SABESP(SBS)2024-11-12 19:45Financial Data and Key Metrics Changes - The company reported a significant impact of approximately BRL 8.8 billion on gross revenue due to the bifurcation of financial assets, which is a new requirement under IFRS 12 [9] - The underlying result showed a significant increase in net revenue of around 7%, translating into a 17% increase in EBITDA [10] - Operational cash generated was BRL 1.6 billion, almost entirely reinvested in the asset base [10] Business Line Data and Key Metrics Changes - Revenue increase was driven by a 2% growth in volume, with half coming from new connections and increased consumption from existing connections [11] - The company experienced a 6.4% tariff readjustment in 2024, resulting in a net positive effect of close to 5% [11] - The average tariff saw a 3% reduction due to optimization between free and regulated contracting environments [12] Market Data and Key Metrics Changes - The company is focusing on expanding its operational and commercial capabilities to enhance revenue protection initiatives and improve customer experience [20] - The new concession contract imposes various obligations and quality indicators, requiring annual tariff reviews [18] Company Strategy and Development Direction - The company plans to invest over BRL 60 billion in an ambitious investment program aimed at accelerating the universalization of sanitation services [17] - A new organizational structure will be implemented, focusing on people, technology, and processes to support the company's advancement [22] - The company aims to explore selected M&As to grow in adjacent areas while maintaining rigorous cost control [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to the new concession contract and emphasized the importance of operational efficiency [19] - The management team is committed to advancing towards universalization and achieving a new level of efficiency, innovation, and sustainability [30] Other Important Information - The company has undergone a transition from a public procurement model to a private one, which has been accelerated since the new management took over [24] - Approximately 500 contracts were terminated to align discounts with the new concession contract limits [25] Q&A Session Summary Question: Update on the gap reduction in commercial programs - Management notified approximately 500 clients and expects to bridge the gap by the end of 2025 [32] Question: Measures to promote efficiency and renegotiation of discounts - The company is engaged in bilateral negotiations to reduce discounts and improve revenue [34] Question: Opportunities to add new cities in São Paulo - The company is interested in opportunities in São Paulo, but the size and timing depend on available deals [36] Question: Status of RAB CapEx recognition discussions - Discussions with the regulatory agency are ongoing, and management has expressed their opinions on the matter [37] Question: Dividend distribution strategy - Management has not engaged in discussions regarding a payout alteration strategy [53] Question: Impact of negative tariff review - The negative tariff review will remain at 3.22% for Q4 until further adjustments are made [59]