SBS · Companhia de Saneamento Básico do Estado de São Paulo - SABESP

Sabesp's 1Q26 results demonstrate robust operational and financial performance, with adjusted EPS rising to R$0.44 from R$0.34 in 1Q25, supported by strong execution in revenue growth and cost discipline. Net sanitation revenue increased 8.5% to R$6,332 million on a reported basis and adjusted net revenue from sanitation services grew 10.9% to R$6,021 million, driven by +11.9% net price (9.1% tariff phase-in +2.8% commercial initiatives), +2.4% volume from new connections, offset by -3.4% customer mix shift toward subsidized rates. Adjusted EBITDA surged 25.9% to R$3,786 million with margin expansion to 63% from 55%, fueled by efficiency gains including 13% average headcount reduction (to 8,814 employees), power cost savings via 86% free market exposure, and improved collection rates, partially countering higher municipal fund expenses. OPEX declined 7.7% or R$188 million, with personnel savings of R$170 million. Capex of R$3,728 million (+30.8% y/y) prioritized sewage (R$2,485 million) and water (R$1,243 million) for universalization targets, outperforming U-Factor benchmarks (87% water supply, 77% sewage collection, 71% treatment). Management highlights sustained momentum, infrastructure impact, and financial discipline, with a conference call on May 8, 2026. Non-recurring M&A expenses of R$(16) million and SAP migration billing impact are noted as temporary. Water production dipped 4.6% to 778 million m³ due to milder weather (temperatures 3.3°C lower) and night pressure management.