By Brazil Stock Guide – Aegea Saneamento wants to grow — but not at the expense of its balance sheet. During the company’s call with analysts, Chief Financial Officer André Pires said the group will only pursue new sanitation concessions if additional sources of capital are secured, underscoring a conservative stance toward expansion amid Brazil’s high-rate environment.
“Our focus is to keep deleveraging. Since December 2024, we’ve reduced leverage from 4.3x to 3.27x EBITDA. In any transformational transaction, we will only move forward if there are extra capital sources. The philosophy is clear: do not endanger the capital,” Pires said.
He noted that sanitation is a capital-intensive business highly exposed to interest rates, which calls for prudence in financing. “We remain attentive to debt costs and opportunities to extend maturities. This mix of financial discipline and operational efficiency underpins our investment capacity,” he added.
Leverage falls as maturities lengthen
Aegea ended the third quarter of 2025 with net debt of R$ 41.4 billion, equivalent to 3.7 times EBITDA at the ecosystem level and 2.9 times on the corporate basis — well below its 4x covenant. After peaking at 4.3x in late 2024 due to R$ 4.2 billion in concession-fee payments, including R$ 3.8 billion for the Rio de Janeiro contract, the company has been reducing leverage quarter after quarter.
The average debt maturity increased from 7.2 to 7.5 years, following new local seven-year debenture issues and ten-year international bonds, part of a liability-management plan aimed at smoothing repayments and reinforcing cash-flow predictability.
Tariff rebalance under court review
Pires also addressed the ongoing tariff rebalance process for Águas do Rio, still under review by the Rio de Janeiro State Audit Court (TCE). The company had signed a conciliation agreement in 2024 to offset differences in sewage-coverage targets, allowing for additional tariff adjustments. A second version, which included a discount on bulk water purchases to mitigate the consumer impact, was later challenged by the court.
“There’s no dispute over our right to a rebalance, only over the most appropriate way to implement it,” Pires said.
Efficiency drives deleveraging
Operational efficiency remains central to Aegea’s deleveraging efforts. In Águas do Rio, the Vem com a Gente program and selective supply cuts helped reduce delinquency from 35% to 15%, while active connections doubled from 900,000 to 1.7 million since 2021.
“Revenue grew 50%, but collections doubled. The faster cash conversion explains our stronger cash generation,” Pires said.
At Corsan, a voluntary-severance program cut personnel expenses by about 40%, setting a new recurring cost base. Delinquency now stands near 1%, and the EBITDA margin reached 64%, supported by efficiency gains and tariff readjustments.
Controlled expansion in Pará
In Pará, where operations began in 2025, Pires said the assets received are consistent with the concession contract and supported by early investments to guarantee water quality and distribution reliability. “The Pará contract is modern and reflects the evolution of BNDES-structured concessions,” he said.
Growth with internal funding
With strong cash generation, lower leverage, and extended debt maturities, Aegea signals that its next growth phase will rely more on internal funding than on new debt. “Maintaining leverage at comfortable and manageable levels is a strategic premise — even when evaluating new opportunities,” Pires concluded.
Read more: Aegea: Profit declines on higher costs and financing despite robust revenue growth
Leave a Reply