SABESP(US:SBS)2020-08-18 19:30Financial Data and Key Metrics Changes - Net income decreased to BRL 378.2 million in Q2 2020 from BRL 454.4 million in Q2 2019, reflecting the impact of the COVID-19 crisis [13] - Adjusted EBITDA increased by 28.4% from BRL 1.23 billion in Q2 2019 to BRL 1.58 billion in Q2 2020 [14] - Net operating revenue grew by 10.9%, from BRL 4 billion in Q2 2019 to BRL 4.43 billion in Q2 2020 [14] - Adjusted EBITDA margin improved to 35.7% in Q2 2020 from 30.8% in Q2 2019 [15] Business Line Data and Key Metrics Changes - Total billed volume decreased by 2%, with water consumption down by 2.1% and sewage by 2% [10] - Residential category volume increased by 0.7%, while commercial, industrial, and public categories saw significant declines of 18.4%, 16.7%, and 24.5% respectively compared to Q2 2019 [11][12] Market Data and Key Metrics Changes - The consumption mix shifted towards residential customers, which are less profitable compared to commercial and industrial customers, impacting average tariff prices [12] - Increased delinquency rates and bill payment exemptions for certain customer categories added to the financial challenges faced by the company [7] Company Strategy and Development Direction - The company focused on cost reduction and securing markets by signing contracts with 13 municipalities, including a significant agreement with Mauá [8] - SABESP is actively negotiating funding for strategic projects and debt refinancing, having raised nearly BRL 2.5 billion through local bond issues [9][27] - The company is adapting to regulatory changes in the sanitation sector, which may enhance competitive advantages due to existing contracts and governance levels [34][35] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the adverse effects of the pandemic and economic instability on operations, but highlighted successful cost containment measures [6][13] - The company is optimistic about securing additional funding and managing debt service suspensions, which will support liquidity and investment execution [21][27] - Regulatory changes are expected to create a more attractive environment for investments in the sanitation sector, which the company is well-positioned to leverage [34] Other Important Information - The company has suspended debt service for five months, amounting to BRL 130 million, which will be added to the principal of the debt [22] - A tariff adjustment index of 3.4026% was authorized, reflecting annual adjustments and compensatory measures [28] Q&A Session Summary - No questions were raised during the Q&A session, indicating a comprehensive presentation and engagement from participants [36][37]