Companhia de Saneamento de Minas Gerais (CSMG3) investor relations material

Executive summary

• Net revenue reached BRL 1.91 billion in Q1 2026, up 2.5% year-over-year, driven by a 6.56% tariff adjustment and stable water/sewage volumes despite adverse weather and a shorter consumption period.

• EBITDA was BRL 787 million, down 3.2% year-over-year, with a margin of 40.9%; net income fell 14.1% to BRL 368 million, impacted by higher costs, depreciation, and financial expenses.

• CapEx reached BRL 695 million, a 28–30% increase year-over-year, supporting expansion and modernization of water and sewage systems.

• Renewal of Belo Horizonte concession until 2073, with a BRL 1.3 billion grant and BRL 300 million settlement recognized, reducing long-term risks.

• Destatization/privatization process advanced as scheduled, with technical compliance and new investor qualification phase launched.

Financial highlights

• Net revenue: BRL 1.91 billion (+2.5% YoY); EBITDA: BRL 787 million (-3.2% YoY); EBITDA margin: 40.9%; Net income: BRL 368 million (-14.1% YoY).

• CapEx: BRL 695 million (+28–30% YoY), a new Q1 record.

• Net debt rose 32% to BRL 7.1 billion; leverage increased to 2.4x EBITDA from 1.8x.

• Dividends paid/declared for Q1 2026 totaled BRL 177.6 million, with additional payments from 2025 and IoE.

• Cash from operations was BRL 675.1 million, slightly down year-over-year.

Outlook and guidance

• High CapEx and asset conversion expected to impact tariffs from January 2027; regulatory environment improved with the 3rd Tariff Review and a pre-tax WACC of 13.7% for 2026–2029.

• Operational efficiency, cost discipline, and loss reduction remain strategic priorities, with ongoing initiatives to reduce losses and improve productivity.

• Delinquency rates expected to normalize, supported by new collection initiatives and improved collection performance.

• No municipalities under water rationing as of May 2026; reservoir levels at 83.5% capacity.

• Investment plan for 2026 focuses on water security, sewage universalization, and loss reduction.