Morneau Shepell Inc.

Morneau Shepell Inc.

May 12, 2011 10:00 ET

Morneau Shepell Reports Q1 2011 Financial Results

TORONTO, ONTARIO--(Marketwire - May 12, 2011) -


Morneau Shepell Inc. (the "Company" or "Morneau Shepell") (TSX:MSI.UN) today reported its financial results for the three-month period ended March 31, 2011 (all amounts are in Canadian dollars, unless noted otherwise).

  • 4.9 percent increase in revenue to $85.4 million, compared to Q1 2010

  • 10.9 percent increase in EBITDA to $15.6 million, from the same period in 2010

  • EBITDA margin of 18.3 percent, compared to 17.3 percent for the first quarter of 2010

"We are pleased with our results in the first quarter of 2011," said Bill Morneau, Executive Chairman of the Company. "The revenue and sales momentum that began in the last quarter of 2010 is continuing. We believe that the impact of the recession on our business has ended and we expect continued positive results in future quarters."

"Our revenue grew in all of our lines of business as a result of mandates won from new and existing clients in the later part of 2010 and in Q1 2011," added Alan Torrie, President and CEO of the Company. "Our EBITDA growth was a result of both the incremental impact of new revenues, and also the cost savings initiatives taken in prior quarters."

Q1 2011 Financial Review
First quarter endedFirst quarter ended
In thousands of dollarsMarch 31, 2011March 31, 2010
EBITDA(1) margin18.3%17.3%
Profit (loss)$6,458($170)
Normalized Free Cash



For the three months ended March 31, 2011 ("Q1 2011"), the Company reported $85.4 million in revenue, a 4.9 percent increase from $81.4 million for the three months ended March 31, 2010 ("Q1 2010"). Total operating expenses were $74.8 million in Q1 2011, compared with $75.2 million in Q1 2010. Profit in Q1 2011 was $6.5 million, compared to a loss of $0.2 million in Q1 2010.

EBITDA(1) of $15.6 million increased by 10.9 percent from Q1 2010 due to the increase in revenue offset by increased expenses. EBITDA(1) margin was 18.3 percent compared to 17.3 percent in Q1 2010.

For Q1 2011, the Company generated cash from operating activities of $9.2 million compared to $6.3 million in Q1 2010. Normalized Free Cash Flow(2) for Q1 2011 increased to $10.6 million compared to $10.1 million in Q1 2010. The Normalized Payout Ratio(3) for Q1 2011 was 88.4 percent compared to 111.1 percent for Q1 2010. The 12-month rolling Normalized Payout Ratio was 95.9 percent, compared to 98.5 percent for the same period in 2010. A dividend in the amount of $0.065 per share was declared in each month of the first quarter of 2011.

Notice of Conference Call

Management of Morneau Shepell will host a conference call today, Thursday, May 12, 2011, at 1:30 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 Web site 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.

IFRS Adoption

This is the Company's first quarter reporting its financial results under International Financial Reporting Standards. Adopting IFRS did not result in changes to actual revenue or cash flows but did affect the Company's consolidated financial position to some extent. To understand the reconciliations between Canadian GAAP and IFRS, please see the note in the financial statements released today.

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 and Normalized Free Cash Flow. The Company believes that 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 "Results of Operations" chart in the Company's MD&A for more details. 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. "EBITDA" is defined as profit before interest expense, income taxes (recovery), depreciation, amortization and impairment losses.
  2. "Normalized Free Cash Flow" is defined as cash from operating activities, adjusted for changes in non-cash operating working capital, capital expenditures and certain non- recurring expenditures.
  3. "Normalized Payout Ratio" is defined as dividends divided by Normalized Free Cash Flow.

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.

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