Q4 2023 Supplemental Information
THREE MONTHS AND YEAR ENDED
Important Cautionary Notes
All amounts in this Supplemental Information are in
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION
Note: This Supplemental Information contains "forward-looking information" within the meaning of Canadian provincial securities laws and "forward-looking statements" within the meaning of applicable Canadian and
Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, investors and other readers should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of the partnership to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: general economic conditions and risks relating to the economy, including unfavorable changes in interest rates, foreign exchange rates, inflation and volatility in the financial markets; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including our ability to complete dispositions and achieve the anticipated benefits therefrom; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the ability to appropriately manage human capital; the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; governmental investigations; litigation; changes in tax laws; ability to collect amounts owed; catastrophic events, such as earthquakes, hurricanes and pandemics/epidemics; the possible impact of international conflicts, wars and related developments including terrorist acts and cyber terrorism; and other risks and factors detailed from time to time in our documents filed with the securities regulators in
Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described herein can be profitably produced in the future. We qualify any and all of our forward-looking statements by these cautionary factors.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements and information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.
Cautionary Statement Regarding the Use of Non-IFRS Measures
This Supplemental Information contains references to Non-IFRS measures. Adjusted EBITDA and Adjusted EBITDA margin are not generally accepted accounting measures under IFRS and therefore may differ from definitions used by other entities. We believe these are useful supplemental measures that may assist investors in assessing the financial performance of
References to
2
Overview
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Q4 2023 Highlights - Operating Performance
Key Performance Metrics
Three Months Ended |
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|
||||
US$ millions (except per unit amounts), unaudited |
2023 |
2022 (1) |
||
Net income (loss) attributable to Unitholders |
$ |
1,423 |
$ |
(14) |
Net income (loss) per limited partnership unit (2) |
6.57 |
(0.06) |
||
Adjusted EBITDA (3) |
608 |
627 |
Statements of Operating Results by Segment
Three Months Ended |
||||
|
||||
US$ millions, unaudited |
2023 |
2022 |
||
Adjusted EBITDA by segment |
||||
Business Services |
$ |
227 |
$ |
181 |
Infrastructure Services |
184 |
254 |
||
Industrials |
222 |
230 |
||
Corporate and Other |
(25) |
(38) |
||
Adjusted EBITDA |
$ |
608 |
$ |
627 |
Adjusted EFO by segment |
||||
Business Services |
$ |
181 |
$ |
93 |
Infrastructure Services |
1,790 |
148 |
||
Industrials |
115 |
119 |
||
Corporate and Other |
(77) |
(67) |
Financial Performance - Three Months Ended
- Net income attributable to Unitholders for the three months ended
December 31, 2023 was$1,423 million ($6.57 per limited partnership unit) compared to net loss of$14 million (loss of$0.06 per limited partnership unit) in the prior period. - Adjusted EBITDA for the three months ended
December 31, 2023 was$608 million compared to$627 million in the prior period reflecting reduced contribution from our Infrastructure Services and Industrials segments. Excluding contribution from disposed operations, Adjusted EBITDA was$577 million , compared to$506 million in the prior period. - Adjusted EBITDA margin for the three months ended
December 31, 2023 increased to 20%, compared to 18% in the prior period.(4) - Adjusted EFO for the three months ended
December 31, 2023 was$2,009 million ($9.25 per unit(5)) compared to$293 million ($1.34 per unit (5)) in the prior period. Excluding the impact of gain (loss) on acquisitions and dispositions, Adjusted EFO for the three months endedDecember 31, 2023 was$211 million ($0.98 per unit (5)) compared to$266 million ($1.22 per unit (5)) in the prior period. - Liquidity at the corporate level for the year ended
December 31, 2023 was$2,055 million , including$170 million of cash and liquid securities,$1,860 million of availability on our credit facilities and$25 million of remaining preferred equity commitment fromBrookfield Corporation . During the quarter, we redeemed$750 million of preferred securities held byBrookfield Corporation and repaid$580 million of borrowings on our corporate credit facilities. Pro forma for announced and closed transactions corporate liquidity is approximately$1,500 million .
- Comparative prior period results have been adjusted in accordance with the new IFRS 17 accounting standard adopted at our residential mortgage insurer on
January 1, 2023 . - Net income (loss) per limited partnership unit calculated as net income (loss) attributable to limited partners divided by the average number of limited partnership units outstanding which was 74.3 million for the three months ended
December 31, 2023 (2022: 74.6 million). - Adjusted EBITDA is a non-IFRS measure and is a key measure of our financial performance that we use to assess operating results and our business performance. For further information on Adjusted EBITDA, see
"Definitions" section at the end of this Supplemental Information. |
4 |
4. Represents Adjusted EBITDA as a percentage of BBU's proportionate share of revenues for the three months ended |
5. Average number of units outstanding on a fully diluted time-weighted average basis for the three months ended
Full-year 2023 Highlights - Operating Performance
Key Performance Metrics
Year Ended |
||||
|
||||
US$ millions (except per unit amounts), unaudited |
2023 |
2022 (1) |
||
Net income (loss) attributable to Unitholders |
$ |
1,405 |
$ |
98 |
Net income (loss) per limited partnership unit (2) |
6.49 |
0.48 |
||
Adjusted EBITDA (3) |
2,491 |
2,254 |
Statements of Operating Results by Segment
Year Ended |
||||
|
||||
US$ millions, unaudited |
2023 |
2022 |
||
Adjusted EBITDA by segment |
||||
Business Services |
$ |
900 |
$ |
641 |
Infrastructure Services |
853 |
872 |
||
Industrials |
855 |
879 |
||
Corporate and Other |
(117) |
(138) |
||
Adjusted EBITDA |
$ |
2,491 |
$ |
2,254 |
Adjusted EFO by segment |
||||
Business Services |
$ |
636 |
$ |
427 |
Infrastructure Services |
2,070 |
513 |
||
Industrials |
492 |
473 |
||
Corporate and Other |
(335) |
(178) |
Financial Performance - Year Ended
- Net income attributable to Unitholders for the year ended
December 31, 2023 was$1,405 million ($6.49 per limited partnership unit) compared to net income of$98 million ($0.48 per limited partnership unit) for the year endedDecember 31, 2022 . - Adjusted EBITDA for the year ended
December 31, 2023 increased to$2,491 million compared to$2,254 million for the year endedDecember 31, 2022 , as a result of increased contribution from our Business Services segment. - Adjusted EBITDA margin for the year ended
December 31, 2023 increased to 19%, compared to 18% in the prior period.(4) - Adjusted EFO for the year ended
December 31, 2023 was$2,863 million ($13.18 per unit(5)) compared to$1,235 million ($5.65 per unit (5)) in the prior period. Excluding the impact of gain (loss) on acquisitions and dispositions, Adjusted EFO for the year endedDecember 31, 2023 was$857 million ($3.95 per unit (5)) compared to$1,178 million ($5.39 per unit (5)) in the prior period.
1. |
Comparative prior period results have been adjusted in accordance with the new IFRS 17 accounting standard adopted at our residential mortgage insurer on |
|
2. |
Net income (loss) per limited partnership unit calculated as net income (loss) attributable to limited partners divided by the average number of limited partnership units outstanding which was 74.5 million for the year ended |
|
2023 (2022: 75.3 million). |
||
3. |
Adjusted EBITDA is a non-IFRS measure and is a key measure of our financial performance that we use to assess operating results and our business performance. For further information on Adjusted EBITDA, see "Definitions" section at |
|
the end of this Supplemental Information. |
5 |
|
4. |
Represents Adjusted EBITDA as a percentage of BBU's proportionate share of revenues for the year ended |
5. Average number of units outstanding on a fully diluted time-weighted average basis for the year ended
Q4 2023 Business Developments
Other Developments
- On
November 7, 2023 , we completed the previously announced sale of our nuclear technology services operation. Proceeds from the sale were used to redeem$750 million of preferred securities held byBrookfield Corporation and repay$580 million of borrowings on our corporate bank facilities. - During the quarter and since the start of the year, we have sold 14 million shares of
GrafTech ("graphite electrode operations"), reducing our ownership interest in the business to 3%. We are now accounting for our investment as a financial asset. - On
December 14, 2023 , we reached an agreement to sell our general partner interest and residential real estate brokerage portfolio to Bridgemarq, a publicly listed real estate services and brokerage business. In exchange, we agreed to take back limited partnership units in the public entity which will increase our ownership interest to approximately 42%. The transaction is expected to close in Q2 2024, subject to shareholder approval. - On
December 14, 2023 , we completed the previously announced sale of a portion of our interest in our technology services operation. Our share of proceeds from the sale was approximately$120 million . Following the sale, we deconsolidated our investment and account for our remaining 17% ownership interest as an equity accounted investment.
Subsequent Events
- On
January 12, 2024 , our advanced energy storage operation completed the repricing of a$2.7 billion term loan at a cost that was 75 basis points below the cost of debt prior to the repricing. - On
February 1, 2024 , the Board of Directors declared a quarterly distribution in the amount of$0.0625 per unit, payable onMarch 28, 2024 to unitholders of record as at the close of business onFebruary 29, 2024 . The Board of Directors of BBUC declared an identical quarterly dividend to its shareholders.
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Q4 2023 Highlights - Balance Sheet & Liquidity
Key Balance Sheet Metrics |
Corporate Liquidity |
As at |
||||
|
|
|||
US$ millions, unaudited |
2023 |
2022 (2) |
||
Total assets |
$ |
82,385 |
$ |
89,250 |
Non-recourse borrowings in subsidiaries of |
40,809 |
44,593 |
||
|
||||
Corporate borrowings |
1,440 |
2,100 |
||
Total equity |
18,532 |
18,429 |
As at |
||||
|
|
|||
US$ millions, unaudited |
2023 |
2022 |
||
Corporate cash and financial assets |
$ |
170 |
$ |
392 |
Committed corporate credit facilities |
1,860 |
1,200 |
||
Committed preferred equity securities |
25 |
25 |
||
Total liquidity |
$ |
2,055 |
$ |
1,617 |
Proportionate borrowings |
||||
Business Services |
$ |
5,813 |
$ |
4,545 |
Infrastructure Services |
3,118 |
5,183 |
||
Industrials |
4,203 |
4,509 |
||
Corporate and Other |
1,440 |
2,100 |
||
$ |
14,574 |
$ |
16,337 |
|
Proportionate share of cash |
||||
Business Services |
$ |
749 |
$ |
586 |
Infrastructure Services |
189 |
270 |
||
Industrials |
224 |
190 |
||
Corporate and Other |
112 |
123 |
||
$ |
1,274 |
$ |
1,169 |
|
Proportionate borrowings, net of cash |
||||
Business Services |
$ |
5,064 |
$ |
3,959 |
Infrastructure Services |
2,929 |
4,913 |
||
Industrials |
3,979 |
4,319 |
||
Corporate and Other |
1,328 |
1,977 |
||
$ |
13,300 |
$ |
15,168 |
Pro Forma Corporate Liquidity
Three Months Ended |
||
US$ millions, unaudited |
|
|
Total corporate liquidity, |
$ |
1,438 |
Distributions, dispositions and other (3) |
1,728 |
|
Redemption of preferred equity securities |
(750) |
|
Acquisitions and investments (4) |
(911) |
|
Pro forma corporate liquidity, |
$ |
1,505 |
- Includes proportionate share of borrowings made under subscription facilities of Brookfield Funds that
Brookfield Business Partners invests alongside. - Comparative prior period results have been adjusted in accordance with the new IFRS 17 accounting standard adopted at our residential mortgage insurer on
January 1, 2023 . - Distributions, dispositions and other of approximately
$1.7 billion includes approximately$1.4 billion of proceeds received on the sale of nuclear technology services.
4. |
Relates to the remaining funding of recently announced and closed acquisitions and investments, subject to the timing of capital funding notices from Brookfield Funds that |
7 |
alongside. |
Units and Shares Outstanding
As at |
||
|
|
|
2023 |
2022 |
|
Limited partnership units |
74,281,763 |
74,612,503 |
Redemption-exchange units |
69,705,497 |
69,705,497 |
BBUC exchangeable shares |
72,954,450 |
72,955,585 |
General partnership and special limited partnership |
8 |
8 |
units |
||
Total outstanding |
216,941,718 |
217,273,593 |
Partnership Capital Structure(1)
As at |
||||
|
|
|||
US$ millions (except price and unit amount), unaudited |
2023 |
2022 |
||
Partnership units outstanding (in millions) (2) |
144.0 |
144.3 |
||
Price (3) |
$ |
20.64 |
16.90 |
|
Partnership market capitalization |
$ |
2,972 |
$ |
2,439 |
BBUC exchangeable shares outstanding (in millions) |
73.0 |
73.0 |
||
Price (3) |
$ |
23.28 |
$ |
18.79 |
BBUC market capitalization |
$ |
1,699 |
$ |
1,372 |
Total market capitalization |
$ |
4,671 |
$ |
3,811 |
Preferred securities |
725 |
1,475 |
||
Proportionate non-recourse borrowings, net of cash |
11,972 |
13,191 |
||
Corporate borrowings, net of cash |
1,328 |
1,977 |
||
Enterprise value (EV) |
$ |
18,696 |
$ |
20,454 |
Incentive Distribution Right
- The special limited partner is entitled to an incentive distribution of 20% based on the volume-weighted average increase in the Partnership's unit price over an incentive distribution threshold multiplied by the number of units and shares outstanding at the end of the quarter. The incentive distribution is recorded as a distribution in equity once approved by the Board of Directors of the Partnership's
General Partner . - During the fourth quarter of 2023, the volume-weighted average price per limited partnership unit was
$15.48 , which was below the incentive distribution threshold of$31.53 per limited partnership unit. This resulted in an incentive distribution of $nil.
Normal Course Issuer Bid ("NCIB")
- Under our NCIB,
Brookfield Business Partners and its affiliates are authorized to repurchase annually up to 5% of their issued and outstanding limited partnership units, or 3,730,658 LP units, including up to 14,522 units on the TSX during any trading day.Brookfield Business Partners and its affiliates can make block purchases that exceed this daily purchase restriction, subject to the annual aggregate limit. -
- During the three months and year ended
December 31, 2023 , the partnership repurchased and canceled 277,611 and 331,875 limited partnership units, respectively, at an average price of approximately$14 per unit. - During the year ended
December 31, 2023 ,Brookfield Corporation , as an affiliate, purchased 374,533 limited partnership units under our NCIB, at an average price of approximately$19 per unit.
- During the three months and year ended
1. |
The table presents supplemental measures to assist users in understanding and evaluating the Partnership's capital structure. |
|
2. |
Partnership units outstanding are inclusive of limited partnership units, redemption-exchange units, special LP units and general partnership units. |
8 |
3. |
TSX: BBU.UN translated to USD at |
Operating Segments
9
Our Operations
- Our strategy is to acquire and manage high-quality operations that provide essential products and services and benefit from a strong competitive position.
-
- We target long-term capital appreciation driven by both organic growth and acquisitions where we can apply our expertise to improve operations and enhance cash flows.
- Our business is principally focused on activities and operations where the broader Brookfield platform provides us with a competitive advantage.
- The table below presents our economic ownership interest in our more significant operations. Adjusted EBITDA and Adjusted EFO presented in this Supplemental Information represent our proportionate share of the economic ownership interest in our underlying operations.
Segment |
Description |
Select Operations |
Economic Ownership |
||
Interest (1) |
|||||
Ÿ Residential Mortgage Insurer ("Sagen") |
Ÿ |
41% |
|||
Service businesses including residential |
Ÿ |
|
26% |
||
Business Services |
mortgage insurance, dealer software and |
Ÿ |
|||
technology services, healthcare services, fleet |
|||||
management and car rental services and other |
Ÿ |
|
Ÿ |
28% |
|
Ÿ Fleet Management and Car Rental Services ("Unidas") |
Ÿ |
35% |
|||
Infrastructure businesses servicing large-scale |
Ÿ Lottery Services Operation ("Scientific Games") |
Ÿ |
33% |
||
Infrastructure |
|||||
infrastructure assets, including lottery services, |
Ÿ |
Modular |
Ÿ |
28% |
|
Services |
modular building leasing services, offshore oil |
||||
services and other |
Ÿ |
Offshore Oil Services ("Altera") |
Ÿ |
53% |
|
Industrials |
Industrial businesses including advanced energy |
Ÿ |
Advanced Energy Storage Operation ("Clarios") |
Ÿ |
28% |
storage operation, engineered components |
|||||
manufacturing and other |
Ÿ |
Engineered Components Manufacturing ("DexKo") |
Ÿ |
33% |
|
1. |
As at |
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Attachments
Disclaimer
AM Best Revises Outlooks to Negative for Wisconsin Mutual Insurance Company
Q4 2023 Supplemental Information
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