SABESP (SBSP3) Q4 2024 earnings summary

Executive summary

• Net income surged 172% to R$9,580 million in 2024, driven by operational improvements, non-recurring items, and post-privatization transformation.

• Adjusted EBITDA rose 19% to R$11,339 million, with margin up to 52%, reflecting higher revenue, tariff increases, and cost efficiencies.

• Management focused on transformation, including restructuring, legal claim reassessment, and a voluntary termination plan affecting up to 20% of workforce.

• Major changes in procurement and project execution, with nearly all CapEx for universalization goals already contracted.

• New concession agreement (URAE-1) signed in July 2024, covering 371 cities until 2060, led to recognition of a financial asset bifurcation.

Financial highlights

• Net operating revenue reached R$21,726 million in 2024, up 8.8% year-over-year; reported revenue as high as R$23,895 million depending on scope.

• Adjusted EBITDA margin improved to 52% from 48% year-over-year.

• Net profit surged 172% to R$9,580 million, enabling a proposed R$2,550 million shareholder distribution (4.2% yield).

• Operating free cash flow increased 53% to R$7,400 million.

• Investments in water and sewage infrastructure totaled up to R$9,640 million in 2024.

Outlook and guidance

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

• Targeting connection of 1 million new units, mainly for sewage treatment, to meet 2025 universalization targets.

• Strategic actions for 2025–2026 include process reviews, talent management, and accelerated CapEx.

• Expecting measurable cost savings from zero-based budgeting and operational improvements.

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