Element Fleet Management Corp. announced increased net income in the first quarter and further progress on the company’s client-centric transformation.

Element’s fleet platform generated adjusted operating income of $90.5 million from its core business in the first quarter, an increase of $25million over Q1 2018. On a consolidated basis, the company reported net income of $59.7 million for Q1 2019, compared to net income of $16.2 million in Q1 2018.

“Our intense focus on transforming our core business continues to create value by strengthening our competitive position, improving our service offering and keeping us on track to deliver the previously communicated profitability gains,” said Jay Forbes, President and Chief Executive Officer of Element. “By deleveraging our balance sheet through a greater degree of syndication, we accelerate our ability to access lower-cost capital, enhance our return on equity, and manage client concentration limits.”

“As we advance the transformation, it has become clear to management that employing a greater degree of syndication to evolve our capital structure is prudent, both economically and strategically,” Forbes added. “We will continue to fund assets on our strong, investment grade balance sheet, while using syndication to systematically manage leverage as well as client concentration limits – particularly with respect to one large, rapidly-growing client. Our leading position in the fleet management industry coupled with the unmatched quality of our client base mean we originate assets that are very attractive to syndication market investors.”

Element’s transformation under its strategic plan continues to proceed ahead of schedule. The company had actioned a cumulative $52 million of run-rate profit improvements as of March 31, keeping the program well on track to action $74 million of profit improvement initiatives by the end of the year. As well, initiatives actioned to date will improve Element’s adjusted operating income by approximately $39 million in 2019; $8.5 million of such improvement was delivered in Q1.

Some additional highlights:

• Core fleet assets under management growth of 7 percent from Q1 2018 driven by wins in all geographies, including key clients in the U.S. and Canada and significant, broad-based growth in Mexico, Australia and New Zealand
• Broadened approach to syndication to accelerate deleveraging, evolve the capital structure and manage client concentration limits while continuing to fund growth, including one large, rapidly-growing client.

The company announced the transformation plan in October.

See the full Q1 results release here.