Companhia de Saneamento do Paraná - SANEPAR (SAPR11.SA) Q2 FY2025 Earnings Call Transcript & Summary

Good morning, everyone. Thank you for joining us today. Welcome to the video conference announcing the results of the second quarter of 2025 for Companhia de Saneamento do Parana - SANEPAR. [Operator Instructions] Please note that this video conference is being recorded and will be made available on the company's Investor Relations website at the address, ri.sanepar.com.br, where the full earnings release and presentation materials are also accessible. You can download the presentation directly from the chat available in English as well. [Operator Instructions] 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. So now I'll hand it over to our Chief Financial and Investor Relations Officer, Abel De Metro.

Thank you, Rodrigo. Good morning. We have our President Director, Wilson Bley, our Innovation and New Business Director and our Investor Director, Leura Lucia Conte de Oliveira. And I will hand it over to our President.

Good morning, everyone. I welcome my team, my Board, and I welcome all of you, our investors. I would like to say that this second half was according to plan. We had nothing unexpected. We had articulated the universalization. So it's an accelerated process for us to be able to reach the results that were anticipated in 2023 that can be achieved previously. As highlights, I would like to discuss the risks of payment. The writs of payments were deposited after being -- after it was included in the budget law. So this payment was done in Banco do Brasil and our legal department is working for the money to be available in our account. We know the rules, all the regulations. And within them, we will move. We will comply to them. And something that brought a positive reflection and will show even better reflection is adherence to PDV. It was 527 employees who adhere to PDV and they are in the process. Some already left the company, other are in the process of leaving. And also we also called some employees from the new public recruiting systems for us to prevent any problems in the company. Another very positive reflection is the free market. We have been evolving this process for quite some time and the financial results can be seen very clearly. We will continue -- 90% of our consumption is in the free market. And you know that we have to adapt our parks for us to be able to reach the results of the free market, which is something we are doing in a very, very fast to reach the results quickly. Another highlight, and I would like to congratulate my Director, is the investments done this year, over BRL 1 billion and in the second quarter BRL 612 million in investments. This shows our capacity, the capacity to plan and execute, reaching the results we expected, which is the biggest mission of our company, which is to deliver water, collect sewage, treat sewage and return this water in a very adequate way to the population, bringing positive results to all of us. And finally, I would like to say that all of that is done within the margins established to all of us. Our leverage has not exceeded 1.7. We are within a very comfortable margin of 3, which is the possible and the maximum parameter. So if compared to other companies, we are very calm in this aspect. This shows solidity, planning and especially responsibility we have to reach the results, to achieve the results. This responsibility is done in this good relationship we have with all of you, investors, with our consumers. And this is a special look. May we be able to continue delivering what is already a part of the company, which is water, quality water, treated water and 99.9% of where we -- the area we cover. And in sewage, we are also moving very fast to reach universalization, which brings very good results, financially speaking, for us since this is new revenue. Today, we have about 82%. 82% is a national reference and it shows our commitment, especially our capacity to plan in actual -- in real action. So I thank you for your -- the opportunity to be here talking to you. We are always open to have this kind of conversation. And I want you to know our commitment to do the best for Sanepar.

Thank you, President. I would like to start with our presentation. So we are going to see the results of the second half -- the second quarter. So now let's discuss the highlights. We had investments, as our President said, above BRL 1.1 billion, an increase of 26%. And in this second quarter, we had 27%. Default, we continue with a controlled default 0.8%. The net debt, 1.7x EBITDA and cash generation in the -- of BRL 1.4 billion. Now we are going to discuss the operating results of the company. So concerning the measured volume of water, we had in the first -- an increase of 0.9%, although the second semester, it was reduced to 7%. Accumulated, it was an increase of 0.9%. Invoice volume, an increase of 0.8%. And concerning water, we had an increase of connections in 6 months of 22,680 new connections and in 12 months 41,379 connections, an increase of 1.2%. So the vegetative increase in this issue of water. Economic units, we increased 34,000 in 12 months and 55,830 in 1 year with an increase of 1.3%. Now concerning sewage, we had a measured volume that increased 2.5% in this semester. In the invoice volume, it increased 2.5% in this semester. In terms of connections, since we seek universalization, we have an increase, a more representative increase in terms of connection and economies. We had an increase -- 26,000 new connections. And in 12 months, we reached 70,964 connections. About economic units, they increased 41,685 economic units in 12 months, 97,152 with an increase of 2.8%. So a significant and a very stable growth. Next slide, let's talk about the reservoir levels. So we have these 4 reservoirs, Irai, Passuna, Piraquara I and Piraquara II. And Irai had 92% at the end of June, Passuna and Piraquara 100% and Piraquara II with 89%. We have to remember that we continue with this water emergency decree we are in winter where the rains are less. So we always have to be aware about consumption and the locations that are reached in certain regions and that might suffer some lack of water. So we are always alert about that. I will -- and then we have the 5th reservoir, which is in progress. In the next slide, we have our -- the history of our service index. So we have to remember the level -- the law of 2007 was a benchmark of sanitation. At the time, we had 99% of treated water for the population in the areas of emergency. So we were universalized in 2007. It shows the evolution, the progress of service of our service in the issue of sewage treatment collection. In June 2025, we have 81.7% of service and 90% of sewage. So we are on the way to reach this target. In the next slide, we will talk about some financial indicators. As we saw the default is 0.8%. We have to remember that the default is always measured without delays. 1 day of delay we consider default. And we have to remember also that the continuous default measured by the agency, the regulating agency is 0.60%, so 0.8% is a 1-day default. So it is within the aging of the company. Last year, it was 1.1% in the same period and in 2023 minus 2.4% because we were recovering the credits because of the COVID as a result of the COVID. So they were very relevant at that time. So losses per connection had an increase of 1.1%, reaching 222 liters of losses per day. And in this sense, we are trying to find some actions to bring this level to more comfortable percentage. Margin EBITDA in the first quarter, 47.1%, ROI of 20% and ROIC -- annualized ROIC of 14.1%. Now let's talk about the quarter results. Our net revenue had an increase of 2.5% compared to the second half of 2024, reaching BRL 1.705 billion. EBITDA had a decrease of 16.8% compared to the second quarter of 2024. It reached BRL 236 million and net profit of BRL 264 million. So we will cover the points that affected that. The cost and expenses, we increased 14.6%. Margin EBITDA in the second quarter was 31.4%, a reduction of 7.3% compared to the second quarter of 2024. And the net profit had a reduction of 7%. Next slide, we have the accumulated results. We have a net revenue increase in the period of 6 months of 4.4%, reaching BRL 3.511 billion in the first semester. EBITDA increased 16.5% in the semester, reaching BRL 1.652 billion and the net profit reaching BRL 1.472 billion and cost and expense reduction of 4.5%, BRL 1.859 billion. EBITDA 47.1%, an increase of 4.9% compared to last year and net margin 19.4%, above the first semester, reaching 41.9% and this is all impacted to the writs of payment. The next slide, we will go -- we will break down the quarter results so that we can understand the results in a more detailed way. So concerning net revenue, as we saw, there was an increase of 2.5%. It was a very shy increase, but we have to observe first, we're having cold weather. In the second quarter, we had very cold weather. This year, our winter was quite strong, and it's been strong. And another issue is the Ponta Grossa event that caused the company to -- from March 21. For 30 days, we did not invoiced the inhabitant on Ponta Grossa. So this affected the net revenue. We have to remember that in the issue of net revenue, something that was enforced in 17 May, the third tariff revision with 3.7% of reposition of readjustment in the fees. Since this is measured proportionately, the impact -- the whole impact happened in June 16, 17, 30 days later in the price. So in the third quarter, this has not been felt. In personnel, there was a decrease of 10.6% in the period. And this is a result, as President said, of the issue of PDV. So we have people who are leaving the company voluntarily from -- starting from March and this disconnection will take place until November of 2025. Although we are hiring new people, but this was one of the elements that brought a reduction in personnel in the quarter -- in the second quarter. So we had, about personnel, a reduction in the lawsuits with a lower register in this period compared to the previous year. It was one of the reasons that caused us to reduce this percentage in personnel. PPR, the employees, this is a result of profit. So since we have a lower profit, this impact and the readjustment of PPR of last year, considering that we reached our target. So that's the reduction. Material account, we had a positive result. We had a reduction of 2.5% in the account of material. We have to remember that the big account is the treatment material. And we can say that in this period, we had a positive result, both in the treatment material as well as in other accounts. Another account that brought increase was electromechanical maintenance. We had an increase there. About electricity, there was a reduction of 26.5%. This is a result of the free market, but not only that, but the issue of operational control about the peak of consumptions, engines and energy efficiency to apply to help us decrease -- improve this account to have this within the expectation because this is an important item in our budget. Concerning third-party services, yes, you observed an increase of 13.6%. And the accounts that are still impacting is the vigilance is the security services due to the new contract scope hired by the company, we have the issue of monitored surveillance, a replacement of this scope of alarm to alarm plus cameras. And so that's why we are seeing an increase in the services, but this is a result of many actions that we had in the past 2, 3 years ago, it was the issue of theft, both energy cables in the treatment of water, in the sewage treatment, this copper material theft. And so -- and this caused the population also to suffer the consequences with interruption of supply of water. So this investment in surveillance is a result of that. And we have other maintenance of our reservoirs. We know how much we have evolved in terms of relevant investments for sewage in Curitiba, we have the biggest sewage treatment station. So we had the issue in the operation of [indiscernible] have some expenses in operations of maintenance for us to be able to remove the proper and to do the proper treatment concerning the sewage. And then about registry and the collection, it's also collection of money after COVID. This is something that increased the labor force price has been -- the cost has been increasing. The economy in Parana has been increasing a lot. So we feel a pressure on the cost of labor. So we are close to a level -- so we have a very low level of unemployment. So some specific sectors that feel the impact because, yes, we have less people available in technical operational services in maintenance, these were some elements that impacted the third-party services. About legal things, we had a decrease. The big point is the highlight is non-management items seen by the company, payments of some funds to the municipalities, regulation fees, other taxes, but the indemnization to third parties. So we had some write-offs in the legal issues and we had some compensations and we had an improvement compared to the first semester of 2024. In this point, we had some health -- some environmental issues. We are always helping the preservation of programs and some partnerships, educational environmental partnerships so that we have our water body preserved. Then judicial provisions and fiscal provisions and tax provisions, we have more relevant things due to provisions. For Ponta Grossa, we signed a pact. We communicated to the market. We will pay BRL 15 million in 15 installments of BRL 1 million starting in August. This affected the initial provision of Ponta Grossa. It affected the result of second quarter. And there was another BRL 54 million impact in the civil. It brought different result of the expected. And for healthcare and social service provision had a 13% increase. Financial expenses had an increase of 240%. Other costs and expenses we had a recalculation of discount fee, which exceeded 436% and the economic environment with a Selic of 15%. So these fees impact the fees of discount. This is the main element of the financial expenses of the period. Other costs and expenses, an increase of 27% as a result of an update related to PPDs, which were done. So all the -- we provision all the expenses and this impacted us in around BRL 60 million in this quarter. In the next slide, let's talk about the quarter results of the accumulated results. So the net result increased 4.5%. The personnel increased 32%. One of those write-offs that we mentioned, the highlights that we could say is provisions, we have a relevant amount as a result of the regulatory liability in other expenses launched the issues of the of payment favorable to the company, but the net result in the period, BRL 1.471 billion, an increase of 95% as we mentioned. Now speaking about the investments, the CapEx. The company invested BRL 1.099 billion, an increase of 26% and the distribution of the composition of this CapEx is divided in 31% in water, 59% in sewage and 10% in other investments. The origin of resources, 78% owned resources and 22% third-party funds. So we did not have to look for other investments, but the traditional ones to pay all our expenses. It's important to avoid right now a more direct action in the market considering the interest rate, which are very high and make the operations expensive. Next slide, speaking of our net debt. It is short term, BRL 879 million, long term, BRL 5.890 billion. And total debt, BRL 6.698 billion. At the end of June, we had BRL 1.396 billion in cash and net debt of -- an increase of 7.2%, BRL 5.302 billion. In June '24, it was BRL 4.946 million, but the leverage level was the same 1.7x EBITDA, which was the same level registered in June '24. The cash generation was quite positive. We had an increase of 15.8%, reaching BRL 1.428 billion with a conversion of 83%. Now the cost of capital of third party reached 11.4%, an increase of 0.6% in the first semester of 2025 compared to the 10.8% in the first semester of 2024. So we still have a debt breakdown very healthy. As we understand, we have 34% of our financing long term connected to Caixa Economica Federal and the long term whose interest is fixed and the variable part TR, as you all know, is a very benign fee in terms of what concerns investment. Inflation, it's 29% of our debt connected with PCA. DI, we have 24%. So the total of our debt of 6.7 -- 24% is connected to DI. But given our cash flow, which somehow is connected to DI, we have had between the position of debt and position of cash flow, which allows us the cost of capital to be close to 11%, 11.4%. We have a contract, which is [indiscernible] which represent 5% of the doubt, 3% in Europe, which is KFW contract, it's about 80% and TJLP 3% and 2% of contracts do not have monetary correction. This is our profile of capital at the end of June 30, 2025. Now let's talk about covenants. So we have some in the system BNDES. We have direct financial debentures of 4th and 7th emissions. We have the covenant that has to be less or equal to 3. EBITDA divided by the service of debt has to be bigger or more than 1.5 and 1. And the other debt have to be less or equal to 1. So we are reaching in this period of 30th of July. The contracts with Caixa, we have EBITDA adjusted by the net finance expense and we are doing well. It has to be -- and the netback then has to be less or equal to 3, we are okay. And the other onerous debt it's 0.3 compared to 0.4. Now let's talk about the other covenants. We have the 9th, 10th until the 14th issue of debentures. They have 2 covenants. So EBITDA adjusted by -- so all the percentage here, they are according to what was expected. And the level of -- the debt level was the percentage of 53% when our limit is 60%. So it seems very little, but it's quite significant, the difference from 53% to 60%. So we are doing very comfortably in this event. In the next slide, let's talk about the balance sheet. Our net debt increased 10.3%. If we compare to the end of 2024. The main element of increase was the issue of dividends and interest on own capital increased 19% in the period with registering the cash -- we had a reduction of -- in the operating working capital, we're reducing 37%. The write-offs exceeding BRL 1 billion, a reduction of 8%. The stocks had an increase of 3.5%. And the suppliers, we had in the contractors and suppliers, 0.9% increase and salaries and social payroll charges due to PDV, we had an increase of 69%. They are all in operating working capital. About assets and liabilities, we had BRL 571 million, a reduction of 7.8% in provisions. In contract assets, we have BRL 3.239 billion, an increase of 16.4%. Our net equity is BRL 11.784 billion with operating working capital of 28 days, very positive. So about the increase of revenue, decrease of liabilities. So we still have to make some payments for salaries. In the last slide, I will talk about the cash flow. We had the operating activities bringing 15.8% increase, reaching BRL 1.428 billion. The investment with BRL 1.85 billion and financing activities consuming BRL 747 million. There was a reduction of BRL 404 million of BRL 1 -- we have BRL 1.396 billion cash flow at the end of the period. So we have to remember that in June 2025, Sanepar paid the dividends related to 2024. This is the history of payment done in this month. And we also paid the PPR to the employees, which was the most important expenditure in 2025 in June. So thank you for listening to the presentation. So we have Ozires Kloster, our Accounting Manager, who is part -- who answer the questions. So Rodrigo, I hand it over to you.

[Operator Instructions] So let's start with our first question coming from Leandro [indiscernible] an investor. Initially, he congratulates Sanepar team for the results and he asks 3 questions. First question, I identified a significant increase, 270% in provisions for contingencies with highlights of an amount for Itau Construtora. Could you break down this case a little bit and how the company is seeking to deal with this? And what are the -- and how to protect future third-party contracts? Second question, could you comment on the main offenders of AVP about the financial assets that had an impact of -- and an impact in financial expenses. And I'd like to understand a little better this increase in the line of third-party services. This increase are being adjusted by contract or they are covering more contracts or improvement of services. What is the reason? These are Leandro's questions.

Leandro, thanks for your question. I will hand over -- I will start with question 2, AVP, which is the adjustment in the current value. The good company has to recognize the assets that whose deadline is within the contract to bring it to the current amount and give the discount that exceeded 2024 deadline of 4.36% to 5.41% given the deadline, which is done, we calculated this -- the asset pay and the change of rate is quite significant impacting the results in this period. This is how we had in other occasions like, for example, when the company extended the contract deadline until '48 with a bigger deadline we had at the time, the need following the accounting laws, we needed to do the adjustments to the current value of these assets. Concerning the third question, the third-party services. Although I had explained the main elements, I will try to bring some more items to clarify this issue related to the increase in third-party services. We have to remember that in 6 months in technical professional services, we had something relevant related to provisions for payments or wages of the writs of payment. Writs of payment is quite relevant in this service, is very representative, very significant. The other costs are the main ones that I mentioned, surveillance services increased 52%, 53%. But I just want to give more details. We had an increase of 696 positions in the period, an increase. And it's important for us to take care of our treatment water stations, security of workers. Sometimes at the stations, it's more than 600 rural locations. And sometimes these areas are very isolated and they need protection. With this surveillance service, we intend to also to avoid theft, protect the population, guarantee service to the population, guarantee that the water will not be cut and also in the revenue of the company, because if you cut the water, we don't deliver the service, you cannot invoice this payment. Not to mention the reputation of the company, which is -- if it is susceptible to interruptions as a result of this kind of thefts and wrongdoings. And about resuming services, the commercial services of invoice, we are spending a little bit more to bring efficiency in our services in terms of recovering our credit, making sure that we are paid. And we have to recognize that our default is quite favorable. We had several actions to recover credit to make sure that, let's say, we receive our invoice. We continue reading the invoice. We are measuring correctly the consumption and we want to make sure that this measuring is correct. We want to have a very good, a monthly standard of measurement. And for that, we need a team available to do these readings, these measurements and do the registry, implement new technologies for us to always serve the population as best as possible. And electromechanical services had an increase, although it was not very significant, but there was an organizational change related to the team about restructuring. So we are seeking ways to be more efficient. And right now, we had an expense which was registered in the period. So Leandro, these are the main issues. Besides one of the main things we can mention, we have some readjustments in contracts. The IPCA accumulated is above 5%. We have an increase in volume produced of 1.4% plus 2.5% of sewage treated. So we had an increase just for these actions, whether it's inflation or increase in volumes treated and produced both in sewage and water. Concerning the first question, the provisions for contingency, I will ask our accounting manager, Ozires, to answer this question.

Thank you, Leandro, for your question. Concerning the provisions in the quarter, we had 2 events that affected this line. Especially we had the provision, as you mentioned in the question, the provision of this contractor, which was a node action of Piraquara II reservoir. We had a provision for that and we added in this quarter BRL 54 million. We also had the effect of losses, the expected losses in the credits, which is provision of losses for the clients. In the first quarter, we did compare -- related to the installments to the ones that were due. We created a provision for this quarter, we added this provision. And also related to the payments for the clients that are in default, we also created a provisions for all the accounts regardless of the fact if they are due or not. So we discussed this with our commercial area and we decided to establish this amount.

Now continuing our -- next I think Leandro also asked about the learning of this team. I would like to hand over to Leura for her to talk about the 5th reservoir that I mentioned at the beginning. I want to talk about the learning here. I think this type of construction, this reservoir is quite unique, but I think we could have some more information about it.

Concerning the learning, from Piraquara II and other initiatives, not specifically reservoirs, the Law 13,303 brought the possibility of adopting the risk matrix. With the risk matrix, we defined both the supplier and the contractor, which is Sanepar, define problems that might come up in the execution of [indiscernible]. So Piraquara II should be an event of more than 10 years, a 10, 15-year project. And we have been evolving that in terms of more detailed reference, the bidding, the tender and this risk matrix can divide -- share the responsibility between supplier and the contracted.

Now continuing, our next question comes from Maria Carolina Carneiro, Banco Safra. She would like to understand 3 points. One, the impacts mentioned of this wagon effect, which can have more impact in the next quarters. Second, the estimated losses due to doubted liquidation and how you have dealt with that? And number three, about possible discussion with regulator of the reach of payment balance, when this will be discussed? These are her 3 points.

So I will hand over to Ozires for him to discuss this effect of goal. This is wagon effect. And the last question I can answer.

So thank you for your question. So the impact of the wagon effect, we consolidated this provision in the second quarter. We do not expect to have any other relevant effect for the next period. Concerning the other provisions, we follow the policy of the company. All the, let's say, accounts that are overdue, we make the provision for overdue accounts over 180 days. And we also make a provision for municipalities based on history if account -- if it's above 2 years with the exception of all those municipalities that have default. We also consider this wagon effect. And for the state sector, there is -- given the history, we have not made any provision basically. This is it.

Concerning the issue of the writs of payment and the regulation discussions about the theme, we maintain -- contacted with the agency. The agency is leaning over this theme. And we understand that we have important arguments to present for the agency and the agency needs to digest all that and maturate all that because at the end of the day, it's responsible for defining -- making decisions, once the agency defines the norms of the norms. So discussions are healthy. They are always very positive. And it's important that we are moving step-by-step this process, which is very slow and we are following this lawsuits that it's going on for over 31 years. And we have -- so we have all the dealings with the justice and with the agency, but we expect that we will reach a balance at the end of the story. And we have room for discussion with the regulator. We understand that we will have a reasonable result at the end. We expect that.

Our next question comes from Mr. [ Jera ] an Investor. How are the development dealings for new businesses, especially about the market expansion according to the communication made to the market in June?

Thanks for your question. I will hand this question over to our Innovation and New Business Director.

Thank you for your question and for the opportunity. The Innovation Board and New Businesses Board, in fact, is the newest here in the company. We've been here for over a year. And yesterday, we had the approval by the Administration Council the director plan of new businesses. So of all the possibilities that the company has, we will stick to 7 pieces that will be disseminated soon so that we can develop new businesses, bringing accessory revenue. And we have discussed this revenue accessories with [indiscernible] about looking at the market, we have a micro approach so that we can look beyond the State of Parana. We are studying. We are at the phase, in an incipient phase. We are just studying the possibilities. But what is the most important thing related to new businesses was a resolution made by the Administration Council 758 where there was a norm related -- regarding how we can do the new businesses. 3,333 authorizes this and approves it and our statute is in line with all that, the possibility to do that -- then I would say in the next few months with the company will disclose all the actual facts that are taking place.

I want to add something. [indiscernible] from Sanepar is an internal regulation for contracts and biddings.

And now continuing Joao Pimentel's question, analyst of Citi. Would you say the impact in revenue related to the agreement of Ponta Grossa? This was Joao's question.

Joao, thank you for your question. Well, Ponta Grossa in terms of revenue, we had the month started in March to March '21 for 30 days, we did not charge them and we estimated at the time BRL 23 million that we did not receive. Last year in 2024, this was responsible for 3.8% of revenue of the company. So it was quite relevant. And now in August, according to TAC, we will give 50% of discount, which will represent about BRL 12 million, BRL 13 million. That was the impact related to revenue, conducting this conduct adjustment signed by Sanepar. Besides what Ozires said, BRL 15 million, I also mentioned BRL 15 million that were provisioned and that are being deposited in 15 installments planned every month as communicated to the market.

Next question comes from [indiscernible] an investor. He congratulates the company for the results and questions the plan of investments for 2025 to 2029. What is the maximum leverage expected considering that now we're adding 1.7 EBITDA. We will maintain the payout in this period?

[indiscernible] this is a very relevant question. We have the payout issue. We have a plan of investment, which is quite relevant of BRL 11.8 billion. We are making all the efforts to do it as best as possible following the regulation rules, the search for savings in the works because we know that this all impacts in the fees and the payments that the company makes. So the more economical this cost us, the more we can invest. Of course, we have a leverage level, which is approved by -- in the business plan when we present to the Administration Council, but we do not present to the market the limits or the maximum. We know that the maximum limit in the contract is 3x leverage. We are doing 1.7x and we are conducting things so that we are always meeting the needs or expectations of our creditors, private banks and all the creditors that finance the companies. And yes, the leverage is something quite relevant that we observe in the business plan and always seeking, trying to have this number in a comfortable place compared to the maximum. We know that there is room for leverage, but we also know that we are conservative because the debts are expensive and they have to be paid. So we have to be very careful and we try to be as careful as possible to avoid super exposure to the market. About payout, it's part of the strategy in the sense that we need to seek universalization of the services. We are on the path -- on the right path and we are making an effort -- and we have the effort of the investors. We understand that here I do not take out of the potential. I do not explore the potential of that I would like, but this is due to our financial limits, both payout and leverage is discussed strongly in the council, our Administration Council, both on monthly meetings when we present results and in the planning meetings, which is normally a 5-year planning revised every year.

Now next question comes from Yuri [indiscernible] analyst of [indiscernible]. About the deposit of writ of payment in Banco do Brasil mentioned by the President, do you intend to make a relevant fact only on the payment leaves this judicial account and goes to an account to Sanepar?

Thank you for your questions. In the -- here, we have an event, which is about the deposit done in Banco do Brasil, as you mentioned by the President. Since this is a very long-term process, we've been working on that for 31 years and our law office understands a lot about that and we still have some administration steps to release these resources to make them available. It does not depend on the company. It's not a company that controls or manages the processes until its liquidation. And of course, the company manages the whole thing related to receiving the resources, but we do not know when this will be made available. Of course, when the resources then are available to the company, we will communicate the market because then all the steps will be concluded and we will own the money and we only disclose this in the PR in the subsequent events to make the market updated on the subject. But it depends on the justice. And there are some steps to cover before that. So we expect good news, but we are careful because it's quite a significant amount and we know that it's not within our power to make this decision. So we are positive, but we do not have any -- the total control of the team, the total management of the team.

Now next question comes from Fabio [indiscernible], an investor. Recently, SABESP announced investment -- relevant investment in digital readers, water readings to guarantee better control. Does Sanepar have any similar initiative?

Fabio, I can say that we are investing time and resources for that. We have 2 concepts about the measuring devices, over 300 [indiscernible] and some of them with a probability of cuts from a distance and reading from a distance. We are in the phase of interacting with our clients so that the client has this information as quickly as possible. And besides that, we are working -- we launched a program called Sanepar [indiscernible] We launched the first tender. It was launched the second public notice, let's say, together with [indiscernible]. One of the items of the second public notice is the possibility for us to find economy in regards to that. We are following the experience of SABESP. And I will say that in the short term, we will have launches. We will have hirings in this line of intelligent growers.

So we conclude the question answer session, and we will hand over to Abel Demetrio for the final remarks.

Thank you for your participation in this video conference of the second quarter. Although the profit, the result has come with a reduction, I think we understand that the core of the company, all the level of service, level of operations of tariffs are preserved. And I'd like to wish to all of you a great weekend. Thank you all.

So the video conference of results of Sanepar is concluded. Have you all a nice day.