PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
São Paulo, S.P., 05429-900
Federative Republic of Brazil
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
in paper as permitted by Regulation S-T Rule 101(b)(7)__.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes ______ No ___X___
registrant in connection with Rule 12g3-2(b):
Earnings Results 2022 |  |
Highlights
The Company recorded a net income of R$ 3,121.3 million in 2022, compared to the R$ 2,305.9 million reported in 2021, an increase of R$ 815.4 million (+35.4%).
Adjusted EBITDA totaled R$ 7,087.7 million, an increase of R$ 715.0 million from the R$ 6,372.7 million reported in 2021 (+11.2%).
Revenue from sanitation services
Increase of R$ 2,325.8 million, impacted by: (i) an average tariff adjustment of 12.8% since May 2022; (ii) a 0.9% increase in total billed volume; and (iii) a higher average tariff due to the increase in the billed volume in the non-residential categories.
Costs, administrative and selling expenses (excluding construction costs)
Growth of R$ 1,573.7 million, mainly due to the: (i) R$ 339.7 million increase in salaries, payroll charges, benefits, and pension plan obligations; (ii) R$ 281.5 million increase in services; (iii) R$ 276.4 million increase with general expenses; and (iv) R$ 234.5 million with treatment supplies.
Impacts from the exchange variation
Exchange variation income on borrowings and financing increased by R$ 443.5 million, due to the appreciation of the Brazilian real against the U.S. dollar and the Japanese Yen in 2022. In 2021, the Brazilian real depreciated against the U.S. Dollar and appreciated against the Yen, as shown in the following table:
| 2022 | 2021 | |
| Debt in foreign currency - R$ millions | 2,775.8 | 3,296.2 |
| Foreign currency debt as a percentage of total debt - % | 15.0 | 19.0 |
| U.S. variation in the year - % | (6.5) | 7.4 |
| Yen variation in the year - % | (18.4) | (3.9) |
Monetary and exchange variations, net
Increase of R$ 342.9 million in monetary and exchange variations on assets, mostly due to the recognition of R$ 314.4 million referring to the monetary adjustment on the GESP 2015 agreement in 2022, resulting from a court decision in the third quarter of 2022, preventing the transfer of reservoirs from the Alto Tietê Production System.
| 2 |
Earnings Results 2022 | |
Financial Highlights
| R$ million | |||||||||
| 2022 | 2021 | Var. (R$) | % | 4Q22 | 4Q21 | Var. (R$) | % | ||
| Revenue from sanitation services | 18,630.0 | 16,304.2 | 2,325.8 | 14.3 | 4,867.9 | 4,200.8 | 667.1 | 15.9 | |
| Construction revenue | 4,863.8 | 4,376.7 | 487.1 | 11.1 | 1,470.6 | 1,144.4 | 326.2 | 28.5 | |
| COFINS and PASEP/TRCF taxes | (1,438.0) | (1,189.9) | (248.1) | 20.9 | (406.3) | (281.4) | (124.9) | 44.4 | |
| (=) | Net operating income | 22,055.8 | 19,491.0 | 2,564.8 | 13.2 | 5,932.2 | 5,063.8 | 868.4 | 17.1 |
| Costs and expenses | (12,689.1) | (11,115.4) | (1,573.7) | 14.2 | (3,430.7) | (3,050.4) | (380.3) | 12.5 | |
| Construction costs | (4,754.4) | (4,278.3) | (476.1) | 11.1 | (1,437.5) | (1,118.7) | (318.8) | 28.5 | |
| Equity results | 24.6 | 22.1 | 2.5 | 11.3 | 7.1 | 5.9 | 1.2 | 20.3 | |
| Other operating income (expenses), net | 8.3 | (21.8) | 30.1 | (138.1) | 6.2 | (34.3) | 40.5 | (118.1) | |
| (=) | Earnings before financial result, income tax, and social contribution | 4,645.2 | 4,097.6 | 547.6 | 13.4 | 1,077.3 | 866.3 | 211.0 | 24.4 |
| Financial result | (372.4) | (927.4) | 555.0 | (59.8) | (506.7) | (301.2) | (205.5) | 68.2 | |
| (=) | Earnings before income tax and social contribution | 4,272.8 | 3,170.2 | 1,102.6 | 34.8 | 570.6 | 565.1 | 5.5 | 1.0 |
| Income tax and social contribution | (1,151.5) | (864.3) | (287.2) | 33.2 | 71.6 | 2.4 | 69.2 | 2,883.3 | |
| (=) | Net income | 3,121.3 | 2,305.9 | 815.4 | 35.4 | 642.2 | 567.5 | 74.7 | 13.2 |
| Earnings per share (R$)* | 4.57 | 3.37 | 0.94 | 0.83 | |||||
* Total shares = 683,509,869
Adjusted EBITDA Reconciliation (non-accounting measures)
| R$ million | |||||||||
| 2022 | 2021 | Var. (R$) | % | 4Q22 | 4Q21 | Var. (R$) | % | ||
| Net income | 3,121.3 | 2,305.9 | 815.4 | 35.4 | 642.2 | 567.5 | 74.7 | 13.2 | |
| Income tax and social contribution | 1,151.5 | 864.3 | 287.2 | 33.2 | (71.6) | (2.4) | (69.2) | 2,883.3 | |
| Financial result | 372.4 | 927.4 | (555.0) | (59.8) | 506.7 | 301.2 | 205.5 | 68.2 | |
| Other operating income (expenses), net | (8.3) | 21.8 | (30.1) | (138.1) | (6.2) | 34.3 | (40.5) | (118.1) | |
| (=) | Adjusted EBIT* | 4,636.9 | 4,119.4 | 517.5 | 12.6 | 1,071.1 | 900.6 | 170.5 | 18.9 |
| Depreciation and amortization | 2,450.8 | 2,253.3 | 197.5 | 8.8 | 649.2 | 593.3 | 55.9 | 9.4 | |
| (=) | Adjusted EBITDA** | 7,087.7 | 6,372.7 | 715.0 | 11.2 | 1,720.3 | 1,493.9 | 226.4 | 15.2 |
| (%) Adjusted EBITDA margin | 32.1 | 32.7 | 29.0 | 29.5 | |||||
* Adjusted EBIT corresponds to income before: (i) other operating income (expenses), net; (ii) financial result; and (iii) income tax and social contribution.
** Adjusted EBITDA corresponds to income before: (i) other operating income (expenses), net; (ii) financial result; (iii) income tax and social contribution; and (iv) depreciation and amortization expenses.
The net operating revenue, which considers construction revenue, totaled R$ 22,055.8 million in 2022, up by 13.2% over 2021.
Costs and expenses, which consider construction costs, totaled R$ 17,443.5 million, up by 13.3% over 2021.
Adjusted EBIT, of R$ 4,636.9 million, increased by 12.6% over the R$ 4,119.4 million recorded in 2021.
Adjusted EBITDA, of R$ 7,087.7 million, increased by 11.2% over the R$ 6,372.7 million recorded in 2021.
The Adjusted EBITDA margin was 32.1% in 2022, compared to 32.7% in 2021.
Excluding the effects of revenue and construction costs, the adjusted EBITDA margin reached 40.6% in 2022, compared to 41.5% in 2021.
The Company recorded a net income of R$ 3,121.3 million in 2022, compared to R$ 2,305.9 million in 2021.
| 3 |
Earnings Results 2022 | |
Revenue from sanitation services
The gross operating revenue from sanitation services, which excludes construction revenue, totaled R$ 18,630.0 million in 2022, an increase of R$ 2,325.8 million (+14.3%) over the R$ 16,304.2 million recorded in 2021.
The main factors that led to the increase were:
| · | Average tariff adjustment of 12.8% since May 2022; |
| · | Increase of 0.9% in the total billed volume; and |
| · | Higher average tariff due to the increase in the billed volume in the non-residential categories. |
Construction revenue
Construction revenue increased by R$ 487.1 million (+11.1%), due to higher investments made.
Billed volume
The following tables show the water and sewage billed volumes, on a year-over-year and quarter-over-quarter basis, per customer category and region.
| WATER AND SEWAGE BILLED VOLUME1 PER CUSTOMER CATEGORY - million m3 | |||||||||
| Water | Sewage | Water + Sewage | |||||||
| Category | 2022 | 2021 | % | 2022 | 2021 | % | 2022 | 2021 | % |
| Residential | 1,869.5 | 1,884.2 | (0.8) | 1,631.4 | 1,629.9 | 0.1 | 3,500.9 | 3,514.1 | (0.4) |
| Commercial | 182.1 | 169.6 | 7.4 | 175.9 | 159.0 | 10.6 | 358.0 | 328.6 | 8.9 |
| Industrial | 34.5 | 34.4 | 0.3 | 37.9 | 35.8 | 5.9 | 72.4 | 70.2 | 3.1 |
| Public | 43.7 | 35.9 | 21.7 | 38.9 | 31.4 | 23.9 | 82.6 | 67.3 | 22.7 |
| Total retail | 2,129.8 | 2,124.1 | 0.3 | 1,884.1 | 1,856.1 | 1.5 | 4,013.9 | 3,980.2 | 0.8 |
| Wholesale³ | 47.8 | 49.7 | (3.8) | 20.5 | 15.8 | 29.7 | 68.3 | 65.5 | 4.3 |
| Total | 2,177.6 | 2,173.8 | 0.2 | 1,904.6 | 1,871.9 | 1.7 | 4,082.2 | 4,045.7 | 0.9 |
| Water | Sewage | Water + Sewage | |||||||
| Category | 4Q22 | 4Q21 | % | 4Q22 | 4Q21 | % | 4Q22 | 4Q21 | % |
| Residential | 471.8 | 475.3 | (0.7) | 412.6 | 411.7 | 0.2 | 884.4 | 887.0 | (0.3) |
| Commercial | 45.6 | 45.6 | - | 44.1 | 41.9 | 5.3 | 89.7 | 87.5 | 2.5 |
| Industrial | 8.7 | 8.8 | (1.1) | 9.6 | 8.5 | 12.9 | 18.3 | 17.3 | 5.8 |
| Public | 11.2 | 8.9 | 25.8 | 10.2 | 7.6 | 34.2 | 21.4 | 16.5 | 29.7 |
| Total retail | 537.3 | 538.6 | (0.2) | 476.5 | 469.7 | 1.4 | 1,013.8 | 1,008.3 | 0.5 |
| Wholesale3 | 11.9 | 12.0 | (0.8) | 5.5 | 4.3 | 27.9 | 17.4 | 16.3 | 6.7 |
| Total | 549.2 | 550.6 | (0.3) | 482.0 | 474.0 | 1.7 | 1,031.2 | 1,024.6 | 0.6 |
| 4 |
Earnings Results 2022 | |
| WATER AND SEWAGE BILLED VOLUME1 PER REGION - million m3 | |||||||||
| Water | Sewage | Water + Sewage | |||||||
| Region | 2022 | 2021 | % | 2022 | 2021 | % | 2022 | 2021 | % |
| Metropolitan | 1,430.9 | 1,440.9 | (0.7) | 1,263.9 | 1,255.7 | 0.7 | 2,694.8 | 2,696.6 | (0.1) |
| Regional² | 698.9 | 683.2 | 2.3 | 620.2 | 600.4 | 3.3 | 1,319.1 | 1,283.6 | 2.8 |
| Total retail | 2,129.8 | 2,124.1 | 0.3 | 1,884.1 | 1,856.1 | 1.5 | 4,013.9 | 3,980.2 | 0.8 |
| Wholesale³ | 47.8 | 49.7 | (3.8) | 20.5 | 15.8 | 29.7 | 68.3 | 65.5 | 4.3 |
| Total | 2,177.6 | 2,173.8 | 0.2 | 1,904.6 | 1,871.9 | 1.7 | 4,082.2 | 4,045.7 | 0.9 |
| Water | Sewage | Water+ wage | |||||||
| Region | 4Q22 | 4Q21 | % | 4Q22 | 4Q21 | % | 4Q22 | 4Q21 | % |
| Metropolitan | 362.2 | 364.3 | (0.6) | 320.6 | 316.3 | 1.4 | 682.8 | 680.6 | 0.3 |
| Regional² | 175.1 | 174.3 | 0.5 | 155.9 | 153.4 | 1.6 | 331.0 | 327.7 | 1.0 |
| Total retail | 537.3 | 538.6 | (0.2) | 476.5 | 469.7 | 1.4 | 1,013.8 | 1,008.3 | 0.5 |
| Wholesale3 | 11.9 | 12.0 | (0.8) | 5.5 | 4.3 | 27.9 | 17.4 | 16.3 | 6.7 |
| Total | 549.2 | 550.6 | (0.3) | 482.0 | 474.0 | 1.7 | 1,031.2 | 1,024.6 | 0.6 |
| 1. | Unaudited |
| 2. | Including coastal and interior regions |
| 3. | Wholesale includes volumes of reuse water and non-domestic sewage |
Costs, administrative & selling expenses and construction costs
Costs, administrative and selling expenses, and construction costs increased by R$ 2,049.8 million in 2022 (+13.3%). Excluding construction costs, the increase was R$ 1,573.7 million (+14.2%).
Costs, administrative and selling expenses, and construction costs as a percentage of net revenue were 79.1% in 2022, compared to 79.0% in 2021.
R$ million
| 2022 | 2021 | Var. (R$) | % | 4Q22 | 4Q21 | Var. (R$) | % | |
| Salaries, payroll charges and benefits, and Pension plan obligations | 2,995.7 | 2,656.0 | 339.7 | 12.8 | 786.9 | 675.0 | 111.9 | 16.5 |
| General supplies | 400.2 | 333.3 | 66.9 | 20.1 | 111.0 | 107.7 | 3.3 | 3.1 |
| Treatment supplies | 599.0 | 364.5 | 234.5 | 64.3 | 159.3 | 101.2 | 58.1 | 57.4 |
| Services | 2,393.3 | 2,111.8 | 281.5 | 13.3 | 646.5 | 605.7 | 40.8 | 6.7 |
| Electricity | 1,500.5 | 1,465.9 | 34.6 | 2.4 | 353.2 | 391.3 | (38.1) | (9.7) |
| General expenses | 1,487.4 | 1,211.0 | 276.4 | 22.8 | 490.1 | 298.9 | 191.2 | 64.0 |
| Tax expenses | 80.1 | 75.9 | 4.2 | 5.5 | 18.9 | 17.3 | 1.6 | 9.2 |
| Subtotal | 9,456.2 | 8,218.4 | 1,237.8 | 15.1 | 2.565.9 | 2,197.1 | 368.8 | 16.8 |
| Depreciation and amortization | 2,450.8 | 2,253.3 | 197.5 | 8.8 | 649.2 | 593.3 | 55.9 | 9.4 |
| Allowance for doubtful accounts | 782.1 | 643.7 | 138.4 | 21.5 | 215.6 | 260.0 | (44.4) | (17.1) |
| Subtotal | 3,232.9 | 2,897.0 | 335.9 | 11.6 | 864.8 | 853.3 | 11.5 | 1.3 |
| Costs, administrative & selling expenses | 12,689.1 | 11,115.4 | 1,573.7 | 14.2 | 3,430.7 | 3,050.4 | 380.3 | 12.5 |
| Construction costs | 4,754.4 | 4,278.3 | 476.1 | 11.1 | 1,437.5 | 1,118.7 | 318.8 | 28.5 |
| Costs, adm & selling expenses, and construction costs | 17,443.5 | 15,393.7 | 2,049.8 | 13.3 | 4,868.2 | 4,169.1 | 699.1 | 16.8 |
| % of net revenue | 79.1 | 79.0 | 82.1 | 82.3 |
Salaries, payroll charges and benefits, and Pension plan obligations
The R$ 339.7 million increase (+12.8%) recorded in 2022 was mainly due to:
| · | The average salary adjustment of 12.9% (R$ 235.6 million) in May 2022 and the application of 1% referring to the Career and Salary Plan in February 2022, partially offset by the 2.0% decline in the average number of employees; and |
| · | R$ 68.1 million, of which: (i) R$ 39.6 million in healthcare expenses; and (ii) R$ 28.5 million in overtime expenses. |
| 5 |
Earnings Results 2022 | |
General supplies
Increase of R$ 66.9 million (+ 20.1%), mainly due to the:
| · | R$ 35.1 million for the maintenance of water and sewage systems, connections, and networks; |
| · | R$ 12.6 million with fuel and lubricants; and |
| · | R$ 6.0 million with maintenance of buildings and facilities. |
Treatment supplies
Increase of R$ 234.5 million (+64.3%), due to: (i) the increase in product prices, some of which were impacted by the foreign market, such as aluminum sulfate, ferric chloride and aluminum polychloride; and (ii) higher application of algaecides, coagulants and disinfectants in several water treatment plants to maintain raw water quality.
Services
Service expenses totaled R$ 2,393.3 million, an increase of R$ 281.5 million (+13.3%) over the R$ 2,111.8 million recorded in 2021. The main increases were:
| · | R$ 63.9 million paid to technical services, mainly IT consulting, maintenance, and support; |
| · | R$ 46.9 million for the maintenance of water and sewage systems; |
| · | R$ 45.9 million with customer service channels; |
| · | R$ 43.8 million with surveillance; and |
| · | R$ 25.4 million with paving and replacing of sidewalks. |
Electricity
Electricity expenses totaled R$ 1,500.5 million in 2022, an increase of R$ 34.6 million (+2.4%) over the R$ 1,465.9 million recorded in 2021. Of the total, the Free Market Tariffs (ACL) accounted for 52.3% of the expenses in 2022 (51.2% in 2021) while the Regulated Market Tariffs (ACR) accounted for 47.7% (48.8% in 2021).
The main factors that contributed to this variation were:
| · | An average increase of 6.4% in ACL prices (includes Grid Market Tariffs - TUSD), with no significant variation in consumption; and |
| · | An average increase of 10.1% in ACR tariffs, with a decrease of 8.7% in consumption. |
The electricity tariffs were impacted, among others, by: (i) higher incidence of red tariff flag and water shortage in 2021; and (ii) the lower tax burden on electricity bills since June 2022, as a consequence of Supplementary Law 194/2022.
General expenses
Increase of R$ 276.4 million (+22.8%), totaling R$ 1,487.4 million in 2022, compared to the R$ 1,211.0 million recorded in 2021, mainly from the: (i) higher expenses with lawsuits, totaling R$ 162.6 million; and (ii) higher provision for transfer to the municipal funds for environmental sanitation and infrastructure, of R$ 96.6 million.
| 6 |
Earnings Results 2022 | |
Expenses with municipal transfers totaled R$ 712.5 million in 2022, compared to the R$ 615.9 million reported in 2021 (+15.7%), mainly due to higher operating revenue reported in 2022.
Depreciation and amortization
The R$ 197.5 million increase (+8.8%) was mainly due to the beginning of operations of intangible assets, totaling R$ 5.2 billion.
Allowance for doubtful accounts
Increase of R$ 138.4 million, from R$ 643.7 million in 2021 to R$ 782.1 million in 2022, due to higher provisioning arising from the increase in delinquency in 2022.
Financial result
| R$ million | ||||
| 2022 | 2021 | Var. (R$) | % | |
| Financial expenses, net of income | (885.5) | (692.5) | (193.0) | 27.9 |
| Monetary and exchange variations, net | 513.1 | (234.9) | 748.0 | (318.4) |
| Financial Result | (372.4) | (927.4) | 555.0 | (59.8) |
Financial expenses, net of revenue
| R$ million | ||||||||
| 2022 | 2021 | Var. (R$) | % | |||||
| Financial expenses | ||||||||
| Interest and charges on domestic borrowings and financing | (954.7) | (517.2) | (437.5) | 84.6 | ||||
| Interest and charges on international borrowings and financing | (47.1) | (46.8) | (0.3) | 0.6 | ||||
| Other financial expenses | (433.7) | (402.0) | (31.7) | 7.9 | ||||
| Total financial expenses | (1,435.5) | (966.0) | (469.5) | 48.6 | ||||
| Financial revenue | 550.0 | 273.5 | 276.5 | 101.1 | ||||
| Financial expenses, net of revenue | (885.5) | (692.5) | (193.0) | 27.9 | ||||
The main impacts resulted from:
| · | Increase of R$ 437.5 million in interest and charges on borrowings and financing in domestic currency, mainly due to: (i) higher interest on debentures, of R$ 286.0 million, from the proceeds of the 29th and 30th issuances, totaling R$ 148.6 million in financial expenses; and (ii) a rise in the average DI rate (from 5.06% in 2021 to 12.45% in 2022), which impacted interest on domestic loans; |
| · | Increase of R$ 31.7 million in other financial expenses, mainly due to: (i) an increase of R$ 49.8 million with contracts for the clean up of the Pinheiros River, given that several contracts were under a performance type, in which the flow of payments occurs mainly after the completion of works and the update of accounts receivable is recorded as a financial expense when the work becomes operational, which occurred in several contracts in 2022; and (ii) a decrease of R$ 17.4 million in interest on lawsuits; and |
| · | Increase of R$ 276.5 million in financial revenues, mainly on financial investments in 2022, as a result of the higher average DI rate. |
| 7 |
Earnings Results 2022 | |
Monetary and exchange variation, net
| R$ million | ||||
| 2022 | 2021 | Var. (R$) | % | |
| Monetary and exchange variations on liabilities | ||||
| Monetary variations on borrowings and financing | (190.2) | (225.8) | 35.6 | (15.8) |
| Exchange variations on borrowings and financing | 492.0 | 48.5 | 443.5 | 914.4 |
| Other monetary variations | (330.5) | (256.5) | (74.0) | 28.8 |
| Total monetary and exchange variations on liabilities | (28.7) | (433.8) | 405.1 | (93.4) |
| Monetary and exchange variations on assets | 541.8 | 198.9 | 342.9 | 172.4 |
| Monetary and exchange variations, net | 513.1 | (234.9) | 748.0 | (318.4) |
The effect of net monetary and exchange variations in 2022 was R$ 748.0 million, especially due to:
| · | R$ 35.6 million decrease in monetary variations on borrowings and financing, due to the decrease in the Amplified Consumer Price Index - IPCA (from 10.06% in 2021 to 5.78% in 2022); |
| · | R$ 443.5 million increase in exchange variations on borrowings and financing, due to the appreciation of the Brazilian real against the U.S. dollar and the Yen in 2022 (6.5% and 18.4%, respectively), when compared to the depreciation of the Brazilian real against the U.S dollar and the appreciation against the Yen in 2021 (-7.4% and 3.9%, respectively); |
| · | Increase of R$ 74.0 million in other monetary variations, mainly on lawsuits, of R$ 62.7 million; and |
| · | Increase of R$ 342.9 million in monetary and exchange variations on assets, mostly due to the higher recognition of R$ 314.4 million referring to the monetary adjustment on the GESP 2015 agreement in 2022, primarily resulting from the judicial order prohibiting the transfer of the reservoirs of the Alto Tietê Production System. |
Income tax and social contribution
The R$ 287.2 million increase in 2022 was mainly due to:
| · | Higher net operating revenue, of R$ 2,564.8 million, mitigated by higher costs and expenses, totaling R$ 1,573.7 million; |
| · | Exchange variation gains, of R$ 443.5 million; and |
| · | Higher monetary adjustment on the GESP 2015 Agreement, of R$ 314.4 million. |
Indicators
| a) | Operating |
| Operating indicators* | 2022 | 2021 | % |
| Water connections1 | 10,113 | 9,840 | 2.8 |
| Sewage connections1 | 8,610 | 8,418 | 2.3 |
| Population directly served - water2 | 28.0 | 27.8 | 0.7 |
| Population directly served - sewage2 | 24.7 | 24.6 | 0.4 |
| Number of employees | 12,299 | 12,515 | (1.7) |
| Water volume produced in the year3 | 2,858 | 2,864 | (0.2) |
| IPM - Micromeasured Water Loss (%)4 | 28.8 | 27.9 | 3.2 |
| IPDt (liters/connection x day)4 | 249 | 252 | (1.2) |
1. Total connections, active and inactive, in thousand units at the end of the period. Excludes water connections in Mauá
2. In million inhabitants, at the end of the period. Does not include wholesale
3. In millions of m³/s. Excludes volumes produced in the municipalities of Aguaí and Tapiratiba. Includes volume produced in Tejupá from May/22 to Dec/22
4. Excludes volumes and connections of Mauá, Aguaí, and Tapiratiba. Includes volumes and connections in Tejupá from May/22 to Dec/22
* Unaudited
| 8 |
Earnings Results 2022 | |
.
| b) | Economic |
| Economic variables at the end of the year* | 2022 | 2021 |
| Amplified Consumer Price Index¹ | 5.78 | 10.06 |
| National Consumer Price Index¹ | 5.93 | 10.16 |
| Consumer Price Index¹ | 7.32 | 9.73 |
| Interbank Deposit² | 12.45 | 5.06 |
| U.S. dollar³ | 5.2177 | 5.5805 |
| Yen³ | 0.03957 | 0.04847 |
1. Accrued in the year (%)
2. Average rate in the year (%)
3. Ptax sale rate on the last day
* Unaudited
Loans and financing
R$ thousand
| DEBT PROFILE | |||||||||
| INSTITUTION | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 onwards | TOTAL | % of total |
| Local Currency | |||||||||
| Debêntures | 739,534 | 1,072,853 | 1,203,451 | 1,082,322 | 1,700,765 | 644,748 | 1,498,157 | 7,941,830 | 41 |
| Caixa Econômica Federal | 99,767 | 99,270 | 105,476 | 112,071 | 119.068 | 126,371 | 859,889 | 1,521,912 | 8 |
| BNDES | 240,602 | 233,867 | 213,586 | 203,726 | 191,168 | 72,322 | 221,092 | 1,376,363 | 7 |
| IDB 2202 | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 181,349 | 1,257,264 | 2,345,358 | 12 |
| IDB INVEST | 51,440 | 53,650 | 82,575 | 144,821 | 147,159 | 182,022 | 695,583 | 1,357,250 | 7 |
| IFC | 80,000 | 80,000 | 80,000 | 80,000 | 80.000 | 80.000 | 270.996 | 750,996 | 4 |
| Lease¹ | 44,453 | 46,638 | 45,839 | 30,769 | 33,767 | 33,968 | 122,410 | 357,844 | 2 |
| Leasing (others)² | 72,109 | 15.580 | 9.248 | 3,972 | 465 | - | - | 101,374 | 1 |
| Others | 6,241 | 2,979 | 2,746 | 142 | - | - | - | 12,108 | 1 |
| Interest and other charges | 417,878 | - | - | - | - | - | - | 417,878 | 2 |
| Total in Local Currency | 1,933,373 | 1,786,186 | 1,924,270 | 1,839,172 | 2,453,741 | 1,320,780 | 4,925,391 | 16,182,913 | 85 |
| Foreign Currency | |||||||||
| IDB | 53,628 | 53,628 | 63,830 | 20,403 | 20,403 | 20,403 | 296,030 | 528,325 | 3 |
| IBRD | 31,722 | 31,722 | 31,722 | 31,722 | 31,722 | 31,722 | 207,038 | 397,370 | 2 |
| JICA | 169,788 | 169,787 | 169,787 | 169,787 | 169,787 | 169,787 | 773,891 | 1,792,614 | 8 |
| IDB 1983AB | 39,962 | - | - | - | - | - | - | 39.962 | 1 |
| Interest and other charges | 17,487 | - | - | - | - | - | - | 17.487 | 1 |
| Total in Foreign Currency | 312,587 | 255,137 | 265,339 | 221,912 | 221,912 | 221,912 | 1,276,959 | 2,775,758 | 15 |
| TOTAL | 2,245,960 | 2,041,323 | 2,189,609 | 2,061,084 | 2,675,653 | 1,542,692 | 6,202,350 | 18,958,671 | 100 |
1. Refers to work contracts signed as Assets Lease
2. Obligations related to leasing agreements, mainly vehicle leases
| 9 |
Earnings Results 2022 | |
Covenants
The table below shows the most restrictive clauses in 2022:
| Covenants | |
| Adjusted EBITDA / Adjusted Financial Expenses | Equal to or higher than 2.80 |
| EBITDA / Financial Expenses Paid | Equal to or higher than 2.35 |
| Adjusted Net Debt / Adjusted EBITDA | Equal to or lower than 3.80 |
| Net Debt / Adjusted EBITDA | Equal to or lower than 3.50 |
| Total Adjusted Debt / Adjusted EBITDA | Lower than 3.65 |
| Other Onerous Debt1 / Adjusted EBITDA | Equal to or lower than 1.30 |
| Adjusted Current Ratio | Higher than 1.00 |
“Other Onerous Debt” corresponds to the sum of pension plan obligations, healthcare plan, installment payment of tax debts, and installment payment of debts with the electricity supplier
In 2022, the Company met the requirements of its loans and financing agreements.
CAPEX
Investments totaled R$ 5,389.6 million in 2022, presented as additions in the notes to the quarterly information under Contract Asset, Intangible Assets, and Property, Plant and Equipment, of R$ 5,240.5 million, R$ 75.4 million, and R$ 73.7 million, respectively. Cash disbursed in 2022 referring to investments, including from previous periods, totaled R$ 3,624.2 million.
The table below shows investments broken down by water, sewage, and region:
R$ million
| Water | Sewage | Total | |
| Metropolitan Region | 1,484.7 | 2,439.7 | 3,924.4 |
| Regional Systems | 680.9 | 784.3 | 1,465.2 |
| Total | 2,165.6 | 3,224.0 | 5,389.6 |
| 10 |
Earnings Results 2022 | |
|
For more information, please contact:
Investor Relations Tel. +55 (11) 3388-8793 / 9267 E-mail: sabesp.ri@sabesp.com.br
Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. |
| 11 |
Earnings Results 2022 | |
Income Statement
| Brazilian Corporate Law | R$ '000 | |
| 2022 | 2021 | |
| Net Operating Income | 22,055,720 | 19,491,061 |
| Operating Costs | (14,350,903) | (12,800,042) |
| Gross Profit | 7,704,817 | 6,691,019 |
| Operating Expenses | ||
| Selling | (911,967) | (825,879) |
| Estimated losses with doubtful accounts | (782,057) | (643,730) |
| Administrative expenses | (1,398,507) | (1,124,069) |
| Other operating revenue (expenses), net | 8,327 | (21,841) |
| Operating Income Before Shareholdings | 4,620,613 | 4,075,500 |
| Equity Result | 24,551 | 22,079 |
| Earnings Before Financial Results, net | 4,645,164 | 4,097,579 |
| Financial, net | (864,735) | (975,887) |
| Exchange gain (loss), net | 492,321 | 48,464 |
| Earnings before Income Tax and Social Contribution | 4,272,750 | 3,170,156 |
| Income Tax and Social Contribution | ||
| Current | (1,230,234) | (961,556) |
| Deferred | 78,751 | 97,269 |
| Net Income for the period | 3,121,267 | 2,305,869 |
| Registered common shares ('000) | 683,509 | 683,509 |
| Earnings per shares - R$ (per share) | 4.57 | 3.37 |
| Depreciation and Amortization | (2,450,849) | (2,253,322) |
| Adjusted EBITDA | 7,087,686 | 6,372,742 |
| % over net revenue | 32.1% | 32.7% |
| 12 |
Earnings Results 2022 | |
Balance Sheet
| Brazilian Corporate Law | R$ '000 | ||
| ASSETS | 12/31/2022 | 12/31/2021 | |
| Current assets | |||
| Cash and cash equivalents | 1,867,485 | 717,929 | |
| Financial investments | 1,677,873 | 2,433,385 | |
| Trade receivables | 3,062,574 | 2,695,077 | |
| Related parties and transactions | 205,793 | 173,657 | |
| Inventories | 124,247 | 113,506 | |
| Restricted cash | 37,474 | 28,467 | |
| Currrent recoverable taxes | 242,906 | 276,104 | |
| Other assets | 66,312 | 64,873 | |
| Total current assets | 7,284,664 | 6,502,998 | |
| Noncurrent assets | |||
| Trade receivables | 215,234 | 223,234 | |
| Related parties and transactions | 950,950 | 644,895 | |
| Escrow deposits | 170,093 | 141,667 | |
| National Water and Sanitation Agency – ANA | 9,193 | 20,666 | |
| Other assets | 146,362 | 161,369 | |
| Equity investments | 110,765 | 79,437 | |
| Investment properties | 46,726 | 46,126 | |
| Contract assets | 8,613,968 | 8,550,102 | |
| Intangible assets | 39,320,871 | 36,503,834 | |
| Property, plant and equipment | 338,939 | 291,157 | |
| Total noncurrent assets | 49,923,101 | 46,662,487 | |
| Total assets | 57,207,765 | 53,165,485 | |
| LIABILITIES AND EQUITY | 12/31/2022 | 12/31/2021 | |
| Current liabilities | |||
| Trade payables | 430,946 | 236,763 | |
| Borrowings and financing | 2,245,960 | 1,830,617 | |
| Accrued payroll and related charges | 498,504 | 426,616 | |
| Taxes and contributions | 293,461 | 257,130 | |
| Dividends and interest on capital payable | 741,725 | 548,006 | |
| Provisions | 924,038 | 809,821 | |
| Services payable | 723,242 | 469,027 | |
| Public-Private Partnership – PPP | 222,413 | 142,757 | |
| Program Contract Commitments | 100,188 | 77,652 | |
| Other liabilities | 476,865 | 294,538 | |
| Total current liabilities | 6,657,342 | 5,092,927 | |
| Noncurrent liabilities | |||
| Borrowings and financing | 16,712,711 | 15,893,219 | |
| Deferred income tax and social contribution | 189,278 | 283,739 | |
| Deferred Cofins and Pasep | 159,723 | 159,456 | |
| Provisions | 686,746 | 638,672 | |
| Pension obligations | 2,150,191 | 2,321,662 | |
| Public-Private Partnership – PPP | 2,736,768 | 2,917,428 | |
| Program Contract Commitments | 12,197 | 44,995 | |
| Other liabilities | 569,276 | 881,528 | |
| Total noncurrent liabilities | 23,216,890 | 23,140,699 | |
| Total liabilities | 29,874,232 | 28,233,626 | |
| Equity | |||
| Paid-up capital | 15,000,000 | 15,000,000 | |
| Profit reserve | 12,155,890 | 9,885,485 | |
| Other comprehensive income | 177,643 | 46,374 | |
| Total equity | 27,333,533 | 24,931,859 | |
| Total equity and liabilities | 57,207,765 | 53,165,485 |
| 13 |
Earnings Results 2022 | |
Cash Flow
| Brazilian Corporate Law | R$ '000 | |||
| Jan-Dec 2022 |
Jan-Dec 2021 | |||
| Cash flow from operating activities | ||||
| Profit before income tax and social contribution | 4,272,750 | 3,170,156 | ||
| Adjustment for Net income reconciliation: | ||||
| Depreciation and amortization | 2,450,849 | 2,253,322 | ||
| Residual value of property, plant and equipment and intangible assets written-off | 10,110 | 27,754 | ||
| Allowance for doubtful accounts | 782,057 | 643,730 | ||
| Provision and inflation adjustment | 630,689 | 380,624 | ||
| Interest calculated on loans and financing payable | 1,091,592 | 647,980 | ||
| Inflation adjustment and foreign exchange gains (losses) on loans and financing | (301,716) | 177,269 | ||
| Interest and inflation adjustment losses | 22,225 | 37,202 | ||
| Interest and inflation adjustment gains | (400,057) | (171,173) | ||
| Financial charges from customers | (328,486) | (349,491) | ||
| Margin on intangible assets arising from concession | (109,369) | (98,402) | ||
| Provision for Consent Decree (TAC) and Knowledge retention program (KRP) | (1,238) | 3,195 | ||
| Equity result | (24,551) | (22,079) | ||
| Interest and inflation adjustment (Public-Private Partnership) | 489,197 | 464,398 | ||
| Provision from São Paulo agreement | 167,714 | 131,878 | ||
| Pension obligations | 183,262 | 176,673 | ||
| Other adjustments | 15,488 | 15,152 | ||
| 8,950,516 | 7,488,188 | |||
| Changes in assets | ||||
| Trade accounts receivable | (489,885) | (742,260) | ||
| Accounts receivable from related parties | (295,091) | 20,665 | ||
| Inventories | (10,741) | (8,658) | ||
| Recoverable taxes | 33,198 | (253,432) | ||
| Escrow deposits | 5,348 | 43,865 | ||
| Other assets | 18,264 | 31,386 | ||
| Changes in liabilities | ||||
| Trade payables and contractors | (220,462) | (245,501) | ||
| Services payable | 86,501 | (116,601) | ||
| Accrued payroll and related charges | 73,126 | 12,478 | ||
| Taxes and contributions payable | 120,853 | 196,255 | ||
| Deferred Cofins/Pasep | 267 | 10,012 | ||
| Provisions | (468,398) | (184,433) | ||
| Pension obligations | (239,174) | (215,937) | ||
| Other liabilities | (722,549) | (68,260) | ||
| Cash generated from operations | 6,841,773 | 5,967,767 | ||
| Interest paid | (1,505,488) | (845,445) | ||
| Income tax and contribution paid | (1,368,686) | (1,208,569) | ||
| Net cash generated from operating activities | 3,967,599 | 3,913,753 | ||
| Cash flows from investing activities | ||||
| Acquisition of contract assets and intangible assets | (3,550,537) | (3,696,669) | ||
| Restricted cash | (9,007) | 7,275 | ||
| Financial investments | 755,512 | 1,076,468 | ||
| Investment properties | (648) | - | ||
| Purchases of tangible assets | (73,668) | (50,281) | ||
| Net cash used in investing activities | (2,878,348) | (2,663,207) | ||
| Cash flow from financing activities | ||||
| Loans and financing | ||||
| Proceeds from loans | 2,807,026 | 2,922,811 | ||
| Repayments of loans | (1,536,724) | (2,896,604) | ||
| Payment of interest on shareholders'equity | (603,541) | (254,218) | ||
| Public-Private Partnership – PPP | (590,201) | (579,486) | ||
| Program Contract Commitments | (16,255) | (121,521) | ||
| Net cash used in financing activities | 60,305 | (929,018) | ||
| Increase/(decrease) in cash and cash equivalents | 1,149,556 | 321,528 | ||
| Represented by: | ||||
| Cash and cash equivalents at beginning of the year | 717,929 | 396,401 | ||
| Cash and cash equivalents at end of the year | 1,867,485 | 717,929 | ||
| Increase/(decrease) in cash and cash equivalents | 1,149,556 | 321,528 | ||
| 14 |
|
Companhia de Saneamento Básico do Estado de São Paulo - SABESP | ||
| By: | /s/ Catia Cristina Teixeira Pereira
|
|
|
Name: Catia Cristina Teixeira Pereira
Title: Chief Financial Officer and Investor Relations Officer |
||
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.