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Presentation

Operator: Welcome to Brookfield Business Partners’ Second 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. [Operator Instructions] I would now like to turn the conference over to Alan Fleming, Head of Investor Relations. Please go ahead, Mr. Fleming.

Alan 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 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 are Cyrus Madon, our Chief Executive Officer; Anuj Ranjan, President and Jaspreet Dehl, our Chief Financial Officer. We’re also joined today by Pat McHugh, the Chief Executive of Scientific Games or rather services and technology operation.

Cyrus will lead off the call today and provide an update on our strategic initiatives followed by Anuj who will discuss the evolution of our technology strategy. Patrick will provide an update on scientific games and Jaspreet will finish with the review of our financial results. The team will then now be available to take your questions. And with that, I’ll pass the call over to Cyrus.

Cyrus Madon: Thanks Alan, good morning everyone. Thanks for joining us on the call today. We had a good quarter. Adjusted EBITDA increased 15% over the last year and our adjusted EBITDA margin continues to improve. Our largest businesses are performing well. Most of these are industry leaders that are critical to their customers. They can’t be easily replaced and they have strong pricing power which is really important during periods of inflation and this has all contributed to their stable earnings and resilient cash flows. While the operating environment still has its challenges today, things seem to be normalizing. Energy costs have eased in most cases, in most cases, material prices are down from last year. Freight rates are well below where they were below peak levels and the worst of the global supply chain issues seem to be behind us.

Labor markets, though, are still very tight. Although wage rates are stabilizing in most regions, and we’re seeing slight reductions in absenteeism, and turnover rates across our businesses. For the most part, volumes are holding up we have some pockets of softness, but for the most part they’re holding up. The pricing we put in price placed across many of our operations is contributing to resilient margins. Global Capital markets are also turning the corner. The risk of material increases to short term interest rates is lower as inflation subsides, and longer-term rates are still at a reasonable level. Credit markets are opening for higher quality issuers to extend or refinance existing borings, which is a benefit for most of our businesses.

In fact, over the last few weeks, we refinanced about $5 billion of debt at four of our businesses. Four of these refinancing’s were done at an all in – three of these refinancing’s were done at an all in cost slightly less than the cost of debt that was replaced. We’re also continuing to make progress on sales processes. Greenergy, our road fuels distribution operation, reached an agreement to sell its North American gas station assets during the quarter. The sale will deleverage that business enabled it to focus on the growth of its European renewable fuels business and generate about $75 million of proceeds for us. In July, we sold a majority of Cardone, our automotive aftermarket parts remanufacturing operation to a larger competitor.

Cardone was subscaled, and it struggled to fully recover from the severe impacts of the pandemic, merging it with a larger competitor taking back a royalty interest on the performance of a bigger business was the best path forward for a tough investment. Finally, the sale of Westinghouse remains on track, we’re working through the remaining regulatory approvals, we’re targeting to close the transaction in the next several months. All-in-all, we’re pleased with our continued progress. Our operations are well positioned as we look forward, we may have some opportunities to acquire high quality businesses from owners who don’t have access to capital, as the impact of recent rate increases continue to work their way through the system. With that, I’m going to hand it over to Anuj to talk about the evolution of our strategy in the technology in technology and the recent acquisition of Network International.

Anuj Ranjan: Thanks Cyrus. Good morning, everyone. Most of our value creation over the years has been achieved by acquiring high quality industrial and services businesses at reasonable prices and improving their operating performance. The returns we’ve generated over the last two decades have been excellent. And we’re now applying this very same playbook to the technology sector. We’re targeting mature software and technology services businesses that have all the same qualities which Cyrus talked about earlier. These are market leaders with strong pricing power and durable competitive positions, which provide products and services that customers need in any environment. Over the past few years, spent a lot of time building a dedicated capability to grow our technology presence.

We started on a smaller scale, acquiring businesses like Everise, a tech enabled customer experience company for large global healthcare and technology clients. In a short amount of time, we’ve tripled EBITDA with business by scaling its servicing capabilities, growing its addressable market and increasing its margins. There’s good interest for this business from potential buyers, and we think an eventual sale is likely to generate multiples of what we bought it for. More recently, we’ve acquired larger scale technology businesses. As you know, last year we acquired CDK Global, our dealer software and technology services operation. Since then, we’ve made excellent progress in our value creation plans, improving margins by 10% and increasing annualized EBITDA by over $200 million.

And in June, we agreed to acquire Network International for about $3 billion. Network is the market leading payment processor in the Middle East. The business provides services to support the financial backbone of the economies in which it operates. Technology allows businesses and governments to securely process both physical and online payments. It also acts on behalf of banks to manage transactions for 18 million credit and debit cards. The business has all the hallmarks of an essential service provider and a strong track record, supporting by a leading technology stack and relationships with more than 150,000 enterprise customers. Payments are an enormous industry benefiting from strong secular tailwinds. The global digital payments space is more than $2 trillion today and growing at an estimated 10% annually.

The shift in consumer spending from traditional cash to digital and online transactions is underpinning the strong industry fundamentals and growth. The opportunity for us is to combine network with Magnati, the Middle East payment processor we acquired last year. These are two highly complementary businesses with limited overlap and customer footprints. We expect that combining them will result in meaningful operational synergies and create a platform with significant scale that is the clear industry leader in the region. With that, I’ll pass it off to Pat and be available to take your questions.

Patrick McHugh: Thank you, Anuj. Good morning everyone. Scientific Games is a trusted leader in the lottery industry, offering a broad suite of innovative technology products, analytics and services. We have a truly global reach serving over 140 customers across 50 countries. Our customers view us as an essential service provider and an important strategic partner. As a result, we’ve been able to foster long-term relationships with government lotteries, many of which have developed over multiple decades. Fundamentally, lotteries exists to support funding for good causes. On an annual basis, lotteries around the world generate over $100 billion of proceeds, which are directed at important social initiatives, including health care, infrastructure development, education, and senior and veteran services.

Lotteries have been around for hundreds of years, a little known fact that scientific games have the largest collection of historic lottery tickets and artifacts, some of which have been signed by the likes of George Washington and Thomas Jefferson. Lotteries have funded much of the early investment infrastructure investment in the U.S. and other nations. We expect these funding sources to become increasingly important, particularly as governments around the world continue to deal with physical challenges. At Scientific Games, we have designed comprehensive solutions to support the entire lottery ecosystem. Our largest segment is instant products, where we provide products and services to scratch card lotteries, including marketing, data analytics, logistics and printing.

We are by far the market leader in instant products with approximately four times the market share of a nearest competitor. Our success in this segment is partially attributed to our unique Scientific Games enhanced partnership model or SGEP. A comprehensive and value added solution for lotteries, which has proven to deliver above market performance while generating increased economics for scientific games. Complementing our instant products is our systems and ilottery segments. Through these segments, we provide essential technology and hardware systems that are the backbone for many lottery programs around the globe. We also have a full suite of digital capabilities to support the development and operation of government sponsored ilottery programs.

The combination of our unique differentiated solutions and attractive industry fundamentals creates a compelling business model with favorable margins, low on-going capital requirements and stable recurring revenue. Our earnings are underpinned by a resilient lottery sales, which have grown consistently across economic cycles over the past 30 years. We’re also well positioned to meet strict regulatory framework and oversights mandated by government lotteries, which require high standards of service and security. We believe these attractive characteristics position the business well for future growth. Over the last year, we focused on leveraging our strong commercial offering to secure several contract wins. These include new contracts to provide products, services and technology to global operators, including the U.K., Vietnam, and Brazil.

Each of these is strategically important wins for the business, which will allow us to greatly expand our global competitive position. In the U.K., we were able to secure contracts to support the entire lottery ecosystem across both retail and digital channels. In Vietnam, we secured a National Instant products contract by demonstrating the success of our SGEP program across the world. In Brazil, we secured a Greenfield opportunity in a country which has limited existing lottery offerings, positioning as well for larger upcoming contracts. Together, these contracts should increase annual EBITDA by 10% once fully ramped. Over the past 12 months, we’ve also focused on addressing short-term headwinds related to input cost inflation and electronic component availability.

To accomplish this, we’ve implemented a series of targeted actions which included one; executing inflation faster mechanics through existing — that existed in our contracts, two; repricing contracts ahead of inflation. Three, renegotiating key vendor contracts as input costs have started to decline four, advanced ordering and long lead components and five, strengthening our supply chain to increase diversity and flexibility. We believe the worst of the headwinds are behind us and expect the full benefit of these actions to be realized by 2024. We plan to execute on the next phase of growth through four key pillars, converting customers to our high performing SGEP model, securing new customers and markets, expanding our ilottery offering and executing on identified operational enhancements.

ilottery is a particular area of focus where we expect meaningful growth from the adoption of government run lottery programs. In simple terms, ilottery is the digital equivalent of physical lotteries, providing consumers with access to lotteries on their smartphones, tablets and computers. ilottery is still in its infancy in the U.S. today with only 11 active programs. These programs have proven to be highly successful generating growth, which is interim incremental to the existing lottery sales. Over time, we expect broader adoption of ilottery programs. We believe we’re well positioned to capitalize on this growth by virtue of our industry experience, which includes supporting three of the top ilottery programs, our leading capabilities and the long-term relationships we’ve developed with many of the existing physical lottery programs.

Overall, it’s an exciting time for scientific games. Our unique value proposition has been resonating with customers, as evidenced by the recent commercial wins. The success is creating momentum for future opportunities, including significant anticipated expansion in ilottery. As a result of these efforts, we’re primed for sustained and profitable growth as a leader in the technology driven omni-channel solutions for government lotteries around the world. With that, I’ll hand it over to Jaspreet. And I’ll be available to answer questions during the Q&A.

Jaspreet Dehl: Thanks, Pat and good morning, everyone. Adjusted EBITDA for the second quarter was $606 million and adjusted EFO was $185 million. Looking at segment performance, our industrial segment generated second quarter adjusted EBITDA of $196 million compared to $204 million last year. Strong performance at our advanced energy storage operation was offset by lower contributions from our smaller, more cyclical natural gas producer and graphite electrode operations. Adjusted EFO was $63 million and included the impact of higher interest and higher tax expense at our advanced energy storage operation. Performance our advanced energy storage operation remains strong, generating increased adjusted EBITDA of $113 million for the second quarter.

Results benefited from improved technology mix driven by the growing demand for higher margin advanced batteries and the impact of pricing actions, which are more than offsetting inflationary pressure. Our engineered components manufacturing operation is performing well and contributed $44 million to adjusted EBITDA. While volumes have softened, margins continue to improve driven by on-going cost saving and commercial optimization initiatives. Moving to infrastructure services, adjusted EBITDA for the second quarter increased to $216 million from $205 million last year. Results benefited from improved performance at work access services operation and higher contributions from our lottery services operations. Adjusted EFO was $88 million and included a $90 million impact from higher interest expense at our nuclear technology services operation, primarily due to higher borrowings and higher rates.

Performance at our work access services operations have improved meaningfully since last year, generating adjusted EBITDA of $31 million in the quarter. We’re working closely with management on accelerating initiatives to reduce costs, optimize commercial terms, and reposition the business in the current environment. On modular building leasing services operations generated $41 million of adjusted EBITDA in line but last year. Utilization of our units is mixed, the U.K. continues to be soft, given a downturn in broader construction activity, while Germany France and Asia Pacific have remained resilient. Strong demand for higher margin value added products and services is contributing to performance. Finally our business services segment generated second quarter adjusted EBITDA of $223 million, which increased from $153 million last year, primarily driven by the contribution from our dealer software and technology services operation.

Adjusted EFO was $119 million and includes the impact of a $15 million increase in taxes at our residential mortgage insurer. Our dealer software and technology services business generated adjusted EBITDA of $56 million. Performance continues to benefit from growth of the businesses subscription based service offering and progress achieved on value creation initiatives to optimize the organizational structure. Our residential mortgage insurer generated $46 million of adjusted EBITDA. Results in normalizing compared to exceptionally strong levels last year, given the impact of higher mortgage rates on borrowers. Mortgage delinquencies and loss ratios remained low compared to historical levels, but are expected to revert to the long-term averages over time.

Our Australian healthcare services operation generated EBITDA of $16 million, while activity levels improved higher labor and medical and surgical costs impacted overall performance during the quarter. Turning to our balance sheet, as Cyrus mentioned, over the last few weeks, we’ve completed a number of refinancing’s within our business. To give you a bit more color, in July, we completed a 1.2 billion refinancing at One Toronto, our GTA casino business, and a $300 million refinancing at DexKo. This week, we priced about a $750 million refinancing of a term loan at CDK Global, our dealer software business. All of these were done at a cost of about 8%. In addition, we refinanced about $2.7 billion of BrandSafway, our work access solutions business, their existing debt.

This was done at about 1% higher cost, and allowed us to extend maturities of the debt. We did put capital into the business, our share was about 195 million. The additional capital we provided will delever the business and give it flexibility to continue to execute on its growth plans. And finally, we ended the quarter with approximately $2.2 billion of corporate liquidity after accounting for plan funding commitments, and expected proceeds from announced to business sales. With that, I’d like to close out our comments and turn the call back over to the operator for questions.

Operator: Thank you. [Operator Instructions] And our first question comes from the line of Gary Ho with Desjardins Capital Markets.

Gary Ho: Thanks and good morning. Maybe I’ll just start off with a question for Cyrus. Just wanted to get an update on what you’re seeing on both the deployment and monetization side, just hearing from other corporates that there’s a bit of a pickup in activity as of late. Just want to hear your thoughts. Perhaps you can cut tie that into kind of where you stand with monetization for Clarios and MBRP as well.

Cyrus Madon: Yes, so look, I would say as a general comment that credit markets have definitely improved, you can see it in the activity. The substantial activity we’ve had, and leveraged finance is starting to become available for transactions, which will all ultimately lead to more activity in the market. I’d also, I also think, many sponsors, many private equity sponsors are under some pressure from their limited partners to generate proceeds. So there’s some motivation to transact. As for our own activity, we’ve told you what we were up to. We don’t have any specific timeline for BRK and Clarios. They’re both excellent candidates for an eventual monetization, we’re making progress in both of them. But there are still some things we want to do in each of those businesses before an eventual monetization. We don’t have any specific timeline there.

Gary Ho: Okay, great. Thanks for the color. And then my second question we’ve prepared just on the scientific games, specifically the [Indiscernible] wondering if you can elaborate you mentioned 11 programs for the ilottery right now do you envision kind of most of the U.S. states would move to having a program over time, just want to gauge the potential market growth opportunity? Do most of the primary provider also service both the physical and the ilottery side or are there other players that only cater to the ilottery products? And maybe just lastly, just competitive landscape? I know Polaroid and others are in the space, just wondering if they’re kind of fairly rational in terms of pricing?

Cyrus Madon: Yes, great, great question. We’re incredibly focused on expanding the ilottery presence, but our position in the market and have continued to support the passage of legislation across the U.S. or government relations team working with our government partners to educate them on the value of, of ilottery. So eventually, we do see the market continuing to open in all states at some point. We expect we’ll be selling ilottery along with traditional retail sales. And we’ve had great performance on that, every place where we — the industry has introduced, internet lottery sales, retail sales have grown. We’ve had great history of that. I think we’re uniquely positioned to answer your question competitively. And in being a full line provider being able to provide the entire ecosystem for lotteries to leverage our analytics and consumer insights to drive performance across seamlessly across the retail and digital channels.

So that’s been a key differentiator for us. So the traditional systems providers do provide ilottery. I think our performance and in particularly being the market leader in instant win games is gives us a unique differentiator. There are some new entrants, just one in particular, that is pure play ilottery. And I think our position, particularly in being able to service the full ecosystem seamlessly for lotteries gives us a very unique advantage. So we’re very bullish on the opportunity.

Gary Ho: Okay, great. And then maybe just last question there for Cyrus or Jaspreet, surprised to hear the refi of three of the four recent investments at rates below the last issue, kind of what’s driving that? And what were the maturity dates on these? And maybe just a general comment, can you just remind us, the cost of borrowings and the length the maturity overall?

Jaspreet Dehl: Yes, I’ll take that. And then Cyrus can add to it. So, we’re, we’re really pleased with the outcomes on the refinancing that we’ve been able to accomplish. And really, it’s a testament to the types of businesses that we own. We’ve, we’ve said this before, but these businesses are, have strong market positions that cash flowing, and they perform well, in any environment. And, quite frankly, if they’re, the credit investors really liked this, these businesses, which is supported refinancings. And, we’re seeing a real differentiation now, between the high quality businesses versus businesses that are not as high quality around the availability of financing. So I think being able to do these refinancings, at the rates that we’ve been able to accomplish, is really a testament to the types of businesses that we own and that we’ve refinance.

In terms of the overall cost as Cyrus said, three of the four that we did more recently, were done at an all in cost lower than where they were. And DexKo and CDK both of these, we’ve taken financing, to do some tuck-in acquisition at CDK, we did a refinancing to on a on a smaller piece of that, about 750 million of the total cap stack. And again, it was just the type both of these businesses have been performing really well. And we were able to refinance at about 8% all in cost. And then sorry, just on your last piece on the maturity so all of the maturities are in that five to seven year range.

Patrick McHugh: And the only thing I’d add Cyrus here is there is a very clear flight to quality that we’re observing in the markets and high quality issuers, meaning high quality businesses can raise capital, and then businesses that aren’t so over levered can also raise capital. The flip side of that is we’re seeing a lot of good companies that are over layered [Ph] or companies that aren’t performing so well, really struggling. And their yields have really ballooned out. That’s probably going to create quite a bit of opportunity for new investments as well.

Gary Ho: Okay, thanks for those, those answers. Thank you so much.

Operator: Thank you. One moment please for our next question. Our next question comes from the line of Andrew Kuske with Credit Suisse.

Andrew Kuske: Thanks. Good morning, I think my first question is really directed to Pat. And it’s just on the ilottery transition, as you go from a more physical sales to or physical model to an ilottery model. Does that ultimately involve margin expansion? And are you in the sort of transitionary phase where you’re really running both systems right now? Or could be a bit more expensive? But ultimately, you get to an end state that just has higher margins?

Patrick McHugh: Yes, great, great question. So let me start with a broader view of ilottery and how it impacts which I think may be part of it. So we’re finding very consistently when we expand into, into ilotteries that we see growth in the overall portfolio. A great example is in Pennsylvania, where we launched one of the most successful ilottery programs in the industry, in 2018. That quickly grew to a billion dollars in sales via the ilottery program. In parallel with that operating the retail lottery systems, we grew that business, from $4billion to $5 billion by 20%. So that, over that period of time, the lottery is gone from $4 billion to $6 billion. So it shows the ability to drive that. We personally as we’ve done a carve out from our previous structure, we had shared resources across our iCasino and ilottery business.

We’re much more nimble now, we expect to continue to see efficiencies and economies of scale with just focusing 100% on lottery pureplay. And hand as we scaled the business, we’ve continued to expect to see margins increase in that area as well. Hopefully that answers your questions.

Andrew Kuske: That does, that’s excellent. I’m going take the second question a different track and maybe, to Cyrus, just on the market environment. And you mentioned the refi that you’ve done and the desire for high yield to go to more quality credits, and how that’s helped you. More broadly, where are you seeing just sort of better investment opportunities on the debt side, over the cohorts or really equity, equity market dislocations that may exist?

Cyrus Madon: So what we see are many, many, many companies that are, continue to be I’ll call – use the word orphaned in the capital markets from an equity perspective, and some of them are great businesses trading at really good valuations. That’s an opportunity set. And we found opportunities there before and we continue to look there. The other side, as I mentioned earlier, there, there are a lot of businesses that are perhaps over levered, perhaps not hitting their full potential in terms of margins and cash flows. And many of them are struggling. In fact, I can’t give I can’t recall the exact number. But there are, I recently saw a list with a couple of 100 names of different businesses that had very high yielding debt like double digit plus yielding yield to worse.

And the owners of those businesses are going to need help to delever if they don’t have the wherewithal to come up with the capital themselves. So that’s really where we’re focused today. I would say on stressed, perhaps distressed situations.

Andrew Kuske: Okay, appreciate that. Thank you.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Jaeme Gloyn with National Bank.

Jaeme Gloyn: Yes, thanks. Question on SU Order. Maybe a couple. First one, I guess. I would, I would have thought that ilottery might cannibalize the physical retail and currently in Pennsylvania the example is it’s otherwise. I guess, maybe a little bit of color as to like, why do you think that is and do you think that’s maybe just a temporary outcome and eventually we’ll start to cannibalize physical just a little bit more of your, your perspective on that dynamic.

Cyrus Madon: Sure. Great, great question. So the end, I’ll cut to the chase. And the answer is no, we don’t. As you’ve noted, it doesn’t cannibalize — unexpected. In the long-term we cannibalize either we think it’s incremental. And there’s a long history outside the U.S., Europe, in particular with lotteries and selling on the internet, are for quite a period of time more than more than a decade, where we’ve seen those lotteries that introduced internet and mobile sales accelerated faster on the retail sales of lotteries that hadn’t here in the U.S. We’re the first states have been live for about seven years the same dynamic. They’ve hit record retail sales, and outpaced the industry, those lotteries have launched Taiwan, there’s a couple reasons for that in our belief.

Number one is broad appeal of the products of lottery products. We find both in the retail segment and digital. When you expand points of distribution and make it easier to purchase a product, we see increase in sales without cannibalization. And again, that is true at retail and in digital, more than 50% of adult, the adult population places the lottery, broad appeal to a small purchase. And distribution expanded distribution makes it easier. The other piece and I think this is consistent with any consumer product is that when lottery start reaching out via internet, you get more presents digitally, digital advertising awareness of the product. And so you’re not only selling on retail, people see the product that I’m sorry, a digital, when they see the product at retail, the more depth to buy, because it’s top of mind.

Many lotteries are still traditional lotteries without an internet presence, they’re still doing much of their advertising in traditional markets like media and TV, medium print. So they move into the digital world. They continue to expand that presence. So we see this as a long term dynamic. And it’s been very, very, very consistent for quite some time.

Jaeme Gloyn: Okay, great. In terms of the growth outlook, you have the letter and your commentary mentioned, the U.K., Vietnam, Brazil, and in the ramping once fully ramped should increase EBITDA by 10%. I guess the first question tied to that is like what kind of timeframe does it take to get these operations fully, fully ramped? And then the next part of the question is, are these are these kinds of Tobel [Ph] positions in those jurisdictions with an opportunity to kind of land and expand? Or how does that? How did these new relationships set up those jurisdictions, those regions?

Cyrus Madon: Yes, great, great question. So in established regions, like U.K. and New Zealand, for example, we’re going in and just placing a competitor. Generally look at a year of implementation that ramping up over the next year. So it’s, it’s pretty short term in Greenfield markets, like Brazil may take a little longer. But again, the option once we roll out is generally over the first couple of years in Greenmarket may be slightly longer, but not far off of that. And we’ve been very successful especially when we move into a managed service environment with our customers to find incremental growth both for our customers with analytic driven performance gains, and then the add on value. So we’re, we go into the market, you say get it, even in an established jurisdiction with a contract base contract, out of the gate of providing products and services that are add on top of the base contract.

Everything’s around it, driving performance for our lottery customer, but also drives economic performance for us adding on top of the base and accelerating, not only increased revenue from the sale of the product, but those all of those products, increase sales of lottery tickets, and we’re in participation contracts.

Jaeme Gloyn: And then, and then sorry, just to get a sense as to like the geographic expansion opportunities. Are these forgive me for not having a deep dive here, but like, is the U.K. a beachhead into Europe? Is Vietnam a beachhead in Asia, Brazil a lot and like or are you well established elsewhere in those in those areas?

Cyrus Madon: Yet different markets in Europe are well established as a technology provider. We provide systems like 30 lotteries throughout Europe. What’s unique about the U.K. not only its size, it’s one of the largest lotteries in the world, but we’ll be providing the entire ecosystem. And it’s a services based contract as well. So in some jurisdictions, we’re just providing the technology. In Europe, this is an example of taking the ecosystem putting in game category management, analytics, and other services to drive performance and be incented on a percent of sales. So it’s much like taking the U.S. model that we’ve been successful with and moving it into the Europe. In New Zealand, Australia, we have almost no penetration on a technology standpoint. So that’s, moving into those markets moving into Africa, Latin America does other you know, pick up significant market share, penetration.

Jaeme Gloyn: Got it. Good. Just switching gears over to Cyrus, just in one of your other answers, you talked about perhaps having that a few things to do before eventual monetization and Clarios. Clarios, obviously still some cost savings initiatives to do the [Indiscernible] last investor day that seemed to hint that maybe that was those pretty close to a monetization. And with Brazilian stock market doing a little better this year, we’re improving through the beginning of the year, maybe a little bit more color on what those like, some things need to be done might be and how much time you need to execute on that front.

Cyrus Madon: Look, on BRK we are in the middle of efficiency program and cost out program that’s still progressing. We think there’s another leg up there has the timing to get all that done. Maybe it’s six months, sort of timeline, maybe a year, probably six months. And then as to when’s the right time to sell it, the markets there. So pretty weak. Now rates are starting to come down. They’ve just started to come down, we expect them to drop further throughout the year there. And that should lead to a recovery in their capital markets, and create all sorts of options for us at that time. We’re not, we’re not in any rush. The business is cash flowing, it’s performing well. We can pick to perform better. That’s where we stand today.

Jaeme Gloyn: Okay, great. Thanks very much.

Operator: Thank you. One moment please for next question. Our next question comes from the line of Devin Dodge with BMO Capital Markets.

Devin Dodge: Thanks. Good morning. I want to start with a question on CDK. Anuj, I think you mentioned in your prepared remarks, there’s been a lot of progress in terms of improving profitability, and really a short amount of time. Can you talk about where you’ve seen the most success so far? And what other parts of the value creation plan still need to play out?

Anuj Ranjan: And why don’t why don’t I start on this one. Look at the team, our team has done a terrific job here. And the management team has done a terrific job. Number one, just reducing overhead grabbing low hanging fruit was part of our playbook when we buy new business. Number two, we’re making a lot of progress on offshoring a bunch of services. Number three, they put in place a more logical, go to market strategy, providing better value to their customers where they need this product and service, and also putting in place more rational pricing where it makes sense. And we can still provide great value for our customers. So that’s sort of been the initial effort at CDK. The on-going effort now is to conduct a technology transformation and really upgrade the technology stack. So the company can provide even better products and services to its customer base.

Devin Dodge: Okay, excellent. Very good, good color. Okay. And then we just put it over to Jaspreet. I think in your comments about refinancing. I think one of the ones you talked about was BrandSafway, and we saw that BBU contributed some more capital to reduce leverage and improve flexibility there. I believe we saw something similar Healthscope earlier this year so just looking forward when you look across the portfolio where do you see the most upcoming refinancings? And are you expecting to give it additional equity to facilitate that rollover of debt?

Jaspreet Dehl: Yes, thanks for the question. So, you’re right, we did put some additional capital into brands and then help delever the business, provided a bit more flexibility. We’re seeing really strong kind of growth in that business now over the last few quarters. So it’s really to kind of support the overall business and help redefine the refinancing as well. At Healthscope, the capital that we put in was very small. And again, it helped pay down some of the RCF that was borrowed within the business, and just gives it a bit more flexibility. As I’m looking forward, we’ve got circa a 5%, of our debt, now maturing in the next 12 months, so it’s not it’s not a whole lot, and it’s very much manageable. Nothing in any of the businesses where, we would have to put any capital in.

So at this point, I’m not anticipating that if we did opportunistically look to refinance, something to get pricing, better pricing, push showed maturity that we need to put capital in. And quite frankly, there’s not a whole lot that we have to do. This will be more opportunistic, where it just helps the capital structure for businesses if we, if we didn’t do anything more.

Devin Dodge: Okay, that’s helpful. Thank you. I’ll turn it over.

Operator: Thank you. One moment for our next question. The next question comes from the line of Nik Priebe with CIBC Capital Markets.

Nik Priebe: Okay, thanks for the question. Just stepping back for a moment, I’d be interested to hear a little bit of color on what you’ve been hearing from Private LPS in the Brookfield sponsored private equity funds, like some LPS have become over allocated to the asset class. So are LPS actively asking for capital return? Or is their primary concern capital preservation? I just be interested to hear some of that feedback? And maybe how that factors in if at all, to the hold versus sell decision making process more generally?

Cyrus Madon: Well, sure, it’s Cyrus here. Why don’t I talk a little bit about what we’re hearing from North American LPs, and then Anuj maybe you can comment on some of our other outflows around the world. But I would say, nobody’s demanding capital back and LPS just don’t do that. They understand when they make a commitment, it’s for 10,12 years. And they fully expect that to play out. The comment they made earlier was in light of the fact that a lot of GPs, want to raise their next fund. And when they go out to conversation with their LPs. The LPs in North America will say we’re already quite allocated fully allocated to RP program. We’d be happy to invest in your next fund. But you really need some realizations from us so we can fund you for the next fund. So the conversation is more along that that sort of line. And it’s pretty consistent, I’d say in North America, that that message is pretty consistent for all for all GPs.

Anuj Ranjan: Yes, and it’s an each year. In North America, while they’re in many cases over allocated, what we’re finding in the Middle East and Asia, for example, is they’re actually quite active, and deploying probably more capital in this environment. They see it as a good opportunity to get exposure to private equity businesses and, and the portfolio companies. So there’s been an uptick there. And but they are deciding to partner with a lesser number of managers. Instead of having as many managers across a very broad spectrum of investments. They’re choosing fewer and fewer GPs to partner with, and partnering in a much bigger way with those, those lesser number of sponsors and GPs and so we’re thrilled that we’re on the right side of that trend, and it’s been quite a good relationship we’ve had with these clients.

Nik Priebe: Yes. Okay. That’s, that’s great, very helpful. And then just my second question. You alluded to the success that you’ve experienced driving earnings growth at Everise and I’m aware that that’s a relatively smaller investment, but I was wondering if you could just expand on the specific initiatives that drove that step change in earnings, and whether those are things that you would or could seek to replicate for some of your larger investments in the technology sector. I’m just trying to understand that investment a little bit better.

Anuj Ranjan: Yes, absolutely. It’s Anuj, and I’ll take that. So we’ve owned Everise for about two and a half years, and we’ve managed to triple EBITDA in that time. It’s been a combination of a whole bunch of different efforts that are very similar to what we do in our playbook across the board. So one aspect of it was growing its addressable market. How we did that was by doing more what we call near shoring and offshoring, which is similar to, for example, what we’ve done in CDK. So having centers in markets closer to the Americas, but in, for example, Latin America with a lower cost, or in Asia, like the Philippines, where we can provide these services. That’s been a big benefit to the business. We’ve focused it on the healthcare sector primarily, and grown quite a bit by providing more and more different service capabilities to the healthcare sector, but focusing on one that was quite resilient.

The U.S. healthcare sector has grown and continues to grow, and we’ve been a beneficiary of that. And I’d say that by a combination of that and a large exercise we had on operational value creation, which again is something we’ve done with many businesses in the past. We could apply to other technology services businesses in the future, paired with some growth, of course, in the underlying markets and in Everise’s market share, we’ve been able to do quite well.

Nik Priebe: Okay. That’s good color. Thanks very much.

Operator: Thank you. I would now like to hand the call back over to CEO, Cyrus Madon for any closing remarks.

Cyrus Madon: Thank you everyone for joining us this quarter. And we look forward to speaking with you next quarter. And of course in the interim, if you have questions, please do contact Alan Fleming, who heads up our investor relations. Thanks very much.

Operator: Ladies and gentlemen, this concludes today’s conference call and webcast. Thank you for participating, and you may now disconnect.