Element Fleet Management (TSE:EFN) capped its fourth quarter and full-year 2025 earnings call by highlighting what management described as a “year of record performance,” supported by continued investment in technology, expanding client activity, and growth across key revenue lines. The company also raised its annual common dividend by 15% and provided 2026 guidance calling for continued revenue growth and further gains in adjusted earnings and free cash flow per share.
Full-year 2025 performance and shareholder returns
Chief Executive Officer Laura Dottori-Attanasio said 2025 delivered record net revenue and double-digit growth in both adjusted earnings and free cash flow per share. Management pointed to an adjusted return on equity of 17.9%, which it attributed to the company’s capital-light model. Element increased its annual common dividend by 15% to $0.60 per share, citing cash generation and confidence in its outlook.
Chief Financial Officer Heath said net revenue for 2025 totaled $1.2 billion, up 9% year-over-year, with strength “across all of our revenue streams.” On capital allocation, he said Element repurchased 5.4 million shares during 2025 at an average price of $32.10, returning $269 million to shareholders through dividends and buybacks—about 43% of adjusted free cash flow. Adjusted free cash flow per share rose 15% to $1.57, while capital expenditures were $71 million, which management described as “well contained.” Element ended the year with a debt-to-capital ratio of 76.9%, within its target range.
Revenue drivers: services, financing, syndication, and originations
Heath broke down 2025 results by revenue stream. Services revenue was $623 million, up 5% year-over-year, which he attributed primarily to increased penetration and utilization across the client base. He noted vehicles under management (VUM) rose 3% during the year and said the revenue impact builds over time as onboarding and implementation progress, which the company expects to support services growth in coming quarters.
Net financing revenue (NFR) totaled $498 million, up 11% year-over-year, driven by leasing and funding efficiencies, higher gain on sale in Mexico, and growth in net earning assets. The core NFR yield was 4.73%, expanding 35 basis points versus 2024.
Syndication revenue was $64 million, up 50% year-over-year, despite a $1.1 billion reduction in assets syndicated. Heath attributed the increase largely to favorable mix, reinstatement of bonus depreciation, and ongoing demand for Element’s syndication product.
Originations in 2025 were $6.5 billion, down 4% year-over-year and below prior guidance, which management said was previously communicated. Heath attributed the shortfall to seasonal softness in summer ordering and later-year model availability that pushed deliveries into future periods, while emphasizing that demand remained strong. Order volumes reached record levels of $2 billion in the fourth quarter and $6.2 billion for the year, which the company said provided “good visibility” into originations for the first half of 2026.
In Q&A, Heath said originations can fluctuate based on client behavior and should be viewed alongside other metrics, including VUM growth, net earning assets, and yield. He also noted the order-to-delivery cycle extended modestly for vehicles requiring upfit, pushing some fourth-quarter orders into 2026.
Fourth-quarter items and operating leverage
Management said reported fourth-quarter results were affected by several non-recurring items, most of which were non-cash. Heath listed the largest as:
- A $130 million deferred tax asset adjustment tied to updated jurisdictional profit expectations;
- A $52 million write-off of the legacy ordering platform as Element transitions to the Autofleet technology platform;
- $9 million of restructuring and acquisition-related costs related to the Car IQ transaction, which closed on Dec. 31.
Heath said these items were excluded from adjusted results and were not indicative of underlying operating performance. On the deferred tax item, he told analysts it reflected a partial derecognition of a historical deferred tax asset related to internal intercompany funding structure changes. He said it did not reflect deterioration in operating performance, had no impact on effective or cash tax rates, and would not affect the company’s ability to utilize tax losses in the future.
On an adjusted basis, operating expenses were $520 million in 2025, up 7%, reflecting ongoing investment in digitization, scalability, and product expansion. Adjusted operating margin was 56.2%, up 90 basis points year-over-year, and Element reported adjusted EPS of $1.24, up 13%.
For the fourth quarter alone, Heath said adjusted EPS was $0.33, up 24% year-over-year, with record quarterly revenue of $313 million. Services revenue in the quarter was a record $163 million. He said operating leverage in Q4 was 7.3%, and adjusted ROE was 18.5%.
Technology, mobility, acquisitions, and 2026 guidance
Dottori-Attanasio emphasized technology initiatives and product expansion as key strategic priorities. She said Element’s Dublin leasing initiative remained on track to meet previously communicated 2028 run-rate targets of $30 million to $45 million in revenue and $22 million to $37 million in adjusted operating income, with a targeted two-and-a-half-year payback.
On electrification, she said electric vehicles under management increased 36% year-over-year to about 129,000 vehicles. Element’s charging platform is live in the U.S. and Canada, with plans to expand globally in 2026 through new partnerships.
The CEO also described progress in “Element Mobility,” focused on connected mobility including telematics, route optimization, and adjacent solutions. She said integrating Autofleet has allowed Element to bring more development in-house, lower structural costs, and increase agility. Element launched its Element ONE driver app in March and expects broader rollout through 2026, while its digital ordering platform remains on track with an initial MVP targeted for the first half of 2026.
In December, Element acquired Car IQ, adding embedded, vehicle-initiated payment capabilities. In Q&A, Dottori-Attanasio said Car IQ enables vehicles to act as payment nodes to reduce fraud, modernize billing, and help clients capture operational efficiencies. She cited due diligence showing one client case where fuel spend was reduced by nearly 14% by eliminating card misuse, and said Element plans to integrate Car IQ into Element ONE and the driver app. Financially, she said Car IQ is expected to be “a little dilutive” in 2026 due to implementation and conversion, with “modest accretion” projected in 2027 on both adjusted operating income and free cash flow bases. She later added Element intends to offer Car IQ to both existing and new clients, emphasizing client choice and noting Element’s longstanding partnership with WEX.
Management also discussed partnerships with Samsara and Motus. Dottori-Attanasio said the partnerships were intended to add services for clients and said Element had already activated units and clients through referral programs. She reiterated an expectation that in 2026 these partnerships would contribute “about mid-single digit revenue.”
On insurance, Dottori-Attanasio said Element’s January 2025 launch of Element Risk Solutions in partnership with Hub “missed the mark,” citing gaps in product offering and go-to-market, and an underestimation of complexity. She said the company still sees an opportunity but has put it “on the back burner” while making organizational changes and refining the approach before a relaunch; Element continues to sell the product.
For 2026, Heath guided to net revenue of $1.28 billion to $1.305 billion and originations of $6.5 billion to $6.9 billion, alongside adjusted operating income of $720 million to $745 million and adjusted operating margin of 56.3% to 57.3%. Element expects adjusted EPS of $1.40 to $1.45 and adjusted free cash flow per share of $1.67 to $1.72. Heath said the guidance ranges were provided prior to any material foreign exchange fluctuations or adverse impacts from changes in global trade agreements or broader political uncertainty.
About Element Fleet Management (TSE:EFN)
Element Financial separated into two independent public companies in October 2016. The former company now consists of Element Fleet Management, a global fleet management company, and ECN Capital, a commercial finance company. Element Fleet Management provides management services and financing for commercial vehicle and equipment fleets. The company’s suite of fleet management services deals with acquisition and financing, to program management and remarketing. ECN Capital operates across North America in three verticals of the equipment finance market: commercial and vendor finance, rail finance, and commercial aviation finance.
