NYSE:SBS Companhia de Saneamento Básico do Estado de São Paulo - SABESP Q4 2024 Earnings Report $19.75 +0.54 (+2.83%) Closing price 04/23/2025 03:59 PM EasternExtended Trading$19.60 -0.15 (-0.75%) As of 04/23/2025 07:56 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Companhia de Saneamento Básico do Estado de São Paulo - SABESP EPS ResultsActual EPS$0.49Consensus EPS $0.06Beat/MissBeat by +$0.43One Year Ago EPSN/ACompanhia de Saneamento Básico do Estado de São Paulo - SABESP Revenue ResultsActual Revenue$981.20 millionExpected Revenue$6.89 billionBeat/MissMissed by -$5.91 billionYoY Revenue GrowthN/ACompanhia de Saneamento Básico do Estado de São Paulo - SABESP Announcement DetailsQuarterQ4 2024Date3/24/2025TimeAfter Market ClosesConference Call DateTuesday, March 25, 2025Conference Call Time12:00PM ETUpcoming EarningsCompanhia de Saneamento Básico do Estado de São Paulo - SABESP's Q1 2025 earnings is scheduled for Monday, May 12, 2025, with a conference call scheduled on Tuesday, May 13, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress ReleaseEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Companhia de Saneamento Básico do Estado de São Paulo - SABESP Q4 2024 Earnings Call TranscriptProvided by QuartrMarch 25, 2025 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:00Good morning, and welcome to Sabesby Fourth Quarter of twenty twenty four Earnings Presentation. With us here today are Carlos Piani, CEO Daniel Slak, CFO and Thiago Levy, Investor Relations. Before we begin, we clarify that the statements made during this presentation will not include projections or estimates of future events. However, they may contain forward looking statements indicating potential trends related to SABESP based on the reasonable expectations, beliefs, and assumptions of SABESP's management as of today. These statements involve risks and uncertainties and are based on assumptions and factors such as market, regulatory, and economic conditions, which may not materialize in addition to the risk factors disclosed in SABESP filings with the Brazilian Securities and Exchange Commission b3 and on its investor relations website. Operator00:01:02Investors should understand that changes in such factors may lead to outcomes that differ from current trends and that undue reliance should not be placed on these statements. The full disclaimer will be presented next and must be read carefully by all participants. I will now turn the floor over to Thiago Levy who will discuss the results. Thiago, you may proceed. Speaker 100:01:27Good afternoon. My name is Thiago Levy. I'm the investor relations director at Sabespy. Welcome to our fourth quarter earnings results call. Today, I'm joined by our CEO, Carlos Bioni, and our CFO and investor relations officer, mister Daniel Zlaki. Speaker 100:01:42Before handing it over to Daniel, I would like to share some unimportant update. As the majority of our investor base consists of international investors, we will now conduct these earnings calls in English with simultaneous translations into Portuguese. Please note that this call is being recorded and all participants will be in listen mode during the presentation. For the Q and A session, we kindly ask you to submit your questions via the Zoom chat. Additionally, all the relevant files for this call will be available on our Investor Relations website. Speaker 100:02:12With that, I will now turn it over to Daniel, who will walk us through our 2024 financial highlights. Speaker 200:02:20Thank you, Thiago. Good morning to all our partners. Thank you for joining us today for our twenty twenty four full year's earnings call. We will start by looking at our operational highlights. The company has produced and treated significant volumes of water and sewage, ensuring the quality and reliability of our services. Speaker 200:02:41Our customer base has continued to grow with an increase in both registered and active water and sewage connections. This growth is a testament to our ongoing efforts to meet the needs of our customers, universalization targets and provide excellent service. Now let's move on to our financial highlights for the year 2024. We have achieved net operational revenues of roughly RMB21.7 billion, an increase of 8.8% compared to the previous year. Our EBITDA has grown by 18.8%, reaching $11,400,000,000 Additionally, our net profit has seen a remarkable increase of 172%, amounting to $9,500,000,000 and allowing us to propose a $2,500,000,000 dollars distribution to our shareholders, which represents a 4.2% dividend yield considering our market cap at the end of twenty twenty four and it's more than 2.5 times twenty twenty three's distribution. Speaker 200:03:47Now moving forward, on the revenue front, the growth was driven by a 7.5 net price and mix increase, 3% growth in volumes where we added 35,000 new connections. These were partially offset by a negative 2% impact from the introduction of Fauuspi in July. On the EBITDA front, we had favorability driven by: one, the revenue growth I just mentioned and two, the reduction of 11% of our workforce with the incentivized dismissal plan from 2023. These two favorable drivers were partially offset by the increasing number of cities that receive municipal transfers. It is important to remember that this last driver is a pass through in the rates and should be picked up in the annual tariff adjustments. Speaker 200:04:41Our operations have generated 53% more cash than prior year, reaching $7,400,000,000 operating free cash flow in 2024. And we have deployed substantial investments in water and sewage infrastructure with a total investment of $6,900,000,000 and growing. This demonstrates our commitment to accelerating the universalization, bringing dignity and a better center of living inside our concession area. Finally, on the covenant side, we remain very comfortable, an important competitive advantage in times where base interest rates are high globally, where our net debt to EBITDA ratio stands at 1.8 and our interest coverage ratio sits at 5.1. We have also been able to maintain the same level of operational return on capital. Speaker 200:05:32These KPIs highlight our strong financial position and the financial strength of our business. Now, I would like to pass to our CEO, Mr. Carlos Piani for the next chapter. Thank you and see you Speaker 300:05:45on the Q and A. Thanks, Daniel. I would also like to thank you all for joining our fourth quarter twenty twenty four conference call. We're proud of the opportunities we've embraced and the groundwork laid to address the challenges ahead. So let's start moving to the next slide and let's talk about our priorities. Speaker 300:06:09In our third quarter earnings call, we presented a slide outlining the long term priorities of Sabev's new management team. These priorities fall in three main categories. First, new challenges created by the privatization and the new concession agreement, such as the advancement of our universalization goals from 02/1933 to 2029 and the inclusion of informal and rural consumers, which were not previously mandatory in all concession areas second, operational efficiency, setting a new performance standard for SobeSB as a privately controlled corporation Third, corporate foundations, updating people, structure, systems and processes that will support sustainable long term growth. Now with that said, I would like to take you through the progress we made on each of these fronts in the fourth quarter of last year. Let's move ahead. Speaker 300:07:10Starting with our CapEx program. In the fourth quarter of last year, we fundamentally changed how we contract works and projects. Previously, SABESP could only engage suppliers through public tenders. With the privatization, we adopted a request for proposal model, divided large projects into smaller packages to attract more suppliers and reduce execution risk, updated contracts templates and streamlined payment processes based on a new project execution timeline. These changes allowed us to contract approximately R15 billion dollars in CapEx by year end, more than doubling our pool of qualified suppliers. Speaker 300:07:55We entered 2025 with nearly 100% of the CapEx needed to meet our universalization goals already contracted. The focus now shifts fully to execution. On the new concession agreement, we've taken important regulatory steps. First, we notified five fifty clients about their termination of legacy discount contracts that lacked regulatory or tariff coverage. This represents a revenue gap of approximately R480 million per year that we're working to recover. Speaker 300:08:35A small number of clients are challenging this legally, but we're cautiously optimistic that these issues will be resolved without any major litigation. We're also working with the remaining discounted consumers now within the $300,000,000 limit set by the new concession agreement to help them meet the criteria that allow for us to recover this amount through tariffs. In parallel, we submitted to our SaaS, our regulatory agency, a proposal for a new discount policy that addresses some of the needs of these terminated clients. This proposal was allowed under the new concession agreement and is currently under review. Another historical regulatory gap came from billing reforms and cancellations not considered by the regulator during tariff reviews. Speaker 300:09:33Since August 2024, we've standardized this process, resulting in a 28% reduction in the fourth quarter of last year compared to the full year average. We expect further gains in 2025. Finally, we submitted the company's regulatory asset base for the twenty nineteen-twenty twenty three period and the 2024 period to ARSESP in the second half of last year. And we anticipate formal feedback in the third quarter of this year. Moving to the next page. Speaker 300:10:10Operationally, we saw immediate improvements In the Southern Metropolitan Division, targeted investments improved water flow for roughly 400,000 residents. On the coast of Sao Paulo, where the population multiplies during the summer, our seasonal plan cut water shortages by 30% year over year, a significant win during peak demand. We also consolidated and standardized operations. We reduced the number of operating divisions from 15 to 11, mirroring the division that is described in the concession agreements in terms of geography. Second, we merged all water, sewage and maintenance functions into single corporate divisions, unlocking future synergies in terms of processes, systems and inventories. Speaker 300:11:09Commercially, we concluded the Caidio Unico enrollment campaign, adding 400,000 consumers to our affordable tariff program. We are now focusing on those who lost benefits under the new rules and extended them for up to six months to allow them to have time to meet national eligibility criteria. We're working closely with municipalities to avoid exclusions. We also implemented new revenue assurance and disconnection policies. These will support better collections and help reduce non revenue water in this twenty twenty five year. Speaker 300:11:48On the financial front, we introduced zero based budgeting, ZBB. Every expense now has a defined owner and must be justified within a matrix management framework. We expect measurable cost savings in 2025. We also prepaid our most expenses debts, we hedge our foreign currency liabilities and we began raising new debt to support our heavy CapEx requirements for 2025. Now let's move to the next slide to talk about people, tech and systems. Speaker 300:12:24In terms of people, we've finalized our level one and level two leadership teams, achieving a fiftyfifty blend of internal talent and external hires. We launched a voluntary termination plan with over 2,000 employees enrolled, representing nearly 20% of our workforce. Their average tenure is twenty eight years with departures of faith through April 2025 to ensure smooth transitions. We opened internal hiring for 200 new operational and back office roles and received nearly 1,900 applications, an extraordinary response. On technology, we renegotiated the SAP Sfour HANA implementation contract and changed our integration partners, targeting a go live in the second quarter of twenty twenty six. Speaker 300:13:25We also strengthened our IT infrastructure and cybersecurity posture. Lastly, we've began preparations to ensure full compliance with Brazil's upcoming tax reform expected to begin rolling out in 2026. Moving to the next slide, I would like to go over our 2025 plan pillars. Our 2025 plan is centered on six key pillars. First, CapEx execution. Speaker 300:13:58We aim to connect around 1,000,000 new units, primarily for sewage treatment to meet our 2025 universalization targets. This is priority number one. Second, regulatory gap reduction. We have clear, actionable plans and aim to resolve a significant portion of these outstanding gaps in 2025. Third, metering in collections. Speaker 300:14:25We're accelerating meter park modernization and strengthening our collection policy to boost measured volumes and cash flow. Fourth, cost efficiency. With ZBB routines now in place, we expect to see a reduction in operational expenses through the year. Fifth, operating and maintenance productivity. We'll review outsourced contracts to ensure our suppliers also pursue productivity gains. Speaker 300:14:58Six, and lastly, culture and digital transformation. We're driving a shift toward higher performance through new rituals, routines and processes. Along SAP, twenty twenty five will see progress on CRM upgrades, OT solutions and the rollout of our advanced metering infrastructure mandated in Sao Paulo and Sao Jose Dos Campos. These projects will make Sabes home to the largest smart water metering network in the world by the February. In closing, I would like to say that we've only been at the helm for five months, but we are energized by the road ahead. Speaker 300:15:442025 is the year when SABESP's transformation will truly begin. With that, let's open the floor for questions. Operator00:15:54Thank you. We will now begin our Q and A session for investors and analysts. Speaker 100:16:17Good afternoon, everyone. We're going to start welcome to the Q and A session. We're going to start with a question that have been coming up a lot since we released the results, which is the bridge from the reported EBITDA to the adjusted EBITDA. And I'll pass to Daniel to explain that. Go on, Daniel. Speaker 200:16:41Thank you, Thiago. Thank you, everyone. Thank you for your questions throughout the day and here on the chat. Thank you for being here. It's always good to connect with all our investors. Speaker 200:16:52So on Q4, we basically had five sets of adjustments. We've had an accrual for taxes on unbilled revenue that we've done, that the company was not doing before. We've also made an accrual for R630 million for the SABES PG and Chi voluntary termination plan portion, that's basically for severance. And we've also given an incentive to the internal people, that was approved by the board throughout right after we joined the company to accelerate the unitization of works that had been in construction for a while. So we've been able to accelerate that throughout and you can see that in our work in progress assets, that has been a reduction in that number year on year, which we expect to continue maintaining the pace. Speaker 200:17:59So those were the two items inside the personal line and that does, I think, also answer a lot of the questions that were on the q and a. We also did our annual inventory cycle. We've been able to significantly expand that and we've implemented new policies for inventory cycle counts that generated an impact of R95 million for slow move and inventory differences. We've also had BRL 60,000,000 of consulting firms of post privatization PMI and also some expenses that we had to incur throughout Q4 to help with the mitigation of the cyber incident that we had. And last but not least, there were also some costs from the privatization offer that were booked in Q4. Speaker 200:18:51We had some in Q3. Some of them were booked in Q4 mainly with regards to Pozi Insurance and some other minor PP and E assets that we wrote off. So those were the adjustments that we've included in your Q4 EBITDA, thinking about what we believe it's a recurring profitability and underlying business. Speaker 100:19:19Great. Thank you. We're going to switch to the second question, which came a lot as well from Maria Carolina from Safra, Marcelo Safra from Itau and Vladimir from XP. It's regarding the personnel line. So can you detail the manageable cost performance, especially personnel line, ex the impact of redundancy program, which was implemented in December? Speaker 100:19:46Can you comment on that reduction in the personal line for the personal line for the fourth quarter this versus fourth quarter twenty twenty three? Speaker 200:19:56Sure. Absolutely. And thank you, Carol and Marcelo and I think someone else also asked that question. So yeah, so so so thank you. Thank you for for the question here. Speaker 200:20:07It's super important. I think on on that front, right, when we exclude the impact of the the voluntary termination plan and and all the other aspects that I just mentioned, we have basically two impacts. We had the voluntary dismissal plan in 2023. So year on year, there was a gain from that and we had a 5.5% lower personnel, number in terms of number of people year on year on on q four. And on top of that, as we came in, we've we've been revising many processes. Speaker 200:20:41Right? Like I mentioned, the one, for example, on the inventory cycle counts and so on and so forth. We've done that in q three as well. And we've started focusing on the core processes and the most critical ones that the the ones that we believe are mostly linked to the business. And when we look at them, one of the the the processes that we've revised was the CapEx and the utilization process. Speaker 200:21:06And we've revised also the pickup on indirect costs linked to CapEx or not, and we've adjusted that to what we believe reflects the best and the most accurate number. And the sum of those two things is actually what drove the personnel again order on quarter. Keep in mind that this adjustment that was done in Q4 with regards to the methodology on the indirect pickup was done in Q4 for everything that happened in the year. And on top of that, when we look at the CapEx for the year, we've been able to significantly accelerate the CapEx in Q4, right? We've executed 40% of the CapEx of the year in Q4. Speaker 200:21:51So we've also, absorbed more of that. So I think the combination of those three things is actually what drove the gain. Speaker 100:22:03Excellent. The next question is from Bruno Morin from Goldman Sachs. The company involved in the Universalisa Sao Paulo program, any updates you could provide on the timing? Speaker 300:22:16I'll take this one, Levi. And thank you for the question. This process is being managed by the state of Sao Paulo, so we don't control the timing. What we have been told is this is something to be, I think concluded by the beginning in first quarter, maybe second quarter of twenty twenty six. From our side, we're interested. Speaker 300:22:41I think we have a huge presence in the state of Sao Paulo, Despite the fact that we're early days in our transformation, I think we cannot lose the opportunity to look at opportunities in our own state. So for sure, we'll take a look and we'll evaluate the risk reward relationship of this opportunity when it arises. We have had early discussions, but I would say these have been still early days. Nothing from that, at least from our side, that has been material. I think things will pick up, I think, by the second half of the year. Speaker 300:23:21K. Speaker 100:23:24Okay. The next question comes also from Bruno Monin and also Carolina from Safra asked that. We will see the benefits of the lower discounts to large clients already in first quarter results? Or are you waiting for any approval from the regulator to implement new prices? Speaker 300:23:46I'll take this one as well. Thank you, Bruno and Carolina. I think we'll see this impact more in the second quarter than first quarter. I don't we're not going to see as much. I think there's a timing of the reading of the meters of each customer at the time of the termination of the contract. Speaker 300:24:07We also had a little bit more higher number of injunctions at the beginning that we were able to win. So I really believe that this change will be material more starting on the second quarter of twenty twenty five. Having said that, we also expect we expect a return by the regulator on the new policy. We haven't had a return yet, and that may also impact how this plays out. But I think it's going to be more material in the second quarter than first quarter. Speaker 100:24:42Okay. Next question also comes from Marcelo from Itau. What is your expectation in terms of personal savings following the voluntary dismissal program? Is all the costs related to this program booked or could be more? Speaker 200:24:58Hi, Marcelo. Thank you for the question. I'll take this one. Look, we try not to give guidance. Really, we've given information that we believe is going to be material enough on the presentation to try to estimate that in the models. Speaker 200:25:18But with regards to any additional cost that we expect to incur, no, there aren't any additional costs that we expect to incur with regards to the voluntary dismissal plan. Speaker 100:25:37Okay. Let me see if we have any more. Just came one from an investor. Does the reduction in contract as in contract assets from SEK7.4 billion in 2023 to SEK4.8 billion in 2024 indicate that there will be an increase in the Rev beyond CapEx? Speaker 200:26:01Thank you, Thiago. I'll take this one. I think the answer is the short answer is yes, right? I think one of the things that we've been trying to do since we got here is really to look at what the company had in inventory and try to understand why wasn't that already put into work, right, because that's the trigger for the neuritization, and really try to remove the bottlenecks and make this part of the CapEx plan that we have because these works have been executed for some reason there and make sure that we take advantage of that and don't reinvent the wheel. So one of the things that we did was in line with that and there was also an accrual for people to incentivize that, like I mentioned, on the adjusted numbers for the quarter. Speaker 200:26:49And we believe that we were successful there. One of the most important things is for us to keep the discipline here as we grow the CapEx. Naturally, some of the works that we're going to do are going to be more long term in terms of length, with regards to construction cycles. As we expand, for example, wastewater treatment station, it's a longer tenure work than, for example, putting a new connection, for example. So, our job is really to try to make sure that we maintain this as current as possible, really to make sure that we're following what we have in terms of interest on capital throughout the construction period from the regulation and we're not exceeding that. Speaker 200:27:36So that's the way that we've been approaching that. Speaker 100:27:41Okay. Some other questions that are coming in, coming up. One question now from Guillermo Lima from Santander. What are your thoughts on the para sanitation auction? It would make more sense to expect you not to participate as it is outside of Sao Paulo state? Speaker 300:28:03I think we're early days at SABESP. We're a little bit over five months. So would that be ideal? Probably not for any opportunity, right, inorganic opportunity. Easier, smaller in our home turf, the state of Sao Paulo, harder and more challenging concessions that are more complex and not as similar to what we have. Speaker 300:28:29What I can tell you is that we're gonna we look at everything as this is also the these processes helps us learn more about the industry. But I I would say that from a relative perspective, taking the the previous question of Universaliza, I think it's easier to look at Universaliza than Para, right? And regarding any partnership with Equatorial, what I could tell you is Equatorial has a comparative and competitive advantage, both of them, because it's a it has a concession in the state. It knows the region pretty well. If if Sabespy decides to go through, I don't see a reason not if Equatorial didn't want to go as well. Speaker 300:29:21But I would say that this is early days. There's nothing currently that's saying that we're going to do this. We're focusing on the transformation, looking at every process that that is on the market, but no decision has been made yet. Okay? So I would say less likely, but it's a risk reward relationship at the moment. Speaker 300:29:41Nothing concrete to Speaker 100:29:45to comment. Okay. We have going back a little bit to the topic of the big discounts, I have another question here from Rompy Mantao as a follow-up. In the same question tariff discount, considering the current term of each contract and assuming you are able to remove the discounts, when could we see the full impact on our P and L? Speaker 300:30:11I think the full impact on the P and L probably would be on the second half of the year. Every cycle, every discussion, every metering cycle would be done probably if we on average, we have some customers that had a sixty day termination clause, but others had longer and so forth. So it's not linear, just one one size fits all. I think this will will will will be concluded probably by the second quarter, and the and the full impact would be on the third quarter where everything happened. Okay? Speaker 300:30:49So it's it's a ladder. It's it's going like this, and and probably, we're we're gonna end the second half with with the full impact with the not annualization, but the quarter the full quarter and the third quarter. That's it. Speaker 100:31:07Okay. Getting a little some more questions here. Elon Armentman from Achieva Investimentos. Can you give a little bit more color in the rise year over year in POCLD? Speaker 200:31:22Thank you. Thank you. Thank you, Ilan. Thank you, Thiago. Look, Ilan, I think it's less about 2024 specifically, it's more about 2023 where the company had major agreements with large customers and whereby the company was able to recover important amounts. Speaker 200:31:42But I would take the advantage of your topic. I think this is one of the regulatory gaps that we have as a company whereby we are looking at many different solutions here and changing how we see, collections. We have a stretcher targets in our 2025 plan for collections, which should implicitly reduce that. But even more than that, we're looking at different ways of payments, right? So company barely use credit card that automatically offloads the risk of the balance sheet of a recurrence in delinquency. Speaker 200:32:22We are increasing the budget for cuts in water for delinquent accounts. This is actually growing by more than two acts, for example. So we're looking at many at all the levers that we have to pull. We're actually at this moment, we're working out as a big firm of renegotiations, a big campaign of renegotiations. So all in all, I think we have a lot of opportunities here. Speaker 200:33:01Dennis, which is our new Head of Customers and Technology, comes from this revenue assurance industry. So we're cooking up a lot of good things on that front. Speaker 100:33:30Just one one I think one last question that we have here from Gabriel of Cica. Does the company have an ongoing severance plan and what is the target? Speaker 300:33:42I don't understand if the severance plan is a terminate open termination plan. And the plan that we had in place, we opened and closed. So basically, that's it. We may open new termination plans moving forward. Differently from the the the one the four the last one before ours, it was open for a year. Speaker 300:34:06So this one was a very short run. This was basically a thirty days program. We may use this lever again, but there's no open termination plan open as we speak. So no major expectations on personnel reduction as per now in different conditions. If they exist, they would follow the rules that we have in place. Speaker 300:34:31There is a price. There is a severance additional severance to be paid until the January 2026. And that would be the case. We would need to pay that extra severance to what's legally due to any employee that we lay off. Speaker 100:34:56Okay. We have another question coming from an investor. How should we think about the mix of consumers as you expand penetration of service towards universalization? Are these areas materially over indexed to consumers who fall under low tariff rates? Speaker 200:35:14Thank you. I'll take this one. Thank you, Frasier for the question, very important one. When we think about our mix, right, and what happened in 2024 and what we would see probably going forward, right? When we look at 2024, we had a BRL200 million impact from mix in the top line. Speaker 200:35:36Most of that impact came from the new rule for vulnerable social tariffs, but a part of that impact came also from that expansion that you just mentioned. I think this is where the FAUSPI, which is the fund for the universalization to amortize the impact of the universalization comes into play to help that also in having more consumers in the social mix. And as we go through tariff cycles, we should see that rebalance throughout the market mix, right? And that's where Fauuspi comes into play to avoid that from having a to amortize that impact to be very big with the consumers. But as we grow naturally thinking about what we still have to cover, especially in the metropolitan regions, we should see an increase in the most social and vulnerable modes of tariff. Operator00:36:33Thank you. The Q and A session is now over. We wish to give the floor to Mr. Carlos Piani for the company's closing remarks. Speaker 300:36:44Thank you. So again, thank you all for joining our call. I think these are still early days of our tenure here at SABESP, a long term road ahead of us. I know that's challenging to do a big transformation being a publicly listed company. So be patient with us. Speaker 300:37:06We're there, but we're very excited with the outlook. Maybe we're going to have some non recurring events because we're going to try to clean as much as we can of everything, everything that we find, but we're very excited with the opportunity. I think the team is excited. I think a lot of opportunities ahead of us. So we're all committed with long term with the long term of the company, and I hope to see you all on the next quarter results in May. Speaker 300:37:31Okay? Thank you all. Have a nice day. Bye bye. Operator00:37:35Sabespy earnings presentation is now closed. Thank you very much for your participation, and we wish you all a very good day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCompanhia de Saneamento Básico do Estado de São Paulo - SABESP Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release Companhia de Saneamento Básico do Estado de São Paulo - SABESP Earnings HeadlinesSabesp: Looking Forward After PrivatizationApril 23 at 2:25 AM | seekingalpha.comZacks.com featured highlights include Allot, Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP, Lindsay, Equity Bancshares and GriffonApril 22 at 1:56 AM | uk.finance.yahoo.comWhat President Trump’s Executive Order 14154 means for your moneyNearly $3 trillion disappeared from the stock market on Thursday morning. According to Whitney Tilson - a former hedge fund manager who predicted the dotcom crash, the housing crisis, and the 2022 tech stock bloodbath - a little-known executive order from the President's first day in office could spark a paradigm-shift that will likely catch millions of Americans off guard.April 24, 2025 | Stansberry Research (Ad)Sabesp: Q4 Earnings SnapshotMarch 26, 2025 | sfgate.comSabesp: Q4 Earnings SnapshotMarch 26, 2025 | sfgate.comCompanhia de Saneamento Basico do Estado de Sao Paulo - SABESP (SBS) Q4 2024 Earnings Call TranscriptMarch 25, 2025 | seekingalpha.comSee More Companhia de Saneamento Básico do Estado de São Paulo - SABESP Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Companhia de Saneamento Básico do Estado de São Paulo - SABESP? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Companhia de Saneamento Básico do Estado de São Paulo - SABESP and other key companies, straight to your email. Email Address About Companhia de Saneamento Básico do Estado de São Paulo - SABESPCompanhia de Saneamento Basico do Estado de Sao Paulo SABESP engages in the provision of water and sewage service. It also offers advisory services on the rational use of water, planning and commercial, and financial and operational management. 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There are 4 speakers on the call. Operator00:00:00Good morning, and welcome to Sabesby Fourth Quarter of twenty twenty four Earnings Presentation. With us here today are Carlos Piani, CEO Daniel Slak, CFO and Thiago Levy, Investor Relations. Before we begin, we clarify that the statements made during this presentation will not include projections or estimates of future events. However, they may contain forward looking statements indicating potential trends related to SABESP based on the reasonable expectations, beliefs, and assumptions of SABESP's management as of today. These statements involve risks and uncertainties and are based on assumptions and factors such as market, regulatory, and economic conditions, which may not materialize in addition to the risk factors disclosed in SABESP filings with the Brazilian Securities and Exchange Commission b3 and on its investor relations website. Operator00:01:02Investors should understand that changes in such factors may lead to outcomes that differ from current trends and that undue reliance should not be placed on these statements. The full disclaimer will be presented next and must be read carefully by all participants. I will now turn the floor over to Thiago Levy who will discuss the results. Thiago, you may proceed. Speaker 100:01:27Good afternoon. My name is Thiago Levy. I'm the investor relations director at Sabespy. Welcome to our fourth quarter earnings results call. Today, I'm joined by our CEO, Carlos Bioni, and our CFO and investor relations officer, mister Daniel Zlaki. Speaker 100:01:42Before handing it over to Daniel, I would like to share some unimportant update. As the majority of our investor base consists of international investors, we will now conduct these earnings calls in English with simultaneous translations into Portuguese. Please note that this call is being recorded and all participants will be in listen mode during the presentation. For the Q and A session, we kindly ask you to submit your questions via the Zoom chat. Additionally, all the relevant files for this call will be available on our Investor Relations website. Speaker 100:02:12With that, I will now turn it over to Daniel, who will walk us through our 2024 financial highlights. Speaker 200:02:20Thank you, Thiago. Good morning to all our partners. Thank you for joining us today for our twenty twenty four full year's earnings call. We will start by looking at our operational highlights. The company has produced and treated significant volumes of water and sewage, ensuring the quality and reliability of our services. Speaker 200:02:41Our customer base has continued to grow with an increase in both registered and active water and sewage connections. This growth is a testament to our ongoing efforts to meet the needs of our customers, universalization targets and provide excellent service. Now let's move on to our financial highlights for the year 2024. We have achieved net operational revenues of roughly RMB21.7 billion, an increase of 8.8% compared to the previous year. Our EBITDA has grown by 18.8%, reaching $11,400,000,000 Additionally, our net profit has seen a remarkable increase of 172%, amounting to $9,500,000,000 and allowing us to propose a $2,500,000,000 dollars distribution to our shareholders, which represents a 4.2% dividend yield considering our market cap at the end of twenty twenty four and it's more than 2.5 times twenty twenty three's distribution. Speaker 200:03:47Now moving forward, on the revenue front, the growth was driven by a 7.5 net price and mix increase, 3% growth in volumes where we added 35,000 new connections. These were partially offset by a negative 2% impact from the introduction of Fauuspi in July. On the EBITDA front, we had favorability driven by: one, the revenue growth I just mentioned and two, the reduction of 11% of our workforce with the incentivized dismissal plan from 2023. These two favorable drivers were partially offset by the increasing number of cities that receive municipal transfers. It is important to remember that this last driver is a pass through in the rates and should be picked up in the annual tariff adjustments. Speaker 200:04:41Our operations have generated 53% more cash than prior year, reaching $7,400,000,000 operating free cash flow in 2024. And we have deployed substantial investments in water and sewage infrastructure with a total investment of $6,900,000,000 and growing. This demonstrates our commitment to accelerating the universalization, bringing dignity and a better center of living inside our concession area. Finally, on the covenant side, we remain very comfortable, an important competitive advantage in times where base interest rates are high globally, where our net debt to EBITDA ratio stands at 1.8 and our interest coverage ratio sits at 5.1. We have also been able to maintain the same level of operational return on capital. Speaker 200:05:32These KPIs highlight our strong financial position and the financial strength of our business. Now, I would like to pass to our CEO, Mr. Carlos Piani for the next chapter. Thank you and see you Speaker 300:05:45on the Q and A. Thanks, Daniel. I would also like to thank you all for joining our fourth quarter twenty twenty four conference call. We're proud of the opportunities we've embraced and the groundwork laid to address the challenges ahead. So let's start moving to the next slide and let's talk about our priorities. Speaker 300:06:09In our third quarter earnings call, we presented a slide outlining the long term priorities of Sabev's new management team. These priorities fall in three main categories. First, new challenges created by the privatization and the new concession agreement, such as the advancement of our universalization goals from 02/1933 to 2029 and the inclusion of informal and rural consumers, which were not previously mandatory in all concession areas second, operational efficiency, setting a new performance standard for SobeSB as a privately controlled corporation Third, corporate foundations, updating people, structure, systems and processes that will support sustainable long term growth. Now with that said, I would like to take you through the progress we made on each of these fronts in the fourth quarter of last year. Let's move ahead. Speaker 300:07:10Starting with our CapEx program. In the fourth quarter of last year, we fundamentally changed how we contract works and projects. Previously, SABESP could only engage suppliers through public tenders. With the privatization, we adopted a request for proposal model, divided large projects into smaller packages to attract more suppliers and reduce execution risk, updated contracts templates and streamlined payment processes based on a new project execution timeline. These changes allowed us to contract approximately R15 billion dollars in CapEx by year end, more than doubling our pool of qualified suppliers. Speaker 300:07:55We entered 2025 with nearly 100% of the CapEx needed to meet our universalization goals already contracted. The focus now shifts fully to execution. On the new concession agreement, we've taken important regulatory steps. First, we notified five fifty clients about their termination of legacy discount contracts that lacked regulatory or tariff coverage. This represents a revenue gap of approximately R480 million per year that we're working to recover. Speaker 300:08:35A small number of clients are challenging this legally, but we're cautiously optimistic that these issues will be resolved without any major litigation. We're also working with the remaining discounted consumers now within the $300,000,000 limit set by the new concession agreement to help them meet the criteria that allow for us to recover this amount through tariffs. In parallel, we submitted to our SaaS, our regulatory agency, a proposal for a new discount policy that addresses some of the needs of these terminated clients. This proposal was allowed under the new concession agreement and is currently under review. Another historical regulatory gap came from billing reforms and cancellations not considered by the regulator during tariff reviews. Speaker 300:09:33Since August 2024, we've standardized this process, resulting in a 28% reduction in the fourth quarter of last year compared to the full year average. We expect further gains in 2025. Finally, we submitted the company's regulatory asset base for the twenty nineteen-twenty twenty three period and the 2024 period to ARSESP in the second half of last year. And we anticipate formal feedback in the third quarter of this year. Moving to the next page. Speaker 300:10:10Operationally, we saw immediate improvements In the Southern Metropolitan Division, targeted investments improved water flow for roughly 400,000 residents. On the coast of Sao Paulo, where the population multiplies during the summer, our seasonal plan cut water shortages by 30% year over year, a significant win during peak demand. We also consolidated and standardized operations. We reduced the number of operating divisions from 15 to 11, mirroring the division that is described in the concession agreements in terms of geography. Second, we merged all water, sewage and maintenance functions into single corporate divisions, unlocking future synergies in terms of processes, systems and inventories. Speaker 300:11:09Commercially, we concluded the Caidio Unico enrollment campaign, adding 400,000 consumers to our affordable tariff program. We are now focusing on those who lost benefits under the new rules and extended them for up to six months to allow them to have time to meet national eligibility criteria. We're working closely with municipalities to avoid exclusions. We also implemented new revenue assurance and disconnection policies. These will support better collections and help reduce non revenue water in this twenty twenty five year. Speaker 300:11:48On the financial front, we introduced zero based budgeting, ZBB. Every expense now has a defined owner and must be justified within a matrix management framework. We expect measurable cost savings in 2025. We also prepaid our most expenses debts, we hedge our foreign currency liabilities and we began raising new debt to support our heavy CapEx requirements for 2025. Now let's move to the next slide to talk about people, tech and systems. Speaker 300:12:24In terms of people, we've finalized our level one and level two leadership teams, achieving a fiftyfifty blend of internal talent and external hires. We launched a voluntary termination plan with over 2,000 employees enrolled, representing nearly 20% of our workforce. Their average tenure is twenty eight years with departures of faith through April 2025 to ensure smooth transitions. We opened internal hiring for 200 new operational and back office roles and received nearly 1,900 applications, an extraordinary response. On technology, we renegotiated the SAP Sfour HANA implementation contract and changed our integration partners, targeting a go live in the second quarter of twenty twenty six. Speaker 300:13:25We also strengthened our IT infrastructure and cybersecurity posture. Lastly, we've began preparations to ensure full compliance with Brazil's upcoming tax reform expected to begin rolling out in 2026. Moving to the next slide, I would like to go over our 2025 plan pillars. Our 2025 plan is centered on six key pillars. First, CapEx execution. Speaker 300:13:58We aim to connect around 1,000,000 new units, primarily for sewage treatment to meet our 2025 universalization targets. This is priority number one. Second, regulatory gap reduction. We have clear, actionable plans and aim to resolve a significant portion of these outstanding gaps in 2025. Third, metering in collections. Speaker 300:14:25We're accelerating meter park modernization and strengthening our collection policy to boost measured volumes and cash flow. Fourth, cost efficiency. With ZBB routines now in place, we expect to see a reduction in operational expenses through the year. Fifth, operating and maintenance productivity. We'll review outsourced contracts to ensure our suppliers also pursue productivity gains. Speaker 300:14:58Six, and lastly, culture and digital transformation. We're driving a shift toward higher performance through new rituals, routines and processes. Along SAP, twenty twenty five will see progress on CRM upgrades, OT solutions and the rollout of our advanced metering infrastructure mandated in Sao Paulo and Sao Jose Dos Campos. These projects will make Sabes home to the largest smart water metering network in the world by the February. In closing, I would like to say that we've only been at the helm for five months, but we are energized by the road ahead. Speaker 300:15:442025 is the year when SABESP's transformation will truly begin. With that, let's open the floor for questions. Operator00:15:54Thank you. We will now begin our Q and A session for investors and analysts. Speaker 100:16:17Good afternoon, everyone. We're going to start welcome to the Q and A session. We're going to start with a question that have been coming up a lot since we released the results, which is the bridge from the reported EBITDA to the adjusted EBITDA. And I'll pass to Daniel to explain that. Go on, Daniel. Speaker 200:16:41Thank you, Thiago. Thank you, everyone. Thank you for your questions throughout the day and here on the chat. Thank you for being here. It's always good to connect with all our investors. Speaker 200:16:52So on Q4, we basically had five sets of adjustments. We've had an accrual for taxes on unbilled revenue that we've done, that the company was not doing before. We've also made an accrual for R630 million for the SABES PG and Chi voluntary termination plan portion, that's basically for severance. And we've also given an incentive to the internal people, that was approved by the board throughout right after we joined the company to accelerate the unitization of works that had been in construction for a while. So we've been able to accelerate that throughout and you can see that in our work in progress assets, that has been a reduction in that number year on year, which we expect to continue maintaining the pace. Speaker 200:17:59So those were the two items inside the personal line and that does, I think, also answer a lot of the questions that were on the q and a. We also did our annual inventory cycle. We've been able to significantly expand that and we've implemented new policies for inventory cycle counts that generated an impact of R95 million for slow move and inventory differences. We've also had BRL 60,000,000 of consulting firms of post privatization PMI and also some expenses that we had to incur throughout Q4 to help with the mitigation of the cyber incident that we had. And last but not least, there were also some costs from the privatization offer that were booked in Q4. Speaker 200:18:51We had some in Q3. Some of them were booked in Q4 mainly with regards to Pozi Insurance and some other minor PP and E assets that we wrote off. So those were the adjustments that we've included in your Q4 EBITDA, thinking about what we believe it's a recurring profitability and underlying business. Speaker 100:19:19Great. Thank you. We're going to switch to the second question, which came a lot as well from Maria Carolina from Safra, Marcelo Safra from Itau and Vladimir from XP. It's regarding the personnel line. So can you detail the manageable cost performance, especially personnel line, ex the impact of redundancy program, which was implemented in December? Speaker 100:19:46Can you comment on that reduction in the personal line for the personal line for the fourth quarter this versus fourth quarter twenty twenty three? Speaker 200:19:56Sure. Absolutely. And thank you, Carol and Marcelo and I think someone else also asked that question. So yeah, so so so thank you. Thank you for for the question here. Speaker 200:20:07It's super important. I think on on that front, right, when we exclude the impact of the the voluntary termination plan and and all the other aspects that I just mentioned, we have basically two impacts. We had the voluntary dismissal plan in 2023. So year on year, there was a gain from that and we had a 5.5% lower personnel, number in terms of number of people year on year on on q four. And on top of that, as we came in, we've we've been revising many processes. Speaker 200:20:41Right? Like I mentioned, the one, for example, on the inventory cycle counts and so on and so forth. We've done that in q three as well. And we've started focusing on the core processes and the most critical ones that the the ones that we believe are mostly linked to the business. And when we look at them, one of the the the processes that we've revised was the CapEx and the utilization process. Speaker 200:21:06And we've revised also the pickup on indirect costs linked to CapEx or not, and we've adjusted that to what we believe reflects the best and the most accurate number. And the sum of those two things is actually what drove the personnel again order on quarter. Keep in mind that this adjustment that was done in Q4 with regards to the methodology on the indirect pickup was done in Q4 for everything that happened in the year. And on top of that, when we look at the CapEx for the year, we've been able to significantly accelerate the CapEx in Q4, right? We've executed 40% of the CapEx of the year in Q4. Speaker 200:21:51So we've also, absorbed more of that. So I think the combination of those three things is actually what drove the gain. Speaker 100:22:03Excellent. The next question is from Bruno Morin from Goldman Sachs. The company involved in the Universalisa Sao Paulo program, any updates you could provide on the timing? Speaker 300:22:16I'll take this one, Levi. And thank you for the question. This process is being managed by the state of Sao Paulo, so we don't control the timing. What we have been told is this is something to be, I think concluded by the beginning in first quarter, maybe second quarter of twenty twenty six. From our side, we're interested. Speaker 300:22:41I think we have a huge presence in the state of Sao Paulo, Despite the fact that we're early days in our transformation, I think we cannot lose the opportunity to look at opportunities in our own state. So for sure, we'll take a look and we'll evaluate the risk reward relationship of this opportunity when it arises. We have had early discussions, but I would say these have been still early days. Nothing from that, at least from our side, that has been material. I think things will pick up, I think, by the second half of the year. Speaker 300:23:21K. Speaker 100:23:24Okay. The next question comes also from Bruno Monin and also Carolina from Safra asked that. We will see the benefits of the lower discounts to large clients already in first quarter results? Or are you waiting for any approval from the regulator to implement new prices? Speaker 300:23:46I'll take this one as well. Thank you, Bruno and Carolina. I think we'll see this impact more in the second quarter than first quarter. I don't we're not going to see as much. I think there's a timing of the reading of the meters of each customer at the time of the termination of the contract. Speaker 300:24:07We also had a little bit more higher number of injunctions at the beginning that we were able to win. So I really believe that this change will be material more starting on the second quarter of twenty twenty five. Having said that, we also expect we expect a return by the regulator on the new policy. We haven't had a return yet, and that may also impact how this plays out. But I think it's going to be more material in the second quarter than first quarter. Speaker 100:24:42Okay. Next question also comes from Marcelo from Itau. What is your expectation in terms of personal savings following the voluntary dismissal program? Is all the costs related to this program booked or could be more? Speaker 200:24:58Hi, Marcelo. Thank you for the question. I'll take this one. Look, we try not to give guidance. Really, we've given information that we believe is going to be material enough on the presentation to try to estimate that in the models. Speaker 200:25:18But with regards to any additional cost that we expect to incur, no, there aren't any additional costs that we expect to incur with regards to the voluntary dismissal plan. Speaker 100:25:37Okay. Let me see if we have any more. Just came one from an investor. Does the reduction in contract as in contract assets from SEK7.4 billion in 2023 to SEK4.8 billion in 2024 indicate that there will be an increase in the Rev beyond CapEx? Speaker 200:26:01Thank you, Thiago. I'll take this one. I think the answer is the short answer is yes, right? I think one of the things that we've been trying to do since we got here is really to look at what the company had in inventory and try to understand why wasn't that already put into work, right, because that's the trigger for the neuritization, and really try to remove the bottlenecks and make this part of the CapEx plan that we have because these works have been executed for some reason there and make sure that we take advantage of that and don't reinvent the wheel. So one of the things that we did was in line with that and there was also an accrual for people to incentivize that, like I mentioned, on the adjusted numbers for the quarter. Speaker 200:26:49And we believe that we were successful there. One of the most important things is for us to keep the discipline here as we grow the CapEx. Naturally, some of the works that we're going to do are going to be more long term in terms of length, with regards to construction cycles. As we expand, for example, wastewater treatment station, it's a longer tenure work than, for example, putting a new connection, for example. So, our job is really to try to make sure that we maintain this as current as possible, really to make sure that we're following what we have in terms of interest on capital throughout the construction period from the regulation and we're not exceeding that. Speaker 200:27:36So that's the way that we've been approaching that. Speaker 100:27:41Okay. Some other questions that are coming in, coming up. One question now from Guillermo Lima from Santander. What are your thoughts on the para sanitation auction? It would make more sense to expect you not to participate as it is outside of Sao Paulo state? Speaker 300:28:03I think we're early days at SABESP. We're a little bit over five months. So would that be ideal? Probably not for any opportunity, right, inorganic opportunity. Easier, smaller in our home turf, the state of Sao Paulo, harder and more challenging concessions that are more complex and not as similar to what we have. Speaker 300:28:29What I can tell you is that we're gonna we look at everything as this is also the these processes helps us learn more about the industry. But I I would say that from a relative perspective, taking the the previous question of Universaliza, I think it's easier to look at Universaliza than Para, right? And regarding any partnership with Equatorial, what I could tell you is Equatorial has a comparative and competitive advantage, both of them, because it's a it has a concession in the state. It knows the region pretty well. If if Sabespy decides to go through, I don't see a reason not if Equatorial didn't want to go as well. Speaker 300:29:21But I would say that this is early days. There's nothing currently that's saying that we're going to do this. We're focusing on the transformation, looking at every process that that is on the market, but no decision has been made yet. Okay? So I would say less likely, but it's a risk reward relationship at the moment. Speaker 300:29:41Nothing concrete to Speaker 100:29:45to comment. Okay. We have going back a little bit to the topic of the big discounts, I have another question here from Rompy Mantao as a follow-up. In the same question tariff discount, considering the current term of each contract and assuming you are able to remove the discounts, when could we see the full impact on our P and L? Speaker 300:30:11I think the full impact on the P and L probably would be on the second half of the year. Every cycle, every discussion, every metering cycle would be done probably if we on average, we have some customers that had a sixty day termination clause, but others had longer and so forth. So it's not linear, just one one size fits all. I think this will will will will be concluded probably by the second quarter, and the and the full impact would be on the third quarter where everything happened. Okay? Speaker 300:30:49So it's it's a ladder. It's it's going like this, and and probably, we're we're gonna end the second half with with the full impact with the not annualization, but the quarter the full quarter and the third quarter. That's it. Speaker 100:31:07Okay. Getting a little some more questions here. Elon Armentman from Achieva Investimentos. Can you give a little bit more color in the rise year over year in POCLD? Speaker 200:31:22Thank you. Thank you. Thank you, Ilan. Thank you, Thiago. Look, Ilan, I think it's less about 2024 specifically, it's more about 2023 where the company had major agreements with large customers and whereby the company was able to recover important amounts. Speaker 200:31:42But I would take the advantage of your topic. I think this is one of the regulatory gaps that we have as a company whereby we are looking at many different solutions here and changing how we see, collections. We have a stretcher targets in our 2025 plan for collections, which should implicitly reduce that. But even more than that, we're looking at different ways of payments, right? So company barely use credit card that automatically offloads the risk of the balance sheet of a recurrence in delinquency. Speaker 200:32:22We are increasing the budget for cuts in water for delinquent accounts. This is actually growing by more than two acts, for example. So we're looking at many at all the levers that we have to pull. We're actually at this moment, we're working out as a big firm of renegotiations, a big campaign of renegotiations. So all in all, I think we have a lot of opportunities here. Speaker 200:33:01Dennis, which is our new Head of Customers and Technology, comes from this revenue assurance industry. So we're cooking up a lot of good things on that front. Speaker 100:33:30Just one one I think one last question that we have here from Gabriel of Cica. Does the company have an ongoing severance plan and what is the target? Speaker 300:33:42I don't understand if the severance plan is a terminate open termination plan. And the plan that we had in place, we opened and closed. So basically, that's it. We may open new termination plans moving forward. Differently from the the the one the four the last one before ours, it was open for a year. Speaker 300:34:06So this one was a very short run. This was basically a thirty days program. We may use this lever again, but there's no open termination plan open as we speak. So no major expectations on personnel reduction as per now in different conditions. If they exist, they would follow the rules that we have in place. Speaker 300:34:31There is a price. There is a severance additional severance to be paid until the January 2026. And that would be the case. We would need to pay that extra severance to what's legally due to any employee that we lay off. Speaker 100:34:56Okay. We have another question coming from an investor. How should we think about the mix of consumers as you expand penetration of service towards universalization? Are these areas materially over indexed to consumers who fall under low tariff rates? Speaker 200:35:14Thank you. I'll take this one. Thank you, Frasier for the question, very important one. When we think about our mix, right, and what happened in 2024 and what we would see probably going forward, right? When we look at 2024, we had a BRL200 million impact from mix in the top line. Speaker 200:35:36Most of that impact came from the new rule for vulnerable social tariffs, but a part of that impact came also from that expansion that you just mentioned. I think this is where the FAUSPI, which is the fund for the universalization to amortize the impact of the universalization comes into play to help that also in having more consumers in the social mix. And as we go through tariff cycles, we should see that rebalance throughout the market mix, right? And that's where Fauuspi comes into play to avoid that from having a to amortize that impact to be very big with the consumers. But as we grow naturally thinking about what we still have to cover, especially in the metropolitan regions, we should see an increase in the most social and vulnerable modes of tariff. Operator00:36:33Thank you. The Q and A session is now over. We wish to give the floor to Mr. Carlos Piani for the company's closing remarks. Speaker 300:36:44Thank you. So again, thank you all for joining our call. I think these are still early days of our tenure here at SABESP, a long term road ahead of us. I know that's challenging to do a big transformation being a publicly listed company. So be patient with us. Speaker 300:37:06We're there, but we're very excited with the outlook. Maybe we're going to have some non recurring events because we're going to try to clean as much as we can of everything, everything that we find, but we're very excited with the opportunity. I think the team is excited. I think a lot of opportunities ahead of us. So we're all committed with long term with the long term of the company, and I hope to see you all on the next quarter results in May. Speaker 300:37:31Okay? Thank you all. Have a nice day. Bye bye. Operator00:37:35Sabespy earnings presentation is now closed. Thank you very much for your participation, and we wish you all a very good day.Read morePowered by