John Sadler - SVP, Corporate Affairs and IR Steven Hudson - Chairman and CEO Brad Nullmeyer - President David McKerroll - President, Head of Rail & Aviation

John Aiken - Barclays Vincent Caintic - Macquarie Investments Tom MacKinnon - BMO Capital Markets Geoff Kwan - RBC Capital Markets Steve Boland - GMP Securities Paul Holden - CIBC World Markets Mario Mendonca - TD Securities Shubha Khan - National Bank Financial Nick Stogdill - Credit Suisse

Thank you, Elliot [ph]. Good evening, ladies and gentlemen.

Thank you for participating in our conference call to discuss Element's fourth quarter and full year results for the 2014 fiscal year. Joining us this evening to discuss these results are Steven Hudson, Element's Chairman and CEO; Brad Nullmeyer, Element's President; and Dave McKerroll who heads up Element's Rail & Aviation verticals.

Michel Beland, Chief Financial Officer, has been called out of town due to serious family illness and will not be available on today's call. The management team's thoughts and prayers are with Michel and his family at this time.

A news release summarizing the financial results was issued earlier today and the financial statements and MD&A for the three-month and 12-month periods ending December 31, 2014 had been filed with CEDAR. This information is also available on our website at www.elementfinancial.ca.

As well, a presentation for the Company's management's comments has been posted to our website in PDF format. You will find it in the Presentations section of our website, and we invite you to open it now and follow along with us.

Our speakers will be sure to let you know which slide they're referring to in the course of their comments. Before we begin, I want to remind our listeners that some of the information we're sharing with you today includes forward-looking statements.

These statements are based on assumptions that are subject to significant risks and uncertainties. I'll refer you to the cautionary statement section of our 2014 fourth quarter MD&A for a discussion of such uncertainties, risks and assumptions.

Although management believes that the expectations reflected in the statements are reasonable, we can obviously give no assurance that the expectations of any forward-looking statements will prove to be correct. You should also note, the Company's earnings release, financial statements, MD&A and today's call include references to a number of non-IFRS measures which we believe help to present the Company and its operations in ways useful to the Company and investors alike.

A reconciliation of these non-IFRS measures to IFRS measures can be found in our MD&A. I'll now turn the call over to Steven Hudson, Chairman and CEO.

Thanks, John, and good evening to everyone. I'm going to start with a brief look-back at the highlights of the past year.

After that I'll ask Brad Nullmeyer and Dave McKerroll to speak to the results in each of our four verticals. In Michel's absence, I'll be speaking to the financials.

I'll provide a brief summary at the end and then open the call to your questions. 2014 was a year of transformation for Element.

Since our inception as a public company, our focus has been primarily on growth in high-quality and targeted revenue and assets. We've accomplished that through a series of strategic acquisitions within our four silos, along with strong organic growth.

With the acquisition of PHH this past July, we've succeeded in building a robust earnings platform to deliver high-quality financial results. As Slide 4 illustrates, key metrics from 2014 prove this out.

Adjusted EPS increased in every quarter of 2014, in fact, EPS almost doubled during the year. Capital efficiency has improved with added leverage, but more importantly, an investment-grade rates.

Operating efficiency has delivered on ROA growth. I'd reference you to Q1 and Q4 which are more representative of our ROA growth, Q2 and Q3 had a little bit of PHH noise in them.

And ROE has increased more than 55% from Q1 to Q4. I'm pleased to achieve that we have a before-tax ROE in Q4 approximately 11%.

Not only have earnings increased, but the quality of these earnings continued to improve. I'll refer you to Slide 5 in this regard.

Not only has fee income increased as a percentage of total net financial revenue, diversifying our financial base nicely, but the proportion of these fees coming from our fleet management service has grown dramatically. I'll now ask Brad Nullmeyer and Dave McKerroll to speak to each of the highlights from our four verticals.

Brad?

Thank you, Steve. During the fourth quarter we continued to benefit from our significant market position in our fleet management business and the organic growth opportunities provided to us from the combining of our three fleet acquisitions.

Although it's only our second quarter with the PHH acquisition under our belt, we continue to deliver excellent results as Slide 7 and 8 demonstrate. Our integration efforts are substantially completed and we realized in excess of our originally forecasted cost savings of $20 million.

We are now turning our attention to the fine-tuning of the integration and realizing the benefits of one North American wide customer-facing system. We continue to spend on new product rollouts and new product development which are allowing us to provide more and better services to our client partners as we help them become more efficient in their operations.

We've been able to take the best of all three operations that are now able to offer these to our North American clients. Improvement such as online ordering systems and numerous new mobile applications are being rolled out to our clients as we speak.

Our exposure to fuel prices is very small, and it's only in the U.S., as in Canada, our revenue is based on units of sale as opposed to dollars. Our exposure is less than 1.3% of our revenue.

And by way of example, if you have pump prices fall an additional 20% from where they are today, our pretax income would be reduced by less than 0.4 of 1%. And although fuel spend is very large for our clients, it's only one of many, many services that we offer, and our earnings on this are only a small portion of the actual at the pump fuel that is spent by our clients.

Our numerous other services that we provide to clients are not based on fuel prices but rather on service deliverables, and this is our key value proposition to our clients. Our order book and fleet is strong, our new client wins are excellent, and our retention rate is high.

Yields continue to be robust and credit losses are at record low levels. Our North American platform is now in place to allow us to provide exceptional customer service and can now be utilized to capitalize on significant opportunities across North America.

I want to take this opportunity to thank our dedicated team of employees that have made the transition into the Element family, and our customers and suppliers for being part of our team. It's this group of hardworking customer-driven employees that are key to our future success and have allowed us to be chosen as Supplier of the Year with the likes of PepsiCo, which is a very important award in recognition of our efforts.

Overall we're very pleased with our fleet management business, its results, and our future prospects. Our commercial and vendor finance business continues to enjoy success in our chosen markets.

Originations from this group will exceed 1.45 million -- $1.45 billion in 2014, up $987 million in 2013. And we continue to move to a vendor-driven model from a direct model.

That accounts for increase in originations in the U.S. over Canada.

And as you can see in Slide 9, 59% of our originations are now coming from the USA. This business is one in which we strive for programmic [ph] origination arrangements where we have a high value-add and we do not directly compete against the banks.

Although we don't specifically disclose our vendor partners' names and the numbers, we have executed several new program arrangements and agreements in 2014 and we broadened our offering to our current partner base. This sets us up in good stead for the coming year.

We successfully engaged in our cross-sell initiatives, specifically in the last quarter, such as combining our fleet knowledge and products in the heavy-duty truck space with our commercial and vendor transportation team and both are offering services. I'll be remiss if I also didn't thank the many employees that form part of this commercial and vendor team, both Canada and the USA, for delivering outstanding results and customer service offerings.

I'll now hand it over to David McKerroll to talk about aviation and rail.

Thanks, Brad. I'll refer you to Slide 11.

In the quarter, our rail vertical funded $137 million of new railcars, versus $163 million in the previous quarter. We've now completed $1 billion of railcar leases through our $2 billion program with Trinity.

Out of this program we started in December 2013, we negotiate and purchase a portfolio of leased cars in Trinity each quarter. And that negotiation is designed to ensure the portfolio meets our internal credit and return criteria, and to also ensure we had a diversification that allows us to get single-A rating in the ABS market.

We continue to build our own expertise, and in 2015 we will be originating transactions directly from shippers and railways in addition to leases we originate from Trinity. We have a very strong relationship with Trinity, Trinity is very important to us, but we need to continue to build our different channel origination.

And I should note, on Trinity's earning call, Trinity stated how pleased they were with the Element relationship and they would like to extend the program beyond 2015. The rail vertical not only provides predictable strong cash flows, it also allows Element to indefinitely defer our income taxes and provide shelter for the other businesses.

I’ll make a brief comment on oil prices. The lower prices had had no effect in our portfolio in 2014, and we expect to have a minimal to no impact in the medium term due to a number of things.

First, the credit quality of the lessees in a true by-rail [ph] portfolio was very high. They're essentially investment grade.

Secondly, the average lease term for the true by-rail [ph] portfolio is six years. And since these are mostly new leases we have, we have very little maturities happening in the medium term, only about 4% of our leases are maturing within the next three years.

As to re-regulation of the industry, the current expectation is that the U.S. government will publish their new regulations governing the transportation of [inaudible] materials by the end of May.

It is difficult to assess the impact of the regulations until they are finalized. However, we have a very new fleet of cars and we don't expect the new regulations will have a material effect on the returns in our portfolio.

And we also expect there'll be opportunities for us in financing third-party retrofits. If I could turn now to Slide 12 and talk about the aviation business.

Aviation, we had a very strong quarter, funding $397 million of new business versus $157 million in the previous quarter. For the full year, aviation booked $800 million in originations, representing an increase of 15.6% over the same period last year.

In last quarter's call we said that based on the known and expected closings, we expect to originate between $300 million and $400 million, and we're pleased to report that we came in the very top of that range. A large [ph] fourth quarter is typical for this business and we expect to see originations for 2015 similarly back-ended.

The backlog of originations and syndications that were cleared in the fourth quarter also produced a significant amount of fee income, which as you can see, improved the returns for the quarter. Our aviation backlog continues to be strong, and in 2015 we also see further contribution from our advisory group to advisory and management fee income.

And with that, I turn it back to you, Steve.

Thanks, Dave. Slide 14 shows total originations for the three-month period ended December 31, 2014 were approximately $1.7 billion, exceeding our estimate of $1.5 billion last quarter's call.

This represents an increase of $490 million or 42% over the immediately preceding quarter and an increase of 67% over the three-month period ended December 31, 2013. Full-year originations reached $4.7 billion, also exceeding the $4 billion to $4.5 billion target that we tabled last quarter.

Slide 15 provides a series of operational metrics. Financial revenue for the three-month period ended December 31, 2014 increased to $176 million from $157 million the previous quarter, an increase of approximately 12%, generating net financial revenue of $126 million for the quarter versus $111 million in the preceding quarter, an increase of approximately 13%.

Adjusted operating expenses were $54 million in the quarter versus $51 million in the immediately preceding quarter. Adjusted operating income before taxes increased by 19 -- by approximately 20% to $72 million to the third quarter -- for the quarter, versus $60 million for the previous quarter.

After tax adjusted operating income or adjusted operating income after tax was $55 million, versus $47 million in the preceding quarter. Turning to Slide 16, which provides a snapshot of our balance sheet, to see how total assets and earnings have grown over the past year, reflecting the material impact of the PHH acquisition in July of this year.

Total assets were approximately $11 billion at the end of the quarter, an increase of 8%, up from $10.5 billion of the preceding quarter, and an increase of over 200% from the year before. Equally important, you'll see the leverage has grown in keeping with our stated intentions.

The Company's tangible leverage ratio, the one we govern ourselves by, computed on the basis of the more restrictive borrowing covenants, was 3.7 to 1 as of December 31, 2014, compared to approximately 3.4 -- or 3.45 as of September 30, and 1.6 December 31, 2013. The Company expects its leverage ratio to continue to increase to 2015/2016 as the capital structure is optimized in terms of mix of investment-grade debt and equity.

Slide 17 provides a number of operational yields and ratios all expressed as a percentage of average earning assets. Financial revenue expressed as a percentage of average earning assets increased from 8.23$ in Q4 from 8% in the previous quarter.

Most of which -- most of the increase resulted from increased syndication activities in the Company's aviation vertical which David mentioned earlier. Meanwhile, interest expense was at 2.35% of average earning assets in Q4, essentially unchanged from the previous quarter.

As a result, average net finance margin yield for the three months period was at 5.6% in Q3 versus 5.88% in Q4. Adjusted operating expenses were 2.5% of average assets, versus 2.61 in the immediately preceding quarter.

Adjusted operating income before tax, or ROE pretax, was 3.36, versus 3.06 in the immediate preceding quarter. This growing return on assets could be expected to translate into growing ROA as our leverage rises.

Slide 18 demonstrates the results of increased leverage applied to the Company's balance sheet. The return on average common equity computed on [ph] the basis of operating -- adjusted operating income pretax increased to 11% for the three-month period ended December 31, 2014 versus 9.7% for the three-month period ended September 30, 2014.

Slide 16 provides a number per-share amounts, all significantly up over the quarter and over the year. Book value was $9.34, versus $9.93 in the preceding quarter.

Free operating cash flow or adjusted operating income before income tax increased by 19% in Q4 to $0.25 versus $0.21 in the preceding quarter, and $0.12 December 31 quarter. Per share adjusted operating income after tax was $0.19, in line with consensus, versus $0.16 in the preceding quarter and $0.09 for quarter ended December 31, 2013.

Before I turn to 2015 and beyond, I want to discuss two things first. First, asset quality.

This is an important growth -- important part of our growth strategy. As you see on Slide 20, by all measures, the quality of our assets have improved.

This speaks to the quality of our clients and help explain why we're not unduly concerned about the impact of the drop of oil in our portfolio. As you can see on Slide 21, not only is our exposure little in any event [ph] but our clients are predominantly investment-grade credits tied to long-term leases.

The second thing I want to touch upon briefly is funding. The Slide 22 says we enjoy a wealth of options and in 2015 we will be able to add to them.

And on that note, I'd like to turn to our future. As I noted earlier, Q4 was the first double-digit pretax ROE quarter, sending us on the path to achieve our target.

Our focus in 2015 will be to realize on this target. Our growth focus will be on organic growth over acquisitions.

That said, we'll continue the keen eye for tuck-in accretive portfolio acquisitions that meet our ROE targets and are fungible within our capital base. Our operations focus will be on reducing operating expenses and increasing operating leverage.

We want to drive more business through our existing infrastructure and continue to drive OpEx down on all our business, especially fleet. Our financing focus will be on increasing financial leverage while reducing its costs.

A much larger size and greater diversity of -- and quality of [ph] assets make this possible. Facilities inherited with PHH present a unique opportunity to significantly lower overall cost of funds.

Obtaining an additional investment grade rating is an important near-term goal to be followed when market conditions [ph] are appropriate by our planned private midterm note offering, also expected to reduce our debt costs. Now that we're in a position to raise debt on increasingly favorable terms, we expect that any additions to our asset base will be funded exclusively by debt.

2014 ended with tangible leverage at 3.72 to 1, and we expect to have a leverage ratio of 4.35 to 1 by the end of 2015, possibly higher. Overall, as I said, continue to increase our ROE.

Our goal was an ROE target 15% range, that is our commitment to you. Before we open the call to questions, I want to refer you to Slide 24 for a summary of the key accomplishments in the fourth quarter.

Basically my quote is [inaudible] another straightforward quarter of earnings and operations as planned and expected, i.e. another boring quarter.

I'd also like to echo my closing statement on the last quarter's call. We had built a large and powerful operations whose opportunity to increase leverage and lower costs of funds is real.

Indeed our financial and tangible leverage ratios at the end of 2014 are almost double 2013. We have raised the quality of our assets as evidenced by our credit loss allowances.

We have literally transformed our Company. Possibly the most salient aspect of our transformation is one that bears special note, our Company's center of gravity has shifted.

Our Company is now indisputably a U.S.-focused company. As you can see on Slide 25, over 60% of our assets are based in the U.S.

and over 60% of our net financial income and syndics and [ph] originations are now derived from U.S. We expect this to continue to grow and opportunities that flow from this are clear.

The U.S. remains the preeminent driver of global economic growth and we are now ideally positioned to benefit from this.

The greater U.S. presence gives us an enhanced ability to fund and execute on cross-border initiatives.

There will, just for the virtue of size, be more attractive portfolio opportunities in the U.S., and having a major presence there means that we're more likely to find them as our competitors do and at attractive prices. This opportunity does not come without risks.

Truly it's a tougher competitive market, but our management team has been there before and succeeded in this market. We see the risk of most immediate concern being FX volatility, the kind we saw on the last half of 2014 where the loonie fell 8% against the U.S.

dollar and the first quarter 2015 the loonie has dropped another -- a further 7%. I want to tell you, management has taken steps to mitigate this risk, that we continue to be vigilant in keeping our FX risks at our operation statements as far as reasonable and locking in profits where we can.

Some of you have asked whether we consider reporting in U.S. dollars like a number of large Canadian companies.

Our answer is that in the short term our stock will trade in Canadian dollar and exchange listed and we'll continue to report in Canadian dollars. We will review this as we go forward.

Operator, that concludes our prepared remarks and we'll be happy to open the call to questions.

Good evening, Steve. I guess, quoting on your commentary with the center of gravity has moved to the U.S., in the near-term outlook for margins, does the surprise breakup by the Bank of Canada has really any impact on your outlook for margins?

And I guess secondarily, can you give us some guidance as to what it might mean if the Fed does eventually begin to raise interest rates and what impact that might have on your outlook?

Maybe I'll -- thanks, John. Good question.

I'll start and pass it to Brad. But as you know, the majority of our assets are in the fleet and rail business.

In the fleet, the master lease arrangements actually have specified the funding bond with U.S. Treasury Canadian bond [inaudible] credit spreads of that [ph].

So, going forward, if interest rates go up or down, you're able to, you know, lock in your -- you're not at risk for rates up and down. And the rail business, 80% of these leases are going to renew in seven to eight years, 80% are a function of non-interest rates, and we get to renew on our terms, not those terms.

So we get a chance to reset. So we feel pretty good that we're positioned either for an increase, which is more likely in the U.S., or decrease in CAD, without taking funding risks.

And as you know, we match our books, so as new leases come on, we fund and put amortizing debt in place that matches the duration, interest rate and currency of those lease obligations. You want to add anything, Brad?

No. I think that's fine.

I agree with that.

Good, thanks. And a follow-on if I may.

Steve, you talked about the -- about hedging your U.S. dollar exposure.

How do you currently put any hedges in place and how much of the $1.05 objective for 2015 has actually been hedged?

Yeah. So to that point, John, when we announced that we increased guidance to $1.05, that wasn't based upon a subjective view of what could happen with the natural hedge we put in.

The earnings flow from fleet and rail are very predictable, so we know the earnings coming up in that book in 2015. So given that we were in the money and the modest cost of hedge, we locked that in for our shareholders.

And that was behind the -- that was the base in which we increased guidance to $1.05. We have not hedged in 2016 or 2017.

Great. Thank you very much.

Hi. Good evening guys.

I have one quick question and one philosophical one. The quick one, for the third-party funds, if you could perhaps update us on the status of those and what you've been seeing so far in the market.

It's David McKerroll speaking. Yeah, we are working on the fund right now.

We hope to be in the market very shortly. I can't give much more details than that.

But we're very -- we feel very positive about the business. The group has been working hard on a number of things, and so we look for some positive results in 2015.

I think, Vincent, we are close on our first one. This is a matter of weeks, not months.

Got it. Okay, great.

And the philosophical one, you know, given recent transactions that we've seen in, you know, aviation equipment finance, as well as some demand for of course third-party funds and aviation and rail, and thinking about your potential opportunities that you mentioned, could you let us know or give us some more detail about how you're thinking about, say, these sorts of these deals, and also how you're thinking about Element and your four verticals going forward? Thanks.

There's a lot to that question, Vincent. That's a pretty deep philosophical question.

But with respect to the funds versus on balance sheet, it's a time to market where a third-party fund for aviation may be a better model, a likely more efficient model than funding on a balance sheet. So, you know, it was [ph] coming.

When Dave referenced an opportunity for retrofit for railcars, that would be on a fund basis. So we're, you know, it's -- we're cognizant that we're a steward of capital on behalf of our shareholders, so we constantly look at fund versus on balance sheet.

With respect to individual businesses trading, I think your reference as to the U.S. banks now getting green light on smaller acquisitions of businesses, there's been some pretty attractive valuation.

I think embedded in your comment was the recent transaction of Huntington Bank acquiring Macquarie's vendor IT business at what are very attractive valuations. We built a very strong business and we'll continue to build it, and these valuations aren't lost on us.

Got it. Thanks so much, Steve.

Yeah, thanks very much. A couple of questions with respect to the bump-up in the financial revenue yield in the aviation and just quarter over quarter, and then the commercial vendor.

I assume what we're getting on the aviation is really all the syndication income that's coming, if you can confirm that that's really the driver here of the bump-up in the yield there. But I don't know what the bump-up quarter over quarter would have been in the yield on commercial and vendor, and if you can talk about what that is and how sustainable that might be?

So the aviation business, Dave and I are nodding, it takes, you know, four quarters of business. Aviation, as you know, Tom, always has a very large fourth quarter.

The syndications take quarters to complete, so that the bump-up in the yield in aviation syndication fees, so, you know, look to Q3 and Q2 as more representative of aviation without the syndication piece.

And Tom, it's Brad. On the commercial and vendor, this is a very strategic part of this business.

As you know, we moved from direct business where you're competing on a transaction-by-transaction basis, it's a more programmatic type basis. And when you get into those program agreements, you get a higher yield for the services you offer.

And this is a mix of business in Q3 and Q4, very sustainable, and that we have these particular clients that are, I won't mention these names, but these programs are in there, will continue to have rights of first refusal and exclusivity arrangements through 2015 and beyond. So it's a sustainable increase, and based upon our service offerings where we've been able to offer the services and take just the rate, what's your best rate, you know, question mark out of it, Tom, so that's what we've seen in the mix of business, and that will absolutely continue through 2015.

Okay. And thanks.

Now if I look at the fleet management fees, they were $38.5 million in third quarter to $39 million in the fourth quarter. Yet if I look at the, you know, you had quite a few originations in fleet, you look at fleet assets were up, from, I don't know, $5.3 billion to $5.6 billion.

Why didn't the fees move up as much? Is there any sort of seasonality here or timing issue?

I would have expected maybe the fleet fees to move up more.

Yes. So, Tom, it's -- there is some seasonality during buying season, that's where we put on more assets during a buying season.

So, example of that, we just put on, you know, a fair number of assets for one of our big -- our major clients where this was their buying season and they purchased 10,000 for an F-150 aluminum body trucks. So there's where we get the asset base.

The fees that go along with those take time to generate. So they're a monthly fee and they take time to come in, so you won't see them depending on what time of the quarter we put them in, you'll see those in the next full quarter.

In addition, our new client wins, we might be closing one today, for example, where we get the full book today, but we'll only start to earn revenue for the last few number of days in the quarter. So you'll see a little bit of a lag behind in the service fee part of that.

And really we're driving towards, on Slide 7, we're driving towards what we think is this optimal -- we know, is this optimal fee revenue base of 50/50 between the two. And what that gives us is a key differentiator between other parties out there, and it gives us the real stickiness.

But again, there's difference in the timing lag that you'll see that come through the financial statements.

Okay. Yeah, that's great.

And then the final one, it's just there's an amortization of an intangible now that jumped into the fourth quarter, and it seemed to be acquisition related and it wasn't in the third quarter. Should we -- why is that?

Should we be expecting this thing to continue? Not quite sure what that number is.

It's an allocation, Tom, of the PHH goodwill to customer lists, which took the account some time to sign off on. So you're allocating goodwill to customer lists, goodwill, not amortizable, but customer list.

So, is that -- over what period did that amortize?

Fifteen --

Fifteen.

Okay.

Fifteen years.

Yes. So it's just cleaning up the purchase price equation, Tom, which you know stays open for a year.

So it's just that classification between those two categories.

Okay. Thanks very much.

Hi, good evening. Most of my questions have been asked.

The only question I had was just on the fleet Canada side. You know, it's, typically, it's a seasonally stronger quarter, but look to be particularly strong.

Just wondering if there was any sort of additional factors there, or this is you feel representative of what was going on in the business?

No. I mean we had great success in bringing our integration platform up to Canada, so we're having great success in bringing things like our mobile applications that we didn't have in Canada up from the States.

So we've had -- we've had good success on that. And secondly, if you remember back, we've always had a chart that varies between a 10% range.

And that particular case was one large client that had put some orders on hold [inaudible] green initiatives. And the fuel price changes has really changed people's view of the fuel price -- sorry, of the green initiatives, so now they're looking at with current prices and where they might go, does it make sense on this -- in this case, when a client put those on hold and change the type of product they're buying.

So, nothing untoward other than good news on bringing the products from down south up here and being able to give those to our Canadian clients, and then some seasonality based upon fuel prices where, quite frankly, people are spending a little more on cars and a little bit less on the green initiative because fuel costs are down.

Yeah. This kind of led me into my other question I had is, it sounds like I guess you are starting to see some of the benefit from the lower fuel prices you talked about where you get hit -- maybe you get some impact on the pump, but maybe where it may help the originations going forward.

is that, you know, are you starting to see that now or is it maybe something you'll see more later in 2015?

You know, we see it -- first of all, in Canada, we have a unit-based fuel price program, so we have per liter, it doesn't matter what fuel prices do. In the States, it is based upon fuel prices, and I gave you a sensitivity on that, it's fairly small, even though it's a big spend for our clients.

What we're seeing the benefit of that, in certain cases, is that people are looking at the type of cars and trucks they buy and they're willing to spend a little more on the car or the truck because they have lower operating costs coming into that. So I don't think that'll be huge, but that's part of it.

And in addition, we're seeing our clients -- you know, our clients are benefiting from this lower fuel cost. I mean our trucking clients, extensively, and if you look at some of our big clients with 40,000 vans on the road, they benefited in their own operations substantially from that.

And what that does, it puts less stress on their total operating costs. But again, we have so many products to offer these clients, that's why we want them, you know, the mix of the revenue and the fee.

So, really it's fairly small, there's some good news in there for our clients. But for us it's a very small feature.

And again, most of our revenue is driven off of the card services and accident services and red light camera services, those types of services that are not driven off fuel prices.

Okay. Great.

Thank you.

Hi. Just a couple of questions.

First, on the extension of the Trinity arrangement. The original deal was kind of done early -- late part of I guess 2013.

Is that sort of the timing that those types of agreements happen like only a few months before it could be extended, or is it possible to see something in the first half of 2015?

Yeah. Well, there's different parts to the agreement, but the buying program was basically when we work with Trinity in the original deal, we said, okay, we want to buy $2 billion worth of cars by the end of 2015.

So we're still on that track. We have good relationship with Trinity.

And we're in discussions all the time about other deals and things we can do. So we'll be discussing that with them throughout the next few months, you know, other deals that we're discussing with them.

Okay. And I guess just, you know, in terms of the service revenue, Brad, you talked about an optimal mix.

Is there really -- is 50%, now that you've got two-quarters of the business under your belt, you're starting to see some growth in that percentage, is 50%, that number in 2016 go to 55%, 60%? Is there an optimal number or is it, the more service revenue, the better?

I guess is that the way to look at it?

Yes. So, Steve, I mean we -- I think the optimal mix is in around that 50% range, and it can go to 55% or 60% or it can go to 45%, depending on what happens with the book.

And as you're aware, we offer alternatives to clients for self-funding. So if someone chooses to self-fund, we have a lower [ph] asset base and we don't earn revenue on the lease side of it, yet we earn more fee income.

So the numbers will change there. But it doesn't give me quite a sticky a business.

So what I'm more concerned about is making sure we have both product offerings in and around the 50% range. And the real key there is to make sure we grow that service revenue, not so much as a percentage but as an absolute dollar amount.

So as we grow our book in fleet, we want to do two things. We want to grow our lease book and the resulting lease revenue off of that, and secondly, we want to grow our absolute dollars of service revenue.

So there's a little bit of a change in the percentages, but when we look at our competitors and what we offer, we think that 50/50 isn't -- is at around the sort of optimal range. And if that gets too far, I mean if it went to 90/10, then I would have concerns, if it went to 90% service revenue, you might be happy with that, but then I don't have a sticky a business with my clients to make sure that they don't change.

This is again a very sticky business. By us having the cars and the trucks and being tied into their systems, into their GL systems, into their payable systems, it really gives us that ultimate stickiness.

And that's why we enjoy 98% type retention rate to this business.

Maybe, Steve, just a couple of comments that echo Brad's thoughts. If you look to PHH historically, their service revenue compounded with 10% to 12% range, which drove the earnings.

We don't talk about margins on service revenue because I know there's a number of our competitors can be on this call this evening, but we think that service revenue growth will continue to grow. You don't want a 100% service revenue because then you're in the waxen fleet corps [ph] world where the clients don't stay as long.

We have our clients stay for two years under Brad's, and Jim's and Dan's clients stay for 10 to 20 years. So you'll see it increase the percentage, but more to Brad's point, it's a dollar-for-dollar growth year over year.

Okay. And is there anything in that arsenal of service business that you seem, you know, that you're missing that you would be growing organically or is there acquisitions part of that, like a specific -- not like a fleet corps that does fuel cards [ph] like you do, but is there anything that you see on the platform that you kind of have looked at and do you think you may need in the future?

Yes. So the answer -- no, Steve.

I mean we have a huge arsenal there and we continue to organically grow things like our mobile applications which are self-grown and give us another entry into the [inaudible] with the rollup on that. There are several acquisition opportunities out there.

Like telematics for example, telematics, there's three companies out there, any of which we could acquire, but that's a technology we don't need to acquire because we're better to pay-as-you-play. Those used to be $300 and $400, and now they're $19 and $20 items.

So there's technology that we'd prefer just to have someone else provide. What I want is I want the stickiness into the client and I want that data which we get.

So we feel very, very good about our product offerings and our arsenal that we have to offer. And that's really brought home by things like PepsiCo, major company giving us their Supplier of the Year award.

That's major, major achievement for us. And that shows that we are doing the right things with our clients and with the products we have to offer.

Okay. Just a question on the aviation and about the yield.

I mean you mentioned the syndication piece in there, and that's brought the yield up. On a quarter-over-quarter basis, if you sort of take out that syndication, would the yield be comparable to Q3?

We've heard that competition is quite fierce in that vertical right now.

I wouldn't say [ph] the competition is fierce. As you know, we're a boutique provider of aviation, we focus on mid to heavy helicopter, civil aircraft and simulators.

So it's not the competitive pricing you see in the commercial aircrafts, Steve. I think if you add 20 -- if you normalize that syndication revenue for the year quarter over quarter, probably take you through that 20 to 40 basis points in Q2 as you push that syndication revenue over the year.

Okay, that's great. Thanks.

Thank you. So, first question I want to ask is on the PHH integration.

So you say you're substantially complete. Does that suggest you're at the $25 million of cost synergies on a run rate basis?

Yes. This is Brad.

Yes.

Okay. And then you talked about excellent client retention.

What about employee retention, at least in terms of the employees you wanted to retain?

Yeah. We have had great success in the employee base.

As you remember, as part of that -- part of the acquisition, many, many of those employees put their pension payments they got from PH&H parent co. into Element stock.

So we've had -- we retained every employee that we wish to there. If you remember, in the States we didn't have an operation, so that was very much giving them the capital and the new products to develop.

In Canada we've had -- we've got the luxury and the discipline of being able to pick between three groups of people and we put that together. So we're very comfortable right now with our management team and our employee base.

And again, I don't want to go back to PepsiCo too many times, but that, you know, those type of awards show that we're doing the right thing in the marketplace with our employees. And retention of our clients has been, you know, pristine.

We've been able to take clients that were on either the old TLSI Element system and able to show them things like mobile applications where anybody on the road today can find the nearest service station or find out where their cars are and, you know, mobile just continues to be another way for us and the clients. So we have fleet managers.

We used to have to phone in about things, and now they get it right to their mobile device. So, very pleased with all those aspects.

Okay.

And again, with the integration part of this, the heavy lifting has been done. What we're now able to do is do the fine-tuning, turn it to the "fun part" of this, which is taking those services and pushing them on across our client base.

Right. So then, is it fair, in terms of Canada, would they be running on the same platform then from a technology standpoint?

Yes.

Okay.

We have one small portfolio to put on, but they're on the same platform now. So all the -- we have, again, we have one small platform to do, but primarily on the same platform, I think 95% or something of their assets are the same North American platform.

And that's really key. I mean if you look back, you go back to first principles on this one, our key was to have a North American customer-facing solution.

And that's what we now have.

Okay. And then on the rail side, Dave, you mentioned the possibility of buying railcars or financing railcars directly with shippers and the railroads.

Would that be something that Element takes on balance sheet or is that more something to go into a fund?

No, that will go on to our balance sheet, just like the Trinity is going to our balance sheet, and would probably fund through ABS.

Okay --

So those leases, Paul, those leases will meet the same credit requirements that our Trinity leases have to meet.

Right. And then if they're going the same ABS vehicle, then that also would be subject to same service agreements as those that you buy directly from Trinity.

Yes.

Yeah, okay. And that sort of what makes up the difference between the $1 billion you expect to buy from Trinity and the $1.3 billion, $1.4 billion I think is your origination guidance?

Well, there's also exchange rate in there.

Yeah, okay.

And so it's the ability for us -- I mean we have our own client we can originate deals for directly. And that helps us offset anything, if we can't get enough cars from Trinity too, we have other avenues where we can make sure we meet our origination guidance.

And then I have a couple accounting type questions. I guess the first one is on the average earning assets for the quarter.

It looks like it's, at 8.5, it's a little bit of an odd number considering you started at 8.9 and 9.7. So I'm assuming it has something to do with the pattern of when some of your existing leases rolled off and when you brought the new originations in.

But maybe provide some color around that for us?

Yeah. On those ones, let's get back to you in half-an-hour worth, a little handicapped in not having Michel.

We'll move back to you in half-hour.

Okay, okay. That's it for me.

Thanks.

Good evening. I'm not sure if this is the same sort of question.

The runoff, similar to what Paul just asked, the runoff in the fleet business, and I appreciate that I've had to make a few assumptions about currency, but that -- the runoff in that business seemed a lot faster than I would have expected. What would we -- what should we expect in terms of how quickly those leases run off quarter to quarter or year over year -- year to year?

Yeah. It goes from -- it goes with our four-year leases, so they're pretty much a 24, 28-month duration, and they roll off pretty evenly over four years.

And most of our clients will, up front, because of our consulting practice and we do four-year lease with them, they will keep it further for the full four years. So you should expect that normal four-year rolloff pattern.

So then looking at the current quarter, again taking into account that I've had to make a number of assumptions about how currency affects that, was there anything you'd highlight in terms of the runoff in the quarter?

I don't think so. But again we're going to get back to you on that one.

But no.

Anything you'd highlight, another division that their business lines like aviation where the runoff also looked a little higher than I would have expected? Is there any kind of asset sales or anything that you can highlight --

Yeah. Well, aviation for sure would have the --

Of course the syndication.

-- sales, so that'll collapse your previous --

Yeah, that makes sense.

But on the fleet, let's just get back to you.

Okay. Thank you.

-- half an hour. Typically should be -- no, these are 48-month leases to 30% balloon, you should see 15% to 17.5% runoffs.

Let's go back and reconcile --

Okay. One other sort of follow-up question then.

On originations, looking at 2015, in the previous press release there was the December press release, December 14 I think it was, you referred to $6.5 billion in originations. Currencies probably helped a little bit.

Any update there?

We think we're [inaudible] we're early in the year.

Okay. Thank you.

Hi, thanks. Good evening.

Just on the Canadian fleet program merger that you've referenced on Slide 22. Over what timeframe would you expect to realize those funding cost savings?

And am I correct in assuming that you haven't baked that into the $1.05, your guidance for 2015?

Yeah. So it has been baked into the $1.05.

Okay.

And it starts now. And we realize basically you had about $900 million funded through a bank and life co.

[ph] relationship, it's now been rolled into Flert [ph], but you'll see that come through evenly through the year.

Okay.

Approximately 70 basis points of savings on $900 million, but that will flow through. And it has been baked into the $1.05.

Okay. Okay.

And then just a different tack here. The Trinity program, Dave, you mentioned that Trinity was happy with the performance of the existing program, that they want to renew the program.

Should we expect something along the lines of another sort of $2 billion over two years, or, you know, basically, will it be a similar program to what the -- to the existing one?

Yeah. We hadn't really got into the quantum of what it would be, those talks.

I mean right now we're trying to work through the first $2 billion. And we're both happy how things are going and we want to extend it, but that's also going to depend on sort of the production that Trinity has and what they have available.

So, no, it's going to be a while for this year as we work through to figure what's -- how big the program is going to be onboard.

Okay. And when you -- sorry.

We would hope that $2 billion is a mark we replicated again in the last few years. But think of this as evergreen program.

Okay.

It's a program that would just naturally evolve into the -- there isn't a legal [inaudible] two years, as long as it's working, both parties will drive it forward.

Got it. And when you say that you intend to augment these originations with deals that directly sourced by Element, are you targeting on an entirely different client base from what, you know, from what's in the sort of Trinity pipeline?

Yeah, you've seen Dave in the last couple of quarters acquire some small portfolios from the likes of CIT and GE, those third-party portfolios that Dave will add to as diversification. So, consider that.

Our principal relationship will always be with Trinity. We're very happy, both partners.

But we'll augment it with third-party portfolios and some shippers.

Okay. Perfect.

Thanks. That's all my questions.

Hi, thanks. Just one more from me.

You mentioned that the order book for fleet is strong. And I was just wondering if you could give us a sense of how big this order book is and how it typically delivers over time.

Thanks.

So, you know, when we look at our originations for next year in our book and we have a substantial order book in place, the fleet business is driven not off cars on the lot but cars that we order through the GM and Chrysler and Ford actual systems. So we look at how many orders we have today in the system that are not yet fulfilled.

And that's very strong compared to what it was last year. It does vary by quarter, but what we're seeing is that the -- we're still seeing the positive effect of 2007, 2008 and people not replacing some vehicles.

We're seeing the effect of some of the green initiatives and we're seeing the effect of total cost of ownership being substantially less on new vehicles. And so we're seeing that order book very strong.

Because of the way cars and vehicle sales have happened over the last few years, there is a very large number of old vehicles out there that aren't worth very much and very few vehicles that are in the two to three, four-year range. So we're seeing very strong things happening in the used market space.

So what that means is that's driving through to new car orders as well because we're maximizing the return on the used vehicles that are two or three years old for our clients, and they can drop the total cost of ownership. So all those numbers work into our originations for next year and our increase in booked.

Got it. And could you -- so your fourth quarter originations were very strong with fleet.

Could you give us a sense of how seasonality typically plays out? And then also if you're willing to disclose the orders through for the GM that you haven't filled yet?

That'd be great. Thank you.

So we wouldn't disclose that. What we do have out there, and we can republish it, is we have a chart that shows by quarter the seasonality, and it varies plus 5% and minus 5%, so, 10% range.

It was more seasonality in Canada, less so in the States. So we can republish that chart for you.

And that's entirely dependent on the years of order and then things that can happen in the marketplace, like again the Ford F-150, the new aluminum body, got delayed. That moved a lot of orders into Q1.

And then we also have our own, it's not seasonality, it's client behavior, where we offer self-funding model, and one of our clients recently, who used to do self-funding for their own internal purposes, has purchased $185 million of vehicles that are coming in the next two quarters, in that order now. So we'll republish that range for you.

And then the U.S. has softened that seasonality for us as well.

Great. Thanks very much, Brad.

Thanks.

Hi. Good evening.

Most of my questions have been answered. But I guess just one for Steve.

When I look at the metrics by each vertical, you provide a -- that advanced [ph] rate. And I'm just wondering how that ties into the tangible leverage ratio.

So when I look at the 96% for fleet, how do you tie that back to the 5-1/2 times?

Yes. So you'll find that if you look to the fleet business, you'll have a leverage ratio.

By the way, leverage ratio has to include restricted cash and securitization vehicle. But think about, as the fleet business leverage in that 7-1/2 to 9 to 1 range, that's sort of a good number, the commercial finance businesses, which are aviation, rail, there's a kind of 3 to 3-1/2 to 1 as a group.

The weighting obviously -- the weighting will have a big impact, if we're able to pick up some portfolios in Q3, Q4, our leverage could go higher. And I would say that our rating agencies will be comfortable with higher leverage given that's for the fleet business.

Okay. So you could potentially take it higher than 5-1/2 times give that that advanced rates differ by vertical.

If it were for the fleet business.

Okay, good. Thank you.

Yeah. Thanks very much.

Just a question on the, I think, the earnings per share you gave were on basic, and it was a little bit less on a fully diluted basis. What's the maximum -- if you could remind us what the maximum difference between the basic and the fully diluted and the percentage-wise might be?

Because I think there is some stipulation that you have associated with that. And what -- is the $1.05 on a basic or fully diluted basis?

Or does it really matter right now?

I don't think it should make a material difference, Tom. But let us, you know, give us half an hour and we'll come back to that.

Okay. Thanks very much.

Just for everyone on the call, there was typo in the MD&A which will be -- that typo will be addressed and their corrections this evening. On Page 66, the summary of quarterly information, the first three numbers in Q4, Q3 and Q2 are -- they are actually net financial revenue, not total financial revenue.

It's a typo, but you'll see a correction published shortly.

Thanks very much, operator, and thank you everyone for joining us on this call. We will look forward to speaking to you all again on May 13th when we report our first quarter results for 2015.

Thank you.