SABESP (SBSP3) Q3 2024 earnings summary

Executive summary

• New management team appointed post-privatization, focusing on universalization, operational transformation, and regulatory gap closure.

• Net operating revenue reached R$15.0 billion, up 132% year-over-year, driven by non-recurring effects; adjusted net revenue was R$5.5 billion (+7% YoY).

• Adjusted EBITDA rose 17% year-over-year to R$2.8 billion, with margin improving to 60.0% after excluding construction and non-recurring items.

• Net income surged to R$6.1 billion (+622% YoY) due to one-time financial asset recognition; adjusted net income was R$1.2 billion (+44% YoY).

• Key priorities include cost control, digital transformation, regulatory compliance, and closing the commercial revenue gap.

Financial highlights

• Net revenue (adjusted) increased by 6.7% year-over-year to R$5.5 billion, mainly from higher volume and tariff adjustments.

• Adjusted EBITDA rose by 16.7% to R$2.8 billion, with operational improvements and cost efficiencies.

• Net income (adjusted) grew by 43.6% to R$1.2 billion.

• Operational cash generation reached R$1.6 billion, with nearly all reinvested in assets.

• Gross revenue was impacted by a R$8.8 billion deferred revenue adjustment due to IFRIC 12 asset bifurcation.

Outlook and guidance

• CAPEX for 2024 expected below R$6.5–7 billion, with delays to be recovered by H1 2025.

• Investment focus for 2025 on large, multi-year sewage treatment projects and Integra Tietê works.

• Guidance for 2024–2028 investments withdrawn pending reassessment post-privatization.

• Management highlights forward-looking statements are subject to market, economic, and regulatory uncertainties.

• Targeting closure of commercial revenue gap by end of 2025.