Element Fleet Management Corp.

Element reported Q3 2026 net revenue of $321 million, up 5% year over year. Adjusted EPS increased 6% to $0.35, free cash flow per share rose 7% to $0.45, and return on equity expanded to 20.2%. Services revenue was $164 million, up 5%, and net financing revenue was $138 million, up 6%. Adjusted operating expenses were $139 million, up 8% year over year, and operating margin was 56.8%. Through the first nine months of 2026, net revenue increased 10%, adjusted EPS grew 14%, and adjusted free cash flow per share increased 9%. Management said 2026 full-year originations will be below prior guidance and other full-year financial metrics are expected to be at or near the lower end of guidance ranges. Looking ahead to 2027, Element expects net revenue growth to moderate to a low-single-digit range excluding FX, with a reported revenue headwind of approximately 2% to 3% from the Mexican peso versus the U.S. dollar based on current assumptions.

Laura Dottori-Attanasio said Element still has a strong franchise, recurring revenue, and substantial organic growth opportunity, but acknowledged the company has not met its own expectations on commercial execution. She said the team had become too concentrated on mega opportunities and is now refocused on pipeline quality, mid-market opportunities, and self-managed conversions. Her tone was candid but confident: she repeatedly stressed that the market opportunity remains intact and that the changes underway should translate into better growth, margin improvement, and stronger EPS/free cash flow per share over time.

Heath Valkenburg emphasized that the quarter was solid financially despite slower top-line momentum, highlighting $321 million of net revenue, $0.35 adjusted EPS, $0.45 free cash flow per share, and 20.2% ROE. He said adjusted operating expenses were $139 million and that the company remains on track for about $20 million of annualized productivity savings beginning in 2027. He also noted debt-to-capital ended at 76.7%, within the 73% to 77% target range, and said the company remained active on buybacks with nearly 11 million shares repurchased year to date and plans to renew its NCIB after November 2026, subject to TSX approval.

Analysts pressed management on the causes of slowing growth, asking whether weaker win rates, lower service penetration, or broader macro conditions were to blame. Laura said client retention is still strong at 97%-98% and that the main problem is commercial execution, not a structural issue or evidence of market share loss; Heath added that product penetration is lagging in U.S. and Canada and that services per unit has been flat there. Questions also focused on the 2027 outlook, FX headwinds from Mexico, Waymo timing, and capital allocation; management said the low-single-digit growth view reflects both slower commercial growth and a roughly 2% to 3% FX headwind, while Waymo revenue should build over time, not immediately.