investor presentation · 2015 q2 2015 total fee revenue (1) 28% 38% 40% 42% spread revenue (2) 72%...

elementcorp.comElement Financial Corporation

I N V E S TO R P R E S E N TAT I O NA U G U S T 2 0 1 5


Element Overview

2


Forward Looking Statements

3

Certain information in this presentation is forward-looking and related to anticipated financial performance, events and strategies. When used in this context, words such as “will”, “anticipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. Forward-looking statements relate to, among other things, Element Financial Corporation’s (“Element”) objectives and strategy; future cash flows, financial condition, operating performance, financial ratios, projected asset base and capital expenditures; Element’s anticipated dividend policy; anticipated cash needs, capital requirements and need for and cost of additional financing; future assets; demand for services; Element’s competitive position; and anticipated trends and challenges in Element’s business and the markets in which it operates.

The forward-looking information and statements contained in this presentation reflect several material factors and expectations and assumptions of Element including, without limitation: that Element will conduct its operations in a manner consistent with its expectations and, where applicable, consistent with past practice; the general continuance of current or, where applicable, assumed industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax and regulatory regimes; certain cost assumptions; the continued availability of adequate debt and/or equity financing and cash flow to fund its capital and operating requirements as needed; and the extent of its liabilities. Element believes the material factors,expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct.

By their nature, such forward-looking information and statements are subject to significant risks and uncertainties, which could cause the actual results and experience to be materially different than the anticipated results. Such risks and uncertaintiesinclude, but are not limited to, operating performance, regulatory and government decisions, competitive pressures and the ability to retain major customers, rapid technological changes, availability and cost of financing, availability of labour and management resources and the performance of partners, contractors and suppliers.

Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, Elementdisclaims any intention and assumes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.


Harold D. Bridge (1) (5)

CA, MBA, FCA, CF, ICD.D

Pierre Lortie (1) (4)

BSc. Appl., P. Eng., MBA

Richard E. Venn (1) (2)

Vice-ChairmanBASc, MBA

Paul Stoyan (1)(3)

LLB, ICD.D

Steven HudsonFCA, BBA

Gordon D. Giffin (1)

BA, JD

William Lovatt (1)

ChairmanCFA, FCPA, FCGA

Joan Lamm-Tennant (1)

PHDThe Hon. Brian Tobin (1)

Corporate Governance – Board of Directors

4

Note(1) Independent Board member(2) Chair of the Risk Committee(3) Chair of the Corporate Governance and Compensation Committee

Former Executive Vice President and CFO of Great-West Lifeco Inc., London Life and Canada Life (35 year career with Great-West Life)

Global Chief Economist and Risk Strategist of Guy Carpenter and Company, LLC, the reinsurance and risk advisory operating company of Marsh and McLennan Companies

Chairman of DBRS; Former Senior Executive Vice President at Canadian Imperial Bank of Commerce (40 year career with CIBC)

Chief Executive Officer, Element Financial Corp.; former founder and CEO of Newcourt Credit Group

Chairman, Gardiner Roberts LLP; Corporate board member

Vice Chairman of BMO Capital Markets; former Federal Minister of Industry, Premier of Newfoundland and Labrador and Member of Parliament

Former U.S. Ambassador to Canada; Senior Partner at McKenna Long and Aldridge LLP (Atlanta); Corporate board member

Former senior partner at Deloitte and Touche for 32 years specializing in financial advisory, audit, corporate finance and M&A

Senior Business Advisor at Dentons Canada LLP; previously the President of Bombardier Transportation, Bombardier Capital, Bombardier International and Bombardier Aerospace Regional Aircraft

(4) Chair of the Credit Committee(5) Chair of the Audit Committee


market capitalization

$5.8 billion

$7.5 billion

Element at a Glance

5

Offices across North America

• Toronto, ON (Corporate)

• Montreal, QC (Aviation)

• Mississauga, ON (Fleet, Commercial & Vendor)

• Philadelphia, PA (Commercial & Vendor)

• Baltimore, MD (Fleet Head Office)

• Stamford, CT (Structured Finance)

• Chicago (Rail)

Core business verticals

Commercial & Vendor Finance

Aviation Finance

Rail Finance

Fleet Management

total assets

$15.3 billion

$21.9 billion

employees

1,700+

2,700+

June 2015

June 2015 Pro Forma

date

* common shares issued and outstanding at $19.13 (TSX close as at August 13, 2015)


Proven Asset Quality

Element is delivering quality asset growth from four proven North American business verticals

Correlation to US Economy

US commercial and industrial activity drives Element’s organic growth in earning assets

Increased Leverage Potential

Increased leverage with lower funding and operating costs drive increased ROE

Fee Income Growth

Growing fee income complements money-over-money returns and drives increased ROE

Investment Highlights

6

Earning Asset Growth

Industry consolidation presents opportunities to acquire quality businesses and asset portfolios

Tax Benefits

Accelerated tax depreciation on rail car assets provides 15+ years of tax deferral on net income

Stable Matched Funding

Deep access to stable funding sources is matched to asset duration, currency and interest rate

Experienced Leadership

Management is very experienced and personally invested in the Company


What We Do

We work closely with each of our funding partners in the life insurance and banking industries to align their investment objectives with our lending criteria and origination processes across each of our four business verticals

7

Our Funding Partners Want We Deliver

Finance AssetsMatched for

• Duration

• Currency

• Interest Rate

● Secured lending

● 48 to 60 month amortizing commercial assets

● 40+ year rail assets (to estimated residual value)

● Forward commitments

● Manufacturer remarketing support

● High barriers to entry

● Service differentiation

● Validating investments for annuities, structured settlements and guaranteed savings products

● Alternative asset class not correlated to commercial or residential real estate

● Capital friendly

Element Financial Corporation

Business Verticals

8

Return on Average Earning Assets (quarter ended June 30, 2015)

Portfolio Allocation 49.0% 15.7% 21.4% 14.0% 100%

FinancialRevenue 8.2% 7.4% 8.9% 8.6% 8.3%

Net InterestMargin 6.6% 4.1% 5.8% 5.8% 6.0%

OperatingExpenses 3.4% 1.1% 1.9% 0.8% 2.4%

Net Income Yield Pre-Tax 3.2% 3.0% 3.9% 5.0% 3.6%

AdvanceRate 96.0% 75.0% 85.0% 65.0% 87.0%

EFN CONSOLIDATEDAVIATION FINANCERAIL FINANCEFLEET MANAGEMENTCOMMERCIAL & VENDOR FINANCE


AVIATION FINANCERAIL FINANCEFLEET MANAGEMENT COMMERCIAL & VENDOR FINANCE

• US$ 3 Billion AAA rated US facility, with $1.1 billion in revolving commitments

• Total combined advance rate in US 96%

• Revolving CAD$ 1.83 billion AAA rated Canadian facilities

• Q2 2015 Secured Debt

• Access to the US ABS market

• April 2014: US$ 340 million

• March 2015: US$ 405 million


• Revolving US$ 0.6 billion US Bank facility

• Combined LifeCo & Bank Commitments of CAD$0.8 billion

• Combined Advance rate in Canada 104%


• US$ 150 million US Bank facility for helicopters

• US$ 128 million S&P rated facility

• Initial advance rate of 80%


Current Funding Facilities

9

billion

$5.3billion

$0.9billion

$1.4billion

$0.3

Senior Line $2.15 B ($0.8 B Outstanding)


Financial Performance

10


Proven Track Record of Growth- Earning Assets

49.0%

15.7%

14.0%

21.4%

11

Fleet Management

Commercial & VendorAviation

Rail

2011$231.5 million

2012$1.3 billion

2013$3.0 billion

2014$9.7 billion

Q2 2015$11.5 billion

Alter Moneta acquisition

TSX listing

Aerospace team acquired

TLS Fleet Services acquired

CoActiv Capital Partners acquired

Nexcap Finance acquired

EFN added to the TSX Composite Index

GE Capital Canadian Fleet Services acquired

GE Capital helicopter portfolio acquired

Trinity Industriesalliance established

Trinity Industries Alliance expanded

PHH Arval acquired


-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

$ m

illio

ns

Rail Aviation Fleet Management Commercial & Vendor

Proven Track Record of Growth- Originations

12


Portfolio Quality

13

99.7%

0.30%

Current Past Due

99.4%

0.60%

Current Past Due

Contractual Delinquencies

As a % of Finance Receivables as at June 30, 2014

Contractual Delinquencies

As a % of Finance Receivables as at June 30, 2015


(1) Reduction due to additional equity raised for PHH Arval acquisition (4) Convertible debentures as both equity and debt(2) Adjusted Operating Income on Average Earning Assets (5) Convertible debentures as debt only(3) Adjusted Operating Income on Average Common Shareholders' Equity (6) Pro forma leverage excluding capital raises at June 29, 2015 for M&A transaction - 4.6:1

Performing on Plan

Highlights

● 15% growth in per share free cash flow over Q1

● 10% growth in per share operating income over Q1

● Leverage ratio increases to 4.6:1 (excluding additional GE Fleet equity raise / 4.19:1 with GE Fleet equity raise included)

● Pre-tax ROA increases 25 bps to 3.55% over Q1

● Pre-tax ROE increases 125 bps to 12.26% over Q1

14

Q12014

Q22014

Q32014

Q42014

Q12015

Q2 2015

Free Operating Cash Flow Per Share

$0.13 $0.14 $0.21 $0.25 $0.27 $0.31

After-tax Adjusted Operating Income per Share

$0.10 $0.11 $0.16 $0.19 $0.21 $0.23

Tangible Leverage (4)

1.81:1 1.53:1 (1) 3.47:1 3.72:1 3.92:1 3.07:1

Tangible Leverage (5) (6)

1.81:1 1.84:1 (1) 4.07:1 4.32:1 4.51:1 4.19:1

Before Tax Return on Assets (2)

3.13% 3.30% 3.06% 3.36% 3.30% 3.55%

Before Tax Return on Equity (3)

7.04% 7.90% 9.69% 10.93% 11.01% 12.26%


Fee Revenue Momentum

Highlights

● Revenue mix continues to shift in favour of fee-based income

● All fee components increased over the previous quarter

● Trending to 45% fee revenue/55% spread revenue by year end

15

2013 2014Q1

2015Q2

2015

Total fee revenue (1) 28% 38% 40% 42%

Spread revenue (2) 72% 62% 60% 58%

Management fees and other revenueQ1

2015Q2

2015

Fleet management fees $38,586 $39,850

Advisory, syndication & other fees $14,387 $23,060

(1) Management fees and other revenues(2) Interest income and rental revenue, net of interest expense


Funding

16

Balance Sheet Capacity to Fund Planned Growth

● Committed facilities amounted to $12.8 billion

● At June 30, 2015, the Company had $3.2 billion in available financing to fund ongoing originations

● Committed facilities are supplemented by access to the ABS market to fund both rail and fleet verticals

● Tangible leverage lower due to convertible debt and preferred shares issued on May 29, 2015 in connection with potential M&A transaction

$1 2.8B

3.07X

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

$-

$2

$4

$6

$8

$10

$12

$14

Q4

-20

11

Q4

-20

12

Q1

-20

13

Q2

-20

13

Q3

-20

13

Q4

-20

13

Q1

-20

14

Q2

-20

14

Q3

-20

14

Q4

-20

14

Q1

-20

15

Q2

-20

15

Bill

ion

s

Cash & Equivalents Senior Facilities

Warehouse Facilities Committed Funding Facilities

Unsecured Convertible Debt

Tangible Leverage


Geographic Diversification

17

As at and for the three month period ending

Q22014

Q22015

Q2Pro forma GE Fleet

CDA US CDA US Oth. US

Originations 58% 42% 26% 74%

Net Financial Income 59% 41% 29% 71%

Earning Assets 59% 41% 31% 69% 30% 70%

US Commercial & Vendor Originations($ millions)

6494 113

160213 225

259 268

428

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

+ 60%

Highlights

● US market remains the dominant influence over Element’s originations, earnings and asset growth

● 74% of originations

● 71% of net finance income

● 69% of earning assets

● US Commercial and Vendor originations grew 60% over the previous record quarter

● Post GE Fleet closing, US market represents 70% of earning assets


GE Transaction

18


How Fleet Management Fits

● Stable customer base with high retention rates and strong credit profile

● Very low credit losses with readily saleable collateral with predictable values

● Efficient capital structure with high advance rates

● Disciplined competitors

● High barriers to entry

● Excellent pipeline visibility with stable and growing “annuity like” cash flows and returns

● Expandable sources of high margin fee income provide earnings and increased customer penetration

● Proven cross-selling wins and opportunities

● Platform built to realize consolidation opportunities

19


• Acquisition of GE Capital Fleet Services Canada

• Established in 1987

• Portfolio purchase and strategic Canada / US cross‐border fleet management alliance

• Portfolio compromised of ~650 regionally diversified customers with low turnover

• Acquisition of TLS Fleet Management from Scotiabank


• Superior credit experience and fee revenue (40%)

• #3 market share in Canadian automotive fleet

• Acquisition of PHH Arval


• Acquisition of U.S. and Canadian assets and operations of PHH Arval

• Acquisition of GE Capital Fleet Services US, Mexico, Australia and New Zealand


• Leading North American position

Element’s Fleet Business Consolidation

20

Element Fleet Management - Cumulative Growth in Net Earning Assets (C$ billions)

201520132012 2014

$0.4 $1.0

$5.4

$13.1


GE Transaction Overview

21

● Element Financial has announced the acquisition of GE Capital’s Fleet Operations in the United States & Mexico and Australia & New Zealand (“GE Fleet”) for C$8.6 billion

● In a related transaction, the sale of GE Capital’s European fleet portfolio to BNP Paribas / Arval strengthens Element’s global fleet management alliance

● Element has been GE’s North American Fleet partner for ~2 years after Element acquired GE Fleet Canada

Operating Regions being Acquired by Element

• North America: U.S. and Mexico

• Australia and New Zealand (“ANZ”)

Transaction Value • C$8.6 billion (including working capital, premium and transaction expenses)

Accretion • ~20% accretion to annual EPS based on fully annualized synergies in the range of US$90-US$95 million

ROE • Annualized ROE expected to reach ~13% by Q4 2016 based on fully annualized synergies in the range of US$90-US$95 million

Leverage • Tangible Leverage of 4.3:1 pro-forma (3.9:1 as of Q1 2015) pursuant to bank covenant and approximately 5.3:1 according to other market convention

Financing • Required equity and equity-linked capital of C$2.7 billion raised in May 2015

• Senior line increased from US$2.0 billion to US$8.5 billion

Credit Rating • Kroll affirms BBB+ rating (stable outlook)

Pro-Forma Assets • Element’s fleet net earning assets to increase to over C$13 billion; total assets to increase to over C$21 billion

Timing • North America expected closing end of Q3 2015; ANZ expected closing Q4 2015


Leveraging Global Capabilities Post Transaction

22

On closing of the two transactions, the Element-Arval Global Fleet Alliance will be capable of managing customer fleets in more than 40 countries

CANADAMontrealMississaugaCalgaryEdmontonVancouver

USASparksHoustonPlantationDenver

MEXICO

Austria BelgiumBrazil Czech RepublicChina Denmark Finland FranceGermanyGreeceHungaryIndiaItalyLuxembourg Morocco NetherlandsPoland PortugalRomaniaRussia Slovakia Spain SwedenSwitzerland Turkey United Kingdom

AUSTRALIA

NEW ZEALAND


23.9%

13.1%

23.1%

11.1%

8.7%

8.6%

5.8%

2.5% 3.3%GE Fleet

Element

ARI

LeasePlan

Enterprise

Wheels

Donlen

Emkay

Others (5)

42.9%

31.0%

9.2%

5.6%

4.2%

2.6% 4.5%

Element

ARI

Foss

Pattison

Emkay

Wheels

Others (4)

Creating the North American Fleet Leader

23

● Element is continuing its strategy of consolidating the North American fleet leasing and services industry

Source: Automotive Fleet, 49th Fact Book

Leading U.S. Fleet Lessors Market Share (1)

Source: Automotive Fleet, 2015 Fact Book

Leading Canadian Fleet Lessors Market Share (1)

(1) Converted from AUD to CAD at 0.94


$5.249.0%

$1.715.7%

$2.321.4%

$ 1.514%

Fleet

Rail

Commercial &Vendor

Aviation$13.874.2%

$1.47.5%

$2.111.0%

$1.37.0%

Fleet

Rail

Commercial &Vendor

Aviation

Attractive Net Earning Assets Profile

24

● Fleet to comprise 74% of Element’s total pro-forma net earning assets

● Element will become the largest fleet company in North America

● Fleet and Rail to comprise over 82% of total pro-forma net earning assets

Element Net Earning Assets (as of June 30, 2015)

Pro-Forma Element Net Earning Assets (as of June 30, 2015)

C$11.5 billion C$18.6 billion


Shared Strengths - Element & GE

25

● Shared Strengths:

— Deep domain expertise

— Compelling value proposition to “reduce total cost of ownership”

— Robust vehicle acquisition, management and transaction processing technology

— Full suite of fleet management service products, and

— Committed to continuous product improvement

● Element has a deeper strength in Strategic Consulting and Accident Management

● GE Fleet has better analytics and customer reporting tools than Element

● Combined Element Fleet will be the leading North American Fleet Management Company with best in class:

— Fleet management service products

— Customer reporting tools, and

— Analytics and strategic consulting services


GE Capital Fleet Overview

26

● GE Fleet provides commercial car and truck financing, and fleet management services

— Established in 1987 and based in Eden Prairie, Minnesota

● Core and highly profitable business, but identified as part of GE “pivot” strategy announced on April 10, 2015

● ~740,000 managed vehicles in total (~580,000 excluding Europe)

— North America: ~480,000

— ANZ: ~100,000

— Europe: ~160,000

● GE Fleet’s European business to be sold to BNP Paribas (Arval partner)

(1)

$5.071%

$0.34%

$1.825%

U.S. Mexico ANZ

Net Earning Assets being Acquired (C$7.1 billion)

(1) 50% of Mexican customers are U.S. multinational companies


Key Metric Element Fleet Management GE Capital Fleet Services US

Total Net Earning Assets C$6.0 billion C$5.0 billion

# of Managed Vehicles ~420k ~450k

% Investment Grade 63.5% 62.1%

Historical Losses < 0.10% < 0.10%

Service Revenue as % of Net Revenue 45% 35%

GE Fleet U.S. Overview

27


GE Fleet U.S. Overview

28

● The GE Fleet U.S.’s portfolio ratings reflect a very close correlation to that of the current Element Fleet portfolio

● GE Fleet U.S.’s portfolio distribution comprises 62.1% of accounts with public investment grade ratings (BBB- or higher), as compared to 63.5% for Element Fleet U.S.

63.5%

21.7%

14.8%

BBB- or Higher

BB+ to BB-

Below BB62.1%

29.7%

8.2%

BBB- or Higher

BB+ to BB-

Below BB

Existing Element Fleet U.S. GE Fleet U.S.


Realizable Synergies

29

● Realizable annualized synergies in the range of US$90-US$95 million

— Integration expected to be completed by Q1 2017

● 20% annual accretion; 16% reflected in 2016 and the remainder in early 2017

● Revenue increases: leveraging increased scale and volume in Maintenance, Vehicle Accident Services, Fuel, Remarketing and Vehicle Acquisition and Upfitting

— Service fees from existing single point-of-contact customer service program and new business pricing discipline

● Expense reductions: combining systems and operations-enabling functions to leverage a single best-in-class North American infrastructure

— North American head office and facilities consolidation

— Risk, legal, technology and finance consolidation

— Improved cost of funds


Integration

30

● Business to be continued under formal Transitional Services Agreement with GE, similar in breadth and performance to previous transactions

● Formal integration plan is well underway, and will be ready for execution by closing

● Oversight by Credit Committee, Risk Committee and Board of Directors

● Quarterly status reporting (report card to investors)

● Expert 3rd parties to be utilized

● Realizable annualized synergies in the range of US$90-US$95 million

— C$25 million realized on integrating of PHH Canadian operations

— Larger combined technology footprint

— Larger integration opportunities in U.S. as book is ~4x the PHH Canadian book

— Savings from cost reductions, efficiencies and procurement savings

— To be realized over an estimated 12 month period

● Valuable experience acquired from the PHH integration and prior GE Canada integration

● Areas of focus:

— Consolidation of technologies

— Merging of offices

— Consolidate operating structure and management

— Procurement opportunities


Improved Balance Sheet Strength

31

● Element’s senior credit facility has been increased from US$2.0 billion to US$8.5 billion through a syndicate of Canadian and international banks

— Extended for a three-year term from the date of closing the acquisition

— Fleet advance rate increased from 90% to 92%, reflecting the high quality of the underlying assets

— Immediate 20bps reduction in funding costs

— Further reduction in funding costs upon Element securing a second credit rating

— Covenant pattern improved reflecting strengthening investment grade credit

— Senior credit facility will be reduced with more cost effective financing over the next 9-12 months

● Kroll affirms BBB+ rating (stable outlook)

— Views the transaction as credit positive

● Balance sheet supports further industry consolidation at the appropriate time


Key Takeaways - Transaction Benefits

32

● Acquisition positions Element as the market leader in North America with leading product and delivery capabilities

● Will strengthen global relationship through an enhanced Global Arval offering

● Ability to provide a global solution, alone or in conjunction with partners

● Strengthens a key division of Element’s business and is in line with communicated strategy

● Expansion of “blue chip” client base

● Provides stable, predictable and low risk cash flows with high barriers to entry

● Service revenue on fleet assets allows for enhanced margins while meeting ROA & ROE targets

● Provides significant synergy potential from platform combination and back-office integration

● Under Element's ownership organic growth potential could be expanded

● Provides scale benefits and synergies on costs and revenue


Growth Strategy

33


Growth Drivers

Equipment Investment Annual Growth Forecast

34

Source: Equipment Leasing & Finance Foundation - 2015 U.S. Economic Outlook

-2%

0%

5%6%

8% 8%

10%

12% 12%

14%

16% 16%

-8%

-6%

1%2% 2%

4%

6% 6%7%

8% 8%9%

-10%

-5%

0%

5%

10%

15%

20%

Mining &Oilfield

Equipment

AgriculturalMachinery

Computers MaterialsHandling

Equipment

RailroadEquipment

Software MedicalEquipment

OtherIndustrial

Equipment

ConstructionMachinery

Ships & Boats Aircraft Trucks

10 Year Average High Estimate Low Estimate


7.37.47.57.67.77.87.98.08.18.28.3

2005 2006 2007 2008 2009 2010 2011 2012

4.64.74.84.95.05.15.25.35.45.55.6

2005 2006 2007 2008 2009 2010 2011 2012

Growth Drivers

35

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

2005 2006 2007 2008 2009 2010 2011 2012

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

2005 2006 2007 2008 2009 2010 2011 2012

Info Processing Equipment – Average Age

Industrial Equipment – Average Age

Transportation Equipment – Average Age

Source: US Bureau of Economic Analysis

Aircraft Equipment – Average Age


Industry Consolidation

36

How the NA Commercial Finance Industry has Evolved since 2008

• Absolute decline in new business volumes and number of industry participants

• Weak participants fail, reorganize or are acquired at opportunistic valuations

• Capex replacement decisions deferred by customers

• Market demand for new equipment financing declines by more than 30% from 2008 to 2009

• Deferred capex spending comes back to the market

• Market demand for new equipment financing expands by +16% per year from 2010 to 2012

• Regulated participants remain constrained from acquisitions

• Balance sheets restored to health

• Experienced new participants funded with private equity and public markets

• Little bank liquidity provided to the industry

• Banks and pension plans able to acquire and provide liquidity to the industry

• Market demand for new equipment driven by US economic expansion

• Manufacturer expansion requires optimized capital allocations

• Strong buyers meet strong sellers to drive economies of scale

• Banks and pension plans begin to acquire commercial finance companies (e.g. CIT; Huntington)

• Specialty finance companies seeking economies of scale (e.g. GATX/GE boxcar fleet, Bohai Leasing/Cronos, AerCap/ILFC)

2008 - 2010 2011 - 2013 2014 - PRESENT

Retrenchment Renaissance Consolidation


Drive Fee Income Growth

● Lease revenues add “stickiness” due to lease term

● Service revenues add “stickiness” due to value created from consultation and demonstrated savings

● Element Fleet fee vs. finance revenue mix at 45%

● GE fee vs. finance revenue mix is less penetrated at 35%

● Newer service offerings include telematics, tolling and violations processing

● Service offering enables access to the large untapped segment of the self-funded/managed fleets

37

Fleet Management

Service Fee RevenueLicensing, Fuel, Accident,

Remarketing, Maintenance, and Other

Lease Revenue


Opportunity for Further Value CreationTr

adin

g M

ult

iple

/ M

arke

t C

ap

Increasing Scale, Capabilities, FundingPristine Balance Sheet and Growth in

High Margin Service Fee Revenue

Well Diversified Traditional Leasing Company

Opportunity to grow high margin service fee revenue

Consolidation of North American Fleet with Continued Strong Presence in each Vertical

Pro-Forma GE Fleet Transaction

Value creation from scale effects / synergies

Driving Higher ReturnsGrowth in high margin

service fee revenue and platform to pursue

additional consolidation opportunities

Leading North American Leasing Company

Fleet, Rail, Commercial & Vendor and Aviation

38


Thank you

39

investor presentation · 2015 q2 2015 total fee revenue (1) 28% 38% 40% 42% spread revenue (2) 72%...

Documents