Brookfield Business Partners L.P.(BBU) - 2020 Q4 - Annual Report

Financial Performance - As of December 31, 2020, total assets amounted to $54.7 billion, with total revenues for the year reaching $37.6 billion[210]. - For the year ended December 31, 2020, net income was $580 million, with a net loss attributable to unitholders of $169 million, compared to a net income of $434 million in 2019[223]. - Revenues decreased by $5,397 million to $37,635 million for the year ended December 31, 2020, compared to $43,032 million in 2019[225]. - Direct operating costs decreased by $5,862 million to $32,465 million for the year ended December 31, 2020, compared to $38,327 million in 2019[226]. - General and administrative expenses increased by $136 million to $968 million for the year ended December 31, 2020, compared to $832 million in 2019[227]. - Company EBITDA for the year ended December 31, 2020 was $1,384 million, an increase of $171 million compared to $1,213 million for 2019[262]. - Company FFO for the year ended December 31, 2020 was $870 million, a decrease of $232 million compared to $1,102 million for 2019[262]. - The company reported net income attributable to unitholders of $580 million for the year ended December 31, 2020, compared to a loss of $169 million in 2019[293]. Segment Performance - The business services segment generated revenues of $22.58 billion, while infrastructure services and industrials segments contributed $4.4 billion and $10.66 billion respectively[210]. - The industrials segment includes BRK Ambiental, which provides water and wastewater services through long-term, inflation-adjusted contracts, enhancing service quality and operational scale[217]. - Company EBITDA for the infrastructure services segment in 2020 was $602 million, an increase of $134 million (approximately 28.6%) from $468 million in 2019[272]. - Company FFO for the infrastructure services segment in 2020 was $364 million, an increase of $50 million (approximately 15.9%) compared to $314 million in 2019[272]. - Industrial segment revenues for 2020 reached $2,965 million, an increase of $416 million (16.3%) from $2,549 million in 2019[279]. - Company EBITDA for the industrials segment decreased to $604 million in 2020, down $15 million (2.4%) from $619 million in 2019, primarily due to lower contributions from GrafTech[280]. Acquisitions and Investments - In October, the company entered into an agreement to acquire the remaining 43% publicly held shares of Sagen for approximately book value, expected to close in the first half of 2021[219]. - The company completed the acquisition of Everise for approximately $240 million, with an expected 35% economic ownership interest[219]. - BrandSafway acquired Big City Access, becoming the largest commercial work access provider in Texas[219]. - The partnership aims to enhance cash flows through an operations-oriented acquisition strategy and capital recycling into new investments[209]. - The partnership aims to pursue acquisitions through consortium arrangements with institutional investors, enhancing growth opportunities[302]. Cash Flow and Liquidity - Cash flow from operating activities for the year ended December 31, 2020, was $4,205 million, up from $2,163 million in 2019[311]. - Total cash flow used in investing activities decreased significantly to $2,334 million in 2020 from $17,939 million in 2019[312]. - Total cash flow used in financing activities was $1,077 million in 2020, a decrease from $15,925 million in 2019[313]. - The partnership's liquidity profile remains strong, supported by cash flows from operations and access to credit facilities totaling $2,075 million[302]. - Cash and cash equivalents increased to $2,743 million as of December 31, 2020, compared to $1,986 million in 2019[309]. Debt and Financial Obligations - Total borrowings as of December 31, 2020, amounted to $23,776 million, an increase from $22,399 million in 2019[306]. - The weighted average interest rate on outstanding debt was 5.0% as of December 31, 2020[305]. - The partnership's net debt to capitalization ratio remained stable at 65% as of December 31, 2020, consistent with 2019[308]. - Total undiscounted contractual obligations were $35,375 million, with $3,545 million due within 1 year and $15,921 million due in over 5 years[344]. Asset Management - Total assets increased by $2,995 million to $54,746 million as of December 31, 2020, compared to $51,751 million as of December 31, 2019[246]. - Financial assets increased by $2,553 million to $8,796 million as of December 31, 2020, compared to $6,243 million as of December 31, 2019, primarily due to the consolidation of IndoStar and growth in Sagen's investment portfolio[247]. - Total assets for the industrials segment as of December 31, 2020 were $23,929 million, an increase from $22,742 million in 2019[278]. Taxation - Current income tax expense decreased by $40 million to $284 million for the year ended December 31, 2020, compared to $324 million in 2019, primarily due to tax recovery in the industrials segment[232]. - Effective tax rate for the year ended December 31, 2020, was 21%, down from 30% in 2019, influenced by varying global tax rates and restructuring within the industrials segment[232]. Impairments and Gains - Net impairment expense decreased by $346 million to $263 million for the year ended December 31, 2020, compared to $609 million in 2019, primarily related to vessel impairments at Altera[230]. - Gain on acquisitions/dispositions for 2020 was $304 million, compared to $726 million in 2019, showing a decrease in transaction gains[294]. Strategic Initiatives - The partnership's strategy includes hedging a portion of its equity investments and cash flows exposed to foreign currencies, utilizing local currency debt financing and derivative contracts[340]. - The partnership continues to monitor opportunities to add hedges back into its portfolio following the U.S. dollar's weakening against major foreign currencies[343].