Companhia De Saneamento Basico Do Estado De Sao Paulo (SBS) Q1 2025 Earnings Call Highlights: ...

GuruFocus News

Thu, May 15, 2025, 2:00 PM 4 min read

Release Date: May 13, 2025

For the implicit transcript of the net call, delight notation to the full net telephone transcript.

• Production volumes grew by 4% year-over-year, driven by higher preservation and h2o unit successful the network.

• Adjusted nett gross accrued by 3.9%, with EBITDA reaching 3 billion, marking a 17% maturation rate.

• Reported nett income accrued by a singular 80% year-on-year.

• The institution has doubled its CapEx execution year-on-year, indicating beardown concern successful infrastructure.

• Companhia De Saneamento Basico Do Estado De Sao Paulo (NYSE:SBS) has made important advancement successful liability management, extending indebtedness illustration tenure and reducing comparative costs by 63 ground points.

• Operating currency conversion was little compared to the erstwhile twelvemonth owed to higher income taxes retained.

• The implementation of Safauspi and Cadastroonico successful societal tariffs negatively impacted gross by expanding subsidized tariffs.

• Challenges successful energy costs arose owed to accrued h2o web unit and little rainfall.

• The voluntary dismissal programme led to a simplification successful headcount, which whitethorn interaction operational capacity.

• There is ongoing uncertainty regarding the solution of tariff discounts and regulatory negotiations, which could impact aboriginal revenue.

• Warning! GuruFocus has detected 7 Warning Signs with SBS.

Q: Could you remark connected the wide expenses enactment which decreased importantly from Q1 2024 to Q1 2025? A: Indeed, 100 cardinal of the simplification comes from the anticipation of municipal funds past year. The remaining simplification is chiefly owed to ineligible accruals and settlements, arsenic we had a ample colony successful February past twelvemonth that did not repetition this year. (Respondent: Unidentified_4)

Q: Can you supply much colour connected the removal of tariff discounts and the imaginable for further reductions? Also, however bash you comparison your EBITDA margins with much mature backstage concessions? A: We person retained little than 300 cardinal successful contracts with ample customers that had discounts. We are optimistic astir eliminating these discounts implicit time. Regarding EBITDA margins, we purpose to equilibrium ratio gains with our assertive execution program for cosmopolitan entree by 2029. We judge achieving margins akin to different players is imaginable implicit time. (Respondent: Unidentified_7)

Q: What are the alternatives for clients who inactive person discounts, and what is the timeline for the regulatory plus basal appraisal? A: The authorities is reviewing discount policies, and we are exploring originative solutions for clients. The regulatory plus basal study is owed successful May, with feedback expected by September and a tariff reappraisal by November. This process volition hap annually for the adjacent 10 years. (Respondent: Unidentified_7)