Brookfield Business Partners L.P. LP Units (BBU) Q2 2024 Earnings Call Transcript

In the second quarter of 2024, Brookfield Business Partners (BBU) reported a solid performance, showcasing resilience and strategic initiatives despite facing challenges from one-time events. During the company's earnings call, key executives provided insights into their business operations, cybersecurity measures, and financial performance, offering a comprehensive overview of the company's current status and future prospects.

Business Highlights and Strategic Initiatives

Brookfield Business Partners reported a strong financial performance in the first half of the year, with a focus on value creation initiatives across its operations. Despite facing challenges from a cybersecurity incident at CDK Global, a dealer software and technology services operation, and increased costs on a construction project, the company remains optimistic about its long-term growth prospects. The strategic sale of lower-quality businesses and the focus on high-quality, mission-critical providers of essential products and services are key differentiators for BBU in today's market.

The company's financial strength is underpinned by a sound business strategy, a strong track record of monetizing mature operations, and a focus on digital and technology capabilities. BBU has sold or reached agreements to sell 10 businesses for approximately $3 billion over the past 1.5 years, achieving significant returns through value creation initiatives. The company's approach to managing cybersecurity risk, as demonstrated by the successful handling of the incident at CDK Global, underscores its commitment to operational excellence and investor confidence.

Cybersecurity and Risk Management

Cybersecurity is a top priority for Brookfield Business Partners, and the company has taken proactive measures to strengthen its protocols and response capabilities. The CDK Global incident, which involved a highly sophisticated threat actor, was handled effectively, with the business restoring substantially all its major applications and third-party system integrations within three weeks. The company's focus on building the best and most secure platform for the industry, along with its investments in technology and customer support, positions it well to mitigate cyber risks and maintain customer trust.

Financial Performance and Outlook

BBU's financial results for the quarter were solid, with adjusted EBITDA at $524 million, excluding contributions from nuclear technology services. The company's Industrials and Business Services segments showed growth, with the advanced energy storage operation benefiting from favorable pricing and operational efficiency initiatives. The company's liquidity position remains strong, with approximately $1.6 billion at the corporate level and no significant upcoming near-term maturities on its debt.

Conclusion

Brookfield Business Partners' second-quarter results demonstrate a company that is resilient, strategic, and focused on value creation. Despite challenges, the company remains confident in its ability to generate meaningful proceeds from its next phase of monetizations. The successful handling of the CDK Global incident underscores the company's operational capabilities and commitment to investor confidence. With a strong financial position, a focus on digital and technology capabilities, and a strategic approach to risk management, Brookfield Business Partners is well-positioned for continued growth and success in the evolving business landscape.