Thank you, Gigi, and welcome to Tenaris 2025 Second Quarter Conference Call. Before we start, I would like to remind you that we will be discussing forward-looking information during the call and that our actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our Chairman and CEO; Carlos Gomez Alzaga, our newly appointed Chief Financial Officer; Gabriel Podskubka, our Chief Operating Officer; and Guillermo Moreno, President of our U.S. Operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment on our quarterly results. Our second quarter sales reached $3.1 billion, down 7% year-on-year, but up 6% sequentially, mainly reflecting an increase in North American OCTG prices and stable volumes. Average selling prices in our Tubes operating segment decreased 2% compared to the corresponding quarter of last year, but increased 6% sequentially. Our EBITDA for the quarter was up 5% sequentially to $733 million, with our EBITDA margin for the quarter close to 24%. Our margins remain in line with those of the previous quarter. Our cost of sales also rose 5%, mainly reflecting product mix differences and higher tariff payments. With operating cash flow of $673 million and capital expenditure of $135 million, our free cash flow for the quarter was $538 million. After a dividend payment of $600 million in May and share buybacks of $237 million, our net cash position amounted to $3.7 billion at the end of the quarter. Now I will ask Paolo to say a few words before we open the call to questions.

Thank you, Giovanni, and good morning to all of you. Our results in the second quarter pointed to the solid industrial and commercial position that Tenaris has built, serving its wide range of customers around the world and the competitive differentiation we have established in key markets. Even as drilling activity in several areas of the world has slowed, our sales rose sequentially together with our EBITDA and net income. Our free cash flow amounted to a solid $538 million, while our shareholder distributions between dividend payments and share buybacks amounted to $837 million during the quarter. There is an increase in the U.S. Section 232 tariff on the import of all steel products from 25% to 50% and the ongoing tariff negotiations have increased market uncertainty. As countries negotiate the so-called reciprocal tariff, no country apart from the U.K. has so far been able to negotiate how the Section 232 tariff will be applied. We expect that the current broad-based approach will eventually be modified towards a more specific product-based approach, which takes into account market factors and considers differential tariff and quotas for some countries. The Section 232 tariff and the ongoing negotiations will change the competitive environment, favoring more utilization of available domestic capacity and fewer imports. Over time, there will be an impact on prices once excess inventories are drawn down and imports are reduced from the high levels we have seen in the first half of the year. Tenaris, with its strong U.S. domestic production base, including the world's most efficient seamless pipe mill at Bay City, and its copper steel production facility, supported by its global industrial system remains well placed to continue serving its U.S. customers with its highly differentiated rig direct service. Our sales this quarter included the successful delivery of pipes and coatings to a wide number of complex line pipe projects around the world. These include Equinor Raia project in Brazil, ConocoPhillips Willow project in Alaska, Shell's Bonga project in Nigeria, Azule Nengo project in Angola, and Chevron Leviathan project in the Mediterranean. Looking forward, we will have lower deliveries to offshore line pipe projects until a new wave of projects progress to the development phase in 2026. One such project will be the GranMorgu project in Suriname. In addition to our line pipe and coating award, we have received the award for the supply of casing and tubing for the project. Key to this achievement was our offer of service, which we will carry out from a base we are now setting up in Suriname. In the fast-growing frontier development of the Guyana-Suriname Basin, we have set up local service bases to support the operation of ExxonMobil of TotalEnergies and other customers in the region. Another major developing region where we have been able to make a difference is the Vaca Muerta shale play in Argentina. Here, as well as casing and tubing, we also supply fracking and coil tubing services and are instrumental in developing the pipeline infrastructure that will enable the oil and gas to reach the global market. During this third quarter, we will complete most of the deliveries for the Vaca Muerta Sur pipeline that will build a crude export capacity to a new deepwater port in Puerto Rosales. Early next year, we should also deliver the pipes for the Duplicar North pipeline that will connect the Northern development in Vaca Muerta to the main crude export pipelines. In Mexico, Pemex has successfully issued a $12 billion financing facility this week. This is an important step that should allow Pemex to increase its current low level of operation and pay down some of its supplier debt. We look forward to supplying a higher level of operation under our current contract. With oil prices around $65 a barrel and drilling activity in the United States and Canada lowering, our sales in these countries remain relatively resilient due to our solid customer portfolio. They're focused on improving operational efficiency, which extended the lateral length for which they appreciate our seamless product and Rig Direct service. We are ready now to take any questions you may have.

Our first question comes from Arun Jayaram from JPMorgan Securities LLC.

Yes, Paolo, I was wondering if you could comment on your thoughts and outlook for the second half of 2025, just given some of the things you cited, tariff impacts, some activity perhaps going down a little bit in the U.S. but give us a sense of how you think about volume trends and margin trends for the second half?

Well, thank you. I think there are many moving parts affecting the second half. We have visibility on the third quarter, but obviously less visibility on the fourth. What we can say for the third quarter is that we expect lower sales on our part due to different factors. Basically, we will have lower invoicing in our fracking operation. We have a kind of black space for 3 months due to the programming of the company for their operation of fracking in Vaca Muerta. This is something that will, to some extent, reduce slightly our invoicing. We also, after an important wave of delivering our line pipe, will have somewhat lower shipments of line pipe during the quarter. Operations in North America will reflect some increase in price, which we expect, but also some containment of the activity in the rigs because the price of oil is today what it is. Even if I compare with our vision 3 months ago, we were more concerned about the impact of a potential recession and lower oil prices. Today, looking at the forecast for the economy worldwide and the market's perception, we would expect the price of oil to stay around $65. In this environment, there shouldn't be a strong reduction in the rig count. So we do not expect this. In North America, more fracking in Canada because of seasonal reasons. And in the U.S., in our view, will be compensated by some more activity in Mexico. So overall, we expect lower sales, especially in the third quarter, in the range of high single digits for our invoicing. In the fourth quarter, it is more difficult to predict to understand which will be the dynamics of prices. There are tariffs that have been raised on the 4th of June for 232 up to 50%, almost for every country, excluding the U.K. The negotiations that are underway today are mostly focusing on the reciprocal tariff, but I'm not touching on the 232. If this situation is not addressed with a more product-by-product specific quota for specific sectors in the coming months, inevitably, prices in turn, domestic prices in the United States will reflect this. This will impact our sales. But today, it's difficult to forecast what the impact on the fourth quarter will be. Also in the third quarter, our slight reduction in sales will take into consideration some repair and maintenance that we usually perform during August. This is our outcome as far as our overall top line is concerned.

Okay. That's helpful. It kind of sounds like your commentary is pretty similar, maybe different moving pieces with what you outlined last quarter in terms of the outlook. Paolo, I was wondering if you could highlight about your project pipeline as you think about 2026 relative to 2025. You highlighted Suriname as a new opportunity for Tenaris. But how does the major or large project pipeline look in 2026, thinking about places like the Vaca Muerta?

On this, I would like to have Gabriel give you a view of how we see our road into '26 and what we can do compared to '25. Gabriel?

Yes. Thanks, Paolo. To give you an overall perspective of the offshore market, which is an important driver for the pipeline business and also for the OCTG business in this segment, I would say that the market dynamic is overall positive. We don't see an immediate effect of the deteriorated market environment in drilling activity. As a matter of fact, the deepwater drilling rigs are quite resilient at very good historical levels. We are working with our customers on many new projects. Some of them are being delayed in the FIDs, but we are confident that in the next few months, they will be sanctioned. Overall, the context, I would say, is positive. Within this context, we have been building and continue to build an important backlog in this strategic segment, Paolo, and you commented on Suriname, where we just got awarded a drilling campaign for OCTG to cover the needs of casing and tubing for these 36 wells that Total will develop in this initial phase of deepwater development. The customer has standardized on Dopeless technologies, and we are getting ready to build our service base in the country. This is in addition to the award of pipeline and coating that we commented on in our prior call. So we are building an important backlog. Also this quarter, we booked deepwater pipeline work for Petrobras Buzios 11 project, and we have also been awarded OCDG needs of Chevron for their deepwater campaign in Agbami in Nigeria. So overall, I would say that we are building an important backlog into 2026. As Paolo mentioned, we had a high concentration of pipelines in the first half of 2025. So our offshore pipeline deliveries in the second half will be slightly lower, but we believe with great confidence that 2023 will have an important contribution overall on the offshore segment.

Thank you, Gabriel. Just to add that our position in this segment after the acquisition of Shawcor, considering the different plants that can operate in welded and seamless in different parts of the world, plus the global deployment of Shawcor and coating, a formidable structure for addressing and assuring short lead times, competitive offers quality to our clients. The acquisition of Shawcor really gave us a different perspective for serving our clients. I think we are capturing the benefit of this.

Our next question comes from Alessandro Pozzi from Mediobanca.

The first one is, again, on the outlook for the second half of 2025. You indicated where sales are going to go. Maybe if you can add some additional color on margins in Q3 and in Q4? Because I think in Q3, maybe you can still benefit a little bit from the lagged effect with the Pipe Logix, but then you will feel the full impact of tariffs as well. And I believe it should be around $140 million per quarter. I'm not sure if you have some remedies in place to reduce the amount of impact from tariffs and/or whether the higher prices will be able to offset this. Because if we look at the Pipe Logix that was out yesterday, it was just a small increase month-on-month. And I mean maybe we will see stronger prices going forward. But your thoughts on margins would be very appreciated. And the second question is on South America. I believe sales were down in Q2. Can you give us maybe the outlook for sales in Argentina and explain why maybe the rig count overall in Argentina is still rather flat despite all the investments in Vaca Muerta?

Thank you, Alessandro. Now on the first point, you are right that the 50% tariff of the Section 232 is affecting us on a dimension that is close to what we are saying. Remember, last time, we were saying with 25%, around $70 million per quarter. Today, with the increase of the tariff to 50%, this number could become higher in the range of $140 million to $150 million per quarter. Now let me add two considerations. First of all, we don't know where the negotiation with Mexico, Canada, Argentina will end up and if there will be some consideration like in the case of U.K. for changing or adapting or modifying by product or by country some of the considerations regarding the tariff of the 232. We do not know, but we think there may be a possibility because in the end, the relation within the USMCA and the relation in Argentina may justify specific negotiations that include aspects related to automotive steel and not only on the reciprocal aspect. This is the first consideration that may change this. The second consideration is that we can react in terms of allocation, organization of our production flows. And these tariffs are getting into our cost of sale gradually because of the inventory; some of these tariffs are affecting our steel bar coming into the U.S. It takes time to flow through our inventory to get into our cost of sales. So you should also consider that the figures we are mentioning are not straight into the next quarter, but only gradually. Also, we have alternatives, and to some extent, can limit part of the impact of this. And then we go to the impact on prices. You are right. Yesterday, the Pipe Logix came out with a very modest increase. But this is also a result of the very high level of imports that were unleashed by the elimination of quotas when the first round of 232 were introduced with 25%, but no quota. There have been imports in the United States from different sources, well above the level of quota. There has been a resulting increase in inventory. The inventory is waiting on prices today and will do so for a while, but not forever. I think that after the increase in 232 on the 4th of June to 50%, some of this import will gradually be reduced. Today, there are many products on the sea, on the vessels coming into the U.S. The decision that needs to be made in September, October and the coming months will be made with a different scenario and different considerations, taking into account the higher level of tariffs. So prices, in my view, will go up or will do so gradually, but inevitably over time. Difficult to predict if this will happen and exactly when, but prices will need to increase more than what has been done up to now. This will also contribute to our margin. Having said this, what we can see is the margin for the next quarter. We expect margins slightly below this quarter, but always in the range between 20% and 25%. Remember, this is where we were guiding last quarter; we will remain within this space between 20% and 25%, but lower than this quarter, slightly lower than this. In the fourth quarter, for the reasons that I mentioned, I think it is more difficult to have a reasonable estimate of what will happen. Most will depend on the decisions that the importers may take and the reflection on price. In my view, having duty for steel and pipe and bars going up 50% will have an impact on the price of Pipe Logix, even in an environment in which the rig count is not very aggressively increasing; even if it stays or it goes down slowly as we anticipated, there should be an impact on prices. This is would be the logical outcome.

And on South America?

In South America, there has indeed been a containment of oil. In Argentina, the rig count has decreased slightly due to a reduction in operations by YPF and other companies in the southern region of the country. This has led to fewer rigs actively operating. Additionally, companies are taking a cautious approach to organizing their investments in Vaca Muerta, primarily due to limitations in access to financing. While there have been significant projects like the $2 billion pipeline in Vaca Muerta South aimed at bringing oil to the coast, the country still faces a high risk level above 700 points, making it challenging for local businesses to secure financing in line with the more optimistic forecasts we had six months ago. While there remains a positive outlook for the development of Vaca Muerta for gas and oil, the growth and pace of operations are slower than anticipated. There was a period when companies were concerned about oil prices hovering between $55 and $60, which would negatively impact local operators reliant on cash flow for financing. However, the situation is gradually improving, despite the country risk. The recent devaluation of the local currency by around 10% in the past month has helped reduce costs, positively affecting project profitability. I am optimistic that Vaca Muerta will keep expanding, leading to increased demand for drilling in the long run. However, in this semester and month, we are observing a reduction in rigs due to the situation in the south and a slow increase in rigs and fracking operations. This is related to the challenges we face in our fracking activities up until September.

Our next question comes from Sebastian Erskine from Rothschild & Co Redburn.

I'd like to start on the commentary around imports. Obviously, it has remained an elevated level in the first half of the year, and should step down in the second half. But kind of how much share gain can we expect by Tenaris and equivalent domestic producers for imports as a percentage of the mix? And I'm thinking about that in terms of offsetting weaker volumes in the back half of the year, particularly in U.S. land where the rig count remains under pressure.

Well, overall, imports represent a large share of demand in the U.S., in the range of 40%. So let's say, if you imagine 50% on 40% of the supply in a very large market, even in an environment in which the rig count should stay or go slightly down, we basically expect this. It will also depend on the price of oil; obviously, it's affecting cash flow. But even in an environment of relatively slowing rigs, the impact on import of the tariff, there will be an impact on prices. There will be some substitution. Now in terms of capacity, I think the domestic industry has the ability to increase production, but the level of utilization is still pretty high today in the different players in this seamless arena. There is probably room for increasing utilization in the welded supply of OCTG, but the supply is limited to a segment of the market and not to the entire market. These are the reasons why I think over time, the price level in the U.S. should go up.

Really appreciate the color, Paolo. And then my second question on distributions. Obviously, announcing the $1.2 billion authorization. It looks like you're kind of front-loading the first tranche of $600 million, and it looks like you completed nearly two-thirds of this. Would you be open to bringing forward the second tranche of repurchases, just given the cadence you've already achieved?

Well, as you know, the Board approved two tranches of share buyback. The second tranche will be considered in the Board meeting on the 29th of October. But this has been approved; anyway, this is what we expect. This will be considered again and very likely launched after the Board on the 29th October.

Our next question comes from the line of Marc Bianchi from TD Cowen. Paolo Rocca, Chairman and CEO, stated that the Board has approved two tranches of share buybacks. The second tranche will be discussed at the Board meeting on October 29th. This has already been approved, and they anticipate it will be considered again and likely initiated after the Board meeting on that date.

The first one is real quick. I just wanted to clarify, Paolo, on the third quarter outlook, the high single-digit decline was a comment on sales or a comment on volume?

It was a comment on sales.

Okay. The other question relates to the supply chain. You talked about if there's potentially exceptions for USMCA and you could divert some of your steel supply from Mexico. Should we think about that as potentially removing the entire $140 million tariff headwind? Or what's the opportunity there?

We can definitely expand our local steel production as much as possible. About a month and a half ago, we experienced an accident at the copper facility, which affected our steel availability temporarily. However, we will ramp up production again and utilize this capacity to the fullest. This is a factor that helps lower the tariff we pay on the bars and semi-finished products that we need to import to support our rolling mill in Bay City, Enbridge. Our ability to operate at peak capacity at the copper plant will primarily determine this action. We're also planning investments to enhance this capability, but those will take some time to implement. Additionally, we are looking into covering some of the demand with welded products. While this might come at a higher cost, it could help us mitigate the tariffs we face. Nonetheless, this won't significantly change our current situation regarding the high tariffs from Canada, Mexico, Argentina, and Europe. I believe that over time, negotiations with these countries may address specific products or semi-finished goods that aren't produced in the U.S. If such items aren't made here, it's possible that negotiations could modify or lessen their impact. These are the factors that could influence the tariff levels we encounter each quarter.

Got it. Got it. The other question I had related to mix. You mentioned some of the pipeline work coming off and some open space in the frac business. I would think that those are lower margin parts of your business compared to OCTG. Can you just sort of talk about maybe how much of an impact that's having on the third quarter, second half, and how we should think about those coming back into the revenue profile eventually?

Yes. Well, I will ask Gabriel because there are very different products here with very high margin and very much more competitive margin.

Yes. In general, you mentioned the fracking business is of a profitable margin. So that has an impact in the third quarter until we pick up that business in the fourth quarter. Then regarding the pipelines, the offshore pipelines that we were mentioning, either welded or seamless with an important coating component, they are also having important margins. They are typically higher than the average of Tenaris, while the onshore pipelines, the ones that Paolo commented on Vaca Muerta, those that are kicking in, in the third, fourth quarter, and the beginning of 2026. Those have welded onshore pipelines that have margins that are lower than the average of Tenaris. So we have moving parts. The ones with lower shipments in the second half are those of higher margins that will pick up in 2026 again.

Our next question comes from David Anderson from Barclays.

I have a question about the Middle East, directed toward Gabriel. I'm curious about your outlook for the region leading into 2026. Saudi Arabia has been slowing down its activity this year and may not see a rebound until the end of next year. If I remember correctly from the last call, you mentioned that Saudi has been decreasing its inventory pipeline throughout the year. I'm interested in your thoughts on how the Saudi market will begin to recover from a pipeline perspective next year, and how you anticipate overall volumes in the Middle East to compare between 2026 and 2025.

Thank you, David. And then I will pass to Gabriel...

David, indeed, as you know, in Saudi, we have been seeing austerity measures for several months already, in line with a lower price environment. So rig count in the Kingdom has been going down, concentrated mainly in oil, but we are also seeing some gas rates being dropped. The level of activity today is about 15% lower than it was a year ago. I would say the inventory level situation is pretty much in line with consumption. We are not having an overhang situation in Saudi anymore. The local supplier network plus Aramco inventories, I think, are pretty lean and in line with demand. Going forward, we would expect our shipments and sales to be in line with the variation of consumption. To compensate for this lower activity in oil in the Kingdom, we have an important pipeline business. I think we mentioned the CCS pipeline award last quarter. This will contribute and offset part of the OCTG. Regarding Saudi, the rest of the MENA region and the key markets, drilling activity is quite resilient. We see the Emirates pushing forward with the expansion of oil and gas with a marginal decrease of some rigs in their unconventional plan, but very marginal. They are still operating today at 120 rigs, which is a historical high level for ADNOC. Kuwait and Iraq are also pressing forward in their activity levels. We see pretty much Qatar on track with the expansion of the LNG project. Overall, I would say that for the second half of this year and into 2026, our shipments in the Middle East will remain fairly stable and solid.

My second question is around Mexico. Paolo, you were talking about some of the challenges that Pemex is facing and now with some positives on the horizon. But Pemex's CapEx budget is down 50% this year. Activity is plummeting. I presume you probably supply most of the pipe there from your facility in Veracruz. So I'm curious how much of a drag has been this year, which hasn't really shown up in the numbers. And secondarily, what kind of the opportunity is next year? So how do you sort of see those? I know it's really hard to tell, considering Pemex doesn't have a ton of visibility, but how do you see this trending going into next year? Overall, I know you're talking about line pipe. I'm talking more OCTG and the like.

Yes, I believe that the financial support Pemex received for its $12 billion debt issuance, backed by the government, is significant. This financing was oversubscribed, indicating strong interest, and Pemex could have raised even more at competitive rates due to Mexico's relatively low debt-to-GDP ratio. This is an important indicator that the Mexican government is committed to addressing Pemex's challenges not only by easing the financial burden on suppliers but also by providing the resources needed to restore operations. We are already witnessing this with the increase in rigs, now at 24, up from a recent low of 19. This reflects the government's renewed support for Pemex, given its importance to the economy, particularly in gas and oil production. It remains to be seen if this support will be sustained as part of Pemex's restructuring plan. Additionally, the management changes at Pemex signal their commitment to these issues. Looking ahead to the second half of 2025, we expect Pemex's volume increase to help maintain our stable sales in North America, offsetting some seasonal declines in Canada and constraints in the U.S. While it is challenging to forecast for the next year due to ongoing negotiations related to the USMCA and necessary strategic adjustments in the energy sector, I remain optimistic. There are available resources, and with oil prices around $65, developing profitable reserves with low extraction costs is a practical path forward.

Our next question comes from Derek Podhaizer from Piper Sandler.

Just a question in U.S. land. So we've seen strength in the gas markets, primarily private driven across the Northeast, Haynesville, and the Eagle Ford gas window. Just curious about your level of exposure to this tailwind in the U.S. I mean, I've always viewed as primarily attached to the larger customers utilizing Rig Direct. But maybe help us think through your exposure to the privates in these particular gas basins?

Thank you, Derek. I will ask Guillermo to give us an overview of our exposure to this. Guillermo...

Yes. Thanks, Paolo. Our exposure to gas, I mean, in Direct has been mainly in Haynesville and more than in Appalachia. So we are seeing an upside. We are seeing a growth of activity in Appalachia, as you said, mainly from private operators. There are a couple of them that have driven the growth that has been traditional clients. So we are seeing an increase in our sales for gas in Haynesville and then also our market share. We stay optimistic about further growth in the future, and with this of our sales. Again, our position in the region where we are very competitive because we are basically very close to that play.

I also think that in all the discussion and negotiation that the American administration is establishing, there is a component about purchasing of LNG and helping develop and grow LNG in the United States. One way or another, even if a fraction of this will be realized in the coming year, this means demand for gas. Gas is important. Gas is demanding seamless pipe with, in some cases, more complex products. The price of gas today supports development for gas, which is relatively solid. All the negotiations should, to some extent, promote or stimulate investment in energy. Therefore, we have to be very focused on this because it would be logical to expect an increase in the activity in gas in the U.S.

Got it. That's helpful. I appreciate the comments. Second question, just maybe some color around how much pipe is on the ground now in the U.S., just thinking about the distributors as well. Just trying to work through the timing as far as working that down from an activity standpoint, which will also further support pricing just outside of the increased tariff costs. So maybe just some color around the pipe on the ground and working through that from an activity lens.

Yes, I believe the issue lies not only with the pipes on the ground but also with those in the sea that were en route to the U.S. before the realization of the impending 50% tariffs. Guillermo, perhaps you can provide additional insights on this.

Yes, for sure. As you said, Paolo before, imports in the first half of 2025 increased a lot. If we see this in numbers, the imports of OCTG in the U.S. first half of 2025 was more than 70% higher than the second half of 2024. So it was a very relevant increase that coupled with some reduction in activity determined that in these 6 months, the pipes on the ground increased equivalent to one month of overall consumption in the U.S. This is putting pressure on prices, not allowing so far Pipe Logix to increase as expected due to the tariff. We think that within this quarter, we'll start to see a reduction and more impact by the fourth quarter because it's when we will see, as Paolo said, the shipments defined based on the 50% tariff and not in the '25 that as we saw were not enough to reduce the level of imports.

Level of inventory in terms of months.

So it went from 6 to 7 months, more or less from the fourth quarter of 2024 to the second quarter of 2025, equivalent to one month of overall consumption.

Our next question comes from Kevin Roger from Kepler Cheuvreux.

I have maybe two follow-ups, if I may. The first one is on Mexico. Can you provide us a bit of sensitivity on what kind of revenue you generated in Mexico, for example, back in 2023 and what you are currently generating right now, just to understand the potential magnitude of earnings that you can get in the country after the $12 billion new financing for Pemex? And the second one on the tariff, if everything remains as it is right now, what is your available capacity in the U.S., and notably on the seamless side? What part of the volumes that you currently import from Mexico and Canada that you can relocate easily in the U.S. with available capacity, please?

Thank you, Kevin. Historically, Pemex operated between 45 to 50 rigs, but currently, we are down to 24. This gives an overview of the market size. Additionally, private operators like Woodside are also active. One of our upcoming increases in shipments to Mexico will be related to Woodside’s offshore project, which is significant for us. This indicates the market size primarily involves OCTG and some line pipe when required for long exports. We do not expect rapid changes but rather a gradual increase in activity levels. Regarding capacity, our main imports to the U.S. consist of steel bars to supplement our copper production. While our domestic steel production is substantial, we need to supplement it with bars imported from abroad, which is a key part of our U.S. imports that we cover financially. We also import specialized products for the Gulf of Mexico that are not available domestically, mainly from Europe, and clients are willing to pay higher tariffs for these as alternatives are limited. Some materials from Canada are going to the northern U.S., but that's a negligible portion of the overall mix.

Our next question comes from Christopher Kuplent from Bank of America.

I've got two. Paolo, the evergreen question, I suppose, is, could you give us an assessment of what you think the M&A environment looks like at this point in time? I mean, it's hard to come up with a forecast for 4Q, but you sound pretty bullish in terms of price evolution into 2026, at least in the U.S. So do you think that sort of lack of clarity is throwing up M&A opportunities that perhaps in the past with a different U.S. administration weren't thinkable? So that would be my first question to you, Paolo.

Well, thank you, Christopher. As you know, we are the largest player in the United States. We have a relevant participation in the market. It's not easy to identify a suitable target for this. I'm convinced that looking ahead, consolidation is important, and also growth along our supply chain is also important. But anything that we can imagine here has a reasonably size that does not transform the company from the point of view of the size of the operation. So we consider, we look, study, and monitor also the attitude of the new administration to see if there are changes in the approach to vertical or horizontal integration, and we will be very active on this if we perceive that there is room for us.

That sounds like you're happy with the current run rate on the buyback program to continue. My second question is more short-term. Maybe you can tell us a little bit about your expectations regarding the evolution of net working capital. I suppose you've referenced the increase in inventories. How do you see your management of inventories considering you've got turnarounds coming up as well, probably well-timed?

Yes. Thank you, Christopher, on this. I will ask Carlos to comment on working capital, what we expect from our working capital. For sure, this quarter, our cash flow has been pretty strong, but Carlos...

Christopher, during the first half of the year, we've been generating cash from our working capital, generating around $250 million. Much of that was coming from inventories and some from receivables. We expect during the next quarter to build up inventories. Now part of that, let's say, trend down in inventory was because we finished some big projects. So we shipped all the material that we had in stock, and we expect to build some inventory during Q3 and then release some of it during Q4.

At this time, I would now like to turn the conference back over to Giovanni Sardagna for closing remarks.

Thank you, Gigi, and thank you all for joining us today.

This concludes today's conference call. Thank you for participating. You may now disconnect.