Bullboard - Stock Discussion Forum Element Fleet Management Corp T.EFN

Alternate Symbol(s): ELEEF

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Element Fleet Management Corp. is a Canada-based fleet solutions providers. It operates as a pure-play automotive fleet manager. The Company offers a full range of fleet services and solutions to corporations, governments and not for profits across North America, Australia, and New Zealand. Its services address every aspect of clients' fleet requirements, from vehicle acquisition, maintenance... see more

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TSX:EFN - Post Discussion

Element Fleet Management Corp > TD 2

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Post by retiredcf on Nov 19, 2024 8:00am

TD 2

Maintain their $33.00 target. GLTA

INVESTOR MEETINGS - KEY THEMES

THE TD COWEN INSIGHT

We hosted the Element Fleet management team for a day of investor meetings. Key issues highlighted below include the components behind 2025 revenue growth guidance, near and medium-term opportunities from the Autofleet acquisition, new funding initiatives, and capital deployment priorities.

Management broke down the components behind underlying revenue growth expectations of 11-13% (in 2025), and the main offsets to arrive at guidance of 6.5% to 8.5%.

Vehicles under management (VUM) growth of ~4%. This is in line with the 2024 pace (excluding VUM lost by deliberately exiting a low margin white label contract). This reflects growth from existing customers, self-managed wins, and market share gains.
An inflation assumption of ~3% (drives +2% revenue growth).
Services penetration (share of wallet) is expected to drive ~4% in revenue growth. This

has been growing at double digits for 3 years.
Other initiatives. Includes moving the U.S. fleet back office to Dublin (optimizing pricing); cross-selling Autofleet services; rolling out fleet insurance as a service; and launching an SME leasing offering.
There are a few revenue headwinds expected in 2025 that may offset. The main issues highlighted were the depreciation of the Mexican Peso and lower syndication yields (lower bonus depreciation tax shield). The latter could reverse under Trump tax policy.

The Autofleet acquisition (closed October 1) appears to be a strategically important technology investment.

Autofleet capabilities are expected to enhance the client experience (already rolling out a new mobile app for drivers and dashboard portal for client fleet managers). The Element sales force is being trained to market Autofleet services (route optimization over the near-term, and potentially telematics capabilities over the medium-term). Importantly, in our view, the Autofleet cloud based platform is expected to support a multi-year digitization and automation initiative.
Management noted they are sensitive to finding a balance between aligning Autofleet and Element priorities, while keeping Autofleet independent in order to maintain a culture of innovation and nimbleness.

New funding structures are being rolled out to manage balance sheet capacity. This includes whole lease sales and a new securitization program (similar to syndication, but not limited to individual client lease portfolios).

Capital deployment priorities for 2025 include ~$80mm in capex, dividend growth, and share buybacks.