Companhia de Saneamento Básico do Estado de São Paulo - SABESP
Q1 2019 Earnings Call Transcript

Published:

  • Operator:
    Good afternoon, ladies and gentlemen. At this time, we would like to welcome everyone to SABESP's conference call to discuss its results for the first quarter of 2019. The audio for this conference is being broadcast simultaneously through the Internet on the website, www.sabesp.com.br, where you can also find the slideshow presentation available for download. [Operator Instructions]. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of SABESP's management and on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of SABESP and could cause results to differ materially from those expressed in such forward-looking statements. Today, with us as we have Mario Sampaio, Head of Capital Market and Investor Relations; Sylvio Xavier, Head of Costs and Tariffs; and Marcelo Miyagui, Head of Accounting. Now I'd like to turn the conference over to Mario Sampaio. Sir, you may begin your conference.
  • Mario Sampaio:
    Okay. Good morning, everybody. Thank you for joining the conference call for the first quarter of this year. Our presentation today, we'll discuss the many events for the period and then as usual, we'll go through the Q&A session if and able. Let's start with Slide 3. Here we can see a 3.1% increase in the company's total billed water and sewage volume in the first quarter of this year. The main growth came from the Retail segment, where billed water volume increased by 6% and sewage volume increased by 6.5%, this when compared to the first quarter of '18. This growth is largely due to the beginning of operations directly to consumers in the City of Guarulhos, which means that we went from wholesale to retail. On the other hand and for the same reason, we can see that the water volume fell by 40.8% in the Wholesale segment, this is obviously due to the size and the represent of steadiness that the City of Guarulhos had in the wholesale set. Let's go to Slide 4, let's briefly comment on our financials. First quarter '19 recorded a profit of BRL647 million over a profit of BRL580 million first quarter last year, and the bottom line increase of 11.5%. When compared to the same period in 2018, we can see that this result is strongly influenced by gross operating revenue, which went from BRL3.28 billion to BRL3.54 billion, increasing then by BRL2.54 million or 7.8%, all this mainly explained by the operations of the City of Guarulhos, which began in January '19 and generated an increase of BRL7.2 million in operating revenues and in addition to a 3.5% tariff repositioning since June '18 and a 3.1% increase in total billed volume. Net operating revenue increased by BRL178.9 million or 4.8% in the first quarter of '19 moving from BRL3.7 billion to BRL3.88 billion this year. This lower increase when compared to the gross operating revenue increase was due to a 6.8% reduction in construction revenue due to the construction of São Lourenço Production System, which strongly impacted revenues in the first quarter of '18. As for costs, administrative and selling expenses and construction costs increased - obviously, increased by 4.4%. As a consequence of the highlighted variations, adjusted EBITDA reached BRL1.55 billion, an increase of 10.4% or BRL145 million compared to the BRL1.4 billion recorded in the same period of '18. Important to highlight that the adjusted EBITDA margin in the quarter was 39.8% compared to 37.8% in the previous year, resulting in a margin of 41.1% in the last 12 months. If we exclude the effects of construction revenue and costs, the adjusted EBITDA margin in the quarter rises to 46.8% in the first quarter of '19 compared to a margin of 45.4% in the first quarter of '18. At the same time, the last 12 months margin reached 49.1%. Let's move to Slide 5. Here we comment on the main variations in costs during the first quarter of '19. As we discussed in previous slide, costs, administrative and selling expenses and construction costs increased by BRL150 million or 4.4% compared to last year. If we exclude construction costs, our costs, administrative and selling expenses increased by BRL157.7 million or 7.9%. The main increases in our costs occurred in
  • Operator:
    [Operator Instructions]. Since there appears to be no further questions, I would like to turn the call back over to SABESP management for closing remarks.
  • Mario Sampaio:
    Well, thank you for your time. And again, no questions now, but any questions any time, please let us know, myself, Angela and the team is fully available. See you next quarter. Bye, bye.
  • Operator:
    This conference has now concluded. Thank you for attending today's presentation.

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