Companhia de Saneamento de Minas Gerais (CSMG3) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 reached R$1.78 billion, up 9.6% year-over-year, driven by tariff adjustments and higher measured volumes in water and sewage.

• Adjusted EBITDA rose 13.6% to R$725.7 million, with margin improving to 40.5% from 38.5% in Q3 2023.

• Adjusted net income was R$368.3 million, a 9.3% increase over Q3 2023, excluding prior year non-recurring labor reversals.

• Investments in 9M24 totaled R$1.56 billion, up 30.7% year-over-year, supporting expansion and modernization.

• Regular and extraordinary dividends declared in 2024 totaled R$752.2 million.

Financial highlights

• Costs and expenses for Q3 2024 totaled R$1.21 billion, up 6% year-over-year, with manageable costs up 6.8% and non-manageable costs up 6%.

• Net financial result was a negative R$50.9 million, impacted by higher foreign exchange expenses and increased gross debt.

• Delinquency rate declined to 2.97%, the lowest in 7 years.

• CapEx for the first nine months was R$1.56 billion, with 82% of the annual forecast already invested.

• Other operational revenues fell 51.8% year-over-year, while other operational expenses surged due to absence of prior year reversals.

Outlook and guidance

• Multi-year investment program (2025–2028) targets R$1.97 billion annually to expand water and sewage systems and meet regulatory goals.

• Ongoing tariff review process to set new rates effective January 2026.

• Água dos Vales PPP project aims to universalize sanitation in 92 municipalities, with public consultation ongoing.

• Ongoing negotiations with municipalities to extend and rebalance contracts, aiming to mitigate regulatory risks and ensure revenue stability.

• Focus on regulatory enhancements and asset base expansion to support future tariff cycles and shareholder returns.