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Morneau Shepell reports strong 2019 second-quarter financial results

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Corporate / Investor Relations / Canada

Morneau Shepell reports strong 2019 second-quarter financial results



  • Revenue increased by 24.2 per cent to $212.7 million
  • Adjusted EBITDA increased by 36.0 per cent to $45.9 million
  • Adjusted EBITDA margin improved to 21.6 per cent compared to 19.7 per cent
  • Adjusted EBITDA per share increased by 15.0 per cent to $0.69 per share

TORONTO, Aug. 8, 2019 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI) today reported its financial results for the three-month period ended June 30, 2019 (all amounts are in Canadian dollars, unless noted otherwise).

The Company delivered growth of 24.2 per cent in revenue and 36.0 per cent in Adjusted EBITDA in the second quarter compared to the same quarter last year. The significant growth was in part related to the LifeWorks acquisition, completed on July 27, 2018, combined with strong growth in its U.S. business operations.

"We are pleased with our performance at this point in the year and the strong execution of our strategic plan.  Our focus on geographic expansion and our cloud-based platform are delivering results for the Company," said Stephen Liptrap, President and Chief Executive Officer.  "As expected, we are seeing strong double-digit growth in the U.S. and continued single-digit growth in Canada.  We are also pleased by the continuing expansion of our sales pipeline and the high level of interest in our solutions."

Year-to-date, the Company reported $417.4 million in revenue, an increase of 23.2 per cent over last year, along with Adjusted EBITDA, at $90.6 million, up 34.6 per cent. Adjusted EBITDA margin for year-to-date increased from 19.9 per cent in the comparative period to 21.7 per cent.

"In addition to solid profitable growth, the integration of LifeWorks continues in line with our expectations," said Liptrap.  "We are also excited to close the acquisition of Mercer's standalone, large market health and defined benefit pension business for its U.S. clients. The acquisition accelerates our growth strategy in the United States, particularly strengthening our presence in the corporate market."

Q2 2019 Financial Review

In thousands of dollars,
except per share amounts

Three months

June 30, 2019

Three months

June 30, 2018

Six months

June 30, 2019

Six months

June 30, 2018






Adjusted EBITDA





Adjusted EBITDA margin





Adjusted EBITDA per share





Normalized Free Cash Flow










Earnings per share






For the three months ended June 30, 2019, the Company reported $212.7 million in revenue, an increase of 24.2 per cent or $41.5 million from the same period last year, primarily due to revenue increases from the LifeWorks acquisition and significant growth in our pension and benefits administrative solutions business. Organic revenue growth in the second quarter was 6.8 per cent, led by strong growth in our pension and benefits administrative solutions business and continued growth in our U.S. and international businesses.

Adjusted EBITDA increased by 36.0 per cent to $45.9 million this quarter from $33.7 million in Q2, 2018. Adjusted EBITDA per share for the quarter was $0.69, up 15.0 per cent from the same period last year. The increase is primarily due to revenue growth and the impact of adopting IFRS 16.

Adjusted EBITDA margin was 21.6 per cent in Q2, 2019, a solid improvement compared to 19.7 per cent in Q2, 2018.

Profit was $6.3 million for the quarter, compared to $13.7 million in Q2, 2018. The decline in profit for the period is directly attributable to LifeWorks integration costs and amortization charges.

During Q2, 2019, the Company generated Normalized Free Cash Flow of $27.6 million compared to $16.9 million in Q2, 2018. The increase is mainly due to increased cash provided by operating activities as a result of higher adjusted EBITDA.

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 Friday, August 9, 2019 at 9 a.m. Eastern Time. 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 416.340.2217 (participant code 6744904) in the Toronto area, or 1.800.806.5484 (participant code 6744904) throughout the rest of Canada and in the United States. A replay of the call will be available via the Morneau Shepell Web site 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. Morneau8 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.

  1. "Adjusted EBITDA" is defined as profit before finance costs, income tax expenses, depreciation, amortization, impairment losses, and certain unusual expenditures.
  2. "Adjusted EBITDA Margin" is defined as Adjusted EBITDA as a percentage of revenue.
  3. "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