Slide 1: Q4 and 2023 Investor Presentation
Q4 and 2023 Investor Presentation Element Fleet Management (TSX: EFN)
Slide 2: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer This presentation contains certain forward-looking statements and forward-looking information regarding Element Fleet Management Corp. (“Element”) and its business which are based upon Element’s current expectations, estimates, projections, assumptions and b
Slide 3: Contents
• Full-year 2023 Highlights………………………………..slide 4 • Executing on our growth strategy • Achieved all 2023 guidance targets • Strategic initiatives update • Vehicles under management • A capital-lighter business model Contents • Growing adjusted FCF per share and return of capital • Originations and OE
Slide 4: Full Year 2023 Highlights
Full Year 2023 Highlights Q 0, Oselement
Slide 5: Executing on our growth strategy
Executing on our growth strategy 1. Record net revenue of $1.3 billion driving record operating margins, adjusted earnings, and free cash flow per share. 2. Building on our Strong performance driven by a 36% increase in originations, continued commercial success in converting self-managed fleets, in
Slide 6: Achieved all 2023 guidance targets
FULL YEAR 2023 HIGHLIGHTS Achieved all 2023 guidance targets Key metrics FY 2023 Results1 FY 2023 Guidance Achieved $ million, except per share) Net revenue $1,294 $1,240 – 1,260 Adjusted Operating margin 55.3% 54.0% - 55.0% Adjusted operating income $715.8 $675 - 700 Adjusted EPS [basic] $1.3
Slide 7: Profitable net revenue growth, fueled by…
FULL YEAR 2023 HIGHLIGHTS Profitable net revenue growth, fueled by… • Our focus on growing capital light services Net revenue streams, and adjusted operating margin revenue. Net financing revenue Services revenue • Our ambitious growth plans. Syndication revenue LTM adjusted operating margin (%) • L
Slide 8: Share of wallet expansion…
FULL YEAR 2023 HIGHLIGHTS Share of wallet expansion… 4Q22 -> 4Q23 services revenue 18.2% • Increased penetration - providing more financing 176.3 1.5 0.4 0.7 and/or services to more of our existing clients’ 17.0 7.5 vehicles - deepens our value proposition (by further lowering Total Cost of Fleet Op
Slide 9: …across our global fleet
FULL YEAR 2023 HIGHLIGHTS …across our global fleet Global VUM (in thousands) Financed only Serviced & financed Serviced only Over the long term, Element drives growth in vehicles under 1,000 1,447 1 1,486 1,463 1,467 1,523 1,541 1,500 1,501 1,485 management (‘VUM’) through: 810 850 822 827 881 893 8
Slide 10: A capital-lighter business model
FULL YEAR 2023 HIGHLIGHTS A capital-lighter business model • The second pillar of our capital-lighter business Syndicated assets and pre-tax return on model is syndication - the sale of fleet lease common equity (pROcE) have grown since 2019 receivables to financial buyers on terms that are Net earn
Slide 11: Growing adjusted FCF per share and returning capital
FULL YEAR 2023 HIGHLIGHTS Growing adjusted FCF per share and returning capital We return capital to our shareholders through growing common dividends, common share buybacks and preferred share series redemptions. We allocate capital to these return ‘levers’ based on: • Required investments in our bu
Slide 12: OEM production
FULL YEAR 2023 HIGHLIGHTS OEM production U.S. and Canada Originations Mexico 1 Australia and New Zealand $2,500 • As forecast, automotive OEM production volumes $2,026 continue to improve. $2,000 • Q4 and 2023 originations improved substantially 1 $1,500 year-over-year. $1,000 • Strong originations
Slide 13: Looking Ahead
Looking Ahead Q 0, Oselement
Slide 14: Full-year 2024 results guidance
LOOKING AHEAD 1 Full-year 2024 results guidance 2024 guidance $ millions except per common share $CAD $USD2 Net revenue $1,365 – 1,390 $1,020 – 1,040 Adjusted operating margin 55.0% – 55.5% 55.0% – 55.5% Adjusted operating income $750 – 770 $560 – 575 Adjusted EPS [basic] $1.41 – 1.46 $1.05 – 1.09 A
Slide 15: Laying the foundation for future growth – Leasing & Strategic Sourcing Initiatives
LOOKING AHEAD • • • • • • • • Laying the foundation for future growth – • • • • • • • • • • • • • • • • Leasing & Strategic Sourcing Initiatives • • • • • • • • • Centralizing accountability for U.S. and Canadian • • • • • • • • leasing in Dublin, Ireland • • • • • • • • • Enhance our consistent, su
Slide 16: Laying the foundation for future growth - Digitization and Automation
LOOKING AHEAD • • • • • • • • • • • • • • • • Laying the foundation for • • • • • • • • • • • • • • • • future growth - Digitization • • • • • • • • • • • • • • • • and Automation • • • • • • • • • Client-centric and focused on enhancing the • • • • • • • • client experience • • • • • • • • • Streng
Slide 17: Revenue growth levers
LOOKING AHEAD Retaining our clients 98% client revenue retention. Growing share of wallet Selling more services and financing to existing clients and increasing utilization of our services. Revenue growth Earning market share levers Leverage our superior value proposition to earn market share from c
Slide 18: Favourable market dynamics supporting conversion of self-managed fleets
LOOKING AHEAD Favourable market dynamics supporting conversion of self-managed fleets Growing Fleet Data-driven Incumbent scale complexity electrification insights advantage The need to simplify Transition to EV Element leverages its Element has 1.5 million the complexities of fueled by corporate ac
Slide 19: Ample opportunity
LOOKING AHEAD Ample opportunity U.S. & Canada Approximately 67% of our 2023 net revenue was earned in the U.S. and Canada. 30% Self-managed fleets Approximately 55% of our addressable market in the U.S. FMC-managed fleets and Canada is currently self-managed, representing Element 45% 55% approximate
Slide 20: The economics of transitioning from ICE to EV
LOOKING AHEAD The economics of Higher capital costs transitioning from ICE to EV = higher net financing and syndication revenue Accident services • The transition is expected to be net revenue positive, Electricity with near-term economic benefits driven primarily Comprehensive by: telematics • Incr
Slide 21: Low risk, resilient, client-centric business model
LOOKING AHEAD • • • • • • • • Low risk, resilient, • • • • • • • • • • • • • • • • client-centric business model • • • • • • • • • • • • • • • • • • • • • • • • • Low recession risk: FMC value proposition – to reduce TCO - becomes more relevant and • • • • • • • • compelling. • • • • • • • • • • • •
Slide 22: Environmental, Social & Governance
Environmental, Social & Governance 22
Slide 23: Sustainability highlights
SUSTAINABILITY • • • • • • • • Sustainability highlights • • • • • • • • • • • • • • • • • • • • • • • • Governance: We are ranked among the top 8% of companies • • • • • • • • (in the S&P/TSX Composite Index) in the Globe & Mail’s 2023 annual “Board Games” rankings. • • • • • • • • • • • • • • • •
Slide 24: Environmental sustainability
SUSTAINABILITY • • • • • • • • • • • • • • • • Environmental • • • • • • • • • • • • • • • • sustainability • • • • • • • • Our commitments include: • • • • • • • • • Transition 350,000 client vehicles into EVs by 2030 through Arc • • • • • • • • by Element, our global “wing-to-wing” Electric Vehicl
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