Companhia de Saneamento de Minas Gerais (CSMG3) investor relations material

Executive summary

• Net revenue reached BRL 1.91 billion in Q1 2026, up 2.5% year-over-year, driven by a 6.56% tariff adjustment and stable water/sewage volumes.

• EBITDA was BRL 787 million, down 3.2% year-over-year, with a margin of 40.9%; net income fell 14.1% to BRL 368 million due to higher costs and financial expenses.

• CapEx increased 28% to BRL 695 million, supporting water and sewage system expansion and modernization.

• Regulatory predictability improved with the third regulatory review, 6.56% tariff increase, and renewal of the Belo Horizonte concession until 2073.

• Operational transformation initiatives included centralized operations, workforce resizing, and energy cost optimization.

Financial highlights

• Net revenue: BRL 1.91 billion (+2.5% YoY); EBITDA: BRL 787 million (-3.2% YoY); EBITDA margin: 40.9% (-240 bps); Net income: BRL 368 million (-14.1% YoY).

• Costs and expenses (excluding D&A): BRL 1.06 billion (+4.7% YoY); CapEx: BRL 695 million (+28% YoY).

• Cash from operations: BRL 675.1 million (-1.5% YoY).

• Net debt rose 32% to BRL 7.1 billion; leverage increased to 2.4x EBITDA.

• Dividend payout for Q1 2026 was BRL 177.6 million.

Outlook and guidance

• Regulatory environment improved with the 3rd Tariff Review, setting a 6.56% tariff increase and a pre-tax WACC of 13.7% for 2026–2029.

• Continued focus on operational efficiency, cost discipline, and investment in modernization and water security.

• Concession with Belo Horizonte extended to 2073, with BRL 1.3 billion grant and BRL 300 million settlement to be paid between 2026–2028.

• Reservoir levels in the Paraopeba System recovered to 83.5% capacity; no municipalities under water rationing as of May 2026.

• Delinquency rates expected to normalize, with new collection initiatives underway.