Amounts in US$ unless otherwise noted Record quarterly net revenue of US$262.5 million driving record adjusted EPS of US$0.27 and adjusted free cash flow per share of US$0.35 Solid net revenue growth of 16.8% led by continued strength in services revenue Strong performance enables continued investment in our business for our clients while maintaining solid adjusted operating margins Management remains confident in its ability to meet, or potentially exceed, the upper end of guidance on most metrics TORONTO, May 14, 2024 (GLOBE NEWSWIRE) -- Element Fleet Management Corp. (TSX:EFN) ("Element" or the "Company"), the largest publicly traded, pure-play automotive fleet manager in the world, today announced strong financial and operating results for the three months ended March 31, 2024. The following tables presents Element's selected financial results in U.S. dollars unless otherwise noted.   Q1 20241 Variances to Q1 2023   In US$ millions, except percentages and per share amount and unless otherwise noted US$ US$ %   Selected financial results - as reported:         Net revenue 262.5 37.8 16.8 % Pre-tax income 123.0 21.0 20.6 % Pre-tax income margin 46.9% 150 bps   Earnings per share (EPS) [basic] 0.23 0.04 21.1 % Earnings per share (EPS) [basic] [$CAD] 0.31 0.05 19.2 % Adjusted results (excludes one-time strategic project costs in Q1 2024)1         Adjusted net revenue2 262.5 37.8 16.8 % Adjusted operating income (AOI)2 143.6 21.3 17.4 % Adjusted operating margin2 54.7% 30 bps   Adjusted EPS2 [basic] 0.27 0.04 17.4 % Adjusted EPS2 [basic] [$CAD] 0.36 0.05 16.1 % Other highlights:         Adjusted free cash flow per share2 (FCF/sh) 0.35 0.07 25.0 % Adjusted free cash flow per share2 (FCF/sh) [$CAD] 0.47 0.10 27.0 % Originations (excluding Armada) 1,542 137.2 9.8 % Q1 2024 includes US$2.1 million in one-time strategic project costs [Q1 2023 - nil]. Adjusted results are non-GAAP or supplemental financial measures, which do not have any standard meaning prescribed by GAAP under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. For further information, please see the "IFRS to Non-GAAP Reconciliations" section in this earnings release. The Company uses "Adjusted Results" because it believes that they provide useful information to investors regarding its performance and results of operations. Commenting on Element's financial performance, Laura Dottori-Attanasio, Chief Executive Officer said, "Element delivered another quarter of strong growth in services revenue reinforcing positive market dynamics, resilient client demand and the trust our clients place in our dedicated team members. Our solid performance provided the opportunity to accelerate some investments in our business this quarter. We remain confident in our ability to continue to deliver value for our clients and shareholders." Net revenue growth Element grew net revenue 16.8% over Q1 2023 ("year-over-year") to US$262.5 million led largely by strong services revenue growth and, to a lesser extent, growth in net financing revenue. Service revenue Services revenue is the key pillar of Element's s capital-lighter business model, which improves the Company's return on equity profile. Q1 2024 services revenue grew 27.3% year-over-year to US$147.1 million driven primarily by heightened penetration and utilization rates of our service offerings from new and existing clients, and stronger revenue generation in Mexico. Q1 2024 services revenue benefitted from US$7.0 million in certain items which are unlikely to repeat in 2024. Excluding these amounts, services revenue grew by 21.3% or US$24.6 million year-over-year and 8.0% or US$10.4 million quarter-over-quarter. In Q1 2024, Element accelerated investments in the business which partially offset the benefits of those items in Adjusted Operating Income. Net financing revenue Q1 2024 net financing revenue grew US$9.0 million or 9.1% from Q1 2023 and grew US$5.0 million or 4.9% quarter-over-quarter. Year-over-year growth was largely as a result of higher net earning assets associated with higher originations. This increase was partly offset by higher funding costs year-over-year. Gain on sale ("GOS") was largely unchanged year-over-year as higher GOS in Mexico was mostly offset by lower GOS in ANZ. Syndication volume We syndicated US$473.2 million of assets in Q1 2024 - US$33.5 million or 6.6% less volume than Q1 last year. This decrease reflects a strategic decision to postpone the syndication of certain assets to the second half of 2024 pending the outcome of proposed U.S. tax legislation changes. The demand for Element's assets remains strong and this postponement underscores a calculated approach to fiscal prudence. Adjusted operating income AOI was US$143.6 million this quarter, an increase of US$21.3 million or 17.4% year-over-year — amounting to adjusted EPS of US$0.27 for Q1 2024, which is a 4 cent increase year-over-year. Element expanded adjusted pre-tax return on common equity by 200 basis points year-over-year to 19.7% in Q1 2024. Originations Element originated US$1.5 billion of assets in Q1 2024 (excluding Armada), which is a US$137.2 million or 9.8% increase year-over-year and consistent with the Company's forecast. The table below sets out the geographic distribution of originations (excluding Armada) for the three-month periods indicated. (in U.S.$000's) March 31, 2024 March 31, 2023 Variance to Q1 2023 (Excluding Armada) US$ % US$ % US$   %   United States and Canada 1,182,987 76.7 1,072,166 76.3 110,821   10.3 % Mexico 259,143 16.8 231,926 16.5 27,217   11.7 % Australia and New Zealand 99,753 6.5 100,555 7.2 (802 ) (0.8 )% Total 1,541,883 100.0 1,404,647 100.0 137,236   9.8 % Growing adjusted free cash flow per share and return of capital to shareholders On an adjusted basis, Element generated US$0.35 of adjusted free cash flow ("FCF") per share in Q1 2024 – 7 cents more year-over-year driven primarily by an increase in net revenues and higher originations, while investing $19.0 million in total capital investments this quarter. Element returned $38.2 million of cash to common shareholders through dividends and buybacks of common shares in Q1 2024. Full-year 2024 guidance Element remains confident in its ability to meet, or potentially exceed, the upper end of guidance on most metrics as a result of its strong first quarter results, sustained commercial success and resilient client demand. The following table highlights Element's full-year 2024 guidance ranges compared to full-year 2023 results. In US$ unless otherwise noted FY 2023 - U.S. Dollars 2024 Guidance - U.S. Dollars Net revenue $959.1 million $1.020 - 1.040 billion Implied YoY Growth   6-8% Adjusted operating margin 55.3% 55.0% - 55.5% Adjusted operating income $530.6 million $560 – 575 million Implied YoY Growth   6-8% Adjusted EPS [basic] $0.98 $1.05 - 1.09 Implied YoY Growth   7-11% Adjusted free cash flow per share $1.24 $1.31 - 1.34 Implied YoY Growth   6-8% Originations (excl Armada) $6.3 billion $7.0 - 7.4 billion Implied YoY Growth   11-17% Certain implied year-over-year growth amounts shown in this table may not calculate exactly due to rounding. Element's full-year 2023 results and 2024 guidance exclude non-recurring setup costs associated with its strategic initiatives. Strategic initiatives update As previously disclosed, the Company plans to optimize its business further by centralizing accountability for its U.S. and Canadian leasing operations and establishing a strategic sourcing presence in Asia. The Company continues to expect these initiatives to generate between US$30 - $45 million (CAD $40 - $60 million) of run-rate net revenue, and between US$22 - $37 million (CAD $30 - $50 million) of run-rate adjusted operating income ("AOI"), by full-year 2028. The above initiatives require approximately US$22 million (total) (CAD $30 million) in non-recurring setup costs, of which US$2.1 million were incurred in Q1 2024 (Q1 2023 - nil). In 2023, the Company incurred US$13.7 million, in aggregate, in such costs. The Company is also prioritizing digitization and automation initiatives to enable future growth and drive operational efficiencies. Centralizing accountability for U.S. and Canadian leasing In late March 2024, the Company entered into a lease agreement with Union Investment and Hines for premier and LEED Platinum-certified office space in Dublin's city center. This transaction marks a significant milestone in the establishment of the Company's new centralized leasing function in Ireland. This initiatives remains on track to be operational by mid-2024. Strategic sourcing On April 24, 2024, the Company commenced operations in Singapore, marking a significant milestone in its ongoing strategic initiative to enhance its global procurement capabilities and strategic sourcing relationships in Asia. Concurrently, the Company entered into its first collaboration agreement with a strategic sourcing supplier. The Company also welcomed Christine Lee Barber, Head of Asia Operations, to lead its operations in Singapore. She brings in-depth knowledge and expertise within the region, and will be accountable for strategic sourcing and relationship management in order to solidify and expand the Company's relationships with Asian-based original equipment manufacturers (OEMs). Digitization and automation Element continues to advance its digital and automation initiatives to elevate the client experience, improve operational efficiency, and deepen client relationships with a focus on growing capital-light service revenues. Element strives to position itself as a leading industry player in supporting clients to navigate the rapidly evolving mobility and vehicle connectivity landscape efficiently. The Company is modernizing its technology platform and business processes to accelerate innovation and deliver value for its clients. These forward-looking investments in Element's and its clients' future include transitioning towards more agile, scalable, and secure cloud-based solutions and creating a globally unified, digitally enabled technology platform that strives to further streamline operations. Investments in Ordering, Collateral Services, and Enterprise Resource Planning are being made to deliver superior client experiences and support when and where clients, drivers, partners, and employees need them most. Capital structure Redemption of all outstanding 6.21% Cumulative 5-Year Rate Reset Preferred Shares Series C To further optimize the Company's balance sheet and mature its capital structure, the Company announced today its intention to redeem – in accordance with the terms of the 6.21% Cumulative 5-Year Rate Reset Preferred Shares Series C (the "Series C Shares") as set out in the Company's articles – all of its 5,126,400 issued and outstanding Series C Shares on June 30, 2024 (the "Share Redemption Date") for a redemption price equal to CAD$25.00 per Series C Share for an aggregate total amount of approximately US$94.6 million (CAD$128 million), together with all accrued and unpaid dividends up to but excluding the Share Redemption Date (the "Redemption Price"), less any tax required to be deducted and withheld by the Company. The Company has provided notice today of the Redemption Price and the Share Redemption Date to the sole registered holder of the Series C Shares in accordance with the terms of the Series C Shares as set out in the Company's articles. Non-registered holders of Series C Shares should contact their broker or other intermediary for information regarding the redemption process for the Series C Shares in which they hold a beneficial interest. The Company's transfer agent for the Series C Shares is Computershare Investor Services Inc. ("Computershare Investor Services"). Questions regarding the redemption process may be directed to Computershare Investor Services at 1-800-564-6253 or by email to Following their redemption on June 30, 2024, the Series C Shares will be de-listed from and no longer trade on the Toronto Stock Exchange ("TSX"). The Company also currently anticipates using a portion of its free cash flow to redeem all its outstanding 5.903% Cumulative 5-Year Rate Reset Preferred Shares Series E (due September 2024) for an approximate aggregate total amount of US$98.2 million (CAD$133 million). Redemption of all outstanding 4.250% Convertible Unsecured Subordinated Debentures The Company has also announced today its intention to redeem all of its currently outstanding 4.250% Convertible Unsecured Subordinated Debentures (the "Debentures") due June 30, 2024. The Debentures will be called for redemption early by the Company on June 26, 2024 (the "Debenture Redemption Date"). The Debentures are listed on the TSX under the symbol EFN.DB.B. As at March 31, 2024, the net carrying value of the Debentures was US$126.1 million. On the Debenture Redemption Date, the Company will pay holders of the Debentures a redemption price equal to the principal amount of Debentures held, plus accrued and unpaid interest thereon up to but excluding the Debenture Redemption Date, less any taxes required to be deducted or withheld. Notice of redemption has been delivered to the registered holder(s) of the Debentures through the debenture trustee, Computershare Trust Company of Canada ("Computershare Trust"), in accordance with the trust indenture governing the Debentures between the Company and Computershare Trust dated April 5, 2019. Prior to the Debenture Redemption Date, beneficial holders of the Debenture will have the right to convert their Debentures into Common Shares at a conversion price of approximately CAD$11.77391 per Common Share. Assuming the Debentures are fully converted prior to the Debenture Redemption Date, the Company expects to issue and deliver to the holders of the Debentures approximately 14.6 million shares from Treasury or approximately 3.8% of Common Shares issued and outstanding as at March 31, 2024. Beneficial holders of the Debentures are encouraged to contact their investment dealer if they have any questions about this redemption. Conference call and webcast A conference call to discuss these results will be held on Wednesday, May 15, 2024 at 8:00 a.m. Eastern Time. The conference call and webcast can be accessed as follows: Webcast: https://services.choruscall.ca/links/elementfleet2024q1.html     Telephone: Click here to join the call most efficiently,or dial one of the following numbers to speak with an operator:       Canada/USA toll-free: 1-844-763-8274       International: +1-647-484-8814     A taped recording of the conference call may be accessed through June 15, 2024 by dialing 1-855-669-9658 or +1-604-674-8052 and entering the access code 0787. Dividends declared The Company's Board has authorized and declared a quarterly dividend of CAD$0.12 per outstanding common share of Element for the second quarter of 2024. The dividend will be paid on July 15, 2024 to shareholders of record as at the close of business on June 28, 2024. Element's Board of Directors also declared the following dividends on Element's preferred shares: Series TSX Ticker Amount (CAD$) Record Date Payment Date Series C EFN.PR.C $0.3881300 June 14, 2024 June 28, 2024 Series E EFN.PR.E $0.3689380 June 14, 2024 June 28, 2024 Note: This will be the final quarterly dividend payment on the Series C Shares prior to their planned redemption on June 28, 2024 as disclosed earlier in this press release. Holders will receive on the Redemption Date of the Series C Shares all accrued and unpaid dividends up to but excluding the Redemption Date. The Company's common and preferred share dividends are designated to be eligible dividends for purposes of section 89(1) of the Income Tax Act (Canada). Normal course issuer bid On November 13, 2023, the TSX approved the Company's intention to renew its normal course issuer bid (the "2023 NCIB"). Under the 2023 NCIB, the Company has approval from the TSX to purchase up to 38,852,159 common shares during the period from November 15, 2023, to November 14, 2024. There cannot be any assurance as to how many common shares, if any, will ultimately be purchased pursuant to the 2023 NCIB. During Q1 2024, we purchased 281,500 common shares for cancellation, for an aggregate amount of approximately US$4.6 million (CAD$6.2 million) at a volume weighted average price of CAD$21.97 per Common Share. Element applies trade date accounting in determining the date on which the share repurchase is reflected in the consolidated financial statements. Trade date accounting is the date on which the Company commits itself to purchase the shares. IFRS to Non-GAAP Reconciliations, Non-GAAP Measures and Supplemental Information The Company's audited consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB and the accounting policies we adopted in accordance with IFRS. These audited consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly our financial position as at March 31, 2024 and March 31, 2023, the results of operations, comprehensive income and cash flows for the three-month periods-ended March 31, 2024 and March 31, 2023. Non-GAAP and IFRS key annualized operating ratios and per share information of the operations of the Company:         As at and for the three-month period ended (in US$000's except ratios and per share amounts or unless otherwise noted)   March 31,2024 December 31,2023 March 31,2023