Adjusted EBITDA: Increased to $2.6 billion from $2.5 billion in 2023. Net Loss: $109 million in 2024, primarily due to impairments in health care services and natural gas producer. Adjusted EFO: $1.5 billion, including $306 million of net gains during the year. Industrial Segment EBITDA: $1.2 billion, up from $855 million in 2023. Business Services Segment EBITDA: $832 million, down from $900 million in 2023. Infrastructure Services Segment EBITDA: $606 million, down from $853 million in 2023. Pro Forma Liquidity: $2.7 billion at the corporate level. Share Buyback Program: Announced a new $250 million share buyback program. Capital Recycling Initiatives: Generated more than $2 billion, including $1 billion from monetizations and distributions. Clarios Distribution: $1.2 billion share of a $4.5 billion distribution. Chemelex Acquisition: BBU's share of the equity investment was approximately $210 million.

Warning! GuruFocus has detected 8 Warning Signs with BBU.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Brookfield Business Partners LP (NYSE:BBU) achieved a record full-year adjusted EBITDA of $2.6 billion, reflecting strong operational performance and increased margins. The company generated over $2 billion from capital recycling initiatives, including $1 billion from monetizations and distributions. BBU completed a successful financing at Clarios, raising $4.5 billion, with BBU's share amounting to $1.2 billion, representing a 1.5 times multiple of their investment. A new $250 million share buyback program was announced, aimed at increasing the per-unit value of BBU. BBU acquired Chemelex, a leading manufacturer of electric heat tracing systems, for $210 million, which is expected to generate durable cash flows and leverage Brookfield's platform for growth.

Negative Points

BBU reported a net loss of $109 million in 2024, primarily due to impairments in healthcare services and natural gas production. The company's infrastructure services segment saw a decline in full-year adjusted EBITDA from $853 million in 2023 to $606 million in 2024. The business services segment experienced a decrease in full-year adjusted EBITDA from $900 million in 2023 to $832 million in 2024. Healthscope, a healthcare business, continues to face challenges with a mismatch between revenue growth and cost escalation. CDK, a dealer software and technology services operation, is experiencing higher costs due to planned modernization and technology upgrades, impacting profitability.

Story Continues

Q & A Highlights

Q: Can you discuss the potential shift towards more Clarios content per vehicle and the opportunity it presents? A: Mark Wallace, CEO of Clarios, explained that the addition of supercapacitors to their portfolio has significantly increased content per vehicle. As vehicles demand more electrical power and autonomous features, multiple energy storage devices will be needed, increasing both OEM and aftermarket content.

Q: How will the $2 billion-plus planned investments in the US be allocated? A: Mark Wallace stated that investments will focus on modernizing facilities with automation and AI, increasing capacity for advanced batteries, enhancing domestic recycling capabilities, and exploring leapfrog technologies like sodium-ion to reduce reliance on foreign supply chains.

Q: Does the financial leverage of Scientific Games impact its ability to pursue growth opportunities? A: Jaspreet Dehl, CFO, noted that Scientific Games has stable cash flows and operational improvements have strengthened its position. The business can self-fund new contracts, including recent wins like the UK lottery and Ohio contracts, without needing additional capital from BBU.

Q: What is the opportunity for Clarios' connected service solutions for fleet operators? A: Mark Wallace highlighted a contract with a European fleet, using battery algorithms to reduce idling and fuel costs, and prevent roadside breakdowns. Clarios is expanding this service to other European and US fleet operators, providing significant value to customers.

Q: How does the re-industrial revolution theme influence BBU's M&A focus? A: Anuj Ranjan, CEO, stated that BBU targets businesses that align with re-industrialization and technology advancement themes, as seen with Clarios and Chemelex. This focus is integral to their investment strategy and pipeline development.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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