Brookfield Business Corporation

Welcome to the Brookfield Business Partners third 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. Now, I'd 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, Dennis Turcotte, our Chief Operating Officer, and Jaspreet Del, our Chief Financial Officer. Cyrus will lead off the call today and provide an update on our strategic initiatives. Dennis will then provide some perspective on the current operating environment, and Jaspreet will finish with a review of our financial results. The team will be then available to take your questions. And with that, I'll pass the call over to Cyrus.

Thanks, Alan. Good morning, everyone, and thanks for joining us today. We had a solid third quarter. Adjusted EBITDA increased to a record $655 million, and our adjusted EBITDA margin improved to 19%, which is up more than 100 basis points compared to a year ago. We're pleased with these results and the continued strength of our business. Our largest operations benefit from stable demand even in an uncertain environment. And this means that the volumes and activity levels for the most part have held up across our business. And the progress we've achieved on our business improvement plans is contributing to increased margin performance. While higher rates are challenging for many businesses, a flight to credit quality is continuing to provide us with opportunities to refinance our existing borrowings at reasonable costs. In fact, last month, CDK Global, our dealer software and technology services operation, repriced its $3.6 billion term loan at an all-in cost, which was about 50 basis points cheaper than the cost of debt that was replaced. In total, we've refinanced nearly a third of our non-recourse borrowing since the beginning of this year, and we've done so with effectively no increase to our overall cost of debt. We're also continuing to progress our capital recycling program. This morning we received the final regulatory approvals needed to complete the $8 billion sale of Westinghouse, and we now expect to close the transaction next week. We'll generate about $1.5 billion of proceeds from the sale of our interest in the business, half of which we'll use to repay the preferred securities we issued to Brookfield Corporation last year, and the balance will go toward reducing the borrowings on our bank credit facility. We also recently reached an agreement to sell a portion of our interest in EverEyes, our technology-enabled business outsourcing operation. We acquired EverEyes just over two years ago and we've made substantial progress growing the business and improving margins. The sale of our interest values the business at just over a billion dollars which represents 3.5 times what we paid for the business just two years ago. We'll generate around $120 million of proceeds for the interest we sold, and we'll continue to own about 17% of the business alongside a new partner that can support its growth. Separate from any monetizations, And despite higher interest costs, our operations are generating substantial cash flow that we can reinvest to support growth or use to deleverage. To put this in context, Clarios, our advanced energy storage operations, is generating more than $500 million of free cash flow each year. And that's after investing in new capacity to support the growth of its advanced battery operations. While this cash could be distributed to BBU and our partners, the business has been deleveraging, and during the quarter, it paid down an additional $700 million of debt. As a result, the net leverage of the business has come down to around 4.5 times EBITDA compared to 6.5 times when we acquired it. Stepping back, BBU is a very valuable business today. Yet despite the progress we've achieved, the trading performance of our units on any relevant metric is materially disconnected from value. To put this in context, today we're trading at less than eight times annual EBITDA and a significant discount to the broader S&P 500 that's trading at 13 times. Businesses that generate similar margins to ours are trading closer to 15 times. The discount in the trading performance of our units and shares matters greatly to us because we know it matters to each of you. We are committed to doing everything we can to continue enhancing the value of our business, including continuing our buyback program, which is highly accretive to value at current prices. With that, I'm going to hand it over to Dennis, who will give you an update on our business operations.