Brookfield Business Partners (BBU) Q4 2025 earnings review
Net Income Swings Positive, but Divestitures Weigh on EBITDA
Brookfield Business Partners delivered a mixed Q4. While the company swung to a Net Income of $118M (vs. a $1.1B loss in 24Q4), Adjusted EBITDA stagnated at $652M, flat YoY. The story is one of aggressive capital recycling: $2B in proceeds generated in FY25 allowed for debt reduction and buybacks, but the sale of cash-flowing assets (road fuels, nuclear, shuttle tankers) created a hole that organic growth in Industrials is only just beginning to fill. The Corporate Reorganization to a single Canadian entity is imminent (Q1 2026), aimed at solving the persistent trading discount.
🐂 Bull Case
The Industrials segment is Accelerating, up 16% YoY in Q4 ($354M vs $306M). Strong execution at the advanced energy storage operation (Clarios) and contributions from the Chemelex acquisition are offsetting weakness elsewhere.
Management delivered on the 'buy low, sell high' promise, generating $2B from disposals in FY25. This fueled $235M in buybacks and $700M in new growth investments (Chemelex, Antylia) without leveraging the balance sheet.
🐻 Bear Case
Infrastructure Services Adjusted EBITDA collapsed 26% YoY in Q4 ($119M vs $160M). While the shuttle tanker sale generated cash, the loss of its recurring earnings is a significant headwind that new acquisitions have not yet fully replaced.
Zero growth in Business Services ($217M flat YoY). Gains in residential mortgage insurance were completely erased by the sale of the dealer software interest and rising 'technology modernization costs' at that same unit.
⚖️ Verdict: ⚪
Neutral. The strategic pivot is clear—selling mature assets to fund buybacks and new tech/industrial plays—but the transition is noisy. Until the new acquisitions (Fosber, Chemelex) fully ramp and offset the divested cash flows, headline EBITDA growth will remain muted.
Key Themes
Business Services Margin Pressure
The Business Services segment is Stagnating. Despite a 26% volume increase in new insurance premiums at the residential mortgage insurer, segment EBITDA was flat YoY. Management cited 'slower revenue recognition' under IFRS 17 and increased technology modernization costs at the dealer software operation (CDK). This indicates operating leverage is currently negative.
Industrials Segment Acceleration
Industrials is the new growth engine, Accelerating to $354M in Q4 (+16% YoY). This performance was driven by commercial execution at the advanced energy storage operation (Clarios) and the integration of Chemelex (heat tracing). Notably, this growth occurred despite a drop in tax recoveries ($297M FY25 vs $371M FY24), suggesting strong organic underlying health.
Corporate Simplification Imminent
The reorganization to a single Canadian corporation was approved by the court on January 16, 2026, with closing expected in Q1 2026. This is a critical structural change designed to increase index inclusion and liquidity, potentially closing the valuation gap that management has complained about for years.
Shrinking Infrastructure Footprint
Infrastructure Services is Decelerating rapidly due to divestments. FY25 EBITDA dropped to $436M from $606M in FY24 (-28%). The sale of the shuttle tanker operation and partial sale of work access services have left this segment materially smaller, reducing diversification benefits.
Capital Return Acceleration
Management is aggressively buying the dip. They repurchased $72M of units in Q4 alone, bringing the full-year total to $235M (8.8 million units). With the stock trading at what they consider a discount to intrinsic value, this capital allocation strategy is providing a floor for the share price.
Other KPIs
Reversing. A significant turnaround from the $109 million loss in FY24. The result benefited from $325M in gains on dispositions (primarily the shuttle tanker operation), offsetting impairment reversals and higher interest expenses.
Stable. Liquidity remains robust, comprising cash and $2.02B in credit facility availability. This dry powder is essential for the pending Fosber acquisition ($170M equity check) and continued buybacks.
Decelerating. Down from $1.86 billion in FY24 (derived from segment sums). While Industrials EFO held up reasonably well, Corporate drags (higher interest/expenses) and lower contribution from Infrastructure weighed on the total.
Guidance
Stable. Management confirmed the forward dividend rate of $0.0625 per quarter ($0.25 annual) will be maintained following the corporate reorganization in Q1 2026.
Pending. The acquisition of Fosber (corrugated packaging machinery) is expected to close in the first half of 2026. BBU will deploy ~$170M for a 35% stake.
Pending. The transaction to simplify the dual-class structure into a single corporate entity is fully approved and slated to close by March 31, 2026.
Key Questions
CDK Modernization Costs
Business Services EBITDA was flat despite strong underlying volumes in insurance. Specifically regarding the dealer software business (CDK), how much of the drag is due to 'technology modernization costs,' and when do these non-recurring investments roll off to allow margin expansion?
Infrastructure Earnings Base
Infrastructure Services EBITDA has nearly halved from 2023 levels ($853M to $436M). With the shuttle tanker sale complete, is $100M-$120M per quarter the new run-rate, or are there further non-core assets tagged for divestiture in this segment?
Reorganization Tax Implications
As we approach the closing of the corporate reorganization in Q1, are there any immediate tax frictions or one-time costs associated with the conversion that investors should model for 2026?
Mortgage Insurance Revenue Lag
You noted a 26% increase in premiums written at the mortgage insurer but mentioned slower revenue recognition under IFRS 17 due to 'uncertain economic forecasts.' Can you quantify the EBITDA impact of this accounting timing in Q4?