Element Fleet Management Corp T.EFN.PR.E

Primary Symbol: T.EFN Alternate Symbol(s): T.EFN.PR.C | ELEEF

Industrials

Element Fleet Management Corp. is a Canada-based global automotive fleet manager. The Company provides business-to-business services and financing to corporations, governments and not-for-profits. It operates in various countries, including the United States, Canada, Mexico, Australia and New Zealand. It provides services and financing for commercial vehicle and equipment fleets, reaching around 56 countries worldwide through the Element-Arval Global Alliance. The Company provides solutions to various industries, such as construction; energy, oil and gas; food and beverage; healthcare; services; transportation, and utilities. Its services include acquisition, electric vehicle, financing, title and registration, collision management, fleet partnerships solutions, fuel, safety, taxable benefits, fleet telematics connectivity solutions, remarketing, sale leaseback, tolls and violations, and strategic fleet consulting. The Company has around 1.5 million client vehicles under management.

TSX:EFN - Post by User

Element Fleet Management Corp

<< Previous

Bullboard Posts

Next >>

Post by retiredcfon Mar 07, 2023 9:55am

133 Views

Post# 35323449

TD Raise Target

Element Fleet Management Corp.

(EFN-T) C$19.41

Revenue Growth and Originations Encouraging

Event

Q4/22 Results

Impact: POSITIVE

Revenue and adjusted EPS beat (vs. our and consensus forecasts). FCF/share was lower than our forecast for Q4/22, but it was above guidance for 2022 overall. Originations were above our forecast, vehicles under management (VUM) expanded q/q, and 2023 guidance was reaffirmed. Our estimates have changed modestly. Our target price moves up to $23.00 (from $22.00) due to the rolling forward of valuation by one quarter. We reiterate our BUY rating.

EPS of $0.27 was above our $0.26 estimate (and consensus); revenue was stronger than expected (+19% y/y, and +14% for 2022). Higher expenses offset somewhat. FCF/share of $0.30 was below our $0.33 estimate (deferred revenue was a drag), but $1.35 was above the high end of 2022 guidance ($1.32).
Revenue of $292mm was above our $272mm forecast (consensus was $270mm), reflecting organic revenue growth of 19% (14% for 2022). Servicing fees, net finance revenue, and syndication revenue all contributed.
2023 guidance was reiterated, and management noted “a growing conviction” in its ability to meet the high end of targets. We are at the high end for most revenue/earnings metrics. The company did lower its syndication volume expectations, citing the volatile interest rate environment.
Originations of $1.8bln were +54% y/y and above our $1.4bln forecast. Management noted that OEM production is improving. VUM was +2% q/q. An expanded mega-fleet mandate (16.5k vehicles) is expected to add 1% to 2023 revenue. The backlog ticked up slightly to $3.0bln (from $2.9bln q/q and y/y).
Capital returns were $56mm in Q4/22 (includes $25.5mm in share buybacks).
Conference call is at 8.00 a.m. ET (can access here). TD Investment Conclusion

The business has strong momentum, suggesting the timing is appropriate for a thoughtful CEO succession in 2023. We believe the combination of commercial momentum and a healthy order backlog will support the medium-term growth outlook. We are encouraged to see the origination growth this quarter. We believe translating the backlog into originations, further servicing growth, and syndication channels remaining open will be required to maintain the earnings and FCF/share momentum.