20-F: Brookfield Business Partners L.P. Reports Financial Results for Fiscal Year Ended December 31, 2024

Brookfield Business Partners L.P. releases its annual report on Form 20-F, detailing its financial performance for the fiscal year ended December 31, 2024.

Summary

• Brookfield Business Partners L.P. has released its Form 20-F for the fiscal year ended December 31, 2024.
• The partnership's financial information is presented in U.S. dollars and prepared in accordance with IFRS.
• As of December 31, 2024, the partnership had 74,281,767 Limited Partnership Units outstanding.
• The partnership evaluates its performance using net income attributable to unitholders and Adjusted EFO.
• Adjusted EBITDA is used to evaluate the performance of the partnership's operations.
• The partnership's operations are organized into four segments: business services, infrastructure services, industrials, and corporate and other.
• The partnership's strategy involves enhancing cash flows, pursuing acquisitions, and recycling capital.
• The partnership is subject to various risks, including economic conditions, competition, and regulatory changes.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative financial results, with a focus on strategic transactions and future growth opportunities. The sentiment is neutral to slightly positive.

Positives

• The partnership is actively managing its capital requirements and ensuring access to capital.
• The partnership is focused on prudently managing its capital requirements and ensuring access to capital is always available.
• The partnership aims to prudently manage its capital requirements and ensure access to capital is always available.

Negatives

• The partnership's operations are subject to cyclical fluctuations in global economic conditions and end-use markets.
• The partnership faces competition for acquisitions from various sources.
• The partnership's indebtedness may restrict its ability to engage in certain activities or make distributions to equity.
• The market price of the partnership's units may be volatile.
• The partnership is dependent on Brookfield and the Service Providers.
• The partnership is subject to various taxation risks.

Risks

• The cyclical nature of the partnership's operating businesses and general economic conditions.
• The ability to complete and effectively integrate acquisitions into existing operations.
• Restrictions on the partnership's ability to engage in certain activities or make distributions due to its indebtedness.
• Changes to U.S. laws or policies, including changes in U.S. domestic and economic policies and foreign trade policies and tariffs.
• The ability to obtain insurance for the partnership's business operations.
• Labor disruptions and economically unfavorable collective bargaining agreements.
• Litigation.
• Investments in jurisdictions with less developed legal systems.
• Changes to the market price of any investments in public companies.
• The partnership's compliance with environmental laws and the broader impacts of climate change.
• Cybersecurity incidents.
• The possible impact of international conflicts, wars and related developments including terrorist acts and cyber terrorism.
• The effectiveness of the partnership's internal controls over financial reporting.
• The market price of the partnership's units may be volatile.
• The partnership is exempt from certain requirements of Canadian securities laws and is not subject to the same disclosure requirements as a U.S. domestic issuer.
• Political instability and unfamiliar cultural factors.
• Changes in government policy and legislation.
• Federal, state and foreign anti-corruption and trade sanctions laws and restrictions on foreign direct investment applicable to the partnership and its operating businesses create the potential for significant liabilities and penalties, the inability to complete transactions, imposition of significant costs and burdens, and reputational harm.
• Operational or business risks that are specific to any of the partnership's business services operations, infrastructure services operations or industrials operations.
• Reliance on third party service providers.
• Catastrophic events, such as earthquakes, hurricanes and pandemics/epidemics.
• Brookfield's significant influence over the partnership.
• The lack of an obligation of Brookfield to source acquisition opportunities to the partnership.
• The departure of some or all of Brookfield's professionals.
• Control of the partnership and/or the BBU General Partner may be transferred to a third party without unitholder consent.
• Brookfield may increase its ownership in the partnership.
• The partnership's Master Services Agreement and its other arrangements with Brookfield do not impose on Brookfield any fiduciary duties to act in the best interests of the partnership's unitholders.
• Conflicts of interest between the partnership and its unitholders, on the one hand, and Brookfield, on the other hand.
• The partnership's arrangements with Brookfield may contain terms that are less favorable than those which otherwise might have been unrelated parties.
• The BBU General Partner may be unable or unwilling to terminate the partnership's Master Services Agreement.
• The limited liability of, and the partnership's indemnification of, the Service Providers.
• Brookfield's relationship with Oaktree.
• The partnership is a holding entity that relies on its subsidiaries to provide it with the funds necessary to its financial obligations.
• The partnership may be subject to the risks commonly associated with a separation of economic interest from control or the incurrence of debt at multiple levels within an organizational structure.
• The partnership may become regulated as an investment company under the Investment Company Act.
• The inability of unitholders to vote on or otherwise take part in the management of Brookfield Business Partners.
• Future sales or issuances of the partnership's securities will result in dilution of existing holders and even the perception of such sales or issuances taking place could depress the trading price of the LP Units or BBUC exchangeable shares.
• Limits on unitholders ability to obtain favorable judicial forum for disputes related to Brookfield Business Partners or to enforce judgements against us.
• Changes in tax law and practice.

Future Outlook

The partnership expects to continue to grow its business and enhance its long-term cash flows through acquisitions and organic growth opportunities.

Industry Context

The partnership operates in various industries, including business services, infrastructure services, and industrials, which are subject to cyclical fluctuations and general economic conditions.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards.
• The document does not list specific comparible companies, projects, and results.

Legal Proceedings

• The dealer software and technology services operation has become subject to several class action lawsuits in connection with the cybersecurity incident and the operation may be subject to further lawsuits, claims, inquiries or investigations.

Related Party Transactions

• The partnership has entered into a Master Services Agreement with the Service Providers, subsidiaries of Brookfield, for management and administrative services.
• The partnership has entered into a Relationship Agreement with Brookfield, governing aspects of the relationship between them.
• The partnership has entered into a Licensing Agreement with Brookfield, granting a non-exclusive, royalty-free license to use the Brookfield name and logo.
• Brookfield Holders have the right to require the Holding LP to redeem all or a portion of the Redemption-Exchange Units for cash, subject to the partnership's right to acquire such interests for its units.
• The partnership has an agreement with Brookfield to subscribe for up to $1.5 billion of perpetual preferred equity securities of subsidiaries of the partnership.
• The partnership has entered into voting agreements to provide the partnership with voting rights over specified entities.
• The partnership has entered into a customary registration rights agreement with Brookfield.
• The partnership has deposit agreements with Brookfield whereby the partnership may place funds on deposit with Brookfield and whereby Brookfield may place funds on deposit with the partnership.

Stakeholder Impact

• The partnership's performance and strategic decisions can impact key stakeholders such as shareholders, employees, customers, suppliers, and creditors.

Next Steps

• The partnership expects to continue current discussions and actively pursue acquisition and disposition opportunities.
• The partnership will continue to focus on strengthening its risk mitigation in cybersecurity and data privacy.

Key Dates

Keywords

Financial results, Annual report, Brookfield Business Partners, BBU, BBU.UN, Financial performance, Investments, Acquisitions, Dispositions, Limited Partnership