Slide 1: Q2 2023 Investor Presentation
Q2 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
• Q2 2023 results . . . . . . . . . . . . . . . . . . . . . . . . . . . . slide 4 • Highlights • 2023 & long-term guidance Profitable net revenue growth Contents • • Share of wallet expansion • Vehicles under management growth • A capital-lighter business model • Growing FCF per share and return of
Slide 4: Q2 2023 Results
Q2 2023 Results Q ‘o) Oselement
Slide 5: Element delivered record Q2 results and reaffirmed full-year 2023 guidance
1. We delivered a record $323.1 million of net revenue in Q2, representing 12.1% growth over Q2 last year as reported, and 8.4% growth over “organic” Q2 2022 net revenue in constant currency 2. Q2 2023 EPS of $0.29 were a 3-cent improvement over Q2 2022, and adjusted EPS of $0.33 -- another quarterl
Slide 6: 2023 guidance and long-term outlook
Full-year 2022 results, excluding non-recurring items 1 • $1,164 million net revenue • 54.8% operating margin • $1.39 free cash flow per share 2023 guidance Full-year 2023 results guidance 1 & • $1,240-1,260 million net revenue • Implied YoY growth rate of 6.5-8.5% long-term outlook • • 54-55% opera
Slide 7: Five revenue growth drivers
Retaining our clients Growing share of wallet Five revenue Earning market share growth drivers Converting self-managed fleets into Element clients Winning government & ‘mega’ fleets 7
Slide 8: Profitable net revenue growth, fueled by…
Q2 2023 RESULTS Profitable net revenue growth, fueled by… • Our transformed operations underpin our Net revenue streams, and operating margin ambitious growth agenda. Net financing revenue Services revenue • Our OEM relationships and service-supplier Syndication revenue LTM operating margin (%) netw
Slide 9: Share of wallet expansion…
Q2 2023 RESULTS Share of wallet expansion… 2Q22 -> 2Q23 services revenue 12.0% 13.2% • Increased penetration - providing more financing 169.8 and/or services to more of our existing clients’ 2.0 9.2 0.2 vehicles - deepens our value proposition (by further 6.7 lowering Total Cost of fleet Operations
Slide 10: …and vehicles under management growth
Q2 2023 RESULTS …and vehicles under mgmt growth Global VUM (in thousands) Financed only Serviced & financed Serviced only Element drives growth in vehicles under management (‘VUM’) 1,000 1,411 1 1,430 1,466 1,484 1,466 1,494 1,533 1,502 through: 771 791 829 846 825 852 888 852 • Improving client ret
Slide 11: A capital-lighter business model
Q2 2023 RESULTS 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 earning assets
Slide 12: Growing FCF per share and return of capital
Q2 2023 RESULTS Growing FCF per share and return of 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: • FCF per share performance (annual common dividend
Slide 13: Current operating environment
Current operating environment 13
Slide 14: OEM production
CURRENT OPERATING ENVIRONMENT OEM production U.S. and Canada Originations Mexico 1 Australia and New Zealand $2,500 • As forecast, automotive OEM production volumes gradually improved. $2,000 • Q2 2023 originations improved substantially year- 1 $1,500 over-year and we remain confident in our full-
Slide 15: Inflation
CURRENT OPERATING ENVIRONMENT • • • • • • • • • • • • • • • • • • • • • • • • Inflation • • • • • • • • • • • • • • • • • Inflation is additive to Element's profitable revenue • • • • • • • • growth. • • • • • • • • • Net financing revenue benefits from rising vehicle • • • • • • • • prices, as does
Slide 16: Access to capital
CURRENT OPERATING ENVIRONMENT • • • • • • • • • • • • • • • • • • • • • • • • Access to capital • • • • • • • • • • • • • • • • • We have a diversified roster of lenders and • • • • • • • • investors across different funding sources that • • • • • • • • afford us ready access to ample cost-effective
Slide 17: Environmental, Social & Governance
Environmental, Social & Governance 17
Slide 18: ESG highlights
ESG • • • • • • • • ESG highlights • • • • • • • • • • • • • • • • • • • • • • • • Governance: We are ranked in the top 7% of 226 companies • • • • • • • • (in the S&P/TSX Composite Index) by The Globe & Mail national newspaper’s 2022 annual “Board Games” study. • • • • • • • • • • • • • • • • Socia
Slide 19: Environmental: Sustainability
ESG • • • • • • • • Environmental: Sustainability • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Our sustainability commitments include: • • • • • • • • • Transition 350,000 client vehicles into EVs by 2030 • • • • • • • • through Arc by Element, our global “wing-to-wing” • • • • •
Slide 20: Fleet Management 101
Fleet Management 101 Lowering the total cost of fleet operations and reducing administrative burden 20
Slide 21: What is it?
FLEET MANAGEMENT 101 What is it? Vehicle Vehicle Production • Operators of automotive fleets can outsource Selection Ordering Tracking vehicle-related responsibilities and functions to a fleet management company (‘FMC’). • Through scale efficiencies and know-how, FMCs lower the total cost of fleet o
Slide 22: Attractive industry dynamics
FLEET MANAGEMENT 101 • • • • • • • • • • • • • • • • • • • • • • • • Attractive industry • • • • • • • • • • • • • • • • dynamics • • • • • • • • • • • • • • • • High barriers to entry • • • • • • • • • Scale: Incumbents possess scale advantages and • • • • • • • • expertise, to maximize TCO savings
Slide 23: Low risk, resilient business model
FLEET MANAGEMENT 101 • • • • • • • • Low risk, resilient • • • • • • • • • • • • • • • • business model • • • • • • • • • • • • • • • • • • • • • • • • • Low recession risk: FMC value proposition – to reduce TCO - becomes more compelling. • • • • • • • • • • • • • • • • • Low inflation risk: “Cost-p
Slide 24: Element Fleet Management
Element Fleet Management The largest publicly traded pure-play FMC in the world 24
Slide 25: Global industry leader
ELEMENT 101 • • • • • • • • Global industry leader • • • • • • • • • • • • • • • • • • • • • • • • • We provide services and financing to large and • • • • • • • • mid-sized corporate/commercial and • • • • • • • • government/public service fleets. • • • • • • • • • We specialize in large, complex f
Slide 26: Three strategic growth priorities
Aggressively pursue organic growth in all our geographies and demonstrate the scalability of Element's transformed operating platform by growing operating ELEMENT 101 income in excess of the annual net Three strategic revenue growth rate. growth priorities Advance a capital-lighter business model by
Slide 27: Ample opportunity
ELEMENT 101 Ample opportunity U.S. & Canada Approximately 70% of our full-year 2022 net revenue will have been earned in the U.S. and Canada. 30% Self-managed fleets Approximately 55% of our addressable market in the FMC-managed fleets U.S. and Canada is currently self-managed, Element 55% 45% 70% r
Slide 28: Rising interest rates
ELEMENT 101 - RESILIENT BUSINESS MODEL • • • • • • • • • • • • • • • • • • • • • • • • Rising interest rates • • • • • • • • • • • • • • • • • Element’s business model is largely agnostic to • • • • • • • • interest rate movements. • • • • • • • • • We match-fund our leases on interest rate type • •
Slide 29: Recession
ELEMENT 101 - RESILIENT BUSINESS MODEL • • • • • • • • Recession • • • • • • • • • • • • • • • • • • • • • • • • • Our value proposition - lower the total cost of • • • • • • • • clients’ fleet operations – remains compelling in a • • • • • • • • recessionary environment. • • • • • • • • • Our “cred
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