Tenaris (NYSE:TS) expects fourth-quarter revenue to rise by close to 10% sequentially and its EBITDA margin to reach around 25%, as higher volumes build on a third quarter that exceeded management’s expectations.
The pipe manufacturer reported third-quarter sales of $3.1 billion, up 4% from a year earlier and 5% from the second quarter. Higher North American demand and increased shipments to customers in the Middle East drove the sequential improvement, the company said on its earnings call.
EBITDA rose 16% sequentially to $756 million, with a margin of 24%. The company attributed the margin recovery to a favorable product mix, efficient industrial performance and the postponement of maintenance at some facilities, despite higher raw material, energy and logistics costs.
“Our third quarter results were better than we had expected,” CEO Gabriel Podskubka said. He added that Tenaris completed some delayed Gulf shipments that it had not anticipated and deferred maintenance at some facilities until next year.
Higher Volumes Expected Into 2027
Podskubka said the expected fourth-quarter revenue increase would come mostly from volume growth across most markets. Higher sales of welded large-diameter pipeline products, which have lower average prices than seamless tubulars, are expected to partly offset positive pricing trends for seamless products.
He also expects revenue to rise again in the first quarter of 2027, supported by additional volume and existing orders in markets with long lead times, including offshore and the Middle East. He cautioned that geopolitical conditions and other variables made precise guidance premature.
Asked whether it was reasonable to expect EBITDA margins not to fall below 25% in early 2027, Podskubka called the assessment “a very fair assumption” based on what the company sees today, while noting that conditions could change.
U.S. Pricing and Middle East Recovery
In the U.S., higher drilling activity and production costs are pushing up prices for oil country tubular goods, or OCTG, as inventories are drawn down, Podskubka said. Tenaris is increasing production in its domestic system to meet demand.
Guillermo Moreno, president of U.S. operations, said U.S. OCTG demand had risen by around 15% since the beginning of the Middle East conflict, with Tenaris sales growing in line with that increase. He expects some additional sales growth in the fourth quarter, followed by broadly flat demand at current levels.
Moreno said the Pipe Logix price index increased around 8% to 9% in the third quarter and another 6% in October. Those increases are expected to be reflected in Tenaris revenue in the fourth quarter and first quarter of 2027. He said firm demand, below-standard inventory levels, rising costs and antidumping margins support pricing in the short term, with room for further increases.
In the Middle East, Podskubka said fourth-quarter and first-quarter activity should be similar to the third quarter, rather than reflect a full recovery. Shipments to parts of the Gulf remain constrained by logistics, and Tenaris is not currently shipping pipe associated with LNG demand in Qatar. He said drilling activity in Saudi Arabia and the United Arab Emirates has remained resilient.
International Projects and Costs
Podskubka identified Argentina and offshore projects as potential growth drivers. He said 42 rigs were operating in Argentina’s Vaca Muerta shale region, up from about 32 a year earlier, and projected 48 by mid-2027. Tenaris expects to start a third fracturing services unit in Argentina in early 2027 and has been awarded two pipeline projects for delivery in the first half.
In Venezuela, Tenaris has won a long-term OCTG supply contract with Rig Direct services for Chevron and a pipe supply contract with Rig Direct services for Eni’s initial 20-well program. Podskubka said Tenaris expects approximately $60 million in Venezuelan revenue for 2026 and anticipates growth in 2027 from a low starting point.
Offshore pipeline deliveries are expected to increase in the fourth quarter and into 2027 as projects in the Mediterranean and Suriname advance. Podskubka said Tenaris received an award from Eni for OCTG, pipe and coating for the Cronos offshore project in Cyprus.
On costs, CFO Carlos Gómez Álzaga said higher raw material prices will continue to flow through inventory into fourth-quarter costs. He expects scrap and ferroalloy costs to level out in the first half of 2027, while some effects from European energy and hot-rolled coil costs will persist.
Podskubka said U.S. tariffs are currently running at approximately $140 million to $150 million per quarter because of increased volume, with the full effect expected to appear in costs in the first half of 2027 as inventory is sold.
Cash, Spending and Shareholder Returns
Tenaris reported operating cash flow of $366 million, capital expenditures of $98 million and free cash flow of $168 million for the third quarter. Its net cash position rose to $3.8 billion at quarter-end, while working capital increased by $270 million.
Gómez Álzaga said Tenaris expects capital spending of around $600 million in 2027. Podskubka pointed to a $230 million Canadian capacity program, the acquisition of Artrom and an ongoing U.S. investment program among the company’s capacity initiatives. Tenaris has received unconditional European Union competition clearance for the Artrom acquisition.
Asked about future dividends and the possibility of changing the payment schedule, Podskubka said those decisions rest with the board. He said the improving outlook and cash generation would be considered, but offered no specific commitment and pointed to February for a potential update.
About Tenaris (NYSE:TS)
Tenaris SA is a global manufacturer and supplier of steel pipe products and related services, with a primary focus on the energy industry. Its products include casing and tubing used in oil and gas wells, line pipe for transporting fluids, and other tubular products for industrial applications.
The company also provides services such as pipe processing, engineering support, logistics, and assistance at drilling sites. Tenaris serves customers across a broad range of international markets, including the Americas, Europe, the Middle East, Africa, and Asia.
Tenaris was established in 2001, bringing together several established pipe manufacturers, including Argentina’s Siderca, Mexico’s Tamsa, and Italy’s Dalmine.
