Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Investor Day (November 2022)
156 slides from Element Fleet Management's investor day presentation, Nov 29, 2022
Slide 1: Element Fleet Management 2022 Investor Day & Accompanying Materials
Element Fleet Management (TSX: EFN) 2022 Investor Day & Accompanying Materials
Slide 2: Forward-looking statements and disclaimer
Forward-looking statements and disclaimer This document 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 belie
Slide 3: Notes
Unless otherwise noted herein… • all monetary amounts are millions of Canadian dollars, except per share amounts, Notes which are single Canadian dollars, and • Element is the attributable source of all content. 2
Slide 4: Contents
• Introductory materials • Fleet Management 101 • Element 101 Contents • Investor Day materials • Organic revenue growth • Scalable operating platform • Capital-lighter business model • ESG & Electric vehicles • Supplemental materials • Current events • Resilient business model 3
Slide 5: Fleet Management 101
Fleet Management 101 Lowering the total cost of fleet operations and reducing administrative burden 4
Slide 6: Fleet management
Fleet management What Attractive Low risk, is it? industry resilient dynamics business model 5
Slide 7: 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 8: 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 9: 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 10: Element Fleet Management
Element Fleet Management The largest pure-play FMC in the world 9
Slide 11: 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 12: The clear market leader in the U.S. and Canada
The addressable market of mid- and enterprise-sized fleets in the U.S. and Canada represents approximately $6 billion of annual net revenue opportunity for FMCs, of which only approximately 45% is currently being earned by FMCs. ELEMENT 101 The clear market leader in the U.S. $ 2,500 and Canada Elem
Slide 13: The clear market leader in ANZ
Element goes to market as Custom Fleet in Australia and New Zealand (‘ANZ’) which, combined, represent approximately $3.3 billion of annual net revenue opportunity for FMCs, of which only approximately 40% is currently being earned by FMCs. ELEMENT 101 The clear market leader in ANZ $ 1,200 Element
Slide 14: The foremost FMC in Mexico
Element’s addressable market in Mexico represents approximately $3.6 billion of annual net revenue opportunity for FMCs, of which only approximately 35% is currently being earned by FMCs. ELEMENT 101 The foremost FMC in Mexico Element is the foremost FMC in a fragmented Mexican market that also $ 1,
Slide 15: Element has never been better positioned
• • • • • • • • • • • • • • • • • • • • • • • • “Element has never • • • • • • • • • • • • • 5 • • • been better positioned • • • • Countries • • • • • • • • • • • • than we are right now • • • • • • • • ~1.5 M • • • • • • • • • • • • • • • • Vehicles to sustain our • • • • • • • • • • • • • • • • m
Slide 16: 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 17: Five revenue growth drivers
Retaining our clients Growing share of wallet ELEMENT 101 Five revenue Stealing market share growth drivers Converting self-managed fleets into Element clients Winning government & ‘mega’ fleets 16
Slide 18: Materially improved results over ~5 years
ELEMENT 101 Materially improved results over ~5 years $300 $0.40 $225 $0.30 N $150 $0.20 $75 $0.10 2018 2019 2020 2021 2022 Net revenue AOI FCF/Share 17
Slide 19: Vehicles under management
ELEMENT 101 Vehicles under Vehicles under management 3.9% year-over-year growth management 1,500,000 1,466,000 1,484,000 1,466,000 Element drives growth in vehicles under 1,430,000 1,411,400 management (‘VUM’) through: 1,400,000 • Improving client retention; • ‘Internal’ growth: earning incremental
Slide 20: Annuity business model
ELEMENT 101 • • • • • • • • Annuity business model • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Our clients’ mission-critical fleet vehicles are • • • • • • • • constantly in use and regularly replaced, driving • • • • • • • • robust recurring services revenue. • • • • • • • • •
Slide 21: Element Fleet Management Investor Day
Element Fleet Management (TSX: EFN) Investor Day Tuesday, November 29, 2022
Slide 22: Presenters
INVESTOR DAY Presenters Jay Forbes Frank Ruperto Jim Halliday David Madrigal Jacqui McGillivray Chris Gittens Izzy Kaufman David Colman President & Chief EVP & Chief Financial EVP & Chief Operating EVP & Chief EVP & Chief People EVP & Chief EVP & Treasurer EVP & General Counsel Executive Officer Off
Slide 23: Agenda
• Opening remarks • Organic revenue growth • Scalable operating platform Agenda • Capital-lighter business model • ESG & Electric Vehicles • Q&A • Closing remarks 22
Slide 24: Opening remarks
Jay Forbes President & Chief Executive Officer Jay joined Element as President & CEO in mid- Opening 2018 and has led the Transformation of the company and the implementation of Element’s growth strategy: remarks • Securing industry-leading client satisfaction and retention; • Deepening the engageme
Slide 25: Element's competitive advantages
Our People, and their delivery of a consistent, superior client experience. OPENING REMARKS Element’s Our Scale, and the unrivaled competitive purchasing power, supplier networks, and data that come from managing advantages 1.5 million vehicles across 5 countries. Our differentiated offerings, inclu
Slide 26: Organic revenue growth
Organic revenue growth Q ‘o) Ogelement
Slide 27: Presenter
David Madrigal Chief Commercial Officer David leads Element’s global commercial sales efforts and is responsible for coordinating our five revenue growth drivers to deliver 6-8% Presenter organic net revenue growth annually. Previously, as the country head of Element Mexico, David and his team succe
Slide 28: Last 6 years' performance in Mexico
ORGANIC REVENUE GROWTH Last 6 years’ performance in Mexico 12% $1,600 Mexico is a country of 126 million people, with 2021 1 GDP of $26.2 trillion pesos ($1.3 trillion U.S. dollars). $1,400 Operating in Mexico since 2016, Element has: 10% • Delivered high double-digit annual net revenue $1,200 growt
Slide 29: Set up for success
ORGANIC REVENUE GROWTH • • • • • • • • • • • • • • • • • • • • • • • • Set up for success • • • • • • • • • • • • • • • • In Q1 2020, we began an overhaul of our Commercial • • • • • • • • function in the U.S. and Canada, upgrading people, • • • • • • • • processes and systems. • • • • • • • • We in
Slide 30: Five revenue growth drivers
ORGANIC REVENUE GROWTH • • • • • • • • Five revenue • • • • • • • • • • • • • • • • growth drivers • • • • • • • • • • • • • • • • • • • • • • • • 1. Retaining our clients • • • • • • • • 2. Growing share of wallet (‘SOW’) • • • • • • • • • • • • • • • • 3. Stealing market share • • • • • • • • 4. C
Slide 31: Traction in the U.S. and Canada
ORGANIC REVENUE GROWTH Traction in the U.S. and Canada… Growth in U.S. & Canada contracted revenue units… …driving U.S. & Canada services revenue growth 200,000 $140 72% 70% 170,000 $130 68% 140,000 $120 66% 110,000 $110 64% 80,000 $100 62% 50,000 $90 60% 20,000 $80 58% 2019 2020 2021 2022 2019 2020
Slide 32: Fueling strong global growth
ORGANIC REVENUE GROWTH …fueling strong global growth Global contracted revenue units Global net revenue 200,000 $300 170,000 $250 140,000 $200 110,000 $150 80,000 $100 50,000 $50 20,000 $0 2019 2020 2021 2022 2019 2020 2021 2022 U.S. & Canada Australia & New Zealand Mexico Net financing revenue Serv
Slide 33: Grounds for confidence in sustainability of success
PEOPLE, PROCESSES AND SYSTEMS Grounds for confidence in sustainability of success People, Strong & rising processes Net Promoter and systems Scores 32
Slide 34: Grounds for confidence in sustainability of success
ORGANIC REVENUE GROWTH Grounds for confidence in sustainability of success Experience Global in Mexico best-practice sharing 33
Slide 35: Client retention
Client retention Q ‘o) Oselement
Slide 36: Presenter
Raj Eshwar Vice President, Client Experience Raj leads Element’s focus on ensuring a consistent superior client experience and is responsible for the Client Retention & SOW Presenter pillars of our growth strategy. In prior roles, Raj was Head of Client experience & Delivery Transformation at T. Row
Slide 37: Rising to best-in-class levels
NET PROMOTER SCORES Rising to best-in-class levels 50 40 30 20 10 2017 0 20181 2019 2020 2021 20222 -10 Our NPS proves we are delivering a consistent, superior client experience – foundational to our organic revenue growth strategy. 1. No NPS surveys were conducted in 2018 2. Last twelve months at S
Slide 38: Deeper insights
NET PROMOTER SCORES Deeper insights SOW success Our highest- Reputation is is >20% greater revenue clients a top-3 driver of with ‘promoters’ are our happiest client decisions 37
Slide 39: Driving improvement
CLIENT RETENTION Driving improvement Client retention We monitor specific KPIs as part of a disciplined 98.6% approach to improving retention, including: • Client-Driver sentiment towards Element; • Ease of doing business with Element; and • Client satisfaction. We are equally disciplined in our res
Slide 40: Approaching 99% globally
CLIENT RETENTION • • • • • • • • Approaching 99% globally • • • • • • • • • • • • • • • • • • • • • • • • • Fast approaching 99% in the U.S. & Canada. • • • • • • • • • We continue to retain ~99% in ANZ, Mexico. • • • • • • • • • • • • • • • • • We deliver the consistent, superior client experience
Slide 41: Strategic Consulting Services
Strategic Consulting Services (‘SCS’) 40
Slide 42: Presenter
Steve Jastrow Vice President, SCS Steve is a 23-year industry veteran, having joined GE Capital’s fleet business in 1999. Today, he leads the consulting & analytics Presenter team (‘Strategic Consulting Services’ or ‘SCS’) that is central to Element’s value proposition. SCS uncovers the insights and
Slide 43: Actionable insights
STRATEGIC CONSULTING SERVICES Illustrative client review content: identified (incl. actioned) cost savings Actionable insights $17.3 SCS provides: • Proactive identification of cost saving opportunities for clients, which often $11.2 $11.3 grow share of wallet (penetration). • Support to Commercial
Slide 44: Share of wallet
Share of wallet (‘SOW’) Q ‘o) Oselement
Slide 45: Three drivers of SOW gains
Penetration SHARE OF WALLET Three drivers of SOW gains Utilization Pricing 44
Slide 46: Penetration
• • • • • • • • • • • • • • • • • • • • • • • • SHARE OF WALLET • • • • • • • • • • • • • • • • Penetration • • • • • • • • • • • • • • • • Recognizing the strong relationships we • • • • • • • • enjoy with our existing clients, and the • • • • • • • • amount of ‘white space’ that exists (clients •
Slide 47: Increasing penetration
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • SHARE OF WALLET • • • • • • • • • • • • • • • • • • • • • • • • Increasing penetration • • • • • • • • We demonstrate our value by using analytics - • • • • • • • • leveraging data from the millions of vehicles we have • • • • • • • • m
Slide 48: Measuring success
SHARE OF WALLET Measuring success Systems: • Monitoring tools identify opportunities to Type Enrolled Opportunity Total Units Penetration Opportunity Opportunity Units Units % % $ Ann. clients for incremental service additions Report date: 11/01/2022 Bill Month: 11/2022 and the value they can delive
Slide 49: Penetration 'white space'
SHARE OF WALLET Penetration ‘white space’ • Ample opportunity to sell incremental services (including financing) to existing clients. $245 million annual net revenue • Increased penetration intensifies clients’ experience of our value proposition by further lowering TCO and reducing fleet-related ‘w
Slide 50: Utilization
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • SHARE OF WALLET • • • • • • • • • • • • • • • • • • • • • • • • Utilization • • • • • • • • • Utilization is a key driver of share of wallet, as • • • • • • • • 2/3rds of services revenue is vehicle usage- • • • • • • • • based. (The re
Slide 51: Improving utilization
SHARE OF WALLET Improving utilization Driving in-network purchases • Proactive notifications (eg. preventive maintenance recommendations) in Xcelerate improve timely directed spend. Expanding our service-supplier network • Ensuring ready access to service options. Strategic consulting services • Ana
Slide 52: Future of utilization
SHARE OF WALLET $460 Client spend with national accounts Future of utilization Success to date • Dramatic increase in client spend with national $420 accounts. • Strong & rising NPS. • Accelerating services revenue growth. Sustainable growth drivers $380 • Technology: increased use of behaviour mana
Slide 53: Pricing
• • • • • • • • • • • • • • • • • • • • • • • • SHARE OF WALLET • • • • • • • • • • • • • • • • Pricing • • • • • • • • • • • • • • • • Inflationary increases in the cost of • • • • • • • • vehicles - and the parts and services • • • • • • • • to maintain and operate them – • • • • • • • • automatic
Slide 54: Stealing market share
Stealing market share Q ‘o) Oselement
Slide 55: Presenter
Nick Verceles Head of North American Sales Nick joined Element earlier this year after five years in sales at UPS, including as head of North American sales for UPS’s wholly owned Presenter subsidiary, Coyote Logistics. This background gives Nick experience in transport, logistics and supply chain.
Slide 56: Current state of play
The addressable market of mid- and enterprise-sized fleets in the U.S. and Canada represents approximately $6 billion of annual net revenue opportunity for FMCs, of which only approximately 45% is currently STEALING MARKET SHARE being earned by FMCs. Current state of play Element is the market leade
Slide 57: Current state of play
Element goes to market as Custom Fleet in Australia and New Zealand (‘ANZ’) which, combined, represent approximately $3.3 billion of annual net revenue opportunity for FMCs, of which only approximately 40% is STEALING MARKET SHARE currently being earned by FMCs. Current state of play Element is the
Slide 58: Current state of play
Element’s addressable market in Mexico represents approximately $3.6 billion of annual net revenue opportunity for FMCs, of which only approximately 35% is currently being earned by FMCs. STEALING MARKET SHARE Current state of play Element is the market leader everywhere we operate, yet there is sig
Slide 59: What we do
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • STEALING MARKET SHARE • • • • • • • • • • • • • • • • What we do • • • • • • • • • • • • • • • • • Hunt strategically to identify and win- • • • • • • • • over clients dissatisfied with our • • • • • • • • competitors. • • • • • • • • •
Slide 60: How we win share
STEALING MARKET SHARE • • • • • • • • How we win share • • • • • • • • • • • • • • • • • • • • • • • • Focus on select targets: Our Commercial function • • • • • • • • and its upgraded people, processes and systems use • • • • • • • • detailed, strategic sales account planning and • • • • • • • • ma
Slide 61: Winning RFPs
STEALING MARKET SHARE • • • • • • • • • • • • • • • • • • • • • • • • Winning RFPs • • • • • • • • • • • • • • • • Our strategy enables us to win without participating in • • • • • • • • “a race to the bottom”. • • • • • • • • • Pre-empt RFPs wherever possible; • • • • • • • • • • • • • • • • • Focu
Slide 62: Success to date
STEALING MARKET SHARE Success to date Thus far in 2022, we have: Stolen market share in 2022 • Stolen 77 clients from competitors across our Clients VUM Incumbents global footprint, representing 33,100 vehicles under management, and 19% more annualized revenue U.S. & 36 21,000 Holman, Wheels, Mercha
Slide 63: Success is sustainable
STEALING MARKET SHARE • • • • • • • • • • • • • • • • • • • • • • • • Success is sustainable • • • • • • • • • • • • • • • • We see a clear path to stealing market share through • • • • • • • • continued investment in our competitive advantages: • • • • • • • • • Our people, and the systems that sup
Slide 64: Converting self-managed fleets into Element clients
Converting self-managed fleets into Element clients 63
Slide 65: Self-managed fleets
• • • • • • • • • • • • • • • • • • • • • • • • “Self-managed fleets • • • • • • • • • • 5• • • • • • represent by far • •Countries • • • • • • • • • • • • • • Element’s largest • • • • • • • • $7.7 B • • • • • • • • • • • • • • • • Net Revenue long-term revenue growth opportunity • • • • • • • • •
Slide 66: Presenter
Manuel Tamayo Country Head, Mexico Manuel has been with Element for seven years. He joined us as the commercial leader for Mexico – coauthoring the successful revenue Presenter growth strategy in that region - and assumed the role of Country Head, succeeding David Madrigal, in 2020. Prior to his tim
Slide 67: Ample opportunity
CONVERTING SELF-MANAGED FLEETS Ample opportunity $ 3,300 Approximately 70% of our full-year 2022 net revenue will have been earned in the U.S. and Canada. Approximately 55% of our addressable market in the U.S. and Canada is currently self-managed, representing approximately $3.3 billion of annual n
Slide 68: Ample opportunity
CONVERTING SELF-MANAGED FLEETS Ample opportunity Approximately 70% of our full-year 2022 net revenue $ 1,900 will have been earned in the U.S. and Canada. Approximately 55% of our addressable market in the U.S. and Canada is currently self-managed, representing approximately $3.3 billion of annual n
Slide 69: Ample opportunity
CONVERTING SELF-MANAGED FLEETS Ample opportunity $ 2,300 Approximately 70% of our full-year 2022 net revenue will have been earned in the U.S. and Canada. Approximately 55% of our addressable market in the U.S. and Canada is currently self-managed, representing approximately $3.3 billion of annual n
Slide 70: Value proposition
CONVERTING SELF-MANAGED FLEETS Value proposition Lower total Provide ready cost of fleet access to cost- operations efficient capital 69
Slide 71: Value proposition
CONVERTING SELF-MANAGED FLEETS Value proposition Reduce Simplify and administrative de-risk fleet burden electrification 70
Slide 72: How we do it in Mexico
• • • • • • • • • • • • • • • • • • • • • • • • CONVERTING SELF-MANAGED FLEETS • • • • • • • • • • • • • • • • How we do it in Mexico… • • • • • • • • • • • • • • • • • Build high-performance sales teams • • • • • • • • • • • • • • • • • Manage them for effectiveness • • • • • • • • • Target prospec
Slide 73: …is how we do it globally
CONVERTING SELF-MANAGED FLEETS • • • • • • • • • • • • • • • • • • • • • • • • …is how we do it globally • • • • • • • • • • • • • • • • Carefully screened sales reps are provided extensive • • • • • • • • in-house training. • • • • • • • • • 80% of sales reps in the U.S. and Canada hired • • • • •
Slide 74: Case study: Global confectionary brand
CONVERTING SELF-MANAGED FLEETS Case study: Global confectionary brand Client believed they were efficiently self-managing a 4,000 vehicle fleet - including sales, distribution, and executive vehicles - with 20 in-house staff. We showed them how much more efficient they could be working with Element.
Slide 75: Case study: Construction/infra./real estate firm
CONVERTING SELF-MANAGED FLEETS Case study: Construction/infra./real estate firm Client was a large off-market opportunity in late 2021: a $5+ billion market cap construction, infrastructure and real estate company. • Strong senior-level connectivity between client and Custom Fleet, which enabled us
Slide 76: Case study: Social service provider
CONVERTING SELF-MANAGED FLEETS Case study: Social service provider Client has a large, decentralized fleet, lack of in-house knowledge, and unmanaged maintenance and fuel expenses. This was a perfect fit for our value prop: lower TCO and make the complex simple for our client. • Engaged with key sta
Slide 77: Element's competitive advantages
Our People, and their delivery of a consistent, superior client experience. CONVERTING SELF-MANAGED FLEETS Element’s Our Scale, and the unrivaled purchasing competitive power, supplier networks, and data that come from managing 1.5 million vehicles advantages across 5 countries. Our differentiated o
Slide 78: Robust outlook
CONVERTING SELF-MANAGED FLEETS Robust outlook Self-managed fleet sales pipeline $70 Sizeable Market: Approximately 55% of the market in the U.S./Canada, 60% in ANZ and 65% in Mexico is $60 unpenetrated. Compelling Value Prop: Our ability to materially $50 lower TCO and reduce administrative burden,
Slide 79: Winning government & 'mega' fleets
Winning government & ‘mega’ fleets 78
Slide 80: Presenter
Chris Tulloch Country Head, ANZ (Custom Fleet) Chris has been with the organization for 19 years, starting when Custom Fleet was owned by GE. He ran the sale process that resulted in Presenter Custom Fleet becoming part of Element. Chris’s career has spanned financial services, commercial and consum
Slide 81: What it means
WINNING GOVERNMENT & ‘MEGA’ FLEETS • • • • • • • • What it means • • • • • • • • • • • • • • • • • • • • • • • • Government fleets come in all shapes, compositions • • • • • • • • and sizes: • • • • • • • • • National down to municipal governments can • • • • • • • • also include affiliated agencies
Slide 82: Case study: Armada
WINNING GOVERNMENT & ‘MEGA’ FLEETS • • • • • • • • • • • • • • • • • • • • • • • • Case study: Armada • • • • • • • • Our four-year relationship with Armada gives us • • • • • • • • • • • • • • • • • Proof of the potential for substantial value • • • • • • • • creation; • • • • • • • • • A growing s
Slide 83: Strategic pursuit
WINNING GOVERNMENT & ‘MEGA’ FLEETS • • • • • • • • Strategic pursuit • • • • • • • • • • • • • • • • • • • • • • • • • Government and ‘mega’ fleets are each • • • • • • • • subsets of the self-managed fleet opportunity. • • • • • • • • • • • • • • • • • Winning one of a government’s many • • • • • •
Slide 84: How we win
WINNING GOVERNMENT FLEETS • • • • • • • • • • • • • • • • • • • • • • • • How we win • • • • • • • • • • • • • • • • Our government account wins have taught us to: • • • • • • • • • Dedicate commercial teams to the sole pursuit of • • • • • • • • these kinds of accounts; • • • • • • • • • Build and
Slide 85: How we win
WINNING MEGA’ FLEETS • • • • • • • • How we win • • • • • • • • • • • • • • • • • • • • • • • • Our ‘mega’ successes have taught us to: • • • • • • • • • Invest in sales force effectiveness; • • • • • • • • • • • • • • • • • Commit to investing in relationships early; • • • • • • • • • Leverage our
Slide 86: Confidence grounded in success to date
WINNING GOVERNMENT & ‘MEGA’ FLEETS • • • • • • • • • • • • • • • • • • • • • • • • Confidence grounded • • • • • • • • • • • • • • • • in success to date • • • • • • • • • • • • • • • • We have grown the Armada relationship (and our capabilities and reputation) • • • • • • • • • • • • • • • • • From
Slide 87: Presenter
David Madrigal Chief Commercial Officer David leads Element’s global commercial sales efforts and is responsible for coordinating our five revenue growth drivers to deliver 6-8% Presenter organic net revenue growth annually. Previously, as the country head of Element Mexico, David and his team succe
Slide 88: Low-risk revenue growth
ORGANIC REVENUE GROWTH • • • • • • • • Low-risk revenue growth • • • • • • • • • • • • • • • • • • • • • • • • • The market opportunities are plentiful, doing • • • • • • • • exactly what we do today, for similar clients in the • • • • • • • • same geographies. • • • • • • • • • We have designed fiv
Slide 89: Scalable operating platform
Scalable operating platform Magnifying organic revenue growth 88
Slide 90: Presenter
Jim Halliday Chief Operating Officer Having led the Transformation of our operating platform to deliver a consistent, superior client experience, Jim knows first-hand the importance of Presenter scalability in the processes and systems which underpin that experience. As COO, Jim is responsible for o
Slide 91: What we do
SCALABLE OPERATING PLATFORM What we do Vehicle Vehicle Production • We aggregate third-party services and add value Selection Ordering Tracking as intermediary by making the complex simple for fleet operators. • Our strategic relationships with OEMs and across our curated service-supplier networks a
Slide 92: Transformed
SCALABLE OPERATING PLATFORM • • • • • • • • • • • • • • • • • • • • • • • • Transformed • • • • • • • • • • • • • • • • • Our scalable operating platform is a product of the • • • • • • • • Transformation we undertook from September • • • • • • • • 2018 through December 2020. • • • • • • • • • We to
Slide 93: Our relationships with OEMs and service-supplier networks
• • • • • • • • • • • • • • • • • • • • • • • • “Our relationships 45 1 • • • • • • • • • • • • • • • • • • National • • • • • • with OEMs and across • • • • Accounts • • • • • • • • • • • • 59,700 our service-supplier • • • • • • • • • • • • • • • • Maintenance networks are a hugely Locations under
Slide 94: Element's competitive advantages
Our People, and their delivery of a consistent, superior client experience. SCALABLE OPERATING PLATFORM Element’s competitive advantages 93
Slide 95: Our People
SCALABLE OPERATING PLATFORM • • • • • • • • Our People • • • • • • • • • • • • • • • • • • • • • • • • • The “people, processes and systems” message is • • • • • • • • in order of priority. • • • • • • • • • Our people are critical to Element’s current and • • • • • • • • future success. • • • • • •
Slide 96: Element's competitive advantages
SCALABLE OPERATING PLATFORM Element’s competitive Our Scale, and the unrivaled purchasing power, supplier networks, advantages and data that come from managing 1.5 million vehicles across 5 countries. 95
Slide 97: Managed maintenance
Managed maintenance Scaling our largest service offering 96
Slide 98: Presenter
Germán Piderit Head of North American Operations Germán joined Element two years ago as VP Operations with responsibility for strategic relationships. He took over his current role of Presenter leading the operations team for our North American clients in March and is responsible for ensuring the de
Slide 99: Program overview
MANAGED MAINTENANCE • • • • • • • • Program overview • • • • • • • • • • • • • • • • • • • • • • • • • From regular oil and tire changes to major • • • • • • • • drivetrain repairs, we ensure clients’ vehicles are • • • • • • • • operating safely and cost-efficiently. • • • • • • • • • Our managed m
Slide 100: Value-added service
MANAGED MAINTENANCE • • • • • • • • • • • • • • • • • • • • • • • • Value-added service • • • • • • • • • • • • • • • • Clients outsource management of their vehicle • • • • • • • • maintenance regime to Element because we add • • • • • • • • value by: • • • • • • • • • Monitoring every vehicle and
Slide 101: How we do it best
Scale: purchasing power; service- supplier networks; data. MANAGED MAINTENANCE How we do it best 100
Slide 102: Service locations in the U.S. and Canada
MANAGED MAINTENANCE Service locations in the U.S. and Canada Approx. 1,250 101
Slide 103: Service locations in the U.S. and Canada
MANAGED MAINTENANCE Service locations in the U.S. and Canada Approx. 1,500 Approx. 3,100 102
Slide 104: Service locations in the U.S. and Canada
MANAGED MAINTENANCE Service locations in the U.S. and Canada Approx. 3,500 Approx. 4,500 103
Slide 105: Service locations in the U.S. and Canada
MANAGED MAINTENANCE Service locations in the U.S. and Canada 1 Approx. 12,000 Approx. 60,000 1. The Element managed maintenance service-suppliers (non-OEMs) identified by their logo on this slide are far from an exhaustive representation of the members of our network. 104
Slide 106: How we do it best
MANAGED MAINTENANCE How we do it best Technology: State-of-the art platform, reflecting upgrades. 105
Slide 107: State-of-the-art platform
MANAGED MAINTENANCE State-of-the-art platform Platform adoption Investments in technology and automation, as well 100% as client onboarding, have made us far more 80% efficient. 60% • Our service-suppliers have adopted our platform 40% – for many we are integrated at point-of-sale 20% (POS). 0% 2020
Slide 108: Accountability
MANAGED MAINTENANCE How we do it best Accountability: Services revenue category (eg. maintenance) leaders have standalone P&L’s, driving accountability for operating margins. 107
Slide 109: Accountability
MANAGED MAINTENANCE • • • • • • • • Accountability • • • • • • • • • • • • • • • • • • • • • • • • Services revenue category leaders in every • • • • • • • • geography have standalone P&Ls, driving • • • • • • • • accountability for operating margins: • • • • • • • • • Maintenance • • • • • • • • •
Slide 110: Proof of success to date
MANAGED MAINTENANCE LTM U.S. & Canadian managed maintenance Proof of success to date revenue ($), operating margin (%) Utilization of our managed maintenance program has increased • 80.5% in 2022 (YTD) vs. 77.1% in 2021. Maintenance services revenue is growing • Up 21% at Q3 2022 (LTM) vs. Q1 2021 (
Slide 111: Presenter
Jim Halliday Chief Operating Officer Having led the Transformation of our operating platform to deliver a consistent, superior client experience, Jim knows first-hand the Presenter importance of scalability in the processes and systems which underpin that experience. As COO, Jim is responsible for o
Slide 112: Automation
We have put 126 automations in production since January 2020 – a pace of 3-4 automations per month with average annual run-rate savings of $35,000 per solution. These automations process 2 million transactions per year across the business. SCALABLE OPERATING PLATFORM Automation • Acquisitions: Our s
Slide 113: Direct client access
SCALABLE OPERATING PLATFORM Direct client access • Ordering used to be a manual, labour intensive process. • Element has rebuilt its ordering platform to allow clients direct access and leverage automation. • Clients on the platform are now able to place 90% of their orders themselves directly; 6x g
Slide 114: Magnifying organic revenue growth
SCALABLE OPERATING PLATFORM Magnifying organic revenue growth • Our transformed operations underpin our Growing free cash flow per share ambitious growth agenda. and expanding operating margins $0.40 55% • Our OEM relationships and service-supplier networks are competitive advantages - and we $0.36
Slide 115: Capital-lighter business model
Capital-lighter business model Accelerating revenue & cash flow, managing leverage, and enhancing ROE 114
Slide 116: Presenter
Frank Ruperto Chief Financial Officer While Frank is relatively new to the Element leadership team, he quickly ascended the learning curve to become a trusted partner for Presenter his fellow executives and a strong source of perspective for Investors. Prior to joining Element in 2021, Frank served
Slide 117: Investment grade balance sheet
CAPITAL-LIGHTER BUSINESS MODEL • • • • • • • • Investment grade • • • • • • • • • • • • • • • • balance sheet • • • • • • • • • • • • • • • • • We have a diversified funding model with access • • • • • • • • to multiple debt capital markets including • • • • • • • • securitizations, bank funding and
Slide 118: Syndication & Services
CAPITAL-LIGHTER BUSINESS MODEL Syndication & Services Net revenue streams, and free cash flow per share $300 $0.39 We are using two levers to effect a capital-lighter business model $250 $0.36 • Syndication: • Is both capital-lighter than net financing $200 $0.33 revenue and economically superior; •
Slide 119: We syndicate when it's economically superior
Syndication volume CAPITAL-LIGHTER BUSINESS MODEL We syndicate when it’s $4,000 (excluding Armada) $3,000 $2,000 economically superior • We write leases with the intention of holding them $1,000 on-book. $0 • We enhance economics through syndication, 2018 2019 2020 2021 20221 20232 driving superior
Slide 120: Syndication market
CAPITAL-LIGHTER BUSINESS MODEL Syndication market U.S. equipment lease 1 $30,000 syndication market (volumes) • The $25-30 billion U.S. equipment lease syndication market is deep and attractive. $25,000 • Element finance receivables’ low loss rates (single digit bps) drive consistent syndication inv
Slide 121: Origins of a capital-lighter business model
CAPITAL-LIGHTER BUSINESS MODEL Origins of a capital- On-book net earning assets decrease as syndicated assets and pre-tax return on common equity (pROcE) grow $14,000 18% lighter business model • Traditionally, Element has held its fleet vehicle $10,500 16% assets on-book, primarily funding same thr
Slide 122: Evolution of capabilities
CAPITAL-LIGHTER BUSINESS MODEL Evolution of capabilities Our best-in-class syndication capabilities: 2018 2019 2020 2021 2022 • We conduct robust securitize vs. syndicate analysis Investment grade $588 $2,263 $2,233 $1,940 $732+ focused on economic return. • We have an experienced team with proven t
Slide 123: Optimizing syndication
CAPITAL-LIGHTER BUSINESS MODEL • • • • • • • • • • • • • • • • • • • • • • • • Optimizing syndication • • • • • • • • • • • • • • • • Syndication is a core component of our strategy, • • • • • • • • representing recurring revenue and access to • • • • • • • • capital. • • • • • • • • Results to-date
Slide 124: Positive impacts of syndication
CAPITAL-LIGHTER BUSINESS MODEL Positive impacts of syndication Enhancing Return on Equity by 610 bps Enabling $1.3 billion in return of capital $1,000 18% $250 217.5 212.1 $800 $200 186.5 31.2 16% 149.8 $600 $150 143.4 133.0 14% 189.2 105.9 $400 $100 92.3 172.5 122.3 116.6 104.4 150.0 74.5 12% 61.7
Slide 125: Remarkable financial impact
CAPITAL-LIGHTER BUSINESS MODEL Remarkable financial impact 2020 2021 2022 Had we not Had we not Had we not As reported As reported As guided syndicated1 syndicated1 syndicated1 Adjusted EPS $0.81 $0.85 $0.77 $0.84 $0.90-0.94 $1.03-1.07 FCF per share $1.00 $1.02 $0.98 $1.05 $1.13-1.18 $1.27-1.32 pROc
Slide 126: ~5-year performance
PERFORMANCE ~5-year performance Net revenue Free cash flow per share $300 $0.35 GR % CA $280 CA GR $0.30 22.0 6.9% $260 $0.25 $240 $0.20 $220 $0.15 $200 $180 $0.10 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Quarterly operating margin Tangible leverage ratio 60% 10.0x ion x pans 56% se 0 bp 9.
Slide 127: 2023 & Long-term guidance
Full-year 2023 results1 PERFORMANCE • $1,140-1,170 million net revenue 2023 & Long- • 54-55% operating margin term guidance • $1.45-1.50 free cash flow per share Long-term outlook • 6-8% annual net revenue growth • Continued operating margin expansion • Double-digit annual free cash flow per share g
Slide 128: Environmental, Social & Governance
Environmental, Social & Governance With a focus on Electric Vehicles 127
Slide 129: Presenter
Jacqui McGillivray Chief People & Social Impact Officer Jacqui is accountable for Element’s ESG strategy, which includes our Diversity, Equity & Inclusion and Corporate Social Responsibility Presenter efforts. She is also responsible for Element’s global balanced scorecard, people and organizational
Slide 130: Highlights
ESG • • • • • • • • Highlights • • • • • • • • • • • • • • • • • • • • • • • • Governance: We are top ranked in Canada by The • • • • • • • • Globe & Mail national newspaper. Driving Toward a Better Future • • • • • • • • Social: We are driving: • • • • • • • • • Diversity, Equity & Inclusion – by c
Slide 131: Sustainability
ESG • • • • • • • • • • • • • • • • Sustainability • • • • • • • • Our sustainability milestones include: • • • • • • • • • • • • • • • • • Joining the UN Global Compact, demonstrating our commitment to • • • • • • • • sustainability principles; • • • • • • • • • • • • • • • • • Increasing our stand
Slide 132: Electric Vehicles
Electric Vehicles Q ‘o) Ogelement
Slide 133: Presenter
Avninder Buttar Vice President, Strategy Avninder joined Element last year and oversees the company’s EV and sustainability strategy. Presenter His role merges his passion for sustainability with his background in corporate strategy, which included roles at Accenture Strategy, Hudson’s Bay Co. and C
Slide 134: Pole position
• • • • • • • • • • • • • • • • • • • • • • • • ELECTRIC VEHICLES • • • • • • • • • • • • • • • • Pole position • • • • • • • • • • • • • • • • Element is best positioned to lead our • • • • • • • • industry through the gradual electrification • • • • • • • • of automotive fleets over the next decad
Slide 135: Arc by Element
• • • • • • • • • • • • • • • • • • • • • • • • ELECTRIC VEHICLES • • • • • • • • • • • • • • • • Arc by Element • • • • • • • • • • • • • • • • • Global offering. • • • • • • • • • Wing-to-wing EV solution, tailored to • • • • • • • • availability and infrastructure in each • • • • • • • • geograph
Slide 136: How we do EVs best
Strategic partnerships ELECTRIC VEHICLES How we do EVs best Strategic Consulting Services (‘SCS’) Learnings from New Zealand, Arval 135
Slide 137: Market validation
Global pilot program launches ELECTRIC VEHICLES 60 50 Market validation 40 We see proof of our leadership in the form of: 30 20 • Strategic partnerships; 10 • Pilot participation growth; and 0 2021 2022 • eVUM growth. 1 Global eVUM Illustrative eVUM purchasing roadmap for a light vehicle fleet 26,00
Slide 138: Favourable economics
ELECTRIC VEHICLES Favourable economics Higher Capital Costs = Higher Net Financing and Syndication Revenue • Higher vehicle prices and opportunities to finance charging infrastructure will improve net financing Charging Infrastructure and syndication revenue. Financing, Maintenance and Support • New
Slide 139: Confidence in sustainability
ELECTRIC VEHICLES • • • • • • • • • • • • • • • • • • • • • • • • Confidence in • • • • • • • • • • • • • • • • sustainability • • • • • • • • • Clients want to electrify – in most cases, • • • • • • • • “eventually,” but that day will come. • • • • • • • • • We are investing to maintain the pole po
Slide 140: Q&A
Q&A 139
Slide 141: Presenter
Chris Gittens Chief Digital Officer Chris is focused on leading and advancing Element’s digital strategy, systems, and tools to drive scale, enhanced security and new Presenter1 revenue growth opportunities aligned with our consistent, superior client experience. He has been in the fleet industry fo
Slide 142: Presenter
Izzy Kaufman Treasurer Izzy is responsible for executing Element’s best- in-class funding strategy, and overall development and optimization of the Presenter1 company's capital structure and debt programs. He is also responsible for managing the company’s credit, liquidity, interest rate, and FX ris
Slide 143: Presenter
David Colman General Counsel David manages the legal, regulatory and governance functions of the business. He is also responsible for the continuous Presenter1 improvement and automation function at Element. David joined Element in 2017 after five years at Blake, Cassels & Graydon, LLP. As General C
Slide 144: Presenter
Michael Barrett Vice President, Investor Relations Mike joined Element in October 2018, prior to which he ran a small business with a mission- critical fleet. Mike also has experience as an Presenter1 investment banker and a lawyer. He earned MBA & JD degrees from the University of Victoria and a BA
Slide 145: Closing remarks
Closing remarks Q ‘o) Ogelement
Slide 146: Closing remarks
Jay Forbes President & Chief Executive Officer Jay joined Element as President & CEO in mid- Closing 2018 and has led the Transformation of the company and the implementation of Element’s growth strategy: remarks • Securing industry-leading client satisfaction and retention; • Deepening the engageme
Slide 147: Three takeaways
CLOSING REMARKS • • • • • • • • Three takeaways • • • • • • • • • • • • • • • • • • • • • • • • • Low-risk organic revenue growth atop our • • • • • • • • industry-leading scalable operating platform • • • • • • • • means expanding margins and growing free cash • • • • • • • • flow on an annuity-lik
Slide 148: Common share performance
CLOSING REMARKS Common share performance 1,2 EFN market cap EFN vs. Top 10 TSX-60 TSR 1,2 EFN vs. S&P TSX Index TSR over the period 1,2 performers over the period EFN Total Shareholder Return S&P TSX Index TSR $8,000 350% 350% 300% 300% $6,000 250% 250% 200% 200% $4,000 150% 150% 100% 100% $2,000 50
Slide 149: Supplemental materials
Supplemental materials Current events, and our resilient business model 148
Slide 150: OEM production delays
CURRENT EVENTS • • • • • • • • OEM production delays • • • • • • • • • • • • • • • • • • • • • • • • • As forecast, automotive OEM production volumes • • • • • • • • are gradually improving. We expect this to • • • • • • • • continue. • • • • • • • • • That said, volumes remain low by historical • •
Slide 151: Inflation
CURRENT EVENTS • • • • • • • • • • • • • • • • • • • • • • • • Inflation • • • • • • • • • • • • • • • • • Inflation is additive to Element's profitable revenue • • • • • • • • growth. • • • • • • • • • Net financing revenue benefits from rising vehicle • • • • • • • • prices, as does syndication re
Slide 152: Industry consolidation
CURRENT EVENTS • • • • • • • • Industry consolidation • • • • • • • • • • • • • • • • • • • • • • • • • Consolidation in our industry by established, long- • • • • • • • • term-return-driven investors bodes well for the • • • • • • • • health of fleet management and, as market • • • • • • • • leader
Slide 153: Element's resilient business model
Element’s resilient business model 152
Slide 154: Rising interest rates
ELEMENT’S 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 155: Recession
ELEMENT’S RESILIENT BUSINESS MODEL • • • • • • • • Recession • • • • • • • • • • • • • • • • • • • • • • • • • Our value proposition - lower the total cost of • • • • • • • • clients’ fleet operations - is even more compelling • • • • • • • • in a recessionary environment. • • • • • • • • • Our “cre
Slide 156: Thank you
Thank you 155
Element Fleet Management — Investor Day (November 2022) on 6ix