SABESP (SBSP3) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 rose 62.6% year-over-year to R$1,209.4 million, driven by higher revenue, lower costs, and efficiency gains, with adjusted EBITDA up 35.5% to R$2,970.5 million and margin improving to 54.2% from 44.8%.

• Revenue from sanitation services grew 14.3% year-over-year in Q2 2024, supported by tariff adjustments and higher billed volume.

• Completed a major privatization process in July 2024, with a new reference shareholder acquiring 15% of shares and new governance structures implemented.

• Operational highlights include increased credit recovery, digital transformation, and expansion of capex delivery capacity.

• Costs, administrative, and selling expenses fell 15.5% year-over-year, supported by efficiency gains and a non-recurring IDP provision in 2Q23.

Financial highlights

• Net operating revenue reached R$6,749.4 million in Q2 2024, up 9.7% year-over-year, with net revenue from sanitation services at R$5,932.9 million, up 14.3%.

• Adjusted EBITDA margin reached 54.2% in Q2 2024, compared to 44.8% in Q2 2023.

• Allowance for doubtful accounts as a percentage of revenue dropped to 2.3% in Q2 2024, with a 67.1% year-over-year decrease.

• Earnings per share rose to R$1.77 from R$1.09 in 2Q23.

• Cash and cash equivalents increased to R$2,809.4 million at June 2024.

Outlook and guidance

• CapEx target for 2024 remains BRL 8.1 billion, with acceleration expected in the second half to meet universalization goals.

• Multi-year investment plan totals R$105.1 billion for 2024-2029, with 99% of 2024-2025 capex already contracted.

• New concession contract, effective July 2024, extends until 2060 and unifies previous program contracts, with new tariff structure including reductions for residential, social, and vulnerable categories.

• Management notes forward-looking statements are subject to market, regulatory, and economic risks.