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Brookfield Business (BBUC) - 2025 Q1 - Quarterly Report

Unaudited Interim Condensed Consolidated Financial Statements Unaudited Interim Condensed Consolidated Statements of Financial Position Total assets increased to $19,299 million, liabilities to $16,715 million, and equity decreased by $51 million - Total Assets increased by $201 million (1.05%) from $19,098 million (Dec 31, 2024) to $19,299 million (Mar 31, 2025)5 - Total Liabilities increased by $252 million (1.53%) from $16,463 million (Dec 31, 2024) to $16,715 million (Mar 31, 2025)5 - Total Equity decreased by $51 million (1.93%) from $2,635 million (Dec 31, 2024) to $2,584 million (Mar 31, 2025)5 Key Asset Changes (Mar 31, 2025 vs Dec 31, 2024) | Asset Category | March 31, 2025 (US$M) | December 31, 2024 (US$M) | Change (US$M) | % Change | | :----------------------------- | :--------------------- | :---------------------- | :------------ | :------- | | Cash and cash equivalents | 968 | 1,008 | (40) | (3.97%) | | Accounts and other receivable, net | 1,460 | 1,337 | 123 | 9.20% | | Inventory, net | 59 | 52 | 7 | 13.46% | | Intangible assets | 6,031 | 5,966 | 65 | 1.09% | | Goodwill | 4,993 | 4,988 | 5 | 0.10% | Unaudited Interim Condensed Consolidated Statements of Operating Results Net loss improved to $135 million from $174 million, primarily due to a significantly lower remeasurement loss on shares - Net Income (Loss) improved from a loss of $174 million (Q1 2024) to a loss of $135 million (Q1 2025), a decrease in loss of $39 million7 - Revenues increased by $101 million (5.42%) from $1,865 million (Q1 2024) to $1,966 million (Q1 2025)7 - Remeasurement loss on exchangeable and class B shares decreased significantly from $111 million (Q1 2024) to $7 million (Q1 2025)7 Operating Results (Three Months Ended March 31) | Metric | 2025 (US$M) | 2024 (US$M) | Change (US$M) | % Change | | :---------------------------------- | :---------- | :---------- | :------------ | :------- | | Revenues | 1,966 | 1,865 | 101 | 5.42% | | Direct operating costs | (1,789) | (1,652) | (137) | 8.30% | | General and administrative expenses | (75) | (64) | (11) | 17.19% | | Interest income (expense), net | (219) | (210) | (9) | 4.29% | | Remeasurement of exchangeable and class B shares | (7) | (111) | 104 | (93.69%) | | Other income (expense), net | (34) | (11) | (23) | 209.09% | | Net income (loss) | (135) | (174) | 39 | (22.41%) | Unaudited Interim Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive loss decreased to $109 million from $221 million, driven by lower net loss and positive foreign currency translation - Comprehensive Income (Loss) improved from a loss of $221 million (Q1 2024) to a loss of $109 million (Q1 2025), a decrease in loss of $112 million11 - Foreign currency translation shifted from a loss of $81 million (Q1 2024) to a gain of $61 million (Q1 2025)11 Comprehensive Income (Loss) (Three Months Ended March 31) | Metric | 2025 (US$M) | 2024 (US$M) | Change (US$M) | | :---------------------------------- | :---------- | :---------- | :------------ | | Net income (loss) | (135) | (174) | 39 | | Foreign currency translation | 61 | (81) | 142 | | Net investment and cash flow hedges | (42) | 59 | (101) | | Total other comprehensive income (loss) | 26 | (47) | 73 | | Comprehensive income (loss) | (109) | (221) | 112 | Unaudited Interim Condensed Consolidated Statements of Changes in Equity Total equity decreased to $2,584 million due to a net loss of $135 million, partially offset by contributions - Total Equity as at March 31, 2025, was $2,584 million, down from $2,635 million at January 1, 202514 - Net income (loss) for Q1 2025 was $(135) million14 - Contributions to equity for Q1 2025 totaled $58 million14 Unaudited Interim Condensed Consolidated Statements of Cash Flow Cash and cash equivalents decreased by $69 million to $968 million, with operating activities using $50 million - Cash and cash equivalents at the end of Q1 2025 were $968 million, compared to $743 million at the end of Q1 202418 - Cash used in operating activities for Q1 2025 was $50 million, a slight improvement from $53 million used in Q1 202418 - Cash provided by financing activities decreased to $71 million in Q1 2025 from $124 million in Q1 202418 Cash Flow Summary (Three Months Ended March 31) | Activity | 2025 (US$M) | 2024 (US$M) | Change (US$M) | | :---------------------------------- | :---------- | :---------- | :------------ | | Operating Activities | (50) | (53) | 3 | | Financing Activities | 71 | 124 | (53) | | Investing Activities | (90) | (77) | (13) | | Effect of foreign exchange rates on cash | 29 | (23) | 52 | | Change during the period | (69) | (6) | (63) | | Balance, beginning of year | 1,008 | 772 | 236 | | Balance, end of period | 968 | 743 | 225 | Notes to Unaudited Interim Condensed Consolidated Financial Statements NOTE 1. Organization and Description of the Company Brookfield Business Corporation, a subsidiary of Brookfield Business Partners, operates global services and industrials with NYSE and TSX listed shares - Brookfield Business Corporation (the 'company') is an owner and operator of services and industrials operations on a global basis, formed under the Business Corporations Act (British Columbia) on June 21, 202120 - The company is a subsidiary of Brookfield Business Partners L.P., with Brookfield Corporation as the ultimate parent20 - Class A exchangeable subordinate voting shares are listed on NYSE and TSX (symbol 'BBUC') and are structured to be economically equivalent to the non-voting limited partnership units ('LP Units') of the partnership20 NOTE 2. Material Accounting Policy Information Financial statements are prepared under IAS 34, applying consistent policies, with no EPS presentation and future IFRS changes assessed - Unaudited interim condensed consolidated financial statements are prepared in accordance with IAS 34, Interim Financial Reporting, using accounting policies from the annual consolidated financial statements as at and for the year ended December 31, 202421 - The company applies temporary mandatory relief from recognizing deferred taxes related to the global minimum top-up tax (effective Jan 1, 2024), with no material current tax impact for Q1 202525 - Earnings per share are not presented because exchangeable shares and class B/C shares are classified as financial liabilities and do not constitute 'ordinary shares' under IAS 3327 - Amendments to IFRS 9 and IFRS 7 (May 2024) clarify requirements for financial liabilities and assets with contingent features, effective Jan 1, 202628 - IFRS 18 (April 2024) replaces IAS 1, requiring additional subtotals in profit/loss and disclosures about management-defined performance measures, effective Jan 1, 202729 NOTE 3. Fair Value of Financial Instruments Total financial assets were $4,689 million and liabilities $14,214 million, primarily at amortized cost, with derivative hedging losses in OCI Financial Instruments (Mar 31, 2025) | Category | FVTPL (US$M) | FVOCI (US$M) | Amortized Cost (US$M) | Total (US$M) | | :--------------- | :----------- | :----------- | :-------------------- | :----------- | | Financial assets | 11 | 132 | 4,546 | 4,689 | | Financial liabilities | — | 41 | 14,173 | 14,214 | - For Q1 2025, net investment hedges resulted in a pre-tax net loss of $22 million recorded in OCI, while cash flow hedges resulted in a pre-tax net loss of $20 million in OCI3738 - All financial assets and liabilities carried at fair value are categorized as Level 1 or Level 2 inputs, with no significant Level 3 inputs or transfers between levels during Q1 20253940 NOTE 4. Financial Assets Total financial assets decreased by $29 million to $324 million, primarily due to a reduction in derivative assets - Total Financial Assets decreased by $29 million to $324 million (Mar 31, 2025) from $353 million (Dec 31, 2024)41 Financial Assets (US$M) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Current | 151 | 167 | | Non-current | 173 | 186 | | Total | 324 | 353 | NOTE 5. Exchangeable Shares, Class B Shares and Class C Shares Exchangeable and Class B shares are classified as liabilities and remeasured based on LP Unit price, with a $7 million remeasurement loss for the quarter - Exchangeable shares and Class B shares are classified as financial liabilities due to their exchangeable and cash redemption features42 - Remeasurement loss on exchangeable and class B shares was $7 million for Q1 2025, significantly lower than $111 million in Q1 202444 - As of March 31, 2025, the closing price of one LP Unit was $23.46, which is used for remeasurement44 Outstanding Exchangeable and Class B Shares (Mar 31, 2025) | Item | Shares Outstanding | Carrying Value (US$M) | | :---------------------- | :----------------- | :-------------------- | | Exchangeable shares | 71,694,067 | 1,682 | | Class B shares | 1 | | NOTE 6. Accounts and Other Receivable, Net Total accounts and other receivables, net, increased by $168 million to $3,397 million, with a significant loan receivable from Brookfield Business Partners - Total Accounts and Other Receivable, Net increased by $168 million to $3,397 million (Mar 31, 2025) from $3,229 million (Dec 31, 2024)46 - Current receivables, net, were $1,460 million (Mar 31, 2025) compared to $1,337 million (Dec 31, 2024)46 - Non-current receivables, net, included a $1,140 million loan receivable from Brookfield Business Partners as of both periods46 NOTE 7. Inventory, Net Net inventory increased slightly by $7 million to $59 million, driven by higher finished goods and other inventory - Carrying amount of inventories increased by $7 million to $59 million (Mar 31, 2025) from $52 million (Dec 31, 2024)48 Inventory Composition (US$M) | Category | March 31, 2025 | December 31, 2024 | | :---------------------- | :------------- | :---------------- | | Raw materials and consumables | 42 | 41 | | Finished goods and other | 17 | 11 | | Total | 59 | 52 | NOTE 8. Other Assets Total other assets increased by $14 million to $641 million, remaining stable with minor changes in components - Total Other Assets increased by $14 million to $641 million (Mar 31, 2025) from $627 million (Dec 31, 2024)49 Other Assets (US$M) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Current | 369 | 371 | | Non-current | 272 | 256 | | Total | 641 | 627 | NOTE 9. Property, Plant and Equipment Net book value of PP&E remained stable at $2,479 million, with additions largely offset by depreciation expense - Net book value of Property, Plant and Equipment was $2,479 million (Mar 31, 2025), a slight decrease of $1 million from $2,480 million (Dec 31, 2024)51 - Additions to PP&E for Q1 2025 were $53 million, while depreciation and impairment expense was $53 million51 - Right-of-use assets included in PP&E were $234 million as of March 31, 202551 NOTE 10. Intangible Assets Net book value of intangible assets increased by $65 million to $6,031 million, driven by foreign currency gains and additions - Net book value of Intangible Assets increased by $65 million to $6,031 million (Mar 31, 2025) from $5,966 million (Dec 31, 2024)54 - Foreign currency translation had a positive impact of $210 million on the gross carrying amount of intangible assets in Q1 202554 - Amortization expense for Q1 2025 was $143 million54 - Customer relationship intangible assets, primarily from the dealer software and technology services operation, had a carrying value of $2.7 billion as of March 31, 2025, with a remaining useful life of 13 years54 NOTE 11. Goodwill Goodwill increased slightly by $5 million to $4,993 million, primarily due to foreign currency translation - Goodwill increased by $5 million to $4,993 million (Mar 31, 2025) from $4,988 million (Dec 31, 2024)55 - Foreign currency translation contributed $5 million to the increase in goodwill during Q1 202555 NOTE 12. Equity Accounted Investments Equity accounted investments increased by $3 million to $201 million, driven by additions and share of net income - Equity accounted investments increased by $3 million to $201 million (Mar 31, 2025) from $198 million (Dec 31, 2024)56 - Additions to equity accounted investments for Q1 2025 were $10 million, and share of net income was $3 million56 NOTE 13. Accounts Payable and Other Total accounts payable and other liabilities increased by $95 million to $5,371 million, mainly due to higher accrued and other liabilities - Total Accounts Payable and Other increased by $95 million to $5,371 million (Mar 31, 2025) from $5,276 million (Dec 31, 2024)57 Accounts Payable and Other (US$M) | Category | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Current | 3,070 | 2,990 | | Non-current | 2,301 | 2,286 | | Total | 5,371 | 5,276 | - Financial liabilities related to the failed sale and leaseback of hospitals amounted to $1,242 million as of March 31, 202557 NOTE 14. Contracts in Progress Net contract work in progress liability decreased slightly to $274 million, despite a significant increase in contract costs incurred to date - Net contract work in progress (liability) decreased by $6 million to $(274) million (Mar 31, 2025) from $(280) million (Dec 31, 2024)58 - Contract costs incurred to date increased by $873 million to $11,888 million (Mar 31, 2025) from $11,015 million (Dec 31, 2024)58 - Profit recognized to date (less recognized losses) increased by $34 million to $189 million (Mar 31, 2025) from $155 million (Dec 31, 2024)58 NOTE 15. Borrowings Non-recourse borrowings in subsidiaries increased to $8,711 million, while the healthcare services operation faces an unsustainable capital structure - Non-recourse borrowings in subsidiaries increased by $221 million to $8,711 million (Mar 31, 2025) from $8,490 million (Dec 31, 2024)61 - The company's operations were in compliance with or had obtained waivers related to all material covenant requirements as of March 31, 202563 - The healthcare services operation obtained forbearance from lenders but its operating performance remains under pressure with an unsustainable capital structure, and it is assessing options63 NOTE 16. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) improved to a loss of $416 million, primarily due to positive foreign currency translation - Accumulated other comprehensive income (loss) attributable to Brookfield Business Partners improved to $(416) million (Mar 31, 2025) from $(422) million (Jan 1, 2025)64 - Foreign currency translation contributed $25 million in other comprehensive income (loss) for Q1 202564 NOTE 17. Direct Operating Costs Direct operating costs increased by $137 million to $1,789 million, driven by higher subcontractor and compensation expenses - Total Direct Operating Costs increased by $137 million (8.30%) to $1,789 million (Q1 2025) from $1,652 million (Q1 2024)68 Direct Operating Costs by Nature (Three Months Ended March 31) | Cost Category | 2025 (US$M) | 2024 (US$M) | Change (US$M) | % Change | | :-------------------------------- | :---------- | :---------- | :------------ | :------- | | Inventory costs | 107 | 122 | (15) | (12.30%) | | Subcontractor and consultant costs | 680 | 597 | 83 | 13.90% | | Compensation | 470 | 439 | 31 | 7.06% | | Other direct costs | 300 | 258 | 42 | 16.28% | NOTE 18. Revenues Total revenues increased by $101 million to $1,966 million, with services transferred over time showing significant growth - Total Revenues increased by $101 million (5.42%) to $1,966 million (Q1 2025) from $1,865 million (Q1 2024)70 Revenue by Timing of Recognition (Three Months Ended March 31) | Timing | 2025 (US$M) | 2024 (US$M) | Change (US$M) | % Change | | :-------------------------------- | :---------- | :---------- | :------------ | :------- | | Goods and services provided at a point in time | 672 | 714 | (42) | (5.88%) | | Services transferred over a period of time | 1,294 | 1,151 | 143 | 12.42% | Revenues by Geography (Three Months Ended March 31) | Geography | 2025 (US$M) | 2024 (US$M) | Change (US$M) | % Change | | :-------------------- | :---------- | :---------- | :------------ | :------- | | Australia | 983 | 919 | 64 | 6.96% | | United States of America | 411 | 454 | (43) | (9.47%) | | United Kingdom | 312 | 213 | 99 | 46.48% | | Brazil | 180 | 206 | (26) | (12.62%) | NOTE 19. Equity Share capital increased to $770 million due to contributions, with Class C shares presented as equity despite being financial liabilities - Share capital increased by $33 million to $770 million (Mar 31, 2025) from $737 million (Jan 1, 2025) due to contributions73 - Class C shares, while classified as financial liabilities due to their cash redemption feature, are presented as equity instruments due to narrow scope presentation exceptions in IAS 3273 NOTE 20. Related Party Transactions The company engages in various transactions with Brookfield, including a $7 million management fee, credit facilities, and a $1.1 billion loan receivable - Base Management Fee attributable to the company for Q1 2025 was $7 million, paid to Service Providers under the Master Services Agreement76 - The company has a $1.1 billion non-interest bearing loan receivable from Brookfield Business Partners, due on demand, related to the disposition of its nuclear technology services operation in 202385 - Brookfield Business Partners provided a $2 billion equity commitment to the company, available on an as-needed basis82 Balances with Related Parties (Mar 31, 2025) | Balance Category | Amount (US$M) | | :----------------------------- | :------------ | | Accounts and other receivable, net | 1,430 | | Accounts payable and other | 531 | | Non-recourse borrowings | 44 | NOTE 21. Derivative Financial Instruments The company uses derivatives to manage market and liquidity risks, with total financial assets of $132 million and liabilities of $41 million - The company uses derivative financial instruments to manage financial risks, including market risk (currency risk and interest rate risk) and liquidity risk88 Aggregate Fair Values of Derivative Financial Instruments (Mar 31, 2025) | Instrument | Financial Assets (US$M) | Financial Liabilities (US$M) | | :---------------------- | :---------------------- | :--------------------------- | | Foreign exchange contracts | 81 | (24) | | Cross currency swaps | 24 | (12) | | Interest rate derivatives | 27 | (5) | | Total | 132 | (41) | NOTE 22. Supplemental Cash Flow Information Net interest paid was $138 million and net income taxes paid were $3 million for Q1 2025, with non-cash working capital changes using $112 million - Net interest paid for Q1 2025 was $138 million, down from $144 million in Q1 202489 - Net income taxes paid for Q1 2025 were $3 million, significantly lower than $41 million in Q1 202489 - Changes in non-cash working capital, net, resulted in a use of $112 million in Q1 2025, primarily driven by accounts receivable90 NOTE 23. Subsequent Events A quarterly dividend of $0.0625 per exchangeable share was declared on April 30, 2025, payable on June 30, 2025 - A quarterly dividend of $0.0625 per exchangeable share was declared on April 30, 202591 - The dividend is payable on June 30, 2025, to shareholders of record as at May 30, 202591 Management's Discussion and Analysis of Financial Condition and Results of Operations Introduction This MD&A, dated May 6, 2025, clarifies Brookfield Business Corporation's identity and the economic equivalence of its shares to Brookfield Business Partners' LP Units - The MD&A is dated May 6, 2025, and has been approved by the Board of Directors93 - The company's class A exchangeable subordinate voting shares are structured to be economically equivalent to the non-voting limited partnership units ('LP Units') of Brookfield Business Partners L.P94 - Brookfield Corporation is the ultimate parent of the company and the group94 Cautionary Statement Regarding Forward-Looking Statements and Information This section warns that forward-looking statements are subject to significant risks and uncertainties that could cause actual results to differ materially from expectations - The MD&A contains 'forward-looking information' and 'forward-looking statements' that are predictive in nature and depend upon future events or conditions96 - Actual results may differ materially from anticipated future results due to assumptions, known and unknown risks, uncertainties, and other factors, many of which are beyond the company's control97 - Factors that could cause actual results to differ include cyclical nature of businesses, general economic conditions, ability to integrate acquisitions, business competition, and restrictions due to indebtedness98 - Other factors include global equity and capital markets, changes to credit ratings, U.S. laws or policies, technological change, labor disruptions, litigation, and investments in less developed legal systems98 Basis of Presentation Financial information is derived from unaudited interim condensed consolidated financial statements prepared under IAS 34, consistent with 2024 annual policies, and presented in U.S. dollars - Financial information is derived from unaudited interim condensed consolidated financial statements prepared in accordance with IAS 34, Interim Financial Reporting102 - The accounting policies applied are consistent with those used in the annual consolidated financial statements as at and for the year ended December 31, 2024102 - The financial statements are presented in U.S. dollars, rounded to the nearest million, and prepared on a going concern basis102 Overview of Our Company Brookfield Business Corporation, an alternative investment vehicle, owns and operates global services and industrial operations, focusing on enhancing cash flows and recycling capital - The company is a Canadian corporation established by Brookfield Business Partners as an alternative vehicle for investors preferring a corporate structure105 - It owns and operates high-quality services and industrial operations globally, benefiting from a strong competitive position and providing essential products and services105 - The strategy is to build value by pursuing an operations-oriented approach to enhancing cash flows and opportunistically recycling capital for growth and new acquisitions105 Review of Consolidated Results of Operations Net loss decreased by $39 million to $135 million, primarily due to a significantly lower remeasurement loss on shares, while revenues increased - Net loss decreased by $39 million to $135 million for the three months ended March 31, 2025, compared to $174 million for the same period in 2024107 - Revenues increased by $101 million to $1,966 million in Q1 2025, benefiting from higher revenues in the construction operation108 - Direct operating costs increased by $137 million to $1,789 million in Q1 2025, primarily due to higher costs within the construction operation109 - The remeasurement loss on exchangeable and class B shares was $7 million in Q1 2025, a significant reduction from $111 million in Q1 2024112 Consolidated Results of Operations (Three Months Ended March 31) | Metric | 2025 (US$M) | 2024 (US$M) | Change (US$M) | % Change | | :---------------------------------- | :---------- | :---------- | :------------ | :------- | | Revenues | 1,966 | 1,865 | 101 | 5.42% | | Direct operating costs | (1,789) | (1,652) | (137) | 8.30% | | General and administrative expenses | (75) | (64) | (11) | 17.19% | | Interest income (expense), net | (219) | (210) | (9) | 4.29% | | Remeasurement of exchangeable and class B shares | (7) | (111) | 104 | (93.69%) | | Other income (expense), net | (34) | (11) | (23) | 209.09% | | Net income (loss) | (135) | (174) | 39 | (22.41%) | Review of Consolidated Financial Position Total assets increased to $19,299 million and liabilities to $16,715 million, while equity decreased by $51 million - Total Assets increased by $201 million to $19,299 million (Mar 31, 2025) from $19,098 million (Dec 31, 2024)118 - Total Liabilities increased by $252 million to $16,715 million (Mar 31, 2025) from $16,463 million (Dec 31, 2024)118 - Accounts receivable and other, net, increased by $168 million to $3,397 million, primarily due to timing of billed receivables in the construction operation and foreign currency movements120 - Intangible assets increased by $65 million to $6,031 million, mainly due to foreign exchange movements and net additions, partially offset by amortization expense122 - The company repurchased 1,260,225 exchangeable shares during Q1 2025 under its normal course issuer bid (NCIB)127 Summary Financial Information Related to the Partnership Brookfield Business Partners reported Q1 2025 revenues of $6,749 million and net income of $256 million, with total assets of $75,887 million - The market price of the company's exchangeable shares is significantly impacted by the market price of Brookfield Business Partners' LP Units128 Brookfield Business Partners IFRS Measures (Q1 2025 vs Q1 2024) | Metric | 2025 (US$M) | 2024 (US$M) | | :---------- | :---------- | :---------- | | Revenues | 6,749 | 12,015 | | Net income | 256 | 203 | Brookfield Business Partners IFRS Measures (Mar 31, 2025 vs Dec 31, 2024) | Metric | March 31, 2025 (US$M) | December 31, 2024 (US$M) | | :---------- | :-------------------- | :----------------------- | | Total assets | 75,887 | 75,474 | | Total liabilities | 61,032 | 58,166 | | Total equity | 14,855 | 17,308 | - Adjusted EBITDA for Brookfield Business Partners was $591 million in Q1 2025, up from $544 million in Q1 2024130 Liquidity and Capital Resources The company manages liquidity through various sources, including a $2 billion equity commitment and two $1 billion revolving credit facilities from Brookfield Business Partners - Principal sources of liquidity include financial assets, undrawn credit facilities, cash flow from operations, monetizations of mature businesses, and access to public and private capital markets131 - Non-recourse borrowings in subsidiaries increased by $221 million to $8,711 million as of March 31, 2025, primarily due to increased borrowings at the water and wastewater operation and foreign exchange movements131 - Brookfield Business Partners provided a $2 billion equity commitment to the company to provide access to equity capital on an as-needed basis133 - The company has two ten-year revolving $1 billion credit facilities with Brookfield Business Partners to facilitate cash movement within the group135 Dividend Policy The company targets dividends on exchangeable shares to be identical to Brookfield Business Partners' LP Unit distributions, ensuring economic equivalence - The company targets to declare and pay dividends on exchangeable shares at the same time and in the same amount as distributions on the LP Units of Brookfield Business Partners, to provide economic equivalence137 - A quarterly dividend of $0.0625 per exchangeable share was declared on April 30, 2025, payable on June 30, 2025138 Cash Flow Cash and cash equivalents decreased by $40 million to $968 million, with operating activities using $50 million and financing activities providing $71 million - Cash and cash equivalents were $968 million as of March 31, 2025, down from $1,008 million as of December 31, 2024140 - Cash flow used in operating activities for Q1 2025 was $50 million, primarily due to timing of working capital changes within the construction operation141 - Cash flow provided by financing activities was $71 million for Q1 2025, including proceeds from Brookfield Business Partners under a credit agreement and net non-recourse borrowings142 - Cash flow used in investing activities was $90 million for Q1 2025, primarily related to capital expenditures of property, plant and equipment and intangible assets143 Off-Balance Sheet Arrangements The company has approximately $1.5 billion in outstanding guarantees and is contingently liable for litigation, including class action lawsuits from a 2024 cybersecurity incident - Total outstanding bank guarantees, insurance bonds, and letters of credit to third parties were approximately $1.5 billion as of March 31, 2025144 - BBUC Holdings Inc., a wholly-owned subsidiary, fully and unconditionally guaranteed Brookfield Business Partners' $2.35 billion bilateral credit facilities and its $1 billion revolving acquisition credit facility145 - The company is contingently liable with respect to litigation and claims, including several class action lawsuits related to a cybersecurity incident in 2024 at its dealer software and technology services operation148 Contractual Obligations Total undiscounted contractual obligations amounted to $17,732 million, with borrowings and interest expense as the largest components - Total undiscounted contractual obligations as of March 31, 2025, were $17,732 million150 Undiscounted Contractual Obligations (Mar 31, 2025) | Category | Total (US$M) | < 1 Year (US$M) | 1-2 Years (US$M) | 3-5 Years (US$M) | 5+ Years (US$M) | | :---------------------- | :----------- | :-------------- | :--------------- | :--------------- | :-------------- | | Borrowings | 8,972 | 148 | 210 | 7,574 | 1,040 | | Lease liabilities | 493 | 56 | 42 | 82 | 313 | | Interest expense | 6,575 | 789 | 759 | 1,823 | 3,204 | | Exchangeable and class B shares | 1,682 | 1,682 | — | — | — | - The company may make future commitments to Brookfield-sponsored private equity funds for target acquisitions149 Related Party Transactions The company engages in various related party transactions with Brookfield, as detailed in Note 20 of the financial statements - The company entered into a number of related party transactions with Brookfield, as described in Note 20 of the unaudited interim condensed consolidated financial statements151 Critical Accounting Policies, Estimates and Judgments Management's financial statement preparation requires critical judgments and estimates, with no significant changes in methodology and no material impact expected from global minimum top-up tax - The preparation of financial statements requires management to make critical judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities152 - These estimates and associated assumptions are based on historical experience and other factors considered relevant, and are reviewed on an ongoing basis153 - The global minimum top-up tax, effective January 1, 2024, is not anticipated to have a material impact on the financial position of the company for Q1 2025155 Controls and procedures No material changes occurred in the company's internal control over financial reporting during the three months ended March 31, 2025 - No change in internal control over financial reporting occurred during the three months ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting156 Future changes in accounting policies The company is assessing the impact of future IFRS 9, IFRS 7, and IFRS 18 amendments, with no other material impacts expected from other IFRS Accounting Standards - Amendments to IFRS 9 and IFRS 7 were issued in May 2024, effective for annual reporting periods beginning on or after January 1, 2026157 - IFRS 18 was issued in April 2024 to replace IAS 1, effective for periods beginning on or after January 1, 2027158 - The company is currently assessing the impact of these amendments and IFRS 18157158 - No other future changes to IFRS Accounting Standards are expected to have material impacts on the company159