In This Article:
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Gross Revenue Impact: Approximately BRL8.8 billion due to bifurcation of financial assets.
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Net Revenue Increase: Around 7% increase, excluding non-recurring effects and construction impact.
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EBITDA Growth: 17% increase driven by unit cost growth and sewage revenue.
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Operational Cash Generation: BRL1.6 billion, mostly reinvested in asset base.
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Volume Growth: 2% increase, half from new connections and half from existing connections.
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Tariff Readjustment: 6.4% in 2024, net positive effect close to 5% after adjustments.
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Personnel Expenses: Reduction due to PDI gains, accounting for 40% of BRL167 million.
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Net Profit Impact: Positive impact of BRL170 million from new concession contract and hedging strategy.
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Investment Completed: BRL1.4 billion in Q3, with plans to accelerate CapEx execution.
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Leverage Levels: Within covenants, return on capital and equity in line with previous periods.
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Companhia De Saneamento Basico Do Estado De Sao Paulo (NYSE:SBS) reported a significant increase in net revenue of around 7%, translating into a 17% increase in EBITDA.
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The company generated operational cash of BRL1.6 billion, which was almost entirely reinvested in the asset base.
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A 6.4% tariff readjustment in 2024 resulted in a net positive effect of close to 5% on revenue.
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The new concession contract extended the useful life of assets, contributing positively to financial results.
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SBS completed BRL1.4 billion in investments this quarter, with plans to accelerate CapEx execution significantly in the coming months.
Negative Points
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The transition from a state-owned to a private company required several management adjustments, incurring additional costs.
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The company faced a net cost increase of around 9%, primarily due to a 12% rise in consumption for reservoir management.
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The inclusion of the Cad Unico in the vulnerable tariff category generated a negative effect of almost BRL30 billion.
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There are challenges in adapting to the new concession contract, which imposes various obligations and quality indicators.
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The company is undergoing a transition period, which has caused delays in some projects and legal proceedings.
Q & A Highlights
Q: We've seen news about the beginning of the gap reduction on commercial programs. Could you update us on the progression, client communication, litigation risk, and expected effects in Q4 '24 and closure by '25? A: We have notified approximately 500 to 600 clients after a legal analysis and regulatory endorsement. We aim to bridge this gap by the end of '25.