SABESP (SBSP3) Q3 2024 earnings summary

Executive summary

• Net income for 3Q24 surged to R$6,111 million, up 622.2% year-over-year, driven by the recognition of a new financial asset following privatization and the new URAE-1 concession agreement, which impacted gross revenue by R$8,820 million.

• Adjusted EBITDA (excluding construction margin and non-recurring effects) was R$2,785 million in 3Q24, up 16.7% from 3Q23, with an adjusted EBITDA margin of 60.0%.

• Net revenue from sanitation services (excluding construction) rose 6.7% year-over-year to R$5,462 million, supported by a 4.6% increase in average tariff and a 2.0% rise in billed volume.

• Privatization completed in July 2024, leading to a new asset bifurcation model and a substantial one-time revenue impact.

• Adjusted net income (excluding non-recurring effects and construction margin) was R$1,173 million in 3Q24, up 43.7% year-over-year.

Financial highlights

• Net operating revenue increased 132.4% year-over-year to R$14,997 million, mainly due to the financial asset effect.

• Construction revenue grew 14.9% to R$1,531 million.

• Costs, administrative, and selling expenses decreased by 6.6% to R$3,229 million.

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

• Financial expenses, net of revenue, rose 21.7% to R$525 million, mainly from higher interest on borrowings and PPPs.

Outlook and guidance

• Management expects operational cash generation, improved water security, and available credit lines to be sufficient for commitments and investments.

• The new URAE-1 concession agreement, effective until 2060, provides legal security and a framework for future investments and compensation for non-amortized assets.

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

• Guidance for 2024–2028 investments withdrawn pending reassessment post-privatization.

• Management notes forward-looking statements are subject to risks and uncertainties, with future results dependent on economic, market, and industry conditions.