Sebastian Erskine

Sebastian Erskine asked about the potential impact of Mexico's market on 2026 volumes, specifically referencing the Trion project and Pemex's strategic plan. He also inquired about the outlook for unit raw material costs in Q4, excluding tariff impacts, following deflation in Q3.

Answer

Chairman and CEO Paolo Rocca noted that new Pemex drilling contracts and private projects like Trion are starting to move forward, and Pemex's improved financial situation (post-$12 billion refinancing) is leading to better supplier payments. While no major immediate change is expected, he anticipates additional activity in 2026. CFO Carlos Gómez Álzaga stated that major changes in raw material costs (like hot rolled coil) are not expected, with only small increases for Q4, and the primary cost impact will be from tariffs.

Sebastian Erskine asked about Mexico's potential as a volume factor in 2026 versus 2025, given secured work from Woodside for the Trion project and positive news flow regarding Pemex's strategic plan and new contracts.

Answer

Paolo Rocca, Chairman and CEO, noted progress on private company projects like Trion and new Pemex drilling contracts. He highlighted Pemex's improved financial situation after a $12 billion refinancing, expecting substantial payment on receivables in Q4. While no major immediate change is foreseen, he anticipates additional activity from private companies and potentially Pemex during 2026. Sebastian Erskine also inquired about unit raw material costs, specifically hot rolled coil deflation in Q3, and the expected input costs into Q4, excluding tariffs. Paolo Rocca does not expect major changes in hot rolled coil prices due to high inventory levels. Carlos Gómez Álzaga, CFO, added that a small increase is expected for Q4, then flat or decreasing, with the primary cost effect in Q4 being the full impact of tariffs on cost of goods sold.

Sebastian Erskine asked about the potential for U.S. domestic producers to gain market share from importers due to tariffs and whether Tenaris would consider accelerating its share repurchase program.

Answer

Chairman & CEO Paolo Rocca stated that with imports representing about 40% of the U.S. market, the 50% tariff will inevitably impact prices and create substitution opportunities, although domestic seamless capacity is already highly utilized. Regarding the buyback, he indicated the second tranche is expected to be launched following the board's review on October 29.

Sebastian Erskine asked about the drivers behind the significant sequential decrease in unit labor and raw material costs in Q1, and requested an update on the deteriorating operational and financial situation with Pemex in Mexico.

Answer

Chairman and CEO Paolo Rocca explained that cost trends are stable to slightly down due to a souring global economic outlook and ongoing restructuring efforts to boost productivity. Regarding Mexico, he confirmed Pemex's situation has worsened but stated it is unsustainable. While the government has announced a recovery plan, its implementation timeline is unknown. Rocca also noted Tenaris has successfully reduced its working capital exposure to Pemex.

Sebastian Erskine questioned TechnipFMC's strong order intake amidst reports of operators slowing deepwater FIDs and declining subsea tree awards, and inquired about the company's resourcing strategy to execute its large backlog, addressing potential industry bottlenecks.

Answer

Chair and CEO Douglas Pferdehirt stated TechnipFMC is not experiencing a slowdown, attributing its success to 80% direct-awarded business and early project involvement. He emphasized that the company only accepts work it can execute, no-bidding projects that don't meet thresholds, and relies on efficiency and doing 'more with the same' rather than just increasing staffing to manage its backlog.

Sebastian Erskine asked for TechnipFMC's perspective on how the subsea cycle has evolved year-to-date versus initial expectations, given competitor comments about slowing deepwater FIDs and estimates of declining subsea tree awards. He also inquired about key basins driving 2026 and the company's resourcing to execute its large backlog, including staffing increases and concerns about industry bottlenecks.

Answer

Doug Pferdehirt, Chair and CEO, stated that TechnipFMC is not experiencing a slowdown in FIDs and is on track for over $10 billion in awards for 2025, consistent with original expectations. He attributed this to 80% of their business being direct awarded, providing privileged access and early visibility. He emphasized their selective approach to projects. Regarding resourcing, he expressed confidence in staffing and resource levels, highlighting that the company's strategy of reducing cycle time allows them to do 'more with the same' through efficiency, rather than relying on increased staffing.

Sebastian Erskine of Rothschild & Co Redburn asked about TechnipFMC's view on the evolving Brazilian market given its selectivity on tenders. He also inquired about the reasons for recent project scope value increases on the opportunities list.

Answer

CEO & Chair Douglas Pferdehirt explained that TechnipFMC maintains a strong, technology-focused relationship with Petrobras and remains selective on non-integrated work, while also executing iEPCI projects for other operators in Brazil. He noted that recent project scope increases reflect higher quality reservoirs and clients' desire to secure TechnipFMC's unique integrated capabilities in a concentrated market.

Sebastian Erskine of Rothschild & Co asked about OEM lead times, the potential for sale-leaseback deals, key learnings from the CSI acquisition, and the quality of assets in the remaining fragmented compression market.

Answer

President & CEO Mickey McKee noted that OEM lead times are stable and that the list of attractive M&A targets is shrinking, with remaining assets being mostly smaller, non-core horsepower. EVP & CFO John Griggs described the CSI acquisition as a "wonderful" success that exceeded synergy targets, with the new ERP system marking the final integration step.

Sebastian Erskine from Redburn Atlantic inquired about the outlook for leading-edge compression pricing and any differences in contract discussions with midstream versus upstream customers. He also asked about the potential for redeploying equipment to other basins given the robust demand for U.S. natural gas.

Answer

CEO Mickey McKee stated that leading-edge pricing remains stable with no significant changes yet, though customers are monitoring the macro environment. He affirmed the company's strong belief in the Permian Basin's long-term fundamentals, even suggesting it could become a 'gas basin with associated oil.' However, he confirmed Kodiak maintains the operational and commercial presence to shift assets to other basins if market dynamics were to change.

Sebastian Erskine inquired about the impact of new Permian pipeline capacity on compression demand and asked for color on the significant working capital outflow in Q3.

Answer

CEO Mickey McKee explained that customers plan for takeaway capacity well in advance, so new pipeline additions are already factored into their long-term compression needs. CFO John Griggs attributed the working capital outflow to temporarily elevated inventory and accounts receivable resulting from the ongoing integration of two separate operating systems post-acquisition, which he expects to normalize by year-end and into 2025.

Sebastian Erskine asked about the specific markets experiencing macroeconomic weakness that are impacting the Technology, Products & Services (TPS) segment, the potential negative implications for the Project Delivery (PD) segment, and the company's confidence in U.S. LNG projects amid concerns over cost inflation and tariffs.

Answer

CEO Arnaud Pieton confirmed that while guidance remains firm, the TPS segment has seen a lag in Technology & Products, particularly in ethylene and some carbon capture projects like Heidelberg and Calpine, due to political and M&A-related delays. He reassured that the services and studies part of TPS, a precursor to PD, remains strong. For U.S. LNG, he stated that visibility has improved for projects like Commonwealth and Lake Charles LNG, and that tariff risks are borne by the clients, not Technip Energies.

Sebastian Erskine asked about the specific markets affected by macroeconomic weakness impacting the Technology, Products & Services (TPS) segment, the potential negative implications for Project Delivery, and the company's confidence in U.S. LNG projects amid cost inflation and tariff concerns.

Answer

CEO Arnaud Pieton explained that while overall guidance is confirmed, the TPS segment's weakness is concentrated in Technology & Products (T&P), particularly in ethylene and delayed carbon capture projects. He noted that the services side of TPS remains strong, which is a positive leading indicator for the Project Delivery segment. Regarding U.S. LNG, Mr. Pieton stated that visibility has improved for projects like Commonwealth and Lake Charles LNG, and emphasized that any tariff-related risks are borne by the clients, not Technip Energies.