BBUC

Capital Recycling and Capital Allocation

• Generated $1.2 billion in asset sale and distribution proceeds in the first half of 2026, including an agreement to sell legacy asset Multiplex for ~$650 million, one of the last remaining legacy spin-out assets.
• Allocated $150 million of recent recycling proceeds to additional share repurchases; since launching the buyback program in early 2025, BBUC has repurchased over $300 million of shares at a nearly 50% discount to net asset value (NAV), which is highly accretive to shareholder value.
• Ended Q2 with $2.8 billion in pro forma corporate liquidity; the company will renew its normal course issuer bid (NCIB) and will remain active in repurchasing while shares trade at a meaningful discount to intrinsic value.

New Acquisitions and Strategic Investments

• Committed over $300 million to acquire two market-leading businesses, World Freight Company (WFC) and Gregg Distributors, and closed a strategic $100 million investment in OpenAI Deployment Company (DeployCo) after syndicating $50 million of the original $150 million commitment to institutional partners.
  • WFC: The world's largest general sales and service agent for air freight, serving 300+ airline customers across 70+ countries with an asset-light model, attractive margins, and strong cash conversion. Management plans to consolidate its decentralized regional brand structure, implement shared services, add automation and AI to high-volume workflows, and accelerate industry consolidation via acquisition.
  • Gregg Distributors: A leading maintenance, repair and operations (MRO) distributor in Western Canada serving 25,000 industrial customers with a same/next-day fulfillment model and resilient cash flows. Management will support a smooth ownership transition, then prioritize strengthening commercial capabilities, growing share of wallet, improving pricing discipline, leveraging purchasing scale, and making targeted technology investments while preserving its customer-first culture.
  • DeployCo: The investment provides access to leading AI models and scarce top technical talent, enabling accelerated AI implementation across BBUC's entire portfolio to unlock operational efficiency and cost savings.

Long-Term Strategic Positioning

• BBUC has compounded NAV per share at a mid-teens annual rate since its founding 10 years ago, following a repeat playbook of buying high-quality market-leading businesses, improving operations and cash flows, and recycling capital to drive ongoing growth.
• Current market conditions favor BBUC's strategy: investors now prioritize resilient businesses with durable cash flows, which BBUC's portfolio of hard-to-replicate assets provides. Large conglomerates are divesting high-quality non-core industrial businesses, creating a growing pipeline of attractive carve-out opportunities that BBUC's complex transaction experience allows it to acquire at reasonable valuations.
• Many fragmented essential services end markets have strong mission-critical providers that lack scale or investment to reach full potential, creating additional acquisition opportunities for BBUC's operational expertise.

AI Implementation Progress

• Early AI deployments have already delivered measurable improvements across the portfolio: Clarios added production line sensors to optimize machine maintenance, production planning, and inventory management; Chemelex implemented AI to optimize polymer blending in manufacturing, reducing yield loss and production variability.

• Capital recycling: Management reaffirmed the prior 24-month target of $2 billion in total recycling proceeds. With $1.2 billion generated in the first 10 months of the period, management expects to meet or exceed the target, with a healthy pipeline of potential monetizations including larger assets like BRK Ambiental and multiple smaller assets.
• Sagen (residential mortgage insurance): Long-term loss ratios are expected to stabilize in the 15% to 25% range, up from the unsustainably low levels seen immediately after BBUC's acquisition, as home prices normalize following recent depreciation.
• DexKo (engineered components): Cost optimization opportunities remain under-exploited, with additional efficiency gains expected even as the business waits for end-market demand to normalize, which management expects to occur in 2027.
• Brookfield Evergreen Fund (BPE): Management remains confident in hitting overall fundraising targets across expanding Canadian, U.S., and future international distribution platforms, and expects full redemption of remaining units by the April 2027 deadline. If full redemption does not occur by the deadline, the end of the redemption discount will be a long-term positive for BBUC.

1. Industrial Segment: Generated Q2 2026 adjusted EBITDA of $323 million, compared to $305 million in Q2 2025, representing a 5.9% year-over-year increase. On a same-store basis, adjusted EBITDA increased 6% year-over-year. This segment contributes approximately 55% of total adjusted EBITDA. Clarios, the segment's advanced energy storage operation, saw strong performance driven by commercial actions and growing demand for higher-margin advanced batteries, and repaid $500 million of debt during the quarter. The engineered components manufacturer delivered a 5% same-store adjusted EBITDA increase, with cost optimization and strong commercial execution offsetting soft end-market conditions.

2. Business Services Segment: Generated Q2 2026 adjusted EBITDA of $204 million, compared to $205 million in Q2 2025, a marginal 0.5% year-over-year decrease. On a same-store basis, adjusted EBITDA increased 6% year-over-year. This segment contributes approximately 34.75% of total adjusted EBITDA. The residential mortgage insurer Sagen delivered resilient performance supported by durable first-time homebuyer demand, though higher claims driven by reserve strengthening increased the quarter's loss ratio. Dealer software and technology services operation CDK benefited from contractual price increases, cross-selling, and cost optimization that offset elevated customer churn.

3. Infrastructure Services Segment: Generated Q2 2026 adjusted EBITDA of $96 million, compared to $109 million in Q2 2025, an 11.9% year-over-year decrease. The decline reflects the impact of a 2025 partial sale of a work access services operation. This segment contributes approximately 16.35% of total adjusted EBITDA. Modular Building Leasing Services and Work Access Services delivered stable performance. Lottery services results were weighed down by a joint venture contract penalty and increased investment spend, which offset segment revenue growth.

• CDK (dealer software): The business' debt has traded at distressed levels, with one credit rating agency placing it on negative watch and media reports of lender negotiations. While underlying business performance remains stable and the business holds strong liquidity with positive operating cash flows, elevated churn from industry transitions and ongoing technology upgrade costs create ongoing pressure on performance.
• Sagen (mortgage insurance): Falling home prices have reduced borrower equity, lowering mortgage cure rates and increasing claims volumes, pushing loss ratios up to normalized long-term levels after a period of unusually low losses.
• Macro: Soft end-market demand for engineered industrial products remains a headwind for the industrial segment, partially offset by active cost optimization initiatives.
• Infrastructure lottery services: A contract penalty at a joint venture and increased growth investment near-term weighed on Q2 profitability. Deployment of capital for new growth initiatives carries execution risk.
• AI deployment: Scaling customized AI solutions across heavy industrial and asset-oriented businesses relies on access to scarce technical talent, a bottleneck that the DeployCo investment is intended to mitigate.

Q: An analyst asked for an update on CDK, whose debt trades at distressed levels amid reports of lender negotiations, and whether additional capital from BBUC will be required. / A: Management declined to comment on unreported lender negotiations, but confirmed CDK's underlying business performance remains stable, with the team progressing technology modernization initiatives that will improve product capabilities and reduce long-term churn. The business has strong liquidity and has generated positive operating cash flow over the past 12 months, and management is continuously optimizing capital structures across its portfolio companies as needed.

Q: An analyst asked what is driving Sagen's rising loss ratio, and what the long-term core loss ratio outlook is. / A: Management explained that after the acquisition, Sagen benefited from an unsustainably low loss ratio environment driven by rapidly rising home prices, and current increases reflect a return to the long-term 15%-25% average normal range. Rising claims and lower cure rates stem from recent home price depreciation that reduced borrower equity; recent home price stabilization suggests cure rates will stop deteriorating, and losses will continue to trend towards historical averages.

Q: An analyst asked why the DeployCo investment size was reduced from the original $150 million target to $100 million, and what strategic value the investment delivers. / A: The size was reduced because strong institutional partner demand allowed BBUC to syndicate part of its commitment; BBUC still secured the full strategic benefit of the partnership at the $100 million level. The investment addresses the key industry bottleneck of AI deployment at scale across industrial businesses, providing access to OpenAI's leading models and scarce deployment talent. Early progress has been made, with hundreds of millions of dollars in projected annual run-rate cost savings across BBUC's portfolio if AI is implemented effectively.

Q: An analyst asked about the valuation and expected growth for the two new acquisitions WFC and Gregg Distributors. / A: Management confirmed that both transactions were priced in the 9-11x EBITDA range, averaging ~10x, in line with BBUC's historical acquisition multiple range. For WFC, decentralized operations create significant margin expansion opportunity via consolidation of back-office functions and AI-driven efficiency gains, alongside organic growth and tuck-in acquisition opportunities in the fragmented industry. For Gregg, there is clear upside from growing share of wallet and improved pricing discipline.