Good morning, everyone. And welcome to SABESP's Earnings Call to discuss results relative to Q3 2022. My name is Luiz Roberto Tiberio. I am the Resource Funding and IRO Officer at SABESP. Today with us, Dr. Benedito Braga, the Company’s CEO; President Dr. Osvaldo Garcia, CFO and IRO; and Marcelo Miyagui, Accounting Officer. Before I move over to Dr. Braga, for his opening remarks, I’d like to give some house-keeping instructions. We have simultaneous translation into English and it’s being recorded. The presentation and the respective recording will be available for download at the company’s IR website where the respective press release is already available. . Our conference will last approximately 1.5 hours and we’ll have 45 minutes for Q&A at the end of the company’s remarks for analysts and investors and 15 minutes for journalists. Concluding the initial instructions, I’d like to say that forward-looking statements made during the company’s presentation concerning business outlook, operating and financial targets are based on assumptions and beliefs of the part of the company’s management and also on information currently available to the company. They are not investment recommendations. Forward-looking statements are no guarantee of performance. They involve risks uncertainties and assumptions as they refer to future events and therefore depend on circumstances that may or may not materialize. Investors should have in mind that economic conditions, industry conditions and other operating factors might affect the future results of the company and thus lead to numbers that will differ considerably from those expressed in these forward looking statements. Well, having said that, I'd like to turn the floor over to Dr. Braga who will make his opening remarks. Please Dr. Braga, over to you.

Thank you Tiberio. It's a great pleasure to be with all here today. I'd like to greet you all. And thank you also for participating and thank you for your interest as investors and as journalists and the general public, who are here with us following our Q3 earnings conference call. Starting with the update on the status of the water sources this year, we are seeing a more comfortable scenario when compared to the same period of last year. Early November 2021, the sum of the volumes stored in the reservoirs of the Metropolitan region of São Paolo was 39%. This year, the total volume stored in the eight systems we have for producing drinking water is at 45%. It is a more comfortable situation, but one that will have to be carefully monitored due to a drier summer forecast by the Climate Forecast Center of Columbia University, which could delay the rains that normally happen in the month of December. In terms of the company's internal affairs, I'd like to highlight that the restructuring that we performed by unifying the regulation oversight department and also the creation of the new business department in July 2021 brought excellent results. Under Dr. Osvaldo's leadership in the financial front, SPEs were set up that have expanded the area in which our company operates, meeting the expectations of our shareholders. As you all know, we have recently disclosed to the market the creation of 3 SPEs or specific purpose companies or entities aimed at expanding the company's areas of activity, and also taking advantage of the synergies across related processes to the sanitation activities. We have signed an agreement to acquire 20% of share at Foxx URE-BA, a special purpose company that is a subsidiary of Orizon Valorização de Resíduos, a transaction…

Good morning, Dr. Braga. Good morning, everyone. And thank you for participating in today's conference call to discuss Q3 2022 results. Starting with Slide number 3, we see an increase in the total volume, which was billed of 8.8% for water and 2.5% for sewage leading to a growth of 1.6% compounded. As a reminder, the growth of the sewage volume above the water volume is a reflection of the investments made in recent years to expand collection and treatment services that are in line with our investment plan. Driving this growth were mainly the non-residential categories. The Commercial category, with a variation of 7.3% in water and 10.2% in sewage. Public, with a variation of 13.3% in water and 17.4% in sewage. The Industrial category showed an increase of 3.5% in water and 1.1% in sewage. The Residential category remained stable flat in water, and we take 1.2% growth in sewage. This mix contributed to the increase in the average tariff in the period, positively impacting the revenues as we will be able to see on the next slide. On Slide number 4, sanitation service revenues net of taxes increased by 16.9% in the period from R$3.9 billion in Q3 2021 to R$4.6 billion in Q3 2022, due to an improvement in mix and to a tariff readjustment of 12.8%, which has been in place since May 10, 2022. EBITDA increased 19.5% from R$1.8 billion in Q3 2021 to R$2.1 billion in Q3 2022, driven mainly by an increase in revenues proportionally higher than the increase in expenses. Net income increased 130.7% coming from R$469 million to R$1.1 billion in Q3 2022. Next slide, please. Starting from a profit of R$469 million in Q3 2021, we saw a positive variation in sanitation revenues net of taxes of R$670 million,…

Thank you, Osvaldo. Thank you, Dr. Braga. So we'll now start the Q&A. The first part is geared to analysts and investors, and then we'll have some time for journalists. If due to time limitations, we're not able to answer, we will address questions at a later moment off-line. Our IR team remains available for that. We have received -- Carolina asked a couple of questions actually, and I'll read those questions to you and then you'll tackle them. I'll read the first one, and then we'll answer the second question after that.

I have 2 questions. Number one, the level of provisions for doubtful receivables dropped in Q3 when compared to Q2 2022. I'd like you to comment on that and say whether that is already reflecting the stabilization of the new systems and practices? And if we can consider that a normalized level, or we should expect to see even better levels going forward? Doubtful receivables, I'll hold that. That's a question, Dr. Braga. Are we going to read both questions one at a time? One at a time. Okay. I'll turn it over to Osvaldo course, our CFO.

Okay. Ladies and gentlemen, the amount for doubtful debt total of receivables for Q3 did drop when compared to Q2 driven by our effort, our strict discipline to reduce default levels. And we believe that that level will get closer to pre-pandemic levels in the second half of next year, 2023. Those actions are assumed in place are being implemented, and they are part of our exchange and our commercial system. You were correct. And they have been showing good results. We expect to see some variations, but we do believe that starting in the second half of next year, 2023, those numbers will be close to what we had in the pre-pandemic period.

Okay. Thank you, Osvaldo. And the second question from Carolina Carneiro is the following. We'd like you to comment on the last two investments announced the purchase in the share of URE-Barueri in the paving company. What is the rationale behind that investment? And why make an M&A in this moment when we are about to change administrations in the state level?

It's not because of the moment. That's something which has been in our agenda, in our radar for some years now. When I opened this call earlier, I complemented Osvaldo on -- as being able to focus on that topic, to tick that item and to really materialize that. And the rationale behind it is that from the point of view of solid reviews. This is in our bylaws actually. Sanitation is not only related to drinking water and sewage treatment, it also entails solid waste and also drainage. So all of that combined is part of our mainstream activities. And from the point of your finance, of course, that makes sense, has to make sense, for us to identify the advantages coming from that partnership with the private sector that is there. And with that, we are contributing to reduce the number of landfills in the area. So everything along the lines of the ESG, that's very, very important for us at this moment for the environment to reduce also greenhouse gases coming from methane produced at landfills, and so on and so forth. So in relation to the cold asphalt front, I think I did mention the advantages of that partnership. We will be able to have a technology at our disposal which will really help us, especially in the country side of the state. And of course, you can use it in the capital city too because in terms of logistics, it's much more interesting. But perhaps Osvaldo can jump in and add something to my comments on the financial side, speaking to the advantages of having entered into this partnership.

As to the asphalt, in addition to the expected returns, which is higher than that coming from the regulators, we expect a reduction in cost also. So we will improve the quality of services and a reduction in costs. Cost reduction is the company's mantra number one, right? We want to provide services at excellent levels but with controlled costs. So that's key for us, and that is in line with the company's policies. It made no sense to wait to execute that. It has been working on -- has been worked on for 2 years now. As for the URE-Barueri, along the same lines, we will acquire at first technology and we'll be able to explore that market across the 375 cities where we operate. So this is just the first steps, and we hope to have interesting returns going forward. Economic studies show good levels of return, as I said. So we expect that that additional revenue will contribute to the company so that we can meet all targets we have set for 2030.

Okay. We have received another couple of questions from Henrique Peretti.

So from Henrique Peretti, two questions. Good morning. Number one, the consumption mix, and as a consequence, the tariff mix. Are they already back to the pre-pandemic levels? Osvaldo?

Yes, the answer is yes. Those levels are close to what we had in pre-pandemic periods. A small gap to be adjust, but we're quite close to what we had before the pandemic. Economic activity has pretty much resumed the levels, both in Commercial and Industrial front. Public sector is still lagging a bit behind, but that's only normal and this will be normalized sooner than later. We should see the order mix in place sooner than later, as I said. Thank you.

And about the following. Any news about the implementation of the new tariff structure? And is the current revenue within the revenue cap for 2022? Thank you. Our regulating agency is extremely interested in the fact that this structure be implemented next year.

That's exactly at -- President, Mr. President -- from May this year. The regulating agency delayed the new tariff structure, and we are now waiting to hear from the regulating agency. So this will -- we expect this to happen this year, 2023. And that has a lot to do with the second part of the question, which has to do with the revenue cap. The second part, the company has to do with the implementation of the new tax structure vis-à-vis the revenue cap. Yes, it is about to be implemented. We expect to see this happen this year, and it is key for us to have our revenues reaching the expected levels. Today, we are still below that cap. But if until the end of the year we have not recovered, there are protection mechanisms in place. When it's below 97.5%, this will be offset in the next tariff readjustment to happen in May 2023.

Okay. Thank you for your answers. I think the results are good, and clear explanations. There is no room for doubt separately, right, for questions.

That's a nice observation, Tiberio. You did a good job.

Well, once again, if there are other questions or comments you want to make, you can do it off-line or now using the Q&A. We can then, in this case, move on to the Q&A session for journalists, okay?

All right. Carry on.

That concludes our Q&A session. I think Dias has a question. Okay, Dias . Sorry, I haven't seen her.

from Valor Economico Newspaper. I'd like to ask about the RSU, solid urban residues. Any new agreements still to happen in this year?

Not for 2022. It's what we have for now. It takes about 1.5 years in terms of analysis of assessments. So no, none specific right now. We do believe that nothing we're having still this year. But just to be sure, this is just first steps. And we do expect that for next year, will have more than one, more than what we had this year. And also, Tiberio has already mentioned, the good results speak for themselves and also the action we have taken into fighting delinquency, reducing costs. All of that leaves us all very excited with the numbers we have just announced.

Dias has thanked for your answer. .I think numbers seem to have left our audience very satisfied and happy, right? Our public, our target audience. Yes. In this case, Dr. Braga, I turn the floor back over to you for your final remarks, if you will.

So Osvaldo, I'll -- talk after Osvaldo.

So I'd like to thank the whole team for your professionalism, your hard work. A special thank you to Miyagui and his team, and our employees and financial office who worked hard for this announcement, this call and for us to be able to be -- to have this level of transparency of quality and announcing results. So this presentation was simple but quite straightforward. And thank you, Mr. Braga.

Okay. On our end, we are quite satisfied and happy with the results for Q3. The financial team has worked really hard, and I'd like to complement on their dedicated hard work. I mean, Osvaldo, Miyagui, Tiberio, the whole team, Pacheco Marcelo. I don't want to forget anyone, right? And I would say, it's my white -- my grey here implies that I'll forget a couple of names. So feel complemented on your hard work and competence, everyone. That's what makes this company -- or allows this company to deliver good financial results, and also deliver. And that's more important; deliver results which are important to the population. SABESP serves 28 million consumers. And with the work we have been doing throughout this period, connecting more people, more households to the grid, to the collection and treatment of sewage and special, because the waterfront is well taken care of. That spells quality of life to all those people. When I started, I talked about the Pinheiros River Basin. The river is now beautiful and clean. But I'd like to emphasize to all of you, ladies and gentlemen, at the other end of the screen to say that the ones who benefited the most are the neediest, the ones who live in the favelas, in the slums, and the neediest part of the city where river would take sewage, right? Not anymore. Today, sewage is treated and helping preserve the environment and improving the quality of life of those people. So that's a takeaway I'd like to convey. And after all, people are benefiting from those good financial numbers, and a good financial performance allows us to better serve our customers. Thank you everyone, and this ends our meeting for today. Thank you. And I wish you good travels to those of you who are leaving now.