Element Fleet Management : Q3 2022 - Financial Statements

Interim Condensed Consolidated Financial Statements

Element Fleet Management Corp.

September 30, 2022

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited, thousands of Canadian dollars)

	As at		As at
	September 30,		December 31,
	2022	2021
	$	$
ASSETS
Cash	55,121	45,271
Restricted funds (note 5)	428,537	400,930
Finance receivables (notes 3 and 15)	7,696,077	7,436,275
Equipment under operating leases (note 4)	2,548,909	2,297,182
Accounts receivable and other assets	204,866	204,873
Derivative financial instruments (note 15)	134,214	26,302
Property, equipment and leasehold improvements, net	84,725	93,872
Intangible assets, net	871,949	830,013
Deferred tax assets	370,810	417,708
Goodwill	1,307,872		1,220,986
	13,703,080	12,973,412
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities	1,396,328	1,206,550
Derivative financial instruments (note 15)	86,592	28,575
Borrowings (note 5)	8,343,474	8,038,963
Convertible debentures (notes 6 and 15)	162,725	159,072
Deferred tax liabilities	128,092		89,303
	10,117,211	9,522,463
Shareholders' equity (note 7)	3,585,869		3,450,949
	13,703,080		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
	September 30,			September 30,
		2022			2021
		$			$
NET REVENUE
Interest income, net (note 9)		127,511			91,119
Rental revenue and other (note 9)		199,359			175,044
Depreciation of equipment under operating leases (notes 4 and 9)		(123,771)			(110,230)
		203,099			155,933
Interest expense		78,240			46,605
Net financing revenue		124,859			109,328
Fleet service revenue (note 9)		162,049			133,042
Direct costs of fixed rate service contracts (note 9)		(12,118)			(11,967)
Servicing income, net		149,931			121,075
Syndication revenue, net (note 9)		15,998			13,937
Net revenue		290,788			244,340
OPERATING EXPENSES
Salaries, wages and benefits		80,708			78,493
General and administrative expenses		29,654			24,355
Depreciation and amortization (note 14)		15,020			15,866
Amortization of convertible debenture discount (note 6)		966			903
Share-based compensation (note 8)		12,885			5,086
		139,233			124,703
OTHER EXPENSES
Amortization of intangible assets from acquisitions		9,144			8,862
Loss/(gain) on investments		-			(2,776)
Income before income taxes from operations		142,411			113,551
Provision for income taxes		38,708			28,610
Net income for the period		103,703			84,941
Basic earnings per share (note 11)	$	0.25		$	0.18
Diluted earnings per share (note 11)	$	0.24		$	0.18

See accompanying notes

Element Fleet Management Corp.

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

		Nine-month			Nine-month
	period ended			period ended
	September 30,		September 30,
		2022			2021
		$			$
NET REVENUE
Interest income, net (note 9)		309,341			288,330
Rental revenue and other (note 9)		604,590			521,469
Depreciation of equipment under operating leases (notes 4 and 9)		(371,056)			(331,775)
		542,875			478,024
Interest expense		179,583			148,324
Net financing revenue		363,292			329,700
Fleet service revenue (note 9)		467,356			381,531
Direct costs of fixed rate service contracts (note 9)		(35,546)			(32,782)
Servicing income, net		431,810			348,749
Syndication revenue, net (note 9)		44,619			49,891
Net revenue		839,721			728,340
OPERATING EXPENSES
Salaries, wages and benefits		234,706			224,772
General and administrative expenses		86,395			77,327
Depreciation and amortization (note 14)		44,411			36,802
Amortization of convertible debenture discount (note 6)		2,849			2,662
Share-based compensation (note 8)		24,259			17,837
		392,620			359,400
OTHER EXPENSES
Amortization of intangible assets from acquisitions		27,011			26,442
Loss/(gain) on investments		2,764			(6,214)
Income before income taxes from operations		417,326			348,712
Provision for income taxes (note 10)		108,899			87,370
Net income for the period		308,427			261,342
Basic earnings per share (note 11)	$	0.72		$	0.55
Diluted earnings per share (note 11)	$	0.70		$	0.54

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
	September 30,		September 30,
	2022	2021
	$		$
Net income for the period	103,703	84,941
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Cash flow and foreign exchange hedges gain	6,069	5,705
Net unrealized foreign exchange gain	152,393		20,159
	158,462	25,864
Provision for income taxes	1,603		1,404
Total other comprehensive income	156,859		24,460
Comprehensive income for the period	260,562		109,401

See accompanying notes