Building on our success; laying the foundation for the future
2015 demonstrated the continued ability of Morneau Shepell to deliver consistent, profitable growth while moving forward with strategies that will sustain our long track record of success. With the objective of building on the exceptional revenue growth of 2014, the Company was able to successfully navigate the challenging economic conditions and make continued progress against our financial goals.
- Revenue for the year reached $567.3 million, increasing by $31.4 million, or 5.9 per cent compared to the previous year.
- Organic revenue increased by 6.0 per cent compared to 2014 as a result of delivering growth across each of the four core lines of business.
- We delivered another year of record adjusted EBITDA, increasing in 2015 by $6.9 million to $105.8 million.
- We continued to achieve exceptionally high recurring revenues of 98 per cent.
We attribute this success in 2015 to a number of factors, but primarily to an unwavering commitment to our corporate strategic plan. We developed this plan to ensure that while reaching our short and mid-term targets, we also lay the foundation to reach our longer-term goals.
The plan focuses on the business through complementary three lenses – lenses that each sharpen our vision of the business from different perspectives.
Lens 1: Current performance and laying the foundation
This lens focuses on performance in the current and upcoming year, and emphasizes the key attributes that will continue to be critical in future years. These attributes are:
- Continued positive client satisfaction levels. Our annual survey found that nine out of 10 clients were very satisfied with us overall. We believe these satisfaction levels are at the root of our ability to maintain such high recurring revenues.
- Strong brand recognition. Our 2015 survey found that our brand recognition in Canada is healthy and improving. This is an ongoing priority for the Company, , but we also recognize an opportunity to ensure that all of our clients better understand the full scope of our capabilities, which will provide new opportunities for deeper relationships across a broader suite of our services.
- Robust pipeline. Development of a strong sales pipeline in each of our lines of business has positioned us well to meet our 2016 targets (and beyond). Implementing a cross line of business development strategy to take advantage of our broad client base has also bolstered our sales pipeline.
- Successful acquisition strategy. We completed the purchase of Ceridian’s U.S. health and welfare administration business, and we also acquired Bensinger, DuPont & Associates, a well-regarded provider of employee and family assistance services in the U.S. These acquisitions support our continuing U.S. expansion strategy and also position us for success in international markets.
- Positive community involvement. Morneau Shepell entered into a partnership with the Canadian Olympic Committee as its official Mental Health Partner and a Founding Partner of Game Plan, a program that supports athletes in their transition to the workplace. We’ve launched a number of programs designed to support the mental health of Canadian athletes and their support teams. It’s an exciting opportunity and reinforces our leadership in providing mental health support services in the workplace.
Lens 2: Stimulating progress for tomorrow
While executing against our 2015 targets and solidifying our sales pipeline for 2016, the Company also made significant progress in positioning Morneau Shepell for future growth. As our clients’ needs evolve, we are expanding our capabilities in a number of areas through strategic investment:
- Geographic expansion. Morneau Shepell continues to view the U.S. market as a significant opportunity in the longer term, notably building on our existing presence in the pension and health plan technology and administration spaces We are also focused on expanding globally, leveraging our international EFAP presence.
- Adjacent services. We are continually evaluating ways to better serve our clients through new services to meet their evolving needs. We are investing in innovative services and technologies that give our clients more powerful tools to evaluate, manage and improve the health and productivity of their people.
- Client expansion. Government and other public sector organizations represent a significant growth opportunity across all our markets for the long term. We are also exploring the relatively untapped potential in small- and mid-sized businesses.
Lens 3: Seeding growth for the long term
The dynamic, increasingly globalized human resources services sector that Morneau Shepell operates within is being transformed by a number of complex factors.
Planning beyond the immediate horizon and identifying the key trends with the potential to transform client needs and our business is an important part of our long-term industry leadership.
Through our strategic planning process, we have identified the trends that have the potential to significantly reshape our business, and where we believe investment and innovation will yield positive results.
Trends such as the evolution of big data and predictive analytics, growth in the use of mobile technology to monitor and manage health, changes in the makeup, shape and relationship between employee and employer in the workplace, and the potential of the transfer of accountability and risk by employers to employees, all continue to be a part of our Lens 3 look into the future.
Maintaining a consistent focus on our priorities
As we evaluate opportunities and take action across each of the three lenses of our strategy, we remain focused on the following priorities that have consistently guided who we are as a company.
- Growth and performance. Sustaining or exceeding our historical organic growth of 6 to 8 percent supplemented by tuck-in acquisitions, while achieving strong margins.
- Clients. Building a strong brand presence with our target audience, and being their provider of choice by delivering a unique and integrative client experience.
- People. Being an employer of choice and developing the leadership capacity within our talent pool to deliver our long-term strategies.
- Shareholder value. Aligning our capital structure and investments to keep the business strong while sustaining our dividend strategy.
These priorities continue to be those by which we measure our success as an organization. By balancing the needs of all our stakeholders – our clients who entrust us with their business, our shareholders who invest in us, our people who dedicate themselves to their work, and our communities where we live and work, we will continue to succeed in the future.
In closing, I would like to extend my appreciation and gratitude to everyone involved in making our business a success year after year: our employees, clients, business partners, board of directors and shareholders.
We thank you for your continued support and guidance and look forward to continuing our relationship with you in future.
President and CEO