• Sales: $2.9 billion, down 10% year-over-year and 12% sequentially.
• Average Selling Prices (Tubes Segment): Decreased 14% year-over-year and 2% sequentially.
• EBITDA: $688 million, up 6% sequentially.
• EBITDA Margin: 23.6%, marginally lower compared to the previous quarter on a comparable basis.
• Operating Cash Flow: $552 million.
• Capital Expenditure: $179 million.
• Free Cash Flow: $373 million.
• Net Cash Position: $4 billion at the end of the quarter.
• Interim Dividend: $0.27 per share, up 35% from last year.
• Share Buyback: $700 million approved to be executed within the next five months.

• Warning! GuruFocus has detected 8 Warning Signs with ESPR.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tenaris SA (NYSE:TS) reported a sequential increase in EBITDA by 6% to $688 million, despite a challenging market environment.
• The company successfully completed an extensive program of plant stoppages and investments in maintenance and modernization, which is expected to improve productivity and environmental performance.
• Tenaris SA (NYSE:TS) expanded its relationship with international oil companies, securing significant offshore project awards that will support its order backlog for 2025 and 2026.
• The Board of Directors approved a 35% increase in the interim dividend and a $700 million share buyback program, reflecting strong free cash flow and a robust net cash position of $4 billion.
• The company anticipates a positive impact from the new US administration's policies, which are expected to favor the energy sector and potentially reduce Chinese imports, benefiting domestic producers like Tenaris SA (NYSE:TS).

Negative Points

• Sales in the third quarter of 2024 decreased by 10% year-over-year and 12% sequentially, primarily due to lower prices and demand in key markets such as the USA, Mexico, and Saudi Arabia.
• Average selling prices in the tubes operating segment fell by 14% compared to the same quarter last year, indicating pricing pressure.
• The company faces challenges in Mexico with delayed payments from Pemex, impacting cash flow.
• There is some uncertainty regarding the impact of the new US administration's trade policies, particularly concerning tariffs and quotas, which could affect Tenaris SA (NYSE:TS)'s operations.
• Economic conditions in Argentina and Mexico remain uncertain, with potential impacts on future investments and activity levels in these regions.

Q & A Highlights

Q: How might the new US administration impact Tenaris, particularly regarding tariffs and M&A opportunities? A: Paolo Rocca, Chairman & CEO, noted that it's early to predict specific changes, but the new administration is perceived as positive for the energy sector, potentially facilitating gas exports and reducing Chinese imports. This could benefit Tenaris, which operates largely within the US. Regarding M&A, the company is waiting to see any policy changes that might affect opportunities.

Q: What are Tenaris's plans for share buybacks beyond the recently announced $700 million program? A: Paolo Rocca stated that the Board will review the situation in February and decide on future buyback policies. The current program is within the Board's authority, and any extension would require further evaluation and possibly a special assembly.

Q: What is the outlook for Tenaris's activities in North America, given some peers' predictions of flat or declining activity? A: Luca Zanotti, President of US Operations, expects an increase in activity in Q1 2025, driven by budget resets, contract rollovers, and returning small operators. Prices are also expected to rise, reflecting recent increases in the pipe logic index.

Q: How will potential tariff increases on imports affect Tenaris's North American operations? A: Paolo Rocca explained that Tenaris can produce all its US sales domestically, so it is well-positioned to handle tariff changes. The company expects any tariff policies to favor domestic production, which would benefit Tenaris given its US manufacturing capabilities.

Q: Can you provide more details on the expected volume and EBITDA margin trends for Q4 2024 and Q1 2025? A: Paolo Rocca indicated that Q4 volumes and sales will be slightly lower than Q3 by single digits, with margins remaining stable. In Q1 2025, volumes and revenues are expected to rebound by around 10%, with margins continuing to align with the second half of 2024.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.