Brookfield Infrastructure Partners Lp Limited Partnership · NYSE:BIP
Brookfield Infrastructure Partners Lp Limited Partnership — Brookfield Business Partners — Investor Day (September 2020)
54 slides from Brookfield Infrastructure Partners Lp Limited Partnership's investor day presentation, Sep 24, 2020
Slide 1: Brookfield Business Partners Investor Day
Brookfield Business Partners INVESTOR DAY SEPTEMBER 24, 2020
Slide 2: Agenda
Agenda Resilience Through Challenging Times 3 Cyrus Madon, Chief Executive Officer Operational Response to the Crisis 21 John Barkhouse, Managing Director Proven Financial Strength 38 Jaspreet Dehl, Chief Financial Officer 2
Slide 3: Resilience Through Challenging Times
Resilience Through Challenging Times CYRUS MADON CHIEF EXECUTIVE OFFICER 3
Slide 4: 2020 has been a year like no other
2020 has been a year like no other 4
Slide 5: Our business proved to be remarkably resilient
Our business proved to be remarkably resilient ~55% OPERATIONS WITH ~40% MANAGEABLE IMPACT OPERATIONS WITH LIMITED IMPACT EBITDA ~5% OPERATIONS WITH MATERIAL IMPACT Based on BBU’s proportionate share of annual EBITDA adjusted for acquisitions and divestures. 5
Slide 6: Contractual revenue streams proved stable
Contractual revenue streams proved stable Services to nuclear industry <5% Clean water services Revenue decline Services to offshore oil & gas industry Revenue decline for the six-month period ended June 30, 2020 compared to the six-month period ended June 30, 2019. BRK Ambiental revenue in local cu
Slide 7: Virtually all our operations have bounced back
Virtually all our operations have bounced back CLARIOS HEALTHSCOPE GREENERGY GENWORTH ~110% ~90% ~85% ~105% Sales Hospital Fuel New premiums volumes admissions volumes written Figures represent comparable year over year performance for the month of July. Genworth refers to new transactional insuranc
Slide 8: Overall our revenues are well above trough levels
Overall our revenues are well above trough levels COMPARABLE REVENUE OVER THE PRIOR YEAR PERIOD 100% -15% 75% - 40% 50% March April May June July 8
Slide 9: All of which means our financial performance has been resilient
All of which means our financial performance has been resilient COMPANY EBITDA COMPANY FFO PER UNIT ($M) ($) $1,290 $5.30 $5.00 $975 $3.10 $565 2018 2019 2020 2018 2019 2020 Represents BBU’s proportionate share of EBITDA and FFO for the twelve-month period ended June 30 of each respective year. Figu
Slide 10: With significant liquidity to fund growth
With significant liquidity to fund growth Corporate Additional liquidity within liquidity operations ~$2.3B ~$5B Corporate liquidity represents pro-forma liquidity as at June 30, 2020 adjusted for known transaction activity. Additional liquidity within operations represents cash and capacity availab
Slide 11: Executing our strategy in volatile markets
Executing our strategy in volatile markets 11
Slide 12: Deployed a significant amount of capital over past 12 months
Deployed a significant amount of capital over past 12 months ACQUIRED HIGH QUALITY INVESTED IN BUSINESSES PUBLIC SECURITIES $3.6B ~$575M Invested Invested ~$1B Current market value Represents total equity invested by BBU and institutional partners. Current market value as at September 21, 2020. 12
Slide 13: Add-on acquisitions
Invested within our operations ADD-ON ACQUISITIONS Broadened product and service offering & penetrated new geographic markets 13
Slide 14: And unlocked value through monetizations
And unlocked value through monetizations SALE OF SALE OF NORTH SALE OF PATHOLOGY BUSINESS AMERICAN PALLADIUM NOVA COLD LOGISTICS ~$360M $570M $175M Proceeds Proceeds Proceeds ~10% 3.3x 26% 13x 56% Above Plan MoC IRR MoC IRR Represents total proceeds including BBU’s and institutional partners’ share.
Slide 15: Flexible investment approach
Flexible investment approach Large scale non-control opportunities Dedicated Attractive Access to unique Preferred team return profile deal structures capital partner Complementary to our strategy of long-term capital appreciation 15
Slide 16: Leveraging our position as a preferred capital partner
Leveraging our position as a preferred capital partner Superior Plus 15-20% + 7.25% + M&A Free cash flow $260M generation Investment in preferred shares Base Return Targeted Return Downside protection and equity linked upside potential Represents total equity invested by BBU and institutional partne
Slide 17: Robust pipeline of opportunities
Robust pipeline of opportunities ~$20B ~20 Equity Capital Potential Investments $12B $5B North Europe America $1B $2B South Asia America Pacific Information presented is illustrative only. Actual results may vary materially and are subject to market conditions and other risks that are set forth in “
Slide 18: Public to private
Reviewing large scale value opportunities Public to Corporate Sponsor private carve-outs exits 18
Slide 19: Building scale in our existing operations
Building scale in our existing operations OURO VERDE INDOSTAR WESTINGHOUSE Consolidation of Acquire loan books Evaluating Brazilian fleet from distressed several add-on management market NBFCs in India targets 30+ 10,000 Penetrate new markets and broaden Potential add-on NBFCs service offerings targ
Slide 20: Potential for a wave of distress opportunities
Potential for a wave of distress opportunities Significant government and central bank support during the crisis versus pre-crisis level (% of GDP) Government fiscal deficit change 20% U.S. U.S. WWII U.K. 2020 2020 Japan 2020 U.S. 10% 2009 Euro Japan U.K. 2020 Euro 2009 2009 2009 U.S. Great Depressi
Slide 21: Operational Response to the Crisis
Operational Response to the Crisis JOHN BARKHOUSE MANAGING DIRECTOR, OPERATIONS 21
Slide 22: Our business operations team responded rapidly
Our business operations team responded rapidly Health & Safety Cash Market Management Opportunities GLOBALLY COORDINATED RESPONSE 22
Slide 23: Responded to mitigate operational and financial impacts
Responded to mitigate operational and financial impacts Safeguard Repositioned Workforce Protect employees capabilities management right to operate Assembled business continuity team to coordinate across regions 23
Slide 24: The response and opportunity at Clarios
The response and opportunity at Clarios 24
Slide 25: World's leading producer of advanced battery technologies
World’s leading producer of advanced battery technologies 1 in 3 cars #1 Powered by a Closed-loop Clarios battery recycling program 56 16,000 Global Operating facilities employees 25
Slide 26: Volumes significantly impacted during lockdowns
Volumes significantly impacted during lockdowns EMEA ~40% in April U.S./CANADA ~40% in April China ~65% in February APAC LATAM ~10% in March ~50% in April Represents year over year decrease in volumes by region for each respective month. 26
Slide 27: Response designed to mitigate impacts
Response designed to mitigate impacts Safeguard Protect Quickly Optimize employees right to operate reduce costs liquidity Assembled business continuity team to coordinate across regions 27
Slide 28: Strong recovery since April
Strong recovery since April AFTERMARKET VOLUMES (2020 AS % OF 2019) 150% 75% 100% AFTERMARKET 50% 0% Mar Apr May Jun Jul Volumes ORIGINAL EQUIPMENT VOLUMES 150% (2020 AS % OF 2019) 100% 25% ORIGINAL EQUIPMENT 50% 0% Mar Apr May Jun Jul 28
Slide 29: Our core operational improvement plan remains on track
Our core operational improvement plan remains on track Manufacturing and recycling $300M+ EBITDA Transportation and logistics enhancements Strategic sourcing Focused on optimizing the U.S. operations and global supply chain Information presented is illustrative only. Actual results may vary material
Slide 30: Realized mid-term value creation
Realized mid-term value creation ~$100 million annualized cost savings by year end TOLEDO FLORENCE TRANSPORTATION BATTERY PLANT RECYCLING CENTER NETWORK ~12% ~30% ~30% Increase in Increase in Reduction in production recycling efficiency core freight costs 30
Slide 31: Significant incremental value enhancement opportunities
Significant incremental value enhancement opportunities ANNUALIZED EBITDA $1.9B+ Target ~$1.9B ~$1.6B Normalized Medium-term Long-term EBITDA run rate potential Information presented is illustrative only. Actual results may vary materially and are subject to market conditions and other risks that ar
Slide 32: Supported by positive market trends
Supported by positive market trends Car parc Environmental Electrification Vehicle powertrain growth regulations evolution 32
Slide 33: Evolution of the car parc
Evolution of the car parc GLOBAL CARS ON THE ROAD GLOBAL NEW CAR SALES (CAR PARC) 1.9B 120M 1.2B 90M 2019 2035 2019 2035 Conventional/Start-stop Hybrids Electric Vehicles Projections based on internally prepared Clarios estimates. Figures rounded for presentation purposes. 33
Slide 34: Driving increased volumes and profitability
Driving increased volumes and profitability Incremental global battery volumes +200M units per year Advanced 56% 65M units per year Incremental opportunity for Clarios Conventional 44% 2019 2035 Projections based on internally prepared Clarios estimates. 34
Slide 35: Powertrain evolution is an opportunity, not a threat
Powertrain evolution is an opportunity, not a threat Every car needs a Clarios-type battery Nissan Sentra Audi SQ7 Toyota Prius BMW X3 Tesla Model S Conventional Hybrid Battery Electric + - + Conventional Advanced References to auto manufacturer brands and vehicle models are for illustrative purpose
Slide 36: And electrification is driving incremental growth
And electrification is driving incremental growth Increased features and emission reduction 2x Increase of vehicle electrical devices by 2025 2x Increase in power demand by 2025 Comfort features Safety/regulatory features Projections based on internally prepared Clarios estimates. 36
Slide 37: Partner of choice on next generation vehicle platforms
Partner of choice on next generation vehicle platforms Providing expertise for next generation and electric vehicles • Collaboration on system development • Evolution of multi-battery solutions • Next generation new product development 37
Slide 38: Proven Financial Strength
Proven Financial Strength JASPREET DEHL CHIEF FINANCIAL OFFICER 38
Slide 39: Meaningfully improved BBU's resilience over the years
Meaningfully improved BBU’s resilience over the years AVERAGE EBITDA OF FIVE LARGEST BUSINESSES 8 ~$750M Sales of businesses ~$3B Proceeds ~$150M 2017 2020 2017 EBITDA for twelve-month period ended December 31, 2017. 2020 EBITDA for the twelve-month period ended June 30, 2020. Proceeds include BBU’s
Slide 40: Certain businesses have increased value potential
Certain businesses have increased value potential Remarkable resilience at Westinghouse ACQUISITION YEAR END UNREALIZED 2018 2019 POTENTIAL $440M ~$600M ~$750M EBITDA EBITDA EBITDA ~9X 9-10X 10X+ Multiple Multiple range Multiple range ~$4B ~$5.7B $7.5B+ Enterprise Value Enterprise Value Enterprise V
Slide 41: Resilient financing across operations
Resilient financing across operations 41
Slide 42: Appropriate levels of debt
Appropriate levels of debt OPERATIONS WITH LIMITED IMPACT ~ 40% OPERATIONS WITH MANAGEABLE IMPACT ~ 55% $7.2B Non-recourse proportionate debt OPERATIONS WITH MATERIAL IMPACT <5% Proportionate non-recourse borrowings as at June 30, 2020. Excludes corporate debt. 42
Slide 43: Favorable financing
Favorable financing 2018 TODAY 6.5% 4.8% ~40% ~70% Fixed Fixed Weighted average interest rate of proportionate non-recourse borrowings as at December 31, 2018 and June 30, 2020. 43
Slide 44: Clarios as an example
Clarios as an example Our largest acquisition to date $10.2B DEBT $13.2B $2.9B BBU’s proportionate debt Enterprise Value ~40% OF BBU’S TOTAL PROPORTIONATE DEBT Clarios enterprise value and debt as at acquisition date. 44
Slide 45: Approach to leverage
Approach to leverage Financed with non-recourse debt at the operating company level Favorable Serviceability Sustainability terms 45
Slide 46: Able to finance at favorable terms
Able to finance at favorable terms ~7 years weighted average maturity No financial maintenance covenants ~6% weighted average cost Clarios figures shown as at acquisition date. 46
Slide 47: Clarios generates significant free cash flow
Clarios as an example Clarios generates significant free cash flow $1.6B $600M $200M $250M EBITDA Interest Taxes Capex $550M Free Cash Flow Based on Clarios trend-line annual EBITDA. Information presented is illustrative only. Actual results may vary materially and are subject to market conditions a
Slide 48: Our view of value today
Our view of value today 48
Slide 49: Our view of value
Our view of value ($M, except per unit) EBITDA Multiple 2020 Estimate1,2 • Genworth Book Value ~$670 Business Services • Healthscope 9 – 10x $250 – $300 • Construction & other 7 – 8x $1,300 – $1,400 • Westinghouse 9 – 10x $1,400 – $1,600 Infrastructure Services • Altera Infrastructure Privatization
Slide 50: Our view of value today
Our view of value today $43 - $47 $40 - $44 GrafTech Westinghouse Cardone Other Multiplex 2019 View of 2020 View of Unit Value Unit Value Information presented is illustrative only. Actual results may vary materially and are subject to market conditions and other factors and risks that are set out i
Slide 51: Long-term upside value remains unaffected
Long-term upside value remains unaffected $60+ Other $40 - $44 Clarios Westinghouse View of Unit Potential Value Today Embedded Unit Value Information presented is illustrative only. Actual results may vary materially and are subject to market conditions and other factors and risks that are set out
Slide 52: Q&A
Q&A Brookfield
Slide 53: Important Cautionary Notes
Important Cautionary Notes NOTICE TO READERS or achievements of Brookfield Business Partners to differ materially We caution that the foregoing list of important factors that may affect from anticipated future results, performance or achievement expressed future results is not exhaustive. When relyi
Slide 54: Brookfield Business Partners Investor Day
Brookfield Business Partners INVESTOR DAY SEPTEMBER 24, 2020
Brookfield Business Partners — Investor Day (September 2020) on 6ix