annualmeetingofshareholders - element fleet

elementcorp.com Element Financial Corpora1on

ANNUAL MEETING OF SHAREHOLDERS MOND A Y J U N E 1 5 , 2 0 1 5


Forward Looking Statements Certain informa:on in this presenta:on is forward-‐looking and related to an:cipated financial performance, events and strategies. When used in this context, words such as “will”, “an:cipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. Forward-‐looking statements relate to, among other things, Element Financial Corpora:on’s (“Element”) objec:ves and strategy; future cash flows, financial condi:on, opera:ng performance, financial ra:os, projected asset base and capital expenditures; Element’s an:cipated dividend policy; an:cipated cash needs, capital requirements and need for and cost of addi:onal financing; future assets; demand for services; Element’s compe::ve posi:on; and an:cipated trends and challenges in Element’s business and the markets in which it operates.

The forward-‐looking informa:on and statements contained in this presenta:on reflect several material factors and expecta:ons and assump:ons of Element including, without limita:on: that Element will conduct its opera:ons in a manner consistent with its expecta:ons and, where applicable, consistent with past prac:ce; the general con:nuance of current or, where applicable, assumed industry condi:ons; the con:nuance of exis:ng (and in certain circumstances, the implementa:on of proposed) tax and regulatory regimes; certain cost assump:ons; the con:nued availability of adequate debt and/or equity financing and cash flow to fund its capital and opera:ng requirements as needed; and the extent of its liabili:es. Element believes the material factors, expecta:ons and assump:ons reflected in the forward-‐looking informa:on and statements are reasonable but no assurance can be given that these factors, expecta:ons and assump:ons will prove to be correct.

By their nature, such forward-‐looking informa:on and statements are subject to significant risks and uncertain:es, which could cause the actual results and experience to be materially different than the an:cipated results. Such risks and uncertain:es include, but are not limited to, opera:ng performance, regulatory and government decisions, compe::ve 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 cau:oned not to place undue reliance on forward-‐looking statements as actual results could differ materially from the plans, expecta:ons, es:mates or inten:ons expressed in the forward-‐looking statements. Except as required by law, Element disclaims any inten:on and assumes no obliga:on to update any forward-‐looking statement, whether as a result of new informa:on, future events or otherwise.

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Harold D. Bridge (1) (5) CA, MBA, FCA, CF, ICD.D

Steven Hudson FCA, BBA

The Hon. Brian Tobin (1)

Corporate Governance – Board of Directors

Notes (1)  Independent Board member (2)  Chair of the Risk Commicee (3)  Chair of the Corporate Governance and Compensa:on Commicee

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

William LovaT (1) Chairman CFA, FCPA, FCGA Former Execu:ve Vice President and CFO of Great-‐West Lifeco Inc., London Life and Canada Life(35 year career with Great-West Life)

Paul Stoyan (1)(3) LLB, ICD.D Chairman, Gardiner Roberts LLP; Corporate board member

Gordon D. Giffin (1) BA, JD

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 Deloice and Touche for 32 years specializing in financial advisory, audit, corporate finance and M&A

Richard Venn (1) (2) Vice-‐ Chairman BASc, MBA Chairman of DBRS; Former Senior Execu:ve Vice President at Canadian Imperial Bank of Commerce (40 year career with CIBC)

Pierre Lor1e (1) (4) BSc. Appl., P. Eng., MBA Senior Business Advisor at Dentons Canada LLP; previously the President of Bombardier Transporta:on, Bombardier Capital, Bombardier Interna:onal and Bombardier Aerospace Regional Aircrak

Joan Lamm-‐Tennant (1) PHD

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

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

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Board Mandate

Primary Board Ac1vi1es

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●  Review, approve and monitor the Corpora:on’s strategic, business and capital plans

●  Review, approve and verify the appropriateness of the Corpora:on’s risk management ac:vi:es

●  In conjunc:on with the CEO, review the Corpora:on’s overall disclosure policies

●  Review the Corpora:on’s approach to human resource management and execu:ve compensa:on and succession plans for the Chair, Vice-‐Chair, CEO and other execu:ve officers

●  Review Corpora:on’s approach to corporate governance and ethics repor:ng

The responsibili:es, powers and opera:on of the Board are set out in its mandate.

The primary ac:vi:es of the Board are as follows:


CommiTee Mandates

Credit CommiTee Audit CommiTee

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●  Oversee the Corpora:on’s credit prac:ces, policies and procedures

●  Monitor the development, origina:on and performance of the Corpora:on’s asset pormolio from a credit risk perspec:ve

●  Consider, evaluate and approve on behalf of the Board, specified credit transac:ons above the management credit approval limits established by the Board

●  Review and recommend for Board approval proposed significant acquisi:ons and other strategic ini:a:ves and investments

●  Receive and review reports concerning the integra:on of acquisi:ons

●  Oversee the Corpora:on’s financial statements and financial disclosures, including interim and annual audited financial statements, MD&A, prospectuses and other securi:es offering documents

●  Responsible for oversight of external auditor work and approval of annual audit plan

●  Approve any retainer of auditors to perform non-‐audit services

●  Review the Corpora:on’s system of internal controls ●  Establish appropriate whistleblower procedures


CommiTee Mandates

Compensa1on & Corporate Governance Risk CommiTee

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●  Review overall compensa:on philosophy and structure for execu:ve and management to ensure compensa:on is in line with the Corpora:on’s objec:ves and does not encourage unnecessary excessive risk taking

●  Develop performance measures that will be used to measure corporate performance and incen:ve bonus payouts for execu:ves and assess performance against such measures

●  Recommend for Board approval the terms of the directors compensa:on program

●  Review the Corpora:on’s corporate governance policies; ●  Examine composi:on and size of Board and make policy

recommenda:ons aimed at enhancing Board and Commicee effec:veness

●  Maintain policies and procedures to ensure sufficient director reten:on procedures and con:nuing educa:on and development programs are in place

●  Ensure succession planning is in place for CEO and senior management

●  Review and consider with senior management the Corpora:on’s risk capacity, risk taking philosophy and approach to determining an appropriate balance between risk and reward

●  Review and evaluate the Corpora:on’s significant financial and non-‐financial risk exposure, including market, credit, liquidity, opera:onal, reputa:onal, strategic, regulatory and business risks, and the steps management has taken to mi:gate, monitor and control such risks exposures

●  Ensure that those managing risk within the Corpora:on have adequate authority, independence and resources to perform the monitoring


Frequency of Mee1ngs Element has ac:ve and engaged Board Commicees which meet regularly to carry out their prescribed du:es and responsibili:es

●  Regular quarterly mee:ngs are scheduled for a comprehensive business review

●  Periodic mee:ngs are scheduled as circumstances warrant

●  In April 2014, the Risk Commicee of the Board was established

●  In 2014, the following mee:ngs were held

Mee1ngs 2014

Board 6

Audit 4

Credit 9

Compensa:on & Governance 6

Risk 2

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Element At a Glance

Offices across North America •  Toronto, ON (Corporate) •  Montreal, QC (Avia:on) •  Mississauga, ON (Fleet, Commercial & Vendor)

•  Philadelphia, PA (Commercial & Vendor)

•  Bal:more, MD (Fleet Head Office)

•  Stamford, CT (Structured Finance) •  Chicago (Rail)

1,700+ employees

$5 billion market capitaliza:on EFN

TSX Composite index member

$12.5 billion total assets

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Core business ver1cals

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Commercial & Vendor Finance

Avia:on Finance

Rail Finance

Fleet Management


Industry Consolida1on

How the North American Commercial Finance Industry has Evolved since 2008

•  Absolute decline in new business volumes and number of industry par:cipants

•  Weak par:cipants fail, reorganize or are acquired at opportunis:c valua:ons

•  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 par:cipants remain constrained from acquisi:ons

•  Balance sheets restored to health •  Experienced new par:cipants funded with private equity and public markets

•  Licle 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 op:mized capital alloca:ons

•  Strong buyers meet strong sellers to drive economies of scale

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

•  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 Consolida:on

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Execu1ng on Growth Strategy -‐ Earning Assets

Fleet Management Commercial & Vendor Avia:on Rail

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2012 $1.3 billion

2013 $3.0 billion

2014 $9.7 billion

2015 $15 billion

-‐  Aerospace team acquired

-‐  TLS Fleet Services acquired

-‐  CoAc:v Capital Partners acquired

-‐  Nexcap Finance acquired -‐  EFN added to the TSX

Composite Index

-‐  GE Capital Canadian Fleet Services acquired

-‐  GE Capital helicopter pormolio acquired

-‐  Trinity Industries alliance established

-‐  Trinity Industries Alliance expanded

-‐  PHH Arval acquired

-‐  $2.78 billion capital raise


2014 Milestones

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2014 Achievements January Completed US$396 million acquisi:on of leased railcars from Trinity Industries

February Sold $125 million of 5-‐year rate rest preferred shares

March Completed US$118 million acquisi:on of leased railcars from Trinity Industries

April Raised US$430 million in ABS market to fund rail assets

May Appointed Joan Lamm-‐Tennant to the Board of Directors

June Raised $1.25 billion to acquire PHH ‘s North American fleet management business

June Provided $100 million aircrak financing facility for Cargojet

August Hired Credit Suisse structured finance team

September Received BBB+ issuer and senior unsecured ra:ng from Kroll

October Expanded senior credit facility to $1.6 billion with nine par:cipa:ng ins:tu:ons

November Senior management invests an addi:onal $7.1 million in Element securi:es

December Appointed Bill Lovac and Richard Venn to the Board of Directors


2015 YTD Achievements January Increased 2015 EPS guidance from $0.99 to $1.05

February Strengthened Sales Capability of Rail Finance Team

February Reported $0.25 per share of Free Opera:ng Cash Flow(1) in Q4 and $0.76 for FY 2014 on $9.7 billion of Earning Assets

March Completed US$405 Million Offering of Rail Equipment Notes

March Announced the Appointment of William Lovac as Chairman and Richard Venn as Vice-‐Chairman

April Appointed the Honourable Brian Tobin to the Board of Directors

May Reported $0.27 per share of Free Opera:ng Cash Flow in Q1-‐2015 on $10.8 billion of Earning Assets

May Completed $2.78 Billion Offering of Subscrip:on Receipts, Debentures and Series G Preferred Shares

2015-‐YTD Milestones

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EFN Share Performance Rela1ve to TSX Indices

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Ques:ons

annualmeetingofshareholders - element fleet

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