Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) reported higher third-quarter revenue and adjusted earnings before interest, taxes, depreciation and amortization, while net income fell as financing costs rose and the company lapped a one-time gain from the prior year.
Adjusted net revenue rose 9% year over year to BRL 6 billion, while adjusted EBITDA increased 14% to BRL 3.6 billion, Chief Financial Officer Daniel Szlak said during the company’s third-quarter 2026 earnings call. The adjusted EBITDA margin expanded to 61.2% from 58.6%.
Reported net income declined to BRL 1.4 billion from BRL 2.2 billion a year earlier. Szlak said the previous year’s quarter included a non-recurring BRL 1.5 billion gain from court-order payments, while interest expenses increased by BRL 380 million as debt rose to finance the company’s investment program. Adjusted net income was approximately BRL 1.1 billion.
Operating cash flow increased 14% year over year to BRL 2 billion. Szlak noted that Sabesp began consolidating EMAE’s results in the previous quarter; the headline financial figures included EMAE, while subsequent discussion of core business performance excluded it.
Tariffs and customer growth support revenue
Price contributed 7.7 percentage points to revenue growth, supported by a 10.6% rate phasing and partly offset by higher refunds, Szlak said. New units contributed 2.2 percentage points and meter upgrades added 0.4 percentage points, while lower consumption per capita and customer mix reduced growth.
Water production totaled 796 million cubic meters, down 1.6% from a year earlier. Szlak attributed the decline to higher rainfall associated with Super El Niño. Active connections reached approximately 9.5 million for water and 8.3 million for sewage, both up 0.1% year over year.
More than 2 million units had access to discounted rates, up about 15% from a year earlier. The expansion of the Cadastro Único social tariff and category mix contributed to a BRL 44 million mix impact during the quarter, Szlak said.
Personnel expenses fell 22%, aided by a 3.4% reduction in headcount and other workforce measures. Power costs rose 37%, reflecting inflation, new ANGRA charges and higher generator costs. Sabesp sourced 89% of its power consumption through the free market, up 13 percentage points year over year.
Investment spending accelerates
Sabesp invested BRL 4.5 billion in the third quarter, up 14% from a year earlier and 21% from the second quarter. Year-to-date capital spending reached BRL 12 billion, while the contracted backlog rose to BRL 44 billion through 2029.
In response to an analyst’s question, Szlak reaffirmed the company’s full-year capital expenditure range of BRL 18 billion to BRL 20 billion, with spending more likely to be near the lower end. Chief Executive Officer Carlos Piani said there were no restrictions holding back capital spending, although changes to safety procedures and an SAP system migration had affected activity during the year.
Szlak said the pace of putting completed assets into service, known as unitization, had slowed temporarily during the system migration but was picking up. October unitization was nearly equal to the total for the third quarter, he said. The company expects to unitize an amount equivalent to roughly two-thirds of 2026 capital spending during the year, including both previously accumulated work in progress and new spending.
Sabesp’s universal access program is structured across four contracting waves covering 375 cities. Alongside it, the Integra Tietê program has BRL 23 billion in planned investment from 2023 through 2029 and is 69% contracted and 39% executed, Szlak said.
Customer service and safety measures
Piani said the company had opened 36 branches and deployed 78 self-service kiosks during 2026. Average branch waiting times fell from a peak of almost 14 minutes in April to just over three minutes in September. Complaints through the ombudsman and critical channels fell 51% between March and September, while complaints registered with consumer protection agency Procon declined 46%.
The company’s commercial plan had an approximately BRL 180 million third-quarter profit-and-loss impact, including rebilling, communications and customer experience initiatives. Szlak said BRL 80 million was non-recurring and BRL 100 million recurring; BRL 70 million of the recurring portion has tariff coverage that the company expects to recover in the 2028 adjustment.
On safety, Piani said the lost-time injury frequency rate for employees and contractors fell 67% year over year in the third quarter, while field inspections were 2.6 times higher. Sabesp plans to invest approximately BRL 41 million in AI-based monitoring through 2029, he said.
Debt and funding outlook
Sabesp ended the quarter with BRL 46.4 billion in gross debt, BRL 38.6 billion in net debt and BRL 7.9 billion in cash. Net debt was 2.7 times EBITDA. Including proceeds from an A/B loan signed in October, cash would have totaled BRL 12.8 billion, enough to cover amortizations through 2029, Szlak said.
Because most debt is linked to Brazil’s CDI rate, a 100-basis-point increase in the Selic rate reduces net income by approximately BRL 200 million, Szlak said. He added that interest rates and inflation are inputs to the regulated cost of capital, which is scheduled to reset in 2029.
Szlak said Sabesp had raised BRL 40 billion since privatization and expected to raise less funding next year because debt amortizations would be smaller and tariffs higher. The company’s primary funding plan is the local market, he said.
About Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS)
Companhia de Saneamento Básico do Estado de São Paulo, known as Sabesp, is a Brazilian water and sanitation company established in 1973. It provides essential water and wastewater services to communities across the state of São Paulo.
The company treats and distributes water and collects and treats sewage. Its customers include residential, commercial and industrial users, as well as municipalities that rely on its water and sanitation infrastructure.
Sabesp serves the city of São Paulo and other municipalities throughout the state.
