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Morneau Shepell Reports 2013 Fourth Quarter and 2013 Financial Results

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Investor Relations / Canada

Morneau Shepell Reports 2013 Fourth Quarter and 2013 Financial Results


TORONTO, March 5, 2014 /CNW/ - Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX: MSI) today reported its financial results for 2013 (all amounts are in Canadian dollars, unless noted otherwise).


  • Strong revenue growth in all our lines of business contributed to a 12.4 per cent increase in revenue
  • Purchased Groupe AST from ADP Canada on March 3, 2014 to become the largest provider of integrated absence management solutions in the country
  • Q4 profit affected by a $16.7 million impairment charge for health clinics sub-service line

"2013 was another solid year for our company," said Bill Morneau, Executive Chairman of Morneau Shepell. "Going forward, we expect our future growth to be in-line with our longer term historical performance. We also expect that our continued investment in our business, our new acquisitions, capital structure, established business relationships and prospective client base will continue to yield positive results for the Company."

"For the year, our revenue growth in all of our business practices contributed to an overall revenue increase of 12.4 per cent to reach $471.2 million," said Alan Torrie, President and CEO, Morneau Shepell. On a quarterly basis, revenue increased by $11.3 million, or 10.5 per cent, to $118.6 million, compared to $107.3 million for the same period in 2012.

Torrie said, "We continue to execute on our growth strategy of expanding organically and via acquisitions. Just two days ago, we purchased, from ADP Canada, Groupe AST, the largest workers' compensation provider in Quebec.  With this acquisition, we further solidify our position in workers' compensation services and become the largest provider of integrated absence management solutions in the country."

Torrie added, "We're very pleased with the inroads we made during the year, with all areas of the business winning new clients and a significant amount of business from our current ones.  Excluding acquisitions, our organic revenue growth was 6.8 per cent.  Adjusted EBITDA increased by $8.4 million, or 10.7 per cent, to $86.5 million.

2013 Financial Review

In thousands of dollars Three months
December 31,
Three months
December 31,
Year ended
December 31,
Year ended
December 31,
Revenue $118,570 $107,258 $471,154 $419,346
Adjusted EBITDA $20,217 $18,843 $86,528 $78,135
Adjusted EBITDA margin 17.1% 17.6% 18.4% 18.6%
Normalized Free Cash Flow $15,939 $13,061 $53,979 $53,314
Profit (loss) $(11,279) $4,234 $10,445 $21,034

For the year ended December 31, 2013, the Company reported $471.2 million in revenue, an increase of $51.8 million or 12.4 per cent from $419.3 million for the year ended December 31, 2012.  Of the 12.4 per cent growth for the year, the Mercer Canada Outsourcing acquisition contributed to an increase in revenue of 5.6 per cent.

Adjusted EBITDA of $86.5 million increased by $8.4 million or 10.7 per cent over $78.1 million in 2012.  Adjusted EBITDA margin was 18.4 per cent, slightly lower than 18.6 per cent in 2012. For the fourth quarter, adjusted EBITDA margin was 17.1 per cent compared to 17.6 per cent for the comparative quarter in 2012.

Our annual impairment test resulted in a charge to the Organizational Health Solutions (OHS) line of business of $16.7 million.  The impairment loss is primarily related to the health clinics sub-service line within OHS, and is due to reduced expectations for increasing operating profits.  The Company's investment in Shepell.fgi continues to yield a positive return and the recoverable amount of the Company's Employee Support Solutions business is well in excess of its carrying amount.

Total operating expenses (excluding depreciation, amortization and impairment losses) were $394.9 million in 2013, compared with $352.2 million in 2012. Profit for the year in 2013 was $10.4 million, compared with $21.0 million in 2012.

Normalized Free Cash Flow
Normalized Free Cash Flow for the year ended December 31, 2013 increased by $0.7 million to $54.0 million compared to $53.3 million for the same period in 2012. The increase is primarily a result of an increase in adjusted EBITDA offset by higher capital expenditures and finance costs paid.

Annual Meeting of Shareholders
Morneau Shepell announced that it will hold its 2014 Annual and Special Meeting of Shareholders on May 13, 2014 in Halifax, Nova Scotia, and it established a record date of March 19, 2014 for the meeting.

Notice of Conference Call
Management of Morneau Shepell will host a conference call on Wednesday, March 5, 2014 at 1:00 p.m. ET. The conference call is open to all of 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 8927592) in the Toronto area, or 1.866.696.5910 (participant code 8927592) throughout the rest of Canada. A replay of the call will be available via the Morneau Shepell website,

About Morneau Shepell Inc.
Morneau Shepell is the largest company in Canada offering human resources consulting and outsourcing services. The Company is the leading provider of Employee and Family Assistance Programs, as well as the largest administrator of pension and benefits plans. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position. Established in 1966, Morneau Shepell serves more than 9,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With approximately 3,200 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 EBITDA, Adjusted EBITDA, and Normalized Free Cash Flow. The Company believes that EBITDA, Adjusted EBITDA, and Normalized Free Cash Flow and their respective payout ratios are useful supplemental measures of performance as they are generally used by Canadian businesses as indicators of financial performance. See the footnotes to the "Operating Results Summary" chart in the Company's MD&A for more details. These financial measures do not have any standard meaning prescribed by IFRS 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, and certain unusual expenditures.
  2. "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:

Michele Kumara 

Helen Reeves