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Morneau Shepell Inc. Reports Record Growth in Q1 2012

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Investor Relations / Canada

Morneau Shepell Inc. Reports Record Growth in Q1 2012

Not for distribution to U.S. news wire services or for dissemination in the U.S.

Morneau Shepell issued the following corrected News Release to replace the News Release issued on May 14, 2012.

TORONTO, Ontario, May 14, 2012 – Morneau Shepell Inc. (the “Company” or “Morneau Shepell”) (TSX: MSI) today reported its financial results for the three-month period ended March 31, 2012 (all amounts are in Canadian dollars, unless noted otherwise).



  • 21.8 percent increase in revenue to $104.0 million, compared to $85.4 million in Q1 2011.
  • 23.7 percent increase in Adjusted EBITDA1 to $19.3 million from $15.6 million in the same period of 2011.

“The success in winning new clients and expanding existing mandates we experienced throughout 2011 continued in the first quarter in 2012 and resulted in this record growth,” said Bill Morneau, Executive Chairman of the Company. “We had a very good quarter and we continue to expect our overall 2012 results to be in line with our historical growth.”

““We commenced work on several outsourcing contracts we won in previous quarters, as well as a large mandate in our health management practice. This, along with increased use of our EAP and consulting services contributed to these results,” added Alan Torrie, President and CEO of Morneau Shepell. “We are very pleased with this strong start to 2012.”


Q1 2012 Financial Review

In thousands of dollars

First quarter ended March 31, 2012


First quarter ended March 31, 2011














Adjusted EBITDA(1)







Adjusted EBITDA(1) margin







Normalized Free Cash Flow(2)















For the three months ended March 31, 2012 (“Q1 2012”), the Company reported $104.0 million in revenue, a 21.8 percent increase from $85.4 million for three months ended March 31, 2011 (“Q1 2011”). Total operating expenses (excluding depreciation and amortization expenses) totalled $87.8 million in Q1 2012, compared with $69.8 million in Q1 2011. Profit in Q1 2012 was $4.4 million, compared with $6.5 million in Q1 2011.

Adjusted EBITDA(1) of $19.3 million increased by 23.7 percent from Q1 2011 due to the increase in revenue of $18.6 million, offset by increased salaries and other operating expenses of $14.9 million after adjusting for expenses related to enterprise software replacement, operational effectiveness initiatives and provision for e-commerce refundable tax credit. Adjusted EBITDA(1) margin was 18.5 percent compared to 18.3 percent in Q1 2011.


For Q1 2012, the Company generated Normalized Free Cash Flow(2) of $13.2 million compared to $10.5 million in Q1 2011. The Normalized Payout Ratio(3) for Q1 2012 was 70.7 percent compared to 89.1 percent for Q1 2011. The 12-month rolling Normalized Payout Ratio  was 86.3 percent compared to 96.5 percent for the same period in 2011. The Company is maintaining its policy of paying a monthly dividend of 6.5 cents on each share.


Notice of Conference Call

Management of Morneau Shepell will host a conference call on Tuesday, May 15, 2012, at 10:00 a.m. EDT. The conference call is open to all those wishing to attend, with a Question & Answer period to follow the presentation. In order to participate in the live conference call, please call 416-695-7806 (participant code 8508656) in the Toronto area, or 1-888-789-9572 (participant code 8508656) throughout the rest of Canada. A replay of the call will be available via the Morneau Shepell Web site at

About Morneau Shepell Inc.

Morneau Shepell Inc. is the largest Canadian-based firm offering benefits and pension consulting, outsourcing, as well as health management services. The company works with clients to develop end-to-end insights and solutions that integrate with their business strategies to achieve results. Through Benefits and Health Solutions Consulting, Pension Consulting, Health Management, Administration Solutions and Shepell·fgi's Employee and Family Assistance Program, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive positions by supporting their employees' financial security, health and well-being.

Established in 1966, Morneau Shepell serves over 8,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 2,600 employees in offices across North America, we provide services to organizations across Canada, in the United States and around the globe.

 Financial Measures

To assist investors in assessing the Company's financial performance, this news release also makes reference to certain financial measures such as EBITDA and Normalized Free Cash Flow. The Company believes that EBITDA and Normalized Free Cash Flow and their respective payout ratios are useful supplemental measures of performance as they are generally used by Canadian businesses as indicators of financial performance. See the footnotes to the "Results of Operations" chart in the Company's MD&A for more details. Financial measures do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers.


"Adjusted EBITDA" is defined as profit before finance costs, income taxes (expenses), depreciation, amortization, and certain non-recurring 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 tax paid) and certain non-recurring expenditures.


"Normalized Payout Ratio" is defined as dividends declared divided by Normalized Free Cash Flow.

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.

For further information:

Investor Relations
MorneauShepell Inc.