Brookfield Business Partners CORPORATE PROFILE MAY 2018
Brookfield Business Partners is a Business Services and Industrials company focused on long-term capital appreciation BBU NYSE BBU.UN TSX $4.7B MARKET CAP 2
Our strategy is to acquire and manage high quality operations globally We target 15% to 20% average return on our investments Broad investment mandate with flexibility to invest across multiple industries and through many forms Leverage Brookfield s global expertise as an owner and operator of real assets Acquire market leaders and businesses with high barriers to entry and/or low production costs, add value through operational and other improvements Closely partnering with management teams for long term business success focused on profitability and sustainability of margins and cash flows Opportunistically recycle capital, selling interests in businesses when value is maximized Global sourcing capability and a proven track record over 30+ years of investing and managing businesses 3
We are building scale and diversity across our four operating segments Business Services Industrials Business Services Industrial Operations Facilities management Real estate services Road fuel distribution and marketing Gaming Others; including logistics, financial advisory services Graphite electrode production Water and wastewater services Specialty metals and aggregates Pre-cast concrete construction products Construction Energy Design Program management Procurement Oil and gas exploration and production Oilfield and marine services 4
Our global footprint continues to grow $16.4B ASSETS 75+ INVESTMENT PROFESSIONALS NORTH AMERICA $5.6 billion U.K & EUROPE $4.2 billion MIDDLE EAST & ASIA $1.1 billion ~600 LOCATIONS SOUTH AMERICA $4.2 billion AUSTRALIA $1.3 billion Note: At March 31, 2018 5
Q1 2018 Financial Snapshot Total Assets $16.4 billion 1 Book Equity $2.7 billion 1,2 Corporate 4% 16% Construction Services Corporate 17% 28% Construction Services Industrial Operations 37% 33% Business Services Industrial Operations 13% 16% Business Services Energy 10% 26% Energy Company EBITDA $191 million 3,4 Company FFO $138 million 3,4 US$ millions US$ millions $115 $95 $75 $55 $35 $15 -$5 -$25 -$45 $16 Business Services $13 Construction $119 Industrial Operations $58 Energy ($15) Corporate $135 $130 $125 $120 $115 $110 $105 $100 $95 $90 $85 $80 $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 -$5 $0 $5 -$10 -$15 -$20 -$25 -$30 -$35 -$40 -$45 $8 Business Services $9 Construction $98 Industrial Operations $38 Energy ($15) Corporate 1) Unaudited, as of March 31, 2018 2) Attributable to limited partnership unitholders, general partnership unitholders, redemption-exchange unitholders, preferred shareholders and special limited partnership unitholders 3) Unaudited, for the quarter ended March 31, 2018 4) Attributable to limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders 6
Disciplined financial risk management Maintaining a strong, flexible balance sheet with ample liquidity at the corporate level to take advantage of attractive opportunities Financing Assets Managing Liquidity Non-recourse financing at the operating business level Weighted average debt maturity of 6.8 years 1 Maintain appropriate net debt to total capitalization for the business Cash flows from operations Opportunistically monetizing mature assets and operations Strategically refinancing existing debt and incurring additional debt No debt drawn at the corporate level Limited recourse for performance bonds and construction guarantees 1) At March 31, 2018 7
Our Business 8
Business Services Services businesses across diverse sectors Facilities Management Real Estate Services Road Fuels Entertainment Other Global provider of integrated facility management services for over 320 million sq. ft of real estate A suite of services including Canadian brokerage services, appraisals and global relocation services A leading supplier of road fuel in the U.K. and Ireland; and the Mobil gas station network across Canada Three Toronto-area gaming facilities generating over $1 billion in gross gaming revenue annually Including Canadian logistics companies and global financial advisory business Ontario Gaming GTA 9
Construction Services Leading international contractor with 55 year track record of delivering landmark property and infrastructure assets, operating under the Multiplex banner The Tower - One St George Wharf, London 50 Martin Place, Sydney The Address Boulevard Hotel, Dubai Fiona Stanley Hospital, Perth Extensive development and construction capability to drive value creation, providing construction and related services globally, including design, program management and procurement Focus on commercial and residential buildings, social infrastructure and mixed-use properties Operates in Australia, Europe, the Middle East, Canada and India 10
Industrials Low-cost producers with high barriers to entry due to market position, operational or capital intensity Graphite Electrodes Water & Wastewater Palladium Mining Other A leading global manufacturer of graphite electrodes used in electric arc furnaces Largest private water and wastewater services company in Brazil serving 15 million people The only pure play palladium producer in the world, located in Canada and producing ~6,300 tonnes per day 1 Limestone aggregates mining and precast and drainage products manufacturer in Canada 1) Underground mining production in Q1 2018 11
GrafTech International Completed IPO for ~13% of GrafTech at $15 per share, implying an enterprise value of ~$7 billion and generating gross proceeds of $571 million At a valuation of ~$7 billion, BBU investment is worth $2.2 billion, an increase of over 6.5 times our initial investment of $295 million Realized cash and notes of $895 million to date: $1.5 billion debt issuance in February, which resulted in a $384 million distribution to BBU $750 million dividend in the form of a promissory note ($259 million to BBU) $160 million cash dividend ($55 million to BBU) $197 million share of IPO proceeds to BBU Continued ownership of 30%, worth $1.4 billion at the IPO price Investment Highlights Acquired in 2015 for an equity purchase price of $855 million, BBU s share of which was $295 million for a 34% stake Successfully repositioned GrafTech with multi-year take-or-pay contracts for much of graphite electrode production negotiated in 2017 at weighted average contract price of $9,700 per metric tonne (over the next five years), 2X historical average pricing 12
Energy Operating across the supply chain including exploration and production, and services to the oil and gas industry Offshore Services Western Canada Gas Australian Oil &Gas Well & Drilling Services Leading provider of critical transportation and production services to the offshore oil industry with long term, fixed rate contracts Long-life, low-cost reserves located at shallow depths Long-life, contracted natural gas reserves and high return offshore oil projects Largest active service rig contractor in Canada providing drilling and well services 13
Our business is well positioned for growth Our growth strategy includes building out our platform businesses over the long term and capitalizing on our flexible investment mandate to acquire high quality businesses for value Platform Business Growth Platform Business Acquisitions Growth organically and through tuck-in acquisitions organically that strengthen and through and expand tuck-in our acquisitions segments and geographic reach 14
Westinghouse Electric Company Definitive agreement to acquire 100% of Westinghouse Electric Company, a leading global provider of infrastructure services to the power generation industry 1 Largest service provider to the world s nuclear power facilities, providing sophisticated engineering, maintenance, facilities management and repair services ~$4.6 billion purchase price, expected to be financed with ~$1 billion of equity, ~$3 billion of long-term debt and by the assumption of certain obligations ~ 50% equity commitment by BBU and the remainder by institutional partners 2 Investment Highlights Leading market player with barriers to entry providing critical services to nuclear power facilities Cash flows underpinned by long-term contracts for regularly scheduled services Strong reputation as a technology leader in the nuclear power industry Growth Enhancing and expanding service offerings Provision of leading technology, including AP1000 design 1) There can be no assurance that Brookfield Business Partners will close this transaction 2) Brookfield Business Partners investment may be syndicated to other institutional investors 15
Schoeller Allibert Definitive agreement to acquire 70% controlling interest in Schoeller Allibert Group B.V., one of Europe s largest manufacturers of returnable plastic packaging 1 Extensive expertise in packaging for the agriculture, automotive, food and food processing, beverage, retail, industrial manufacturing and pooling industries 205 million purchase price. 40 million equity commitment by BBU and the remainder by institutional partners 2 The founding family, Schoeller Group, will own the remaining 30% as a long-term partner Investment Highlights Strong competitive position and barriers to entry from manufacturing scale, reputation for quality and intellectual property Customer base, many with long-term relationships, diversified over segments and geographies Growth Expected growth in the returnable packaging industry driven by sustainability requirements, waste reduction, e-commerce and logistics automation Organic growth opportunities through product and services innovation International expansion, organically and through bolton acquisitions, supported by Brookfield s global presence 1) There can be no assurance that Brookfield Business Partners will close this transaction 2) Brookfield Business Partners investment may be syndicated to other institutional investors 16
Appendices 17
Selected Segmented Financial Information The following tables present selected income statement and balance sheet information by operating segment on a proportionate basis: Statements of Operating Results Statements of Financial Position Three Months Ended Mar. 31, US$ MILLIONS, UNAUDITED 2018 2017 Company EBITDA by segment Business Services $ 16 $ - Construction Services 13 (14) Industrial Operations 119 (1) Energy 58 16 Corporate and Other (15) (8) Company EBITDA $ 191 $ (7) US$ MILLIONS, UNAUDITED As at Mar. 31, 2018 Dec. 31, 2017 Net debt (cash) by segment Business Services $ 331 $ 327 Construction Services (188) (234) Industrial Operations 767 361 Energy 119 151 Corporate and Other (643) (392) Net debt (cash) $ 386 $ 213 Company FFO by segment Business Services $ 8 $ 4 Construction Services 9 (3) Industrial Operations 98 79 Energy 38 20 Corporate and Other (15) (5) Company FFO 1 $ 138 $ 95 Equity attributable to unitholders by segment Business Services $ 442 $ 448 Construction Services 751 959 Industrial Operations 342 661 Energy 690 660 Corporate and Other 461 310 Equity attributable to unitholders $ 2,686 $ 3,038 1) Company FFO is a non-ifrs measure and is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investment. For further information on Company FFO, see Definitions at the back of the Corporate Profile. 18
Governance Senior Management Team Cyrus Madon Chief Executive Officer Peter Gordon Chief Operating Officer Craig Laurie Chief Financial Officer Ralf Rank Chief Investment Officer, Services Joe Freedman Senior Vice Chairman Jim Reid Chief Investment Officer, Energy Jaspreet Dehl Managing Director David Aiken Chief Investment Officer, Industrials Brookfield Business Partners has entered into a Master Services Agreement with Brookfield Asset Management Provides a comprehensive suite of services to Brookfield Business Partners Base management fee equal to 1.25% annually of total capitalization of Brookfield Business Partners Brookfield is entitled to receive incentive distributions equal to 20% of an increase in the unit price of BBU over the incentive distribution threshold (currently $36.72/unit) 1) For further information regarding the arrangements refer to the Management Services Agreement available in the public filings of Brookfield Business Partners in the U.S. and Canada 19
Investor Relations contact: Courtney Burke North America 1-866-989-0311 Global +1-416-363-9491 Email: bbu.enquiries@brookfield.com 20 20
Definitions and Use of Non-IFRS Measures Company Funds From Operations (Company FFO), where applicable, is a key measure of our financial performance and we use Company FFO to assess operating results and our business performance. Company FFO is a non-ifrs measure which does not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Company FFO is calculated as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, non-cash gains or losses and other items. Company FFO is presented net to unitholders, or net to parent company. When determining Company FFO, we include our proportionate share of Company FFO of equity accounted investments. For further information on Company FFO see Use of Non IFRS Measures of the Q1 2018 6-K. Company EBITDA, where applicable, is a key measure of our financial performance and we use Company EBITDA to assess operating results and our business performance. Company EBITDA is non-ifrs measure which does not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Company FFO is further adjusted as Company EBITDA to exclude the impact of realized disposition gains (losses), interest expense, current income taxes, and realized disposition gain, current income taxes and interest expenses related to equity accounted investments. Company EBITDA is presented net to unitholders, or net to parent company. For further information on Company EBITDA see Use of Non IFRS Measures of the Q1 2018 6-K. Equity attributable to unitholders is exclusive of the equity interest of others in our operating subsidiaries Unitholders are defined as the parent company prior to the Spin-off on June 20, 2016 and as limited partnership unitholders, general partnership unitholders, special limited partnership unitholders and redemption-exchange unitholders post Spin-off. 21
Important Cautionary Notes All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, the statistical and financial data in this document is presented as of March 31, 2018. CAUTIONARY STATEMENT REGARDING FORWARD- LOOKING STATEMENTS AND INFORMATION This Corporate Profile 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 forwardlooking 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 L.P. and its subsidiaries 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. Statements relating to reserves are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described herein can be profitably produced in the future. We qualify any and all of our forward-looking statements by these cautionary factors. 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. CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES This Corporate Profile contains references to Company FFO. When determining Company FFO, we include our unitholders proportionate share of Company FFO for equity accounted investments. Company FFO is not a generally accepted accounting measure under IFRS and therefore may differ from definitions of Company FFO or Funds from Operations used by other entities. We believe that this is a useful supplemental measure that may assist investors in assessing the financial performance of Brookfield Business Partners and its subsidiaries. Company FFO should not be considered as the sole measure 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. 22