Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Q1 2020 Earnings Presentation
22 slides from Element Fleet Management's earnings presentation, May 2020
Slide 1: Q1 2020 Investor Presentation
Q1 2020 Investor Presentation
Slide 2: Forward-looking statements
Forward-looking statements 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 beliefs. In some
Slide 3: Disclaimer
Disclaimer An investment in the securities of Element involves significant risks. A discussion of some of the material risks affecting Element and its business appears under the heading “Risk Factors” in Element’s Annual Information Form for the year ended December 31, 2019, and under the headings “
Slide 4: The COVID-19 pandemic has created unprecedented disruption; Element is well-equipped to endure
COVID-19 | Business overview | Financial overview The COVID-19 pandemic has created unprecedented disruption; Element will not be unscathed but is well-equipped to endure COVID-19 has created tremendous The fundamental strengths of our uncertainty for businesses… business remain intact… • Overwhelme
Slide 5: As we look at the remainder of 2020, the pandemic is likely to impact Element
COVID-19 | Business overview | Financial overview As we look at the remainder of 2020, the pandemic is likely to impact Element in several ways, some of which are positive Demand for our fleet management services will see several pressure points, with partial offsets thereto Net Financing Servicing
Slide 6: Summary of Q1 2020
Summary of Q1 2020 1. Core adjusted operating income increased 10% year-over-year to $135 million; COVID-19 had limited impact on our business and thus on our financial results, save for an $11.4 million quarter-over-quarter increase in provision for credit losses 2. Through our transformation progr
Slide 7: Element's foundational strengths position it well for continued profitable growth
Business overview | Financial overview | Outlook Element’s foundational strengths position it well for continued profitable growth • No. 1 in North America and Australia / New Zealand $18.2 B 1 • Approximately two-thirds of portfolio with investment-grade clients Assets • An investment-grade balance
Slide 8: Our business model is designed to be resilient throughout economic cycles
Business overview | Financial overview | Outlook Our business model is designed to be resilient, delivering solid, consistent results throughout economic cycles 1 Blue-chip clients • Two-thirds of our earning assets are leased to investment-grade rated clients (publicly rated, or “investment-grade e
Slide 9: Client base widely diversified across 75+ major industry classifications
Business overview | Financial overview | Outlook Element’s client base is widely diversified across 75+ major industry classifications and 700+ sub-specific industries 70% of earning assets by value are in use by clients 50% of earning assets by value are in use by clients operating in the following
Slide 10: Our strategy is on track with a clear path forward
Business overview | Financial overview | Outlook Our strategy is on track with a clear path forward Transforming Element's Strengthening and de-leveraging Pivoting the organization to business the balance sheet growth • Focused resources on creating a • Divested non-core assets, including excess • I
Slide 11: Core after-tax adjusted operating income of $0.23 per share in Q1 2020
Financial overview | Outlook | Transformation overview Element generated core after-tax adjusted operating income of $0.23 per share in Q1 2020 Core Fleet Management Operations For the three-month periods ended March 31, December 31, March 31, (in $000’s for stated values, except per share amounts)
Slide 12: Transformation program has improved operating leverage and free cash flow generation
Financial overview | Outlook | Transformation overview Transformation program has improved operating leverage and increased free cash flow generation Operating leverage Transformation program Core net revenue 280 70.0% Adjusted operating income margin 257.6 248.4 244.5 249.2 237.7 65.0% 240 219.1 22
Slide 13: Improving earnings and a de-leveraging balance sheet
Financial overview | Outlook | Transformation overview With improving earnings and a de-leveraging balance sheet, we are producing solid financial results Tangible leverage Transformation program Tangible leverage Target 12x Tangible leverage excluding Armada warehouse 9.56x 1 10x 7.46x 7.70x 7.86x
Slide 14: Three waves of opportunity
Outlook | Transformation overview | Funding overview We are focused on executing on three waves of opportunity 2019 2020 2021 2022 2023 Wave 1: Transformation Wave 2: Syndication Wave 3: Growth 14
Slide 15: Wave 1: Executing a client-centric transformation
Transformation overview | Funding overview | Growth overview Wave 1: Executing a client-centric transformation to create immediate and long-lasting value for all stakeholders • Our management team is executing a • These actions are translating into results: we comprehensive transformation plan deliv
Slide 16: Path to $180 million annual run-rate improvement by year-end 2020
Transformation overview | Funding overview | Growth overview We are well on our way to actioning our target $180 million annual run-rate pre-tax operating income improvement by year-end 2020 2018 2019 2020 Quick wins Back to basics Building for the future Annual run-rate pre-tax operating income imp
Slide 17: Wave 2: Broadened use of syndication to accelerate de-leveraging
Funding overview | Growth overview Wave 2: In 2019, we broadened our use of syndication to accelerate the de-leveraging of our balance sheet Securitization Element can securitize a lease if it meets the eligibility ON BALANCE SHEET ➜ criteria, is in good standing and does not exceed concentration li
Slide 18: Strengthen and de-leverage our balance sheet through syndication
Funding overview | Growth overview We continue to strengthen and de-leverage our balance sheet through syndication Recall, expanded use of Syndication market syndication allows us to: demand remains healthy: Reduce tangible leverage ratio Syndication market has faster, enabling access to lower remai
Slide 19: Investment-grade balance sheet affords ready access to cost-efficient capital
Funding overview | Growth overview Our investment-grade balance sheet continues to afford us and our clients ready access to cost-efficient capital Capital structure Drawn vs. undrawn funding capacity (C$ billions) Balance Senior credit 2020-03-31 (C$ millions) facilities Drawn amount Undrawn capaci
Slide 20: Ready access to U.S. bond, term ABS and syndication markets
Funding overview | Growth overview We have ready access to the U.S. bond, term ABS and syndication markets, and dependable operating cash flow We still intend to issue senior unsecured term debt in the U.S. bond market in 2020, while recognizing that market conditions may not be attractive in the sh
Slide 21: Wave 3: Pivot to growth as transformation solidifies our foundation
Growth overview Wave 3: We have begun the pivot to growth as transformation solidifies our foundation Completed the first in-depth We have crafted a plan to Five means of growth study of the North American drive low-risk, value- fleet market to our accretive growth in 1 Holding market share knowledg
Slide 22: A global fleet leader
Dominant market position in A global North America fleet leader Well diversified across clients, industries, geographies, revenue and funding sources Accountable management with Element Fleet Management proven ability to deliver shareholder is a leading global fleet value management company, providi
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