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Morneau Shepell reports 2019 first quarter financial results

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Corporate / Investor Relations / Canada

Morneau Shepell reports 2019 first quarter financial results



  • Revenue increased by 22.2 per cent to $204.7 million
  • Adjusted EBITDA increased by 33.2 per cent to $44.7 million
  • Adjusted EBITDA margin improved to 21.8 per cent compared to 20.0 per cent
  • Adjusted EBITDA per share increased by 13.3 per cent to $0.68 per share

TORONTO, May 8, 2019 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI) today reported its financial results for the three-month period ended March 31, 2019 (all amounts are in Canadian dollars, unless noted otherwise).

The Company delivered growth of 22.2 per cent in revenue and 33.2 per cent in Adjusted EBITDA in the first quarter compared to the same quarter last year. The significant growth was largely related to the LifeWorks acquisition, completed on July 27, 2018. "We are pleased with our solid first quarter results," said Stephen Liptrap, President and Chief Executive Officer. "Our core businesses continue to perform to expectations. Our administration business had a particularly strong quarter, in part as a result of the work we do on behalf of Prudential Retirement.

"At this point in the year, we're on track with the synergies expected following the LifeWorks acquisition and we are very encouraged by the responses from clients and prospects to our cloud-based platform," continued Liptrap. "Going forward, we are developing that platform to link our solutions across the four critical pillars of employee well-being: mental, physical, financial and social. In doing so, the goal is to strengthen what makes us uniquely competitive as the power brand in well-being markets internationally."

Q1 2019 Financial Review

In thousands of dollars, except per share

Three months ended

March 31, 20191

Three months ended

March 31, 2018




Adjusted EBITDA



Adjusted EBITDA margin



Adjusted EBITDA per share



Normalized Free Cash Flow






Earnings per share





1 The current period results include the impacts from the adoption of the new IFRS 16 Leases (IFRS 16) as described in note 3 of the unaudited condensed consolidated interim financial statements. As permitted with this new standard, the comparative financial information has not been restated.


For the three months ended March 31, 2019, the Company reported $204.7 million in revenue, an increase of 22.2 per cent or $37.2 million from the same period last year, primarily due to revenue increases from the LifeWorks acquisition and significant growth in our pension and benefits administration business.

Total operating expenses (excluding depreciation and amortization expenses) were $163.7 million in Q1, 2019, compared to $134.2 million in Q1, 2018.

Adjusted EBITDA increased by 33.2 per cent to $44.7 million this quarter from $33.6 million in Q1, 2018. The increase is primarily due to business growth resulting from the LifeWorks acquisition and the impact of adopting IFRS 16.

Adjusted EBITDA margin was 21.8 per cent in Q1, 2019, a solid improvement compared to 20.0 per cent in Q1, 2018.

Profit was $8.7 million for the quarter, compared to $14.2 million in Q1, 2018. The decline in profit for the period is directly attributable to LifeWorks-related acquisition expenses of $9.1 million, including $7.4 million in intangibles amortization.

During Q1, 2019, the Company generated Normalized Free Cash Flow of $24.0 million compared to $16.8 million in Q1, 2018. The increase is mainly due to increased cash provided by operating activities as a result of higher adjusted EBITDA and improved working capital management.

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 Thursday, May 9, 2019 at 9 a.m. Eastern Time. 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 6744904) in the Toronto area, or 1.800.806.5484 (participant code 6744904) 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 leading provider of technology-enabled HR services that deliver an integrated approach to well-being through our cloud-based platform. Our focus is providing everything our clients need to support the mental, physical, social and financial well-being of their people. By improving lives, we improve business. Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement and benefits consulting, actuarial and investment services. Morneau Shepell employs almost 5,000 employees who work with some 24,000 client organizations that use our services in 162 countries. 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 Company'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:, 855-622-3327