Element Fleet Management : Q1 2021 - Supplementary Information

Q1 2021 Supplementary Information

as at March 31, 2021

This supplementary information should be read in conjunction with the

Company's Management Discussion & Analysis dated March 31, 2021.

In this document, the Company uses terms such as "before-tax adjusted operating income", "net earning assets", "operating margin" and other terms that do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other organizations. Definitions of these terms can be found in Element's Management Discussion & Analysis that accompanies the financial statements for the most recent quarter or year, which have been filed on SEDAR (www.sedar.com). Element believes that certain non-IFRS measures can be useful to investors because they provide a means by which investors can evaluate Element's key drivers and operating performance, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying performance of the business.

Element Fleet Management Corp.

www.elementfleet.com/investors

FORWARD-LOOKING STATEMENTS DISCLAIMER

The following pages provide information management believes is relevant to an assessment and understanding of the financial condition, results and operations of Element Fleet Management Corp. (the "Company" or "Element") as at and for the three- month period ended March 31, 2021, and should be read in conjunction with the Company's Q1 Management Discussion & Analysis and interim condensed consolidated financial statements and accompanying notes for the three months ended March 31, 2021. All monetary figures are in millions of Canadian dollars unless otherwise noted or for per share amounts. Additional information regarding the Company is available on SEDAR at www.sedar.com and on the Company's website at www.elementfleet.com.

CAUTIONARY STATEMENT

THIS ANALYSIS HAS BEEN PREPARED TAKING INTO CONSIDERATION INFORMATION AVAILABLE TO MAY 11, 2021. CERTAIN STATEMENTS CONTAINED IN THIS REPORT CONSTITUTE "FORWARD- LOOKING STATEMENTS". IN SOME CASES THE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY WORDS OR PHRASES SUCH AS "MAY", "CAN", "WILL", "EXPECT", "GUIDANCE", "PLAN", "ANTICIPATE", "TARGET",

"INTEND", "POTENTIAL", "ESTIMATE", "BELIEVE" OR THE NEGATIVE OF THESE TERMS, OR OTHER SIMILAR EXPRESSIONS INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, INCLUDING, AMONG OTHERS, STATEMENTS REGARDING ELEMENT'S TRANSFORMATION PLAN, GROWTH PROSPECTS AND OBJECTIVES, EXPECTATIONS REGARDING SYNDICATION, ABILITY TO DRIVE OPERATIONAL EFFICIENCIES, ASSETS, BUSINESS STRATEGY, COMPETITIVE POSITIONING, ABILITY TO CREATE VALUE FOR SHAREHOLDERS, THE EVOLUTION OF ELEMENT'S BUSINESS, THE AVAILABILITY OF FUNDS FROM OPERATIONS, CASH FLOW GENERATION, BUSINESS INTEGRATION, STRATEGIC ASSESSMENT, BUSINESS OUTLOOK, ELEMENT'S DIVIDEND POLICY AND THE PAYMENT OF FUTURE DIVIDENDS, ELEMENT'S PROPOSED SHARE PURCHASES, INCLUDING THE NUMBER OF COMMON SHARES TO BE REPURCHASED, THE TIMING THEREOF AND TSX ACCEPTANCE OF THE NORMAL COURSE ISSUER BID AND ANY RENEWAL THEREOF AND OTHER EXPECTATIONS REGARDING FINANCIAL OR OPERATING PERFORMANCE AND METRICS. SUCH STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO INHERENT RISKS, UNCERTAINTIES AND NUMEROUS ASSUMPTIONS, INCLUDING, WITHOUT LIMITATION, THE IMPACT OF THE COVID-19 PANDEMIC, GENERAL ECONOMIC CONDITIONS, OPERATIONAL CAPABILITIES, TECHNOLOGICAL DEVELOPMENT, RELIANCE ON DEBT FINANCING, DEPENDENCE ON BORROWERS, INABILITY TO SUSTAIN RECEIVABLES, COMPETITION, INTEREST RATES, REGULATION, INSURANCE, FAILURE OF KEY SYSTEMS, DEBT SERVICE, FUTURE CAPITAL NEEDS AND SUCH OTHER RISKS OR FACTORS DESCRIBED FROM TIME TO TIME IN REPORTS OF ELEMENT, INCLUDING HEREIN AND IN ELEMENT'S MD&A AND ANNUAL INFORMATION FORM, WHICH HAVE BEEN FILED ON SEDAR AND MAY BE ACCESSED AT WWW.SEDAR.COM. THE COVID-19 PANDEMIC HAS CAST ADDITIONAL UNCERTAINTY ON ELEMENT'S INTERNAL EXPECATIONS, ESTIMATES, PROJECTIONS, ASSUMPTIONS AND BELIEFS. THE DURATION, EXTENT AND SEVERITY OF THE IMPACT THE COVID-19 PANDEMIC, INCLUDING MESAURES TO PREVENT ITS SPREAD, WILL HAVE ON ELEMENT'S BUSINESS IS HIGHLY UNCERTAIN AND DIFFICULT TO PREDICT AT THIS TIME.

BY THEIR NATURE, FORWARD-LOOKING STATEMENTS INVOLVE NUMEROUS ASSUMPTIONS, KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES, BOTH GENERAL AND SPECIFIC, WHICH CONTRIBUTE TO THE POSSIBILITY THAT PREDICTIONS, FORECASTS, PROJECTIONS AND OTHER FORMS OF FORWARD-LOOKING INFORMATION MAY NOT OCCUR OR BE ACHIEVED. MANY FACTORS COULD CAUSE ELEMENT'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AND READERS ARE CAUTIONED THAT THE LIST OF FACTORS IN THE FOREGOING PARAGRAPH IS NOT EXHAUSTIVE. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS INTENDED, PLANNED, ANTICIPATED, BELIEVED, ESTIMATED OR EXPECTED. ACCORDINGLY, READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS OR INTERPRET OR REGARD FORWARD-LOOKING STATEMENTS AS GUARANTEES OF FUTURE OUTCOMES, AS NO FORWARD-LOOKING STATEMENT MAY BE GUARANTEED. EXCEPT AS MAY BE REQUIRED BY APPLICABLE CANADIAN SECURITIES LAWS, THE COMPANY DOES NOT INTEND, AND DISCLAIM ANY OBLIGATION TO UPDATE OR REWRITE ANY FORWARD-LOOKING STATEMENTS WHETHER ORAL OR WRITTEN AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

Q1 2021 | Element Fleet Management Corp.

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TABLE OF CONTENTS

Section Content

STRATEGIC PRIORITIES

1. Aggressively pursue organic growth and demonstrate the scalability of our operating platform by magnifying 4-6% annual net revenue growth into high single-digit to low double-digit operating income growth

1. Quarterly global net revenue, operating margin and adjusted operating income
2. Deals closed in the quarter

1.2.1 New client revenue timing differences by geography

1. Net revenue growth quarter-over-quarter (QoQ) and quarter-over-same-quarter-prior-year (YoY) in Australia and New Zealand - in local currency (Australian dollars)
2. Net revenue growth QoQ and YoY in Mexico - in local currency
3. Net revenue growth QoQ and YoY in the U.S. and Canada - in U.S. dollars
4. Global net revenue growth QoQ and YoY

1. Operating leverage
2. Global adjusted operating income growth QoQ and YoY

1. Advance a capital-lighter business model by increasing service penetration and strategically syndicating fleet assets, which enhances return on equity

1. Assets under management by geography
2. Global assets under management before the impact of changes in FX
3. 4Q20 -> 1Q21 Assets under management
4. 4Q20 -> 1Q21 End-of-period earning assets

1. Debt and equity relative to assets under management
2. Quarterly syndication volume and revenue yield
3. Quarterly average net earning asset mix and pre-tax return on common equity
4. Net revenue splits by geography

1. Achieve high single-digit to low double-digit annual free cash flow growth and predictably return excess equity to shareholders by way of growing common dividends and share buybacks

1. Free cash flow
2. Free cash flow and adjusted operating income per share

1. Value of tax assets
2. NCIB activity
3. Common dividends

ELECTRIC VEHICLES

1. EV penetration of Element clients' fleets
2. Current estimates as to the timing of battery electric vehicles achieving total cost of ownership / operation (TCO) and purchase price (PP) parity with internal combustion engine vehicles

Q1 2021 | Element Fleet Management Corp.

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Strategic Priorities

Q1 2021 | Element Fleet Management Corp.

Supplementary Information | 4

1. Aggressively pursue organic growth and demonstrate the scalability of our operating platform by magnifying 4-6% annual net revenue growth into high single-digit to low double-digit operating income growth

1.1 Quarterly global net revenue, operating margin and adjusted operating income

One of our three strategic priorities in 2021 (and beyond) is the aggressive pursuit of profitable, organic net revenue growth. We believe the business is capable of growing 4-6% annually in this regard in normal market conditions. Leveraging the scalability of our transformed operating platform, Element will magnify that 4-6% revenue growth into high single-digit to low double-digit annual operating income growth. We will report on our quarterly progress here in our Supplementary Information document.

C$M

290	Net revenue										80%
Operating margin
	Adjusted operating
	Transformation										70%
240
												60%
190
												50%
140
												40%
90												30%
40												20%
1Q18	2Q18	3Q18	4Q18	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21

Q1 2021 | Element Fleet Management Corp.

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