Ms. Laura Dottori-Attanasio reports

ELEMENT REPORTS STRONG Q3 RESULTS, INCREASES COMMON DIVIDEND 20%, ANNOUNCES STRATEGIC INITIATIVES AND PROVIDES 2024 GUIDANCE

Element Fleet Management Corp. has released strong financial and operating results for the three months ended Sept. 30, 2023.

"Our people are delivering for our clients, and our business is delivering for our investors, as illustrated by Element's strong financial and operating performance in the third quarter and year to date," said Laura Dottori-Attanasio, president and chief executive officer of Element Fleet. "Moreover, our confidence in our outlook is evidenced by the board's approval of management's recommended 20-per-cent increase to Element's common dividend. We remain focused on profitable organic revenue growth, positive operating leverage and increasing free cash flow per share next year, in line with our full-year 2024 results guidance.

"Additionally, we have launched a number of strategic initiatives to evaluate and capitalize on opportunities we see to enhance Element's long-term annual performance outlook over the coming years," Ms. Dottori-Attanasio continued. "Centralizing accountability for our U.S. and Canadian leasing function at a new office in Dublin, Ireland, and establishing a strategic sourcing presence in Asia by opening an office in Singapore are two of the strategic initiatives under way, which will take effect next year. I am confident both initiatives will create value for Element stakeholders: improved service and optionality for our clients; strengthened operations and supply chains for our business; learning and career development opportunities for our people; and enhanced long-term performance for our investors. We look forward to sharing our progress on these and other strategic initiatives over the coming quarters."

Full-year 2024 results guidance

               FULL-YEAR 2024 RESULT RANGES

Net revenue                      $1,365-million-$1.39-billion   
Adjusted operating margin        55.0 per cent-55.5 per cent        
Adjusted operating income        $750-million-$770-million     
Adjusted EPS                     $1.41-$1.46        
Free cash flow per share         $1.75-$1.80        

Element Fleet expects sustained commercial success and resilient client demand for the company's services to underpin full-year 2024 net revenue of between $1,365-million and $1.39-billion. The company is committed to positive operating leverage and expects to generate high-single- to low-double-digit adjusted earnings per share and free cash flow per share growth next year.

Element Fleet's full-year 2024 results guidance ranges exclude non-recurring set-up costs to be incurred by the company as it invests in the strategic initiatives announced today and detailed below.

Excluding the same non-recurring set-up costs related to strategic initiatives, Element Fleet expects to deliver full-year 2023 results near, at or above the high end of its previously provided guidance ranges.

Strategic initiatives

Element Fleet today announced strategic initiatives that will accelerate the company's growth and improve long-term profitability.

These initiatives require approximately $25-million to $30-million (total) in non-recurring set-up costs, the majority of which will be incurred in the next three quarters. The company will provide more details as to the anticipated quarterly cadence of these investments as part of its full-year 2023 result disclosures.

Element Fleet expects the strategic initiatives described below to:

• Contribute profitable net revenue growth and operational efficiencies beginning in 2025;
• Fully recoup the $25-million to $30-million (total) of related investments within approximately 2.5 years;
• Generate between $40-million and $60-million of run-rate net revenue and between $30-million and $50-million of run-rate adjusted operating income by full-year 2028.

Centralizing accountability for U.S. and Canadian leasing

Element Fleet has increased quarterly service revenue on a year-over-year basis in each of the last seven quarters. The company's experience has been that assigning accountability for the performance of distinct Element Fleet service products to individual senior leaders drives focus that results in accelerated growth.

With this in mind, Element Fleet is centralizing accountability for the U.S. and Canadian leasing function under one seasoned executive, Chris Gittens, who has previously led the company's Canadian business and its strategic relationships business focused on megafleets and -- most recently -- was Element Fleet's chief information officer.

Mr. Gittens will consolidate U.S. and Canadian leasing operations at a new Element Fleet office in Dublin, Ireland -- a global leasing centre of excellence.

Centralized accountability for this function will elevate Element Fleet clients' leasing experience, optimize related operations and improve pricing discipline, all to maximize the value of the company's portfolio.

Establishing a strategic sourcing and relationship management presence in Asia

To enhance global procurement capabilities by strengthening existing ties and fostering valuable new sourcing relationships in Asia, Element Fleet will open a small new office in Singapore next year.

This initiative aligns with the company's and its clients' commitments to sustainability and decarbonization given Asia's global leadership position in the development and production of both battery-electric and hybrid vehicles.

Chris Tulloch, the leader of Element Fleet's Australian and New Zealand businesses, is driving this strategic initiative given his lengthy fleet management industry tenure and physical proximity to Asia.

Advancing digitization and automation

Element Fleet is prioritizing investments in digitization and automation as a critical enabler of future growth and operating efficiencies. Joining Element Fleet to accelerate these efforts are David Attard as chief digital officer and Yu Jin as chief information officer.

Mr. Attard and Mr. Jin bring extensive expertise in business-to-business and business-to-consumer solutions to Element Fleet's strong core of digital and information technology talent across the business.

Together, Mr. Attard, Mr. Jin and their teams will leverage Element Fleet's unmatched data set and analytic capabilities to innovate for the company's clients and make Element Fleet more efficient.

Profitable organic revenue growth

Element Fleet increased third quarter net revenue 14.8 per cent over Q3 2022 to $333.8-million. As previously disclosed, Element Fleet benefited from $17-million of non-recurring net revenue in Q3 2022. Controlling for this benefit -- that is, compared with organic Q3 2022 net revenue -- and in constant currency, Element Fleet increased third quarter net revenue 15.6 per cent year over year. AOI grew 11.7 per cent year over year and 16.1 per cent organically and in constant currency to $184.8-million.

Third quarter EPS was 32 cents, up seven cents year over year and three cents quarter over quarter. Q3 adjusted EPS was 35 cents, up nine cents over organic Q3 2022 (up six cents in constant currency) and two cents quarter over quarter on a constant currency basis. Element Fleet generated 42 cents of free cash flow per share in the quarter -- four cents more year over year driven primarily by higher originations and strong commercial performance.

A capital-lighter business model

Third quarter service revenue grew 17.3 per cent or $26.0-million year over year as reported (14.0 per cent or $21.6-million in constant currency) and 3.6 per cent or $6.1-million quarter over quarter (3.7 per cent or $6.3-million in constant currency) to $175.9-million. On an organic basis, year-over-year service revenue grew 21.8 per cent or $31.5-million (18.2 per cent or $27.1-million in constant currency).

Element Fleet syndicated over $1.0-billion of assets in Q3, generating $17.3-million of syndication revenue. The syndication market demand for Element Fleet's assets remains robust, affording the company ready access to this off-balance-sheet source of cost-effective financing.

Expanding free cash flow per share and return of capital to shareholders

Element Fleet generated 42 cents of FCF per share in Q3 2023, 10.5-per-cent or four-cent-per-share growth year over year and 2.4-per-cent or one-cent growth in constant currency. Strong quarterly FCF was driven primarily by strong originations and service revenue.

In addition, the company announced a 20-per-cent increase to its common dividend, from 40 cents to 48 cents per share annually, underscoring the board's confidence in the sustainability of Element Fleet's cash flow generation, financial resilience and favourable outlook. This increase is effective immediately and therefore will be reflected in the fourth quarter 2023 common dividend authorized and declared today, to be paid in respect of Q4 2023 on Jan. 15, 2024.

Element Fleet's common dividend represents 31 per cent of the company's past 12 months (at Sept. 30, 2023) FCF per share, within the company's 25-per-cent to 35-per-cent target payout range. Element Fleet expects its common dividend to continue to grow annually, consistent with FCF per-share growth.

Element Fleet has returned $187.8-million of cash to common shareholders through dividends and buybacks of common shares year to date.

Capital structure and share repurchase authorization

To further optimize the company's balance sheet and mature its capital structure, the company announced today its intention to redeem -- in accordance with the terms of the 6.93-per-cent cumulative five-year rate reset preferred shares, Series A, as set out in the company's articles -- all of its 4.6 million issued and outstanding Series A shares on Dec. 31, 2023, for a redemption price equal to $25 per Series A share, for an aggregate total amount of approximately $115-million, together with all accrued and unpaid dividends up to but excluding the redemption date, less any tax required to be deducted and withheld by the company.

The company has provided notice today of the redemption price and the redemption date to the sole registered holder of the Series A shares in accordance with the terms of the Series A shares as set out in the company's articles. Non-registered holders of Series A shares should contact their broker or other intermediary for information regarding the redemption process for the Series A shares in which they hold a beneficial interest. The company's transfer agent for the Series A shares is Computershare Investor Services Inc. Questions regarding the redemption process may be directed to Computershare Investor Services at 1-800-564-6253 or by e-mail to corporateactions@computershare.com.

The company also currently anticipates using a portion of its free cash flow to redeem all its outstanding 6.21 per cent cumulative five-year rate reset preferred shares, Series C (due June, 2024), and 5.903 per cent cumulative five-year rate reset preferred shares, Series E (due September, 2024), for approximate aggregate total amounts of $128-million and $133-million, respectively. Redeeming all the company's high-cost legacy preferred shares will eliminate approximately $5.9-million in cash dividends per quarter, once all redemptions are complete.

The company also has approximately $168-million in 4.25 per cent convertible debentures as of Sept. 30, 2023, that are convertible into an aggregate of approximately 14.6 million common shares in June, 2024.

Conference call and webcast

A conference call to discuss these results will be held on Tuesday, Nov. 7, 2023, at 8 a.m. Eastern Time.

The conference call and webcast will be available as follows.

Webcast:  at the Chorus Call website

Telephone:  Dial one of the following numbers to speak with an operator.

Canada/United States toll-free:  1-800-319-4610

International:  1-604-638-5340

A taped recording of the conference call will be available through Dec. 7, 2023, by dialling 1-800-319-6413 or 1-604-638-9010 and entering the access code 0419.

Dividends declared

On Nov. 6, 2023, the board authorized and declared a quarterly dividend of 12 cents per outstanding common share of Element Fleet for the fourth quarter of 2023. The dividend will be paid on Jan. 15, 2023, to shareholders of record as at the close of business on Dec. 29, 2023.

Element Fleet's board of directors also declared the following dividends on Element Fleet's preferred shares.

                 DIVIDENDS ON PREFERRED SHARES

Series     TSX ticker   Amount       Record date      Payment date     

Series A   EFN.PR.A     $0.4333125   Dec. 15, 2023    Dec. 29, 2023
Series C   EFN.PR.C     $0.3881300   Dec. 15, 2023    Dec. 29, 2023
Series E   EFN.PR.E     $0.3689380   Dec. 15, 2023    Dec. 29, 2023

Note: This will be the final quarterly dividend on the Series A shares although holders will receive on redemption of the Series A shares all accrued and unpaid dividends up to but excluding the redemption date.

The company's common and preferred share dividends are designated to be eligible dividends for purposes of Section 89(1) of the Income Tax Act (Canada).

Normal course issuer bid

Pursuant to the company's current normal course issuer bid, under which the company has approval from the Toronto Stock Exchange to purchase up to 39,228,719 common shares during the period from Nov. 15, 2022, to Nov. 14, 2023, 3,830,549 common shares were repurchased for cancellation as of Sept. 30, 2023, for an aggregate amount of approximately $70.9-million at a volume-weighted average price of $18.52 per common share.

Element Fleet 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.

In furtherance of the company's return of capital plan, Element Fleet intends to renew its normal course issuer bid for its common shares. If accepted by the TSX, the company would be permitted under the 2023 NCIB to purchase for cancellation, through the facilities of the TSX or such other permitted means, up to 10 per cent of the public float (calculated in accordance with TSX rules) of Element Fleet's issued and outstanding common shares during the 12 months following such TSX acceptance at prevailing market prices (or as otherwise permitted). The actual number of the company's common shares, if any, that may be purchased under the 2023 NCIB and the timing of any such purchases will be determined by the company, subject to applicable terms and limitations of the 2023 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 2023 NCIB. If the 2023 NCIB renewal is accepted by the TSX, any subsequent renewals of the 2023 NCIB will be in the discretion of the company and subject to further TSX approval.

Element Fleet's unaudited interim condensed consolidated financial statements and related management's discussion and analysis as at and for the three- and nine-month periods ended Sept. 30, 2023, have been filed on SEDAR+.

About Element Fleet Management Corp.

Element Fleet (TSX: EFN) is the largest publicly traded pure play automotive fleet manager in the world, providing the full range of fleet services and solutions to a growing base of loyal, world-class clients -- corporates, governments and not-for-profits -- across North America, Australia and New Zealand. Element Fleet enjoys proven resilient cash flow, a significant proportion of which is returned to shareholders in the form of dividends and share buybacks; positive operating leverage; and an evolving capital-lighter business model that enhances return on equity. Element Fleet's services address every aspect of clients' fleet requirements from vehicle acquisition, maintenance, accidents and remarketing to integrating electric vehicles and managing the complexity of gradual fleet electrification. Clients benefit from Element Fleet's expertise as the largest fleet solution provider in its markets, offering unmatched economies of scale and insight used to reduce fleet operating costs and improve productivity and performance.

We seek Safe Harbor.