By Brazil Stock Guide – Iguá Saneamento delivered a textbook expansion-phase quarter in 4Q25: strong revenue and EBITDA growth, meaningful operational gains and a deeper net loss driven by its capital structure. Net revenue rose 42.8% year-on-year to R$1.0 billion, while adjusted EBITDA increased 73.7% to R$363.9 million. Still, net loss widened to R$149.5 million, from a loss of R$26.2 million in 4Q24.
Expansion momentum
The main driver of the quarter was the consolidation of new operations, particularly Sergipe, which reached full operational status in May 2025 and immediately added scale. Total water and sewage connections rose 75.4% to 2.38 million, while billed volume increased 54.9%. Operational efficiency also improved, with non-revenue water losses declining to 46%, from 48% a year earlier. The data suggests Iguá is beginning to extract productivity gains even amid a heavy deployment phase.
Strong top line, heavy financial burden
Financially, however, the key issue remains the mismatch between operational growth and debt-related costs. Net financial expenses reached R$390.2 million in the quarter, up 14%, with interest on loans, financing and debentures totaling R$399.8 million. Management attributes part of this pressure to early-stage concessions in Rio de Janeiro and Sergipe, as well as accrued interest during grace periods that has no immediate cash impact but weighs on accounting results. In short, Iguá is scaling up — but still paying the upfront cost of doing so.
Leverage still elevated
This dynamic remains central for investors. Gross debt stood at R$12.8 billion, with net debt at R$12.0 billion. Consolidated leverage declined to 10.35x adjusted EBITDA (LTM), still high but down from 11.53x in 3Q25. Excluding Rio and Sergipe, leverage drops to 3.52x, indicating that legacy operations remain financially healthier. The distinction is critical: risk is less about the core business and more about the timing of returns from new concessions.
What comes next
Investors typically tolerate higher leverage in regulated infrastructure when backed by visibility, execution and contractual growth — and Iguá has delivered on those fronts so far. The company invested R$828.2 million in 2025, advanced projects across key regions and expanded its customer base while improving margins. The next phase, however, is more demanding: converting expansion into earnings and deleveraging.
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