By Brazil Stock Guide – Iguá Saneamento doubled its quarterly net loss to R$137 million in the third quarter of 2025, as higher financial expenses and the early phase of large concessions outweighed strong operational growth. While revenue, volumes and adjusted EBITDA expanded sharply with the full operation of Sergipe and the acceleration of the Iguaçu PPP, the company’s debt load and funding structure continue to dictate the pace of its financial performance.
The company delivered R$872.9 million in net operating revenue, up 33.5% from a year earlier, driven by new connections, stronger commercial recovery efforts and the integration of Sergipe and Iguaçu. Adjusted EBITDA rose 48.2% to R$297.5 million, supported by a 74% jump in the number of serviced economies and a 52% rise in billed volumes. Despite those gains, financial expenses surged nearly 70%, keeping the bottom line in negative territory.
Operational growth anchored by Sergipe and the Iguaçu PPP
The company ended the quarter with 2.36 million economies, supported by the addition of 967,000 new units from Sergipe alone. Water revenue rose 64% and sewage revenue increased 38.7%, reflecting higher coverage, regularization of previously inactive or irregular consumers, and the expansion of collection and treatment networks. Service revenue grew 71.6%, boosted by new connections, inspections and maintenance activities.
Excluding Sergipe and Iguaçu, revenue would still have grown 12.4% year over year, showing resilient performance from the company’s mature operations in Cuiabá, Paranaguá, Atibaia and Agreste.
Costs rise with new concessions but efficiencies start to show
Total costs and expenses increased 32.9%, tied to the scaling up of new operations, the expansion of field teams and higher spending on technical services, fraud-combat campaigns and infrastructure modernization. The company also improved its delinquency rate, which fell to 1.1%, supported by stronger credit recovery efforts and stricter regularization campaigns in Rio de Janeiro.
Adjusted EBITDA margin reached 41.3%, only slightly below last year’s level, even with the elevated startup costs associated with Sergipe and the PPP ramp-up.
Leverage remains high but shows sequential improvement
Iguá closed the quarter with R$12.74 billion in gross debt and R$1.11 billion in cash, resulting in R$11.63 billion in net debt. The leverage ratio stood at 11.08x adjusted EBITDA, down from 12.00x in the previous quarter, as the trailing EBITDA base strengthened with the inclusion of five months of Sergipe’s operations. Even with its slight improvement, leverage remains high as the early financing structure of major concessions continues to weigh on the balance sheet.
Sergipe remains the largest pressure point: the concession began operations only in May 2025 but already carries a fully disbursed R$2.65 billion bridge loan, which comes due in a single bullet payment in 2029. Iguá expects to refinance this structure into long-term project finance, but the timing and cost of that transition will be central to its deleveraging strategy.
Excluding Sergipe, leverage falls to 8.94x, and excluding both Sergipe and Rio, it declines to a much more conservative 3.13x, reflecting the cash generation capacity of the company’s mature assets.
Investment program advances across all regions
Iguá invested R$155.4 million in the quarter and R$533.9 million over nine months, with projects focused on network expansion, setorialization, modernization of treatment plants, and improvements to distribution systems. Key advances included progress at the ETE Barra and Complexo Lagunar in Rio de Janeiro, sanitation expansion in Paranaguá and Cuiabá, and the continued rollout of operational bases and network works under the Iguaçu PPP.
In Sergipe, the company accelerated emergency water security projects in Poço Redondo, Porto da Folha, Itabaiana and Riachão do Dantas, and advanced its R$100 million Summer Plan, targeting structural shortages in the Sertão and Agreste regions.
Management transition
Iguá entered a new management cycle in August with the appointment of René Silva as CEO, initiating a leadership transition focused on operational discipline, efficiency and people-centered management.
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