Investor Presentation Q1 2018
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
Outpacing the market Total Return - from IPO to March 31, 2018 YTD-1-3-5 Year Compound Annual Return 3
Our strategy focuses on five growth pillars Vision To optimize the health and productivity of people – the heart of every successful organization Deploy new Collaborate Transform Drive Accelerate technology across LOBs to how we do Strategy successful growth solutions to increase client business and execution of our through US address macro value and drive achieve best in core businesses expansion HR trends growth class efficiency Our Values Our Purpose Foundation We value long-term relationships Improving business We treat others the way we want to be treated Improving lives We are innovative and entrepreneurial Our People Our Clients Ensure we have engaged talent with right skills to execute strategic Create great client experiences plan 4
Balanced Revenue Mix 2017 Line of Business Revenue 2017 Geographical Revenue 36% 34% 15% United States Pension and Benefit Employee Assistance Outsourcing Programs 19% 11% Retirement, Health and Absence Management Benefit Consulting Solutions 85% Canada 5
High recurring revenue 700 $631 $592 600 $567 $536 500 $471 $419 (million) 400 acquisition growth $365 organic growth 300 recurring revenue 200 100 98% 98% 98% 98% 97% 95% 98% 0 2011 2012 2013 2014 2015 2016 2017 Percentage indicates proportion of total revenue that is recurring from prior year 6
2018 Q1 results Adjusted EBITDA ($M) Revenue ($M) 33.6 31.3 167.5 156.6 20.0 % adjusted EBITDA margin Q1 2017 Q1 2018 Q1 2018 Q1 2017 7.0% growth 7.4% growth 7
Capital Structure 54 million common shares ~$1.4 billion 45% institutional, 5% management, 50% retail Convertible debenture $86 million Due June 2021, 4.75% rate, $25.10 conversion price Bank debt $300M facility matures December 2020 $191 million Financial Covenant: Bank debt to Adjusted EBITDA ≤ 3.0:1 – Currently at 1.6:1 • 8
Investment Summary Talented Best in team of Successful class client employees Consistent Strong acquisitions satisfaction Strong margins cash flows recurring revenue 9
Investor Relations contacts: Scott Milligan Stephen Liptrap smilligan@morneaushepell.com sliptrap@morneaushepell.com
Long history of successful acquisitions 1990-99 2000-2009 2010 - present 2010 – MSIF converts to a corporation as Morneau Shepell Inc. (MSI) Coopers & Lybrand’s Completes an IPO and pension consulting and becomes an income trust: 2011 – Jacques Lamarre & Associates to expand Employee Assistance actuarial business – 1992 Morneau Sobeco Income presence in Quebec Fund (MSIF) – 2005 Sobeco from Ernst & 2012 – SBC Systems and Mercer’s Canadian pension and benefits Young to form Morneau Cowan Benefits outsourcing business Sobeco – 1997 Consulting’s defined 2013 – Dion Durrell’s workers’ compensation business to strengthen benefit pension business Canadian pension Absence Management Solutions practice – 2008 consulting practice of 2014 – Group AST, largest workers’ compensation business in Quebec Deloitte & Touche – 1998 Actuarial firm Leong & Associates – 2008 2015 – Ceridian’s US Health and Welfare Administration business and Bennsinger, Dupont & Associates to enhance US Employee Assistance Shepell·fgi – making MSIF capability a leader in workplace health and productivity 2016 – Solareh and Longpré to enhance Employee Assistance presence solutions - 2008 in Quebec 2017 – Pro Health Group, a health and wellness company and Chestnut Global Partners (CGP) a leading global EAP provider 11
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