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Morneau Shepell announces CEO succession; reports 2016 fourth quarter and full year financial results

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Corporate / Investor Relations / Canada

Morneau Shepell announces CEO succession; reports 2016 fourth quarter and full year financial results



  • Alan Torrie, President and CEO of Morneau Shepell announces retirement; Stephen Liptrap to become President and CEO
  • Solid profit growth continues in 2016
  • Adoption of ordinary course Shareholder Rights Plan also announced

TORONTO, March 2, 2017 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX: MSI) today announced Alan Torrie's intention to retire after 12 years with the Company, the past eight as President and CEO.  Torrie will retire immediately prior to the annual meeting of shareholders to be held on May 5, 2017.

In line with Morneau Shepell's succession plans, the Board of Directors announced that Stephen Liptrap, Chief Operating Officer, will assume the role of President and CEO on May 5, 2017.

"Under Alan's leadership, Morneau Shepell has delivered exceptional performance.  During his tenure, the Company's revenues and market cap have each quadrupled, with the Company now on the S&P/TSX Composite Index. In addition, during this time, the Company's geographic footprint has expanded well beyond its Canadian roots," said Jill Denham, Chair of the Board.  "Notably, Alan has built a strong executive team with deep bench strength, enabling the Company to transition to a new leader seamlessly.  He has been a respected leader to the full Morneau Shepell team where he has created a work environment with strong values and a focus on innovation." 

"I am pleased the Board has selected Stephen as my successor.  Since taking on the role of Chief Operating Officer almost a year ago and leading our largest business unit for over six years before that, he has demonstrated his diverse abilities as a senior executive who I expect will lead the Company profitably into future growth opportunities," said Torrie.  "With Stephen's combination of a strong commitment to our employees, his business skills, deep expertise in the HR field, his exceptional leadership skills and his trusted relationships with our clients, I am very confident in the Company's future."

Liptrap brings more than 25 years of senior executive experience to the role.  He has been with the Company since 2008.  For six years, prior to being appointed Chief Operating Officer in 2016, Liptrap led one of Morneau Shepell's fastest growing business units and significantly increased revenues, margins and its international market presence. Prior to joining the Company, his executive experience spanned a number of sectors, including retail, information technology and consumer packaged goods at large North American publicly-traded companies.

"I am honoured the Board has confidence in me to lead Morneau Shepell into the next phase of its growth," said Liptrap.  "It has been a real pleasure working with Alan these past eight years. I am thrilled to continue to build the business toward delivering the kind of results that our shareholders and all our stakeholders, including our clients and our employees, have come to expect from the Company."

2016 fourth quarter and full year financial results

Fourth quarter highlights

  • Adjusted EBITDA increased by 6.0 per cent to $26.7 million.
  • Adjusted EBITDA margins in the quarter improved from 17.3 per cent to 17.9 per cent.
  • Revenue increased by 2.3 per cent.

Full year highlights

  • Adjusted EBITDA grew by $6.5 million to $112.3 million – a 6.1 per cent increase for the year.
  • Adjusted EBITDA margins improved to 19.0 per cent from 18.7 per cent
  • Revenue increased by 4.4 per cent per cent to $592.1 million.

"It was a solid fourth quarter that unfolded as planned, and we are pleased by our profitability growth for the period," said Alan Torrie, President and CEO of Morneau Shepell. "While our topline growth wasn't quite as robust for the quarter, it was what we expected. A number of key business wins toward the end of the year strengthens our pipeline and bodes well for future performance."

Commenting on 2016 overall, Torrie said: "We had yet another solid year in line with our expectations and, much like our views on the fourth quarter, we're pleased by our profit growth.  Adjusted EBITDA grew 6.1 per cent to $112.3 million for the year. We are pleased with this result considering our relatively modest revenue and organic growth of 4.4 per cent and 3.6 per cent, respectively. Going forward, the Company is well positioned for future growth while also expecting to maintain its disciplined focus on profit growth and margin improvements."

Q4 2016 Financial Review

In thousands of dollars

Three months ended
December 31, 2016

Three months ended
December 31, 2015

Year ended
December 31, 2016

Year ended
December 31, 2015






Adjusted EBITDA





Adjusted EBITDA margin





Normalized Free Cash Flow











For the year ended December 31, 2016, the Company reported $592.1 million in revenue, an increase of $24.8 million or 4.4 per cent from $567.3 million for the year ended December 31, 2015. Organic revenue grew by 3.6 per cent as a result of growth from all four lines of business. For the fourth quarter revenue growth was 2.3 per cent.

Adjusted EBITDA of $112.3 million increased by $6.5 million from $105.8 million in 2015, primarily due to margin improvements and relatively modest revenue growth compared to historical norms. Adjusted EBITDA margin was 19.0 per cent, slightly higher than 18.7 per cent in 2015. For the fourth quarter, adjusted EBITDA margin was 17.9 per cent compared to 17.3 per cent for the comparative quarter in 2015.

Normalized Free Cash Flow
Normalized Free Cash Flow for the year ended December 31, 2016 increased by $9.3 million to $70.9 million compared to $61.6 million in 2015. The increase was mainly due to higher cash generated from operating activities, before changes in non-cash operating working capital and EBITDA adjustments of $5.2 million as well as lower capital expenditures of $2.7 million.

Ordinary course adoption of Shareholder Rights Plan

Morneau Shepell also announces that its Board of Directors has approved the adoption of a Shareholder Rights Plan Agreement (the "Rights Plan") between the Company and CST Trust Company. The Rights Plan has not been adopted in response to any specific takeover bid or other proposal to acquire control of Morneau Shepell and the Company is not aware of any such pending or contemplated proposals.

The Rights Plan has been adopted to ensure, to the extent possible, that all shareholders of the Company are treated fairly and equally in connection with any takeover bid or other acquisition of control of the Company.

At the close of business today, one right will be issued and attached to each common share of Morneau Shepell outstanding at such time. The rights will automatically attach to the common shares and no further action will be required by shareholders. A right will also automatically attach to each common share of Morneau Shepell issued hereafter.

Subject to the terms of the Rights Plan and to certain exceptions provided therein, the rights will become exercisable in the event that any person, together with joint actors, acquires or announces its intention to acquire 20 per cent or more of the Company's outstanding common shares without complying with the "Permitted Bid" provisions of the Rights Plan or in circumstances where the application of the Rights Plan is waived in accordance with its terms. The "Permitted Bid" provisions prevent the dilutive effects of the Rights Plan from operating if a takeover bid is made to all holders of common shares of the Company (other than the bidder) by way of a takeover bid circular that remains open for acceptance for a minimum of 105 days and satisfies certain other conditions. In circumstances where a takeover bid does not comply with the requirements of the Rights Plan or where the application of the Rights Plan is not waived in accordance with its terms, the rights holders (other than the acquiring person and any joint actors) will be entitled to purchase additional common shares of the Company at a significant discount to the market price.

The Rights Plan has been accepted for filing by the Toronto Stock Exchange conditional on ratification by the shareholders of the Company within six months of its effective date.  The Board of Directors considers that the adoption of the Rights Plan is desirable and in the interests of all of the Company's shareholders, and recommends shareholders vote in favour of the Rights Plan at the annual and special meeting of shareholders scheduled for May 5, 2017 (the "Meeting").  If the Rights Plan is not ratified by the Company's shareholders within six months, the Rights Plan and all rights issued thereunder will terminate and cease to be effective at that time. If the Rights Plan is ratified, it will continue in effect until the close of the annual meeting of shareholders in 2020.

Additional details regarding the Rights Plan will be provided in the Management Information Circular that will be available for viewing on SEDAR at and mailed to the shareholders of the Company prior to the Company's upcoming Meeting.

Annual Meeting of Shareholders
Morneau Shepell announced that it will hold its 2016 Annual and Special Meeting of Shareholders on May 5, 2017, and it established a record date of March 20, 2017 for the meeting.

Notice of Conference Call
Management of Morneau Shepell will host a conference call on Friday, March 3, 2017 at 10:00 a.m. ET.  The conference call is open to all those wishing to attend, with a question and answer period to follow the presentation. In order to participate in the live conference call, please call 416-340-2217 (participant code 5757749) in the Toronto area, or 1-866-696-5910 (participant code 5757749) throughout the rest of Canada. A replay of the call will be available via the Morneau Shepell website at

About Morneau Shepell
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits, and retirement needs. The Company is the leading provider of Employee and Family Assistance Programs, the largest administrator of pension and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position. Established in 1966, Morneau Shepell serves approximately 20,000 organizations, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 4,000 employees globally, Morneau Shepell provides services to organizations across Canada, the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit

Financial Measures
To assist investors in assessing the Company's financial performance, this news release also makes reference to certain financial measures such as Adjusted EBITDA, Adjusted EBITDA margin, Normalized Free Cash Flow and Organic Revenue. The Company believes that Adjusted EBITDA, Adjusted EBITDA margin, Normalized Free Cash Flow and Organic Revenue are useful supplemental measures to assist our investors in assessing our financial performance. See the Company's MD&A for more details. These financial measures do not have any standard meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other issuers.


"Adjusted EBITDA" is defined as profit before finance costs, income tax expenses, depreciation, amortization, impairment losses, and certain unusual expenditures.


"Normalized Free Cash Flow" is defined as cash provided by operating activities, adjusted for changes in non-cash operating working capital, capital expenditures, current income taxes (net of income taxes paid), and certain unusual expenditures.


"Organic Revenue" is defined as revenue excluding acquisitions not in the comparative period and divestitures, and the Health Republic Insurance of New York (HRINY), who was given a wind down of business directive by the New York State Department of Financial Services in 2015.


Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", or other words of similar effect may indicate a "forward-looking" statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (available on SEDAR at and in the firm's MD&A under the heading "Risks and Uncertainties". Those risks and uncertainties include ability to maintain profitability and manage growth, reliance on information systems and technology, reputational risk, dependence on key clients, reliance on key professionals and economic conditions. Many of these risks and uncertainties can affect the firm's actual results and could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statement made by the Company or on the firm's behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

SOURCE Morneau Shepell - Corporate

For further information: Helen Reeves, 416.345.5633,