Brookfield Business : AGM Transcript

Brookfield Business Corporation - Annual Meeting of Shareholders Webcast

June 20, 2024

Corporate Speakers:

• Cyrus Madon, Brookfield Business Partners L.P.; Executive Chairman
• Anuj Ranjan, Brookfield Business Partners L.P.; CEO
• Jaspreet Dehl, Brookfield Business Partners L.P.; CFO
• Alan Fleming, Brookfield Business Partners L.P.; Managing Director

PRESENTATION

Alan Fleming^ Cyrus, we are ready to commence the meeting.

Cyrus Madon^ Thank you Alan. Good morning, everyone. It's now 9:00AM, time to begin the Annual General Meeting of Shareholders of Brookfield Business Corporation.

My name is Cyrus Madon. As Executive Chairman, it's my pleasure to chair today's meeting. On behalf of the Board and its management team, I'd like to extend a warm welcome to everyone joining us today.

As a first order of business, I'd like to ask Alan Fleming, our Managing Director and Head of Investor Relations to serve as today's moderator and set out the voting procedure for the meeting and the process to submit questions.

Alan Fleming^ Thank you, Cyrus. Voting during the meeting will take place on our virtual meeting platform. I will now explain this process. For each matter being voted on, every holder of Class A exchangeable subordinate voting shares, which we will refer to at this meeting as the Class A shares is entitled to one vote in respect of each share held as at the close of business on May 1st, 2024.

The Class A shares, as a Class, collectively hold 25% of the outstanding votes and the Class B multiple voting shares, which we will refer to at this meeting as the Class B shares, all of which are held by the subsidiary of Brookfield Business Partners L.P., hold 75% of the outstanding votes. Adoption of a proposed motion requires a majority of the votes cast at the meeting by the holders of the Class A shares and the Class B shares, voting together as a single Class.

Voting will be open for all resolutions throughout the formal portion of the meeting. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote.

If you voted in advance of the meeting and do not wish to change your vote, then no action is needed. If you vote on any matter during this meeting, all of your previously submitted votes in respect of all matters to be voted upon at this meeting will be automatically revoked. Accordingly, if you do vote on any matter during this virtual meeting, please ensure you vote on all matters for which you are entitled to vote.

We welcome questions from our shareholders, which may be submitted by typing the question into the virtual meeting platform using the messaging icon on the top of the page.

Please indicate whether your question is of a general nature or if it relates to a motion being considered as part of the meeting's formal business. Please click the "submit" button once you have finished typing

a question. I will read out the question and ask a member of management to respond to it. If we receive many questions that are similar, we will read out one of the questions and indicate that we have received many similar questions. Only registered shareholders or proxyholders are able to submit questions at this meeting. If you're connected to this meeting as a guest, we will not be able to submit a question. We will endeavour to answer all questions submitted during the allotted time.

We recommend that you submit your questions relating to the motions being tabled as soon as possible, as it may take time for the virtual meeting platform to process them.

Cyrus Madon^ Thank you, Alan. I now call the meeting to order and ask TSX Trust Company by its representatives, Helen Kim and Kareeshma Aliar to act as scrutineers.

I also ask Alan to act as secretary of the meeting. In the unlikely event of a serious technological failure that prevents the meeting from continuing, the meeting will be rescheduled, and you'll be appropriately notified.

It is now my pleasure to introduce Anuj Ranjan, our Chief Executive Officer.

Anuj Ranjan^ Thank you Cyrus and thank you everyone for joining our Annual General Meeting. I'm pleased to be here and introduce Jaspreet Dehl, our Chief Financial Officer. Once we get through the formal part of the meeting, Jaspreet and I will give a brief presentation and then we would be happy to answer any questions you might have.

Cyrus Madon^ Thank you, Anuj. There are three items of business to be considered today and I'm going to ask Alan to outline them for you.

Alan Fleming^ First, to receive the consolidated financial statements of the Corporation for the fiscal year ended December 31, 2023, including the external auditor's report.

Second, to elect directors who will serve until the next annual meeting of shareholders; and

Third, to appoint the external auditor and authorize the directors to set their remuneration.

As mentioned in connection with the business to be addressed today, all voting will be conducted online through the virtual meeting platform. Voting is now open on all resolutions.

In order to expedite the formal part of today's meeting, the Executive Chairman has asked Jaspreet Dehl as proxyholder, to move resolutions.

Although this procedure will assist in the handling of the formal matters, it is not intended to discourage anyone from submitting questions in reference to any resolution, after it has been proposed.

Mr. Executive Chairman, please be advised that the notice calling this meeting and the management information circular were disseminated to voting shareholders in accordance with all applicable laws.

As secretary of the meeting, I will keep a copy of the notice and proof of mailing with the minutes of this meeting.

Based upon the scrutineers' preliminary report on attendance, I confirmed that there is a quorum.

Cyrus Madon^ Thank you, Alan. I, therefore, declare that the meeting properly constituted for the transaction of the business for which it has been called.

Turning to the first item of formal business, I'll now table the Corporation's consolidated financial statements for the year ended December 31, 2023, together with the external auditor's report.

Our financial statements have been mailed to shareholders who have requested them and are also available on our website.

Alan Fleming^ Mr. Executive Chairman, we have not received any questions or comments submitted in connection with the financial statements.

Cyrus Madon^ Thank you, Alan. The second item of business at our meeting today is to elect directors who will serve until our next annual meeting of shareholders.

Alan, would you please read the names of the proposed nominees?

Alan Fleming^ Thanks Cyrus. The ten proposed nominees for election by holders of the Corporation's Class A shares and Class B shares are:

Cyrus Madon, Jeffrey Blidner, David Court, Stephen Girsky, David Hamill, Anne Ruth Herkes, John Lacey, Don Mackenzie, Michael Warren, and Patricia Zuccotti.

Information on all ten director nominees is set out in our management information circular, which was posted on our website and is available from the Corporation upon request.

Mr. Executive Chairman, we have not received any questions or comments with respect to the nomination of directors.

Cyrus Madon^ Thank you, Alan. We invite shareholders and proxyholders to submit their vote online if they have not already done so. As a reminder, if you've already voted or sent in your proxy, there is no need to do anything unless you wish to change your vote.

Jaspreet Dehl^ Mr. Executive Chairman, I nominate for election as directors the ten nominees named in the management information circular, dated May 8, 2024, to serve as directors of the Corporation until the next annual general meeting of shareholders or until their successors are elected or appointed.

Cyrus Madon^ Thank you, Jaspreet.

I declare the nominations closed.

Management has received proxies representing a majority of the Corporation's Class A shares and 100% of the Class B shares. These proxies direct management to vote a majority of the Class A shares and all of the Class B shares in favor of the resolution.

I now declare that those nominated have been duly elected as directors of the Corporation.

The third item of business today is the appointment of the Corporation's external auditor and authorizing the directors to set their remuneration. As stated in the management information circular, the audit committee of our Board of Directors has recommended that Deloitte LLP be reappointed as the Corporation's external auditor.

Jaspreet Dehl^ Mr. Executive Chairman, I move that Deloitte LLP be appointed the external auditor of the Corporation to serve until the next annual general meeting of shareholders, and that the directors be authorized to set their remuneration.

Cyrus Madon^ Thank you, Jaspreet. The resolution has been moved and the motion is now before the meeting for discussion.

Alan Fleming^ Mr. Executive Chairman, we have not received any questions or comments submitted in connection with the appointment of the auditors.

Cyrus Madon^ Thank you, Alan.

Management has received proxies representing a majority of the Corporation's Class A shares and 100% of the Class B shares. These proxies direct management to vote a majority of the Class A shares and all of the Class B shares in favor of the resolution.

Voting is now closed on all resolutions. I am advised that we have the results of the resolutions based on the tabulation of votes cast in advance of the meeting.

Alan Fleming^ Thank you, Cyrus. On the matter of the appointment of the Corporation's external auditor and the authorization of directors to set their remuneration, I am pleased to declare the motion carried.

The final voting results will be available after the meeting in a press release that the Corporation will issue and posted to SEDAR+ at sedarplus.ca.

Cyrus Madon^ Thanks Alan. So, folks, that completes the formal business of today's meeting and since there is no other business, this concludes our meeting.

Now that the formal meeting has been concluded, Anuj and Jaspreet will make a short presentation on behalf of the management team and at the end of the presentation they'll be happy to respond to any questions or comments that you've submitted.

Please note that, in responding to questions and in talking about our new initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information, please review the risk factors section of our Annual Report on Form 20-F.

Finally, we'd like to ensure that all shareholders who are interested in asking a question to have the opportunity to do so. We will make every effort to address questions during the Question and Answer period. Over to you, Anuj.

Anuj Ranjan^ Thank you, Cyrus and good morning, everyone. On behalf of the management team, I would like to thank all of our shareholders for their continued support and interest in the Corporation this past year.

2023 was a successful year for our business. We had strong financial results, continued to build value within our operations and made excellent progress in our capital recycling initiatives.

Looking forward, we are positioning the business for continued growth as we advance our value creation and monetization plans at some of our more mature businesses.

With that, I will hand it over to Jaspreet Dehl, our Chief Financial Officer, who will provide an overview of the business accomplishment, strategy, and outlook.

Jaspreet Dehl^ Thank you Anuj and good morning, everyone.

Starting with a brief overview, BBUC was created with the intention of broadening our investor base by providing investors greater flexibility to invest in BBU. The Class A shares of BBUC are an economically equivalent security to our limited partnership units, but in the form of a corporate structure which can appeal to a larger base of investors.

BBUC shareholders can exchange the shares of BBUC on a one-for-one basis into BBU units at any time. These exchange rights provide BBUC investors access to BBU's entire portfolio of diverse and global high-quality services and industrial operations.

BBUC pays dividends that are identical in amount and timing to the distributions paid to BBU unitholders. And finally, as a Canadian Corporation, BBUC is also eligible for many indices that exclude limited partnerships such as the Russell 2000 Index and MSCI Small Cap Canadian Index, both of which BBUC was added to in the past two years.

Stepping back, our business objective is to deliver long-term growth in intrinsic value per unit, primarily through capital appreciation. This was our goal when we launched our business, and it remains so today.

We do this by investing in high-quality businesses on a value basis and taking a hands-on approach to enhancing their operations and cash flow.

We target 15-20% returns on all our investments. Our local presence, with boots on the ground in all regions where we operate, is a key competitive advantage. We have 160 investment and operating professionals dedicated to sourcing new opportunities and working alongside management teams to execute operational improvement plans.

The majority of our assets today are in North America and Europe. We also have businesses in Brazil, Australia, India, and the Middle East. As Anuj mentioned, our business had a successful 2023. We achieved record Adjusted EBITDA of $2.5 billion and improved our EBITDA margin to 19%.

Apart from strong financial results, we generated more than $2 billion of proceeds from our capital recycling initiatives, including about $1.5 billion for BBU from the sale of Westinghouse, which closed late last year.

We also continued to benefit from favorable access to capital and since the beginning of last year, we've refinanced or repriced over $20 billion of consolidated non-recourse borrowings at our operations. This has lowered the overall cost of debt for BBU.

As an example, at CDK Global, we completed two repricing of its $3.6 billion term loan in the last eight months, which decreased the spread on the debt by about 125 basis points and resulted in over $40 million of annual interest savings for the business.

The strength of our business performance continues to be in part driven by the quality of our underlying operations.

Our largest businesses are essential service providers, meaning they provide products and services that are critical to their customers, which enables them to maintain revenue in all types of environments.

They are also market leaders with strong pricing power. They are able to pass through higher costs even in high inflationary environments like we've seen over the last few years.

As market leaders, they have a durable competitive advantage, which supports strong margin growth as well as high returns on capital.

Simply put, we own great businesses and we're making them better through a hands-on approach to improving the earnings and cash flows.

This is done by focusing on repeatable processes around ensuring:

First, operational excellence, where we recruit and retain the best talent, eliminate spans and layers, and ensure the right organizational design.

Second, through commercial excellence, with the focus on improving the sales organization, we enhance top line organic growth and expand the customer base at our businesses.

Third, through strategic repositioning, we understand where a company sits within its ecosystem, and the opportunities and challenges within its environment.

In addition, today we're focused on ensuring that we're using technology and data analytics to provide more opportunities to drive value through digitalization and automation.

A great example of our value creation playbook in practice is at Westinghouse. Westinghouse is a global leader providing services to over half of the world's nuclear power plants.

We acquired Westinghouse in 2018 out of a complex bankruptcy process after the business had experienced significant cost overruns on fixed price construction contracts and at a time when the broader nuclear energy sector was out of favor.

We appointed a world-class management team and over four years worked closely with them to strengthen the underlying business and improve the operations at Westinghouse.

Under our ownership, Westinghouse strengthened its industry leadership position and its EBITDA nearly doubled to an annual run-rate of about $800 million.

On the back of this transformation, we launched a sales process and reached an agreement with a strategic consortium to sell the business for approximately $8 billion.

When combined with distributions received, we realized 6x multiple of our invested capital and an IRR of over 60% on our investment. I'll now pass the call back to Anuj for some closing remarks.

Anuj Ranjan^ Thank you, Jaspreet.

Our business is in an excellent position today. We own and operate market-leading businesses that provide mission critical products and services for their customers. They cannot be easily replaced and have real competitive advantages, strong pricing power, and resilient margins.

We're making these great businesses even better by rolling up our sleeves and taking a hands-on approach to improving margins and cash flow.

And at the right time we will monetize businesses to maximize value for our investors. Since creating BBU, we've sold 20 businesses, realizing a 3x multiple on our investment and an IRR of 30%. We will continue to recycle capital to support our growth.

If you are interested in further updates on our business, we encourage all of you to join us for our Annual Investor Day, which will be held on Tuesday, September 24th.

More information on this event will be made available on our website in the coming months.

Thank you for your continued interest in our business and your ongoing support. Please do not hesitate to reach out to any of us should you have any questions, ideas, or comments you wish to share as partners in our business.

This concludes our prepared remarks. We would now be pleased to answer any questions.

Alan, would you please advise if there are any questions at this time?

Alan Fleming^ Thank you Anuj. Mr. Executive Chairman, there are no questions to be addressed at this time.

Cyrus Madon^ Thanks Alan. So as there are no further questions or comments, I'd like to thank you all for taking the time to join us today and we look forward to speaking to all of you throughout the year. Thank you.