Element Fleet Management : Q2 2022 - Financial Results

Interim Condensed Consolidated Financial Statements

Element Fleet Management Corp.

June 30, 2022

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited, thousands of Canadian dollars)

	As at		As at
	June 30,		December 31,
	2022	2021
	$	$
ASSETS
Cash	70,581	45,271
Restricted funds (note 5)	455,561	400,930
Finance receivables (notes 3 and 15)	7,384,175	7,436,275
Equipment under operating leases (note 4)	2,431,788	2,297,182
Accounts receivable and other assets	186,598	204,873
Derivative financial instruments (note 15)	99,481	26,302
Property, equipment and leasehold improvements, net	85,157	93,872
Intangible assets, net	833,078	830,013
Deferred tax assets	383,708	417,708
Goodwill	1,236,429		1,220,986
	13,166,556	12,973,412
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities	1,223,626	1,206,550
Derivative financial instruments (note 15)	69,282	28,575
Borrowings (note 5)	8,180,938	8,038,963
Convertible debentures (notes 6 and 15)	161,591	159,072
Deferred tax liabilities	115,641		89,303
	9,751,078	9,522,463
Shareholders' equity (note 7)	3,415,478		3,450,949
	13,166,556		12,973,412

See accompanying notes

On behalf of the Board:

DirectorDirector

Element Fleet Management Corp.

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

		Three-month			Three-month
		period ended			period ended
		June 30, 2022			June 30, 2021
		$			$
NET REVENUE
Interest income, net (note 9)		98,901			93,100
Rental revenue and other (note 9)		204,962			173,430
Depreciation of equipment under operating leases (notes 4 and 9)		(124,735)			(109,653)
		179,128			156,877
Interest expense		55,876			47,525
Net financing revenue		123,252			109,352
Fleet service revenue (note 9)		161,711			122,675
Direct costs of fixed rate service contracts (note 9)		(11,674)			(9,490)
Servicing income, net		150,037			113,185
Syndication revenue, net (note 9)		14,844			12,865
Net revenue		288,133			235,402
OPERATING EXPENSES
Salaries, wages and benefits		77,786			72,654
General and administrative expenses		28,944			25,826
Depreciation and amortization (note 14)		15,456			10,410
Amortization of convertible debenture discount (note 6)		950			887
Share-based compensation (note 8)		5,211			7,511
		128,347			117,288
OTHER EXPENSES
Amortization of intangible assets from acquisitions		8,958			8,674
Loss/(gain) on investments		1,322			(637)
Income before income taxes from operations		149,506			110,077
Provision for income taxes		38,386			29,205
Net income for the period		111,120			80,872
Basic earnings per share (note 11)	$	0.26		$	0.17
Diluted earnings per share (note 11)	$	0.25		$	0.17

See accompanying notes

Element Fleet Management Corp.

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

		Six-month			Six-month
	period ended			period ended
	June 30, 2022		June 30, 2021
		$			$
NET REVENUE
Interest income, net (note 9)		181,830			197,211
Rental revenue and other (note 9)		405,231			346,425
Depreciation of equipment under operating leases (notes 4 and 9)		(247,285)			(221,545)
		339,776			322,091
Interest expense		101,343			101,719
Net financing revenue		238,433			220,372
Fleet service revenue (note 9)		305,307			248,489
Direct costs of fixed rate service contracts (note 9)		(23,428)			(20,815)
Servicing income, net		281,879			227,674
Syndication revenue, net (note 9)		28,621			35,954
Net revenue		548,933			484,000
OPERATING EXPENSES
Salaries, wages and benefits		153,998			146,279
General and administrative expenses		56,741			52,972
Depreciation and amortization (note 14)		29,391			20,936
Amortization of convertible debenture discount (note 6)		1,883			1,759
Share-based compensation (note 8)		11,374			12,751
		253,387			234,697
OTHER EXPENSES
Amortization of intangible assets from acquisitions		17,867			17,580
Loss/(gain) on investments		2,764			(3,438)
Income before income taxes from operations		274,915			235,161
Provision for income taxes (note 10)		70,191			58,760
Net income for the period		204,724			176,401
Basic earnings per share (note 11)	$	0.47		$	0.37
Diluted earnings per share (note 11)	$	0.46		$	0.36

See accompanying notes

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, thousands of Canadian dollars)

	Three-month		Three-month
	period ended		period ended
	June 30, 2022		June 30, 2021
	$		$
Net income for the period	111,120	80,872
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit or loss:
Cash flow and foreign exchange hedges gain	23,045	2,126
Net unrealized foreign exchange gain (loss)	35,896		(7,297)
	58,941	(5,171)
Provision for income taxes	6,351		550
Total other comprehensive income (loss)	52,590		(5,721)
Comprehensive income for the period	163,710		75,151

See accompanying notes