Companhia de Saneamento de Minas Gerais (CSMG3) Q3 2024 earnings summary

Executive summary

• Net revenue for Q3 2024 reached R$1.78 billion, up 9.6% year-over-year, driven by tariff adjustments and increased water and sewage volumes.

• Adjusted EBITDA grew 13.6% to R$725.7 million, with margin improving to 40.5% from 38.5% in Q3 2023.

• Adjusted net income was R$368.3 million, up 9.3% year-over-year, excluding prior year reversals and tax impacts.

• Investments in the first nine months of 2024 totaled R$1.56 billion, up 30.7% year-over-year, supporting expansion and modernization.

• Regular and extraordinary dividends declared in 2024 totaled R$752.2 million.

Financial highlights

• Costs and expenses for Q3 2024 were R$1.21 billion, a 6% increase year-over-year, with manageable costs up 6.8%.

• Non-manageable costs increased, mainly due to higher electricity, fuel, and depreciation expenses.

• Provision for doubtful accounts rose 65.6% due to a review and recovery of written-off accounts.

• Other operational revenues fell 51.8% year-over-year, while other operational expenses surged due to absence of prior year reversals.

• CapEx for the first nine months was R$1.56 billion, 30.7% higher than 2023, with 82% of the annual forecast already invested.

Outlook and guidance

• Multi-year investment program (2025–2028) targets R$1.97 billion annually to expand water and sewage systems and meet regulatory goals.

• Ongoing negotiations with municipalities to extend and rebalance contracts, aiming to mitigate regulatory risks and ensure revenue stability.

• Focus on regulatory enhancements to support future tariff cycles and asset base growth.

• Expectation of robust investment cycles and regulatory changes to improve shareholder compensation.

• Ongoing tariff review process to set new rates effective January 2026.