormuz.

And and my follow-up. Um and we do appreciate just the uncertainty and the disruption caused by the the Middle East conflict on on your business there.

Gabrielle, can you maybe give us a little bit more detail?

On what your assumptions assume for the second half of of, of 26, in terms of that disruption. Uh, and perhaps, maybe if we separate that impact, talk a little bit about how the underlying business is doing, because it sounds like you are expecting a nice, um, you know, Improvement or reflection as we think about the fourth quarter, in terms of your base business. Again, excluding some of the noise Associated, uh, with the straight of hormones.

Gabriel Podskubka: Sure, Arun. I think it's an important point on the assumption of the Strait of Hormuz reopening or not. This is an important premise, we have changed the premise that we had last quarter, in which we believed, or at least the base case scenario for our guideline was given with a shorter solution of Hormuz opening. Today, given the uncertainty that we suffered the last few months, we are changing, not the outlook, but we're changing the premise on which we give our guidance for H2 of the year. Where we are considering that the opening of the Strait of Hormuz in the short term would be an upside to our scenario. Okay.

Sure. I don't I I think it's it's an important.

Uh, point on the Assumption of the straight, or most reopening or not. This is an important premise.

Um, and we have a change the premise.

That we had last quarter in which we believed or at least the base case scenario for our guideline was given with a short resolution of uh almost opening. So today uh and given the

The uncertainty that we suffer, the last few months, we are changing, not the Outlook, but we're changing the premise on which we we give our guidance for the for the second semester of the year.

And where we are, considering that the opening of the Strait of—almost,

Gabriel Podskubka: Last quarter, we mentioned that we have about a business of $100 million of material that is going to the upper part of the Gulf, the one that is compromised due to the inability for ships to transit to Hormuz. This is Iraq, Kuwait, and Qatar. We have even enlarged this backlog. Today, the figure would be $130 million. This is the material that we have for that part of the Middle East that today is out of our forecast. If at any point in time the conflict gets resolved or navigability in the strait is restored, it will take us 70 to 90 days to ship this material from our mills and invoice it in the upper part of the Gulf. This is an upside that we would have when and if this happens, and this would be a recurrent upside in our forecast.

In the short term will be an upside to our scenario, okay? Last last quarter, we mentioned that we have about a business of 100 million dollars.

Uh of material that is going to the upper part of the gulf, the 1 that is compromised.

Due to the inability to for ships to Transit through. Hormis this is Iraq, Kuwait and Qatar.

We have even enlarged, this backlog today. This figure would be 130 million

and and this is the, the material that we have for that part of the

of the Middle East that today is out of our forecast. If at any point in time, uh the conflict gets resolved or navigability on the in. The straight is restored, it will take us 70 to 90 days, to ship this material, from our meals, and invoice it in the upper part of the of the gulf. This is an upset that we will have when when, and if this happens.

Gabriel Podskubka: As for now, we have taken this out of our base case scenario. Having said that, if we talk about the outlook, the guidance that we have given is that in H2 2026, we expect revenues and EBITDA in line with H1, with clearly a Q3 that is more affected and more in line with Q2. As you are anticipating, an uptick and an interesting jump in Q4, that it will reflect all the other things that are happening in the world. The higher price of oil that is driven by the Hormuz disruption is creating the conditions in the US, in Canada, in Argentina, and also the strength of the offshore market to start showing, and this has taken some time for these rigs to be added and for our mills to be ramped up.

And this will be a recurrent upside in our forecast. As for now, we have taken this out of our base case, s our base case scenario. We having said that, if we talk about the, the Outlook, the, the guidance that we that we have given, is that in the second half,

Of 2026. We expect

Revenues and EBITDA in line with the first half, with clearly a third quarter that is more effective and more in line with the second quarter. And, as you are anticipating, an uptick and an interesting jump.

In the fourth quarter, that it will reflect.

All the other things that are happening in the world because of this— the higher price of oil, that is driven...

By the hormones that disruption is creating the conditions in the US, in Canada in Argentina and also the strength.

Gabriel Podskubka: We will see an important jump of volume and to some extent, some pricing as well, in Q4 of the year. This in a nutshell gives a description of the outlook with an important clarification on the premise on the upper part of Hormuz, because as you know, UAE and Saudi, the lower part of Hormuz, despite the difficulties, they have been able to continue the drilling activity, and we have been able to continue shipping with additional logistics and effort. This part has been less affected, I would say. Hopefully, this clarifies your point, Arun.

Of the offshore Market to start showing, and this is has taken some time for these risks to be added and for our means to be ramped up. And we will see a a, an important, uh, jump of volume and some to some extent, some pricing as well.

In the fourth quarter of the year.

This in a nutshell Giza, a description of the Outlook with an important uh clarification on the premise.

on the upper part of almost, because as you know, UAE and Saudi

The lower part of almost, despite the difficulties they have been able to continue the drilling activity and we have been able to continue shipping with additional Logistics.

uh, an effort, but this part

Arun Jayaram: Yes. Thank you, sir.

Has been less affected. I would say. Hopefully this clarifies your your point around.

Yes, thank you, sir.

Operator: Thank you. Our next question comes from Marc Bianchi with TD Cowen. Please proceed.

Thank you. Our next question comes from Mark Biyani with TD. Please proceed.

Marc Bianchi: Hey, thank you. I'd like to follow up on that progression into Q4 here. Maybe Gabriel, you could help us maybe translate this backlog opportunity of the $100 million plus that is being compromised. On a quarterly basis, if we were to sort of remove the effect of the Strait being impassable, I think if I work the math out, your Q4 EBITDA should be looking like your Q1 EBITDA in that $730 million range. If none of this stuff with the Strait were happening and you had a normal level of activity in the northern part of the Gulf, what would that look like?

You know, I think if I work the math out your your fourth quarter, Evita should be should be looking like your first quarter Ava and that 730 million dollar range. If none of this stuff with the straight were happening. And and you know, you had a normal level of um

...of activity in the northern part of the Gulf. What would that look like?

Gabriel Podskubka: I think you are having a very fair assumption on what the Q4 from what we are seeing and with all the uncertainty that we are managing. Without this northern part of the Gulf, our projection for Q4 will be pretty much in line with Q1, as you are indicating. If this conflict of Hormuz will assure a navigability in the short term, during the next few weeks, we will be able to ship and invoice this additional $130 million within Q4. It is an upside, it is still a possible upside, and this will clearly increase. You would assume that the margin on the material that we are selling in Iraq, in Kuwait, and in Qatar, is premium material, special grade. It has a good average margin compared to the rest of the portfolio of Tenaris.

I think you’re making a very fair assumption on what the fourth quarter will be, from what we’re seeing. And with all the...

The uncertainty that we're managing, but without this northern part of the gulf, our projects and for the fourth quarter will be pretty much in line with with the first quarter that you're you're indicating and uh if you would if this uh conflict of or mousse will assure and availability in the short term. During the next few weeks, we will be able to ship an invoice. This additional 130 million dollars within the fourth quarter is still, it's an upside, it's still a possible upside.

and this will, uh, clearly increase and you will, you would assume that the the margin

On the material that we are selling in the in Iraq, in Kuwait.

Gabriel Podskubka: It would be a nice upside addition that we are having in Q4 or thereafter. We would need 90 days for this to materialize.

Uh, and Inata is this premium material special grade, so it has a good average margin compared to the rest of the portfolio—of 10. So it would be a nice...

upside addition, that will happen in the fourth quarter or

Or the year after would need 90 days for these 2 materialized.

Marc Bianchi: Yeah. Okay. That is very helpful. Just following back up on the capital return, you had made the comment about a similar level of capital return to the prior periods with this new program. Just to clarify on that, typically what Tenaris has done is pay an interim dividend that is about one-third of the total dividend, and then in May, we get a dividend that is the remaining two-thirds. I know it is ultimately a board decision, is that sort of the message that you are looking to deliver here?

Gabriel Podskubka: Yes, Marc, this is exactly. It's not my decision, it's a board decision. Based on past practice, this one-third, two-third has been the track record that the company showed. This is what I was implying.

Yeah. Okay. That that's very helpful and then just the following back up on the, on the capital return. Um, you've made the comment about, um, a similar level of capital return to the prior periods with this new program, um, and just to clarify on that. So typically what scenarios has done is pay an interim dividend that's about 1/3 of the the total dividend and then in may we get a dividend that's that's the remaining 2/3. Um, I mean I know it's ultimately a board decision but is that sort of the uh the message that you're looking to deliver here?

Yes, Mark. This is exactly—it's not. My decision is the board's decision, but based on past practices, it is one-third to three-thirds as it has been.

A a bit, the track record of the company shows. So this is what I was implying.

Marc Bianchi: Great. Thank you very much. I'll turn it back.

Gabriel Podskubka: Thanks, Marc.

Great, thank you very much. I'll turn it back.

Operator: Thank you. Our next question comes from Sebastian Erskine with Rothschild & Co Redburn. Please proceed.

Thanks Mark.

Thank you. Our next question comes from Sebastian Airskin with Rothschild and Company. Redbarn, please proceed.

Sebastian Erskine: Yes. Good morning. Good afternoon. Thanks for taking my questions. Just to focus in on North America, and two parts to this. North American sales are flat quarter-on-quarter. You've called out US OCTG strength offsetting Canada and Mexico. How much of that flat outcome reflects the fact that US pricing is still lagging the Pipe Logix increases that we've seen? Maybe if you could give some color specifically on how you see that evolving in the H2 of the year for North America, in terms of price and volume. Just a bigger picture question on US pricing. Obviously, we started to see the cycle turn. You're offsetting the step-up in hot rolled coil prices. At what level do you see imported OCTG coming back as a competitive threat again, even net of the Section 232?

Sebastian Erskine: How much headroom basically is there before you begin to approach some level of parity with imports? Would be helpful to get your thoughts on that. Thank you.

Uh, yes, good morning, good afternoon. Thanks for taking my questions, just to focus in on, on kind of North American, and 2, 2 parts to this. So so North American Sales, sort of flat quarter on quarter. You'd call that sort of us OCD strength or setting, kind of a Mexico and how much of that flat outcome reflects. The fact that that us pricing is still lagging. The the pipe projects increases that we've seen. And maybe if you could give some color specifically on how you see that evolving in the, in the second half of the year for North America, you know, in terms of price and, and volume and then, just to sort of bigger picture question, on, on us pricing. I mean, obviously, you know, we started to see the the cycle turn, you know, you're offsetting that the Step Up in, in, in hot World quill prices. Um, but at what level, you know, do you see, imported octg coming back as as a competitive threat. Again, even net of the section 232. So how, how much Headroom basically is there before you begin to approach some level of parity with Imports, uh will be helpful to get your thoughts on that. Thank you.

Gabriel Podskubka: Thank you, Sebastian. I think on both questions related to US activity and pricing, I would ask Guillermo to add more color, and maybe I will come back to the rest of North America on Canada, Mexico, that complements our reporting group. Guillermo, Well, thank you, Gabriel, and good morning, Sebastian. Well, in the case of the US, let me first start with how we are seeing the market. Since the beginning of the conflict in Iran, we have seen activity increase by almost 10%, an addition of around 50 rigs. Our view is that from now to the rest of the year, another 10 or 15 rigs will be added on top of those.

Thank you, Sebastian. Uh, I think on both questions related to US activity and pricing, I will ask you to add more color, and maybe I will come back to the rest of North America, on Canada and Mexico, so that complements our—

Reporting for the group, but thank you. Gabriel, and good morning, Sebastian.

when in the case of the US,

Uh, let me first start with what we are see how we are seeing the market. Uh, so far since the beginning of, uh, of the conflict in Iran, we have seen activity, increase

By almost 10%. So, in addition of around 50 rigs,

and um, our view is that from now to the rest of the year and another 10 or 15 rigs will be added uh on top of those

Guillermo Moreno: Our expectation is that our shipments to the market will grow in line with the growth of activity as we capture additional sales because of a higher activity of our customers. Regarding prices, well, you know that normally our prices go very much in line with the increase of Pipe Logix, with a one-quarter delay, as we have explained in many conference calls. Since the beginning of the year, we've seen that Pipe Logix has increased around 9%. In our view, an additional 5% is expected, at least 5%, till the end of the year. Our prices will be reflecting these increases accordingly to the one-quarter delay that I mentioned before. Regarding Canada, Mexico, to complete the North America view, Mexico, we see it stable with a gradual increase in activity.

Uh, our expectations is that our achievements?

Um, since the beginning of the conflict.

Um, the beginning of the year, the same as biology has increased around 9%.

And in our view, um, an additional 5% is expected at least.

5%, till the end of of the year. And, uh,

Our prices will be reflected, uh, this increases accordingly to the 1 quarter delay that I I mentioned before.

Okay. Uh regarding uh Canada, Mexico. We see to complete the North America view, Mexico. We see the stable with a gradual increase in activity.

Guillermo Moreno: Pemex has been clearly supported and funded by the higher prices of hydrocarbons in the recent months, and the backing of the government. We see that is stable and progressing, and we see a lot of efforts of the government in Mexico creating incentives and conditions for private companies in different schemes to support with oil and gas activity in Mexico. That is something that in volume will gradually progress. There is also the pricing effect in Mexico that is somehow linked with the international indicators of pricing that are also moving north. Regarding Canada, after a very strong season in Q1, it's natural in Q2 of the year to have a seasonality decrease in volume and activity. This is an area that is also where we have a good, promising perspective of increase of drilling activity, both in oil and gas.

uh,

premix has been clearly supported and funded by the higher prices of hydrocarbons in the recent months and the backing of the government. So we see, uh, that stable and progressing, and we see a lot of efforts of of the government in Mexico, creating incentives and conditions for private companies in different schemes to support.

Uh, with oil and gas activity in Mexico. So, that is something that in volume, will gradually progress. And there is also the, the pricing affect in Mexico that is somehow linked with the international indicators of pricing. That are also moving North regarding Canada after a very strong uh, season in the first quarter is naturally in the second quarter of the year to have a

uh, seasonality decreasing in volume and activity but this is an area that is also

Guillermo Moreno: That's why we have made the decision on increase of capacity. This is an area where we have a unique setup, and we believe that gradually we will grow our position and revenue in Canada as well. Overall, I think all the three main components of North America are going to start contributing in a positive direction in the quarters to come.

Where we have a, a good promising, uh perspective of increase of draining activity, both in oil and gas. That's why we have made the decision on, uh, increase of capacity. So this is an area where we have a unique setup.

and we believe that gradually, we will grow our

Our position and and revenue in Canada as well. So overall, I think those all the

The 3 main components of North America are are going to start contributing in a, in a positive direction, in the quarter to come.

Sebastian Erskine: Super. That's helpful. Just very quickly, just to follow up on that point, just in terms of the import level in terms of that's fallen quite aggressively this year. I'm just trying to work out how much room is there in this pricing cycle, above which then you bring imports to become more competitive again, even net of the Section 232. I wonder if you maybe just give some thoughts on that parity level with the imports.

But that's helpful and just very quickly just to to follow up on that on that point. Just in terms of the the the import level in, in terms of That's Falling, quite quite aggressively this year. Um, but I'm just trying to work out a sort of what, you know, how much room is there in this pricing cycle above, which then you bring inputs to become more competitive again, even net of the section 232, I wonder if you maybe just give some thoughts on on that, um, that priority level with the, with, with the Imports. Um,

Guillermo Moreno: Yeah. 2026, as you said, imports have been contained, and we expect to see similar levels in the coming quarters. The main reason of this containment, as you said, are the Section 232 tariff, but also the trade cases filed against unfairly traded imports. Assuming that we have a positive determination in the new trade case, we expect imports to stay contained. For them to start to grow, we will need a more relevant price increase.

Yeah. I mean 2026 as you said in post has been contained and uh we expect to see uh similar levels in the coming quarter. The main reason of this containment as you said that the section 232 tariff, but also uh the trade cases um filed against and fell it trade the input. So

assuming that we have a positive determination in, in the new trade case, we expect, uh,

Imports to stay.

Contained. Uh and for them to to start to grow, we will need a more relevant price increase

Sebastian Erskine: Brilliant. Thank you very much. I'll turn it back. Thanks very much for the call.

Brilliant, thank you very much. I'll turn it back. Thanks very much for the color.

Operator: Thank you. Our next question comes from Isaco Brambilla with Mediobanca. Please proceed.

Thank you. Our next question comes from esako, brilla with Medio banca please proceed.

Isaco Brambilla: Hi. Good morning, everybody. Hope you can hear me well. A bag of questions have already been answered, so I make just a couple. First, on profitability, is it still correct to assume that Q2 should represent the weakest quarter of 2026 for you in terms of the EBITDA margin with sequential improvement throughout H2?

Hi, good morning, everybody. Hope you can hear me. Uh well uh back of questions have already been answered. So I make just just a couple first on profitability. Is it still correct to assume that the second quarter should represent the weakest quarter of 2026 for you? In terms of ebj margin with sequential Improvement throughout the second half?

Gabriel Podskubka: Good morning, Isaco. I believe Q2 and Q3 will be similar in revenues and pretty much in line on EBITDA margin. I would say that Q2 and Q3 are looking very similar, pretty much in line, and we will see the uptick starting in Q4 and going forward. Q2 and Q3, I would categorize them as very similar.

Uh,

good morning is I, I believe that the second quarter and the third quarter will be similar in revenues and uh pretty much in line on Aida margin.

Uh, so I I would say that second and third.

Are looking, uh, very similar, pretty much.

In 9, and we will see the uptick starting in the, in the fourth quarter and going forward. So, second and third, I would

Categorize them as very similar.

Isaco Brambilla: Okay.

Gabriel Podskubka: The lower volume and the logistic extra cost, and the same components that we explained, that reaction in Q2 are still present in Q3.

As the lower volume and the logistic extra cost are the same.

the same, uh,

Uh, components that we explained.

Uh, that reaction in the second quarter are still present.

Isaco Brambilla: Okay. Just to follow up on that, impacts from lower absorption of fixed cost and higher logistic and transportation, say, for our Q3 previews, we can take into account the same indication given together with Q2.

In the third quarter.

Gabriel Podskubka: Yes

Isaco Brambilla: Okay, thanks.

Gabriel Podskubka: Yeah, correct. When you go to Q4, we're seeing a volume that is going to be north of 1 million tons. In that moment, I think the volume will start supporting and helping the absorption of fixed cost in the EBITDA margin that you're looking at.

Option of fixed cost and the higher logistics and transportation, uh, for, uh, say, for our third quarter reviews, we can take into account the same indication given together with the second quarter. So, 1,004. Okay, thanks.

Yeah, correct, while when you go to the fourth quarter, we are seeing a volume that is going to be.

Uh, north of 1 million.

Tons. So, in that moment, I think the volume and...

Will start supporting.

And uh, helping the absorption of of fixed cost in the VA margin that you're looking at.

Isaco Brambilla: Brilliant. Thanks.

Brilliant. Thanks.

Operator: Thank you. Ladies and gentlemen, as a reminder, if you do have a question, press star one one to get in the queue. Again, that is star one one if you do have a question. One moment, please. We have a question from Jamie Franklin with Jefferies. Please proceed.

Thank you. And ladies and gentlemen as a reminder, if you do have a question, press star 1 1 1 to get in the queue.

Again that is star 1, 1. If you do have a question,

1 moment, please.

We have a question from Jamie Franklin with Jeffrey, please proceed.

Jamie Franklin: Hi there. Thanks for taking my questions. Just a couple of quick ones. Just on the fracking operations, obviously, the operating margin in your other line came down a little bit in Q2. Of course, it's small numbers relative to the overall group, but just wondering what a normalized level of margin kind of looks like for this business going forward. Also, if you can give us an update on the third set of equipment that's expected to be added by year end. Secondly, just on the Q3 impact, could you just dive a bit deeper into the seasonality and product mix effects that you mentioned, please?

Oh, hi there. Thanks for taking my questions. Uh, just a couple of of quick ones, just on the on the fracking operations. Obviously the operating margin, uh, and your other line came down a little bit in 2q, of course, it's, it's small numbers relative to the overall group, but just wondering what a normalized level of margin, a kind of looks like for this business, uh, going forward. Um, and also, if you can give us an update on the third set of equipment that's expected to be added by year end. Um, and then, secondly, just on the 3Q impact, uh, could you just dive a bit deeper into the seasonality and product mix effects that you mentioned, please?

Gabriel Podskubka: Sure, Jamie. On the first question, Q2 and Q3, we will have some white space in our utilization of our 2 units of fracking in Argentina. On the Q4, we will have our third unit starting operations. We will see an uptick in the level of invoicing of this segment of the business. In terms of margin and profitability, I would not disclose it for competitive reasons, but I would say that this is a business that is with an EBITDA ratio, contributing an accretive to the average of Tenaris. On your second point regarding the mix, Q3, we have seasonality in Europe. Typically, the Q3, we have our shutdown of our operations in Europe, and also many of our customers reduce their level of activity of purchasing. There is a slight reduction on seamless volumes in the Q3.

Sure. Jamie on the first question uh second quarter and and third quarter. Uh um, we will have some uh,

White space in in our, uh, utilization of a, our 2 units of frogging in in Argentina.

And, uh, in the fourth quarter, we will have our third unit.

Uh, starting operation. So we will see an uptick in the level of invoicing.

Uh, of this, uh, segment of the business.

And in terms of a margin and profitability, I would not disclose it for competitive reasons. But I would say that this is

A a a business that is, uh, within every that ratio.

Uh, contributing an accurate— to the, to the average of, uh, of 10 artists.

On your second Point regarding the mix.

In the third quarter, we have seasonality in Europe. Typically, the

Third quarter. We have our shutdown.

Of our operations in Europe, and also, many of our customers reduced the level of activity of purchasing. So, there is a slight reduction on seamless volumes.

Gabriel Podskubka: Related to the additional mix point, is that we are starting the shipment of the large Sakarya pipeline, is a welded SAW pipeline from Brazil into Turkey. This started this quarter and will continue for three or four quarters. This has an average price and margin that is below the average of Tenaris, it's a very interesting project, but from that point of view, has a slight effect on the mix. These are the color behind the seasonality and mix, which are particular to the Q3.

in the third quarter and related to the to the make the additional mix point is that we are starting the shipment of the large.

Sicaria pipeline is a welded SW pipeline from Brazil into Turkey. They start this quarter and will continue for a

a 3 or 4 quarters and this has an average price of margin. That is

Below the average of 1080. So it's a very interesting project but from that point of view,

Uh, has a a slight effect on the mix. So these are the the color behind the seasonality and mix.

of, which are particular to the

to the third quarter.

Jamie Franklin: Very helpful. Thank you.

Gabriel Podskubka: You're welcome.

Very helpful. Thank you.

Operator: Thank you. Again, ladies and gentlemen, if you do have a question, simply press star one one to get in the queue. That is star one one if you have a question. As I see no further questions in the queue, I will turn the call back to Giovanni Sardagna for final comments.

You're welcome.

Thank you. And again, ladies and gentlemen, if you do have a question simply press star 1, 1 to get in the key.

that is star 1, 1, if you have a question,

As I see no further questions in the queue, I will turn the call back to jovanni sarda for final comments.

Giovanni Sardagna: Well, thank you, Carmen, and thank you all for joining us. We talk soon. Thank you.

Well, thank you Carmen and thank you all for joining us and uh, we talked soon.

Jamie Franklin: Thank you.

Thank you.

Operator: This will conclude our conference. Thank you for participating, and you may now disconnect.

This will conclude our conference. Thank you for participating, and you may now disconnect.