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Morneau Shepell Reports 2013 Third Quarter Financial Results

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Investor Relations / Canada

Morneau Shepell Reports 2013 Third Quarter Financial Results

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

Revenue and profit continue path in growth

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


  • A 17.0% increase in revenue to $118.5 million for Q3, 2013 compared to $101.3 million for the same period in 2012
  • A 13.6% increase in adjusted EBITDA to $21.9 million for Q3, 2013 versus the comparative period last year

“We are very pleased with our strong third quarter and year-to-date revenue growth ,” said Bill Morneau, Executive Chairman of Morneau Shepell. “Going forward, we anticipate our performance to be in line with our longer-term historical performance. We expect that our successful client development efforts to date and our solid pipeline of growth opportunities will continue to yield positive results for the Company.”

“All four lines of business continued to perform well through the third quarter of the year,” said Alan Torrie, President and CEO of Morneau Shepell.  “We are particularly pleased with the success of the acquisition of the Mercer outsourcing business, which is approaching the end of the first year.  Our performance is ahead of expectations.”

Q3 2013 Financial Review

In thousands of dollars

Three months ended September 30, 2013

Three months ended September 30, 2012

Nine months ended September 30, 2013

Nine months ended September 30, 2012






Adjusted EBITDA





Adjusted EBITDA margin





Normalized Free Cash Flow











For the three months ended September 30, 2013 (“Q3, 2013”), the Company reported $118.5 million in revenue, an increase of 17.0% or $17.2 million from the same period in 2012 (“Q3, 2012”).  Total operating expenses (excluding depreciation and amortization expenses) were $98.0 million in Q3, 2013, compared to $83.1 million in Q3, 2012. Q3 of 2012 was the last full quarter before the Company’s revenue included the acquired Mercer outsourcing business.

Adjusted EBITDA of $21.9 million increased by $2.6 million or 13.6% from $19.3 million for Q3, 2012, primarily due to the growth in revenue of $17.2 million, partially offset by an increase in salaries and other operating expenses of $14.6 million after EBITDA adjustments.

Adjusted EBITDA margin was 18.5% compared to 19.0% for the same period in 2012.

During Q3, 2013, the Company generated Normalized Free Cash Flow of $11.1 million compared to $11.4 million in Q3, 2012 primarily due to increased capital expenditures.

The 12-month rolling Normalized Payout Ratio was 73.2% compared to 77.1% for Q3, 2012.  The improved Normalized Payout Ratio is primarily due to higher adjusted EBITDA during the past 12 months.

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 is hosting a conference call on Thursday, November 14, 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 retirement 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 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,300 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, 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