Presented by: Catherine Blazer - Senior Account Executive Adam Cline - Finance Manager Bryan St. Eve - Director of Flee

1. The Importance of Fleet Management to The Bottom Line Presented by: Catherine Blazer - Senior Account Executive Adam Cline - Finance Manager Bryan St. Eve - Director of Fleet Management

2. Presenter • Catherine Blazer Catherine is a Senior Account Executive with Enterprise Fleet Management; she has been with Enterprise for over 12 years. Catherine started her career with Enterprise in the rental division, and was promoted to Fleet Management in 2006.   Catherine is on the board of Construction Financial Management Association (CFMA), serves on committees for Associated General Contractors (AGC), and is a member of the Kentucky Association of Highway Contractors (KAHC).

3. Presenter • Bryan St. Eve • Bryan has been with Enterprise for over 11 years, and with the Fleet Management Division for 10.  Throughout his career he has held accounting, sales and management positions in Dallas, St. Louis, Denver, and Louisville, all with Enterprise Fleet Management.   • Bryan is a native of St. Louis, MO, and received a BBA in Finance and Economics from Southern Methodist University in Dallas, TX; he currently serves as Director of Fleet Management for EFM in Louisville, KY.

4. Presenter • Adam Cline • Adam is currently a Finance Manager for Enterprise Fleet Management.  He has been with the company for 12 years, and with the Fleet Management Division for 10.  With Enterprise, he has held leadership positions in the areas of acquisition, tax and title compliance and accounting.   • Adam has worked at the corporate office and in various field locations.  Adam is a native of St. Louis, MO, and received a BBA in Finance and Business Administration.

5. Agenda • Dollars and cents of buying, selling and operating a fleet of vehicles • Basics of vehicle Fleet Management • The importance of a flexible fleet and managing risk in a cyclical or seasonal business • Replacement Analysis • Industry issues involving vehicle fleets • Questions to ask to determine if Fleet Management makes sense for your client’s business

6. 6 Elements of Cost of Operating a Fleet

7. Food for Thought For a standard $25,000 Ford F-150, what is the total approximate cost to operate over 8 years/200,000 miles? • $50,000 • $75,000 • $100,000

8. Answer • Pre-Tax cost is $105,338

9. Example – Buy and Hold Assumptions Vehicle cost $24,938 Sales Tax of 6% or $1,496 Interest Rate of 4.00% for 4-year loan 25,000 miles per year (all business) Hold for 8 years or 200,000 miles Fuel economy of 20.00 MPG with some degradation Fuel price of $3.50 with 5.00% inflation No inflation is considered for non-fuel expenses Sells for $1,000 after 8 years Insurance costs of $1,200 annually or $9,600 in total Preventative maintenance based upon provider’s schedule (5,000 miles) Normal costs related to vehicle breakdowns were considered $250 annually for administrative time and effort

10. Total Cost for 1 Vehicle – 8 Years at 200,000 miles

11. Total Cost for 50 Vehicles – 8 Years at 200,000 miles $5,266,900 • Total Cost $658,363 • Average Annual Spend 52.7¢ • Cents Per Mile $2,870,000 • Present Value

12. Understanding the Basics of Fleet Management Expertise in the Automotive Industry with Emphasis on Cradle-to-Grave Vehicle Processes

13. The Basics of Fleet Management

14. The Building Blocks of Fleet Management

15. Reducing and Controlling Costs • Vehicle selection to fit the needs of the business • Vehicle buy and vehicle incentives • Selling the vehicle • Competitive funding and options • Open-End Lease • Closed-End Lease • Maintenance and repair plans • Monitor and control operating costs such as fuel • Proper replacement patterns • Productivity gains from time savings

16. Characteristics of Closed-End and Open-End Lease • Closed-End • Traditional “Lease” structure: • Contract is for a set period of time and set amount of miles. • Generally a lower monthly payment, but subject to over miles and wear and tear penalties • Open-End (our most recommended structure for commercial use) • Flexibility of ownership • Market Value financing • Client takes advantage of resale

17. Example of Open-end Lease • A $20,000 vehicle is leased to a customer for 36 months with 2% per month depreciation. • At the end of 36 months, the lease will have a residual of $5,600 representing the balance that is not depreciated in the lease. • $20,000 times 2% times 36 months = $14,400 • $20,000 minus $14,400 = $5,600 • If the vehicle sells for $6,000, the customer receives the $400 difference ($6,000 minus $5,600) • If the vehicle sells for $5,000, the customer pays the $600 difference ($5,000 minus $5,600)

18. Core Cost Elements

19. Example – Managed Fleet Assumptions Vehicle cost $23,938 Sales Tax of 6% or $1,436 Interest Rate of 3.35% for 4-year lease 25,000 miles per year (all business) Hold for 8 years or 200,000 miles Fuel economy of 20.00 MPG with slight degradation Fuel price of $3.50 with 5.00% inflation No inflation is considered for non-fuel expenses Sells for $1,300 after 8 years Insurance costs of $1,200 annually or $9,600 in total Maintenance plan put in place to control service intervals and avoid unnecessary services Normal costs related to vehicle breakdowns were considered $50 annually for administrative time and effort

20. Total Cost for 1 Vehicle – 8 Years at 200,000 miles

21. Total Cost for 50 Vehicles – 8 Years at 200,000 miles

22. Managing Cyclical and Seasonal Industries

23. Business Peaks • Hiring workers and need vehicles fast • Tend to acquire from dealership inventory • Will overpay because of unnecessary equipment and lack of dealer inventory Business Valleys • Idle Vehicles = Idle Capital • Tend to sell in “fire-sale” mentality and may not get a good price

24. Vehicles in Service 12 Time in Service

25. The Value of Replacement

26. The Value of Replacement One of the important elements of Fleet Management is knowing the economics and the customer’s business goals of when to replace vehicles This example did not assume replacement options Fleet management companies do not recommend 200,000 mileage patterns for a Ford F-150 Fleet Management Companies monitor the following items: Used vehicle prices Maintenance and downtime considerations / customer service issues Fuel and fuel economy standards Appearance and branding Vehicle incentives The structure of the lease term provides an automatic trigger to analyze the hold versus replace decision

27. Food for Thought Do you know how often your clients replace their company vehicles? • Every 3-4 years • Every 5-6 years • Every 7-8 years • Longer than 8 years

28. Vehicle – Buy and Hold PlanMaintenance and Repair

29. Buy and Hold – Fuel Cost 25,000/year – 6% Inflation - $3.75/GallonStarting MPG in Year 1 – 13mpgStarting MPG in Year 5 – 14mpg25,000 Miles/Year

30. Replacement Analysis at 4 Years / 100,000 miles

31. Total Cost for 1 Vehicle – with Replacement

32. Total Cost of Buy and Hold Strategy

33. Total Cost of a Replacement Plan Strategy

34. Evaluating Trends and Planning

35. Considerations Having an expert opinion to evaluate the industry trends and consult on business needs in order to plan for ahead for the future

36. Food for Thought Do you know what the average price of fuel was in 2001? • $1.15 • $2.65 • $3.00

37. Answer $1.15

38. National Fuel Price Analysis Average Unleaded Fuel PPG 2001-2012 Source: U.S Energy Information Administration

39. Inflation and Fuel Costs Over 8 years

40. CAFE Mandate: Double Fuel Economy by 2025 54.5 MPG in 2025 5% annual increase in MPG for cars 3.5% annual increase in MPG for trucks Fuel – Long Term Requirements

41. An Analogy to the Finance Profession Fleet Management is similar to a Tax Professional A company can do it alone without professional advice But it’s likely to cost you more Tax Professionals implement proper cash flow planning techniques and ensures all of the proper deductions for a constantly-changing tax code A vehicle fleet manager designs a flexible fleet and strives for the best economics for a given business

42. Putting it in Perspective Looking at the Ford F-150 51 different choices (this does not mean different colors, interiors, etc.) Acquisition prices range from MSRP of $24,000 to $53,000 Small changes can quickly add over $1,000 Looking at all Vehicles There are roughly 2,200 different series each model year Keeping updated on year-to-year changes is no small task

43. An Analogy to the Finance Profession Fleet Management is similar to a Tax Professional A company can do it alone without professional advice But it’s likely to cost you more Tax Professionals implement proper cash flow planning techniques and ensures all of the proper deductions for a constantly-changing tax code A vehicle fleet manager designs a flexible fleet and strives for the best economics for a given business

44. Other hot topics in the industry CNG / Electric / Hybrid / Diesels Smaller Vehicles / Lighter Vehicles Computerized Dashboards Oval Car Bodies to Reduce Drag CVT: Continuously Variable Transmissions Rising commodity costs – rubber for tires and maintenance in general Redesigned and release of commercial vehicles: Ford Transit and Transit Connect, Dodge Promaster, Nissan NV, etc.

45. The Building Blocks of Fleet Management

46. Is an additional source of capital important to their business? Do they know the total spend for the fleet? Is it difficult to dispose of vehicles during a business downturn? Do they have idle vehicles at different points in time? Is vehicle downtime a significant detriment to their business? Who approves maintenance invoices and what experience does that person have with the automotive industry? At what mileage intervals are the vehicles being serviced for oil changes? Do they track maintenance expense on a vehicle-by-vehicle basis? What is the plan if fuel prices continue to rise? Is the business equipped to analyze the new products (i.e., Hybrids, compressed natural gas, electric, etc.) that are coming to market? Questions to Ask to Determine if Fleet Management Makes Sense for your clients:

47. Questions

48. For more information on fleet consultation Please check out our website www.efleets.com or call 877-23 FLEET