Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Q1 2018 Earnings Presentation
29 slides from Element Fleet Management's earnings presentation, 2018
Slide 1: Q1-2018 Review & Financial Results
Q1-2018 Review & Financial Results Element Fleet Management Element Fleet Management Q1-2018 Earnings Call
Slide 2: Cautionary Statement
Cautionary Statement 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
Slide 3: Agenda
Agenda • Leadership Announcement • Q1 2018 Highlights • Operations Update • Financial Review • Summary Element Fleet Management Q1-2018 Earnings Call 3
Slide 4: Dan Jauernig, Acting CEO
Dan Jauernig Acting CEO Element Fleet Management Q1-2018 Earnings Call
Slide 5: Jay Forbes: Capable, Proven Leader
Jay Forbes Capable, Proven Leader • Chief Executive Officer of Element effective June 1, 2018. • A fresh strategic perspective for Element to create immediate and lasting value for investors, customers and employees. • A deep passion for serving customers, operational expertise, strong financial acu
Slide 6: Reconstituted, Independent Board
Reconstituted, Independent Board Help Driving Significant Value For All Shareholders The Company intends to nominate a slate of the following nine individuals for election to the Board at the 2018 Annual Meeting: • Current independent directors Brian Tobin (Chairman), Paul Damp, Joan Lamm- Tennant a
Slide 7: Q1 2018 Highlights
Q1 2018 Highlights Core Fleet • Achieved Core Fleet adjusted earnings of $0.16 per share, better than plan ‒ Reiterating 2018 financial outlook with current expectation towards better end of range • Continued to enhance the customer experience and execute on operational improvements • Solid originat
Slide 8: Operations Update
Operations Update Strong Competitive Position • Retention rates returning to normal levels and customer satisfaction continuing to improve • New customer wins across a broad range of client types and industries ‒ Subscribing to a broad range of service offerings including telematics • Strategic busi
Slide 9: Xcelerate Release Overview
Xcelerate Release Overview Delivering on Self-Service, Analytics & Connected Data January 2018 Release March 2018 Release April 2018 Release Connected Data Dashboards & Vehicle Detail Tab – focuses on idling and speeding measure and the ability to compare performance across breakdowns or specific un
Slide 10: New Customer: Primoris Services Corporation
New Customer Primoris Services Corporation • Specialty construction and infrastructure company providing service to pipeline, power, utility, and civil markets • PSC key needs: − Outsource non core competency to reduce cost − Increase asset utilization, reduce downtime − Scale to support growth and
Slide 11: New Customer: Bluescope Steel - Australia
New Customer Bluescope Steel - Australia • Global leader in premium coated and painted steel products • Key fleet needs: ‒ Process improvements ‒ Innovative solutions ‒ Proactive fleet management ‒ Supply chain leverage • ~900 units, largely comprised of tool of trade vehicles • Successfully launche
Slide 12: Customer Retention Update: GE Appliances
Customer Retention Update GE Appliances Recognizes Its Top Suppliers at 2018 Presidents’ Council Summit • Global appliance company, GE Appliances purchased by Haier in 2016 • GE Appliances goals: − Outsource non core competency to reduce cost − Complete complex integration, choosing key suppliers −
Slide 13: Customer Retention Update: Unilever
Customer Retention Update Expanding Relationships – Unilever • Global RFP; Mexico is Unilever’s largest fleet • Unilever’s key needs: − Increase driver safety − Reduce maintenance costs − Sole supply • 1,800 vehicle fleet; initially shared 50% of their light vehicle fleet with a competitive fleet ma
Slide 14: Amerit Fleet Solutions
Amerit Fleet Solutions Outsourced Vehicle Maintenance Solutions • Element acquired a 15% minority stake (US$9.75M equity investment) in the largest U.S. provider of dedicated outsourced fleet maintenance • Amerit provides outsourced on-site, service center and mobile vehicle maintenance to several E
Slide 15: 19th Capital Operating Metrics
19th Capital Operating Metrics Days t o Release Vehicles • Recovered ~2,000 owner-operator trucks 60 cumulatively 40 20 ‒ Collections now at 90%+ 0 • Corporate fleet average 30 month term & May-17 May-18 Target 95%+ collections Port f olio Valu e b y Vin t ag e ( $) • Continue selling pre-2014 vinta
Slide 16: Samir Zabaneh, CFO: Review of Financial Results
Samir Zabaneh CFO Review of Financial Results Element Fleet Management Q1-2018 Earnings Call
Slide 17: Adjusted Earnings Per Share
Adjusted Earnings Per Share Adjusted Basic EPS Q1 2017 Q4 2017 Q1 2018 Core Fleet Management $0.18 $0.18 $0.16 Non-core assets $0.06 $0.01 $0.01 Total $0.24 $0.19 $0.17 Adjusted Basic EPS (constant currency) Q1 2017 Q4 2017 Q1 2018 Core Fleet Management $0.17 $0.18 $0.16 Non-core assets $0.06 $0.01
Slide 18: Key Operating Metrics
Key Operating Metrics As of and for the three months ended March 31, 2018 In millions, except per share amounts and where otherwise noted Core Fleet Non-Core Total Management Assets Average earning assets $12,299.0 $857.9 $13,156.9 Average interim funding $604.1 - $604.1 Average funded assets $12,90
Slide 19: Core Fleet Management Net Revenue
Core Fleet Management Net Revenue Net Revenue Summary Net Revenue ($mil) Q1 2017 Q4 2017 Q1 2018 Service and other revenue $128.4 $141.0 $128.5 Net interest and rental revenue $83.6 $80.3 $80.0 Total net revenue $212.0 $221.3 $208.4 Net Revenue Summary (Constant Currency) Net Revenue ($mil) Q1 2017
Slide 20: Core Fleet Management Net Revenue: Yield
Core Fleet Management Net Revenue Yield to Average Earning Assets Net Revenue (in $mil, except %) Q1 2017 Q4 2017 Q1 2018 Net interest and rental revenue $83.6 $80.3 $80.0 Average earning assets $12,428.8 $12,331.0 $12,299.0 Net interest and rental revenue margin 2.69% 2.61% 2.60% Yield to Average E
Slide 21: Consolidated Adjusted Operating Expenses
Consolidated Adjusted Operating Expenses Category (in $mil, except %) Q1 2017 Q4 2017 Q1 2018 Salaries, wages and benefits $74.9 $83.8 $82.3 General and administrative expenses $36.7 $38.7 $33.8 Depreciation and amortization $3.7 $4.6 $5.3 Total adjusted operating expenses $115.3 $127.1 $121.4 % of
Slide 22: Non-Core Assets Net Revenue
Non-Core Assets Net Revenue Net Revenue Summary Net Revenue ($mil) Q1 2017 Q4 2017 Q1 2018 Service and other revenue $19.1 $0.6 $0.7 Net interest and rental revenue $7.3 $7.9 $2.2 Total net revenue $26.4 $8.5 $2.9 Yield to Average Earning Assets Net Revenue ($mil, except %) Q1 2017 Q4 2017 Q1 2018 N
Slide 23: Non-Core Assets
Non-Core Assets Total Assets In millions Dec. 31, Mar. 31, Category Description 2017 2018 Senior term loans (A&B) and revolver equipment 19th Capital Group LLC $775.9 $794.7 loan(1) 19th Capital Group LLC Equity ownership (49.99%) $10.0 $0.0 32.5% interest in ECAF Holdings Ltd., an indirect ECAF I H
Slide 24: Funding Update: Balance Sheet Capacity
Funding Update Balance Sheet Capacity • Committed facilities (available $30 & outstanding) of $18B at March 31, 2018 $25 • At March 31, 2018, Element $20 had $4.3B in available BILLIONS financing to fund ongoing $15 originations $10 • Committed facilities are $5 supplemented by access to the Term AB
Slide 25: IFRS 9 Adoption
IFRS 9 Adoption IAS 39 carrying IFRS 9 carrying As at January 1, 2018 ($mil) value Reclassification Remeasurement value Loan to 19th Capital - Allowance for $0 $0 $(65.0) $(65.0) credit losses Finance receivables (excluding loan to 19th Capital) - Allowance for credit $(4.3) $0 $(3.9) $(8.2) losses
Slide 26: Effective Income Tax Rate
Effective Income Tax Rate Q1 2018 2017 Canadian statutory rate 26.6% 26.6% Impact of other jurisdictions 0.5% 13.1% Adjustments to statutory rates -9.1% -19.7% Effective tax rate on adjusted operating 18.0% 20.0% income • US statutory rate declined from 37.9% to 25.6% • US tax reform was main driver
Slide 27: Dan Jauernig, Acting CEO
Dan Jauernig Acting CEO Element Fleet Management Q1-2018 Earnings Call
Slide 28: Summary: Focused on Operations
Summary Focused on Operations • Making strong progress on strategic plan, operational excellence and structural cost reductions • Core fleet adjusted operating income expected to be within 3% to 5% of 2017 results (constant currency basis) ‒ At end of Q1 2018, tracking towards better end of this out
Slide 29: Questions
QUESTIONS Element Fleet Management Q1-2018 Earnings Call
Element Fleet Management — Q1 2018 Earnings Presentation on 6ix