SABESP (SBSP3) Q2 2024 earnings summary

Executive summary

• Completed an 18-month transformation, centralizing operations, reducing business units, and improving efficiency while maintaining service quality despite weather challenges.

• Successfully transitioned from a state-owned to a privatized company, with privatization completed in July 2024, new governance structures, and a concession agreement effective until 2060.

• Adjusted EBITDA reached R$2,970.5 million in 2Q24, up 35.5% year-over-year, with margin improving to 54.2% from 44.8%.

• Net income for 2Q24 was R$1,209.4 million, a 62.6% increase over 2Q23, driven by higher tariffs, billed volume, and cost reductions.

• Implemented customer-centric and digital strategies, improving credit recovery, launching new billing models, and expanding capex delivery capacity.

Financial highlights

• Consolidated net revenue from sanitation services in 2Q24 was R$5,475.6 million, up 11.9% year-over-year.

• Adjusted EBITDA for 2Q24 was R$2,970.5 million, with a margin of 54.2%.

• Net income for 1H24 totaled R$2,032.7 million, up 36.3% from 1H23.

• OPEX per cubic meter fell 6.7% year-over-year, and EBITDA per cubic meter increased 38.2%.

• Costs and expenses fell 15.5% year-over-year, with personnel costs down 8.4%.

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 of BRL 27 billion through 2029, focusing on major projects like the Tietê River cleanup and network expansion.

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

• Management expects operational cash generation and available credit lines to be sufficient for future investments.

• New concession agreement effective until 2060, with unified program contracts and tariff reductions implemented post-privatization.