Investor Presentation Q3 2016

Transcription

1 Investor Presentation Q Health Benefits Employee Assistance Retirement

2 Forward-looking statements This document 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. The 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 firm s publicly filed documents (available on SEDAR at sedar.com) and in Morneau Shepell (the Company s) MD&A under the heading Risks and Uncertainties. Those risks and uncertainties include current economic conditions, income tax matters, the ability to maintain profitability and manage growth, reliance on information systems and technology, reputational risk, dependence on key clients, and reliance on key professionals. Many of these risks and uncertainties can affect the Company s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statement made by the Company or on the Company 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 document are qualified by these cautionary statements. These statements are made as of the current date 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. 2

3 Improving business. Improving lives. Our Purpose Our Values We value long-term relationships. We treat others the way we want to be treated. We are innovative and entrepreneurial. 3

4 The priorities that guide us Drive organic growth well in excess of the overall economy Being an employer of choice and developing leadership Building long-term relationships and a strong brand presence Aligning our performance, capital structure and investments Balancing the needs of all of our stakeholders 4

5 Outpacing the market Total Return -from IPO to Nov 22, Year Compound Annual Return 400% 350% 300% 250% 200% Morneau Shepell 323.4% S&P/TSX Index 87.8% S&P Div. Aristocrats Index 85.8% 1-Year 3-Year 5-Year MSI +33.1% +14.7% +21.0% S&P/TSX +15.9% +7.0% +8.3 % 150% 100% S&P Div. Aristocrats +12.6% +6.4% +8.9% 50% 0% -50% Sep/05 Sep/07 Sep/09 Sep/11 Sep/13 Sep/15 MSI was added to the S&P/TSX Composite Index after the close of trading on Sept 16,

6 Sources of revenue Balanced revenue mix (2015) 38% Administrative Solutions 31% Employee Assistance Programs 20% Retirement and Benefit Consulting 11% Absence Management Solutions 6

7 High recurring revenue 600 $536 $ $471 (million) $249 $332 $335 $365 $419 acquisition growth organic growth 200 $147 recurring revenue % 99% 99% 97% 98% 98% 98% 98% 97% Percentage indicates proportion of total revenue that is recurring from prior year 7

8 Long history of successful acquisitions 1962 Sobeco was founded and helped launch the Québec Pension Plan 1966 W.F. Morneau & Associates was established 1992 Morneau acquires Coopers & Lybrand s pension consulting and actuarial business 1996 Morneau launches its administrative outsourcing practice 1997 W.F. Morneau & Associates and Sobeco merge to form Morneau Sobeco 1998 Morneau acquires the Canadian pension consulting practice of Deloitte & Touche 2005 The firm completes an IPO and becomes an income trust: Morneau Sobeco Income Fund (MSIF) 2006 MSIF acquires Heath Benefits Consulting 2008 MSIF acquires the defined benefit pension business of Cowan Benefits Consulting; and acquires the actuarial firm Leong & Associates 2008 MSIF becomes a leader in workplace health and productivity solutions with its acquisition of Shepell fgi 2010 Conversion to Morneau Shepell Inc. (MSI) 2011 MSI acquires Jacques Lamarre & Associates to expand Employee Assistance presence in Quebec 2012 MSI acquires SBC Systems to enhance benefits administration platform; and acquires Mercer Canada s pension and benefits outsourcing, business 2013 MSI acquires Dion Durrell s workers compensation business to strengthen Absence Management Solutions practice 2014 MSI acquires Group AST, the largest workers compensation business in Quebec 2015 MSI acquires Ceridian s US Health and Welfare Administration business and Bennsinger, Dupont& Associates to enhance US EAP capability 8

9 2016 Q3 year to date results Revenue ($M) Adjusted EBITDA ($M) % adjusted EBITDA margin Q Q Q % growth 6.1% growth Q

10 Capital Structure 53.1 million common shares 45% institutional, 5% management, 50% retail ~$1 billion Convertible debenture Due June 2021, 4.75% rate, $25.10 conversion price $86 million Bank debt Additional details on next page $174 million 10

11 Flexibility in debt agreement Current bank debt facility (matures Nov 29, 2017) Debt available Current Balance ($m) Revolving debt facility $300 million $174 million Financial covenants Bank debt to EBITDA 3.0:1 EBITDA to interest expense 3.0:1 Currently 1.6: 1 Currently 6.8: 1 11

12 Investment summary Significant recurring revenue base with strong margins, cash flow and low capital requirements Consistent performance and returns to investors over time total return well in excess of broader indices Customer base of large, blue-chip companies Unique integrated provider of human resource services 12

13 Investor Relations contacts: Scott Milligan Alan Torrie Stephen Liptrap 13