3rd Quarter Results...look fantastic. FFO per unit doubled over last year.
Brookfield Business Partners Reports 2018 Third Quarter Results
November 02, 2018
BROOKFIELD, NEWS, Nov. 02, 2018 (GLOBE NEWSWIRE) -- Brookfield Business Partners L.P. (NYSE: BBU) (TSX: BBU.UN) (“Brookfield Business Partners”) announced today financial results for the quarter ended September 30, 2018.
“We reported strong results for the third quarter, benefitting from increased scale and diversification of our business as a result of acquisitions, organic growth and improvements we have made to our operations,” said Cyrus Madon, CEO of Brookfield Business Partners. “With the acquisition of Westinghouse Electric Company, we have entered the Infrastructure Services segment, which has significant long-term growth potential for our business.”
Brookfield Business Partners reported Company FFO for the three months ended September 30, 2018 of $170 million, or $1.31 per unit (excluding incentive distribution), compared to $46 million, or $0.42 per unit in the same period of 2017. Company FFO in the quarter benefited from significantly improved results in our industrials segment and the incremental contributions of Westinghouse and Teekay Offshore. Net income attributable to unitholders for the quarter was $93 million compared to $9 million in 2017.
Operational Update
Our business services segment generated Company FFO of $26 million during the quarter, compared to $40 million in the third quarter of 2017. Previous year results included our U.S. brokerage joint venture which was sold in the second quarter of 2018. Results also benefited from strong performances at our gaming operation, One Toronto, and at BGIS, our facilities management business, which performed well across all regions. Our construction services business performed well in Australia and the UK, but results were weak in the Middle East where we are completing projects and refocusing into a smaller operation. New business activity in construction services brought the company’s backlog at the end of the quarter to approximately $8 billion.
Our infrastructure services segment generated Company FFO of $49 million during the quarter. This included a partial contribution from Westinghouse following our acquisition of the company, together with institutional partners, on August 1st. Brookfield Business Partners’ share of the $920 million equity investment was $405 million for a 44% ownership of the business. The business performed well during the two months since the closing of the acquisition and benefited from a one-time recovery on a project.
Our energy segment generated Company FFO of $35 million during the quarter, compared to a loss of $5 million in the third quarter of 2017. Teekay Offshore and Quadrant contributed positively to our results this quarter. We exercised an option during the quarter to take a controlling interest of 51% in Teekay Offshore’s general partner. Prior year results include a $16 million loss on the sale of a small oil and gas producer in Western Canada.
Our industrials segment generated Company FFO of $76 million during the quarter, compared to $22 million in the third quarter of 2017. Company FFO increased largely due to significantly higher contributions from GrafTech compared to the prior year and the first full quarter of contribution from Schoeller Allibert, our newly acquired returnable packaging manufacturer. During the quarter we realized proceeds of $668 million ($230 million for Brookfield Business Partners) from a secondary offering and concurrent share buyback at GrafTech.
Strategic Initiatives Update
Quadrant Energy
In August we signed an agreement to sell Quadrant, our Australian oil and gas company, for $2.15 billion. Brookfield Business Partners’ net share of the proceeds is expected to be ~$125 million. In addition to the sale consideration, the agreement includes future upside on select exploration interests.
Imagine Communications
In October, together with institutional partners, we acquired a 50.1% controlling interest in Imagine Communications, a provider of high speed fixed wireless broadband. The company is an established business using a proven technology to roll out a national high-speed broadband solution in rural areas of Ireland. Brookfield Business Partners will own 30% of the business.
Cardone Industries
In October we originated a $240 million senior secured term loan to Cardone Industries, a leading remanufacturer of automotive parts in North America. Brookfield Business Partners’ share of the loan was $50 million, with the balance taken by institutional partners. The financing was used to partially refinance existing indebtedness and provide liquidity to fund further growth.
Distribution
The Board has declared a quarterly distribution in the amount of $0.0625 per unit, payable on December 31, 2018 to unitholders of record as at the close of business on November 30, 2018.