Element Fleet Management Corp.

Thank you for standing by. This is the conference operator. Welcome to the Element Fleet Management First Quarter 2023 Financial and Operating Results Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the prepared remarks, there will be an opportunity to ask questions from analysts. To join or rejoin the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. Element wishes to remind listeners that some of the information in today's call includes forward-looking statements. These statements are based on assumptions that are subject to significant risks and uncertainties and the company refers you to the cautionary statements and risk factors in its year-end and most recent MD&A, as well as its most recent AIS, for a description of these risks, uncertainties, and assumptions. Although management believes that the expectations reflected in the statements are reasonable, it can give no assurance that the expectations reflected in any forward-looking statements will prove to be correct. Elements earning Press release, financial statement, MD&A, supplementary information documents, quarterly investor presentation, and today's call include references to non-GAAP measures, which management believes are helpful to present the company and its operations in ways that are useful to investors. A reconciliation of these non-GAAP measures to IFRS measures can be found in the MD&A. I would now like to turn the call over to Jay Forbes, President and Chief Executive Officer of Element. Please go ahead.

Thank you, operator, and good evening to all of you joining us to discuss Element's Q1 results and our improved outlook for the business this year. I would first like to spend a bit of this time speaking to how far Element has come over the last five years, the momentum we have in this current environment, and where the business is heading. before turning things over to Laura and Frank. In 2018, a number of us, myself included, saw something quite special in Element. That belief provided us with the impetus and courage to launch a three-pronged strategy to transform the core fleet management business, returning its focus to delivering a consistent superior client experience, to deleverage and strengthen the balance sheet, and to rid the company of non-core distractions. Not too long after launching this transformation strategy, I started to notice a change. The wind shifted from head-on to an angle we could catch, and our momentum began to build in the right direction. While we know that the fruits of transformation would have been born earlier, but for the pandemic and the OEM production shortages, the work we put into transformation and the ensuing pivot to growth has perfectly positioned Element to make 2023 another record year in which we can fully harness the power of the tailwinds that now propel us forward. Positive momentum we have built is readily sustainable. Thanks to the strong commercial capabilities we've developed, the scalability of our operating platform, our competitive differentiators, such as strategic consulting, Arc by Element, and most importantly, our client-facing people, And our momentum is sustainable thanks to that best-in-class leadership team that we have in place who are committed to see the existing proven strategy take hold. When I think about our investments in our commercial capabilities and the scalable operating platform, coupled with the favorable market dynamics and consolidation taking place in this industry, I have every reason to believe Laura and the leadership team can sustain and indeed build on current momentum for years to come. And Laura is exactly the right leader to ensure this organization does so. When I expressed to the boards my intention to retire from the CEO role, I made clear that I was not working towards a specific ending. Instead, I wanted to ensure we found the right successor with a strong cultural fit. We needed someone with experience managing a large and complex balance sheet, and experience with a B2B commercial strategy. However, perhaps the most salient requirement from my perspective was someone that would embrace and be embraced by our organization. It was an exhaustive search, but her patience paid off. We found that proverbial needle in the haystack with Laura. Not only does she possess the requisite capabilities, more importantly, she understands the importance of preserving and enhancing Elements' unique culture. Our culture of client centricity, of collaboration, and of continuous improvement is the backbone of this organization and has been foundational to every success we've achieved over the last five years. One of my fondest memories of my time here involves seeing that spirit of collaboration and continuous improvement in action. It was early 2020, and the ANZ leadership team traveled to Mexico. to understand the incredible success of the Mexican commercial growth strategy. I'll never forget the humility and curiosity that are leaders' models, first in listening and then learning, and then importing those learnings to apply them in A and Z in 2020, and later that same year into the US and Canada. This habit of best practice sharing is something that we continue to foster, and it's one of the many benefits of working in a global organization. Our continuous improvement mindset is another example of how far we've come. We are a high-performance organization, and we constantly challenge ourselves to be better, whether it be our employee experience, our client experience, or the business itself. This is especially true in our commercial groups, where we're constantly scrutinizing and evolving our sales and marketing practices to ensure that we can capture an outsized share of opportunities in the fleet management market. And whether this is winning clients from competitors or advancing our self-managed mandate, the continuous improvement mindset ensures we have best-in-class commercial approaches across all markets. In short, we built an organization that is experiencing tremendous positive momentum through the combination of investment in our people, processes, systems, and culture, and opportunities with well-established market leadership in three regions that are experiencing very favorable dynamics for organic growth. The strength and stability of the company and the positive outlook we have for its future provide me with both the satisfaction and confidence to bring my time with Element to a close. In doing so, I'd like to take this opportunity to say a heartfelt thank you to the 2,500-strong team here across all of our locations, from the frontline staff to our executive group and board of directors, all of them have done so much to drive our success over the last five years. It has been incredibly satisfying for me to be part of this organization, and I will truly miss the sense of belonging and camaraderie that I've experienced during my time with Element. I've led many organizations, through turnarounds and transformations, and none have been as special or as successful as this one. The reason for this success is undoubtedly the people that make up our company and their willingness to engage and to be challenged in pursuit of the ambitious objectives that we set forth. Watching this play out over the past five years has been the highlight of my career. As I step out of the CEO role and move into my role as strategic advisor to Laura, I do so with great confidence and peace of mind, knowing Laura is as committed to our strategy and to the people that make it a reality as I have been. With that Laura, the floor is yours.

Thanks Jay. Good morning everyone and thank you for joining us on this call this evening. Before we discuss our first quarter results, I do want to express my gratitude to Jay, for his leadership and his dedication to our company. Under his guidance, Element has become a market leader and a client-centric growth engine. Our clients, investors, and team members are deeply appreciative of Jay's contributions. Now, during my comprehensive onboarding program over the past three months, I focused on our three strategic priorities. The first, achieving profitable organic revenue growth The second, advancing a capital lighter business model. And thirdly, our approach to capital allocation, which really consists of appropriate investments in our business, followed by return of capital to our shareholders. Now, regarding our first priority of profitable organic revenue growth, I did spend time with our clients, commercial leaders, and sales teams in each country we served, to understand how we can expand our share of wallet with existing clients and attract new ones. And with our talented team and culture, I do believe six to eight percent annual organic growth is very achievable. Now regarding our second priority of advancing a capital lighter business model through services revenue growth and through syndication, I see ample room for services revenue growth within our existing client base and the self-managed fleet market. And as proven this quarter, our access to the U.S. market for vehicle lease syndication remains robust. And as you would have seen, our first quarter results are impressive. We had 8.9% net revenue growth, quarter over quarter margin expansion, record pre-tax return on equity, and double-digit free cash flow per share growth. But I'll leave Frank to provide more details on these numbers. As we look ahead, I'm confident in our strategy and ability to continue generating value for our stakeholders. We have pent-up demand for fleet vehicles that remain strong across our client base. Our order backlog is expected to remain at elevated levels through 2023 and into 2024. and that's despite increasing originations. This is a direct reflection of that pent-up demand from existing clients, combined with the ongoing success of our commercial and operating teams at winning and onboarding new clients. Consumer demand for new vehicles is also relevant, because any weakening that could happen there could lead to further OEM allocation to the fleet segment, which of course would benefit Elements. Our momentum, coupled with current market dynamics, has us updating our outlook for this year. Not only is our near-term outlook improving, but our clients and our prospects' continued interest in the shift towards hybrid and battery electric vehicles presents a long-term runway of growth opportunity for us. Through further expanding our arc by element services, we'll continue to provide our clients with innovative solutions that meet the revolving needs in this area. And with that, I'll turn it over to Frank for more details on our first quarter results and the year ahead. Over to you, Frank.