Brookfield Business Partners Investor Meeting September 28, 2016
Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements and Information This presentation contains forward-looking information within the meaning of Canadian provincial securities laws and forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of Brookfield Business Partners and its subsidiaries, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods. In some cases, forward-looking statements can be identified by terms such as expects, anticipates, plans, believes, estimates, seeks, intends, targets, projects, forecasts or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of Brookfield Business Partners to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest and foreign exchanges rate; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation within the countries in which we operate; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in our documents filed with the securities regulators in Canada and the United States. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, Brookfield Business Partners undertakes no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise. Use of Non-IFRS Measures and Other This presentation contains references to financial measures which are not generally accepted accounting measures under IFRS and may differ from similar definitions used by other entities. We believe that these are useful supplemental measures that may assist investors in assessing our financial performance and the cash anticipated to be generated by our operations. Such measures should not be considered as the sole indicators of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. Certain values used in this presentation are for illustrative purposes and based on various factors that may or may not materialize, including past performance metrics that may not be indicative of future performance. References to Brookfield Business Partners or BBU are to Brookfield Business Partners LP together with its subsidiaries unless the context reflects otherwise. All amounts are in U.S. dollars unless otherwise specified. 2
Table of Contents Overview 4 CYRUS MADON, CEO Our Operations Construction and Business Services 10 JON HAICK, HEAD OF SERVICES Energy 27 JIM REID, HEAD OF ENERGY Industrials 35 PETER GORDON, HEAD OF INDUSTRIALS Financials 43 CRAIG LAURIE, CFO Looking Forward 51 CYRUS MADON, CEO Q & A 59 3
Overview CYRUS MADON 4
Brookfield Business Partners is a business services & industrials company focused on long-term capital appreciation NYSE: BBU TSX: BBU.UN MARKET SYMBOL 5
Our business has diversified operations Business Services Industrials Provide construction and related services globally, including: Design Program Management Procurement Provide business services to global clients, including: Real Estate Services Logistics Facilities Management Financial Services Energy supply chain operations: Oil & Gas Production low cost, low decline, long-life assets Oilfield Services Industrial manufacturing operations: Graphite Electrode Production Pre-cast Concrete Construction Products Aggregates Specialty Metals 6
Leveraging Brookfield s history as an owner and operator of real assets Focus on owning and operating high-quality businesses Target long-term growth Invest where we have a competitive advantage Flexibility to invest in multiple industries in a variety of forms 7
And well positioned to create value and grow Strong balance sheet and access to capital Experienced management team Global presence Long-term track record of strong returns 8
with an ability to deploy capital across the globe 50+ PRIVATE EQUITY INVESTMENT PROFESSIONALS 5 CONTINENTS 9
Construction Services JON HAICK 10
Construction Services Operates under the Multiplex brand A leading construction contractor in Australia, the UK and the Middle East and recently expanded to Canada and India ~$70 billion CURRENT AND COMPLETED PROJECTS ~1,000 PROJECTS DELIVERED $7 billion+ BACKLOG 100+ PROJECTS 50 Martin Place, Sydney 11
Our business has attractive attributes Steady Steady Earnings earnings & Cash and cash Flows flows Long term track record of sustained earnings and cash flow Diverse Diverse Client Base client base Top tier public and private clients (many of whom are recurring) Client diversity improves earnings stability Attractive Attractive Geographi Markets geographic markets Core markets are stable with encouraging growth prospects Geographic diversity improves earnings stability Deep Deep Relationships relationships with Supply Chain Established subcontractor networks developed over many years of successful delivery Difficult to replicate as we have grown with subcontractors Mitigates risk in delivery Established culture focused on health and safety 12
...which has allowed us to complete distinct projects across a wide range of sectors COMMERCIAL ~600 PROJECTS RESIDENTIAL ~250 PROJECTS VALUE: ~$15 BILLION SOCIAL ~150 PROJECTS VALUE: ~$15 BILLION VALUE: ~$40 BILLION 1 1 1 Brookfield Place, Australia The Tower One St George Wharf, UK Fiona Stanley Hospital, Australia 1) Historic values converted into U.S. dollars and indexed to inflation 13
We have created significant value through organic growth # OF PROJECTS BACKLOG $ in billions 21% 104 14% $7.3 $6.4 86 2014 2016 1 2014 2016 1 1) As of June 30, 2016 14
...and looking forward our backlog is diversified and robust Residential BACKLOG BY SECTOR $7.3 BILLION Government 1% Office 24% 26% Canada Middle East 2% BACKLOG BY REGION $7.3 BILLION 18% Australia 44% Tourism & Leisure 10% Health 6% 4% Education 29% Retail UK 36% 15
We are building skylines in Australia Australia 108, Melbourne 1.5 million sq. ft. luxury residential tower located on Melbourne s south riverbank Tallest residential tower in the southern hemisphere Expected completion Q3 2020 101 FLOORS 1,100 RESIDENCES 320 METRES 16
in the UK One Blackfriars Road, London 760,000 sq. ft. luxury residential tower Includes retail, public piazza, spa pool, leisure facilities Expected completion Q4 2017 50 FLOORS 161 HOTEL ROOMS 274 RESIDENCES 170 METRES 17
in the UAE The Address Boulevard, Dubai 2.1 million sq. ft. luxury downtown residential tower including retail, pool, leisure facilities One of world s tallest residential towers Expected completion by year end 72 FLOORS 200 HOTEL ROOMS 530 RESIDENCES 370 METRES 18
Other Business Services JON HAICK 19
Our diversified operations primarily focus on commercial and residential real estate services FACILITIES MANAGEMENT Canada, USA and Australia 300 million+ sq. ft. managed 1 RESIDENTIAL REAL ESTATE SERVICES Canada, USA; Realtor networks & property management FINANCIAL SERVICES Global M&A and corporate financial advisory services LOGISTICS Global employee relocation services Cold storage warehousing & logistics 1) Proforma for announced acquisitions 20
Providing services to large institutional and government clients 300 million+ SQ. FT. 1 MANAGED REAL ESTATE 64,000+ REAL ESTATE AGENTS U.S. AND CANADA NETWORKS $75 billion+ VALUE OF OVER 700 TRANSACTIONS ADVISED ON SINCE 2003 1) Proforma for announced acquisitions 21
...with attractive attributes Recurring cash flow flow streams Long-term contracts and customer relationships High contract renewal rates Diverse Diverse Markets markets Global footprint and network Diverse client base of public, corporate and private customers Growth opportunities Growth Opportunities Organic growth through new contract wins, long-term franchise agreements and customer relationships Growth opportunities through follow-on acquisitions new geographies or service lines 22
We have created significant value through organic growth and acquisitions Organic Growth Expanded size and scale of real estate agent network and transaction volumes Entered into new long-term franchise agreements and converted competing real estate brands to our network Introduced new business lines and geographies while growing financial advisory service transaction volumes Growth through Acquisitions Expanded operating platforms by executing complementary synergistic bolt-on acquisitions 23
Brookfield Global Integrated Solutions Integrated facilities management company with self perform capabilities, strong customer relationships and contracted cash flows Building a Global Facilities Management Company 1 30,000+ LOCATIONS 300 million+ SQ.FT. MANAGED C$4 billion+ MANAGED SPEND 5,600+ TEAM MEMBERS AUSTRALIA CANADA INDIA NEW ZEALAND SINGAPORE HONG KONG UNITED STATES UK 1) Proforma for announced acquisitions 24
Brookfield Global Integrated Solutions Value creation through organic growth Growth driven by new customer wins and introducing new product lines REVENUE GROWTH C$ in millions Significant growth in government outsourcing, particularly in Canada 21% CAGR $1,238 $1,487 Increased scope of services with existing customers by developing new product lines $694 $842 $905 Launch and expansion of project management division in Australia 2012 2013 2014 2015 TTM 2016 1 1) 2016 based on last twelve months up to June 30, 2016 25
Brookfield Global Integrated Solutions Value creation through acquisitions Opportunity to acquire complementary synergistic businesses at highly accretive valuations McKinstry Business focused on critical environment facilities management serving a high growth industry 370 employees 7 million+ sq. ft. of real estate under management SNC-Lavalin O&M Highly synergistic acquisition of #2 provider of facilities management services in Canada 1,000+ employees 50 million+ sq. ft. of real estate under management 1 1) Acquisition announced and subject to customary closing conditions 26
Energy JIM REID 27
Oil and gas exploration & production (E&P) and energy related services 100,000+ BARRELS OF OIL EQUIVALENT PER DAY OF PRODUCTION ~80% / ~20% GAS / OIL WEIGHTING $3 billion ACQUISITIONS DURING CURRENT COMMODITY DOWNTURN AND MARKET DISLOCATION Horseshoe Canyon, Canada 28
Our operations include CANADIAN E&P Operate in western Canada with an orientation toward long-life, low-cost reserves located at shallow depths AUSTRALIAN E&P Focused on long-life, contracted natural gas reserves and high return offshore oil projects ENERGY SERVICES Contract drilling and well servicing operations in western Canada 29
Our operations have attractive attributes Long life, low cost reserves Low cost gas operator with industry leading full cycle costs in Canada Large scale, long-life and contracted natural gas reserves in Western Australia Low decline, large in-place resources Canada s largest CBM producer and 12th largest natural gas producer Largest domestic gas supplier in Western Australia supplying ~23% of the market Low decline with the ability to add significant reserves at a low cost per barrel / mcf Focused on downside protection Long-term gas contracts and medium term oil hedging in Western Australia Active financial hedging in Canada Locations in stable countries currently Canada and Australia Investing for value to build large scale platforms 30
We are building value in our energy investments Acquisitions Opportunities from Australian business rationalizations Major opportunity for consolidation in energy services at this point in the cycle Exploration & Development 20 million acres of exploration permits in Australia Over 2 million acres of mostly contiguous land in Canadian coalbed methane and shallow gas Operational Excellence Focus on cost structure during downturn environment Sale of non-core assets in Australia Maintain low decline with proprietary data management tool Adding value during downturn to position for successful exit on market recovery 31
We have created significant value through cost savings and acquisition synergies Our western Canadian oil and gas business has reduced cash costs 1 from C$2.18 to C$1.74 per mcf 1) Cash costs include royalties, transportation, operating costs and G&A 32
as well as long term take-or-pay contracts Quadrant Energy Largest marketer of domestic gas in State of Western Australia Acquired for value relative to reserves, infrastructure, advanced exploration portfolio Structured long-term gas contracts $2.1 billion INVESTMENT 30%+ COST MANAGEMENT SAVINGS TO DATE 33
Other Industrials PETER GORDON 35
We acquire industrial businesses with distinct characteristics Strong competitive position in their sectors Companies where Brookfield s operating experience can add value post-acquisition Low rates of change in industry 36
...and attractive attributes Acquired for value Priced at a discount to intrinsic value Positioned to withstand cyclical downturns Quality plant & equipment with significant replacement cost Defendable market share in challenging conditions Opportunity for capacity rationalization and cost reduction Barriers to entry High cost to build new capacity High switching cost for customers Ownership of scarce resource 37
Our current operations include manufacturing and mining businesses BATH AND SHOWER PRODUCTS 10% North American market share with a dominant position in Canada INFRASTRUCTURE-RELATED PRODUCTS Pre-cast concrete forms GRAPHITE ELECTRODES Graphite electrodes used in electric arc furnaces PALLADIUM MINE One of two primary palladium mines in North America LIMESTONE QUARRY One of largest western Canadian limestone quarries with 1 billion tonnes of reserves 38
and we are creating value through operational improvement Support management teams with Brookfield resources, experience and expertise Improve management systems and operating processes Emphasis on cash margins by product and customer Focus on new product development Systematic cost reduction Surface value from hidden assets 39
Price/MT (2016 dollars) Sales Volume (MT) GrafTech was acquired for half of replacement cost at a low-point in the cycle GRAFTECH GRAPHITE ELECTRODE (GE) SALES $ / MT (2016 dollars) Average =$4,114 / MT 40
and we are making step change improvements to enhance profitability Focus production at lowest cost facilities and exit non-core businesses Match corporate overhead with business needs Focus on safety Cost Savings $50 million+ SAVINGS TO DATE $50 million+ EXPECTED FUTURE MARGIN IMPROVEMENT 41
MAAX Bath Manufacturer of bath and shower products with strong North American market share COMPANY EBITDA C$ millions Investment made in 2008 at the onset of the housing downtown $40+ New management team Significant cost reductions $13 2009 2016F 1 Investment in new products (R&D) Focus on marketing and sales 1) Based on future forecasts, actual performance may vary 42
Financials CRAIG LAURIE 43
Meaningful asset base with significant runway to capitalize on opportunities TOTAL ASSETS $8.1 BILLION 1 TOTAL DEBT $2.1 BILLION 1 Corporate and Other Construction Energy 3% 28% Construction 1% 22% Other Business Services 23% Energy 38% Other Industrials 28% 18% Other Business Services 39% Other Industrials 1) As of June 30, 2016 44
Strong balance sheet and ample liquidity Over $200 million of cash and $650 million available on revolving facilities No net corporate debt Non-recourse financing at the operating asset level Consolidated net debt to total capitalization ratio of 28% Actively manage our liquidity and capital requirements 45
will enable us to fund growth in current operations and make new acquisitions Significant cash flows from operations Opportunistically monetize mature assets and operations Strategically refinance existing debt and manage leverage Closed $4 billion of additional, committed private fund capital which is a partner to BBU 46
while maintaining a disciplined approach to financial risk management Maintain conservative levels of corporate debt Strategically finance asset debt in local currency Actively manage foreign currency exposure Raise capital on an accretive basis and maintain a prudent capital structure 47
An approach to valuation US$ in millions 4 Construction $100 Company FFO 1 Multiple Valuation 2 8-10x $800-$1,000 Business Services $45 10-12x $450-$540 Flowing barrels per day (net to BBU) 3 Price per flowing barrel Energy 27,000 $28,000-$30,000 $550-$650 Industrials Book Value $363 1) Based on last 12 months to June 30, 2016 Company FFO is a non-ifrs measure based on funds from operations that may differ from similar definitions used by other entities 2) Net of BBU s proportionate share of debt financing, as applicable 3) On a net to BBU basis, on a gross basis flowing barrels per day of 108,000 4) Figures rounded for presentation purposes Total Valuation Value per Unit $2,200 - $2,600 $24 to $28 48
We have significant embedded growth in our existing operations BOOK VALUE 1 $ in millions COMPANY FFO 2 $ in millions $1,290 0 0 $204 $675 0 0 0 $10 Stabilized Businesses Emerging Businesses - Stabilized Businesses Emerging Businesses 1) Book value of equity at June 30, 2016 excluding securities and corporate cash, adjusted for repayment of our acquisition facility. Book value is presented net to Brookfield Business Partners 2) Company FFO based on last twelve months to June 30, 2016 excluding gains on securities. Company FFO is presented net to Brookfield Business Partners 49
as our emerging businesses have the potential to generate significant Company FFO as they are stabilized EMERGING BUSINESSES COMPANY FFO 1 $ in millions $135 $165 $100 Incremental Company FFO $10 1 TTM 2016 15% 20% 25% Illustrative FFO Yield 1) Company FFO based on last twelve months to June 30, 2016 excluding gains on securities. Company FFO is presented net to Brookfield Business Partners 50
Looking Forward CYRUS MADON 51
Drivers of value creation 1 2 3 Improvement in emerging businesses Organic growth of stabilized businesses Acquisitions and investments 52
We continue to identify new opportunities in high-quality businesses on a value basis Leverage Real Assets Expertise Create Platform Companies Out of Favour Sectors and Geographies Emerging Businesses Capital Markets Dislocation 53
We have a robust pipeline for new opportunities across segments and geographies PIPELINE BY SEGMENT PIPELINE BY REGION 26% South America Industrials 40% 6% Europe 53% Business Services 53% 16% Australia & Asia 7% North America Energy 54
Taking advantage of capital market weakness Energy and industrial businesses had been impacted by weak commodity and capital markets earlier this year Invested approximately $400 million in securities of businesses with high quality assets and strong long-term fundamentals Markets have recovered and our investments have increased in value by $95 million 1 1) $95 million in realized and unrealized gains on a gross basis, or $27 million net to Brookfield Business Partners 55
In India we are taking advantage of banking system stress Evaluating opportunities to recapitalize and improve businesses Partnered with State Bank of India to pursue distress opportunities Local partner enables us to access proprietary deals Recently provided a loan with equity-type return potential to a local residential developer Fastest growing major economy, positive policies and lower inflation stimulus Domestic savings amongst the highest in the world at 30% of GDP Headwinds from weakness in corporate and bank balance sheets 56
In Brazil we are taking advantage of liquidity constrained conglomerates Discussions with large corporate groups interested in monetizing non-core assets Discussions with banks regarding distressed borrowers in need of additional capital Focus on high quality businesses with barriers to entry Presidential impeachment in unprecedented political crisis Weak macroeconomic figures but a few indicators starting to rebound Scarcity of capital and rationalization of operations by large businesses 57
In conclusion our longer term strategic goals are Own and operate high quality businesses with solid long-term fundamentals Create operating platforms which we can grow over many years Target long-term returns of 15 to 20% on our investments 58
Q & A CYRUS MADON 59