Brookfield Business Corporation

Welcome to the Brookfield Business Partners first quarter 2023 results conference call and webcast. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, simply press star 11 on your touchtone phone. I would now like to turn the conference over to Alan Fleming, head of investor relations. Please go ahead, Mr. Fleming.

Thank you, operator, and good morning. Before we begin, I'd like to remind you that in responding to questions and talking about our growth initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I encourage you to review our filings with the securities regulators in Canada and the U.S., which are available on our website. Joining me on the call today is Cyrus Madden, our Chief Executive Officer, and Jaspreet Dell, our Chief Financial Officer. We're also joined today by Mark Wallace, our Chief Executive Officer at Clarios, our Advanced Energy Storage Operation. Cyrus will lead off and provide an update on our business, followed by Mark, who will discuss our strategic initiatives and recent developments at Clarios. Jaspreet will finish with a review of our financial results. The team will then be available to take your questions. And with that, I'll pass the call over to Cyrus.

Thank you, Alan, and good morning, everyone. Thanks very much for joining us on the call today. We've had a great start to the year. Adjusted EBITDA increased over 25% compared to last year, and our adjusted EBITDA margin increased over the year from 17% to 19%, so a pretty significant uplift. It's been an eventful few months in the capital markets, as you know. Fortunately, our business has not been affected by recent U.S. regional banking issues, and governments have acted quickly to stabilize confidence in the broader financial system. We're now seeing banks begin to selectively lend for buyout activity again. Lawn deals in the U.S. have tightened, and European credit markets are also slowly recovering from the fallout. A flight to quality credit is serving our business as well. The market price of debt at our largest companies like Clarios, Scientific Games, and CDK Global, to name a few, is trading at or near par, and we've been able to refinance existing borrowings and issue new debt at good terms. As an example, just a few weeks ago, Clarios sought to refinance $1.5 billion of its debt in order to extend its maturities through 2030. Not only was it successful in doing so, but the exceptional demand for its debt enabled us to upside this offering to $3.5 billion at an overall cost of about 7%. We achieved this with virtually no increase to the overall cost of its borrowings. This is a phenomenal outcome and evidence of financing available for high-quality businesses like the many that we own today. Turning to capital recycling, as you know, it often takes several years for us to implement improvements, reposition our operations, and build value in our businesses, all else being equal in the short term. This means the earnings and cash flows of businesses we buy are usually lower than those of the more mature businesses we sell. To put this in context, we're working to close the sale of Westinghouse, our nuclear technology services provider, for a total enterprise value of about $8 billion. We used proceeds from Westinghouse to fund the acquisition of three great businesses last year, Scientific Games, CDK Global, and La Trobe. And over the next few years, we expect to drive improvements to these businesses which should nearly double the share of free cash flow we are giving up from the sale of Westinghouse. In the near term, the Westinghouse sale proceeds will repay the financial obligations we assumed to fund our substantial acquisition activity last year, which will support our free cash generation later this year. So all in all, our business fundamentals remain strong, We're making great progress on initiatives to continue building value in our operations. And that's a great segue to pass the call over to Mark, who has joined us today to talk about all the great things we're doing to drive growth at Clarios.