Slide 1: Q3 2023 Investor Presentation
Q3 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
• Strategic initiatives . . . . . . . . . . . . . . . . . . . . . . . . slide 4 • Q3 2023 results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 • Highlights • 2024 guidance Contents • Profitable net revenue growth • Share of wallet expansion • Vehicles under management growth
Slide 4: Strategic initiatives
Strategic initiatives Q ‘o) Oselement
Slide 5: Strategic initiatives will benefit our clients and our investors
STRATEGIC INITIATIVES • • • • • • • • Strategic initiatives will benefit • • • • • • • • • • • • • • • • our clients and our investors • • • • • • • • • • • • • • • • 1. Centralizing accountability for U.S. and Canadian leasing • • • • • • • • • Enhance our consistent, superior client leasing experi
Slide 6: Leasing in Dublin, Ireland
STRATEGIC INITIATIVES • • • • • • • • • • • • • • • • • • • • • • • • Leasing in Dublin, Ireland • • • • • • • • • Seasoned Element executive, Chris Gittens, to lead the function • • • • • • • • • Chris previously led Element’s Canadian business, the • • • • • • • • Strategic Relationships / ‘mega’
Slide 7: Strategic sourcing in Asia
STRATEGIC INITIATIVES • • • • • • • • Strategic sourcing in Asia • • • • • • • • • • • • • • • • • • • • • • • • • President of our ANZ businesses, Chris Tulloch, leading this initiative • • • • • • • • • Develop new and strengthen existing relationships with Asian OEMs to expand and improve our cli
Slide 8: Q3 2023 Results
Q3 2023 Results Q ‘o) Oselement
Slide 9: Element delivered another strong quarter
1. Q3 2023 net revenue grew 14.8%, pre-tax income grew 17.5% and adjusted operating income grew 11.7% over Q3 2022 results as reported 2. Q3 2023 EPS were $0.32 and adjusted EPS were $0.35, representing 7 and 5 cents improvement, respectively, Element delivered over Q3 2022 results as reported anoth
Slide 10: 2024 guidance
1 Full-year 2024 results guidance 2024 guidance • $1.365 –1.390 billion net revenue • 55.0-55.5% adjusted operating margin • $750-770 million adjusted operating income • $1.41-1.46 adjusted EPS • $1.75-1.80 free cash flow per share 1. Excluding the impact of non-recurring setup costs related to stra
Slide 11: 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 11
Slide 12: Profitable net revenue growth, fueled by...
Q3 2023 RESULTS Profitable net revenue growth, fueled by… • Our focused and ambitious growth agenda. Net revenue streams, and adjusted operating margin • Our OEM relationships and service-supplier Net financing revenue Services revenue networks are competitive advantages - and we Syndication revenue
Slide 13: Share of wallet expansion
Q3 2023 RESULTS Share of wallet expansion… 3Q22 -> 3Q23 services revenue 18.2% 17.3% • Increased penetration - providing more financing 175.9 and/or services to more of our existing clients’ 8.7 1.1 5.2 vehicles - deepens our value proposition (by further 12.2 lowering Total Cost of fleet Operations
Slide 14: ...and vehicles under management growth
Q3 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 1,447 1 1,486 1,463 1,467 1,523 1,541 1,500 1,501 through: 810 850 822 827 881 893 846 842 • Industry-high client
Slide 15: Multi-service vs. single-service VUM
Q3 2023 RESULTS Multi-service vs. single-service VUM Across our global VUM, we are: Multi-service VUM 3Q23 Single-service VUM • Making progress on share-of-wallet growth; and • Still in a position to reap benefit from further growth. 1.50M 74% VUM We have increased the percentage of multi-service VU
Slide 16: A capital-lighter business model
Q3 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 17: Growing FCF per share and return of capital
Q3 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: • Required investments in our business; • Tangible
Slide 18: Current operating environment
Current operating environment 18
Slide 19: 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 continue to gradually improve. $2,000 • Q3 2023 originations improved substantially year- 1 $1,500 over-year. $1,000 • Strong originati
Slide 20: 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 21: 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 22: Environmental, Social & Governance
Environmental, Social & Governance 22
Slide 23: 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 24: Environmental Sustainability
ESG • • • • • • • • • • • • • • • • • • • • • • • • Environmental • • • • • • • • • • • • • • • • Sustainability • • • • • • • • Our commitments include: • • • • • • • • • Transition 350,000 client vehicles into EVs by 2030 through • • • • • • • • Arc by Element, our global “wing-to-wing” Electric V
Slide 25: Fleet Management 101
Fleet Management 101 Value proposition: lowering the total cost of fleet operations and reducing administrative burden 25
Slide 26: 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 27: 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 28: Low risk, resilient business model
FLEET MANAGEMENT 101 • • • • • • • • Low risk, resilient • • • • • • • • • • • • • • • • business model • • • • • • • • • • • • • • • • • • • • • • • • • Low recession risk: FMC value proposition – to reduce TCO - becomes more relevant and compelling. • • • • • • • • • • • • • • • • • Low inflation
Slide 29: Element Fleet Management
Element Fleet Management The largest publicly traded pure-play FMC in the world 29
Slide 30: 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 31: Three strategic growth priorities
Aggressively pursue organic growth in all our geographies and grow operating income in excess of the annual net revenue growth rate. ELEMENT 101 Three strategic Advance a capital-lighter business model growth priorities by growing services revenue and strategically syndicating assets, which enhance
Slide 32: Ample opportunity
ELEMENT 101 Ample opportunity U.S. & Canada Approximately 67% of our LTM 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% approxima
Slide 33: 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 34: Recession
ELEMENT 101 - RESILIENT BUSINESS MODEL • • • • • • • • Recession • • • • • • • • • • • • • • • • • • • • • • • • • Our value proposition - lower the total cost of • • • • • • • • clients’ fleet operations – is more compelling in a • • • • • • • • recessionary environment. • • • • • • • • • Our “cred
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