Brookfield Business Partners L.P. (NYSE:BBU) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals a mixed financial performance with a significant EPS miss, despite some positive adjusted EBITDA figures. Although there is an ongoing share repurchase program, the Q&A highlights concerns about tariffs and unclear management responses, which suggest potential risks. The market cap indicates a mid-cap stock, which might not react as strongly as a small-cap stock. Overall, the negative sentiment from financial performance and management's lack of clarity is likely to lead to a negative stock price movement.
Key Financial Performance
EPS $0.38 EPS, down from expectations of $1.28.
Adjusted EBITDA $591 million, up from $544 million year-over-year.
Adjusted EFO $345 million, which included a $114 million net gain from the sale of offshore oil services.
Industrial segment adjusted EBITDA $304 million, which included $72 million of tax benefits and contributions from a newly acquired electric heat tracing manufacturer.
Business Service segment adjusted EBITDA $213 million, up from $205 million year-over-year, with strong performance from residential mortgage insurance and improved project execution.
Infrastructure Services segment adjusted EBITDA $104 million, down from $143 million year-over-year, impacted by the sale of offshore oil services and weak market conditions in work access services.
Liquidity Approximately $2.3 billion at the corporate level, pro forma for recent acquisitions.
Share buyback $140 million spent on repurchasing nearly six million units and shares as part of a $250 million repurchase program.
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Operating Highlights
Acquisition of Antylia Scientific: Brookfield has reached an agreement to acquire Antylia Scientific, a leading manufacturer and distributor of critical consumables and testing equipment serving life sciences and environmental labs.
Investment in U.S. Economy: The United States remains an attractive destination for capital, with Brookfield investing in the backbone of the U.S. economy and seeing growth in many businesses due to technology, relocalization, and policy changes.
Expansion in India and the Middle East: India is highlighted as a bright spot in the global economy, while the Gulf countries in the Middle East continue to thrive, presenting opportunities for strategic growth.
Operational Efficiencies: Brookfield is evaluating proactive measures across businesses to mitigate headwinds, including nearshoring production capacity and exploring alternative supplier arrangements.
Share Repurchase Program: Brookfield has initiated a $250 million share repurchase program, having already returned $140 million to shareholders.
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Risk or Challenges
Earnings Expectations: Brookfield Business Partners L.P. missed earnings expectations, reporting an EPS of $0.38 against expectations of $1.28.
Tariffs and Trade Policy: The company is assessing the impacts of tariffs and changing policy decisions on global economic growth, indicating potential risks but not expecting material impacts on cash flows.
Supply Chain Challenges: There are expected impacts on DexKo, related to tariffs on imports from China, but the company believes it can mitigate these through commercial and sourcing opportunities.
Economic Growth Risks: The company acknowledges potential downturns in global growth and the risk of secondary impacts from tariffs on economic and global growth.
Market Dynamics: The company is preparing for a more uncertain outlook over the next 12 to 18 months as businesses and consumers adapt to changing behaviors and purchasing decisions.
Competitive Pressures: Despite some demand headwinds in Europe and discretionary demand softness, the company believes its larger businesses are market leaders with essential products that can withstand economic volatility.
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Guidance & Outlook
Capital Recycling Initiatives: Generated over $1.5 billion from capital recycling initiatives.
Acquisitions: Committed $370 million to acquire two market-leading industrial businesses.
Share Repurchase Program: Announced a $250 million repurchase program, returning $140 million to shareholders.
Acquisition of Antylia Scientific: Reached an agreement to acquire Antylia Scientific, a leading manufacturer and distributor of critical consumables and testing equipment.
Outlook on Economic Environment: Preparing for a more uncertain outlook over the next 12 to 18 months as businesses and consumers adapt.
Financial Performance: Adjusted EBITDA for Q1 was $591 million, up from $544 million in the prior period.
Liquidity Position: Ended the quarter with liquidity of approximately $2.3 billion at the corporate level.
Repurchase Program Continuation: Plan to renew the existing NCIB for share repurchases once it expires in August.
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Shareholder Return Plan
Share Repurchase Program: Brookfield Business Partners announced a $250 million repurchase program earlier this year and has already returned $140 million to shareholders as part of that program, buying back nearly six million units and shares.
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Key Q&A
Q:Can you quantify the impact of tariffs on EBITDA near term? Are DexKo competitors also affected by tariffs?
A:Performance in Q1 was in line with plan. There’s some sign of recovery in North America in Q1, but the market remains pretty muted. Trailer registrations in North America remain at a multiyear low. The business has improved margins in a down market and is managing through tariff impacts. Competitors will also be affected, but DexKo is well placed to manage through this.
Q:Where do you stand with the 45X filing and any pivots regarding credits Clarios is entitled to?
A:There’s no change in views around the tax credit. The business filed their tax return for 2024 at the end of January, and it’s being processed normally. We expect tax benefits and credits from the 2024 return in the near term.
Q:Can you talk about plans to return capital to shareholders?
A:We’re always looking for opportunities to monetize or generate realizations. We’ve returned about $10 billion over two years. We have a buyback program currently running until August and will look to renew it. We aim for a balanced approach of deleveraging, returning capital, and new investments.
Q:Can you provide context on the realignment at Scientific Games and its value enhancement?
A:We’re investing in digital and see significant opportunities in the lottery ecosystem. We’ve deployed innovative technologies and appointed a new Head of Digital to support growth in EBITDA.
Q:Will BBU participate in the Barclays Payments business investment?
A:Yes, BBU will participate in the Barclays investment, similar to previous investments in network and Magneti. We see many opportunities in financial infrastructure.
Q:Does the merger of Schoeller Allibert with IPL provide an exit for Brookfield?
A:The merger creates an international sustainable packaging producer and presents a tremendous opportunity for value creation. The transaction does not require additional funding from BBU.
Q:What is the current state of churn in the CDK business?
A:Current year performance is lower due to technology investments. Churn is higher among customers with single products, but stabilizing among core DMS customers.
Q:What is the performance of the Unidas business and any macro impacts?
A:Overall operating performance is fine, with stable fleet management contracts. The car rental side is also performing well, but interest rates in Brazil have impacted costs.
Q:Are actions underway to manage tariff impacts and pricing?
A:We are taking actions where we can, including pricing. We are preparing and passing through the noise as the situation unfolds.
Q:Has Clarios had any interaction with the IRS regarding the 2024 tax filings?
A:The process is normal, and we are confident that Clarios qualifies under regulations and will receive payment in due course.
Q:What impact has the higher mortgage insurance had on transactional premiums?
A:Overall performance at Sagen is strong, with increased transactional volume driven by regulatory changes, including the increase in the cap and amortization period.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the quantification of tariff impacts on EBITDA and the specific actions being taken to manage pricing in various business lines. Additionally, there was a lack of clarity on the exact numbers related to the impact of higher mortgage insurance on transactional premiums.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Advanced Energy
Brookfield Partners
Energy Storage
Europe
Mexico
Storage operation
access
action
advantage
business market
business risk
chain
company
competitor
cycle
decision
dynamic
economy
end market
environment opportunity
expectation
exposure
headwind
impact tariff
lab
manufacturing
margin
month business
optimization
policy change
presence
relocalization
repurchase program
service shuttle
share repurchase
spot
start
tax
trade
unit share
BBU Transcript
Brookfield Business Partners L.P. LP Units (BBU) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call highlights strong financial metrics, operational improvements, and strategic capital allocation. Management's focus on maintaining margins, reinvesting for growth, and executing a buyback program supports a positive outlook. The Q&A section reveals optimism about market recovery, successful cost management, and strategic investments. Despite some uncertainties, such as the regulatory issue with La Trobe, management remains confident in future growth. The market cap suggests moderate stock movement, leading to a positive prediction within the 2% to 8% range.
Brookfield Business Partners L.P. LP Units (BBU) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call summary and Q&A session present mixed signals. Financial performance is stable, with strong liquidity and a significant share repurchase program, but growth in some areas is slower than expected. The market strategy and AI initiatives show promise, but uncertainties in the macroeconomic outlook and slower-than-expected contract ramp-ups temper optimism. The market cap suggests moderate volatility, leading to a neutral prediction for short-term stock movement.
Brookfield Business Partners L.P. (NYSE:BBU) Q1 2025 Earnings Call Transcript
Unknown5-3
The earnings call reveals a mixed financial performance with a significant EPS miss, despite some positive adjusted EBITDA figures. Although there is an ongoing share repurchase program, the Q&A highlights concerns about tariffs and unclear management responses, which suggest potential risks. The market cap indicates a mid-cap stock, which might not react as strongly as a small-cap stock. Overall, the negative sentiment from financial performance and management's lack of clarity is likely to lead to a negative stock price movement.
Brookfield Business Partners LP (BBU) Q1 2025 Earnings Call Transcript
Positive5-2
The earnings call highlights positive financial performance, with an 8.6% increase in Adjusted EBITDA and a substantial share repurchase program, which typically boosts stock prices. The Q&A section reveals proactive management of market challenges, such as tariffs, and strategic investments in digital and financial infrastructure. Despite some vague responses, the company's liquidity and capital return plans are strong. Given the company's market cap, these factors suggest a positive stock price movement, likely in the range of 2% to 8% over the next two weeks.
BBU Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
