Vallourec (VK) Q1 2026 earnings summary

Executive summary

• Q1 2026 EBITDA reached $220 million (22.6% margin), exceeding guidance midpoint, with strong cash generation and net cash position of $67 million after $107 million in share buybacks; reporting currency changed to US Dollar effective January 1, 2026.

• Over 60% of EBITDA converted to cash, with adjusted free cash flow at $177 million and total cash generation of $135 million.

• Resilient performance amid Middle East disruptions, supported by operational efficiency, cost management, and local presence in Saudi Arabia and UAE; some order postponements and shipping delays occurred.

• Signed a long-term geothermal agreement with Fervo Energy for up to $800 million over five years, and MoUs for hydrogen and CO2 storage, highlighting momentum in new energies.

• Intention to return nearly €650 million to shareholders by August 2026, with unused buyback funds to be distributed as an extraordinary interim dividend.

Financial highlights

• Q1 2026 revenues were $975 million, down 7% year-over-year and 19% sequentially, mainly due to lower Tubes volumes and Middle East/Gulf of America shipments.

• EBITDA was $220 million, up 2% year-over-year but down 12% sequentially; EBITDA margin improved to 22.6%.

• Net income group share was $87 million, representing 9% of revenue, nearly flat year-over-year.

• Adjusted free cash flow was $177 million, with strong cash conversion and stable year-over-year.

• Net cash position at quarter-end was $67 million, with gross debt reduced to $994 million and liquidity at $1.9 billion.

Outlook and guidance

• Q2 2026 EBITDA expected between $175 million and $205 million, with Q2 anticipated as the low point for the year.

• Tubes volumes and EBITDA per ton expected to decrease sequentially in Q2 due to Middle East conflict, with recovery in H2 2026 if geopolitics stabilize.

• U.S. market prices projected to rise further, offsetting higher energy and raw material costs; North America Tubes to benefit from market share gains.

• Iron ore production sold expected at 5.5 million tons for 2026; Mine and Forest Q2 guidance at 1.4 million tons, full-year guidance at 4.5 million tons confirmed.

• International Tubes recovery expected in H2 2026, assuming stable geopolitics.