Companhia de Saneamento Básico do Estado de São Paulo - SABESP

and volume expansion with partial offsets from FAUSP and MIX. Volume growth contributed 3.5%, supported by 1.5% from new connections for the aggregate of water and sewage. Additionally, we saw 2% in increased consumption in the quarter, despite slightly lower temperatures in Sao Paulo State in the period versus last year. As a reference, historical consumption increase in the past three years for Q2 has been 3.2%. Breaking down the revenue dynamics, average prices rose by 5%, largely due to tariff carryover in April and May from May's 2024 tariff cycle. While in June, we saw a tariff decline driven by July 2024 1% tariff decrease. In addition to that, we also continue to benefit from the removal of these comes to the first cohort of large clients with prices rising an average 47% versus Q4 2024. As mentioned in Q125 call, we have also terminated more contracts and we'll start seeing the benefit of them throughout H2. On the mixed topic, it was impacted by the growth in the number of subsidized residential units. notably with the expansion of clients eligible for discounts. In July 2025, we saw the approval by the concession of the extension for 18 months of subsidies to current clients that do not fit the CAGI-ÚNICO rules and the introduction of a new intermediary discount class called Tarifa Paulista, which will further help consumers in vulnerable situations. EBITDA growth was driven by price and discipline in cost control, On the cost front, we have been communicating that we would be changing the conduction in legal claims, outsourcing an important part to specialized external counsel and implementing settlements. This has contributed about 200 million in EBITDA year-on-year for this quarter. Deep diving into personnel, expenses fell 10.3% year-on-year despite a 5.5% increase derived from the collective bargain with our unions. This was mostly driven by an 11% reduction in headcount from 2023 and 2024 voluntary dismissal plans, which have been substantially captured in June. These measures are part of our broader efficiency strategy. Net income rose 77% year on year, reaching 2.1 billion. The key drivers include the financial asset bifurcation, lower amortization from the extended concession agreement, and the interest and monetary correction driven by the reversal of legal accruals I mentioned before. This was partially offset by lapping a prior year lower effective tax rate. Going to one of our most important commitments and a fundamental pillar for our next five-year strategy, CAPEX totaled $3.6 billion in Q2 2025, a 178% increase year-on-year and a 26% acceleration versus Q1 figures. We're ahead of schedule on our 24 and 25 view factor targets with water units target already met and 86% of sewage collection and 51% of sewage treatment delivered. To bring more color to the financial figures, our main programs include Integra Tietê, Coastal Works, and São Paulo Metro Region, among others. As an example, we're increasing treatment capacity by 68%, adding 17 cubic meters per second across our top five sewer treatment plants, like Barueri. Our leverage continues to be under control, with no effective exposure to currency, given our foreign-denominated debt is fully swapped. We close July with four years of debt amortization in cash on hand, which we expect to deploy throughout the next months as we advance the CapEx agenda. 53% of our debt now matures from 2030 onwards, improving our long-term profile. Key financial ratios continue to improve. ROIC reached 13% and ROE 15%, while net debt to adjusted EBITDA remains conservative at 1.9 times, reflecting the strength of our balance sheet and operating model. Finally, a quick update on the tariff cycle as we had many inbound questions. We have submitted to our SASP the data for our 2024 RAB and expect to hear back by end of September, after which we will have the final tariff adjustment by December 1st. This will become public information and be effective by January 1st, 2026. The main topics of that iteration will be the net additions to the RAB 2024's pass-through expenses, compensation adjustments from the last 2019-2023 forward-looking cycle on non-executed CAPEX, adjusted 2024 histogram, and the contractual amendment signed in December 2024. I will now pass the floor to our CEO, Mr. Carlos Piani. Piani, the floor is yours.

Thanks again, Daniel. Let's now move to the next session of our presentation and review the highlights of our focus areas. Starting with slide 18, our strategy remains focused on three priorities, meeting new concession agreement challenges through faster universalization and regulatory compliance, raising operating standards in quality, reliability, and customer service, and boosting financial efficiency while strengthening people, technology, and processes for long-term success. Now, turning to slide 19 and our latest operational updates. CapEx execution continues to accelerate. In the second quarter, we invested 3.6 billion Hais, bringing our last 12-month total to 10.6 billion Hais. Our backlog now stands at 35 billion Hais across 542 projects, which are scheduled to be executed until the end of 2029. On the regulatory side, we've maintained our positive track record. Around 70% of injections from large clients related to legacy discounts have been overruled in our favor. This remains one of our main initiatives to close the revenue gap. Operationally, we've seen significant improvements in the client service front, quarter over quarter. 18% reduction in complaints about water shortages, 23% reduction in water leaks reported by the population, and 42% reduction in the average time for pavement restoration. On the energy efficiency front, we commissioned 32 photovoltaic plants with 44 megawatt peak of installed capacity, which we expect to generate annual savings of 44 million has per year. By the end of 2026, we expect to increase the total number to 44 plants with 60 megawatt peak of installed capacity. On the commercial front, our metering upgrade program is starting to gain traction with 225,000 new units installed in the quarter, 10% more than in Q1. In addition, SatVestia recently signed a 3.8 billion hash turnkey contract that will cover the replacement of 4.4 million meters with smart IoT enabled units by 2029. A landmark move in leveraging data, accuracy, and advanced infrastructure capabilities. One of our most important goals on the commercial front is to protect and secure our revenues. In this regard, we became the first utility in Brazil to operate with automatic PIX payments, that is, recurring PIX transactions. We also began operating with smart POS machines in the field, and in May, launched our customer service channel for WhatsApp. This new channel is already delivering promising results, which I will detail on the next page. And in the cost management front, ZBB initiatives deliver concrete results, centralization of global maintenance contracts, craft of a legal settlement strategy to streamline legal processes, optimization of chemical use, improvement of meter reading processes, and prioritization of pump replacements. This leads us to slide 20, which focuses on our technology-driven customer service initiatives. Our recently created customer service WhatsApp channel has now handled over 3 million conversations and collected 96 million highs, with an average satisfaction rating of 4.52. We're proud to be the first utility in the world to process payments through WhatsApp using Meta's proprietary technology. We've also expanded digital service, adding second copies of invoices, facial authentication, pics and credit card payments, and conversational AI, bringing faster, more personalized, more accessible customer interactions. All these results were achieved in just the past 60 days. Our new smart POS enables payments directly at the customer's location through PIX or credit card in up to 24 installments, helping avoid immediate disconnections, providing convenience, and ensuring secure, fast, and inclusive transactions. Finally, on slide 21, let's reflect on our first year post-provenzation. As mentioned by Daniel, our universalization targets are progressing at an accelerated pace. In total, over 1.3 million people gain access to water, 1.4 million people gain access to sewage treatment in this first cycle. Now more than 5 million people benefit from affordable tariffs, including the new Tarifa Social Paulista. And our CAPEX program has induced the creation of more than 7.5 thousand direct jobs in our construction sites alone. In summary, the second quarter demonstrates that our transformation is on track. We're scaling infrastructure, improving service quality, enhancing customer experience, strengthening our financial position, and delivering tangible social and environmental benefits. That is all for now, but before we move to the Q&A session, there will be a one-minute video that we would like to share with you. Thank you.

It's been about nine to ten years since I moved here, and the situation here wasn't very good. It was mud, it was... There was no basic sanitation, we passed some tests here. We already started with the social rate, so for us it was very good, right? Because of our monthly earnings, which is a minimum wage for a family of seven people, it's very complicated. If you don't know how to distribute your income, you'll go through a loss. So having the social rate for us is important, it's interesting. We save on the social tariff, we complement the food, we complement the other monthly expenses we have. It's a benefit that brings us comfort.