BROOKFIELD, NEWS, Nov. 06, 2017 (GLOBE NEWSWIRE) -- Brookfield Business Partners L.P. (NYSE:BBU) (TSX:BBU.UN) (“Brookfield Business Partners”) announced today financial results for the quarter ended September 30, 2017.
“We had an active quarter integrating previously announced business acquisitions and completing others. We acquired two high quality businesses this quarter; Loblaw’s gas station operations and Teekay Offshore Partners L.P. ('Teekay Offshore'). We were also selected as the successful proponent of the largest casino concession ever awarded in Canada,” said Cyrus Madon , CEO of Brookfield Business Partners. “For the balance of the year our focus is the integration of our newly acquired operations, which we expect will contribute meaningfully to our Company FFO in 2018.”
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| |
Three months ended
September 30 |
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Nine months ended
September 30 |
| US$ millions (except per unit amount), unaudited |
|
2017 |
|
|
2016 |
|
|
2017 |
|
2016 |
|
| Net income attributable to unitholders1 |
$ |
9 |
|
$ |
20 |
|
$ |
69 |
$ |
(18) |
|
| Net (loss) income per limited partnership unit2,3,4 |
$ |
(0.15) |
|
$ |
0.22 |
|
$ |
0.40 |
|
n/a |
|
Company FFO1,5 |
$ |
46 |
|
$ |
50 |
|
$ |
184 |
$ |
145 |
|
| |
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|
|
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Brookfield Business Partners reported net income attributable to unitholders for the quarter ended September 30, 2017 of $9 million compared to $20 million in the third quarter 2016. Net income per unit was a loss of $0.15, including the impact of the incentive distribution. Company FFO totaled $46 million for the quarter compared to $50 million in 2016. Our Company FFO benefited from strong results in our business services and industrials segments, which were offset by a $16 million loss on the sale of an oil and gas producer in Western Canada in our energy segment, as previously disclosed.
Operational Update
The following table presents Company FFO by segment:
| |
Three months ended
September 30 |
|
Nine months ended
September 30 |
| US$ millions, unaudited |
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
| Business Services |
$ |
23 |
|
$ |
18 |
|
|
$ |
44 |
|
$ |
35 |
|
| Construction Services |
|
17 |
|
|
16 |
|
|
|
26 |
|
|
63 |
|
| Energy |
|
(5) |
|
|
12 |
|
|
|
26 |
|
|
47 |
|
| Industrial Operations |
|
22 |
|
|
11 |
|
|
|
109 |
|
|
8 |
|
| Corporate and Other |
|
(11) |
|
|
(7) |
|
|
|
(21) |
|
|
(8) |
|
| Company FFO1,5 |
$ |
46 |
|
$ |
50 |
|
|
$ |
184 |
|
$ |
145 |
|
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|
|
|
|
|
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Our business services segment generated Company FFO of $23 million in the third quarter of 2017, compared to $18 million in the third quarter of 2016. Results benefited from positive contributions from the acquisitions of Greenergy, a road fuels distributor that we acquired in May 2017, and the Loblaw gas station operations, a fuel marketing business, acquired in July 2017. Our facilities management business posted strong results and we completed a small tuck-in acquisition to further its growth strategy. Results in this segment were partially offset by lower results at our financial advisory service business, which tends to have variability in its results.
Our construction services segment contributed $17 million of Company FFO in the quarter, compared to $16 million in 2016. Marginally improved results from our Australian and U.K. operations relative to prior year were partially offset by lower activity in the Middle East. Our backlog has increased to $8 billion as we secured seven projects during the quarter. This included One Nine Elms , a mixed-use development in London, 447 Collins Street a mixed-use development in Melbourne, and AYKON London One, a 50 story residential tower in London. Following quarter end, we were awarded The Address Residences Jumeirah Gate, a mixed-use development in Dubai and Transit City, a residential development in Toronto.
Our energy segment reported a Company FFO loss of $5 million during the quarter, compared to Company FFO of $12 million in the prior year, primarily due to a $16 million loss on the sale of our smaller oil and gas producer in Western Canada. Our Western Canadian natural gas operations reported a marginally stronger quarter, as our hedging program partially protected us from weak spot pricing caused by pipeline outages during the quarter.
Our industrial operations segment generated Company FFO of $22 million during the third quarter, compared to $11 million in 2016. Company FFO for 2016 included $7 million of net gains from the sale of public security investments. Our results for the third quarter of 2017 benefited from a full quarter contribution from BRK Ambiental, our Brazilian water services operation acquired in May 2017. In addition, our graphite electrode and palladium mining operations generated stronger results in the third quarter compared to 2016, primarily due to an increase in sales volumes and higher realized prices at both operations.
Strategic Initiatives Update
During the quarter, together with institutional partners, we acquired a network of 213 Canadian gas stations and associated convenience kiosks from Loblaw Companies Limited. Our equity investment was approximately $43 million for a 26% share of the business. We have begun the process of rebranding to the Mobil fuel brand and we intend to grow this business by further building out its network.
In August we were selected, together with institutional partners (collectively, “Brookfield”) and Great Canadian Gaming Corporation (“Great Canadian”), as the successful proponent by the Ontario Lottery and Gaming Corporation (“OLG”) to operate certain gaming facilities in the Greater Toronto Area (the “GTA Bundle”). As a result of this award, Brookfield and Great Canadian will acquire all the gaming assets in the GTA Bundle and the exclusive right to operate these assets for a minimum period of 22 years, with a 10 year extension option, in accordance with the requirements of a Casino Operating and Services Agreement. Brookfield and Great Canadian will each hold a 49% interest in a newly formed partnership. The partnership will work closely with all vested stakeholders to revitalize the GTA Bundle and enhance guest experience.
In September, together with institutional partners, we completed the acquisition of 60% of the common units of Teekay Offshore. Brookfield Business Partners funded $317 million for a 25% share of the business. Teekay Offshore is a leading global provider of marine services and solutions focused on production and logistics to the offshore oil industry. Our investment will strengthen Teekay Offshore’s balance sheet, allowing the company to execute on its strategy and take advantage of future growth opportunities.
Subsequent to the quarter, together with institutional partners, we provided a $123 million first lien secured loan to Total Environment Group. Our share of the investment was approximately $32 million. Total Environment is a Bangalore-based home builder and proceeds of the loan will be used to refinance debt and fund construction of a portfolio of five residential projects totaling six million square feet.
During the quarter, we issued approximately 20 million units for a total of $600 million in gross proceeds through a bought deal equity offering and concurrent private placements that closed on September 26, 2017. The proceeds will be used for general corporate purposes, including the funding of previously announced transactions and future growth opportunities. We also increased our revolving unsecured credit facilities by $100 million to an aggregate of $250 million. These transactions brought our total liquidity, after accounting for our closed and announced transactions, to approximately $1 billion. Subsequent to the quarter end, the underwriters of our September 2017 equity offering exercised their over-allotment option and purchased approximately one million additional units for additional gross proceeds of approximately $30 million upon closing of the over-allotment option on October 26, 2017.
Distribution
The Board has declared a quarterly distribution in the amount of $0.0625 per unit, payable on December 29, 2017 to unitholders of record as at the close of business on November 30, 2017.
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/financial-reports.
Notes:
1 Attributable to parent company prior to the spin-off on June 20, 2016 (“Spin-off”) and to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders and special limited partnership unitholders post Spin-off.
2 Comparative figures for the nine months ended September 30, 2016 not representative of performance, as units were spun out on June 20, 2016.
3 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 and nine months ended September 30, 2017 was 108.9 million and 108.3 million respectively, and for the three months ended September 30, 2016 was 92 million.
4 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.
5 Company FFO
