Brookfield Business (BBUC) - 2025 Q2 - Quarterly Report

Executive Summary & Financial Highlights This section presents the CEO's commentary on an active quarter and highlights key financial metrics, including a significant turnaround in net income and increased Adjusted EBITDA CEO Commentary CEO Anuj Ranjan reported an active quarter with strategic divestitures, significant acquisitions, and unit repurchases, underscoring operational resilience and progress on value creation - Active quarter with agreements for partial interest sales in three businesses, $300 million invested to acquire two market-leading businesses, and repurchase of 2.2 million common equity units[2] - Financial results demonstrate operational resilience in an uneven macroeconomic environment[2] - Progress on value creation plans and capital recycling initiatives supports compounding growth for investors[2] Key Financial Metrics The company achieved a significant turnaround in net income attributable to Unitholders and a healthy increase in Adjusted EBITDA for the three months ended June 30, 2025 Key Financial Metrics (US$ millions, except per unit amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------------: | :--------------------------------: | :-------------------------------: | :-------------------------------: | | Net income (loss) attributable to Unitholders | $26 | ($20) | $106 | $28 | | Net income (loss) per limited partnership unit | $0.12 | ($0.10) | $0.49 | $0.13 | | Adjusted EBITDA | $591 | $524 | $1,182 | $1,068 | - Adjusted EBITDA for the three months ended June 30, 2025, increased to $591 million from $524 million in the prior period, reflecting increased performance on a same-store basis and contribution from recently completed acquisitions[3] - Prior period results for Adjusted EBITDA included $71 million of contribution from disposed operations, such as the offshore oil services' shuttle tanker operation sold in January 2025[3] Operational Update This section provides a detailed breakdown of Adjusted EBITDA and Adjusted EFO performance across all operating segments, highlighting key drivers and impacts Adjusted EBITDA by Segment Adjusted EBITDA by segment shows strong growth in Industrials and Business Services, while Infrastructure Services declined due to a strategic divestiture Adjusted EBITDA by Segment (US$ millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :--------------------------------: | :--------------------------------: | :-------------------------------: | :-------------------------------: | | Industrials | $307 | $213 | $611 | $441 | | Business Services | $205 | $182 | $418 | $387 | | Infrastructure Services | $109 | $157 | $213 | $300 | | Corporate and Other | ($30) | ($28) | ($60) | ($60) | | Total Adjusted EBITDA | $591 | $524 | $1,182 | $1,068 | - Industrials segment Adjusted EBITDA increased to $307 million (Q2 2025) from $213 million (Q2 2024), driven by strong operating performance in advanced energy storage, $71 million in tax recoveries, and contributions from recent acquisitions[4] - Infrastructure Services segment Adjusted EBITDA decreased to $109 million (Q2 2025) from $157 million (Q2 2024), primarily due to the sale of the offshore oil services' shuttle tanker operation in January 2025[6] Adjusted EFO by Segment Adjusted EFO performance varied across segments, benefiting from lower corporate interest expense but impacted by higher interest in Industrials and prior period disposition gains Adjusted EFO by Segment (US$ millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :--------------------------------: | :--------------------------------: | :-------------------------------: | :-------------------------------: | | Industrials | $154 | $206 | $284 | $386 | | Business Services | $105 | $86 | $222 | $254 | | Infrastructure Services | $38 | $76 | $204 | $148 | | Corporate and Other | ($63) | ($79) | ($131) | ($168) | - Adjusted EFO benefited from lower interest expense due to a reduction in corporate borrowings compared to the prior period[6] - Industrials Adjusted EFO reflected the impact of higher interest expense related to the funding of a distribution received from the advanced energy storage operation[6] - Adjusted EFO in the prior period included $103 million of net gains related to the disposition of the Canadian aggregates production operation and the sale of public securities[6] Strategic Initiatives This section details the company's strategic activities, including capital recycling, significant acquisitions, and the ongoing unit repurchase program Capital Recycling The company completed the sale of partial interests in three businesses to a new evergreen fund, expecting approximately $690 million in cash redemption value within 18 months - Completed the sale of a partial interest in three businesses to a new evergreen private equity fund managed by Brookfield Asset Management[7] - BBU will receive units of the new evergreen fund with an initial redemption value of approximately $690 million, representing an 8.6% discount to net asset value (NAV)[7] - The units are expected to be redeemed for cash within the 18-month period following the initial close of the new evergreen fund[7] Canadian Mortgage Lender Acquisition A partnership was formed to privatize First National Financial Corporation for $2.7 billion, with BBU investing approximately $145 million for an 11% interest - Entered into a partnership to privatize First National Financial Corporation, a leading publicly-listed Canadian residential and multi-family mortgage lender, for $2.7 billion[8] - BBU's share of the equity funding is expected to be approximately $145 million for an 11% interest in the business[8] - The transaction is expected to close later this year, subject to required approvals[8] Specialty Consumables and Equipment Manufacturer Acquisition The acquisition of Antylia Scientific, a specialty consumables and equipment manufacturer, was completed for approximately $1.3 billion, with BBU investing $168 million for a 26% interest - Completed the acquisition of Antylia Scientific, a leading manufacturer and distributor of critical consumables and testing equipment serving life sciences and environmental labs, for approximately $1.3 billion[9] - BBU invested $168 million for a 26% interest in Antylia Scientific[9] Unit Repurchase Program The company repurchased 2.2 million units and shares for $56 million during the quarter, contributing to $157 million in year-to-date buybacks, with plans to renew the NCIB - Invested $56 million to repurchase 2.2 million units and shares at an average price of approximately $25 per unit/share during the quarter[10] - Year-to-date, the buyback program has returned $157 million to owners through the repurchase of 6.5 million units and shares[10] - The normal course issuer bid (NCIB) is planned for renewal upon its expiration later this month[10] Capital & Liquidity This section details the company's robust corporate liquidity position, including available credit facilities and pro forma liquidity after recent transactions Liquidity Position The company ended the quarter with $2.3 billion in corporate liquidity, including $2.2 billion from credit facilities, with pro forma liquidity reaching $2.9 billion - Ended the quarter with approximately $2.3 billion of liquidity at the corporate level[11] - Corporate liquidity includes $2.2 billion of availability on credit facilities[11] - Pro forma for announced and recently closed transactions, corporate liquidity is approximately $2.9 billion[11] Distributions & Dividends This section outlines the declared quarterly distributions for Brookfield Business Partners L.P. and corresponding dividends for Brookfield Business Corporation, including payment details Brookfield Business Partners L.P. Distribution The Board declared a quarterly distribution of $0.0625 per unit for Brookfield Business Partners L.P., payable on September 29, 2025 - Quarterly distribution declared in the amount of $0.0625 per unit[13] - Payable on September 29, 2025, to unitholders of record as at the close of business on August 29, 2025[13] Brookfield Business Corporation Dividend Brookfield Business Corporation declared a quarterly dividend of $0.0625 per share, mirroring the L.P. distribution, payable on September 29, 2025 - Quarterly dividend declared in the amount of $0.0625 per share[36] - Payable on September 29, 2025, to shareholders of record as at the close of business on August 29, 2025[36] - Each exchangeable share of Brookfield Business Corporation is structured to provide an economic return equivalent to one unit of Brookfield Business Partners L.P., with dividends targeted to match distributions[37] Company Information & Disclosures This section provides investor resources, a company overview, conference call details, and crucial cautionary statements regarding forward-looking information and non-IFRS measures Additional Information & Investor Resources The Board approved the news release and financial statements, with additional investor resources like the Letter to Unitholders available online - The Board of Directors has reviewed and approved this news release, including the summarized unaudited interim condensed consolidated financial statements[14] - Brookfield Business Partners' Letter to Unitholders and Supplemental Information are available on the company's website under Reports & Filings[14] Company Overview Brookfield Business Partners is a global business services and industrials company, the flagship listed vehicle for Brookfield Asset Management's Private Equity Group - Brookfield Business Partners is a global business services and industrials company focused on owning and operating high-quality businesses that provide essential products and services and benefit from a strong competitive position[15] - Investors can invest through Brookfield Business Partners L.P. (NYSE: BBU; TSX: BBU.UN) or Brookfield Business Corporation (NYSE, TSX: BBUC)[15] - Brookfield Business Partners is the flagship listed vehicle of Brookfield Asset Management's Private Equity Group, which manages over $1 trillion of assets[16] Conference Call and Webcast Details Second quarter 2025 results and related materials are available on the company's website, with a webcast and conference call held on August 1, 2025 - Second quarter 2025 results, Letter to Unitholders, and Supplemental Information are available on the company's website[18] - A results call was accessible via webcast on August 1, 2025, at 10:00 a.m. Eastern Time, with preregistration available for participants[19] - A replay of the webcast will be available on the company's website[19] Cautionary Statements This section includes cautionary statements on forward-looking information, highlighting inherent risks, and clarifies Adjusted EBITDA as a non-IFRS supplemental measure - The news release contains forward-looking statements and information, which are predictive in nature and depend upon or refer to future events or conditions[45][46] - Investors should not place undue reliance on forward-looking statements due to inherent assumptions, known and unknown risks, uncertainties, and other factors beyond the company's control[47] - Adjusted EBITDA is a Non-IFRS measure, useful for assessing financial performance but should not be considered in isolation or as a substitute for IFRS financial statements[51] Forward-looking Statements and Information This subsection defines forward-looking statements, outlines associated risks and uncertainties, and clarifies the company's policy on updating such information - Forward-looking statements are predictive and relate to future events, conditions, operations, financial results, and strategic outlook, identified by words like 'expects,' 'anticipates,' 'plans,' and 'believes'[46] - Actual results may differ materially from forward-looking statements due to various factors, including economic conditions, interest rates, foreign exchange rates, inflation, competition, acquisitions, dispositions, and regulatory changes[47][48] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[50] Non-IFRS Measure This subsection clarifies Adjusted EBITDA as a non-IFRS supplemental measure for financial performance, not a substitute for IFRS statements, and defines 'Brookfield Business Partners' - Adjusted EBITDA is a non-IFRS measure, which may differ from definitions used by other entities[51] - It is presented as a useful supplemental measure to assist investors in assessing financial performance but should not be considered in isolation from or as a substitute for IFRS financial statements[51] - References to Brookfield Business Partners include Brookfield Business Partners L.P. and its subsidiaries, controlled affiliates, and operating entities[52] Consolidated Financial Statements - Brookfield Business Partners L.P. This section presents Brookfield Business Partners L.P.'s unaudited interim condensed consolidated financial statements, including financial position, operating results, and non-IFRS measure reconciliation Consolidated Statements of Financial Position The consolidated financial position shows a slight decrease in total assets and a significant reduction in corporate borrowings for Brookfield Business Partners L.P. as of June 30, 2025 Consolidated Statements of Financial Position (US$ millions) | Item | As at June 30, 2025 | As at December 31, 2024 | | :------------------------------------ | :-------------------: | :---------------------: | | Assets | | | | Cash and cash equivalents | $3,329 | $3,239 | | Financial assets | $11,658 | $12,371 | | Accounts and other receivable, net | $7,148 | $6,279 | | Inventory and other assets | $5,808 | $5,728 | | Property, plant and equipment | $10,591 | $13,232 | | Deferred income tax assets | $1,959 | $1,744 | | Intangible assets | $19,158 | $18,317 | | Equity accounted investments | $2,397 | $2,325 | | Goodwill | $13,287 | $12,239 | | Total Assets | $75,335 | $75,474 | | Liabilities | | | | Corporate borrowings | $1,116 | $2,142 | | Accounts payable and other | $13,766 | $16,691 | | Non-recourse borrowings in subsidiaries | $42,493 | $36,720 | | Deferred income tax liabilities | $2,639 | $2,613 | | Equity | | | | Limited partners | $2,291 | $1,752 | | Non-controlling interests | $15,321 | $17,308 | | Total Liabilities and Equity | $75,335 | $75,474 | - Total Assets decreased slightly from $75,474 million at December 31, 2024, to $75,335 million at June 30, 2025[22] - Corporate borrowings significantly decreased from $2,142 million at December 31, 2024, to $1,116 million at June 30, 2025[22] Consolidated Statements of Operating Results Operating results show a substantial revenue decrease but a significant improvement in net income attributable to limited partners for the three months ended June 30, 2025 Consolidated Statements of Operating Results (US$ millions) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------------: | :--------------------------------: | :-------------------------------: | :-------------------------------: | | Revenues | $6,695 | $11,946 | $13,444 | $23,961 | | Direct operating costs | ($5,465) | ($10,928) | ($10,867) | ($21,806) | | General and administrative expenses | ($271) | ($307) | ($582) | ($624) | | Interest income (expense), net | ($801) | ($778) | ($1,571) | ($1,574) | | Income (loss) before income tax | $70 | ($52) | $459 | $136 | | Net income (loss) | $135 | $65 | $391 | $268 | | Attributable to: Limited partners | $11 | ($7) | $41 | $10 | - Revenues for the three months ended June 30, 2025, decreased to $6,695 million from $11,946 million in the prior year[24] - Net income attributable to Limited partners for the three months ended June 30, 2025, improved to $11 million from a net loss of $7 million in the prior period[24] Reconciliation of Non-IFRS Measure (Adjusted EBITDA) This reconciliation details adjustments from Net Income (Loss) to Adjusted EBITDA across segments, highlighting the impact of non-cash items and non-controlling interests Reconciliation of Net Income (Loss) to Adjusted EBITDA (Three Months Ended June 30, 2025, US$ millions) | Item | Business Services | Infrastructure Services | Industrials | Corporate and Other | Total | | :------------------------------------ | :----------------: | :---------------------: | :-----------: | :------------------: | :-----: | | Net income (loss) | $253 | ($173) | $95 | ($40) | $135 | | Depreciation and amortization expense | $208 | $175 | $384 | — | $767 | | Interest income (expense), net | $238 | $142 | $401 | $20 | $801 | | Amounts attributable to non-controlling interests | ($320) | ($157) | ($746) | — | ($1,223) | | Adjusted EBITDA | $205 | $109 | $307 | ($30) | $591 | Reconciliation of Net Income (Loss) to Adjusted EBITDA (Six Months Ended June 30, 2025, US$ millions) | Item | Business Services | Infrastructure Services | Industrials | Corporate and Other | Total | | :------------------------------------ | :----------------: | :---------------------: | :-----------: | :------------------: | :-----: | | Net income (loss) | $253 | ($17) | $240 | ($85) | $391 | | Depreciation and amortization expense | $430 | $340 | $727 | — | $1,497 | | Interest income (expense), net | $468 | $291 | $767 | $45 | $1,571 | | Amounts attributable to non-controlling interests | ($666) | ($314) | ($1,490) | — | ($2,470) | | Adjusted EBITDA | $418 | $213 | $611 | ($60) | $1,182 | - The reconciliation tables provide a detailed breakdown of adjustments from net income (loss) to Adjusted EBITDA for each operating segment and corporate activities, highlighting the significant impact of depreciation, amortization, interest, and non-controlling interests[25][28][30] Consolidated Financial Statements - Brookfield Business Corporation This section presents Brookfield Business Corporation's unaudited interim condensed consolidated financial statements, including financial position and operating results Consolidated Statements of Financial Position (BBUC) The consolidated financial position for Brookfield Business Corporation as of June 30, 2025, shows a decrease in total assets, notably in property, plant and equipment Consolidated Statements of Financial Position (US$ millions) | Item | As at June 30, 2025 | As at December 31, 2024 | | :------------------------------------ | :-------------------: | :---------------------: | | Assets | | | | Cash and cash equivalents | $613 | $1,008 | | Financial assets | $290 | $353 | | Accounts and other receivable, net | $3,234 | $3,229 | | Inventory, net | $26 | $52 | | Other assets | $517 | $627 | | Property, plant and equipment | $181 | $2,480 | | Deferred income tax assets | $236 | $197 | | Intangible assets | $5,980 | $5,966 | | Equity accounted investments | $187 | $198 | | Goodwill | $5,018 | $4,988 | | Total Assets | $16,282 | $19,098 | | Liabilities | | | | Accounts payable and other | $2,981 | $5,276 | | Non-recourse borrowings in subsidiaries | $7,940 | $8,490 | | Exchangeable and class B shares | $1,815 | $1,709 | | Deferred income tax liabilities | $967 | $988 | | Equity | | | | Brookfield Business Partners | ($159) | ($59) | | Non-controlling interests | $2,738 | $2,694 | | Total Liabilities and Equity | $16,282 | $19,098 | - Total Assets decreased from $19,098 million at December 31, 2024, to $16,282 million at June 30, 2025[42] - Property, plant and equipment saw a significant reduction from $2,480 million to $181 million[42] Consolidated Statements of Operating Results (BBUC) Operating results for Brookfield Business Corporation show a net loss attributable to Brookfield Business Partners, primarily due to a remeasurement loss on exchangeable shares Consolidated Statements of Operating Results (US$ millions) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------------: | :--------------------------------: | :-------------------------------: | :-------------------------------: | | Revenues | $1,860 | $1,929 | $3,826 | $3,794 | | Direct operating costs | ($1,695) | ($1,860) | ($3,484) | ($3,512) | | Interest income (expense), net | ($212) | ($203) | ($431) | ($413) | | Remeasurement of exchangeable and class B shares | ($176) | $237 | ($183) | $126 | | Net income (loss) | ($23) | $40 | ($158) | ($134) | | Attributable to: Brookfield Business Partners | ($120) | $124 | ($178) | ($26) | - Net loss attributable to Brookfield Business Partners for the three months ended June 30, 2025, was $120 million, compared to net income of $124 million in the prior period[35] - Current period results included a $176 million remeasurement loss on exchangeable and class B shares, which are classified as liabilities under IFRS[35] - Revenues for the three months ended June 30, 2025, were $1,860 million, a slight decrease from $1,929 million in the prior year[44]