Q3 2021 - Financial Results

Interim Condensed Consolidated Financial Statements

Element Fleet Management Corp.

September 30, 2021

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited, in thousands of Canadian dollars)

	As at		As at
	September 30,		December 31,
	2021	2020
	$	$
ASSETS
Cash	103,771	8,789
Restricted funds (note 6)	344,120	388,978
Finance receivables (note 3 and 16)	7,680,976	9,561,622
Equipment under operating leases (note 4)	2,224,870	2,157,227
Accounts receivable and other assets	173,119	226,952
Derivative financial instruments (note 16)	21,196	53,629
Property, equipment and leasehold improvements, net	97,623	112,352
Intangible assets, net	822,457	814,378
Deferred tax assets	415,351	444,120
Goodwill	1,221,995		1,223,341
	13,105,478	14,991,388
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable and accrued liabilities	1,003,874	1,062,610
Derivative financial instruments (note 16)	30,590	68,282
Borrowings (note 6)	8,335,704	9,864,336
Convertible debentures (note 7 and 16)	157,842	154,267
Deferred tax liabilities	77,238		57,776
	9,605,248	11,207,271
Shareholders' equity (note 8)	3,500,230		3,784,117
	13,105,478		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
	September 30,			September 30,
		2021			2020
		$			$
NET REVENUE
Interest income, net (note 10)		91,119			122,100
Rental revenue and other (note 10)		175,044			159,381
Depreciation of equipment under operating leases (notes 4 and 10)		(110,230)			(104,908)
		155,933			176,573
Interest expense		46,605			73,301
Net financing revenue		109,328			103,272
Fleet service revenue (note 10)		133,042			135,488
Direct costs of fixed rate service contracts (note 10)		(11,967)			(10,754)
Servicing income, net		121,075			124,734
Syndication revenue, net (note 10 and 18)		13,937			15,246
Net revenue		244,340			243,252
OPERATING EXPENSES
Salaries, wages and benefits		78,493			74,910
General and administrative expenses		24,355			28,789
Depreciation and amortization (note 15)		15,866			10,568
Amortization of convertible debenture discount (note 7)		903			843
Share-based compensation (note 9)		5,086			5,591
		124,703			120,701
OTHER EXPENSES
Amortization of intangible assets from acquisitions		8,862			9,338
Restructuring and transformation costs (note 17)		-			24,213
(Gain) loss on investments		(2,776)			710
Income before income taxes from operations		113,551			88,290
Provision for income taxes (note 11)		28,610			17,512
Net income for the period		84,941			70,778
Basic earnings per share (note 12)	$	0.18		$	0.14
Diluted earnings per share (note 12)	$	0.18		$	0.14

See accompanying notes

Element Fleet Management Corp.

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

		Nine-month			Nine-month
	period ended			period ended
	September 30,		September 30,
		2021			2020
		$			$
NET REVENUE
Interest income, net (note 10)		288,330			403,490
Rental revenue and other (note 10)		521,469			481,833
Depreciation of equipment under operating leases (notes 4 and 10)		(331,775)			(319,099)
		478,024			566,224
Interest expense		148,324			266,992
Net financing revenue		329,700			299,232
Fleet service revenue (note 10)		381,531			396,227
Direct costs of fixed rate service contracts (note 10)		(32,782)			(31,131)
Servicing income, net		348,749			365,096
Syndication revenue, net (note 10)		49,891			51,666
Net revenue		728,340			715,994
OPERATING EXPENSES
Salaries, wages and benefits		224,772			225,239
General and administrative expenses		77,327			89,170
Depreciation and amortization (note 15 )		36,802			32,134
Amortization of convertible debenture discount (note 7)		2,662			5,401
Share-based compensation (note 9)		17,837			15,455
		359,400			367,399
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		26,442			29,221
Restructuring and transformation costs (note 17)		-			57,871
(Gain) loss on investments		(6,214)			764
Income before income taxes from operations		348,712			246,877
Provision for income taxes (note 11)		87,370			38,147
Net income for the period		261,342			208,730
Basic earnings per share (note 12)	$	0.55		$	0.40
Diluted earnings per share (note 12)	$	0.54		$	0.40

See accompanying notes

Element Fleet Management Corp.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in thousands of Canadian dollars)

	Three-month		Three-month
	period ended		period ended
	September 30,		September 30,
	2021	2020
	$		$
Net income for the period	84,941	70,778
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit or loss:
Cash flow and foreign exchange hedges gain (loss)	5,705	(1,654)
Net unrealized foreign exchange gain (loss)	20,159		(21,699)
	25,864	(23,353)
Provision for income taxes	1,404		1,739
Total other comprehensive gain (loss)	24,460		(25,092)
Comprehensive income for the period	109,401		45,686

See accompanying notes