Tenaris (TS) Q3 2026 earnings review
Tenaris sales rebound in North America, and its outlook rises
Tenaris, a global maker of steel pipes for oil and gas drilling, bounced back from its second-quarter dip faster than its own flat plan suggested, though temporary items helped profit margins. Revenue rose 5% from last quarter as stronger North American drilling and renewed deliveries to Iraq and Kuwait outweighed a drop in South America. Operating profit before depreciation and amortization (EBITDA) climbed 16% to $756 million, and the company forecast another increase in the fourth quarter.
| Revenue | $3,102M +5% from last quarter; +4% from a year ago |
|---|---|
| EBITDA margin | 24.4% 21.9% last quarter; 24.0% excluding one-offs by our math |
| North America pipe sales | $1,652M +12% from last quarter; +14% from a year ago |
| Fourth-quarter outlook | Raised Sales and EBITDA to rise from Q3 and set a higher 2027 baseline |
⚖️ Verdict: 🟢 Bullish
The story got better because North American pipe prices and volumes are rising while customers in the Middle East have started receiving shipments despite Strait of Hormuz disruptions. That combination allowed Tenaris to lift its fourth-quarter outlook and call it a new baseline for 2027. One caution: the third-quarter margin beat relied in part on postponing factory maintenance and $11 million in one-off gains, while rising inventories absorbed $270 million in cash.
The question now is whether higher North American prices and offshore shipments can keep EBITDA margins above 24% once delayed plant maintenance resumes. Either lagged US price increases cover rising raw material and repair costs, or catching up on factory maintenance pulls margins back down. Fourth-quarter cost of sales and shipment volumes will settle it.
🐂 Bull Case
North America Carries the Sales Rebound
Tenaris relies on North America for more than half of its core pipe revenue, and management had bet on rising US drilling rigs and benchmark pipe prices to pull the group out of its second-quarter slump. That rebound arrived a quarter earlier than the company's flat third-quarter outlook suggested.
- North America pipe sales: $1,652 million, up 12.3% from last quarter and 13.9% from a year ago
- Total pipe volumes: 976,000 metric tons, up 3.2% from last quarter, led by a 9.5% rise in welded pipes
- Average pipe selling prices: up 2% from last quarter and up 3.6% from a year ago by our math
This matters because drillers in the United States are drawing down pipe inventories while oilfield pipe prices climb to cover higher raw material and shipping costs. Because US contract prices reset with a one-quarter delay to market indices, the price gains that began in the third quarter should carry into the fourth quarter and lift revenue further.
What to watch: fourth-quarter total pipe shipment volumes against the one-million-ton mark management previously targeted. Reaching one million tons would confirm that higher North American rig counts are filling the mills and covering fixed factory costs.
Middle East Shipments Resume Despite Shipping Conflict
Conflict in the Middle East and disruptions in the Strait of Hormuz blocked about $130 million of pipe orders for Iraq, Kuwait and Qatar last quarter, forcing management to remove those sales from its second-half plan. In the third quarter, oil producers adapted as "flows of oil have increased using ship-to-ship transfers" and local drilling slowly began to recover.
As a result, pipe sales in Asia Pacific, the Middle East and Africa rose 6.8% from last quarter to $595 million on "deliveries to Kuwait and Iraq and higher sales in North Africa". While regional sales remain 16.9% below last year, restarting deliveries into the upper Persian Gulf shows the shipping blockade is no longer total, though the press release did not state how much of the $130 million delayed order book remains unshipped.
What to watch: management's update on the conference call regarding the remaining dollar value of delayed upper-Gulf orders. A shrinking backlog figure would show that Tenaris can clear its held inventory without waiting for a formal peace deal.
Offshore Orders Start Lifting Customer Cash Advances
Tenaris has pointed to a growing order book for deepwater offshore oil projects as a major driver for late 2026 and 2027. Until this quarter, the only forward indicator on the balance sheet—customer advances, which are upfront cash deposits paid before pipes are shipped—had fallen for six straight quarters, dropping from $206.2 million at the end of 2024 to $129.9 million in June 2026.
In the third quarter, customer advances rose by $35.5 million by our math to $165.4 million, reversing that slide as oil companies move ahead with cost-competitive offshore projects to diversify supply. The company said fourth-quarter sales will rise in part on higher shipments to these offshore projects, aligning the balance sheet with management's commentary.
What to watch: fourth-quarter customer advances and Europe and South America coating service sales. Continued growth in upfront deposits alongside higher offshore deliveries would show new deepwater awards are replacing projects as they ship.
🐻 Bear Case
Delayed Maintenance and One-Offs Helped Margins
Tenaris lifted its EBITDA margin—operating profit before depreciation and amortization as a share of sales—by 2.5 percentage points from last quarter to 24.4%, beating its own plan to keep margins near the second quarter's 21.9%. The company credited a better product mix and factory efficiency, which helped reduce cost of sales by 1.3 percentage points of revenue and selling and administrative expenses by 1.1 percentage points.
However, two temporary items flattered the rebound. First, Tenaris aided factory margins through the "postponement of maintenance programs at some of our facilities", which shifts repair costs into future quarters. Second, the smaller Others segment booked $11 million in one-off gains "from the sale of land, recovery of tariffs and the reversion of provisions", lifting that unit's operating margin to 23.3% from 17.8% last quarter; without those gains, group EBITDA margin was 24.0% by our math, compared with 24.1% a year ago excluding a $34 million duty refund.
What to watch: fourth-quarter cost of sales as a percentage of revenue when delayed plant maintenance takes place. If raw material, energy and shipping inflation outrun price increases once maintenance resumes, margins will slip back below 24%.
South America Drops as Inventory Ties Up Cash
While drilling activity has been increasing in Argentina, Tenaris's South American pipe revenue fell 12.0% from last quarter and 14.0% from a year ago to $447 million. The company said regional revenue dropped because of lower sales of pipeline pipes in Argentina and fewer pipe-coating services in Guyana.
At the same time, cash tied up in day-to-day operations grew by $270 million in the quarter, cutting operating cash flow to $366 million from $518 million in the second quarter. Inventories on the balance sheet rose 6.0% from last quarter and 12.3% from a year ago to $3.94 billion by our math, leaving operating working capital at 143 days of sales.
What to watch: fourth-quarter inventory levels and South American pipe sales as a third hydraulic fracturing unit starts work in Argentina. If fourth-quarter shipments rise as planned, inventories and working capital days should fall and release cash.
Risks This Quarter Didn't Answer
Three standing cost, competitive and legal concerns received no new resolution in the third-quarter earnings release.
- US steel import tariffs: nine-month commentary noted higher US tariff costs, which previously ran at $110–120 million per quarter, and the call must show whether US pipe price rises now fully cover them.
- Trade cases against Chinese and Indian imports: the release gave no update on pending trade rulings that protect domestic pricing.
- Legal and customs disputes: Tenaris booked another $4.3 million provision for the Usiminas lawsuit in Brazil (previously estimated at $130.5 million), and gave no final ruling on the $49.6 million US customs audit.
👓 Other Themes
Buybacks Stay Paused as Cash Reaches $3.8 Billion
Tenaris spent nothing on share buybacks in the third quarter, keeping nine-month repurchases at $90 million compared with $825 million in the first nine months of 2025 after shifting its capital return policy toward dividends. Even with the working capital build, free cash flow of $268 million lifted the net cash pile to $3.78 billion ahead of the roughly $600 million interim dividend due in November.
💲 Other KPIs
Spending on property, plant and equipment fell 19.0% from last quarter and 46.9% from a year ago to $98.4 million, or 3.2% of revenue by our math. Over the past four quarters, capital spending has stepped down from $185.4 million in the third quarter of 2025, directly cushioning free cash flow during the working capital build.
Tenaris's share of profit from associated companies, mainly steelmaker Ternium, brought in $37.7 million, down from $48.0 million last quarter but reversing an $9.0 million loss a year ago. For the first nine months, associated company income rose more than threefold to $119.0 million, lifting earnings per share alongside a lower share count.
🔮 Guidance
Raised. The steel pipe maker expects fourth-quarter sales and EBITDA to rise from third-quarter levels, driven by higher North American pipe demand and prices plus offshore shipments. Because third-quarter results already beat the flat forecast, growing again in the fourth quarter lifts second-half revenue and EBITDA above the first half's $6.07 billion and $1.38 billion. The company added that "The fourth quarter should set a new quarterly baseline for our sales and EBITDA going into 2027".
❓ Key Questions
How much did delayed maintenance help third-quarter margins?
Tenaris said postponing facility maintenance programs helped lift EBITDA margin to 24.4%. Investors need the dollar cost of that delayed work and when the expenses will hit the income statement.
How much of the upper-Gulf order book shipped?
Deliveries to Kuwait and Iraq resumed as oil moved via ship-to-ship transfers. Management has not yet said how much of the $130 million delayed order book was invoiced in Q3 and how much remains in inventory.
Why did inventories climb to $3.94 billion?
Inventories rose by $223 million this quarter and tied up $270 million in working capital. Management should clarify how much of this stock is finished pipe waiting for fourth-quarter offshore and Middle East shipments.
Is the third fracking unit in Argentina operating?
Last quarter management committed to starting a third hydraulic fracturing unit in Argentina in the fourth quarter, and the release gave no update on its launch or margin contribution.