SABESP (SBSP3) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 surged to R$6,111 million, up 622.2% year-over-year, driven by the recognition of a R$8,820 million financial asset after privatization and non-recurring items; adjusted net income excluding non-recurring effects was R$1,173 million, up 43.7% from Q3 2023.

• Adjusted EBITDA reached R$2,785 million, a 16.7% increase year-over-year, with margin improving to 60.0% from 46.6% after excluding construction margin and non-recurring items.

• Net revenue from sanitation services (excluding construction) rose 6.7% to R$5,462 million, supported by tariff adjustments and higher billed volume.

• Privatization completed in July 2024, leading to a new concession contract covering 371 municipalities until 2060 and a new asset bifurcation model.

• Organizational restructuring blends internal talent with external hires to drive a high-performance culture.

Financial highlights

• Net operating revenue increased 132.4% year-over-year to R$14,997 million, mainly due to the financial asset effect; adjusted net revenue (excluding non-recurring effects and construction) was R$5,462 million, up 6.7% year-over-year.

• Adjusted EBITDA margin rose to 60.0% in Q3 2024 from 46.6% in Q3 2023.

• Net income (adjusted) grew by 43.6% year-over-year to R$1,173 million.

• Investments totaled R$1,444 million in Q3 2024, focused on water and sewage infrastructure.

• Net cash from operating activities was R$4,740 million for 9M24, up from R$3,145 million in 9M23.

Outlook and guidance

• Management is prioritizing early universalization, regulatory compliance, operating and commercial efficiency, and financial discipline, with a focus on effective CAPEX execution rather than quarterly targets.

• The new concession contract (URAE-1) provides long-term regulatory stability and a clear framework for tariff adjustments and indemnification of non-amortized investments.

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