58
Brookfield Business Partners Investor Meeting September 28, 2016
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
3
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
Overview CYRUS MADON
4
Brookfield Business Partners is a
business services & industrials company
focused on
long-term capital appreciation
5
NYSE: BBU
TSX: BBU.UN MARKET SYMBOL
Our business has diversified operations…
6
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
Leveraging Brookfield’s history as an owner and operator of real assets
7
• 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
And well positioned to create value and grow…
8
• Strong balance sheet and access to capital
• Experienced management team
• Global presence
• Long-term track record of strong returns
…with an ability to deploy capital across the globe
9
50+ PRIVATE EQUITY INVESTMENT
PROFESSIONALS
5 CONTINENTS
Construction Services JON HAICK
10
$7 billion+ BACKLOG
100+ PROJECTS
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
11
50 Martin Place, Sydney
~$70 billion CURRENT AND
COMPLETED PROJECTS
~1,000 PROJECTS DELIVERED
Our business has attractive attributes…
12
Steady Earnings
& Cash Flows
• Long term track record of sustained earnings and
cash flow
Diverse Client
Base
• Top tier public and private clients (many of whom
are recurring)
• Client diversity improves earnings stability
Attractive Geographi
Markets
• Core markets are stable with encouraging growth
prospects
• Geographic diversity improves earnings stability
Deep 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
Steady earnings
and cash flows
Diverse
client base
Attractive
geographic markets
Deep relationships
...which has allowed us to complete distinct projects across a wide range of sectors
13
RESIDENTIAL
~250 PROJECTS
VALUE: ~$15 BILLION
SOCIAL
~150 PROJECTS
VALUE: ~$15 BILLION
Fiona Stanley Hospital, Australia The Tower – One St George Wharf, UK Brookfield Place, Australia
COMMERCIAL
~600 PROJECTS
VALUE: ~$40 BILLION
1 1 1
1) Historic values converted into U.S. dollars and indexed to inflation
1) As of June 30, 2016
We have created significant value through organic growth…
14
2014 2016
14%
$6.4
BACKLOG
$ in billions
1
$7.3
2014 2016
21%
86
104
# OF PROJECTS
1
...and looking forward our backlog is diversified and robust
15
44%
36%
2%
18% 24%
29%
4% 6%
10%
26%
1%
Office
Retail
Education
Health
Tourism &
Leisure
Residential
Government
Australia
UK
Canada
Middle East
BACKLOG BY SECTOR
$7.3 BILLION
BACKLOG BY REGION
$7.3 BILLION
We are building skylines in… Australia
16
• 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
320 METRES
1,100 RESIDENCES
Australia 108, Melbourne
17
• 760,000 sq. ft. luxury residential
tower
• Includes retail, public piazza, spa
pool, leisure facilities
• Expected completion Q4 2017
50 FLOORS
170 METRES
274 RESIDENCES
161 HOTEL ROOMS
One Blackfriars Road, London
…in the UK
18
• 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
370 METRES
530 RESIDENCES
200 HOTEL ROOMS
The Address Boulevard, Dubai
… in the UAE
Other Business Services JON HAICK
19
LOGISTICS
Global employee relocation services
Cold storage warehousing & logistics
RESIDENTIAL REAL ESTATE
SERVICES
Canada, USA; Realtor networks &
property management
Our diversified operations primarily focus on commercial and residential real estate services
20
FACILITIES MANAGEMENT
Canada, USA and Australia
300 million+ sq. ft. managed1
FINANCIAL SERVICES
Global M&A and corporate
financial advisory services
1) Proforma for announced acquisitions
$75 billion+ VALUE OF OVER 700 TRANSACTIONS
ADVISED ON SINCE 2003
64,000+ REAL ESTATE AGENTS
U.S. AND CANADA NETWORKS
300 million+ SQ. FT.
MANAGED REAL ESTATE
Providing services to large institutional and government clients
21
1) Proforma for announced acquisitions
1
...with attractive attributes
22
Recurring cash
flow streams
• Long-term contracts and customer relationships
• High contract renewal rates
Diverse Markets
• Global footprint and network
• Diverse client base of public, corporate and
private customers
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
Recurring cash
flow streams
Diverse
markets
Growth
opportunities
We have created significant value through organic growth and acquisitions
23
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
Brookfield Global Integrated Solutions
24
Integrated facilities management company
with self perform capabilities, strong customer relationships and
contracted cash flows
AUSTRALIA | CANADA | INDIA | NEW ZEALAND | SINGAPORE | HONG KONG | UNITED STATES | UK
Building a Global Facilities Management Company1
30,000+ LOCATIONS
5,600+ TEAM MEMBERS
C$4 billion+ MANAGED SPEND
300 million+ SQ.FT. MANAGED
1) Proforma for announced acquisitions
Brookfield Global Integrated Solutions Value creation through organic growth
25
• Growth driven by new customer
wins and introducing new product
lines
• Significant growth in government
outsourcing, particularly in
Canada
• Increased scope of services with
existing customers by developing
new product lines
• Launch and expansion of project
management division in Australia
REVENUE GROWTH
C$ in millions
$694 $842 $905
$1,238
$1,487
2012 2013 2014 2015 TTM 2016
21%
CAGR
1
1) 2016 based on last twelve months up to June 30, 2016
Brookfield Global Integrated Solutions Value creation through acquisitions
26
Highly synergistic acquisition of #2
provider of facilities management
services in Canada
• 1,000+ employees
• 50 million+ sq. ft. of real estate
under management
Business focused on critical
environment facilities management
serving a high growth industry
• 370 employees
• 7 million+ sq. ft. of real estate
under management
McKinstry SNC-Lavalin O&M
Opportunity to acquire complementary synergistic businesses
at highly accretive valuations
1
1) Acquisition announced and subject to customary closing conditions
Energy JIM REID
27
$3 billion ACQUISITIONS DURING CURRENT
COMMODITY DOWNTURN AND
MARKET DISLOCATION
Oil and gas exploration & production (E&P) and energy related services
28
Horseshoe Canyon, Canada
100,000+ BARRELS OF OIL EQUIVALENT
PER DAY OF PRODUCTION
~80% / ~20% GAS / OIL
WEIGHTING
Our operations include…
29
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
Our operations have attractive attributes…
30
Investing for value to build large scale platforms
30
• Low cost gas operator with industry leading full cycle costs in
Canada
• Large scale, long-life and contracted natural gas reserves in
Western Australia
• 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
• 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
Long life, low cost
reserves
Low decline,
large in-place
resources
Focused on
downside
protection
• Opportunities from
Australian business
rationalizations
• Major opportunity for
consolidation in energy
services at this point in
the cycle
We are building value in our energy investments…
31
• 20 million acres of
exploration permits in
Australia
• Over 2 million acres of
mostly contiguous land in
Canadian coalbed
methane and shallow gas
• 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
Acquisitions Exploration &
Development
Operational
Excellence
Our western Canadian oil and gas business has reduced cash costs1
from C$2.18 to C$1.74 per mcf
We have created significant value through cost savings and acquisition synergies…
32
1) Cash costs include royalties, transportation, operating costs and G&A
…as well as long term take-or-pay contracts
33
• 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
Quadrant Energy
30%+ COST MANAGEMENT
SAVINGS TO DATE
$2.1 billion INVESTMENT
Other Industrials PETER GORDON
35
We acquire industrial businesses with distinct characteristics…
36
Strong competitive position in their sectors
Companies where Brookfield’s operating experience can add
value post-acquisition
Low rates of change in industry
• Priced at a discount to intrinsic value
• Quality plant & equipment with significant replacement cost
• Defendable market share in challenging conditions
• Opportunity for capacity rationalization and cost reduction
• High cost to build new capacity
• High switching cost for customers
• Ownership of scarce resource
...and attractive attributes
37
Acquired
for value
Positioned to
withstand cyclical
downturns
Barriers
to entry
Our current operations include manufacturing and mining businesses…
38
BATH AND SHOWER PRODUCTS
10% North American market
share with a dominant position
in Canada
One of two primary palladium
mines in North America
One of largest western Canadian
limestone quarries with 1 billion
tonnes of reserves
INFRASTRUCTURE-RELATED
PRODUCTS
Pre-cast concrete forms
GRAPHITE ELECTRODES
Graphite electrodes used
in electric arc furnaces
PALLADIUM MINE LIMESTONE QUARRY
…and we are creating value through operational improvement
39
• 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
GrafTech was acquired for half of replacement cost at a low-point in the cycle
40
GRAFTECH GRAPHITE ELECTRODE (GE) SALES $ / MT (2016 dollars)
Sa
les V
olu
me
(M
T)
Pri
ce
/MT
(2
01
6 d
olla
rs)
Average =$4,114 / MT
…and we are making step change improvements to enhance profitability
41
• Focus production at lowest cost
facilities and exit non-core
businesses
• Match corporate overhead with
business needs
• Focus on safety
Cost Savings
$50 million+ EXPECTED FUTURE
MARGIN IMPROVEMENT
$50 million+ SAVINGS
TO DATE
COMPANY EBITDA
C$ millions
MAAX Bath
42
Manufacturer of bath and shower products
with strong North American market share
2009 2016F
$13
$40+ • Investment made in 2008 at the
onset of the housing downtown
• New management team
• Significant cost reductions
• Investment in new products (R&D)
• Focus on marketing and sales
1) Based on future forecasts, actual performance may vary
1
Financials CRAIG LAURIE
43
Meaningful asset base with significant runway to capitalize on opportunities
44
1) As of June 30, 2016
TOTAL ASSETS
$8.1 BILLION1
23%
28%
28% 18%
3%
TOTAL DEBT
$2.1 BILLION1
38%
39%
22%
1%
Other
Industrials
Energy
Corporate
and Other
Other Business
Services
Construction
Other Industrials
Energy
Other Business
Services
Construction
Strong balance sheet and ample liquidity…
45
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
…will enable us to fund growth in current operations and make new acquisitions…
46
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
…while maintaining a disciplined approach to financial risk management
47
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
An approach to valuation
48
$800-$1,000 Construction $100
$450-$540 Business Services
Energy
$363 Industrials
$2,200 - $2,600
8-10x
10-12x $45
Multiple Company FFO1 Valuation2
$24 to $28
US$ in millions4
Value per Unit
Book Value
Flowing barrels per
day (net to BBU)3
Price per
flowing barrel
$28,000-$30,000 27,000 $550-$650
Total Valuation
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
We have significant embedded growth in our existing operations…
49
-
0
0
0
0
0
$1,290
$675
$204
$10
BOOK VALUE1
$ in millions
COMPANY FFO2
$ in millions
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
Stabilized
Businesses
Emerging
Businesses
Stabilized
Businesses
Emerging
Businesses
… as our emerging businesses have the potential to generate significant Company FFO as they are stabilized
50
EMERGING BUSINESSES
COMPANY FFO1
$ in millions
$10
$100
$135
$165
TTM 2016 15% 20% 25%1
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
Incremental
Company
FFO
Illustrative FFO Yield
Looking Forward CYRUS MADON
51
Drivers of value creation
Improvement in
emerging
businesses
1
Organic growth
of stabilized
businesses
2
52
Acquisitions and
investments
3
We continue to identify new opportunities in high-quality businesses on a value basis…
53
Leverage Real Assets Expertise
Create Platform Companies
Out of Favour Sectors and Geographies
Emerging Businesses
Capital Markets Dislocation
We have a robust pipeline for new opportunities across segments and geographies
54
53%
26%
6%
16%
53%
7%
40%
Business
Services
Energy
South America
Europe
Australia
& Asia
Industrials
North America
PIPELINE BY SEGMENT PIPELINE BY REGION
Taking advantage of capital market weakness
55
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 million1
1) $95 million in realized and unrealized gains on a gross basis, or $27 million net to Brookfield Business Partners
• 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
In India we are taking advantage of banking system stress
56
• 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
In Brazil we are taking advantage of liquidity constrained conglomerates
57
• 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
In conclusion our longer term strategic goals are
58
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
Q & A CYRUS MADON
59
