Element Fleet Management Corp. (TSX: EFN) (“Element” or the
“Company”), the largest pure-play automotive fleet manager in the
world, today announced financial and operating results for the
three and nine months ended September 30, 2021 showcasing the
Company’s resilient business model, as well as a 19% common
dividend increase, renewal of its normal course issuer bid
("NCIB"), and the Company's outlook on 2022 and 2023.
Element’s market-leading platform generated
adjusted operating income ("AOI") of $125.6 million in Q3,
equivalent to $0.21 per share, flat to Q3 2020 and up $0.01 per
share from last quarter in constant currency. Element reported net
income of $84.9 million or $0.18 per share for the quarter, a
$0.04 per share increase year-over-year and $0.01 per share
increase quarter-over-quarter.
Net revenue rose 0.4% on a nominal basis and
4.4% in constant currency over Q3 last year, while year-to-date net
revenue is up 1.7% and 7.0% on the same bases respectively. Q3 free
cash flow of $0.27 per share is a $0.02 per share increase from Q3
2020, and a $0.04 per share or 14.7% increase in constant
currency.
Element's expanding year-to-date and
last-twelve-month operating margins evidence the scalability of the
Company's platform, as does 5.4% year-to-date AOI growth versus
prior year, which is 11.3% growth in constant currency. Advancing
Element's capital-lighter business model through syndication and
growing services revenue has enhanced pre-tax return on equity to
15.7% as of the end of the quarter.
“Our business has never performed better, nor
have we been better positioned in the market,” said Jay Forbes,
President and Chief Executive Officer of Element. “We significantly
advanced our growth objectives in the third quarter, and we
continue to steadily increase our free cash flow per share, which
we view as the most important measure of Element’s
performance.”
"Client demand for new vehicles remains robust,
with global orders 34% above 2020 levels year-to-date in constant
currency,” Mr. Forbes continued. “However, OEM production delays
from the global microchip shortage persist. The consequence has
been a $0.5 billion net increase to our record order backlog since
June 30. When OEM production capacity normalizes – which we expect
to occur by mid-2023 – we anticipate enjoying a multi-quarter surge
in net revenue, operating income and free cash flow as our excess
order backlog is drawn down as quickly as production allows.”
“Looking ahead to 2022 against the backdrop of
these OEM production delays, we see our great business having a
good year, continuing to showcase Element’s resilience,” Mr. Forbes
continued, outlining the Company’s expectations for 2022:
- Generating low
single-digit net revenue growth, as strong services revenue growth
offsets the impacts of continued OEM production delays;
- Holding
operating margins at 2021 levels, absorbing inflation increases
through inflationary revenue benefits and operating productivity
gains;
- Growing adjusted
earnings per share by 6-11% and free cash flow per share by 8-13%
through a combination of modest AOI growth and fewer shares
outstanding; and
- Advancing
Element’s capital-lighter business model by syndicating when it
makes sense and growing services revenue, resulting in expected
further enhancement of pre-tax returns on common equity towards the
16-17% range.
“We intend to return significant amounts of free
cash flow to our shareholders in 2022 by way of a 19% increase in
our common dividend and a renewed NCIB, as well as our intended
redemption of Element’s Series I preferred share class when the
opportunity presents itself in June,” Mr. Forbes added.
“Finally, in 2023,” Mr. Forbes concluded, “we
expect our great company to have a great year. We expect our excess
Order backlog to begin to be Originated. We expect inflationary
tailwinds to have their first full-year impact on our net revenue.
And we expect to deliver outstanding financial and operational
results for our shareholders.”
Element’s outlook on 2023 is further explored in
Mr. Forbes’ letter to shareholders beginning on page 11 of this
news release; in the “Economic Conditions and Outlook” section of
the Company’s MD&A; and in the Company’s Supplementary
Information document for the quarter, available on Element’s
website.
Profitable revenue growth in
2021
Element is on track to meet its 4-6% annual net
revenue growth target in constant currency for 2021. The Company
grew net revenue $47.9 million or 7.0% in the first three quarters
of this year compared to the same period last year on a constant
currency basis, driven by net financing revenue growth of
$41.5 million or 14.4%, services revenue growth of $4.5
million and syndication revenue growth of $1.9 million
period-over-period. Element’s scalable operating platform allowed
the Company to expand operating margins on the same YTD
period-over-period basis in constant currency from 51.4% at Q3 2020
to 53.5% at Q3 2021. The result is a magnified AOI growth rate of
11.3% on the same basis. Even absorbing the adverse impacts of a
strengthening Canadian dollar year-to-date in 2021 versus the same
period last year, Element grew net revenue by 1.7% and AOI by
5.4%.
The strong growth of net financing revenue –
14.4% YTD at Q3 2021 in constant currency versus same period last
year, despite a material decrease in average net earning assets
over the same period – is driven by lower costs of funding, gains
on the sale of the Company’s vehicles in ANZ and Mexico, and the
reduction of Element’s balance sheet allowance for credit losses
year-to-date given the quality and performance of the Company's
asset portfolio as well as improving economic circumstances.
Element’s services revenue grew
$12.8 million or 3.8% in constant currency year-to-date at Q3
versus same period last year when excluding the Q3 one-time
services revenue ($8.3 million in constant currency) from last
year's YTD results. This growth was driven by services revenue
growth in ANZ and Mexico in addition to increased maintenance and
long-term rental services provided to U.S. and Canadian
clients.
Earning new business from existing clients –
which the Company calls “share of wallet” (SOW) growth – is an
important strategic pursuit for Element. The majority of SOW wins
are in respect of additional services, deepening and expanding the
number of client service subscriptions, which (i) improves client
retention, (ii) grows profitable revenue atop the Company’s
scalable operating platform and (iii) advances Element’s
capital-lighter business model given the low capital-intensive
nature of providing services (versus financing).
An overweighting on this aspect of the Company’s
revenue growth strategy is evident in third quarter results.
Globally, Element contracted for 20% more SOW revenue units in Q3
2021 than in Q3 2020 and 31% more than in Q3 2019. The Company’s
commercial team in Mexico created a targeted marketing campaign for
each service product offering in that market and grew LTM SOW
revenue units by 109%.
The following table provides further
quantitative perspective on Element’s growing levels of commercial
success, which are best contextualized in the Company’s
Supplementary Information document (available on the Company’s
website) where this table also appears.
|
|
3Q21 |
|
3Q21 |
|
|
3Q21 |
3Q21 |
3Q20 |
3Q21 |
3Q19 |
|
3Q21 |
△ |
3Q20 |
△ |
3Q19 |
|
LTM |
△ |
LTM |
△ |
LTM |
|
Revenue units |
% |
Revenue units |
% |
Revenue units |
|
Revenue units |
% |
Revenue units |
% |
Revenue units |
Share of wallet |
|
|
|
|
|
|
|
|
|
|
|
Australia and New Zealand |
7,268 |
(45 |
%) |
13,206 |
(1 |
%) |
7,369 |
|
28,077 |
(7 |
%) |
30,037 |
1 |
% |
27,672 |
Mexico |
5,216 |
13 |
% |
4,631 |
(31 |
%) |
7,600 |
|
22,639 |
109 |
% |
10,808 |
31 |
% |
17,337 |
U.S. and Canada |
56,269 |
43 |
% |
39,396 |
50 |
% |
37,512 |
|
254,832 |
83 |
% |
139,417 |
51 |
% |
168,847 |
Subtotal |
68,753 |
20 |
% |
57,233 |
31 |
% |
52,481 |
|
305,548 |
70 |
% |
180,262 |
43 |
% |
213,856 |
|
|
|
|
|
|
|
|
|
|
|
|
Market share |
|
|
|
|
|
|
|
|
|
|
|
Australia
and New Zealand |
2,491 |
nmf |
|
264 |
(55 |
%) |
5,589 |
|
11,551 |
(8 |
%) |
12,613 |
(46 |
%) |
21,564 |
Mexico |
3,734 |
(10 |
%) |
4,138 |
27 |
% |
2,948 |
|
12,746 |
(27 |
%) |
17,461 |
(12 |
%) |
14,482 |
U.S. and Canada |
28,504 |
157 |
% |
11,100 |
143 |
% |
11,743 |
|
93,381 |
342 |
% |
21,135 |
123 |
% |
41,892 |
Subtotal |
34,729 |
124 |
% |
15,502 |
71 |
% |
20,280 |
|
117,678 |
130 |
% |
51,209 |
51 |
% |
77,938 |
|
|
|
|
|
|
|
|
|
|
|
|
Self-managed |
|
|
|
|
|
|
|
|
|
|
|
Australia
and New Zealand |
593 |
nmf |
|
17,813 |
(2 |
%) |
605 |
|
15,078 |
(18 |
%) |
18,327 |
301 |
% |
3,756 |
Mexico |
9,192 |
77 |
% |
5,182 |
396 |
% |
1,855 |
|
14,237 |
67 |
% |
8,532 |
26 |
% |
11,287 |
U.S. and Canada |
6,805 |
22 |
% |
5,597 |
(67 |
%) |
20,474 |
|
20,984 |
17 |
% |
17,978 |
(57 |
%) |
48,336 |
Subtotal |
16,590 |
(42 |
%) |
28,592 |
(28 |
%) |
22,934 |
|
50,299 |
12 |
% |
44,837 |
(21 |
%) |
63,379 |
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
Australia
and New Zealand |
10,352 |
(67 |
%)1 |
31,283 |
(24 |
%) |
13,563 |
|
54,706 |
(10 |
%)1 |
60,977 |
3 |
% |
52,992 |
Mexico |
18,142 |
30 |
% |
13,951 |
46 |
% |
12,403 |
|
49,622 |
35 |
% |
36,801 |
15 |
% |
43,106 |
U.S. and Canada |
91,578 |
63 |
% |
56,093 |
31 |
% |
69,729 |
|
369,197 |
107 |
% |
178,530 |
43 |
% |
259,075 |
Global |
120,072 |
18 |
% |
101,327 |
25 |
% |
95,695 |
|
473,525 |
71 |
% |
276,308 |
33 |
% |
355,173 |
|
|
|
|
|
|
|
|
|
|
|
|
1. Two major states in ANZ were in lock-down for
most of Q3 2021.
A capital-lighter business
model
Element advanced its capital-lighter business
model in the quarter by syndicating $521 million of fleet assets as
planned, meeting demand from the Company’s growing base of frequent
buyers and generating $13.9 million of revenue. The Company
regularly transacts with new investors in fleet assets, having
grown its buyer pool to 30 institutions with the addition of 5 new
investors year-to-date.
As of the end of Q3, Element had transacted on
$2.1 billion of fleet assets year-to-date; essentially flat to YTD
volume at Q3 2020. The Company is on pace to achieve its
syndication volume and revenue targets for 2021, which were
modified in H1 to account for OEM production delays. The resulting
limits on Originations defer the availability of certain fleet
assets to Element that are attractive ‘product” for the Company’s
syndication activities.
After syndicating 22 client names for the first
time in Q2 this year, Element syndicated an additional 24 client
names – each for the first time – in Q3. This included the
Company’s second-ever portfolio transaction, for which multiple
clients’ assets were pooled and syndicated en bloc to a single
buyer. This portfolio approach had the effect of enhancing
syndication revenue yield for Element.
Syndication is a resilient source of
high-quality earnings for Element. Syndication accelerates revenue
recognition and the velocity of cash flow, expands operating
margins and enhances returns on equity. It also lowers financing
risk by reducing tangible leverage.
The other thrust of Element’s capital-lighter
business model is growing services revenue, which has a relatively
low funding requirement – the net working capital position of
procured services – compared with net financing revenue.
Q3 services and syndication revenues together
comprised 55.3% of net revenue for the quarter and enhanced pre-tax
return on common equity by 40 basis points quarter-over-quarter to
15.7%.
Cash return to shareholders
Element generated $0.27 of free cash flow per
share in the quarter; a $0.02 per share improvement from Q3 2020
and $0.04 per share improvement on a constant currency basis. Per
share growth is aided by the Company’s repurchases of its common
shares for cancellation pursuant to its NCIB.
When Element announced the establishment of its
NCIB on October 27, 2020, the Company noted the program represented
the first year of what management envisioned to be a regular,
ongoing return of capital strategy. Today, Element announced that
the Toronto Stock Exchange ("TSX") has approved Element’s notice of
intention to renew its NCIB. Further details of this announcement,
the renewed NCIB and the prior NCIB can be found beginning on page
15 of this news release.
Element is also announcing a 19% increase to its
common dividend, from $0.26 to $0.31 annually per share, effective
immediately and therefore to be reflected in the Q4 2021 common
dividend authorized and declared today to be paid in respect of Q4
2021 on January 14, 2022. With this increase, Element’s common
dividend represents approximately 30% of the Company’s last twelve
months’ free cash flow per share, which is the mid-point of the 25%
to 35% payout range the Company plans to maintain going
forward.
Element has returned $567.6 million in cash to
shareholders year-to-date as of October 31, 2021 by repurchasing
33,075,133 common shares for cancellation pursuant to the Company’s
NCIB and paying $111.2 million in dividends to common
shareholders.
Adjusted Operating Results - as
reported
|
Three-month periods ended |
|
Nine-month periods ended |
(in $000’s for stated values, except per share amounts) |
September 30,2021 |
|
June 30,2021 |
|
September 30,2020 |
|
September 30,2021 |
September 30,2020 |
|
$ |
|
$ |
|
$ |
|
$ |
$ |
Net revenue |
|
|
|
|
|
Servicing income, net |
121,075 |
|
113,185 |
|
124,734 |
|
348,749 |
365,096 |
Net financing revenue |
109,328 |
|
109,352 |
|
103,272 |
|
329,700 |
299,232 |
Syndication revenue, net |
13,937 |
|
12,865 |
|
15,246 |
|
49,891 |
51,666 |
Net revenue |
244,340 |
|
235,402 |
|
243,252 |
|
728,340 |
715,994 |
Adjusted operating expenses1 |
|
|
|
|
|
Salaries, wages and benefits |
78,493 |
|
72,654 |
|
74,910 |
|
224,772 |
225,239 |
General and administrative expenses |
24,355 |
|
25,826 |
|
28,789 |
|
77,327 |
89,170 |
Depreciation and amortization |
15,866 |
|
10,410 |
|
10,568 |
|
36,802 |
32,134 |
Adjusted operating expenses1 |
118,714 |
|
108,890 |
|
114,267 |
|
338,901 |
346,543 |
Adjusted operating income1 |
125,626 |
|
126,512 |
|
128,985 |
|
389,439 |
369,451 |
Provision for taxes applicable to adjusted operating income |
31,419 |
|
32,577 |
|
21,927 |
|
96,124 |
63,635 |
Cumulative preferred share dividends |
8,103 |
|
8,103 |
|
10,875 |
|
24,309 |
32,687 |
After-tax adjusted operating income attributable to common
shareholders1 |
86,104 |
|
85,832 |
|
96,183 |
|
269,006 |
273,129 |
Weighted average number of shares outstanding [basic] |
416,353 |
|
428,646 |
|
438,854 |
|
427,753 |
438,006 |
After-tax adjusted operating income per share1
[basic] |
0.21 |
|
0.20 |
|
0.22 |
|
0.63 |
0.62 |
Net income |
84,941 |
|
80,872 |
|
70,778 |
|
261,342 |
208,730 |
Earnings per share [basic] |
0.18 |
|
0.17 |
|
0.14 |
|
0.55 |
0.40 |
Adjusted Operating Results - in constant
currency
|
Three-month periods ended |
|
Nine-month periods ended |
(in $000’s for stated values, except per share amounts) |
September 30,2021 |
|
June 30,2021 |
|
September 30,2020 |
|
September 30,2021 |
September 30,2020 |
|
$ |
|
$ |
|
$ |
|
$ |
$ |
Net revenue |
|
|
|
|
|
Servicing income, net |
121,075 |
|
115,100 |
|
118,954 |
|
348,749 |
344,271 |
Net financing revenue |
109,328 |
|
110,667 |
|
100,587 |
|
329,700 |
288,195 |
Syndication revenue, net |
13,937 |
|
13,184 |
|
14,419 |
|
49,891 |
47,953 |
Net revenue |
244,340 |
|
238,951 |
|
233,960 |
|
728,340 |
680,419 |
Salaries, wages and benefits |
78,493 |
|
73,714 |
|
72,236 |
|
224,772 |
214,701 |
General and administrative expenses |
24,355 |
|
26,201 |
|
27,731 |
|
77,327 |
85,020 |
Depreciation and amortization |
15,866 |
|
10,551 |
|
10,166 |
|
36,802 |
30,778 |
Adjusted operating expenses1 |
118,714 |
|
110,466 |
|
110,133 |
|
338,901 |
330,499 |
Adjusted operating income1 |
125,626 |
|
128,485 |
|
123,827 |
|
389,439 |
349,920 |
Provision for taxes applicable to adjusted operating income |
31,419 |
|
33,085 |
|
21,051 |
|
96,124 |
60,456 |
Cumulative preferred share dividends |
8,103 |
|
8,103 |
|
10,875 |
|
24,309 |
32,687 |
After-tax adjusted operating income attributable to common
shareholders1 |
86,104 |
|
87,297 |
|
91,901 |
|
269,006 |
256,777 |
Weighted average number of shares outstanding [basic] |
416,353 |
|
428,646 |
|
438,854 |
|
427,753 |
438,006 |
After-tax adjusted operating income per share1
[basic] |
0.21 |
|
0.20 |
|
0.21 |
|
0.63 |
0.59 |
- See non-IFRS measures, and the
Company’s Management Discussion & Analysis (MD&A) for the
three- and nine-month periods ended September 30, 2021 for
more information.
Commentary on Adjusted Operating
Results
Element’s adjusted operating income (“AOI”) for
the quarter was $125.6 million (equivalent to $0.21 on a per
share basis), a $3.4 million or 2.6% FX-driven decline from Q3 2020
and an $0.9 million or 0.7% FX-softened decline from Q2 2021. On a
constant currency basis, Q3 2021 AOI was $1.8 million or 1.5%
higher than Q3 2020, and $2.9 million or 2.2% lower than prior
quarter.
In constant currency, the year-over-year
increase in Q3 AOI stemmed from higher net financing revenue and
services revenue, each as discussed below, offset by higher
adjusted operating expenses, which were driven by a one-time
increase in compensation expense, and an increase in depreciation
and amortization. These are discussed in further detail under
"Adjusted operating expenses" below.
The modest quarter-over-quarter AOI decline on
both nominal and constant currency bases was driven by the same
adjusted operating expense growth noted above and further detailed
below, and in spite of strong quarter-over-quarter net revenue
growth on both nominal and constant currency bases, led by services
revenue - again, detailed below.
Notably, notwithstanding lower
quarter-over-quarter AOI, Q3 2021 adjusted EPS grew $0.01 on
nominal and constant currency bases as a result of robust common
share repurchase activity pursuant to our strategic priority to
predictably return capital to Element shareholders.
Services revenue, net
Q3 2020 services revenue benefitted from a
one-time income acceleration of $8.8 million as a result of Armada
purchasing certain vehicles from Element. Controlling for this
one-time impact, Q3 2021 services revenue grew $5.2 million or 4.5%
year-over-year and $10.4 million or 9.4% over the same period on a
constant currency basis.
This growth was driven by revenue from accident
services, long-term vehicle rentals and telematics in the U.S. and
Canada, where services revenue grew 9.4% year-over-year in constant
currency (and controlling for last year's one-time impact).
U.S./Canadian growth was achieved in spite of significant OEM
production delays indirectly suppressing services revenue
contributors, remarketing being the prime example. Importantly,
this remarketing service revenue is not lost but rather deferred
until OEM production capacity normalizes. We discuss OEM production
matters in detail under "Orders, Originations and Order Backlog"
below.
Outside the U.S. and Canada, year-over-year Q3
services revenue grew 21.5% in Mexico and 7.2% in ANZ on constant
currency bases -- results of our increased focus in all geographies
on this proven resilient revenue stream. Our commercial teams are
capitalizing on SOW opportunities with existing clients and selling
services to new clients (a) won from other FMCs and (b) outsourcing
self-managed fleets for the first time.
Quarter-over-quarter, services revenue grew
$7.9 million or 7.0% with a modest assist from FX;
quarter-over-quarter services revenue grew $6.0 million or
5.2% in constant currency. Growth in the U.S. and Canada of 10.9%
on a nominal basis (ie. before FX tailwind) was driven by
acquisition fees, accident services, telematics, titling and
registration, and tolls & violations service revenue gains, and
achieved in spite of remarketing volume and attendant revenue
decline quarter-over-quarter. Again, this remarketing service
revenue is deferred, not lost.
Services revenue in Mexico grew 13.7%
quarter-over-quarter in constant currency while ANZ services
revenue decreased 15.8% on the same basis – predominantly a
consequence of the one-time provision release that benefitted
Custom Fleet’s services revenue in Q2 2021, as well as (but to a
lesser extent) shelter-in-place edicts across various parts of
Australia and New Zealand in Q3, which reduced overall client
consumption of usage-based services for the quarter.
Year-to-date, Q3 services revenue has contracted
$7.5 million or 2.1% from YTD 2020, but grown $12.8 million or
3.8% on a constant currency basis -- in both cases, excluding the
Q3 one-time services revenue ($8.8 million; $8.3 million in
constant currency) from last year's YTD results.
Strong services revenue growth across the
business is a reflection of a combination of (a) a strengthened and
reinvigorated Commercial effort, (b) a deliberate focus on services
as an important source of revenue growth, and (c) the return of
client vehicle activity levels toward pre-pandemic norms. Although
we saw pre-pandemic activity levels at the end of July this year,
weekly volumes have oscillated since. As noted above, much of ANZ
was back in "lockdown" for material portions of Q3, but North
American clients' consumption of services (and volumes of fuel - a
solid indicator) has also been variable through Q3 and October.
We are confident that there remains further
upside to services revenue growth as client vehicle activity levels
sustainably return to and exceed pre-pandemic norms. Moreover,
remarketing revenue remains depressed by OEM production delays,
which will eventually be resolved - thereby releasing this
significant pent-up contributor to services revenue.
We believe Element is capable of high
single-digit annual services revenue growth in 2022 and
irrespective of the timing of OEM production normalization.
Orders, Originations and Order Backlog
Orders
Originations are necessarily preceded by vehicle
orders, which are legally binding commitments by our clients to
lease or purchase vehicles from Element upon vehicle production by
the relevant OEM.
U.S. and Canadian vehicle order volumes
year-to-date at October 31, 2021 are 48.7% above 2020 year-to-date
order volumes at October 31 (in constant currency), and are largely
consistent with 2017 and 2018 vehicle order volumes on the same
basis. (2019 order volume in the U.S. was significantly enlarged by
Armada as we adopted them as a new client to rapidly build out
their fleet requirements.) October 2021 was the single largest
month of U.S. and Canadian vehicle orders in Element's history
(excluding historical Armada orders).
Custom Fleet (ANZ) has seen vehicle orders grow
35.1% YTD vs. YTD 2020, while Element Mexico’s YTD 2021 orders have
grown 52.3% year-over-year.
Originations
Automotive OEM production delays driven by the
global microchip shortage have constrained origination volumes
throughout 2021 – particularly in the U.S., Canada and ANZ.
The table below sets out the geographic
distribution of Element's originations for the following
three-month periods ended.
(in $000’s for stated values) |
September 30, 2021 |
June 30, 2021 |
September 30, 2020 |
|
$ |
% |
$ |
% |
$ |
% |
United States and Canada |
996,511 |
|
75.82 |
|
888,254 |
|
74.14 |
|
1,032,225 |
|
80.69 |
|
Mexico |
181,610 |
|
13.82 |
|
167,145 |
|
13.95 |
|
113,173 |
|
8.85 |
|
Australia and New Zealand |
136,113 |
|
10.36 |
|
142,703 |
|
11.91 |
|
133,865 |
|
10.46 |
|
Total |
1,314,234 |
|
100.00 |
|
1,198,102 |
|
100.00 |
|
1,279,263 |
|
100.00 |
|
The table below sets out the geographic
distribution of Element's originations for the following
three-month periods ended, on a constant currency basis:
(in $000’s for stated values) |
September 30, 2021 |
June 30, 2021 |
September 30, 2020 |
|
$ |
% |
$ |
% |
$ |
% |
United States and Canada |
996,511 |
|
75.82 |
|
906,772 |
|
74.39 |
|
984,979 |
|
79.82 |
|
Mexico |
181,610 |
|
13.82 |
|
171,385 |
|
14.06 |
|
118,195 |
|
9.58 |
|
Australia and New Zealand |
136,113 |
|
10.36 |
|
140,593 |
|
11.54 |
|
130,862 |
|
10.60 |
|
Total |
1,314,234 |
|
100.00 |
|
1,218,750 |
|
100.00 |
|
1,234,036 |
|
100.00 |
|
We originated just over $1.3 billion of
assets in Q3, which is a 9.7% improvement over prior quarter as
reported and a 7.8% improvement on a constant currency basis.
Originations in the quarter were also greater than in Q3 last year
by 2.7% as reported and 6.5% in constant currency.
U.S. and Canadian originations grew a modest
1.2% year-over-year in constant currency and 9.9% over prior
quarter on the same basis. We did originate vehicles for Armada in
the U.S. in Q3, although these are not originations that turn into
leases and generate net financing or syndication revenue for
Element. We continue to earn increasing services revenue in respect
of Armada's growing fleet.
Originations in Mexico in Q3 grew 53.7%
year-over-year and 6.0% over prior quarter, in both cases on a
constant currency basis. Mexico continues to be the market least
impacted by OEM production delays to date.
Originations in ANZ for the quarter grew 4.0% in
constant currency over Q3 of last year but declined 3.2% in
constant currency sequentially as a result of the pandemic-driven
lockdowns in the region as previously noted.
Order Backlog
Robust client demand for vehicles opposite OEM
production delays has resulted in record vehicle order backlogs in
each of our operating geographies (excluding historical Armada
orders in the U.S.).
Our global order backlog on September 30th stood
at $2.0 billion, a $0.5 billion increase (in constant currency)
over the June 30, 2021 backlog of $1.5 billion; and a 186% or $1.3
billion increase (in constant currency) over the September 30, 2020
backlog.
We estimate the current $2.0 billion order
backlog represents approximately $1.2 billion of orders in excess
of our average Q3 order backlog. These $1.2 billion orders
represent approximately
- $35 to $40 million in deferred net
revenue,
- $30 to $35 million in deferred
adjusted operating income, and
- $45 to $50 million in deferred free
cash flow.
From our current vantage point, we believe OEM
production delays are likely to improve modestly over the course of
2022, enabling our originations to do the same. We expect OEMs to
recover full production capacity by the end of H1 2023, allowing
them to start drawing down our order backlog shortly
thereafter.
When that time comes, we expect Element will
enjoy a multi-quarter surge in revenue and consequent outsized
increases in operating income (given our scalable platform) and
cash flow (considering the highly profitable and cash-accretive
nature of originations for our business). We provide more
information on this subject in our Supplementary Information
document for the quarter, available on the Company’s website.
Net financing revenue
Net financing revenue for the quarter grew $6.1
million or 5.9% year-over-year — despite an 18.1% decrease in
average net earning assets over the same period driven by
syndication and OEM production delays limiting origination volumes.
On a constant currency basis, Q3 2021 net financing revenue grew
$8.7 million or 8.7% year-over-year despite average net earning
assets shrinking 15.5% on the same basis.
This strong performance was driven by:
- lower costs of funding, with our
efforts to optimize our debt structure continuing to reduce pure
interest expense and credit facility fees;
- gains on the sale of used vehicles
("GOS") in ANZ - and, to a lesser extent, Mexico - where we
continue to benefit from the supply-constrained secondary market;
and
- the reduction of our balance sheet
allowance for credit losses. Improving economic circumstances and
the outstanding quality and performance of our asset portfolio
resulted in the inclusion of a provision for credit loss reversal
in Q3 2021 net financing revenue.
Quarter-over-quarter, net financing revenue was
essentially flat as reported, and down $1.3 million or 1.2% on a
constant currency basis. The primary headwind quarter-over-quarter
was the pandemic-driven conditions in ANZ previously noted, which
had a modest negative impact on GOS in the quarter versus prior
quarter due to lower volume. We continue to materially outperform
historical norms for GOS per transaction in that market.
For the nine-month period ended
September 30, 2021, net financing revenue is $30.5 million or
10.2% higher than it was for the same nine-month period last year.
On a constant currency basis, the delta is $41.5 million or 14.4%.
This double-digit growth is attributable to the same drivers of Q3
2021 performance year-over-year identified above.
As noted last quarter, net financing revenue is
likely to further decline, albeit modestly, in this second half of
2021. This is despite continued execution on incremental interest
expense saving opportunities. GOS in ANZ has historically been
lowest in the fourth quarter of every year (excluding last year,
when secondary vehicle markets rebounded in H2 from H1 lockdowns),
and Q4 GOS decline this year may be exacerbated by lockdowns that
continued into the early part of the quarter in ANZ. In the U.S.
and Canada, OEM production delays continue to constrain
originations, which, in turn, impacts net financing revenue.
Net financing revenue yield on average net
earning assets
|
For the three-month periods ended |
|
For the nine-month periods ended |
|
(in $000’s for stated values) |
September 30,2021 |
|
June 30,2021 |
|
September 30,2020 |
|
September 30,2021 |
|
September 30,2020 |
|
|
|
|
|
|
|
Average net earning assets |
$ |
8,928,182 |
|
$ |
9,161,155 |
|
$ |
10,895,388 |
|
$ |
9,412,812 |
|
$ |
11,477,320 |
|
Net interest income and rental revenue |
6.99 |
% |
6.85 |
% |
6.48 |
% |
6.77 |
% |
6.58 |
% |
Interest expense |
2.09 |
% |
2.08 |
% |
2.69 |
% |
2.10 |
% |
3.10 |
% |
Net financing revenue yield on average net earning assets |
4.90 |
% |
4.77 |
% |
3.79 |
% |
4.67 |
% |
3.48 |
% |
|
|
|
|
|
|
Average debt outstanding |
$ |
7,937,478 |
|
$ |
8,193,170 |
|
$ |
11,715,194 |
|
$ |
8,636,010 |
|
$ |
12,588,633 |
|
Average cost of debt (Interest
expense / average debt) |
2.35 |
% |
2.32 |
% |
2.50 |
% |
2.29 |
% |
2.83 |
% |
Average
1-Month LIBOR rates |
0.08 |
% |
0.10 |
% |
0.16 |
% |
0.13 |
% |
0.64 |
% |
Average net earning assets decreased 18.1% or
$2.0 billion year-over-year and 2.5% or $233.0 million
quarter-over-quarter - in both cases, largely as a result of (a)
below average origination volumes due to OEM production delays and
(b) syndication.
At the same time, net financing revenue yield on
average net earning assets has improved 111 basis points
year-over-year and 13 basis points quarter-over-quarter,
reflecting:
- The resilience of net financing
revenue for the reasons noted above; and
- The evolving geographic mix of
assets on our balance sheet.
We do not expect net financing revenue yield to
change materially in Q4.
Syndication revenue, net
Demand for our syndicated assets continues to be
robust and we continue to mature this revenue stream. We regularly
transact with new investors in our assets, having grown our regular
buyer pool to 30 institutions with the addition of 5 new investors
year-to-date - with whom we have done approximately $80 million of
transactions this year. Year-to-date at the end of Q3, we had
transacted on $2.1 billion of fleet assets; essentially flat
year-over-year. This syndication activity contributes meaningfully
to both a reduction in our tangible leverage and a return of excess
capital to shareholders by way of $416.4 million in share buybacks
year-to-date.
After syndicating 22 client names for the first
time in Q2 this year, we syndicated an additional 24 client names -
each for the first time - in Q3. This included our second-ever
portfolio transaction, for which multiple clients' assets were
pooled and syndicated en bloc to a single buyer. This portfolio
approach had the effect of enhancing syndication revenue yield.
We syndicated $521 million of assets in the
quarter as planned - $79 million less than in Q3 2020 and
$89 million less than prior quarter - generating $13.9 million
of syndication revenue representing a 2.67% yield on assets
syndicated.
Compared to Q3 2020, syndication revenue for the
quarter was $0.5 million or 3.3% lower on a constant currency
basis - $1.3 million or 8.6% lower as reported - but 7 basis
points higher in yield in constant currency, and 8 basis points
higher as reported.
Syndication revenue grew $0.8 million or
5.7% in constant currency quarter-over-quarter - $1.1 million
or 8.3% growth as reported - and yield improved 56 basis points in
constant currency.
Notwithstanding the increase in syndication
revenue yield for the quarter compared to last quarter and Q1 2021,
those H1 syndication revenue yields continue to be closer to the
recurring quarterly yields we are forecasting at this time. Yields
vary based on the mix (client credit rating, remaining lease
durations, lease pricing terms, etc.) of assets syndicated in the
period, in addition to benchmark U.S. treasury swap rates.
Adjusted operating expenses and margins
Adjusted operating expenses of $118.7 million
for the quarter were 3.9% or $4.4 million higher than last year
($8.6 million in constant currency) and 9.0% or $9.8 million
higher than last quarter ($8.2 million in constant
currency).
Last quarter we indicated that adjusted
operating expenses would be higher in the second half of this year.
The increase in Q3 is attributable to:
- a one-time adjustment booked to Q3
salaries and related expenses to adjust the short-term incentive
accrual for the outstanding performance of the business;
- higher IT and related general and
administrative expenses in the quarter as we continue to enhance
our technological capabilities; and
- several work-in-process projects -
many of which began as Transformation initiatives - becoming
"operational" in the quarter by accounting standards, resulting in
- the beginning of the depreciation
and amortization of same and
- the accelerated full depreciation
and amortization of assets that have become redundant as a
result.
We forecast slightly lower adjusted operating
expenses in the fourth quarter.
Year-to-date adjusted operating expenses are
$7.6 million or 2.2% less than they were year-to-date at Q3
last year; however, in constant currency on the same comparative
basis, adjusted operating expenses increased $8.4 million or
2.5%, which is mostly attributable to the Q3 increase in
depreciation and amortization.
Operating margin for the quarter was 51.4%, 160
basis points less than Q3 2020 and 230 basis points less than Q2
2021. We signaled this expected contraction as part of last
quarter's disclosures. On a constant currency basis, the same
deltas were 150 and 240 basis points respectively. The primary
driver of these contractions was Q3 2021 adjusted operating
expenses, the growth of which is discussed above.
Year-to-date operating margin is 53.5% - a 190
basis point improvement from 2020 year-to-date at Q3 and a 200
basis point improvement on a constant currency basis.
CEO LETTER TO SHAREHOLDERS
My fellow shareholders,
I’ve long been an advocate for strategic agility
– setting a bold course for stakeholder value creation and
executing same, with a balance of focus and open-mindedness in
recognition of the well-proven adage that the best laid plans of
mice and men…
This ability to stay open and responsive to
changing business dynamics has served Element well as we navigated
the complexities of transformation and the unknowns of the
pandemic, and it will serve us equally well as we plot our way
through the unexpected challenges arising from an industry-first
vehicle supply shortage.
The ability to embrace and action new
opportunities together with the ability to identify and mitigate
new risks has allowed Element to
-
Grow global net promoter score from -9 to 26
- Achieve record
high levels of client retention
- Improve employee
engagement to 86%
- Expand its
operating margin from 44.3% to 53.4%
- Eliminate $4.8
billion1 in debt, reducing tangible leverage from 9.6x to 5.8x
- Improve pre-tax Return on Equity
from 11.9% to 15.7%,
all over the last three years.
The business has never performed better, nor has
it been better positioned in the market.
Becoming a Great Company: 2021
Performance
Element’s progress in becoming a great company
is evident in our forecast results for 2021, where we expect to
deliver:
- Organic revenue
growth of approximately 4-5% and we expect to exit 2021 with an
all-time high order backlog of between $2.5 and $2.8 billion,
representing approximately $40 million to $65 million in deferred
revenue, operating income and cash flow;
- Operating margin
expansion to approximately 53% which, when combined with the
organic revenue growth, translates into 5-6% growth in Adjusted
Operating Income (AOI);
- Strong free cash
flow per share growth of 3-4%, which should result in more than
$650 million in cash returned to investors through a higher
dividend and share buybacks;
- Virtually flat
adjusted EPS as the increase in AOI and decrease in common shares
is offset by a step-up of our effective tax rate; and
- A capital-lighter business model,
with an improved pre-tax return on equity exceeding 15%.
Importantly, the aforementioned performance is
expected to be achieved in a year plagued by pandemic-related
challenges, namely a slower-than-expected return to normal service
consumption levels, and OEM production shortages. I am proud of the
speed at which our people adjusted to these externalities and, as a
result, our ability to continue to deliver significant financial
performance and value to shareholders. I believe the changes we
introduced in response to these pandemic-related challenges have
further strengthened our claim to being a great company worthy of
your investment.
_______________1 All financial figures herein
and the cited differences between them are calculated on a constant
currency basis, except debt and pre-tax return on equity.
OEM Production Shortages
While our clients’ demand for vehicles has
returned to – indeed surpassed – pre-pandemic levels, the OEMs’
inability to fill these orders has resulted in a massive backlog,
and created a significant deferral of revenue, operating income and
cash flow. We emphasize deferred – not lost – because technically,
orders placed by clients are legally-binding commitments to
Element. Practically, our clients need a vehicle now to either
replace an existing vehicle or to meet the growth requirements of
their business. For both reasons, the $2.5+ billion order backlog
represents guaranteed – but deferred – revenue for Element.
The revenues (and associated operating income
and cash flow) deferred run the full continuum:
- Net Financing
Revenue is deferred as we await vehicle deliveries and experience
delays in new financing revenues, which are highest at the outset
of the lease;
- Syndication
revenue is deferred as lower Originations reduce the volume of
syndication transactions; and
- Services revenue is deferred as we
delay the remarketing of vehicles for clients and third-parties
(one of our top services revenue generators).
While we expect 2022 to be a better year for
Originations than 2021, we believe OEM production will run at less
than full capacity for the entire year.
That said, there are some silver linings to
these production delays, and they highlight the value - to both
Element and our clients - of our unmatched breadth of service
solutions. For instance, we are booking Services revenue that we
wouldn’t otherwise generate without the current constraints on
Originations.
- Demand for vehicle maintenance is
increasing as aging vehicles need more attention to remain in
service. As mileage piles up, big-ticket repairs can no longer be
put off. We are proactively advising our clients on upgrading their
strategic preventative maintenance programs and helping them manage
the costs of keeping their mission-critical vehicles on the road,
deepening those client relationships in the process.
- We are also seeing high demand for
long-term vehicle rentals, for two reasons. First, some clients are
starting to grow their fleets again, and they can’t get new leased
vehicles to support that growth. Second, fleet vehicles that are no
longer fit for purpose for various reasons – such as having been
written-off in an accident – cannot be readily replaced with new
vehicles. Our access to suitable long-term rental vehicles brings
enormous value to clients in these circumstances by ensuring they
can meet their day-to-day operating needs uninterrupted and
hassle-free.
Our perspective on these types of revenue
streams is the same as our perspective on the outsized gains on the
sale of used vehicles that we continue to generate in Australia
& New Zealand (ANZ) and, to a lesser extent, Mexico: but for
OEM production delays, we would not be earning this scale of
revenue, operating income and cash flow from these transactions. At
the same time, the net financing revenue pent-up in our record
order backlog is guaranteed and unaffected.
Most of our Services revenue streams are
unimpacted by the OEM production delays – think accident repairs,
annual registrations, driver safety training and risk management,
emergency roadside assistance, seasonal tire changes, taxable
benefits reporting, telematics, tolls and violations processing,
etc. As we continue to increase our “share of wallet” and add
revenue units through market share gains and self-managed fleet
wins, the net revenue contribution of our services will continue to
grow.
Overall, our unmatched services offering enables
us to drive net revenue, operating income and free cash flow
largely independent of Origination volumes. And OEM production
delays are a net Services revenue tailwind the longer the
circumstances persist. Moreover, we know that when the global
microchip shortage abates and OEM production capacity normalizes,
we will convert our record order backlog into substantial
Origination volumes and earn the related, currently-deferred
revenue all the same.
2022 Outlook: A Great Company Having A
Good Year
When I think about the year ahead against the
backdrop of these OEM production delays, I’m envisioning a great
company having a good year as we continue to hone our capabilities
and advance our strategic ambitions while patiently awaiting the
resumption of normal levels of vehicle deliveries.
While 2022 had all the makings of a great year –
a massive order backlog, an outstanding commercial growth pipeline,
a solid inflationary tailwind – it won’t be quite the year we had
anticipated. While we believe service consumption will largely
return to sustained pre-pandemic levels by the end of 2021, we
believe OEM production shortages (and the semiconductor chip
shortages that underpin same) will take longer to resolve than we
originally expected and, accordingly, we anticipate another year
wherein a portion of our growing revenues, operating income and
cash flow will be deferred.
Nonetheless, we expect 2022 will be a good year
for Element:
- Organic revenue growth of
approximately 1-3% as strong growth in Services revenue and
continuing Gains on Sale in ANZ and Mexico compensate for revenues
deferred by the delay in Originations;
- Operating margins
maintained at 2021 levels as the business absorbs inflation
increases through inflationary revenue benefits and operating
productivity gains;
- Adjusted earnings
per share growth of 6-11% and Free Cash Flow per share growth of
8-13%, resulting from modest AOI growth and ~6% fewer shares
outstanding; and
- A capital-lighter
business model -- enabled by higher syndication volumes and low
capital-intensive Services revenue growth (which, together with
Syndication, will constitute an estimated 55-60% of total revenues)
-- growing pre-tax return on equity to an estimated 16-17%.
Based on our forecast performance for 2022, and
confident in the pent-up profits and cash flow in our order
backlog, we have announced a 19% increase in the common share
dividend, renewed our normal course issuer bid for another year and
signalled our intention to redeem the series I preferred
shares.
2023 Outlook: A Great Company Having A
Great Year
Looking past the coming year and through to 2023
when we can reasonably expect our excess order backlog in the U.S.
and Canada to begin to be cleared, we can readily envision our
great company having a great year.
With expectations of OEM production capacity
back to 100% by the end of the first half of 2023, and with
expectations that current inflationary pressures will have their
first full year’s worth of positive impact on our results in 2023,
we expect Element to deliver outstanding financial results
including:
- Organic revenue
growth of approximately 8-10% as deferred revenue (realized on the
drawdown of excess Order backlog) adds to the strong organic growth
in Services and Net Financing Revenues;
- Operating margin
expansion of 200-300 bps as our scalable operating platform absorbs
the increased revenues with little operating cost increases;
- Adjusted earnings
per share growth of 13-19% resulting from strong AOI growth and
reduced share count;
- Free Cash Flow per
share growth of 20-27% as cash-accretive Originations ramp back up;
and
- A capital-lighter
business model - enabled by higher syndication volumes and low
capital-intensive Services revenue - growing pre-tax return on
equity to an estimated 18-20%.
I’m now well into my fourth year with Element
and never have I been more confident regarding the future success
of this Company. Our Commercial teams are hitting their full stride
in all three regions, for the very first time. Operations has never
been more efficient nor more effective in their care of our
clients. Finance has given us unbridled access to cost-effective
capital that allows us to compete with anyone in our markets. And
our people - more experienced and capable from overcoming the
challenges of the last few years - are engaged and collaborative,
quickly disseminating best practices across our global footprint to
deliver a superior client experience, consistently, to each of our
5,500 clients. Yours is a great Company.
Until next quarter,
Jay
Conference Call and Webcast
A conference call to discuss these results will
be held on Wednesday, November 10, 2021 at 7:00 p.m. Eastern Time.
The conference call and webcast may be accessed as follows:
- Webcast:
http://services.choruscall.ca/links/elementfleet20211110.html
- Telephone: Click here to join the call most efficiently,or dial
one of the following numbers to speak with an operator:
- North America Toll-Free: 1-800-319-4610
- International: +1-604-638-5340
The webcast will be available on the Company’s website for three
months. A taped recording of the conference call may be accessed
through December 10, 2021 by dialing 1-800-319-6413 or
+1-604-638-9010 and entering the access code 7883.
Dividends Declared
The Company’s Board of Directors has authorized
and declared a quarterly dividend of $0.0775 per outstanding common
share of Element for the fourth quarter of 2021. The dividend will
be paid on January 14, 2022 to shareholders of record as at the
close of business on December 31, 2021.
Element’s Board of Directors also declared the
following dividends on Element’s preferred shares:
|
Series |
TSX Ticker |
Amount |
Record Date |
Payment Date |
|
|
|
|
|
|
|
|
|
Series A |
EFN.PR.A |
$0.4333125 |
December 15, 2021 |
December 31, 2021 |
|
|
Series C |
EFN.PR.C |
$0.3881300 |
December 15, 2021 |
December 31, 2021 |
|
|
Series E |
EFN.PR.E |
$0.3689380 |
December 15, 2021 |
December 31, 2021 |
|
|
Series
I |
EFN.PR.I |
$0.3593750 |
December 15, 2021 |
December 31, 2021 |
|
The Company’s common and preferred share
dividends are designated to be eligible dividends for purposes of
section 89(1) of the Income Tax Act (Canada).
Normal Course Issuer Bids
On November 4, 2020, the TSX approved the
Company's notice of intention to commence a NCIB for its issued and
outstanding common shares ("Common Shares"). The NCIB allowed the
Company to repurchase on the open market (or as otherwise
permitted), at the Company's discretion during the period commenced
November 10, 2020 and ending on the earlier of November 9, 2021 and
the completion of purchases under the NCIB, up to 43,929,594 Common
Shares, subject to the terms and conditions of TSX rules and
applicable securities laws. Under the NCIB for the three- and
nine-month periods ended September 30, 2021, the Company
repurchased for cancellation 8,725,688 and 30,085,733 Common
Shares, respectively, for approximately $122.5 million and $416.4
million, respectively, including commission, at a volume weighted
average price of $14.03 and $13.84 per Common Share, respectively.
Under the NCIB for the period from commencement up to and including
October 31, 2021, the Company repurchased for cancellation an
aggregate of 33,837,233 Common Shares for approximately $466.4
million, including commission, at a volume weighted average price
of $13.79 per Common Share. The Company applies trade date
accounting in determining the date on which the share repurchase is
reflected in its consolidated financial statements. Trade date
accounting is the date on which management commits the Company to
purchase the Common Shares. Under the NCIB, the Company has
repurchased Common Shares over the TSX and over alternative trading
systems in Canada.
At the time of establishing the NCIB in November
2020, Element noted that the program would be the first year of an
envisioned regular, ongoing return of capital strategy. Today, the
Company announced the TSX has approved Element's notice of
intention to renew its NCIB for the Company's issued and
outstanding Common Shares.
Under the NCIB approved by the TSX, the Company
may purchase on the open market (or otherwise as permitted) up to
40,968,811 Common Shares, representing approximately 10% of the
“public float” of the Common Shares, at its discretion during the
period commencing on November 15, 2021 and ending on the earlier of
November 14, 2022 and the completion of purchases under the NCIB.
The actual number of Common Shares which may be purchased pursuant
to the NCIB and the timing of such purchases will be determined by
management of the Company, subject to applicable law and the rules
of the TSX.
Under the rules of the TSX, during the six
months ended October 31, 2021, the average daily trading volume of
the Common Shares on the TSX was 678,774, and, accordingly, daily
purchases on the TSX pursuant to the NCIB will be limited to
169,693 Common Shares, other than purchases made pursuant to the
block purchase exception. As of October 31, 2021, the Company had
410,501,730 Common Shares issued and outstanding and a “public
float” of 409,688,114 Common Shares.
Purchases made pursuant to the NCIB are expected
to be made through the facilities of the TSX, or such other
permitted means (including through alternative trading systems in
Canada), at prevailing market prices or as otherwise permitted. The
NCIB will be funded using existing cash resources and any Common
Shares repurchased by the Company under the NCIB will be cancelled.
The Company believes that the NCIB is in the best interests of the
Company and constitutes a desirable use of its funds.
The Company will enter into an automatic
securities purchase plan (“ASPP”) with an independent designated
broker in order to facilitate repurchases of Common Shares. The
ASPP has been approved by the TSX and will be entered into
effective as of November 15, 2021, the commencement date of the
NCIB.
Under the ASPP, the Company’s independent
designated broker may purchase Common Shares under the NCIB at
times when the Company would ordinarily not be permitted to, due to
its regular self-imposed blackout periods. Before the commencement
of any particular internal trading black-out period, the Company
may, but is not required to, instruct its independent designated
broker to make purchases of Common Shares under the NCIB during the
ensuing blackout period in accordance with the terms of the NCIB.
Such purchases will be determined by the independent designated
broker in its sole discretion based on parameters established by
the Company prior to commencement of the applicable blackout period
in accordance with the terms of the ASPP and applicable TSX rules.
Outside of these blackout periods, Common Shares will continue to
be purchasable by the Company at its discretion under the NCIB.
The ASPP will terminate on the earliest of the
date on which: (a) the purchase limit specified in the ASPP has
been reached, (b) the purchase limit under the applicable NCIB has
been reached, (c) the Company terminates the ASPP in accordance
with its terms, in which case the Company will issue a press
release confirming such termination, and (d) the applicable NCIB
terminates.
Non-IFRS Measures
The Company’s unaudited interim condensed
consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB) and the
accounting policies Element adopted in accordance with IFRS.
The Company believes that certain non-IFRS
measures can be useful to investors because they provide a means by
which investors can evaluate the Company’s underlying key drivers
and operating performance of the business, exclusive of certain
adjustments and activities that investors may consider to be
unrelated to the underlying economic performance of the business of
a given period. Throughout this News Release, management used a
number of terms and ratios which do not have a standardized meaning
under IFRS and are unlikely to be comparable to similar measures
presented by other organizations. A full description of these
measures can be found in the Management Discussion & Analysis
that accompanies the unaudited interim condensed financial
statements for the quarter ended September 30, 2021.
Element’s unaudited interim condensed
consolidated financial statements and related management discussion
and analysis as at and for the three- and nine-month periods ended
September 30, 2021 have been filed on SEDAR
(www.sedar.com).
About Element Fleet
Management
Element Fleet Management (TSX: EFN) is the
largest pure-play automotive fleet manager in the world, providing
the full range of fleet services and solutions to a growing base of
loyal, world-class clients – corporates, governments and
not-for-profits – across North America, Australia and New Zealand.
Element enjoys proven resilient cash flow, a significant proportion
of which is returned to shareholders in the form of dividends and
share buybacks; a scalable operating platform that magnifies
revenue growth into earnings growth; and an evolving
capital-lighter business model that enhances return on equity.
Element’s services address every aspect of clients’ fleet
requirements, from vehicle acquisition and maintenance to accident
recovery and remarketing. Clients benefit from Element’s expertise
as the largest fleet solutions provider in its markets, offering
unmatched economies of scale and insight used to reduce fleet
operating costs and improve productivity and performance. For more
information, visit www.elementfleet.com/investors.
This press release includes forward-looking
statements regarding Element and its business. Such statements are
based on the current expectations and views of future events of
Element’s management. In some cases the forward-looking statements
can be identified by words or phrases such as “may”, “will”,
“expect”, “plan”, “anticipate”, “intend”, “potential”, “estimate”,
“believe” or the negative of these terms, or other similar
expressions intended to identify forward-looking statements,
including, among others, statements regarding Element’s
improvements to run-rate profitability; enhancements to clients’
service experience and service levels; enhancement of financial
performance; improvements to client retention trends; reduction of
operating expenses; increases in efficiency; Element's dividend
policy and the payment of future dividends; transformation of its
core business; creation of value for all stakeholders; expectations
regarding syndication; growth prospects and expected revenue
growth; level of workforce engagement; improvements to magnitude
and quality of earnings; executive hiring and retention; focus and
discipline in investing; balance sheet management and plans to
reduce leverage ratios; anticipated benefits of the balanced
scorecard initiative; Element’s proposed share purchases, including
the number of common shares to be repurchased, the timing thereof
and TSX acceptance of the NCIB and any renewal thereof; and
expectations regarding financial performance. No forward-looking
statement can be guaranteed. Forward-looking statements and
information by their nature are based on assumptions and involve
known and unknown risks, uncertainties and other factors which may
cause Element's actual results, performance or achievements, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statement or information. Accordingly, readers
should not place undue reliance on any forward-looking statements
or information. Such risks and uncertainties include those
regarding the ongoing COVID-19 pandemic, risks regarding the fleet
management and finance industries, economic factors and many other
factors beyond the control of Element. A discussion of the material
risks and assumptions associated with this outlook can be found in
Element's annual MD&A, and Annual Information Form for the year
ended December 31, 2020, each of which has been filed on SEDAR and
can be accessed at www.sedar.com. Except as required by applicable
securities laws, forward-looking statements speak only as of the
date on which they are made and Element undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events, or otherwise.
Contact:
Michael Barrett
Vice President, Investor Relations
(416) 646-5698
mbarrett@elementcorp.com
Element Fleet Management (TSX:EFN)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
Element Fleet Management (TSX:EFN)
Historical Stock Chart
Von Apr 2023 bis Apr 2024