Companhia De Saneamento Q3 2026 Earnings Call Transcript

Companhia De Saneamento (NYSE:SBS) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Companhia De Saneamento has raised 40 billion since post-privatization and expects to raise less next year due to smaller amortizations and anticipated higher tariffs.

The company plans to focus on local funding sources due to higher international capital costs, with ample capacity in the local market.

Strategic planning includes resetting the WACC in 2029, which will account for current higher interest rates through a predefined contractual formula.

Full Transcript

OPERATOR

Our next question comes from Artur Pereira from J.P. Morgan.

Artur Pereira (Analyst at J.P. Morgan)

Hi. A brief one on the leverage. Could you please share the outlook for funding and leverage given the recent increase in Brazil’s rates and also Companhia De Saneamento’s robust capex plan for 2027 and 2029?

Daniel Szlak (Chief Financial Officer)

Thank you, Artur. Look, in terms of leverage and funding, we have raised 40 billion to date since the post-privatization. We’re finalizing our budget for next year, but we expect a lower number to be raised for next year mainly because amortizations are smaller next year. We’ve extended a lot of the duration of the debt so we have less amortizations next year, and we will have a higher tariff next year as well. So these two things combined should reduce the capital requirements for next year.

That said, thinking about—let’s assume that we have to raise the same 20 billion that we raised this year next year—we have a trillion reais in the local market, in the corporate market, another half a billion in incentivized debentures. So there’s ample room for us to raise capital and make sure that we do that, especially now that the cost of capital abroad is a little bit more expensive maybe. Let’s see what happens now after the midterms and how this sustains in the market.

But as it stands, our plan A is local. With regards to how this gets reflected, naturally, as we reset the WACC in 2029, we have a formula that’s already predefined in the contract that should reset the indices that feed into the formula, and they should capture that period of higher interest rates. So at some point this gets rebalanced in the contract.

Artur Pereira (Analyst at J.P. Morgan)

Thank you.

OPERATOR

The Q&A session is now over. We wish to give the floor to Mr. Carlos Piani for the company’s closing remarks.

Carlos Piani

Thank you, all of you, for joining us. Thank you, all of you, for joining the call today for your questions and for your continued interest in the company. Our investor relations teams will remain available for any other further questions that you may have. Thank you, and have all a great day. Bye-bye.

OPERATOR

Companhia De Saneamento earnings presentation is now closed. Thank you very much for your participation, and we wish you all a very good day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.