Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Investor Presentation (June 2017)
33 slides from Element Fleet Management's investor presentation, June 2017
Slide 1: Investor Update
Investor Update Element Fleet Management June 2017 Element Fleet Management – Investor Update June 2017
Slide 2: Forward-looking statements
Certain information in this presentation is forward-looking and related to anticipated financial performance, events and strategies. When used in this context, words such as “will”, “anticipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. Forward-loo
Slide 3: Element Corporate Overview
Element Corporate Overview Element Fleet Management – Investor Update June 2017
Slide 4: Investment Highlights
Investment Highlights • Element is a stand alone, “pure play” FMC – focused 100% on Fleet Management on a global platform • Investment-grade credit ratings reflecting asset quality (A-, BBB+) • Stable ABS funding program - $9B raised since 2003 • Prudent Balance Sheet leverage; growth in service and
Slide 5: Long-Term Value Creation
Long-Term Value Creation Element Fleet Management (TSX:EFN) Element Fleet is the largest publicly traded fleet management company in the world, with market leadership in North America and an industry leading position in Australia and New Zealand. We are a leading business services provider, driven b
Slide 6: Element Fleet Management: The Leading Global Fleet Management Company
Element Fleet Management The Leading Global Fleet Management Company Total assets TSX Composite Index Employees C$18.8 billion EFN 2,700+ As of Mar 31st , 2017 Earning Assets Service Offerings As of Mar 31st , 2017 Canada 0 0 Vehicle Financing Mexico 10% United States 2% Acquisition, Title, New Zeal
Slide 7: The Creation Story
The Creation Story Strategic Acquisitions & Organic Growth C$13.8B C$14.0B C$5.4B C$0.4B C$1.0B June 2012 May 2013 June 2014 2015 2016 Acquisition of TLS Fleet Acquisition of Acquisition of Acquisition of GE Fleet Split from Management from Scotiabank GE Fleet Canada PHH Fleet North America and ANZ
Slide 8: Revenue Mix
Revenue Mix Continued Growth in Service Revenue Q1 Q2 Q3 Q4 Q1 % of Net Revenue 2016 2016 2016 2016 2017 Total service & other revenue 55.6 56.9 58.3 60.0 61.2 Net interest and rental revenue 44.4 43.1 41.7 40.0 38.8 • Service and Fee Revenue continues to grow as a percentage of Total Revenue • Exce
Slide 9: Element Portfolio Quality
Element Portfolio Quality Low Risk Assets/Minimal Credit Losses Delinquencies as a % of Finance Receivables • Portfolio continues to perform well Q1 Q4 Q1 globally with high quality assets and 2016 2016 2017 highly rated customers Non-current (> 31 days) 0.10% 0.02% 0.17% • Non-current accounts incr
Slide 10: Treasury Update
Treasury Update $30 Committed facilities (available & outstanding) amounted to C$18.3B as of March 31, 2017 $25 At March 31, 2017, C$5.0B in $20 available financing to fund ongoing originations $15 Committed facilities are supplemented by access to pre committed Term ABS $10 market $5 Debt maturitie
Slide 11: Stable Funding Strategy
Stable Funding Strategy Proven Through Business Cycles No impact from the yield curve or FX volatility. No liquidity events. Origination: ABS Market: Going forward, EFN’s scale • High credit customers • Term notes Reg.144A and size allow for more and quality collateral Fully matched: frequent, consi
Slide 12: North American Post Integration Update
North American Post Integration Update • In January, we successfully migrated all of GE Fleet’s U.S. and Canadian customers and portfolio onto Element’s fleet management system (“FMS”); all customers are now live on Xcelerate and Driver Xcelerate • All GE Capital transitional services agreements hav
Slide 13: Fleet Management
Fleet Management Element Fleet Management – Investor Update June 2017
Slide 14: Competitive Landscape – US (Indicative)
Competitive Landscape – US (Indicative) Other Competitors • Full service lease providers ie. Ryder, Penske (Heavy Trucks) Element • Specialty lessors ie. FleetAdvantage, Idealease • OEMs, affiliates and distributors ie. Toyota, Yale, Crown • Equipment managers ie. Lift Solutions, MH Fleet, Weis3 • F
Slide 15: Element Experience
Element Experience Category Leader Quality Client Base • #1 Fleet Management • Diversified, high-quality, Company in North America long-tenured base of commercial customers • Scalable platform providing High levels of innovative, end-to-end • Target fleets: > 1000 units satisfaction yield long- serv
Slide 16: Product Overview
Product Overview Element Fleet Management – Investor Update June 2017 16
Slide 17: Remarketing Services
Remarketing Services US Portfolio Performance Conservative lease terms and strong remarketing efforts result in consistent gain-on-sale generation for clients Avg. Disposition Realization by Seasoning (1)(2)(3) Avg. Disposition Realization by Year of Sale (1)(2) % of Total Vehicle Units Sold (left)
Slide 18: Customer Value Proposition
Customer Value Proposition End-to-end solutions, maximizing productivity of the client’s resources, while managing their total cost of ownership Typical Composition of Fleet Expenses Improve productivity Minimize vehicle costs 1% • Maintenance and accident repairs • Consulting, specification and 4%
Slide 19: The Future of Fleet
The Future of Fleet Innovation CORE FLEET MANAGEMENT Data migration and integration milestones Synergy and migration enhancements Ongoing infrastructure and compliance SUSTAINED INNOVATION New capabilities/partnerships/acquisitions driving an increase in fee-based services Product extensions into ne
Slide 20: Overview
Overview Client Portal Xcelerate for Drivers With a user centric design, the responsive web application provides a central hub to view fleet data and an interface to take action and optimize fleet performance. • Inventory management • Transaction management • Ordering • Reporting • Analytics With th
Slide 21: Element Fleet Key Strengths
Element Fleet Key Strengths • Scale to invest in Fleet (investment of • Significant purchasing power, scale, and ~$100 million plus in technology) leverage • Combined offerings of financing, services • Largest and most comprehensive and exceptional consulting are best in ownership of benchmarking da
Slide 22: Credit Governance and Decisioning
Credit Governance and Decisioning Governance Credit Decisioning Industry & Market Overviews • Audit, Credit and Risk Committees, • Clear separation of functions Deep understanding of the assets and led by independent directors, industries we finance linked to business development, provide strong boa
Slide 23: Element Fleet US Portfolio
Element Fleet US Portfolio Diversification Lease Portfolio Characteristics US Client Breakout by Industry Classification • Diversified client base: Electric Services, 7.83% Electrical Work, 5.41% Pharmaceutical Preparations, 5.37% ‒ Largest client is only 3.41% of portfolio Cable and Other Pay Telev
Slide 24: Ten Reasons to Focus on Fleet
Ten Reasons to Focus on Fleet 1. North American leader with scale/value 2. Investment-grade customer base High levels of satisfaction yield long-term customer 3. Growing fee income relationships 4. Low credit losses 20-30 years 288 clients 5. Annuity-like revenue 30-40 years 74 clients 6. Efficient
Slide 25: Questions
Questions Element Fleet Management – Investor Update June 2017
Slide 26: Appendix
Appendix Element Fleet Management – Investor Update June 2017
Slide 27: Analyst Update Call
Analyst Update Call June 1, 2017 Element Fleet Management Element Fleet Management – Investor Update June 2017
Slide 28: Agenda
Agenda • Discussion of May 31st Trading Halt • Provide Update on 19th Capital Certain of the information we are sharing with you today includes forward-looking statements. These statements are based on expectations and assumptions that are subject to significant risks and uncertainties. Please refer
Slide 29: 19th Capital Update
19th Capital Update What is the background of the relationship? • Element has been funding these assets under a program agreement with Celadon since 2013 and into Q1 2016 • These assets were retained by Element Fleet post the separation as they are ‘Fleet Like’ assets • Strategy is to increase the p
Slide 30: 19th Capital Update
19th Capital Update Why the Joint Venture with Celadon? • Provided Element with more operational control over assets funded and owned by Element • Completed with no additional financial exposure • Provided commonality of interest between the parties • Provided additional collateral available to supp
Slide 31: 19th Capital Update
19th Capital Update How is the Joint Venture structured and operated? • Element formed a heavy duty truck fleet leasing JV (called 19th Capital) with Celadon, both parties contributing truck leasing portfolios to the JV • Element contributed its portfolio of $963.4 million to the JV for debt of $829
Slide 32: 19th Capital Update
19th Capital Update What is the Focus of the Joint Venture? • Incurred a non-cash $10.2 million start up loss from our share of the Joint Venture in Q1 • Focused on improving the JV’s operations, reducing the Q1 start up losses throughout 2017 and gaining profitability in 2018 • To increase the pene
Slide 33: 19th Capital Update
19th Capital Update Celadon’s status and impact to the JV? • 19th Capital is a separate entity and is bankruptcy remote from Celadon • Element does not have direct credit exposure to Celadon • The JV has less than 5% of its portfolio on lease to Celadon • Celadon’s auditors have withdrawn their repo
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