Tenaris (TEN) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $3.32 billion, down 18% year-over-year and 3% sequentially, with net income at $348 million, impacted by a $171 million litigation provision related to Usiminas.

• H1 2024 net sales were $6.76 billion, down from $8.22 billion year-over-year, and net income was $1.10 billion, compared to $2.27 billion in the prior year.

• Free cash flow in Q2 2024 was $774 million, supported by a $285 million reduction in working capital; net cash position at quarter-end was $3.8 billion after $459 million in dividends and $492 million in share buybacks.

• The company completed the acquisition of Mattr's pipe coating business unit, contributing $297.9 million in revenue.

• Comprehensive income for H1 2024 was $1.25 billion, with $1.23 billion attributable to shareholders.

Financial highlights

• Q2 2024 EBITDA was $650 million (19.6% margin), including the $171 million litigation provision; adjusted EBITDA would be $821 million (24.7% margin).

• H1 2024 EBITDA was $1.64 billion (24.2% margin), down 43% year-over-year.

• Operating cash flow in Q2 2024 reached $935 million; capital expenditure was $161 million.

• Basic and diluted earnings per share for H1 2024 were $0.95, compared to $1.91 in the prior year.

• Cash and cash equivalents plus current investments totaled $3.30 billion at June 30, 2024.

Outlook and guidance

• Q3 2024 sales and EBITDA are expected to decline due to lower activity in the US and Latin America, continued OCTG price declines, and planned maintenance stoppages.

• Sales volume in the second half is expected to be 10%-15% below the first half, with further price adjustments in the Americas.

• Margin guidance for the second half is at the lower end of the 20%-25% range.

• The company is adapting its business strategy to address climate change and energy transition risks, with ongoing volatility in Argentina and exposure to Pemex under review.

• Offshore and LNG-related demand remains supportive into 2025, but uncertainty persists due to OPEC+ production cuts and regional volatility.