Skip to main content
Morneau Shepell reports 2014 second quarter financial results

A transformational journey. LifeWorks becomes TELUS Health. Visit our About Us page to learn more.

Investor Relations / Canada

Morneau Shepell reports 2014 second quarter financial results


TORONTO, Aug. 7, 2014 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX: MSI) today reported its financial results for the three-month and six-month periods ending June 30, 2014 (all amounts are in Canadian dollars unless noted otherwise).


  • Revenue for the second quarter increased 19.1 per cent over the prior year
  • Organic revenue for the second quarter increased 12.4 per cent compared to the second quarter of 2013
  • Adjusted EBITDA margin for the second quarter was a healthy 19.3 per cent, Adjusted EBITDA was $27.2 million and net income for the second quarter was $10.1 million

"We had a great second quarter and a very strong first half of the year," said Bill Morneau, Executive Chair of Morneau Shepell. "These results provide the momentum we need to deliver another strong year for the business in 2014."

"From both a revenue perspective and bottom-line perspective, our financial results for the quarter significantly exceeded the prior year," said Alan Torrie, President and CEO of Morneau Shepell. "For the second quarter in a row, growth in revenue and profitability was higher than historical levels, with all four lines of business performing well."

Torrie added, "Among the factors contributing to our strong second quarter performance were the continued growth in the U.S. outsourcing market as a platform provider to U.S. health insurance exchanges, faster than expected integration of the Groupe AST acquisition, and business wins from existing and new clients. We are confident that our new business opportunities and our long-term client relationships will continue to yield positive results for the Company.  We expect our revenue for the balance of the year to grow in line with historic growth rates."

Q2 2014 Financial Review

In thousands of dollars

Three months

ended June 30,


Three months

ended June 30,


Six months

ended June 30,


Six months

ended June 30,







Adjusted EBITDA





Adjusted EBITDA margin





Normalized Free Cash Flow










For the three months ended June 30, 2014, the Company reported $140.9 million in revenue, an increase of $22.5 million or 19.1 per cent from the same period 2013. Total operating expenses (excluding depreciation and amortization expenses) were $115.9 million in Q2 2014, compared to $96.9 million in Q2 2013.

Adjusted EBITDA increased by $4.4 million or 19.2 per cent to $27.2 million compared to $22.8 million for the same period in 2013. The increase is primarily due to growth in revenue of $22.5 million, partially offset by an increase in salaries and other operating expenses of $18.2 million after EBITDA adjustments.

Adjusted EBITDA margin was 19.3 per cent, unchanged from the same period in 2013.

During Q2 2014, Normalized Free Cash Flow for the Company decreased by $2.4 million to $13.0 million compared to $15.4 million for the same period in 2013. The 12-month rolling Normalized Payout Ratio at Q2 2014 was 68.4 per cent compared to 72.7 per cent in 2013. The decrease 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, August 7, 2014, at 1 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 3318843) in the Toronto area, or 1.866.696.5910 (participant code 3318843) 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, 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 more than 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,600 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 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 noncash operating working capital, capital expenditures, current income taxes (net of income taxes paid), and certain unusual 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.

SOURCE Morneau Shepell - Investor Relations

For further information: Investors: Michele Kumara, 416.383.6463,; Media: Helen Reeves, 416.345.5633,