Element Fleet Management Corp reported record quarterly net revenue and raised its common dividend.

From GlobeNewswire: 2024-11-13 17:01:00

Element Fleet Management Corp. (TSX:EFN) reported record quarterly net revenue of $280 million, up 12% year-over-year. Adjusted EPS was $0.29 and adjusted free cash flow per share was $0.36. The company raised its common dividend by 8% and completed the acquisition of Autofleet. Element guides to net revenue growth of 6.5 to 8.5% in 2025.

Q3 2024 saw Element’s net revenue increase 12% year-over-year to $280 million, with growth across all revenue categories. Service revenue grew by 12% to $147 million, driven by higher origination volumes. Net financing revenue increased 11% year-over-year to $11 million, largely due to higher net earning assets and higher gains on sale.

Element syndicated a record $1 billion of assets in Q3 2024, a 32% increase from the previous year. Adjusted operating income reached $161 million, up 15% year-over-year, resulting in an adjusted EPS of $0.29. Operating margin expanded by 120 basis points year-over-year to 57.7%. Originations totaled $1.7 billion, a 10% increase from the previous year. Element Financial Corporation reported a 10% increase in originations in the U.S. and Canada for Q3 2024 compared to the same period in 2023. The company generated $0.36 of adjusted free cash flow per share, investing $18 million in capital. The Board declared a 8% increase in quarterly cash dividends, totaling CAD$0.13 per share.

Element’s common dividends represent 27% of the last twelve months’ FCF per share, falling within the 25% to 35% target range. The company returned $36 million and $112 million to shareholders in dividends and buybacks in Q3 2024 and the first nine months of the year, respectively. Element intends to renew its normal course issuer bid for common shares.

Element is optimizing its business by centralizing U.S. and Canadian leasing operations and establishing a strategic sourcing presence in Asia. These initiatives are expected to generate between $30 – $45 million of net revenue and $22 – $37 million of adjusted operating income by 2028 with a payback period of less than 2.5 years.

Element completed the acquisition of Autofleet for $110 million, enhancing its fleet and mobility solutions with innovative technology. This acquisition aims to accelerate digitization and automation initiatives to deliver efficient solutions to clients. Autofleet’s financial results will be consolidated with Element’s starting in Q4 2024. Q3 2024 included $7 million in acquisition-related costs.

Element reaffirmed its full-year 2024 guidance, expecting results near or at the high end of previously provided ranges. Net revenue is projected to be $1.060 – $1.080 billion with an 11-13% year-over-year growth. Adjusted operating margin is expected to be 55.0% – 55.5% with adjusted operating income of $575 – 595 million and adjusted EPS of $1.07 – $1.11. Originations are forecasted to be $7.0 – 7.4 billion with an 11-17% year-over-year growth. Element provides initial guidance for 2025, expecting 6.5-8.5% net revenue growth and high single-digit to low double-digit increases in adjusted operating income and EPS. Anticipated headwinds include currency depreciation and higher interest expenses. The Company redeemed all outstanding Series E preferred shares, simplifying its capital structure. A conference call will be held on November 14, 2024 to discuss these results. Management uses various IFRS and non-GAAP measures to assess performance. Adjusted net revenue for the three-month period ended September 30, 2024 was $279,636, with adjusted EPS of $0.29. For the three-month period ended September 30, 2024, Element Fleet Management reported a total finance receivables amount of $7,612,881, with net investment in finance receivables at $5,251,679. The company’s net earning assets were $7,789,048, and total debt stood at $8,346,905. Shareholders’ equity was reported at $2,774,502 for the same period.

Adjusted operating expenses for the three-month period ended September 30, 2024, were $118,209, with reported expenses at $145,669. Adjusted operating income reached $161,427, and the adjusted net income was $119,537. After-tax adjusted operating income attributable to common shareholders was also calculated.

The adjusted operating margin, calculated as adjusted operating income before taxes divided by net revenue, was not specified in the report. After-tax adjusted operating income and adjusted net income were provided, reflecting the impact of adjusting items. The company’s financial figures suggest a stable financial position for the period ending September 30, 2024.



Read more at GlobeNewswire:: Element Reports Record Third Quarter Results, Raises Common