Q2 2026 Tenaris SA Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Q2 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 one one on your telephone. You will 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.
Operator: Good day, and thank you for standing by. Welcome to the Q2 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 one one on your telephone. You will 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.
Speaker #1: 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.
Speaker #1: ahead. Investor Relations Officer. Please go
Giovanni Sardagna: Thank you, Carmen, and welcome to Tenaris 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 shipment to customers in the Middle East due to the effective closure of the Strait of Hormuz for most of the quarter.
Giovanni Sardagna: Thank you, Carmen, and welcome to Tenaris 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 shipment to customers in the Middle East due to the effective closure of the Strait of Hormuz for most of the quarter.
Speaker #2: to TENARIS 2026 second quarter conference Thank you, Carmen, and welcome 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.
Speaker #2: With me on the call today are Gabriel Podgórska, our Chief Executive Officer, Carlos Gomes Alzaga, our Chief Financial Officer, and Guillermo Moreno, President of our US operations.
Speaker #2: Before passing over the call to Gabriel for his opening remarks, I would like to briefly comment our quarterly results. Our second 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.
Speaker #2: Average selling prices in our tube operating segment were 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.
Giovanni Sardagna: Average selling prices in our tube operating segment were 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, mainly due to lower absorption of fixed costs in addition to higher raw material and logistic costs. With operating cash flow of $580 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 the 25 November.
Giovanni Sardagna: Average selling prices in our tube operating segment were 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, mainly due to lower absorption of fixed costs in addition to higher raw material and logistic costs. With operating cash flow of $580 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 the 25 November.
Speaker #2: 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.
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: I will ask Gabriel to say a few words before we open the call to questions.
Giovanni Sardagna: I will ask Gabriel to say a few words before we open the call to questions.
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.
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: to extend a warm welcome to all of Mainly due to lower absorption of you participating in our call today. Our second quarter results clearly reflect the impact of the Middle East conflict and disruption in the Strait of Hormuz.
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 Thank you, Giovanni, and I would like 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: until the Hormuz Strait reopens. In Saudi Arabia and the Emirates, however, we were able to continue supply of OCDG 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 US, in Canada, and also in Argentina. In the US, 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 high-torque 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.
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 US, in Canada, and also in Argentina. In the US, 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 high-torque 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 copper steel shop and our Ambridge seamless pipe This situation will continue extensively deploying a new high torque wedge connection, which we developed for longer laterals.
Speaker #3: In Canada, we have launched a major 230 million dollar investment program to increase the effective production capacity of our mill in South St Marie.
Speaker #3: This investment will strengthen our domestic supply capabilities for our Canadian customers. In Argentina, nine high-spec rigs have been added in Bacamuerta 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 three 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.
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 three 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 Total Energies 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 chains 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.
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 chains 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 Total Energies 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 sales 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.
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: Whoa.
Giovanni Sardagna: Whoa.
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.
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.
Speaker #2: To remove yourself, press STAR 11 again. Our first question is from Arun Jayaram with JP Morgan Securities. Please proceed.
Speaker #4: 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.
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. Wondered 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?
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. Wondered 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?
Speaker #4: But wondered 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?
Speaker #3: 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.
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 shares. 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.
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 shares. 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.
Speaker #3: 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 shares.
Speaker #3: So that's the rationale for the decision. And as 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.
Speaker #3: And at the same time, wishes to maintain financial flexibility in an environment of uncertainty, but that can also offer growth opportunities. Regarding the sustainability and future, I would say at this time that this will be decided by the board and subject to the approval of shareholder annual meeting.
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.
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.
Speaker #3: But 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 payment in May as well.
Speaker #4: Great. Thank you for that color. And my follow-up, and we do appreciate just the uncertainty and the disruption caused by the Middle East conflict.
Arun Jayaram: Great. Thank you for that color. My follow-up, and 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 of 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.
Arun Jayaram: Great. Thank you for that color. My follow-up, and 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 of 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.
Speaker #4: On your business there, Gabriel, could you maybe give us a little bit more detail on what your assumptions assume for the second half of 2026 in terms of that disruption?
Speaker #4: 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 improvement or reflection as we think about the fourth quarter in terms of your base business.
Speaker #4: Again, excluding some of the noise associated with the Strait of Hormuz.
Speaker #3: 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 and we have changed the premise that we had last quarter in which we believed or at the least the base case scenario for our guideline was given with a short resolution of almost opening.
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?
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?
Speaker #3: Today, and 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 guideline for the second semester of the year and where we are considering that the opening of the Strait of Hormuz in the short term will be an upside to our scenario.
Speaker #3: Okay, last quarter we mentioned that we have about a business of 100 million dollars of material that is going to the upper part of the Gulf, the one that is compromised due to the inability to for ships to transit through Hormuz.
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 will be a recurrent upside in our forecast.
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 will be a recurrent upside in our forecast.
Speaker #3: This is Iraq, Kuwait, and Qatar. We have even enlarged this backlog. Today, the figure would be 130 million. And this is the material that we have for that part of the Middle East that today is out of our forecast.
Speaker #3: If at any point in time the conflict gets resolved or navigability on 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.
Speaker #3: This is an upside that we will have when and if this happens, and this will be a recurrent upside in our forecast. As for now, we have taken this out of our base case our base case scenario.
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 effective 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.
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 effective 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.
Speaker #3: Having said that, if we talk about the outlook, the guidance that we have given is that in the second half of 2026, we expect revenues and EBITDA in line with the first half, with a clearly a third quarter that is more affected 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 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 risks to be added and for our means to be ramped up and we will see an important jump of volume and to some extent some pricing as well.
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, 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.
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, 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.
Speaker #3: In the fourth quarter of the year. This is 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.
Speaker #3: But this part has been less affected. I would say hopefully this clarifies your point, Arun.
Speaker #4: Yes. Thank you, sir.
Arun Jayaram: Yes. Thank you, sir.
Arun Jayaram: Yes. Thank you, sir.
Speaker #2: Thank you. Our next question comes from Mark Bianchi with TD Cowan. Please proceed.
Operator: Thank you. Our next question comes from Marc Bianchi with TD Cowen. Please proceed.
Operator: Thank you. Our next question comes from Marc Bianchi with TD Cowen. Please proceed.
Speaker #1: Hey, thank you. I'd like to follow up on that progression into the fourth quarter here. It may be, Gabriel, you could help us maybe translate this backlog opportunity of 100 million plus that's being compromised.
Marc Bianchi: Hey, thank you. I'd like to follow up on that progression into the Q4 here. Maybe, Gabriel, you could help us maybe translate this backlog opportunity of $100 million plus that's 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?
Marc Bianchi: Hey, thank you. I'd like to follow up on that progression into the Q4 here. Maybe, Gabriel, you could help us maybe translate this backlog opportunity of $100 million plus that's 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?
Speaker #1: 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 fourth quarter EBITDA should be looking like your first quarter EBITDA and that's 730 million dollar range.
Speaker #1: 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?
Speaker #3: I think it's a you're having a very fair assumption on what the fourth quarter from what we're seeing and with all the uncertainty that we are managing.
Gabriel Podskubka: I think you're having a very fair assumption on what the Q4 from what we're seeing and with all the uncertainty that we are managing, but without this northern part of the Gulf, our projection for the Q4 will be pretty much in line with the Q1, as you're 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 the Q4. It's an upside, it's still a possible upside, and this will clearly increase. You would assume that the margin on the material that we're selling in Iraq, Kuwait, and Qatar, it is premium material, special grade, so it has a good average margin compared to the rest of the portfolio of Tenaris.
Gabriel Podskubka: I think you're having a very fair assumption on what the Q4 from what we're seeing and with all the uncertainty that we are managing, but without this northern part of the Gulf, our projection for the Q4 will be pretty much in line with the Q1, as you're 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 the Q4. It's an upside, it's still a possible upside, and this will clearly increase. You would assume that the margin on the material that we're selling in Iraq, Kuwait, and Qatar, it is premium material, special grade, so it has a good average margin compared to the rest of the portfolio of Tenaris.
Speaker #3: But without this northern part of the Gulf, our projection for the fourth quarter will be pretty much in line with the first quarter that you're indicating.
Speaker #3: And if you if this conflict of Hormuz will assure a navigability, in the short term, during the next few weeks, we'll be able to ship an invoice this additional 130 million dollars within the fourth quarter is still an upside.
Speaker #3: It's still a possible upside. And this will clearly increase and you would assume that the margin on the material that we are selling in Iraq, in Kuwait, and in Qatar is this premium material special grade.
Speaker #3: So it has a good average margin compared to the rest of the portfolio of TENARIS. So it would be a nice upside addition that will happen in the fourth quarter or thereafter.
Gabriel Podskubka: It would be a nice upside addition that we have in the Q4 or thereafter. We would need 90 days for this to materialize.
Gabriel Podskubka: It would be a nice upside addition that we have in the Q4 or thereafter. We would need 90 days for this to materialize.
Speaker #3: We would need 90 days for these to materialize.
Speaker #1: Yeah. Okay. That's very helpful. And then just following back up on the capital return, you'd made the comment about a similar level of capital return to the prior periods with this new program.
Marc Bianchi: Yeah. Okay. That's very helpful. Then just following back up on the capital return, you'd 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's about one-third of the total dividend, and then in May, we get a dividend that's the remaining two-thirds. I know it's ultimately a board decision, but is that sort of the message that you're looking to deliver here?
Marc Bianchi: Yeah. Okay. That's very helpful. Then just following back up on the capital return, you'd 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's about one-third of the total dividend, and then in May, we get a dividend that's the remaining two-thirds. I know it's ultimately a board decision, but is that sort of the message that you're looking to deliver here?
Speaker #1: And just to clarify on that, so typically what TENARIS has done is pay an interim dividend that's about one third of the total dividend and then in May we get a dividend that's the remaining two thirds I mean, I know it's ultimately a board decision, but is that sort of the message that you're looking to deliver here?
Speaker #3: Yes, Mark. This is exactly it's not my decision. It's a board decision, but based on past practice, this one third to third has been a bit the track record that the company showed.
Gabriel Podskubka: Yes, Marc, this is exactly. It's not my decision, it's a board decision. Based on past practice, this 1/3, 2/3 has been the track record that the company showed. This is what I was implying.
Gabriel Podskubka: Yes, Marc, this is exactly. It's not my decision, it's a board decision. Based on past practice, this 1/3, 2/3 has been the track record that the company showed. This is what I was implying.
Speaker #3: So this is what I was implying.
Speaker #1: Great. Thank you very much. I'll turn it back.
Marc Bianchi: Great. Thank you very much. I'll turn it back.
Marc Bianchi: Great. Thank you very much. I'll turn it back.
Speaker #3: Thanks, Mark.
Gabriel Podskubka: Thanks, Marc.
Gabriel Podskubka: Thanks, Marc.
Speaker #2: Thank you. Our next question comes from Sebastian Erskine with Rothschild and Company Redburn. Please proceed.
Operator: Thank you. Our next question comes from Sebastian Erskine with Rothschild & Co Redburn. Please proceed.
Operator: Thank you. Our next question comes from Sebastian Erskine with Rothschild & Co Redburn. Please proceed.
Speaker #4: Yes, good morning. Good afternoon. Thanks for taking my questions. Just to focus in on kind of North America and two parts to this. So North American sales sort of flat quarter on quarter.
Sebastian Erskine: Yes. Good morning. Good afternoon. Thanks for taking my questions. Just to focus in on kind of North America, 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 H2 for North America, in terms of price and volume. Just a sort of 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: Yes. Good morning. Good afternoon. Thanks for taking my questions. Just to focus in on kind of North America, 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 H2 for North America, in terms of price and volume. Just a sort of 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?
Speaker #4: You'd called out sort of US OCDG strengths of setting kind of Mexico and how much of that flat outcome reflects the fact that US pricing is still lagging the pipe logics increases that we've seen and maybe if you could give some color specifically on how you see that evolving in the second half of the year for North America, in terms of price and volume.
Speaker #4: And then just a sort of bigger picture question on US pricing. I mean, obviously, we started to see the cycle turn. You're offsetting the step up in hot oil coil prices.
Speaker #4: But at what level do you see imported OCDG coming back as a competitive threat again, even net of the section 232? So how much headroom basically is there before you begin to approach some level of parity with imports?
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.
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.
Speaker #4: Would be helpful to get your thoughts on that. Thank you.
Speaker #3: Thank you, Sebastian. I think on both questions related to US activity and pricing, I will ask Guillermo to add more color and maybe I will come back to the rest of North America and Canada and Mexico that complements our reporting group.
Gabriel Podskubka: Thank you, Sebastian. I think on both questions related to US activity and pricing, I would ask Guillermo to add more color. Maybe I will come back to the rest of North America on Canada, Mexico, that complements our reporting group. Guillermo on-
Gabriel Podskubka: Thank you, Sebastian. I think on both questions related to US activity and pricing, I would ask Guillermo to add more color. Maybe I will come back to the rest of North America on Canada, Mexico, that complements our reporting group. Guillermo on-
Speaker #3: But Guillermo, on.
Speaker #5: Well, thank you, Gabriel. And with more on Sebastian. When in the case of the US, let me first start with what we are seeing how we are seeing the market.
Guillermo Moreno: 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. So far, since the beginning of the conflict in Iran, we have seen activity increase by almost 10%, so 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. Our expectations is that our shipments to the market will grow in line with the growth of activity as we capture additional sales, because of the 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.
Guillermo Moreno: 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. So far, since the beginning of the conflict in Iran, we have seen activity increase by almost 10%, so 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. Our expectations is that our shipments to the market will grow in line with the growth of activity as we capture additional sales, because of the 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.
Speaker #5: So far, since the beginning of the conflict in Iran, we have seen activity increase by almost 10%. So an addition of around 50 rigs.
Speaker #5: And our view is that from now to the rest of the year and another 10 or 15 rigs, we'll be added on top of those.
Speaker #5: Our expectations is that our shipments to the market will be will grow in line with the growth of activity as we capture additional sales because of a higher activity of our customers.
Speaker #5: Regarding prices, well, you know that normally our prices go in line with very much in line with the grease of pipe logics. With one quarter delay, as we have explained in many conference calls, since the beginning of the conflict, or the beginning of the year, the seamless pipe logic has increased around 9%.
Marc Bianchi: Since the beginning of the year, the seamless 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. Okay. Regarding Canada, Mexico, to complete the North America view, Mexico, we see it stable with a gradual increase in activity.
Marc Bianchi: Since the beginning of the year, the seamless 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. Okay. Regarding Canada, Mexico, to complete the North America view, Mexico, we see it stable with a gradual increase in activity.
Speaker #5: And in our view, an additional 5% is expected at least. 5% till the end of the year. And our prices will be reflected risk increases accordingly to the one quarter delay that I mentioned before.
Speaker #3: Okay. Regarding Canada-Mexico, we see to complete North America view, Mexico, we see the stable with a gradual increase in activity. PEMEX has been clearly supported and funded by the higher prices of hydrocarbons.
Gabriel Podskubka: 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 as 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, and 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 the Q1, it's natural in the 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.
Gabriel Podskubka: 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 as 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, and 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 the Q1, it's natural in the 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.
Speaker #3: In the recent months and the backing of the government. So we see that 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.
Speaker #3: So that is something that in volume will gradually progress. And there is also the pricing effect in Mexico that is somehow linked with the international indicators of pricing that are also moving north.
Speaker #3: Regarding Canada, after a very strong season in the first quarter, it's natural in the second quarter of the year to have a seasonality decrease in volume and activity.
Speaker #3: But this is an area that is also where we have good promising perspective of increase of drilling activity both in oil and gas that's why we have made the decision on the increase of capacity so 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.
Gabriel Podskubka: That's why we have made the decision on the 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.
Gabriel Podskubka: That's why we have made the decision on the 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.
Speaker #3: So 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.
Sebastian Erskine: Super. That's helpful. Just very quickly, just to follow up on that point, just in terms of the import level in diesel. 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.
Sebastian Erskine: Super. That's helpful. Just very quickly, just to follow up on that point, just in terms of the import level in diesel. 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.
Speaker #4: Super, that's helpful. And just very quickly, just to follow up on that point, just in terms of the import level in terms of that's falling quite aggressively this year.
Speaker #4: But I'm just trying to work out sort of what 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.
Speaker #4: I wonder if you maybe just give some thoughts on that parity level with the imports.
Gabriel Podskubka: Yeah. 2026, as you said, imports have been contained. We expect to see similar levels in the coming quarters. The main reason of this containment, as you said, are the Section 232 tariff, 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, and for them to start to grow, we will need a more relevant price increase.
Gabriel Podskubka: Yeah. 2026, as you said, imports have been contained. We expect to see similar levels in the coming quarters. The main reason of this containment, as you said, are the Section 232 tariff, 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, and for them to start to grow, we will need a more relevant price increase.
Speaker #3: Yeah, I mean, 2026, as you said, imports have been contained and we expect to see similar levels in the coming quarter. The main reason of this containment, as you said, are the section 232 tariff, but also the trade cases filed against unfairly traded imports.
Speaker #3: So assuming that we have a positive determination in the new trade case, we expect imports to stay contained and for them to start to grow, we will need a more relevant price increase.
Speaker #4: Brilliant. Thank you very much. I'll turn it back. Thanks very much for the color.
Sebastian Erskine: Brilliant. Thank you very much. I will turn it back. Thanks very much for the color.
Sebastian Erskine: Brilliant. Thank you very much. I will turn it back. Thanks very much for the color.
Speaker #1: Thank you. Our next question comes from Isaco Bambrila with Mediobanca. Please proceed.
Operator: Thank you. Our next question comes from Isacco Brambilla with Mediobanca. Please proceed.
Operator: Thank you. Our next question comes from Isacco Brambilla with Mediobanca. Please proceed.
Isacco Brambilla: Hi. Good morning, everybody. Hope you can hear me well. A bag of questions have already been answered, I make just a couple. First, on profitability, is it still correct to assume that the Q2 should represent the weakest quarter of 2026 for you in terms of the EBITDA margin with sequential improvement throughout the H2?
Isacco Brambilla: Hi. Good morning, everybody. Hope you can hear me well. A bag of questions have already been answered, I make just a couple. First, on profitability, is it still correct to assume that the Q2 should represent the weakest quarter of 2026 for you in terms of the EBITDA margin with sequential improvement throughout the H2?
Speaker #6: Hi, good morning. Everybody hope you can hear me. Well, bulk of questions have already been answered. So I'll make 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 EBITDA margin with sequential improvement throughout the second half?
Gabriel Podskubka: Good morning, Isacco. I believe the Q2 and the Q3 will be similar in revenues and pretty much in line on EBITDA margin. I would say that second and third are looking very similar, pretty much in line, we will see the uptick starting in the Q4 and going forward. Second and third, I would categorize them as very similar.
Gabriel Podskubka: Good morning, Isacco. I believe the Q2 and the Q3 will be similar in revenues and pretty much in line on EBITDA margin. I would say that second and third are looking very similar, pretty much in line, we will see the uptick starting in the Q4 and going forward. Second and third, I would categorize them as very similar.
Speaker #3: Good morning, Isaco. I believe that the second quarter and the third quarter will be similar. In revenues and pretty much in line on EBITDA margin.
Speaker #3: So I would say that second and third are looking very similar pretty much in line and we will see the uptick starting in the fourth quarter and going forward.
Speaker #3: So second and third, I would categorize them as very similar. As the lower volume and the logistic extra cost and the same components that we explained that reduction in the second quarter are still present in the third quarter.
Isacco Brambilla: Okay.
Isacco Brambilla: Okay.
Gabriel Podskubka: As the lower volume and the logistic extra cost, the same components that we explained, that reaction in the Q2 are still present in the Q3.
Gabriel Podskubka: As the lower volume and the logistic extra cost, the same components that we explained, that reaction in the Q2 are still present in the Q3.
Speaker #6: Okay. So just to follow up on that as impacts from lower absorption of fixed cost and higher logistic and transportation for, say, for our third quarter previews, we can take into account the same indication given of together with the second quarter.
Isacco Brambilla: Okay. Just to follow up on that, as impacts from lower absorption of fixed cost and higher logistic and transportation, for our Q3 previews, we can take into account the same indication given together with the Q2.
Isacco Brambilla: Okay. Just to follow up on that, as impacts from lower absorption of fixed cost and higher logistic and transportation, for our Q3 previews, we can take into account the same indication given together with the Q2.
Speaker #6: So 100%. Okay. Thanks.
Gabriel Podskubka: Yes.
Gabriel Podskubka: Yes.
Isacco Brambilla: The fourth year upstairs. Yeah. Okay, thanks.
Isacco Brambilla: The fourth year upstairs. Yeah. Okay, thanks.
Speaker #3: Yeah, correct. While when you go to the fourth quarter, we are seeing a volume that is going to be north of 1 million tons.
Gabriel Podskubka: Yeah, correct. When you go to Q4, we are 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 are looking at.
Gabriel Podskubka: Yeah, correct. When you go to Q4, we are 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 are looking at.
Speaker #3: So in that moment, I think the volume and we'll start supporting and helping the absorption of fixed cost in the EBITDA margin that you're looking at.
Speaker #6: Brilliant. Thanks.
Isacco Brambilla: Brilliant. Thanks.
Isacco Brambilla: Brilliant. Thanks.
Speaker #1: Thank you. And ladies and gentlemen, as a reminder, if you do have a question, press star 11 to get in the queue. Again, that is star 11.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you do have a question, press star 1 to get in the queue. Again, that is star 1 if you do have a question. One moment, please. We have a question from Jamie Franklin with Jefferies. Please proceed.
Operator: Thank you. Ladies and gentlemen, as a reminder, if you do have a question, press star one to get in the queue. Again, that is star one if you do have a question. One moment, please. We have a question from Jamie Franklin with Jefferies. Please proceed.
Speaker #1: If you do have a question, one moment, please. We have a question from Jamie Franklin with Jefferies. Please proceed.
Jamie Franklin: Oh, 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 is 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 is 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?
Jamie Franklin: Oh, 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 is 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 is 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?
Speaker #7: Oh, hi there. Thanks for taking my questions. Just a couple of quick ones. Just on the fracking operations, obviously operating margin, and your other line came down a little bit in Q2.
Speaker #7: 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.
Speaker #7: And also if you can give us an update on the third set of equipment that's expected to be added by year end. And then secondly, just on the 3Q impact, could you just dive a bit deeper into the seasonality and product mix effects that you mentioned, please?
Speaker #3: Sure, Jamie. On the first question, second quarter and third quarter, we will have some white space in our utilization of the our two units of fracking in Argentina.
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 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 will not disclose it for competitive reasons, but I will say that this is a business that is with an EBITDA ratio, contributing and accretive to the average of Tenaris. On your second point regarding the mix, Q3, we have seasonality in Europe. Typically, Q3, we have our shutdown of our operations in Europe, also many of our customers reduce their level of activity of purchasing. There is a slight reduction on seamless volumes in Q3.
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 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 will not disclose it for competitive reasons, but I will say that this is a business that is with an EBITDA ratio, contributing and accretive to the average of Tenaris. On your second point regarding the mix, Q3, we have seasonality in Europe. Typically, Q3, we have our shutdown of our operations in Europe, also many of our customers reduce their level of activity of purchasing. There is a slight reduction on seamless volumes in Q3.
Speaker #3: And on the fourth quarter, we will have our third unit starting operations. So we will see an uptick in the level of invoicing of this segment of the business.
Speaker #3: And in terms of margin, and profitability, I would not disclose it for competitive reasons, but I will say that this is a business that is with an EBITDA ratio contributing an aggregative to the average of TENARIS.
Speaker #3: On your second point regarding the mix third quarter, we have seasonality in Europe. Typically, the third quarter, we have our shutdown of our operations in Europe.
Speaker #3: And also many of our customers reduce the level of activity of purchasing. So there is a slight reduction on seamless volumes. In the third quarter, and related to the additional mix point is that we are starting the shipment of the large Zaccaria pipeline.
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 Q3.
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 Q3.
Speaker #3: It's a welded, SAW pipeline from Brazil into Turkey. This started this quarter and will continue for three or four quarters. And this has an average price and margin that is below the average of TENARIS.
Speaker #3: So it's a very interesting project, but from that point of view, has a slight effect on the mix. So these are the color behind the seasonality and mix.
Speaker #3: Which are particular to the third quarter.
Speaker #7: Very helpful. Thank you.
Jamie Franklin: Very helpful. Thank you.
Jamie Franklin: Very helpful. Thank you.
Speaker #3: You're welcome.
Gabriel Podskubka: You're welcome.
Gabriel Podskubka: You're welcome.
Speaker #1: Thank you. And again, ladies and gentlemen, if you do have a question, simply press star 11 to get in the queue. That is star 11 if you have a question.
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.
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.
Speaker #1: As I see no further questions in the queue, I will turn the call back to Giovanni Sardagna for final comments.
Speaker #3: Well, thank you, Carmen, and thank you all for joining us. And we talk soon. Thank you. Thank you.
Giovanni Sardagna: Well, thank you, Carmen, thank you all for joining us, we talk soon. Thank you.
Giovanni Sardagna: Well, thank you, Carmen, thank you all for joining us, we talk soon. Thank you.
Operator: Thank you.
Guillermo Moreno: Thank you.
Operator: This will conclude our conference. Thank you for participating, you may now disconnect.
Operator: This will conclude our conference. Thank you for participating, you may now disconnect.
