Brookfield Business Corporation

Welcome to the Brookfield Business Partners first quarter 2024 results conference call and webcast. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be a question and answer session. 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. We'll begin the call today with an update on our business and initiatives from Anuj Ranjan, our chief executive officer. Anuj will then turn the call over to Adrienne Letts, managing partner on our business operations team, who will share some perspective on our value creation initiatives and progress at Dexco. We'll end the call with Jaspreet Dal, our chief financial officer, discussing our financial results for the quarter. The team will then be available to take your questions. And with that, I'd like to now pass the call over to Anuj.

Thanks, Alan, and good morning. Thank you all for joining us on the call today. We had a good start to the year. Adjusted EBITDA was $544 million, and our overall adjusted EBITDA margin increased from 19% to over 20% for the quarter. We're pleased with these results and the continued performance of our largest and highest quality operations, which are contributing to our resilient earnings. Apart from our financial results, we're continuing to make good progress on our capital recycling initiatives. Since the start of the year, we've generated about $300 million of proceeds through both distributions from our operations and agreements we reached to sell two of our smaller businesses. We have now monetized a total of 20 businesses since taking BBU public and generated about $6 billion of proceeds from these sales. realizing a three times average multiple on those investments and a composite IRR of over 30%. These strong returns clearly demonstrate our track record of building real intrinsic value in our businesses. As you're aware, it's been an eventful few months in the global capital markets. Markets still seem to be functioning well, but sticky inflation and increased geopolitical tensions have contributed to more volatility. That being said, activity levels seem to be picking up. At BBU, we continue to be able to refinance our operations and have favorable access to capital. Just last month, with Brand Safeway, our work access services operation, we completed the repricing of a $1.3 billion term loan and ultimately reduced the interest rate spread on the debt by 100 basis points, saving us $13 million annually. Strong demand also allowed us to upsize the offering by $150 million. In some cases, we've been able to prudently up-finance borrowings to fund distributions, which we did at our Canadian Entertainment operation during the quarter, and expect to see more opportunities like these as the earnings of our largest operations continue to increase. Stepping back, our global presence and the types of businesses we own give us a very unique vantage point to stay on top of emerging opportunities across the world. The biggest of these today seems to be the rapid rise of artificial intelligence or AI. What we've been doing over the last few years is exploring where machine learning can benefit our business, experimenting with ideas and building capabilities. We created an AI value creation office comprised of leaders across the organization with the purpose of leveraging the best ideas and the scale of the broader Brookfield ecosystem to build real value in our business. It's early days. But the number of ways we're using AI across our operations are tangible and growing. To give you a few examples, our dealer software and technology services business recently launched an AI virtual assistant tool that uses machine learning, natural language processing, and generative AI to automate certain tasks for its customers. Other operations are exploring more opportunities to automate processes and improve efficiency. such as our lottery services business, which is using AI tools to draft responses to new customer proposals. Our residential mortgage insurer, on the other hand, is developing predictive models based on decades of proprietary housing data to help it assess risk and adjust its underwriting criteria. The pace of change being driven by AI is also giving rise to new risks, and our primary goal is to ensure we are identifying those areas and factoring the risk of disruption into everything we do. Over time, the integration of AI as a productivity tool is likely to enhance virtually every aspect of our business and our job is to stay on top of it. But what AI is unlikely to do is replace the human judgment that underpins our investment philosophy. I now want to pass the call over to Adrian Letts. Adrian joined us about two years ago as a senior leader on our business operations team and has been working closely with Dennis looking after the global operations of our business.