Welcome!

News Feed Item

Element Delivers $0.14 of Free Operating Cash Flow EPS in Q2 on $4.1 Billion of Earning Assets

-- After Tax Adjusted Operating EPS of $0.11 in line with consensus

TORONTO, ONTARIO -- (Marketwired) -- 08/12/14 -- Element Financial Corporation (TSX:EFN) ("Element" or the "Company"), one of North America's leading equipment finance companies, today reported financial results for the three-month and six-month periods ending June 30, 2014 with organic originations of $0.8 billion contributing to a 7.9 percent increase in the Company's total earning assets to $4.1 billion as at June 30, 2014 versus $3.8 billion as at March 31, 2014.

Free operating cash EPS was $0.14 for the three-month period and $0.27 for the six month period ending June 30, 2014. Based partly on the continued growth of the Company's book of railcar assets combined with the growing book of earning assets, the Company is not expected to pay cash taxes for the next twenty years. After tax adjusted operating income per share was $0.11 for the three-month period and $0.21 for the six-month period ending June 30, 2014 in line with the consensus of analyst estimates.

"Organic origination volumes were strong across each of our four business verticals in Q2 setting Element up to exceed the $3.9 billion pre-PHH origination target that we had established for 2014," said Steven Hudson, Element's Chairman and CEO. "Trinity industries recently affirmed that US$1 billion of rail car leases are expected to flow to Element in 2014 and we are aiming to exceed this target," added Mr. Hudson.

While Element's Aviation and Rail verticals have predictable annual origination volumes, these can be subject to less predictable quarter to quarter variances. The Aviation order book tends to see the strongest closings in the fourth quarter accounting for up to 40 percent of annual volumes. Rail originations, which flow to Element in large aggregated transactions, to a lesser extent can also affected by some seasonality.

The Company's US Commercial & Vendor Finance unit reported new originations of $213.3 million for the three month period ending June 30, 2014 versus $160.5 million originated in the preceding quarter. Originations from Element's Canadian Commercial & Vendor platform were $158.4 million versus $141.0 million in the previous quarter. Aviation Finance reported originations of $149.4 million in Q2, including $32.4 million of a $100 million facility approved for CargoJet during the period, versus originations of $96.2 million in the preceding quarter. Element's Fleet Management unit reported originations of $138.2 million in Q2 versus $113.4 million in the preceding quarter. The Railcar Finance vertical, which reported $131.2 million of new railcar leases in Q1 in addition to the acquisition of a US$396 million portfolio of existing railcar leases from Trinity Industries, contributed $133.2 million of new railcar leases in Q2. Organic originations, excluding acquisitions, from all four verticals for the period amounted to $793 million in Q2 for a 23 percent increase over the $642 million of organic originations in the previous period.

Financial revenue for the three-month period ending June 30, 2014 was $75.1 million or 7.91 percent of average earning assets versus $66.5 million in the previous quarter or 7.90 percent of average earning assets. Interest expense was $23.0 million for the three-month period ending June 30, 2014 or 2.42 percent of average earning assets versus $21.5 million in the previous quarter or 2.55 percent of average earning assets. Net financial income for the three-month period ending June 30, 2014 was $52.1 million for the quarter versus $45.0 million in the preceding quarter.

The Company's adjusted operating expense ratio continued to decline during Q2 to 2.19 percent of average earning assets versus 2.22 percent in the preceding quarter and is on track to achieve the post PHH integration target ratio of 2.0 percent by the end of 2014.

The Company's allowance for credit losses was $11.8 million or 0.37 percent of finance receivables as at June 30, 2014 versus $11.1 million or 0.40 percent as at March 31, 2014 resulting from slightly lower write-offs during the quarter on larger earning assets base. Delinquencies remained constant during the quarter at 0.40 percent of total finance receivables as at June 30, 2014 compared to 0.40 percent as at March 31, 2014.

At the end of the period, the Company had total available sources of capital of $2.52 billion versus $1.37 billion at the end of the preceding period as a result of the expansion of the Company's senior revolving credit facility which added $800 million in additional availability and the Company's US revolving secured borrowing facility which was increased by $350 million to accommodate the growing origination in the US Commercial and Vendor business. The Company's average financial tangible leverage ratio was 1.79:1 as at June 30, 2014 compared to 1:80 at March 31, 2014. Subsequent to the end of the quarter, on closing the acquisition of PHH Arval and the financing associated with this acquisition, Element's financial tangible leverage increased to 3.57:1 resulting from the higher debt advance rate on those specific assets and is expected to reach 4.0:1 by the end of 2014.

"The Company has reinforced its capital structure and negotiated improved terms to its senior revolving credit facility that enable Element to gain access to longer-term and lower-cost rated debt market facilities," noted Mr. Hudson. "Work is well-advanced in discussions with our rating agencies and we expect to be actionable in these rated debt markets by the fourth quarter of this year," added Mr. Hudson.

At the end of the period, the Company had 189.5 million common shares outstanding as well as 4.6 million preferred Series A shares, 5.1 million preferred Series C shares and 5.0 million preferred Series E shares outstanding.

Unaudited Interim Statements and MD&A

Element's unaudited interim financial statements and related management discussion and analysis as at and for the three-month and six-month periods ended June 30, 2014 have been filed on SEDAR (www.sedar.com).

Conference Call

A conference call to discuss the results with analysts will be held on Wednesday, August 13, 2014 at 8:00 a.m. ET. The conference call can be accessed by dialing the following numbers:

North America Toll-Free: 1-866-696-5910 passcode 8764790

Local & International: 1-416-340-2217 passcode 8764790

The call will be recorded and can be accessed until August 27, 2014 by dialing 905-694-9451 or 1-800-408-3053 and entering the pass code 9173123.

Non-IFRS Measures

The Company's unaudited condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and accounting policies adopted are in accordance with IFRS.

The Company believes that certain Non-IFRS Measures can be useful to investors because they provide a means by which investors can evaluate the Company's underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business of a given period. Throughout this Press Release, management used a number of terms and ratios which do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other organizations. A full description of these measures can be found in the Management Discussion and Analysis that accompanies the financial statements for the quarter ended June 30, 2014.

The following table provide a reconciliation of non-IFRS to IFRS measures related to the Company:


                                                                            
                                 As at and for the        As at and for the 
                                three months ended        six months ended  
----------------------------------------------------------------------------
$ thousands (except                                                         
 % and per share            June 30, March 31,  June 30,  June 30,  June 30,
 amounts)                       2014      2014      2013      2014      2013
----------------------------------------------------------------------------
                                                                            
Reported and                                                                
 adjusted income                                                            
 measures                                                                   
Net income (loss)       A    11,128    15,836   (13,882)   26,964    (9,197)
Adjustments:                                                                
  Share-based                                                               
   compensation               3,661     4,194     2,818     7,855     4,270 
  Amortization of                                                           
   intangible                                                               
   assets from                                                              
   acquisitions                 835     1,026       343     1,861       682 
  Integration costs               -         -     5,000         -     8,000 
  Transaction costs          13,107         -    20,500    13,107    20,500 
  Provision                                                                 
   (recovery) of                                                            
   income taxes               2,603     5,246      (282)    7,849     2,285 
----------------------------------------------------------------------------
Adjusted operating                                                          
 income                 B    31,334    26,302    14,497    57,636    26,540 
Provision for taxes                                                         
 applicable to                                                              
 adjusted operating                                                         
 income                      (6,279)   (5,647)   (4,046)  (11,926)   (7,445)
----------------------------------------------------------------------------
After-tax adjusted                                                          
 operating income   D=B-C    25,055    20,655    10,451    45,710    19,095 
----------------------------------------------------------------------------
Selected cash flow                                                          
 amounts                                                                    
Free operating cash                                                         
 flow                   B    31,334    26,302    14,497    57,636    26,540 
----------------------------------------------------------------------------
Selected statement                                                          
 of financial                                                               
 position amounts                 -                                         
Finance                                                                     
 receivables,                                                               
 before allowance                                                           
 for credit losses                                                          
 (1)                    E 3,164,453 2,996,601 2,174,650 3,164,453 2,174,650 
Allowance for                                                               
 credit losses          F    11,767    11,086    10,973    11,767    10,973 
----------------------------------------------------------------------------
Finance                                                                     
 receivables, net                                                           
 (1)                G=E-F 3,152,686 2,985,515 2,163,677 3,152,686 2,163,677 
Equipment under                                                             
 operating leases                                                           
 (1)                    H   909,783   813,480         -   909,783         - 
----------------------------------------------------------------------------
Total earning                                                               
 assets             I=G+H 4,062,469 3,798,995 2,163,677 4,062,469 2,163,677 
  Average earning                                                           
   assets, net          J 3,795,053 3,365,598 1,546,145 3,578,232 1,471,585 
----------------------------------------------------------------------------
Goodwill and                                                                
 intangible assets      K   182,804   180,674   182,673   182,804   182,673 
----------------------------------------------------------------------------
Accounts payable                                                            
 and accrued                                                                
 liabilities            L   103,976   112,590    80,917   103,976    80,917 
----------------------------------------------------------------------------
Secured borrowings      M 2,356,990 2,467,016 1,539,011 2,356,990 1,539,011 
Unsecured                                                                   
 convertible                                                                
 debentures             N   299,264         -         -   299,264         - 
----------------------------------------------------------------------------
Total debt              O 2,656,254 2,467,016 1,539,011 2,656,254 1,539,011 
----------------------------------------------------------------------------
  Average debt          P 2,509,655 2,182,433 1,093,655 2,346,948 1,089,666 
----------------------------------------------------------------------------
Total shareholders'                                                         
 equity                 Q 1,726,331 1,610,781   879,560 1,726,331   879,560 
Preferred shares        R   357,243   235,142         -   357,243         - 
----------------------------------------------------------------------------
Common                                                                      
 shareholders'                                                              
 equity             S=Q-R 1,369,088 1,375,639   879,560 1,369,088   879,560 
  Average common                                                            
   shareholders'                                                            
   equity               T 1,371,122 1,356,019   635,079 1,366,362   548,494 
  Average total                                                             
   shareholders'                                                            
   equity               U 1,622,345 1,504,591   635,079 1,563,793   548,494 
----------------------------------------------------------------------------

Non-IFRS and IFRS Key Annualized Operating Ratios and per Share Information:


                                                                            
----------------------------------------------------------------------------
                                                     As at and for the      
                                                    three months ended      
----------------------------------------------------------------------------
                                                June 30, March 31,  June 30,
$ thousands (except % and per share amounts)        2014      2014      2013
----------------------------------------------------------------------------
Free operating cashflow per share                                           
 (basic) (1)                           (B-Y)/W $   0.14  $   0.13  $   0.11 
After-tax adjusted operating                                                
 income per share (basic)              (D-Y)/W $   0.11  $   0.10  $   0.08 
----------------------------------------------------------------------------
Key annualized operating ratios                                             
Financial leverage ratio                 (O)/Q     1.54      1.53      1.75 
Tangible leverage ratio            (O+L)/(Q-K)     1.79      1.80      2.32 
Average financial leverage ratio           P/U     1.55      1.45      1.72 
Allowance for credit losses as a                                            
 percentage of finance receivables         F/E     0.37%     0.37%     0.50%
Adjusted operating income on                                                
 average common shareholders'                                               
 equity                                (B-Y)/T     7.90%     7.04%     9.13%
Adjusted operating income on                                                
 average earning assets                    B/J     3.30%     3.13%     3.75%
After-tax adjusted operating                                                
 income on average common                                                   
 shareholders' equity                  (D-Y)/T     6.07%     5.37%     6.58%
After-tax adjusted operating                                                
 income on average earning assets          D/J     2.64%     2.45%     2.70%
Per share information                                                       
Number of shares outstanding                                                
 (including special warrants)                V  189,503   189,503   155,116 
Weighted average number of shares                                           
 outstanding (basic)                         W  189,503   189,215   129,362 
Weighted average number of shares                                           
 outstanding (diluted)                       X  194,808   194,114   129,362 
Cumulative preferred share                                                  
 dividends during the period                 Y $  4,254  $  2,442  $      - 
Net income (loss) per share                                                 
 (basic)                               (A-Y)/W $   0.04  $   0.07  $  (0.11)
Net income (loss) per share                                                 
 (diluted)                             (A-Y)/X $   0.04  $   0.07  $  (0.11)
Book value per share                       S/V $   7.22  $   7.26  $   5.67 
----------------------------------------------------------------------------
(1) Prior period free operating cashflow per share (basic) has been restated
 for the change in definition applied in the current period.                

                                                                            
----------------------------------------------------------------------------
                                                     As at and for the      
                                                     six months ended       
----------------------------------------------------------------------------
$ thousands (except % and per share amounts)    June 30, 2014  June 30, 2013
----------------------------------------------------------------------------
Free operating cashflow per share                                           
 (basic) (1)                           (B-Y)/W   $      0.27    $      0.22 
After-tax adjusted operating                                                
 income per share (basic)              (D-Y)/W   $      0.21    $      0.16 
----------------------------------------------------------------------------
Key annualized operating ratios                                             
Financial leverage ratio                 (O)/Q          1.54           1.75 
Tangible leverage ratio            (O+L)/(Q-K)          1.79           2.32 
Average financial leverage ratio           P/U          1.50           1.99 
Allowance for credit losses as a                                            
 percentage of finance receivables         F/E          0.37%          0.50%
Adjusted operating income on                                                
 average common shareholders'                                               
 equity                                (B-Y)/T          7.46%          9.68%
Adjusted operating income on                                                
 average earning assets                    B/J          3.22%          3.61%
After-tax adjusted operating                                                
 income on average common                                                   
 shareholders' equity                  (D-Y)/T          5.71%          6.96%
After-tax adjusted operating                                                
 income on average earning assets          D/J          2.55%          2.60%
Per share information                                                       
Number of shares outstanding                                                
 (including special warrants)                V       189,503        155,116 
Weighted average number of shares                                           
 outstanding (basic)                         W       189,360        118,597 
Weighted average number of shares                                           
 outstanding (diluted)                       X       194,698        118,597 
Cumulative preferred share                                                  
 dividends during the period                 Y   $     6,696    $         - 
Net income (loss) per share                                                 
 (basic)                               (A-Y)/W   $      0.11    $     (0.08)
Net income (loss) per share                                                 
 (diluted)                             (A-Y)/X   $      0.10    $     (0.08)
Book value per share                       S/V   $      7.22    $      5.67 
----------------------------------------------------------------------------
(1) Prior period free operating cashflow per share (basic) has been restated
 for the change in definition applied in the current period.                

Selected Financial Information and Financial Ratios

The following table summarizes key financial data to be read in conjunction with the unaudited interim condensed consolidated financial statements of the Company as at and for three months ended June 30, 2014, March 31, 2014 and June 30, 2013. Such financial statements are prepared in accordance with IFRS and are reported in Canadian dollars.


                                                                            
                                             As at and for the              
                                            three months ended              
----------------------------------------------------------------------------
(in $000's for stated values,                                               
 except ratios and per share    June 30, 2014 March 31, 2014   June 30, 2013
 amounts)                                   $              $               $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
After tax adjusted operating                                                
 income (loss) per share                                                    
 (basic)                                 0.11           0.10           0.08 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Free operating cash flows per                                               
 share (basic)                           0.14           0.13           0.11 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial revenue                      75,077         66,500         33,960 
----------------------------------------------------------------------------
Adjusted operating income              31,334         26,302         14,497 
----------------------------------------------------------------------------
After tax adjusted operating                                                
 income                                25,055         20,655         10,451 
----------------------------------------------------------------------------
Income/(loss) before taxes             13,731         21,082        (14,164)
----------------------------------------------------------------------------
Net income/(loss)                      11,128         15,836        (13,882)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                        5,483,252      4,234,963      2,533,370 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance receivables, net            3,152,686      2,985,515      2,163,677 
Equipment under operating                                                   
 leases                               909,783        813,480              - 
----------------------------------------------------------------------------
Total earning assets                4,062,469      3,798,995      2,163,677 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
New originations                      792,603      1,084,014        397,896 
Loan acquisitions                           -              -        488,692 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Secured borrowings                  2,356,990      2,467,016      1,539,011 
Convertible debentures                299,264              -              - 
----------------------------------------------------------------------------
Total debt                          2,656,254      2,467,016      1,539,011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average finance receivables         2,993,305      2,811,352      1,546,145 
Average equipment under                                                     
 operating leases                     801,748        554,246              - 
----------------------------------------------------------------------------
Average earning assets              3,795,053      3,365,598      1,546,145 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average debt outstanding            2,509,655      2,182,433      1,093,655 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Number of shares outstanding                                                
 (including special warrants)         189,503    189,502.737    155,115.941 
Weighted average number of                                                  
 shares outstanding (including                                              
 special warrants)                    189,503    189,214.813    129,362.171 
Weighted average number of                                                  
 shares outstanding (diluted)         194,808    194,113.733    129,362.171 
Total shareholders' equity          1,726,331      1,610,781        879,560 
Average common shareholders'                                                
 equity                             1,371,122      1,356,019        635,079 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per share                                                 
 (basic)                                 0.04           0.07          (0.11)
Net income (loss) per share                                                 
 (diluted)                               0.04           0.07          (0.11)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                                                            
                                             As at and for the              
                                             six months ended               
----------------------------------------------------------------------------
(in $000's for stated values,                                               
 except ratios and per share           June 30, 2014           June 30, 2013
 amounts)                                          $                       $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
After tax adjusted operating                                                
 income (loss) per share                                                    
 (basic)                                        0.21                   0.16 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Free operating cash flows per                                               
 share (basic)                                  0.27                   0.22 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial revenue                            141,577                 65,798 
----------------------------------------------------------------------------
Adjusted operating income                     57,636                 26,540 
----------------------------------------------------------------------------
After tax adjusted operating                                                
 income                                       45,710                 19,095 
----------------------------------------------------------------------------
Income/(loss) before taxes                    34,813                 (6,912)
----------------------------------------------------------------------------
Net income/(loss)                             26,964                 (9,197)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                               5,483,252              2,533,370 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Finance receivables, net                   3,152,686              2,163,677 
Equipment under operating                                                   
 leases                                      909,783                      - 
----------------------------------------------------------------------------
Total earning assets                       4,062,469              2,163,677 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
New originations                           1,876,617                694,147 
Loan acquisitions                                  -                572,735 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Secured borrowings                         2,356,990              1,539,011 
Convertible debentures                       299,264                      - 
----------------------------------------------------------------------------
Total debt                                 2,656,254              1,539,011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average finance receivables                2,899,728              1,471,585 
Average equipment under                                                     
 operating leases                            678,504                      - 
----------------------------------------------------------------------------
Average earning assets                     3,578,232              1,471,585 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average debt outstanding                   2,346,948              1,089,666 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Number of shares outstanding                                                
 (including special warrants)                189,503            155,115.941 
Weighted average number of                                                  
 shares outstanding (including                                              
 special warrants)                           189,360            118,596.525 
Weighted average number of                                                  
 shares outstanding (diluted)                194,698            118,596.525 
Total shareholders' equity                 1,726,331                879,560 
Average common shareholders'                                                
 equity                                    1,366,362                548,494 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per share                                                 
 (basic)                                        0.11                  (0.08)
Net income (loss) per share                                                 
 (diluted)                                      0.10                  (0.08)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The following table summarizes key operating ratios to be read in conjunction with the unaudited interim condensed consolidated financial statements of the Company as at and for the three months ended:


                                                                            
                                    As at and for the      As at and for the
                                three-month periods ended  six months ended 
----------------------------------------------------------------------------
                               June 30, March 31, June 30, June 30, June 30,
                                   2014      2014     2013     2014     2013
----------------------------------------------------------------------------
Ratios                                                                      
Financial leverage ratio (2)      1.54      1.53     1.75     1.54     1.75 
                                                                            
Tangible leverage ratio (3)       1.79      1.80     2.32     1.79     2.32 
                                                                            
Average financial leverage                                                  
 ratio                            1.55      1.45     1.72     1.50     1.99 
                                                                            
Allowance for credit losses as                                              
 a percentage of finance                                                    
 receivables                      0.37%     0.37%    0.50%    0.37%    0.50%
                                                                            
Annualized credit loss                                                      
 provision as a percentage of                                               
 average finance receivables      0.52%     0.43%    0.28%    0.47%    0.36%
                                                                            
Portfolio average remaining                                                 
 life (in months, excluding                                                 
 equipment under operating                                                  
 leases)                          27.3      28.8     22.6     27.3     22.6 
                                                                            
Adjusted operating income on                                                
 average common shareholders'                                               
 equity                           7.90%     7.04%    9.13%    7.46%    9.68%
                                                                            
Adjusted operating income on                                                
 average earning assets           3.30%     3.13%    3.75%    3.22%    3.61%
                                                                            
After-tax adjusted operating                                                
 income on average common                                                   
 shareholders' equity             6.07%     5.37%    6.58%    5.71%    6.96%
                                                                            
After-tax adjusted operating                                                
 income on average earning                                                  
 assets                           2.64%     2.45%    2.70%    2.55%    2.60%
                                                                            
Book value per share           $  7.22  $   7.26  $  5.67  $  7.22  $  5.67 
----------------------------------------------------------------------------
(1) All are ratios presented on an annualized basis.                        
(2) Financial leverage ratio is computed as total debt (the sum of secured  
 borrowings and extendible convertible debentures) divided by total         
 shareholders equity.                                                       
(3) Tangible leverage ratio is computed as the sum of secured borrowings,   
 convertible debentures and accounts payable and accrued liabilities,       
 divided by shareholders equity less goodwill and intangible assets.        

Results of Operations - For the three months ended June 30, 2014, March 31, 2014 and June 30, 2013 and six months ended June 30, 2014 and June 30, 2013

The following table sets forth a summary of the Company's results of operations for the three months ended June 30, 2014, March 31, 2014 and June 30, 2013 and six months ended June 30, 2014 and June 30, 2013:


                                                                            
                                         For the                For the     
                                   three-month periods     six month periods
                                          ended                  ended      
----------------------------------------------------------------------------
                               June 30, March 31, June 30, June 30, June 30,
(in 000's for stated values,       2014      2014     2013     2014     2013
 except per unit amounts)             $         $        $        $        $
----------------------------------------------------------------------------
Net Financial Income                                                        
Interest income                  51,547    48,545  29,564   100,092  56,437 
Rental revenue, net (1)          14,501    10,174       -    24,675       - 
----------------------------------------------------------------------------
Total interest income and                                                   
 rental revenue, net             66,048    58,719  29,564   124,767  56,437 
Interest expense                 22,985    21,533   9,212    44,518  18,255 
----------------------------------------------------------------------------
Net interest income and rental                                              
 revenue, net before provision                                              
 for credit losses               43,063    37,186  20,352    80,249  38,182 
Provision for credit losses       3,868     2,958   1,099     6,826   2,670 
----------------------------------------------------------------------------
Net interest income and rental                                              
 revenue, net                    39,195    34,228  19,253    73,423  35,512 
Other revenue items              12,897    10,739   5,495    23,636  12,031 
----------------------------------------------------------------------------
Net financial income             52,092    44,967  24,748    97,059  47,543 
Operating Expenses                                                          
Salaries, wages and benefits     12,564    12,567   7,994    25,131  15,156 
General and administration                                                  
 expenses                         8,194     6,098   2,257    14,292   5,847 
Share-based compensation          3,661     4,194   2,818     7,855   4,270 
----------------------------------------------------------------------------
                                 24,419    22,859  13,069    47,278  25,273 
----------------------------------------------------------------------------
Business acquisition costs                                                  
Amortization of intangibles                                                 
 from acquisition                   835     1,026     343     1,861     682 
Integration costs                     -         -   5,000         -   8,000 
Transaction costs                13,107         -  20,500    13,107  20,500 
----------------------------------------------------------------------------
                                 13,942     1,026  25,843    14,968  29,182 
----------------------------------------------------------------------------
Net income/(loss) before taxes   13,731    21,082 (14,164)   34,813  (6,912)
Tax expense/(recovery)            2,603     5,246    (282)    7,849   2,285 
----------------------------------------------------------------------------
Net income/(loss) for the                                                   
 period                          11,128    15,836 (13,882)   26,964  (9,197)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net income/(loss) per share                                                 
 (basic)                           0.04      0.07   (0.11)     0.11   (0.08)
Net income/(loss) per share                                                 
 (diluted)                         0.04      0.07   (0.11)     0.10   (0.08)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Rental revenue, net is represents rental income earned on equipment     
 under operating leases, less depreciation.                                 

Overall Performance Highlights

The Company's earning assets, consisting of the Company's Finance receivables and Equipment under operating leases, have grown substantially during the period to June 30, 2014 to $4,062.5 million from $3,002.3 million reported at December 31, 2013. The growth over December 31, 2013 is primarily due to the combined effect of the total new originations for the year in the amount of $1,876.6 million, helped by the large contribution of the Trinity vendor program, net of repayments, syndication activities, amortization of equipment under operating leases and changes in foreign exchange rates of $816.4 million.

The Company is reporting a net income of $11.1 million for the three months ended June 30, 2014, compared to $(13.9) million in the comparative period ended June 30, 2013, and $15.8 million in the immediately preceding quarter ended March 31, 2014. Net income for the six month period ended June 30, 2014 was $27.0 million, compared to $(9.2) million for the comparative six month period ended June 30, 2013. Basic net income per share was $0.04 for the three-months ended June 30, 2014, compared to $(0.11) for the comparative period ended June 30, 2013 and $0.07 for the immediately preceding quarter ended March 31, 2014. Basic net income per share for the six month period ended June 30, 2014 was $0.11 versus $(0.08) for the comparative six month period ended June 30, 2013. The improved results over the comparative periods are due to the timing of business acquisition costs which do not relate to maintaining operating activities and were incurred in the previous quarter but not in the current quarter.

As indicated previously, management believes that adjusted operating income is the most appropriate operating measure of the Company's performance as it excludes non-cash items related to share-based compensation and business acquisition costs which do not relate to maintaining operating activities. For the three months ended June 30, 2014, the Company is reporting adjusted operating income of $31.3 million and after-tax adjusted operating income per share of $0.11, compared to $14.5 million in adjusted operating income or $0.08 in after tax operating income per share for the comparative three months ended June 30, 2013, and compared to $26.3 million in adjusted operating income or $0.10 in after tax operating income per share for the immediately preceding quarter ended March 31, 2014. For the six month period ended June 30, 2014, the Company is reporting adjusted operating income of $57.6 million and after-tax adjusted operating income per share of $0.21, compared to $26.5 million and $0.16 per share in the comparative six month period ended June 30, 2013.

As indicated previously, Management also believes that Free Operating Cash Flows and Free Operating Cash Flows per Share as described in the Non-IFRS Measures section of this MD&A are a key statistics to properly assess the operating performances of the Company to mostly reflect the substantial value being created by the very long deferral of cash income taxes and the investment value produced by that deferral. So, while the Company is reporting after-tax adjusted operating income per share of $0.11 and $0.21 for the three and six months ended June 30, 2014, free operating cash flows per share reaches $0.14 and $0.27 per share, respectively.

Consolidated Financial Position

The following table sets forth a summary of the Company's consolidated financial position as of the dates presented:


                                                                       As at
----------------------------------------------------------------------------
                                          June 30,   March 31,  December 31,
(in 000's for stated values, except           2014        2014          2013
 per unit amounts)                               $           $             $
----------------------------------------------------------------------------
                                                                            
Cash                                        35,727      42,093        12,401
Restricted cash                            141,035     102,066       103,550
Cash held in escrow                        929,834           -             -
Finance receivables                      3,152,686   2,985,515     2,763,228
Equipment under operating leases           909,783     813,480       239,055
Derivative financial instruments               525       1,129             -
Deferred tax assets                         29,761      31,729        28,231
Non-portfolio assets                       283,901     258,951       308,188
----------------------------------------------------------------------------
Total assets                             5,483,252   4,234,963     3,454,653
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Accounts payable and accrued                                                
 liabilities                               103,976     113,254        80,917
Subscription receipts escrow liability     929,834           -             -
Secured borrowings                       2,356,990   2,467,016     1,893,910
Convertible debentures                     299,264           -             -
Derivative financial instruments            37,437       7,747         3,014
Deferred tax liabilities                    29,420      36,165        30,156
----------------------------------------------------------------------------
Total liabilities                        3,756,921   2,624,182     2,007,997
Shareholders' equity                     1,726,331   1,610,781     1,446,656
----------------------------------------------------------------------------
Total liabilities and shareholders'                                         
 equity                                  5,483,252   4,234,963     3,454,653
----------------------------------------------------------------------------
----------------------------------------------------------------------------

About Element Financial Corporation

With total assets in excess of $10 billion, Element Financial Corporation is one of North America's leading equipment finance companies. Element operates across North America in four verticals of the equipment finance market - Commercial & Vendor Finance, Aviation Finance, Railcar Finance and Fleet Management.

This release includes forward-looking statements regarding Element and its business. Such statements are based on the current expectations and views of future events of Element's management. In some cases the forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "plan", "anticipate", "intend", "potential", "estimate", "believe" or the negative of these terms, or other similar expressions intended to identify forward-looking statements, including, among others, statements regarding new originations in the current quarter, the anticipated pipeline of prospective transactions, and proposed purchases of portfolios of finance assets. The forward-looking events and circumstances discussed in this release may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Element, including risks regarding the equipment finance industry, economic factors, risks related to completion of the proposed purchases of portfolios of finance assets, and many other factors beyond the control of Element. No forward-looking statement can be guaranteed. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statement or information. Accordingly, readers should not place undue reliance on any forward-looking statements or information. A discussion of the material risks and assumptions associated with this outlook can be found in Element's 2013 MD&A, and 2013 Annual Information Form, all of which have been filed on SEDAR and can be accessed at www.sedar.com. Accordingly, readers should not place undue reliance on any forward-looking statements or information. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Element undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, sha...
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, showed how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningful f...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
An IoT product’s log files speak volumes about what’s happening with your products in the field, pinpointing current and potential issues, and enabling you to predict failures and save millions of dollars in inventory. But until recently, no one knew how to listen. In his session at @ThingsExpo, Dan Gettens, Chief Research Officer at OnProcess, discussed recent research by Massachusetts Institute of Technology and OnProcess Technology, where MIT created a new, breakthrough analytics model for ...
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
@DevOpsSummit at Cloud taking place June 6-8, 2017, at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long developm...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera MyS...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.