Brookfield Business Partners L.P.(BBU) - 2023 Q1 - Quarterly Report

Financial Performance - As of March 31, 2023, the partnership's total assets amounted to $90.2 billion, with revenues of $13.8 billion for the three months ended March 31, 2023[206]. - Revenues for Q1 2023 increased by $331 million to $13,758 million compared to $13,427 million in Q1 2022[252]. - Revenues from the infrastructure services segment increased by $483 million, driven by contributions from recently acquired lottery services operations[252]. - Advanced energy storage operations saw growth in battery volumes, contributing to increased revenues in the industrials segment by $139 million[252]. - The company generated approximately $195 million from the sale of public securities and residential property management operations during the quarter[242]. - Net income for Q1 2023 was $203 million, compared to $35 million in Q4 2022 and a loss of $65 million in Q3 2022[259]. - Adjusted EBITDA for Q1 2023 was $622 million, representing a $136 million increase from $486 million in Q1 2022, driven by contributions from Business Services and Infrastructure Services segments[287]. Segment Performance - The business services segment generated revenues of $7.9 billion, while the infrastructure services segment contributed $2.0 billion, and the industrials segment accounted for $3.8 billion[207]. - Adjusted EFO in the Business Services segment for Q1 2023 was $213 million, up $153 million from $60 million in Q1 2022, primarily due to a $67 million gain from the disposition of residential property management operations[293]. - Adjusted EBITDA in the Business Services segment for Q1 2023 was $212 million, an increase of $118 million compared to $94 million in Q1 2022, attributed to recent acquisitions and improved performance in Indian non-bank financial services[294]. - Adjusted EFO in the Infrastructure Services segment for Q1 2023 was $86 million, a decrease of $53 million from $139 million in Q1 2022, mainly due to higher interest expenses and tax expenses from the sale of non-core assets[300]. - Adjusted EBITDA in the Infrastructure Services segment for Q1 2023 was $225 million, an increase of $17 million from $208 million in Q1 2022, primarily due to contributions from recently acquired lottery services operations[301]. Operational Highlights - The partnership aims to enhance cash flows through an operations-oriented acquisition strategy and recycling capital into new investments[203]. - The partnership's residential mortgage insurer is the largest in Canada, significantly enhancing access to homeownership for first-time buyers[210]. - The dealer software and technology services operations closed the sale of a non-core division for pre-tax consideration of approximately $490 million on May 1, 2023[212]. - The offshore oil services operations emerged from Chapter 11 restructuring with a deleveraged balance sheet, maintaining an economic interest of approximately 53%[226][239]. - The modular building leasing services completed an acquisition for approximately $419 million, enhancing its product offering in the U.K.[228][239]. Cash Flow and Capital Expenditures - Cash flow from operating activities for the three months ended March 31, 2023 was $153 million, a significant improvement from cash used of $267 million in the same period of 2022[344]. - The net cash flow from operating activities decreased by $118 million to $640 million for the three months ended March 31, 2023, compared to $758 million for the same period in 2022, primarily due to higher interest expenses[345]. - The company reported capital expenditures of $639 million for Q1 2023, with $164 million for maintenance and $475 million for growth[271]. Debt and Equity - The partnership's net debt-to-capitalization ratio remained stable at 70% as of March 31, 2023[340]. - Corporate borrowings decreased by $70 million to $2,030 million as of March 31, 2023[263]. - Amounts attributable to non-controlling interests increased by $436 million to $1,240 million for Q1 2023 compared to $804 million for Q1 2022, due to earnings from recent acquisitions[327]. - The total number of LP Units outstanding as of March 31, 2023, was 74,612,997, compared to 74,612,503 as of December 31, 2022[279]. Expenses and Taxation - Direct operating costs decreased by $125 million to $12,466 million in Q1 2023, down from $12,591 million in Q1 2022[253]. - General and administrative expenses rose by $103 million to $401 million in Q1 2023, compared to $298 million in Q1 2022[253]. - Interest expense increased by $405 million to $865 million in Q1 2023, up from $460 million in Q1 2022, primarily due to increased borrowings[254]. - Current income tax expense rose by $47 million to $126 million in Q1 2023, compared to $79 million in Q1 2022[258]. Market and Strategic Outlook - The company expects to increase cash flows through acquisitions and organic growth, with optimism that inflation has peaked and interest rates may soon follow[241]. - The partnership operates in multiple regions, including the United States, Europe, Australia, Canada, and Brazil, with a diverse portfolio of essential products and services[203]. - The company is focused on enhancing its operating results and comprehensive income, with specific attention to financial position as of March 31, 2023[368].