Element Fleet Management Corporation · TSX:EFN
Element Fleet Management — Q4 2019 Earnings Presentation
20 slides from Element Fleet Management's earnings presentation, February 2020
Slide 1: Q4 and FY 2019 Investor Presentation
Q4 and FY 2019 Investor Presentation
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains certain forward-looking statements and forward-looking information regarding Element and its business which are based upon Element’s current expectations, estimates, projections, assumptions and beliefs. In some cases, words such as “plan”, “expe
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 dated on or about March 2, 2020, and under the headings “Risk
Slide 4: Business overview: foundational strengths position Element for growth
Business overview | Financial overview | Outlook | Transformation overview Element’s foundational strengths position it well for continued profitable growth • No. 1 in North America and Australia / New Zealand $17.4 B 1 • Approximately two-thirds of portfolio with investment-grade clients Assets • A
Slide 5: Resilient business model delivering consistent results
Business overview | Financial overview | Outlook | Transformation overview Our business model is designed to be resilient, delivering strong, consistent results in all economic conditions 1 Blue-chip clients • Two-thirds of our portfolio is with investment-grade rated clients (publicly rated, or “in
Slide 6: Client base diversified across more than 700 industries
Business overview | Financial overview | Outlook | Transformation overview Element’s client base is widely diversified across more than 700 industries Approximately 50% of earning assets by value are spread across 40 industries (see immediately below); remainder across 700+ industries Industry Class
Slide 7: Important themes for Q4 2019
Business overview | Financial overview | Outlook | Transformation overview Important themes for Q4 2019 1. Both Q4 and full-year 2019 core operating results are outstanding, with substantial year-over-year increases in net revenue and adjusted operating income 2. We are transforming our business, st
Slide 8: Our strategy is on track with a clear path forward
Business overview | Financial overview | Outlook | Transformation overview Our strategy is on track with a clear path forward Closure on 19th Capital Transforming Element's Strengthening and deleveraging business the balance sheet • Despite getting off to a strong start in the • Focused resources on
Slide 9: Core after-tax adjusted operating income of $0.24 per share in Q4 2019
Financial overview | Outlook | Transformation overview | Syndication overview Element generated core after-tax adjusted operating income of $0.24 per share in Q4 2019, and $0.88 per share in full-year 2019 Core Fleet Management Operations Q4 2019 and year-end 2019 summary results For the three-month
Slide 10: Transformation improved operating leverage and free cash flow
Financial overview | Outlook | Transformation overview | Syndication overview Transformation program has improved operating leverage and increased free cash flow generation Operating leverage Transformation program 280 Core net revenue 65.0% 257.6 Adjusted operating income margin 248.4 244.5 237.7 2
Slide 11: Increasing earnings and rapidly deleveraging balance sheet
Financial overview | Outlook | Transformation overview | Syndication overview With increasing earnings and a rapidly deleveraging balance sheet, we are producing strong financial results Tangible leverage Transformation program Tangible leverage Target Tangible leverage excluding Armada warehouse 12
Slide 12: Three waves of opportunity
Outlook | Transformation overview | Syndication overview | Growth 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 12
Slide 13: Wave 1: Executing a client-centric transformation
Transformation overview | Syndication overview | Growth overview | Guidance 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 transforma
Slide 14: Transformation target increased to $180M of profit improvements
Transformation overview | Syndication overview | Growth overview | Guidance Given our progress, we increased our transformation target to $180M of profit improvements actioned by 2020 2018 2019 2020 Quick wins Back to basics Building for the future Annual run-rate pre-tax operating income improvemen
Slide 15: Wave 2: Broadened use of syndication to accelerate deleveraging
Syndication overview | Growth overview | Guidance Wave 2: In 2019, we broadened our use of syndication to accelerate the deleveraging 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 co
Slide 16: Strengthening and deleveraging the balance sheet through syndication
Syndication overview | Growth overview | Guidance We continue to strengthen and deleverage our investment- grade balance sheet through syndication 1. Reduce tangible leverage ratio faster, enabling access to lower cost of capital Expanded use of syndication 2. Mitigate credit concentration risk crea
Slide 17: Accessing the U.S. corporate debt market
Syndication overview | Growth overview | Guidance We expect to access the U.S. corporate debt market to further diversify our funding sources and lower our cost of capital Two investment-grade S&P: BBB Fitch: BBB+ ratings in the U.S. give Stable Outlook Stable Outlook us access to the unsecured corp
Slide 18: Wave 3: Pivot to growth ahead of schedule
Growth overview | Guidance Wave 3: We are beginning the pivot to growth ahead of schedule 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- 1 Holding market share fleet market to
Slide 19: 2020 after-tax adjusted operating income per share guidance
Guidance We continue to expect to deliver after-tax adjusted operating income per share of $1.00 to $1.05 in 2020 After-tax adjusted operating income per share $1.00 - $1.05 $0.86 $0.70 2018 2019 2020E Note: 2020 estimates are on a currency neutral basis We expect to deliver after-tax adjusted opera
Slide 20: A global fleet leader
Dominant market position in A global North America fleet leader Well diversified across clients, industries, geographies, revenue and funding sources Element Fleet Management Accountable management with is a leading global fleet proven ability to deliver management company, shareholder value providi
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