Tenaris S.A.

Good day and thank you for standing by. Welcome to the second quarter 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press and Star11 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.

Thank you, Carmen, and welcome to Tenaris' 2026 Second Quarter 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 Gomez Alzaga, our chief financial officer, and Guillermo Moreno, president of our U.S. operations. 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. 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 $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 the 25th of November. Now, I will ask Gabriel to say a few words before we open the call to questions.

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 disruption in the trade war moves, 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 Adnok, who have maintained their drilling operations fairly intact. 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 place is increasing in the United States, in Canada, and also in Argentina. In the United States, we are adding worksheets 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 Coppel 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. 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 Kronos project sanctioned by ENI and Total Energies which will take deepwater gas from Cyprus to an LNG facility in Egypt. Tenaris has been supporting ENI in the definition and supply of the pipeline requirements and also on the OCDG needed for the four wells of the project. We inaugurated our new service center in Suriname, together with Total Energies and government officials. From this base, we managed the OCDG supply chain for the Grand Morgue project. We also began deliveries of limepipe and coating for the Zacaria 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. This year, our raw material costs have increased and are impacting our charts progressively. We are also increasing prices, and in the fourth quarter, we should see this positive effect in our sales and margins. 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.