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]

Financial Performance - Adjusted net revenue increased slightly by 0.1% from R$5462 million in 3Q24 to R$5468 million in 3Q25[15, 21, 32] - Adjusted EBITDA increased by 14.7% from R$2794 million in 3Q24 to R$3206 million in 3Q25[15, 33, 34] - Adjusted net income increased by 9.5% from R$1173 million in 3Q24 to R$1284 million in 3Q25[15, 110] - Cash flow from operations increased by 21.9% from R$1413 million in 3Q24 to R$1723 million in 3Q25[15] - Cash conversion rate increased from 50.6% in 3Q24 to 53.7% in 3Q25[15] Operational Highlights - Water production volume increased by 4.4% from 775.101 million m³ in 3Q24 to 808.878 million m³ in 3Q25[10] - Water connections increased by 0.6% from 9450 thousand in 3Q24 to 9509 thousand in 3Q25[12] - Sewage connections increased by 1.1% from 8156 thousand in 3Q24 to 8245 thousand in 3Q25[13] Capital Expenditure (CAPEX) - Total CAPEX year-to-date reached R$10430 million[48, 117] - CAPEX for water projects in 3Q25 was R$1155 million, while sewage projects reached R$2823 million[48] - The company has contractual obligations up to 2029, with investments reaching R$38564 million[118, 119] Debt and Ratios - The company issued R$4.9 billion in debt in July, with maturities in 5, 7, and 10 years[62] - 59% of the company's debt matures in 2030 onwards[61, 62] - The company's cash position as of 3Q25 was R$11.6 billion[61, 62]

Core Insights - BBVA's hostile takeover bid for Banco Sabadell has concluded after 18 months without success [1] - The bid was accepted by shareholders representing 25.47% of voting rights, falling short of the required 30% [2] - BBVA's bid valued Banco Sabadell at $19 billion [3] Company Developments - Banco Sabadell's CEO stated the bank has undergone a "major transformation" and aims for a profitability increase to 16% by 2027, alongside returning €6.45 billion to shareholders [3] - BBVA plans to resume shareholder remuneration through a share buyback program and the highest dividend ever [4] - BBVA expects to generate approximately €48 billion in cumulative attributable profit from 2025 to 2028 and allocate €36 billion for shareholder distributions [5] Industry Context - The attempted takeover was viewed as a test case for consolidation in the European banking sector [5] - The bid received clearance from the CNMV and the European Central Bank but faced opposition from politicians, business groups, and unions [5] - BBVA's earlier attempt to merge with Banco Sabadell in 2020 failed due to price disagreements [6]

Core Viewpoint - BBVA SA Chairman Carlos Torres has no intention of resigning despite the failure to acquire Banco Sabadell SA, emphasizing his commitment to lead the bank as long as shareholders and the board support him [1] Summary by Relevant Sections - **Acquisition Attempt**: BBVA's $19 billion offer for Banco Sabadell was rejected by nearly three-quarters of shareholders, concluding a 17-month takeover effort [1]

EMAE Acquisition Overview - EMAE focuses on hydroelectric power generation with an operational installed capacity of 961 MW and a physical guarantee of 162 MWavg[10, 12] - EMAE manages water resources, including the Billings Reservoir, aiming for effective use by SABESP by 2027[10] - EMAE's Net Revenue is R$541 million, Net Income is R$67 million, and Adjusted EBITDA is R$154 million (2Q25 LTM)[12] Strategic Rationale - The acquisition aims to expand water storage capacity by 52% with full integration of the Billings system by 2029[15] - The acquisition enhances system resilience by adding +7 m³/s of operational flexibility (+10% of treated water supply) from 2026 to 2029[15] - The transaction allows direct participation over critical water sources, integrating the Billings-Pinheiros-Tietê system[19] Transaction Details - SABESP will acquire 74.9% of EMAE's voting shares and 66.8% of its non-voting shares, representing 70.1% of the total capital[31] - The transaction is expected to close in 4Q25-1Q26, subject to regulatory approvals[35]

Brazil’s Cia de Saneamento Basico do Estado de Sao Paulo acquired a majority stake in Empresa Metropolitana de Águas e Energia SA in a 1.13 billion reais ($212 million) deal https://t.co/c0ZLjY2H4q ...

Core Viewpoint - Sabesp (SBS) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook for its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates in determining near-term stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to buying pressure and a potential rise in stock price, reflecting an improvement in the company's underlying business [5][6]. Zacks Rank System - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10]. Specifics for Sabesp - For the fiscal year ending December 2025, Sabesp is expected to earn $1.18 per share, with analysts raising their estimates by 8.3% over the past three months [8].