Element Fleet Management : Q2 2021 - Financial Statements

Interim Condensed Consolidated Financial Statements

Element Fleet Management Corp.

June 30, 2021

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited, in thousands of Canadian dollars)

	As at		As at
	June 30,		December 31,
	2021	2020
	$	$
ASSETS
Cash	21,550	8,789
Restricted funds (note 6)	371,240	388,978
Finance receivables (note 3 and 16)	8,167,862	9,561,622
Equipment under operating leases (note 4)	2,153,502	2,157,227
Accounts receivable and other assets	210,894	226,952
Derivative financial instruments (note 16)	31,250	53,629
Property, equipment and leasehold improvements, net	99,591	112,352
Intangible assets, net	807,875	814,378
Deferred tax assets	425,464	444,120
Goodwill	1,194,392		1,223,341
	13,483,620	14,991,388
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities	1,138,017	1,062,610
Derivative financial instruments (note 16)	38,891	68,282
Borrowings (note 6)	8,529,975	9,864,336
Convertible debentures (note 7 and 16)	156,631	154,267
Deferred tax liabilities	73,634		57,776
	9,937,148	11,207,271
Shareholders' equity (note 8)	3,546,472		3,784,117
	13,483,620		14,991,388

See accompanying notes

On behalf of the Board:

DirectorDirector

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands of Canadian dollars, except for per share amounts)

		Three-month			Three-month
		period ended			period ended
		June 30, 2021			June 30, 2020
		$			$
NET REVENUE
Interest income, net (note 10)		93,100			140,708
Rental revenue and other (note 10)		173,430			147,997
Depreciation of equipment under operating leases (note 4)		(109,653)			(99,371)
		156,877			189,334
Interest expense		47,525			88,679
Net financing revenue		109,352			100,655
Fleet service revenue (note 10)		122,675			124,418
Direct costs of fixed rate service contracts (note 10)		(9,490)			(9,903)
Servicing income, net		113,185			114,515
Syndication revenue, net (note 10)		12,865			10,333
Net revenue		235,402			225,503
OPERATING EXPENSES
Salaries, wages and benefits		72,654			74,859
General and administrative expenses		25,826			28,590
Depreciation and amortization (note 15)		10,410			10,910
Amortization of convertible debenture discount (note 7)		887			2,003
Share-based compensation (note 9)		7,511			4,427
		117,288			120,789
DISPOSITION OF 19TH CAPITAL
Gain on settlement of debt (note 5)		-			38,580
Loss on sale of assets (note 5)		-			(52,442)
Net loss on disposition		-			(13,862)
OTHER EXPENSES
Amortization of intangible assets from acquisitions		8,674			9,660
Restructuring and transformation costs (note 17)		-			18,663
Gain on investments		(637)			(3)
Income before income taxes from operations		110,077			62,532
Provision for income taxes (note 11)		29,205			3,938
Net income for the period		80,872			58,594
Basic earnings per share (note 12)	$	0.17		$	0.11
Diluted earnings per share (note 12)	$	0.17		$	0.11

See accompanying notes

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands of Canadian dollars, except for per share amounts)

		Six-month			Six-month
	period ended			period ended
	June 30, 2021		June 30, 2020
		$			$
NET REVENUE
Interest income, net (note 10)		197,211			281,390
Rental revenue and other (note 10)		346,425			322,452
Depreciation of equipment under operating leases (notes 4)		(221,545)			(214,191)
		322,091			389,651
Interest expense		101,719			193,691
Net financing revenue		220,372			195,960
Fleet service revenue (note 10)		248,489			260,739
Direct costs of fixed rate service contracts (note 10)		(20,815)			(20,377)
Servicing income, net		227,674			240,362
Syndication revenue, net (note 10)		35,954			36,420
Net revenue		484,000			472,742
OPERATING EXPENSES
Salaries, wages and benefits		146,279			150,329
General and administrative expenses		52,972			60,381
Depreciation and amortization (note 15 )		20,936			21,566
Amortization of convertible debenture discount (note 7)		1,759			4,558
Share-based compensation (note 9)		12,751			9,864
		234,697			246,698
DISPOSITION OF 19TH CAPITAL
Gain on settlement of debt (note 5)		-			38,580
Loss on sale of assets (note 5)		-			(52,442)
Net loss on disposition		-			(13,862)
OTHER EXPENSES
Amortization of intangible assets from acquisitions		17,580			19,883
Restructuring and transformation costs (note 17)		-			33,658
(Gain) loss on investments		(3,438)			54
Income before income taxes from operations		235,161			158,587
Provision for income taxes (note 11)		58,760			20,635
Net income for the period		176,401			137,952
Basic earnings per share (note 12)	$	0.37		$	0.27
Diluted earnings per share (note 12)	$	0.36		$	0.26

See accompanying notes

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(LOSS)

(unaudited, in thousands of Canadian dollars)

	Three-month		Three-month
	period ended		period ended
	June 30, 2021		June 30, 2020
	$		$
Net income for the period	80,872	58,594
OTHER COMPREHENSIVE LOSS
Items that may be reclassified subsequently to profit or loss:
Cash flow and foreign exchange hedges gain	2,126	829
Net unrealized foreign exchange loss	(7,297)		(100,387)
	(5,171)	(99,558)
Provision for income taxes	550		153
Total other comprehensive loss	(5,721)		(99,711)
Comprehensive income (loss) for the period	75,151		(41,117)

See accompanying notes