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Morneau Shepell reports 2015 first quarter results

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Investor Relations / Canada

Morneau Shepell reports 2015 first quarter results

Steady growth in revenue and adjusted EBITDA lead to a solid first quarter


TORONTO, May 11, 2015 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX: MSI) today reported its financial results for the three-month period ending March 31, 2015 (all amounts are in Canadian dollars, unless noted otherwise).


  • Revenue in the quarter increased by 5.6 per cent (6.9% organically) over the comparative quarter, to $138.4 million
  • Adjusted EBITDA growth was also strong, increasing by 8.0 per cent to $26.6 million

"We're pleased with our performance in the first quarter," said Bill Morneau, Executive Chair of Morneau Shepell. "We've entered 2015 with steady growth in revenue and adjusted EBITDA versus the comparative quarter in 2014, and are continuing to perform well against our key indicators."

"Keeping our focus on key priorities allowed us to meet our growth and performance goals," noted Alan Torrie, President and CEO of Morneau Shepell. "Revenue for the first three months of 2015 rose by $7.3 million, or 5.6 per cent, to $138.4 million, compared to $131.1 million for the same period in 2014. Our organic revenue grew by 6.9 per cent, primarily from our Administrative Solutions line of business, which saw steady expansion in the U.S. health exchange outsourcing and new client wins in Canada."

Torrie added, "In addition to paying a consistent dividend to our shareholders, we've also invested in strategic areas of the business and we expect this investment in our operations and infrastructure to yield positive results for the Company."

Q1 2015 Financial Review

In thousands of dollars

Three months ended
March 31, 2015

Three months ended
March 31, 2014




Adjusted EBITDA



Adjusted EBITDA margin



Normalized Free Cash Flow






For the three months ended March 31, 2015, the Company reported $138.4 million in revenue, an increase of 5.6 per cent or $7.3 million from the same period in 2014. Total operating expenses (excluding depreciation and amortization expenses) were $115.1 million in Q1, 2015, compared to $108.6 million in Q1, 2014.

Adjusted EBITDA of $26.6 million increased by $2.0 million or 8.0 per cent from $24.7 million for Q1, 2014. The increase is primarily due to growth in revenue of $7.3 million, partially offset by an increase in salaries and other operating expenses of $5.3 million after EBITDA adjustments.

Adjusted EBITDA margin was 19.3 per cent compared to 18.8 per cent for the same period in 2014.

During Q1, 2015, the Company generated Normalized Free Cash Flow of $14.2 million compared to $14.7 million in Q1, 2014. The decrease is due to higher capital expenditures during the period to support business growth.

The 12-month rolling Normalized Payout Ratio at Q1 2015 was 74.8 per cent compared to 65.5 per cent at Q1, 2014.

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 will host a conference call on Tuesday, May 12, 2014, at 11:00 a.m. ET. 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 8000751) in the Toronto area, or 1.888.789.9572 (participant code 8000751) 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 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 3,700 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,