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Morneau Shepell Reports 2013 Second Quarter Financial Results

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Investor Relations / Canada

Morneau Shepell Reports 2013 Second Quarter Financial Results

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

Steady trend in revenue and profit growth continues


TORONTO, ON, August 13, 2013 – Morneau Shepell Inc. (the “Company” or “Morneau Shepell”) (TSX: MSI) today reported its financial results for the three-month period ending June 30, 2013 (all amounts are in Canadian dollars, unless noted otherwise).


  • A 10.8% increase in revenue to $118.3 million compared to $106.8 million for the same period in 2012
  • A 10.0% increase in adjusted EBITDA to $22.8 million versus the comparative period last year
  • The integration of Mercer Canada’s Pension and Benefits Outsourcing operations with Morneau Shepell’s existing Administrative Solutions practice continues as planned


“Morneau Shepell’s second quarter revenue growth remained strong, staying in the double digits,” said Bill Morneau, Executive Chairman of Morneau Shepell. “Our new business wins in the quarter were positive and our pipeline remains solid with both new and existing clients. Looking forward, we expect future growth to be in line with our historical performance over the longer term. ”


“Our business continued to deliver solid results for the second quarter of 2013,” said Alan Torrie, President and CEO of Morneau Shepell.  “Adjusted EBITDA for the quarter is slightly ahead of expectations due to the timing on the integration of the Mercer Canada’s Pension and Benefits Outsourcing operations.  This integration, which is a three-year project, continues to progress as anticipated.  We are happy with the performance of the business in terms of results, the people and clients who have joined us. ”


Q2 2013 Financial Review


In millions of dollars

Three months ended June 30, 2013

Three months ended June 30, 2012

Six months ended June 30, 2013

Six months ended June 30, 2012






Adjusted EBITDA





Adjusted EBITDA margin





Normalized Free Cash Flow











For the three months ended June 30, 2013 (“Q2, 2013”), the Company reported $118.3 million in revenue, an increase of 10.8% or $11.5 million from the same period in 2012 (“Q2, 2012”).  Total operating expenses (excluding depreciation and amortization expenses) were $96.9 million in Q2, 2013, compared to $86.9 million in Q2, 2012.

Adjusted EBITDA of $22.8 million increased by $2.1 million or 10.0% from $20.8 million for Q2, 2012, primarily due to the growth in revenue of $11.5 million, partially offset by an increase in operating expenses of $9.5 million after EBITDA adjustments.

Adjusted EBITDA margin was 19.3% compared to 19.4% for the same period in 2012.


During Q2, 2013, the Company generated Normalized Free Cash Flow of $15.4 million compared to $15.6 million in Q2, 2012.  The Normalized Payout Ratio for Q2, 2013 was 60.7% compared to 59.8% for the same period in 2012.  The 12-month rolling Normalized Payout Ratio was 71.2% compared to 77.5% for Q2, 2012.  The Company is maintaining its policy of paying a monthly dividend of 6.5 cents per share.

Notice of Conference Call

Management of Morneau Shepell are hosting a conference call on Tuesday, August 13, 2013, at 1:00 p.m. ET.  The conference call is open to all those wishing to attend, with a question and answer period to follow. In order to participate in the live conference call, please call 416.340.2217 (participant code 4066907) in the Toronto area, or 1.866.696.5910 (participant code 4066907) throughout the rest of Canada. A replay of the call will be available via the Morneau Shepell website at

About Morneau Shepell Inc.

Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of Employee and Family Assistance Programs, as well as the largest administrator of pension and benefits plans. 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 more than 8,000 organizations, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in 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 Normalized Payout Ratio. The Company believes that adjusted EBITDA, adjusted EBITDA margin, Normalized Free Cash Flow and Normalized Payout Ratio are useful supplemental measures of performance as they are generally used by Canadian businesses as indicators of financial performance. See the Company's MD&A for more details. These financial measures do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers.

  1. "Adjusted EBITDA" is defined as profit before finance costs, income tax expenses, depreciation, amortization, impairment losses, and certain unusual expenditures.
  2. "Normalized Free Cash Flow" is defined as cash provided by operating activities, adjusted for changes in noncash operating working capital, capital expenditures, current income taxes (net of income taxes paid), and certain unusual expenditures.
  3. “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:

Michele Kumara

Helen Reeves