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SABESP (SBS) Q3 Earnings Miss Estimates, Revenues up Y/Y

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SABESP’s (SBS - Free Report) net income in the third quarter of 2018 slumped 50% year over year to R$ 565.2 million ($143.4 million). Earnings per share (EPS) totaled R$0.83, down from year-ago quarter’s figure of R$1.32.

Considering the ADR equivalent of EPS, the bottom line in the reported quarter was 21 cents, lagging the Zacks Consensus Estimate of 26 cents by 19.2%. Also, the figure declined 100% from the year-ago quarter’s tally of 42 cents.

Revenues Improve Y/Y

In the reported quarter, SABESP's net operating revenues (including construction revenues) were R$3,810.8 million ($967million), up 7.8% year over year. The figure missed the Zacks Consensus Estimate of $1,066 million by 9.2%.

The year-over-year improvement was driven by favorable impact from the tariff-repositioning index.

Highlights of the release

Costs and expenses, which include construction costs, totaled R$ 2,719.2 million ($690), up 13% year over year.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were R$ 1,434.6 million ($364 million), down 1.5% year over year.

Billed water and sewage volumes in the quarter inched up 0.1% year over year to 923.9 million cubic meters. The company's water connections rose 2.3% in the third quarter of 2018. Sewage connection improved 2.8% from third-quarter 2017 level.

Balance Sheet & Cash Flow

As of Sep 30, 2018, SABESP's cash and cash equivalents were R$3,619.3 million ($918.5 million), up from R$2,283 million ($688.8 million) at the end of 2017. Borrowings and financing grew 20.4% in the first nine months of 2018 to R$2,104.5 million ($534 million).

Cash generation from operations in the first nine months of 2018 was R$3,088 million ($783.7 million) versus R$2,339.2 million ($737.9 million) in the year-ago period.

During the quarter, the company invested R$795.6 million ($202 million)

Zacks Rank

SABESP currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Water Supply Utilities’ Release

Here are some players from the water utility space that have reported third-quarter 2018 results. American Water Works Co (AWK - Free Report) , SJW Group (SJW - Free Report) and American States Water Company (AWR - Free Report) beat the Zacks Consensus Estimate by 3.5%, 12.5% and 3.3%, respectively.

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