Tenaris S.A. 2025 First Quarter Results Summary
Business Context and Reporting Period
Tenaris S.A. (NYSE: TS) reported unaudited consolidated results for the quarter ended March 31, 2025. The company operates in the oil and gas industry, manufacturing tubular products and providing related services. The reporting period reflects seasonal volume increases in Canada and the USA, offset by lower average selling prices due to product mix shifts.
Key Financial Metrics
| Metric | 1Q 2025 | 4Q 2024 | 1Q 2024 |
|---|---|---|---|
| Net Sales ($ million) | 2,922 | 2,845 | 3,442 |
| Operating Income ($ million) | 550 | 558 | 812 |
| Net Income ($ million) | 518 | 519 | 750 |
| Shareholders' Net Income ($ million) | 507 | 516 | 737 |
| Earnings per ADS ($) | 0.94 | 0.94 | 1.27 |
| EBITDA ($ million) | 696 | 726 | 987 |
| EBITDA Margin (%) | 23.8% | 25.5% | 28.7% |
| Free Cash Flow ($ million) | 647 | — | — |
| Net Cash Position ($ billion) | 4.0 | — | — |
Segment Performance: Tubes segment net sales were $2,765 million (down 16% year-over-year) with an operating margin of 18.6%. The "Others" segment reported net sales of $157 million and an operating margin of 23.1%.
Material Changes vs. Prior Periods
- Year-Over-Year Decline: Net sales decreased 15% and Net Income decreased 31% compared to 1Q 2024. This was driven by lower sales of premium OCTG products in Mexico, Turkey, and Saudi Arabia, and reduced seamless line pipe sales for offshore projects.
- Sequential Stability: Compared to 4Q 2024, Net Sales increased 3% and Net Income remained flat. However, EBITDA decreased 4% sequentially.
- Price vs. Volume: Total sales volumes increased 8% sequentially, but average selling prices declined 5% due to market and product mix effects.
- Working Capital: The company achieved a significant reduction in working capital of $224 million during the quarter, contributing to strong operating cash flow of $821 million.
Guidance, Outlook, and Risks
Outlook: Management expects 2Q 2025 sales to show a small increase as average selling prices recover, with volumes remaining close to 1Q levels. EBITDA margins are expected to be in line with the first quarter.
Market Context: Oil and gas drilling activity remains stable globally. However, expectations for global economic growth have declined, and OPEC+ announced production increases, potentially pressuring oil prices. US OCTG reference prices have risen due to extended tariffs on steel imports, which management expects to offset higher raw material costs.
Risks and Contingencies:
- Litigation: Ongoing litigation related to the acquisition of a participation in Usiminas resulted in a $5 million loss in 1Q 2025 (compared to a $67 million gain in 4Q 2024 from a provision reversal).
- Commodity Prices: Future results depend on oil and gas prices and the subsequent investment programs of energy companies.
- FX Exposure: The quarter included net foreign exchange losses of $15 million.
Investor Verification Checklist
- Usiminas Litigation Impact: Verify the volatility of earnings caused by the reversal of provisions related to the Usiminas acquisition litigation.
- Product Mix Shifts: Confirm the sustainability of the shift away from premium OCTG products in key markets (Mexico, Turkey, Saudi Arabia) and its long-term margin impact.
- Tariff Effectiveness: Monitor whether US tariff-driven price increases successfully offset rising steel and scrap costs as projected by management.
- Working Capital Management: Assess if the $224 million reduction in working capital is a one-time seasonal benefit or a structural improvement in efficiency.
- Share Buybacks: Review the $237 million spent on share buybacks and its impact on the net cash position of $4.0 billion.