COMPANHIA DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
São Paulo, S.P., 05429-900
Federative Republic of Brazil
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
in paper as permitted by Regulation S-T Rule 101(b)(7)__.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes ______ No ___X___
registrant in connection with Rule 12g3-2(b):
| EARNINGS RESULTS 3Q23 |
Videoconference November 10, Friday 09:00 a.m. (New York) / 11:00 a.m. (Brasília) Simultaneously translation Click here to access the replay ri.sabesp.com.br/en/ |
Earnings Page 2 |
CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP
Catia Cristina Teixeira Pereira Relations Officer
Luiz Roberto Tiberio SABESP announces 3Q23 results São Paulo, November 09, 2023 - A Companhia de Saneamento Básico do Estado de São Paulo - SABESP (B3: SBSP3; NYSE: SBS), one of the largest water and sewage services providers in the world based on the number of customers, announces today its third quarter of 2023 results. The Company's operating and financial information, except when indicated otherwise is presented in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the same period of 2022. SBSP3: R$ 61.12/share SBS: US$ 12.32 (ADR=1 share) Total shares: 683.509.869 Market value: R$ 42,10 billion Closing quote: 11/09/2023 |
Earnings Page 3 |
| Highlights |
| 01. | Adjusted EBITDA totaled R$ 2,414.0 million in 3Q23, up by R$ 277.8 million (+13.0%) over the R$ 2,136.2 million reported in 3Q22. Consequently, the adjusted EBITDA margin (excluding the construction revenue) reached 47.1% compared to the 46.1% reported in 3Q22. Consolidated net income reached R$ 846.3 million in the quarter, declining by R$ 234.8 million or 21.7%. |
| 02. | Water supply and sewage services in the Municipality of Olímpia On October 11, 2023, the Company signed a Concession Agreement to provide public water supply and sanitation services to the Municipality of Olímpia, after establishing SPE SABESP Olímpia S/A. On this date, the SPE started to assist the current service provider DAEMO (Department of Water and Sewage of the Municipality of Olímpia) during a period of 60 days, after which the entire operation will be transferred and carried out by SPE SABESP Olímpia, with the start of the Concession term. There was no impact in results in 3Q23. |
| 03. | Revenue from sanitation services Increase of R$ 527.0 million (+10.5%), impacted by: (i) a 9.6% tariff adjustment implemented since May 2023; (ii) a 3.5% increase in total billed volume; and (iii) a higher average tariff due to the increase in ranges with higher consumption in the residential category. |
| 04. | Impacts from the exchange variation In 3Q23, there was a negative exchange variation, with a YoY impact of R$ 77.2 million, due to the appreciation of the U.S. Dollar and the Yen in 3Q23, compared to the appreciation of the U.S. Dollar and the depreciation of the Yen in 3Q22, as shown below: |
| 3Q23 | 3Q22 | |
| Foreign currency debt - R$ million | 2,483.9 | 2,617.6 |
| Foreign currency debt as a percentage of total debt - % | 13.1 | 14.0 |
| U.S. dollar variation in the quarter - % | 3.9 | 3.2 |
| Yen variation in the quarter - % | 0.5 | (3.2) |
Earnings Page 4 |
| 1. | Result for the period |
R$ million
| 3Q23 | 3Q22 | Var. (R$) | % | 9M23 | 9M22 | Var. (R$) | % | ||
| Revenue from sanitation services | 5,539.4 | 5,012.4 | 527.0 | 10.5 | 15,640.9 | 13,762.1 | 1,878.8 | 13.7 | |
| COFINS and PASEP/TRCF taxes | (418.9) | (374.9) | (44.0) | 11.7 | (1,110.3) | (1,031.7) | (78.6) | 7.6 | |
| (=) | Revenue from sanitation services, net | 5,120.5 | 4,637.5 | 483.0 | 10.4 | 14,530.6 | 12,730.4 | 1,800.2 | 14.1 |
| Construction revenue | 1,332.8 | 1,350.2 | (17.4) | (1.3) | 3,775.6 | 3,393.2 | 382.4 | 11.3 | |
| (=) | Net operating income | 6,453.3 | 5,987.7 | 465.6 | 7.8 | 18,306.2 | 16,123.6 | 2,182.6 | 13.5 |
| Construction costs | (1,303.2) | (1,319.9) | 16.7 | (1.3) | (3,691.0) | (3,316.9) | (374.1) | 11.3 | |
| Costs and expenses | (3,454.2) | (3,151.3) | (302.9) | 9.6 | (10,537.4) | (9,258.3) | (1,279.1) | 13.8 | |
| Other operating income (expenses), net | 6.0 | (2.7) | 8.7 | (322.2) | 71.1 | 2.1 | 69.0 | 3,285.7 | |
| Equity results | 4.6 | 6.0 | (1.4) | (23.3) | 21.0 | 17.4 | 3.6 | 20.7 | |
| (=) | Earnings before financial result, income tax, and social contribution | 1,706.5 | 1,519.8 | 186.7 | 12.3 | 4,169.9 | 3,567.9 | 602.0 | 16.9 |
| Financial result | (428.9) | 118.5 | (547.4) | (461.9) | (702.5) | 134.3 | (836.8) | (623.1) | |
| (=) | Earnings before income tax and social contribution | 1,277.6 | 1,638.3 | (360.7) | (22.0) | 3,467.4 | 3,702.2 | (234.8) | (6.3) |
| Income tax and social contribution | (431.3) | (557.2) | 125.9 | (22.6) | (1,130.2) | (1,223.1) | 92.9 | (7.6) | |
| (=) | Net income | 846.3 | 1,081.1 | (234.8) | (21.7) | 2,337.2 | 2,479.1 | (141.9) | (5.7) |
| Earnings per share (R$)* | 1.24 | 1.58 | 3.42 | 3.63 |
* Number of shares = 683,509,869
Adjusted EBITDA Reconciliation (Non-accounting measures)
R$ million
| 3Q23 | 3Q22 | Var. (R$) | % | 9M23 | 9M22 | Var. (R$) | % | ||
| Net income | 846.3 | 1,081.1 | (234.8) | (21.7) | 2,337.2 | 2,479.1 | (141.9) | (5.7) | |
| Incentivized Dismissal Program - IDP | 529.6 | 529.6 | |||||||
| (=) | Adjusted Net Income (excluding the IDP*) | 846.3 | 1,081.1 | (234.8) | (21.7) | 2,866.8 | 2,479.1 | 387.7 | 15.6 |
| Income tax and social contribution | 431.3 | 557.2 | (125.9) | (22.6) | 1,130.2 | 1,223.1 | (92.9) | (7.6) | |
| Financial result | 428.9 | (118.5) | 547.4 | (461.9) | 702.5 | (134.3) | 836.8 | (623.1) | |
| Other operating income (expenses), net | (6.0) | 2.7 | (8.7) | (322.2) | (71.1) | (2.1) | (69.0) | 3,285.7 | |
| Depreciation and amortization | 713.5 | 613.7 | 99.8 | 16.3 | 2,041.4 | 1,801.6 | 239.8 | 13.3 | |
| (=) | Adjusted EBITDA (excluding the IDP)** | 2,414.0 | 2,136.2 | 277.8 | 13.0 | 6,669.8 | 5,367.4 | 1,302.4 | 24.3 |
| (%) Adjusted EBITDA margin (excluding the IDP) | 37.4 | 35.7 | 36.4 | 33.3 | |||||
| (%) Adjusted EBITDA margin (excluding the IDP) on Net Revenue, excluding Construction | 47.1 | 46.1 | 45.9 | 42.2 |
* Incentivized Dismissal Program
** Adjusted EBITDA corresponds to income before (i) other operating income (expenses), net; (ii) financial result; (iii) income tax and social contribution; (iv) depreciation and amortization expenses; and (v) incentivized dismissal program.
The net operating income, which includes construction revenue, totaled R$ 6,453.3 million in 3Q23, an increase of 7.8% over 3Q22.
Excluding construction costs, costs and expenses totaled R$ 3,454.2 million, an increase of R$ 302.9 million (+9.6%).
The adjusted EBITDA was R$ 2,414.0 million in 3Q23 compared to the R$ 2,136.2 reported in 3Q22 (R$ 7,860.4 million in the last 12 months).
Earnings Page 5 |
The Adjusted EBITDA margin was 37.4% in 3Q23 compared to the 35.7% reported in 3Q22 (32.4% in the last 12 months). Excluding the effects of revenue and construction costs, the adjusted EBITDA margin reached 46.6% in 3Q23 compared to 45.4% in 3Q22 (40.8% in the last 12 months).
The Company recorded a net income of R$ 846.3 million in 3Q23, compared to R$ 1,081.1 million in 3Q22.
| 2. | Revenue from sanitation services |
The gross operating revenue from sanitation services, which excludes construction revenue, totaled R$ 5,539.4 million in 3Q23, an increase of R$ 527.0 million (+10.5%) over the R$ 5,012.4 million recorded in 3Q22.
The main factors that led to the increase were:
| · | Tariff adjustment of 9.6% since May 2023; and |
| · | An increase of 3.5% in the total billed volume. |
Revenue from sanitation services grew by R$ 1,878.8 million (+13.7%) in 9M23, moving up from R$ 13,762.1 million in 2022 to R$ 15,640.9 million in 9M23, mainly due to:
| · | Tariff adjustment of 12.8% since May 2022; |
| · | Tariff adjustment of 9.6% since May 2023; and |
| · | An increase of 2.4% in the total billed volume. |
| 3. | construction revenue |
Construction revenue fell by R$ 17.4 million (-1.3%), due to lower investments made.
Construction revenue grew by R$ 382.4 million in 9M23 (+11.3%), as a result of higher investments made in the period.
| 4. | Billed volume |
The following tables show the water and sewage billed volumes, on a quarter-over-quarter and year-over-year basis, per customer category.
| WATER AND SEWAGE BILLED VOLUME1 PER CUSTOMER CATEGORY - million m3 | |||||||||
| Water | Sewage | Water + Sewage | |||||||
| Category | 3Q23 | 3Q22 | % | 3Q23 | 3Q22 | % | 3Q23 | 3Q22 | % |
| Residential | 477.6 | 462.3 | 3.3 | 420.0 | 405.5 | 3.6 | 897.6 | 867.8 | 3.4 |
| Commercial | 47.1 | 45.5 | 3.5 | 45.4 | 44.2 | 2.7 | 92.5 | 89.7 | 3.1 |
| Industrial | 9.0 | 8.8 | 2.3 | 9.7 | 9.6 | 1.0 | 18.7 | 18.4 | 1.6 |
| Public | 12.3 | 11.1 | 10.8 | 11.1 | 10.1 | 9.9 | 23.4 | 21.2 | 10.4 |
| Total Retail | 546.0 | 527.7 | 3.5 | 486.2 | 469.4 | 3.6 | 1,032.2 | 997.1 | 3.5 |
| Wholesale2 | 11.2 | 11.8 | (5.1) | 5.5 | 4.9 | 12.2 | 16.7 | 16.7 | |
| Total | 557.2 | 539.5 | 3.3 | 491.7 | 474.3 | 3.7 | 1,048.9 | 1,013.8 | 3.5 |
Earnings Page 6 |
| Water | Sewage | Water + Sewage | |||||||
| Category | 9M23 | 9M22 | % | 9M23 | 9M22 | % | 9M23 | 9M22 | % |
| Residential | 1,426.2 | 1,397.6 | 2.0 | 1,251.1 | 1,218.8 | 2.7 | 2,677.3 | 2,616.4 | 2.3 |
| Commercial | 141.2 | 136.5 | 3.4 | 134.6 | 131.8 | 2.1 | 275.8 | 268.3 | 2.8 |
| Industrial | 26.4 | 25.8 | 2.3 | 28.7 | 28.4 | 1.1 | 55.1 | 54.2 | 1.7 |
| Public | 34.6 | 32.4 | 6.8 | 31.1 | 28.8 | 8.0 | 65.7 | 61.2 | 7.4 |
| Total Retail | 1,628.4 | 1,592.3 | 2.3 | 1,445.5 | 1,407.8 | 2.7 | 3,073.9 | 3,000.1 | 2.5 |
| Wholesale2 | 34.9 | 36.0 | (3.1) | 16.2 | 14.9 | 8.7 | 51.1 | 50.9 | 0.4 |
| Total | 1,663.3 | 1,628.3 | 2.1 | 1,461.7 | 1,422.7 | 2.7 | 3,125.0 | 3,051.0 | 2.4 |
1. Not reviewed by external auditors
2. Wholesale includes volumes of reuse water and non-domestic sewage
| 5. | Costs, administrative & selling expenses |
Costs, administrative and selling expenses increased by R$ 302.9 million in 3Q23 (+9.6%).
Costs, administrative and selling expenses as a percentage of net revenue (excluding construction revenue) were 67.5% in 3Q23 compared to 68.0% in 3Q22.
R$ million
| 23 | 3Q23 | 3Q22 | Var. (R$) | % | 9M23 | 9M22 | Var. (R$) | % |
| Salaries, payroll charges and benefits, and Pension plan obligations | 800.9 | 764.7 | 36.2 | 4.7 | 2,892.5 | 2,208.7 | 683.8 | 31.0 |
| General supplies | 96.6 | 107.8 | (11.2) | (10.4) | 274.4 | 289.2 | (14.8) | (5.1) |
| Treatment supplies | 113.2 | 149.9 | (36.7) | (24.5) | 416.7 | 439.7 | (23.0) | (5.2) |
| Services | 724.5 | 635.3 | 89.2 | 14.0 | 1,992.6 | 1,746.8 | 245.8 | 14.1 |
| Electricity | 368.0 | 359.3 | 8.7 | 2.4 | 1,150.5 | 1,147.4 | 3.1 | 0.3 |
| General expenses | 458.1 | 361.5 | 96.6 | 26.7 | 1,168.5 | 997.3 | 171.2 | 17.2 |
| Share of the municipal government in the collection | 221.2 | 193.0 | 28.2 | 14.6 | 614.6 | 528.3 | 86.3 | 16.3 |
| Other general expenses | 236.9 | 168.5 | 68.4 | 40.6 | 553.9 | 469.0 | 84.9 | 18.1 |
| Tax expenses | 22.8 | 23.3 | (0.5) | (2.1) | 63.9 | 61.2 | 2.7 | 4.4 |
| Depreciation and amortization | 713.5 | 613.7 | 99.8 | 16.3 | 2,041.4 | 1,801.6 | 239.8 | 13.3 |
| Allowance for doubtful accounts | 156.6 | 135.8 | 20.8 | 15.3 | 536.9 | 566.4 | (29.5) | (5.2) |
| Costs, administrative & selling expenses | 3,454.2 | 3,151.3 | 302.9 | 9.6 | 10,537.4 | 9,258.3 | 1,279.1 | 13.8 |
| % of net revenue (excluding construction revenue) | 67.5 | 68.0 | 72.5 | 72.7 | ||||
| % of net revenue (excluding construction revenue and the IDP) | 67.5 | 68.0 | 68.9 | 72.7 |
SALARIES, PAYROLL CHARGES AND BENEFITS, AND PENSION PLAN OBLIGATIONS
The R$ 36.2 million increase (+4.7%) recorded in 3Q23 was mainly due to:
| · | The salary adjustment of 4.9% (R$ 15.0 million) in May 2023 and the application of 1% referring to the Career and Salary Plan in February 2023, partially offset by the 3.7% decline in the average number of employees; and |
| · | R$ 15.1 million in health care expenses, due to higher use of services and increased average hospital costs. |
The R$ 683.9 million increase (+31.0%) in 9M23, was mainly due to:
| · | An increase of R$ 529.6 million, due to the provision created for employees who joined the IDP; |
Earnings Page 7 |
| · | R$ 31.5 million in health care expenses; and |
| · | R$ 88.6 million due to the 12.9% and 4.9% salary adjustments in May 2022 and May 2023, respectively, and the application of 1% referring to the Career and Salary Plan in February 2023, partially offset by the 2.3% decline in the average number of employees. |
GENERAL SUPPLIES
Decrease of R$ 11.2 million (-10.4%), spread across various, the most significant of which was the R$ 3.0 million decrease with fuels and lubricants.
TREATMENT SUPPLIES
Decrease of R$ 36.7 million (-24.5%), due to: (i) the decrease in some product prices, some of which were impacted by the international market, such as aluminum polychloride; and (ii) the lower use of algaecides, coagulants, and disinfectants in several water treatment plants to maintain the quality of raw water.
Decrease of R$ 23.0 million (-5.2%) in 9M23, mainly impacted by the volatility in the international prices and the product utilization mix aligned with the strategy of achieving the best cost/benefit. Furthermore, due to the greater availability of water, it was possible to use more water from reservoirs that have lower treatment costs.
SERVICES
Service expenses totaled R$ 724.5 million, an increase of R$ 89.2 million (+14.0%) over the R$ 635.3 million recorded in 3Q22. The main increases were:
| · | R$ 37.1 million with paving and replacing of sidewalks; |
| · | R$ 26.7 million paid to technical services; |
| · | R$ 11.1 million with credit recovery; |
| · | R$ 8.2 million with surveillance; and |
| · | R$ 7.3 million for the maintenance of water and sewage networks, connections, and systems. |
Expenses increased by R$ 245.8 million (+14.1%) in 9M23, moving up from R$ 1,746.8 million in 2022 to R$ 1,992.6 million in 2023, due to:
| · | R$ 96.7 million paid to technical services, mainly IT consulting, maintenance, and support; |
| · | R$ 51.6 million for the maintenance of water and sewage networks, connections, and systems; |
| · | R$ 47.5 million with paving and replacing of sidewalks; |
| · | R$ 18.5 million with meter reading and bill delivery; |
| · | R$ 11.1 million with credit recovery; |
| · | R$ 9.1 million with advertising; and |
| · | R$ 8.6 million with surveillance. |
ELECTRICITY
Electricity expenses totaled R$ 368.0 million in 3Q23, an increase of R$ 8.7 million (+2.4%) over the R$ 359.3 million recorded in 3Q22. Of the total, the Free Market Tariffs (FMT) accounted for 64.6% of total expenses in 3Q23 (65.4% in 3Q22) while the Regulated Market Tariffs (RMT) accounted for 35.4% (34.6% in 3Q22).The main factors that contributed to this variation were:
Earnings Page 8 |
| · | An average increase of 5.9% in FMT prices (including Grid Market Tariffs - TUSD), with an 11.3% decrease in consumption; and |
| · | An average increase of 10.7% in RMT tariffs, with a decrease of 8.1% in consumption. |
Due to the volatility in average costs observed in 9M23, the variation in this line came to R$ 3.1 million (0.3%).
GENERAL EXPENSES
Increase of R$ 96.6 million (+26.7%), totaling R$ 458.1 million in 3Q23, compared to the R$ 361.5 million reported in 3Q22, mainly due to:
| · | Increase of R$ 64.9 million in expenses with lawsuits in 3Q23; and |
| · | Higher provision for transfer to the Municipal Funds for Environmental Sanitation and Infrastructure, of R$ 28.1 million. |
Expenses with municipal transfers totaled R$ 221.1 million in 3Q23, compared to the R$ 193.0 million reported in 3Q22.
Expenses with the use of water totaled R$ 27.6 million in 3Q23, compared to the R$ 26.8 million reported in 3Q22.
General expenses increased by R$ 171.2 million (+17.2%) in 9M23, mainly due to:
| · | Increase in the provision for transfer to the Municipal Funds for Environmental Sanitation and Infrastructure, of R$ 86.3 million; and |
| · | Increase of R$ 79.5 million in expenses with lawsuits. |
DEPRECIATION AND AMORTIZATION
Increase of R$ 99.8 million (+16.3%) (R$ 239.8 million (+13.3%) in 9M23), due to the beginning of operations of intangible assets, totaling R$ 6.4 billion.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Increase of R$ 20.8 million (+15.3%), moving up from R$ 135.8 million in 3Q22 to R$ 156.6 million in 3Q23, due to the higher delinquency in 3Q23.
Reduction of R$ 60.8 million (-28.0%) year-over-year in 3Q23, primarily due to the impact of the debt negotiation fair (Feirão) held in August and September 2023.
| 6. | Financial result |
R$ million
| 3Q23 | 3Q22 | Var. (R$) | % | |
| Financial expenses, net of revenue | (330.8) | (229.7) | (101.1) | 44.0 |
| Monetary and exchange variations, net | (98.1) | 348.2 | (446.3) | (128.2) |
| Financial Result | (428.9) | 118.5 | (547.4) | (461.9) |
Earnings Page 9 |
Financial expenses, net of revenue
R$ million
| 3Q23 | 3Q22 | Var. (R$) | % | |
| Financial expenses | ||||
| Interest and charges on domestic borrowings and financing | (297.3) | (271.3) | (26.0) | 9.6 |
| Interest and charges on international borrowings and financing | (22.4) | (14.6) | (7.8) | 53.4 |
| Other financial expenses | (158.1) | (89.9) | (68.2) | 75.9 |
| Total financial expenses | (477.8) | (375.8) | (102.0) | 27.1 |
| Financial revenue | 147.0 | 146.1 | 0.9 | 0.6 |
| Financial expenses, net of revenue | (330.8) | (229.7) | (101.1) | 44.0 |
The main impacts resulted from:
| · | An increase of R$ 26.0 million in interest and charges on domestic borrowings and financing, mainly due to funding from IDB Invest 2022 and IDB Invest 2023 (in July 2022 and May 2023, respectively), with an impact of R$ 21.4 million; |
| · | An increase of R$ 7.8 million in interest and charges on international borrowings and financing, mainly due to an increase in the interest rate of some contracts with IDB and IBRD, due to the variation of the average SOFR rate (from 2.14% in 3Q22 to 5.27% in 3Q23); and |
| · | Increase of R$ 68.2 million in other financial expenses, due to: (i) the R$ 42.0 million increase in interest charged on performance agreements, as a result of the higher number of agreements that entered the payment phase; and (ii) increased provisioning of interest charged on lawsuit, of R$ 26.3 million. |
Monetary and exchange variations, net
R$ million
| 3Q23 | 3Q22 | Var. (R$) | % | |
| Monetary and exchange variations on liabilities | ||||
| Monetary variations on borrowings and financing | (14.6) | 14.7 | (29.3) | (199.3) |
| Exchange variations on borrowings and financing | (49.9) | 27.3 | (77.2) | (282.8) |
| Other monetary variations | (68.7) | (43.8) | (24.9) | 56.8 |
| Total monetary and exchange variations on liabilities | (133.2) | (1.8) | (131.4) | 7,300.0 |
| Monetary and exchange variations on assets | 35.1 | 350.0 | (314.9) | (90.0) |
| Monetary and exchange variations, net | (98.1) | 348.2 | (446.3) | (128.2) |
The negative effect of net monetary and exchange variations in 3Q23 was R$ 446.3 million, especially due to:
| · | R$ 29.3 million increase in monetary variations on borrowings and financing, due to the increase in the IPCA - Consumer Price Index (from -1.32% in 3Q22 to 0.61% in 3Q23); |
| · | An exchange variation loss of R$ 77.2 million on borrowings and financing, due to the appreciation of the U.S. Dollar and the Yen in 3Q23 (3.9% and 0.5%, respectively), compared to the appreciation of the U.S. Dollar and the devaluation of the Yen in 3Q22 (3.2% and -3.2%, respectively); |
| · | Increase of R$ 24.9 million in other monetary variations, mainly on lawsuits, of R$ 20.9 million; and |
| · | Impact of R$ 314.9 million in monetary and exchange variations on assets, due to the recognition of R$ 324.5 million referring to the non-recurring monetary adjustment on the GESP 2015 agreement in 3Q22, resulting from the judicial order prohibiting the transfer of the reservoirs of the Alto Tietê Production System. |
Earnings Page 10 |
| 7. | Income tax and social contribution |
The R$ 125.9 million decrease in 3Q23 was mainly due to:
| · | R$ 302.9 million increase in costs and expenses; and |
| · | Negative variation of R$ 547.4 million in the financial result. |
The aforementioned factors were mitigated mainly by the R$ 465.6 million increase in net operating income.
| 8. | Indicators |
| a) | operational |
| Operational indicators* | 3Q23 | 3Q22 | % |
| Water connections1 | 9,402 | 9,325 | 0.8 |
| Sewage connections1 | 8,090 | 7,990 | 1.3 |
| Population directly served - water2 | 28.1 | 27.9 | 0.7 |
| Population directly served - sewage2 | 24.9 | 24.7 | 0.8 |
| Number of employees | 11,606 | 12,372 | (6.2) |
| Volume of water produced in the quarter3 | 746 | 709 | 5.2 |
| Volume of water produced in the year3 | 2,213 | 2,134 | 3.7 |
| IPM - Measured Water Loss (%)3 | 29.5 | 28.6 | 3.1 |
| IPDt (liters/connection x day)3 | 257 | 248 | 3.6 |
1. Active connections, in thousand units at the end of the period.
2. In million inhabitants, at the end of the period. Does not include wholesale.
3. Millions of m³. Excludes volumes produced in the municipalities of Aguaí, Mauá, and Tapiratiba in 3Q22.
* Not reviewed by external auditors
| b) | Economic |
| Economic variables at the close of the quarter* | 3Q23 | 3Q22 |
| IPCA - Amplified Consumer Price Index1 | 0.61 | (1.32) |
| INPC - National Consumer Price Index1 | 0.22 | (1.23) |
| IPC - Consumer Price Index1 | (0.05) | 0.40 |
| DI - Interbank Deposit² | 13.28 | 13.47 |
| U.S. dollar3 | 5.0076 | 5.4066 |
| Japanese yen³ | 0.03351 | 0.03737 |
1. Accrued in the quarter (%)
2. Average quarterly rate (%)
3. Ptax sale rate on the last day
* Not reviewed by external auditors
Earnings Page 11 |
| 9. | Borrowings and financing |
R$ Thousand
| DEBT PROFILE | |||||||||
| INSTITUTION | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 onwards | TOTAL | % of Total |
| Local currency | |||||||||
| Debentures | 342,735 | 1,205,249 | 1,334,931 | 1,213,264 | 1,360,087 | 656,199 | 1,548,625 | 7,661,090 | 40 |
| Caixa Econômica Federal | 25,810 | 107,238 | 113,931 | 121,043 | 128,588 | 136,471 | 989,491 | 1,622,572 | 9 |
| BNDES | 58,759 | 235,928 | 215,485 | 205,555 | 192,861 | 72,977 | 223,213 | 1,204,778 | 6 |
| IDB - National | 14,100 | 249,099 | 260,899 | 330,209 | 315,069 | 420,959 | 2,356,865 | 3,947,200 | 21 |
| IFC | 7,600 | 22,800 | 39,200 | 51,800 | 70,800 | 103,600 | 934,658 | 1,230,458 | 6 |
| Leases (Concession Agreements, Program Contracts, and Contract Asset)1 | - | 49,299 | 51,852 | 30,229 | 34,632 | 38,007 | 119,669 | 323,688 | 2 |
| Leases (others)2 | 26,637 | 59,141 | 50,856 | 20,889 | 720 | - | - | 158,243 | 1 |
| Other | 2,711 | 3,000 | 2,765 | 142 | - | - | - | 8,618 | 0 |
| Interest and other charges | 254,428 | 107,897 | 0 | - | - | - | - | 362,325 | 2 |
| Total in local currency | 732,780 | 2,039,651 | 2,069,919 | 1,973,131 | 2,102,757 | 1,428,213 | 6,172,521 | 16,518,972 | 87 |
| Foreign currency | |||||||||
| IDB | - | 51,469 | 66,405 | 29,873 | 29,873 | 29,873 | 440,818 | 648,311 | 3 |
| IBRD | - | 30,445 | 30,445 | 30,445 | 30,445 | 30,445 | 285,533 | 437,758 | 2 |
| JICA | 4,837 | 143,785 | 143,785 | 143,785 | 143,785 | 143,785 | 655,119 | 1,378,881 | 8 |
| Interest and other charges | 16,032 | 2,936 | - | - | - | - | - | 18,968 | 0 |
| Total in foreign currency | 20,869 | 228,635 | 240,635 | 204,103 | 204,103 | 204,103 | 1,381,470 | 2,483,918 | 13 |
| TOTAL | 753,649 | 2,268,286 | 2,310,554 | 2,177,234 | 2,306,860 | 1,632,316 | 7,553,991 | 19,002,890 | 100 |
1. Refers to work contracts signed as Assets Lease;
2. Obligations related to leasing agreements, mainly vehicle leases.
Earnings Page 12 |
Covenants
The table below shows the most restrictive clauses in 3Q23:
| Covenants | |
| Adjusted EBITDA / Adjusted Financial Expenses | Equal to or higher than 2.80 |
| EBITDA / Financial Expenses Paid | Equal to or higher than 2.35 |
| Adjusted Net Debt / Adjusted EBITDA | Equal to or lower than 3.80 |
| Net Debt / Adjusted EBITDA | Equal to or lower than 3.50 |
| Total Adjusted Debt / Adjusted EBITDA | Lower than 3.65 |
| Other Onerous Debt1 / Adjusted EBITDA | Equal to or lower than 1.30 |
| Adjusted Current Ratio | Higher than 1.00 |
1. "Other Onerous Debts" correspond to the sum of pension plan obligations and healthcare plan, installment payment of tax debts, and installment payment of debts with the electricity supplier.
In 3Q23, the Company met the requirements of its borrowings and financing agreements.
| 10. | Investments |
Investments totaled R$ 1,404.4 million in 3Q23, presented as additions in the notes to the quarterly information under Contract Asset, Intangible Assets, and Property, Plant and Equipment, of R$ 1,251.1 million, R$ 105.3 million, and R$ 48.0 million, respectively. Disbursements in 3Q23 referring to investments, including from previous periods, totaled R$ 751.8 million.
The table below shows investments broken down by water and sewage:
R$ million
| Water | Sewage | Total | |
| Investments made | 610.1 | 794.3 | 1,404.4 |
In 3Q23, investments were mainly allocated towards works to reduce water loss, expand the sewage systems, and for the Novo Rio Pinheiros project.
| 11. | Public-Private Partnership - PPP |
The chart below shows expenses with Public-Private Partnerships in 3Q23, compared to the figures reported in 3Q22:
R$ Thousand
| SÃO LOURENÇO PRODUCTION SYSTEM | 3Q23 | 3Q22 | Var. (R$) | % |
| General supplies | 4,855.5 | 4,617.8 | 237.7 | 5.1 |
| Services | 10,245.3 | 9,743.8 | 501.5 | 5.1 |
| General expenses | 1,341.7 | 1,276.0 | 65.7 | 5.1 |
| Amortization | 42,474.5 | 42,474.5 | ||
| Financial expenses | 81,204.8 | 81,019.3 | 185.5 | 0.2 |
| Total | 140,121.8 | 139,131.4 | 990.4 | 0.7 |
Earnings Page 13 |
| ALTO TIETÊ PRODUCTION SYSTEM | 3Q23 | 3Q22 | Var. (R$) | % |
| General supplies | ||||
| Services | 18,539.6 | 18,639.5 | (99.9) | (0.5) |
| General expenses | ||||
| Amortization | 4,078.3 | 4,333.5 | (255.2) | (5.9) |
| Financial expenses | 4,529.4 | 6,517.5 | (1,988.1) | (30.5) |
| Total | 27,147.3 | 29,490.5 | (2,343.2) | (7.9) |
| Total expenses with PPPs | 167,269.1 | 168,621.9 | (1,352.8) | (0.8) |
Earnings Page 14 |
Earnings Page 15 |
Income Statement
| Brazilian Corporate Law | R$ '000 | |
| 3Q23 | 3Q22 | |
| Net Operating Income | 6,453,246 | 5,987,739 |
| Operating Costs | (3,944,519) | (3,767,593) |
| Gross Profit | 2,508,727 | 2,220,146 |
| Operating Expenses | ||
| Selling | (237,074) | (234,054) |
| Allowance for doubtful accounts | (156,664) | (135,822) |
| Administrative expenses | (419,083) | (333,719) |
| Other operating revenue (expenses), net | 6,028 | (2,787) |
| Operating Income Before Shareholdings | 1,701,934 | 1,513,764 |
| Equity Result | 4,635 | 5,941 |
| Earnings Before Financial Results, net | 1,706,569 | 1,519,705 |
| Financial, net | (379,339) | 91,396 |
| Exchange gain (loss), net | (49,581) | 27,112 |
| Earnings before Income Tax and Social Contribution | 1,277,649 | 1,638,213 |
| Income Tax and Social Contribution | ||
| Current | (461,143) | (501,204) |
| Deferred | 29,789 | (55,949) |
| Net Income for the period | 846,295 | 1,081,060 |
| Registered common shares ('000) | 683,509 | 683,509 |
| Earnings per shares - R$ (per share) | 1.24 | 1.58 |
| Depreciation and Amortization | (713,461) | (613,711) |
| Adjusted EBITDA | 2,414,002 | 2,136,203 |
| % over net revenue | 37.4% | 35.7% |
Earnings Page 16 |
Balance Sheet
| Brazilian Corporate Law | R$ '000 | ||
| ASSETS | 09/30/2023 | 12/31/2022 | |
| Current assets | |||
| Cash and cash equivalents | 1,592,888 | 1,867,485 | |
| Financial investments | 1,381,568 | 1,677,873 | |
| Trade receivables | 3,393,831 | 3,062,574 | |
| Related parties and transactions | 232,797 | 205,793 | |
| Inventories | 120,608 | 124,247 | |
| Restricted cash | 53,736 | 37,474 | |
| Current recoverable taxes | 262,742 | 242,906 | |
| Other assets | 81,746 | 66,312 | |
| Total current assets | 7,119,916 | 7,284,664 | |
| Noncurrent assets | |||
| Trade receivables | 214,526 | 215,234 | |
| Related parties and transactions | 941,047 | 950,950 | |
| Escrow deposits | 130,795 | 170,093 | |
| National Water and Sanitation Agency - ANA | 3,463 | 9,193 | |
| Other assets | 235,262 | 146,362 | |
| Equity investments | 156,367 | 110,765 | |
| Investment properties | 46,690 | 46,726 | |
| Contract assets | 7,889,956 | 8,613,968 | |
| Intangible assets | 41,825,448 | 39,320,871 | |
| Property, plant and equipment | 418,424 | 338,939 | |
| Total noncurrent assets | 51,861,978 | 49,923,101 | |
| Total assets | 58,981,894 | 57,207,765 | |
| LIABILITIES AND EQUITY | 09/30/2023 | 12/31/2022 | |
| Current liabilities | |||
| Trade payables | 518,199 | 430,946 | |
| Borrowings and financing | 2,652,150 | 2,245,960 | |
| Accrued payroll and related charges | 909,606 | 498,504 | |
| Taxes and contributions | 310,157 | 293,461 | |
| Dividends and interest on capital payable | 553 | 741,725 | |
| Provisions | 1,014,493 | 924,038 | |
| Services payable | 756,547 | 723,242 | |
| Public-Private Partnership - PPP | 239,831 | 222,413 | |
| Program Contract Commitments | 26,379 | 100,188 | |
| Other liabilities | 631,337 | 476,865 | |
| Total current liabilities | 7,059,252 | 6,657,342 | |
Earnings Page 17 |
| Noncurrent liabilities | |||
| Borrowings and financing | 16,350,740 | 16,712,711 | |
| Deferred income tax and social contribution | 72,125 | 189,278 | |
| Deferred Cofins and Pasep | 159,937 | 159,723 | |
| Provisions | 703,141 | 686,746 | |
| Pension obligations | 2,126,918 | 2,150,191 | |
| Public-Private Partnership - PPP | 2,583,118 | 2,736,768 | |
| Program Contract Commitments | 11,851 | 12,197 | |
| Other liabilities | 320,956 | 569,276 | |
| Total noncurrent liabilities | 22,328,786 | 23,216,890 | |
| Total liabilities | 29,388,038 | 29,874,232 | |
| Equity | |||
| Paid-up capital | 15,000,000 | 15,000,000 | |
| Profit reserve | 12,078,963 | 12,155,890 | |
| Other comprehensive income | 177,643 | 177,643 | |
| Retained earnings | 2,337,250 | - | |
| Total equity | 29,593,856 | 27,333,533 | |
| Total equity and liabilities | 58,981,894 | 57,207,765 |
Earnings Page 18 |
Cash Flow
| Brazilian Corporate Law | R$ '000 | |||
| Jan-Sep 2023 | Jan-Sep 2022 | |||
| Cash flow from operating activities | ||||
| Profit before income tax and social contribution | 3,467,427 | 3,702,154 | ||
| Adjustment for Net income reconciliation: | ||||
| Depreciation and amortization | 2,041,377 | 1,801,622 | ||
| Residual value of property, plant and equipment and intangible assets written-off | 7,241 | 23,652 | ||
| Allowance for doubtful accounts | 536,895 | 566,448 | ||
| Provision and inflation adjustment | 331,157 | 282,463 | ||
| Interest calculated on loans and financing payable | 960,460 | 776,535 | ||
| Inflation adjustment and foreign exchange gains (losses) on loans and financing | (174,497) | (409,109) | ||
| Interest and inflation adjustment losses | 13,976 | 18,484 | ||
| Interest and inflation adjustment gains | (88,031) | (394,968) | ||
| Financial charges from customers | (285,514) | (247,355) | ||
| Margin on intangible assets arising from concession | (84,577) | (76,289) | ||
| Provision for Consent Decree (TAC) and Incentivized Dismissal Program (IDP) | 571,275 | (1,238) | ||
| Equity result | (21,016) | (17,448) | ||
| Interest and inflation adjustment (Public-Private Partnership) | 366,143 | 366,890 | ||
| Provision from São Paulo agreement | 185,838 | 167,655 | ||
| Pension obligations | 155,763 | 141,493 | ||
| Other adjustments | 17,629 | 11,397 | ||
| 8,001,546 | 6,712,386 | |||
| Changes in assets | ||||
| Trade accounts receivable | (563,914) | (483,163) | ||
| Accounts receivable from related parties | 8,325 | (311,635) | ||
| Inventories | 3,639 | (6,553) | ||
| Recoverable taxes | (19,836) | 124,392 | ||
| Escrow deposits | 48,850 | 17,907 | ||
| Other assets | (93,738) | (3,630) | ||
| Changes in liabilities | ||||
| Trade payables and contractors | (409,644) | (224,046) | ||
| Services payable | (152,533) | (49,493) | ||
| Accrued payroll and related charges | (30,917) | 101,473 | ||
| Taxes and contributions payable | (168,118) | (85,843) | ||
| Deferred Cofins/Pasep | 214 | 1,334 | ||
| Provisions | (224,307) | (422,684) | ||
| Pension obligations | (179,036) | (169,884) | ||
| Other liabilities | (684,069) | (426,677) | ||
| Cash generated from operations | 5,536,462 | 4,773,884 | ||
| Interest paid | (1,476,871) | (1,145,888) | ||
| Income tax and contribution paid | (1,062,516) | (1,058,829) | ||
| Net cash generated from operating activities | 2,997,075 | 2,569,167 |
Earnings Page 19 |
| Cash flows from investing activities | ||||
| Acquisition of contract assets and intangible assets | (2,209,493) | (2,507,631) | ||
| Restricted cash | (16,262) | (9,194) | ||
| Financial investments | 331,342 | 833,325 | ||
| Investment properties | (1,676) | - | ||
| Purchases of tangible assets | (88,242) | (40,472) | ||
| Net cash used in investing activities | (1,984,331) | (1,723,972) | ||
| Cash flow from financing activities | ||||
| Loans and financing | ||||
| Proceeds from loans | 1,391,821 | 2,690,603 | ||
| Repayments of loans | (1,276,199) | (1,369,327) | ||
| Payment of interest on shareholders' equity | (823,671) | (603,541) | ||
| Public-Private Partnership - PPP | (502,375) | (476,097) | ||
| Program Contract Commitments | (76,917) | (16,004) | ||
| Net cash used in financing activities | (1,287,341) | 225,634 | ||
| Increase/(decrease) in cash and cash equivalents | (274,597) | 1,070,829 | ||
| Represented by: | ||||
| Cash and cash equivalents at beginning of the year | 1,867,485 | 717,929 | ||
| Cash and cash equivalents at end of the year | 1,592,888 | 1,788,758 | ||
| Increase/(decrease) in cash and cash equivalents | (274,597) | 1,070,829 |
Companhia de Saneamento Básico do Estado de São Paulo - SABESP | |
| By: | /s/ Catia Cristina Teixeira Pereira |
Name: Catia Cristina Teixeira Pereira
Title: Chief Financial Officer and Investor Relations Officer
|
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.
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SABESP - Companhia de Saneamento Básico do Estado de São Paulo published this content on 13 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2023 11:47:54 UTC.
