Element Reports Strong Q1 2026 Results
Element Reports Strong Q1 2026 Results |
| [06-May-2026] |
Amounts in US$ unless otherwise noted
TORONTO, May 6, 2026 /CNW/ - Element Fleet Management Corp. (TSX: EFN) ("Element" or the "Company"), the largest publicly traded, pure play automotive fleet manager in the world and a global leader in intelligent fleet and mobility solutions, today announced financial and operating results for the three-month period ended March 31, 2026. The following table presents Element's selected financial results.
"We entered 2026 with solid performance across the business and continued engagement from our clients," said Laura Dottori-Attanasio, Chief Executive Officer of Element. "During the quarter, we advanced our platform, expanded our capabilities, and delivered against our strategic priorities." Dottori-Attanasio continued, "We are building on this start to the year with a focus on disciplined growth and consistency, while continuing to deliver meaningful outcomes for our clients over time." Net revenue growth Net revenue for Q1 2026 was $324 million, an increase of $48 million or 17% from Q1 2025 ("year-over-year"), driven by growth across all revenue streams. Compared to Q4 2025 ("quarter-over-quarter"), net revenue increased by $10 million or 3%, due to higher net financing and syndication revenues. Service revenue Element's largely unlevered services revenue continues to underpin the Company's capital-light business model and long-term growth strategy, driving the improvement in return on equity. Services revenue totaled $162 million in Q1 2026, up $10 million or 6% year-over-year attributable to continued VUM expansion. Services revenue declined by $1 million sequentially. Net financing revenue For Q1 2026, net financing revenue was $138 million, an increase of $26 million or 23% compared to Q1 2025. The increase was driven by growth in net earning assets, higher gains on sale ("GOS"), along with the continued execution of the Company's strategic leasing initiatives. Partly offsetting these factors were higher funding costs from incremental acquisition-related debt and higher provisions for credit losses, related to a client-specific item. On a quarter-over-quarter basis, net financing revenue increased by $8 million or 6%, primarily due to the continued benefits of the Company's optimized leasing strategy and higher GOS, partially offset by higher provisions for credit losses. Syndication volume The Company syndicated $867 million of assets in Q1 2026, representing an increase of $293 million or 51% year-over-year, and an increase of $201 million or 30% quarter-over-quarter. Syndication revenue totaled $24 million, increasing by $12 million compared to Q1 2025, primarily driven by higher volume, the reinstatement of 100% bonus depreciation and a favourable client mix, reflecting continued strong investor demand for the Company's syndication products. On a quarter-over-quarter basis, revenues increased by $3 million or 13% from Q4 2025, largely due to higher volumes. Adjusted operating expenses Adjusted operating expenses totaled $142 million in Q1 2026, up $17 million or 13% year-over-year, and $4 million or 2.7% quarter-over-quarter, largely reflecting higher salaries and wages from incremental headcount associated with the Car IQ acquisition, inflationary increases, and continued investment in strategic initiatives. Higher depreciation and amortization expenses further contributed to the growth from Q1 2025. On a quarter-over-quarter basis, the increase in operating expenses was partly offset by lower professional fees. Adjusted operating expense growth reflects ongoing investments in digitization and product expansion. Importantly, the Company continues to deliver positive operating leverage, as revenue growth outpaces expense growth, supported by efficiencies from prior investments. Adjusted operating income and adjusted operating margins AOI for Q1 2026 was $182 million, an increase of $31 million or 21% compared to Q1 2025, and $6 million or 4% compared to Q4 2025, underpinned by higher revenue. Adjusted operating margin in Q1 2026 was 56.2%, up from 54.7% in Q1 2025, and 56.0% in Q4 2025, representing expansions of 150 basis points and 20 basis points, respectively. Originations Element originated $1.5 billion of assets in Q1 2026, a decrease of $56 million or 4% compared to Q1 2025, largely due to the reduction in volume from an originate-to-syndicate client. Excluding this impact, underlying originations growth was solid, supported by strong client demand and continued conversion of the Company's Q4 2025 order volumes. On a quarter-over-quarter basis, originations increased by $102 million or 8% from Q4 2025, reflecting strong underlying demand. The table below sets out the geographic distribution of Element's originations for the three-month periods indicated.
Adjusted free cash flow per share and returns to shareholders Adjusted diluted free cash flow ("FCF") per share was $0.45 in Q1 2026, increasing 25% year-over-year and 15% quarter-over-quarter. Element returned $94 million to shareholders during the quarter, comprised of $37 million in common share dividends and $57 million through common share repurchases. Common dividend and share repurchases The Company's Board of Directors (the "Board") authorized and declared a quarterly cash dividend of CAD$0.15 per common share of Element for the second quarter of 2026. The dividend will be payable on July 15, 2026 to shareholders of record as at the close of business on June 30, 2026. The Company's common dividends are designated to be eligible dividends for purposes of section 89(1) of the Income Tax Act (Canada). In furtherance of the Company's return of capital plan, Element renewed its normal course issuer bid (the "NCIB") for its common shares. Under the NCIB, the Company has approval from the TSX to purchase up to 39,930,568 common shares during the period of November 20, 2025, to November 19, 2026. The Company intends to remain active under its NCIB in 2026. The actual number of the Company's common shares, if any, that may be purchased under the NCIB, and the timing of any such purchases, will be determined by the Company, subject to applicable terms and limitations of the NCIB (including any automatic share purchase plan adopted in connection therewith). There cannot be any assurance as to how many common shares, if any, will ultimately be purchased pursuant to the NCIB. Any subsequent renewals of the NCIB will be in the discretion of the Company and subject to further TSX approval. During Q1 2026, the Company purchased 2,289,400 Common Shares for cancellation under its NCIB at a volume weighted average price of CAD $33.33. Element applies trade date accounting in determining the date on which the share repurchase is reflected in the consolidated financial statements. Trade date accounting is the date on which the Company commits itself to purchase the shares. Debt-to-capital leverage ratio Commencing Q4 2024, the Company amended its banking covenants from a tangible leverage ratio ("TLR") to debt-to-capital, which the Company regards as a more meaningful measure of its leverage. At March 31, 2026, the Company's debt-to-capital ratio was 76.4% (December 31, 2025 76.9%), within the target range of 73% to 77%. The Company remains committed to maintaining a strong investment grade balance sheet. Conference call and webcast A conference call to discuss these results will be held on Thursday, May 7, 2026 at 8:00 a.m. Eastern Time. The conference call and webcast can be accessed as follows: Webcast: https://www.elementfleet.com/firstquarter2026 Telephone: Click here to join the call most efficiently, or dial one of the following numbers to speak with an operator: Canada/USA toll-free: 1-800-715-9871 International: +1-647-932-3411 A taped recording of the conference call may be accessed through June 7, 2026 by dialing 1-800-770-2030 (Canada/U.S. Toll Free) or 1-647-362-9199 (International Toll) and entering the access code 2546427#. IFRS to Non-GAAP Reconciliations, Non-GAAP Measures and Supplemental Information The Company's Unaudited Interim Condensed Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB and the accounting policies we adopted in accordance with IFRS. These Unaudited Interim Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary to present fairly the Company's financial position as at March 31, 2026 and March 31, 2025, the results of operations, comprehensive income and cash flows for the three-month period-ended March 31, 2026, December 31, 2025 and March 31, 2025. Non-GAAP and IFRS key annualized operating ratios and per share information of the operations of the Company:
Management also uses a variety of both IFRS and non-GAAP and Supplemental Measures, and non-GAAP ratios to monitor and assess their operating performance. The Company uses these non-GAAP and Supplemental Financial Measures because they believe that they may provide useful information to investors regarding their performance and results of operations. The following table provides a reconciliation of certain IFRS to non-GAAP measures related to the operations of the Company and other supplemental information.
The following table summarizes key statement of financial position amounts for the periods presented.
Throughout this press release, management uses the following terms and ratios which do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other organizations. Non-GAAP measures are reported in addition to, and should not be considered alternatives to, measures of performance according to IFRS. Adjusted operating expenses Adjusted operating expenses are equal to salaries, wages and benefits, general and administrative expenses, and depreciation and amortization less adjusting items impacting operating expenses. The following table reconciles the Company's reported expenses to adjusted operating expenses.
Adjusted operating income or Pre-tax adjusted operating income Adjusted operating income reflects net income or loss for the period adjusted for the amortization of debenture discount, share-based compensation, amortization of intangible assets from acquisitions, provision for or recovery of income taxes, loss or income on investments, and adjusting items from the table below. The following tables reconciles income before taxes to adjusted operating income.
Adjusted operating margin Adjusted operating margin is the adjusted operating income before taxes for the period divided by the net revenue for the period. After-tax adjusted operating income After-tax adjusted operating income reflects the adjusted operating income after the application of the Company's effective tax rates. Adjusted net income Adjusted net income reflects reported net income less the after-tax impacts of adjusting items. The following table reconciles reported net income to adjusted net income. After-tax adjusted operating income attributable to common shareholders After-tax adjusted operating income attributable to common shareholders is computed as after-tax adjusted operating income less the cumulative preferred share dividends for the period.
About Element Fleet Management Element Fleet Management (TSX: EFN) is the largest publicly traded pure play automotive fleet manager in the world and a global leader in intelligent fleet and mobility solutions. Guided by our Purpose to Move the world through intelligent mobility, we help clients manage the vehicles, data, technology, and decisions that keep their businesses moving. Fleet is our foundation, and intelligent mobility is how we lead. By combining deep fleet expertise with connected technologies, data driven intelligence, and strategic partnerships, Element helps clients lower total cost of ownership, improve uptime and driver experience, and build more resilient operations. Element manages over 1.5 million vehicles globally and leverages this scale and data to help clients optimize performance, identifying over $1.6 billion in cost savings opportunities across our clients' fleets in the past year. Through Element Mobility, we are advancing our leadership into the next era of intelligent mobility to deliver measurable business outcomes for our clients. For more information, visit: https://www.elementfleet.com This press release includes forward-looking statements regarding Element and its business. Such statements are based on management's current expectations and views of future events. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "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 financial performance, including future cash flows, financial condition, operating performance, operating income, financial ratios, capital structure and capital expenditures; expectations regarding acquisitions and strategic initiatives and the benefits to be derived therefrom; expected enhancements to client experience; expectations regarding client and revenue retention trends; management of operating expenses; increases in efficiency; Element achieving its digital platform ambitions; the Element Mobility strategy enabling the Company to increase client and shareholder value and unlock new revenues streams; EV strategy and capabilities; global EV adoption rates; dividend policy and the payment of future dividends; the costs and benefits of strategic initiatives; creation of value for all stakeholders; expectations regarding syndication; growth prospects and expected revenue growth; level of workforce engagement; improvements to magnitude and quality of earnings; executive hiring and retention; focus and discipline in investing; balance sheet management and plans and expectations with respect to leverage ratios; Element's ability to achieve its sustainability objectives; and Element's proposed share purchases, including the number of common shares to be repurchased, the timing thereof and TSX acceptance of the NCIB and any renewal thereof. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause Element's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Such risks and uncertainties include those regarding the fleet management, mobility and finance industries, economic factors, regulatory landscape and many other factors beyond the control of Element. A discussion of the material risks and assumptions associated with this outlook can be found in Element's annual MD&A, and Annual Information Form for the year ended December 31, 2025, each of which has been filed on SEDAR+ and can be accessed at www.sedarplus.ca. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. 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Company Codes: Toronto:EFN | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
