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Element Doubles Originations in Q4; All Verticals Deliver Record Volume

February 21, 2014, 07:00 AM
Filed Under: Corporate Earnings

Element Financial Corporation (Element” or “the Company”) today reported financial results for the 12-month and three-month periods ending December 31, 2013 with all five business verticals delivering record originations volumes contributing to a 30 percent increase in the Company’s Net Finance Receivables of $3 billion as at December 31, 2013 versus $2.3 billion as at September 30, 2013. After tax adjusted operating income increased to $15.0 million in Q4-2013 producing $0.09 of operating earnings per share for the period in line with the consensus of analysts’ estimates.

“We were very active across all segments of the business in the fourth quarter which allowed us to show the core strength of this management team’s ability to grow Element’s asset base both organically and through strategic acquisitions,” said Steven Hudson, Element’s Chairman and CEO. “This record performance in the fourth quarter, together with continued favourable trends for the acquisition of new capital equipment in the markets we serve in North America, positions Element for continued strong growth in 2014 across each of our business verticals,” added Mr. Hudson.

Across all segments, new originations grew to $997 million for the three-month period ended December 31, 2013 versus $410 million in Q3-2013.

  • Commercial and Vendor Finance (Canada) accounted for $196 million of Q4 originations versus $166 million in the previous period.
  • Commercial and Vendor Finance (US) accounted for $113 million of Q4 originations versus $94 million in the previous period.
  • Aviation Finance accounted for $462 million of Q4 originations, which included a $243 million contribution from the acquisition of GE Capital Corporation’s helicopter portfolio, versus $92 million in the previous period.
  • Fleet Management accounted for $114 million of Q4 originations versus $58 million in the previous period.
  • The Rail Finance vertical, which was established in December of 2013 following the launch of Element’s strategic alliance with Dallas-based Trinity Industries, contributed $112 million to Q4 originations.

The Company’s adjusted operating expense ratio continued to decline during the fourth quarter to 2.26 percent of average portfolio assets versus 2.49 percent in the third quarter. The Company’s financial leverage ratio declined to 1.31:1 as at December 31, 2013 versus 1.93:1 as at September 30, 2013.

“As we continue to add scale to our asset base through 2014, we expect our OPEX ratio to continue to fall and our leverage ratio to begin to rise allowing us to push more of our top line growth directly through to operating earnings and better returns for our shareholders,” noted Mr. Hudson. “For example, in the fourth quarter of 2013, we absorbed more than $1 million of unallocated transaction pursuit costs into our operating expense line as we invested resources in identifying and analyzing various acquisition opportunities that have yet to be harvested. While we expect to continue to invest in pursuing these and other acquisition opportunities over the near term, the impact of these costs is expected to diminish as we add further scale to the business throughout 2014,” added Mr. Hudson.

Element expects to organically originate more than $3.8 billion of new equipment loans and leases during 2014 across the Company’s five North American market verticals representing an increase of 80% over the $2.1 billion Element organically originated in 2013.

To read the full earnings release, click here.

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