Core Insights - Sabesp reported a full-year adjusted net revenue of BRL 22.2 billion for 2025, reflecting a 2.2% increase compared to 2024, with adjusted EBITDA reaching BRL 13.2 billion, a 17% year-over-year increase, and an adjusted EBITDA margin of 60% [1] - The company emphasized strong cash generation, with cash flow from operations in Q4 reaching BRL 3.0 billion, representing a 24% growth, and cash conversion increasing to 83% [2] Financial Performance - For Q4, adjusted net revenue was BRL 5.7 billion, up 2.1% year-over-year, with adjusted EBITDA totaling BRL 3.4 billion, a 13% increase, and an adjusted EBITDA margin of 60% [3] - Full-year net income was reported at BRL 8.5 billion, influenced by a prior non-cash gain in 2024 and benefiting from stronger operational EBITDA [8] - Adjusted net income for the year was BRL 6.3 billion, representing a 22% growth, with operating cash flow reaching BRL 8.1 billion [7] Customer and Operational Growth - The customer base grew, with water connections reaching approximately 9.5 million (up 0.4% year-over-year) and sewage connections increasing to 8.3 million (up 0.8%) [4] - Water production in Q4 totaled 789 million cubic meters, described as stable due to disciplined system management [5] Revenue Drivers - Q4 revenue growth was driven by pricing, volume, and consumer mix, with pricing contributing approximately 1.5 percentage points and volume growth from added units contributing about 3 percentage points [9] - The price index excluding mix effects remained stable during 2025, with large-client prices rising as discounts were removed [10] Cost Management - EBITDA expansion was attributed to improvements in G&A, better collection performance, and energy efficiency initiatives, with 82% of energy consumption now in the free market [11] - Personnel expenses declined despite a 5.5% collective bargaining increase, linked to a 15% reduction in headcount [12] Capital Expenditure and Investment - Sabesp's CapEx for 2025 totaled BRL 15.2 billion, more than double 2024 levels, supporting universalization obligations [13] - The company delivered 32 major projects in 2025, including over 827 kilometers of new infrastructure [14] Balance Sheet and Debt Management - As of the end of 2025, Sabesp reported BRL 40 billion in gross debt and BRL 28 billion in net debt, with an average cost of debt at CDI minus 0.2% [17] - Net debt to adjusted EBITDA was approximately 2.2x, with ROIC at 11% and ROE at 17% [17] Strategic Opportunities - The company is evaluating inorganic growth opportunities, with a preference for larger deals, and has completed the acquisition of EMAE's controlling shares [20][21] - Management discussed ongoing discussions with regulators regarding additional works and potential expansions in urban drainage [20]

Financial Data and Key Metrics Changes - Adjusted net revenue for Q4 2025 reached BRL 5.7 billion, growing 2.1% year-over-year [4] - Adjusted EBITDA totaled BRL 3.4 billion, representing a 13% growth versus a year ago, with margins expanding to 60% [4] - Adjusted net income remained stable at around BRL 1.9 billion [4] - For the full year 2025, adjusted net revenue totaled BRL 22.2 billion, representing a 2.2% growth versus 2024 [5] - Adjusted EBITDA reached BRL 13.2 billion, growing 17% year-over-year, with margins expanding to 60% [5] - Reported net income for Q4 reached BRL 2.7 billion, representing 87% growth year-over-year [11] - Cash flow from operations reached BRL 3 billion, representing a 24% growth [5] Business Line Data and Key Metrics Changes - Water production totaled 789 million cubic meters in Q4, remaining stable [3] - Water connections reached approximately 9.5 million, increasing 0.4% year-over-year, while sewage connections grew 0.8%, reaching 8.3 million [3] - The number of units benefiting from subsidized rates reached nearly 2 million connections, or roughly 6 million people, doubling the average from 2024 [10] Market Data and Key Metrics Changes - The price index, excluding mix effects, remained stable as there were no rate reviews for 2025 [9] - Discounts granted to large clients were reduced by approximately BRL 450 million in 2025, with less than a handful of contracts still active [46] Company Strategy and Development Direction - The company’s strategy focuses on three priorities: delivering new concession agreement obligations, achieving operational efficiency, and improving financial efficiency [16] - CapEx for 2025 reached BRL 15.2 billion, representing a 120% increase year-over-year [17] - The company aims to enhance water safety and expand infrastructure capacity through significant investments [17] Management Comments on Operating Environment and Future Outlook - Management emphasized the importance of accelerating universal access and improving service reliability [16] - The company is optimistic about achieving universalization targets ahead of schedule, with significant progress already made [12] - Management highlighted the need for a strong regulatory framework to support future investments and opportunities [38] Other Important Information - The company ended 2025 with BRL 12 billion in cash, covering more than three years of amortizations [15] - The acquisition of MIE's controlling shares was completed, which is expected to increase reservoir capacity significantly [21] Q&A Session Questions and Answers Question: Potential upside to the BRL 70 billion CapEx number - Management indicated that inflation and evolving business needs could lead to an increase in the CapEx number, with investments being advanced to address water safety and metering upgrades [25][26] Question: Annualized level of CapEx in Q4 - Management stated that they are trying to accelerate CapEx and will maintain or increase the pace if possible [29] Question: Payroll line and capitalization of expenses - Management explained that personnel expenses were low due to cost reductions and that there was a higher level of capitalization of expenses in Q4, which should not be considered a one-off [34] Question: Strategic considerations for investing in Copasa - Management highlighted the importance of regulatory frameworks and the bidding process as critical factors in considering investments in Copasa [38][39] Question: Evolution of discounts for larger customers - Management reported that they have virtually zeroed out discounts for large clients and expect positive impacts in 2026 [46] Question: Update on CapEx for water safety - Management indicated that they expect to spend between BRL 1.5 billion and BRL 2 billion on water safety this year, with a total pipeline of close to BRL 8 billion [47][48]

Financial Data and Key Metrics Changes - Adjusted net revenue for Q4 2025 reached BRL 5.7 billion, growing 2.1% year-over-year [4] - Adjusted EBITDA totaled BRL 3.4 billion, representing a 13% growth versus a year ago, with margins expanding to 60% [4][5] - Adjusted net income remained stable at around BRL 1.9 billion for Q4 2025 [4] - For the full year 2025, adjusted net revenue totaled BRL 22.2 billion, representing a 2.2% growth versus 2024 [5] - Adjusted EBITDA for the full year reached BRL 13.2 billion, growing 17% year-over-year, with margins also at 60% [5][6] - Reported net income for Q4 reached BRL 2.7 billion, representing 87% growth year-over-year [11] - Cash flow from operations reached BRL 3 billion for Q4, representing a 24% growth [5] Business Line Data and Key Metrics Changes - Water production totaled 789 million cubic meters in Q4, remaining stable [3] - Water connections increased by 0.4% year-over-year to approximately 9.5 million, while sewage connections grew 0.8% to 8.3 million [3][4] - The number of units benefiting from subsidized rates reached nearly 2 million connections, approximately 6 million people, doubling the average from 2024 [10] Market Data and Key Metrics Changes - The company achieved 84% of water targets, 74% of sewage collection, and 70% of sewage treatment for the year 2026 as of February 2026 [12] - The company generated BRL 8.5 billion in net income in 2025, with 75% reinvested to support infrastructure expansion [20] Company Strategy and Development Direction - The company’s strategy focuses on three priorities: delivering new concession agreement obligations, achieving operational efficiency, and improving financial efficiency [16] - CapEx for 2025 reached BRL 15.2 billion, representing a 120% increase year-over-year, aimed at accelerating universalization and expanding infrastructure capacity [16][17] - The company is advancing metering upgrades and integrating new water sources into its system to enhance operational flexibility and water safety [26] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of accelerating universal access and improving service reliability [16] - The company is committed to maintaining a strong balance sheet while pursuing significant investments in infrastructure [15] - Management expressed confidence in achieving universalization targets ahead of schedule and highlighted the positive impact of their investment program on the community [12][20] Other Important Information - The company concluded the acquisition of EMAE's controlling shares, which is expected to increase reservoir capacity in the metropolitan system by up to 52% in the long term [21][22] - The company has a robust expansion backlog with approximately BRL 39 billion in contracted investments through 2029 [18] Q&A Session Summary Question: Potential upside to the BRL 70 billion CapEx number - Management indicated that inflation and evolving business needs could increase the CapEx number, with investments in water safety and advanced metering upgrades being prioritized [25][26] Question: Annualized CapEx level in Q4 - Management stated that they aim to maintain or accelerate the CapEx pace if feasible, emphasizing the importance of delivering universal access [28] Question: Payroll line and cost efficiency - Management noted that personnel expenses were low due to cost reductions and capitalizing on more expenses through CapEx, reflecting a full-year result rather than a seasonal effect [33] Question: Strategic opportunities outside São Paulo - Management expressed interest in larger deals like Copasa but emphasized the importance of regulatory frameworks and bidding processes in decision-making [35][36] Question: Evolution of discounts for larger customers - Management reported capturing about BRL 450 million in discount removals in 2025, with a goal to zero out remaining contracts [44] - For water safety CapEx, management expects to spend between BRL 1.5 billion and BRL 2 billion this year [45]

Financial Data and Key Metrics Changes - Adjusted net revenue for Q4 2025 reached BRL 5.7 billion, growing 2.1% year-over-year [4] - Adjusted EBITDA totaled BRL 3.4 billion, representing a 13% growth versus a year ago, with margins expanding to 60% [4] - Adjusted net income remained stable at around BRL 1.9 billion [4] - For the full year 2025, adjusted net revenue totaled BRL 22.2 billion, representing a 2.2% growth versus 2024 [5] - Adjusted EBITDA for the full year reached BRL 13.2 billion, growing 17% year-over-year, with margins expanding to 60% [5] - Reported net income for Q4 reached BRL 2.7 billion, representing 87% growth year-over-year [11] - Cash flow from operations reached BRL 3 billion, representing a 24% growth [5] Business Line Data and Key Metrics Changes - Water production totaled 789 million cubic meters in Q4, remaining stable [3] - Water connections increased by 0.4% year-over-year, reaching approximately 9.5 million, while sewage connections grew 0.8% to 8.3 million [3] - The number of units benefiting from subsidized rates reached nearly 2 million connections, approximately 6 million people, doubling the average from 2024 [10] Market Data and Key Metrics Changes - The price index, excluding mix effects, remained stable, with no rate reviews for 2025 [9] - Discounts for large clients contributed about 1.5 percentage points to revenue growth, with BRL 450 million worth of discounts removed in 2025 [8][47] Company Strategy and Development Direction - The company focuses on three strategic priorities: delivering new concession agreement obligations, achieving operational efficiency, and improving financial efficiency [17] - CapEx for 2025 reached BRL 15.2 billion, a 120% increase year-over-year, supporting universalization and infrastructure capacity expansion [17] - The company aims to enhance water safety and metering upgrades, with significant investments planned for the future [27][48] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong cash generation and a fortress-like balance sheet, reinforcing the ability to fund investment programs [5][16] - The company is optimistic about achieving universal access targets ahead of schedule, with significant infrastructure projects planned for 2026 [12][13] - Management emphasized the importance of regulatory frameworks and bidding processes for potential acquisitions, particularly regarding Copasa [39][40] Other Important Information - The company concluded the acquisition of MIE's controlling shares, which is expected to increase reservoir capacity significantly [22][23] - The company has a strong liquidity position with BRL 12 billion in cash, covering more than three years of amortizations [16] Q&A Session All Questions and Answers Question: Potential upside to the BRL 70 billion CapEx number - Management indicated that inflation and evolving business needs could lead to an increase in the CapEx number, with investments in water safety and metering upgrades being prioritized [25][26][27] Question: Annualized level of CapEx in Q4 - Management stated that they aim to maintain or accelerate CapEx levels in 2026, depending on execution capabilities [29][30] Question: Payroll line and cost efficiency - Management confirmed that personnel expenses were low due to cost reductions and centralization efforts, with a focus on capitalizing more expenses through CapEx [33][35] Question: Strategic opportunities outside São Paulo - Management expressed interest in larger deals like Copasa, emphasizing the importance of regulatory frameworks and bidding processes in decision-making [39][40] Question: Evolution of discounts for larger customers - Management reported that BRL 450 million in discounts were removed in 2025, with plans to continue capturing remaining discounts [47][48]

RESULTS 4Q25 AND 2025 SAFE HARBOR STATEMENT This presentation does not contain projections or estimates of future events. However, it may include forward-looking statements that indicate potential trends related to Sabesp, based on the reasonable expectations, beliefs, and assumptions of the Company's management. The use of expressions such as "projects," "estimates," "anticipates," "foresees," "plans," "expects," and similar terms shall not be construed as forecasts or guidance for purposes of applicable r ...

Core Viewpoint - The Brazilian ADR Sabesp (SBS) has performed exceptionally well, achieving total returns exceeding 50%, including dividends, since the last coverage [1] Company Performance - Sabesp has been rated as a "Strong Buy" by the analyst, indicating strong confidence in its future performance [1] Analyst Background - The analyst specializes in undercovered stocks, primarily focusing on Brazil and Latin America, with contributions to platforms like TipRanks and TheStreet [2]

Core Insights - Companhia de Saneamento Básico do Estado de São Paulo (SABESP) focuses on water treatment and sewage services for end consumers [1] Company Analysis - The company is involved in the water treatment sector, providing essential services to the population [1] - SABESP operates in a market that is not widely covered, presenting potential investment opportunities [1] Investment Focus - The analysis emphasizes the importance of companies with sustained free cash flows, low leverage, and sustainable debt levels [1] - There is a preference for companies in emerging markets that exhibit high margins and solid pro-shareholder attitudes, including buyback programs and dividend distributions [1]

Core Insights - Companhia de Saneamento Básico do Estado de São Paulo (SABESP) focuses on water treatment and sewage services [1] Company Analysis - SABESP is dedicated to providing essential water and sewage services to end consumers, indicating its role in public health and infrastructure [1] - The company operates in a sector that is often overlooked by investors, presenting potential value opportunities [1] Investment Focus - The analysis emphasizes the importance of companies with sustained free cash flows, low leverage, and sustainable debt levels, particularly in emerging markets [1] - There is a preference for companies that exhibit high margins and solid pro-shareholder attitudes, including consistent buyback programs and dividend distributions [1]

Financial Performance - Revenue from sales and services for the quarter reached R$9,413,305, compared to R$14,986,700 in the same quarter last year, reflecting a decrease of 37.3%[11] - Net income from continuing operations was R$2,158,565, down from R$6,111,883 year-over-year, a decline of 64.7%[11] - Basic earnings per share for the quarter were R$3.16, down from R$8.94 in the same quarter last year, a decrease of 64.7%[11] - The company reported a gross profit of R$2,991,172, down from R$11,005,126 year-over-year, a decline of 72.8%[11] - Total comprehensive income for the period is R$2,053,983, down from R$6,111,883 in the same quarter of the previous year[12] - Net income for Q3 2025 was R$2.159 billion, a decrease of 64.7% compared to R$6.111 billion in Q3 2024[39] - The net revenue for Q3 2025 was R$9.425 billion, down 37.2% from R$14.997 billion in the same quarter last year[39] - The margin for net income decreased to 23% in Q3 2025 from 41% in Q3 2024[39] Assets and Liabilities - Total assets increased to R$95,982,957, up from R$80,978,272 year-over-year, representing a growth of 18.5%[8] - Total liabilities rose to R$95,982,957, an increase of 18.5% from R$80,978,272 in the previous year[10] - Current liabilities increased to R$14,434,328, compared to R$11,968,321 in the previous year, marking a rise of 20.6%[10] - Long-term assets increased to R$32,054,871 from R$24,927,066, reflecting a growth of 28.2%[8] - Total equity increased to R$42,710,275, up from R$36,928,054, representing a growth of 15.1%[10] - Total liabilities increased to R$53,277,182 in Q3 2025, up from R$38,225,976 in Q3 2024, which is a rise of 39.4%[56] - Total equity grew to R$42,710,275 in Q3 2025, compared to R$37,908,972 in Q3 2024, representing an increase of 12.5%[56] Cash Flow and Investments - Cash and cash equivalents stood at R$4,966,996.7, significantly up from R$1,681,204, indicating a growth of 195.5%[8] - Cash generated from operations year-to-date is R$10,326,542, an increase of 27.2% from R$8,117,827 in the previous year[13] - Net cash from operating activities increased to R$7,454,364 from R$4,740,155 year-over-year[22] - Cash generated from operations rose to R$10,443,765 compared to R$8,115,218 in the previous year[22] - Total investments in Q3 2025 reached R$4.0 billion, the highest amount recorded in a single quarter, focusing on infrastructure and universalization targets[29][37] - In the first nine months of 2025, Sabesp invested R$10.4 billion, delivering potable water to over 616,264 new units, exceeding the annual target[30] Operational Metrics - The company connected 73,846 new sewage units and provided sewage treatment for nearly 948,965 units, achieving 92% of the annual goal[30] - Operating expenses (OPEX) decreased by 15% year-over-year to R$2,270 million in 3Q25, with significant reductions in general expenses and personnel costs[46] - The company reported an EBITDA of R$3,069 million in 3Q25, with a margin of 33%, up from 51% in the previous year[48] - Total billed volume increased by 2.5% driven by improved measurement through meter replacements and new connections[45] Financial Risk Management - The company has been managing foreign exchange risk through hedging transactions since 2024 to mitigate potential losses from exchange rate fluctuations[76] - Interest rate risk management is conducted through derivative financial instruments, with total borrowings and financing subject to different inflation adjustment indices amounting to R$34,940,121 as of September 30, 2025[79] - The company’s liquidity is primarily reliant on cash from operating activities and borrowings, with total financial liabilities projected at R$64,953,147 as of September 30, 2025[92] - The company has entered into hedging instruments to manage financial risks associated with foreign-currency financing, aiming to mitigate exposure to market fluctuations[95] Debt and Financing - As of September 30, 2025, total financial debt amounts to R$8,911,109, an increase from R$3,366,723 as of December 31, 2024[77] - Total borrowings and financing as of September 30, 2025, amounted to R$34,926,444, an increase from R$25,258,297 as of December 31, 2024, representing a growth of 38.4%[99] - The company has various financing agreements with the Brazilian Development Bank (BNDES) and the Inter-American Development Bank (IDB), with interest rates ranging from TJLP + 1.76% to CDI + 2.70%[200] - SABESP's foreign currency loans include agreements with the International Finance Corporation (IFC) and JICA, with interest rates such as SOFR + 1.20% and 1.8% to 2.5% for Yen loans, maturing between 2029 and 2048[200] Customer and Revenue Management - The company has a diversified customer base, mitigating credit risk exposure from accounts receivable[85] - The average rate for residential customers decreased by 6.2% to R$4.04/m3, while the average rate for commercial customers increased by 3.9% to R$15.12/m3[44] - Revenue from sanitation services for the nine-month period ended September 30, 2025, totaled R$18,366,116, accounting for 99.14% of the consolidated amount[62] Employee and Management Costs - The number of employees decreased by 12% year-over-year, with 9,306 employees at the end of 3Q25[49] - Key management personnel compensation expenses for the period from July to September 2025 totaled R$8,527, compared to R$2,325 in the same period of 2024[6] Capital and Shareholder Information - The company has recognized a capital increase of R$3,400,000, raising the paid-up capital to R$18,400,000[15] - SABESP issued R$2,815,700 in non-convertible debentures on August 1, 2025, with a yield of IPCA + 9.28% p.a., of which R$2,765,700 was acquired by SABESP Luxembourg[7] - SABESP completed a capital increase of R$85,000 on November 3, 2025, through the issuance of 85,000,000 new shares[8]

Financial Data and Key Metrics Changes - Adjusted net revenue was stable year over year at $5.5 billion, while adjusted EBITDA grew 15% to $3.2 billion, achieving a 59% margin [6][17] - Adjusted net income reached $1.2 billion, reflecting a 9.5% growth compared to the prior year, and cash flow from operations increased 22% to $1.7 billion [6][17] - EBITDA to cash conversion reached 54% in the quarter, indicating disciplined execution and resource optimization [6] Business Line Data and Key Metrics Changes - Water production increased by 4.4% year over year to 809 million cubic meters, with active connections growing by 0.6% [5] - Sewage connections rose by 1.1%, reflecting the company's investment focus on sewage services [5] Market Data and Key Metrics Changes - The company reported a collection efficiency of 101%, marking one of the highest historical performances [12][21] - The Fawuspi rate increased from 3.28% to 3.78%, impacting revenue and EBITDA [6][94] Company Strategy and Development Direction - The company is focused on three strategic priorities: delivering on the new concession agreement, improving operational efficiency, and strengthening financial efficiency [19][20] - CapEx accelerated to $4 billion in the quarter, growing 175% year over year, supporting the company's investment program [14][20] - The company is rolling out a large smart metering program, with 4.4 million IoT-enabled smart meters planned for installation by 2029 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving universal access and improving service delivery, with a commitment to operational excellence and sustainable growth [17][19] - The company is optimistic about its ability to manage water security and has contingency plans in place for the upcoming rainy season [36][52] Other Important Information - The company has formalized a decarbonization roadmap with targets to reduce total emissions by 15% by 2035 [26] - The MI acquisition is expected to enhance water security and operational efficiency, with closing anticipated between late Q4 and early Q1 of the following year [27] Q&A Session Summary Question: Updates on the annual tariff review process - Management is in the final steps of determining the regulatory asset base addition for 2024 and expects to share updates soon [30][32] Question: Expectations on hydro resilience improvements - Short-term strategies include contingency plans for water management, while the MI acquisition is expected to enhance water security [36][39] Question: M&A opportunities and focus areas - The company is focused on fulfilling obligations from the privatization of Sabesp but is also exploring potential M&A opportunities as they arise [42][45] Question: Details on the severance program - The company does not expect to implement additional voluntary dismissal programs after the current one [48][50] Question: Impact of social tariffs on revenue - The impact of social tariffs in Q3 was approximately $117 million, which will be recovered through future tariff adjustments [59][65] Question: Discounts reduced for large clients - The total gain from discount removal for large clients in Q3 was approximately $133 million, with ongoing adjustments affecting pricing and mix [68][71] Question: CapEx execution details - The company executed $4 billion in CapEx, focusing primarily on sewage treatment and water safety improvements [102][105]