Element Reports $0.35 per share of After-tax Adjusted EPS in Q4-2015 Exceeding Consensus Estimates

TORONTO, ONTARIO--(Marketwired - March 2, 2016) -

• Total earning assets increase to $20.5 billion at year end from $9.03 billion at the end of 2014
• Total earning assets at yearend dominated by the US market at 73% while Canada declines to 16%
• Originations increased to $2.54 billion in Q4-2015 versus $1.89 billion in Q3-2015
• Fleet management fees increase to $101.3 million in Q4-2015 versus $53.7 million in Q3-2015
• Pre-tax adjusted return on average common equity increased to 12.6% in Q4-2015 versus 11.2% in Q3-2015
• Portfolio quality remains strong with arrears at 0.16% of finance receivables versus 0.20% at the end of Q3-2015
• Tangible leverage increased to 4.57:1 at December 31, 2015 from 3.72:1 at the end of previous year
  

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-months and year ending December 31, 2015. For the three months ended December 31, 2015 after tax adjusted operating income was $143.5 million or $0.35 per share (basic), exceeding consensus estimates, versus $55.4 million or $0.19 per share for the same period last year. Free operating cash flow was $161.5 million, or $0.40 per share, compared to $71.8 million, or $0.25 per share for the same period last year.

"This quarter provides investors with a first look at Element's Fleet management business with the acquired GE portfolio fully loaded into these results," noted Bradley Nullmeyer, Element's President. "The process of integrating the acquired GE fleet operations is now well advanced and we are pleased report that we now expect to achieve US$100 million of savings from this integration. As a result, our Fleet business enters 2016 with an adjusted ROAA of 3.2% and is on track to exit the year at 4% plus," added Mr. Nullmeyer.

Overall, new originations amounted to $2.5 billion for the three-month period ended December 31, 2015 representing a 47 percent increase over the $1.7 billion reported for the same period last year. Fleet Management accounted for $1,620 million of Q4 originations, while the Rail Finance vertical contributed $198 million. Aviation Finance accounted for $306 million of Q4 originations, while the Commercial & Vendor vertical accounted for $422 million. Full year origination volumes amounted to $7.7 billion, which was well ahead of plan with respect to the Company's previous full-year guidance of $6.5 billion of new originations during 2015, and represented an increase of 63 percent over the prior year.

Financial revenue for the three-month period ended December 31, 2015 was $409.2 million, or 8.3 percent of average earning assets versus, $175.7 million or 8.2 percent of average earning assets in the same period last year. Management fees and other revenue included in financial revenue amounted to $123.9 million during the fourth quarter of 2015 versus $54.8 million in the same period last year, representing an increase of 126 percent.

Interest expense was $119.5 million for the three-month period ended December 31, 2015 compared to $50.0 million for the same period last year. The average cost of borrowing was 2.69 percent during Q4-2015 versus 2.53 percent reported during the previous quarter and 2.66 percent for the same period last year. The cost increase, in each case, was due to the use of more expensive acquisition bank financing to fund the purchase of the GE Fleet operations in September 2015, with less expensive and permanent financing for these assets put in place during late December 2016.

Net financial income for the three-month period ended December 31, 2015 was $289.7 million versus $125.7 million for the same period last year. Adjusted operating expenses for the three-month period ended December 31, 2015 were $128.2 million, or 2.61 percent of average earning assets, versus $53.8 million, or 2.52 percent of average earning assets, in the same period last year with the relative cost increase largely due to the higher cost base of Fleet to provide services that generate service fee income in addition to net yields from leasing activities.

Total earning assets increased to $20.5 billion as at December 31, 2015 versus $19.3 billion as at the end of the preceding quarter and $9.0 billion as at the end of the same period last year. The year-over-year increase was due largely to the acquisition of the GE Fleet operations during Q3, 2015, representing $7.8 billion of earning assets.

Total debt increased to $18.7 billion as at December 31, 2015 from $17.4 billion as at September 30, 2015 and $8.1 billion as at December 31, 2014. The Company's tangible leverage ratio increased in line with our strategic objective of increasing return on equity to 4.57:1 as at December 31, 2015 versus 4.53:1 as at September 30, 2015, and from 3.72:1 as at the prior year end.

Using a discount rate of 6.5 percent, the Company estimates that the present value of its deferral of cash income tax liabilities for the next 12 plus years represents additional unleveraged value of $4.50 per share.

"I am extremely pleased with the reception received from all of our stakeholders to the announcement we made last month that we are separating Element into two stand-alone public entities," noted Steven Hudson, Element's Chief Executive Officer. "From this process will emerge the world's largest publicly traded fleet management company with stable growth, pristine credit quality and recurring high-margin fee income as well as a high-growth commercial finance business that will transition by the end of the year to an asset management business with a strong investment-grade balance sheet," added Mr. Hudson.

Dividends Declared

The Company's Board of Directors has authorized and declared a quarterly dividend of $0.025 per outstanding common share of Element for the first quarter of 2016. The dividend will be paid on April 15, 2016 to shareholders of record at the close of business on March 31, 2016. These dividends are designated to be eligible dividends for purposes of section 89(1) of the Income Tax Act (Canada).

The Company's Board of Directors also declared the following dividends on Element's preferred shares:

• A quarterly dividend of $0.4125 per outstanding Cumulative 5-Year Rate Reset Preferred Share, Series A (TSX: EFN.PR.A) payable on March 31, 2016 to shareholders of record on the close of business on March 17, 2016. The dividend payment is for the quarterly period up to but excluding March 31, 2016.
  
  
• A quarterly dividend of $0.40625 per outstanding Cumulative 5-Year Rate Reset Preferred Share, Series C (TSX: EFN.PR.C) payable on March 31, 2016 to shareholders of record on the close of business on March 17, 2016. The dividend payment is for the quarterly period up to but excluding March 31, 2016.
  
  
• A quarterly dividend of $0.40 per outstanding Cumulative 5-Year Rate Reset Preferred Share, Series E (TSX: EFN.PR.E) payable on March 31, 2016 to shareholders of record on the close of business on March 17, 2016. The dividend payment is for the quarterly period up to but excluding March 31, 2016.
  
  
• A quarterly dividend of $0.40625 per outstanding Cumulative 5-Year Rate Reset Preferred Share, Series G (TSX: EFN.PR.G) payable on March 31, 2016 to shareholders of record on the close of business on March 17, 2016. The dividend payment is for the quarterly period up to but excluding March 31, 2016.
  
  

These dividends are designated to be eligible dividends for purposes of section 89(1) of the Income Tax Act (Canada).

Conference Call

A conference call to discuss the results with analysts will be held on Wednesday, March 2, 2016 at 5:00 p.m. Eastern Time. The conference call can be accessed by dialing the following numbers:

North America Toll-Free:	1-866-696-5910 passcode 8146137
Local:	416-695-7806 passcode 8146137
International:	https://www.confsolutions.ca/ILT?oss=7P1R8666965910

A series of presentation slides will be referenced by management during the conference call. These slides will be available on the Company's website in advance of the conference call and may be accessed at http://www.elementcorp.com/investors/presentations-1.

The conference call will be recorded and can be accessed until April 1, 2016 by dialing 1-800-408-3053 or 905-694-9451 and entering the pass code 1939049.

Non-IFRS Measures

The Company's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and the accounting policies we adopted 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 & Analysis that accompanies the financial statements for the year and quarter ended December 31, 2015.

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

			As at and for the three months ended						As at and for the year ended
$ thousands (except % and per share amounts)			December 31, 2015		September 30, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Reported and adjusted income measures
Net income (loss)		A	104,433		(4,656	)	47,064		174,431		54,069
Adjustments:
	Amortization of debenture synthetic discount		2,955		2,906		1,445		9,289		2,863
	Share-based compensation		9,449		8,774		6,135		34,197		18,851
	Amortization of intangible assets from acquisitions		16,445		4,972		7,840		31,362		10,447
	Transaction and integration costs		34,747		128,068		3,346		203,283		99,141
	Provision (recovery) of income taxes		(6,491	)	(32,943	)	6,008		(16,749	)	4,099
Adjusted operating income		B	161,538		107,121		71,838		435,813		189,470
Provision for taxes applicable to adjusted operating income		C	(18,060	)	(19,948	)	(16,393	)	(76,237	)	(41,085	)
After-tax adjusted operating income		D=B-C	143,478		87,173		55,445		359,576		148,385
Cumulative preferred share dividends during the period		Y	8,912		8,904		6,109		31,047		18,935
After-tax adjusted operating income attributable to common shareholders		D1= D-Y	134,566		78,269		49,336		328,529		129,450
Selected cash flow amounts
Adjusted operating income before income taxes		B	161,538		107,121		71,838		435,813		189,470
Selected statement of financial position amounts
Finance receivables, before allowance for credit losses		E	17,589,087		16,371,356		8,482,904		17,589,087		8,482,904
Allowance for credit losses		F	33,791		24,135		16,915		33,791		16,915
Earning assets
	Net investment in finance receivable	G	16,199,530		15,174,976		7,749,260		16,199,530		7,749,260
	Equipment under operating leases	H	4,126,553		3,991,195		1,279,670		4,126,553		1,279,670
	Investment in managed fund	H1	143,936		138,788		-		143,936		-
Total earning assets		I=G+H+H1	20,470,019		19,304,959		9,028,930		20,470,019		9,028,930
	Average earning assets, net	J	19,636,834		12,997,240		8,543,386		13,056,842		5,888,922
Goodwill and intangible assets		K	2,245,298		2,152,541		863,008		2,245,298		863,008
Accounts payable and accrued liabilities		L	654,638		660,578		368,113		654,638		368,113
Secured borrowings		M	17,862,038		16,576,204		7,751,395		17,862,038		7,751,395
Unsecured convertible debentures		N	836,472		831,916		303,147		836,472		303,147
Total debt		O=M+N	18,698,510		17,408,120		8,054,542		18,698,510		8,054,542
	Average debt	P	17,803,601		11,645,733		7,536,131		11,840,871		4,779,722
Total shareholders' equity		Q	5,717,555		5,377,345		2,830,951		5,717,555		2,830,951
Preferred shares		R	533,656		533,635		365,113		533,656		365,113
Common shareholders' equity		S=Q-R	5,183,899		4,843,710		2,465,838		5,183,899		2,465,838
	Average common shareholders' equity	T	4,857,497		3,500,993		2,406,023		3,417,151		1,840,665
	Average total shareholders' equity	U	5,391,140		4,034,893		2,771,135		3,882,088		2,121,399

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

		As at and for the three months ended									As at and for the year ended
$ thousands (except % and per share amounts)		December 31, 2015			September 30, 2015			December 31, 2014			December 31, 2015			December 31, 2014
Free operating cashflow per share [basic]	(B-Y)/W	$	0.40		$	0.32		$	0.25		$	1.33		$	0.76
After-tax adjusted operating income per share [basic] (1)	(D1)/W	$	0.35		$	0.26		$	0.19		$	1.08		$	0.57
After-tax proforma diluted adjusted operating income per share	(D1+Z)/X	$	0.33		$	0.25		$	0.18		$	1.04		$	0.56
Key annualized operating ratios
Leverage ratios
Financial leverage ratio	O/Q		3.27			3.24			2.85			3.27			2.85
Tangible leverage ratio			4.57			4.53			3.72			4.57			3.72
Average financial leverage ratio	P/U		3.30			2.89			2.72			3.05			2.25
Average tangible leverage ratio			4.72			3.59			3.60			4.06			2.60
Other key operating ratios
Allowance for credit losses as a percentage of finance receivables	F/E		0.19	%		0.15	%		0.20	%		0.19	%		0.20	%
Adjusted operating income on average common shareholders' equity	(B-Y)/T		12.57	%		11.22	%		10.93	%		11.85	%		9.26	%
Adjusted operating income on average earning assets	B/J		3.30	%		3.30	%		3.36	%		3.34	%		3.22	%
After-tax adjusted operating income on average common shareholders' equity	(D-Y)/T		11.08	%		8.94	%		8.20	%		9.61	%		7.03	%
After-tax adjusted operating income on average earning assets	D/J		2.92	%		2.68	%		2.60	%		2.75	%		2.52	%
Per share information
Number of shares outstanding (including special warrants)	V		386,135			385,798			264,059			386,135			264,059
Weighted average number of shares outstanding [basic]	W		385,930			305,073			264,057			305,230			225,289
Proforma diluted average number of shares outstanding	X		435,469			356,149			269,431			344,906			230,663
Cumulative preferred share dividends during the period	Y	$	8,912		$	8,904		$	6,109		$	31,047		$	18,935
Other effects of dilution adjusted operating income basis	Z	$	9,600		$	9,029		$	-		$	28,520		$	-
Net income (loss) per share [basic]	(A-Y)/W	$	0.25		$	(0.04	)	$	0.16		$	0.47		$	0.16
Net income (loss) per share [diluted]		$	0.24		$	(0.04	)	$	0.15		$	0.46		$	0.15
Book value per share	S/V	$	13.43		$	12.56		$	9.34		$	13.43		$	9.34

(1)	For the period ended September 30, 2015, adjusted for the timing of the closing of the GE Fleet Operations in Mexico, Australia and New Zealand, the Company would report adjusted operating income per share of $0.28.

Quarterly Selected Financial Information and Financial Ratios

The following tables summarize key financial data and key operating ratios for the three-month periods ended December 31, 2015, September 30, 2015 and December 31, 2014:

	As at and for the three months ended
	December 31, 2015	September 30, 2015		December 31, 2014
(in $000's for stated values, except ratios and per share amounts)	$	$		$
After tax adjusted operating income (loss) per share (basic) (1)	0.35	0.26		0.19
Free operating cash flows per share (basic) (1)	0.40	0.32		0.25
Financial revenue (1)	409,240	258,521		175,703
Adjusted operating income (1)	161,538	107,121		71,838
After tax adjusted operating income (1)	143,478	87,173		55,445
Income before taxes	97,942	(37,599	)	53,072
Net income	104,433	(4,656	)	47,064
Total assets	25,163,345	23,572,478		11,290,502
Net investment in finance receivables	16,199,530	15,174,976		7,749,260
Equipment under operating leases	4,126,553	3,991,195		1,279,670
Investment in managed fund	143,936	138,788		-
Total earning assets	20,470,019	19,304,959		9,028,930
Total finance assets	21,835,861	20,482,756		9,745,659
New originations	2,544,870	1,889,951		1,665,765
Finance receivables and equipment under operating lease from acquisitions (2)	-	7,785,499		-
Secured borrowings	17,862,038	16,576,204		7,751,395
Convertible debentures	836,472	831,916		303,147
Total debt	18,698,510	17,408,120		8,054,542
Average finance receivables (1)	15,589,686	10,808,794		7,396,499
Average equipment under operating leases (1)	3,906,412	2,051,627		1,146,887
Average investment in managed fund	140,736	136,819		-
Average earning assets (1)	19,636,834	12,997,240		8,543,386
Average debt outstanding (1)	17,803,601	11,645,733		7,536,131
Number of shares outstanding (including special warrants)	386,135	385,798		264,059
Weighted average number of shares outstanding (including special warrants) [basic]	385,930	305,073		264,057
Total shareholders' equity	5,717,555	5,377,345		2,830,951
Average common shareholders' equity (1)	4,857,497	3,500,993		2,406,023
Earnings per share [basic]	0.25	(0.04	)	0.16
Earnings per share [diluted]	0.24	(0.04	)	0.15

(1)	For additional information, see "Description of Non-IFRS Measures" section.
(2)	Three months ended September 30, 2015, relates to the estimated fair value assigned to finance receivables equipment under operating lease from the acquisition of the GE Fleet Operations on August 31, 2015 and September 30, 2015.

The following table summarizes key operating ratios as at and for the three months ended:

		As at and for the three-months ended
		December 31, 2015			September 30, 2015			December 31, 2014
Leverage ratios
Standard Leverage (2) (3)
	- Financial leverage ratio		3.27			3.24			2.85
	- Average financial leverage ratio		3.30			2.89			2.72
Bank Covenant (2) (4)
	- Tangible leverage ratio		4.57			4.53			3.72
	- Average tangible leverage ratio		4.72			3.59			3.60
Other ratios and yields
Allowance for credit losses as a percentage of finance receivables (2)			0.19	%		0.15	%		0.20	%
Annualized credit loss provision as a percentage of average finance receivables (2)			0.19	%		0.17	%		0.12	%
Portfolio average remaining life (in months, excluding equipment under operating leases) (2)			24.9			24.2			24.8
Adjusted operating income on average common shareholders' equity (2)			12.57	%		11.22	%		10.93	%
Adjusted operating income on average earning assets (2)			3.30	%		3.30	%		3.36	%
After-tax adjusted operating income on average common shareholders' equity (2)			11.08	%		8.94	%		8.20	%
After-tax adjusted operating income on average earning assets (2)			2.92	%		2.68	%		2.60	%
Book value per share		$	13.43		$	12.56		$	9.34

(1)	All are ratios presented on an annualized basis.
(2)	For additional information, see "Description of Non-IFRS Measures" section.
(3)	Financial leverage ratio is computed as total debt (the sum of secured borrowings and extendible convertible debentures) divided by total shareholders' equity.
(4)	Computed under bank covenant.

Annual Selected Financial Information and Financial Ratios

The following table summarizes key financial data as at and for the year ended December 31, 2015:

	As at and for the year ended	As at and for the year ended		As at and for the year ended		As at and for the year ended		As at and for the nine-months ended
	December 31, 2015	December 31, 2014		December 31, 2013		December 31, 2012		December 31, 2011
(in $000's for stated values, except ratios and per share amounts)	$	$		$		$		$
After tax adjusted operating income (loss) per share (basic) (1)	1.08	0.57		0.34		0.14		(0.01	)
Free operating cash flows per share (basic) (1)	1.33	0.76		0.47		0.19		(0.01	)
Financial revenue (1)	1,062,820	474,323		163,117		53,006		10,386
Adjusted operating income (1)	435,813	189,470		65,261		14,910		(428	)
After tax adjusted operating income (1)	359,576	148,385		47,680		10,941		(1,034	)
Income before taxes	157,682	58,168		4,846		(11,370	)	(7,544	)
Net income	174,431	54,069		(1,650	)	(6,420	)	(6,071	)
Total assets	25,163,345	11,290,502		3,454,653		1,508,892		416,715
Net investment in finance receivables	16,199,530	7,749,260		2,739,445		1,300,003		231,183
Equipment under operating leases	4,126,553	1,279,670		239,055		-		-
Investment in managed fund	143,936	-		-		-		-
Total earning assets	20,470,019	9,028,930		2,978,500		1,300,003		231,183
Total finance assets	21,835,861	9,745,659		3,002,283		1,314,617		231,537
New originations	7,693,308	4,717,146		2,101,755		689,330		119,671
Finance receivables and equipment under operating lease from acquisitions (2)	7,785,499	4,298,224		573,008		756,236		158,474
Secured borrowings	17,862,038	7,751,395		1,893,910		989,128		172,517
Convertible debentures	836,472	303,147		-		-		-
Total debt	18,698,510	8,054,542		1,893,910		989,128		172,517
Average finance receivables (1)	10,734,243	5,027,425		1,879,729		629,485		168,099
Average equipment under operating leases (1)	2,250,018	861,497		14,049		-		-
Average investment in managed fund	72,581	-		-		-		-
Average earning assets (1)	13,056,842	5,888,922		1,893,778		629,485		168,099
Average debt outstanding (1)	11,840,871	4,779,722		1,381,880		453,356		119,624
Number of shares outstanding (including special warrants)	386,135	264,059		188,935		102,542		66,380
Weighted average number of shares outstanding (including special warrants) [basic]	305,230	225,289		138,423		78,132		33,302
Total shareholders' equity	5,717,555	2,830,951		1,446,656		423,425		238,341
Average common shareholders' equity (1)	3,417,151	1,840,665		736,981		300,807		91,687
Common share dividends declared per share	0.025	-		-		-		-
Earnings per share [basic]	0.47	0.16		(0.01	)	(0.08	)	(0.18	)
Earnings per share [diluted]	0.46	0.15		(0.01	)	(0.08	)	(0.18	)

(1)	For additional information, see "Description of Non-IFRS Measures" section.
(2)	For December 31, 2015 -Fair value assigned to the finance assets from the acquisition of GE Fleet Operations on August 31, 2015 and September 30, 2015.

The following table summarizes key operating ratios as at and for the year ended:

		As at and for the year ended
		December 31, 2015		December 31, 2014
Leverage ratios
Standard Leverage (1) (2)
	- Financial leverage ratio	3.27		2.85
	- Average financial leverage ratio	3.05		2.25
Bank Covenant (1) (3)
	- Tangible leverage ratio	4.57		3.72
	- Average tangible leverage ratio	4.06		2.60
Other ratios and yields
Allowance for credit losses as a percentage of finance receivables (1)		0.19	%	0.20	%
Annualized credit loss provision as a percentage of average finance receivables (1)		0.17	%	0.26	%
Portfolio average remaining life (in months, excluding equipment under operating leases) (1)		24.9		24.8
Adjusted operating income on average common shareholders' equity (1)		11.85	%	9.26	%
Adjusted operating income on average earning assets (1)		3.34	%	3.22	%
After-tax adjusted operating income on average common shareholders' equity (1)		9.61	%	7.03	%
After-tax adjusted operating income on average earning assets (1)		2.75	%	2.52	%
Book value per share (1)		$13.43		$9.34

(1)	For additional information, see "Description of Non-IFRS Measures" section.
(2)	Financial leverage ratio is computed as total debt (the sum of secured borrowings and extendible convertible debentures) divided by total shareholders' equity.
(3)	Computed under bank covenant.

Results of Operations - For the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, and the twelve months ended December 31, 2015 and 2014

The following table sets forth a summary of the Company's results of operations for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014 and twelve months ended December 31, 2015 and 2014:

	For the three-month periods ended					For the year ended
	December 31, 2015		September 30, 2015		December 31, 2014	December 31, 2015		December 31, 2014
(in 000's for stated values, except per unit amounts)	$		$		$	$		$
Net Financial Income
Interest income	217,254		161,210		102,527	609,578		298,868
Rental revenue, net (1)	75,406		36,173		20,664	166,152		62,645
Total interest income and rental revenue, net	292,660		197,383		123,191	775,730		361,513
Interest expense	119,521		73,590		50,046	304,821		140,383
Net interest income and rental revenue, net before provision for credit losses	173,139		123,793		73,145	470,909		221,130
Provision for credit losses	7,360		4,770		2,268	18,641		12,945
Net interest income and rental revenue, net	165,779		119,023		70,877	452,268		208,185
Management fees and other revenues	123,940		65,908		54,780	305,731		125,755
Net financial income	289,719		184,931		125,657	757,999		333,940
Operating Expenses
Salaries, wages and benefits	70,386		45,251		32,835	186,051		91,251
General and administration expenses	57,795		32,559		20,984	136,135		53,219
Amortization of debenture synthetic discount	2,955		2,906		1,445	9,289		2,863
Share-based compensation	9,449		8,774		6,135	34,197		18,851
	140,585		89,490		61,399	365,672		166,184
Business acquisition costs
Amortization of intangibles from acquisition	16,445		4,972		7,840	31,362		10,447
Transaction and integration costs	34,747		128,068		3,346	203,283		99,141
	51,192		133,040		11,186	234,645		109,588
Net income before taxes	97,942		(37,599	)	53,072	157,682		58,168
Tax expense	(6,491	)	(32,943	)	6,008	(16,749	)	4,099
Net income for the period	104,433		(4,656	)	47,064	174,431		54,069
Earnings per share [basic]	0.25		(0.04	)	0.16	0.47		0.16
Earnings per share [diluted]	0.24		(0.04	)	0.15	0.46		0.15

(1)	Rental revenue, net is equal to rental income earned on equipment under operating leases, less depreciation on equipment under operating leases.

Overall Performance Highlights for the Three-Months Ended December 31, 2015

The Company's earning assets, consisting of the Company's net investment in finance receivables, equipment under operating leases and investment in managed fund, have grown substantially during the period to December 31, 2015 to $20,470.0 million from $9,028.9 million reported at December 31, 2014. The growth over December 31, 2014 is primarily due to the combined effect of the acquisition of the GE Fleet Operations in August and September 2015, which contributed $7,785.5 million of finance receivables and equipment under operating leases, total new originations for the year in the amount of $7,693.3 million, helped by the large contribution of the Trinity vendor program and origination volume contributed by PHH Arval, net of repayments, syndication activities, amortization of equipment under operating leases and changes in foreign exchange rates of $4,027.6 million. Please refer to note 26 of the Company's Consolidated Financial Statements as at and for the year ended December 31, 2015 for a detailed roll-forward of finance receivables and equipment under operating leases during the year.

Net income before income taxes for the three months ended December 31, 2015 was $97.9 million compared to a net income before income taxes of $53.1 million reported for the three months ended December 31, 2014 and net loss before income taxes of $37.6 million reported in the immediately preceding quarter. The loss in the immediately preceding quarter is the result of the transaction and integration costs incurred in the current quarter related to the acquisition of the GE Fleet Operations.

As indicated previously, management believes that adjusted operating income, a Non-IFRS Measure, 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. Adjusted operating income for the three month period ended December 31, 2015 was $161.5 million, an increase of $89.7 million or 124.9% over the amount reported during the comparative quarter ended December 31, 2014 and an increase of $54.4 million or 50.8% over the amount reported during the immediately preceding quarter ended September 30, 2015. The increase over the comparative quarter ended December 31, 2014 and the immediately preceding quarter, is primarily the result of the acquisition of the GE Fleet Operations on August 31, 2015 and September 30, 2015, and of strong organic growth in the intervening periods.

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. Thus, while the Company is reporting after-tax adjusted operating income per share (basic) of $0.35 for the three months ended December 31, 2015, free operating cash flows per share (basic) reaches $0.40, compared to $0.19 and $0.25, respectively, for the comparative three months ended December 31, 2014, and $0.26 and $0.32, respectively, for the immediately preceding quarter ended September 30, 2015.

Overall Performance Highlights for the Year Ended December 31, 2015

The Company's earning assets, consisting of the Company's net investment in finance receivables, equipment under operating leases and investment in managed fund, have grown substantially during the period to December 31, 2015 to $20,470.0 million from $9,028.9 million reported at December 31, 2014. The growth over December 31, 2014 is primarily due to the combined effect of the acquisition of the GE Fleet Operations in August and September 2015, which contributed $7,785.5 million of finance receivables and equipment under operating leases, total new originations for the year in the amount of $7,693.3 million, helped by the large contribution of the Trinity vendor program and origination volume contributed by PHH Arval and the GE Fleet Operations, net of repayments, syndication activities, amortization of equipment under operating leases and changes in foreign exchange rates of $4,027.6 million. Please refer to note 26 of the Company's Consolidated Financial Statements as at and for the year ended December 31, 2015 for a detailed roll-forward of finance receivables and equipment under operating leases during the year.

Net income before income taxes was $157.7 million for the year ended December 31, 2015 compared to $58.2 million for the prior year resulting from a substantial growth in total finance receivable and equipment under operating leases during the year from both organic originations and from the GE Fleet Operations acquisition net of an increase of $125.0 million from increased business acquisition costs related to the acquisition of the GE Fleet Operations during the third quarter of 2015.

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. Adjusted operating income for the year ended December 31, 2015 was $435.8 million, an increase of $246.3 million or 130.0% over the amount reported during the comparative year ended December 31, 2014. The increase over the comparative period ended December 31, 2014 is primarily the result of the acquisition of the PHH Arval on July 7, 2014 and the GE US Fleet Operations during Q3 2015, and strong organic growth.

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 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. Thus, while the Company is reporting after-tax adjusted operating income per share of $1.08 for the year ended December 31, 2015, free operating cash flows per share reaches $1.33 per share, compared to $0.57 and $0.76, respectively, for the comparative year ended December 31, 2014.

Consolidated Financial Position

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

	December 31, 2015	September 30, 2015	December 31, 2014
(in 000's for stated values, except per unit amounts)	$	$	$
Cash	61,007	47,459	66,869
Restricted cash	619,870	466,540	443,238
Finance receivables	17,555,296	16,347,221	8,465,989
Equipment under operating leases	4,126,553	3,991,195	1,279,670
Investment in managed fund	154,012	144,340	-
Derivative financial instruments	18,114	15,831	5,746
Deferred tax assets	142,563	135,870	39,405
Other non-portfolio assets	2,485,930	2,424,022	989,585
Total assets	25,163,345	23,572,478	11,290,502
Accounts payable and accrued liabilities	654,638	660,578	368,113
Secured borrowings	17,862,038	16,576,204	7,751,395
Convertible debentures	836,472	831,916	303,147
Derivative financial instruments	33,359	65,066	11,196
Deferred tax liabilities	59,283	61,369	25,700
Total liabilities	19,445,790	18,195,133	8,459,551
Shareholders' equity	5,717,555	5,377,345	2,830,951
Total liabilities and shareholders' equity	25,163,345	23,572,478	11,290,502

Element's audited financial statements and related management discussion and analysis as at and for the year ended December 31, 2015 have been filed on SEDAR (www.sedar.com).

About Element Financial Corporation

With total assets of $25.2 billion, Element Financial Corporation is one of North America's leading fleet management and equipment finance companies. Element operates across North America in four verticals of the equipment finance market (Fleet Management, Rail Finance, Commercial & Vendor Finance, and Aviation Finance) and in Australia and New Zealand in the Fleet Management business.

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 the integration and financial impact of the acquisition of various fleet management businesses from GE Capital, new originations in the current quarter, the anticipated pipeline of prospective transactions, and 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 2015 MD&A, and 2014 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.