ANNUAL BROCHURE 2016 - Marmon EWC

ANNUAL BROCHURE 2016

Marmon Energy Services Company Marmon Engineered Components Company Marmon Food, Beverage & Water Technologies Company Marmon Retail & Highway Technologies Company

Marmon Overview

Marmon Holdings, Inc., part of Berkshire Hathaway Inc., is a global, diversified industrial organization. Marmon comprises four autonomous companies consisting of 16 diverse, stand-alone business sectors, and about

175 independent manufacturing and service businesses. These four companies and their respective sectors are:

Marmon Energy Services Company -- 2016 Revenues $2.843 billion

UTLX Company

n Rail Products & Services and Intermodal Containers

Serving the energy, chemical, petrochemical, agricultural, and transportation markets with products and services including railroad tank cars and intermodal tank containers.

n Engineered Products & Services

Providing the transportation, energy, and other industries with products, services, and technologies including sulfur processing, steel tank heads and cylinders, bi-modal railcar movers, and wheels, axles, gears, and related products.

n Engineered Wire & Cable

Producing electrical and electronic wire and cable for energy-related markets as well as transit, aerospace, defense, communication, and other industrial applications.

n Crane Services

Supplying mobile cranes, operators, and lift engineering services primarily to the energy, mining, petrochemical, and construction markets.

Marmon Engineered Components Company -- 2016 Revenues $1.747 billion

n Distribution Services & Construction Products

Serving a broad range of industries with products including specialty metal pipe, tubing, and beams; construction fasteners; and electrical wire products.

n Tubing, Fittings &

n Safety Products

Industrial Products

Providing gloves and other protective wear for

Supplying copper and aluminum tubing and fittings for markets including plumbing, HVAC/R, automotive, and construction; aluminum and brass fittings and forgings for many commercial

markets including foodservice, automotive, and general industry; portable lighting equipment for mining and safety markets; and overhead electrification equipment for mass transit systems.

and industrial applications; and adhesives primarily

for automotive and aerospace applications.

Marmon Food, Beverage & Water Technologies Company -- 2016 Revenues $1.230 billion

n Retail Food Technologies

Producing food preparation equipment primarily for quick-serve restaurants as well as other commercial and institutional environments.

n Restaurant & Catering Technologies

Supplying professional cooking and refrigeration equipment for high-end restaurants as well as the hospitality and catering markets.

n Beverage Technologies

Supplying beverage dispensing and cooling equipment, and related products to brand owners and foodservice retailers.

n Water Technologies

Producing water treatment equipment for residential, commercial, and industrial applications.

Marmon Retail & Highway Technologies Company -- 2016 Revenues $1.605 billion

n Retail Science

Delivering retail marketing solutions to brands and retailers that are driven by shopper insights and include merchandising displays, in-store digital merchandising, retail environments, and marketing programs.

n Retail Store Equipment

Supplying display fixtures, shopping carts, and related services for retail stores, as well as material handling carts and automation equipment for many industries.

n Retail Products

Supplying extension cords, air compressors, and other products through the home center channel, as well as work gloves and socks sold at retail.

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n Highway Technologies

Serving the heavy-duty highway transportation industry with flatbed, drop-deck, and other trailers; truck and trailer components including fifth wheels, wheel-end and undercarriage products, and fenders; and truck modification services.

n Vehicle Solutions

Providing the light-duty vehicle aftermarket with engine and suspension products including clutches, fuel pumps, engine and transmission mounts, brake hydraulics, and related components.

Marmon is our kind of company.

Warren Buffett, Chairman & CEO, Berkshire Hathaway Inc.

Marmon Holdings, Inc.

Selected Financial Data (U.S. GAAP Basis)

(dollars in millions)

2016 2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

Revenues

$7,425 $7,770 $7,982 $6,972 $7,163 $6,913 $5,963 $5,062 $6,919 $6,904 $6,933 $5,605

Operating Income*

$1,444 $1,472 $1,407 $1,201 $1,163 $1,018 $855 $751 $977 $951 $884 $556

Operating Income %

19.5% 18.9% 17.6% 17.2% 16.2% 14.7% 14.3% 14.8% 14.1% 13.8% 12.8% 9.9%

Total Assets

$13,318 $12,388 $11,720 $10,614 $9,910 $9,027 $8,249 $7,755 $7,390 $8,079 $7,708 $7,758

Shareholders' Equity**

$7,301 $8,928 $8,217 $7,516 $6,854 $6,065 $5,393 $4,840 $4,311 $5,037 $4,486 $4,495

*Excludes interest income and interest expense **Excludes noncontrolling interests

H I JK

G

A

End Markets (% of 2016 revenues)

A Energy, Mining & Petrochemical 27%

F

B Construction & HVAC 18%

C Retail Stores & Restaurants 16%

D Industrial 10%

E

E Heavy-Duty Vehicles (OEM & Aftermarket) 10%

F Consumer 6%

D

B

G Transportation Providers 5%

H Food & Agriculture 4%

I Aerospace & Military 2%

C

J Construction & Agricultural Equipment 1%

K Other 1%

CD B

Geographic Markets (% of 2016 revenues)

A North America 85% B Europe 7% C Pacific Rim 6% D Other 2%

A

By the Numbers

n Four companies comprising 16 business sectors

n About 175 independent business units

n Operations in more than 20 countries

n More than 350 manufacturing, distribution, and service facilities

n About 19,000 employees worldwide

n Founded in 1953 by brothers Jay and Robert Pritzker

n Berkshire Hathaway acquired Marmon in 2008

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Marmon Review and Outlook

Marmon in 2016 again set a new record for operating income margin (19.5 percent), a tribute to our outstanding managers and workforce worldwide and their application of Marmon's 80/20 business model. This achievement is even more impressive considering the confluence of strong economic headwinds that resulted in Marmon's first year of declining revenues and operating income (4.4 and 1.9 percent, respectively) since 2009.

These headwinds, which began in 2015, included the recession in oil/gas and other natural resources, and continued weakness in many of Marmon's key industrial end-user markets, e.g., construction and agricultural equipment. We enter 2017 facing the additional factors of the continued strong dollar and the sharp decline in transportation, including rail and heavy-duty truck, both of which are major Marmon end-user markets. Although the worst effects of these headwinds appear to have eased, the trajectory of the recovery in these markets is difficult to gauge.

While Marmon managers have decisively reduced overhead costs where needed in down markets, like those today, we are not merely marking time until these markets recover. Rather, we are aggressively pursuing profitable growth opportunities through both innovation and acquisition across Marmon's diverse portfolio of products, services, technologies, and geographies.

Acquisitions, a critical element of our 80/20-driven success, have been an ever-present part of Marmon's DNA since the company's founding in 1953. Almost every existing Marmon business was acquired during the 55 years of Pritzker family ownership and the last nine years under Berkshire Hathaway. Along with our rising innovation success, acquisitions breathe new life into our organization and stimulate greater growth.

Under our 80/20 dictates, we map our major markets to find "sweet spots" that offer both growth potential and attractive profitability. Often, the largest growth segment of a market offers the lowest profitability. For example, in the water treatment market, a stock market favorite, the municipal water treatment segment is growing rapidly, but profit margins are low. In railcars, the tank car leasing segment is attractive in both growth and margins, but the market map tells us the freight car leasing market is not as attractive. We also use these comprehensive market maps to identify bolt-on acquisitions to build the needed platforms. We did this successfully in 2007 with our KX Technologies acquisition to provide a much-needed proprietary product boost in our residential water treatment business. KX has provided profitable growth that we could not have achieved with internal developments alone. We did it again early in 2016 with the addition of a freight car repair business to complement our already successful tank car repair network.

The key to a successful acquisition program is sustaining the growth of the acquired business for a long period, not just the first year's accretion. We never buy to achieve such one-time synergies often touted on Wall Street. We strongly believe our 80/20 market mapping discipline greatly improves our long-term acquisition track record. While such a discipline has always existed at Marmon, in these days of higher acquisition valuation multiples, our market maps must be accurate to protect us against paying for only one-time growth and the undesirable Marmon value dilution that would follow due to a lack of sustainable growth.

Now and again we hit the growth jackpot with bigger acquisitions, e.g., TransUnion in 1981 and IMI's beverage dispensing and merchandising equipment business in 2014. Such deals encompass multiple attractive businesses on our market maps. TransUnion brought to Marmon many of our best businesses including Union Tank Car, EcoWater, Sterling Crane, and Robertson fasteners, to name but a few. IMI brought to us Cornelius, which stood out on our beverage and food equipment market map and has led to a substantial bolt-on acquisition program to supplement our existing Prince Castle food equipment offering.

While we constantly look to land another "big fish," such catches occur infrequently. However, reinvesting our substantial Marmon cash flow is critical to sustaining our longterm growth. In that spirit, we continue to get better at flushing out more opportunities with our market maps, which are now updated more often and backed by the certainty of more market research. In summary, our acquisition appetite is enhanced because of our good acquisition track record and the use of our comprehensive 80/20 business model, which greatly facilitates the integration of a bolt-on acquisition in a disciplined and expeditious way. We believe our success with such bolt-on and larger acquisitions, together with the benefits of Marmon's rapidly emerging innovation culture, will produce the profitable growth necessary to satisfy our customers' wants, our employees' needs, and our shareholders' return expectations. Profitable new growth, whether internal or spawned by acquisition, is the perfect antidote to the inherent cyclicality in many of our businesses. Such growth ensures our long-term success in serving all of our constituencies while also creating a vibrant atmosphere that motivates our valued employees. Our bolt-on and larger acquisition success has, accordingly, increased nicely in recent years as a result of paying much more attention to these internally developed and more current market maps. Evidencing this success, we acquired eight bolt-on businesses

in 2016 that fit well on our market maps and will produce nicely profitable annualized revenues of about $270 million. The following pages provide more specific examples and testimonials on how each of our four Marmon Operating Companies use 80/20 market maps to successfully run their businesses.

Frank S. Ptak Chairman & CEO, Marmon Holdings, Inc.

John J. Goody Vice Chairman, Marmon Holdings, Inc.

Kenneth P. Fischl Vice Chairman, Marmon Holdings, Inc.

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Marmon Energy Services Company

Despite continued strong headwinds across most of our core end markets, Marmon Energy Services Company posted another record year. These results were made possible by the talented and dedicated leaders of our business units and sectors who thrive in our 80/20 culture. Our managers constantly analyze relevant data, monitor key end markets, and embrace the ever-changing realities regarding both their internal capabilities and core customer needs. Thus, they consistently make smart decisions and create impactful growth strategies.

Our 2016 performance was driven primarily by our Rail Leasing business. The momentum of our core 109,000-railcar lease fleet and the 2015 acquisition of 25,000 tank cars from General Electric were the greatest contributors to the increase in operating income. Our core Railcar Repair business also performed extremely well with a 28 percent improvement in operating income through growth in both internal and third-party repair work.

Of special note was the outstanding performance of our Engineered Wire & Cable Sector, which increased operating income despite revenues falling by 9 percent. Facing severe slowdowns and pricing pressure in several key end markets, the Sector and business leadership teams used market mapping to focus resources on high-value opportunities while applying other 80/20 tools to de-emphasize lower-value business and cut costs. As a result, the Sector improved its contribution margin by 360 basis-points and added critical sales and engineering staff while cutting low-value fixed costs for a net overhead savings of nearly 4 percent. The net result was an operating income improvement of 7 percent. This is 80/20 working at its best!

Our largest corporate initiative to enhance our culture and drive more sound growth strategies is the requirement that all units prepare market maps for their businesses. Through this exercise, we have surfaced several highly strategic acquisitions, some of which were completed in 2016. In January, we added the GE Rail Repair network, which will allow us to further grow our third-party work beyond tank cars as well as enhance our overall tank car repair network for both internal and third-party customers. Mid-year, we purchased United Crane Hire in Western Australia, giving our Freo business access to a territory that

has been unavailable for years along with potential entry to some large key accounts. Late in the year, we purchased Zephir, a leading manufacturer of railcar movers in Italy. Zephir is a "hand in glove fit" for our successful Trackmobile business where we are the North American market leader but lacked the understanding and technology needed for globalization.

The Rail Leasing market has been falling since late 2014. However, our record results were achievable due to the momentum of our multi-year lease portfolio. This is nothing new as we have repeatedly experienced the positive and negative effects of this leasing momentum over the many economic cycles of the past. Understanding this fact, our Rail Leasing business continually manages our portfolio exposure to provide some measure of insulation for periods of weak demand. In 2017, we anticipate overall lower earnings tied to our Rail Leasing business, where new transactions and renewals will reflect the realities of current market pricing. While we are cautiously optimistic that this down cycle has bottomed and is starting to bounce back, it will take some time for lease rates to recover.

Regardless of market cycle, we will never cease to drive the continuous development of our 80/20 culture. In 2017, we will hone the preliminary insights gained using market mapping to form the basis of larger sustainable growth strategies through innovation, new market entry, and/or acquisitions. Of course, providing our customers with practical and cost effective solutions is always our overriding objective. None of this can happen without a strong, steady supply of talent and a growthoriented business culture that challenges and rewards that talent. Accordingly, attracting and retaining the next generation workforce is always a high priority.

I could not be more proud to lead this exceptional group of people and truly believe that over the coming years even I will be surprised by the growth and success they bring to us.

Roger W. Shores President & CEO Marmon Energy Services Company

End Markets (% of 2016 revenues)

F GH E D

A C

B

A Energy & Mining 46% B Petrochemical & Chemical 21% C Industrial 11% D Transportation Providers 8% E Food & Agriculture 8% F Aerospace & Military 3% G Construction 2% H Other 1%

Geographic Markets (% of 2016 revenues)

CD B

A

A North America 87% B Europe 3% C Pacific Rim 8% D Other 2%

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