Q2 2026 Cia de Saneamento do Parana SA Earnings Call

August 14, 2026

Speaker #1: Obrigado por aguardarem. Sejam muito bem-vindos à conferência de divulgação dos resultados do segundo trimestre da Companhia de Saneamento do Paraná, Sanepar. Destaco que, para aqueles que precisarem de tradução simultânea, temos essa ferramenta disponível na plataforma.

Moderator: Obrigado por aguardarem. Sejam muito bem-vindos à conferência de divulgação dos resultados do Q2 da Companhia de Saneamento do Paraná, Sanepar. Destaco àqueles que precisarem de tradução simultânea, que temos essa ferramenta disponível na plataforma.

[Company Representative]: [Foreign language]

Speaker #1: To access it, simply click the interpretation button indicated by a globe icon at the bottom of the screen, then select your preferred language: Portuguese or English.

Ozires Kloster: For those requiring simultaneous translations, this feature is available on the platform. To access it, simply click the interpretation button indicated by a global icon at the bottom of the screen, then select your preferred language, Portuguese or English. For those listening in English, you also have the option to mute the original Portuguese audio by clicking "mute original audio". Please note that this video conference is being recorded and will be made available on the company's investor relations website, ri.sanepar.com.br, where the full earnings release and presentation materials are safely accessible. You can download the presentation directly from the chat available in English. During the presentation, all participants will have their microphones muted. The Q&A session will follow the presentation. To ask questions, click the Q&A icon at the bottom of your screen and type in your question into the queue.

Operator: Translations, this feature is available on the platform. To access it, simply click the interpretation button indicated by a global icon at the bottom of the screen, then select your preferred language, Portuguese or English. For those listening in English, you also have the option to mute the original Portuguese audio by clicking "mute original audio". Please note that this video conference is being recorded and will be made available on the company's investor relations website, ri.sanepar.com.br, where the full earnings release and presentation materials are safely accessible. You can download the presentation directly from the chat available in English. During the presentation, all participants will have their microphones muted. The Q&A session will follow the presentation. To ask questions, click the Q&A icon at the bottom of your screen and type in your question into the queue.

Speaker #1: For those listening in English, you also have the option to mute the original Portuguese audio by clicking "Mute Original Audio." Please note that this video conference is being recorded and will be made available on the company's Investor Relations website, ri.sanepar.com.br, where the full earnings release and presentation materials are accessible.

Speaker #1: You can download the presentation directly from the chat, available in English. During the presentation, all participants will have their microphones muted. The Q&A session will follow the presentation.

Speaker #1: To ask questions, click the Q&A icon at the bottom of your screen and type your question into the queue. Once your name is called, a prompt will appear to activate your microphone.

Ozires Kloster: Once your name is called, a prompt will appear to activate your microphone, allowing you to ask questions. We recommend submitting all the questions at once for efficiency. If your question is not addressed during the event, please feel free to email it to ri@sanepar.com.br. Please be aware that the information provided during this presentation, including any forward-looking statements regarding Sanepar's business, outlook, projections, and financial targets, reflect management's current beliefs and assumptions, as well as information available at the time. These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results to differ materially. Investors should consider general economic conditions, market factors, and other variables that could impact the company's performance and cause actual results to differ from those expressed in forward-looking statements. Now I will hand it over to our Chief Financial and Investor Relations Officer, Ozires Kloster. Thank you.

Operator: Once your name is called, a prompt will appear to activate your microphone, allowing you to ask questions. We recommend submitting all the questions at once for efficiency. If your question is not addressed during the event, please feel free to email it to ri@sanepar.com.br. Please be aware that the information provided during this presentation, including any forward-looking statements regarding Sanepar's business, outlook, projections, and financial targets, reflect management's current beliefs and assumptions, as well as information available at the time. These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results to differ materially. Investors should consider general economic conditions, market factors, and other variables that could impact the company's performance and cause actual results to differ from those expressed in forward-looking statements. Now I will hand it over to our Chief Financial and Investor Relations Officer, Ozires Kloster.

Speaker #1: We are now allowing you to ask questions. We recommend submitting all your questions at once for efficiency. If your question is not addressed during the event, please feel free to email it to ri@sanepar.com.br.

Speaker #1: Please be aware that the information provided during this presentation, including any forward-looking statements regarding Sanepar's business outlook, projections, and financial targets, reflects management's current beliefs and assumptions, as well as information available at the time.

Speaker #1: These statements are subject to risks, uncertainties, and changes in circumstances that could cause actual results to differ materially. Investors should consider general economic conditions, market factors, and other variables that could impact the company's performance and cause actual results to differ from those expressed in forward-looking statements.

Speaker #1: So now I will hand it over to our Chief Financial and Investor Relations Officer, Osiris Kostner. Thank you. Good morning, everyone, participating in this conference.

Speaker #1: I would like to join with us. We have our CEO, Wilson Blay; the investor, Leora, Investment Director; and our Environment and Action Accounting Manager, who is also with us today.

Ozires Kloster: Thank you. Good morning everyone participating in this conference. Joined with us, we have our CEO, Wilson Bley, the Leoda Investment Director, and our accounting manager is also with us today. The RI manager, Ricardo, with all his team. Before starting the presentation, I would like to hand it over to our president.

Ozires Kloster: Good morning everyone participating in this conference. Joined with us, we have our CEO, Wilson Bley, the Leoda Investment Director, and our accounting manager is also with us today. The RI manager, Ricardo, with all his team. Before starting the presentation, I would like to hand it over to our president. Good morning, everyone. I would like to greet my board and thank them for all their efforts, and I'd like to greet all our shareholders and show the importance of their participation in this event. I'd like to say that the company continues in a healthy financial condition. We can fulfill our targets, whether contracts or legal. It's an accelerated race to reach universalization access in water entry and sewage before the legal deadlines, bringing comfort to our work contracts. We were renovated until 2042, guaranteeing comfort.

Speaker #1: The RI manager, Hikaru, and his entire team. Before starting the presentation, I would like to hand it over to our president. Good morning, everyone.

Speaker #1: I would like to greet my Board and thank them for all their efforts. I would also like to greet all our shareholders and highlight the importance of their participation in this event.

Wilson Bley: Good morning, everyone. I would like to greet my board and thank them for all their efforts, and I'd like to greet all our shareholders and show the importance of their participation in this event. I'd like to say that the company continues in a healthy financial condition. We can fulfill our targets, whether contracts or legal. It's an accelerated race to reach universalization access in water entry and sewage before the legal deadlines, bringing comfort to our work contracts. We were renovated until 2042, guaranteeing comfort.

Speaker #1: I'd like to say that the company continues in a healthy financial condition. We can fulfill our targets, whether contractual or legal. It's an accelerated race to reach universalization of access in water entry and sewage before the legal deadlines, bringing comfort to our contracts.

Speaker #1: We would renovate it until 2042, guaranteeing comfort. And the second quarter is within what was predicted, with an extraordinary factor, which Osiris will address. But without this extraordinary factor, we can see an increase both in revenues and also billed revenue and new connections, whether water or sewage.

Wilson Bley Lipski: The second quarter is within what was predicted with an extraordinary factor, which Ozires will address. Without this extraordinary factor, we can see an increase both in revenues and also billed revenue and new connections, whether water or sewage. This shows that the company continues to serve the society, bringing revenues, dividends to be able to make the necessary investments to continue all this operation, which is not so simple. This complexity brings challenges, and we are fulfilling these challenges, which makes us comfortable. What makes us comfortable is that we see a lot of rainfall, quite a normal level, and this allows us to have the filling of the new reservoir, which is close to 20%, and the other reservoirs are within a normal level of volume. So that it guarantees that in the next few months, we have a good volume.

Wilson Bley: The second quarter is within what was predicted with an extraordinary factor, which Ozires will address. Without this extraordinary factor, we can see an increase both in revenues and also billed revenue and new connections, whether water or sewage. This shows that the company continues to serve the society, bringing revenues, dividends to be able to make the necessary investments to continue all this operation, which is not so simple. This complexity brings challenges, and we are fulfilling these challenges, which makes us comfortable. What makes us comfortable is that we see a lot of rainfall, quite a normal level, and this allows us to have the filling of the new reservoir, which is close to 20%, and the other reservoirs are within a normal level of volume. So that it guarantees that in the next few months, we have a good volume.

Speaker #1: And this shows that the Company continues to serve society, generating revenues and dividends to make the necessary investments to continue all these operations, which is not so simple.

Speaker #1: But this complexity brings challenges, and we are addressing these challenges, which makes us comfortable. What makes us comfortable is that we are seeing a lot of rainfall—quite a normal level—and this allows us to have the feeling that the new reservoir is close to 20%, and the other reservoirs are within a normal level of volume.

Speaker #1: So that it guarantees that in the next few months we have a good volume. Of course, with El Niño, all the resilience of the company is being planned, and with a strong resilience plan for us to be able to face all the challenges with no or without any problems in the supply of water, or any investments.

Ozires Kloster: Of course, with El Niño, all the resilience of the company is being planned, and with a strong resilience plan for us to be able to face all the challenges without any problems in the supply of water and investments. When speaking of investments, last year, we had record investments, and this year, as you will see in our figures, our numbers, we are reaching our targets within our investment plan. So I would like to assure everyone the company is doing very well, but we had all this problem of the precatórios, and I want to say that the company will always defend its position in the recognition of these precatórios, which is 25% for the company and 75% for the tariff moderation.

Wilson Bley: Of course, with El Niño, all the resilience of the company is being planned, and with a strong resilience plan for us to be able to face all the challenges without any problems in the supply of water and investments. When speaking of investments, last year, we had record investments, and this year, as you will see in our figures, our numbers, we are reaching our targets within our investment plan. So I would like to assure everyone the company is doing very well, but we had all this problem of the precatórios, and I want to say that the company will always defend its position in the recognition of these precatórios, which is 25% for the company and 75% for the tariff moderation.

Speaker #1: When speaking of investments, last year we had record investments, and this year, as you will see in our figures, our numbers, we are reaching our targets within our investment plan.

Speaker #1: So I would like to assure everyone the company is doing very well, but we had to—we had all this problem of the precarious, and I want to say that the company will always defend its position in the recognition of this precarious, which is 25% for the company and 75% for the moderation of tariff moderation.

Speaker #1: And we will make every effort necessary to reach this result, which is the result not only expected by the company, but that we believe is our right.

Ozires Kloster: We will make every effort necessary to reach this result, which is the result not only expected by the company, but that we believe that it's our right. So I'd like to assure you that we have taken all the measures, and if necessary, we will take other measures until we receive a final decision, and that which is in our favor because we believe it's our right. So I thank all of you and wish you a good day, and good work to all of us. I can't hear. So the reservoir volumes. Sorry, but the sound is not audible. Okay. At the end of June, we had 83%. Today, we have 88%. The water is around 20%. The reservoir in June was 13%. In the next slide, we will highlight the issue of the history of the delivery of service.

Wilson Bley: We will make every effort necessary to reach this result, which is the result not only expected by the company, but that we believe that it's our right. So I'd like to assure you that we have taken all the measures, and if necessary, we will take other measures until we receive a final decision, and that which is in our favor because we believe it's our right. So I thank all of you and wish you a good day, and good work to all of us.

Speaker #1: So I'd like to assure you that we have taken all the measures, and if necessary, we will take other measures until we receive a final decision, and that which is in our favor, because we believe it's our right.

Speaker #1: So I thank all of you and wish you a good day. And good work to all of us.

Speaker #2: I can't hear. So, the reservoir volumes—sorry, but the sound is not audible. Okay. At the end of June, we had 83%.

Ozires Kloster: I can't hear. So the reservoir volumes. Sorry, but the sound is not audible. Okay. At the end of June, we had 83%. Today, we have 88%. The water is around 20%. The reservoir in June was 13%. In the next slide, we will highlight the issue of the history of the delivery of service.

Speaker #2: Today, we have 88%, and the water level is around 20%. The reservoir, in June, was at 13%. In the next slide, we will highlight the issue of the history of the delivery of service.

Speaker #2: We are universalized in water, 100% in sewage. We reached 82.9%, highlighting that 100% of this sewage is treated, as all wastewater is treated. In the next slide, we can see the operational results, which were very good.

Ozires Kloster: We are universalized in water 100%. In sewage, we reached 82.9%, highlighting that 100% of this sewage is treated, this wastewater is treated. In the next slide, we can see the operational results, which was very good. If we both the quarter and the six months, we have grown in quarter in the measured volume. In water, we increased 5.4%, and in the six months, 3.3%. In billed volume, in the quarter, an increase of 5%, and for six months, the increase was 3.1%. In connection numbers, new connections that happened within the period of six months in water was 24,643 connections and an increase of 0.7%. An increase also in new economies of 4,400, an increase of 0.7% with 32,668 new units. We have the history of connections. We have 3,555,000 new connections in the last 12 months, an increase of 48,923 connections.

Speaker #2: If we look at both the quarter and the six months, we have grown in court in the measured volume in water. We increased 5.4%, and in the six months, 3.3%.

Speaker #2: In built volume in the quarter, there was an increase of 5%. And for the six months, the increase was 3.1%. And regarding connections, new connections that happened within the period of six months in water were 24,643 connections.

Speaker #2: And an increase of 0.7%. And an increase also in new economies of 4.4%, an increase of 0.7%, with 32,668 new units. We have the history of connections.

Speaker #2: We have 3,555 new connections in the last 12 months, an increase of 48,923 connections. And regarding the history of units, we closed June with 4,424 million.

Speaker #2: And in the last 12 months, 68,016 units. In the next slide, if we look at the sewage, there was a significant increase—the billed volume in the quarter increased 5.9%.

Ozires Kloster: In the history of units, we closed June with 4,424,000, and in the last 12 months, 68,616 units. In the next slide, if we look at the sewage, there was a significant increase. The billed volume in the quarter increased 5.9%, and in the period of six months, 4%. The number of connections has also been quite significant, 1.3%, closing almost 35,000 connections. The units increased 1.4%, with an increase of 5,560 units. On the right side, we can see the history of the connections. The total connections today is 2,000,688 connection, an increase in the last 12 months of 75,896 connections. The history of the economic units is closing in June with 3,636 economic units and an increase of 109,000 units in the last 12 months. Now, moving to the financial indicators.

Speaker #2: And in the period of six months, 4%. So, the number of connections has also been quite significant: 1.3%, closing in almost 35,000 connections. The units increased 1.4%, with an increase of 5,560 units.

Speaker #2: And on the right side, we can see the history of the connections. The total connections today is 2,688 connections, with an increase in the last 12 months of 75,896 connections.

Speaker #2: And the history of the economic units ended in June with 3,636,000 economic units, and an increase of 109,000 units in the last 12 months.

Speaker #2: Now, moving to the indicators, financial indicators. So we can feel here an impact of the recognition of the 25% regulatory liability. So our EBITDA margin in the quarter closed at 28.4%.

Ozires Kloster: We can feel here an impact of the recognition of the 25% of the regulatory liability. Our EBITDA margin in the quarter closed in 28.4%, in the accumulated of six months, 36%. We will show you later on, there is a slide that will show you what would be the adjusted if we not counting the precatório. The net margin, we had a negative result both in the quarter and in the accumulated. We had negative margins in the quarter in the -26.6 and accumulated less 4%. ROI and ROIC analyzed. ROI closing 3.7% and ROIC 4.7%. Some good news, the delinquency closing 1.9%. In line with our strategic planning, even a little below what we anticipated. Losses per connection, it is an indicator that is quite positive. In this quarter, we closed with an indicator 216 liters of connections per day.

Speaker #2: In the accumulated six months, 36%. And then we will show you later on—there is a slide that will show you what would be the adjusted, if we discount, not counting the precarious.

Speaker #2: Regarding net margin, we had a negative result both in the quarter and in the accumulated period. We had negative margins in the quarter, minus 26.6%, and in the accumulated period, minus 4%.

Speaker #2: ROI and ROIC annualized: ROI closing at 3.7%, and ROIC at 4.7%. Some good news—the delinquency is closing at 1.9%. So, in line with our strategic planning, even a little below what we anticipated.

Speaker #2: Losses per connection, it's an indicator. It is quite positive. In this quarter, we closed with an indicator of 216 liters per connection per day. It's one of the lowest in the past quarters and years.

Speaker #2: So if we look at June 2025, we had 223 liters, and in 2024, we had 220 liters per day. So here, if we—the quarter results statement—if we look at net revenue, it was very positive, increased 11.5%.

Ozires Kloster: It is one of the lowest in the past quarters and years. If we look at June 2025, we had 223 liters, and in 2024, we had 220 liters per day. Here, the quarter results statement. If we look at net revenue, was very positive, increased 11.5%. The costs with personnel saw an increase of 7%. We have the effect of the collective agreement, which was in March this year with INPC adjustment of 36%. We have an effect of the new hirings, the new employees that joined our company. In accumulated, I will see the effect of the voluntary severance program, which is seeing a positive result. In material, we had a small decrease. Electricity, we had an increase. The issue of energy, besides the volumes produced, that increased, and also the treated wastewater.

Speaker #2: The costs with personnel saw an increase of 7%. We have the effect of the collective agreement, which was in March this year with INPC, with an adjustment of 3.6%.

Speaker #2: We have an effect of the new hirings—the new employees that join our company in the accumulated. I will see the effect of the voluntary severance program, which is seeing positive results.

Speaker #2: And then in material, we had a small decrease. Electricity, we had an increase—the issue of energy besides the volumes produced that increased—and also the treated wastewater. We also saw one of the suppliers of the free market, one of the companies, is in judicial recuperation.

Speaker #2: So Sanepar had to look for emergency contracting at a price a little higher than free market prices. But this is being addressed; we're looking for a solution.

Ozires Kloster: We also saw one of the suppliers of the free market, one of the companies, is in judicial recuperation. Sanepar had to look for an emergency contracted at a price a little higher than the free market prices, but this is being addressed. We are looking for a solution. Looking at the third-party services, this is a line that had an increase in the quarter, especially driven by the third-party services and the PPPs. We have the micro regions that started operating their PPPs last year. This year, the cost is higher. Now, moving to the next slide, and we can analyze the results more in depth. We can see the net revenue of June 2025, and also showing the progress, how we reached this accumulated revenue in June 2026. We had an increase in economies. In the graph, it amount 36 million.

Speaker #2: Looking at the third-party services, this is a line that had an increase in the quarter, especially driven by the third-party services and the PPT. We have the micro regions that started operating their PPTs last year.

Speaker #2: So this year, the cost is higher. Now, moving to the next slide, we can analyze the results in more depth. We can see the net revenue for June 2025 and also show the progress of how we reached this accumulated revenue in June 2026.

Speaker #2: So, we had an increase in economies in the graphic amounting to R$36 million. It represents an increase in volume of R$53 million. We also had an adjustment in the tariff.

Speaker #2: It brings an impact we had. If we look at the readjustment in March, we had IRT, which was approved, so this brought us an increase of $100 million.

Ozires Kloster: It represents an increase in volume of BRL 53 million. Readjustment in tariff that we had, it brings an impact. If we look at the readjustment, in March, we had IRT that was approved. This brought us an increase of BRL 100 million in other revenue, BRL 7 million. It closing in almost BRL 2 billion. Out of this revenue, we have the costs and expenses, personnel, material, energy, provisions. It was positive. It was a lower amount than last year. The highlight of the regulatory liability. It is highlighted that only in EBITDA it impacted BRL 260 million. Down there, if you look at the financial expenses we segregated, we can see the regulatory liability, BRL 693 million. With that, we had this loss in the quarter of BRL 505 million. If we look later, we made a composition excluding this effect of the precatórios.

Speaker #2: Another revenue of $7 million. It's closing in on almost $2 billion. Out of this revenue, we have the costs and expenses: personnel, material, energy, provisions. It was positive.

Speaker #2: It was a lower amount than last year. The highlight is the regulatory liability. So, it's highlighted that only in EBITDA, it impacted $260 million. Down there, if you look at the financial expenses segregated, we can see the regulatory liability of $693 million. With that, we had this loss in the quarter of $505 million.

Speaker #2: But if we look later, we made a composition excluding this effect of the precarious, and we had an EBITDA of $800 million, which is a non-recurrent.

Speaker #2: And the profit of $447 million—if we exclude the effect of the court-ordered debt payment—our EBITDA margin would be adjusted to 41%.

Ozires Kloster: We had an EBITDA of BRL 800 million, which is non-recurrent, and a profit of BRL 447 million if we exclude the effect of the court-ordered debt payment. Our EBITDA margin would be adjusted in 41%, and the net margin would be positive in 23%. Now moving on to the accumulated result. We have an increase in the revenue of 9.6%, the net revenue. The cost in personnel, as I mentioned, we are seeing a reduction in 27.4%. Last year was over BRL 1 billion, and the Q1 of last year, there was the voluntary severance program. Over 500 employees left, and this cost to the company. Even with the hirings that we are making, we are paying less salary, so we are seeing a reduction in the cost compared to the accumulated last semester. Now, I will break down the same thing I did in the quarter.

Speaker #2: And the liquid net margin would be positive at 23%. Now, moving on to the accumulated result, we have an increase in revenue of 9.6%.

Speaker #2: The net revenue, the cost in personnel—as I mentioned, we are seeing a reduction of 27.4%. Last year was over a billion reais, and in the first quarter of last year there was the voluntary severance program.

Speaker #2: So, over 500 employees left, and this cost to the company. So, even with the hirings that we are making, we see that we are paying less in salaries, so we are seeing a reduction in the cost compared to the accumulated last semester.

Speaker #2: Now I will break down the same thing I did in the quarter. If I look at the net revenue in the six months last year, we had close to $3.5 billion.

Speaker #2: So we had an increase in economies that brought $74 million in revenue from increased volume. Build volume was $44 million. Readjustment and consumption, which can be migration of levels of consumption, brought us $215 million, and other revenues, $4 million.

Ozires Kloster: If I look at the net revenue in the six months last year, it had closed in BRL 3.5 billion. We had an increase in economies that brought a BRL 74 million revenue, an increase in volume Build volume BRL 44 million. Readjustment and consumption, which can be migration of levels of consumption, it brought us BRL 250 million, and other revenues, BRL 4 million. We are closing BRL 3.8 billion in revenue, six months. EBITDA closing BRL 3.8 billion. No, sorry, the revenue. The EBITDA would be practically BRL 1.4 billion. Highlighting, bolding line of EBITDA, the regulatory liability, and if we see the regulatory liability, it impacted BRL 843 million. The profit reported, the loss in the six months was BRL 152 million. We made the same account.

Speaker #2: So we closed in $3.8 billion in revenue for six months. EBITDA closed at $3.8 billion—no, sorry, the revenue. So we would have—and the EBITDA would be practically $1.4 billion.

Speaker #2: So if highlighting both in line of EBITDA the regulatory liability, and if we see the regulatory liability, it impacted 843 million. So the profit reported, the loss in the six months, was 152 million.

Speaker #2: We made—we made the same account. In the next slide, we can see the adjustment. Excluding the effect of the court-ordered debt payment, we would have an EBITDA of $1.6 billion and a profit of $950 million in the six months, above what was reported last year, which was around $650 million.

Ozires Kloster: In the next slide, we can see the adjustment, excluding the effect of the court or the debt payment, we would have an EBITDA of BRL 1.6 billion and a profit of BRL 950 million in the six months above what was reported last year, which was around BRL 650 million. The margin EBITDA would be 42.7%, and the net margin would be around 24.7%. Now, some comments before moving to investments. The accounts that had variations are the same. If you look at the third-party services and electricity, the same comment I made in the quarter, it works for the six-month period. Provisions was also positive, both in the quarter and in the six-month period, closing in this adjusted profit of over BRL 900 million. Now, looking at the investments, like our president highlighted, it is a very robust investment.

Speaker #2: So, the EBITDA margin would be 42.7%, and the net margin would be around 24.7%. Now, a few comments before moving to investments. The accounts that had variations are the same.

Speaker #2: So if you look at the third-party services and electricity the same comment I made in the quarter it works for the six month period provisions was also positive in the both in the in the quarter and in the six month period closing in this adjusted profit of over 900 million.

Speaker #2: Now, looking at the investments, like our President highlighted, it's a very robust investment. We closed R$1.152 billion in the period of six months.

Speaker #2: An increase of 4.8% compared to the same period last year. Last year we also saw a record investment and the the progress the evolution last year we had 1 billion 99 million in the period of six months.

Ozires Kloster: We closed BRL 1 billion, BRL 152 million in the period of 6 months, an increase of 4.8% compared to the same period last year. Last year, we also saw a record investment in the progress, the evolution. Last year, we had BRL 1 billion, BRL 99 million in the period of 6 months. We had increased 26% compared to the previous year, and in June 2024, was BRL 871. This investment is segregated 35% in water, 55% sewage, with the company pursuing universalization. Consequently, the investment is higher than other assets. We have other assets, administrative, and the funding origin, 65% own resources and 35% third parties. Now moving on to the next slide. We have the structure of the capital, our net debt closing BRL 2.6 billion.

Speaker #2: We had an increase of 26% compared to the previous year, and in June '24 it was 871. This investment is segregated: 35% in water, 55% sewage. The company is pursuing universalization; consequently, the investment is higher than for other assets. We have other assets—administrative—and the funding origin: 65% own resources and 35% third-party.

Speaker #2: Now, moving on to the next slide. We have the structure of the capital. Our net debt closing is $2.6 billion. Unleverage, which is the net debt by EBITDA, is one time, which is an impact of the precatório, which is in the company's cash and reduces our net debt. And if we convert, the cash conversion was $1.3 billion.

Ozires Kloster: Leverage, which is the net debt by EBITDA, which is one time, which is an impact of the precatório, which is in the company's cash, which reduces our net debt. If we convert, the cash conversion was BRL 1.3 billion, and the conversion of EBITDA into cash was 95%. Looking at the cost of our debt, it is an average cost of 12%, and we bring a timeline. If you look on the right side, the amortization debt, we have debt in 2026 of BRL 384 million, in 2027, BRL 1 billion, BRL 82 million. As you can see in the explanation, in the financial note, we have a debenture that maturity date is next year. That is why the amount is higher than the other years. In 2028, we have BRL 789 million. 2029, BRL 656 million. 2030, BRL 965 million.

Speaker #2: And the conversion of EBITDA into cash was 95%. Looking at the cost of our debt it's an average cost of 12% and we bring a timeline if you look on the right side the amortization debt we had debts in 2026 of 384 million in 2027 1 billion 82 million as you can see in in the explanation in the financial note we have a debenture that maturity date is next year that's why the amount is higher than the other years in 2028 we have 789 million 2029 656 million 2030 965 million.

Speaker #2: And as of 2031 we have 3.4 billion which represents 47% of our of our debt. It's a it's a quite of diluted debt throughout the times and it's with very well managed by the administration.

Ozires Kloster: As of 2031, we have BRL 3.4 billion, which represents 47% of our debt. It is quite a diluted debt throughout the times, and it is very well managed by the administration. The debt composition, the debt breakdown, we have the TR 37%, IPCA 30%, DI 22, 4% IPC-Fipe, no correction, 3%, and EUR 2% and 1% TJLP. Now, moving on to the covenants. We have a general outlook of our contract obligations, the covenants. They are all being met. Looking at the contract of KfW, I will mention the main indicators that cover all of them. So we have the coverage ratio has to be higher or equal to 1.1. The debt less equal or less to three, we are reaching zero. Add the onerous debt, less or equal to one, we have 143.

Speaker #2: The debt composition, the debt breakdown: we have the TR, 37%; IPCA, 30%; DI, 22.4%; IPC, 5%; no correction, 3%; Euro, 3%; and 1% TJLP.

Speaker #2: Now, moving on to the covenants. We have a general outlook of our contract obligations. The covenants—they are all being met. Looking at the contract with KFW.

Speaker #2: I will mention the main indicators that cover all of them. So, we have the coverage ratio, which has to be higher or equal to 1.1.

Speaker #2: The debt is equal to or less than three. We are reaching zero. At the onerous debt less than or equal to one, we have 143, and the level of debt has to be equal to 60, and we reached 54%.

Speaker #2: In the next slide we see this this structure of our balance sheet. So we our so we had an increase of the net debt so our PPPs our loans they dropped 1.9 but we had a reduction of our financial investments.

Ozires Kloster: The level of debt has to be less or equal 60, and we reached 54%. In the next slide, we see this structure of our balance sheet. So we have an increase of the net debt. So our PPPs, our loans, they dropped 1.9, but we had a reduction of our financial investments. In June, we had some events. So in the next slide, we will see the cash flow. So we had some payments of dividends, about 530 million and 520 million, and also the participation of results with the employees. We saw a net increase. We saw an increase in the operational turnover capital. We had an increase drop, but some accounts, for example, contractors and suppliers, salaries and payroll charges, we had a decrease. So salaries and payroll charges. Our voluntary severance program was done in installments, so that is why the balance last year was lower.

Speaker #2: In June, we had some events, so in the next slide we will see the cash flow. We had some payments of dividends—around $530 million and $520 million.

Speaker #2: Also the participation of results with the increase. We saw. Debt increase the we we saw an increase in the operational turnover and capital we had we had an increase drop but some accounts for example contractors and suppliers salaries and payroll charges we had a decrease so salaries and payroll charges our our our voluntary severes program was done in installment so that's why the the balance last year was lower so now we paid out so now that impacted in our balance in the asset and contracts and other assets it's a very ex significant line we can see all the investments we make in the projects all the projects that are being executed and they are in this account and within and later it will become an asset and we'll and then it will be part of the fixed asset.

Ozires Kloster: Now we paid out, so now that impacted in our balance. In the assets and contracts and other assets, it is a very significant line. We can see all the investments we make in the projects, all the projects that are being executed, and they are in this account. Later it will become an asset and then it will be part of the fixed assets. We close with BRL 4.1 billion in this line, and this is reflecting all the investments made by the company. The fixed asset closing in BRL 14.3 billion and the equity closing in BRL 1 billion. The turnover capital closing 35 days, which is the relation between the turnover capital compared to the net revenue. It is a good turnover if you look from this perspective. The cash flow, the operational activities in the company generated BRL 1.309 billion.

Speaker #2: So we close with R$4.1 billion in this line, and this is reflecting all the investments made by the company—the fixed asset closing at R$14.3 billion and equity closing at R$1 billion.

Speaker #2: The turnover capital closed at 35 days, which is the relation between the turnover capital compared to the net revenue. So, it's a good turnover if you look at it from this perspective.

Speaker #2: The cash flow from the operational activities in the company generated $1.1 billion, $309 million. The financing activities consumed our cash, also $1 billion, and the financing activities brought a reduction of $1 billion, $121 million.

Speaker #2: So this financing activities net so we had we had some loans on 300 over 380 million. The dividends payment and JCP 524 million finance payment we we so paid out the debentures so that brought an initial value in the beginning of the year but now it tends to be lower.

Ozires Kloster: The financing activities consumed our cash in also BRL 1 billion, and the financing activities brought a reduction of BRL 1,121 million. So this financing activities net. We had some loans on over BRL 380 million. The dividends payment and JCP, BRL 524 million. Finance payment, we paid out the bankers. That brought an initial value in the beginning of the year, but now it tends to be lower. Then these payments, BRL 77 million and other valuations, BRL 39 million. With that, we saw a reduction in our cash flow equivalent of BRL 945 million. At the beginning of the year, we had BRL 5.6 billion, and now in June, we have an amount of BRL 4.6 billion. We conclude our presentation. Now I hand over the floor to Rodrigo for the Q&A session. Now we will start the Q&A session.

Speaker #2: Then these payments of $77 million and other valuations of $39 million resulted in a reduction in our cash flow equivalent to $945 million. So, at the beginning of the year, we had $5.6 billion, and now in June, we have an amount of $4.6 billion.

Speaker #2: So we conclude our presentation. I now hand over the floor to Rodrigo for the Q&A session. So, we will start the Q&A session.

Speaker #2: So, to make questions, we recommend that you send the questions through the Q&A icon. Your names will be announced for you to ask your questions, and then you will see a prompt to activate your microphone.

Speaker #2: If you cannot unmute your microphone, just write 'no mic' at the end of your question so that your question will be read out loud. Our first question comes from Danielle.

Operator: Now we will start the Q&A session. To make questions, we recommend that you send the questions through the Q&A icon, and your names will be announced for you to ask your questions, and then you will see a prompt to activate your microphone. If you cannot unmute your microphone, just write no mic at the end of your question so that your question will be out loud. Our first question comes from Daniel Travitsky, analyst from SAS, about the provision of the precatórios. What are the arguments of the company of part of the receivables, and what are you going to do, judicially speaking, to obtain that decision, to obtain that choice?

Ozires Kloster: To make questions, we recommend that you send the questions through the Q&A icon, and your names will be announced for you to ask your questions, and then you will see a prompt to activate your microphone. If you cannot unmute your microphone, just write no mic at the end of your question so that your question will be out loud. Our first question comes from Daniel Travitsky, analyst from SAS, about the provision of the precatórios. What are the arguments of the company of part of the receivables, and what are you going to do, judicially speaking, to obtain that decision, to obtain that choice? About the judicial proceedings, we took some measures. We went all the way concerning administrative measures, even before the publication of the Note 2026. From this note, we requested a review of all this, a new proposal.

Speaker #2: Analyst from SAS about the provision of the what are the argument of the company of part of the receivables and what what are you going to do judicially speaking to obtain that decision to obtain that choice about the judicial proceedings we made some we took some measures we we went all the way in concerning administrative measures even before the publication of the note 2026 and from this note we requested requested a review of all this new proposal.

Wilson Bley: About the judicial proceedings, we took some measures. We went all the way concerning administrative measures, even before the publication of the Note 2026. From this note, we requested a review of all this, a new proposal.

Speaker #2: We made a new notification and recently we appealed. We made an appeal of administrative appeal to requesting that if the note the point seven note was valid so this appeal was not was not judged by a so then we had a writ of mandamus the first writ of mandamus because we were afraid we that the the rule would change which happened so we did not receive the injection we were not successful then we we we filed a new writ of mandamus and we requested some measures that were not granted to us and now we are going to make the further step and now in parallel Dr. Flavio will add some information.

Wilson Bley Lipski: We made a new notification, and recently we made an administrative appeal requesting that if the Note 007 was valid. This appeal was not judged by Agepar. Then we had the writ of mandamus, the first writ of mandamus, because we were afraid that the rule would change, which happened. We did not receive the injunction. We were not successful, and we filed a new writ of mandamus, and we requested some measures that were not granted to us. Now we are going to make the further step. Now in parallel, Dr. Flavio will add some information. We are taking some actions so that we can understand whether we give up the path of writ of mandamus or then we file an extraordinary file. Whether we take some further measures, ordinary, to reclaim the right that we understand is our right.

Wilson Bley: We made a new notification, and recently we made an administrative appeal requesting that if the Note 007 was valid. This appeal was not judged by Agepar. Then we had the writ of mandamus, the first writ of mandamus, because we were afraid that the rule would change, which happened. We did not receive the injunction. We were not successful, and we filed a new writ of mandamus, and we requested some measures that were not granted to us. Now we are going to make the further step. Now in parallel, Dr. Flavio will add some information. We are taking some actions so that we can understand whether we give up the path of writ of mandamus or then we file an extraordinary file. Whether we take some further measures, ordinary, to reclaim the right that we understand is our right. Dr. Flavio, he will add to my comment.

Speaker #2: So we are taking some actions so that we can understand whether we give up the path of risk of mandamus or then we file an extraordinary file so whether we take some further measures ordinary to reclaim the right that we understand is our right.

Speaker #2: Dr. Flavio, so he will add to my comment. So, as the president mentioned, the risk of mandamus was not appealed and is definitely being analyzed. It's in the phase of injunction.

Speaker #2: We need the final judgment, and we are studying new measures to reclaim our right, which is supported by legal norms. We have several opinions, both from outside law firms and also internally.

Flavio Luis Coutinho Slivinski: Dr. Flavio, he will add to my comment. As the president mentioned, the writ of mandamus was not appealed definitely. It is being analyzed. It is in a phase of injunction, and we need the final judgment. We are studying new measures to reclaim our right, which is supported by the legal norms. We have several opinions, both from outside law firms, and also internals. We have a study by the companies of sanitation. We understand that the law is on our side. We have this path. We are not giving up. We have a lot of arguments to discuss judicially, and I think we owe this to the company to defend this until the last higher court. I think another important thing, it is a decision from high management that every legal path we will follow.

Flavio Luis Coutinho Slivinski: As the president mentioned, the writ of mandamus was not appealed definitely. It is being analyzed. It is in a phase of injunction, and we need the final judgment. We are studying new measures to reclaim our right, which is supported by the legal norms. We have several opinions, both from outside law firms, and also internals. We have a study by the companies of sanitation. We understand that the law is on our side. We have this path. We are not giving up. We have a lot of arguments to discuss judicially, and I think we owe this to the company to defend this until the last higher court. I think another important thing, it is a decision from high management that every legal path we will follow.

Speaker #2: We have a study by our, by the company's sanitation, and so we understand that the law is on our side, and so we have this path.

Speaker #2: We are not giving up. We have a lot of arguments to discuss judicially, and I think we owe this to the company to defend this until the last higher court.

Speaker #2: And I think another important thing is that it's a decision from high management that every legal path we will follow, we will go all the way to pursue our right, which we understand is the right of the company.

Speaker #2: So, the best law firms are being hired. We have several legal opinions that uphold our decision, and this path will be followed all the way to the end.

Wilson Bley Lipski: We will go all the way to pursue our right, which we understand it is the right of the company. The best law firms are being hired. We have several legal opinions that uphold our decision, and this path will be followed all the way to the end. We will do everything we need to do to reestablish what was anticipated when we recognized this accounting and not change the rules in the middle of the way. Just like Agepar, our agency, has done. Sorry, it is not. The provision in the quarter. We were waiting to see whether we made the provisions. We were waiting for the legal decisions to see an effect, to see the Technical Note 002 from Agepar.

Flavio Luis Coutinho Slivinski: We will go all the way to pursue our right, which we understand it is the right of the company. The best law firms are being hired. We have several legal opinions that uphold our decision, and this path will be followed all the way to the end. We will do everything we need to do to reestablish what was anticipated when we recognized this accounting and not change the rules in the middle of the way. Just like Agepar, our agency, has done.

Speaker #2: So we will do everything we need to do to reestablish what was anticipated when we recognized this accounting, and not change the rules in the middle of the way.

Speaker #2: You know just like our our agency has done. Sorry it's not the provision in the in the quarter so it so we so we we we were waiting to to see whether we made the provisions.

Speaker #2: We were waiting for the legal decisions to see an effect to to see to the the technical note point two from so since we did not have any new event looking from the law and CPC that deals with the contingencies and the contingent liability we did not have any other way whether then recognize this in our accounts because so right now we are considering the position the the the possibility of losing so that's why we we recognized the 25% regulatory liability is there is recognized 100% for the reversal according to the technical note 002 that expedited on the on June 23 this year the resources are in invested in the company so this note stipulated that 50% would be investment nonhonorous and 50% we would have to reverse or to to in better tariffs for the consumption in the level of 5 cubic meters.

Ozires Kloster: Sorry, it is not. The provision in the quarter. We were waiting to see whether we made the provisions. We were waiting for the legal decisions to see an effect, to see the Technical Note 002 from Agepar.

Ozires Kloster: Since we did not have any new event looking from the law and CPC that deals with the contingencies and the contingent liability, we did not have any other way but then recognize this in our accounts. Right now we are considering the possibility of losing. That is why we recognized the 25% regulatory liabilities there, is recognized 100% for the reversal according to the Technical Note 002 that Agepar expedited on 23 June this year. The resources are invested in the company. This note stipulated that 50% would be investment non-onerous and 50% we would have to reverse or to embed a tariff for the consumption in the level of 5 cubic meters. We understand that it would not be reasonable to Yes, it would not be fair to just benefit the consumers that consume less.

Speaker #2: We understand that it would it would not be reasonable to yes it would not be fair to. Just benefit the the consumers that consume less.

Speaker #2: So it would not be fair with those who consume more. So continuing the next question comes from Mateus Paulini an investor. The same question.

Speaker #2: was asked by other participants initially he congratulates the company for its good results and he has two questions. First question after after the TJ after the law did not accept your request so in case there is there is a favorable decision the reversal would be 4.4 billion or only the 25% is that way you can make an agreement with or come to an understanding so how will you will how will you work the operationalize the 50% discount in the tariffs and the liquid network and the 50% investment nonhonorous will will they be excluded in the regulatory base or you will there is a possibility of incorporating it in the future I would like to add some information of Osiris and Flavio too but our expectation is an expectation that in the next 15 20 days we will have the final decision so we are hopeful that this decision will confirm the right that we understand as fair which is the the application of the note seven technical note seven where 25% would be for reduction of tariff 75% we and we would like this discount to be applied in a linear manner for all the levels of consumptions benefiting all our clients so so that they all have the same discount applied in their bills and 25% of course for the company within the the the as as the law so we defend 75 25 and we will fight for that and we will do everything possible but the expectation is big so so that we can have this result but if we don't have this result we will try another another strategy.

Ozires Kloster: It would not be fair with those who consume more. Continuing. The next question comes from Matheus Paolini, an investor. The same question was asked by other participants. Initially, he congratulates the company for its good results, and he has two questions. First question, after the TJPR, after the law did not accept your request. In case there is a favorable decision, the reversal would be BRL 4.4 billion or only the 25%? Is there any way you can make an agreement with Agepar or come to an understanding? How will you work to operationalize the 50% discount in the tariffs and the liquid network? The 50% investment non-onerous, will they be excluded in the regulatory base, or there is a possibility of incorporating it in the future?

Wilson Bley Lipski: I would like to add some information of Ozires and Flavio too, but our expectation is an expectation that in the next 15, 20 days, we will have the final decision. We are hopeful that this decision will confirm the right that we understand is fair, which is the application of Technical Note 7, where 25% would be for reduction of tariff to 75%. We would like this discount to be applied in a linear manner for all the levels of consumptions, benefiting all our clients, so that they all have the same discount applied in their bills. And 25%, of course, for the company within the law. We defend 75/25, and we will fight for that, and we will do everything possible. But the expectation is big so that we can have this result.

Wilson Bley: I would like to add some information of Ozires and Flavio too, but our expectation is an expectation that in the next 15, 20 days, we will have the final decision. We are hopeful that this decision will confirm the right that we understand is fair, which is the application of Technical Note 7, where 25% would be for reduction of tariff to 75%. We would like this discount to be applied in a linear manner for all the levels of consumptions, benefiting all our clients, so that they all have the same discount applied in their bills. And 25%, of course, for the company within the law. We defend 75/25, and we will fight for that, and we will do everything possible. But the expectation is big so that we can have this result. If we do not have this result, we will try another strategy.

Speaker #2: So we understand that that these two 26 note brings additional responsibilities. This 50% of resources nonhonorous to be applied in the investments in projects they are not part of our regulatory assets.

Ozires Kloster: If we do not have this result, we will try another strategy. We understand that this 2.26 note brings additional responsibilities. This 50% of resources non-onerous to be applied in the investments in projects. They are not part of our regulatory assets, so this would be outside the tariff. We understand that this is not healthy because we have to segregate these investments without having to do all the OPEX and not have a remuneration of tariffs for all these investments. We proposed an administrative resource for Agepar, which was not judged. So we are requesting the linear discount and not what was proposed, a 25% discount in the level of 5 cubic meters. From the perspective of our company, we do not reach the result of tariff moderation, which is expected by all consumers.

Speaker #2: So this would be outside the tariff. We understand that this is not healthy because we have to segregate these investments without having to do all the opex and not have a remuneration of tariffs for all these investments.

Wilson Bley: We understand that this 2.26 note brings additional responsibilities. This 50% of resources non-onerous to be applied in the investments in projects. They are not part of our regulatory assets, so this would be outside the tariff. We understand that this is not healthy because we have to segregate these investments without having to do all the OPEX and not have a remuneration of tariffs for all these investments. We proposed an administrative resource for Agepar, which was not judged. So we are requesting the linear discount and not what was proposed, a 25% discount in the level of 5 cubic meters. From the perspective of our company, we do not reach the result of tariff moderation, which is expected by all consumers.

Speaker #2: So we propose an administrative resource for which was not. Judged and and so we so we are requesting the linear discount and not what was proposed a 25% is current in the level of 5 mid cubic meters in from the perspective of our company we don't reach the result of moderation tariff moderation which is expected by all all consumers from this perspective I reaffirm every path that is possible whether legal or administrative we will pursue to reestablish the rule that we had when we recognized this result in our accounts in the when we not in the actual amount but when we receive the news of this court order that payment that we made in the past.

Flavio Luis Coutinho Slivinski: From this perspective, I reaffirm every path that is possible, whether legal or administrative, we will pursue to reestablish the rule that we had when we recognized this result in our accounts, not in the actual amount, but when we received the news of this court order debt payment that we made in the past. According to our president, it is a method of legal strategy, so we will make, analyze and make all the necessary measures concerning the Agepar agreement. Agepar is our regulatory agent. It regulates, it creates the rules. I do not know if there is any possibility of an agreement, because we do not see any possibility of making an agreement because it is not one party litigating against the other. There is no possibility of agreement concerning the inclusion of this 25%.

Wilson Bley: From this perspective, I reaffirm every path that is possible, whether legal or administrative, we will pursue to reestablish the rule that we had when we recognized this result in our accounts, not in the actual amount, but when we received the news of this court order debt payment that we made in the past.

Speaker #2: According to our president, it's a method of legal strategy. So we will analyze and take all the necessary measures concerning the agreement with our regulatory agent.

Speaker #2: It it regulates it creates the rules so I don't know if there is any possibility of an agreement because it's because it's it's it's not it's we don't see any possibility of making an agreement because it's not one part litigating against the other you know so that is no possibility of agreement concerning the this this the inclusion of this 25% that inclusive is mentioned we are taking the necessary measures now concerning this technical note and this is being recognized in our accounting statement.

Flavio Luis Coutinho Slivinski: According to our president, it is a method of legal strategy, so we will make, analyze and make all the necessary measures concerning the Agepar agreement. Agepar is our regulatory agent. It regulates, it creates the rules. I do not know if there is any possibility of an agreement, because we do not see any possibility of making an agreement because it is not one party litigating against the other. There is no possibility of agreement concerning the inclusion of this 25%.

Speaker #2: Another thing we expedited and we we we also requested a mediation between our. And Sanepar to be done by the government state government which is the major shareholder but the only proposal presented by Sanepar is is the is the recognition of the technical note seven that is no other agreement other than recognize what is fair which is the recognition the technical note point two said that.

Wilson Bley Lipski: I think Ozires mentioned we are taking the necessary measures now concerning this technical note, and this is being recognized in our accounting statements. Another thing, we expedited and we also requested a mediation between Agepar and Sanepar to be done by the state government, which is the major shareholder. But the only proposal presented by Sanepar is the recognition of Technical Note 7. There is no other agreement other than recognize what is fair, which is the recognition. The Technical Note 002 said that the discount on the tariff would be 35 days after the publication of the technical note. So it should have initiated on 25 July. We requested, since we appealed, we requested to suspend until this resource was judged.

Flavio Luis Coutinho Slivinski: I think Ozires mentioned we are taking the necessary measures now concerning this technical note, and this is being recognized in our accounting statements. Another thing, we expedited and we also requested a mediation between Agepar and Sanepar to be done by the state government, which is the major shareholder. But the only proposal presented by Sanepar is the recognition of Technical Note 7. There is no other agreement other than recognize what is fair, which is the recognition. The Technical Note 002 said that the discount on the tariff would be 35 days after the publication of the technical note. So it should have initiated on 25 July. We requested, since we appealed, we requested to suspend until this resource was judged.

Speaker #2: Discount on the tariff would be 35 days after the publication of the technical note so it should have initiated in July. 25 we requested since we appealed the for the we requested to suspend the until this resource was try was judged and to us not it was not deferred and so we requested an extension of deadline to implement this discount in the tariff according to the technical note even because of operational issues the our IT is totally focused on the issue of legal reform that the company is as of December 1st we have to issue an invoice with a new leak changes tax in taxes we have to issue the invoice so the company asked for an extension of deadline so we might have an answer before that right now we are not giving any discounts to the users to the consumption consumers according to the technical note we would have 50% as a discount in the tariff so so with 75% for moderation tariffs it would change the law so we are waiting for the decision so that we can operationalize the proceedings one question from Mateo Stalin investor the revenue move to in 12 months increased a lot what is the description of this increase the effect of the social tariff in 2025 what is the expectation of provision for credits of liquidation doubtful liquidation in 2026 that was Mateo's questions the delinquency if we look at it in the quarter in closing of six months it goes in 1.9% we had 0.8% in the same.

Ozires Kloster: It was not deferred, so we requested an extension of deadline to implement this discount in the tariff according to the technical note, even because of operational issues. Our IT is totally focused on the issue of legal reform that the company is as of 1 December. We have to issue an invoice with the new changes. In taxes, we have to issue the invoice. The company asked for an extension of deadline. So we might have an answer before that. Right now, we are not giving any discounts to the users, to the consumers. According to the technical note, we would have 50% as a discount in the tariff. So with that 75% for moderation tariffs, it would change the law. We are waiting for the decision so that we can operationalize the proceedings. One question from Matheus Tonini, investor.

Flavio Luis Coutinho Slivinski: It was not deferred, so we requested an extension of deadline to implement this discount in the tariff according to the technical note, even because of operational issues. Our IT is totally focused on the issue of legal reform that the company is as of 1 December. We have to issue an invoice with the new changes. In taxes, we have to issue the invoice. The company asked for an extension of deadline. So we might have an answer before that. Right now, we are not giving any discounts to the users, to the consumers. According to the technical note, we would have 50% as a discount in the tariff. So with that 75% for moderation tariffs, it would change the law. We are waiting for the decision so that we can operationalize the proceedings.

Ozires Kloster: One question from Matheus Tonini, investor. The revenue in 12 months increased a lot. What is the description of this increase, the effect of the social tariff in 2025? What is the expectation of provision for credits of doubtful liquidation in 2026? That was Matheus' questions.

Ozires Kloster: The revenue in 12 months increased a lot. What is the description of this increase, the effect of the social tariff in 2025? What is the expectation of provision for credits of doubtful liquidation in 2026? That was Matheus' questions. The delinquency, if we look at it in the quarter, in closing of six months, it grows 1.9%. We had 0.8% in the same period last year. We had the effect in last year, if I am not mistaken, we had the program of credit recovery, which was quite positive. It brought a recovery of credits higher than in the same period that we are comparing with this year. Looking from the perspective of the losses, loss provisions, we had an effect. We improved the provision procedures.

Speaker #2: Last year we had the effect, and last year, if I'm not mistaken, we had the program of credit recovery, which was quite positive. It brought a recovery of credits higher than in the same period that we are comparing with this year.

Wilson Bley: The delinquency, if we look at it in the quarter, in closing of six months, it grows 1.9%. We had 0.8% in the same period last year. We had the effect in last year, if I am not mistaken, we had the program of credit recovery, which was quite positive. It brought a recovery of credits higher than in the same period that we are comparing with this year. Looking from the perspective of the losses, loss provisions, we had an effect. We improved the provision procedures.

Speaker #2: The perspective of the losses loss provisions we had an effect we we changed we improved the the the provision procedures we in the first half of the year we recognized the the if we called way wagon effect which was the consumers that paid their debt in installments for the second half we cannot anticipate so the company does not disclose provisions future provisions our next question comes from Reinaldo Verissimo an investor is there any interest in dispute in the concession for sanitation in other states and could you also give us an overview of how El Niño affects Sanepar I believe that this moment is is requires us to look at the market.

Wilson Bley Lipski: In the H1, we recognized the, if we call the wagon effect, which was the consumers that paid their debt in installments. For the H2, we cannot anticipate. Because the company does not disclose future provisions. Our next question comes from Reinaldo Verissimo, an investor. Is there any interest in disputing the concession for sanitation in other states? Could you also give us an overview of how El Niño affects Sanepar? I believe that this moment requires us to look at the market, and if we see possibilities of new partnerships, we can work on them. But I do not think that the market is so open to new concessions. There are some that are programmed. They are within our radar. But yes, we have to do it with a lot of responsibility.

Wilson Bley: In the H1, we recognized the, if we call the wagon effect, which was the consumers that paid their debt in installments. For the H2, we cannot anticipate. Because the company does not disclose future provisions.

Ozires Kloster: Our next question comes from Reinaldo Verissimo, an investor. Is there any interest in disputing the concession for sanitation in other states? Could you also give us an overview of how El Niño affects Sanepar?

Speaker #2: We see possibilities for new partnerships and are working on them, but I don't think the market is very open to new concessions. There are some that are scheduled and are within our radar, but yes, we have to proceed with a lot of responsibility. We need to make investments in the contracts we currently have, and these partnerships would represent perhaps a nationalization or maybe an increase in revenue, but it has to be done carefully.

Wilson Bley: I believe that this moment requires us to look at the market, and if we see possibilities of new partnerships, we can work on them. But I do not think that the market is so open to new concessions. There are some that are programmed. They are within our radar. But yes, we have to do it with a lot of responsibility.

Speaker #2: We we need to make a very very accurate analysis so that we find no difficulties in the future what we observed is that the market this half of the of the the future market is awaiting political decisions so it's not very heated there are no tenders being being proposed about El Niño we have some challenging scenarios what we anticipate what we are predicting is El Niño is is showing its consequence we have an increase of 1.8 degrees in increase in the northern hemisphere that brings a special perception of an of an increase in rainfall divided in three big areas in Paraná more on the north west and northeast to have an increase in rainfall another corridor we we might have storms and in this corridor close to the coast which includes Curitiba we have an additional volume but not so in big as in the north and northwest we are we are creating a contingency plan to face this issue what what it may bring to us is not diff issues or challenges in dealing with water so we are bringing technologies so that we can so that even with high turbulence that we can continue providing us our services distributing our water which is universalized but I would like to Fernando Guedes our environment director I would ask him to make his comments good morning as president as our president Wilson Blay said that is a confirmation around 95% of a severe intensity of the El Niño phenomenon and another probability that calls our attention that we highlight is 69% of intensity of this phenomenon might be one of the biggest since 1950 the company has looked at that with a lot of concern very cautiously and managing this.

Ozires Kloster: We have to make investments on the contracts we have, and these partnerships would be a nationalization, maybe an increase of revenue. But we need to make a very accurate analysis so that we find no difficulties in the future. What we observed is that the market this H1, the future market, is awaiting political decisions. It is not very heated. There are no tenders being proposed. About El Niño, we have some challenging scenarios. What we anticipate or we are predicting is El Niño is showing its consequence. We have an increase of 1.8 degrees in increase in the Northern Hemisphere that brings a special perception of an increase in rainfall divided in three big areas in Paraná, more on the Northwest and Northeast to have an increasing rainfall. Another corridor, we might have storms.

Wilson Bley: We have to make investments on the contracts we have, and these partnerships would be a nationalization, maybe an increase of revenue. But we need to make a very accurate analysis so that we find no difficulties in the future. What we observed is that the market this H1, the future market, is awaiting political decisions. It is not very heated. There are no tenders being proposed. About El Niño, we have some challenging scenarios. What we anticipate or we are predicting is El Niño is showing its consequence. We have an increase of 1.8 degrees in increase in the Northern Hemisphere that brings a special perception of an increase in rainfall divided in three big areas in Paraná, more on the Northwest and Northeast to have an increasing rainfall. Another corridor, we might have storms.

Wilson Bley Lipski: In this corridor close to the coast, which includes Curitiba, we have an additional volume, but not so big as in the north and northwest. We are creating a contingency plan to face this issue, what it may bring to us. It's not issues or challenges in dealing with water. We are bringing technologies so that even with high turbulence, we can continue providing our services, distributing our water, which is universalized. I would like to, Fernando Guedes, our environment director, I would ask him to make his comments. Good morning. As our President Wilson Bley said, there is a confirmation, around 95% of a severe intensity of the El Niño phenomenon. Another probability that calls our attention, that we highlight, is 69% of intensity of this phenomenon might be one of the biggest since 1950.

Wilson Bley: In this corridor close to the coast, which includes Curitiba, we have an additional volume, but not so big as in the north and northwest. We are creating a contingency plan to face this issue, what it may bring to us. It's not issues or challenges in dealing with water. We are bringing technologies so that even with high turbulence, we can continue providing our services, distributing our water, which is universalized. I would like to, Fernando Guedes, our environment director, I would ask him to make his comments.

Fernando Guedes: Good morning. As our President Wilson Bley said, there is a confirmation, around 95% of a severe intensity of the El Niño phenomenon. Another probability that calls our attention, that we highlight, is 69% of intensity of this phenomenon might be one of the biggest since 1950.

Speaker #2: Risks create operational resilience, and analyzing all the impacts that will result from this effect—so all this risk management, resilience, operational resilience management, but we have management tools and technologies and methodologies. In terms of water security, it involves actions that include monitoring security.

Fernando Mauro Nascimento Guedes: The company has looked at that with a lot of concern, very cautiously, and managing these risks, creating operational resilience, and analyzing all the impacts that will result from this effect. All this risk management resilience, operational resilience management, but we have management tools and technologies and methodologies in terms of water security, actions that involve monitoring security, environment, and systematic follow-up of predictions and meteorological warnings. We highlight a tool that calls our attention, not only in Paraná, but all over the country. The Indro platform, developed in partnership with Simepar, which is a monitoring technology in the state of Paraná. It's a management technology that monitors climatic events and its impact in the reservoirs. This gives us a general view and allows us to manage the risks more effectively.

Fernando Guedes: The company has looked at that with a lot of concern, very cautiously, and managing these risks, creating operational resilience, and analyzing all the impacts that will result from this effect. All this risk management resilience, operational resilience management, but we have management tools and technologies and methodologies in terms of water security, actions that involve monitoring security, environment, and systematic follow-up of predictions and meteorological warnings. We highlight a tool that calls our attention, not only in Paraná, but all over the country. The Indro platform, developed in partnership with Simepar, which is a monitoring technology in the state of Paraná. It's a management technology that monitors climatic events and its impact in the reservoirs. This gives us a general view and allows us to manage the risks more effectively.

Speaker #2: Environment and systematic follow-up of predictions and meteorological warnings we highlight a tool that call our attention not only Paraná but all over the country the Indro platform developed in partnership with Sanepar which is a monitoring technology in the state of Panera Paraná it's a management technology that monitors climatic events and the its impact in the reservoirs so this gives us a general view and allows us to manage the risks the more effectively so the company is anticipating is predicting and organizing itself training its its personnel and also working with the authorities and other and in case there are some some dramatic situations if this risk intensifies at the end of spring beginning of summer November December but the company is prepared totally prepared with.

Ozires Kloster: The company is anticipating, is predicting, and organizing itself, training its personnel, and also working with the authorities in case there are some dramatic situations. If this risk intensifies at the end of spring, beginning of summer, November, December, but the company is prepared, totally prepared with energy generators, submersive pumps in case of floods or also maybe tornadoes that might cause a drop, blackouts. With these generators, we can continue delivering our services in the state of Paraná. With the issue, sometimes a lot of sediments can flow into the reservoirs, but our team and the operation board is prepared to deal or to treat this water as necessary and meet the indicators which are required by the health ministry.

Fernando Guedes: The company is anticipating, is predicting, and organizing itself, training its personnel, and also working with the authorities in case there are some dramatic situations. If this risk intensifies at the end of spring, beginning of summer, November, December, but the company is prepared, totally prepared with energy generators, submersive pumps in case of floods or also maybe tornadoes that might cause a drop, blackouts. With these generators, we can continue delivering our services in the state of Paraná. With the issue, sometimes a lot of sediments can flow into the reservoirs, but our team and the operation board is prepared to deal or to treat this water as necessary and meet the indicators which are required by the health ministry.

Speaker #2: Energy generators submersive pumps in case of floods in our and or also maybe tornadoes that might cause a drop blackouts so with this generators we can continue delivering our services to this in the state of Paraná the and with the issue sometimes a lot of sediments can flow into the reservoirs but our team and the operation board board is prepared to deal or to treat this water as necessary and meet the indicators which are required by the health ministry so I want to make so be sure that we are planned and we have we are prepared to face this risks that might happen more and this is this likelihood is only increasing I would like to say that we have a permanent working group made up by the civil defense of the state of Paraná together with Sanepar and Sanepar where this training process is offered to all our employees every change every service we have priority together with the civil defense and Sanepar is studying that on daily basis creating contingency plans so we have identified in all our so we we we can see maybe our new sources where we do not have the this turbulence this where the water is not compromised because of this storms so as so the storms that might bring blackout blackouts so we are hiring generators and also batteries like no breaks that we to allow us not to have instability that would not cause our pumps to stop and so all our wastewater treatment plans to keep them working and I want you to to make sure that all plans everything is being done tested to avoid any difficulties in the future our next question comes from Luis Alves investor how is the new reservoir is it in operation meaning guava this new reservoir gives us it allows us the flow until of two.

Wilson Bley Lipski: I want to be sure that we are planned and we are prepared to face these risks that might happen more, and this likelihood is only increasing. I would like to say that we have a permanent working group made up by the Civil Defense of the state of Paraná together with Simepar and Sanepar, where this training process is offered to all our employees. Every change, every service we have priority together with the Civil Defense. Sanepar is studying that on daily basis, projecting scenarios, and creating contingency plans. We can see maybe our new sources where we do not have the turbulence, where the water is not compromised because of these storms. The storms that might bring blackouts, we are hiring generators and also batteries, like Nobreaks to allow us not to have instability that would not cause our pumps to stop.

Fernando Guedes: I want to be sure that we are planned and we are prepared to face these risks that might happen more, and this likelihood is only increasing. I would like to say that we have a permanent working group made up by the Civil Defense of the state of Paraná together with Simepar and Sanepar, where this training process is offered to all our employees. Every change, every service we have priority together with the Civil Defense. Sanepar is studying that on daily basis, projecting scenarios, and creating contingency plans. We can see maybe our new sources where we do not have the turbulence, where the water is not compromised because of these storms. The storms that might bring blackouts, we are hiring generators and also batteries, like Nobreaks to allow us not to have instability that would not cause our pumps to stop.

Ozires Kloster: All our wastewater treatment plants, to keep them working. I want you to make sure that all plants, everything is being done, tested, to avoid any difficulties in the future. Our next question comes from Luiz Alves, investor. "How is the new reservoir? Is it in operation?" Miringuava, this new reservoir, it allows us the flow of 2,000 liters per second. Today is 1,300 liters per second in some periods. If we did not have Miringuava, only in the course of few minutes of Miringuava River, the flow drops below 600, 500 liters per second, causing difficulties in the treatment and distribution. We are very comfortable operationally because we are enjoying what is reserved in Miringuava to allow this fluidity, this flow, so that we can treat the water by the maximum flow of treatment estimated by our wastewater treatment. The growth is very high.

Fernando Guedes: All our wastewater treatment plants, to keep them working. I want you to make sure that all plants, everything is being done, tested, to avoid any difficulties in the future.

Speaker #2: Thousand liters per second today's 1,300 liters per second in some periods if we did not have meaning guava only in the course of meaning guava river the flow drops below 600 500 liters per second bringing causing difficulties in the treatment and distribution so we are so we are very comfortable operationally because we are enjoying what is what is reserved in meaning guava to allow this fluidity this flow so that we can treat the water by the flow of the maximum flow of treatment estimated by our wastewater treatment the growth is very high we had some we had some drought so we had some lack of rain at the beginning of the year on December last year we we we expected the feeling of this reservoir to be bigger but in summer and beginning of autumn it was it did not exceed exceed five six percent of feeling level so with the utilization of this permanent flow of of what we need in this era so we know as you see we left from 13 percent but today in the beginning of the semester today we see the feeling level is 20 percent so we have a good perspective that by the end of the year the levels will be within the operational levels and then it can bring some confidence and resilience operational resilience very strong now our next question comes from Guilherme da Rocha investor if you disconceded the regulatory liability you had a you have a good cash generation and good profit what is the objective criteria the board will take for the distribution of the dividends can we expect a catch-up dividend so that was Guilherme's question thank you for your question obviously the company it has its politics we have according to the to the policy we may we can have a distribution of from 25 to 50 percent with the advent of the technical.

Ozires Kloster: Our next question comes from Luiz Alves, investor. "How is the new reservoir? Is it in operation?"

Wilson Bley: Miringuava, this new reservoir, it allows us the flow of 2,000 liters per second. Today is 1,300 liters per second in some periods. If we did not have Miringuava, only in the course of few minutes of Miringuava River, the flow drops below 600, 500 liters per second, causing difficulties in the treatment and distribution. We are very comfortable operationally because we are enjoying what is reserved in Miringuava to allow this fluidity, this flow, so that we can treat the water by the maximum flow of treatment estimated by our wastewater treatment. The growth is very high.

Ozires Kloster: We had some droughts, we had some lack of rain at the beginning of the year. In December last year, we expected the filling of this reservoir to be bigger, but in summer and beginning of autumn, it did not exceed 5% or 6% of filling level. With the utilization of this permanent flow of what we need in this ETA. Now as you see, we left from 13%, but today, the beginning of the semester, today we see the filling level is 20%. We have a good perspective that by the end of the year, the levels will be within the operational levels, and then it can bring some confidence and operational resilience, very strong. Our next question comes from Guilherme da Rocha, investor. "If you disconsider the regulatory liability, you have a good cash generation and good profit.

Wilson Bley: We had some droughts, we had some lack of rain at the beginning of the year. In December last year, we expected the filling of this reservoir to be bigger, but in summer and beginning of autumn, it did not exceed 5% or 6% of filling level. With the utilization of this permanent flow of what we need in this ETA. Now as you see, we left from 13%, but today, the beginning of the semester, today we see the filling level is 20%. We have a good perspective that by the end of the year, the levels will be within the operational levels, and then it can bring some confidence and operational resilience, very strong.

Ozires Kloster: Our next question comes from Guilherme da Rocha, investor. "If you disconsider the regulatory liability, you have a good cash generation and good profit. What is the objective criteria the board will take for the distribution of the dividends? Can we expect a catch-up dividend?" That was Guilherme's question.

Ozires Kloster: What is the objective criteria the board will take for the distribution of the dividends? Can we expect a catch-up dividend?" That was Guilherme's question. Thank you for your question. Obviously, the company, it has its politics. According to the policy, we can have a distribution of from 25% to 50%. With the advent of the Technical Note 002/2026-GTI-AGEPAR, administration suspended the credit of JCPs of the H1. The statute predicts the credit on the six-month basis with the ongoing of the Agepar proceedings. As mentioned, the company is seeking all the resources to make the previous note valid. We also have the issue of revisiting the business plan of the company, that in the H2, we are revisiting it for the period 2027 to 2031.

Speaker #2: Now, the outflow for care administration suspended the credit of JPCS for the first half, so the statute predicts the credit on a six-month basis with the ongoing of the—.

Wilson Bley: Thank you for your question. Obviously, the company, it has its politics. According to the policy, we can have a distribution of from 25% to 50%. With the advent of the Technical Note 002/2026-GTI-AGEPAR, administration suspended the credit of JCPs of the H1. The statute predicts the credit on the six-month basis with the ongoing of the Agepar proceedings. As mentioned, the company is seeking all the resources to make the previous note valid. We also have the issue of revisiting the business plan of the company, that in the H2, we are revisiting it for the period 2027 to 2031.

Ozires Kloster: The board in December, based on our performance in the H2, will decide what credit will be made. We conclude the question-and-answer session, and the questions that have not been read will be answered. I hand over to Ozires Kloster for the final remarks. I'd like to thank the presence of all the board. Thank you all who participated in this conference, and wish you a very good day and very good weekend. The confidence of results of the H2 2026 is concluded. Thank you all, and have a great day.

Wilson Bley: The board in December, based on our performance in the H2, will decide what credit will be made.

Operator: We conclude the question-and-answer session, and the questions that have not been read will be answered. I hand over to Ozires Kloster for the final remarks.

Ozires Kloster: I'd like to thank the presence of all the board. Thank you all who participated in this conference, and wish you a very good day and very good weekend.

Operator: The confidence of results of the H2 2026 is concluded. Thank you all, and have a great day.

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Q2 2026 Cia de Saneamento do Parana SA Earnings Call

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