Companhia de Saneamento Básico do Estado de São Paulo SABESP : Presentation Conference Call 4Q19

2019 CONFERENCE CALL

Economic-Financial and Investor Relations Office

March 31, 2020

LEGAL NOTICE

This presentation may contain forward-looking statements referring to SABESP's business outlook, operating and financial estimates and growth prospects. These are only projections and, as such, they are exclusively based on the expectation of SABESP's management team in relation to the future of the business and its continuous access to capital to finance the Company's business plan. These forward-looking statements largely depend on changes in market conditions, governmental rulings, industry performance and the Brazilian economy, amongst other factors, in addition to the risks disclosed in the documents filed by SABESP, thus they are subject to changes without prior notice.

2

BILLED VOLUME (million m³)

Total water and sewage billed volume, including wholesale

			Sabesp				Sabesp
		(Excluding Guarulhos and Santo André)			(Including Guarulhos and Santo André)
									3.5%
				2.7%					3,749.0	3,879.7
3,550.3
3,646.0
				2.4 %					0.2%
								2.107,9	2.112,7
1.926,4	1.971,9
			Water
		Water					7.7%
		3.1%				Sewage
		Sewage				1.767,0
						1.641,1
1.623,9	1.674,1
2018	2019
				2018	2019
						Historical Billed Volume

																		942	944	931	924	950	973	989	959	993
											925		904	923
					880	880	910
		863	872
841
							495	512	520		509	519	528	531	523	520	534	533	556	522	536
		484	490	494
473										414						416	440	433			457
386	399	405		395	404	413	408	404	437
368	379	382	386
	3Q15		4Q15	1Q16		2Q16		3Q16		4Q16		1Q17		2Q17		3Q17		4Q17		1Q18		2Q18	3Q18		4Q18	1Q19		2Q19		3Q19		4Q19
																																3
															Sewage	Water		Water + Sewage

FINANCIAL HIGLIGHTS (R$ million)

14,253.6

Gross operating revenue13.2%16,134.0

16,085.1

Net operating revenue11.8%17,983.6

Costs, adm. & selling		10,943.6
expenses and		12,257.0	12.0%
construction costs
Adjusted EBITDA	6,540.6
	14.8%
7,510.5

5,148.0

Adjusted EBIT11.3%

5,730.3

2,835.1

Net income18.8%3,367.5

2018		2019

4

KEY EVENTS IMPACTING RESULTS IN 2019

• Start of operation in the municipality of Santo André
• • R$ 1,424,8 million increase in operating revenues and R$ 6.5 million reduction in expenses, and R$ 1,418.3 million increase in net income
• Operations in the municipality of Guarulhos
• • R$ 424,6 million increase in operating revenues, R$ 189,9 million increase in costs and expenses, and R$ 231,7 million increase in net income
• TAC - Retirees
• • R$ 173.3 million reversal in Salaries and payroll charges and Pension plan obligations
• São Lourenço Production System
• • R$ 137,9 million increase in costs and expenses resulting from the startup of operations
• Signing of a Service Agreement with the municipality of São Bernardo do Campo and Guarujá
• • R$ 39,0 million R$ 46,4 million innon-recurring expenses

5

COSTS AND EXPENSES (R$ million)

							Costs and expenses in 2018*: R$ 8,203.9	14.3%
0.3%						Costs and expenses in 2019*: R$ 9,375.6
2,673.6	2,681.9								*Excluding construction costs
					22.6%			27.8%
					1,808.4	19.1%	22.2%	1,780.2
					1,474.7			1,392.6
						1,142.9	1,177.6
			17.1%
	9.5%		959.4	963.8
					-23.2%	24.7%
	249.3	272.9	265.1	310.4					166.7
							128.1
									58.7	73.2
	Salaries and payroll	General Supplies	Treatment Supplies	Services	Electricity	General Expenses	Depreciation and	Allowance for Doubtful
	charges and Pension							Amortization	Accounts
	plan obligations

2018 2019

% Net Revenue in 2018
16.6%	1.5%	1.6%	9.2%	6.0%	6.0%	8.7%	1.0%	0.4%
% Net Revenue in 2019
14.9%	1.5%	1.7%	10.1%	6.4%	6.5%	9.9%	0.7%	0.4%

6

FINANCIAL PERFORMANCE (R$ million)

1,898.5

230.6

3,367.5

2,835.1

(1,313.4)

(50.2)

(233.1)

2018	N.O.R.	Costs &	Other Revenue	Net Financial	Income Tax &	2019
Net Income	Net Income
	Expenses	& Expenses (*)	Result	Social Contribution

	2019	2018	Variation
Net Income 2018		2,835.1
Net Operating Revenue	17,983.6	16,085.1	1,898.5
Costs & Expenses	(12,257.0)	(10,943.6)	(1,313.4)
Other Revenue & Expenses (*)	(15.0)	35.2	(50.2)
Net Financial Result	(1,033.7)	(1,264.3)	230.6
Income Tax & Social Contribution	1,310.4	(1,07.3)	(233.1)
Net Income 2019		3,367.5

(*) Includes equity results	7

PERFORMANCE INDICATORS

Total Gross Revenue per m³ Billed - R$/m³

Figures at 4Q19 average prices, updated by IPCA

The following were not considered:
Construction revenue
R$928 million referring to the agreement with Guarulhos in 4Q18
R$1,254 million referring to agreement with Santo André in 3Q19	8

PERFORMANCE INDICATORS

Operating Expense per m³ Billed - R$/m³

Figures at 4Q19 average prices, updated by IPCA

Expenses considered: Personnel

General Supplies General materials Services Electricity General expenses Tax expenses

Reversals excluded:

R$696 million referring to agreement with the State Government in 1Q15

R$307 million referring to the migration of the additional pension plan in 3Q16 R$173 million referring to the TAC Retirees.

9

PERFORMANCE INDICATORS

EBITDA per m³ Billed - R$/m³

Figures at 4Q19 average prices, updated by IPCA

The following were not considered:
Revenue:
R$928 million referring to the agreement with Guarulhos in 4Q18
R$1,254 million referring to agreement with Santo André in 3Q19
Reversal of expenses:
R$696 million referring to agreement with the State Government in 1Q15
R$307 million referring to the migration of the additional pension plan in 3Q16	10
R$173 million referring to the end of the TAC Retirees in 3Q19.

SABESP 2019

• Net income of R$ 3.4 billion
• Market expansion with the incorporation of Santo André and Guarulhos
• • 2 million people incorporated to the population served - 600 thousand with new water connecitons and new sewage connections
  • Stopping the delinquency of the municipalities in the wholesale base
• 17 contracts secured/renewed in 2019
• • 2019 324 municipalities contracted - 92.2% of the revenue secured
  • 2018 307 municipalities contracted - 84.4% of the revenue secured
  • The 10 biggest contracts acccount for 65.6% of the revenue and have na average maturity of 26 years

11

SITUATION TO COMBAT THE CRISIS

• More secured water supply system in the SPMR
• • Water production capacity 12% higher
  • Transfers between reservoirs increaded by 163% and between distribution systems by 300%
  • Water storage 8% higher
  • In 2013 the reservoir storage levels were 52% and in March 2020, 77%
  • Reduction in production from 69.1 m³/s in 2013 to 66 69,1 m³/s in 2019
• Finacials Indicators
• • EBITDA margem of 44.6% tn 2013 to 52.2% in 2019
  • The Covenants (Total Debt / EBITDA and Net Debt / EBITDA) that was 2.32x and 1,91x in 2013 reached 1.75x and 1.45x, respectively in 2019
  • Foreign Exchange exposure was 39.1% in 2013 reached 48% in 2019
  • Value of the debt in dollar remained practically the same, US$ 1.579 million in 2013 against US$ 1.578 million in 2019
  • Dollar that breakes the Covenant in 2013 was R$ 5,71 against the value of the dollar R$ 2,34. In 2019 the dólar that breakes the Covenant was R$ 13,15 against the valeu of the dollar of R$ 4.03
• Sabesp more prepared to face the health crisis caused byCovid-19

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DIVERSIFIED CONSUMER BASE

WATER BILLED VOLUME BY TYPE OF CUSTOMER	SEWAGE BILLED VOLUME BY TYPE OF CUSTOMER

WATER REVENUES BY TYPE OF CUSTOMER*	SEWAGE REVENUES BY TYPE OF CUSTOMER*

Approximately 90% of water volume and revenue come from residential,	Approximately 90% of sewage volume and revenue come from residential,
commercial and industrial customer	commercial and industrial customer

*Managerial information	13

www.sabesp.com.br

IR Contacts

Mario Azevedo de Arruda Sampaio	Angela Beatriz Airoldi
Head of Capital Markets and Investor Relations	Investor Relations Manager
[e-mail]	[e-mail]
[phone]	[phone]