Q4 2020 Morneau Shepell Inc Earnings Call
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Good morning, ladies and gentlemen, welcome to the fourth quarter 2020 conference call from one of Chapelle Inc. Please note that this conference call will contain forward looking statements, which reflect management's current beliefs and expectations regarding the corporation's future growth and results of operations.
Actual results can differ materially from these anticipated.
I would like to turn email alert for Mr. Stephen The crap, President and Chief Executive Officer of partnership L. Inc. Please go ahead, Mr lip dropped.
Thank you Dana good morning, and thank you for joining us on the call with me today is Grier Colter, our Chief Financial Officer yesterday. After the market close we released Morneau <unk> financial results for the fourth quarter of 'twenty 'twenty and for last year as a whole like always you can access the news.
Released financial statements in the MD&A on our website at more of the Chappelle dotcom.
Today I will review our business performance from last year, our fourth quarter highlights and then briefly go over the news today about our intention to change our company name to life works then.
And then Greg will cover off our financials before we open the call to questions.
To start.
Our 2020 results speak to the strong resiliency of our business model, especially during a challenging time like no. Other we delivered a solid year in 2020 that featured revenue profitability and organic revenue growth, we met our expectations for 2020 that we had.
Net prior to the arrival of COVID-19 in March and the Lockdowns of followed.
All things considered we're pleased by how the year of turned out the fourth quarter was also very solid much like the third quarter with the same trends slower in person services, but also a major increase in sales of technology enabled solutions the.
The number of the stands out for me in addition to solid revenues and improve profitability and margins was organic growth of $4 four per cent in the quarter for the second quarter running we're reporting a recurring technology revenue that includes our lifeworks platform.
C B T system solutions health and welfare of administration and financial wellbeing.
This suite of recurring revenue technology products grew at 13% in the quarter and just over 9% for the year.
Let's turn to some recent business wins, starting in the United Kingdom, We won our core well being contract in Q4, a significant win to support 70000 employees of one of the world's largest e-commerce companies.
In the fast growing well being market in the United States, we want of contract in Q4 for ICT solution for the U S based employees of of the one of the world's largest interior automotive manufacturers.
In the first month of 2021 also in the United States.
We up sold of telemedicine solution to one of our existing clients of health insurer.
Support it's 20000 members.
In Canada in the digital mental health space, we developed an exciting unique partnership with shoppers drug Mart near the end of last year, we're now providing shoppers customers through its P. C health up with access to a complete range of digital cognitive therapy solutions through ability I C. P T.
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In Western Canada for the province of Alberta, We landed a large contract in Q4 to provide actuarial analysis related to the social security strategy for that province.
Our benefits administration business, we are extremely pleased by two major wins at the beginning of this year.
One contract is with the state of South Carolina, and its public employee benefit of authority.
Similarly in another U S state we wanted the major contract to provide benefit administration services for state police and firefighter pension plan.
In early February we also completed the tuck in acquisition of the outstanding shares of SMG Health in Australia. This brings together two companies in that market with a common vision to deliver a holistic that's the health and wellbeing to their clients employees.
Together with our other businesses in Australia, we offer an unmatched range of well being services to corporate clients in that important market for us.
As we go for this year, our sales wins of an extremely strong and above historical levels. Our funnel continues to be strong and is growing across all lines of business.
At our annual meeting of May I'll do them more of a thorough review of our performance for last year and an overview of our strategic plan.
But there are factors of May 2020, a solid year for us that are worth mentioning as they speak to the state of our business today.
In March last year as Covid landed on everyone of our people and systems pivoted to remote work quickly and productively and that is still the case, we continue to prioritize the health safety and wellbeing of our people and our clients above all else.
And that commitment went a long way last year to helping us reported the highest client satisfaction and employee engagement levels in our company's history.
As I mentioned as the pandemic took hold in person services were largely shut down as the Lockdowns have arrived at the same time, we continue to see a very strong increase in demand for technology enabled solutions provided by virtual deliver particularly in the fast growing markets for well being.
I see BT and telemedicine as well as our other digital care solutions.
The pivot to virtual delivery is one reason for our improving organic growth as we move deeper into the year.
Additionally, during the year, we continue to see growth in retirement solutions disability management and pension administration, all businesses with strong recurring revenues.
During the year, we added nearly 4 million lives through new client wins to our well being business. We now cover 13.8 million direct lives through our E. S. A P programs up from just over $10 million at the beginning of the year.
We also saw the continued adoption of our Lifeworks platform, a key part of our technology and innovation strategy.
We increase the lives on the platform to $5 1 million, an increase of 125 per cent.
This migration sets the stage for Upselling clients, two additional technology modules.
At the beginning of the year, we've been upselling at 10% and by year end, we were able to increase that to 15%.
Even with the large increase in the base of total lives of available.
Last year, we kept rolling out new technology enabled solutions, specifically designed to address the wellbeing challenges independent of it which is really shine a light on the mental health issues in our communities and we have been there to help.
Last April we launched our monthly mental health index that we've talked about now on several calls.
It's a new global benchmark for measuring the mental health of the working population by year end of the index had been mentioned in the media over 2600 times.
The index is not only of brand building assets, but it provides insights that can help of governments and communities with their policy decisions about public health.
Also in April we launched well, Ken mobile App and website, which provides access to free mental health resources to Canadians more than 65 people of downloaded the app and more than 30000 people have visited the website so far.
In a similar vein our living well podcast launched in July and has over 8000 podcast downloads and continues to build an audience for our thought leadership content.
Finally, as I referred to and business highlights our ability ICB T portfolio took off last year, providing online therapy. The 35000 Canadians to help them manage their anxiety and depression symptoms with over 1 million sessions being delivered.
At the beginning of the year, we had just under $1 million and ICT revenues and by year end that was over $8 million.
What I hope is clear from this review of 2020 and the fourth quarter highlights is that we are committed to strengthening our position as a global leader in the total well being space.
And there's more room for our brand to grow as we go forward.
And that brings me to our announcement that we intend to change our company name to life works.
For many years the mono Chapelle name has served our business exceptionally well, it's a solid brand in our Canadian markets. It resonates with the quality of our people and services.
That said over the last 10 years alone we have grow into a place where almost half of our revenue now comes from outside Canada.
Our growth for the presents an opportunity to refresh our brand to better reflect where we are going as the company and to support our purpose is the technology enabled leader in total wellbeing.
We really do have a great story to tell as the company today with some 24000 clients delivering services in more than 160 countries and the operating in a fast changing and growing industry globally.
For starters, we like the Lifeworks speaks to our purpose as the business improving lives improving business.
It's the idea of that by improving the person's life, we improve how they perform at work and.
And how their organizations and communities work.
The global wellbeing industry like our company is changing fast it's a much more dynamic and technology focus than it has ever been before while we're still in the beta B space. There is much more of a beat of see feel in the brand presence of the market players.
These are factors of suggests it is the right time for a new company name to support our growth strategy.
This has not been the decision that we've taken lately for without considerable research. We conducted an in depth name of evaluation process involving our key stakeholders, including clients brokers advisors buyers and decision makers across all of our lines of business.
In all of our major markets.
Life works as the name outperformed all other naming options in our extensive research. It was the top choice for a new name that reflects all aspects of our business in our market segments in key geographies, Canada, the United States, the United Kingdom and Australia.
It is the confident named memorable and appropriate for a company with our global strategy and aspirations. It is also a name that works well for a technology company. We look forward to of formal brand launch after our annual meeting in May and continuing to build on our history and legacy as we move.
To the next chapter.
In closing there are three levers for growth in our business model that are really driving our company forward.
One is a solid core of recurring revenues across our businesses. The second is are accelerating global expansion and the third is our proven ability to innovate with new technologies to create market leading solutions and that is why we are sharing our growth rate of recurring technology.
The revenues on a regular basis.
On that note Grier Colter will review the financials Greer.
Thanks, Steven and good morning.
Let's start with the financials for the full year.
Taco, what Stephen said 'twenty 'twenty was an excellent year for the business and we adapted well to the changes brought about by COVID-19.
Revenue grew 10, 2% to $979 2 million with adjusted EBITDA, increasing nine 6% to $200 million.
Adjusted EBITDA margins were essentially flat to prior year at 24 per cent.
The increase in adjusted EBITDA is due to organic growth.
And the midyear of 2019 acquisition of Mercer as large market administration business, partially offset by the divestiture of our benefits consulting business.
Adjusted EBITDA per share for the year was $2 87 are for.
4% increase compared to $2.76 in 2019.
Profit for the year was $55 9 million compared to $19 million in 2019.
The increase is primarily due to the gain realized on the divestiture of our benefits consulting business back in March 2020, followed by organic growth in the business.
Normalized free cash flow for the year decreased to $101 2 million compared to 100 and for $6 million for the same period in 2019, primarily due to higher capex.
Partially offset by higher cash provided by operating activities.
The company will maintain its policy of paying a monthly dividend of $6.05 per share.
Turning to the fourth quarter, we were very pleased with the overall results. While we continue to face some headwind in our face to face services, we delivered strong revenue of $249 6 million.
Representing four 4% organic growth compared to last year.
Adjusted EBITDA increased six 2% to 51 million with adjusted EBITDA margins, increasing to 24% from $19 four per cent.
As Stephen noted we were happy with the quarterly performance of our technology enabled solutions and of particular mentioned, our health and productivity solutions business grew about 22% organically in the quarter as a result of very strong performance from our <unk> product.
We had anticipated coming into the quarter that we would complete all of the integration work related to our Mercer acquisition and we've done that with 650000 included in our adjusted items for the quarter and you'll recall that we completed our lifeworks integration work in Q3. So I was planned for 2021, the only anticipated item to be adjusted.
Is our ERP project unless of course, we were to do a transaction.
For the reasons I just noticed noted we delivered profit of $10 8 million compared to $2 6 million for the fourth quarter last year.
Earnings per share was 15 cents in the quarter compared to for in Q4 2019.
And we generated normalized free cash flow of $23 million compared to $18 million last year.
In closing I'd like to emphasize that our liquidity position remains very strong, giving us the capacity to support our growth strategy. We did an excellent job managing our working capital throughout 2020, and our receivables declined during the year as we grew the business draws on our revolving credit facility declined by about $60 million during the year to end at about 400 and for.
The $50 million at year end.
And with that I'll turn it back to you Steven Thanks career in summary, we ended the year with a very solid fourth quarter that met our expectations for the year during a very challenging time, we grew revenue per.
Ross it and saw higher levels of organic growth, while maintaining strong sales pipeline that bodes well going forward I'd like to thank everyone on the call for your time, so far today and we'd be pleased to now answer your questions.
Donna. Please go ahead and open the line.
Thank you, we'll now take questions from the telephone line. If you have a question and you're using a speaker phone. Please at the handset before making your selection.
You have a question. Please press star one on your device.
If at any time you wish to cancel your question. Please press Star two please press star one at this time, if you have a question that'll be a brief pause for participants register thank you for your patience.
And the first question is from Stephanie.
Stephanie price. Please go ahead.
Hi, good morning, good morning, Stephanie.
If you could talk a little bit about the conversion rates on the Lifeworks platform. It looks like you did a good tick up again this quarter. So just curious how we should think about the drivers of of the continued conversion and what youre seeing in that part of the necessity.
Yeah more than happy to the conversion has actually exceeded our expectations I think the team has done a great job Stephanie so the way I like to think about it we've got at the $13 8 million direct lives are through our EAP programs for those of lives associated with our clients. We have now got 5.1.
None of them are where the organizations of agreed to put their employees on the platform, which is absolutely great and then what with that $5 1 million and we have an opportunity to go out and upsell, we had been up selling out of a rate of about 10%, which we're quite happy with and that accelerated through the year, where we ended the year, having up sold of about 15.
On a per cent of those lives so very happy on those measures across the board.
Great. Thanks, and then I think maybe you comment on the competitive environment as well it seems like there's been a couple of wellbeing telehealth firm sort of you know either come to market or look at the IPO in Canada. Just curious if you see the competition is increasing and how you.
Kind of differentiate from some of these new entrants.
Yeah, it's really interesting because as you know we had a partnership for a number of years.
With a very strong telemedicine provider and that's great and we continue to win business with them and.
And go forward, we also need the decision out of our clients' requests really too.
Put in place of our own telemedicine solution. So that when people are on the E. P platform on the Lifeworks platform. They can also access telemedicine seamlessly and we continue through fourth quarter, where we sold well over a million dollars in that business. We continue to see that trend as we moved in.
The Q1, so we actually see it as an accelerator within that business.
Okay, Great and then maybe just finally for me you mentioned the international expansion of a couple of times of the script.
The Australian acquisition that are current post quarter, just curious how you're thinking of the international opportunity here in line, how we should kind of think about that that's really an acquisition.
Yeah, and if you think about Stephanie our largest market. So we deliver services in over 160 countries around the world, but we've really got strength when I think of that sales and account management and on the ground resources in substantial quantity in Canada. The U S U K and Australia the.
The Australia acquisition was really good for us because it vaults us nicely into solidly number two within that marketplace.
It also broadens out of our services and we just see that as a market that is ripe for total well being and we will be able to continue to grow. We also see that market is one where there might also be other tuck in opportunities similar to what we've done in the U S and Canada.
We also you know we deliver services quite of bit within the U K, that's the key market for us.
And we're able to get into mainland Europe from the U K. If there was an opportunity to continue to grow our business in mainland Europe. We would obviously look at that either from a growth standpoint or from a inorganic growth standpoint as we go forward. We also have some joint ventures as I've talked about before in some other markets.
We see these really are seedlings, a which may take off and grow we're seeing very good growth.
And those businesses that is in Russia, Brazil, China, and eastern Europe that are very small today, but we do see high percentage growth rates within those markets.
Great. Thank you very much I'll pass the line.
Alright, Thanks Stephanie.
Thank you. The next question is from Graham Ryding from TD Securities. Please go ahead.
Hi, good morning.
One of your graph I could if I could start with him I think he mentioned the you added 2.8 million lives to well being offering in 2020.
So I think the math of the 25 to 30 per cent increase.
Is that kind of translate into.
All being related revenue jumping by by that amount or how should we think about the revenue impact from the income.
So you can see it in lives covered.
Yeah, the way I think about of Graham. It's Stephen here is the first thing moving from 10 million lives and moving over to 13 million lives coming onto our over overall platform, yes, as we add those direct lives that's per employee per month of some of that revenue would've shown.
Non up as we move through the year and the contracts that we signed towards the end of the year of the revenue you will show up in 'twenty 'twenty. One once we get them on we moved them over to our total so that's in our EAP system once you're in our EAP system or of wellbeing system, we move them over to a life works total well being platform we do.
Of that at no cost of that really is of $5 1 million and then we upsell of additional modules to them at that point in time, if the normally a P is call. It two to $4 per employee per month, the additional modules and selling of total wellbeing solution would be another two to $4 per employee per month, and that's why we track very closely.
Percentage were up selling from that $5 1 million and again as I mentioned before we're very pleased to have that right up at 15%.
Got it so that's 15 per cent of the $5 one that's been the <unk>.
Correct of taking on the total of it okay Yep.
You mentioned on the on the.
The your earlier remarks, but I didn't fully catch I'm wondering if you could just flush it again for US exactly what's included when you talk about your tech enabled well being products, but what are those.
Yeah, the easiest way to think about it. So the first thing we wanted to do is just to provide more clarity for everyone really on the call and everyone who follows our company closely we just thought it would be very valuable to pull out from our businesses things that are technology enabled we're delivering true Tac and things that are.
Recurring revenue.
In particular, so that is what we've really done with that measure those things would include things like our lifeworks platform, so as selling the platform and people on it.
It would include or ICB T solution that we're delivering it would include our benefits administration, where we're selling of our benefits system. It would include the ongoing revenue from our system solutions, where we sell that into a large primarily government organizations and it would include financial wellbeing.
The common element to all of those to me is they're all recurring revenue, they're all delivered through technology.
As I mentioned, we were very pleased to see those grow 13% in the quarter I don't know if we'll hit that every quarter, but we're very pleased to see overall for the year. They grew at 9%.
And I think as I've mentioned before we would target that suite of services to be growing in the high single digits.
Okay got it.
And some of the offset is the are the other areas of your business is what brings it all down the 4%.
Yeah, the biggest offset in my mind, Grandma's really and we've talked about this three of the pandemic is just we have a lot of face to face services that you know immediately stopped and some of come back in some form of delivering virtually in some of those things would include things like where we delivered children support solutions people come to our.
The for things like autism speech therapy things like that where we go onsite and helped with specific traumatic events. So think about banks getting robbed and things like that where we're not providing those onsite services and some could also include where we're going on site to provide actuarial services and things like that.
Where you know of clients that put some of those projects on hold so I. The way I would look at it is we had really really strong growth that we're very happy with all three of the pandemic relating to our technology solutions directly ties to our strategy of where we're trying to go.
And we had some things that would have been much more on the negative side or stopped which would have been more of the face to face in person services against some of those have come back virtually as we move through the year, but you cannot provide some of those services fully virtual.
Okay.
Understood.
I'll, maybe make you that's it from the effects.
Thanks, Ken.
The next question is from <unk> from BMO capital markets. Please go ahead.
Thank you and good morning, good morning.
So to follow up on that last topic.
Organic growth continues to improve if we look at the headwinds.
<unk> faced in the first half of 2020 in terms of reduced in person revenues what percentage would you say.
You have been able to move them virtually.
Yeah, Hi, Janet Greer here, maybe I'll try this one but.
So just to be clear of these businesses were.
In our life works business, Firstly, and then secondly, I'd say it was in the Canadian region just to.
Clarify that if you look at overall for Moreno, the headwind was in and around 100 basis points. So if you look at our organic growth for example in fourth quarter. It was about was for 4% so the.
The impact of that you know, we would've said, we'd probably more normalized would've been growing in the fourth quarter at five 5% and then if you apply it to the Lifeworks business, which grew.
The four 1% in the fourth quarter and you can do this math background of both yourself for that business would have grown more of like six 5% in the quarter.
So yeah, the impacts of about 100 basis points, our top line to the overall total consolidated business.
Okay, that's great great inflammation and.
Looking into 2021 could we go over your expectations for capital expenditures and an could you provide.
The timeline.
In terms of your ERP implementation as well as your too long for real estate footprint.
Holiday.
Yeah for sure so.
It's for you again.
The Capex estimate this year, probably be pretty similar to last year, so it'll be in the $70 million to $75 million range.
The reason for the elevated capital as we've talked about before is really in 2021, primarily driven by two things number one as you mentioned the ERP project, which will be done in the third or fourth quarter of the share.
And the original kind of estimate on that was a $20 million or so maybe it'd be a couple of million over that as we've evolved through the project and looked at the functionality of it.
It may be a little bit more than that but not materially.
And then in roughly half of that we spent in 2020, but the other half of it will be in 'twenty 'twenty. One and then the second reason for the elevated Capex as I think you were mentioning as the real estate build out so we've got.
About $20 million of of Capex that are as leasehold improvements for our new.
Head office in Toronto, which is really the consolidation of about 200000 square feet into of 120000.
Which that's really what's driving that and then beyond that.
The capex from 2022 of them beyond should come off.
To the tune of $20 million.
And I think the all important obviously these were kind of one time.
Items that are not we're not talking technologies stand here will continue to invest in the businesses and the products all of that kind of stuff, but that hopefully that answers the question.
Alright, so sort of fine.
If I understand correctly, you know looking into 2022 of your expectations are for Capex to normalize to five.
The 5% of.
Yeah, I think that's a good estimate like that yes, $50 million to $55 million I mean, obviously, we haven't done the specific budgets for the year and all of that kind of stuff, but that's the range that we would expect.
Okay, Great and then last one for me in terms of the M&A environment could you detail.
How your pipeline is looking like these days and.
Mind us of what you would look for and the potential acquisition.
Yeah, So I.
I kind of put it into three categories.
Where we can get you know products that we can add to our rail so stuff that we're not selling today, but where are we kind of cross sell it or bring it into our ecosystem put it on a platform of solid that's the first category of second is the scale so, particularly in the the admin business, but also applicable to the AAP business. These are scale businesses and how you can grow them to become.
More efficient so we're always looking at ways to grow these businesses, obviously organically, but also inorganically in the in the third is geographically and so.
The we had a nice example of a small acquisition in Australia will continue to do these kinds of things in terms of the M&A environment.
I would say the evolution of the last quarter, we're seeing a better flow. So that's good and it's and I would say all of the categories I'd say, there's a lot of money on the sidelines. So the competition for M&A is pretty tough but.
We've got other levers that we can use them cross sell is an example of.
So we're we've got a legitimate business. So we can compete in certain areas with private equity, but I guess.
Where were we may find more success on the smaller end of the market in the near term so where we may have to do smaller acquisitions, where we kind of stay out of that space, where you have large auctions on a ton of private equity money.
But you know it continues to evolve I'd say.
The pipelines looking as good as it's looked in a year so that's positive but.
The continued to be very disciplined and we know what we want and what we don't want them, we've got criteria and all of that kind of stuff but.
Yes, I'd say the pipeline is looking a lot better.
Thank you for your comments.
Thank you. The next question is from James Molloy from National Bank Financial. Please go ahead.
Yes. Thanks, good morning, good morning.
Jim.
First question just on the the Lifeworks migration I think we're all pretty pretty impressed with the stats you threw out there and just if I'm thinking about this correctly.
From the Q3 disclosure to today.
It sounds like the the number of lives covered by the enhanced platform is has almost doubled from like.
You know call it 400000 lives to.
North of 750000 lives so.
That's a pretty big step up in this quarter.
Is that the kind of pace, you're you're expecting on a quarterly basis and I guess, what would have caused that big jump this quarter relative to the last three quarters.
Yes, Great question, Jamie It's Stephen here and your numbers of dead on and we're also equally excited by that.
I think it's probably too early to fully follow what the pace is going to be I think we would expect it to continue to increase quarter after quarter and we will continue to look at.
How do we continue selling more modules in the past quarters. Some of them were related to what I would call ongoing regular movement and we also had some very large clients move their employees and the large clients are going to make it a little bit lumpier.
So I'm not sure if I can say that will be the growth rate every single quarter, but I think we will continue to see.
What we saw on the annual basis, we would continue to see that accelerate overtime.
Okay great.
The the first client win that you mentioned.
It's a U K based E Commerce company 70000 employees I guess first is that correct and then.
What what solutions do they add to the attic of core platform Lifeworks EAP solution or is there something more involved with this relationship.
Yeah, and you had absolutely no out of the client so I'll leave that with you but.
Yeah, we're just on the none of those basins on some of these wins, obviously, but yeah. There are one of the largest E retailers in the world and we won the total wellbeing solution for their U K employees, and we will look to obviously move of that contract into some other geographies, but we're very excited by it and we.
Continue to get a lot of interest from our clients and when you think about what's gone on in the pandemic I mean in the old World. It was really really important to have an EAP and have somewhere that your employees could reach out to you and get the support on the <unk>.
Non emmis confidential basis, when they wanted it and when they needed it as we move through the pandemic it becomes even more valuable that you figure out you know.
How do I provide a broader range of service to employees, how do I give them the opportunity if they are at home and feeling lonely the connect as part of recognition how do I make them feel part of the.
The bigger organization, how do I communicate better with them and allow them to chat with other employees, how do I give them the opportunity to save money on things that might be showing up to their door. Because they are ordering we just see a tremendous amount of interest for all of the things that we offer through the platform and as Grier said, we will.
To look at either M&A or our own builds or partnerships to put more and more things.
Onto that platform and we've already seen really early success I would tell the medicine.
And again clients don't want an one off separate solutions that their employees have to find they're very excited to talk to them of about one platform. The hosts everything that they are employees of looking for.
Okay, great and if I could just dig in a little bit more and speaking to this relationship specifically when you say total well being how many how many modules of our services.
Would they be signing up for and is it more or less than your existing client base. So what I'm trying to understand is the the new clients that are coming in are they coming in because of all of the exciting new modules and solutions more knowns, providing or is it similar to your sort of base client.
Yeah, what I would say as you know before we got into the pandemic, we were really selling either a core platform for life works or we're selling.
Total well being platform and you know we didn't let people pick and choose the modules as we moved into the pandemic. We thought there was tremendous value to allowing clients to choose the modules. Some of them you know might want recognition of some of them might just want perks and things like that what we have found Jim is that for the most of them.
Our clients are taking the vast majority of the modules there might be of reason not to take one of them and it might be I already have a strong recognition platform, but give me everything else for it.
Might be I don't want perks, because in the retailer's case, I don't want perks, because my competitors are showing up and I don't want off for my competitor products. Two of my employees. So we tend to find there is a really really good reason for a client to maybe not take one module or something like that but it's more of that then.
Oh, just give me that one module so it's pretty close to what we're hoping the total well being in the first place, but a little bit more nuanced and I think our teams did a really really nice job the listening to our clients and then altering our offering of little bit to make sure we're delivering services our clients wanted.
Right Okay.
That's good last one for me.
If you can share with us some more for more color about the SMG acquisition of specifically about the Australia market like can you give us some.
Some color around market sizing the more nodes positioning and how this helps moreno in in that market and what you are what you see from that market going forward.
Yeah similar to the rest of the world, we see a tremendous.
The opportunity within Australia, and a lot of those different markets.
We know it's fairly well we have looked at it for quite a while and as you can imagine we've delivered services. When we did the Lifeworks acquisition, we did pick up a business within Australia that we are quite excited about that.
That business was kind of and number two in the market, but I would argue there was you know if we were to a there was a whole bunch of two b's and two season there with this acquisition, we move firmly into the number two states with a lot of distance between us and the other folks below average. So you know that obviously is very new.
<unk> similar to the rest of the world, though we.
We see Australia has the opportunity to move not just from EAP, but in the total well being and its an opportunity to talk to clients around all of the different things we offer of mental physical financial and social health is an opportunity to move folks onto the total wellbeing platform or sell additional modules and things like that.
Also think that there's a lot of opportunity within that market to continue to do acquisitions and move towards being a larger player within that marketplace.
Yeah, It's it's quite interesting and we also see Australia is a good opportunity to continue to serve as other markets be it in Asia or New Zealand from that spot.
And Jay maybe I'll just add on top.
Order of magnitude. This is I'm not sure whether this was public or not but it's.
It's about $10 million in revenue give or take.
That's kind of the size of the.
The returns.
Above our threshold that we've talked about it but for US we're happy with the deals obviously, we would love of who was five or 10 times the size but.
Oh, great when the deal for us.
Yeah, and just building on that Jay and the one thing I would say in Greer mentioned it in his comments as well we will continue to look for the larger acquisitions that will move the dial, but we've been very very successful for a number of years doing tuck in acquisitions. Our teams are very good at it is the core competence is us.
As an organization.
This Australia acquisition really fits into that I know, it's always a lot of work as we talk to our teams to do the smaller ones, but we're very good in the easily fold and so we do see that as a key part of our strategy continuing going forward.
Great color thanks, guys.
Thank you.
The next question is from Graham Ryding from TD Securities. Please go ahead.
Hi.
You've talked in the past about the Lifeworks platform and how you've kind of I think a bit of of vision to put more services on that platform.
Is your benefits of ban or maybe your ICT product can you talk about where your where you're at.
With that process.
And that the need for longer term strategy.
Yeah, you're exactly right Graham and I think I would say that there is two things we've been focused on.
With that platform and I would say as I described that platform in the future it's not.
Our lifeworks platform I'm, putting more on it's going to be.
More of an enterprise platform and what we surface three of our clients through it.
And I think the two things that we've been focused on what I would call plumbing, so making sure that the platform is globally relevant making sure that we've got all of the security features for many clients putting single sign on net.
Sure we look at data residency, making sure our languages exist.
And all of the locales that are clients of organizations have in place. So there's a whole bunch of plumbing work that's taken place over the last year, which I think was really really important.
As we go forward and then you're exactly right. We continue to look at how we offer more services three of the platform. A couple of examples as we moved into the pandemic, we started offering physical health.
On the platform. So you could go on and do workouts you could link a new of personal trainer you could have them work with you a lot of our clients employees, obviously use that quite a bit as we got in the pandemic.
We also had the ability to surface on there our telemedicine solution again, many clients have said, we really appreciate that being in a similar place. So that had been very great for us we are in the process as we go forward and we have a five year road map.
How do we link in our ICT solutions isn't that for clients, who want to be able to access <unk> in a single place.
And that's kind of on the roadmap right now and for some clients, we put a key parts from our other platforms pension and benefit information into that platform as well. So we've got a very strong roadmap that roadmap looks at the <unk>.
And to put more services in that platform and what I would always say to our team as long as our clients value it.
And you know they're willing to pay for those services.
Okay. That's good color.
And of similar I guess the your.
Your health and productivity Division.
All the time it has a lot of similarities to the wellbeing of side of the business is there any potential that you just sort of integrate that into your life being the.
Well being area.
The consolidated.
Yes, it's sort of a really good question Graham So I would make a couple of comments so for.
First of all both of those businesses have so much in front of them in terms of the potential.
I think having our teams and having very very strong leaders and those both of those businesses that are thinking about where we go and what we do in those businesses is really really important.
We are also the very good at making sure where it makes sense we approach clients in a very integrated way. So I'll give you. An example, I mean, we've recently moved to leverage our very large life works sales and account management work force of well over 100 people to sell <unk>.
We've got a very specialized group within I see BT business that is very focused on moving into some new verticals and some high growth markets as well so.
Even though we've got businesses individuals that are focused on their product roadmap.
We go to market as it makes sense to go to market in an integrated way, we're very good at doing that and our teams are very focused on doing that.
Perfect. That's it for me thank you.
Thank you.
There are no further questions registered at this time I would like to turn the meeting back over to you.
Great. Thank you very much Donna I'd like to end by expressing my thanks to everybody on the call. We continue to appreciate your interest in our company and we look forward to other opportunities in the future, including these calls to keep you up to date on what we're doing to drive our growth and success as the business. Thank you.
Thank you. The conference has now ended please disconnect your lines at this time and thank you for your participation.
This conference is no longer being recorded.
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