Element Fleet Management Corp

Last modified by Asif Farooqui on 2022/12/22 17:53

Contents

Summary
Recent Developments
Financial Highlights
- 3Q 2022 Results
  - Outlook
Business Overview
- Fleet services
- Fleet solutions
References

Summary

Element Fleet Management is the largest pure-play automotive fleet manager in the world.
Element has nearly 1.5 million vehicles under management.
The company operate: the U.S., Canada, Mexico, and Australia and New Zealand.

Element Fleet Management Corp. (TSX: EFN, OTC: ELEEF) is the largest pure-play automotive fleet manager in the world. The company's business is exclusively focused on business-to-business services for corporates, governments and not-for-profits that operate large fleets of vehicles. Element has nearly 1.5 million vehicles under management and is the market leader everywhere the company operate: the U.S., Canada, Mexico, and Australia and New Zealand.

Recent Developments

Element adds 16,500 Rentokil Terminix vehicles

December 19, 2022; Element adds 16,500 Rentokil Terminix vehicles to the 4,700 already under their management in the U.S., pursuant to a five-year contract¹

Element Fleet Management Corp. the largest pure-play automotive fleet manager in the world, today announced a five-year agreement with Rentokil Terminix, the North American division of Rentokil Initial plc, to provide services and financing to its 21,000+ vehicle fleet in the U.S.

Rentokil Initial plc has been a long-standing client of Element. With its recent acquisition of Terminix, the company decided to consolidate the financing and management of its entire U.S. vehicle fleet under one fleet management company and chose Element as that provider. Under the terms of this agreement, Element will extend its current fleet management services and financing (currently 4,700 vehicles) to an additional 16,500 Rentokil Terminix vehicles in the U.S., increasing the total global vehicles under management by a full 1 percent and making Rentokil Terminix a top 10 client. This partnership will also enable Rentokil Terminix's mission to transition its global fleet to more efficient and sustainable ultra-low emissions vehicles (ULEVs) by 2040. Rentokil Initial joined the EV100 in 2020.

Financial Highlights

3Q 2022 Results

Element's third quarter net revenue grew 19.0% year-over-year (17.0% in constant currency) to $290.8 million, led by services revenue growth of 23.8% (20.9% constant currency). Q3 net financing revenue grew 14.2% (13.5% in constant currency) year-over-year while syndication revenue improved by 14.8% (10.3% in constant currency).²

Approximately $17 million of such revenue was a product of actions taken this year that are not expected to generate similar levels of net revenue (and resulting operating income and cash flow) next year or in subsequent years.

The Company's "organic" Q3 net revenue of $273.8 million (ie. excluding such $17 million of Q3 revenue) represents 12.1% growth year-over-year (10.2% in constant currency). Q3 "organic" services revenue growth was 19.3% (16.4% in constant currency) and "organic" net financing revenue growth was 6.0% (5.4% in constant currency) year-over-year.

Net revenue growth was demonstrably profitable as year-over-year pre-tax income and AOI growth rates - at 25.4% and 31.7%, respectively - exceeded the year-over-year net revenue growth rate. The same is true of its "organic" results: AOI of $148.4 million grew 18.2% (16.3% in constant currency) year-over-year, exceeding the comparable net revenue growth rates.

Pre-tax income margin expanded to 49.0% and operating margin expanded 547 basis points year-over-year to 56.9% for the quarter. Q3 "organic" operating margin was 54.2%, representing 281 bps of expansion year-over-year.

Element's Q3 EPS were $0.25 and adjusted EPS were $0.30, the latter up 9 cents per share or 42.9% year-over-year. Q3 "organic" adjusted EPS of $0.26 was up 5 cents per share or 23.8% year-over-year.

Outlook

The company provided full-year 2022 results guidance last quarter, both including and excluding $25 million of net revenue (and resulting operating income and cash flow) from actions being taken this year that are not expected to generate similar levels of net revenue next year or in subsequent years. The guidance excluding such revenue is 2022 "organic" results guidance. At $25 million, these revenues were significant, which warranted their call-out. However, the company do not forecast or expect any such revenues in 2023.

Business Overview

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.

Fleet services

The company offers end to end fleet management³

Acquire

Acquisition
Electric Vehicles
Financing
Title and Registration

Manage

Collision Management
Fleet Partnership Solutions
Fuel
Maintenance
Safety
Taxable Benefits
Connectivity Solutions
Toll Management

Maximize

Remarketing
Sale Leaseback
Strategic Fleet Consulting

Fleet solutions

The company understand business and offer fleet management program to get you the right vehicles and the best technology in order to reduce both fleet costs and fleet risks.⁴

Need