Q3 2021 Brookfield Business Partners LP Earnings Call
Welcome to the Brookfield business Partners' third quarter 2021 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 joined the question queue simply press star and one on your Touchtone telephone.
Need assistance during the call you may signal, an operator by pressing Star then zero now.
Now I'd like to turn the conference over to Alan Fleming Senior Vice President 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.
Further information on known risk factors I encourage you to review our filings with the securities regulators in Canada.
S, which are available on our website.
Joining me today on the call is <unk>, Chief Executive Officer, Denis Turcotte, Chief operating officer, and Jeffrey <unk>, Our Chief Financial Officer.
I'll turn the call first over to <unk> to provide an update on our business. Dennis will then discuss recent activities at our nuclear technology services operations and <unk> will finish with a review of our financial results will then be available to take your questions and with that ill pass it over to <unk>.
Thanks, Alan and good morning, everyone. I appreciate you joining us today.
We had a great quarter, we generated strong growth in EBITDA and <unk>, we continue to be really pleased with how our overall business is performing.
We're working on a number of initiatives to continue building long term value.
And our balance sheet is in great shape.
Last week, we reached an agreement to acquire scientific games lottery business for $5 8 billion.
This business is an essential provider of services and technology to most of the major government sponsored lottery programs around the world.
Lotteries represent a critical and growing source of funding for governments globally in.
In many cases proceeds from these programs are directly earmarked to fund important social infrastructure initiatives related to health care education <unk>.
And your services infrastructure and environmental protection.
In fact over $100 billion of lottery sales annually are directed to funding these types of programs.
And with increasing budget deficits, we expect governments to rely even more on the proceeds generated from lottery programs as a funding alternatives.
Scientific games lottery business is really well positioned with long term partnerships and the capabilities to meet the standards of service and security required by highly regulated lottery programs.
Rod offering includes design distribution systems in turnkey technology solutions the.
The business is integrated across the lottery ecosystem and it's very clear value proposition has contributed to a high level of customer retention.
We think we are acquiring this high quality business at a reasonable value we plan to work with management to support its growth.
We see opportunities to enhance service offerings to existing customers and also grow the customer base.
As an essential service provider with a strong technology offering the business is also very well positioned to benefit from the expected growth of digital lotteries around the world.
We're funding approximately 30% of the equity on closing and with the balance of the equity from our institutional partners.
In October.
We closed our acquisition of <unk> Global and just as a reminder, <unk> is a leading provider of highly engineered components, primarily for industrial trailers and total equipment manufacturers, we invested about $400 million of the equity for 35% ownership stake.
We're now in the early stages of Onboarding.
In developing our plans for continued growth expanding into adjacent products and supporting its very successful acquisition strategy.
We're also working to close our acquisition acquisition of module Air Group, a leading provider of modular unit leasing services in Europe and Asia.
Hope to complete this deal by year end. These are all great businesses and over the past few years, we focused on acquiring similar types of larger scale resilient operations, which has enabled to enhance the overall profile of btu and when it comes time to start selling the larger businesses.
As we've acquired the size and scale of our monetization will increase very substantially.
From time to time, we will also opportunistically acquire smaller businesses that we can grow and scale.
Our recent acquisition of <unk>, which closed in August is a great example of this.
Although as a distributor of solar power kits for the distributed generation market in Brazil. This is a rapidly growing market in Brazil, and although is really well positioned.
It's a market leader with scale and efficient cost position and a network of more than 11000 independent resellers.
We plan to support its growth by expanding our service offerings and broadening its product portfolio into adjacent markets that can benefit from increased demand for energy.
On an overall basis, our business continues to grow our adjusted.
Did EBITDA is now $1 6 billion.
For the last five for the last year, well above $240 million. It was five years ago.
And our recent acquisitions will add about $400 million to our EBITDA based on there.
Annual historical performance, which will increase as we execute on our value creation plan.
On a per unit basis.
NAV has increased at an annual compound rate of 18%.
Very pleased with our overall progress.
Looking forward, we're focused on closing and Onboarding. Our recent acquisitions. We're also working to complete the launch of our paired corporate entity.
Brookfield business corporations, and we hope to get this done.
Around the end of this year subject to regulatory approval, so with that I'm going to hand, it over to Dennis.
Thanks, <unk> good morning, everyone.
As <unk> mentioned, we have business operations professionals working closely with the management teams at each of our operations to advance their business plans, we provide support and expertise to unlock value enhanced cash flows and grow our businesses Westinghouse our nuclear technology services operation is.
One of our businesses, where our team has had a meaningful positive impact and I wanted to spend some time today, providing you with an update on our progress there.
As a reminder, Westinghouse is our global service provider to the nuclear power industry. The business plays a critical role in ensuring the safe and uninterrupted operation of our customers' power facilities globally.
Westinghouse is the technology provider for approximately half of the global nuclear power fleet. The majority of the businesses profitability is generated from regularly recurring plant and refueling maintenance outages and ongoing operating improvement initiatives.
Through all the economic disruptions over the last two years performance at Westinghouse has remained remarkably resilient.
Business continues to generate a lot of free cash flow that will continue to support distributions up to be Bu, while also supporting reinvestment opportunities within the business building on a broad base of technologies to maintain its industry leading position.
Westinghouse was core business is the delivery of fuel and maintenance services. The vast majority of it services are delivered under multi year contracts and the critical and specialized nature.
All of this work ensures very high customer retention within its core business. The total value of orders on a per quarter basis has continued to trend upward since 2019 underpinned by stable customer base with predictable demand driven by the scheduled timing of outage and maintenance activity at customer facilities.
<unk> currently the company is experiencing a strong fall outage maintenance season, executing almost 30 outages in the Americas with significantly higher scope in volumes compared to the same period last year.
During the quarter, we identified increased costs on to legacy manufacturing projects at one of westinghouse's manufacturing facilities in Europe.
Both projects have been underway since before we acquired the business in 2018 contracted in 2010 2011 and are progressing toward completion costs are predominantly related to lower than expected labor productivity and higher engineering testing and inspection inspection costs on these first.
Of a kind projects. These two projects are unique in their complexity and structure and are not core to the company's ongoing operations as required with projects in a loss position. We've recognized all estimated future increased cost this quarter.
More broadly our team continues to work closely with management to advance our ongoing transformation agenda focused on optimizing manufacturing supply chain and G&A cost and on driving organic and inorganic growth.
The team has made meaningful progress on enhancing its commercial excellence by aligning the business strategy and organization with customer priorities regionally driving standardization and processes and leveraging data analytics to improve the business. We think there's still more room to improve and have a line of <unk>.
Site to achieving our annual EBITDA target of in excess of $700 million towards the $800 million over the next few years through a combination of ongoing operational improvements and contributions from our recent add on acquisitions.
Westinghouse has successfully executed seven add on acquisition since 2019.
Each of these is relatively small but strategically important in augmenting the businesses core engineering and services capabilities bolstering its digital product offerings and increasing its presence in newer markets.
In October.
The business agreed to acquire a partial interest in a Spanish engineering company. The investment further strengthens the businesses outage maintenance and digital service offerings, which will increase its competitiveness with customers in Europe and globally.
Once fully integrated and ramped up we expect total annualized EBITDA from the 7% add on acquisitions completed since 2019 to reach approximately $70 million annualized which equates to 10% of total annual run rate EBITDA.
The company continues to lead the industry innovation as well as part of its growth strategy westinghouse's, developing and deploying new products aimed at enhancing the value proposition of its service offerings.
It is leading the way in the development of next generation accident tolerant fuel and working on innovative new digital solutions, including the first ever three D printed fuel component installed inside our commercial nuclear reactor.
As the industry leader in technology and innovation Westinghouse is also well positioned to lead the way in commercializing. The next generation of nuclear reactor design and energy storage solutions, including the development of modular reactors and are with wide ranging applications.
Nuclear power will play an increasing role as a clean energy source to meet global decarbonization goals Westinghouse remains very well positioned to fulfill its critical role in supporting the safety and reliability of the nuclear power industry, which underpins our confidence in the business as long term growth potential.
With that I'll hand, it to Jeff spree, Thanks, Dennis and good morning, everyone.
As far as <unk> mentioned, we reported strong performance in the third quarter generating adjusted EBITDA or what we formerly called company EBITDA of.
$443 million compared to 381 million last year.
Adjusted <unk> increased to $276 million or $1 86 per unit compared to $208 million or $1 39 per unit in 2020.
Performance within business services with very strong compared to the prior year lead.
We generated adjusted EBITDA of 163 million.
Our residential mortgage insurer contributed 81 million and benefited from lower loss ratios increased market share and robust new underwriting activity.
Home price appreciation in Canada has moderated over the last few months, but the market remains above 2019 levels.
As expected to remain resilient in 2022.
The business is operating with excess capital relative to the required capital adequacy level.
Yesterday, the Canadian financial regulator lifted a moratorium on dividend increases for banks and insurance companies.
We hope with this announcement, we will be able to distribute some of the excess cash in the business through a special dividend by the end of the year.
Our healthcare services in Australia generated adjusted EBITDA of 17 million demand for elective surgery at a hospital remains strong.
Performance during the quarter was impacted by intermittent lockdowns and government restrictions.
New South Wales and Victoria.
As these restrictions.
We are hopeful that activity levels will recover quickly.
Our construction business reported adjusted EBITDA of $22 million.
Performance benefited from strong project execution on Australia.
Bidding on new business has been strong we secured new projects and ended the quarter with a backlog of approximately $7 8 billion consistent with the second quarter.
Moving on to our industrial segment.
We generated adjusted EBITDA of $171 million for the third quarter, our advanced energy storage operations performed well and reported adjusted EBITDA of $120 million.
Would you.
Battery demand from auto manufacturers during the quarter because of global production reductions.
More than offset by growing demand for higher margin advanced batteries in the aftermarket.
We continue to progress our targeted $400 million of annual profit improvement and are pleased with the cash flow generation of the business.
And finally moving to our infrastructure services segment, we generated adjusted EBITDA of $140 million for the third quarter of 2021.
Nuclear technology services reported EBITDA of $56 million strong performance is driven by higher volumes, primarily due to the timing and scope of the fall outage cycle.
Across the business.
During the quarter, we identified higher costs in two legacy projects in Europe, which impacted overall financial performance.
This and a little bit of detail earlier.
Excluding the impact of these legacy project costs EBITDA for the quarter increased by about 15% over prior periods.
Our work access services business contributed $19 million in adjusted EBITDA for the quarter industrial end market activity levels are improving north American commercial end markets have been slower to recover and the business is experiencing some impacts from tighter labor markets.
Some of its region.
During the quarter, we acquired boost industrial group, which extends our footprint into strategic U S end markets and service lines.
Before I finish my comments I'd like to spend a couple of minutes on liquidity.
Sheet is in great shape, we ended the quarter with $2 3 billion of corporate liquidity, which provides us ample capacity to continue funding our growth.
We currently have initiatives underway to increase liquidity and maintain a strong corporate balance sheet.
Our operations generated significant cash flows, which will fund distributions to support our growth.
As the earnings of our operation Krill. Their borrowing capacity has also increased and this can provide opportunities to increase that as a means of generating additional corporate liquidity.
That said, we remain mindful to finance each of our operations with an appropriate level of long dated debt at favorable rates.
Is nonrecourse to be Bu and can be readily serviced and sustained across all market cycles.
And finally over time, we will generate significant proceeds as we monetize some of our investments.
We also recently increased our corporate borrowing capacity by approximately 500 million, which will contribute to us maintaining our strong corporate liquidity position.
That I'd like to close our comments and turn the call back over to the operator for questions.
Thank you as.
As a reminder to ask a question you will need to press star one on your telephone.
Withdraw your question press the pound key.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Geoff Kwan with RBC capital markets.
Hi, good morning.
My first question was on stage and Jessica you mentioned, obviously, the news out of Austria yesterday, and I'm just wondering.
The comments that they had made was it seemed like they expect.
Companies to be kind of more measured in terms of.
Dividend increases returning capital or buybacks and whatnot.
But given Sejant publix.
Not really public do you think you might have more flexibility to reduce your excess capital faster than the publicly traded banks insurers and then the second part of my question was based on the numbers that came out of <unk>.
Mike had 170%.
My rough math kind of suggests.
Alright, sorry, Mike I was at 200, and I think 14, but if I assumed 170%, which is above historical that I think the math puts out to you about U S 300 million that could be pulled out to <unk> is that correct.
So on the first part thanks.
Thanks for your questions Jeff.
First part of your question.
Youre right.
C. J is now private and.
We're still a regulated entity and more importantly, we also wanted to make sure that we're.
Managing the business with the appropriate level of capital reserves that are required for the business.
And we're also mindful of the credit rating.
Because that's important for our customers and maintaining a strong credit rating for CGM.
Having said that you're right the <unk>.
Casualty issue today is that 214%, which is significantly higher than the minimum requirement, which is 150% to 150% and the target that management typically operates with which is the 160% to 165%.
So based on kind of the current.
Sure.
Available liquidity within the business.
As well as ensuring that we've got appropriate capital reserves.
Our view is that we could.
Dividend out approximately.
At least 500 million U S.
And <unk> would get its share.
500, so that's kind of the plan for now but then.
As you know well.
<unk> continues to do very well continues to generate strong free cash flow in there.
Hopefully the opportunity for additional distributions down the road.
Okay.
Then with respect to <unk>, they announced $150 million share buyback program.
Do you intend to kind of tender pro rata or to the extent that there is opportunity to go higher or how are you approaching that.
Hey, Jeff Cyrus here look.
Whether we tender into into that we could and.
We'll jets do what's opportunistic for us and as and when we want.
Liquidity will just pick an opportune time, we're not in any rush.
To sell our shares here.
If anything the backdrop is pretty strong for this company right now.
So we'll just be we'll just be prudent do what's best for our balance sheet.
Okay, and just my last question kind of ties into.
At the Holdco liquidity.
Obviously, you guys have run with them.
More that just because you've been more active.
This past year year and a bit.
Do you have an idea with some liquidity stuff that youre looking at when you think you might get back to a net cash position I know, obviously theres been some monetization you've contemplated that could be quite huge and gets you back to cash very quickly, but just curious your thoughts.
Around timing and when that might happen.
No we're not we're not.
We're not running our business.
Around any specific timeframe Jeff.
We feel we have a huge amount of flexibility today, just given everything <unk> talked about distribute ongoing distributions.
The possibility for up financings with our within our portfolio are real.
It could be quite substantial.
At the same time.
I think given just given the size of our business and the number of businesses we own today.
You can assume you should assume actually that we always have something for sale and.
I'm pretty confident that.
Something we have for sale will sell at some point again, we just want to maximize value we have no need to sell anything.
Today, but if we want to create more liquidity, we can always do that.
Okay, great. Thank you.
Thank you.
Our next question comes from the line of Devin Dodge with BMO capital markets.
Alright. Thanks, So just a question on the sanitation business in Brazil.
Earnings have been growing pretty substantially there I think EBITDA was up something in the neighborhood of 40%.
In the first half of the year can you speak to what the earnings power of that business could be as more of the concession investments that youre, making become.
Income generating.
Yeah, Hi, it's Chesapeake.
Sue.
Youre right that the.
Water and wastewater business in Brazil has been doing well.
We had a bit of a slow start out of the gate, but it will be.
For the last couple of years, we've been seeing.
Strong execution on the Capex program.
At the business, which adds new economies.
So EBITDA growth also.
Added a pretty substantial new concession that was operationalized in the middle of this year, which is all okay.
<unk> two.
The bottom line and EBITDA.
And.
We're going to continue to work with the team there invest in the business.
And there may be opportunities.
To monetize some of the more mature concessions and reinvest those proceeds.
Overall, the business is doing well and continues to do well.
Okay. Thanks for that.
Maybe just switching over to altera.
Fairly significant EBITDA lift there versus what you had been the last few quarters. Just can you talk to the drivers of the Q3 performance and how we should think about its earnings going forward.
Sure. It's just repeat again I can start and Dennis canard.
So.
The business is still operating in a challenging environment.
Yes, we had a little bit of an uplift this quarter, because we had some profit sharing arrangements on oil price and volume increases that our customers that were helpful.
But the backdrop is.
Still challenging for Alterra, and we're continuing to work with the management team.
There to make sure we're supporting kind of initiatives.
That are ongoing.
Okay. Thanks for that.
Maybe just one clarification those problematic.
<unk> and Westinghouse that tenants was referring to.
How much how much longer are we.
Or are you guys can be working on that when do they ramp up if you can kind of give some context for how long that'll be in the portfolio.
Sure. It's two projects one is to provide five segments too.
Kind of a global fusion reactor project. The other one is to provide 12 steam generators too.
EDF.
Each contract.
Wasn't in place in 2010, 2011, so are well underway the fusion reactor projects should wrap up by before the end of 2023 and the steam generator projects should wrap up by I think around 2028.
With the final delivery of the 12 month units planned for that point.
Okay. Thanks for that I'll turn it over.
Thank you and our next question comes from the line of Gary Ho with Desjardins capital.
Thanks.
Good morning, just going back to <unk> you mean.
The chip shortage impacting OEM sales.
Our view a significant business in your portfolio that might be impacted by these chip shortage issues just wondering.
Judy.
Can you comment on any other are the ones that youre seeing that might be impacted by these and other supply chain disruptions that we've seen in the space.
Do you mean at <unk> specifically.
Yes <unk>.
And any other significant businesses that you might be experiencing.
No we have great line of sight to all of the issues. We don't see anything degrading from this point and in fact everything is improving with each passing day not just at <unk>, but even more broadly, but this will be with us for a period of time and.
We're focused on everything we can control in that case.
Okay.
And then just going back to Jeff's question on the monetization side maybe.
Maybe can you give us an update.
On the ones that you might be looking at that's more mature businesses anything imminent.
Yes look.
Yes.
We arent going to comment on specific things that are for sale or when it might be sold.
But.
As I said, you should assume something is for sale at.
At any point in time, just given the number of businesses, we own now and a number of them are more mature.
But I think it's better if we don't comment and if thats okay.
But I just want to be very clear, we do not have to sell anything today.
<unk>.
Really strong position here.
Our preference is to be.
Very disciplined as we sell things just as we are when we buy things.
Okay, and then sorry, that's why I have you just going back to the scientific games transaction.
I think it was reported that the company the parent company was going through a dual track process on the IPO price was even higher than the $5 $8 billion that you're paying for can you give us a glimpse and kind of why you've been successful with these corporate carve outs valuation aside.
Well look.
Scientific games.
Now this is all rumor.
Rumor on the street, so take it for what it is but.
It was rumored that there was at least one large strategic party looking at the business and.
Perhaps that.
Reduced.
The interest of some financial buyers.
It was also rumored.
I think it's probably correct.
They were running a dual track process for an IPO.
That may have also reduced the interest of of some buyers.
And I think we were just able to offer them speed and certainty.
And immediate liquidity.
As you know when you IPO business and if you want all the proceeds it takes it could take some time.
Could take years right to get off of that size a position so.
So I think we offered them speed and certainty in a reasonable valuation.
And we are.
We know we have a reputation as a reasonable buyer and.
Difficult to deal with through these processes, so I think.
That reputation will advantage made a difference here.
Okay.
Just add one thing for you to see.
Just on the your question on the operational side.
On the carve outs, we've got a really strong operations team.
So Donna and we've now done quite successfully set up a few corporate carve outs like feature and unclear. So again.
That gives us a high level of conviction when we buy a business like that we'll be able to tighten it up and operate it and enhance the underlying at that time.
Okay.
And then just last one for me.
Just Pete.
Side of the dividend from <unk>.
Internal initiatives that you've highlighted distributions are up financing.
Any way that you can give us a range of magnitude of wear.
What that total can be.
Yes too.
As IRA said without calling into the <unk>.
<unk>.
We've got a few different the fires.
Going definitely the stage and now a dividend.
The other the other business side, you've seen over the last number of years, where.
Dave pretty regularly given us.
$2 million to $250 million distribution as Westinghouse.
That business continues to perform well and our expectation.
Is died.
We will continue to have dividends there.
The number of <unk>.
<unk> within the portfolio that are quite mature more stabilized EBITDA with potential financing.
So we feel quite comfortable that we've got.
The initiatives underway that will maintain a strong balance sheet and liquidity positions and have have no.
Problem.
Funding all of our announced transactions, including the scientific gaming lottery business and even post start continuing to maintain.
Significant liquidity to <unk>.
And future growth.
Okay, great. Thanks, Thanks for the comments that's it for me.
Thank you.
And our next question comes from the line of Jamie <unk> with National Bank.
Yes. Thanks good.
Good morning.
I just wanted to.
Dig into the other segments of the business services.
Uh huh.
Segment. So obviously, the we have the data on the on the bigger investments, but that other segment seems to be doing pretty well also.
Would you be able to provide any color on on which businesses or is it broad based on areas that are performing well and driving some of that nice EBITDA growth.
Sure I can provide some high level color as you notice we don't as you noted we don't usually go into details on all of those are smaller businesses, but.
Broadly the.
One <unk> at the casino business in <unk>.
Canada, the casinos have opened back up.
We've seen kind of strong foot traffic there so that.
Driving positive EBITDA.
<unk>.
Our fuel distribution and marketing business.
In the UK and Canada has been performing quite well you would have seen some of the news on fuel shortages in the U K, which is which.
It's been positive.
Just in terms of being able to supply additional volume in the market for that business.
Positive impact as well.
I'd say those are the two bigger drivers there.
Okay, Great and then.
In the in the industrial segment with.
With card Don can you talk about some of the dynamics.
That are at play there in the auto parts manufacturing space, maybe a little color on how that business is performing and it's all the risks youre seeing.
Sure the basic driver there.
Is fundamentally miles driven which if you have access to that data is down materially.
<unk> to recover though but that's the fundamental issue, we're actually very pleased with the turnaround underway. We're actually ahead of plan on many fronts and the management team. There continues to reposition our product mix in very favorable ways, but we do need the miles driven to come up.
We are not losing and in fact are gaining market share in certain product lines.
So it's really just the fundamental macro factors in that situation.
Okay, great. Thank you.
Thank you. Your next question comes from the line of Matthew Weekes with IAA capital markets.
Good morning, Thanks for taking my question I think most of mine have been asked at this point. So I'll, probably just ask a quick clarification question.
I believe you had said earlier that in relation to the two legacy projects and Westinghouse that there were kind of some cost overruns that those had been those expected increased cost were all recognized in the current quarter is that correct.
Yes, yes.
Okay. Thank you. So so is it fair to say that probably there might not be an income statement impact going forward, but will that reflect in sort of cash flows as time goes on and the work completed on those projects.
Yeah, it's Jess so.
We've worked to now both of the projects and have ensured that we have now accrued.
Our best estimate of cost to complete.
So we don't anticipate any additional P&L impact.
And because they are loss, making contracts as we incur additional costs that will have a cash flow impact and we will.
Be talking to at least one of the customers.
On potential commercial.
Remediation, but.
That's still TBD at this point and it'll be it'll be small if we are successful and in parallel we're going to re launch an effort focused on getting the productivity of the operations up so.
Hope to have a positive effect from that over the next couple of years.
Okay. Thank you that's helpful. I'll turn the call back have a great weekend.
Yes.
Thank you.
We have a follow up question from the line of Geoff Kwan with RBC capital markets.
Yes, just my question was with all this talk about higher inflation and higher rates within your portfolio.
One is do you see is.
Likely to perform the best and if you had to pick a.
A few businesses that you own that might be a little bit more vulnerable in that environment, which ones would they be.
Well.
From my point of view, I think of materials energy and productivity labor and.
In that regard the businesses that are more dependent on those as part of its caused some manufacturer are inherently more vulnerable brand Safeway as an example.
There are.
Challenges associated with turnover.
But again the good news is.
The management teams are hyper focused on these things and the worst seems to be I'll say closely behind us and we see things improving moving forward in all regards.
There are areas resin material raw material resin for example through our solar operation we've had significant increases over the last 18 to 24 months, having said that we've been able to pass those increases through to our customers. So.
We are very actively engaged on the commercial side of all of these businesses, including brand to make sure that we're getting ahead, where we can and quickly catching up where we can't get ahead to pass through all these incremental costs.
Okay. Thank you.
Thank you.
I will now turn the conference back over to CEO Cyrus Madden for any closing remarks.
Thank you very much for joining us.
This quarter and we'll speak to you.
Three months thank you.
Yes.
This concludes today's conference call. Thank you for participating and you may now disconnect.
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Yes.
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Welcome to the Brookfield business Partners' third quarter 2021 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 joined the question queue simply press star and one on your Touchtone telephone.
Should you need assistance during the call you may signal, an operator by pressing Star then zero now.
Now I'd like to turn the conference over to Alan Fleming Senior Vice President 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.
Further information on known risk factors I encourage you to review our filings with the securities regulators in Canada.
S, which are available on our website.
Joining me today on the call is sires Madden Chief Executive Officer, Denis Turcotte, Chief operating officer, and Jeffrey <unk>, Our Chief Financial Officer.
I will turn the call first over to Cyrus to provide an update on our business. Dennis will then discuss recent activities at our nuclear technology services operations and Jeff will finish with a review of our financial results will then be available to take your questions and with that ill pass it over to <unk>. Thanks.
Ellen and good morning, everyone. I appreciate you joining us today.
We had a great quarter, we generated strong growth in EBITDA in <unk> and we continue to be really pleased with how our overall business is performing.
We're working on a number of initiatives to continue building long term value and our balance sheet is in great shape lash.
Last week, we reached an agreement to acquire scientific games lottery business for $5 $8 billion.
This business is an essential provider of services and technology to most of the major government sponsored lottery programs around the world.
Lotteries represent a critical and growing source of funding for governments globally and.
In many cases proceeds from these programs are directly earmarked to fund important social infrastructure initiatives related to help health care education <unk>.
And your services infrastructure and environmental protection.
In fact over $100 billion of lottery sales annually are directed to funding these types of programs.
And with increasing budget deficits, we expect governments to rely even more on the proceeds generated from lottery programs as a funding alternatives.
Scientific games lottery business is really well positioned with long term partnerships and the capabilities to meet the standards of service and security required by highly regulated lottery programs.
Rod offering includes design distribution systems in turnkey technology solutions the.
The business is integrated across the lottery ecosystem and it's very clear value proposition has contributed to a high level of customer retention.
We think we are acquiring this high quality business at a reasonable value we plan to work with management to support its growth, we see opportunities to enhance service offerings to existing customers and also grow the customer base.
As an essential service provider with a strong technology offering the business is also very well positioned to benefit from the expected growth of digital lotteries around the world.
We're funding approximately 30% of the equity on closing and with the balance of the equity from our institutional partners.
In October we closed our acquisition of <unk> Global and just as a reminder, <unk> is a leading provider of highly engineered components, primarily for industrial trailers and total equipment manufacturers, we invested about $400 million of the equity for 35% ownership stake.
We're now in the early stages of Onboarding and developing our plans for continued growth expanding into adjacent products and supporting its very successful acquisition strategy.
We're also working to close our acquisition acquisition of module Air.