Brookfield Business Corporation Class A · TSX:BBUC
Brookfield Business Corporation Class A — Brookfield Business Partners — Investor Day (September 2017)
55 slides from Brookfield Business Corporation Class A's investor day presentation, Sep 27, 2017
Slide 1: Brookfield Business Partners Investor Day
Brookfield Business Partners I N V E S T O R D AY SEPTEMBER 27, 2017
Slide 2: Today's topics
Today’s topics Our Business • Solid foundation with sustainable competitive advantages Year in Review • Executing on our long-term strategic goals Operations and Financial Overview • Flexible balance sheet bolstered by strong cash flow Our Growth Plans • Target 15 to 20% average return on our invest
Slide 3: Our Business
wil Our Business Brookfield
Slide 4: Business Services and Industrials company focused on long-term capital appreciation
Brookfield Business Partners is a Business Services and Industrials company focused on long-term capital appreciation BBU BBU.UN $3.8B NYSE TSX MARKET CAP 4
Slide 5: Brookfield Business Partners at a glance
Brookfield Business Partners at a glance $14.4B ASSETS 65 INVESTMENT PROFESSIONALS ~400 LOCATIONS Business Services | Industrials Note: As of June 30, 2017 5
Slide 6: Acquire and manage high quality operations globally
Target of 15% to 20% average return on investments Our strategy is to acquire and manage high quality operations globally 6
Slide 7: Our advantages
Our advantages • Proven track record over 30+ years of investing in and managing businesses • Broad sourcing capability on a global scale • Broad investment mandate supported by access to capital and financial flexibility • Ability to pursue challenged businesses where competition is limited • Exper
Slide 8: We invest across four segments
Today, we invest across four segments Business Industrial Services Operations Construction Energy 8
Slide 9: Polling Question #1
Polling Question #1 Where do you think BBU should be investing in the next 2 years? a) North America b) South America c) Europe d) Australia e) India f) China 9
Slide 10: Year in Review
wil ‘Year in Review Brookfield
Slide 11: Significant progress expanding scale and global footprint
In the last year we made significant progress in expanding our scale and global footprint to generate long-term capital appreciation for our unitholders 11
Slide 12: A productive year
A productive year Deployed or committed ~$3 billion1 of capital to acquire businesses with solid long-term fundamentals Diversified our business profile, created new and expanded existing operating platforms Recycled capital to maximize returns Raised capital to strengthen our balance sheet 1) Inclu
Slide 13: Secured or completed five acquisitions
Secured or completed five acquisitions BRK Ambiental • Strong cash flow streams Greenergy • High barriers to entry and/or low production costs • Opportunities to improve through our operational expertise BG Fuels • Capability to leverage Brookfield’s broader platform Teekay Offshore • Significant gr
Slide 14: BRK Ambiental acquisition
BRK Ambiental is a rare opportunity to acquire an attractive business… 70% controlling stake in Brazil’s largest private water distribution, collection and treatment company • Serving 15 million people • 4 industrial water assets • 22 municipal water and sewage • Public concessions and public- treat
Slide 15: BRK Ambiental: growing, contracted cash flows
… with growing, contracted cash flows Investment highlights • BBU equity investment of $383 million (26% BBU ownership) • Executed transaction in a challenging environment • Revenues supported by regulatory framework • Embedded EBITDA growth Growth • Attractive risk adjusted returns on growth opport
Slide 16: Greenergy is the UK's leading provider of road fuels
Greenergy is the U.K’s leading provider of road fuels… Acquisition of the U.K.’s largest fuel supplier with high barriers to entry • ~300 kT of biodiesel production capacity • Well located import and storage infrastructure • Extensive distribution network delivering 18 billion+ liters of road fuels
Slide 17: Greenergy: international growth opportunity
… with significant opportunity for international growth Investment highlights • BBU equity investment of $37 million (14% BBU ownership) • Clear market leader in U.K. road fuel supply • Track record of strong free cash flow • Scalable global fuel logistics and procurement core competency Growth • Si
Slide 18: Canadian Mobil Gas Stations
Canadian Mobil Gas Stations is a stable business… 213 retail gas stations and associated convenience kiosks adjacent to sites of Canada’s leading grocery stores • Introducing premier Mobil brand to Canada • Retain existing customers with Loblaw’s PC Plus® loyalty program • Long-term agreement with I
Slide 19: Steady free cash flow generation
… with ability to generate steady free cash flow Investment highlights • BBU equity investment of $43 million (26% BBU ownership) • High volume sites with throughput in top quartile of industry • Stable industry with high free cash flow Growth • Exclusivity to develop new stations at 800+ locations
Slide 20: Teekay Offshore is a highly contracted business
Teekay Offshore is a highly contracted business… Leading global provider of marine services and solutions to the oil industry • Marine transportation and production services • Offshore oil regions: North Sea, Brazil and Canada • Global fleet with leading presence in key markets 20
Slide 21: Teekay Offshore: strong cash flows at attractive entry price
… with growing, strong cash flows at an attractive entry price Investment highlights • BBU equity investment of approximately $310 million (~25% BBU ownership1) • Cash flows underpinned by medium to long-term, fixed-rate contracts with limited direct commodity price exposure Growth • Contracted EBIT
Slide 22: OLG GTA Concession
OLG GTA Concession1 is the largest casino award in Canada… • Includes three gaming facilities in the Greater Toronto area • The largest casino concession ever awarded in Canada • Increasing cash flows and attractive growth prospects • Opportunity to develop a fourth facility • Partnership with Great
Slide 23: Increasing cash flows and attractive growth prospects
… with increasing cash flows and attractive growth prospects Investment highlights • Consortium’s expected total investment over C$1 billion funded by debt and equity • Underserved market with attractive characteristics for gaming • Long-term concession in protected market with stable, growing cash
Slide 24: Polling Question #2
Polling Question #2 Which new segment would you like to see us invest in? 24
Slide 25: Emerging Businesses
Emerging Businesses operate below what we believe to be trendline performance and have significant improvement potential 25
Slide 26: We have created value in our emerging businesses
We have created value in our emerging businesses We expect Company FFO from emerging businesses to increase VALUE DRIVERS Operations Emerging Business1 Improvement Market Price Volumes GrafTech North American Palladium Ember 1) Represents only significant emerging businesses 26
Slide 27: Our business is becoming more competitive
Our business is becoming more competitive… Improved underlying businesses with our operational expertise during industry downturn, allowing us to uncover even greater value as industry recovers • $100 million of sustainable • 32% increase in payable palladium operational improvements since productio
Slide 28: Benefiting from price improvements in end markets
… and we are beginning to benefit from price improvements in end markets Supply and demand fundamentals driving palladium prices over $900/oz Natural gas pricing improvement coupled with an active hedging program provides greater certainty of cash flows with upside optionality Constrained supply all
Slide 29: Improved businesses with significant upside potential
…resulting in improved businesses with significant upside potential EMERGING BUSINESSES Company EBITDA Book Value ($M) ($M) ~$600 ~$170 $37 1 2 2017 Trendline Book Value 1) Company EBITDA based on trailing twelve months to June 30, 2017 2) Based on historical performance assuming normalized industry
Slide 30: Operations and Financial Overview
Operations and Financial Overview 30
Slide 31: Operations grouped into four segments
Today our operations are grouped into four segments $14.4B $2.6B ASSETS BOOK EQUITY 40% Construction Industrial Operations 28% 14% 18% Energy Business Services Note: As of June 30, 2017. Equity in graphs adjusted for transactions currently funded by debt, which will be replaced by equity. Excludes e
Slide 32: Growth positions us to generate higher returns
Our growth positions us to generate higher returns in the year ahead ($ billions) June 2017 December 2016 Assets $ 14.4 $ 8.2 Equity attributable to unitholders 2.6 2.5 ($ millions) TTM June 2017 December 2016 Company FFO1 $ 243 $ 200 Company EBITDA1 170 240 1) Based on trailing twelve months 32
Slide 33: Business Services
Business Services: Services to real estate and other sectors Industrial Operations 28% $4.2B $0.4B Energy ASSETS BOOK EQUITY 14% 40% Construction Business 18% Services Services Other 12% 60% Real Estate Services Financial Advisory Business 5% Services 9% Road Fuels 14% Facilities Management Note: As
Slide 34: Industrial Operations
Industrial Operations: Manufacturing, mining and water provision Construction Services 40% $5.9B $0.5B ASSETS BOOK EQUITY 18% Business Services Industrial 14% 28% Operations Energy Water and Wastewater 55% Industrial Operations 29% Graphite Electrodes 5% Others 11% Palladium Mining Note: As of June
Slide 35: Construction
Construction: Services provided by a leading global contractor $2.5B $1.0B ASSETS BOOK EQUITY Multiplex 40% Industrial Operations 28% 14% 18% Energy Business Services Note: As of June 30, 2017. Equity in graphs adjusted for transactions currently funded by debt, which will be replaced by equity. Exc
Slide 36: Energy
Energy: Oil and gas exploration & production and energy related services Industrial Construction $1.4B $0.3B Operations 28% 40% Services ASSETS BOOK EQUITY 14% 18% Energy Business Services Western Canada Gas 65% Energy 14% Australian Oil & Gas 6% 15% Others Energy Services Note: As of June 30, 2017.
Slide 37: Key financial objectives
Key financial objectives Maintain disciplined financial risk management and a strong balance sheet with ample liquidity Strategically refinance existing debt and manage leverage Fund growth with cash flow from operations Opportunistically monetize mature assets and operations 37
Slide 38: Disciplined financial risk management
Disciplined financial risk management… Maintaining a strong, flexible balance sheet Debt by Segment ($ billions) June 2017 Borrowings $ 3.2 Energy Less cash & equivalents (1.0) 12% Industrial Net debt $ 2.2 60% Operations Equity 5.3 Business 28% Total $ 7.5 Services • Non-recourse financing at the o
Slide 39: Ample liquidity at the corporate level
…with ample liquidity at the corporate level ~$1 billion of liquidity to take advantage of attractive opportunities ($ billions) Cash $ 0.4 Revolving facilities 0.7 Available liquidity $ 1.1 Committed for acquisitions1 (0.7) Recent unit issuance 0.6 Pro-forma liquidity $1.0 1) Recently closed, annou
Slide 40: We will opportunistically recycle capital
We will opportunistically recycle capital … We harvest capital from mature assets and operations at the right time to optimize our company’s investment returns Available Invest Capital Capital Dispose Add of Investment Value 40
Slide 41: Sale of Maax
… which was exemplified by the sale of Maax In January 2017, we sold our bath and shower products operations resulting in $92 million gain before tax for unitholders • Acquired at the onset of the housing downtown in 2008 • Repositioned the company into a North American industry leader with lean ope
Slide 42: Growth through business improvements and acquisitions
Growth through business improvements and acquisitions Pro-forma Company EBITDA ($ millions) BG Fuels $475 - $525 Greenergy GrafTech OLG NAP BRK Ambiental $170 Ember Teekay 1 2 3 2017 Company EBITDA Business Improvement Acquisitions Pro-Forma Company EBITDA 1) Company EBITDA based on trailing twelve
Slide 43: Evolution of our value
Evolution of our value Multiple 2016 Company 2017 ($ millions, except per unit3) Estimate EBITDA Estimate1,2,3 • Greenergy acquisition Business $450 – $540 • BG Fuels acquisition 8 – 10x $800 – $1,100 Services • OLG GTA concession acquisition • GrafTech repositioning Industrials $360 • BRK Ambiental
Slide 44: Strong share performance since spin-off
We have experienced strong share performance since spin-off1 30% $29.68 CAGR $21.47 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2016 2017 1) Spin-off date of June 20, 2016 to September 25, 2017 44
Slide 45: Successful execution of our strategy
Successful execution of our strategy and reinvestment of cash flow generated from our business will drive additional value to unitholders 45
Slide 46: Polling Question #3
Polling Question #3 What performance metric is most relevant to you? a) FFO b) EBITDA c) AFFO d) Other 46
Slide 47: Our Growth Plans
Our Growth Plans Brookfield
Slide 48: Well positioned for growth
Our business is well positioned for growth We see significant opportunity to expand, with a focus on: Platform Business Acquisitions Growth that strengthen and organically and through expand our segments and tuck-in acquisitions geographic reach 48
Slide 49: Current opportunity focus
Current opportunity focus Opportunities in Services, Industrials and Energy Brazil and India pipelines continue to grow U.S. and Europe are competitive environments On-going initiative to consider new sectors 49
Slide 50: What makes a great long-term business
What makes a great long-term business We will sell some businesses but keep others for the longer term Predictable Pricing Low Rate Operational Free Cash Flows Power of Change Intensity Strong Competitive High Barriers High Return Demand, Growth, Position in Industry to Entry on Capital Scalability
Slide 51: Building operating platforms with significant growth potential
Building operating platforms with significant scope and growth potential… Integrated facilities management Facilities Management Platform provider with 30,000+ locations • Services for occupiers of real estate Johnson Controls • Contracted cash flows and high renewal rates Joint venture partners in
Slide 52: Our segment allocation will continue to evolve
Our segment allocation will continue to evolve Flexible investment mandate supports greater diversification and entry into new sectors 3 – 5 Years2 Today1 24% Spin-off 24% $3.8B MARKET CAP 18% 45% 33% $2.0B 19% MARKET CAP 17% Equity 20% Business Services Construction Industrial Operations Energy New
Slide 53: Why invest in BBU
Why invest in BBU • Our current operations will grow through business improvement and long- term growth of platform companies • We continue to have an active pipeline of potential opportunities and we have significant liquidity to execute these • We have an experienced team with an active management
Slide 54: Brookfield
Brookfield }54
Slide 55: Important Cautionary Notes
Important Cautionary Notes All amounts are in U.S. dollars unless otherwise the fact that our success depends on market demand for by other issuers and entities. specified. Unless otherwise indicated, the statistical and our products; the behavior of financial markets, including We define Company FF
Brookfield Business Partners — Investor Day (September 2017) on 6ix