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| 1 |
Earnings Results 3Q22 |  |
Highlights
The Company recorded a net income of R$ 1,081.1 million in 3Q22, compared to the R$ 468.6 million reported in 3Q21, an increase of R$ 612.5 million (+130.7%).
Adjusted EBITDA totaled R$ 2,136.2 million, up by R$ 346.9 million (+19.4%) over the R$ 1,789.3 million reported in 3Q21.
Revenue from sanitation services
Increase of R$ 727.5 million, impacted by: (i) a tariff adjustment of 12.8% since May 2022; (ii) a 1.6% increase in total billed volume; and (iii) a higher average tariff due to the increase in the billed volume in the non-residential categories.
Costs, administrative and selling expenses (excluding construction costs)
Growth of R$ 377.3 million, mainly due to the: (i) R$ 113.3 million increase in services; (ii) R$ 83.5 million increase with salaries, payroll charges, benefits, and pension plan obligations; and (iii) R$ 67.8 million increase with treatment supplies.
Impacts from the exchange variation
Exchange variation expenses
on borrowings and financing fell by R$ 279.9 million, due to the lower appreciation of the U.S. dollar and the depreciation of the Japanese
Yen against the Brazilian real in 3Q22, compared to the appreciation reported in 3Q21 for both currencies, as shown in the table below:
| 3Q22 | 3Q21 | |
| Debt in foreign currency - R$ million | 2,617.6 | 3,242.5 |
| Foreign currency debt as a percentage of total debt - % | 14.0 | 18.0 |
| USD variation in the quarter - % | 3.2 | 8.7 |
| Yen variation in the quarter - % | (3.2) | 8.3 |
| 2 |
Earnings Results 3Q22 | |
| 1. | Financial Highlights |
| R$ million | |||||||||
| 3Q22 | 3Q21 | Var. (R$) | % | 9M22 | 9M21 | Var. (R$) | % | ||
| Revenue from sanitation services | 5,012.4 | 4,284.9 | 727.5 | 17.0 | 13,762.1 | 12,103.4 | 1,658.7 | 13.7 | |
| Construction revenue | 1,350.2 | 1,186.1 | 164.1 | 13.8 | 3,393.2 | 3,232.3 | 160.9 | 5.0 | |
| COFINS and PASEP/TRCF taxes | (374.9) | (317.1) | (57.8) | 18.2 | (1,031.7) | (908.4) | (123.3) | 13.6 | |
| (=) | Net operating income | 5,987.7 | 5,153.9 | 833.8 | 16.2 | 16,123.6 | 14,427.3 | 1,696.3 | 11.8 |
| Costs and expenses | (3,151.3) | (2,774.0) | (377.3) | 13.6 | (9,258.3) | (8,065.0) | (1,193.3) | 14.8 | |
| Construction costs | (1,319.9) | (1,159.5) | (160.4) | 13.8 | (3,316.9) | (3,159.7) | (157.2) | 5.0 | |
| Equity results | 6.0 | 4.0 | 2.0 | 50.0 | 17.4 | 16.2 | 1.2 | 7.4 | |
| Other operating income (expenses), net | (2.7) | 2.7 | (5.4) | (200.0) | 2.1 | 12.5 | (10.4) | (83.2) | |
| (=) | Earnings before financial result, income tax, and social contribution | 1,519.8 | 1,227.1 | 292.7 | 23.9 | 3,567.9 | 3,231.3 | 336.6 | 10.4 |
| Financial result | 118.5 | (520.6) | 639.1 | (122.8) | 134.3 | (626.2) | 760.5 | (121.4) | |
| (=) | Earnings before income tax and social contribution | 1,638.3 | 706.5 | 931.8 | 131.9 | 3,702.2 | 2,605.1 | 1,097.1 | 42.1 |
| Income tax and social contribution | (557.2) | (237.9) | (319.3) | 134.2 | (1,223.1) | (866.7) | (356.4) | 41.1 | |
| (=) | Net income | 1,081.1 | 468.6 | 612.5 | 130.7 | 2,479.1 | 1,738.4 | 740.7 | 42.6 |
| Earnings per share (R$)* | 1.58 | 0.69 | 3.63 | 2.54 |
* Total shares = 683,509,869
Adjusted EBITDA Reconciliation (Non-accounting measures)
| R$ million | |||||||||
| 3Q22 | 3Q21 | Var. (R$) | % | 9M22 | 9M21 | Var. (R$) | % | ||
| Net income | 1,081.1 | 468.6 | 612.5 | 130.7 | 2,479.1 | 1,738.4 | 740.7 | 42.6 | |
| Income tax and social contribution | 557.2 | 237.9 | 319.3 | 134.2 | 1,223.1 | 866.7 | 356.4 | 41.1 | |
| Financial result | (118.5) | 520.6 | (639.1) | (122.8) | (134.3) | 626.2 | (760.5) | (121.4) | |
| Other operating income (expenses), net | 2.7 | (2.7) | 5.4 | (200.0) | (2.1) | (12.5) | 10.4 | (83.2) | |
| (=) | Adjusted EBIT* | 1,522.5 | 1,224.4 | 298.1 | 24.3 | 3,565.8 | 3,218.8 | 347.0 | 10.8 |
| Depreciation and amortization | 613.7 | 564.9 | 48.8 | 8.6 | 1,801.6 | 1,660.0 | 141.6 | 8.5 | |
| (=) | Adjusted EBITDA** | 2,136.2 | 1,789.3 | 346.9 | 19.4 | 5,367.4 | 4,878.8 | 488.6 | 10.0 |
| (%) Adjusted EBITDA margin | 35.7 | 34.7 | 33.3 | 33.8 |
* Adjusted EBIT corresponds to income before (i) other operating income (expenses), net; (ii) financial result; and (iii) income tax and social contribution
** Adjusted EBITDA corresponds to income before (i) other operating income (expenses), net; (ii) financial result; (iii) income tax and social contribution; and (iv) depreciation and amortization expenses.
The net operating revenue, which considers construction revenue, totaled R$ 5,987.7 million in 3Q22, up by 16.2% over 3Q21.
Costs and expenses, which consider construction costs, totaled R$ 4,471.2 million, up by 13.7% over 3Q21.
Adjusted EBIT, of R$ 1,522.5 million, increased by 24.3% over the R$ 1,224.4 million recorded in 3Q21.
Adjusted EBITDA, of R$ 2,136.2 million, increased by 19.4% over the R$ 1,789.3 million recorded in 3Q21 (R$ 6,861.3 million in the last 12 months).
The adjusted EBITDA margin reached 35.7% in 3Q22, compared to 34.7% reported in 3Q21 (32.4% in the last 12 months).
Excluding the effects of revenue and construction costs, the adjusted EBITDA margin reached 45.4% in 3Q22, compared to 44.4% in 3Q21 (40.6% in the last 12 months).
The Company recorded a net income of R$ 1,081.1 million in 3Q22, compared to R$ 468.6 million in 3Q21.
| 3 |
Earnings Results 3Q22 | |
| 2. | Revenue from sanitation services |
The gross operating revenue from sanitation services, which excludes construction revenue, totaled R$ 5,012.4 million in 3Q22, an increase of R$ 727.5 million (+17.0%) over the R$ 4,284.9 million recorded in 3Q21.
The main factors that led to the increase were:
| · | Average tariff adjustment of 12.8% since May 2022; |
| · | Higher average tariff due to the increase in the billed volume in the non-residential categories; and |
| · | Increase of 1.6% in the total billed volume. |
| 3. | Construction revenue |
Construction revenue increased by R$ 164.1 million (+13.8%), due to higher investments made.
| 4. | Billed volume |
The following tables show the water and sewage billed volume, on a quarter-over-quarter and year-over-year basis, per customer category and region.
| WATER AND SEWAGE BILLED VOLUME(1) PER CUSTOMER CATEGORY - million m3 | |||||||||
| Water | Sewage | Water + Sewage | |||||||
| Category | 3Q22 | 3Q21 | % | 3Q22 | 3Q21 | % | 3Q22 | 3Q21 | % |
| Residential | 462.3 | 462.2 | - | 405.5 | 400.7 | 1.2 | 867.8 | 862.9 | 0.6 |
| Commercial | 45.5 | 42.4 | 7.3 | 44.2 | 40.1 | 10.2 | 89.7 | 82.5 | 8.7 |
| Industrial | 8.8 | 8.5 | 3.5 | 9.6 | 9.5 | 1.1 | 18.4 | 18.0 | 2.2 |
| Public | 11.1 | 9.8 | 13.3 | 10.1 | 8.6 | 17.4 | 21.2 | 18.4 | 15.2 |
| Total retail | 527.7 | 522.9 | 0.9 | 469.4 | 458.9 | 2.3 | 997.1 | 981.8 | 1.6 |
| Wholesale(3) | 11.8 | 12.2 | (3.3) | 4.9 | 3.9 | 25.6 | 16.7 | 16.1 | 3.7 |
| Total | 539.5 | 535.1 | 0.8 | 474.3 | 462.8 | 2.5 | 1,013.8 | 997.9 | 1.6 |
| Water | Sewage | Water + Sewage | |||||||
| Category | 9M22 | 9M21 | % | 9M22 | 9M21 | % | 9M22 | 9M21 | % |
| Residential | 1,397.6 | 1,409.0 | (0.8) | 1,218.8 | 1,218.3 | - | 2,616.4 | 2,627.3 | (0.4) |
| Commercial | 136.5 | 123.9 | 10.2 | 131.8 | 117.1 | 12.6 | 268.3 | 241.0 | 11.3 |
| Industrial | 25.8 | 25.6 | 0.8 | 28.4 | 27.3 | 4.0 | 54.2 | 52.9 | 2.5 |
| Public | 32.4 | 27.0 | 20.0 | 28.8 | 23.8 | 21.0 | 61.2 | 50.8 | 20.5 |
| Total retail | 1,592.3 | 1,585.5 | 0.4 | 1,407.8 | 1,386.5 | 1.5 | 3,000.1 | 2,972.0 | 0.9 |
| Wholesale(3) | 36.0 | 37.7 | (4.5) | 14.9 | 11.4 | 30.7 | 50.9 | 49.1 | 3.7 |
| Total | 1,628.3 | 1,623.2 | 0.3 | 1,422.7 | 1,397.9 | 1.8 | 3,051.0 | 3,021.1 | 1.0 |
| WATER AND SEWAGE BILLED VOLUME(1) PER REGION - million m3 | |||||||||
| Water | Sewage | Water + Sewage | |||||||
| Region | 3Q22 | 3Q21 | % | 3Q22 | 3Q21 | % | 3Q22 | 3Q21 | % |
| Metropolitan | 354.9 | 354.1 | 0.2 | 315.7 | 309.6 | 2.0 | 670.6 | 663.7 | 1.0 |
| Regional(2) | 172.8 | 168.8 | 2.4 | 153.7 | 149.3 | 2.9 | 326.5 | 318.1 | 2.6 |
| Total retail | 527.7 | 522.9 | 0.9 | 469.4 | 458.9 | 2.3 | 997.1 | 981.8 | 1.6 |
| Wholesale(3) | 11.8 | 12.2 | (3.3) | 4.9 | 3.9 | 25.6 | 16.7 | 16.1 | 3.7 |
| Total | 539.5 | 535.1 | 0.8 | 474.3 | 462.8 | 2.5 | 1,013.8 | 997.9 | 1.6 |
| 4 |
Earnings Results 3Q22 | |
| Water | Sewage | Water + Sewage | |||||||
| Region | 9M22 | 9M21 | % | 9M22 | 9M21 | % | 9M22 | 9M21 | % |
| Metropolitan | 1,068.6 | 1,076.6 | (0.7) | 943.5 | 939.5 | 0.4 | 2,012.1 | 2,016.1 | (0.2) |
| Regional(2) | 523.7 | 508.9 | 2.9 | 464.3 | 447.0 | 3.9 | 988.0 | 955.9 | 3.4 |
| Total retail | 1,592.3 | 1,585.5 | 0.4 | 1,407.8 | 1,386.5 | 1.5 | 3,000.1 | 2,972.0 | 0.9 |
| Wholesale(3) | 36.0 | 37.7 | (4.5) | 14.9 | 11.4 | 30.7 | 50.9 | 49.1 | 3.7 |
| Total | 1,628.3 | 1,623.2 | 0.3 | 1,422.7 | 1,397.9 | 1.8 | 3,051.0 | 3,021.1 | 1.0 |
1. Unaudited by external auditors
2. Including coastal and interior regions
3. Wholesale includes volumes of reuse water and non-domestic sewage
| 5. | Costs, administrative & selling expenses and construction costs |
Costs, administrative and selling expenses, and construction costs increased by R$ 537.7 million in 3Q22 (+13.7%). Excluding construction costs, the increase was R$ 377.3 million (+13.6%).
Costs, administrative and selling expenses, and construction costs as a percentage of net revenue were 74.7% in 3Q22, compared to 76.3% in 3Q21.
| R$ million | ||||||||
| 3Q22 | 3Q21 | Var. (R$) | % | 9M22 | 9M21 | Var. (R$) | % | |
| Salaries, payroll charges and benefits, and Pension plan obligations | 764.7 | 681.2 | 83.5 | 12.3 | 2,208.7 | 1,981.0 | 227.7 | 11.5 |
| General supplies | 107.8 | 79.3 | 28.5 | 35.9 | 289.2 | 225.6 | 63.6 | 28.2 |
| Treatment supplies | 149.9 | 82.1 | 67.8 | 82.6 | 439.7 | 263.4 | 176.3 | 66.9 |
| Services | 635.3 | 522.0 | 113.3 | 21.7 | 1,746.8 | 1,506.1 | 240.7 | 16.0 |
| Electricity | 359.3 | 375.0 | (15.7) | (4.2) | 1,147.4 | 1,074.5 | 72.9 | 6.8 |
| General expenses | 361.5 | 327.4 | 34.1 | 10.4 | 997.3 | 912.1 | 85.2 | 9.3 |
| Tax expenses | 23.3 | 23.5 | (0.2) | (0.9) | 61.2 | 58.6 | 2.6 | 4.4 |
| Subtotal | 2,401.8 | 2,090.5 | 311.3 | 14.9 | 6,890.3 | 6,021.3 | 869.0 | 14.4 |
| Depreciation and amortization | 613.7 | 564.9 | 48.8 | 8.6 | 1,801.6 | 1,660.0 | 141.6 | 8.5 |
| Allowance for doubtful accounts | 135.8 | 118.6 | 17.2 | 14.5 | 566.4 | 383.7 | 182.7 | 47.6 |
| Subtotal | 749.5 | 683.5 | 66.0 | 9.7 | 2,368.0 | 2,043.7 | 324.3 | 15.9 |
| Costs, administrative & selling expenses | 3,151.3 | 2,774.0 | 377.3 | 13.6 | 9,258.3 | 8,065.0 | 1,193.3 | 14.8 |
| Construction costs | 1,319.9 | 1,159.5 | 160.4 | 13.8 | 3,316.9 | 3,159.7 | 157.2 | 5.0 |
| Costs, adm & selling expenses, and construction costs | 4,471.2 | 3,933.5 | 537.7 | 13.7 | 12,575.2 | 11,224.7 | 1,350.5 | 12.0 |
| % of net revenue | 74.7 | 76.3 | 78.0 | 77.8 |
Salaries, payroll charges and benefits, and Pension plan obligations
The R$ 83.5 million increase (+12.3%) recorded in 3Q22 was mainly due to:
| · | R$ 68.1 million for the average salary adjustment of 12.9% in May 2022 and the application of 1% referring to the Career and Salary Plan in February 2022, partially offset by the 2.2% decline in the average number of employees; and |
| · | Increase in expenses with overtime, of R$ 9.1 million. |
General supplies
Increase of R$ 28.5 million (+ 35.9%), mainly due to the:
| 5 |
Earnings Results 3Q22 | |
| · | R$ 23.2 million for the maintenance of water and sewage systems, connections and networks; and |
| · | R$ 1.1 million with furniture up-keeping. |
Treatment supplies
Increase of R$ 67.8 million (+82.6%), mainly due to higher product prices and higher use of algaecides, coagulants, and disinfectants in several Water Treatment Plants to maintain the quality of raw water.
The prices of several materials used in the treatment process of water and sewage, such as aluminum sulfate, ferric chloride, and aluminum polychloride, were impacted by the international market.
Services
Service expenses totaled R$ 635.3 million, an increase of R$ 113.3 million (+21.7%) over the R$ 522.0 million recorded in 3Q21. The main increases were:
| · | R$ 21.7 million in technical services, mainly consulting, maintenance, and IT support; |
| · | R$ 21.1 million with paving and replacing of sidewalks; |
| · | R$ 17.4 million with customer service channels; |
| · | R$ 15.4 million for the maintenance of water and sewage systems; |
| · | R$ 10.4 million with the transportation of waste generated in the Water Treatment Plants and Sewage Treatment Plants; and |
| · | R$ 8.7 million with surveillance. |
Electricity
Electricity expenses totaled R$ 359.3 million in 3Q22, a decrease of R$ 15.7 million (-4.2%) over the R$ 375.0 million recorded in 3Q21. Of the total, the Free Market Tariffs (ACL) accounted for 54.1% of total expenses in 3Q22 (53.2% in 3Q21) while the Regulated Market Tariffs (ACR) accounted for 45.9% (46.8% in 3Q21).
The main factors that contributed to this variation were:
| · | An average reduction of 1.9% in ACL cost (includes Grid Market Tariffs - TUSD), with no significant variation in consumption; and |
| · | An average decrease of 9.0% in ACR tariffs, with no significant variation in consumption. |
Year-over-year, electricity tariffs were impacted, among others, by: (i) the red tariff flag in 3Q21; and (ii) the lower tax burden on electricity bills in 3Q22, as a result of the Complementary Law 194/2022.
General expenses
Increase of R$ 34.1 million (+10.4%), totaling R$ 361.5 million in 3Q22, compared to the R$ 327.4 million recorded in 3Q21, mainly from: (i) higher provision for transfer to the Municipal Funds for Environmental Sanitation and Infrastructure, of R$ 27.1 million; and (ii) increase in expenses with lawsuit in 3Q22, of R$ 7.3 million.
Expenses with municipal transfers totaled R$ 193.0 million in 3Q22, compared to the R$ 165.9 million reported in 3Q21 (+16.3%), mainly due to higher operating revenue reported in 3Q22.
Depreciation and amortization
The R$ 48.8 million increase (+8.6%) was mainly due to the beginning of operations of intangible assets, totaling R$ 4.8 billion.
| 6 |
Earnings Results 3Q22 | |
Allowance for doubtful accounts
Increase of R$ 17.2 million, from R$ 118.6 million in 3Q21 to R$ 135.8 million in 3Q22, due to higher provisioning arising from the increase in delinquency in 3Q22.
| 6. | Financial result |
| R$ million | ||||
| 3Q22 | 3Q21 | Var. (R$) | % | |
| Financial expenses, net of income | (229.7) | (207.5) | (22.2) | 10.7 |
| Monetary and exchange variations, net | 348.2 | (313.1) | 661.3 | (211.2) |
| Financial Result | 118.5 | (520.6) | 639.1 | (122.8) |
Financial expenses, net of revenue
| R$ million | ||||
| 3Q22 | 3Q21 | Var. (R$) | % | |
| Financial expenses | ||||
| Interest and charges on domestic loans and financing | (271.3) | (167.4) | (103.9) | 62.1 |
| Interest and charges on international loans and financing | (14.6) | (12.5) | (2.1) | 16.8 |
| Other financial expenses | (89.9) | (105.0) | 15.1 | (14.4) |
| Total financial expenses | (375.8) | (284.9) | (90.9) | 31.9 |
| Financial revenue | 146.1 | 77.4 | 68.7 | 88.8 |
| Financial expenses, net of revenue | (229.7) | (207.5) | (22.2) | 10.7 |
The main impacts resulted from:
| · | Increase of R$ 103.9 million in interest and charges on domestic loans and financing, mainly due to: (i) higher interest on debentures, of R$ 68.3 million, from the proceeds of the 29th and 30th issuances; and (ii) a rise in the average DI rate (from 7.07% in 3Q21 to 13.47% in 3Q22), which impacted interest on domestic loans; |
| · | Decrease of R$ 15.1 million in other financial expenses, mostly due to higher recognition of interest on lawsuits in 3Q21; and |
| · | Increase of R$ 68.7 million in financial revenues, mainly on financial investments in 3Q22, as a result of the higher average DI rate. |
Monetary and exchange variation, net
| R$ million | ||||
| 3Q22 | 3Q21 | Var. (R$) | % | |
| Monetary and exchange variations on liabilities | ||||
| Monetary variations on loans and financing | 14.7 | (52.0) | 66.7 | (128.3) |
| Exchange variations on loans and financing | 27.3 | (252.6) | 279.9 | (110.8) |
| Other monetary variations | (43.8) | (69.3) | 25.5 | (36.8) |
| Total monetary and exchange variations on liabilities | (1.8) | (373.9) | 372.1 | (99.5) |
| Monetary and exchange variations on assets | 350.0 | 60.8 | 289.2 | 475.7 |
| Monetary and exchange variations, net | 348.2 | (313.1) | 661.3 | (211.2) |
The effect of net monetary and exchange variations in 3Q22 was R$ 661.3 million, lower than the figure reported in 3Q21, especially due to:
| 7 |
Earnings Results 3Q22 | |
| · | R$ 66.7 million decrease in monetary variations on loans and financing, due to the decrease in the Amplified Consumer Price Index (IPCA) from 3.02% in 3Q21 to -1.32% in 3Q22; |
| · | R$ 279.9 million decrease in exchange variations on loans and financing, due to the lower appreciation of the U.S. dollar and the depreciation of the Yen against the Real in 3Q22 (3.2% and -3.2%, respectively), when compared to the appreciation recorded in both currencies in 3Q21 (8.7% and 8.3%, respectively); |
| · | Decrease of R$ 25.5 million in other monetary variations, mainly on lawsuits, of R$ 21.4 million; and |
| · | Increase of R$ 289.2 million in monetary and exchange variations on assets, mostly due to the recognition of R$ 324.5 million referring to the monetary adjustment on the São Paulo State Government (GESP) Agreement 2015 in 3Q22, primarily resulting from the judicial order prohibiting the transfer of the reservoirs of the Alto Tietê Production System. |
| 7. | Income tax and social contribution |
The R$ 319.3 million increase in 3Q22 was mainly due to:
| · | Higher net operating revenue, of R$ 833.8 million; |
| · | Higher costs and expenses, of R$ 537.7 million; |
| · | Positive exchange variation, of R$ 279.9 million, from an expense of R$ 252.6 million in 3Q21 to a revenue of R$ 27.3 million in 3Q22; and |
| · | Monetary adjustment on the GESP Agreement 2015, of R$ 324.5 million. |
| 8. | Indicators |
| a) | Operating |
| Operating indicators* | 3Q22 | 3Q21 | % |
| Water connections(1) | 10,118 | 10,152 | (0.3) |
| Sewage connections(1) | 8,592 | 8,627 | (0.4) |
| Population directly served - water(2) | 27.9 | 27.7 | 0.7 |
| Population directly served - sewage(2) | 24.7 | 24.6 | 0.4 |
| Number of employees | 12,372 | 12,598 | (1.8) |
1. Total connections, active and inactive, in thousand units at the end of the period. Does not include Mauá in 3Q21
2. In million inhabitants, at the end of the periodo. Excludes wholesale
* Not reviewed by external auditors
| b) | Economic |
| Economic variables at the end of the quarter* | 3Q22 | 3Q21 |
| Amplified Consumer Price Index(1) | -1.32 | 3.02 |
| National Consumer Price Index(1) | -1.23 | 3.13 |
| Consumer Price Index(1) | 0.40 | 3.63 |
| Interbank Deposit Certificate(2) | 13.47 | 7.07 |
| U.S. dollar(3) | 5.4066 | 5.4394 |
| Yen(3) | 0.03737 | 0.04878 |
1. Accrued in the quarter (%)
2. Average rate in the quarter (%)
3. Ptax sale rate on the last day
* Not reviewed by external auditors
| 8 |
Earnings Results 3Q22 | |
| 9. | Loans and financing |
| R$ thousand | |||||||||
| DEBT PROFILE | |||||||||
| INSTITUTION | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 onwards | TOTAL | % of total |
| Local Currency | |||||||||
| Debentures | 41,619 | 737,339 | 1,070,665 | 1,201,533 | 1,080,529 | 1,690,560 | 2,124,539 | 7,946,784 | 42 |
| Caixa Econômica Federal | 25,974 | 98,128 | 97,639 | 103,743 | 110,230 | 117,111 | 959,317 | 1,512,142 | 8 |
| BNDES | 61,662 | 239,906 | 233,195 | 212,964 | 203,127 | 190,613 | 292,531 | 1,433,998 | 8 |
| IDB 2202 | - | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,438,374 | 2,345,119 | 12 |
| IDB INVEST | - | 37,340 | 39,550 | 44,300 | 106,390 | 108,728 | 554,590 | 890,898 | 5 |
| IDB INVEST 2022 | - | 14,100 | 14,100 | 38,275 | 38,431 | 38,431 | 322,784 | 466,121 | 2 |
| IFC | - | 80,000 | 80,000 | 80,000 | 80,000 | 80,000 | 350,767 | 750,767 | 4 |
| Lease(1) | 43,534 | 46,102 | 48,454 | 32,141 | 32,991 | 33,717 | 131,783 | 368,722 | 2 |
| Leasing (others)(2) | 20,295 | 65,380 | 17,062 | 9,223 | 4,107 | 660 | - | 116,727 | 1 |
| Others | 1,531 | 6,234 | 2,972 | 2,739 | 142 | - | - | 13,618 | - |
| Interest and other charges | 195,350 | 120,600 | - | - | - | - | - | 315,950 | 2 |
| Total in Local Currency | 389,965 | 1,626,478 | 1,784,986 | 1,906,267 | 1,837,296 | 2,441,169 | 6,174,685 | 16,160,846 | 86 |
| Foreign Currency | |||||||||
| IDB | - | 55,570 | 55,570 | 64,186 | 17,233 | 17,233 | 267,189 | 476,981 | 3 |
| IBRD | - | 32,870 | 32,870 | 32,870 | 32,870 | 32,870 | 227,332 | 391,682 | 2 |
| JICA | 5,394 | 160,347 | 160,347 | 160,347 | 160,347 | 160,347 | 891,015 | 1,698,144 | 9 |
| IDB 1983AB | - | 41,311 | - | - | - | - | - | 41,311 | - |
| Interest and other charges | 6,779 | 2,708 | - | - | - | - | - | 9,487 | - |
| Total in Foreign Currency | 12,173 | 292,806 | 248,787 | 257,403 | 210,450 | 210,450 | 1,385,536 | 2,617,605 | 14 |
| TOTAL | 402,138 | 1,919,284 | 2,033,773 | 2,163,670 | 2,047,746 | 2,651,619 | 7,560,221 | 18,778,451 | 100 |
1. Lease (Concession Agreements, Program Contracts and Contract Asset). Refers to work contracts signed as assets leases
2. Obligations related to leasing agreements, mainly vehicle leases
Covenants
The table below shows the most restrictive clauses in 3Q22:
| 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 Debt(1) / Adjusted EBITDA | Equal to or lower than 1.30 |
| Adjusted Current Ratio | Higher than 1.00 |
| 1. | “Other Onerous Debt” corresponds to the sum of pension plan obligations, healthcare plan, installment payment of tax debts, and installment payment of debts with the electricity supplier. |
As of September 30, 2022, the Company had met the requirements of its loans and financing agreements.
| 10. | CAPEX |
Investments totaled R$ 1,430.3 million in 3Q22, presented as additions in the notes to the quarterly information under Contract Asset, Intangible Assets, and Property, Plant and Equipment, of R$ 1,388.4 million, R$ 24.2 million, and R$ 17.7 million, respectively. Cash disbursed in 3Q22 referring to investments, including from previous periods, totaled R$ 1,030.7 million.
| 9 |
Earnings Results 3Q22 | |
The table below shows investments in the 3Q22 broken down by water, sewage, and region:
| R$ million | |||
| Investment | Water | Sewage | Total |
| Metropolitan Region | 398.4 | 648.7 | 1,047.1 |
| Regional Systems | 158.0 | 225.2 | 383.2 |
| Total | 556.4 | 873.9 | 1,430.3 |
| 10 |
Earnings Results 3Q22 | |
|
For more information, please contact:
Investor Relations Tel. +55 (11) 3388-8793 / 9267 E-mail: sabesp.ri@sabesp.com.br
Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these 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. |
| 11 |
Earnings Results 3Q22 | |
Income Statement
| Brazilian Corporate Law | R$ '000 | |
| 3T22 | 3T21 | |
| Net Operating Income | 5,987,739 | 5,153,917 |
| Operating Costs | (3,767,593) | (3,324,800) |
| Gross Profit | 2,220,146 | 1,829,117 |
| Operating Expenses | ||
| Selling | (234,054) | (197,282) |
| Estimated losses with doubtful accounts | (135,822) | (118,559) |
| Administrative expenses | (333,719) | (292,855) |
| Other operating revenue (expenses), net | (2,787) | 2,686 |
| Operating Income Before Shareholdings | 1,513,764 | 1,223,107 |
| Equity Result | 5,941 | 3,994 |
| Earnings Before Financial Results, net | 1,519,705 | 1,227,101 |
| Financial, net | 91,396 | (268,635) |
| Exchange gain (loss), net | 27,112 | (251,989) |
| Earnings before Income Tax and Social Contribution | 1,638,213 | 706,477 |
| Income Tax and Social Contribution | ||
| Current | (501,204) | (262,037) |
| Deferred | (55,949) | 24,091 |
| Net Income for the period | 1,081,060 | 468,531 |
| Registered common shares ('000) | 683,509 | 683,509 |
| Earnings per shares - R$ (per share) | 1.58 | 0.69 |
| Depreciation and Amortization | (613,711) | (564,914) |
| Adjusted EBITDA | 2,136,203 | 1,789,329 |
| % over net revenue | 35.7% | 34.7% |
| 12 |
Earnings Results 3Q22 | |
Balance Sheet
| Brazilian Corporate Law | R$ '000 | ||
| ASSETS | 09/30/2022 | 12/31/2021 | |
| Current assets | |||
| Cash and cash equivalents | 1,788,758 | 717,929 | |
| Financial investments | 1,631,894 | 2,433,385 | |
| Trade receivables | 3,118,249 | 2,695,077 | |
| Related parties and transactions | 215,882 | 173,657 | |
| Inventories | 120,059 | 113,506 | |
| Restricted cash | 37,661 | 28,467 | |
| Currrent recoverable taxes | 151,712 | 276,104 | |
| Other assets | 74,208 | 64,873 | |
| Total current assets | 7,138,423 | 6,502,998 | |
| Noncurrent assets | |||
| Trade receivables | 278,251 | 223,234 | |
| Related parties and transactions | 947,432 | 644,895 | |
| Escrow deposits | 139,648 | 141,667 | |
| National Water and Sanitation Agency – ANA | 15,443 | 20,666 | |
| Other assets | 164,839 | 161,369 | |
| Equity investments | 92,933 | 79,437 | |
| Investment properties | 46,090 | 46,126 | |
| Contract assets | 8,788,122 | 8,550,102 | |
| Intangible assets | 38,080,682 | 36,503,834 | |
| Property, plant and equipment | 302,246 | 291,157 | |
| Total noncurrent assets | 48,855,686 | 46,662,487 | |
| Total assets | 55,994,109 | 53,165,485 | |
| LIABILITIES AND EQUITY | 09/30/2022 | 12/31/2021 | |
| Current liabilities | |||
| Trade payables | 289,126 | 236,763 | |
| Borrowings and financing | 1,787,602 | 1,830,617 | |
| Accrued payroll and related charges | 526,851 | 426,616 | |
| Taxes and contributions | 283,342 | 257,130 | |
| Dividends and interest on capital payable | 424 | 548,006 | |
| Provisions | 642,277 | 809,821 | |
| Services payable | 587,189 | 469,027 | |
| Public-Private Partnership – PPP | 167,498 | 142,757 | |
| Program Contract Commitments | 99,620 | 77,652 | |
| Other liabilities | 452,730 | 294,538 | |
| Total current liabilities | 4,836,659 | 5,092,927 | |
| Noncurrent liabilities | |||
| Borrowings and financing | 16,990,849 | 15,893,219 | |
| Deferred income tax and social contribution | 335,952 | 283,739 | |
| Deferred Cofins and Pasep | 160,790 | 159,456 |
| 13 |
Earnings Results 3Q22 | |
| Provisions | 665,995 | 638,672 | |
| Pension obligations | 2,293,271 | 2,321,662 | |
| Public-Private Partnership – PPP | 2,783,480 | 2,917,428 | |
| Program Contract Commitments | 12,003 | 44,995 | |
| Other liabilities | 559,824 | 881,528 | |
| Total noncurrent liabilities | 23,802,164 | 23,140,699 | |
| Total liabilities | 28,638,823 | 28,233,626 | |
| Equity | |||
| Paid-up capital | 15,000,000 | 15,000,000 | |
| Profit reserve | 9,829,855 | 9,885,485 | |
| Other comprehensive income | 46,374 | 46,374 | |
| Retained earnings | 2,479,057 | - | |
| Total equity | 27,355,286 | 24,931,859 | |
| Total equity and liabilities | 55,994,109 | 53,165,485 |
| 14 |
Earnings Results 3Q22 | |
Cash Flow
| Brazilian Corporate Law | R$ '000 | |||
| Jan-Sep 2022 |
Jan-Sep 2021 | |||
| Cash flow from operating activities | ||||
| Profit before income tax and social contribution | 3,702,154 | 2,605,123 | ||
| Adjustment for Net income reconciliation: | ||||
| Depreciation and amortization | 1,801,622 | 1,660,020 | ||
| Residual value of property, plant and equipment and intangible assets written-off | 23,652 | 9,940 | ||
| Allowance for doubtful accounts | 566,448 | 383,711 | ||
| Provision and inflation adjustment | 282,463 | 218,521 | ||
| Interest calculated on loans and financing payable | 776,535 | 478,061 | ||
| Inflation adjustment and foreign exchange gains (losses) on loans and financing | (409,109) | 95,341 | ||
| Interest and inflation adjustment losses | 18,484 | 27,990 | ||
| Interest and inflation adjustment gains | (394,968) | (72,348) | ||
| Financial charges from customers | (247,355) | (274,274) | ||
| Margin on intangible assets arising from concession | (76,289) | (72,672) | ||
| Provision for Consent Decree (TAC) and Knowledge retention program (KRP) | (1,238) | 3,134 | ||
| Equity result | (17,448) | (16,209) | ||
| Interest and inflation adjustment (Public-Private Partnership) | 366,890 | 344,282 | ||
| Provision from São Paulo agreement | 167,655 | 143,725 | ||
| Pension obligations | 141,493 | 136,096 | ||
| Other adjustments | 11,397 | (1,395) | ||
| 6,712,386 | 5,669,046 | |||
| Changes in assets | ||||
| Trade accounts receivable | (483,163) | (412,159) | ||
| Accounts receivable from related parties | (311,635) | (1,944) | ||
| Inventories | (6,553) | (1,126) | ||
| Recoverable taxes | 124,392 | (940,923) | ||
| Escrow deposits | 17,907 | 36,510 | ||
| Other assets | (3,630) | 16,436 | ||
| Changes in liabilities | ||||
| Trade payables and contractors | (224,046) | (242,335) | ||
| Services payable | (49,493) | (68,265) | ||
| Accrued payroll and related charges | 101,473 | 63,173 | ||
| Taxes and contributions payable | (85,843) | 940,857 | ||
| Deferred Cofins/Pasep | 1,334 | 3,812 | ||
| Provisions | (422,684) | (111,674) | ||
| Pension obligations | (169,884) | (153,899) | ||
| Other liabilities | (426,677) | (47,349) | ||
| Cash generated from operations | 4,773,884 | 4,750,160 | ||
| Interest paid | (1,145,888) | (556,877) | ||
| Income tax and contribution paid | (1,058,829) | (945,435) | ||
| Net cash generated from operating activities | 2,569,167 | 3,247,848 | ||
| Cash flows from investing activities | ||||
| 15 |
Earnings Results 3Q22 | |
| Acquisition of contract assets and intangible assets | (2,507,631) | (2,477,227) | ||
| Restricted cash | (9,194) | 8,910 | ||
| Financial investments | 833,325 | 1,684,144 | ||
| Purchases of tangible assets | (40,472) | (27,366) | ||
| Net cash used in investing activities | (1,723,972) | (811,539) | ||
| Cash flow from financing activities | ||||
| Loans and financing | ||||
| Proceeds from loans | 2,690,603 | 1,606,484 | ||
| Repayments of loans | (1,369,327) | (1,285,529) | ||
| Payment of interest on shareholders' equity | (603,541) | (254,218) | ||
| Public-Private Partnership – PPP | (476,097) | (433,969) | ||
| Program Contract Commitments | (16,004) | (63,450) | ||
| Net cash used in financing activities | 225,634 | (430,682) | ||
| Increase/(decrease) in cash and cash equivalents | 1,070,829 | 2,005,627 | ||
| Represented by: | ||||
| Cash and cash equivalents at beginning of the year | 717,929 | 396,401 | ||
| Cash and cash equivalents at end of the year | 1,788,758 | 2,402,028 | ||
| Increase/(decrease) in cash and cash equivalents | 1,070,829 | 2,005,627 | ||
| 16 |
|
Companhia de Saneamento Básico do Estado de São Paulo - SABESP | ||
| By: | /s/ Osvaldo Garcia
|
|
|
Name: Osvaldo Garcia
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.
