Element Fleet Management Corp T.EFN

Alternate Symbol(s): ELEEF | T.EFN.DB.B | T.EFN.P.C | T.EFN.P.E

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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.

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Element Fleet Management Corp

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Post by retiredcfon Dec 20, 2022 9:02am

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Post# 35181712

RBC

December 19, 2022

Element Fleet Management Corp.
Simply the Pest: Mega fleet win with Rentokil Terminix

TSX: EFN | CAD 18.33 | Outperform | Price Target CAD 26.00

Sentiment: Positive

Details: Element Fleet announced it reached a 5-year agreement with Rentokil Terminix, the North American division of Rentokil Initial plc (RTO-LN, covered by RBC analyst Andrew Brooke), a global pest control and hygiene services company, to provide services and financing to 21,200 vehicles in Rentokil’s U.S. fleet. EFN currently provides management services and financing to 4,700 vehicles in Rentokil’s fleet in the U.S. and will manage and finance an additional 16,500 vehicles under the new agreement following Rentokil's acquisition of Terminix.

The expanded relationship with Rentokil represents EFN’s largest mega fleet win since it pivoted towards growth in 2021 and makes Rentokil one of EFN’s 10 largest customers.

Our take: Positive. The contract win adds +1.1% to EFN's vehicles under management (VUM) and provides further evidence of EFN's positive momentum winning new customers and deepening relationships with existing customers such as managing more vehicles and also cross-selling additional fleet services. It's unclear how quickly EFN will realize the associated financing and fleet services revenues or by how much it will add to EPS, but big picture, we view today's announcement as positive for EFN's share price.

EFN is our #1 high-conviction best idea, in part as we think EFN is a relative (perhaps absolute) winner in a recession, high inflation and/or high interest rate environment with the shares being defensive but also offering significant valuation upside potential when macro conditions improve driven by strong growth potential.