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Morneau Shepell reports 2018 first quarter financial results

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Corporate / Investor Relations / Canada

Morneau Shepell reports 2018 first quarter financial results


  • Revenue increased by 7.0 per cent to $167.5 million
  • Adjusted EBITDA increased by 7.4 per cent to $33.6 million
  • Profit increased by 71.8 per cent to $14.2 million


TORONTO, May 7, 2018 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI) today reported its financial results for the three-month period ended March 31, 2018 (all amounts are in Canadian dollars, unless noted otherwise).

"We delivered a solid first quarter that tracks to our expectations for this point in the year where, compared to the same period in 2017, revenue increased 7.0 per cent and Adjusted EBITDA increased 7.4% percent with margins remaining steady at 20.0 per cent," said Stephen Liptrap, President and Chief Executive Officer. "From a market perspective, we were pleased by continuing to deliver single-digit growth in our core Canadian business and double-digit growth in the U.S. where our expansion is accelerating on a foundation of new business wins, innovative products and tuck-in acquisitions that increase our competitive strength."

"Our solid year-over-year quarterly performance is also the direct result of contributions by all our lines of business," continued Liptrap "Morneau Shepell is well positioned strategically, operationally and financially to continue to deliver profitable growth that meets or exceeds historical levels of performance. For 2018, we expect yet another solid year of growth and profitability that underscores our commitment to delivering strong overall shareholder returns."

Q1 2017 Financial Review

In thousands of dollars

Three months ended

March 31, 2018

Three months ended

March 31, 2017




Adjusted EBITDA



Adjusted EBITDA margin



Normalized Free Cash Flow







For the three months ended March 31, 2018, the Company reported $167.5 million in revenue, an increase of 7.0 per cent or $10.9 million from the same period last year.

Total operating expenses (excluding depreciation and amortization expenses) were $134.2 million in Q1, 2018, compared to $131.0 million in Q1, 2017.

Adjusted EBITDA increased by 7.4 per cent to $33.6 million from $31.3 million in Q1, 2017. The increase is primarily due to growth in revenue of $10.9 million, partially offset by an increase in salaries and other operating expenses of $8.6 million after EBITDA adjustments.

Adjusted EBITDA margin was 20.0 per cent, consistent with 20.0 per cent in Q1, 2017.

Profit was $14.2 million for the quarter, compared to $8.3 million in Q1, 2017.

During Q1, 2018, the Company generated Normalized Free Cash Flow of $16.8 million compared to $18.3 million in Q1, 2017.  The decrease is due to higher current tax expense and capital expenditures of $1.8 million, partly offset by higher cash generated from operating activities before changes in non-cash operating working capital and EBITDA adjustments of $1.7 million.

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 8, 2018 at 8:30 a.m. ET. The conference call is open to all those wishing to attend, with a question and answer period to follow the presentation. In order to participate in the live conference call, please call 416.340.2217 (participant code 9489673) in the Toronto area, or 1.800.806.5484 (participant code 9489673) 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 only human resources consulting and technology company that takes an integrated approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. As a leader in strategic HR consulting and innovative pension design, the Company helps clients solve complex workforce problems and provides integrated productivity, health and retirement solutions.  Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations.  With more than 4,000 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, and Normalized Free Cash Flow. The Company believes that Adjusted EBITDA, Adjusted EBITDA margin, and Normalized Free Cash Flow are useful supplemental measures to assist our investors in assessing our 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.


"Adjusted EBITDA Margin" is defined as Adjusted EBITDA as a percentage of revenue.


"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 taxes paid), and certain unusual expenditures.


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 Inc.

For further information: Helen Reeves, 416.345.5633,