Brookfield Business Partners LP Q2 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst : First question was on Westinghouse. So, if you are able to come to an agreement on a deal, like who would be the key entities that would have to approve it? And would any of them have any more, call it, specific criteria that might influence to say the preference or the type of buyer for Westinghouse?

Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst : Okay. And then on the BRK Ambiental, you made reference and then there was that filing potentially taking it public. But is a sale also a possibility or is an IPO the more likely option for the...? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2022 / 2:00PM, BBU_u.TO - Q2 2022 Brookfield Business Partners LP Earnings Call

Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst : Okay. And just if I can ask one last question for Stuart. Sagan, when you take a look at -- going back to the 1990s sizing downturn, I think your combined ratio peaked around 90%. Today, we're still at extremely low combined ratios, I mean, in Q2, you had a negative loss ratio. But if we have this housing downturn that some people think that we're going to have, like what kind of do you think like the ballpark range do you think that the combined ratio could look to get to? And what would be the key reasons that you would say it would differ from what was experienced back in the 1990s?

Question: Devin Dodge - BMO Capital Markets Equity Research - Analyst : All right. How should we reconcile the confidence in the Westinghouse sale process with the...

Question: Devin Dodge - BMO Capital Markets Equity Research - Analyst : All right. Let's talk again. Apologies for the technical difficulties. So, I wanted to start with Cyrus, how we should reconcile the confidence at that Westinghouse sale process with the broader challenges in financial markets and that slowdown in private market transactions that was referenced in the letter.

Question: Devin Dodge - BMO Capital Markets Equity Research - Analyst : Okay. That's good color. After that the dividend recap at Westinghouse and the recent bolt-on acquisition, can you remind us where leverage stands after those 2 transactions?

Question: Devin Dodge - BMO Capital Markets Equity Research - Analyst : Okay. Okay. And then maybe a question for Stuart. Can you speak to the competitive environment for mortgage insurance in Canada, I think we saw CMHC loose some market share over the last few years. And I'm wondering if you've seen them become a little bit more aggressive in intent to recapture at least some of that lost market share? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2022 / 2:00PM, BBU_u.TO - Q2 2022 Brookfield Business Partners LP Earnings Call

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Yes, thanks. And Stuart, good to hear from you again. I'll start with you, actually. Thinking about the ROE outlook, you mentioned 20% as being sustainable normalized periods. I'm just trying to square that right actually with loss ratios that recently have been flat like 0% to negative that are driving 20% ROEs to a more normalized loss ratio environment of 15% to 25%. I would assume that the ROE would dip a little bit from there. Maybe just sort of talk through how your -- what other factors are driving the sustainable 20% ROE in the business?

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Okay. Understood. As we're thinking about the Sagen business and Brookfield's recent acquisition of Latrobe, are there any longer-term potential synergies for these 2 businesses tied to mortgage markets in different countries?

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Okay. And then last one on Sagen. Stuart, some of the headlines reading today is around trigger rates on variable rate mortgages. What's your assessment of variable rate mortgages within the Sagen portfolio? How close would borrowers be to triggers? How is that process implemented from the banks and do the mortgage insurers have a say and how that is processed and managed? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2022 / 2:00PM, BBU_u.TO - Q2 2022 Brookfield Business Partners LP Earnings Call

Question: Gary Ho - Desjardins Securities Inc., Research Division - Analyst : First question for Cyrus. You chatted about Westinghouse and BRK. Maybe you can give us an update on Clarios and how that monetization initiative is progressing?

Question: Gary Ho - Desjardins Securities Inc., Research Division - Analyst : Okay. Perfect. And then second, maybe for Stuart. Can you provide a bit more, I guess, greater perspective in the hotter housing markets last few years, the GTA, Vancouver area, et cetera. Any concerns there? And do you have kind of LTV specific for those regions?

Question: Gary Ho - Desjardins Securities Inc., Research Division - Analyst : Okay. And then I want to talk a little bit about Scientific rates. So, my understanding of the business is that the government contracts are fairly kind of long-dated and predominantly fixed rate. So, I want to get a bit more color on that kind of business being squeezed on the margin side, maybe whether you've been able to reprice some of those contracts, just given the spike in inflation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2022 / 2:00PM, BBU_u.TO - Q2 2022 Brookfield Business Partners LP Earnings Call

Question: Gary Ho - Desjardins Securities Inc., Research Division - Analyst : Okay. That's great. And then maybe just if I can speak in one more just on BRK. Can you give us a bit more details on how much debt there is in that investment maybe in total or your proportionate share?