SABESP(US:SBS)2025-08-12 13:30Financial Data and Key Metrics Changes - Net income increased by 77% year on year, reaching BRL 2.1 billion, driven by financial asset bifurcation, lower amortization from the extended concession agreement, and interest and monetary corrections from legal accrual reversals [4] - EBITDA growth was supported by price increases and disciplined cost control, with a significant contribution from legal claims management strategies [3][4] - Average prices rose by 5% due to tariff adjustments, while volume growth contributed 3.5% to revenue [1][2] Business Line Data and Key Metrics Changes - The company saw a 1.5% increase in new connections for water and sewage, contributing to overall volume growth [1] - The removal of discounts for large clients resulted in an average price increase of 47% compared to Q4 2024 [2] - Personnel expenses fell by 10.3% year on year, despite a 5.5% increase from collective bargaining, largely due to a reduction in headcount [3] Market Data and Key Metrics Changes - The company reported a 2% increase in consumption during the quarter, despite slightly lower temperatures in São Paulo compared to the previous year [1] - The approval of an 18-month extension for subsidies to vulnerable clients is expected to impact future revenue dynamics [2] Company Strategy and Development Direction - The company is focused on three strategic priorities: regulatory compliance, improving operational standards, and enhancing financial efficiency [9] - CapEx totaled BRL 3.6 billion in Q2 2025, a 178% increase year on year, with a total backlog of BRL 35 billion across 542 projects scheduled for completion by 2029 [4][10] - The company aims to increase treatment capacity by 68% across its top sewage treatment plants [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting universalization targets and improving service quality while balancing efficiency gains with operational demands [78][83] - The company anticipates continued improvements in operational metrics, including reductions in complaints and water leaks [11] - Management highlighted the importance of ongoing investments and strategic initiatives to enhance customer service and operational efficiency [9][12] Other Important Information - The company has submitted data for the 2024 Regulatory Asset Base (RAB) and expects feedback by September, with final tariff adjustments to be effective January 1, 2026 [6] - The company has implemented a smart metering initiative in partnership with Vivo, aiming to replace 4.4 million meters by 2029 [59] Q&A Session Summary Question: Can you provide details on OpEx performance this quarter? - Management noted significant reductions in all cost lines, attributing this to efficiency programs and voluntary dismissal plans [20][21] Question: What is the impact of the social tariff evolution? - Management explained that the company invested BRL 170 million in discounts for vulnerable populations, which will be compensated in future tariff cycles [26][27] Question: Can you clarify the CapEx for universalization? - Management confirmed that while the target of 1 million new sewage connections is challenging, they are on track to meet it by the end of the year [30][34] Question: What are the reasons for the increase in delinquency rates? - Management attributed the increase to the removal of discounts and tariff increases, which affected customer billing [54] Question: Can you elaborate on the smart metering agreement? - Management detailed a partnership with Vivo for smart meter rollout, emphasizing the importance of a single point of contact for accountability [59] Question: What is the timeline for the tariff review process? - Management clarified that the final tariff adjustment will be disclosed in December, with a public hearing expected regarding the new methodology [62][68]