Brookfield Business Partners Reports 2018 First Quarter Results

May 07, 2018

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	Three months ended March 31
US$ millions (except per unit amount), unaudited		2018			2017
Net income (loss) attributable to unitholders¹	$	74		$	66
Net income (loss) per limited partnership unit^2,3	$	*(0.53*	)	$	0.61
Company FFO^1,4	$	138		$	95
Company FFO per limited partnership unit²	$	1.07		$	0.88

Notes:
1		Attributable to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders and special limited partnership unitholders.
2		Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redemption exchange units held by Brookfield Asset Management for limited partnership units, for the three months ended March 31, 2018 was 129 million and for the three months ended March 31, 2017 was 108 million.
3		Income (loss) attributed to limited partnership unit on a fully diluted basis is reduced by incentive distributions paid to special limited partnership unitholders during the period. A reconciliation of net income per unit is available on page 9 of this release.
4		Company FFO is presented as a net amount attributable to unitholders and is a non-IFRS measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investment. A reconciliation of net income to Company FFO is available on page 7 and 8 of this release.

	As of
		Mar. 31,		Dec. 31,
US$ millions, unaudited		2018		2017

Assets
Cash and cash equivalents	$	1,439	$	1,106
Financial assets		870		784
Accounts receivable, net		4,455		4,362
Inventory and other assets		1,641		1,577
Assets held for sale		188		14
Property, plant and equipment		2,460		2,530
Deferred income tax assets		207		174
Intangible assets		3,059		3,094
Equity accounted investments		530		609
Goodwill		1,545		1,554
Total assets	$	16,394	$	15,804

Liabilities
Accounts payable and other	$	6,027	$	5,638
Liabilities associated with assets held for sale		21		-
Borrowings		4,385		3,265
Deferred income tax liabilities		836		837
Total liabilities		11,269		9,740

Equity¹
Limited partners		1,406		1,585
General partner		-		-
Non-controlling interests attributable to:
Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc.		1,280		1,453
Interest of others in operating subsidiaries		2,439		3,026
Total equity		5,125		6,064
Total liabilities and equity	$	16,394	$	15,804

US$ millions, unaudited	Three months ended
		March 31
		2018			2017

Revenues	$	8,194		$	1,934
Direct operating costs		(7,649	)		(1,874	)
General and administrative expenses		(118	)		(62	)
Depreciation and amortization expense		(106	)		(65	)
Interest expense		(86	)		(19	)
Equity accounted income (loss), net		17			10
Impairment expense		-			(7	)
Gain on acquisitions/dispositions		16			272
Other income (expenses), net		(14	)		14
Income (loss) before income tax		254			203
Income tax (expense) recovery
Current		(28	)		(4	)
Deferred		(10	)		4
Net income (loss)	$	216		$	203
Attributable to¹:
Limited partners	$	(35	)	$	32
General partner		-			-
Non-controlling interests attributable to:
Redemption-exchange units held by Brookfield Asset Management Inc.		(34	)		34
Special Limited Partners		143			-
Interest of others	$	142		$	137

Note:
1		Attributable to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders, special limited partnership unitholders and preferred shareholders.

For the 3 months ended March 31, 2018 US$ millions, unaudited	Construction Services			Business Services			Energy			Industrial Operations				Corporate and Other			As per IFRS Financials
Revenues	$	1,043		$	6,304		$	97		$	747		$		3		$	8,194
Direct operating costs		(1,020	)		(6,214	)		(60	)		(353	)			(2	)		(7,649	)
General and administrative expenses		(10	)		(57	)		(5	)		(30	)			(16	)		(118	)
Interest expense		-			(19	)		(8	)		(59	)			-			(86	)
Equity accounted Company FFO		-			8			28			4				-			40
Current income taxes		(4	)		(4	)		-			(20	)			-			(28	)
Realized disposition gains, net		-			-			-			16				-			16
Company FFO attributable to others		-			(10	)		(14	)		(207	)			-			(231	)
Company FFO^1,2		9			8			38			98				(15	)		138
Depreciation and amortization																		(106	)
Impairment expense																		-
Realized disposition gains recorded in fair value changes or prior periods																		-
Deferred income taxes																		(10	)
Other income/(expense), net																		(14	)
Non-cash items attributable to equity accounted investments																		(23	)
Non-cash items attributable to others																		89
Net income (loss) attributable to unitholders²																	$	74

Notes:
1		The Statements of Company Funds from Operations above are prepared on a basis that is consistent with Brookfield Business Partners' Supplemental Information and differs from net income as presented in Brookfield Business Partners’ Consolidated Statements of Operating Results on page 6 of this release, which is prepared in accordance with IFRS. Management uses company funds from operations (Company FFO) as a key measure to evaluate operating performance. Readers are encouraged to consider both measures in assessing Brookfield Business Partners’ results. Company FFO is presented as a net amount attributable to unitholders and is a non-IFRS measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO for equity accounted investments.
2		Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders.

For the 3 months ended March 31, 2017 US$ millions, unaudited	Construction Services			Business Services			Energy			Industrial Operations				Corporate and Other			As per IFRS Financials
Revenues	$	1,016		$	616		$	69		$	231		$		2		$	1,934
Direct operating costs		(1,020	)		(583	)		(51	)		(219	)			(1	)		(1,874	)
General and administrative expenses		(11	)		(23	)		(4	)		(15	)			(9	)		(62	)
Interest expense		-			(4	)		(6	)		(9	)			-			(19	)
Equity accounted Company FFO		-			4			13			-				-			17
Current income taxes		10			-			(1	)		(8	)			3			4
Realized disposition gain, net		2			5			36			229				-			272
Company FFO attributable to others		-			(11	)		(36	)		(130	)			-			(177	)
Company FFO^1,2		(3	)		4			20			79				(5	)		95
Depreciation and amortization																		(65	)
Impairment expense																		(7	)
Realized disposition gains recorded in fair value changes or prior periods																		-
Deferred income taxes																		(4	)
Other income, net																		14
Non-cash items attributable to equity accounted investments																		(7	)
Non-cash items attributable to others																		40
Net income attributable to unitholders²																	$	66

	Three months ended
	March 31
US$, unaudited		2018			2017
Net income (loss) per unitholder, excluding incentive distribution¹	$	0.57		$	0.61
Incentive distribution per unit²		(1.10	)		-
Net income (loss) attributable to limited partnership unit^1,2	$	(0.53	)	$	0.61

Notes:
1		Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redemption exchange units held by Brookfield Asset Management for limited partnership units, for the three months ended March 31, 2018 was 129 million and for the three months ended March 31, 2017 was 108 million.
2		Income (loss) attributed to limited partnership unit on a fully diluted basis is reduced by incentive distributions paid to special limited partnership unitholders during the period.