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Morneau Shepell reports 2018 fourth quarter and 2018 financial results

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Corporate / Investor Relations / Canada

Morneau Shepell reports 2018 fourth quarter and 2018 financial results


Fourth quarter highlights

  • Revenue increased 28.0 per cent to $200.8 million
  • Adjusted EBITDA increased by 29.7 per cent to $35.7million

Full year highlights

  • Revenue increased 15.5 per cent to $722.3 million
  • Adjusted EBITDA increased by 15.7 per cent to $137.0 million

TORONTO, March 6, 2019 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX: MSI) today reported its financial results for the fourth quarter and the full year of 2018 (all amounts are in Canadian dollars, unless noted otherwise).

The Company delivered strong growth in revenue and Adjusted EBITDA in the fourth quarter of 2018. "We were very pleased with how all our core businesses performed," said Stephen Liptrap, President and Chief Executive Officer. "The significant upswing in our year-over-year quarterly growth, as we expected, was impacted by two developments. First, the LifeWorks acquisition completed on July 27 continued to deliver profitable growth in our well-being business across our geographic markets. Second, in the quarter specifically, we benefited from our new client relationship with Prudential Retirement, for which we now provide pension administration services to support more than 250 of its defined benefit plans in the U.S."

Commenting on 2018 overall, Liptrap said: "We made significant strides in 2018 in executing against our five-year strategic plan. We delivered another year of strong profitable growth while integrating our largest acquisition and our significant new client relationship with Prudential Retirement.  Looking ahead we are excited to deploy our cloud based total well-being platform to make a real difference in the lives of our clients' employees."

Q4 2018 Financial Review

In thousands of dollars

Three months

December 31, 2018

Three months

December 31,

Year ended

December 31, 2018

Year ended

December 31,






Adjusted EBITDA





Adjusted EBITDA





Normalized Free
Cash Flow











The comparative figures for the three months and year ended December 31, 2017 have been restated as a result of the Company's adoption of IFRS 15 (Revenue from contract with customer)


For the year ended December 31, 2018, the Company reported $722.3 million in revenue, an increase of $97.2 million or 15.5 per cent from $625.1 million in prior year because of the LifeWorks acquisition, which contributed 8.3 per cent or $51.9 million of revenue growth. Organic revenue grew by 5.3 per cent, as a result of growth from across our four core lines of business in Canada and, increasingly, in the U.S. where our market expansion strategy gained momentum.

Adjusted EBITDA increased by $18.5 million or 15.7 per cent to $137.0 million from $118.4 million in 2017, primarily due to revenue growth and contribution from the LifeWorks acquisition. Adjusted EBITDA margin continued to be solid at 19.0 per cent, modestly higher than 18.9 per cent in 2017.

Profit for the year was $21.8 million compared to a profit of $33.0 million last year due to LifeWorks acquisition related expenses which total approximately $24.9 million ($19.7 million after tax) including amortization charges from acquired intangibles of $12.3 million, transaction expenses to complete the acquisition of $10.0 million and integration costs of $2.6 million.

Normalized Free Cash Flow
Normalized Free Cash Flow for the year ended December 31, 2018 increased by $5.2 million to $75.1 million compared to $69.9 million for the same period in 2017. The increase was due to higher cash generated from operating activities from on-going operations.

Annual Meeting of Shareholders
Morneau Shepell announced that it will hold its 2018 Annual Meeting of Shareholders on May 9, 2019, and it established a record date of March 25, 2019 for the meeting.

Notice of Conference Call
Management of Morneau Shepell will host a conference call on March 7, 2019 at 9:00 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 416-641-6104 (participant code 6332688) in the Toronto area, or 1-800-952-5114 (participant code 6332688) 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 well-being, health, benefits and retirement needs. The Company is the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. LifeWorks by Morneau Shepell is a total well-being solution that combines employee assistance, wellness, recognition and incentive programs. As a leader in strategic HR consulting and innovative pension design, the Company also helps clients solve complex workforce problems and provides integrated productivity, health and retirement solutions.  Established in 1966, Morneau Shepell serves approximately 24,000 clients, ranging from small businesses to some of the largest corporations and associations.  With almost 5,000 employees in offices across North America, Morneau Shepell provides services to organizations 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 Management, Discussion & Analysis ("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" represents 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 the 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 - Corporate

For further information:, 855-622-3327