SABESP (SBSP3) Q4 2024 earnings summary

Executive summary

• Achieved significant operational growth, expanding water and sewage connections, and improving service quality, supporting universalization targets.

• Completed privatization in July 2024, transitioning to a publicly-held company with a new reference shareholder holding 15%.

• Net income surged 172% to R$9.6 billion in 2024, driven by operational improvements, non-recurring items, and a financial asset bifurcation.

• Major management transition and restructuring included staff reductions, IT review, and strategic consulting.

• Nearly all CapEx for universalization goals is contracted, with a focus on regulatory compliance and operational efficiency.

Financial highlights

• Net operating revenue reached R$36.1 billion in 2024, up 41% year-over-year; adjusted net revenue from sanitation services was R$21.7 billion (+9%).

• Adjusted EBITDA rose 19% to R$11.3 billion, with margin up to 52% from 48% year-over-year.

• Net profit surged 172% to R$9.6 billion, enabling a proposed R$2.5 billion shareholder distribution.

• Investments in water and sewage infrastructure totaled R$6.9 billion (+10% vs. 2023).

• Operating free cash flow increased to R$7.4 billion.

Outlook and guidance

• Targeting universalization of basic sanitation by 2029, four years ahead of previous goals, with planned investments of R$70 billion by 2029.

• 2025 plan prioritizes CapEx execution, regulatory gap reduction, metering and collections, cost efficiency, productivity, and digital transformation.

• Strategic actions for 2025 and 2026 underway, including process reviews, talent management, and accelerated CAPEX.

• Anticipates full impact of reduced client discounts in P&L by the third quarter of 2025.

• Regulatory framework incentivizes efficiency and investment, with tariff adjustments and performance metrics.