“We have had a strong start to the year and each of our business segments performed well resulting in robust quarterly Company FFO,” said
| Three months ended March 31 |
|||||
| US$ millions (except per unit amount), unaudited | 2019 | 2018 | |||
| Net income (loss) attributable to unitholders1 | $ | 62 | $ | 74 | |
| Net income (loss) per limited partnership unit2,3 | $ | 0.48 | $ | (0.53) | |
| Company FFO1,4 | $ | 205 | $ | 138 | |
| Company FFO per limited partnership unit2 | $ | 1.59 | $ | 1.07 | |
Operational Update
The following table presents Company FFO by segment:
| Three months ended March 31 |
||||||
| US$ millions, unaudited | 2019 | 20185 | ||||
| Business Services | $ | 32 | $ | 17 | ||
| Infrastructure Services | 102 | 22 | ||||
| Industrials | 81 | 114 | ||||
| Corporate and Other | (10) | (15) | ||||
| Company FFO1,4 | $ | 205 | $ | 138 | ||
Our business services segment generated Company FFO of
Our infrastructure services segment generated Company FFO of
Our industrials segment generated Company FFO of
Strategic Initiatives Update
We progressed a number of initiatives so far in 2019 that we believe will contribute meaningfully to the growth of our business.
- Clarios Power Solutions (“Clarios”)
OnApril 30, 2019 , together with institutional partners, we closed our acquisition of Clarios for a purchase price of approximately$13.2 billion . The transaction was funded with$3.0 billion of equity, of whichBrookfield Business Partners expects its share to be$750 million for a 25% ownership interest, which will be determined once institutional partner participation is finalized. Clarios is the global market leader in automotive batteries and we plan to continue growing this world-class business and build on its track record of innovation.
Healthscope Limited
InJanuary 2019 , together with institutional partners, we reached a definitive agreement to acquire up to a 100% controlling interest inHealthscope for a purchase price of approximately$4.1 billion . We have received regulatory approval and are working through the shareholder approval process. We expect to close this transaction in the second quarter of 2019.
Cardone Industries (“Cardone”)
InApril 2019 , together with institutional partners, we recapitalized Cardone for$195 million , which is being used to support near term liquidity requirements in the business. We acquired an 85% controlling interest in Cardone. Brookfield Business Partners’ share is 35% of Cardone for$80 million (inclusive of the prior investment of$33 million ). Cardone is a leading remanufacturer of automotive parts inNorth America and we look forward to working with the management team to improve and grow the business.
- BGIS
InMarch 2019 , we signed an agreement to sell BGIS, our global provider of facilities management services, for approximately $1 billion. Brookfield Business Partners’ net share of the proceeds is expected to be approximately$180 million . The sale is expected to close in the second quarter.
- BGRS
InApril 2019 , we signed an agreement to sell our executive relocation business, BGRS, which will generate net proceeds of approximately $230 million forBrookfield Business Partners . The sale is expected to close in the second quarter.
North American Palladium
InApril 2019 , we completed our first public market sale of shares inNorth American Palladium , the only pure play palladium producer in the world. We sold approximately 5.7 million shares for$10 per share, which generated net proceeds of approximately$15 million forBrookfield Business Partners .
- Teekay Offshore
InApril 2019 , together with institutional partners, we agreed to acquire all ofTeekay Corporation's remaining interests in Teekay Offshore, including a 49% GP interest, LP units, warrants and a loan commitment for a total of$100 million . Brookfield Business Partners’ share was approximately$45 million . With the transaction,Brookfield Business Partners' ownership interest will increase to approximately 30%. Prior to or following closing, a portion ofBrookfield Business Partners' share may be syndicated to other institutional investors. The acquisition is expected to close in the second quarter.
Distribution
The Board of Directors has declared a quarterly distribution in the amount of
Additional Information
The Board has reviewed and approved this news release, including the summarized unaudited consolidated financial statements contained herein.
Brookfield Business Partners’ Letter to Unitholders and the Supplemental Information are available at https://bbu.brookfield.com/reports-and-filings.
Notes:
- Attributable to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders and special limited partnership unitholders.
- 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 endedMarch 31, 2019 was 129.2 million (2018: 129.3 million). - Income (loss) attributed to limited partnership unit on a fully diluted basis is reduced by incentive distributions declared to special limited partnership unitholders during the period based on the volume-weighted average increase in unit price of the partnership’s unit over an incentive threshold. A reconciliation of net income per unit is available on page 9 of this release.
- 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 as appropriate 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 pages 7 and 8 of this release.
- The comparative figures have been updated to conform with the new segment presentation.
For more information, please visit our website at https://bbu.brookfield.com or contact:
| Media: Claire Holland Tel: (416) 369-8236 Email: [email protected] |
Investors: Gwyn Hemme Tel: (416) 359-8632 Email.: [email protected] |
Conference Call and 2019 First Quarter Earnings Webcast Details
Investors, analysts and other interested parties can access Brookfield Business Partners’ 2019 first quarter results as well as the Letter to Unitholders and Supplemental Information on our website under the Reports & Filings section at https://bbu.brookfield.com
The conference call can be accessed via webcast on
Cautionary Statement Regarding Forward-looking Statements and Information
Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of
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, the reader 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
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchange rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; 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 and hurricanes; the possible impact of international conflicts and other 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
We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law,
Cautionary Statement Regarding the Use of Non-IFRS Measures
This news release contains references to Company FFO. When determining Company FFO, we include our unitholders’ proportionate share of Company FFO for equity accounted investments. Company FFO is not a generally accepted accounting measure under IFRS and therefore may differ from definitions of Company FFO or Funds from Operations used by other entities. We believe that this is a useful supplemental measure that may assist investors in assessing the financial performance of
References to
Consolidated Statements of Financial Position
| As of | |||||
| US$ millions, unaudited | Mar. 31, 2019 | Dec. 31, 2018 | |||
| Assets | |||||
| Cash and cash equivalents | $ | 1,540 | $ | 1,949 | |
| Financial assets | 1,257 | 1,369 | |||
| Accounts receivable, net | 5,012 | 5,160 | |||
| Inventory and other assets | 3,246 | 3,075 | |||
| Assets held for sale | 1,005 | 63 | |||
| Property, plant and equipment | 7,789 | 6,947 | |||
| Deferred income tax assets | 253 | 280 | |||
| Intangible assets | 5,169 | 5,523 | |||
| Equity accounted investments | 537 | 541 | |||
| Goodwill | 2,164 | 2,411 | |||
| $ | 27,972 | $ | 27,318 | ||
| Liabilities and equity | |||||
| Liabilities | |||||
| Corporate borrowings | $ | nil | $ | nil | |
| Accounts payable and other | 9,519 | 9,082 | |||
| Liabilities associated with assets held for sale | 781 | 9 | |||
| Non-recourse borrowings in subsidiaries of Brookfield Business Partners | 10,355 | 10,866 | |||
| Deferred income tax liabilities | 868 | 867 | |||
| $ | 21,523 | $ | 20,824 | ||
| Equity | |||||
| Limited partners | 1,583 | 1,548 | |||
| Non-controlling interests attributable to: | |||||
| Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc. | 1,450 | 1,415 | |||
| Interest of others | 3,416 | 3,531 | |||
| 6,449 | 6,494 | ||||
| $ | 27,972 | $ | 27,318 | ||
Consolidated Statements of Operating Results
| US$ millions, unaudited | Three months ended March 31 |
|||||
| 2019 | 2018 | |||||
| Revenues | $ | 9,201 | $ | 8,194) | ||
| Direct operating costs | (8,193) | (7,649) | ||||
| General and administrative expenses | (178) | (118) | ||||
| Depreciation and amortization expense | (311) | (106) | ||||
| Interest income (expense), net | (184) | (86) | ||||
| Equity accounted income (loss), net | 7 | 17 | ||||
| Impairment expense, net | ─ | ─ | ||||
| Gain (loss) on acquisitions/dispositions, net | (2) | 16 | ||||
| Other income (expenses), net | (90 | (14) | ||||
| Income (loss) before income tax | 250 | 254 | ||||
| Income tax (expense) recovery | ||||||
| Current | (30) | (28 | ||||
| Deferred | (19) | (10) | ||||
| Net income (loss) | $ | 201 | $ | 216 | ||
| Attributable to: | ||||||
| Limited partners | 32 | (35) | ||||
| Non-controlling interests attributable to: | ||||||
| Redemption-exchange units held by Brookfield Asset Management Inc. | 30 | (34) | ||||
| Special Limited Partners | ─ | 143 | ||||
| Interest of others | 139 | 142 | ||||
Statements of Company Funds from Operations
| For the three months ended March 31, 2019 US$ millions, unaudited |
Business Services |
Infrastructure Services |
Industrials | Corporate and Other |
Total | ||||||||||
| Revenues | $ | 6,935 | $ | 1,289 | $ | 977 | $ | ─ | $ | 9,201 | |||||
| Direct operating costs | (6,778) | (892) | (521) | (2) | (8,193) | ||||||||||
| General and administrative expenses | (67) | (34) | (58) | (19) | (178) | ||||||||||
| Interest income (expense), net | (20) | (101) | (69) | 6 | (184) | ||||||||||
| Equity accounted Company FFO | 7 | 18 | 3 | ─ | 28 | ||||||||||
| Current income taxes | (10) | 9 | (34) | 5 | (30) | ||||||||||
| Realized disposition gains (loss), net | ─ | ─ | (2) | ─ | (2) | ||||||||||
| Other income (expense), net | ─ | (4) | 2 | ─ | (2) | ||||||||||
| Company FFO attributable to others | (35) | (183) | (217) | ─ | (435) | ||||||||||
| Company FFO1,2 | 32 | 102 | 81 | (10) | 205 | ||||||||||
| Depreciation and amortization expense | (311) | ||||||||||||||
| Realized disposition gain (loss) recorded in prior periods | ─ | ||||||||||||||
| Impairment expense, net | ─ | ||||||||||||||
| Gain on acquisition and disposition | ─ | ||||||||||||||
| Deferred income taxes | (19) | ||||||||||||||
| Other income (expense), net | (88) | ||||||||||||||
| Non-cash items attributable to equity accounted investments | (21) | ||||||||||||||
| Non-cash items attributable to others | 296 | ||||||||||||||
| Net income (loss) attributable to unitholders2 | $ | 62 | |||||||||||||
Notes:
- 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 as appropriate and other items. When determining Company FFO, we include our proportionate share of Company FFO for equity accounted investments.
- Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders.
Statements of Company Funds from Operations
| For the three months ended March 31, 2018 US$ millions, unaudited |
Business Services |
Infrastructure Services |
Industrials | Corporate and Other |
Total | |||||||||
| Revenues | $ | 7,347 | $ | 2 | $ | 842 | $ | 3 | $ | 8,194 | ||||
| Direct operating costs | (7,234) | ─ | (413) | (2) | (7,649) | |||||||||
| General and administrative expenses | (67) | ─ | (35) | (16) | (118) | |||||||||
| Interest income (expense), net | (19) | ─ | (67) | ─ | (86) | |||||||||
| Equity accounted Company FFO | 8 | 20 | 12 | ─ | 40 | |||||||||
| Current income taxes | (8) | ─ | (20) | ─ | (28) | |||||||||
| Realized disposition gains (loss), net | ─ | ─ | 16 | ─ | 16 | |||||||||
| Other income (expense), net | ─ | ─ | ─ | ─ | ─ | |||||||||
| Company FFO attributable to others | (10) | ─ | (221) | ─ | (231) | |||||||||
| Company FFO1,2 | 17 | 22 | 114 | (15) | 138 | |||||||||
| Depreciation and amortization expense | (106) | |||||||||||||
| Realized disposition gain (loss) recorded in prior periods | ─ | |||||||||||||
| Impairment expense, net | ─ | |||||||||||||
| Gain on acquisition and disposition | ─ | |||||||||||||
| 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:
- 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 as appropriate and other items. When determining Company FFO, we include our proportionate share of Company FFO for equity accounted investments.
- Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders.
Reconciliation of Net Income per Unit
| Three months ended March 31 |
|||||
| US$, unaudited | 2019 | 2018 | |||
| Net income (loss) per unitholder, excluding incentive distribution1 | $ | 0.48 | $ | 0.57 | |
| Incentive distribution per unit2 | ─ | (1.10) | |||
| Net income (loss) attributable to limited partnership unit1,2 | $ | 0.48 | $ | (0.53) | |
Notes:
- 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 endedMarch 31, 2019 was 129.2 million (2018: 129.3 million). - 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 based on the volume-weighted average increase in unit price of the partnership’s unit over an incentive threshold.
Source:
| Title | Document |
|---|---|
English |