Stephen Takacsy’s Top Picks for April 29, 2025

Stephen Takacsy’s Top Picks for April 29, 2025

By BNNBloomberg.ca Staff

Published: April 29, 2025 at 1:26PM EDT

Stephen Takacsy, president, CEO and CIO, Lester Asset Management

FOCUS: Canadian stocks

Top picks: EQB, Altus, Tecsys

MARKET OUTLOOK:

We saw a positive environment for stocks and bonds in 2025 with low inflation, falling interest rates and strong employment, however U.S. President Donald Trump’s hostile words and trade war against its closest allies and traditional trading partners has clouded the picture. He has caused most of these countries to push back by imposing retaliatory tariffs, boycotting U.S. products, and selling U.S. stocks and bonds. This has created economic and geopolitical uncertainty, put pressure on U.S. Treasury yields and caused the U.S. dollar to drop, as well as caused an immeasurable amount of damage to the U.S.’s reputation.

With such unpredictability, we’ve ensured that our Canadian equity portfolio is resilient with minimum impact from tariffs and low exposure to a consumer slowdown. We are also taking advantage of market downdrafts to add to our holdings that are being unfairly punished such as Savaria, Jamieson Wellness, Pollard Banknote and CCL.

Canadian bonds have been volatile, influenced by the U.S. bond market which is being pressured by Trump’s tariffs. These are seen as inflationary in the short term, but also recessionary affecting consumers and corporate credit spreads, and in the longer term the U.S. government’s credibility and creditworthiness from high debt levels combined with higher interest rates. Foreign investors are fleeing the U.S. market and higher treasury yields are warning Trump that his onerous tariffs are bad policy. Our Fixed income strategy continues to be invested in short term higher-yielding corporate bonds, which are trading at attractive yields of five per cent to seven per cent, well ahead of inflation, and with low risk.

TOP PICKS:

EQB (EQB TSX)

Canada’s Challenger Bank - EQB, also known as Equitable, is Canada’s seventh largest bank. Investors still associate it as primarily an alternative mortgage lender like home capital, but since its acquisition of Concentra Bank in 2022, EQB has a much more diversified mix of consumer and commercial lending, equipment financing and asset management. EQB has been the best performing bank stock on the TSX for over 10 years now and has the fastest growth rate and highest return on equity (ROE) of all the Canadian banks. EQB currently trades at under 1.2 times book value (BV) and less than eight times forward price to earnings ratio (P/E). These are lower multiples than the big banks despite EQB’s higher growth rate, higher ROE of 15 per cent plus, and strong capital position. EQB consistently grows its book value by 10 per cent to 15 per cent per year, hikes its dividend by up to 20 per cent per year, and has been buying back shares lately. The stock’s recent pullback of almost 20 per cent has created a great buying opportunity. Of note is that Stephen Smith, EQB’s largest shareholder, has also been buying shares, increasing his stake to over 17 per cent.

ALTUS GROUP (AIF TSX)

Global leader in real estate analytics- Altus is a real estate consulting company that is now mostly a pure-play technology company. It divested of several businesses over the years including most recently its tax advisory service. It’s focus now is on its industry leading software platform which provides specialized analytics and data for valuing and monitoring the performance of commercial real estates assets. Think of it as the Bloomberg of real estate. Its clients are mostly banks, insurance companies, asset managers, pension funds, real estate owners and property managers. The stock was always expensive, however recurring software revenue has grown to nearly 75 per cent of overall revenues and EBITDA margins continue to expand to nearly 30 per cent such that the company now deserves its higher tech multiple. However, it still trades at a significant discount to its peers. Altus has been aggressively buying back shares at an average price of over $54 with the proceeds of the sale of its tax business. It would also make an attractive acquisition target for larger U.S. data analytics companies such as CoStar, S&P, Morningstar, MSCI and Thompson Reuters.

TECSYS (TCS TSX)

High-quality small cap tech stock- Tecsys develops and sells supply chain management software solutions, mainly to hospital networks in the U.S. which is a segment it dominates and is now expanding into pharmacies. It also sells supply chain solutions to businesses that have complex distribution, including warehousing, transportation, and logistics. Its software platform is end-to-end from purchase-order management and fulfillment to inventory management and warehousing, to accounting and analytics. We’ve recommended Tecsys on several occasions as far back as 2019 when it was $15 following which it quadrupled to over $60. We also recommended again in 2023 in the mid $20s after tech stocks corrected. TCS recently raised its guidance as recurring software (SaaS) revenues are growing by over 30 per cent per year, gross margins have expanded to over 70 per cent, and EBITDA margins are expected to surpass 10 per cent next year. Tecsys trades at around three times revenues, a significant discount to its peer group. TCS has also been aggressively buying back shares. The stock’s recent 20 per cent pullback presents a great buying opportunity. We think Tecsys could be sold to a strategic buyer for as much as $100 per share within a few years.

DISCLOSURE	PERSONAL	FAMILY	PORTFOLIO/FUND
EQB TSX	Y	Y	Y
AIF TSX	Y	Y	Y
TCS TSX	Y	Y	Y

PAST PICKS: March 28, 2024

PET VALU (PET TSX)

It got very overvalued during the pandemic hype, but this has since normalized. However, systems sales are still growing as they open 40-45 new stores annually. The market remains underserved outside cities. A cap-lite model, generating 22% EBITDA margins, and over 20% ROIC. Strong free cash flow. A great time to buy at 16x PE. Is recession-proof. Likely a takeover candidate

• Then: $31.66
• Now: $27.48
• Return: -13%
• Total Return: -12%

MDA SPACE (MDA TSX)

At the time, there were huge announcements coming, and there was a huge order backlog. Is the only pure-play space tech stock in the world. The space economy is booming and they are perfectly positioned. Are famous for their robotics (Canadarm). The backlog has jumped from $3 billion to $5 billion, and recently raised guidance by 40% revenue and EBITDA growth. Trades at a discount to its US peers. 

• Then: $14.71
• Now: $26.74
• Return: 82%
• Total Return: 82%

BORALEX (BLX TSX)

Canada's leading renewable energy company. Are strong in Quebec, US and France in wind, but solar and energy storage are growing. Recommended it because all utilities were beaten down. It hit $36 before Trump was elected. However, energy demand is increasing. BLX has fine free cash flow generation and a pipeline that will double capacity in coming years. Revenues and EBITDA will jump 25% this year. Trading at historically low valuations.

• Then: $28.62
• Now: $31.23
• Return: 9%
• Total Return: 11%

Total Return Average: 27%

DISCLOSURE	PERSONAL	FAMILY	PORTFOLIO/FUND
PET TSX	Y	Y	Y
MDA TSX	Y	Y	Y
BLX TSX	Y	Y	Y

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Source

https://www.bnnbloomberg.ca/investing/2025/04/29/stephen-takacsys-top-picks-for-april-29-2025/

https://stockchase.com/expert/view/1344/Stephen-Takacsy-B-Eng-MBA

Gustave Le Bon: The Nature of Crowds

Gustave Le Bon: The Nature of Crowds

The nature of crowds has long been a topic of interest in philosophy. However, the 18^th and 19^th centuries were a time when an increased emphasis was placed on understanding the psychology of crowds. For example,  the 18th century philosopher Jean Jacques Rousseau proclaimed that  “…we have a very imperfect knowledge of the human heart if we do not also examine it in crowds.”

Gustave Le Bon (1841-1931), a French social psychologist, is often seen as the father of the study of crowd psychology. Le Bon believed an understanding of crowd psychology was essential for a proper understating of the both history and the nature of man. As he wrote in his classic and highly influential work The Crowd: A Study of the Popular Mind: 

“It is crowds rather than isolated individuals that may be induced to run the risk of death to secure the triumph of a creed or an idea, that may be fired with enthusiasm for glory and honour… Such heroism is without doubt somewhat unconscious, but it is of such heroism that history is made.”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

In this video we will provide a summary of Le Bon’s classic work. In particular, we will investigate his insights into the nature of crowds, look at the role ideas play in influencing crowds, examine the  religious sentiment of crowds, and discuss  the psychological and emotional benefits one derives from joining a crowd.

What is a crowd? Le Bon defined a crowd as a  group of individuals united by a common idea, belief, or ideology.

The idea which unites a crowd is not chosen by a process of clear reasoning and examination of evidence. Instead, as we will discuss in more detail later, crowds accept beliefs and ideas superficially and utilize them as fuel for revolutionary action.

When an individual becomes part of a crowd, according to Le Bon, he undergoes a profound psychological transformation. That is, he  ceases to operate as an individual: 

“He is no longer himself, but has become an automaton who has ceased to be guided by his will.” (The Crowd: A Study of the Popular Mind – Gustave Le Bon)

With such a psychological transformation, an individual no longer lives for himself, but instead becomes a pawn who sacrifices his own personal ends and goals in favour of those of the crowd:

“In a crowd every sentiment and act is contagious, and contagious to such a degree that an individual readily sacrifices his personal interest to the collective interest.” (The Crowd: A Study of the Popular Mind – Gustave Le Bon)

As was mentioned earlier, Le Bon maintained that a crowd forms when an  influential idea unites a number of individuals and propels them to act towards a common goal. These influential ideas, however, are never created by members of the crowd. Instead,  they are brought into the world by the minds of great individuals.

Since those who compose a crowd are by their very nature mediocre, they are incapable of understanding these ideas in their  original form. Therefore, in order for an idea to unite and influence a crowd,  it must first be thoroughly simplified:

“Ideas being only accessible to crowds after having assumed a very simple shape must often undergo the most thoroughgoing transformations to become popular. It is especially when we are dealing with somewhat lofty philosophical or scientific ideas that we see how far-reaching are the modifications they require in order to lower them to the level of the intelligence of crowds…. However great or true an idea may have been to begin with, it is deprived of almost all that which constituted its elevation and its greatness by the mere fact that it has come within the intellectual range of crowds and exerts an influence upon them.” (The Crowd: A Study of the Popular Mind – Gustave Le Bon)

For example, a great philosopher could extol  the nature of liberty in an 800 page masterpiece. However, the crowd, incapable of comprehending such thoughts, would require the  concept of liberty to be thoroughly simplified in order for it to stimulate revolutionary action. Le Bon proposed that  this is where leaders come in. For it is the leader of a crowd who communicates simplified ideas to the crowd and in doing so unites it together and stimulates it to act. 

“The majority of men, especially among the masses, do not possess clear and reasoned ideas on any subject whatever outside their own specialty. The leader serves them as guide.” (The Crowd: A Study of the Popular Mind – Gustave Le Bon)

In the modern day one can see how invigorated and rejuvenated crowds become when they hear a leader pronounce that a cause is being  fought in the name of freedom, peace, or prosperity. Once these words are proclaimed the members of the crowd nod their heads in blind obedience to whatever else follows from the leader’s mouth – completely ignorant as to the corrupt purposes that may be the true guide for the leader’s  actions.

“How numerous are the crowds that have heroically faced death for beliefs, ideas, and phrases that they scarcely understood!”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

Referring to the ideas which leaders manipulate in order to govern and control crowds, Le Bon wrote:

“By many they are considered as natural forces, as supernatural powers. They evoke grandiose and vague images in men’s minds, but this very vagueness that wraps them in obscurity augments their mysterious power. They are the mysterious divinities hidden behind the tabernacle, which the devout only approach in fear and trembling.”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

Approaching these simplified, and therefore gravely misunderstood, ideas as mysterious divinities, a crowd always forms a  religious relationship to the ideas which motivate them to action. This being the case even when the ideas have no explicitly religious component:  “A person is not religious solely when he worships a divinity, but when he puts all the resources of his mind, the complete submission of his will, and the whole-souled ardour of fanaticism at the service of a cause or an individual who becomes the goal and guide of his thoughts and actions.”

Along this line of reasoning Le Bon continued:

“Were it possible to induce the masses to adopt atheism, disbelief would exhibit all the intolerant ardour of a religious sentiment, and in its exterior forms would soon become a cult.”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

While crowds are capable of acts which achieve both good and evil, Le Bon believed that more often than not  crowds commit barbarous and immoral actions.  Why do crowds so often act in an immoral manner?

Le Bon put forth the following explanation:  “…our savage, destructive instincts are the inheritance left dormant in all of us from the primitive ages. In the life of the isolated individual it would be dangerous for him to gratify these instincts, while his absorption in an irresponsible crowd, in which in consequence he is assured of impunity, gives him entire liberty to follow them.”

The 20th century  psychologist Carl Jung reiterated this idea:

“…if people crowd together and form a mob, then the dynamisms of the collective man are let loose – beasts or demons that lie dormant in every person until he is part of a mob. Man in the mass sinks unconsciously to an inferior moral and intellectual level, to that level which is always there, below the threshold of consciousness, ready to break forth as soon as it is activated by the formation of a mass.” (Carl Jung)

(Check out our 2-part video mini-series on Carl Jung)

Nonetheless, Le Bon believed he understood what motivated individuals to join a crowd.

When an individual lives his life as an individual – that is, when he forced to take responsibility for his life – he is apt to feel a crushing burden and sense of impotence he can’t seem to shake.

In joining a crowd or a mass movement, the individual is temporarily relieved of this responsibility and sense of impotence, and comes to feel that he is capable of shaking the foundations of the earth:

“In crowds the foolish, ignorant, and envious persons are freed from the sense of their insignificance and powerlessness, and are possessed instead by the notion of brutal and temporary but immense strength.”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

Le Bon thought that we are all in a sense a part of a crowd, as we are all  motivated by ideas and ideologies which are socialized into us and via communal action unite us with others in our culture. Many of our actions, in other words,  are motivated by ideas, beliefs, and ideologies which we do not understand. Le Bon thought it was impossible to fully extricate one’s self from all of these implicit ideas.  Yet he did maintain that partial freedom and independence can be attained by bringing to the light of reason the ideas, values, and beliefs which guide our actions. For as Le Bon  wisely claimed:

“The tyranny exercised unconsciously on men’s minds is the only real tyranny, because it cannot be fought against.”(The Crowd: A Study of the Popular Mind – Gustave Le Bon)

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Source

 https://academyofideas.com/2013/07/the-nature-of-crowds/

Stock ideas - Lumine Group Inc. (LMN - VN)

Stock Ideas

This is not a  stock recommendation, it is an idea. Used chiefly for myself to keep track of information for future reference. An investor must always evaluate the price of the underlying asset before buying. The key question to ask is!...What is the intrinsic value of the business?

Lumine Group Inc. (LMN - VN)

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Profile

Lumine Group Inc acquires, strengthens, and grows vertical market software businesses in the Communications and Media industry. The company's software solutions are designed to enable customers to boost productivity and operate more cost effectively, innovate more rapidly to address rapidly changing market needs and opportunities, grow top-line sales, improve customer service, and reduce customer churn.

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Comments from Stockchase

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Investor Insights

This summary was created by AI, based on 3 opinions in the last 12 months.

Lumine Group (LMN-X) was spun off from Constellation Software and specializes in software for media and telecommunications, as well as corporate carve-outs. The company's pace of acquisitions has been good, and it has shown steady growth. Experts believe it is a good long-term investment with solid acquisition strategy and strong business in software acquisition sector. However, some experts also caution that the stock may be a bit rich at its current price.

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It was spun off from Constellation Software about a year ago. It is in the same business of Vertical Market Software but differs in that it focuses on media and telecommunications and does larger deals. It also specializes in corporate carve-outs, buying a division of a big company. Its pace of acquisitions is good and the CEO talks to the street more than CSU or TOI. We can expect returns similar to those of CSU

Jordan Zinberg, April 8, 2024

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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

Both the increased share count and the loss relate to the conversion of preferred shares by CSU, and the set up was done this way to reduce taxes and faciliate the LMN spin out to shareholders. Both the loss and the share conversion were fully expected and disclosed a year ago, and going forward neither will be an issue at all for the company. We see LMN as one of the best long term buys in Canada. Not risk free, but it has already done very well and its acquisition strategy is working solidly so far. 

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Has since sold shares and bought Constellation Software. Strong business in software acquisition sector. Focus is on small software companies with zero competition. Expects strong performance going forward. Good long term investment. 

Jason Del Vicario

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Source

https://stockchase.com/company/view/7427/LMN-X

Stockwatch...Element Fleet Management Reports Fourth Quarter and Record 2024 Financial Results; Reaffirms Full-Year 2025 Guidance

Stockwatch...Element Fleet Management Reports Fourth Quarter and Record 2024 Financial Results; Reaffirms Full-Year 2025 Guidance

GlobeNewswire, Feb 26, 2025 5:01 PM EST

Element Fleet Management Reports Fourth Quarter and Record 2024 Financial Results; Reaffirms Full-Year 2025 Guidance

• Record 2024 net revenue of $1.1 billion driving record adjusted operating income, adjusted earnings per share and adjusted free cash flow per share
  
• Record performance in 2024 underpinned by an 18% year-over-year increase in services revenue, and a 9% year-over-year increase in net financing revenue associated with higher net earning assets
• Strong performance allowed for acceleration of strategic investments to position us for future success while delivering full-year adjusted operating margins within guidance range
  
• Robust client demand, strong and growing pipeline, and a high-recurring-revenue business model, combined with the benefits of investments made in 2024, to drive continued growth across key financial metrics
  
• Reaffirming 2025 guidance for net revenue growth of 6.5 to 8.5%, positive adjusted operating leverage, and high single- to low double-digit growth in each of adjusted operating income, adjusted EPS, and adjusted free cash flow per share

TORONTO, Feb. 26, 2025 (GLOBE NEWSWIRE) -- Element Fleet Management Corp. (TSX:EFN) (“Element” or the “Company”), the largest publicly traded, pure-play automotive fleet manager in the world, today announced financial and operating results for the three months ended December 31, 2024 and record results for full-year 2024.  The following table presents Element's selected financial results.

	Q4 2024 1		Q3 2024 1		Q4 2023 1		QoQ	YoY	2024		2023		YoY
In US$ millions , except percentages and per share amount							%	%					%
Selected results - as reported
Net revenue	270.9		279.6		245.1		(3)%	11%	1,087.6		959.1		13%
Pre-tax income	121.4		134.0		103.4		(9)%	17%	513.6		448.9		14%
Pre-tax income margin	44.8	%	47.9	%	42.2	%	(310) bps	260  bps	47.2	%	46.8	%	40  bps
Earnings per share (EPS) [basic]	0.23		0.24		0.20		(1)%	3%	0.96		0.84		12%
EPS [basic] [$CAD]	0.32		0.33		0.27		(3)%	19%	1.31		1.13		16%
Adjusted results (excludes one-time strategic project costs in  2024) 1
Adjusted net revenue 2	270.9		279.6		245.1		(3)%	11%	1,087.6		959.1		13%
Adjusted operating income (AOI) 2	143.3		161.4		134.9		(11)%	6%	601.2		530.5		13%
Adjusted operating margin 2	52.9	%	57.7	%	55.0	%	(480) bps	(210) bps	55.3	%	55.3	%	— bps
Adjusted EPS 2 [basic]	0.27		0.29		0.25		(7)%	8%	1.12		0.98		14%
Adjusted EPS 2 [basic] [$CAD]	0.37		0.40		0.33		(8)%	12%	1.53		1.32		16%
Other highlights:
Adjusted free cash flow per share 2 (FCF/sh)	0.30		0.36		0.29		(17)%	3%	1.38		1.24		11%
Adjusted 2 (FCF/sh) [$CAD]	0.41		0.49		0.40		(16)%	2%	1.89		1.67		13%
Originations	1,498		1,716		1,490		(13)%	1%	6,732		6,340		6%

Strategic project costs totaled $20 million, of which $14 million was incurred in 2023 and $6 million in 2024, These costs were, attributable to leasing initiatives in Ireland, and were $2 million below planned investment as previously communicated. These costs for the quarterly periods in the above table were as follows: Q4 2023 ($11 million), Q3 2024 ($2 million), and Nil in Q4 2024. Additionally, Q3 2024 also included $7 million in acquisition-related costs, including severance, in connection with the Autofleet transaction.
Adjusted results are non-GAAP or supplemental financial measures, which do not have any standard meaning prescribed by GAAP  under IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. For further information, please see the "IFRS to Non-GAAP Reconciliations" section in this earnings release. The Company uses “Adjusted Results” because it believes that they provide useful information to investors regarding its performance and results of operations.

"In 2024, we continued to execute our global growth strategy that builds on our considerable business momentum, delivering record results and value to clients, team members, and our shareholders. At the core of our efforts is a digital-first mindset and an unwavering commitment to operational excellence and prioritizing client success," said Laura Dottori-Attanasio, Chief Executive Officer of Element. "Our robust performance relative to our plan allowed us to accelerate strategic investments aimed at enhancing our client experience, modernizing operations through digitization and automation, and strengthening our teams and culture. We achieved this while delivering within our full-year adjusted operating margin guidance and exceeding other key financial metrics. With these investments, we are building a stronger, more agile, and more innovative foundation to lead in defining the future of mobility.

Dottori-Attanasio continued, "We expect expense growth to moderate considerably in 2025 as the acceleration and benefits of this year’s investments begin to materialize. By optimizing costs and driving operational efficiencies through digital innovation, our disciplined approach to strategic investing in the areas that are critical to client success positions us well to both deliver on our financial targets and sustain success well into the future."

Net revenue growth

Element grew 2024 net revenue 13% over 2023 ("year-over-year") to $1.1 billion led largely by double-digit services revenue growth and higher net financing revenue.

Q4 2024 net revenue increased $26 million or 11% on a year-over-year basis led largely by robust services revenue growth.  Q4 2024 net revenue decreased $9 million or 3% from a record Q3 2024 led largely by lower net financing revenue, lower syndication revenue and seasonal factors impacting Gains on Sale ("GOS"). This was partly offset by higher services revenue quarter-over-quarter.

Service revenue

Element's largely unlevered services revenue is the key pillar of its capital-light business model, which also improves the Company's return on equity profile.

2024 services revenue increased a strong 18% year-over-year to $596 million driven primarily by higher penetration and utilization rates of our service offerings from new and existing clients and higher origination volumes.

Q4 2024 services revenue grew a robust 25% year-over-year and  10% quarter-over-quarter driven primarily by higher penetration and utilization rates.

Net financing revenue

2024 net financing revenue grew $38 million or 9% year-over-year led largely by higher net earning assets resulting from higher originations across all geographies. This increase was partly offset by higher funding costs, including higher interest expense largely associated with financing the redemptions of our preferred shares (previously recorded below the AOI line). GOS was largely unchanged year-over-year, as increased volumes of vehicles for sale continue to mitigate used vehicle price normalization.

Q4 2024 net financing revenue increased $1 million or 1% year-over-year led largely by the same reasons cited in the full-year 2024 explanation above. This increase was partly offset by a year-over-year decrease in GOS, and higher funding costs. A higher volume of vehicles for sale was more than offset by a decrease in used vehicle pricing in Mexico and ANZ.

Q4 2024 net financing revenue decreased $13 million or 11% from Q3 2024. This quarter-over-quarter decrease was materially led by seasonal factors affecting GOS and for the same reasons cited directly above. Lower net earning assets and higher interest expense associated with financing the redemption of our preferred shares on September 30, 2024, and the impact of incremental debt due to the acquisition of Autofleet also contributed to the decrease.

Syndication volume

The Company syndicated a record $3.5 billion of assets in 2024, an increase of $984 million or 40% from 2023, and $1.0 billion in Q4 2024 - $330 million or 47% higher than Q4 2023. This growth was largely associated with higher origination volume, the Company's ongoing focus on its capital lighter model, and management of its tangible leverage.  Overall, investor demand remains robust.

2024 syndication revenue decreased $3 million or 6% year-over-year led largely by the bulk syndication of a Canadian lease portfolio in December 2024 (the "Bulk Sale") in the amount of $346 million (CAD$474 million). This Bulk Sale further diversified our funding sources. Initial sale and setup costs impacted yields. Yields were further impacted by the Company's syndication mix and scheduled reduction in bonus depreciation driving lower net yields. Gross yield, which is a measure of the value and demand for our core syndication product, was relatively unchanged from 2023. For further information on the Bulk Sale, please refer to the Element announces new strategic funding relationship section in this press release.

Q4 2024 syndication revenue decreased $7 million or 55% year-over-year for the same reasons cited above for the full year 2024, and $11 million or 64% quarter-over-quarter largely due to lower net yields and setup costs associated with the sale of the Canadian portfolio.

Adjusted operating income and adjusted operating margins

AOI was a record $601 million in 2024, an increase of $71 million or 13% year-over-year. This resulted in adjusted EPS of $1.12 in 2024, which is a 14% increase year-over-year. 2024 adjusted operating margin was 55.3%, unchanged from last year and at the mid-point of the Company's revised 2024 guidance range between 55.0 to 55.5%. Excluding Autofleet, adjusted operating margins would have expanded 30 basis points year-over-year to 55.6%.

Q4 2024 AOI was $143 million, an increase of $8 million or 6% year-over-year. Q4 2024 adjusted operating margin was 52.9% influenced by accelerated strategic investments, seasonal factors impacting GOS, $3 million in Autofleet operating costs, and the impact of the bulk sale of a portfolio of Canadian leases, which the Company believes will benefit 2025 and beyond. Excluding Autofleet, Q4 2024 adjusted operating margin was 54.1%.

Q4 2024 AOI decreased $18 million or 11% quarter-over-quarter led largely by the same reasons cited in the preceding paragraph.

Originations

Element originated $6.7 billion of assets in 2024, which is a $392 million or 6% increase year-over-year led by growth across all regions.

Q4 2024 originations of $1.5 billion increased $8 million or 1% year-over-year; however, originations decreased $218 million or 13% quarter-over-quarter led largely by seasonal factors including historically slower client order volume during the summer months.

Order volumes increased significantly in the last four months of 2024, reaching a record monthly high in December. This momentum, bolstered by improvements made through our U.S. & Canada Leasing strategic initiative based in Ireland, is expected to drive solid origination volumes in the first half of 2025.

The table below sets out the geographic distribution of Element's originations for 2024 and 2023:

(in US$000’s for stated values)	December 31, 2024			December 31, 2023
	$	%		$	%
United States and Canada	5,206,339	77.34	%	4,850,411	76.50	%
Mexico	1,035,249	15.38	%	1,028,165	16.22	%
Australia and New Zealand	489,960	7.28	%	461,451	7.28	%
Total	6,731,548	100.00	%	6,340,027	100.00	%

Adjusted free cash flow per share and returns to shareholders

On an adjusted basis, Element generated $1.38 of adjusted free cash flow ("FCF") per share in 2024; up 11% year-over-year driven by growth in net revenues and higher originations, while investing approximately $77 million in total capital investments during the year. In Q4 2024, Element accelerated approximately $47 million of tax payments to the Australian Tax Office relating to the 2025 to 2027 taxation years. The tax payments relate to cash tax timing benefits received due to temporary accelerated depreciation available during the pandemic, effectively providing the Company with a tax deferral. The accelerated payment allows for future adjusted free cash flow to better represent the cash taxes that would be paid in the normal course of operations during those future years. This acceleration of Australian cash taxes is excluded from adjusted free cash flow per share.

Element returned $336 million of cash to shareholders through common share dividends, common share buybacks and preferred share redemptions in 2024.

Common dividend and share repurchases

On February 26, 2025, the Board of Directors (the "Board") authorized and declared a quarterly cash dividend of CAD$0.13 per common share of Element for the first quarter of 2025. The dividend will be payable on April 15, 2025 to shareholders of record as at the close of business on March 31, 2025.

The Company’s common dividends are designated to be eligible dividends for purposes of section 89(1) of the Income Tax Act (Canada).

In furtherance of the Company’s return of capital plan, Element renewed its normal course issuer bid (the “NCIB”) for its common shares. Under the NCIB, the Company has approval from the TSX to purchase up to 40,386,699 common shares during the period from November 20, 2024, to November 19, 2025. The Company intends to be more active under its NCIB in 2025. The actual number of the Company’s common shares, if any, that may be purchased under the NCIB, and the timing of any such purchases, will be determined by the Company, subject to applicable terms and limitations of the NCIB (including any automatic share purchase plan adopted in connection therewith). There cannot be any assurance as to how many common shares, if any, will ultimately be purchased pursuant to the NCIB. Any subsequent renewals of the NCIB will be in the discretion of the Company and subject to further TSX approval.

During 2024, the Company purchased 630,657 Common Shares for cancellation under its normal course issuer bids, for an aggregate amount of approximately $11 million at a volume weighted average price of CAD$23.77 per Common Share. During Q4 2024, the Company purchased 175,357 Common Shares under its NCIB, for cancellation, for an aggregate amount of approximately $4 million at a volume weighted average price of CAD$28.51 per Common Share.  During January and February 2025, the Company purchased 1.1 million Common Shares under its latest NCIB, for cancellation, for an aggregate amount of approximately $22 million at a volume weighted average price of CAD $28.75 per Common Share.

Element applies trade date accounting in determining the date on which the share repurchase is reflected in the consolidated financial statements. Trade date accounting is the date on which the Company commits itself to purchase the shares.

Preparing Element for the future

In 2024, Element was purposeful in accelerating strategic investments in support of future growth.  The Company prioritized initiatives that elevate the client experience, modernize operations through digitization and automation, strengthen its teams and culture, and emphasized these efforts through the acquisition of Autofleet. While pursuing these strategic advancements, the Company exercised operational discipline to ensure that financial targets were achieved, maintaining operating margins within its 2024 guidance range of 55.0 to 55.5%. The Company expects expense growth to moderate considerably in 2025 as the benefits of these investments begin to materialize.

Notable achievements include:

• Centralizing accountability for its U.S. and Canadian leasing operations in Ireland and establishing a strategic sourcing presence in Singapore, with these initiatives expected to generate between $30 - $45 million of run-rate net revenue, and between $22 - $37 million of run-rate adjusted operating income (“AOI”), by full-year 2028. Both units are fully operational with an expected payback period from the Company's investments at less than 2.5 years.
  
• Acquiring Autofleet’s robust and highly scalable fleet optimization technology platform to substantially accelerate its digitization and automation initiatives, enhance the client experience and accelerate operational scalability, unlocking new growth and value creation potential.  The integration of Autofleet will enhance the Company's position in the evolving mobility and vehicle connectivity landscape. Priorities include developing a Digital Driver Experience app, building a digital client reporting portal, and gradually migrating Element's applications to Autofleet's cloud and AI-based platform.
  
• Launching an Acceleration Office, to fast-track and prioritize strategic initiatives like our holistic digital and data analytics transformation, and our expansion into both Insurance and the Small-to Medium-Sized Fleets space.
  
• In January 2025, the Company expanded beyond its core by announcing a new Insurance Risk solution - a fully integrated insurance and risk management offering. This new service, launched in a strategic partnership with Hub International Limited ("HUB"), a leading global insurance brokerage and financial services firm servicing commercial fleets, is designed to transform how clients insure and manage commercial fleets. The new service bundles insurance coverage solutions, including accident management, subrogation, driver safety programs, and telematics, to deliver a seamless, vehicle life-cycle experience for clients.

Guidance

Full-year 2024 Guidance

Element delivered full-year 2024 results within or above the high end of its previously provided guidance ranges on key metrics, with the exception of originations. The following table highlights our full-year 2024 guidance (as was updated alongside its Q2 2024 results release) compared to the full-year 2024 results.

In US$, except per share amounts	Full-year 2024 Guidance	Full-year 2024 Actuals
Net revenue	$1.060 - $1.080 billion	$1.088 billion
YoY Growth	11-13 %	13%
Adjusted operating margin 1	55.0% - 55.5%	55.3%
Adjusted operating income	$575 - 595 million	$601 million
YoY Growth	8-12 %	13%
Adjusted EPS [basic]	$1.07 - $1.11	$1.12
YoY Growth	9-13 %	14%
Adjusted free cash flow per share	$1.32 - 1.36	1.38
YoY Growth	6-10 %	11%
Originations	$7.0 - 7.4 billion	$6.7 billion
YoY Growth	11-17 %	6%

1. Excluding Autofleet, adjusted operating margin was 55.6% in 2024; representing adjusting operating margin expansion of 30 basis points year-over-year.

Certain year-over-year growth amounts shown in this table may not calculate exactly due to rounding.

Full-year 2025 Guidance

The Company expects to see continued growth in its client base and net revenue, driven by the ongoing transition to self-managed fleets and robust demand for its services and solutions. Strong order volumes over the last four months of 2024, bolstered by enhancements made through our U.S. and Canada leasing initiative in Ireland, is expected to drive solid originations volume in the first half of 2025. Originations are preceded by vehicle orders, which are binding commitments by clients to lease or purchase vehicles from Element.

Element is committed to generating positive operating leverage in 2025, and expects to begin realizing the benefits of the investments undertaken in 2024.

In US$, except per share amounts	Full-year 2025 Initial  Guidance	Full-year 2025 Guidance
Net revenue	6.5 - 8.5%	$1.160 - $1.185 billion
Adjusted operating income	High-single to low-double digit	$645 - $670 million
Adjusted operating margins		55.5 - 56.5%
Adjusted EPS [basic]	High-single to low-double digit	$1.20 - $1.25
Adjusted free cash flow per share	High-single to low-double digit	$1.48- $1.53
Originations	Low- to mid-single digit	$6.9 - $7.1 billion

The Company's guidance for 2025 incorporates the effects of several anticipated revenue headwinds, including the depreciation of the Mexican Peso (the Company has assumed an MXN-to-USD exchange rate of 20.5:1), higher interest expenses due to increased local Peso funding in 2025, and financing the redemption of the preferred shares. In addition, the scheduled reduction in bonus depreciation in the U.S. is likely to impact syndication yields. We also anticipate that our 2025 effective tax rate will average between 24.5% to 26.5%.

The above ranges are prior to any further material foreign exchange fluctuations, and any adverse impact related to changes in the trade agreements between the U.S., Mexico, and Canada.

Simplified capital structure

To further optimize the Company's balance sheet and simplify its capital structure, the Company redeemed the following during 2024: (1) all of its 5,126,400 issued and outstanding 6.21% Cumulative 5-Year Rate Reset Preferred Shares Series C (the “Series C Shares”) on June 20, 2024, at a price of CAD$25.00 per Series C Share for an aggregate total amount of approximately US$91.2 million; (2) all of its 5,321,900 issued and outstanding 5.903% Cumulative 5-Year Rate Reset Preferred Shares Series E (the "Series E Shares") on September 30, 2024, at a price of CAD$25.00 per Series E Share for an aggregate amount of US$95 million approximately; and (3) all of its remaining outstanding 4.25% Convertible Unsecured Subordinated Debentures due June 30, 2024 for consideration of approximately 14.6 million Common Shares, issued from Treasury and delivered to beneficial holders.

Following the redemption of its Series E preferred shares, the Company no longer has any preferred shares outstanding.

As at December 31, 2024, total Common Shares issued and outstanding were 404.5 million.

Element announces new strategic funding relationship

In December 2024, Element established a new strategic funding relationship with affiliates of Blackstone’s Infrastructure & Asset-Based Credit Group (“Blackstone”) involving a portfolio of Canadian fleet lease receivables valued at approximately $346 million (CAD$474 million). This initial transaction, which took place on December 20, 2024, has characteristics similar to that of a bulk syndication. Through this arrangement Element benefits from substantial derecognition of these finance lease receivables, diversifying and optimizing its funding profile, validating the high-quality of its asset origination platform, and supporting the Company's continued growth.

This transaction further assists in diversifying the Company's funding sources, reducing leverage and driving our capital lighter model. However, due to the initial sale, overall yield was negatively impacted by setup costs. These costs are not expected to recur in future transactions. Consequently, the Company expects higher syndication yields in 2025, while also benefiting from the derecognition of finance lease receivables that similar transactions would offer.

Transitioning to debt-to-capital vs. tangible leverage ratio ("TLR")

In Q4 2024, in collaboration with its partners, the Company changed its banking covenants from TLR to debt-to-capital, which the Company believes is a more meaningful measure of its leverage. Commencing in Q4 2024, the Company will prioritize the reporting and management of debt-to-capital metrics, though TLR will be still disclosed this quarter for consistency. The bank covenants are set at 80% of debt-to-capital, and the Company targets a range between 73% to 77%. The Company remains committed to maintaining a strong investment grade balance sheet and will continue to monitor TLR as a key internal metric, but it will be of reduced importance as an operating constraint.

At December 31, 2024, the Company's debt-to-capital ratio was 74.1% (December 31, 2023 72%) and its TLR was 7.56:1 (December 31, 2023 5.99:1).

About Element Fleet Management

Element Fleet Management (TSX: EFN) is the largest publicly traded pure-play automotive fleet manager in the world. As a Purpose-driven company, we provide a full range of sustainable and intelligent mobility solutions to optimize and enhance fleet performance for our clients across North America, Australia, and New Zealand. Our services address every aspect of our clients’ fleet requirements, from vehicle acquisition, maintenance, route optimization, risk management, and remarketing, to advising on decarbonization efforts, integration of electric vehicles and managing the complexity of gradual fleet electrification. Clients benefit from Element's expertise as one of the largest fleet solutions providers in its markets, offering economies of scale and insight used to reduce operating costs and enhance efficiency and performance. At Element, we maximize our clients’ fleet so they can focus on growing their business. For more information, please visit: https://www.elementfleet.com

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Source

https://money.tmx.com/quote/EFN/news/7656589568104390/Element_Reports_Fourth_Quarter_and_Record_2024_Financial_Results_Reaffirms_FullYear_2025_Guidance