Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) reported fourth-quarter and full-year 2025 results that management said reflected ongoing operational improvements, an accelerated investment program, and progress toward universalization targets under its concession agreement.
Operational metrics and service expansion
Sabesp said operational key performance indicators “remain solid” as it expands service coverage. Water production totaled 789 million cubic meters in the fourth quarter, which management described as broadly stable due to disciplined system management aimed at water safety.
Quarterly financial results and adjustments
For the fourth quarter, Sabesp reported adjusted net revenue of BRL 5.7 billion, an increase of 2.1% year-over-year. Adjusted EBITDA totaled BRL 3.4 billion, up 13%, with the adjusted EBITDA margin expanding to 60%. Adjusted net income was “stable at around BRL 1.9 billion,” according to the CFO.
Cash generation was highlighted as a key theme. Cash flow from operations reached BRL 3.0 billion in the quarter, representing 24% growth, and cash conversion increased to 83%.
Management also provided a bridge between reported and adjusted figures. The company excluded construction and financial asset bifurcation impacts tied to accounting norms, and pointed to several non-recurring items in the quarter, including:
- BRL 60 million tied to the continuation of a logistics network restructuring
- A BRL 28 million reduction of legal accruals, “mostly from settlements”
- BRL 370 million in one-off tax gains recognized during the quarter
Reported net income in the fourth quarter was BRL 2.7 billion, up 87% year-over-year, which management attributed mainly to stronger EBITDA.
Full-year 2025 performance: profitability and cash generation
For full-year 2025, adjusted net revenue was BRL 22.2 billion, up 2.2% versus 2024. The company emphasized profitability improvements, with adjusted EBITDA reaching BRL 13.2 billion, a 17% year-over-year increase, and the adjusted EBITDA margin also at 60%.
Adjusted net income was BRL 6.3 billion, representing 22% growth. Operating cash flow for the year reached BRL 8.1 billion, which management said supports the investment program while maintaining what it described as a “fortress-like” balance sheet.
Sabesp reported full-year net income of BRL 8.5 billion. Management noted that the comparison was affected by lapping a BRL 4.5 billion non-cash gain in 2024 related to a contract and financial asset bifurcation, while 2025 results benefited from stronger operational EBITDA and a BRL 1.5 billion monetary update of court-ordered payments in favor of the company.
Revenue drivers: pricing, volume, and consumer mix
Management said fourth-quarter revenue growth was driven by pricing, volume, and mix. Pricing reflected the continued removal of discounts previously granted to large clients, which the company said contributed roughly 1.5 percentage points to revenue growth. Volume growth from added units contributed about 3 percentage points, while mix was impacted by the expansion of subsidized rate programs.
The CFO said the price index excluding mix effects remained stable during 2025 because there were no rate reviews during the year, but large-client prices rose as discounts were removed. Sabesp said units benefiting from subsidized rates reached nearly 2 million connections—about 6 million people—roughly double the 2024 average. Management said the financial impacts of the expanded subsidy programs are expected to be addressed in the next rate revision.
On costs, the company attributed EBITDA expansion to factors including G&A improvements, better collection performance, and energy efficiency initiatives supported by migration to Brazil’s free power market. Sabesp said 82% of its energy consumption is now in the free market, which more than offset higher power prices in the captive market throughout 2025. The company also cited headcount optimization and lower consumption of general and treatment materials, partially offset by higher services expenses related mainly to IT and automation.
Personnel expenses declined in the quarter despite a 5.5% collective bargaining increase, which management linked to a 15% reduction in headcount following voluntary dismissal programs. For the year, management said there were about 3,800 departures and 2,500 arrivals, ending December with 9,200 employees.
CapEx acceleration, targets, and balance sheet positioning
Sabesp’s investment program was a central focus of the call. The company said 2025 CapEx totaled BRL 15.2 billion, more than double 2024 levels, including BRL 4.8 billion in the fourth quarter alone. Management said the pace supports universalization obligations and noted it reached the 2025 universal access targets a month early. As of February, management said the company had already reached 84% of 2026 water targets, 74% of sewage collection targets, and 70% of sewage treatment targets for 2026.
Management said 32 major projects were delivered in 2025, including more than 827 kilometers of new infrastructure and expanded sewage treatment access to more than 3.8 million people. The company expects 38 additional projects to be delivered in 2026, including initiatives under the Integra Tietê program, water safety projects, and expansions in both coastal and countryside areas. Sabesp also said it concluded all conceptual engineering designs through 2029 and updated its longer-term CapEx plan, citing inflation updates, bringing forward water safety and metering upgrades, network sensors, and changes in regulatory requirements that are under discussion with the regulator.
In the Q&A, management said the CapEx plan previously communicated was defined at 2022/2023 price levels and would naturally rise due to inflation. The CEO added that some investments originally planned for future cycles are being advanced, citing water safety initiatives, an indirect reuse water facility at scale in the metropolitan region, integration of new water sources, and accelerated metering upgrades using more advanced technology alongside sensors and remote-control capabilities to improve loss detection and operational flexibility.
Asked whether fourth-quarter CapEx implied a higher run-rate, the CEO said the company is trying to accelerate execution and would invest more in 2026 if it believes it can deliver universal access earlier and can execute at that pace.
On the balance sheet, Sabesp ended 2025 with BRL 40 billion in gross debt and BRL 28 billion in net debt. The company said its average cost of debt was CDI minus 0.2%, with a weighted average maturity of about 5.6 years, and 49% of debt maturing after 2031. Sabesp reported BRL 12 billion in cash, which it said covers more than three years of amortizations. Net debt to adjusted EBITDA was approximately 2.2x, while ROIC was 11% and ROE was 17%.
Management also discussed the removal of large-client discounts, saying it captured about BRL 450 million in 2025 and has “virtually zeroed” most related contracts, with only a handful still active. It expects a positive carryover into 2026 due to contract timing, and said there remains roughly BRL 50 million to BRL 100 million tied to injunctions that are still being litigated, with about 70% already ruled in Sabesp’s favor.
For water safety investments, management said BRL 700 million was spent in 2025, and it expects BRL 1.5 billion to BRL 2.0 billion in 2026. The company described a total pipeline of close to BRL 8 billion across the contract period, with discussions ongoing with the regulator on whether to anticipate additional works.
Separately, the CEO said Sabesp is evaluating inorganic opportunities with a preference for larger deals, and discussed Copasa as a potential opportunity, citing the regulatory framework and the bidding process structure as key decision pillars beyond price. The CEO also said the company continues to pursue smaller “tuck-in” opportunities within São Paulo and has held discussions about urban drainage with the state and regulator, describing it as a mid- to long-term opportunity requiring a suitable regulatory framework.
Finally, management said it concluded the acquisition of EMAE’s controlling voting and non-voting shares in January and, the week prior to the call, acquired an additional stake from the Oceania Fund. Sabesp said it now holds about 98% of EMAE’s common shares, with a tender offer for remaining voting shares expected in April. The CEO described EMAE as a strategic asset with potential to increase reservoir capacity in the metropolitan system by up to 52% in the long term.
About Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS)
Companhia de Saneamento Básico do Estado de São Paulo (SABESP) is a Brazilian utility that provides water supply and wastewater collection and treatment services. As the principal sanitation company serving the state of São Paulo, SABESP operates a wide range of infrastructure spanning water capture, treatment plants, distribution networks and sewage systems. The company’s activities support residential, commercial and industrial customers and are focused on delivering potable water, ensuring water quality and expanding access to sanitation services.
SABESP’s service offering includes the operation and maintenance of water treatment and sewage treatment facilities, network expansion and rehabilitation, meter reading and billing, customer service and environmental programs aimed at improving sewage treatment rates and protecting water resources.
