Companhia de Saneamento de Minas Gerais (CSMG3) Q1 2026 earnings summary

Executive summary

• Net revenue reached R$ 1.91 billion in 1Q26, up 2.5% year-over-year, driven by a 6.56% tariff adjustment and stable water/sewage volumes despite adverse weather and a shorter consumption period.

• EBITDA was R$ 787 million, down 3.2% year-over-year, with a margin of 40.9% (down 240 bps). Net income fell 14.1% to R$ 368 million, reflecting higher costs and financial expenses.

• Capex increased 28% to R$ 695 million, supporting water/sewage system expansions and modernization.

• Net debt rose 32% to R$ 7.1 billion, with leverage at 2.4x EBITDA (vs. 1.8x a year ago), following a R$ 2.0 billion debenture issue.

• Dividend payout for 1Q26 was R$ 177.6 million.

Financial highlights

• Net revenue: R$ 1.91 billion (+2.5% YoY); EBITDA: R$ 787 million (-3.2% YoY); EBITDA margin: 40.9% (-240 bps); Net income: R$ 368 million (-14.1% YoY).

• Costs and expenses (excl. D&A): R$ 1.06 billion (+4.7% YoY); Capex: R$ 695 million (+28% YoY).

• Cash from operations: R$ 675.1 million (-1.5% YoY).

• Net debt: R$ 7.1 billion (+32% YoY); leverage: 2.4x EBITDA.

Outlook and guidance

• Regulatory environment improved with the 3rd Tariff Review, setting a 6.56% tariff increase and a pre-tax WACC of 13.7% for 2026-2029.

• Concession with Belo Horizonte extended to 2073, with R$ 1.3 billion grant and R$ 300 million settlement to be paid between 2026-2028.

• No municipalities under water rationing as of May 2026; reservoir levels at 83.5% capacity.