Element Reports Q2 Fleet Originations Double Year/Year



Element Financial reported financial results for the three-month and six-month periods ending June 30, 2016. Pending approval by the company’s shareholders on September 20, 2016, Element will separate into two publicly traded companies, effective October 3, 2016.

The following report on Element’s Fleet Management Business was excerpted from the news release:

Element Fleet Management

Total earning assets at June 30, 2016 were $12.73 billion versus $12.76 billion as at the end of the previous three-month period and $5.2 billion at June 30, 2015. Originations for Q2/16 were $1.70 billion versus $1.59 billion for the previous three-month period ending March 31, 2016 and $820.7 million for Q2/15.

Service and fee revenue was $126.7 million versus $126.7 million on a currency neutral basis for the previous three-month period ending March 31, 2016 and $44.6 million for the same period last year. Services and fee revenue accounted for 57% of total fleet revenue versus 56% for the previous three-month period ending March 31, 2016 and 52% for the same period last year.

Net interest income and rental revenue, net of interest expense and provision for credit losses, for Q2/16 was $97.1 million versus $98.6 million on a currency neutral basis for the previous three-month period ending March 31, 2016 and $40.6 million for Q2/15. Operating expenses for Q2/16 were $99.6 million versus $102.1 million on a currency neutral basis for the previous three-month period ending March 31, 2016 and $44.3 million in Q2/15.

Return on average assets in Element Fleet Management is expected to reach 4% exiting 2016 and to exceed 4% in 2017. Return on tangible equity is expected to be 22% exiting 2016 and to be in the range of 22% to 24% in 2017. EPS is expected to be in the range of $1.05 to $1.15 for 2016 dependent on further industry consolidation, tuck-in acquisitions and currency fluctuations and to grow by between 10% and 12% in 2017.

“Element Fleet Management had a very strong second quarter with record origination volumes and a further uptick to 57% in the contribution that service and fee revenue makes to our revenue mix,” said Bradley Nullmeyer, Element Fleet Management’s CEO. “I’m also pleased to report that we are now in the closing innings of our integration of the fleet management business that we acquired from GE Capital last June and have confirmed that our integration savings will achieve an annualized run rate of US$100 million by the end of 2016 putting us on a clear path to exit the year with a 4% ROAA.”

“Element Financial Corporation’s consolidated results reflect the impact of currency fluctuations during the period and the deliberate steps we are taking to transition our commercial finance business, to be operated as ECN Capital, to an asset management business model,” added Steven Hudson, Element Financial’s CEO.

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