Gary Ho

Gary Ho asked for details on Clarios' insurance contract for 45X tax credits, specifically if it provides payment if IRS processing is delayed. He also sought an update on the monetization environment for mature assets like BRK and La Trobe, and the current IPO market outlook.

Answer

CFO Jaspreet Dehl confirmed a substantial amount of Clarios' 45X credits were insured, providing a backup if IRS payment is delayed, though they expect direct payment. Head of Global Business Operations Adrian Letts noted a strong monetization environment, highlighting BRK's exceptional performance and potential IPO in Brazil, and La Trobe's strong inflows and re-engagement with parties for capital return.

Gary Ho asked about Brookfield Business Partners' commitment to renewing its buyback program, given that the stock still trades below its $54 NAV and the current $250 million NCIB program is nearing completion.

Answer

Jaspreet Dehl, CFO, acknowledged the stock's strong performance but noted it remains below intrinsic value. He confirmed commitment to completing the current $250 million buyback program and stated that the NCIB was renewed in August with significant capacity. He indicated they would remain opportunistic for further repurchases, balancing buybacks with corporate debt reduction and growth investments.

Gary Ho asked about the strategic rationale behind selling Westinghouse given its subsequent success, whether Brookfield Business Partners would consider holding assets longer, opportunities to further monetize assets into the new Brookfield Private Equity Fund, and details on strategic investments in CDK Global and their financial impact.

Answer

Anuj Ranjan, Chief Executive Officer, explained that Westinghouse was sold after a successful operational transformation, aligning with their strategy to compound value by recycling capital into new opportunities. He noted that while BBU has optionality for longer-term holdings, their core focus remains on early-stage margin improvement and strategic exits. Regarding the Brookfield Private Equity Fund, he mentioned positive initial results and potential future opportunities depending on BBU's share price and fund inflows. Adrian Letts, Head of Global Business Operations Team, and Jaspreet Dehl, Chief Financial Officer, discussed CDK Global's continued investment in modernizing technology, noting that margins are ahead of acquisition levels, churn has stabilized, and the bulk of the year-over-year decrease in results is related to technology spend.

Gary Ho asked if the success of Westinghouse post-sale makes Brookfield Business Partners consider holding assets longer. He also inquired about future opportunities to monetize BBU assets into the new Brookfield Private Equity Fund and the criteria for selecting such assets. Additionally, he sought details on the strategic investments and product enhancements at CDK, their impact in the quarter, and projected future spend.

Answer

CEO Anuj Ranjan explained that Westinghouse's success post-sale is a testament to BBU's operational transformation playbook, emphasizing their goal to make businesses so good that others find value. He noted BBU's optionality for longer-term holdings but reiterated the focus on compounding value through early margin improvements and capital recycling. Regarding the BP Fund, Anuj confirmed its positive progress and potential for future asset monetization depending on BBU's share price and BPE inflows. Adrian Letts, Head of Global Business Operations Team, stated that CDK's current quarter reflects continued investment in technology modernization, with margins ahead of acquisition and churn stabilized. CFO Jaspreet Dehl added that the bulk of the year-over-year decrease in CDK's results was due to technology spend.

Gary Ho of Desjardins Capital Markets asked for details on the use of AI to improve productivity, the financial impact of the recent tax bill, and the strategy regarding share buybacks, particularly the spread between BBU and BBUC shares.

Answer

CEO Anuj Ranjan provided several examples of high-impact AI projects at Clarios, EverRise, CDK, and Nielsen, detailing significant cost savings and efficiency gains. CFO Jaspreet Dehl confirmed the new tax bill is a net positive, benefiting businesses through accelerated depreciation and R&D deductions, and stated the company remains committed to its buyback program, viewing the share price as accretive.

Gary Ho of BMO Capital Markets inquired about the quantifiable near-term EBITDA impact of tariffs on DexKo, its competitive positioning, the status of the Clarios 45X tax credit filing, and clarification on plans to accelerate capital returns to shareholders, including potential monetizations.

Answer

Adrian Letts, Head of Business Operations, stated that DexKo's performance was on plan with improved margins, and it is well-positioned to manage tariff impacts relative to competitors. CFO Jaspreet Dehl confirmed the Clarios tax filing is processing normally and the benefit is expected in the near term. CEO Anuj Ranjan added that the company will continue its balanced approach of deleveraging, buybacks, and new investments, leveraging creative monetization strategies without commenting on specific assets.

Gary Ho asked about the market opportunity for Clarios's connected service solutions, Brookfield Corp.'s potential participation in the BBU buyback, BBU's corporate debt levels post-Clarios distribution, and the strategy to protect capital in the challenged Healthscope business.

Answer

Mark Wallace, CEO at Clarios, described how its service for a European fleet operator reduces engine idling by 40% and noted the pipeline is expanding to the U.S. Jaspreet Dehl, CFO, clarified the buyback is for BBU to repurchase shares in the open market and that post-monetizations, the pro forma liquidity of $2.7 billion is a comfortable level after paying down corporate debt. She also explained that for Healthscope, the focus is on operational improvements and negotiations with insurers and government to protect invested capital.

Gary Ho questioned the performance and outlook for DexKo amid market softness, the status of monetization plans for Clarios, and whether disclosing asset valuations could mitigate stock volatility.

Answer

Adrian Letts, a managing partner, stated that DexKo is managing costs effectively and expects the market to recover through late 2024 and into 2025. CEO Anuj Ranjan expressed encouragement about progress on all strategic alternatives for Clarios, including an IPO. CFO Jaspreet Dehl explained that BBU provides all the components for investors to calculate asset values themselves and that providing a specific NAV number is unlikely to have made a difference.