Element Fleet Management Corp. (EFN) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of Element Fleet Management Corp. Please note that today's meeting is being recorded. [Operator Instructions] I would now like to hand the conference over to David Steinhauer.

Thank you, and good morning. My name is David Steinhauer, and I'm the Senior Vice President, Assistant and General Counsel and Corporate Secretary of Element Fleet Management Corp. I would like to briefly read the forward-looking information statement before turning the meeting over to Kathleen Taylor as Chair of the meeting. In the course of today's meeting, directors or officers of the corporation may, in their remarks or in response to questions, make certain statements which are forward-looking statements in our perspective. Forward-looking statements are neither promises nor guarantees but are subject to risks and uncertainties that may cause the actual results, performance or achievements of the corporation or developments in the corporation's business or its industry to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. A more detailed discussion of risk factors affecting Element's business industry can be found in the corporation's most recent annual information form and management's discussion and analysis. Forward-looking statements are based on management's beliefs and opinions at the time the statements are made, and undue reliance should not be placed on any of these forward-looking statements. There should be no expectation that these forward-looking statements will be updated or supplemented as a result of changing circumstances or otherwise and other than as required by applicable laws, the corporation disclaims any obligation to do so. I will now turn the meeting over to Element's Chair of the Board, Kathleen Taylor.

Thank you, David. Good morning, ladies and gentlemen. Welcome to the 2025 Annual General Meeting of the Shareholders of Element Fleet Management. I'm Kathleen Taylor, Chair of the Board, and I'm excited to be chairing my first Element AGM since becoming Chair last year. This meeting is being held in virtual format. We believe it provides easier access to our widespread shareholder base without the time, cost and environmental impact of travel to attend an in-person meeting. All shareholders have the opportunity to participate, submit questions and vote at the meeting. For efficiency, we request that shareholders who have specific comments or questions on a formal item of business to make their written submissions now, clearly identifying the applicable item of formal business to which the comment or question relates. During the course of this meeting, at the appropriate time, these submissions will be addressed prior to voting on the applicable motions. Following the formal business of the meeting, we will have a question-and-answer session. If you have any questions not specifically relating to an item of formal business to be discussed at today's meeting, please feel free to submit those questions at any time during the meeting, and we will do our best to ensure that such questions are addressed at the conclusion of the meeting. Shareholders can submit questions by clicking on the message icon, typing in and submitting their questions. We will do our best to answer all shareholder questions. But if for any reason, we're unable to do so during the meeting, we will endeavor to follow-up with shareholders after the meeting. Before proceeding with the formal business, I would like to take this opportunity to welcome Paolo Ferrari and Tracey McVicar, who are standing for nomination to the Board at this meeting. They each bring integral skills, perspectives and experience and we are confident they will be a tremendous asset to the company. I'd also like to express our thanks to outgoing Board members, Andy Clarke and Arielle Meloul-Wechsler, for their valuable support and their contributions to Element. Now we'll proceed to the business at hand. We have 4 matters of formal business to conduct today: presentation of our 2024 financial statements, the election of directors, the reappointment of the company's auditors and the advisory resolution on the corporation's approach to executive compensation. Once the formal business of the meeting has been completed, I will turn the meeting over to Element's President and Chief Executive Officer, Laura Dottori-Attanasio for some closing remarks. There will then be an opportunity to ask questions. I'll now call the meeting to order. I will preside as Chair of this meeting, and I'll ask David Steinhauer to act as our Secretary. I hereby appoint Computershare Trust Company of Canada to act as scrutineer for the meeting. Computershare is represented today by Anup Das as scrutineer. The scrutineer has provided me with a preliminary report on our attendance at this meeting. With over 86% of Element's common shares represented in person or by proxy. I declare that the record of a quorum of shareholders is present, and I declare that the meeting is duly and properly constituted for the transaction of business. I also direct that the confirmation of mailing of the notice of meeting received by Computershare and the scrutineer's complete report on attendance be annexed to the minutes of the meeting. Further, in order to expedite the meeting, I ask David Steinhauer to make the requisite motions during the meeting and will dispense with the seconding of motion. Voting at today's meeting will be conducted by online ballot for all matters. If you are a registered shareholder or a duly appointed proxy holder and used our control number to log into the meeting, will be provided the opportunity to vote by online ballot. If you have already voted by proxy and you vote again for any online ballot during the meeting, your online vote during the meeting will revoke your previously submitted proxy. If you have already voted by proxy and do not wish to revoke your previously submitted proxy, please do not vote again during the online ballot. The polls will be opened for all items of business to be voted on at the same time. This will allow you to vote on each item immediately or if you prefer, you may wait until the conclusion of discussion on each item prior to casting your vote. The items of business to be voted on and your available voting options will be visible on the voting panel on your screen. To submit a vote, please click on the voting choice displayed on your screen. Once discussion has concluded on all items of business, we will provide a few additional moments to enter your votes. I will then declare voting closed on all matters of business. The results of the votes on each matter will be announced prior to the closed meeting. I now declare the online voting polls open for all items of business. The secretary has the minutes of the last meeting of shareholders of the corporation, and we will dispense with the reading of those minutes of that meeting. The first item of business is the presentation of the corporation's consolidated financial statements as at and for the year ended December 31, 2024, and the auditor's report thereof. We will dispense with the reading of the auditor's report. Our next item of business is the election of directors of the corporation. The Board has fixed the number of directors to be elected at 10. Pursuant to our advanced notice bylaw, there have been no director nominations put forward other than directors nominated on behalf of management as set out in our management information circular. Accordingly, in the interest of expediency, I'll ask David Steinhauer to make a nomination. Dave?

I nominate those persons specified in the management information circular delivered with the notice of meeting, namely Virginia Addicott, Laura Dottori-Attanasio, Paolo Ferrari, Keith Graham, Joan Lamm-Tennant, Rubin McDougal; Tracey McVicar, Andrea Rosen, Kathleen Taylor and Luis Tellez to serve as directors of the corporation and to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation.

Thank you, David. As noted, since there were no prior nominations under our advanced notice bylaw, I declare the nominations closed. I also request a motion that the 10 persons nominated as Directors of the corporation be so elected.

I so move.

David, can you please advise whether any questions have been received from participants of this meeting?

There have been no questions received at this time.

In accordance with the corporation's majority voting policy, we will have individual voting for directors to be conducted by way of online ballot. Registered shareholders and duly appointed proxy holders can vote by selecting the applicable voting option. I'll announce the results of the vote at the conclusion of the meeting. We'll now move to the reappointment of auditors. May I have a motion that Ernst & Young LLP be reappointed as auditors of the corporation until the next Annual Meeting of Shareholders or until a successor is appointed and that the Board of Directors are authorized to fix the auditor's remuneration.

I so move.

Thank you, David. Can you please advise whether any questions have been received from the participants of this meeting?

There have been no questions.

Thank you. I'll announce the results of the vote at the conclusion of the meeting. We'll now move to consideration of the advisory resolution on the corporation's approach to executive compensation. As described in our circular, shareholders are asked to approve the resolution on the corporation's approach to executive compensation. This vote is advisory only and nonbinding on the corporation and the Board. However, it will influence how the Board and the Compensation and Corporate Governance Committee look at compensation in the future and the Board believes that this say-on-pay vote is good governance and allows our shareholders to provide specific feedback on the corporation's compensation practices. May I have a motion that the advisory resolution as set out in the circular be passed as an ordinary resolution of the shareholders of the corporation.

I so move.

Thank you, David. Are there any questions from participants on this point in the meeting?

There have been no questions received.

Thank you. We'll now briefly pause while the polls close and the results are tabulated by the scrutineers. I can confirm the polls are now closed, and the scrutineers have tabulated the results. I'm pleased to confirm that all matters have passed with over 93% approval. Accordingly, as a result, I hereby declare the directors elected, the auditors reappointed, and the advisory resolution on executive compensation approved. The voting results will be filed on SEDAR and disclosed in the press release following the meeting. David, can you please advise whether any other formal business has been brought before the meeting?

There has been no other formal business brought before the meeting.

Thank you, David. In that case, this concludes the formal business broad before the meeting. I wish to thank you all for attending today, and I'll now declare this meeting terminated. I'll also turn the meeting over to Laura for her closing remarks. Laura?

Thank you, Katie, and thank you to our shareholders joining us today. At Element, we're driven by our purpose to move the world through intelligent mobility. Leveraging our leadership position in the fleet and mobility industry, we're executing a global growth strategy that is delivering value to our clients, our team members and our shareholders. By embracing a digital-first approach, prioritizing client success, investing in our business and driving operational excellence we are positioning Element to sustain this industry leadership and shape the future of mobility. In 2024, our efforts centered on laying the groundwork to modernize our operations through digitization and automation and preparing to invest in initiatives that will allow us to grow beyond our core. It was a pivotal year for Element highlighted by strong commercial success, important investments in our future and record financial results. We achieved record revenue of $1.1 billion and adjusted operating income of $601 million, resulting in adjusted earnings per share and free cash flow per share growth of 15% and 13%, respectively, and adjusted ROE reaching 16%. These results speak to the strength and resilience of our business model and the trust our clients place in us. In addition, our strong performance allowed us to deliver great value to shareholders. We increased our dividend by 8% to CAD 0.52 per share annually and we returned $336 million to shareholders in 2024 through common dividends, common share repurchases and preferred share redemptions. Our strong commercial and financial performance also enabled us to accelerate strategic investments, all of which were driven by our commitment to driving our clients' success. Notably, a key highlight of 2024 was our acquisition of Autofleet, an innovator in cloud-based AI-driven fleet optimization technology. The benefits of combining Element's commercial infrastructure and financial resources with Autofleet's innovation for both our clients and business are clear. Our commercial teams are actively introducing Autofleet solutions to our clients while Autofleet's clients now gain access to Element's robust infrastructure and support. We're also making bold moves to expand our reach, innovate and deliver more value. In 2024, we centralized U.S. and Canadian leasing operations in Ireland, enhancing the leasing experience for our clients. Beyond our core business, we identified growth opportunities in new products and services, we added an industry specialist in both insurance and small- to medium-sized fleets to help us develop a road map to enter these promising markets. Our newly launched acceleration office is designed to fast track and prioritize strategic initiatives like our digital driver app, a digital client portal and our expansion into both the insurance and the small- to medium-sized fleet space. These objectives will be delivered through the expertise of our team members and through our digital-first approach. Driven by our collective achievements and key investments, we will continue to drive forward with pace and determination, prioritizing areas where we see the greatest opportunities as definitive leaders on the trends that are reshaping the fleet and mobility landscape. While global trade developments will have economic impacts, we've exhibited the resilience of our business during periods of uncertainty which we have once again demonstrated through the solid Q1 results we released this week. Thanks to our great team, our resilient business model, our industry-leading position and our 2024 strategic investments, we are well prepared for continued success and are helping our clients manage through the challenges posed by the current geopolitical landscape. We've developed an ambitious yet achievable growth strategy with a focus on 3 key objectives: continuing to grow organically with improved commercial effectiveness, providing industry-leading client experience by transforming our holistic digital, analytics and operational capabilities, growing beyond the core with new products and services such as insurance and digitally enabled offerings in small- to medium-sized fleets and shared mobility. As we look ahead, we remain focused on our clients who are at the heart of all we do. We thank them for their trust in us, their partnership and allowing us to help them thrive. To you, our shareholders, we thank you for your support and continued confidence. You have a vital role in driving our success and growth. In closing, driven by our strong commercial momentum, resilient business model, a commitment to executing with operational excellence and benefiting from our investments in 2024, we are well positioned to advance intelligent mobility initiatives and continue to create value for our clients and for our shareholders in 2025 and beyond. And with that, I'll turn it back to our Chair, Katie Taylor.

Thank you, Laura. We'd now like to invite any supplemental questions from shareholders or proxy holders present at the meeting. If you wish to ask a question and have not yet done so, please type in and submit your question. David, can you please let me know whether we have any further questions received from participants of the meeting?

There have been no questions received.

Thank you. In that case, on behalf of the Board and management of the corporation, I'd like to thank all of our shareholders and all others who have joined us today for your ongoing support of Element and your attendance at this year's meeting. Thank you, and have a great day.

This concludes the meeting. You may now disconnect.