Brookfield Business Partners LP Q1 FY2025 earnings call

• Capital Recycling & Acquisitions: Generated over $1.5 billion from capital recycling, committed $370 million to acquire two market-leading industrial businesses, reduced corporate borrowings, and bought back nearly 6 million units and shares with a $250 million repurchase program, having returned $140 million to shareholders. - Strategic Themes: Relocalization and digitalization are key themes; the US is attractive, Europe is moving to a pro-growth agenda, India and Gulf countries are bright spots. - Tariff Impact: Assessed impacts on businesses, with most exposure manageable; Clarios' US-Mexico battery operations under USMCA exemption, DexKo working through tariff impacts from China imports. - Operational Capabilities: Evaluating nearshoring, alternative suppliers, cost optimization, and pricing actions to mitigate headwinds.

Industrial Segment: First quarter adjusted EBITDA was $304 million, including $72 million tax benefits at Advanced Energy Storage and contributions from the electric heat tracing manufacturer acquired in January. Business Service Segment: First quarter adjusted EBITDA was $213 million, an increase from $205 million in 2024, driven by the residential mortgage insurer and improved project execution at the construction operation, offset by higher costs at the dealer software and technology service operation. Infrastructure Services Segment: First quarter adjusted EBITDA was $104 million, down from $143 million in the same quarter of 2024, due to the sale of offshore oil services' shuttle tanker operations and weak market conditions in work access services.

• Share Repurchase: Continues $250 million repurchase program, having bought back nearly 6 million units/shares for $140 million, plans to renew the NCIB in August. - Growth Focus: Leveraging relocalization, digitalization, and operational capabilities to capitalize on market trends.

• Tariff Impact: Potential near-term disruption from trade policy changes, though manageable for most businesses. - Economic Downturn: Exposure to global growth downturns, but experience in navigating cycles to position for value creation.

Q: Quantify DexKo's tariff impact on EBITDA and competitor exposure A: DexKo's performance in Q1 was in line with plan, market muted in North America, but business managed costs and margins; DexKo better positioned than competitors.

Q: Clarios' 45X filing and tax credit views A: No change in views, tax return filed end of January, processing normally, expecting near-term tax benefits.

Q: Accelerating capital return via monetization A: Always looking for monetization opportunities, using various approaches, will renew share buyback in August.

Q: Scientific Games realignment and value enhancement A: Investing in digital for lottery ecosystem, deploying innovative tech, appointed new Head of Digital, expanding team.

Q: Barclays Payments investment and BBU participation A: BBU participates, similar to network and Magneti, focusing on financial infrastructure transformation.

Q: CDK churn and technology investments A: Churn higher due to technology investments, core DMS churn stabilizing with commercial actions.

Q: Unidas performance and market impact A: Unidas' fleet management and car rental businesses performing well, managed interest rate impact, free cash flow positive.

Q: Tariff mitigation actions in business lines A: Underway, including pricing actions, mainly in Clarios and DexKo, with mitigation strategies in place.

Q: Clarios tax filing progress and credit visibility A: Tax return processing normally, confident of receiving payment in due course.

Q: Sage mortgage insurance impact of regulatory changes A: Regulatory changes led to higher transactional volumes, increased amortization period and price cap contributing.