SABESP(US:SBS)2025-11-11 14:00Financial 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]