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Morneau Shepell reports 2019 financial results for the full year and the fourth quarter

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Corporate / Investor Relations / Canada

Morneau Shepell reports 2019 financial results for the full year and the fourth quarter


Full year highlights

  • Revenue increased by 23.1 per cent to $888.9 million
  • Adjusted EBITDA increased by 33.2 per cent to $182.5 million


Fourth quarter highlights

  • Revenue increased by 23.3 per cent to $247.5 million
  • Adjusted EBITDA increased by 34.7 per cent to $48.0 million


TORONTO, March 10, 2020 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI) today reported its financial results for the full year 2019 and the fourth quarter ended December 31, 2019 (all amounts are in Canadian dollars, unless noted otherwise).

For the full year in 2019, revenue grew 23.1 per cent, or $166.6 million, to $888.9 million, with Adjusted EBITDA increasing by $45.5 million to $182.5 million, a 33.2 per cent increase. Adjusted EBITDA margins increased to 20.5 per cent from 19.0 per cent compared to the previous year.

The significant upswing in year-over-year annual financial results is attributed to revenue from the mid-year acquisition of Mercer's stand-alone, large market, health and defined benefit pension plan administration business in the United States, a full year of revenue from LifeWorks following its acquisition the previous year, organic growth across the Company's core lines of business, and the impact of adopting IFRS 16.

"We delivered a year of strong performance while accelerating our international expansion as the power brand in the employee well-being space," said Stephen Liptrap, President and Chief Executive Officer. "We are pleased by our ability in the past year to integrate two strategic acquisitions that expand our U.S. and U.K. market presence while deepening our technological capabilities and global talent base. During a year of strategic expansion, we continued to maintain strong client satisfaction levels, which is a key marker of success in driving our business forward."

For the fourth quarter of 2019, the Company produced revenue growth of 23.3 per cent, or $46.8 million, to $247.5 million over the comparative period. Adjusted EBITDA increased 34.7 per cent, or $12.4 million, to $48.0 million, with Adjusted EBITDA margins increasing to 19.4 per cent. The factors in the Company's improved quarterly performance include revenue from the Mercer acquisition, organic growth across core lines of business, and the impact of adopting IFRS 16.

Commenting further on the year, Liptrap said: "We're moving with momentum into 2020 towards the goal of being the clear leader in the businesses in which we operate. We're excited by the opportunity to own the employee well-being space, to continue expanding globally, and to deploy world-class solutions to our clients through our cloud-based platform and the talents and skills of our people. We believe this is a uniquely differentiated competitive profile in our market space."

Year-end/Q4 2019 Financial Review

In thousands of dollars,
except per share amounts

Three months

December 31,

Three months

December 31,

Year ended

December 31,

Year ended

December 31,






Adjusted EBITDA





Adjusted EBITDA margin





Adjusted EBITDA per share





Normalized Free Cash Flow










Earnings per share






Adjusted EBITDA per share (basic) for the year was $2.76, a 21.1% increase compared to $2.28 per share in 2018, due to a higher adjusted EBITDA.

Profit for the year was $19.0 million compared to $21.8 million last year.  The decline is due to higher amortization charges related to acquired intangibles from acquisitions and higher finance costs. 

Normalized Free Cash Flow for the year increased by $18.4 million to $93.5 million compared to $75.1 million for the same period in 2018 primarily due to higher 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.

In Q4 2019, the Company increased its existing revolving Credit Facility ("Credit Facility") by $100 million with the same terms and conditions.

On December 11, 2019, the Company issued a redemption notice in respect of the outstanding $80.7 million of convertible debentures. Of the principal amount, $79.2 million was converted into a total of 3,156,248 common shares at a conversion price of $25.10 per common share. The remaining $1.5 million was redeemed through cash payout.


1 The Company has adopted IFRS 16, Leases ("IFRS 16) at January 1, 2019, using the modified retrospective approach. Under this approach, comparative information is not restated and the cumulative effect of applying IFRS 16 is recognized as retained earnings at the date of initial application. Please refer to note 3 of the Company's Consolidated Financial Statements for the year ended December 31, 2019 for details.


Annual Meeting of Shareholders
Morneau Shepell announced that it will hold its 2020 Annual Meeting of Shareholders on May 8, 2020, and it established a record date of March 24, 2020 for the meeting.

Notice of Conference Call
Management of Morneau Shepell will host a conference call on Wednesday, March 11, 2020 at 10 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 3300415) in the Toronto area, or 1.800.806.5484 (participant code 3300415) throughout the rest of Canada and in the United States. 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 employee well-being through our cloud-based platform. Our focus is providing world-class solutions to our clients 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 consulting, actuarial and investment services. Morneau Shepell employs approximately 6,000 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