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Posted Thursday November 8, 2018


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Morneau Shepell reports strong third-quarter 2018 financial results

Canada's Finance Ministers Bill Morneau's family business revenue increased 19.9 per cent to $182.8 million; Adjusted EBITDA increased 20.0 per cent to $34.0 million; LifeWorks integration progressing well

Morneau Shepell Inc. reported its financial results for the three and nine-month period ended September 30, 2018 (all amounts are in Canadian dollars, unless noted otherwise).

"We had a very strong quarter, delivering 19.9 per cent revenue growth and a 20.0 per cent increase in Adjusted EBITDA," said Stephen Liptrap, President and Chief Executive Officer. "Our performance is all the more satisfying given our focus in the quarter on integrating the LifeWorks acquisition that continues to proceed in line with our expectations. If anything, we're a bit further ahead than planned on achieving financial synergies and combining our market strategies and product roadmaps."

The acquisition of LifeWorks, a significant global well-being provider, was completed on July 27, 2018 for a total purchase price of approximately $437.6 million, subject to final closing working capital adjustments.

Year-to-date, the Company reported $521.5 million in revenue, an increase of 11.4 per cent over last year. Adjusted EBITDA, at $101.3 million is also up 11.4 per cent over the same period last year.

"Moving forward, we're confident in delivering a very solid year of results, given our year-to-date performance and our strong pipeline growth in the quarter," continued Liptrap. "We expect to keep building on our momentum and executing our strategic plan towards the goal of being a leading HR power brand."

Q3 2018 Financial Review

In thousands of dollars

Three months ended

Sept. 30, 2018

Three months ended

Sept. 30, 2017

Nine months ended

Sept. 30, 2018

Nine months ended

Sept. 30, 2017

Revenue

$182,805

$152,528

$521,522

$468,303

Adjusted EBITDA

$33,989

$28,333

$101,308

$90,940

Adjusted EBITDA margin

18.6%

18.6%

19.4%

19.4%

Normalized Free Cash Flow

$23,075

$17,227

$56,829

$50,989

Profit (loss)

($9,556)

$9,178

$18,346

$29,575



For the three months ended September 30, 2018, the Company reported $182.8 million in revenue, an increase of 19.9 per cent or $30.3 million from the same period in 2017.

Total operating expenses (excluding depreciation and amortization expenses) were $162.2 million in Q3, 2018, compared to $126.2 million in Q3, 2017.

Adjusted EBITDA increased by 20.0 per cent to $34.0 million compared to the same period in 2017.

Adjusted EBITDA margin was 18.6 per cent, the same as in Q3, 2017.

Profit in the quarter amounted to a loss for the period of $9.6 million, was affected by $22.3 million in expenses related to transaction and integration costs associated with the LifeWorks acquisition. It also includes costs related to a transformation project to drive long-term value in the forms of earnings and cash flow improvement through changes in the way the Company operates.

During Q3, 2018, the Company generated Normalized Free Cash Flow of $23.1 million compared to $17.2 million in Q3, 2017.

The Company is maintaining its policy of paying a monthly dividend of 6.5 cents per share.












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