- Record Financial Performance: Adjusted EPS rose 7% to $0.30, free cash flow per share grew 8% to $0.40, and net revenue hit $290M, up 6% YoY.
- Client Expansion: Gained 46 new clients and 265 service enrollments, with 43% of $390M in client savings opportunities actioned.
- Strategic Growth Drivers: Service revenue to lead growth via new clients and product penetration, while Dublin initiatives target $30M–$45M net revenue by 2028.
- Operational Efficiency: Achieved 2.5% operating leverage despite 5% expense growth, with 9% client order volume increase and 6% higher committed pipeline.
Strong Engagement in Self-Managed Space
The company is seeing strong engagement and activity in the self-managed space, with companies that previously managed their fleets in-house now looking for expert-led solutions. This trend is expected to drive growth, particularly with the company's tech initiatives, including Autofleet and Samsara partnerships, which are expected to drive returns in client experience, operational efficiencies, and margin improvement.
Service Revenue Growth
Element expects service revenue to be the largest contributor to growth in 2025 and beyond, driven by new client wins, increasing product penetration, and bringing new products and services to market. The company is focused on converting opportunities and onboarding material contracts to drive growth in service revenue.
Net Financing Revenue Yield
The net financing revenue yield has increased by 20 basis points quarter-over-quarter, driven by the leasing initiative and funding structure improvements. As stated by the management, "We're happy with the result, particularly given the absorption of extra debt from the preferred share redemptions and Autofleet acquisition."
Capital Deployment
The company's top priorities for capital deployment are reinvesting in the business for long-term growth, paying dividends, and share repurchases. Element Fleet also needs to manage its leverage to maintain an investment-grade rating. With a P/E Ratio of 29.32 and a Dividend Yield of 1.39%, the company's valuation appears reasonable considering its growth prospects.
Partnerships and Growth Initiatives
The partnership with Modis in the vehicle reimbursement market is expected to drive growth, and the company expects to see some growth in this space. The Dublin initiatives are on track to achieve the target of generating $30 million to $45 million in net revenue by the end of 2028. The partnerships with Samsara and Modis are expected to add a dollar amount to revenue growth in 2026, not a percentage increment to the traditional 6.5% to 8.5% revenue guidance.