Morneau Shepell Inc.

Morneau Shepell Inc.

March 10, 2011 09:28 ET

Morneau Shepell Reports 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - March 10, 2011) -


Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI.UN), formerly Morneau Sobeco Income Fund (the "Fund"), today reported its financial results for 2010 (all amounts are in Canadian dollars, unless noted otherwise).


  • Strong 2010 fourth quarter revenue growth.
  • Record revenue of $87 million and $335.2 million for the three- and twelve-month periods ended December 31, 2010.
  • Adjusted EBITDA(2) of $16.5 million for the fourth quarter and $64.0 million for the full year. Adjusted EBITDA margin was 18.9 percent and 19.1 percent, respectively.

"We are pleased to announce that in the fourth quarter of 2010, our revenue grew by 4.4%. Overall, in 2010 we saw continued growth in our pension and benefits consulting and outsourcing practices. EAP revenue rebounded in the last half of 2010, after being impacted by the recession in earlier quarters," said Bill Morneau, Executive Chairman of the Company. "Moving into 2011 we are seeing positive indicators that we will experience growth across our business for the coming year."

"Cost savings initiatives that we undertook in 2010 will position us well going forward. We consolidated and rationalized certain operations and facilities, and this will result in reducing costs going forward," added Alan Torrie, President and CEO of the Company. "This, along with the new and expanded client mandates won in 2010, and a positive momentum in sales growth, will help us deliver improved returns for our shareholders."

 2010 Financial Review

In thousands of dollars
Fourth quarter ended December 31, 2010 (Unaudited) Fourth quarter ended December 31, 2009 (Unaudited) Twelve months ended December 31, 2010 (Unaudited) Twelve months ended December 31, 2009 (Unaudited)
Revenue $ 87,017 $ 83,316 $ 335,194 $ 331,703
Standardized EBITDA(1) $ 8,989 $ 15,739 $ 55,956 $ 61,314
Adjusted EBITDA(2) $ 16,464 $ 18,474 $ 63,971 $ 64,427
Standardized EBITDA(1) margin 10.3% 18.9% 16.7% 18.5%
Adjusted EBITDA(2) margin 18.9% 22.2% 19.1% 19.4%

For the twelve months ended December 31, 2010 ("F2010"), the Fund reported $335.2 million in revenue, a 1.1 percent increase from $331.7 million for the twelve months ended December 31, 2009 ("F2009"). Operating and administrative expenses (including salary, benefit and contractor expenses) totalled $281.6 million in F2010, compared with $271.7 million in F2009. Net income in F2010 was $18.9 million, compared with $10.8 million in F2009.

Standardized EBITDA(1) of $56.0 million decreased by 8.7 percent from F2009 due to non-recurring expenditures related to restructuring as well as to corporate reorganization and consolidation. Standardized EBITDA(1) margin was 16.7 percent, compared with 18.5 percent in F2009. Adjusted EBITDA(2) of $64.0 million remained comparable to F2009. Adjusted EBITDA(2) margin was 19.1 percent compared to 19.4 percent in F2009.

Distributable Cash

For F2010, the Fund generated cash from operating activities of $42.4 million compared to $49.0 million in F2009. Standardized Distributable Cash(2) for F2010 decreased to $27.6 million, or $0.65 per Unit (basic), compared to $35.2 million, or $0.87 per Unit (basic) in F2009. Adjusted Consolidated Distributable Cash(3) declined by $0.4 million to $44.3 million, or $0.93 per Unit (basic), in F2010, compared with $44.7 million, or $0.97 per Unit (basic), for F2009. The Adjusted Payout Ratio(4) for F2010 was 101.9 percent compared to 98.3 percent for F2009. The 12-month rolling Standardized Payout Ratio(5) is 145.4 percent and the 12-month rolling Adjusted Payout Ratio is 101.9 percent, which compares with 109.6 percent and 98.3 percent for the same periods in 2009.

Annual Meeting of Shareholders

Morneau Shepell also announced that it will hold its 2011 Annual General Meeting on May 12, 2011 and it established a record date of March 31, 2011 for the meeting.

Notice of Conference Call

Management of Morneau Shepell will host a conference call today, Thursday, March 10, 2011, at 2:00 p.m. EST. 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 416-695-7806 (participant code 8122527) in the Toronto area, or 1-888-789-9572 (participant code 8122527) 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 Inc. is the largest Canadian based human resources consulting and outsourcing firm focused on pension, benefit, employee assistance programs and other workplace health and productivity solutions. We offer solutions to assist employers in supporting the financial security, health and productivity of their employees. With approximately 2,300 employees in offices across North America, we provide services to organizations across Canada, in the United States and around the globe.

Non-GAAP Financial Measures

To assist investors in assessing the Fund's financial performance, this news release also makes reference to certain non-GAAP measures such as Standardized EBITDA, Adjusted EBITDA, Standardized Distributable Cash and Adjusted Consolidated Distributable Cash. The Fund also believes that Standardized Distributable Cash and Adjusted Consolidated Distributable Cash and their respective payout ratios are useful supplemental measures of performance as they are generally used by Canadian open-ended business income funds as indicators of financial performance. See the footnotes to the "Results of Operations" chart in the firm's MD&A for more details. Non-GAAP measures do not have any standard meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers

  1. "Standardized EBITDA" is defined as income before interest, depreciation, income taxes (recovery) amortization, impairment changes and non-controlling interest. The Fund believes that Standardized EBITDA is a useful measure in evaluating performance of the Fund. It is used to monitor compliance with debt covenants and to make decisions related to distributions to Unitholders rather than net income due to the significant amount of amortization expense related to the firm's intangible assets.
  2. "Adjusted EBITDA" is defined as Standardized EBITDA adjusted for significant non-recurring expenditures related to the restructuring, reorganization and strategic planning as well as the integration of Shepell.fgi operations and Morneau Sobeco, as well as conversion and strategic planning.
  3. "Standardized Distributable Cash" is defined as cash from operating activities, including the effects of changes in non-cash operating working capital, less capital expenditures and Consolidated Distributable Cash available to non-controlling interest.
  4. "Adjusted Consolidated Distributable Cash" is defined as cash from operating activities adjusted for capital expenditures excluding changes in non-cash operating working capital and payment related to non-recurring expenditures.
  5. "Adjusted Payout Ratio" is defined as declared distributions divided by Adjusted Consolidated Distributable Cash.
  6. "Standardized Payout Ratio" is defined as declared distributions divided by Standardized Distributable Cash.

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, ability to pay dividends, 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.

Contact Information

  • Morneau Shepell Inc.
    Investor Relations
    (416) 445-2700